Tuesday, October 30, 2012
British Airways has begun the process of fitting out ex-Bmi aircraft with a new fully-flat product to be used on mid-haul routes.
As previously reported, a total of seven former Bmi A321 aircraft are being refitted with 23 Thompson Aero Seating business class seats, featuring a 78-inch fully-flat bed and 45-inch seat pitch, and 131 economy seats with a 31-inch pitch.
In addition the aircraft are being fitted with the Thales i5000 AVOD in-flight entertainment system.
Two of the aircraft refits have now been completed, with a further two to be completed by the end of this month, followed by one in November and two in December.
Posted by Thibaut Labarre at 11:50 PM
When asked about the future of the low-fare airline industry, Vueling Airlines CEO Alex Cruz has a simple answer: “We will grow and the legacy carriers will shrink.” But that is only the short version of a more complex story.
While most low-fare carriers are continuing to grow, strategies and behavior patterns are changing, particularly in Europe. EasyJet is introducing assigned seating and has started selling its tickets through global distribution systems (GDS). Vueling, Norwegian Air Shuttle and others are actively pursuing connecting traffic, and Norwegian plans to launch long-haul flights next year.
“We are evolving the low-cost model,” said Ali Sabanci, CEO of Turkish low-fare carrier Pegasus Airlines, on the sidelines of the World Low-Cost Airlines Congress last month in London. “Only two years ago, ‘GDS’ was a swear word.”
By introducing new possibilities for the model, airlines are trying to gain access to a broader customer base. EasyJet’s drive to GDS cooperation, for instance, is aimed at attracting more business travelers. Vueling has enough frequencies at its Barcelona base to enable a large number of natural connections—passenger streams to which it would otherwise not have access.
EasyJet’s decision to introduce assigned seating also can be seen as a move to draw corporate travelers. Trials on selected routes have shown that the boarding process does not take any longer than the previous open-seating procedure, says EasyJet’s customer and revenue director, Cath Lynn. But the airline now can achieve higher yields and ancillary revenues by offering seats at the front of the aircraft to passengers buying the most expensive tickets.
Some changes also are being forced on low-fare carriers. The industry has always reduced capacity in the winter, but not to the extent it does today. Whereas previously it tended to fill seats by reducing fares, that is now often no longer a viable strategy, given the sharp rise in fuel prices. Instead, airlines park more aircraft in the winter.
Ralph Anker, who runs the network analysis website anna.aero, says Ryanair reduced capacity last winter by 38% from the preceding summer season. The reduction had been only 30% a year earlier. Other low-fare carriers cut winter capacity further as well—EasyJet lowered its capacity last winter 34% from summer levels, compared with 28% in 2010; Vueling cut capacity by 44% last winter from 40% the year before; and Norwegian dropped its offering by 28% in 2011 from 27% the previous year.
As networks grow, the low-fare airlines find themselves in more direct competition with each other. When Hungarian national carrier Malev collapsed in January, Wizz Air immediately widened its already significant presence at Budapest Airport and Ryanair opened a new base. Following the closure of BMIbaby in September, Monarch Airlines, FlyBe, Ryanair and Jet2.com picked up abandoned routes at East Midlands Airport.
One current low-fare success story is Spanish carrier Vueling, which is thriving in spite of its home market’s economic weakness. Vueling benefits greatly from industry consolidation. At its main base in Barcelona, its biggest competitor, Spanair, went bankrupt in January and ceased operations. EasyJet has announced the closing of its Madrid base and Ryanair has reduced capacity into Spain, albeit from a very high level.
Cruz says Vueling had a watch list of airlines that might pull out of the market and reaction plans in place in case that occurred. “We cannot afford not to respond fast,” he says. As a consequence, the airline has seen traffic expand by more than 20% in recent months. Cruz says Vueling has lower unit costs than EasyJet and he sees “more room to cut.”
Vueling expects more growth potential as it develops its Barcelona base. Cruz also is keen to build connecting traffic there, the share of which was about 10% before the summer and is rapidly increasing. He argues that it is fine to offer connections for low-cost carriers as long as the schedule is built on point-to-point traffic and the airline takes advantage of natural connections only. But he will not tolerate new routes that are based on connecting-traffic revenues.
