Korean Air ,the sixth airline after Singapore, Emirates, Qantas, Air France and Lufthansa to get the A380 into service launches its inaugural services from Seoul to Toyko's Narita and Hong Kong today, 17th June. The hop to Tokyo is definately short haul territory but Hong Kong is four hours away. Next destination from early July will be Bangkok, another popular mass travel destination in the 4-5 hour flight time bracket.
The choice of these nearby destinations is sensible firstly because of the very high traffic volumes on each, secondly because it means that any initial technical problems occur not far from home base and thirdly because it provides a reasonably high number of landings and takeoffs per flying hour so that crews can accumulate flown sectors quickly.
European operations will begin on 26th September with Paris CDG the selected destination .Again this makes good business and operational sense as fellow Skyteam member Air France is based there with its own fleet of A380s and a comprehemsive spares holding. London may be disappointed but from the point of view of Korean's group tour operators,-the source of most of its leisure business,-Paris is a much better option both for a starting, and as we have discussed before, departure point for the "Round Europe 10 capitals in 10 days " kind of of itinerary. Either London and its additional £65 visa fee can be avoided altogether or, if it has to be included at least its penal levels of long haul departure tax can be avoided by making Paris the jumping off point for the final and long haul sector on the way home. It is unlikely that the UK Government in its precipitate chase for greener-than-thou credentials as well as generating as much revenue as possible from what they see as a captive business will worry too much. The possibility that Korean's choice is an early warning blip on the radar screen or instrument panel is unlikely to be understood. It's a bit like a doctor not recognising a small sign of future trouble and therefore not acting to head it off from the start. For the time being at least UK Plc is unlikely to be deflected from its current discouraging aviation policy.
Meanwhile congratulations to Korean today. The only other new A380 operator this year will be China Southern while 2012 also sees only two further additions, the neighbours Thai and Malaysia. Airbus are probably reasonably happy with that number while they further build other existing fleets, particularly Emirates',as it enables them to focus all their new operators support in a limited number of places at any one time while total fleet time and experience grows steadily across an increasing number of aircraft in service. Yesterday, 16th June, saw the much anticipated delivery of the 50th A380,Singapore Airlines 12th aircraft.
Friday, 17 June 2011
Friday, 10 June 2011
One World wins Malaysia Airlines.What now for Skyteam in S.E. Asia?
Malaysia Airlines Qantas sponsored bid to join the One World Alliance strengthens both parties and leaves the Skyteam alliance short of options in South East Asia. Star, with Thai and Singapore Airlines now dominates the Bangkok and Singapore hubs, though Qantas' own Europe-Australia hubbing operation in Singapore is also significant. One World with Cathay Pacific and now Malaysia dominate Hong Kong and Kuala Lumpur. That has to give Skyteam a headache.
Skyteam will have hoped that the long standing KLM Amsterdam-Kuala Lumpur- Australia codeshare, with each airline providing a daily Amsterdam-Kuala Lumpur service would have stood them in good stead. Most less enterprising European airlines have found it difficult to simultaneously serve profitably the leisure rich but premium deficient Malaysian market while also being competitive -ie high frequency with nonstop services- and Singapore. As result all the European majors other than KLM and Lufthansa have in the last ten or more years either ignored Malaysia or left it to a codeshare operated by Malaysian aircraft. From this they gain a small presence but only a few percentage points of codeshare commission and not a big slice of the revenue.
So how come that, up against KLM undoubtedly championing Skyteam, an airline with no operation of its own to Malaysia has brought Malaysia Airlines into its own alliance group? The answer lies in two things,- a long history and a significant present and future. Qantas was involved with MAS since before its formal separation in 1971 from the original highly successful,IATA mould-breaking Malaysia Singapore Airlines. Its biggest rival for early favour was BA's predecessor BOAC and for a while the two ran neck and neck and would have been happy to break each others'. Qantas and Australia had two major advantages though. One was that its unusually long term country manager ,John Hill, had built up strong and deep relationships in the upper levels of Malaysian politics, so much so that he was eventually rewarded with the title "Dato", the Malaysian equivalent of a British knighthood and one infrequently given to foreigners.The second was that Australia had never been the colonial power so was better liked politically. BOAC hadn't got the same depth of relationships and against the UK there was enormous resentment that at the split all the MSA traffic rights to London were initially given to new arch rival and much resented Singapore Airlines. BOAC did pull back a few points by getting MAS visibly airborne in double quick time and ahead of its "real" domestic and regional operations by operating ostensibly jointly with the infant MAS a series of "exempt charters" between London and Kuala Lumpur. These were low cost scheduled services on universal sale rather than being restricted to often pretty bogus affinity groups. Participants in these had to be members of at least six months standing of a club or assosciation set up for a purpose other than travel. The greatest example was probably the Trowbridge Caged Birds Society which mushroomed from a few bird cage owners in Britain's rural west country into a tens of thousands strong club offering its members high frequency flights between the UK and USA. Naturally ,they would say, people interested in birds are interested in flying. Nothing strange about that. To give MAS a further boost, BOAC painted one side of one of its Boeing 707s in the brand new MAS livery, albeit only for the first month. The colonial legacy though increasingly grated in Malaysian politics culminating in a "Buy British Last " campaign in the later 1970s.
