easyJet

easyJet becoming successful hybrid LCC-business airline, annual results show

EasyJet, Europe’s fourth-largest airline, delivered a strong financial and operational performance in its FY2011 (12 months to 30-Sep-2011), managing to avoid the worst of high oil prices, air traffic strikes, higher taxes, weak consumer confidence and conflict in the Middle East/North African market to deliver a profit before tax of GBP248 million. The result was at the top end of the LCC’s guidance.

Strong revenue growth and prudent ex-fuel cost control drove the strong result. easyJet’s shares slid on the result, however, as CEO Carolyn McCall came with a downbeat outlook for the current financial year due to slow economic growth, competition, taxes and fuel costs. Ms McCall delivered a strong set of results in her first full year as head of the carrier, the UK’s largest. EasyJet increased pre-tax profit by GBP60 million, or 31.5%, to GBP248 million in FY2011, a remarkable feat in light of the myriad difficulties encountered in the period and a testament to the company’s new strategy.

AirAsia, eyeing revenue, makes strong entrance to frequent flyer programme

Low-cost airlines dogmatic to their cost base have traditionally shunned frequent flyer programmes, seeing them as only increasing costs. So a move from AirAsia – Asia's largest LCC and which has the lowest reported cost base in the world – to venture into the FFP arena via its "Big" programme, a fully-fledged offering of flight rewards, a credit card and third-party partners, is a reminder that airline models are not inelastic and that few airlines are reaping the possible rewards of a FFP, which can be more valuable than the airline it is attached to.

As air travel becomes commoditised, airlines should be selling not a ticket but their brand, CAPA's boardroom magazine Airline Leader writes in the current feature examining how FFPs are for both love and money. Leveraging a brand can be accomplished through a FFP, and AirAsia has one of the best brands out there. But FFPs are not just a means to an end: they are a means unto themselves. In the year to 30-Jun-2011 Qantas reported a 22% increase in profit from external billings (points sold to credit card companies and other partners) of AUD202 million (USD212 million).

easyJet pushes further into France, throwing down the gauntlet to Air France

easyJet has announced plans to open two new and permanent bases in France, at Nice and Toulouse, which the LCC says will be operational by summer 2012. The carrier will base two A319 aircraft each at the airports, which will be the carrier's 21st and 22nd network bases, as part of efforts to strengthen its French domestic and pan-European network.

easyJet’s moves into provincial France mirrors those being made by national carrier Air France, which is desperately seeking to turnaround its loss-making short-haul business by pushing short-haul capacity out of Paris. easyJet’s plan could be a major headache for the French flag carrier as it aims to cement its dominance in regional France. As easyJet noted, with such a low LCC penetration, relative to neighbouring countries, the LCC onslaught is unlikely to ease anytime soon.

Intra-Europe traffic trends in the right direction, but outlook darkens for Europe’s carriers

European airlines continued to report positive passenger traffic results in Aug-2011, the final month of the summer peak travel period, when European airlines make the bulk of their revenue. Almost all of the major airlines reported year-on-year increases in load factor and passenger numbers, despite the increasingly worrying economic backdrop affecting business and consumer confidence across the region. If such uncertainty continues, European carriers may be in for a bumpy end to 2011.

UK airports record strong summer and first half, but charter carriers face up to new realities

The UK’s major airports have reported a surprisingly upbeat summer season, with the country’s largest airport operator BAA setting a new passenger traffic record. London Luton, Gatwick, City and Manchester have also posted encouraging results this year, as the country shifted back into growth mode after a difficult few years. But BAA has warned that the better times could to be coming to an end, with a weaker-than-expected growth outlook for the remainder of the year.