During the volcanic ash and more recent snow episodes there were countless media shriekings about people "stranded" or "stuck" in Europe.
Perhaps the most vitriolic was by a lady journalist from the Independent who said she had been stuck at Geneva Airport which was another place affected by snow. It wasn't just Heathrow.She was obviously suffering considerable distress when she wrote her article and had even lost the ability to figure out how to painlessly and pleasurably eat a large Toblerone. You don't just stick the whole thing in your mouth dear or those ridges will indeed be painful.Just break the triangles off one by one and all will be well. Much more alarming was her rant about a Captain trying his best to keep the passenges up to date with a fast changing situation and her alarming fantasising about stabbing anyone present, past or future who looked as if they might have anything to do with BA. It was an extraordinary outburst, forgiveable perhaps if she had no option but to be incarcerated in Geneva Airport, or any other place, for three days. But she did have an option as did tens of thousands of other "stranded in Europe" people last Spring. Even a basic knowledge of geography should tell most that Europe is not a series of islands. Apart from the UK and Ireland it is one continuous landmass= roads and railways connecting everywhere to everywhere else.Did she sleep through all her geography lessons at school? If so, the purchase of a map at the Geneva Airport bookstall would have been a good investment and enabled her to either while away the time in deep learning or get a clue that Geneva is linked to Paris by train. It takes three hours. There are then trains from Paris to Calais Ville via Boulogne. After that a short taxi ride takes you to Calais port where you are spoiled for choice of frequent ferries to Dover and bingo,- in a matter of hours you are no longer stranded at Geneva but on firm British soil and less than a hundred miles from London.
The airlines perhaps made a big mistake when most dumbed down their route maps by taking out all but the most basic information and making them totally uninteresting. They could have left them as they were as an aid to those who they had to leave "stranded" or "stuck". Maybe now they should hand out wartime style escape maps to all arriving passengers so that in extremis they can see where they are, where they have come from and how to get back there without an aeroplane. "Oh look,- it's land nearly all the way".
Thursday, 30 December 2010
Airline Liability-Snow Nonsense.
For the second time this year, airlines are facing having to compensate passengers whose flights have been delayed or cancelled due to natural factors entirely outwith their control. Under normal concepts of justice a party can only be responsible for an act or omission by itself or a contractor. That is fair.
Some time ago the EU enacted laws under which an airline which failed to deliver the contracted transportation either reasonably to schedule or not at all has been liable to pay compensation.Its purpose was to avoid airlines cancelling flights for their own convenience or to avoid losses on lightly booked services. Again,fair enough. Since then though governments have found that by decreeing that this extends to flights disrupted by volcanic dust, snow or other unavoidable natural causes they themselves slip neatly off the hook even if their own decisions grounded flights. This is particularly useful,- and immoral,- when the act or mmision is actually one of their own. The panic measures taken during the volcanic dust episode,which happened during days of visibly clear blue skies over the UK,-were absurd and costly backside covering. This activity appears to be normal in the civil service where accountability for anything is rarely accepted.Bonuses flow regardless.
The whole principle needs urgent review but is unlikely to get it. Just as there is little incentive for EU and state politicians to tackle the whole question of their own pay and allowances, there is none for them to probe anything which would move responsibility away from the airlines to themselves. They can not even face people up to the fact that its is up to themselves as users to take out appropriate insurance. Unfortunately the idea that anyone should have personal responsibility for anything they do does not sit well with the European view that someone (else) is always liable. Even "Act of God" does not wash although to be fair it is unlikely that any Almighty gets involved in the minutiae of daily volcanic or meteoroligical activity.
Unfortunately for the airlines,the producers of mass, safe, low cost travel and huge economic benefits to business and tourism, they are too often portrayed as carbon emitting, environment destroying hooligans by the green lobby and as wonderful cash cows there for the milking by governments. On bad days, their customers join in the chorus ,screaming for more regulation or just plain cash handouts for the misdeeds of volcanos, snow or any other thing. Airlines are seen as ineligible for the normal sense of natural justice or fair play. They are vilified and the baying mob of EU governments and upset passengers says someone else,- i.e.they,- must pay. Despite all their efforts and all they do ,they have no sympathy when the chips of "who pays?" are down. Outside the EU there is more understanding of the realities and airlines fly in less hostile skies.Some are even appreciated for their contribution to national economies.
Some time ago the EU enacted laws under which an airline which failed to deliver the contracted transportation either reasonably to schedule or not at all has been liable to pay compensation.Its purpose was to avoid airlines cancelling flights for their own convenience or to avoid losses on lightly booked services. Again,fair enough. Since then though governments have found that by decreeing that this extends to flights disrupted by volcanic dust, snow or other unavoidable natural causes they themselves slip neatly off the hook even if their own decisions grounded flights. This is particularly useful,- and immoral,- when the act or mmision is actually one of their own. The panic measures taken during the volcanic dust episode,which happened during days of visibly clear blue skies over the UK,-were absurd and costly backside covering. This activity appears to be normal in the civil service where accountability for anything is rarely accepted.Bonuses flow regardless.
The whole principle needs urgent review but is unlikely to get it. Just as there is little incentive for EU and state politicians to tackle the whole question of their own pay and allowances, there is none for them to probe anything which would move responsibility away from the airlines to themselves. They can not even face people up to the fact that its is up to themselves as users to take out appropriate insurance. Unfortunately the idea that anyone should have personal responsibility for anything they do does not sit well with the European view that someone (else) is always liable. Even "Act of God" does not wash although to be fair it is unlikely that any Almighty gets involved in the minutiae of daily volcanic or meteoroligical activity.
Unfortunately for the airlines,the producers of mass, safe, low cost travel and huge economic benefits to business and tourism, they are too often portrayed as carbon emitting, environment destroying hooligans by the green lobby and as wonderful cash cows there for the milking by governments. On bad days, their customers join in the chorus ,screaming for more regulation or just plain cash handouts for the misdeeds of volcanos, snow or any other thing. Airlines are seen as ineligible for the normal sense of natural justice or fair play. They are vilified and the baying mob of EU governments and upset passengers says someone else,- i.e.they,- must pay. Despite all their efforts and all they do ,they have no sympathy when the chips of "who pays?" are down. Outside the EU there is more understanding of the realities and airlines fly in less hostile skies.Some are even appreciated for their contribution to national economies.
Wednesday, 22 December 2010
Heathrow- A Glimmer of Hope for the Managers.
From amidst reports that the Heathrow terminals today again resemble zoos, with more people admittedly getting away but thousands from the cancelled flights still there trying to get last minute seats from people who don't show up or whose connections don't arrive, a glimmer of hope for the beleagered BAA and airline managers,- as distinct from their leaders.
For most of the airport and resident airlines' managers there are two distinct parts of the year. From October to March they are heads down into the planning and budget process for the next summer peak season. The battles flow to and forth as the line people battle for money and resources from their finance departments. The line is trying to maximise performance and customer service, whilst the finance departments are pushing them to minimise costs. The senior managers who present the budgets are repeatedly told to go back and try harder until they finally return with a figure which the finance people reluctantly accept. At this point the airport or airline General Manager responsible is assured of surviving his or her forthcoming annual review and may now get a bonus."Good budget,- well done" is what he or she hopes to hear even though they know respite is only temporary as the whole edifice is built on sand. There is at least temporary remission from being battered to death.
The second part of the year, from April to September takes in the peak operating season for which the planners were trying to get the required resources. After a lull maybe in April and May, the pressure starts to build up, any resource gaps begin to show and sooner or later the daily operation begins to crack. At this point the battering resumes with a new intensity, this time from the CEO and other people who were the original ultimate source of the big "No" to the additional spend. All delayed departures are allocated a code, identified as "late baggage" or similar. In fact the real code should be "CEO" or "Finance Director" or "Head of Service Delivery". Instead it is the unfortunate line General Manager standing next to the (planned)disaster who cops it.
For those about to go into the final rounds of the budget after Christmas,the current disaster is a Godsend. Which Finance Director or CEO or other will dare to kick "Essential additional equipment for snow clearance and emergency customer care" into the "Go back and do it again" long grass.The operators might,just for once, get all they need.
