The Times today reports that a study for the European Commission on airport capacity concludes that Europe's busiest airports could handle 28 million more passengers per year without additional runways or expansion.More efficient use of slots is said to be part of the solution especially at Heathrow which plans no runway expansion although major work on rebuilding Terminal 2 is in progress and more could follow.
No worries though. The EU Transport Commissioner, Siim Kallas, is said to intend legislation later this year to tackle the issue. Problem solved,- at a stroke.
Tuesday, 31 May 2011
Wednesday, 25 May 2011
Volcanic ash - A legal absurdity. God knows.
Once upon a time there were three legal guidelines aimed to lead the way to simple decisions on questions of legal liability.
The first was that sometimes accidents for which nobody is to blame really do happen.
The second was that people should be free of liability for anything over which they had absolutely no control.
The third was that liability should not exist or at most be low if the act or omission complained of formed only a reasonable risk of which the sufferer was aware and willingly accepted by virtue of taking part in the activity concerned.
As time went on increasing numbers of the human race grew to feel that whatever happened to them someone else was responsible. It wasn't a big step from that to also believe that the someone should pay. Initially this was sidestepped and coped with by introducing the notion that the blameless event or accident was an Act of God. This was unfair. To many the appeal of God is that he (or she? why not?) is meant to be benign although there are those of course who prefer to portray him/her as a purveyor of fire and brimstone as a better way of getting folk to toe the line and behave themselves. Did anyone ask God whether he/she was OK with being the villain of last resort?
As it turns out God has not proved to be good at turning up in court and shelling out cash to the outstretched palms of "no win, no fee" personal liability lawyers and other righteous upholders of the "Where there's blame" - and there always must be,- "there's a claim " culture. One can imagine him/her, upon receiving yet another verdict of "Act of God" and another invitation to cough up, rolling their eyes and muttering something sounding like " Clucking Bell,-whatever next. What part of Love thy Neighbour don't they get?".
As result of continued non appearances by the declared guilty party the earthly,- though one wonders,-authorities of the UK and EU have decided that when volcanos periodically spew out ash,- and fire and brimstone even,- thereby stranding booked would-be travellers, it is the airlines who are to blame. No arguing. Without a doubt to blame and they should therefore pay up not just by refunding fares which is reasonable enough ,but to the extent of keeping those affected housed, watered and fed until such time as they can proceed on their way. In extreme cases this could be quite a while and possibly caused or extended by the same legislating governments' failure to really understand what they are dealing with and resorting to their innate default mode of covering their potentially exposed rear ends.
It was obvious from last year's airline industry losses of nearly £2 billion during and as result of UK and EU government's lengthy closure of airspace while the Icelandic volcano did its thing that something needed to be changed. It hasn't been. Under EU law airlines cancelling or delaying flights beyond 5 hours continue to be liable to to stranded passengers remains. This liability includes:
-Provision of food and accomodation until such time as they can be carried to booked destination.
-Reimbursement of reasonable costs if the passengers have found their own hotels and/or alternative transport home.
The airlines neither have anything to do with volcanos deciding to erupt nor governments' decisions on whether or not they can operate. This year the governments have tried to fudge the last bit by theoretically leaving it up to the airlines as to whether they decide to operate or not in the new "red" or "blue" zones. This cleverly transfers liability to them for the decision of whether or not to fly. Clever one, but it still totally ignores the fact that disruption and costs to people caused by what were formerly acts of the Almighty should not, as result of said party not showing and stumping up in court, be transferred to a totally innocent alternative,-the airlines. It is absurd that they should be liable. There are plenty of insurance companies around to do what insurers are meant to do,- take on the risk in return for the payment of a commensurate fee by the transport user. "Come on people", one can hear from above "Just do something for yourselves for once." Almost incredibly he/she and Michael O'Leary are singing from the same hymnsheet here. That really is an act of God.
The first was that sometimes accidents for which nobody is to blame really do happen.
The second was that people should be free of liability for anything over which they had absolutely no control.
The third was that liability should not exist or at most be low if the act or omission complained of formed only a reasonable risk of which the sufferer was aware and willingly accepted by virtue of taking part in the activity concerned.
As time went on increasing numbers of the human race grew to feel that whatever happened to them someone else was responsible. It wasn't a big step from that to also believe that the someone should pay. Initially this was sidestepped and coped with by introducing the notion that the blameless event or accident was an Act of God. This was unfair. To many the appeal of God is that he (or she? why not?) is meant to be benign although there are those of course who prefer to portray him/her as a purveyor of fire and brimstone as a better way of getting folk to toe the line and behave themselves. Did anyone ask God whether he/she was OK with being the villain of last resort?
As it turns out God has not proved to be good at turning up in court and shelling out cash to the outstretched palms of "no win, no fee" personal liability lawyers and other righteous upholders of the "Where there's blame" - and there always must be,- "there's a claim " culture. One can imagine him/her, upon receiving yet another verdict of "Act of God" and another invitation to cough up, rolling their eyes and muttering something sounding like " Clucking Bell,-whatever next. What part of Love thy Neighbour don't they get?".
As result of continued non appearances by the declared guilty party the earthly,- though one wonders,-authorities of the UK and EU have decided that when volcanos periodically spew out ash,- and fire and brimstone even,- thereby stranding booked would-be travellers, it is the airlines who are to blame. No arguing. Without a doubt to blame and they should therefore pay up not just by refunding fares which is reasonable enough ,but to the extent of keeping those affected housed, watered and fed until such time as they can proceed on their way. In extreme cases this could be quite a while and possibly caused or extended by the same legislating governments' failure to really understand what they are dealing with and resorting to their innate default mode of covering their potentially exposed rear ends.
