Sticking to the playbook. Well done the team over at FR.
The numbers of course are staggering. Well on the way to a 50 mil pax plus airline this year- the underlying numbers show some clear success in the strategy.
Revenues grew by 24% to €1.6bn (£1.1bn), which included ancillary revenues of €252m (£175.5m), up 54%. This meant that ancillaries accounted for 15.8% of total revenues, versus the airline’s target of 20%. This is the key to the long term success of FR. For a conventional airline this number is essentially zero as no additional revenues are booked in this manner. This only now shows how much this is worth and how successful Ryanair has been at pursuing the growth of the revenue base not based on RPMs/ASMs and CASMs.
We believe that leveraging the individual passenger as the core metric is the fundemental differentiator between the true LCC model and the legacy one. Any airline still clinging to their outdated metrics deserves to be shot.
Those of you who are regular readers - know am not a big fan of the Ryanair service but I totally buy into the model and am quite happy to put up with the poor service in exchange for a reliable timetable and a low price. This is the true credo.
Cheers
Timothy
Monday, November 5, 2007
Thursday, November 1, 2007
AIr Asia X delays UK launch till Q4 2008
As reported in DowJones News Wires, KL-based AirAsia X, 20% owned by the Virgin Group, plans to start services to London or Manchester in Q408. The LCC’s chief executive, Azran Osman-Rani, told Dow Jones Newswires it would acquire 50 Airbus A350s or Boeing 787-10s to handle its ongoing expansion.
Those interim A330s are not all going to fly to the Gold Coast so where are they going? Howeve a big twin like A330 would have to stretch REALLY hard to make it to the UK.
Enquiring minds want to know.
Cheers
Timothy
Those interim A330s are not all going to fly to the Gold Coast so where are they going? Howeve a big twin like A330 would have to stretch REALLY hard to make it to the UK.
Enquiring minds want to know.
Cheers
Timothy
Southwest returns to Worldspan after many years
Southwest will be returning to participation in Worldspan announced today as part of their ongoing campaign to court the business traveler.
However Worldspan even under Travelport ownership is not known as a major corporate agency system, nor do they have deep penetration among agencies in WN's key markets. So why?
Two reasons:
Reason 1 - Southwest needs all the bookings they can get - with Galileo and Worldspan under joint ownership (but NOT common platforms), Travelport made them an offer they couldnt refuse.
Reason 2 - Southwest needs a back door capability to reach the OTAs who are still using Worldspan.
It has been a long time coming. Now if only Southwest would announce something more meatier. We still dont have much clue to their long term strategy change.
However Worldspan even under Travelport ownership is not known as a major corporate agency system, nor do they have deep penetration among agencies in WN's key markets. So why?
Two reasons:
Reason 1 - Southwest needs all the bookings they can get - with Galileo and Worldspan under joint ownership (but NOT common platforms), Travelport made them an offer they couldnt refuse.
Reason 2 - Southwest needs a back door capability to reach the OTAs who are still using Worldspan.
It has been a long time coming. Now if only Southwest would announce something more meatier. We still dont have much clue to their long term strategy change.
Tuesday, October 30, 2007
And then there were ... 2? LCCs in Europe
GB Airways surprise capture by easyJet caught BA knapping. The big network king has suffered several defections over the last year. First there was BMED (founded by Lord Hesketh for those of you who are trivia buffs). Sold to BMI from under the noses of Willy and Co. Who promptly sold back BA's slots to them for more than the cost of the airline they bought. Go figure!
The news this week of Franchise partner GB Airways selling to easyJet was followed within a day or so by Loganair - one of the smallest of the franchises - who has also terminated their agreement.
The loser is clearly BA - but who is the winner. Some pundits are opining that this will raise the bar even higher for other LCCs. As we have said many times we believe that the market has fragmented and led to a new HVC - Hybrid Value Carrier model. Either network carriers coming down into the LCC type model or LCCs going up.
For the European market we see very few sticking to the purist (or purest) model. Ryanair for sure is one of them. However we believe that the others will morph into the HVC middle ground. Already we see many - even BA charging for value added services. We see consolidation of the kind of models that has united many brands in Germany under the Air Berlin management. (LTU, Condor, Germania, DBA etc). The dominance of the LCCs in different markets is clearly having effect. With BA pulling back still from Gatwick - easyJet's acquisition of GB Airways will bring a lot more slots and traffic to its new best friend hub at LGW. Interestingly this could also mean over time an opportunity for EZ to expand into a long haul model or at the very least a partnership with Virgin Atlantic.
Stay tuned folks this is going to be interesting. With Sir Michael Bishop soon to retire (he is getting quite old now) BMI cannot hope to remain independent for much longer. Let's just see how things work themselves out.
Cheers
Timothy
The news this week of Franchise partner GB Airways selling to easyJet was followed within a day or so by Loganair - one of the smallest of the franchises - who has also terminated their agreement.
The loser is clearly BA - but who is the winner. Some pundits are opining that this will raise the bar even higher for other LCCs. As we have said many times we believe that the market has fragmented and led to a new HVC - Hybrid Value Carrier model. Either network carriers coming down into the LCC type model or LCCs going up.
For the European market we see very few sticking to the purist (or purest) model. Ryanair for sure is one of them. However we believe that the others will morph into the HVC middle ground. Already we see many - even BA charging for value added services. We see consolidation of the kind of models that has united many brands in Germany under the Air Berlin management. (LTU, Condor, Germania, DBA etc). The dominance of the LCCs in different markets is clearly having effect. With BA pulling back still from Gatwick - easyJet's acquisition of GB Airways will bring a lot more slots and traffic to its new best friend hub at LGW. Interestingly this could also mean over time an opportunity for EZ to expand into a long haul model or at the very least a partnership with Virgin Atlantic.
Stay tuned folks this is going to be interesting. With Sir Michael Bishop soon to retire (he is getting quite old now) BMI cannot hope to remain independent for much longer. Let's just see how things work themselves out.
Cheers
Timothy
Tuesday, October 23, 2007
Virgin Blue introduces premium economy seats
Morphing of LCCs continue....
Our prediction that LCCs would continue to morph and many more would move up the food chain seems to be coming true. Today Virgin Blue announced they were introducing a seperate premium cabin. Heaven forbid they would desert their pagan (LCC) roots, but here it comes.
The first 3 rows of both 737-700s and -800s will be configured with convertible seats that can change from 3 abreast each side of the aircraft to just 2 with 34 inch pitch.
This follows on the heals of the successful promotion of the "Blue Zone" seats (front of the bus and the exit rows).
With a new website more premium lounges and a higher yield getting the notice of the analysts - Virgin Blue is moving more into the Hybrid Carrier.
Now if only they could do something about the float....
Our prediction that LCCs would continue to morph and many more would move up the food chain seems to be coming true. Today Virgin Blue announced they were introducing a seperate premium cabin. Heaven forbid they would desert their pagan (LCC) roots, but here it comes.
The first 3 rows of both 737-700s and -800s will be configured with convertible seats that can change from 3 abreast each side of the aircraft to just 2 with 34 inch pitch.
This follows on the heals of the successful promotion of the "Blue Zone" seats (front of the bus and the exit rows).
With a new website more premium lounges and a higher yield getting the notice of the analysts - Virgin Blue is moving more into the Hybrid Carrier.
Now if only they could do something about the float....
Tuesday, October 16, 2007
Trouble at Skybus already?
Its only been in operation for a few months but already they are monkeying around with the schedule.
Skybus has cancelled flights to San Diego and Bellingham in favor of new direct nonstops from Portsmouth Boston. Clearly they are sticking rigidly to the Rynair playbook... maybe....
Skybus has cancelled flights to San Diego and Bellingham in favor of new direct nonstops from Portsmouth Boston. Clearly they are sticking rigidly to the Rynair playbook... maybe....
Thursday, October 11, 2007
A Dreadful summer reverses trends on UK Emplanements
That depressing and awful UK Summer had a positive effect on UK Enplanements - particularly at LHR and LGW who both experienced growth in August and September against a backdrop of declines during the first half year.
We should however continue to see soft results from the two primary London Airports as carriers move capacity to mainland Europe.