Go for it ladies and gents!
ps While the above deals with the physical resources issue ,it still leaves all levels of management and supervision with the question about the whole service ethos and whether every ounce of effort and energy have been correctly and creatively deployed to deal with the situation prevaling since last Saturday. Why did the Salvation Army, that magnificent last resort of customer service when all else has failed, have to dish out warm drinks? There are plenty available in the terminals. Where were the BAA and airline people? Why weren't they tipped out of their offices and straight onto the front line to do and hand out whatever was necessary?
For most of the airport and resident airlines' managers there are two distinct parts of the year. From October to March they are heads down into the planning and budget process for the next summer peak season. The battles flow to and forth as the line people battle for money and resources from their finance departments. The line is trying to maximise performance and customer service, whilst the finance departments are pushing them to minimise costs. The senior managers who present the budgets are repeatedly told to go back and try harder until they finally return with a figure which the finance people reluctantly accept. At this point the airport or airline General Manager responsible is assured of surviving his or her forthcoming annual review and may now get a bonus."Good budget,- well done" is what he or she hopes to hear even though they know respite is only temporary as the whole edifice is built on sand. There is at least temporary remission from being battered to death.
The second part of the year, from April to September takes in the peak operating season for which the planners were trying to get the required resources. After a lull maybe in April and May, the pressure starts to build up, any resource gaps begin to show and sooner or later the daily operation begins to crack. At this point the battering resumes with a new intensity, this time from the CEO and other people who were the original ultimate source of the big "No" to the additional spend. All delayed departures are allocated a code, identified as "late baggage" or similar. In fact the real code should be "CEO" or "Finance Director" or "Head of Service Delivery". Instead it is the unfortunate line General Manager standing next to the (planned)disaster who cops it.
For those about to go into the final rounds of the budget after Christmas,the current disaster is a Godsend. Which Finance Director or CEO or other will dare to kick "Essential additional equipment for snow clearance and emergency customer care" into the "Go back and do it again" long grass.The operators might,just for once, get all they need.
Go for it ladies and gents!
ps While the above deals with the physical resources issue ,it still leaves all levels of management and supervision with the question about the whole service ethos and whether every ounce of effort and energy have been correctly and creatively deployed to deal with the situation prevaling since last Saturday. Why did the Salvation Army, that magnificent last resort of customer service when all else has failed, have to dish out warm drinks? There are plenty available in the terminals. Where were the BAA and airline people? Why weren't they tipped out of their offices and straight onto the front line to do and hand out whatever was necessary?
Monday, 20 December 2010
Heathrow- White but in the brown stuff.
As much of the Sky and BBC 24 connected world knows, UK Plc is suffering a bit of embarrassment over the inability of the world's busiest international airline hub to recover quickly from snow which last fell on Saturday. It is now Monday night and Tuesday looks little better with the southern runway billed to stay closed, presumably still snow and ice covered. Why? The root of the problem is unclear-not enough machines? manpower?fluid?Heath and safety issues? What? No clues have emerged from the BAA and BA leaders who have appeared on our screens. All they have done is to say they are working on it, disruption will last for some days, airlines which don't announce their cancellations are bad and passengers whose travel isn't really necessary (in Christmas week?) should do them a favour and cancel, presumably to hold Christmas in June or some other time convenient to the operators.
It is all extraordinary,- or appears to be. Maybe it isn't but clearly Joe Public is not to be trusted with real information. The same appears to be happening at Eurostar over at St Pancras. Intending passengers are required to queue in the freezing cold outside in a line stretching back to the British Library. Presumably it is considered good for them and anyway keeps them from cluttering up the very pleasant cafe and shop lined interior of the building .The ticket office is closed until New Year as "We have no more tickets to sell". Neither there nor at Heathrow do there appear to be enough staff and their leaders simply walking the floor giving information and solving whatever problems there are as best they can. Few probably have "the authority" to do much or make even minor non standard decisons anyway. This is another recent problem in some service businesses. The Heathrow terminal situation is almost becoming a humanitarian problem now.The foreign airlines seem to be coping much better but the home teams seem just overwhelmed. Again the question, "Why?". No well trained army of Head Office and other volunteers able to provide real help or a friendly face? Are the basics of friendly faces and care of people not a dominant part of the corporate ethos? We are talking airports, airlines and rail companies here,- not banks.
Philip Hammond, the Transport Minister, says that there will be a thorough assessment of all the problems and their solutions once life is back to normal. Very sensible and he looks as if he will keep it objective.Let's hope though that rather than entrusting the task to civil servants he will recruit a team well versed in organisational structures, the mechanics and the detail of making airports run, and the concepts and fundamentals of of customer care. Key is the need to look beyond "who didn't order the snowplough?" and who did what on the day to the underlying corporate ethos. What sort of people run the companies concerned? What are their core vaues? As well as vital profitability ,are they really all about genuine customer service and care when things go wrong? How are the hands-on operational professionals regarded in the company and are they listened to or scorned? What happens in annual reviews to people who champion spending money on an occasional but vital need? One suspects that they may have a hard time of it and risk being labelled as lacking commercial acumen or awareness and generally rather boring compared to the more glitzy and higher profile marketing and other folk. It's worth a probing look. Nearly every disaster is a long time in the making before it happens and it stems from roots far from the scene and time of the event and people on whose watch it eventually happens. Sadly though ,courts of enquiry and the like often don't look far enough back along the chain of events .It is usually those holding the ball on the day who end up in the dock. The blame is allocated,scapegoats selected and sacked, imprisoned or just villified and the world moves on without learning the lessons .The really guilty escape unscathed.That's what happened when Heathrow's Terminal 5 originally opened and there is a danger it will happen again.Over to you Mr Hammond.
It is all extraordinary,- or appears to be. Maybe it isn't but clearly Joe Public is not to be trusted with real information. The same appears to be happening at Eurostar over at St Pancras. Intending passengers are required to queue in the freezing cold outside in a line stretching back to the British Library. Presumably it is considered good for them and anyway keeps them from cluttering up the very pleasant cafe and shop lined interior of the building .The ticket office is closed until New Year as "We have no more tickets to sell". Neither there nor at Heathrow do there appear to be enough staff and their leaders simply walking the floor giving information and solving whatever problems there are as best they can. Few probably have "the authority" to do much or make even minor non standard decisons anyway. This is another recent problem in some service businesses. The Heathrow terminal situation is almost becoming a humanitarian problem now.The foreign airlines seem to be coping much better but the home teams seem just overwhelmed. Again the question, "Why?". No well trained army of Head Office and other volunteers able to provide real help or a friendly face? Are the basics of friendly faces and care of people not a dominant part of the corporate ethos? We are talking airports, airlines and rail companies here,- not banks.
Philip Hammond, the Transport Minister, says that there will be a thorough assessment of all the problems and their solutions once life is back to normal. Very sensible and he looks as if he will keep it objective.Let's hope though that rather than entrusting the task to civil servants he will recruit a team well versed in organisational structures, the mechanics and the detail of making airports run, and the concepts and fundamentals of of customer care. Key is the need to look beyond "who didn't order the snowplough?" and who did what on the day to the underlying corporate ethos. What sort of people run the companies concerned? What are their core vaues? As well as vital profitability ,are they really all about genuine customer service and care when things go wrong? How are the hands-on operational professionals regarded in the company and are they listened to or scorned? What happens in annual reviews to people who champion spending money on an occasional but vital need? One suspects that they may have a hard time of it and risk being labelled as lacking commercial acumen or awareness and generally rather boring compared to the more glitzy and higher profile marketing and other folk. It's worth a probing look. Nearly every disaster is a long time in the making before it happens and it stems from roots far from the scene and time of the event and people on whose watch it eventually happens. Sadly though ,courts of enquiry and the like often don't look far enough back along the chain of events .It is usually those holding the ball on the day who end up in the dock. The blame is allocated,scapegoats selected and sacked, imprisoned or just villified and the world moves on without learning the lessons .The really guilty escape unscathed.That's what happened when Heathrow's Terminal 5 originally opened and there is a danger it will happen again.Over to you Mr Hammond.