As Vueling opens up more bases in European countries outside of Spain, Cruz sees it becoming more pan-European. “We have to start connecting the dots,” he says. As part of its expansion plans, Vueling is seriously considering an order for the CS300, the larger version of the Bombardier CSeries. “The CSeries will be the new narrowbody in town for a long time,” Cruz believes. “It is a very attractive aircraft.”
Vueling is in the process of placing an order for at least 60 aircraft; it will decide in the next few months if it will order the Airbus A320NEO, Boeing 737 MAX or Bombardier CSeries.
Bombardier is offering a 160-seat version of the CS300, which is designed for 149 seats in a legacy airline layout. The manufacturer might have to add a second overwing exit on each side of the aircraft to accommodate rapid disembarkation regulations in emergencies. Cruz believes the CS300 will still be a comfortable aircraft with 160 seats, though. Vueling, which has given the three manufacturers clear specifications for cabin and seat configuration, has been very pleased by the response.
The Vueling CEO also points out that the Canadian government is eager to help with the financing of Bombardier’s aircraft.
Vueling operates a fleet of Airbus A320s and when it began the order campaign last year, Cruz thought it would choose between the A320NEO and the 737 MAX. Bombardier’s offer came to the table later.
Another European LCC about to reveal a major aircraft order is Turkey’s Pegasus. “We are already there, but I would like to announce it in my own country,” CEO Sabanci says. The carrier is deciding between the A320NEO and the 737 MAX, he says, and it will buy more than 40 aircraft, the size of its current fleet.
Pegasus, originally a charter airline, turned to scheduled flying in 2005. It has averaged 41% annual growth in the past five years. Sabanci thinks the airline has much potential for further development in the Turkish domestic market, as the middle class and disposable income are growing. It can triple capacity on domestic routes in the next few years and still not offer too many seats, he says.
Internationally, Pegasus is focusing on Russia and the Commonwealth of Independent States (CIS). “We need to send the low-cost virus to these countries,” Sabanci says. But he complains about government protection, of which incumbents, such as Turkish Airlines and Aeroflot, are taking advantage. “We would like to fly to Moscow and St. Petersburg, but they are a no-no for us. The regulators still have a romantic relationship with the national carriers,” Sabanci says.
Also enjoying growth in the Middle East, Air Arabia has nonetheless been forced to alter its strategy due to the uprisings in the region, particularly in Egypt. The airline, based in Sharjah, the UAE, is shifting capacity growth away from its two bases in Morocco and Egypt as it waits for the market to return. “Our focus will be on Russia, the CIS and Africa,” Air Arabia’s CEO Adel Ali says.
The airline opened a base in Alexandria, Egypt, several years ago. The Egyptian operation comprises three aircraft, two of which are flying out of Alexandria and one out of the Red Sea resort towns of Sharm-el-Sheikh and Hurghada. Air Arabia Egypt was supposed to have grown to seven aircraft as part of the initial ramp-up and was planned to grow to about 20 units within five years.
Air Arabia had planned to set up a subsidiary in neighboring Jordan, but it shelved those efforts with the outbreak of the Arab Spring last year, and Ali says the decision will not be revisited soon.
Other markets have proven more lucrative than expected. Saudi Arabia has opened its air transport market significantly in the past several years, and Air Arabia now serves six destinations in the country with 70 weekly frequencies.
Posted by Thibaut Labarre at 11:43 PM
Employers are asking their executives to fly more but with smaller budgets, a new survey of aviation professionals has found.
Aviation consultancy Ascend's 2012 survey, which polled 624 frequent travellers in Europe and North America, suggests companies expect an average 1.5 percent increase in flights against an estimated 1 percent travel budget increase.
The survey tallies with data from Carlson Wagonlit Travel CWT.L, who manage travel for corporate clients. Their 2013 forecasts show that fares are expected to rise globally throughout the rest of 2012 and into 2013, with travel budgets continue to be squeezed.
This means, thinks Ascend's chief economist Peter Morris, that travel suppliers that can provide good value without loss of business functionality will do well.
"Unlike some other business budget areas, we are not seeing overall cuts which means respondents appreciate the value and necessity of business travel by air in a global marketplace."
Of the travellers in the Ascend survey, just 61 percent travel by either business or first class on long-haul journeys. Economy and premium economy class is slowly filling up with suited passengers; the latest forecasts from the International Air Transport Association (IATA) show a 3.5 percent year-on-year fall in July for premium-class travel within Europe.