Here is our top line analysis of the UK Results for September:
Manchester - continues to decline. Shift to the regions and growth of Liverpool are the primary reasons.
Stansted - slow growth only 2.5% compared to high single and double digit growth we are used to seeing. With Air Berlin pulling back moderately and the new terminal not yet available for use - the summer rush was clearly about all that the facility could handle. We are seeing Ryanair pulling back some capacity planned for the fall and winter months. Stansted is poised to overtake MAN as the UK's 3rd largest airport.
London City - another spectacular growth for LCY up nearly 30%.
Upcoming
The opening this month (or next) of the new Eurostar terminal at St Pancras will have some impact most likely on Stansted. It should be remembered that every time a Eurostar train leaves the station it is the same as watching 2 fully loaded 747s take off.
Comment on BAA and raising of rates. The UK regulator seems to be taking a leaf out of the German regulators book and RAISING rates. While this comes as much relief to the Spanish owners of BAA it can only serve to drive more traffic away. We believe that separating all the airports in BAA's portfolio would be counterproductive. However separating STN from the other two would be beneficial allowing for more competition on one of the most scarce of resources - slots and tarmac.
We should however continue to see soft results from the two primary London Airports as carriers move capacity to mainland Europe.
Here is our top line analysis of the UK Results for September:
Manchester - continues to decline. Shift to the regions and growth of Liverpool are the primary reasons.
Stansted - slow growth only 2.5% compared to high single and double digit growth we are used to seeing. With Air Berlin pulling back moderately and the new terminal not yet available for use - the summer rush was clearly about all that the facility could handle. We are seeing Ryanair pulling back some capacity planned for the fall and winter months. Stansted is poised to overtake MAN as the UK's 3rd largest airport.
London City - another spectacular growth for LCY up nearly 30%.
Upcoming
The opening this month (or next) of the new Eurostar terminal at St Pancras will have some impact most likely on Stansted. It should be remembered that every time a Eurostar train leaves the station it is the same as watching 2 fully loaded 747s take off.
Comment on BAA and raising of rates. The UK regulator seems to be taking a leaf out of the German regulators book and RAISING rates. While this comes as much relief to the Spanish owners of BAA it can only serve to drive more traffic away. We believe that separating all the airports in BAA's portfolio would be counterproductive. However separating STN from the other two would be beneficial allowing for more competition on one of the most scarce of resources - slots and tarmac.
Wednesday, October 10, 2007
Air Berlin starts retreat at Stansted
Air Berlin has thrown in the towel on its much publicized attempt to challenge Ryanair and Easyjet at Stansted. With only 2 remaning point beyond flights at STN from the original 4 - AB will now only offer flights from STN to Germany and its hub at Palma de Majorca.
Stansted will continue to be a major hub for AB generating over 1.2 million pax at STN, its second largest hub outside of Germany.
Stansted will continue to be a major hub for AB generating over 1.2 million pax at STN, its second largest hub outside of Germany.
Friday, July 27, 2007
O'Leary sticks it to HM Government
Not being one of the Crown's loyal subjects, Mr O'Leary is not necessarily subject to such punishment as locking him up in the Tower or leaving him Hung, Drawn and Quartered. Much though I am sure that Hon Gwyneth Dunwoody MP, Chair(wo)man Transport Committee of the British House of Commons would perhaps like him to be.
However he has a point about the issues being raised at the session being somewhat off point. HMG (Her Majesty's Government) and even its Loyal Opposition have both focused on the issue of the way pricing is displayed to (in the mind of Mr O'Leary) the real issue of extra taxes without extra value.
if you wish to have a quiet "Titter" then read the release on Ryanair's website. http://www.ryanair.com/site/EN/news.php?yr=07&month=jul&story=gen-en-260707
Guy Fawkes would have been proud.
Cheers
Timothy
However he has a point about the issues being raised at the session being somewhat off point. HMG (Her Majesty's Government) and even its Loyal Opposition have both focused on the issue of the way pricing is displayed to (in the mind of Mr O'Leary) the real issue of extra taxes without extra value.
if you wish to have a quiet "Titter" then read the release on Ryanair's website. http://www.ryanair.com/site/EN/news.php?yr=07&month=jul&story=gen-en-260707
Guy Fawkes would have been proud.
Cheers
Timothy
Tuesday, July 24, 2007
Airline Branding Oz Style - Its callled.........
Politely "Pissing on your neighbours".
The day after Qantas announced a subtle next generation branding for the uber brand airline - Virgin Blue announced the decision of the jury of its own naming for its Transpacific Airline.
V Australia.
Now I am sure there is much consternation in Mascott right now. V Australia for the old hands is probably a throwback to the days when Qantas 707s were called V Jets.
It is interesting to note that under the terms of the Virgin Group brand franchise, use of the Virgin name is not permitted for the operators of the Virgin brand for airlines in Australia to stray anyway outside of their own territory using the Virgin name. Hence Pacific Blue is the name for the TransTasman and South Pacific services. So lets count the operator list of the Virgin brand in Airlines:
Virgin Atlantic
Virgin Express (now Brussels Airlines)
Virgin Blue
Virgin Nigeria
Virgin America
So technically only 2 should ever appear at the same location at the same time. Virgin Atlantic is allowed everywhere.
So poor old Qantas. Nice shiny new paint jobs with the new logo type and mods. Too bad they have been upstaged by V. I wonder what they will call it for short
Cheers
Timothy
The day after Qantas announced a subtle next generation branding for the uber brand airline - Virgin Blue announced the decision of the jury of its own naming for its Transpacific Airline.
V Australia.
Now I am sure there is much consternation in Mascott right now. V Australia for the old hands is probably a throwback to the days when Qantas 707s were called V Jets.
It is interesting to note that under the terms of the Virgin Group brand franchise, use of the Virgin name is not permitted for the operators of the Virgin brand for airlines in Australia to stray anyway outside of their own territory using the Virgin name. Hence Pacific Blue is the name for the TransTasman and South Pacific services. So lets count the operator list of the Virgin brand in Airlines:
Virgin Atlantic
Virgin Express (now Brussels Airlines)
Virgin Blue
Virgin Nigeria
Virgin America
So technically only 2 should ever appear at the same location at the same time. Virgin Atlantic is allowed everywhere.
So poor old Qantas. Nice shiny new paint jobs with the new logo type and mods. Too bad they have been upstaged by V. I wonder what they will call it for short
Cheers
Timothy
Monday, July 23, 2007
US DoT policy on China Route Awards - puzzling to say the least
The Government always moves in mysterious ways. This time it is downright screwy.
Effectively the government has decided to consolidate the 2007 and 2009 China route awards. Thus creating a strange situation that would mean that United Airlines automatically gets the 2008 award yet the competition for 2007 and 2009 are hotly contested. For a learned discourse on this go to the Aviation Week website: http://www.aviationweek.com/aw/generic/story_channel.jsp?channel=comm&id=news/NDCH07177.xml
However logic would normally suggest that the route awards should be engaged by priority of value proposition. Not so it would appear. Only if you choose the right award date process does it work. Again go figure.
So why the DoT has decided to do this seems to be that the US Dept of Transportation is trying to outdo the European Directorates in bureaucratic nonsense.
If all else fails give it to Maxjet so I can fly from my favorite airport of Seattle on a reasonable seat.
oops that sounds like a special interest statement. Sorry........
Effectively the government has decided to consolidate the 2007 and 2009 China route awards. Thus creating a strange situation that would mean that United Airlines automatically gets the 2008 award yet the competition for 2007 and 2009 are hotly contested. For a learned discourse on this go to the Aviation Week website: http://www.aviationweek.com/aw/generic/story_channel.jsp?channel=comm&id=news/NDCH07177.xml
However logic would normally suggest that the route awards should be engaged by priority of value proposition. Not so it would appear. Only if you choose the right award date process does it work. Again go figure.
So why the DoT has decided to do this seems to be that the US Dept of Transportation is trying to outdo the European Directorates in bureaucratic nonsense.
If all else fails give it to Maxjet so I can fly from my favorite airport of Seattle on a reasonable seat.
oops that sounds like a special interest statement. Sorry........