Wednesday, 15 December 2010
UK Cuts- Railways do Well
The previous Labour Transport Minister,Lord Adonis was probably the best we have seen in that role for some time.Approachable,genuinely able to talk to anyone at all in an unpatronising fashion, and a good listener and without a train of political or social baggage and hangups he was an unusual politician and an even more unusual Minister in that he had a deep and enquiring interest in his subject exemplified by his two week round Britain rail trip on 2008. He also produced a much needed definitive plan for the rail network, including High Speed 2,electrification of the North Western Liverpool-Manchester-Preston-Blackpool triangle,and the Great Western main line through to Wales, including its Oxford and Newbury branches, the completion of Crossrail and Thameslink (let's forget that was once called Thameslink 2000), the replacement of the veteran but excellent diesel HSTs and the addition of more carriages in various areas. It was a difficult act to follow, especially when Ministers have been told to come up with major cuts almost everywhere.
Transport and rail in particular is a difficult subject to get to grips with. Fortunately in the current circumstances it has short , medium and long term implications for social mobility (literally),employment,the cost of manufactured good, efficient distribution of goods and services,blurring north/south divides, living standards, quality of life particularly for commuters,as well as pollution levels ,and energy policy. In short it has many constituents all of whom need it to work well, efficiently, safely and as pleasantly as possible. It working- or more powerfully not working -can have a significant effect on ballot boxes all over the country.
The incoming Minister, Phil Hammond and his aide, Theresa Villiers, have wisely and successfully championed continuing as much of Adonis' rail plans as possible and almost the entire programme has survived, albeit with some timescales stretched by a couple of years and the Great Western scheme limited for the moment to London/ Hayes (already done for Heathrow Express)/Reading and beyond only to Oxford and Newbury.Two important items,the HST replacements and whether/when to extend electrification of the Midland main line north of Bedford remain to be resolved and decisions on these are expected in January 2011. The truncated Great Western and the North Western electrification schemes are far more significant than they may at first look. The Great Western project takes the wires through Reading station which is about to undergo a major track and facilities rebuilding. It would have been a great waste of future time and money not to have done the wiring at the same time. The Oxford branch takes the main line wires west as far as Didcot,over 50 miles from London, from which further incremental expensions to Swindon, then Bath, Bristol and the Severn Tunnel all become within reach and much simpler to do. It also opens the way to further progress north into the Midlands and the long electrified West Coast mainline. Similarly the relatively short distances of the 4 components of the North Western scheme , each little more than 20 miles in length and about 40 years overdue, open up the opportunity for more much longer distance electric traction -eg Manchester and Liverpool- Scotland at a low cost. A trans Pennine link to Leeds could make Liverpool-Manchester-Leeds-York link into the electrified East Coast mainline. It's all rather like positioning the first lines in a game of boxes. A clever early strategy can make for big long term gains. Lord Adonis undoubtedly saw this and knew what he was doing although at first sight some of the components may have looked unsexy. It is fortunate that despite all the financial pressures and demands from all sides ,the new government has seen the array of economic and electoral bottletops Adonis' blueprint hits and have had the nerve to stick with it.
Transport and rail in particular is a difficult subject to get to grips with. Fortunately in the current circumstances it has short , medium and long term implications for social mobility (literally),employment,the cost of manufactured good, efficient distribution of goods and services,blurring north/south divides, living standards, quality of life particularly for commuters,as well as pollution levels ,and energy policy. In short it has many constituents all of whom need it to work well, efficiently, safely and as pleasantly as possible. It working- or more powerfully not working -can have a significant effect on ballot boxes all over the country.
The incoming Minister, Phil Hammond and his aide, Theresa Villiers, have wisely and successfully championed continuing as much of Adonis' rail plans as possible and almost the entire programme has survived, albeit with some timescales stretched by a couple of years and the Great Western scheme limited for the moment to London/ Hayes (already done for Heathrow Express)/Reading and beyond only to Oxford and Newbury.Two important items,the HST replacements and whether/when to extend electrification of the Midland main line north of Bedford remain to be resolved and decisions on these are expected in January 2011. The truncated Great Western and the North Western electrification schemes are far more significant than they may at first look. The Great Western project takes the wires through Reading station which is about to undergo a major track and facilities rebuilding. It would have been a great waste of future time and money not to have done the wiring at the same time. The Oxford branch takes the main line wires west as far as Didcot,over 50 miles from London, from which further incremental expensions to Swindon, then Bath, Bristol and the Severn Tunnel all become within reach and much simpler to do. It also opens the way to further progress north into the Midlands and the long electrified West Coast mainline. Similarly the relatively short distances of the 4 components of the North Western scheme , each little more than 20 miles in length and about 40 years overdue, open up the opportunity for more much longer distance electric traction -eg Manchester and Liverpool- Scotland at a low cost. A trans Pennine link to Leeds could make Liverpool-Manchester-Leeds-York link into the electrified East Coast mainline. It's all rather like positioning the first lines in a game of boxes. A clever early strategy can make for big long term gains. Lord Adonis undoubtedly saw this and knew what he was doing although at first sight some of the components may have looked unsexy. It is fortunate that despite all the financial pressures and demands from all sides ,the new government has seen the array of economic and electoral bottletops Adonis' blueprint hits and have had the nerve to stick with it.
Tuesday, 30 November 2010
BA/Iberia: The Galleon enters harbour.
As predicted, BA's Chairman Martin Broughton had no problems with reluctant or recalcitrant shareholders at yesterday's meetings to approve the company's move into oblivion as a standalone financial entity and into the hands of IAG,- International Airlines Group. Two hours to the south west and not on the direct onward path to anywhere other than South America, Iberia's shareholders were just as enthusiastic to get their hands on the new paper. At the three public meetings which took place, the lowest percentage in favour of the merger was 99.88%. The small number of individual investors (about 50 according to The Times)who turned up despite the bitter weather and the London tube strike need not have bothered. Thanks to the institutional investors it was all over before it started and their small percentage of shareholdings would make not a jot of difference.
By all accounts the Chairman was in a bullish and not too cuddly mood, confidently tossing aside questions he didn't like with something approaching apparent contempt.This was despite several questions from the floor being very valid and the concerns expressed reasonable and worthy of considered and considerate replies. This rumbustuous knockabout stuff is a worrying sign. Once Chairman and Board start treating what they see as the little people without genuine understanding and some degree of empathy it is a straight run to dealing with all who question or disagree the same way,-investors, customers and staff alike. Shareholders are also usually BA customers and they wil be concerned that the same "policy" driven high handedness, already a feature of some BA dealings with its customers, will become a dominant and dangerous culture. Never mind the icy patches outside yesterday. Even on a warm day there are enough bananaskins around for the Board to avoid throwing more in its own path.
In the words of the 1960's folk song: "If I had a hammer,I'd hammer out danger............"
Footnote: One of the advantages of registering IAG in Spain was said to be the tax breaks available there. Does this mean that UK Plc is about to see a large chunk of UK corporate tax move outside its grasp along with its erstwhile "national carrier".
By all accounts the Chairman was in a bullish and not too cuddly mood, confidently tossing aside questions he didn't like with something approaching apparent contempt.This was despite several questions from the floor being very valid and the concerns expressed reasonable and worthy of considered and considerate replies. This rumbustuous knockabout stuff is a worrying sign. Once Chairman and Board start treating what they see as the little people without genuine understanding and some degree of empathy it is a straight run to dealing with all who question or disagree the same way,-investors, customers and staff alike. Shareholders are also usually BA customers and they wil be concerned that the same "policy" driven high handedness, already a feature of some BA dealings with its customers, will become a dominant and dangerous culture. Never mind the icy patches outside yesterday. Even on a warm day there are enough bananaskins around for the Board to avoid throwing more in its own path.
In the words of the 1960's folk song: "If I had a hammer,I'd hammer out danger............"
Footnote: One of the advantages of registering IAG in Spain was said to be the tax breaks available there. Does this mean that UK Plc is about to see a large chunk of UK corporate tax move outside its grasp along with its erstwhile "national carrier".
Friday, 26 November 2010
BA/Iberia. The Galleon Sails On.