It was obvious from last year's airline industry losses of nearly £2 billion during and as result of UK and EU government's lengthy closure of airspace while the Icelandic volcano did its thing that something needed to be changed. It hasn't been. Under EU law airlines cancelling or delaying flights beyond 5 hours continue to be liable to to stranded passengers remains. This liability includes:
-Provision of food and accomodation until such time as they can be carried to booked destination.
-Reimbursement of reasonable costs if the passengers have found their own hotels and/or alternative transport home.
The airlines neither have anything to do with volcanos deciding to erupt nor governments' decisions on whether or not they can operate. This year the governments have tried to fudge the last bit by theoretically leaving it up to the airlines as to whether they decide to operate or not in the new "red" or "blue" zones. This cleverly transfers liability to them for the decision of whether or not to fly. Clever one, but it still totally ignores the fact that disruption and costs to people caused by what were formerly acts of the Almighty should not, as result of said party not showing and stumping up in court, be transferred to a totally innocent alternative,-the airlines. It is absurd that they should be liable. There are plenty of insurance companies around to do what insurers are meant to do,- take on the risk in return for the payment of a commensurate fee by the transport user. "Come on people", one can hear from above "Just do something for yourselves for once." Almost incredibly he/she and Michael O'Leary are singing from the same hymnsheet here. That really is an act of God.
Tuesday, 24 May 2011
Australian Tiger feels (another) squeeze.
Australia's Singapore-owned Tiger is feeling the squeeze,-and not only from the aeronautical authorities as previously noted.
The Singapore parent has now announced that following the loss of S$9 million in the year to March this subsidiary will not grow capacity this year and two of its ten A320s will return north where they can reinforce the group's South East Asia operations.
This will place Tiger Australia in a very difficult position for a small low cost/low fare operator up against three big domestic competitors. Jetstar, Virgin Australia and Qantas all offer a wider range of routes and much higher frequencies between almost any city pairs Tiger might be interested in. With much larger fleets they can also respond much better to any schedule disruptions or unserviceabilities whereas Tiger is much more easily forced into the sort of cancellations or long delays which hit its market reputation and competitive position. In a static state that leaves it with pretty much the only option being to cut fares/yields further to cling on to market share and keep its paws in the door. From there the obvious risk is of a vicious spiral. The freeze on capacity for the coming year can't be exciting for Tiger since to claw back that S$ 9 million it has both to cut costs further and to get yields and passenger numbers up. Not easy when you are a small fish without the economies of scale and reserve capacity available to the three big ones.
Any operator in this position must see two options. One is to invest a lot more, add a large number of additional aircraft and up the frequencies to give the big boys a proper run for their money. The outlay would be huge. The other is to conclude that particularly in a constrained market the investment and risk are just too great and either get rid of this part of the business or move it elsewhere. Tiger's Australian managment have a tough job on their hands to get rid of a furrowing of brows in Singapore.
Footnote: Qantas has much for which to thank the low cost carriers. Apart from revitalising and stimulating the market, especially domestics, they have given the very substantially unionised and traditionally organised legacy airline a cover to enable it to carry out substantial changes and outsourcing as well as to enable it to set up its own lower cost airline ,Jetstar. All this has given it a new life on routes which would be uneconomic under its previous labour agreements and formulae.
The Singapore parent has now announced that following the loss of S$9 million in the year to March this subsidiary will not grow capacity this year and two of its ten A320s will return north where they can reinforce the group's South East Asia operations.
This will place Tiger Australia in a very difficult position for a small low cost/low fare operator up against three big domestic competitors. Jetstar, Virgin Australia and Qantas all offer a wider range of routes and much higher frequencies between almost any city pairs Tiger might be interested in. With much larger fleets they can also respond much better to any schedule disruptions or unserviceabilities whereas Tiger is much more easily forced into the sort of cancellations or long delays which hit its market reputation and competitive position. In a static state that leaves it with pretty much the only option being to cut fares/yields further to cling on to market share and keep its paws in the door. From there the obvious risk is of a vicious spiral. The freeze on capacity for the coming year can't be exciting for Tiger since to claw back that S$ 9 million it has both to cut costs further and to get yields and passenger numbers up. Not easy when you are a small fish without the economies of scale and reserve capacity available to the three big ones.
Any operator in this position must see two options. One is to invest a lot more, add a large number of additional aircraft and up the frequencies to give the big boys a proper run for their money. The outlay would be huge. The other is to conclude that particularly in a constrained market the investment and risk are just too great and either get rid of this part of the business or move it elsewhere. Tiger's Australian managment have a tough job on their hands to get rid of a furrowing of brows in Singapore.
Footnote: Qantas has much for which to thank the low cost carriers. Apart from revitalising and stimulating the market, especially domestics, they have given the very substantially unionised and traditionally organised legacy airline a cover to enable it to carry out substantial changes and outsourcing as well as to enable it to set up its own lower cost airline ,Jetstar. All this has given it a new life on routes which would be uneconomic under its previous labour agreements and formulae.
Thursday, 19 May 2011
BA -"Peace in our Time?". Where now?
The settlement of the long running dispute between BA and its cabin crew BASSA,a sub union of Unite, was welcomed by many last week. What really was the outcome and who came off best? After 18 or more months of this dispute BA pretty much had the union on the ropes with nowhere to go other than to call another strike which would probably have been largely ineffective thanks to a combination of its non unionised New or Mixed Fleet of recent recruits, strike breakers and volunteers from across the airline. The origins of the dispute were many and went far back into the history and culture of the airline's relationships with its cabin crew and BASSA rather than being solely about the issues of late 2009.
At first sight BA has come off best from the settlement and indeed it has achieved its immediate objectives of reducing the number of crew on most flights and setting up an entirely new group of cabin staff working to much more market related terms and conditions. Over time, though not quickly enough, this group will become the majority and thereby the airline's cabin crew costs will move closer to those of the short haul low cost carriers and the Asian and Gulf long haul ones.So far so good.
