According to a recent report in the Netherlands' de Telegraaf , an Air France group reorganisation will see a General Director replace the CEO role in KLM. The paper says that this person will report to a largely French national top level managment in Paris. It is unlikely that this will be welcomed in KLM's Amsterdam headquarters.
At the time of KLM's purchase by the Air France group there were promises of continuity of the brand,- which retains all its value ,-and of essentially the same structures for the next five years. This secured the deal and minimised the fuss. It also allowed KLM people to believe that this arrangement could perhaps continue well into the future , the airlines both having their own cultures as well as brand indentities. Indeed the KLM brand as well as its network is an ideal fit with Air France. KLM is highly regarded in the English speaking world particularly in the UK provinces and former UK territories overseas. To the British it doesn't have a strong national identity and what there is is neutral or friendly. Indeed to many KLM is almost British and no patriotic disloyalty is involved in flying with them. Air France on the other hand is definately French which immediately arouses historic positives and negatives. The combined carriers therefore offer something for everyone,- an assumption of chic style and a taste of something mildly exotic with Air France for the francophiles and something more familiar though less adventurous with KLM for the rest. Those sentiments apart ,the two networks work well both separately and in combination. The KLM brand is therefore unlikely to be tampered with.
If true, the increased centralisation and visible subordination of Amsterdam to Paris is no surprise. Whatever the comforting words spoken and the posed smiling handshakes at the time of the coming together, this sort of move is common in all mergers and aquistions. Sometimes integration is almost painfully slow (vis BEA and BOAC in the 1970s) and sometimes very rapid (Kraft's takeover of Cadburys in 2010). There are arguments for both. Air France/KLM looks as if it has taken a middle course with the aim of making it feel more evolutionary rather than revolutionary and less likely to alarm the Netherlands in particular.
Over at Heathrow and Madrid what was dressed up as a merger between BA (whose bride was twice nearly KLM way back in the 1980s/90s, but that's another story) and Iberia was actually a takeover of both brands by a new (Spanish) company, ICAG, initially owned by the former shareholders of the two companies. There a similar erosion of the independence of not just one but both brands is highly likely. At some time in the future it is reasonable to expect that the illusions of separate CEOs and Boards will also disappear. It does not much matter by which route a merger or takeover is achieved . The need to strip out costs means that the organisational slide into centralisation is almost inevitable. With that of course come savings including the selection of common aircraft and staff reductions . Expensive management numbers are an essential target and those of the junior partner are most vulnerable.
Another major announcement from Paris is that the expected order for around 100 widebodies is likely to be split between Airbus and Boeing. This in reality continues a policy already established in Air France and to a lesser extent in KLM which has had very pronounced Boeing leanings. To the surprise of many, Air France abandoned its A340 purchases after the -300 version and instead went for the Boeing 777 as did most other carriers once it became clear that Boeing could secure long range overwater clearances for the big twin. KLM has long showed a preference for Boeings for both long and short haul with only a small, almost niche, fleet of A330-200s now being augmented by -300s.
A final point of interest is that if some of the Group order were to go to the A350, Rolls Royce would ,through lack of choice, return as an engine supplier after a very long absence from both companies. KLM has not ordered a purely RR engine since the Dart on the F27 and Viscount 800 and neither has Air France since the Avon on the Caravelle. There was no choice on those either.
Wednesday, 20 July 2011
Tuesday, 12 July 2011
Boeing 787 Dreamliner,- The Nightmare continues....
Just when it looked as if Boeing was about to follow the delivery of the first 787s to All Nippon with a smooth transition to the most recently announced ongoing delivery schedule leading reasonably quickly to full scale uninterrupted production , another hiccup has rolled in.
The manufacturer has now announced a hold of around a month on the final assembly line. (ATI news 12/07).
It is not clear in which order aircraft currently on the line and those parked outside for further pre-delivery work will actually be delivered to the airlines but Ethiopian appear to be indicating a slippage of about three months to its "early 2012" aircraft. The issue of who gets what and when is more complex than just getting aircraft away from Everett as quickly as possible. The timing and order of deliveries also affects the competitive position of one customer vis-a-via another. Whereas until the programe slipped an early customer may have expected to have say two years advantage over a later purchaser ,a reshuffling can close this gap and reduce or even eliminate that advantage altogether with considerable financial consequences. Strategies of route, frequency, capacity or product and brand improvement can be totally thrown into disarray. The frowns therefore go much deeper than being just about the length of delay to delivery.