Friday, July 20, 2007
Virgin America - Shiny New Planes - website needs some work
OK - so I couldn's resist it - I had to take the new Virgin America Website for a spin.
Very pleasing on the eye but BOY does someone from usability need to work on this thing. its terrible. Full of Flash style MS XML stuff that makes the whole experience very tedious.
It has clearly not had a lot of time to test the full capability as i found numerous bugs and lots of annoyances that really should not happen in a top class airline as VA hopes to be.
So chaps great ideas but - please make a non-MSXML 5.0 site version. Then the real people can use it. god help anyone who is still on dial up.
Cheers
Timothy
Very pleasing on the eye but BOY does someone from usability need to work on this thing. its terrible. Full of Flash style MS XML stuff that makes the whole experience very tedious.
It has clearly not had a lot of time to test the full capability as i found numerous bugs and lots of annoyances that really should not happen in a top class airline as VA hopes to be.
So chaps great ideas but - please make a non-MSXML 5.0 site version. Then the real people can use it. god help anyone who is still on dial up.
Cheers
Timothy
Thursday, July 19, 2007
Westjet nixes AiRes - Travelport and IBS get bloody nose
After leaning over backwards to accomodate Travelport - Westjet finally announced it was pulling the plug on the Aires project and staying put with its aging OpenSkies solution for PSS.
This creates a significant problem for Westjet which is expanding fast and after a few fumbles needs the capability of an advanced Internal res system to maintain its growth.
The impact of this decision is that there are some beneficiaries for WestJet's action. Air Canada and ITA must be breathing a huge sigh of relief because it buys them more time on Polaris. Air Canada must also be happy that no other Alliance is going to be present in Canada for at least the next 2 calendar years. Probably there will be rejoicing in the Unisys camp and probably at Results too. However the big winners are probably Sabre, Navitaire and Amadeus who will be celebrating the misfortune of their most noisy competitor.
Then there are those who must be pretty nervous about now. Virgin Blue is happy not to have to proceed with their implementation but Virgin America is probably having kittens and hoping against hope that the system stays up and running over the next 4 weeks. All of Aires customers must be making urgent phone calls to their lawyers.
Its always unfortunate to see an industry supplier such as IBS stumble. Lets hope they use the time wisely and take the time to fix their problems. Insiders tell us this is not a trivial matter for any player.
Cheers
Timothy
This creates a significant problem for Westjet which is expanding fast and after a few fumbles needs the capability of an advanced Internal res system to maintain its growth.
The impact of this decision is that there are some beneficiaries for WestJet's action. Air Canada and ITA must be breathing a huge sigh of relief because it buys them more time on Polaris. Air Canada must also be happy that no other Alliance is going to be present in Canada for at least the next 2 calendar years. Probably there will be rejoicing in the Unisys camp and probably at Results too. However the big winners are probably Sabre, Navitaire and Amadeus who will be celebrating the misfortune of their most noisy competitor.
Then there are those who must be pretty nervous about now. Virgin Blue is happy not to have to proceed with their implementation but Virgin America is probably having kittens and hoping against hope that the system stays up and running over the next 4 weeks. All of Aires customers must be making urgent phone calls to their lawyers.
Its always unfortunate to see an industry supplier such as IBS stumble. Lets hope they use the time wisely and take the time to fix their problems. Insiders tell us this is not a trivial matter for any player.
Cheers
Timothy
Alitalia - and then there were ... NONE???
Oh wow is me - the auction for Alitalia has now officially collapsed. AirOne and its bidding group have officially withdrawn so now there are no bidders.
There are some good lessons to be learned here.
1. The world is not Italy
2. Listen up Iberia board... dont make the same mistakes
Seriously though - this should be taken as an opportunity for the Prodi government to go back to the drawing board and re-cast the bidding in a transparent manner.
Oh yes and do remember our favorite bete noir is lurking in the wings with a suit against the EC for their previous do nothing approach to state aid to Alitalia (and others). So lets be clear. If the Prodi administration has to invest any more cash into Alitalia - then there is going to be a nasty fight. Mr O'Leary will force the EC to take a hard line on this subject or risk being taken to court in an embarassing result of having to claim the money back.
Is anyone paying attention in Athens?
Doesn't anyone in Rome remember Swissair and Sabena?
This one is going to run for a while yet
Cheers
Timothy
There are some good lessons to be learned here.
1. The world is not Italy
2. Listen up Iberia board... dont make the same mistakes
Seriously though - this should be taken as an opportunity for the Prodi government to go back to the drawing board and re-cast the bidding in a transparent manner.
Oh yes and do remember our favorite bete noir is lurking in the wings with a suit against the EC for their previous do nothing approach to state aid to Alitalia (and others). So lets be clear. If the Prodi administration has to invest any more cash into Alitalia - then there is going to be a nasty fight. Mr O'Leary will force the EC to take a hard line on this subject or risk being taken to court in an embarassing result of having to claim the money back.
Is anyone paying attention in Athens?
Doesn't anyone in Rome remember Swissair and Sabena?
This one is going to run for a while yet
Cheers
Timothy
Holy Cow - that's Billions with a B - DL Quarterly Profit
The headline numbers are staggering:
http://www.atwonline.com/news/story.html?storyID=9602
$1.77Billion profit before extraordinary charges. Still leaving $274 million net is not a bad number for a light quarter.
However this will come as little comfort to those of you who have experienced Delta's current "superior service" (as I did on the floor in Atlanta Airport). There was a great piece on The US pulbic radio network NPR (audio and text) http://www.npr.org/templates/story/story.php?storyId=11980704.
Now is the summer of our discontent.
If you want to avoid problems check back here or our sister Blog www.t2impact.blogger.com where we will be providing some practical advice.
Cheers
Timothy
http://www.atwonline.com/news/story.html?storyID=9602
$1.77Billion profit before extraordinary charges. Still leaving $274 million net is not a bad number for a light quarter.
However this will come as little comfort to those of you who have experienced Delta's current "superior service" (as I did on the floor in Atlanta Airport). There was a great piece on The US pulbic radio network NPR (audio and text) http://www.npr.org/templates/story/story.php?storyId=11980704.
Now is the summer of our discontent.
If you want to avoid problems check back here or our sister Blog www.t2impact.blogger.com where we will be providing some practical advice.
Cheers
Timothy
Wednesday, July 11, 2007
SQ to dump VS stake
So the much vaulted (8 years ago) deal between these high branded fellows looks like it will finally end with a nice profit for SQ and VS firmly back in the hands of Sir Richard the Lion Heart.
Did it fail? Yes it did not live up to its aspirations. There were 3 primary reasons that SQ took the stake.
1. An insurance policy for its alliance. At the time you will recall that United and Air Canada were hardly in the best of shape and clearly didnt have a good feed for SQ. They still dont BTW.
2. A great investment. This has been proven and so those canny chaps in SQ made that a good point.
3. Access to LHR. This issue is no longer as important as it once was.
Was it a good deal? Yes great deal all round except the synergies didnt happen and most of the expectations were not realized. There have been very few passenger benefits and VS has (probably) wisely steered clear of the Alliance game to date. Dont forget that SQ harbors significant aspirations across the Pacific with its sights set on Oz to US West Coast. These have been dashed by the likes of local hero Virgin Blue who will be flying transpac next year if they have any say in the matter.
What will happen next?
Branson likes partners. I suspect he will be on the look out for another player. However with Virgin Blue now going Transpac and Virgin America coming to an airport near you in the USA - there really is no need for a partner.
Dont look for any near term change.
Cheers
Timothy
Did it fail? Yes it did not live up to its aspirations. There were 3 primary reasons that SQ took the stake.
1. An insurance policy for its alliance. At the time you will recall that United and Air Canada were hardly in the best of shape and clearly didnt have a good feed for SQ. They still dont BTW.
2. A great investment. This has been proven and so those canny chaps in SQ made that a good point.
3. Access to LHR. This issue is no longer as important as it once was.
Was it a good deal? Yes great deal all round except the synergies didnt happen and most of the expectations were not realized. There have been very few passenger benefits and VS has (probably) wisely steered clear of the Alliance game to date. Dont forget that SQ harbors significant aspirations across the Pacific with its sights set on Oz to US West Coast. These have been dashed by the likes of local hero Virgin Blue who will be flying transpac next year if they have any say in the matter.