Next Monday,November 29th,BA's shareholders meet to vote their old company into oblivion as "a publicly quoted financial entity" and together with their Iberia equivalents sign up for compensatory shares in the new Spanish registered IAG,- International Airlines Group. BA's Chairman , writing in Overview, the magazine for shareholders,claims in an article headed "Still British to the core" that he "can reassure shareholders that British Airways will not have its strength drained by this merger". The front cover proclaims boldly "Everything you need to know about the merger". From this we can deduce that the Board thinks we need to know very little.Its 16 pages including covers are surprisingly unrevealing.It is a million airmiles from "Everything there is to know about the merger". There is absolutely nothing in it about the proposed organisational and financial structure for a start.
Mr Broughton says "Now British Airways will be more an airline brand". Nothing is said about its ongoing legal persona,if any. It is reasonable to assume therefore that it will indeed simply be a brand or division of IAG rather than a wholly owned subsidiary. He mentions airlines joining IAG "to retain their identity for the long term", but does not explain how this will be achieved or what guarantees there will be. If it is just a brand then BA will have lost control of the ultimate test of independence,- could it walk away from IAG if it found it didn't like the way things were turning out? It appears not. In that case BA and Iberia will be dead and gone for ever as separate businesses. All that will remain will be two facades, hollow shells,for the time being the frontage for IAG.
If this reasoning is correct and we haven't missed anything, there are a whole host of unstated facts and unasked questions behind the corporate smokescreen theme that this is an unmissable deal for BA's shareholders,customers and staff. What are the specific strategies and financial objectives of IAG? How do they differ from what the individual companies might reasonably have expected to achieve (bearing in mind that BA has been remarkably free of a global geographical strategy for the last 10 to 15 years)? Is the initial 55/45% split between the holdings of former BA and Iberia shareholders relevant for a second beyond the start of trading on the first day? How will the starting price of IAG shares be determined? If BA and Iberia have gone as separate entities ,who will mastermind staff issues, recruitment, career progresion etc? Will the two brands have any independence in strategy, route development and aircraft aquisition or will they have to bid against each other for turf and resources in an annual IAG budgeting process? If they do,as would be normal in a straight merger then surely the Group HQ will grow EU style and become another tier of management above the two brands. Decision making will be slower and complexity and costs higher?
Possibly the answers will be appear during Monday's meetings, but given the fact that the institutional investors, tired of years of few dividends and depressed share prices, have already indicated that they will vote "Yes" ,it looks all over bar any shouting from individual investors .Numerically they will be heavily outvoted anyway.
All that apart,recent events in Euroland and Ireland in particular should furrow the brows. Putting aside Greece, already in the sin bin,Spain is third after Ireland and Portugal in the list of Euro countries which could end up calling for the cash dispensing fire brigade. Unlike the other two it looks too big an economy to be rescued in the same way. That being the case,is this a good time for a UK company to be throwing in its lot with a Spanish one whose domestic market could end up with all sorts of problems were its homeland to get into serious difficulties? What if the needs of the Spanish side of the business drained cash from the needs of the UK operation? If you were piloting BA at this moment might you not be thinking of quickly hitting the "Go Round" button on the control panel?
Mr Broughton says "Now British Airways will be more an airline brand". Nothing is said about its ongoing legal persona,if any. It is reasonable to assume therefore that it will indeed simply be a brand or division of IAG rather than a wholly owned subsidiary. He mentions airlines joining IAG "to retain their identity for the long term", but does not explain how this will be achieved or what guarantees there will be. If it is just a brand then BA will have lost control of the ultimate test of independence,- could it walk away from IAG if it found it didn't like the way things were turning out? It appears not. In that case BA and Iberia will be dead and gone for ever as separate businesses. All that will remain will be two facades, hollow shells,for the time being the frontage for IAG.
If this reasoning is correct and we haven't missed anything, there are a whole host of unstated facts and unasked questions behind the corporate smokescreen theme that this is an unmissable deal for BA's shareholders,customers and staff. What are the specific strategies and financial objectives of IAG? How do they differ from what the individual companies might reasonably have expected to achieve (bearing in mind that BA has been remarkably free of a global geographical strategy for the last 10 to 15 years)? Is the initial 55/45% split between the holdings of former BA and Iberia shareholders relevant for a second beyond the start of trading on the first day? How will the starting price of IAG shares be determined? If BA and Iberia have gone as separate entities ,who will mastermind staff issues, recruitment, career progresion etc? Will the two brands have any independence in strategy, route development and aircraft aquisition or will they have to bid against each other for turf and resources in an annual IAG budgeting process? If they do,as would be normal in a straight merger then surely the Group HQ will grow EU style and become another tier of management above the two brands. Decision making will be slower and complexity and costs higher?
Possibly the answers will be appear during Monday's meetings, but given the fact that the institutional investors, tired of years of few dividends and depressed share prices, have already indicated that they will vote "Yes" ,it looks all over bar any shouting from individual investors .Numerically they will be heavily outvoted anyway.
All that apart,recent events in Euroland and Ireland in particular should furrow the brows. Putting aside Greece, already in the sin bin,Spain is third after Ireland and Portugal in the list of Euro countries which could end up calling for the cash dispensing fire brigade. Unlike the other two it looks too big an economy to be rescued in the same way. That being the case,is this a good time for a UK company to be throwing in its lot with a Spanish one whose domestic market could end up with all sorts of problems were its homeland to get into serious difficulties? What if the needs of the Spanish side of the business drained cash from the needs of the UK operation? If you were piloting BA at this moment might you not be thinking of quickly hitting the "Go Round" button on the control panel?
Wednesday, 24 November 2010
Airbus, Boeing and Airline strategists all need painkillers,- but which ones?
Airbus and Boeing must at this moment be giving more praise than ever for their evergreen cash producers, the A320 and 737 series. With these having high delivery rates and long order books the manufacturers will be wondering just how long they can spin them out without having to go through the cash drain of developing real sucessors.Airbus said at Shanghai that they will re-engine the A320 but if Boeing were to trump them with a true 737 replacement how long could a re-engined 1970s design hold its own before they would have to take the same expensive route? At the same time the airlines will be asking themselves how long they can order more of existing models without finding themselves to be the last customer before shiny, new and more economical replacements overtake them?
For now though these cash machines are the saviour of both companies, enabling them to absorb the A380's very slow production buildup and the 787 "Nightmareliner"'s ongoing delay into service, three years late and counting.
How long can the customers hang on? The A380's delivery rate which was at last about to reach 20 in a calendar year could be hit again by the need to redistribute new build engines to replace ones affected by the recent uncontained failure. This could knock on into at least the first part of 2011. The 787 meanwhile looks to be sliding towards a late 2011/early 2012 service introduction.
For the A380 the blip may not be too serious as the slow production has meant that these are early days for the type and the backlog is healthy despite the dearth of recent new confirmed orders. The type is also young as its massive wing shows it to be in effect the "SP" of the series,- the smallest version of what could become a much larger aircraft. Emirates and Cathay in particular want to see the -900 sooner rather than later. The 787,particularly the -8,faces a different problem. Airlines tend to go for an aircraft whose size will be optimum at about midpoint of its front line service life. Had deliveries started on time three years ago the -8 would have been fine. Now,assuming a planned 10-12 years front line service, we are already 20-30% into that. Meanwhile projected growth will have pushed the midlife capacity requirement higher. OK,-there is the -9 to cover that. Fine for the original -8 customers who can make the switch but what next for the existing -9 ones? Boeing are reluctant to prematurely shorten the life of its other cash cow, the 777, by stretching the 787 still further and even if they did that would only achieve the capacity of the -200 model, leaving the -300 slot uncovered and very vulnerable to the A350. For the first time in its jet history, Boeing faces having a gap in its product range and being outflanked by Airbus with the A350 and 380 covering all needs from about 240 seats upwards. How did this happen? Management upheavals?Industrial strife? Managing extensive production outsourcing? Too many distractions?