Hopefully this will be the last production problem, but on past record there will be a lot of crossed fingers,- and some legs.
The manufacturer has now announced a hold of around a month on the final assembly line. (ATI news 12/07).
It is not clear in which order aircraft currently on the line and those parked outside for further pre-delivery work will actually be delivered to the airlines but Ethiopian appear to be indicating a slippage of about three months to its "early 2012" aircraft. The issue of who gets what and when is more complex than just getting aircraft away from Everett as quickly as possible. The timing and order of deliveries also affects the competitive position of one customer vis-a-via another. Whereas until the programe slipped an early customer may have expected to have say two years advantage over a later purchaser ,a reshuffling can close this gap and reduce or even eliminate that advantage altogether with considerable financial consequences. Strategies of route, frequency, capacity or product and brand improvement can be totally thrown into disarray. The frowns therefore go much deeper than being just about the length of delay to delivery.
Hopefully this will be the last production problem, but on past record there will be a lot of crossed fingers,- and some legs.
Monday, 11 July 2011
Air Malawi continues to bleed money. Solutions sought,- and offered.
Air Malawi, historically a good quality but far, far, too small an operator based in its landlocked central African home is, according to the country's newspaper "The Nation" yet again under review after having lost about $7.1 million in 2009/10 and $ 8.3 million the previous year. That is a lot of money for a very small business and a drag on Malawi's already overburdened economy. Passenger numbers and revenue both fell, thanks probably due to the general global economy but also a chaotic and inadequate timetable lacking in any form of coherance and not even delivering a respectable common timed service between the two major domestic cities, Lilongwe and Blantyre. The report also adds that "most of the company's equipment was not operational during the year, forcing it to lease aircraft for its operations." That can't have helped either.
If Finance Minister Ken Kandodo who vows that "government will continue efforts to ensure that parastatals will deliver on the essential goods and services to Malawians efficiently and effectively " had had the opportunity to read Airnthere's 19th April item "AFRAA doesn't get it", he would have had the opportunity to get rid of the furrowed brow and of this ongoing financial drain on the Treasury with little further ado.
To repeat what we said then, the simple solution in cases of small unprofitable and for ever uneconomic national airlines, almost invariably overburdened with historic costs is to let them go to the wall, declare open skies to all comers provided they satisfy safety requirements and let the unsubsidised private sector and foreign carriers invest in filling the gaps. The result is likely to be more frequencies, more destinations, better service and above all, no further demands on the national exchequer.
Air Malawi has long struggled to overcome its high cost past and find a new role from the time that Zimbabwe came into being as a new state replacing Rhodesia under UDI. During the days of both UDI and apartheid in South Africa , Malawi under the late President Banda carved out a unique niche for itself as a crossroads and connecting point for business moving between the various countries which had no direct links with each other. Significant numbers of politically generated passengers travelled to and through Blantyre in particular and for a number of years it had a unique twice weekly hubbing operation on Mondays and Saturdays when aircraft from all of these countries arrived within an hour or so,exchanged passengers and flew out again. During the rest of the week there were a series of other "useful" connections. Air Malawi was also busy flying mine workers to and from South Africa until Banda suddenly halted the business following the crash of a South African Wenela owned DC4 departing Botswana thanks to being erroneously filled with jet rather than piston fuel. At the same time the airline had for a short time gone long haul with the purchase of a surplus VC10 from British Caledonian in the mistaken belief that the London route, profitable for a weekly BA service, could be the same for them despite this trebling route capacity at a stroke. The VC10 was an impressive looking and sounding aircraft but it gobbled both fuel and money at a massive rate especially when flying with low loads. Eventually a seemingly insoluable problem with a centre fuel tank leak and the need for a major overhaul grounded it and a brief flirtation with the idea of replacing it with a brand new $80 million or so Lockheed Tristar 500 was thankfully abandoned.
Psychologically and financially the airline has never really recovered from all these things which happened almost in parallel . The end of the VC10 and long haul aspirations, the collapse of Rhodesian UDI and the emergence of Zimbabwe, and the end of the South African mine labour traffic were a huge impact to absorb and coming close together in time were simply overwhelming. All this was compounded by the virtual closure to international services into and out of Blantyre, the destination of most commercial visitors to the country, to ensure that the new international airport at Lilongwe justified its existence. The costs and bills of this fell on Air Malawi's doormat through no fault of its own.