What will happen next?
Branson likes partners. I suspect he will be on the look out for another player. However with Virgin Blue now going Transpac and Virgin America coming to an airport near you in the USA - there really is no need for a partner.
Dont look for any near term change.
Cheers
Timothy
Monday, July 9, 2007
What is the state of the state for Long Haul LCC?
We have been tracking the Long Haul LCC roller coaster. As we predicted in February of this year the market for Long Haul LCC would heat up in 2007. Seems like we might have even underestimated the scale.
If we look at the premier LCCs in the world today we can easily say that the top players include:
Ryanair, Gol, Air Asia, Air Berlin, Virgin Blue and Jetstar. (I am not counting hybrids like US Airways or Airtran who don’t quite count at the moment). Each of these players have taken a slightly different path to Long Haul LCC.
Ryanair will take advantage of the Semi-Open Skies between EU and US next year. Gol bought Varig, Air Asia has the Air Asia X JV with a certain Brit, Virgin Blue plumped down some of its cash for 777s to fly across the Pacific. Jetstar is a surrogate for QF and a replacement for Australian Airlines. Finally Air Berlin jumped into the fray with its purchase of LTU and the recent order this week for 25 787s.
The stage is now set for a explosive growth in long haul LCC. With so much capacity in the Europe-Asia markets, Transpac looking up and even the stodgy old Transatlantic market picking up - the opportunities for significant traffic number growth is looking quite good.
Now of course where will these people end up and is there enough capacity to entertain them once they get there? We shall see
Cheers
Timothy
If we look at the premier LCCs in the world today we can easily say that the top players include:
Ryanair, Gol, Air Asia, Air Berlin, Virgin Blue and Jetstar. (I am not counting hybrids like US Airways or Airtran who don’t quite count at the moment). Each of these players have taken a slightly different path to Long Haul LCC.
Ryanair will take advantage of the Semi-Open Skies between EU and US next year. Gol bought Varig, Air Asia has the Air Asia X JV with a certain Brit, Virgin Blue plumped down some of its cash for 777s to fly across the Pacific. Jetstar is a surrogate for QF and a replacement for Australian Airlines. Finally Air Berlin jumped into the fray with its purchase of LTU and the recent order this week for 25 787s.
The stage is now set for a explosive growth in long haul LCC. With so much capacity in the Europe-Asia markets, Transpac looking up and even the stodgy old Transatlantic market picking up - the opportunities for significant traffic number growth is looking quite good.
Now of course where will these people end up and is there enough capacity to entertain them once they get there? We shall see
Cheers
Timothy
Wednesday, May 30, 2007
Has Travel Technology become - ordinary?
This little announcement crept into the bottom of this weeks TW Travel Technology Newsletter:
SPECIAL NOTE: Beginning in July, the Technology E-letter will be published once a month, on the first Thursday of each month, beginning with the July 5 edition.
From a daily newsletter to once a week to now once a month in less than a year. Well - sounds like anyone writing for this stuff will be hard pressed for copy and making money. So perhaps the subject matter has ceased to be very interesting. What's next? Eyefortravel reducing its conferences (perhaps it should do this anyway). Last year we saw the merger of several shows and the quiet shuttering of others. I guess TT is now a utility and not very sexy any more.
Makes you wonder why we do it!
Well here's a little secret - we are really crazy..................
Cheers
ITK
SPECIAL NOTE: Beginning in July, the Technology E-letter will be published once a month, on the first Thursday of each month, beginning with the July 5 edition.
From a daily newsletter to once a week to now once a month in less than a year. Well - sounds like anyone writing for this stuff will be hard pressed for copy and making money. So perhaps the subject matter has ceased to be very interesting. What's next? Eyefortravel reducing its conferences (perhaps it should do this anyway). Last year we saw the merger of several shows and the quiet shuttering of others. I guess TT is now a utility and not very sexy any more.
Makes you wonder why we do it!
Well here's a little secret - we are really crazy..................
Cheers
ITK
Alitalia - and then there were 2...
The Government of Sr Prodi can't seem to do much right these days.
Hot on the heels of a major right down of its dilapidated fleet and a resulting bad quarter, AZ lost one of the 3 remaining suitors. Sadly it was the strongest financially - the TPG, Mattelin Patterson consortium bailed yesterday. Reason? Connot comply with the restrictions on the bidding process imposed by the government. This leaves just Aeroflot (yes those guys) and AP Holdings (AirOne) only in the running.
So unless there is a white knight at the last moment (and I believe that the bidding process does not allow that), then the Prodi regime has a terrible dilemma on its hands. I can almost hear Mr O'Leary jumping for joy.
Our advice (which of course at this point is provided free of charge) is to re-open the bidding process and remove many of the stupid constraints on the bidders.
Its the only way to resolve a bad situation. However for the Italian government 3 not very nice choices:
Box A - admit you were wrong and re-open the bidding
Box B - the Russians get it (Garibaldi will be spinning in his grave)
Box C - Monopoly run by AirOne.
Hmmmm I think I would seek asylum in the Vatican
Cheers
ITK
Hot on the heels of a major right down of its dilapidated fleet and a resulting bad quarter, AZ lost one of the 3 remaining suitors. Sadly it was the strongest financially - the TPG, Mattelin Patterson consortium bailed yesterday. Reason? Connot comply with the restrictions on the bidding process imposed by the government. This leaves just Aeroflot (yes those guys) and AP Holdings (AirOne) only in the running.
So unless there is a white knight at the last moment (and I believe that the bidding process does not allow that), then the Prodi regime has a terrible dilemma on its hands. I can almost hear Mr O'Leary jumping for joy.
Our advice (which of course at this point is provided free of charge) is to re-open the bidding process and remove many of the stupid constraints on the bidders.
Its the only way to resolve a bad situation. However for the Italian government 3 not very nice choices:
Box A - admit you were wrong and re-open the bidding
Box B - the Russians get it (Garibaldi will be spinning in his grave)
Box C - Monopoly run by AirOne.
Hmmmm I think I would seek asylum in the Vatican
Cheers
ITK
Tuesday, May 29, 2007
Stealth Fare increases - United Airlines new policy
Like all good travellers - the team at ITK like to use the automated tools whenever possible. Better we do it than have some half baked agent in India give you bad information and then charge you for the privilege. However there are times when the IBE - Internet Booking Engine just doesn’t work. It cant handle for example International very well. So admittedly International is but a small percentage of the airlines business but it is an increasingly important part. So one would expect the airline to allow international access to special folk who can manipulate the system to get the answer that is actually there but not viewable through the eyes of the IBE.
United has a new policy. Upgrades are now only available on their website. So if the website doesn’t work what can you do? Answer - nothing. Kicking screaming and throwing a tantrum (this is the usual recourse) only works some times.
So United and others are now deploying these "self service" tools that in fact raise their yields resulting in a stealth price rise by denying the traveller access to someone who can fix the problem.
I am picking on United because I had the specific issue of this today. But other carriers have similar policies, processes and procedures that are resulting in the same thing. A barrier to lower fare access resulting in the punter having to buy a higher fare than is actually necessary.
It adds a whole new meaning to the term "Lower fares MAY be available on our website". Actually United is being careful (as are most airlines) in actually NOT saying that the LOWEST fares are available at their websites because - as I have been able to see numerous times - actually they are not.
Cheers
Timothy
United has a new policy. Upgrades are now only available on their website. So if the website doesn’t work what can you do? Answer - nothing. Kicking screaming and throwing a tantrum (this is the usual recourse) only works some times.
So United and others are now deploying these "self service" tools that in fact raise their yields resulting in a stealth price rise by denying the traveller access to someone who can fix the problem.
I am picking on United because I had the specific issue of this today. But other carriers have similar policies, processes and procedures that are resulting in the same thing. A barrier to lower fare access resulting in the punter having to buy a higher fare than is actually necessary.
It adds a whole new meaning to the term "Lower fares MAY be available on our website". Actually United is being careful (as are most airlines) in actually NOT saying that the LOWEST fares are available at their websites because - as I have been able to see numerous times - actually they are not.