So much for the history. What about the present and the future? Qantas is back in Malaysia from Australia with its low cost medium haul Jetstar operation. Add to that the fact that Australia is a much more important trading partner than the Netherlands and also has much more regional political significance and it is no surprise that, disappointed though KLM and Skyteam will be, the Australians and One World have prevailed. This is despite the group containing the old irritant,-the British/BA who now currently have no aviation toehold in Malaysia of their own but are substantially submerged in a joint service agreement with Qantas between Australia, South East Asia and Europe. This itself is ironic in view of over seventy years of Qantas/BA internecine rivalries interspersed with a series of periods of cooperation.For the last fifteen or so though the relationship has been in the good mates phase, achieved in no small part from BA withdrawing its own Australia services from everywhere other than Sydney. (BA now goes to Australia 14 times a week. Emirates 63).
What do Malaysia and Kuala Lumpur mean to One World other than keeping other alliances out? Thanks to nearby Singapore and to Malaysia's late opening in 1998 of a global quality airport, Kuala Lumpur has struggled to build up services by foreign carriers. Malaysia Airlines has probably been reasonably happy with this as it has limited direct competition and pushed the European airlines in particular to do codeshares on its metal. Malaysia itself, despite a tendancy towards nationalism and protectionism ,has probably been less happy as it would like to have been seen as more of a true international crossroads. The sight of all those varied tails down at Changi has been very annoying.
Finally, what does One World offer Malaysia and its national airline? At the very least it will greatly strengthen the airline's frequent flyer programme which has been competing especially with Star's much more powerful global one out of Singapore. This should significantly reinforce Malaysia Airlines in its home market and particularly amongst frequent flyers in the premium cabins.Secondly it should encourage more codeshares on Malaysia's own services. Even BA might sign up despite possible diversion of small amounts of traffic from its own and Qantas' joint London services to and from Singapore. Qantas would have to agree but within One World that is more likely than before. Thirdly , other One World carriers may look again at putting their own aircraft into Kuala Lumpur. The Malaysia Airlines hub there offers a good range of city pairs at reasonable frequencies. Good quality hotels are close at hand for any misconnections and delays. The ground service at Kuala Lumpur could do with some polish to achieve Singapore's usually excellent mix of courtesy, care and a "can do" attitude and it is up to One World to put the pressure on for that to be achieved.
All the parties to this linkup should be pleased with it. It gives them some interesting opportunities and should be welcome to the Malaysian Government in its ceaseless quest to avoid Singapore running away with all the goodies. It is also an excellent launch pad for some new thinking about Malaysia Airlines' and Kuala Lumpur International Airport's place in the world. Shame for Skyteam but they will have to smile and think of something else.
Skyteam will have hoped that the long standing KLM Amsterdam-Kuala Lumpur- Australia codeshare, with each airline providing a daily Amsterdam-Kuala Lumpur service would have stood them in good stead. Most less enterprising European airlines have found it difficult to simultaneously serve profitably the leisure rich but premium deficient Malaysian market while also being competitive -ie high frequency with nonstop services- and Singapore. As result all the European majors other than KLM and Lufthansa have in the last ten or more years either ignored Malaysia or left it to a codeshare operated by Malaysian aircraft. From this they gain a small presence but only a few percentage points of codeshare commission and not a big slice of the revenue.