YES TO NO-FRILLS
Low-cost carriers, who don't just offer cheap fares, but prime airport destinations and frequencies, are also enjoying the benefits of reduced travel budgets.
Europe's second-largest budget carrier easyJet says that around 18 percent of their passengers are now travelling on business, and this is only set to increase. Spokesperson Anna Knowles says that over the past year, the airline has completed a number of corporate deals, and most recently a deal with the Houses of Parliament.
But even budget airlines cannot rest on their laurels. Morris argues that low-cost carriers must concentrate on providing a range of services, products, and flexibility. "It is not enough to say 'that is the price, take it or leave it' - because it appears that some customers will leave it."
And managed business travellers can access competitive rates from their travel provider, which have been negotiated with legacy carriers.
Nigel Turner, a CWT director, says that though many companies use low-cost carriers, they are not seeing a major shift to these airlines, "as schedule, airport location and total trip cost including all fees are key to any business travel decision making process."
Forty-four percent of respondents thought airport check-in processes were the most improved aspect of corporate travel, with booking technology given the thumbs-up by nearly three quarters of respondents.
Airports investment in IT continues apace. In a recent study by air transport technology specialist SITA, more than half of all airports said they expect IT spend to increase in 2012, while it will remain stable for another third.
Passengers' appreciation of online processes was in marked contrast to offline elements: Customer service and security processes were both cited by Ascend as major flaws in the travel experience.
Full survey: http://www.ascendworldwide.com/download/Corporate_TravelSurvey_2012.pdf
Posted by Thibaut Labarre at 11:40 PM
Monday, October 22, 2012
The global airline alliances are moving into the Middle East.
American Airlines and British Airways said Monday that Qatar Airways would join their Oneworld alliance, giving them access to one of the world’s fastest-growing airlines and a modern hub in Doha, the capital of Qatar.
The announcement came just hours after Air France-KLM revealed a commercial partnership with Etihad Airways, based in Abu Dhabi, United Arab Emirates. And last month, Emirates of Dubai, the biggest of the Persian Gulf’s vibrant carriers, announced a wide-ranging combination with Qantas Airlines of Australia.
“It’s a recognition they are taking Gulf carriers seriously after writing them off,” said Akbar Al Baker, the chief executive of Qatar Airways. “When you cannot defeat someone, you’ve got to join them.”
These deals are just the latest in a flurry of global partnerships in recent months. The three big airline coalitions — Star Alliance, SkyTeam and Oneworld — have been busy courting new members in China, Latin America and the Middle East as air travel becomes more global and major business markets expand well beyond the traditional routes between the United States and Europe.
The alliances offer passengers — particularly frequent fliers and business travelers — more destinations, easier connections and the ability to transfer frequent-flier miles among airlines. It also gives them access to business lounges at more airports across the world as well as speedier check-in and boarding.
Formed in the mid-1990s to make connections between flights easier and to offer more destinations than airlines could offer on their own, over time alliances have created deeper bonds among some of their members.
SkyTeam, whose members include Delta Air Lines, Air France-KLM and China Southern, has expanded its partnerships in China, signing on China Eastern and Xiamen Airlines. It added Taiwan’s China Airlines recently. It also brought in Saudi Airlines and Lebanon’s Middle East Airlines. For its part, Star Alliance, the biggest of the three alliances, is adding Shenzhen Airlines of China and EVA Airlines of Taiwan, and also signed big Latin American carriers in June — Copa Airlines and the merged AviancaTaca airline.
The deals with the Middle East carriers signify a major turning point for traditional airlines, which have unsuccessfully tried to fend them off and sought to block their expansion in Europe. Global alliances have filled in big chunks of the world in recent years, but there are still significant white spots on the map, particularly in India and Latin America.
“It’s like the opening phase of Monopoly, where you’re busy buying up property across the board,” said Dominique Patry, the vice president for international affairs and alliances at Air France-KLM. “That work is not entirely over yet.”
But even as the alliances grow, some airlines are still seeking partnerships outside them. Qantas, for instance, is a member of Oneworld, and its deal with Emirates effectively put an end to its longstanding relationship with British Airways, another Oneworld member.
Michael Wisbrun, the managing director of SkyTeam, said the carriers had focused so far on expanding their global footprint. “The focus now,” he added, “will be more on enhancing the customer experience.”