For the airline strategists and planners the A380 delays may be irritating but are manageable as the aircraft is unchallenged in its very large aircraft slot. The 747-8 might attract a few sales at the bottom of its capacity range but Boeing has nothing above that. In some cases, despite all the noise, the global financial problems have meant that the delays are almost certainly welcome. The late arrival of the 787, originally a 767/A310 replacement poses different problems and some opportunities. Again, Boeing may be less well placed to deal with and benefit from this situation than Airbus.Airbus can offer a package of reasonably priced A330s,probably shorn of already amortised development costs ,now and A350s later ,whereas few would be interested in adding new 767s with low eventual resale values to plug the gap until 787s actually arrive. Refurbishing existing 767s is a possibility and may have to be done, but unless paid for by Boeing the payback time is too short to stack up financially.
Both of these possibilities produces further headaches down the track.The semi-widebodied 767s will simply have very little market in three to five years time unless Boeing buys them back for tanker conversions, while fleets of relatively new A330s flooding into the used market would mean low prices and the opportunity for low cost and niche competitors to buy them cheap, offsetting higher operating and engineering costs against low ownership costs.Scrapping them to keep them off the market is an option but an expensive one so would require a very low initial aquistion cost. Engine and component manufacturers wouldn't like that either as they need aircraft to age so as to make their money on spares.
All round then it looms like something of an Alka-Seltzer year end but on the face of it Airbus may be a bit more cheerful than Boeing.For the airlines, some clever footwork will be required but for the wise and nimble all is not lost and there could be some creative opportunities out there. Do we hear another "Ouch" from the manufacturers? They might consider stopping wasting time and money on suing each other over alleged subsidies and instead focus simply on producing quality aircraft on time and on spec.
For now though these cash machines are the saviour of both companies, enabling them to absorb the A380's very slow production buildup and the 787 "Nightmareliner"'s ongoing delay into service, three years late and counting.
How long can the customers hang on? The A380's delivery rate which was at last about to reach 20 in a calendar year could be hit again by the need to redistribute new build engines to replace ones affected by the recent uncontained failure. This could knock on into at least the first part of 2011. The 787 meanwhile looks to be sliding towards a late 2011/early 2012 service introduction.
For the A380 the blip may not be too serious as the slow production has meant that these are early days for the type and the backlog is healthy despite the dearth of recent new confirmed orders. The type is also young as its massive wing shows it to be in effect the "SP" of the series,- the smallest version of what could become a much larger aircraft. Emirates and Cathay in particular want to see the -900 sooner rather than later. The 787,particularly the -8,faces a different problem. Airlines tend to go for an aircraft whose size will be optimum at about midpoint of its front line service life. Had deliveries started on time three years ago the -8 would have been fine. Now,assuming a planned 10-12 years front line service, we are already 20-30% into that. Meanwhile projected growth will have pushed the midlife capacity requirement higher. OK,-there is the -9 to cover that. Fine for the original -8 customers who can make the switch but what next for the existing -9 ones? Boeing are reluctant to prematurely shorten the life of its other cash cow, the 777, by stretching the 787 still further and even if they did that would only achieve the capacity of the -200 model, leaving the -300 slot uncovered and very vulnerable to the A350. For the first time in its jet history, Boeing faces having a gap in its product range and being outflanked by Airbus with the A350 and 380 covering all needs from about 240 seats upwards. How did this happen? Management upheavals?Industrial strife? Managing extensive production outsourcing? Too many distractions?
For the airline strategists and planners the A380 delays may be irritating but are manageable as the aircraft is unchallenged in its very large aircraft slot. The 747-8 might attract a few sales at the bottom of its capacity range but Boeing has nothing above that. In some cases, despite all the noise, the global financial problems have meant that the delays are almost certainly welcome. The late arrival of the 787, originally a 767/A310 replacement poses different problems and some opportunities. Again, Boeing may be less well placed to deal with and benefit from this situation than Airbus.Airbus can offer a package of reasonably priced A330s,probably shorn of already amortised development costs ,now and A350s later ,whereas few would be interested in adding new 767s with low eventual resale values to plug the gap until 787s actually arrive. Refurbishing existing 767s is a possibility and may have to be done, but unless paid for by Boeing the payback time is too short to stack up financially.
Both of these possibilities produces further headaches down the track.The semi-widebodied 767s will simply have very little market in three to five years time unless Boeing buys them back for tanker conversions, while fleets of relatively new A330s flooding into the used market would mean low prices and the opportunity for low cost and niche competitors to buy them cheap, offsetting higher operating and engineering costs against low ownership costs.Scrapping them to keep them off the market is an option but an expensive one so would require a very low initial aquistion cost. Engine and component manufacturers wouldn't like that either as they need aircraft to age so as to make their money on spares.
All round then it looms like something of an Alka-Seltzer year end but on the face of it Airbus may be a bit more cheerful than Boeing.For the airlines, some clever footwork will be required but for the wise and nimble all is not lost and there could be some creative opportunities out there. Do we hear another "Ouch" from the manufacturers? They might consider stopping wasting time and money on suing each other over alleged subsidies and instead focus simply on producing quality aircraft on time and on spec.
Friday, 5 November 2010
The Qantas A380 Incident- Australia Hits UK Number One News Slot for the first time in living memory?
See our sister blog: Twigaview at www.twigaview.blogspot.com for this one,-or just Google it at Twigaview Blog.
Wednesday, 3 November 2010
KLM Extends Entebbe services to Kigale. What it means for the KLM/Kenya Airways partnership
KLM's announcement that it will extend its Amsterdam-Entebbe A330-200 service to Kigali this winter is interesting. The Dutch airline originally took its 26% share in Kenya Airways as a means of strengthening its position on the continent by being able to feed its business from Amsterdam to points in East, Central and Southern Africa through KQ's Nairobi hub.This would counter particularly BA's strong presence achieved both via direct flights from London and, later, its new Nairobi based franchise operator RegionAir.In the event the BA franchise was short lived and KLM's potential particularly for extending its Amsterdam-Nairobi code share arrangements throughout Kenya Airways' regional operation has never been as vigorously persued as expected.
While the KLM Kigali operation bypasses Nairobi and will inevitably draw some long haul business to Europe and beyond away from Nairobi ,it is unlikely to seriously undermine the general level of KL/KQ cooperation and the feed of other business over Nairobi. Both carriers probably see it as far less of a problem than would be presented by the arrival of a Gulf operator.
While the KLM Kigali operation bypasses Nairobi and will inevitably draw some long haul business to Europe and beyond away from Nairobi ,it is unlikely to seriously undermine the general level of KL/KQ cooperation and the feed of other business over Nairobi. Both carriers probably see it as far less of a problem than would be presented by the arrival of a Gulf operator.
Thursday, 28 October 2010
Ryanair, Hahn and the Message.
The news that Ryanair will pull 33% of its services out of Frankfurt/Hahn in response to new German Government taxes on air travel looks a shrewd move. Not as a punishment for the federal government,- they aren't in the habit of backing down especially as the price sensitive low cost/price carriers are likely to suffer more than less price sensitive Lufthansa. It should be seen more as a measured cost saving response to the possible effect on the airline's Hahn business but, far more important and much more strategically significant, a warning to others that Ryanair is happy to take its ball away and play elsewhere if it doesn't like what is being done to it in any market or at any airport.They did the same recently when Belfast City( George Best )was unable to produce the promised runway extension on schedule. The message is very clear and simple. Give Ryanair what it wants or they will take their investment and jobs somewhere else.
Thursday, 21 October 2010
African Alliance and Pincer Movement/
John Williams has flagged up a recent news item from Africa.
Egyptair, Ethiopian and South African are discussing a range of possible cooperative moves including a regional low cost joint venture in Central Africa, which we take to mean primarily Zimbabwe, Zambia and Malawi although their definition may go a country or two outside that. Lufthansa, who currently have no services to East or Central Africa are also said to be interested in possible financial support.
As he observes, all are or will be Star members.Ethiopian has an investment in Lome, Togo based ASKY and itself operates extensively across the the east-west Africa axis as well as from its Addis Ababa hub to points south, central and east, notably Nairobi,Entebbe,Dar es Salaam,Kilimanjaro,Bujumbura,Kigale ,Lilongwe,Lubumbashi, Lusaka,Kinshasa,Libreville,Luanda,and Harare, mirroring much of rival Kenya Airways' Nairobi based network.Egyptair has reasonable reach into East Africa's Nairobi, Dar es Salaam and South Africa's Johannesburg but has never served the general Central Africa region. SAA on the other hand reaches expensively north into many of the same cities.