Unite though, and its new leader Len McClusky, have been in the business for a long time and unsurprisingly took advantage of the company's preoccupation with its short term objectives to obtain very significant strategic gains for the themselves. The cumbersome and expensive terms and conditions, restrictive practices, layover agreements,and many of the plethora of allowances for things ranging from long sectors to going to destinations they don't like remain in place. For those who want to join a union, the hitherto non unionised New Fleet now becomes the domain of Unite. This gives them more members, more subscriptions, improved finances and greater dominance at Heathrow, probably the last big single site of unionised labour in the UK. BA has not therefore moved into the world of simple, straightforward labour agreements in which the assumption is that having signed on as employees , people come to work ready to be flexible, do whatever it takes to deliver the best product with whatever resources turn out to be available. In other words, old fashioned prescriptive agreements based more on the practice of heavy industry than a fleet footed worldwide transportation and service business stay in place. Sweeping that concept away should have been a top priority and it is a major opportunity lost.
McClusky has also succeeded in binding BA's new Chief Executive, Keith Williams into a three monthly meeting, something a CEO is unwise to do as it disempowers managers lower down the organisation and risks him or her becoming embroiled in all sorts of distractions from their own strategic role. It would not be surprising if, with the genie out of the bottle, leaders of BA's other unions sought the same top level access.
Putting the industrial issues aside, where does BA go now? In the last 15 or so years its overwheming focus on the transatlantic market and its unwillingness to expand its long haul fleet so as not to increase its debt in the form of forward leasing obligations, has meant that its has shrunk its global network to much of Asia including Japan and the Far East,and Australasia and at best marked time in Africa and the Middle East. Faced with rising costs and yields constrained by the rapid expansion of new competition in the Middle East and Asia it has thrifted its costs including some of the very visible ones such as catering and customer contact particulary overseas and at airports. It seems to have retreated into its HQ at Waterside near Heathrow and mentally and physically pulled up the drawbridge on non IT based communication with its customers, suppliers and many of its staff. Inter departmental and external communication began to decline at least 13 years ago when the rather chaotic but very clearly aviation industry Hatton Cross Headquarters site which catered for almost everybody and where all the various components of the business intermingled was abandoned in favour of the near but far and difficult to get to or park at brown field development at Waterside. Hatton Cross' easy Underground and public transport access for anyone who wanted to see BA people was also lost. The move meant that the constituent parts of the airline became more scattered, some seeing very little of the others. The drawbridge having gone up ,everyone paid a price for it even if they didnt realise it at the time. Since then there has further withdrawal to behind electonic barricades and to many the airline is not easily accessible. Even its websites, which tell a lot about cheap fares and the like, say little about the airline or even who its Directors and senior managers are or how to contact them. "Policies" cover almost every interaction with customers and compliance with them rather than customer friendliness has become the watchword. Staff are judged on how they enforce compliance rather than how happy they make the customers. Flexibility has largely gone. Late for your flight? Your low cost ticket has gone. As long as you do show up at the airport within 3 hours Easyjet will put you on the next one if you have been held up en route. Who would you rather do business with if you had encountered that sort of problem? BA therefore needs to seriously rethink where it is, what they want its previously aspirational brand to represent and the values that go with it. At the moment it is rather wandering in the wilderness.
There are though some optimistic signs. With the cabin crew dispute put to bed for the time being and some thinking being done with added outside help about underlying problems and Keith Williams , the soft man to Willie Walsh's hard man, in place as CEO there an opportunity for a renaissance. First of all there will soon be a new iteration of a five year business plan, which will hopefully give BA's people a new sense of direction and moving ahead. Managing what seems to be a static or declining business is miserable for anyone so given some imagination and a few bold strokes there is a real opportunity here. Secondly ,a relaunch of the brand is planned for the autumn. This is a great opportunity to re-energise and remotivate people at all levels across the airline, as well as to reinvogorate customer loyalty. A very good development has been the appointment of a man from the hotel and hospitality industry as head of customer experience (a ghastly title but never mind). Major hotel groups have achieved service delivery and operational wonders almost everywhere, sometimes against seemingly impossible odds. If the BA brand can gain some of the same sort of magic and become consistently excellent as a service as well as a transportation business it could both put in and extract much more value. It also needs to excel and be global reaching in its own right and not be over reliant on the One World alliance to fill in its gaps.
Foremost amongst needs of a brand relaunch will be to replace its mechanistic, systems driven, hard nosed tone of voice with something far more cuddly. FIFO just doesn't work. The brand has to be the customer's proactive friend driven by an ethos of going out of its way to value, embrace and look after them, rather than being a frowning obstacle in the way of customers getting where, what and how they want. For a long time one of BA's predecessor airlines had the simple all encompassing tagline-"All over the world we take good care of you". Not a bad re-starting point in 2011 either.
At first sight BA has come off best from the settlement and indeed it has achieved its immediate objectives of reducing the number of crew on most flights and setting up an entirely new group of cabin staff working to much more market related terms and conditions. Over time, though not quickly enough, this group will become the majority and thereby the airline's cabin crew costs will move closer to those of the short haul low cost carriers and the Asian and Gulf long haul ones.So far so good.
Unite though, and its new leader Len McClusky, have been in the business for a long time and unsurprisingly took advantage of the company's preoccupation with its short term objectives to obtain very significant strategic gains for the themselves. The cumbersome and expensive terms and conditions, restrictive practices, layover agreements,and many of the plethora of allowances for things ranging from long sectors to going to destinations they don't like remain in place. For those who want to join a union, the hitherto non unionised New Fleet now becomes the domain of Unite. This gives them more members, more subscriptions, improved finances and greater dominance at Heathrow, probably the last big single site of unionised labour in the UK. BA has not therefore moved into the world of simple, straightforward labour agreements in which the assumption is that having signed on as employees , people come to work ready to be flexible, do whatever it takes to deliver the best product with whatever resources turn out to be available. In other words, old fashioned prescriptive agreements based more on the practice of heavy industry than a fleet footed worldwide transportation and service business stay in place. Sweeping that concept away should have been a top priority and it is a major opportunity lost.