Cheers
Timothy
Thursday, May 24, 2007
New Tools for Consumers - Better Research - smarter consumers?
There are now some pretty good tools available for researching and buying products.
This last week saw that Farecast came out of beta (this is beginning to be a huge joke as for example GMAIL is still officially in Beta), YAPTA started up and FareCompare - probably the grand daddy of them all - is still plodding out there.
These tools have in fact done a better job at consumer advocacy than say a Kayak or Mobissimo. In fact they are better tools. Too bad they don’t seem to have a good business model that is obvious.
So armed with this new set of tools are the consumers getting better or what?
At this stage there is an interesting lever being used by several of the sites to trumpet their successes. This is the fare refund program.
Way back when the OAG was the tool of choice (the book not the website!), every ticket was refundable. Today's tickets are rarely refundable for the lowest fares used. But in response to a general outcry over "Use it or Lose it" rules - many airlines introduced a fare refund or re=use program. Today most airlines offer this - even Southwest. However it is not usually offered in a manner that you can actually get your money back. Only with difficulty will Alaska offer the money without a fee. Basically most of the refunds get eaten up in "User" fees that the airlines slap on. For example Northwest will charge you $25 to issue a travel voucher - however if you insist on getting the cash - then you will need to fork over $100. Some airlines offer a one day return policy. Delta offers this and you can cancel your ticket and get your money back if you do so in 24 hours. BE CAREFUL though - you could get caught because if you do this online it will automatically cancel the seats you have taken and then put you to the back of the queue for a cheap seat. Meaning you could lose out altogether.
But the point of my story here is that there is a new chapter emerging that will change the shape of the relationship between Consumer and airline. In the past the airline controlled the intermediary (Travel Agent - on or offline) because that person was the one making the reservation and had a contractual relationship. In this new world the consumer is freely giving his own data to a 3rd party not subject to a contractual relationship. Thus these 3 players can aggregate the data and provide consumer facing tools at will. This will keep the airlines up at night while they try and figure out yet another losing battle in the war to retain opaque pricing information.
Fundamentally the consumer is more empowered IF HE/SHE is smart enough to use that information. So the trick for airlines and intermediaries is to retain their edge. For even more fun and games - why not contact one of the analysts at InTheKno and find out how you can actually use some of this technology to your advantage - irrespective of whether you are a consumer, intermediary or supplier.
Give us a ping. www.inthekno.com
This last week saw that Farecast came out of beta (this is beginning to be a huge joke as for example GMAIL is still officially in Beta), YAPTA started up and FareCompare - probably the grand daddy of them all - is still plodding out there.
These tools have in fact done a better job at consumer advocacy than say a Kayak or Mobissimo. In fact they are better tools. Too bad they don’t seem to have a good business model that is obvious.
So armed with this new set of tools are the consumers getting better or what?
At this stage there is an interesting lever being used by several of the sites to trumpet their successes. This is the fare refund program.
Way back when the OAG was the tool of choice (the book not the website!), every ticket was refundable. Today's tickets are rarely refundable for the lowest fares used. But in response to a general outcry over "Use it or Lose it" rules - many airlines introduced a fare refund or re=use program. Today most airlines offer this - even Southwest. However it is not usually offered in a manner that you can actually get your money back. Only with difficulty will Alaska offer the money without a fee. Basically most of the refunds get eaten up in "User" fees that the airlines slap on. For example Northwest will charge you $25 to issue a travel voucher - however if you insist on getting the cash - then you will need to fork over $100. Some airlines offer a one day return policy. Delta offers this and you can cancel your ticket and get your money back if you do so in 24 hours. BE CAREFUL though - you could get caught because if you do this online it will automatically cancel the seats you have taken and then put you to the back of the queue for a cheap seat. Meaning you could lose out altogether.
But the point of my story here is that there is a new chapter emerging that will change the shape of the relationship between Consumer and airline. In the past the airline controlled the intermediary (Travel Agent - on or offline) because that person was the one making the reservation and had a contractual relationship. In this new world the consumer is freely giving his own data to a 3rd party not subject to a contractual relationship. Thus these 3 players can aggregate the data and provide consumer facing tools at will. This will keep the airlines up at night while they try and figure out yet another losing battle in the war to retain opaque pricing information.
Fundamentally the consumer is more empowered IF HE/SHE is smart enough to use that information. So the trick for airlines and intermediaries is to retain their edge. For even more fun and games - why not contact one of the analysts at InTheKno and find out how you can actually use some of this technology to your advantage - irrespective of whether you are a consumer, intermediary or supplier.
Give us a ping. www.inthekno.com
Friday, May 11, 2007
Alert - Slowdown Coming
For the last 2 years - 2006-2007 we have been very bullish on the Airline Industry in general. With clear weaknesses persisting in certain sectors, the mood however has been broadly bullish. Particularly with respect to the US Domestic market. Record load factors and yields have pushed the sector above its previous historic highs of 2000. There is however a trend emerging within the overall sector that is worrying.
The highs are shorter and the lows are deeper and longer.
Peter Drucker once wrote that the industry sector that had never made money was Tech. Airlines as a whole in the North American market have not shown and industry profit in 6 years.
However the situation is not looking good for the mid term. Several companies are issuing warning notices - Southwest and Delta being prime examples - that the US market will be at best flat in 2008. Delta is responding by even more cuts in its Domestic mainline markets and shifting capacity to the International market. Southwest is starting to look at how Ryanair and Easyjet are boosting their bottom lines with ancillary revenues.
So enjoy it while it lasts. Look for significant increases in non-traditional (IE legacy) airlines activity in 2008. The LCC share will continue to rise and yields will decline from their 2007 highs.
Cheers
Timothy
The highs are shorter and the lows are deeper and longer.
Peter Drucker once wrote that the industry sector that had never made money was Tech. Airlines as a whole in the North American market have not shown and industry profit in 6 years.
However the situation is not looking good for the mid term. Several companies are issuing warning notices - Southwest and Delta being prime examples - that the US market will be at best flat in 2008. Delta is responding by even more cuts in its Domestic mainline markets and shifting capacity to the International market. Southwest is starting to look at how Ryanair and Easyjet are boosting their bottom lines with ancillary revenues.
So enjoy it while it lasts. Look for significant increases in non-traditional (IE legacy) airlines activity in 2008. The LCC share will continue to rise and yields will decline from their 2007 highs.
Cheers
Timothy
Monday, May 7, 2007
Trivia time... Do you know your Boeings?
Boeing for many years has had its own numbering scheme. Thus if you are a serious anorak then you know that British Airways uses the designation 36 from its predecessor company BOAC. Thus the Rolls Royce Conway powered 707s were 707-436.The few P&W powered versions that BOAC acquired were designated 707-336s.
If you really want to get a list of all Boeing's customers - send me an email and I will give you the hidden key...
Cheers
Timothy
If you really want to get a list of all Boeing's customers - send me an email and I will give you the hidden key...
Cheers
Timothy
New LCC in......... New Zealand?
New LCC startup KiwiJet has been announced with Flat Fares from NZ$150.
Dominant Carrier Air New Zealand smells a rat and tells its staff to stop leaking confidential information since the idea sounds suspiciously like their own plans for a Domestic LCC. Company spokesman David Jamieson told staff in a memo though there was no evidence of a leak, "it was important they keep information commercially confidential".
The new airline will be reasonably well funded $20Million and backed by American Investors. Welcomed by leading Agency Chain - Australia's Flight Center - it comes as the Trans Tasman market is getting crowded with Emirates operating a lot of flights instead of letting its planes sit on the ground in SYD and MEL. At the same time a resurgent NZ is moving agressively into long Haul markets including now the only schedule RTW service.
Dominant Carrier Air New Zealand smells a rat and tells its staff to stop leaking confidential information since the idea sounds suspiciously like their own plans for a Domestic LCC. Company spokesman David Jamieson told staff in a memo though there was no evidence of a leak, "it was important they keep information commercially confidential".
The new airline will be reasonably well funded $20Million and backed by American Investors. Welcomed by leading Agency Chain - Australia's Flight Center - it comes as the Trans Tasman market is getting crowded with Emirates operating a lot of flights instead of letting its planes sit on the ground in SYD and MEL. At the same time a resurgent NZ is moving agressively into long Haul markets including now the only schedule RTW service.