Ever since the early 1980s therefore, the company has struggled to reach an economic critical mass and to carve out a new role for itself in regional air travel. Despite the best of intentions, a fair product with a good safety record and operational standards and a lot of effort, it has not managed to find itself one. It is the right moment therefore, with no discredit to anyone, for Mr Kandodo to say "Enough is enough" and for the market to provide its own solutions. For sure it will, so don't bother to pay a smart international consultancy provider vast amounts of money to tell you that. Take it from here,- absolutely free.
If Finance Minister Ken Kandodo who vows that "government will continue efforts to ensure that parastatals will deliver on the essential goods and services to Malawians efficiently and effectively " had had the opportunity to read Airnthere's 19th April item "AFRAA doesn't get it", he would have had the opportunity to get rid of the furrowed brow and of this ongoing financial drain on the Treasury with little further ado.
To repeat what we said then, the simple solution in cases of small unprofitable and for ever uneconomic national airlines, almost invariably overburdened with historic costs is to let them go to the wall, declare open skies to all comers provided they satisfy safety requirements and let the unsubsidised private sector and foreign carriers invest in filling the gaps. The result is likely to be more frequencies, more destinations, better service and above all, no further demands on the national exchequer.
Air Malawi has long struggled to overcome its high cost past and find a new role from the time that Zimbabwe came into being as a new state replacing Rhodesia under UDI. During the days of both UDI and apartheid in South Africa , Malawi under the late President Banda carved out a unique niche for itself as a crossroads and connecting point for business moving between the various countries which had no direct links with each other. Significant numbers of politically generated passengers travelled to and through Blantyre in particular and for a number of years it had a unique twice weekly hubbing operation on Mondays and Saturdays when aircraft from all of these countries arrived within an hour or so,exchanged passengers and flew out again. During the rest of the week there were a series of other "useful" connections. Air Malawi was also busy flying mine workers to and from South Africa until Banda suddenly halted the business following the crash of a South African Wenela owned DC4 departing Botswana thanks to being erroneously filled with jet rather than piston fuel. At the same time the airline had for a short time gone long haul with the purchase of a surplus VC10 from British Caledonian in the mistaken belief that the London route, profitable for a weekly BA service, could be the same for them despite this trebling route capacity at a stroke. The VC10 was an impressive looking and sounding aircraft but it gobbled both fuel and money at a massive rate especially when flying with low loads. Eventually a seemingly insoluable problem with a centre fuel tank leak and the need for a major overhaul grounded it and a brief flirtation with the idea of replacing it with a brand new $80 million or so Lockheed Tristar 500 was thankfully abandoned.
Psychologically and financially the airline has never really recovered from all these things which happened almost in parallel . The end of the VC10 and long haul aspirations, the collapse of Rhodesian UDI and the emergence of Zimbabwe, and the end of the South African mine labour traffic were a huge impact to absorb and coming close together in time were simply overwhelming. All this was compounded by the virtual closure to international services into and out of Blantyre, the destination of most commercial visitors to the country, to ensure that the new international airport at Lilongwe justified its existence. The costs and bills of this fell on Air Malawi's doormat through no fault of its own.
Ever since the early 1980s therefore, the company has struggled to reach an economic critical mass and to carve out a new role for itself in regional air travel. Despite the best of intentions, a fair product with a good safety record and operational standards and a lot of effort, it has not managed to find itself one. It is the right moment therefore, with no discredit to anyone, for Mr Kandodo to say "Enough is enough" and for the market to provide its own solutions. For sure it will, so don't bother to pay a smart international consultancy provider vast amounts of money to tell you that. Take it from here,- absolutely free.
Thursday, 7 July 2011
Bombardier , the Thameslink Order and the future of train building in the UK.
Thameslink's choice of Siemens electric trains over the rival Bombardier offer has brought immediate huffing and puffing from a number of quarters including the unions who see the loss of 1,400 membership fees as most unwelcome.
True, it is sad to see a potential UK order go abroad .This one could probably have gone to the Derby facility of the Canadian Bombardier company and it probably is true to say that no other EU country would stick so rigidly as the UK to the bidding rules to its own overall disadvantage, but that's not new.