So how come that, up against KLM undoubtedly championing Skyteam, an airline with no operation of its own to Malaysia has brought Malaysia Airlines into its own alliance group? The answer lies in two things,- a long history and a significant present and future. Qantas was involved with MAS since before its formal separation in 1971 from the original highly successful,IATA mould-breaking Malaysia Singapore Airlines. Its biggest rival for early favour was BA's predecessor BOAC and for a while the two ran neck and neck and would have been happy to break each others'. Qantas and Australia had two major advantages though. One was that its unusually long term country manager ,John Hill, had built up strong and deep relationships in the upper levels of Malaysian politics, so much so that he was eventually rewarded with the title "Dato", the Malaysian equivalent of a British knighthood and one infrequently given to foreigners.The second was that Australia had never been the colonial power so was better liked politically. BOAC hadn't got the same depth of relationships and against the UK there was enormous resentment that at the split all the MSA traffic rights to London were initially given to new arch rival and much resented Singapore Airlines. BOAC did pull back a few points by getting MAS visibly airborne in double quick time and ahead of its "real" domestic and regional operations by operating ostensibly jointly with the infant MAS a series of "exempt charters" between London and Kuala Lumpur. These were low cost scheduled services on universal sale rather than being restricted to often pretty bogus affinity groups. Participants in these had to be members of at least six months standing of a club or assosciation set up for a purpose other than travel. The greatest example was probably the Trowbridge Caged Birds Society which mushroomed from a few bird cage owners in Britain's rural west country into a tens of thousands strong club offering its members high frequency flights between the UK and USA. Naturally ,they would say, people interested in birds are interested in flying. Nothing strange about that. To give MAS a further boost, BOAC painted one side of one of its Boeing 707s in the brand new MAS livery, albeit only for the first month. The colonial legacy though increasingly grated in Malaysian politics culminating in a "Buy British Last " campaign in the later 1970s.
So much for the history. What about the present and the future? Qantas is back in Malaysia from Australia with its low cost medium haul Jetstar operation. Add to that the fact that Australia is a much more important trading partner than the Netherlands and also has much more regional political significance and it is no surprise that, disappointed though KLM and Skyteam will be, the Australians and One World have prevailed. This is despite the group containing the old irritant,-the British/BA who now currently have no aviation toehold in Malaysia of their own but are substantially submerged in a joint service agreement with Qantas between Australia, South East Asia and Europe. This itself is ironic in view of over seventy years of Qantas/BA internecine rivalries interspersed with a series of periods of cooperation.For the last fifteen or so though the relationship has been in the good mates phase, achieved in no small part from BA withdrawing its own Australia services from everywhere other than Sydney. (BA now goes to Australia 14 times a week. Emirates 63).
What do Malaysia and Kuala Lumpur mean to One World other than keeping other alliances out? Thanks to nearby Singapore and to Malaysia's late opening in 1998 of a global quality airport, Kuala Lumpur has struggled to build up services by foreign carriers. Malaysia Airlines has probably been reasonably happy with this as it has limited direct competition and pushed the European airlines in particular to do codeshares on its metal. Malaysia itself, despite a tendancy towards nationalism and protectionism ,has probably been less happy as it would like to have been seen as more of a true international crossroads. The sight of all those varied tails down at Changi has been very annoying.
Finally, what does One World offer Malaysia and its national airline? At the very least it will greatly strengthen the airline's frequent flyer programme which has been competing especially with Star's much more powerful global one out of Singapore. This should significantly reinforce Malaysia Airlines in its home market and particularly amongst frequent flyers in the premium cabins.Secondly it should encourage more codeshares on Malaysia's own services. Even BA might sign up despite possible diversion of small amounts of traffic from its own and Qantas' joint London services to and from Singapore. Qantas would have to agree but within One World that is more likely than before. Thirdly , other One World carriers may look again at putting their own aircraft into Kuala Lumpur. The Malaysia Airlines hub there offers a good range of city pairs at reasonable frequencies. Good quality hotels are close at hand for any misconnections and delays. The ground service at Kuala Lumpur could do with some polish to achieve Singapore's usually excellent mix of courtesy, care and a "can do" attitude and it is up to One World to put the pressure on for that to be achieved.
All the parties to this linkup should be pleased with it. It gives them some interesting opportunities and should be welcome to the Malaysian Government in its ceaseless quest to avoid Singapore running away with all the goodies. It is also an excellent launch pad for some new thinking about Malaysia Airlines' and Kuala Lumpur International Airport's place in the world. Shame for Skyteam but they will have to smile and think of something else.
Thursday, 9 June 2011
Subsidies and Liabilities:- It's the farmers get the pleasure. It's the airlines get the pain.