Friday, May 4, 2007
Is this the new best job in the world?
"Head of Astronaut Sales" for Virgin Galactic is Carolyn Wincer. Based in London - she is now developing sales channels for the Virgin SpaceFlights when they start in a few years time.
With early deposits the experiences or cabins are essentially sold out through 2010. This is for PAYING customers.
Is this the new dream travel job?
InTheKno will shortly be undertaking its first annual education survey. Lets see what the market thinks
The InTheKno Team
With early deposits the experiences or cabins are essentially sold out through 2010. This is for PAYING customers.
Is this the new dream travel job?
InTheKno will shortly be undertaking its first annual education survey. Lets see what the market thinks
The InTheKno Team
Thursday, May 3, 2007
EU GDS Deregulation
Altitude with Attitude asks "to deregulate or not?"
The EU Commissoner - the adept M.Jacques Barrot http://ec.europa.eu/commission_barroso/barrot/index_en.htm - for Transport has been soliciting input on the need to deregulate the GDS market. As you probably know there is a significant difference of opinion on both sides of the Atlantic on the issue of GDS regulation. The current regulations on the EU side are set to be replaced. So the question is do we keep them or not?
With the US market deregulated for over a year - we have not seen the sky fall and arguably competition has crept into the market. So is there a case for retaining regulation?
Firstly it is important to remember that the markets are remarkably different. GDS bookings accounted for a significantly smaller portion of the total air travel market emanating from the EU than the US market. Why? A lot more LCC traffic and the lack of participation already is smaller. There is only one GDS with Airline ownership - hardly control - which is Amadeus. (Down significantly from its hey day with control now in the hands of Private Equity investors.)
Secondly the need for consumer protection is now less as there are better and greater obligations for passenger rights than in the US market.
Thirdly the consolidation of the TMC market in Europe into 4 major global players and significant regional ones lessens the need for tight regulation of the supply chain access system.
Our opinion is that there is no need to retain the GDS regulation and that it should be allowed to die quietly. However the EU is known for responding to pressure from certain quarters. There is a chorus being orchestrated (love the mixed metaphor) by BTC Chairman Kevin Mitchell (A US person) to get the EU Corporations to form up against the GDS deregulation. We believe that the regulation structure is now largely an anachronism in todays open markets.
We welcome other views and are happy to debate this issue.
Cheers
Timothy
The EU Commissoner - the adept M.Jacques Barrot http://ec.europa.eu/commission_barroso/barrot/index_en.htm - for Transport has been soliciting input on the need to deregulate the GDS market. As you probably know there is a significant difference of opinion on both sides of the Atlantic on the issue of GDS regulation. The current regulations on the EU side are set to be replaced. So the question is do we keep them or not?
With the US market deregulated for over a year - we have not seen the sky fall and arguably competition has crept into the market. So is there a case for retaining regulation?
Firstly it is important to remember that the markets are remarkably different. GDS bookings accounted for a significantly smaller portion of the total air travel market emanating from the EU than the US market. Why? A lot more LCC traffic and the lack of participation already is smaller. There is only one GDS with Airline ownership - hardly control - which is Amadeus. (Down significantly from its hey day with control now in the hands of Private Equity investors.)
Secondly the need for consumer protection is now less as there are better and greater obligations for passenger rights than in the US market.
Thirdly the consolidation of the TMC market in Europe into 4 major global players and significant regional ones lessens the need for tight regulation of the supply chain access system.
Our opinion is that there is no need to retain the GDS regulation and that it should be allowed to die quietly. However the EU is known for responding to pressure from certain quarters. There is a chorus being orchestrated (love the mixed metaphor) by BTC Chairman Kevin Mitchell (A US person) to get the EU Corporations to form up against the GDS deregulation. We believe that the regulation structure is now largely an anachronism in todays open markets.
We welcome other views and are happy to debate this issue.
Cheers
Timothy
Wednesday, May 2, 2007
Congrats Delta Employees - don't spend it all at once
There's going to be some partying going on in ATL, SLC, CVG and NYC tonight.
The payouts for the 40K employees have just been announced:
Cash and equity
Management employees get around $5K cash and $200K equity (vesting over time)
Contract employees get around $2K cash and $9K equity (vesting straight away).
Let hope they use it wisely.
On this subject I think we should all give a round of applause to Gerald Grinstein. Honorable to the end he is hardly taking anything for his pains other than his (in comparison) modest salary of $350K. I think this is a noble and much to be admired action on behalf of a true ethical person. Gerry - hats off to you.
Now lets see any others (its too late for Mr Tilton) do something similar.
Cheers
Timothy
The payouts for the 40K employees have just been announced:
Cash and equity
Management employees get around $5K cash and $200K equity (vesting over time)
Contract employees get around $2K cash and $9K equity (vesting straight away).
Let hope they use it wisely.
On this subject I think we should all give a round of applause to Gerald Grinstein. Honorable to the end he is hardly taking anything for his pains other than his (in comparison) modest salary of $350K. I think this is a noble and much to be admired action on behalf of a true ethical person. Gerry - hats off to you.
Now lets see any others (its too late for Mr Tilton) do something similar.
Cheers
Timothy
Sunday, April 29, 2007
Steam before Wind? Railways try to get back at LCCs
It is a well known fact that the dawn of the jet age was the final nail in the coffin of big rail in the USA. Not so in Europe where Big rail continues to flourish - albeit heavily subsidized by governments as a national resource. In the 1990s it was estimated once that DB lost more money than all the airlines combined. Talk about protectionism.
Similarly the Channel Tunnel and its rail service destroyed the UK-Europe ferry market to a large extent. However the business plan for EuroTunnel and Eurostar did not anticipate LCCs such as RyanAir and Easyjet. It assumed that it would be able to offer fares below the legacy carriers and hence siphon off traffic on lucrative runs such as London to Paris and London to Brussels. With enormous capacity - it should be remembered that every time a Eurostar train leaves the station it has the capacity of 2 747s.
Sadly for the railways this protection did not extend to passengers wallets. With the cost of a rail ticket between London and Manchester north of GBP 200 and rail tickets to Paris from London exceeding even the cost of a business class ticket - the Cross Channel rail services didnt quite reach their potential. Eurotunnel is again at death's door. What is big rail to do?
If you cant beat 'em join 'em. Hoping to emulate the airline alliances many European Rail carriers and Eurostar are going to launch a Frequent Traveller program. Tentatively titled "RailTeam" it will include Eurostar, DB, SNCF, NS, SNCB amongst others. However in much the same way as the South African carriers cried foul when Government owned (and loss making) SAA launched its own LCC - Fly Mango - we can expect to hear from the Euro LCCs on this one. If not then someone should be checking the respective government's check stubs.
Cheers
Charlie and Timothy
Similarly the Channel Tunnel and its rail service destroyed the UK-Europe ferry market to a large extent. However the business plan for EuroTunnel and Eurostar did not anticipate LCCs such as RyanAir and Easyjet. It assumed that it would be able to offer fares below the legacy carriers and hence siphon off traffic on lucrative runs such as London to Paris and London to Brussels. With enormous capacity - it should be remembered that every time a Eurostar train leaves the station it has the capacity of 2 747s.
Sadly for the railways this protection did not extend to passengers wallets. With the cost of a rail ticket between London and Manchester north of GBP 200 and rail tickets to Paris from London exceeding even the cost of a business class ticket - the Cross Channel rail services didnt quite reach their potential. Eurotunnel is again at death's door. What is big rail to do?
If you cant beat 'em join 'em. Hoping to emulate the airline alliances many European Rail carriers and Eurostar are going to launch a Frequent Traveller program. Tentatively titled "RailTeam" it will include Eurostar, DB, SNCF, NS, SNCB amongst others. However in much the same way as the South African carriers cried foul when Government owned (and loss making) SAA launched its own LCC - Fly Mango - we can expect to hear from the Euro LCCs on this one. If not then someone should be checking the respective government's check stubs.
Cheers
Charlie and Timothy
Friday, April 27, 2007
Skybus roars on day one
We just spoke with Bob Tenenbaum, Senior Counselor to Skybus. He told us the company was off to a fabulous start. They sold 97,000 tickets in the first 18 hours - that's 90 tickets per minute.