The alliance, he said, recently introduced a service called SkyPriority that will expand to over 1,000 airports by the end of the year. Elite passengers from any alliance airline will get the same priority lanes for checking-in and for boarding, allowing travelers to navigate airports faster, whether in Moscow, Atlanta or Nairobi, Kenya.
Charlie Pappas, the head of alliances at Delta, said: “If you fly to Beijing and then connect to a flight with China Eastern, we seek to replicate Atlanta’s best practices. The same if you fly with Air France to Seoul or with Aeromexico to Amsterdam.”
Some airlines are seeking deeper ties still. Delta, Air France-KLM and Alitalia, for instance, have pooled their trans-Atlantic flights through a joint venture that allows them to coordinate ticket prices, schedules and routes on all their flights between the United States and Europe. They split revenue and costs, and share the profit from the venture, which obtained antitrust immunity from competition regulators in the United States and Europe. The venture generates about $10 billion to $12 billion in revenue a year.
Other airlines have established similar partnerships. United Airlines, Lufthansa and Air Canada operate their trans-Atlantic flights along a similar model, as do American Airlines, British Airways and Iberia. American and JAL also have a joint venture on their United States-Japan routes.
All these new businesses have been helped by open skies agreements that have allowed unrestricted access to airports between the United States and other countries, particularly in Europe. Because of restrictions on foreign ownership, these joint ventures are the closest the airlines can cooperate without merging. In fact, a joint study by the European Commission and the Department of Transportation in November 2010 said these alliances were “effectively a close substitute to a merger.”
Mr. Patry, of Air France, said: “The airline industry remains very fragmented. But, eventually, alliances may be a vehicle for the consolidation of the airline industry. There would be the logical thing.”
Posted by Thibaut Labarre at 10:01 PM
Tuesday, October 16, 2012
THE decision made on October 10th by Britain’s BAE Systems, the world’s third-biggest defence firm, and EADS, the Franco-German owner of Airbus, to call off their proposed €38 billion ($50 billion) merger is a bitter blow both to the two companies and to hopes for the emergence of a more integrated European defence and aerospace industry. Executives reluctantly concluded that there was no hope of securing the political agreement of all three governments involved (France, Britain and Germany) that the deal should proceed. Perhaps surprisingly, it was the Germans—specifically the chancellor, Angela Merkel—who blocked it. Mrs Merkel informed France’s president, François Hollande, of her decision in a phone call on the evening of October 9th.
Although the intended merger, which would have split the new entity 60/40 between EADS and BAE shareholders, had its critics, it was in the long-term strategic interests of both companies. It offered BAE a way back into the booming civil-aviation market it left six years ago, as well as access to a much stronger balance-sheet. Airbus has an order backlog of €485 billion, more than double Boeing’s.
BAE, which generates over 40% of its sales in America, needs to reduce its dependence on shrinking defence budgets. The Pentagon’s spending is due to fall by $600 billion over the next decade. To protect its bottom line, BAE has cut costs ruthlessly, but there is a limit to how much further it can go. Other options, such as selling its American business or being bought by one of the American prime defence contractors, are deeply unattractive to both BAE and the British government. Being subsumed by a Northrop Grumman or Lockheed Martin would mean far less influence for Britain over its defence industry than it would have had through a BAE-EADS merger.
As for EADS, four years ago it decided to aim for a better split between its dominant civil and its subscale military operations; to expand its business in America; and to “normalise” the company by freeing its managers from the political interference that stems from a shareholder pact between the French and German governments. At a stroke, the deal with BAE gave it a way to realise all three objectives. Together, the two firms would have produced a well-balanced business resembling Boeing, with stable cash flows, pooled R&D spending and the ability to take on big investment programmes. The merger would also have set off a wave of much-needed consolidation among Europe’s smaller defence firms.
Where Angela feared to tread
The problem was the government shareholdings in the new entity (see article). The Americans insisted that, in order to keep BAE’s vital “special security agreement” with the Pentagon, the new group could not be controlled by foreign governments: it set a limit of 9% each for the French and Germans. The French government, which owns 15% of EADS, agreed to the 9% limit. Germany does not have a direct stake, though Daimler owns 15% of EADS. Still, Mrs Merkel refused.