It is not true though that the loss of this large order has resulted in the issue of the 1,400 redundancy notices. The blame/reasons lie largely elsewhere. Bombardier ,right now at pretty much the peak of its production with 5 different contracts trains in the works, was about to face a large orders gap and the redundancies would almost certainly have happened anyway. Four of these current contracts will have been completed by the end of the year and actual construction work on the new Thameslink trains is around eighteen months to two years away.
Why has this production hiatus occured?
There are two basic reasons.
Firstly the UK domestic rail industry does not have a rolling programme of replacements and new builds as it did in nationalised British Rail days when it was much easier to have a co-ordinated national plan which delivered a steady and reliable stream of orders to the engineering arm of the company thereby avoiding the problems of peaks and troughs in work and use of resources. When the Thameslink contract was awarded it was more than 800 days since the previous order by or for any UK rail company. Hence the impending gap regardless of Thameslink.
Secondly, despite knowing that these gaps will occur and working with that as a fact of life, Bombardier UK does not vigorously persue overseas orders and with very few exceptions only builds trains for the British leasing companies and operators at Derby. That is a matter for their corporate strategy people and could therefore be changed if the parent company so desired. They have standard high quality electric and diesel trains, the Electrostar and Turbostar (Clubman to Chiltern Railways customers) for short and medium distances in high or low density layouts. Although optimised for the UK with its sub-EU loading guage these are exportable. For example orders from both the Irish Republic and Northern Ireland are have escaped and gone as far away as South Korea. The British Electrostar has only been exported to South Africa for the Johannesburg-Airport- Pretoria Gautrain project. It could have done better if more strenuously promoted.
On the political side, the UK Government is also to blame for the Bombardier redundancies. This is not though because the Thameslink contract was allowed go to Siemens who after all already suppy a number of UK operators including Heathrow Express with the British version of their Desiro trains. Government culpabilty lies in the very short duration of most franchises making a smooth flow of orders unlikely and co-ordination of them into the most economic sequences difficult. This is despite much micro managment of the train operating companies in other areas of their activity by the Department of Transport.
The unions only solution to any of these problems seems to be to scream for renationalisation but that's about political dogma, not economics. It isn't going to happen so they are wasting energy and breath which would be much better spent working with the companies on new productivity deals to bring down costs and encourage more investment rather than opposing just about anything that managments and the government propose. Certainly the unions are currently adding nothing useful to the debate about the continuation of a train building industry in the UK. They can be as "angry" as they like but that's not going to do anything for anyone, least of all the holders of 1,400 P45s.
As simply described here, Siemens getting the Thameslink contract is not the root of Bombardier's Derby problems. It also need not mean the end of Bombardier's train building in the UK .Indeed they would be foolish to completely walk away when they have other much better options to make a go of the British plant.
True, it is sad to see a potential UK order go abroad .This one could probably have gone to the Derby facility of the Canadian Bombardier company and it probably is true to say that no other EU country would stick so rigidly as the UK to the bidding rules to its own overall disadvantage, but that's not new.
It is not true though that the loss of this large order has resulted in the issue of the 1,400 redundancy notices. The blame/reasons lie largely elsewhere. Bombardier ,right now at pretty much the peak of its production with 5 different contracts trains in the works, was about to face a large orders gap and the redundancies would almost certainly have happened anyway. Four of these current contracts will have been completed by the end of the year and actual construction work on the new Thameslink trains is around eighteen months to two years away.
Why has this production hiatus occured?
There are two basic reasons.
Firstly the UK domestic rail industry does not have a rolling programme of replacements and new builds as it did in nationalised British Rail days when it was much easier to have a co-ordinated national plan which delivered a steady and reliable stream of orders to the engineering arm of the company thereby avoiding the problems of peaks and troughs in work and use of resources. When the Thameslink contract was awarded it was more than 800 days since the previous order by or for any UK rail company. Hence the impending gap regardless of Thameslink.
Secondly, despite knowing that these gaps will occur and working with that as a fact of life, Bombardier UK does not vigorously persue overseas orders and with very few exceptions only builds trains for the British leasing companies and operators at Derby. That is a matter for their corporate strategy people and could therefore be changed if the parent company so desired. They have standard high quality electric and diesel trains, the Electrostar and Turbostar (Clubman to Chiltern Railways customers) for short and medium distances in high or low density layouts. Although optimised for the UK with its sub-EU loading guage these are exportable. For example orders from both the Irish Republic and Northern Ireland are have escaped and gone as far away as South Korea. The British Electrostar has only been exported to South Africa for the Johannesburg-Airport- Pretoria Gautrain project. It could have done better if more strenuously promoted.