All three airlines serve each others home bases though SAA's presence in Cairo is only via an Egyptair operated codeshare and overlap at numerous points. in the middle sits part KLM owned (27%)Kenya Airways who will not be keen to see more incursions into what it sees as its own natural hunting ground.
Assuming that the "Central Africa" they are referring to is indeed Zimbabwe, Zambia and Malawi, only Zimbabwe has in normal times,-ie not now,-a strong national carrier. The Zambian Government sensibly stood aside long ago and let the original Zambia Airways go under when their losses became unsustainable, while Malawi almost inexplicable in terms of the drain on its Treasury and foreign exchnage continues to hold the non commercially viable Air Malawi above water. For all three countries the sensible solution would be a revival of a joint airline along the lines of Central African Airways, but as anything labelled as federal carries an unacceptable post-colonial stigma, that is very unlikely to happen.
City pair linkages and frequencies throughout Central Africa, while improved on a decade ago, are relatively infrequent and haphazard and do not encourage travel.If you miss your flight there may not be another along soon, or today,or tomorrow........In the 1970s during Rhodesian UDI and deep in the South African apartheid era there was a unique hubbing operation at Blantyre every Monday and Saturday when SAA,Air Rhodesia, Air Malawi, Zambia Airways, East African and latterly DETA of Mozambique met to exchange passengers,many holding two passports,travelling between places which forbade direct contact. Later, in the early 1990s, Brian Pocock of Air Botswana implimented with BAe 146s his dream of a multi-stopping spinal service knitting together the main southern, central and eastern Africa with a Johannesburg-Gaberone-Harare-Lusaka or Lilongwe-Nairobi-Entebbe route. Neither of these ventures have survived so there is a gap in air service provision right across the three countries and the adjacent territories, particularly within central Africa itself.
Potentially the rewards are good. With high yields and Dash 8/ATR/Embraer 170/190 series aircraft there is business to be had and generated by a well run, well financed and safety driven airline. Already (new)Lonrho owned Fly540 have seen this and begun cross border services from Kenya and started a subsidiary in Angola. Central Africa lies conveniently between the two. Substantially Kenya Airways owned Precisionair of Tanzania also has the ability to grow into a pan East and Central Africa low cost carrier. Provision of capacity via frequency is essential to success. A twice weekly operation from anywhere to anywhere is doomed as it doesn't give flexibilty. Again, one missed connection and a whole business itinerary is blown out.
The question for SAA,Egyptair and Ethiopian is whether they have the stomach, money and people for this kind of an operation when it comes to putting the resources on the table. Undercapitalisation is the bugbear of any new startup anywhere and even for a modern three turboprop operation a good £25 million is needed to support the first three years of buildup. It's not petty cash.
This proposal apart,a lot is happening in Africa right now. More of that shortly.
Egyptair, Ethiopian and South African are discussing a range of possible cooperative moves including a regional low cost joint venture in Central Africa, which we take to mean primarily Zimbabwe, Zambia and Malawi although their definition may go a country or two outside that. Lufthansa, who currently have no services to East or Central Africa are also said to be interested in possible financial support.
As he observes, all are or will be Star members.Ethiopian has an investment in Lome, Togo based ASKY and itself operates extensively across the the east-west Africa axis as well as from its Addis Ababa hub to points south, central and east, notably Nairobi,Entebbe,Dar es Salaam,Kilimanjaro,Bujumbura,Kigale ,Lilongwe,Lubumbashi, Lusaka,Kinshasa,Libreville,Luanda,and Harare, mirroring much of rival Kenya Airways' Nairobi based network.Egyptair has reasonable reach into East Africa's Nairobi, Dar es Salaam and South Africa's Johannesburg but has never served the general Central Africa region. SAA on the other hand reaches expensively north into many of the same cities.
All three airlines serve each others home bases though SAA's presence in Cairo is only via an Egyptair operated codeshare and overlap at numerous points. in the middle sits part KLM owned (27%)Kenya Airways who will not be keen to see more incursions into what it sees as its own natural hunting ground.
Assuming that the "Central Africa" they are referring to is indeed Zimbabwe, Zambia and Malawi, only Zimbabwe has in normal times,-ie not now,-a strong national carrier. The Zambian Government sensibly stood aside long ago and let the original Zambia Airways go under when their losses became unsustainable, while Malawi almost inexplicable in terms of the drain on its Treasury and foreign exchnage continues to hold the non commercially viable Air Malawi above water. For all three countries the sensible solution would be a revival of a joint airline along the lines of Central African Airways, but as anything labelled as federal carries an unacceptable post-colonial stigma, that is very unlikely to happen.
City pair linkages and frequencies throughout Central Africa, while improved on a decade ago, are relatively infrequent and haphazard and do not encourage travel.If you miss your flight there may not be another along soon, or today,or tomorrow........In the 1970s during Rhodesian UDI and deep in the South African apartheid era there was a unique hubbing operation at Blantyre every Monday and Saturday when SAA,Air Rhodesia, Air Malawi, Zambia Airways, East African and latterly DETA of Mozambique met to exchange passengers,many holding two passports,travelling between places which forbade direct contact. Later, in the early 1990s, Brian Pocock of Air Botswana implimented with BAe 146s his dream of a multi-stopping spinal service knitting together the main southern, central and eastern Africa with a Johannesburg-Gaberone-Harare-Lusaka or Lilongwe-Nairobi-Entebbe route. Neither of these ventures have survived so there is a gap in air service provision right across the three countries and the adjacent territories, particularly within central Africa itself.
Potentially the rewards are good. With high yields and Dash 8/ATR/Embraer 170/190 series aircraft there is business to be had and generated by a well run, well financed and safety driven airline. Already (new)Lonrho owned Fly540 have seen this and begun cross border services from Kenya and started a subsidiary in Angola. Central Africa lies conveniently between the two. Substantially Kenya Airways owned Precisionair of Tanzania also has the ability to grow into a pan East and Central Africa low cost carrier. Provision of capacity via frequency is essential to success. A twice weekly operation from anywhere to anywhere is doomed as it doesn't give flexibilty. Again, one missed connection and a whole business itinerary is blown out.
The question for SAA,Egyptair and Ethiopian is whether they have the stomach, money and people for this kind of an operation when it comes to putting the resources on the table. Undercapitalisation is the bugbear of any new startup anywhere and even for a modern three turboprop operation a good £25 million is needed to support the first three years of buildup. It's not petty cash.
This proposal apart,a lot is happening in Africa right now. More of that shortly.
Air New Zealand-The Passenger's Friend.
Full marks to long hauler Air New Zealand for their product relaunch scheduled for full introduction on April 11th 2011.
Their reach around the world from New Zealand -Asia-UK-USA-New Zealand, with many passengers on board for the best part of 24 hours requires special thinking,- and they have done it.With new seating concepts in all classes,-notably the sofa idea in Economy,and the innovative new Economy Plus arrangement and snacks anytime to order via the seatback touch screens they are setting the long haul pace.
In the front of the aircraft BA has just upped its First Class cabin and improved its Club World to try to cope with the very high quality Gulf carriers' offerings ,though it will have to think again about its visibly thrifted catering too, while Emirates' highly imaginative First and Business cabin layouts on the upper deck of the A380 are particularly stunning.
This is all good news to passengers who have suffered from real product competition being stifled by over-simplistic accountants ("everyone must share the pain,- the customers too")and the huge distortion of choice caused by the big frequent flyer programmes. Good on Air New Zealand for leading new thinking about "the back of the bus".If they can add to their hardware advantage by delivering their offerings with a consistently good, upbeat and cheerful service/hospitality style too, they will give particularly the long established European and American carriers a hard run for their money on the routes where they compete.
Their reach around the world from New Zealand -Asia-UK-USA-New Zealand, with many passengers on board for the best part of 24 hours requires special thinking,- and they have done it.With new seating concepts in all classes,-notably the sofa idea in Economy,and the innovative new Economy Plus arrangement and snacks anytime to order via the seatback touch screens they are setting the long haul pace.
