Netherlands

Airlines in transition: Hybrid and low-cost carriers push for better airline-airport relationships

Alex Cruz, CEO of Spanish LCC Vueling, spoke passionately at a recent conference of his need to see partnerships between airports and airlines that are deep and long-lasting. Mr Cruz referred specifically to co-operation that permits both partners to benefit from alternative revenue generation. Ahead of the forthcoming CAPA Airlines in Transition conference in Istanbul – which will feature some 30 airline CEOs addressing this and related issues – we consider how these parties have collaborated in the past and how it is shaping up now.

Vueling Airlines has become one of the innovators of the hybrid/low-cost business model that has become more prevalent and is found in other airlines such as easyJet (progressively) and Flybe (one of the originators of the model).

The fast changing airline industry makes life difficult for airport planners – just as change also offers opportunities.

British Airways/IAG with bmi looks to re-establish world leadership – and long term survival

It can be a fine line between survival and success, just as the blowtorch of a threatened existence provides a powerful motive to pursue ambitious goals.

Last month’s International Airlines Group (IAG)/British Airways move on bmi is only one more piece in the strategic kaleidoscope opening out in front of the Group Chairman, Willie Walsh. The world is his oyster at present. Answering a question following the bmi purchase announcement, Mr Walsh said that despite the uncertain economic environment that Europe’s politicians have created, this was a time of opportunity. His airline is well placed now to capitalise and, as bad news for others spells bargains in the marketplace, the time could well be ripe. In the process, London Heathrow Airport is firmly in the spotlight as Virgin Atlantic also remains a sale possibility. Yet for BA and all of its major rivals, the elephant in the room remains how to service shorthaul network connections profitably.

Rail link plans fall through but demand remains high

For the air transport industry to remain competitive with what is an increasingly ‘preferred’ mode of transport in the EU and beyond – rail – the air-rail link is, ironically, a saviour. In two recent cases such links have been postponed or called into question by a bidder, but there are still plenty of schemes in the pipeline, with Europe leading the way in this field.

The scheme that has been postponed is one at Dublin, Ireland, where the Transport Minister confirmed early in Nov-2011 that investment in transport infrastructure generally will be scaled back significantly over the next five years. Overall spending on transport capital will fall by almost 50% from EUR1.5 billion in 2011 to EUR0.8 billion in 2016. As part of this reduction, the Government will postpone the new rail link to Dublin International Airport. Prime Minister Enda Kenny stated, “We cannot afford to do all that we want to do. This plan is based on what the country can afford. We face a large budget deficit, dependent on support funding and operate in a very challenging international environment."

Air France-KLM restructuring to continue as 3Q earnings fall sharply

Air France-KLM plans to expedite and intensify restructuring efforts as the group, Europe’s second-largest airline by revenue, struggles under its debt burden and misses earnings targets. The group, the worst performing of Europe’s big three network carriers, reported a steep slide in profitability in the seasonally-strong fiscal second quarter (three months to 30-Sep-2011), as passenger numbers and revenue growth failed to keep up with cost gains.

As expected, Air France-KLM’s disappointing second quarter result was accompanied by a downbeat outlook for the remainder of the year, with an operating loss expected in the current fiscal third quarter and for calendar 2011.

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.

Global aviation focal point: Bangkok, Singapore and the role of the Star Alliance

Southeast Asia is steadily becoming the focal point of global aviation. When headed for Southeast Asia, most travellers fly to/from or via one of two cities: Bangkok or Singapore. And they are most likely to do so on a Star Alliance member carrier. Recently CAPA reviewed the world’s top routes and found that the rankings confirmed the rise of Asia as the largest, and fastest growing, aviation market. Using CAPA’s Route Analyser Tool, we will now consider the most travelled routes between different regions and how traffic flows are concentrated – or not – on these sectors. First the seats available between Europe and Southeast Asia is reviewed.