On the political side, the UK Government is also to blame for the Bombardier redundancies. This is not though because the Thameslink contract was allowed go to Siemens who after all already suppy a number of UK operators including Heathrow Express with the British version of their Desiro trains. Government culpabilty lies in the very short duration of most franchises making a smooth flow of orders unlikely and co-ordination of them into the most economic sequences difficult. This is despite much micro managment of the train operating companies in other areas of their activity by the Department of Transport.
The unions only solution to any of these problems seems to be to scream for renationalisation but that's about political dogma, not economics. It isn't going to happen so they are wasting energy and breath which would be much better spent working with the companies on new productivity deals to bring down costs and encourage more investment rather than opposing just about anything that managments and the government propose. Certainly the unions are currently adding nothing useful to the debate about the continuation of a train building industry in the UK. They can be as "angry" as they like but that's not going to do anything for anyone, least of all the holders of 1,400 P45s.
As simply described here, Siemens getting the Thameslink contract is not the root of Bombardier's Derby problems. It also need not mean the end of Bombardier's train building in the UK .Indeed they would be foolish to completely walk away when they have other much better options to make a go of the British plant.
Thursday, 30 June 2011
Snow Job, -Welcome to BAA Heathrow's new Operations Director
The appointment of outsider Normand Boivin, currently operations chief at Montreal, as the new Director of Operations at Heathrow is an interesting one.
While relatively busy domestically and cross-border to the USA, Montreal has realtively little truly international business and is a fairly simple operation. He will therefore find the size and complexity of Heathrow an interesting and stretching challenge.If he doesn't he's missing something.
Mr Bovin's winning hand though must be experience and expertise in handling winter snow,- very large amounts of it although whether it is the same as the UK's seemingly unique variety remains to be seen. The arrival of an outsider with a fresh view of the airport is very welcome and if he can score an early hit by dramatically improving Heathrow's ways of handling snow and its attitude to keeping the show on the road whatever the elements may throw at it. Hopeless, hapless resignation and failure to look after customer airlines and their customers as last winter is simply unacceptable. If he is an operational man with a deep and truly passionate understanding that the airport is a service business and no longer a state monopoly "Authority" ,he will be worth his weight in avoided complaint letters, compensation claims and lost future business.
While relatively busy domestically and cross-border to the USA, Montreal has realtively little truly international business and is a fairly simple operation. He will therefore find the size and complexity of Heathrow an interesting and stretching challenge.If he doesn't he's missing something.
Mr Bovin's winning hand though must be experience and expertise in handling winter snow,- very large amounts of it although whether it is the same as the UK's seemingly unique variety remains to be seen. The arrival of an outsider with a fresh view of the airport is very welcome and if he can score an early hit by dramatically improving Heathrow's ways of handling snow and its attitude to keeping the show on the road whatever the elements may throw at it. Hopeless, hapless resignation and failure to look after customer airlines and their customers as last winter is simply unacceptable. If he is an operational man with a deep and truly passionate understanding that the airport is a service business and no longer a state monopoly "Authority" ,he will be worth his weight in avoided complaint letters, compensation claims and lost future business.
Thursday, 23 June 2011
The London Airports Debate.
Speeches on Tuesday last week about London's airport capacity by Boris Johnson, Mayor of London, and Willie Walsh CEO of ICAG, owner of the BA and Iberia brands were interesting and headline grabbing. Both were advocating the building of a new airport on what would be reclaimed land somewhere ill defined along the Thames estuary to the east of London. Each though gets to the argument by a different route. The cost they say would be around £40 billion although there is no indication of how this sum is arrived at and whether or not the bill for the supporting infrastructure and rail and road links is included. Historically we should expect to see the eventual cost come in at least twice as much as the initial kite flying estimates. It is worth further examining what both Johnson and Walsh along with the UK Government and the BAA are saying,-and not saying,-on the whole issue and where they and their organisations have come from on it.