Only ten seats per flight had $10 fares, so the revenue volume is way higher than one would first think. Despite glitches on their website over the initial first two days, sales have dropped to a lower level but, happily for Skybus, remained steady.
Tenenbaum remarked that the airline was "surprised" at the volume. No kidding. It may have been the world's busiest e-commerce site for that day. Assume $75 is closer to the average fare, then they raked in over $7m on day 1. A nice way to start business wouldn't you say?
Only ten seats per flight had $10 fares, so the revenue volume is way higher than one would first think. Despite glitches on their website over the initial first two days, sales have dropped to a lower level but, happily for Skybus, remained steady.
Tenenbaum remarked that the airline was "surprised" at the volume. No kidding. It may have been the world's busiest e-commerce site for that day. Assume $75 is closer to the average fare, then they raked in over $7m on day 1. A nice way to start business wouldn't you say?
Thursday, April 26, 2007
Emirates again speculates on "Pack'em In" Long Haul LCC
Vice Chairman the very nice Mr Maurice Flanagan again today speculated on Emirates launching a low cost low fare derivative of Emirates. Tentatively titled Emirate Express by insiders - the new LCC carrier would be based around the A380 on a packed double decker bus.
With capacity of up to 800 people its easy to see how such a program could be a huge winner for EK. With Emirates formal brand focussing on the sharp end of the aircraft these days and offering full services at the back - they now face a host of imatators in the region. But the idea is not new. EK for several years has been running the "Curry Express" from Birmingham to Dubai for VFR and worker based traffic for the large expat community in the Midlands. It is now up to 2 flights a day - no first class but some J. There are even new airlines LCCs being mooted for direct BHX or LBA flights to the Indian subcontinent.
With some diversion of revenue already occuring with more direct flights between the UK and the Indian sub-continent EK needs to offer a price competitive product and continue to funnel the traffic through DXB.
Why not now?
No A380s and the new terminal at DXB is not quite ready. But rest assured when Jebel Ali International starts operating in a few years time - you can be sure to see A380s pulling up to a specialized terminal packed to the gunwales with bargain hunters and VFR traffic.
Imagine just that - STN/BHX/LBA - Jebel Ali. 3X a day - 2 X would go to India and 1 would go on to Australia and New Zealand. Putting an additional flight on to JNB would relieve some of the near term artifiical capacity constraints on the lucrative ZA to UK market.
Not my cup of tea but definitely something Mr O'Leary would be considering if he wasnt so wedded to Boeing.
Cheers
Timothy
With capacity of up to 800 people its easy to see how such a program could be a huge winner for EK. With Emirates formal brand focussing on the sharp end of the aircraft these days and offering full services at the back - they now face a host of imatators in the region. But the idea is not new. EK for several years has been running the "Curry Express" from Birmingham to Dubai for VFR and worker based traffic for the large expat community in the Midlands. It is now up to 2 flights a day - no first class but some J. There are even new airlines LCCs being mooted for direct BHX or LBA flights to the Indian subcontinent.
With some diversion of revenue already occuring with more direct flights between the UK and the Indian sub-continent EK needs to offer a price competitive product and continue to funnel the traffic through DXB.
Why not now?
No A380s and the new terminal at DXB is not quite ready. But rest assured when Jebel Ali International starts operating in a few years time - you can be sure to see A380s pulling up to a specialized terminal packed to the gunwales with bargain hunters and VFR traffic.
Imagine just that - STN/BHX/LBA - Jebel Ali. 3X a day - 2 X would go to India and 1 would go on to Australia and New Zealand. Putting an additional flight on to JNB would relieve some of the near term artifiical capacity constraints on the lucrative ZA to UK market.
Not my cup of tea but definitely something Mr O'Leary would be considering if he wasnt so wedded to Boeing.
Cheers
Timothy
Wednesday, April 25, 2007
If US Airways orders the 787
The source of this rumor is no less the The Times. The Times says we will hear news by the weekend. This will be a tough blow for Airbus, with a likely consolation prize being a big order for more A320s.
Airbus will tout the merits of its order, as will not want to lose face. For Boeing it will be another flipped Airbus customer. The 787 is now marching towards 600 orders before its first flight at an accelerating pace; with orders this week from Air Canada and Virgin adding over 40 including options. By the time the Paris show starts, Boeing may headed towards 700 orders for this plane.
For Airbus the unstated issue will be yet another loss to its A350XWB - now increasingly seen as too little and too late and the outcome of the A380 debacle. What was a "captured customer" defecting over to the 787 will certainly make Airbus more aggressive. Note Airbus was already offering the A350 at over 50% off sticker prices. These are desperate days at Airbus.
Airbus will tout the merits of its order, as will not want to lose face. For Boeing it will be another flipped Airbus customer. The 787 is now marching towards 600 orders before its first flight at an accelerating pace; with orders this week from Air Canada and Virgin adding over 40 including options. By the time the Paris show starts, Boeing may headed towards 700 orders for this plane.
For Airbus the unstated issue will be yet another loss to its A350XWB - now increasingly seen as too little and too late and the outcome of the A380 debacle. What was a "captured customer" defecting over to the 787 will certainly make Airbus more aggressive. Note Airbus was already offering the A350 at over 50% off sticker prices. These are desperate days at Airbus.
Breathing life into the moribund GDS
Long Haul LCC - Oasis Hong Kong has joined Abacus as a participating airline. Does this mean that this prototype LCC long haul carrier has sold out?
No i believe that this is going to be the result of a new reality in the GDS/Airline relationship. Whether it is sustainable is to be seen - however all the GDS - Abacus included - need to show a positive result after the dramatic change in commercials from last year's PCA revisions.
Its win for both sides; Oasis needs more distribution, Abacus needs a new airline. Will Oasis use the GDS when it comes to the USA this year? Good question. Stay tuned
Cheers
Timothy
No i believe that this is going to be the result of a new reality in the GDS/Airline relationship. Whether it is sustainable is to be seen - however all the GDS - Abacus included - need to show a positive result after the dramatic change in commercials from last year's PCA revisions.
Its win for both sides; Oasis needs more distribution, Abacus needs a new airline. Will Oasis use the GDS when it comes to the USA this year? Good question. Stay tuned
Cheers
Timothy
Tuesday, April 24, 2007
Norwegian Gobbles up Flynordic - LCC vs HVC
For some this might seem to be a consolidation amongst LCCs. For others its a rationalization of the LCC model that shows its maturity.
Norwegian is not a traditional Low Fare LCC - rather it sits in a relatively protected market of Scandinavia where anything less than SAS's high prices is seen as a boon. Already it operates with a competitive schedule on some of the most highly profitable routes in the world which exist within Scandinavia. From its home base in Oslo it can charge relatively reasonable prices and make money. All the great attributes of a LCC.
Taking over FlyNordic is a win win for Finnair and for Norwegian. The former has stumbled a few times of late and who operate at the behest of SK. So this is good for them to go back to their core business. The latter confirms its move UP the airline food chain. Operating at a low end of the GDS chain you can book its products there but you have to pay a premium fee to the airline in the form of an additional fee (this was actually the prototype for the full service Amadeus fee that is now enacted for such airlines as BA).
Conclusion is that LCCs who see a future as a conventional carrier can do that if they operate in a high priced market such as Scandinavia. This version of the HVS - Hybrid Value Carrier - sees the likes of GOL, EasyJet joined now by Norwegian.
Note Norwegian now has Finnair as a part owner (5% with an option up to 10%). That's just enough to keep SK off kilter and give them access to great feed for Finnair's alternative route structure - particularly to Asia. However they need more feed to other places.
Are we seeing a new trend of Symbiotic LCCs combining with FNCs? GOL+Varig is another example
Time will tell
Norwegian is not a traditional Low Fare LCC - rather it sits in a relatively protected market of Scandinavia where anything less than SAS's high prices is seen as a boon. Already it operates with a competitive schedule on some of the most highly profitable routes in the world which exist within Scandinavia. From its home base in Oslo it can charge relatively reasonable prices and make money. All the great attributes of a LCC.
