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.

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.

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?

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.............

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.