It is hard to see why. The Americans were happy for the Germans, the French and the British all to have takeover-blocking special shares; and given the closeness of big defence firms to their government customers, Mrs Merkel would have had enough influence over the new entity to protect Germany’s security interests. Possible explanations include her natural caution, German voters’ distaste for the arms business, and above all a suspicion that the new firm would be more Anglo-French than Germanic at heart. All this should worry Europeans. If a generally logical merger can fall apart on such petty grounds, what hope is there of a banking union?
Posted by Thibaut Labarre at 8:50 AM
Friday, October 12, 2012
BA is to trial a new service allowing passengers to be automatically checked in ahead of their flight.
The automated service will check in passengers 24 hours before their flight, assign them a seat and send them their boarding pass electronically.
Launching this month, the trial will initially be offered to selected passengers departing from French airports, before being extended to “a larger group of travellers in the spring”.
If these trials are successful, BA says it will then make the service an option for all customers across the BA network by the end of next year.
BA says that during the trial "seats will be allocated on a individual basis", adding that "if customers wish to change the seat allocated they will be able to do so". The carrier also said that "In the future, the vision is to allow customers to store their preferences and if they are available, be allocated seats accordingly".
Commenting on the move BA’s managing director of brands and customer experience, Frank van der Post, said:
“Customers have so much to think about prior to a trip, be that finishing up in the office or getting the kids’ suitcases packed.
"We’re aiming to give them one less thing to think about by giving them the choice to be checked in automatically and sent their boarding pass electronically. Then they just need to drop off any bags and make their way to the plane.”
The carrier has also announced plans to trial a complimentary porter service for First passengers and Gold Executive Club members at Heathrow T5.
Set to launch this autumn, the trial will see customers greeted as their vehicle pulls up at T5, and offered the services of a porter who will escort them and transport their luggage to the First check-in area.
Posted by Thibaut Labarre at 11:24 PM
The feature enables customers who are browsing the site to search by multiple criteria including price and by the type of trip they are looking for. Easy to identify symbols, like a heart for a romantic getaway or a sun for a beach break, help narrow options so customers can find their perfect trip faster than ever before. Each destination includes a link to easyJet's booking process or to newly created destination guides for further destination specific information.
Posted by Thibaut Labarre at 11:18 PM
Virgin Australia has just announced that a major new marketing campaign will debut this afternoon during the broadcast of the AFL grand final.
The campaign will feature a new 60 second TV commercial which was filmed on the salt plains of Western Australia, and will also incorporate online, print, outdoor and social media elements.
“When we launched the new Virgin Australia brand and identity last year, we made a promise to put the magic back into flying,” said Chief Customer Officer Mark Hassell.
“This campaign highlights how we have delivered on that promise. We have completely overhauled the customer experience, transforming the look and feel of travelling with Virgin Australia both in the air and on the ground.
“We now have a brand new product that can compete with the best airlines in the world,” he added.
Posted by Thibaut Labarre at 11:12 PM
The €700 million ($899 million) terminal complex is 800m-long and is the largest above-ground construction project at Frankfurt Airport since the opening of Terminal 2 in 1994. It will be exclusively used by Deutsche Lufthansa AG and its Star Alliance partners. It will also provide more docking positions for serving wide body aircraft like the Airbus A380 superjumbo and the Boeing B747 family.
Pier A-Plus will offer 185,000 square metre of total useable floor space. It provides seven docking positions for long-haul aircraft with four designed for double-decker jets like the A380 superjumbo served by three passenger bridges, and three more positions with two passenger bridges for aircraft like the Boeing 747-8 and Airbus 340. It also features five Lufthansa lounges, including one First Class, two Senator and two Business lounges. These facilities combined together expand Lufthansa’s total lounge space by almost 50% to more than 14,000 square meters. The lounges are designed to offer maximum comfort. The moving walkways are made longer and broader to reduce walking distances while the waiting areas feature seats with integrated power outlets and USB ports for electronic devices.
Pier A-Plus at Frankfurt Airport also offers new retail concept. Retail component covers about 12,000 square meters of the total surface area with some 60 shops and restaurants. These are mainly concentrated at two central marketplaces. Also, Duty Free and Travel Value Shops are conceptualised as walk-through shops, which is a first for the airport. Travelers automatically reach the sales area after passing the security control points.
The ground-breaking ceremony for Pier A-Plus took place in December 2008.
link to full press release: http://presse.lufthansa.com/fileadmin/downloads/en/newslink/newslink-59/lh-newslink-59-October-2012.pdf
Posted by Thibaut Labarre at 11:08 PM