McClusky has also succeeded in binding BA's new Chief Executive, Keith Williams into a three monthly meeting, something a CEO is unwise to do as it disempowers managers lower down the organisation and risks him or her becoming embroiled in all sorts of distractions from their own strategic role. It would not be surprising if, with the genie out of the bottle, leaders of BA's other unions sought the same top level access.
Putting the industrial issues aside, where does BA go now? In the last 15 or so years its overwheming focus on the transatlantic market and its unwillingness to expand its long haul fleet so as not to increase its debt in the form of forward leasing obligations, has meant that its has shrunk its global network to much of Asia including Japan and the Far East,and Australasia and at best marked time in Africa and the Middle East. Faced with rising costs and yields constrained by the rapid expansion of new competition in the Middle East and Asia it has thrifted its costs including some of the very visible ones such as catering and customer contact particulary overseas and at airports. It seems to have retreated into its HQ at Waterside near Heathrow and mentally and physically pulled up the drawbridge on non IT based communication with its customers, suppliers and many of its staff. Inter departmental and external communication began to decline at least 13 years ago when the rather chaotic but very clearly aviation industry Hatton Cross Headquarters site which catered for almost everybody and where all the various components of the business intermingled was abandoned in favour of the near but far and difficult to get to or park at brown field development at Waterside. Hatton Cross' easy Underground and public transport access for anyone who wanted to see BA people was also lost. The move meant that the constituent parts of the airline became more scattered, some seeing very little of the others. The drawbridge having gone up ,everyone paid a price for it even if they didnt realise it at the time. Since then there has further withdrawal to behind electonic barricades and to many the airline is not easily accessible. Even its websites, which tell a lot about cheap fares and the like, say little about the airline or even who its Directors and senior managers are or how to contact them. "Policies" cover almost every interaction with customers and compliance with them rather than customer friendliness has become the watchword. Staff are judged on how they enforce compliance rather than how happy they make the customers. Flexibility has largely gone. Late for your flight? Your low cost ticket has gone. As long as you do show up at the airport within 3 hours Easyjet will put you on the next one if you have been held up en route. Who would you rather do business with if you had encountered that sort of problem? BA therefore needs to seriously rethink where it is, what they want its previously aspirational brand to represent and the values that go with it. At the moment it is rather wandering in the wilderness.
There are though some optimistic signs. With the cabin crew dispute put to bed for the time being and some thinking being done with added outside help about underlying problems and Keith Williams , the soft man to Willie Walsh's hard man, in place as CEO there an opportunity for a renaissance. First of all there will soon be a new iteration of a five year business plan, which will hopefully give BA's people a new sense of direction and moving ahead. Managing what seems to be a static or declining business is miserable for anyone so given some imagination and a few bold strokes there is a real opportunity here. Secondly ,a relaunch of the brand is planned for the autumn. This is a great opportunity to re-energise and remotivate people at all levels across the airline, as well as to reinvogorate customer loyalty. A very good development has been the appointment of a man from the hotel and hospitality industry as head of customer experience (a ghastly title but never mind). Major hotel groups have achieved service delivery and operational wonders almost everywhere, sometimes against seemingly impossible odds. If the BA brand can gain some of the same sort of magic and become consistently excellent as a service as well as a transportation business it could both put in and extract much more value. It also needs to excel and be global reaching in its own right and not be over reliant on the One World alliance to fill in its gaps.
Foremost amongst needs of a brand relaunch will be to replace its mechanistic, systems driven, hard nosed tone of voice with something far more cuddly. FIFO just doesn't work. The brand has to be the customer's proactive friend driven by an ethos of going out of its way to value, embrace and look after them, rather than being a frowning obstacle in the way of customers getting where, what and how they want. For a long time one of BA's predecessor airlines had the simple all encompassing tagline-"All over the world we take good care of you". Not a bad re-starting point in 2011 either.
Tuesday, 17 May 2011
UK Railways- The Fines Culture.
While the State has successfully in effect sued itself for negligence over the Hatfield crash and now has to pay itself a £5 million fine thereby relieving itself of this amount for investment in additional safety measures, the Department for Transport,-DfT for short,-which too often sits as a micromanager upon the shoulders of the franchised rail operating companies,- seems bent on fining one of the best performing and most customer orientated of them, Chiltern Railways, for comparatively minor transgressions and delays in completing projects.
According to Today's Railways, the Department agrees that "the effects on passengers may be considered minor" Chiltern accepts that "..in 2009 there were four technical breaches of the franchise agreement;none of which had significant consequences for our passengers or incurred cost to the taxpayer" but points out that the four comprised late delivery of a small number of customer improvements. They go on to note that since these, the longest of which was 16 weeks, they have delivered £7.25 million of station and car park improvements and this month will be introducing four new 2 coach trains at a cost of £1.25 million per carriage (yes, these have become expensive).
To be proposing to remove £ 500,000 from the Chiltern pot for further improvements can only be seen as D(a)fT just as the court's fining Network Rail £5 million rather than insisting instead that they invest this amount in hitherto unannounced,- ie bonus,- safety or service improvements looks counterproductive and a wasted opportunity to at least achieve something positive other than "lessons learned" from the Hatfield fatalities. If Chiltern were a poor performer there might be some point in their fine, but they are not. They are probably the best, which is in no small part due to their uniquely long franchise which continues until nearly the end of 2021, another lesson which DfT seem unwilling to learn.Hopefully they will see sense before dipping their hands into Chiltern's pocket. Maybe they have a budget defecit problem to cover? Might not cutting a few micromanagment positions be a better bet?