Turning first to Boris Johnson, he says "We're on the verge of making a historic mistake over the provision of airport capacity. Heathrow is perpetually struggling to fit a pint into a quart pot. It's no wonder the Heathrow experience can be so miserable." So far so good. But wait a minute. The reason why Heathrow is now bursting at the seams movementwise and can not substantially grow slot numbers is that the incoming coalition government binned Labour's go-ahead for new the third runway there. One of the noisiest opponents of the scheme was Boris acting on behalf of his and the Conservative Party's west London constituents. It was pure populist NIMBYism although dressed up as a success in the environmental war. (Let's not forget that aviation contributes just 2% of UK's emissions and that the M4/M25 contribute more to pollution around Heathrow than do aircraft.) The constituencies concerned are primarily the smarter and vociferous ones from Notting Hill westwards to around Richmond. Noise blight in Hounslow and the places right under the final rather than outer approaches , while protested about, seems to have had much less clout. Folk there tend not to be so well connected to the Westminster networks so have less leverage. Most of all affected groups have moved into the areas in which they now live well after the jet age really got going from 1960 onwards so they moved in the full knowledge of the noise issue and that the airport would continue to grow. Mr Johnson knows that the airport is bursting at the seams right now and that the new 3rd runway provided the quickest and best way to meet it. He also knows that the possibility of another airport being built is extremely remote and if it were the UK's pedestrian approach to planning, approving and building anything, would ensure that it would take at least 20 and probably nearer 30 years to open. It is obvious to all that in a development averse country every possible obstruction would be thrown in its way and the citizens of Kent and Essex are unlikely to accept a new airport on their doorstep without a massive struggle. Sundry varieties hitherto unsung wildlife would have their support groups too. The reality is that the Thames estuary idea is unlikely to fly and a new inland site is unthinkable. Either would solve London's strategic problem while not asking inner Londoners in particular to take any of the downsides. The Mayor also does not seem to have considered the issue of the loss of tens of thousands of jobs and behind that a wave of further jobs dependent on them in western London.
Next there is Wille Walsh, now no longer with the single concentrated focus on the BA brand. He is perhaps flying more than one kite. The first is final call on the government to reconsider the third runway for one last time before it is totally dead for ever. Politically this appeal couldn't have come at a worse moment. Faced with accusations of having recently done around 15 U-turns,it will not be willing to do another on what is portrayed as a vital environmental issue. They will want to play tough and square jawed on a few high profile items. Heathrow is an ideal one , albeit negative, and may be balanced out by the more positive support for the HS2 high speed rail line to the north announced by the Prime Minister yesterday. Walsh is quoted as saying "We've already lost because the growth in Dubai could have come to London" and that following the transfer of the BA and Iberia brands to ICAG "We will access growth outside the UK". In other words UK Plc is about to discover the downside of no longer having what was seen as a national airline whose success and future depended almost wholly on what it could achieve at Heathrow plus a bit of overflow at Gatwick. Foreign registered ICAG can let its investment in London stand still or decline and just make its money elsewhere. Secondly the fact is that the growth at the Gulf (and other) airports up to now has not been lost by Heathrow's overcrowding. Until very recently and even now there have been been additional and transfered (bought) slots available and airport runway capacity has not been the main constraint. BA itself has enormous potential to juggle slots between its marginal shorthaul services and its long haul ones. It has chosen not to do so. It has also chosen not to expand its long haul fleet over the last ten years despite growing markets. It has grown its dependency on trans Atlantic services and not responded to the growth of the Gulf carriers by increasing destinations or frequencies in its eastern and southern markets.It has focused primarily on hubbing to North America from Europe, the Middle East and parts of Africa rather than the rest of the world and it does that well.Elsewhere BA has been remarkably passive and unadventurous while others have feasted from its table. It has also downsized its economy cabins so that it caters less for the mass lower yielding business which has had to gravitate to other carriers, thereby fuelling the competition's growth in both aircraft size and frequencies. Completing the circle, this has increased their competitivness with BA for business traffic as well. The BA brand's passenger throughput and connectivity at London Heathrow is therefore concentrated very much on the higher end of the Atlantic market and is well below its potential in other segments including volume .The BAA and its army of concessionaires can not be delighted.
