Sunday, 13 February 2011

BA/Iberia merger into IAG- The first days........

The early days of a merger are always fascinating as the previous tribes adjust,-or fail to adjust,-to their new circumstances and the fact that those not in the overall new group are, despite earlier outward protestations to the contrary, no longer in true control of their own destiny. The penny or peseta can take a while to drop that from here on the brands will have to have their plans approved by the group and that they are competing between themselves for money and resources. The media take a while to catch up too. There are still statements that IAG is owned 55% by BA and 45%by Iberia.Not so. These two entities, now brands, own nothing. The moment trading in IAG shares began the SHAREHOLDERS of BA,not BA itself, owned 55 % of IAG and similarly those who had previously held Iberia shares owned 45%. From that second onwards and trading was under way in London and Madrid, it was irrelevant how the shares' previous owners had come by them. BA and Iberia as separate standalone financial entities with shareholders were dead and gone and had in themselves no stake in IAG.

Two weeks into the marriage is far too early to make any judgments but we can make some pretty fair judgments of what is likely to have been going on in the respective head offices of the new IAG itself at Heathrow and the two brands' lairs, just two miles away in the case of BA and 1,000 miles away in the case of Iberia. Of the two, the Iberia contingent is probably the happier as they have the benefit of time and distance. BA people are far too close and therefore more likely to experience "help from Head Office" and invitations to "come along over".

On day 1 the two new top managment teams in both the BA and Iberia brands will have come in early, eased themselves into their seats with a feelings of pride or relief, and hopefully all ready to set off at a brisk trot. They now had their hands on the controls ,-or so they thought. Real life in mergers is seldom like that though.

Over at the HQ of the merged group those selected from both companies to lead the whole entity will also have slipped into their seats with a sense of pride and probably exhilaration. From having been at the top of just one company they are now at the top of another, pretty much twice the size. This is heady stuff. Having bagged their desks, put out their array of pens,parked their laptops, found where the secretaries, loos, coffee machines etc are, they will have found themselves wondering quite what to do. The phones won't have been ringing,-at least not from their former places of work,-the filing cabinets and new laptops' memories will be empty. Where to start then? Well, of course the answer is easy,- start hassling the two supposedly standalone brands for reports, statistics, plans, budgets, business cases explanations and the rest of corporate detrius. So stand by at (BA) Waterside and (IB) Madrid to fight your corners and use the words "back off" or similar, although even those have something of the Canute about them. At least those in Madrid have a slightly better chance,- " Allo? Very bad line this. Sorry. Click". Good luck to all concerned wherever you are.

Hotels- "A bath for the night ?"

A few years go in Simonstown, South Africa we came across as new look room in a B and B. Spacious and comfortable, it was truly en suite. The toilet stood fair and rounded in the middle of the room not far from the bed. It was truly the centrepiece and it's occupant could chat to anyone present. All rather Louis XIV.
We dismissed this as some sort of quirky abberation and moved to another with a more conventional layout, thinking we were never likely to encounter similar again.

We were wrong. More and more writeups in travel magazines talk admiringly of luxurious bath and ablution arrangements of all sorts situated right there in the room along with what used to be the main reason for staying in a hotel- the bed. Some are lightly and certainly not sound proof curtained off. Some are just open plan. A writeup of a recently opened Swire owned boutique hotel in the UK says that the entrance is through the bathing area. Even in Royal Windsor a few weeks ago in a pleasant hotel overlooking the castle walls, we were proudly shown our room complete with all facilities open plan albeit with some partial glass screening. The throne itself in its glass cubicle was visible from the whole room bar a few blind spots where mirrors were thoughtfully provided to ensure that nothing was missed.

Can we expect hotels to now start offering the old airline option in the days of central IFE screens,- "Viewing or non viewing?".For those of us who like to select
a hotel for the comfort of the sleeping and lounging about arrangements the notion that some choose the best place for a public bath and pee is a little bit strange . Personally we won't be booking on the basis of bath nights. We prefer hotels which stick with bed nights. Are we alone?

Monday, 7 February 2011

Africa Warms Up.

Several recent items of good news from Africa continue the momentum in the airline business on the eastern side of the continent.

Nairobi sees a boost with Qatar Airways A320 services to double daily, giving a choice of afternoon and evening departures to Doha and onwards of course to the rest of the Qatar network. Will Emirates respond by putting in its long mooted third daily by inserting a morning departure? The city also sees SAA moving to an A340 instead of an A320 on some of its 10x weekly services to Johannesburg.

Further south, from 1st May SAA moves to a daily nonstop A340-600 from Johannesburg to New York, omitting the current en route Dakar call.This will make the SAA offering more attractive from all East and Central African points from four hours distant Nairobi southwards and challenge the North American offerings of the European and Gulf carriers. Currently, by virtue of its choice of USA destinations, BA leads the pack with its best ever range of connections over London Heathrow Terminal 5, but to New York itself it's anybody's game with choice of schedule, overall time,the convenience and attractiveness of the connecting terminals,price,and service content and style all in play. Already Johannesburg has the edge over the Gulf carriers to Australasia and South America and clearly SAA seeks to build on this.It needs to do something about its on board service though as this falls well below Gulf standards.

A little further west, as John Williams points out, we see further evidence of SAA's declared policy to focus on growth within the high volume/high yield markets in Africa. The airline last month announced the signing of an MOU with the Central Africa Eco Community for the creation of Air Cemac, a regional carrier which will presumably cover the francophone Central African states including Congo Brazzaville, Central African Republic and Gabon. It looks like the same project as announced earlier by the Star African grouping of SAA, Ethiopian and Egyptair for the 2011 launch of a new West/Central African carrier.

All developments in Africa which see more seats, city pairs, frequencies or improved airport facilities and capacity(Nairobi needs to speed this up)are welcome and exciting. Unfortunately, although the above Star venture in Central Africa nudges things a little further west,it doesn't penetrate West Africa as such. The airline business on "the west coast" remains largely a chaotic shambles, albeit with the occasional patch of optimism. The Virgin Nigeria project looked as if it could ride to the rescue but without the massive funds required to set up a Kenya Airways or Ethiopian lookalike from scratch and with an over cautious approach to the necessary rapid development it did not and Virgin pulled out. Nigeria, with its huge oil revenues, should be a first rate hub. It is not. Accra is well positioned to take advantage of this but doesn't really. Abijan is the furthest point west which could fulfil a real hub role but political turmoil has prevented this. In all three places, the airports although modernised in parts are basically decades old.Nigeria adds to its own problems with visa requirements for passengers making international connections so straight away puts itself out of that business. Asky with its simple figure of eight operation with two aircraft provides some useful local connections via Lome, and intruders from the east, Ethiopian and Kenya Airways provide some very useful and good quality city pair connections within the region.These are a drop in the ocean though. There is huge latent demand for air travel to/from and within West Africa but it lags far behind the eastern side of the continent.