According to Today's Railways, the Department agrees that "the effects on passengers may be considered minor" Chiltern accepts that "..in 2009 there were four technical breaches of the franchise agreement;none of which had significant consequences for our passengers or incurred cost to the taxpayer" but points out that the four comprised late delivery of a small number of customer improvements. They go on to note that since these, the longest of which was 16 weeks, they have delivered £7.25 million of station and car park improvements and this month will be introducing four new 2 coach trains at a cost of £1.25 million per carriage (yes, these have become expensive).
To be proposing to remove £ 500,000 from the Chiltern pot for further improvements can only be seen as D(a)fT just as the court's fining Network Rail £5 million rather than insisting instead that they invest this amount in hitherto unannounced,- ie bonus,- safety or service improvements looks counterproductive and a wasted opportunity to at least achieve something positive other than "lessons learned" from the Hatfield fatalities. If Chiltern were a poor performer there might be some point in their fine, but they are not. They are probably the best, which is in no small part due to their uniquely long franchise which continues until nearly the end of 2021, another lesson which DfT seem unwilling to learn.Hopefully they will see sense before dipping their hands into Chiltern's pocket. Maybe they have a budget defecit problem to cover? Might not cutting a few micromanagment positions be a better bet?
Sunday, 15 May 2011
African strategies and developments-Cameroon
Sadly it seems that Camair of Cameroon is not a follower of our hints on possible strategies for smaller airlines in Africa as outlined in the item on AFRAA posted on 19th April.
An article by Christopher Jator in the Cameroon Tribune on 5th May quotes Camair's CEO,Alex van Elk, lamenting that the overall load factor is just 30% whereas 66% is required for profitability. That means that a seriously daunting 70% of seats are being flown unoccupied,-or in other words pointlessly and worse, very expensively. Hopefully this state of affairs is nothing to do with the article's revelation that "there has been feedback of public excitement during flights".
It appears that the way forward is seen as being to expand regional flying from Douala with a third 737, this one a -500 to be leased from US based ACG, with new or additional services to Libreville,Lagos,Cotonou, Dakar, Brazzaville and Bangui (note the traditional pattern of links between French speaking West African countries generally hopping over the English speaking ones other than Lagos). This is certainly a better option than pushing ahead with more long haul but there must be a question as to whether they would do better with a lower capacity jet such as the EMB 170/190 series, rather than the thirstier smallest 737. Key to Camair's problems though is probably their 5 times weekly 767 service to Paris in competition with Air France's daily 777. The ability of a lightly loaded widebody on a long haul service to lose tens of thousands of any currency you like in just a few hours can effectively gobble up chunks of working capital day by day, week by week at an alarming rate . Despite this a good number of smaller national carriers continue to persue the ambition to get to Paris or London to the end,- their end. Some governments persist in urging/forcing them to do so and then blame their managment for not making a profit out of it. Then often follows sacking of said managment, restriction of competition and the end of market growth. If governments wish carriers to operate prestige,-or any other,- routes regardless of the economics, the only answer is for the airline to do so under contract on a costs plus basis in exchange for which the revenue is handed over to the governmemt.
Another recent Cameroon development is the signing of an air service agreement with China. This could well result in the appearance of a Chinese operator in Douala to transport some of the tens of thousands of Chinese workers now in Africa. This is likelyb to be seen by Camair as a possible boost to their regional services as the passengers are taken on to their final destinations. Maybe, but they would have to ensure agreement with the Chinese carrier of profitable minimum prorates on the much shorter sectors within West Africa. Alliances and long haul carriers in general will push for the easily calculated SRP-Straight Rate Prorate in which case each airline's portion of the end to end revenue is its share of the overall mileage with no minimum guarantee. This is a disaster for domestic and regional short haul operators providing connections of just a few hundred miles from an inbound long haul sector of several thousand. This formula has to be one of the reasons why overwhelmingly shorthaul Aer Lingus left the One World alliance.
Free advice for Camair: (for which consultants would charge a fortune and gobble up time with countless glossy brochures and undoubtedly impressive audio visual presentations). Beware bleeding to death on long haul. Make the government pay or just scrub it. Also beware the Chinese bearing gifts in the shape of big shiny aeroplanes landing in Douala expecting you to disperse many of the customers for peanuts. Be very specific about your oncarriage pricing demands and stick to them.
An article by Christopher Jator in the Cameroon Tribune on 5th May quotes Camair's CEO,Alex van Elk, lamenting that the overall load factor is just 30% whereas 66% is required for profitability. That means that a seriously daunting 70% of seats are being flown unoccupied,-or in other words pointlessly and worse, very expensively. Hopefully this state of affairs is nothing to do with the article's revelation that "there has been feedback of public excitement during flights".
It appears that the way forward is seen as being to expand regional flying from Douala with a third 737, this one a -500 to be leased from US based ACG, with new or additional services to Libreville,Lagos,Cotonou, Dakar, Brazzaville and Bangui (note the traditional pattern of links between French speaking West African countries generally hopping over the English speaking ones other than Lagos). This is certainly a better option than pushing ahead with more long haul but there must be a question as to whether they would do better with a lower capacity jet such as the EMB 170/190 series, rather than the thirstier smallest 737. Key to Camair's problems though is probably their 5 times weekly 767 service to Paris in competition with Air France's daily 777. The ability of a lightly loaded widebody on a long haul service to lose tens of thousands of any currency you like in just a few hours can effectively gobble up chunks of working capital day by day, week by week at an alarming rate . Despite this a good number of smaller national carriers continue to persue the ambition to get to Paris or London to the end,- their end. Some governments persist in urging/forcing them to do so and then blame their managment for not making a profit out of it. Then often follows sacking of said managment, restriction of competition and the end of market growth. If governments wish carriers to operate prestige,-or any other,- routes regardless of the economics, the only answer is for the airline to do so under contract on a costs plus basis in exchange for which the revenue is handed over to the governmemt.