In the front of the aircraft BA has just upped its First Class cabin and improved its Club World to try to cope with the very high quality Gulf carriers' offerings ,though it will have to think again about its visibly thrifted catering too, while Emirates' highly imaginative First and Business cabin layouts on the upper deck of the A380 are particularly stunning.
This is all good news to passengers who have suffered from real product competition being stifled by over-simplistic accountants ("everyone must share the pain,- the customers too")and the huge distortion of choice caused by the big frequent flyer programmes. Good on Air New Zealand for leading new thinking about "the back of the bus".If they can add to their hardware advantage by delivering their offerings with a consistently good, upbeat and cheerful service/hospitality style too, they will give particularly the long established European and American carriers a hard run for their money on the routes where they compete.
Tuesday, 19 October 2010
Aviation Taxes-Here they (EU) go again.
The Times reports that Janusz Lewandowski, the Polish EU budget commissioner will today present his proposals to reform the EU budget, 40% of which is gobbled up by Europe's farmers.
He is expected to suggest new taxes to fund the EU and its ever growing and expensive activities including salary increases and the translation of all EU documents from any of the 23 or so languages involved into any of the others. These taxes will include new ones on carbon emissions and air transport. Aviation, far from being a sacred cow to be looked after has become everyone's cow to be milked to exhaustion. While aircraft and engine manufacturers and airline managements have driven for ever more efficient products and hugely expanded their markets to the benefit of the world's electorates, politicians continue to snatch the benefits from under their noses to fill gaps in their often grossly mismanaged national coffers.The airlines, fearful of noisy and fashionable environmental lobbies have so far been very muted, even hand-wringingly cooperative in their responses. It is time they woke up to the dangers to their growth and survival that these national highwayman acts pose. Already many governments are making far more profit from airlines than the companies themselves are.Indeed they make this profit even when the airlines are making losses.
Barricades folks? And, oh yes, anyone for sorting out the gross overspend costs of the EU administration rather than just pouring ever more money into it so that it doesn't have to face its own realities?
He is expected to suggest new taxes to fund the EU and its ever growing and expensive activities including salary increases and the translation of all EU documents from any of the 23 or so languages involved into any of the others. These taxes will include new ones on carbon emissions and air transport. Aviation, far from being a sacred cow to be looked after has become everyone's cow to be milked to exhaustion. While aircraft and engine manufacturers and airline managements have driven for ever more efficient products and hugely expanded their markets to the benefit of the world's electorates, politicians continue to snatch the benefits from under their noses to fill gaps in their often grossly mismanaged national coffers.The airlines, fearful of noisy and fashionable environmental lobbies have so far been very muted, even hand-wringingly cooperative in their responses. It is time they woke up to the dangers to their growth and survival that these national highwayman acts pose. Already many governments are making far more profit from airlines than the companies themselves are.Indeed they make this profit even when the airlines are making losses.
Barricades folks? And, oh yes, anyone for sorting out the gross overspend costs of the EU administration rather than just pouring ever more money into it so that it doesn't have to face its own realities?
Sunday, 17 October 2010
Etihad Plans,- The "I" Word.
Today's Sunday Times(17/10/10)carries an interview by Karen Robinson with James Hogan,CEO of Etihad.
Mr Hogan says much what one would expect and starts off well enough with the simple statement "We are right at the crossroads of the world" So far so good. That is exactly where the Gulf is and a glance at the departure boards of Dubai, Abu Dhabi or Doha,- particularly Dubai,- airports at any time of their 24 hour days will confirm that they are making good use of it and must be causing furrowed brows in airline board rooms especially in Asia, Africa and Europe. An hour or two spent airside watching the flows of passengers and who they are, (everybody from everywhere) will reaffirm the fact and provide much food for thought.All the flows and cross-flows seem to work.It's most impressive.
The interview then continues well enough with a few more "our"s and "we"s until about the half way point when these are replaced by "my" and "I". A small thing maybe, but if this is how the interview went,then dangerous. Always "we" and "our", Mr Hogan or "they" might get a bit upset.............
Mr Hogan says much what one would expect and starts off well enough with the simple statement "We are right at the crossroads of the world" So far so good. That is exactly where the Gulf is and a glance at the departure boards of Dubai, Abu Dhabi or Doha,- particularly Dubai,- airports at any time of their 24 hour days will confirm that they are making good use of it and must be causing furrowed brows in airline board rooms especially in Asia, Africa and Europe. An hour or two spent airside watching the flows of passengers and who they are, (everybody from everywhere) will reaffirm the fact and provide much food for thought.All the flows and cross-flows seem to work.It's most impressive.
The interview then continues well enough with a few more "our"s and "we"s until about the half way point when these are replaced by "my" and "I". A small thing maybe, but if this is how the interview went,then dangerous. Always "we" and "our", Mr Hogan or "they" might get a bit upset.............
Monday, 11 October 2010
International Airline Group,-Willing brides?
Willie Walsh of BA recently announced his vision of expanding International Airlines Group ,which will be the holding company of the merged BA and Iberia, to include up to maybe ten additional airlines. Amongst the specified possibles were the strong and independent minded Cathay Pacific and Qantas.Both are used to close control of their own geographical territories,tactics, strategies and ultimate destinies. It seems out of character and therefore unlikely that either would be happy to surrender this freedom of action and control of all they see in return for an uncertain slice of a bigger cake and for seats at the Board table of a distant Madrid based conglomerate. They are also very selective about the company they keep and some of the other possible members mentioned by Walsh would have little attraction for them. Why,-in addition to this loss of control,- marry into hassle,potential dilution of profits to support weaker members, and Europe style labour laws? Walsh could well be disappointed on this one.
Tuesday, 28 September 2010
Not so Global Brand?
Last Sunday's papers carried an eyecatching full page ad announcing a tie-up between the rapidly growing Etihad and the three Australasia Virgin-related airlines,Virgin Blue, Virgin Pacific and V Australia. It showed graphically the extended reach into Australia and the western Pacific that the arrangement gives Etihad. A clear and useful message, but wait a moment, how does this read with Virgin Atlantic who operate a daily London-Sydney flight in direct competition with Etihad? Wouldn't one have expected strong promotion of all four Virgin branded airlines flying in formation rather than the three Australasian brands standing with their arms around a very effective and fast growing competitor?
On the subject of new generation Australasian airlines, a recent observation of Virgin Blue cabin crew pausing at an airside coffee stall en route to their first flights of the day was illuminating and cheering. Bright young people, pleased to see each other. Lots of chat and cheerful expressions. They were out to have a good day which meant a good day for the customers too. Not a mutter about " Managment, rosters, "imposition" and the like. They will fit well with the high standards of on board service provided by the Gulf airlines.Together they have an attractive and powerful customer proposition.Others beware!
On the subject of new generation Australasian airlines, a recent observation of Virgin Blue cabin crew pausing at an airside coffee stall en route to their first flights of the day was illuminating and cheering. Bright young people, pleased to see each other. Lots of chat and cheerful expressions. They were out to have a good day which meant a good day for the customers too. Not a mutter about " Managment, rosters, "imposition" and the like. They will fit well with the high standards of on board service provided by the Gulf airlines.Together they have an attractive and powerful customer proposition.Others beware!
Sunday, 26 September 2010
Spanish Omelette
Press Reports last week carried the news:"Iberia agreed not to block the merger with British Airways after reviewing BA's pension recovery plan".
How good of them.Very considerate.Surely they can hardly wait for the two companies to be wrapped into one Spanish omlette, the 60/40 holding company?
Amazingly ever since the merger was first mooted there has hardly been a bleep of a query, let alone a challenge from "analysts", BA's shareholders or anywhere else. Many have fallen over themselves to praise its supposed merits and not an eyebrow has been raised. The line has been that this is a "must do" as it opens up wonderful opportunities for BA without which the company will be lost for ever.
Why? Why? Why?
Let's examine the entrails more closely.