Taking over FlyNordic is a win win for Finnair and for Norwegian. The former has stumbled a few times of late and who operate at the behest of SK. So this is good for them to go back to their core business. The latter confirms its move UP the airline food chain. Operating at a low end of the GDS chain you can book its products there but you have to pay a premium fee to the airline in the form of an additional fee (this was actually the prototype for the full service Amadeus fee that is now enacted for such airlines as BA).
Conclusion is that LCCs who see a future as a conventional carrier can do that if they operate in a high priced market such as Scandinavia. This version of the HVS - Hybrid Value Carrier - sees the likes of GOL, EasyJet joined now by Norwegian.
Note Norwegian now has Finnair as a part owner (5% with an option up to 10%). That's just enough to keep SK off kilter and give them access to great feed for Finnair's alternative route structure - particularly to Asia. However they need more feed to other places.
Are we seeing a new trend of Symbiotic LCCs combining with FNCs? GOL+Varig is another example
Time will tell
Friday, April 13, 2007
Beware the Ides of March 2010 - USA Air Transport Infrastructure
With apologies to Will S.
McKinsey - never one to be shy in trotting out bucket loads of information, has recently published a study on private investment in public transportation infrastructure.
http://www.mckinseyquarterly.com/PDFDownload.aspx?L2=19&L3=69&ar=1987&srid=17&gp=0
One of the trends the InTheKno team follow is the slow build up and saturation of Air Transport infrastructure. 2007 will rank up there as one of the worst years on record for delays and infrastructure hiccoughs. With no new airports and only few runway or terminals (O'Hare excepted) planned for the next 10 years in the USA - it is not hard to see how by 2010 we will be in deep kaka when we have a boom year.
However the US has two coming fact collisions which are going to exacerbate the problem. With nearly 700 million pax a year - the US market is the world's largest. Definitely by any measurement you put on it. But its growth has been stunted in recent years. Two constraints are now rapidly approaching, one is a capacity constraint, the other a major expansion of traffic.
The US Air Traffic Management system is probably the laughing stock of the world. Only the dedicated Controllers using improvised solutions keep the system running. Congress sees no need (and the Bush Administration would rather spend the money on wars) to upgrade the creaking system. It will break down and we will have problems. This is inevitable without serious attention now. Just look at Brazil if you don’t think it can have a serious impact.
The other capacity influence will be the growth of VLJ's - Very Light Jets. These new planes will be added to the market occupying the same air space footprint as RJs and smaller mainline passenger and cargo jets. The problem is a bit like a Freeway (Motorway, Autoroute, Autobahn, Autostrada...) where you have a metered on ramp at major population points. But imagine if you will - adding double the number of people using the Freeway coupled with a 5x number of on ramps. You don’t need to be a hydraulics engineer to see how this will disrupt traffic flows leading to more bunching and backups.
Will the USA double the number of ATC controllers to meet this demand? Will they order new radar equipment (that is BTW easily available) will they introduce an economic pricing model to match this demand hike?
Not for the next 2 years. which means given the lead times necessary to implement this - we will be having a crisis - oh in about Q1 2010.
Don’t say we didn’t warn you...
Cheers
The InTheKno Team
McKinsey - never one to be shy in trotting out bucket loads of information, has recently published a study on private investment in public transportation infrastructure.
http://www.mckinseyquarterly.com/PDFDownload.aspx?L2=19&L3=69&ar=1987&srid=17&gp=0
One of the trends the InTheKno team follow is the slow build up and saturation of Air Transport infrastructure. 2007 will rank up there as one of the worst years on record for delays and infrastructure hiccoughs. With no new airports and only few runway or terminals (O'Hare excepted) planned for the next 10 years in the USA - it is not hard to see how by 2010 we will be in deep kaka when we have a boom year.
However the US has two coming fact collisions which are going to exacerbate the problem. With nearly 700 million pax a year - the US market is the world's largest. Definitely by any measurement you put on it. But its growth has been stunted in recent years. Two constraints are now rapidly approaching, one is a capacity constraint, the other a major expansion of traffic.
The US Air Traffic Management system is probably the laughing stock of the world. Only the dedicated Controllers using improvised solutions keep the system running. Congress sees no need (and the Bush Administration would rather spend the money on wars) to upgrade the creaking system. It will break down and we will have problems. This is inevitable without serious attention now. Just look at Brazil if you don’t think it can have a serious impact.
The other capacity influence will be the growth of VLJ's - Very Light Jets. These new planes will be added to the market occupying the same air space footprint as RJs and smaller mainline passenger and cargo jets. The problem is a bit like a Freeway (Motorway, Autoroute, Autobahn, Autostrada...) where you have a metered on ramp at major population points. But imagine if you will - adding double the number of people using the Freeway coupled with a 5x number of on ramps. You don’t need to be a hydraulics engineer to see how this will disrupt traffic flows leading to more bunching and backups.
Will the USA double the number of ATC controllers to meet this demand? Will they order new radar equipment (that is BTW easily available) will they introduce an economic pricing model to match this demand hike?
Not for the next 2 years. which means given the lead times necessary to implement this - we will be having a crisis - oh in about Q1 2010.
Don’t say we didn’t warn you...
Cheers
The InTheKno Team
Transatlantic For 12 quid
Perfectly feasible. Now on the radar courtesy of RyanAir's Mr O'Leary.
A canny Irish man that he is (an accountant by training in case you were unsure where his potty mouth came from), Mr O'Leary has formally announced that he will start a new sister airline to Ryanair for Transatlantic travel. Given the now enormous feed into and out of Stansted his ability to move passengers Americas to EU will be a short incremental piece rather than a leap of faith. Consider this:
1. He doesn't need a whole new aircraft - even though he wants to order 50 brand new A350XWB or 787s. In fact the Boeing 737 for which all his pilots are trained is available in an ER version (both 737-700ER and 737-900ER). http://www.boeing.com/commercial/737family/index.html
The 737-700ER unmodified has a certified range of 5510 miles. This will take you from Stansted to ISP (3478 miles) or OAK (5375 miles). Even San Diego (also mentioned in his announcement) is possible.
2. He has the right to switch aircraft sub types in his Boeing order (actually he can do pretty much what he likes with the order - the Boeing guys LOVE him)
3. The longest route on Ryanair is today 3 1/2 hours. (Marrakesh to London). The record flight time from Boston to London (Eastbound) is around 5 hours. Not a big difference in structure.
4. RyanAir has one of the best ontime records in Europe today.
So Mr O'Leary - why wait 4 years? Boeing can deliver you a brand new plane built in around 2 weeks. So Next April sounds fine don't you think?
Cheers!
The InTheKno team have just published the first study examining the LCCs and the Travel Trade. For more information go to www.inthekno.com or email sales@inthekno.com
A canny Irish man that he is (an accountant by training in case you were unsure where his potty mouth came from), Mr O'Leary has formally announced that he will start a new sister airline to Ryanair for Transatlantic travel. Given the now enormous feed into and out of Stansted his ability to move passengers Americas to EU will be a short incremental piece rather than a leap of faith. Consider this:
1. He doesn't need a whole new aircraft - even though he wants to order 50 brand new A350XWB or 787s. In fact the Boeing 737 for which all his pilots are trained is available in an ER version (both 737-700ER and 737-900ER). http://www.boeing.com/commercial/737family/index.html
The 737-700ER unmodified has a certified range of 5510 miles. This will take you from Stansted to ISP (3478 miles) or OAK (5375 miles). Even San Diego (also mentioned in his announcement) is possible.
2. He has the right to switch aircraft sub types in his Boeing order (actually he can do pretty much what he likes with the order - the Boeing guys LOVE him)
3. The longest route on Ryanair is today 3 1/2 hours. (Marrakesh to London). The record flight time from Boston to London (Eastbound) is around 5 hours. Not a big difference in structure.
4. RyanAir has one of the best ontime records in Europe today.
So Mr O'Leary - why wait 4 years? Boeing can deliver you a brand new plane built in around 2 weeks. So Next April sounds fine don't you think?
Cheers!
The InTheKno team have just published the first study examining the LCCs and the Travel Trade. For more information go to www.inthekno.com or email sales@inthekno.com
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