Another recent Cameroon development is the signing of an air service agreement with China. This could well result in the appearance of a Chinese operator in Douala to transport some of the tens of thousands of Chinese workers now in Africa. This is likelyb to be seen by Camair as a possible boost to their regional services as the passengers are taken on to their final destinations. Maybe, but they would have to ensure agreement with the Chinese carrier of profitable minimum prorates on the much shorter sectors within West Africa. Alliances and long haul carriers in general will push for the easily calculated SRP-Straight Rate Prorate in which case each airline's portion of the end to end revenue is its share of the overall mileage with no minimum guarantee. This is a disaster for domestic and regional short haul operators providing connections of just a few hundred miles from an inbound long haul sector of several thousand. This formula has to be one of the reasons why overwhelmingly shorthaul Aer Lingus left the One World alliance.
Free advice for Camair: (for which consultants would charge a fortune and gobble up time with countless glossy brochures and undoubtedly impressive audio visual presentations). Beware bleeding to death on long haul. Make the government pay or just scrub it. Also beware the Chinese bearing gifts in the shape of big shiny aeroplanes landing in Douala expecting you to disperse many of the customers for peanuts. Be very specific about your oncarriage pricing demands and stick to them.
Monday, 9 May 2011
ICAG eyes TAP,- but Finland looks a better bet.
ICAG, owner of the BA and Iberia brands is according to the Times and others to be eyeing TAP which is likely to be part of the Portugese government's distress sale of assets to help it balance its books. Actually the Sunday Times said "British Airways is plotting a bid........" When will they begin to understand that BA is no more. As a standalone company it has gone.It is simply a brand of ICAG.
With the Iberia brand already dominant on the eastern side of the Iberian peninsular, what would the addition of TAP bring to the business? The answer is probably not a lot other than to keep other possible bidders such as the Lufthansa or Air France groups out.
Much more promising is the speculation that Finnair could be Walsh's next target if they are prepared to forgo their independence and become just another brand in the ICAG porftolio. Helsinki lies almost directly beneath the great circle route from northern Europe including the UK to much of Asia .If it were provided with good connections from a wide range of European provincial cities bypassing the main hubs such as London,it would be an excellent routing for eastern business and leisure travellers. Following on from the decision not to build the third Heathrow runway and , other depressing measures to allow the significance of the airport to gradually decline, further development of Helsinki as the transfer point of choice could substantially improve ICAG's current patchy coverage of the strongly growing Asian market. It would also open up further opportunities onwards to Australasia. Over the past dozen or so years the BA part of ICAG has pulled out of Osaka, Nagoya, Seoul,Taipei, Manila, Kuala Lumpur and Jakarta and reduced its own cover of Australia to a minimum.Iberia doesn't even touch the region.
Those who would worry most about a possible ICAG or any other major group's Helsinki hub are not so much their fellow Europeans but the Gulf airlines who have been reaping rich rewards from their extensive and high frequency offerings notably from Europe's secondary cities to a large number of Asian and Australasia major ones. The northern routing to the east is shorter than the southern via the Gulf and, given the right investment in frequency and capacity by ICAG or anyone else and enlarged, slick and attractive transfer arrangements at Helsinki ,the northern Europe v Gulf competition could become less one sided. Copenhagen is another possibility if the countries owning SAS decided that having their own independent airline was no longer worth the candle. The next question would be whether an organisation such as ICAG with a relatively cautious European outlook on investment and risk and its definition of what is really operating cost and what is debt would really put in the massive investment it would take to make a great impact. On past performance this approach would be the show stopper and ensure that while the northern routes took some of particularly the high end the business ,they would not put in enough investment in routes, capacity and frequency to seriously challenge the fast growing Gulf businesses.
With the Iberia brand already dominant on the eastern side of the Iberian peninsular, what would the addition of TAP bring to the business? The answer is probably not a lot other than to keep other possible bidders such as the Lufthansa or Air France groups out.
Much more promising is the speculation that Finnair could be Walsh's next target if they are prepared to forgo their independence and become just another brand in the ICAG porftolio. Helsinki lies almost directly beneath the great circle route from northern Europe including the UK to much of Asia .If it were provided with good connections from a wide range of European provincial cities bypassing the main hubs such as London,it would be an excellent routing for eastern business and leisure travellers. Following on from the decision not to build the third Heathrow runway and , other depressing measures to allow the significance of the airport to gradually decline, further development of Helsinki as the transfer point of choice could substantially improve ICAG's current patchy coverage of the strongly growing Asian market. It would also open up further opportunities onwards to Australasia. Over the past dozen or so years the BA part of ICAG has pulled out of Osaka, Nagoya, Seoul,Taipei, Manila, Kuala Lumpur and Jakarta and reduced its own cover of Australia to a minimum.Iberia doesn't even touch the region.
Those who would worry most about a possible ICAG or any other major group's Helsinki hub are not so much their fellow Europeans but the Gulf airlines who have been reaping rich rewards from their extensive and high frequency offerings notably from Europe's secondary cities to a large number of Asian and Australasia major ones. The northern routing to the east is shorter than the southern via the Gulf and, given the right investment in frequency and capacity by ICAG or anyone else and enlarged, slick and attractive transfer arrangements at Helsinki ,the northern Europe v Gulf competition could become less one sided. Copenhagen is another possibility if the countries owning SAS decided that having their own independent airline was no longer worth the candle. The next question would be whether an organisation such as ICAG with a relatively cautious European outlook on investment and risk and its definition of what is really operating cost and what is debt would really put in the massive investment it would take to make a great impact. On past performance this approach would be the show stopper and ensure that while the northern routes took some of particularly the high end the business ,they would not put in enough investment in routes, capacity and frequency to seriously challenge the fast growing Gulf businesses.