The EU has agreed to pay £ 170 million in compensation to farmers who claim to have lost money due to the German E-coli episode. Agriculture consumes nearly 50% of the growing EU budget (otherwise known as an overhead on Europe's overall balance sheet). The reason for the compensation is said to be that E.Coli's appearance in the food chain is an eventuality beyond the farmers' control
It's a different story for the airlines then. Volcanic activity is beyond their control and yet they held entirely responsible for the costs their disappointed customers incur when through no fault of their own EU directives ground them. The over-the top panic EU response Icelandic flareup in spring 2010 cost the airlines around £2.2 billion. They were again held liable to compensate passengers affected by the recent smaller scale repeat and there are no signs that the EU will change that in the future although the original legislation was aimed at an entirely different purpose,- to prevent or discourage the cancellation of services simply to save operators money or inconvenience.
This difference of approach by the EU is blatantly unreasonable. Why further protect the very expensive, protectionist and powerful farming lobby but not the mainly (in Europe) unsubsidised airline business which at no cost to governments provides countries with the enormous social and economic benefits of quality, frequent and often low cost transportation for businessmen, tourists and other leisure travellers?
Those like former British Prime Minister Tony Blair who recommend expansion of the EU's barely democratic powers need to understand the crushing effect of its attitudes to successful forward looking private businesses. Aviation brings very real benefits all over the world and at the moment is in danger of being discouraged by an unholy alliance of stay-in-your-own-village environmentalists and governments who see a successful industry as a easy source of revenue. Currently these governments make far more money out of airlines than do the airlines themselves. In the EU this adds to the funds available to further subsidise farmers so the successful are subsidising the unsuccessful. No wonder the industry isn't happy.
It's a different story for the airlines then. Volcanic activity is beyond their control and yet they held entirely responsible for the costs their disappointed customers incur when through no fault of their own EU directives ground them. The over-the top panic EU response Icelandic flareup in spring 2010 cost the airlines around £2.2 billion. They were again held liable to compensate passengers affected by the recent smaller scale repeat and there are no signs that the EU will change that in the future although the original legislation was aimed at an entirely different purpose,- to prevent or discourage the cancellation of services simply to save operators money or inconvenience.
This difference of approach by the EU is blatantly unreasonable. Why further protect the very expensive, protectionist and powerful farming lobby but not the mainly (in Europe) unsubsidised airline business which at no cost to governments provides countries with the enormous social and economic benefits of quality, frequent and often low cost transportation for businessmen, tourists and other leisure travellers?
Those like former British Prime Minister Tony Blair who recommend expansion of the EU's barely democratic powers need to understand the crushing effect of its attitudes to successful forward looking private businesses. Aviation brings very real benefits all over the world and at the moment is in danger of being discouraged by an unholy alliance of stay-in-your-own-village environmentalists and governments who see a successful industry as a easy source of revenue. Currently these governments make far more money out of airlines than do the airlines themselves. In the EU this adds to the funds available to further subsidise farmers so the successful are subsidising the unsuccessful. No wonder the industry isn't happy.
Friday, 3 June 2011
Heathrow's threat to increase charges ,-Life on the horns of a financial dilemma.
Heathrow Airport last week bluntly warned airlines that their failure to grow passenger numbers sufficiently risks charges being increased to maintain their revenue needs.
Their problem is easy enough to see and has several ingredients.
Firstly the airport is now effectively slot limited for much of the operational day. As result passenger throughput growth can only come from larger aircraft and higher density configurations rather than increased frequencies. Against this, some short haul operators have reduced aircraft size while the largest base operator,BA, has for the last ten years concentrated on higher yield business so that on long haul services it has relatively low density overall configurations with small Economy cabins. At the same time BA has not increased its active long haul fleet size for over ten years and ,despite the arrival from 2013 of drip feed of A380s replacing elderly B747-400s and B 787s doing the same for 767s ,has no dynamic plan for large scale growth. Neither of the other two base carriers, Virgin Atlantic and BMI appear to have substantial growth plans either. This has to be of particular concern to the airport operator who needs to maximise passenger numbers to boost per capita fees and duty free shop sales.
Secondly the abandonment of the third runway or even the idea of mixed mode operation on the existing two, mainly to please environmentalists and Conservative constituencies in West London, has condemned the airport to gradual erosion its market share by European rivals. Its position as a global interlining hub will be particularly hard hit and BA's overall market share will also slip as it concentrates on being mainly a point to point carrier serving primarily London and south eastern England.
UK Plc. has effectively decided on a strategy of relative managed decline or at best low growth for its hitherto highly successful airline industry. The north and Scotland have already been largely surrendered to foreign carriers' direct flights and last February Willie Walsh,now CEO of ICAG ,in welcoming "the competition" effectively declared himself to be happy with that. For UK Plc.the connection between the need to encourage inbound business and tourism, things the country is good at and desparately needs, does not seem to be understood by its politicians.
