United Kingdom

Emirates' Spanish expansion highlights Iberia's long-haul weakness to the east

Emirates' announcement to open a daily service to Barcelona and an additional daily flight to Madrid, after only entering the country in 2010, shows how Spain is unique for Emirates in being a major European market with no incumbent local competition since Iberia operates what it calls a "90 degree hub": its long-haul traffic, a successful operation, is almost entirely to the Americas, leaving Spain's demand for medium- and long-haul services east of Europe to be fulfilled by foreign carriers. Emirates does not target Iberia's Americas network from Spain but does focus on Africa, where Iberia has limited service, the Middle East, where Iberia only serves Cairo and Tel Aviv (the latter of which Emirates will not serve) and Asia-Pacific, where Iberia has no service to at all.

Vueling grows its low cost Barcelona hub role as Iberia Express focusses on Madrid premium traffic

Vueling's growth this year, the largest since its merger with rival Clickair in 2009, underscores the airline's role as a cost-effective hub carrier with connecting flights at Barcelona's El Prat Airport, a status Iberia concluded it could not achieve in Barcelona, largely pulling out of the market in favour of specially-formed LCC Clickair. After the Clickair-Vueling merger, Iberia retained part ownership (46%, now controlled by Iberia parent International Consolidated Airline Group) while the merged carrier continued its focus on Barcelona. The partnership appears to be working well for both Iberia and Vueling.

That focus has been re-affirmed by the airline's intention to grow summer destinations served from El Prat by a further 10, bringing the total to 70, 23 more than served last year, and representing a 17% seat increase at El Prat. The growth is supported by the addition of four A320s and a single A319.

AirAsia X route changes spotlight ownership complexity post MAS deal, but also growth opportunities

Doomsayers will be quick to look at a series of route cancellations from Malaysia-based AirAsia X and proclaim the demise of the modern low-cost long-haul model AirAsia X pioneers. The context for the changes – ending service to London Gatwick, Mumbai, New Delhi and Paris Orly – expands beyond fuel costs, rising taxes in Europe and new visa restrictions in Malaysia. AirAsia X was already struggling in Europe and particularly in India. The recent cross-ownership deal between Malaysia Airlines (MAS) and the AirAsia Group was also clearly a big factor.

That is not to suggest AirAsia X's changes are simply a matter of submission to MAS. The biggest advantage, besides brand awareness, of the high profile London and Paris routes was their ability to put passengers on multiple AirAsia short-haul flights as they travelled around southeast Asia. MAS' deployment of the A380 later this year will lower unit costs to London, narrowing the gap with AirAsia X, currently using more fuel-thirsty A340s. With the AirAsia-MAS partnership, and plans for the two to facilitate passenger transfers, the AirAsia group can still gain feed on its short-haul network while AirAsia X will benefit from redeploying capacity in Asia Pacific and, notably, China.

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.