Sunday, 8 May 2011
Malawi,- Swift Air , a new arrival.
Chiming well with our item of 11th April on AFRAA and desirable African local carrier developments ,Edmundo Sales provides a newspaper article from Malawi announcing the launch of a new Lilongwe based airline, Swift Air. The owner is given as African Flying Boats.
Equipped initially with a single Beech 1900D, with four more planned to follow,the company is to operate twice daily Lilongwe/Blantyre/Lilongwe and twice weekly on the northern route Lilongwe/Mzuzu/Kargona. Particularly if common timings can be achieved these will be a welcome addition to Air Malawi's offerings.
Two further developments are planned. One is a cross border service to Lusaka, Zambia via Mfue service. Mfue is the airfield for the superb unfenced South Luangwa National Park which amongst a host of other attractions, offers visitors the the best chance in Africa of seeing a leopard in the wild. The second is a (Grumman?) amphibian service between Lilongwe and Blantyre and the relatively small and understated Lake Malawi beach resorts. Suitably linked, these could give Central Africa a unique high-end safari and beach combination very different to East Africa's familar product.
Historically, amphibian services have for various reasons including costs, spares availability and training often been problematical so it will be interesting to see if they work in this environment or whether a reversion to a conventional landplane operation turns out to be a better bet. The first hurdle though for any startup is to get up and running, to avoid running out of working capital before profitability kicks in ,and to keep ahead of the cashflow tsunami. We wish Swift Air well.
Equipped initially with a single Beech 1900D, with four more planned to follow,the company is to operate twice daily Lilongwe/Blantyre/Lilongwe and twice weekly on the northern route Lilongwe/Mzuzu/Kargona. Particularly if common timings can be achieved these will be a welcome addition to Air Malawi's offerings.
Two further developments are planned. One is a cross border service to Lusaka, Zambia via Mfue service. Mfue is the airfield for the superb unfenced South Luangwa National Park which amongst a host of other attractions, offers visitors the the best chance in Africa of seeing a leopard in the wild. The second is a (Grumman?) amphibian service between Lilongwe and Blantyre and the relatively small and understated Lake Malawi beach resorts. Suitably linked, these could give Central Africa a unique high-end safari and beach combination very different to East Africa's familar product.
Historically, amphibian services have for various reasons including costs, spares availability and training often been problematical so it will be interesting to see if they work in this environment or whether a reversion to a conventional landplane operation turns out to be a better bet. The first hurdle though for any startup is to get up and running, to avoid running out of working capital before profitability kicks in ,and to keep ahead of the cashflow tsunami. We wish Swift Air well.
Thursday, 5 May 2011
Less easy Easyjet
Easyjet's decision to hike debit card fees to from £ 5.50 to £ 8,- a transaction which costs them around 20p,- and credit card ones to £8 plus 2.5 % of the total ticket value indicate a move towards a less friendly image.
Up to now Easyjet have been the Waitrose of the UK low cost operators, selling much the same as the others but in better, more customer orientated wrappers and nicer overall product packaging. This has been a differentiator which has notably made them more acceptable to the business market as well as to many leisure travellers. People shop at Waitrose ,- and pay more,-although many of their products are the same as anyone else's because they sense a different ethos and there is a greater feeling of trust. Price apart, customers like to do business with people they like and they will pay a reasonable premium to do that.
A growing customer irritation with all airlines but especially the low costs is the build-it-yourself tariff which follows the initial headline low basic ticket price. What started out as a means of showing non airline related taxes and may have been reasonably acceptable is now no longer so. First came the combination of "Taxes" with "Other Charges", notably fuel surcharges . These were simply additional cash to the airline. After that came a plethora of other initially customer choice add-ons and then ones which they simply could not avoid. The result is that the original price quote has become almost irrelevant and a source of suspicion and distrust. Easyjet was careful not to lead the way down this path so did not come across as more user friendly than some. They were the smiling face of Low Cost. Customer sentiment swung their way as a softer option. Nobody likes to feel that they are about to be done. If people wanted "hard nosed" then they knew where to look for it and it wasn't Easyjet.
It would seem that following a few changes at the top,the company may be saying "To hell with all that,- we want the money and don't care if it hits our image." This move isn't of itself conclusive evidence of that approach but it is an indicator of a cultural shift which may not be a wise one. Easyjet may reckon that as there is no bigger UK player that comes over as significantly better/cuddlier at present an adverse change in brand perception is a risk they can take. It does though undermine a powerful differentiator. Accountants can always quantify the immediate revenue benefit but, as ever, nobody can prove the downsides . That's why those, along with any dissenting voices, are easily brushed aside. Easyjet was built on fun, energy , up for it and good to fly with. They didn't do things that upset the customers. That stance has made them a lot of money and kept them ahead of the pack.
Amber light to the orange people. Keep the zing and bounce. Don't irritate.
Up to now Easyjet have been the Waitrose of the UK low cost operators, selling much the same as the others but in better, more customer orientated wrappers and nicer overall product packaging. This has been a differentiator which has notably made them more acceptable to the business market as well as to many leisure travellers. People shop at Waitrose ,- and pay more,-although many of their products are the same as anyone else's because they sense a different ethos and there is a greater feeling of trust. Price apart, customers like to do business with people they like and they will pay a reasonable premium to do that.
A growing customer irritation with all airlines but especially the low costs is the build-it-yourself tariff which follows the initial headline low basic ticket price. What started out as a means of showing non airline related taxes and may have been reasonably acceptable is now no longer so. First came the combination of "Taxes" with "Other Charges", notably fuel surcharges . These were simply additional cash to the airline. After that came a plethora of other initially customer choice add-ons and then ones which they simply could not avoid. The result is that the original price quote has become almost irrelevant and a source of suspicion and distrust. Easyjet was careful not to lead the way down this path so did not come across as more user friendly than some. They were the smiling face of Low Cost. Customer sentiment swung their way as a softer option. Nobody likes to feel that they are about to be done. If people wanted "hard nosed" then they knew where to look for it and it wasn't Easyjet.