Thirdly,the effects of Britain's absurdly high rates of Air Passenger Duty are now beginning to kick in and discourage both outbound and inbound leisure traffic particularly on long haul. Overseas tour operators who thrive on round-Europe groups will sensibly plan either to avoid the UK altogether (and thus save the extra £65 UK-only non Schengen visa fee as well) or at least ensure that the UK is not the last place on the itinerary. The final port of call is usually where the bulk of tourists' shopping is done. BA in its yield chase is probably not too bothered about that but Heathrow Airport in particular will be and again see its only chance of remaining profitable as being in increasing fees to the airlines. Its investment in new terminal capacity including the current total rebuilding of Terminal 2 and Queen's Building into Heathrow East demands higher passenger throughput,- or increased fees to maximise returns from both imposed and self inflicted capacity constraints.
BAA Plc must feel trapped in an unholy pincer movement between an unsympathetic or simply oblivious high taxing green tinged Government, the environmental lobby and base carriers broadly marking time, both voluntarily and involuntarily, rather than vigorously or even subtly persuing global market share. Add to that the current general "don't spend" pressures particularly in Europe the UK and USA and the airport has only one albeit risky way out of the corner,-higher charges. How they must long for a tax removing Government like the Dutch, a runway building one like the French or even the impossible dream of a Gulf or Oriental one not only building furiously but also being open for business 24 hours a day.An aggressive and expanding base carrier would be nice too.
Their problem is easy enough to see and has several ingredients.
Firstly the airport is now effectively slot limited for much of the operational day. As result passenger throughput growth can only come from larger aircraft and higher density configurations rather than increased frequencies. Against this, some short haul operators have reduced aircraft size while the largest base operator,BA, has for the last ten years concentrated on higher yield business so that on long haul services it has relatively low density overall configurations with small Economy cabins. At the same time BA has not increased its active long haul fleet size for over ten years and ,despite the arrival from 2013 of drip feed of A380s replacing elderly B747-400s and B 787s doing the same for 767s ,has no dynamic plan for large scale growth. Neither of the other two base carriers, Virgin Atlantic and BMI appear to have substantial growth plans either. This has to be of particular concern to the airport operator who needs to maximise passenger numbers to boost per capita fees and duty free shop sales.
Secondly the abandonment of the third runway or even the idea of mixed mode operation on the existing two, mainly to please environmentalists and Conservative constituencies in West London, has condemned the airport to gradual erosion its market share by European rivals. Its position as a global interlining hub will be particularly hard hit and BA's overall market share will also slip as it concentrates on being mainly a point to point carrier serving primarily London and south eastern England.
UK Plc. has effectively decided on a strategy of relative managed decline or at best low growth for its hitherto highly successful airline industry. The north and Scotland have already been largely surrendered to foreign carriers' direct flights and last February Willie Walsh,now CEO of ICAG ,in welcoming "the competition" effectively declared himself to be happy with that. For UK Plc.the connection between the need to encourage inbound business and tourism, things the country is good at and desparately needs, does not seem to be understood by its politicians.
Thirdly,the effects of Britain's absurdly high rates of Air Passenger Duty are now beginning to kick in and discourage both outbound and inbound leisure traffic particularly on long haul. Overseas tour operators who thrive on round-Europe groups will sensibly plan either to avoid the UK altogether (and thus save the extra £65 UK-only non Schengen visa fee as well) or at least ensure that the UK is not the last place on the itinerary. The final port of call is usually where the bulk of tourists' shopping is done. BA in its yield chase is probably not too bothered about that but Heathrow Airport in particular will be and again see its only chance of remaining profitable as being in increasing fees to the airlines. Its investment in new terminal capacity including the current total rebuilding of Terminal 2 and Queen's Building into Heathrow East demands higher passenger throughput,- or increased fees to maximise returns from both imposed and self inflicted capacity constraints.
BAA Plc must feel trapped in an unholy pincer movement between an unsympathetic or simply oblivious high taxing green tinged Government, the environmental lobby and base carriers broadly marking time, both voluntarily and involuntarily, rather than vigorously or even subtly persuing global market share. Add to that the current general "don't spend" pressures particularly in Europe the UK and USA and the airport has only one albeit risky way out of the corner,-higher charges. How they must long for a tax removing Government like the Dutch, a runway building one like the French or even the impossible dream of a Gulf or Oriental one not only building furiously but also being open for business 24 hours a day.An aggressive and expanding base carrier would be nice too.
Tuesday, 31 May 2011
EU Aiport Capacity,- Legislation to the rescue.
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.
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.
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.
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