Until the 1990s, BA had the world's most extensive international network bar none. Its range of destinations and frequencies made it "The World's Favourite Airline" in terms of passengers carried across international borders, even though its service levels and style were hardly ever "favourite" particularly from the day Malaysia-Singapore Airlines started flying to London in the late 1960s.Bit by bit this network dominance has been imitated and eroded by the growth of codeshares (one of the greatest customer cons of all time but we will come back to that another day), frequent flyer programmes and more recently alliances, all things which the airline should have strenuously fought against from the outset.
There have been possible mergers which would have made good sense for BA, notably the twice aborted one with KLM, its most natural partner. KLM fitted in nearly every way, culturally,geographically and networkwise. Amsterdam and London are near neighbours, just an hour apart.Flowing transfer business between pleasant easy-to use-Schipol and BA's excellent Heathrow Terminal 5 is simple. Just look at a map.
Seemingly thanks to a breakdown in the chemistry between BA's Chairman Lord King and then CEO Sir Colin Marshall and the KLM leadership who saw them as arrogant ,KLM eventually went off with Air France. Lufthansa, the other big hitter in Europe, is far too independent minded and has ploughed its own furrow in expanding through aquisitions, not mergers.
Iberia, with its main base Madrid in the south west corner of Europe sits two hours from Heathrow and away from the shortest routes to anywhere apart from Europe to South America and southern Europe and parts of Africa to North America.Flowing business from the UK and central/northern Europe to other places in the world via Madrid means extra time spent en route while competitors flying nonstop will be well on their way home by the time the BA/IB option is back in the air again from Madrid. Why, other than a lower price, would anyone choose the indirect option? Talk of great new network opportunities therefore looks over optimistic. What is Iberia's network? Very good to Spanish speaking and USA orientated South America but BA covers the main cities nonstop from London anyway. A bit to North America and a lot all over Europe from Spain. South America is interesting but is unlikely to be big in terms of BA's network needs in the next ten years.Why would BA be interested in a share of Iberia's European routes? Do they make a lot of money? Unlikely as they are up against shoals of low cost and charter carriers. Why put BA's much more profitable long haul routes into a revenue pool in exchange for a share of that and primarily Iberia's business to South America?
What then does Iberia bring to the party in efficiency, costs,innovation, product or service style? Something new and dynamic that BA desparately needs or is it just a distraction? Iberia is a legacy carrier, unionised,not low cost, not known for outstanding service and has a limited international network. Would the merger bring most Spanish business heading to other destinations to travel via Heathrow,- and is there a lot of it? In relative terms it looks unlikely and how much is there to play for in total? Silence.
There is cheerful talk of huge management,overheads and joint purchasing savings from the merger.Several hundred million a year even after BA's own slimming purges. Well exactly where? Already both carriers will have been big enough to get the best purchasing deals available and the other savings are notoriously difficult to achieve through mergers .They should not be taken as guaranteed.
Very simplistically, just take BA's financial results and combine them with Iberia's. Look at the revenue of both companies,deduct the costs, add in some inefficiencies and cost increases of a 2 base operation, throw in some identifiabhle savings and then split the result 60/40. What does the current BA gain as a return per anything from the new joint holding company? How does this compare with what BA could achieve if instead of a merger it spent its management resources,time, energy and money sorting itself out, making its products and style second to none and resuming profitable growth,- while retaining control of its own destiny?
How good of them.Very considerate.Surely they can hardly wait for the two companies to be wrapped into one Spanish omlette, the 60/40 holding company?
Amazingly ever since the merger was first mooted there has hardly been a bleep of a query, let alone a challenge from "analysts", BA's shareholders or anywhere else. Many have fallen over themselves to praise its supposed merits and not an eyebrow has been raised. The line has been that this is a "must do" as it opens up wonderful opportunities for BA without which the company will be lost for ever.
Why? Why? Why?
Let's examine the entrails more closely.
Until the 1990s, BA had the world's most extensive international network bar none. Its range of destinations and frequencies made it "The World's Favourite Airline" in terms of passengers carried across international borders, even though its service levels and style were hardly ever "favourite" particularly from the day Malaysia-Singapore Airlines started flying to London in the late 1960s.Bit by bit this network dominance has been imitated and eroded by the growth of codeshares (one of the greatest customer cons of all time but we will come back to that another day), frequent flyer programmes and more recently alliances, all things which the airline should have strenuously fought against from the outset.
There have been possible mergers which would have made good sense for BA, notably the twice aborted one with KLM, its most natural partner. KLM fitted in nearly every way, culturally,geographically and networkwise. Amsterdam and London are near neighbours, just an hour apart.Flowing transfer business between pleasant easy-to use-Schipol and BA's excellent Heathrow Terminal 5 is simple. Just look at a map.
Seemingly thanks to a breakdown in the chemistry between BA's Chairman Lord King and then CEO Sir Colin Marshall and the KLM leadership who saw them as arrogant ,KLM eventually went off with Air France. Lufthansa, the other big hitter in Europe, is far too independent minded and has ploughed its own furrow in expanding through aquisitions, not mergers.
Iberia, with its main base Madrid in the south west corner of Europe sits two hours from Heathrow and away from the shortest routes to anywhere apart from Europe to South America and southern Europe and parts of Africa to North America.Flowing business from the UK and central/northern Europe to other places in the world via Madrid means extra time spent en route while competitors flying nonstop will be well on their way home by the time the BA/IB option is back in the air again from Madrid. Why, other than a lower price, would anyone choose the indirect option? Talk of great new network opportunities therefore looks over optimistic. What is Iberia's network? Very good to Spanish speaking and USA orientated South America but BA covers the main cities nonstop from London anyway. A bit to North America and a lot all over Europe from Spain. South America is interesting but is unlikely to be big in terms of BA's network needs in the next ten years.Why would BA be interested in a share of Iberia's European routes? Do they make a lot of money? Unlikely as they are up against shoals of low cost and charter carriers. Why put BA's much more profitable long haul routes into a revenue pool in exchange for a share of that and primarily Iberia's business to South America?
What then does Iberia bring to the party in efficiency, costs,innovation, product or service style? Something new and dynamic that BA desparately needs or is it just a distraction? Iberia is a legacy carrier, unionised,not low cost, not known for outstanding service and has a limited international network. Would the merger bring most Spanish business heading to other destinations to travel via Heathrow,- and is there a lot of it? In relative terms it looks unlikely and how much is there to play for in total? Silence.
There is cheerful talk of huge management,overheads and joint purchasing savings from the merger.Several hundred million a year even after BA's own slimming purges. Well exactly where? Already both carriers will have been big enough to get the best purchasing deals available and the other savings are notoriously difficult to achieve through mergers .They should not be taken as guaranteed.
Very simplistically, just take BA's financial results and combine them with Iberia's. Look at the revenue of both companies,deduct the costs, add in some inefficiencies and cost increases of a 2 base operation, throw in some identifiabhle savings and then split the result 60/40. What does the current BA gain as a return per anything from the new joint holding company? How does this compare with what BA could achieve if instead of a merger it spent its management resources,time, energy and money sorting itself out, making its products and style second to none and resuming profitable growth,- while retaining control of its own destiny?
Wednesday, 18 August 2010
The Beginning............
This is the beginning of a new blog aimed at all those interested in the past,present and future of transport by land,sea or air. It is about current realities and future vision in each of those timescales.While probably majoring on aviation I see all modes as having relevance to each other. Air'N There will question conventional wisdoms, and "models" and look behind some of the apparent realities. Frustration will be inevitable when nonsenses lie across the track, road,river,or airway and as the world is full of these, past,present and future there should be plenty to talk about. The aim will always be enlightenment, explanation and sometimes to express irritation or exasperation based on an objective look at what is and could be happening or have happened.
The twin questions, "Why?" and "Why not?" will always be close to the surface. Most people want to see better things in short timescales.The tone will reflect this. No offence is intended to anyone by anything.
For those with wider general UK and international political, business and other interests there is a parallel blog "Twiga View".
The twin questions, "Why?" and "Why not?" will always be close to the surface. Most people want to see better things in short timescales.The tone will reflect this. No offence is intended to anyone by anything.
For those with wider general UK and international political, business and other interests there is a parallel blog "Twiga View".
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