It would seem that following a few changes at the top,the company may be saying "To hell with all that,- we want the money and don't care if it hits our image." This move isn't of itself conclusive evidence of that approach but it is an indicator of a cultural shift which may not be a wise one. Easyjet may reckon that as there is no bigger UK player that comes over as significantly better/cuddlier at present an adverse change in brand perception is a risk they can take. It does though undermine a powerful differentiator. Accountants can always quantify the immediate revenue benefit but, as ever, nobody can prove the downsides . That's why those, along with any dissenting voices, are easily brushed aside. Easyjet was built on fun, energy , up for it and good to fly with. They didn't do things that upset the customers. That stance has made them a lot of money and kept them ahead of the pack.
Amber light to the orange people. Keep the zing and bounce. Don't irritate.
Monday, 2 May 2011
High Technology and Dark and Stormy Nights,- anywhere.
The news that the Air France A330 black boxes have both been found is excellent. Now comes the wait to see how well preserved,- if at all,- the information is. If both the technical and voice data are retrieveable so that they can be read in tandem some valuable insights are likely about the sequence of events, how they were dealt with and whether there was any chance of a different outcome had the crew had time to figure it out. Looking back it is easy to analyse what different reactions and inputs could have done but on a dark, turbulent night over the South Atlantic life is very different and the luxury of exploring all possibilites just isn't there. There isn't time.
The underlying questions must surely be firstly about the action between humans and very clever computer driven technology and secondly about how well the humans are trained to deal with the dreadful seconds when the technology is overwhelmed and as a last resort says to the humans: "I'm b------d if I know what to do now. I'm out of here. You have a go ". Are the humans, with the type of training and day to day flying they do in with a good chance of saving the day?
In days of yore and before the arrival of EFIS cockpit displays, pilots were trained on a red meat diet of raw data flying ,ideally in places with crowded skies and lousy weather, and had in front of them a bank of dials showing just about everything that was happening amongst the various systems. From constant or frequent scanning they would be aware if any dial started to move even a fraction in an unwanted direction and could also pick up whether an apparently inconsequential thing on one led to a movement on another, and so on. A picture began to build up that something wasn't quite as it should be and give an early warning of possible real trouble. This was similar to the life of an old fashioned family doctor who by knowing his patients over time could see problem A arise, then B and start to think about whether there was any relationship between the two and could be alerted to the possible development of something nasty very early on.Pilots and doctors both need to be clever at diagnostics and both currently share similar problems.
EFIS cockpits marked a change of philosophy to " If there's a problem it will be flagged up. Otherwise you don't need to know what all the other dials you used to see are showing". The pilot's visual databank thus shrank as did understanding of cross-relationships between one fault and another. Thus he or she might not accumulate the experience that told them that a slight flicker top left could lead to another middle right and so on.
The further development of fly by wire automated technology has also led to a spread of the idea "The technology is cleverer than you are so if at all possible let it get on with flying the aircraft and leave the controls well alone". The result has been training and edicts in many cases seriously limiting the amount of hand flying that pilots do.
It is this which makes life even worse on the flight deck when on a dark and foul night there is a sudden necessity to take control and actually fly the aircraft out of trouble. The manufacturers, airlines, training schools and civil aviation authorities all need to seriously review where they are with high technology and where to go with initial pilot training, subsequent line flying and ongoing checks and simulator sessions and how to avoid these usually excellent systems de-skilling pilots who are still required to pull rabbits out of hats when all else fails.
The underlying questions must surely be firstly about the action between humans and very clever computer driven technology and secondly about how well the humans are trained to deal with the dreadful seconds when the technology is overwhelmed and as a last resort says to the humans: "I'm b------d if I know what to do now. I'm out of here. You have a go ". Are the humans, with the type of training and day to day flying they do in with a good chance of saving the day?
In days of yore and before the arrival of EFIS cockpit displays, pilots were trained on a red meat diet of raw data flying ,ideally in places with crowded skies and lousy weather, and had in front of them a bank of dials showing just about everything that was happening amongst the various systems. From constant or frequent scanning they would be aware if any dial started to move even a fraction in an unwanted direction and could also pick up whether an apparently inconsequential thing on one led to a movement on another, and so on. A picture began to build up that something wasn't quite as it should be and give an early warning of possible real trouble. This was similar to the life of an old fashioned family doctor who by knowing his patients over time could see problem A arise, then B and start to think about whether there was any relationship between the two and could be alerted to the possible development of something nasty very early on.Pilots and doctors both need to be clever at diagnostics and both currently share similar problems.
EFIS cockpits marked a change of philosophy to " If there's a problem it will be flagged up. Otherwise you don't need to know what all the other dials you used to see are showing". The pilot's visual databank thus shrank as did understanding of cross-relationships between one fault and another. Thus he or she might not accumulate the experience that told them that a slight flicker top left could lead to another middle right and so on.
The further development of fly by wire automated technology has also led to a spread of the idea "The technology is cleverer than you are so if at all possible let it get on with flying the aircraft and leave the controls well alone". The result has been training and edicts in many cases seriously limiting the amount of hand flying that pilots do.
It is this which makes life even worse on the flight deck when on a dark and foul night there is a sudden necessity to take control and actually fly the aircraft out of trouble. The manufacturers, airlines, training schools and civil aviation authorities all need to seriously review where they are with high technology and where to go with initial pilot training, subsequent line flying and ongoing checks and simulator sessions and how to avoid these usually excellent systems de-skilling pilots who are still required to pull rabbits out of hats when all else fails.
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