The third player is the Her Majesty's Government. Labour's transport minister Lord Adonis was the most dynamic in the role seen in recent years and truly championed air and rail travel and enthusiasticaly mastered all aspects of his brief. He was determined update the infrastructure for both and to align with growth projections so that Britain remained competitive. This would probably be the first time since the 1930s that demand and facilities were in step. He was to be further helped by recently introduced Regional Spatial Strategies which would cut the red tape and speed approvals of major national projects and rid them of countless running battles with local authorities lying on the runways or rail tracks. This leading edge , cut-through-the-proceses-and-get-it-done body was quickly scrapped by the incoming coalition and the planning powers returned to the local levels. From May 2010 the very able Philip Hammond has been the new minister. He has driven rail modernsiation and capacity increases with successful vigour but has gone the other way with aviation. Not only was the third Heathrow runway abandoned but even the prosposed small slot improvement by allowing parallel arrivals and departures on its existing two was rejected. This put the cork in the movements bottle. The second runway at Stansted was also ditched and Gatwick can not build one until 2018 at the earliest thanks to a Michael Heseltine deal with the surrounding local authorities in return for the original building of the North Terminal. Now increased passenger numbers at London's two prime airports will only come from larger aircraft. New destinations may only be added at a cost to existing ones. Heathrow therefore will inevitably decline in relative importance as an aviation hub and the growth will go elswhere in Europe and/or to the geographically very fortunately located Gulf.
The Government has so far played the aviation card badly.It promises a "new aviation policy" in spring 2013 with a consulatation paper to be launched in spring 2012. A policy is not of itself a solution. It is a declaration of intent. It simply encourages investment, building of facilities, infrastructure and the rest. It doesn't guarantee anything and all these things can take years to appear, if they ever do. This makes the abandonment of Heathrow's runway 3 look even more precipitate and ill advised. There is just about time for a last minute handbrake turn. It looks unlikely though. Boris and Willie are providing a smokescreen which is distracting attention from this very urgent last chance possibility.
The fourth and final player in the Heathrow game has been the BAA and Heathrow. Until privatised it behaved very much as any monopoly supplier in a state of holding investment down and in frequent conflict with its customer airlines in particular. The relationship with the primary resident airline, BA, was for years adversarial although it improved considerably from the opening of T4 in 1986 onwards. A base carrier and its landlord often have conflicting interests and views of their own position in the scheme of things and Heathrow was no exception. The nationalised origins of both coloured and restricted their thinking .The BAA saw itself very much as an "Authority" not a service business with customers to woo and cherish. Their view of airlines and passengers tended to be coloured very black and yellow by this starting point. There have recently been encouraging changes. The opening of T5 has given the airport a facility to match the best anywhere. The demolition of T2 and Queens Building and creation of "Heathrow East" in its place promises another transformation and should enable the bulldozers to deal appropriately with T1, and by then a new T1 ,- currently not planned,- may be required . Heathrow was gearing itself to a much better future with at last some useful additional runway space to use both for expansion and to relieve some of the pressure of operating at maximum capacity for much of the day. The loss of that runway has come as a huge setback to the BAA as well as the UK itself. Again,the talk of a new aiport is a serious distraction diverting attention away from the real issue. It's not quite too late. The decision could and should be quickly reversed and building commence. Meanwhile the alternative hubs and their resident airlines are smiling from ear to ear and ICAG's UK eyes are glazing over as their future investment focus moves elsewhere. Unfortunately for UK Plc, others- and not just airlines,- will inevitably do the same.It's a rather tragic story for all concerned in Britain. If there were anything like effective strategic short, medium and long term national planning it would not have happened.
Turning first to Boris Johnson, he says "We're on the verge of making a historic mistake over the provision of airport capacity. Heathrow is perpetually struggling to fit a pint into a quart pot. It's no wonder the Heathrow experience can be so miserable." So far so good. But wait a minute. The reason why Heathrow is now bursting at the seams movementwise and can not substantially grow slot numbers is that the incoming coalition government binned Labour's go-ahead for new the third runway there. One of the noisiest opponents of the scheme was Boris acting on behalf of his and the Conservative Party's west London constituents. It was pure populist NIMBYism although dressed up as a success in the environmental war. (Let's not forget that aviation contributes just 2% of UK's emissions and that the M4/M25 contribute more to pollution around Heathrow than do aircraft.) The constituencies concerned are primarily the smarter and vociferous ones from Notting Hill westwards to around Richmond. Noise blight in Hounslow and the places right under the final rather than outer approaches , while protested about, seems to have had much less clout. Folk there tend not to be so well connected to the Westminster networks so have less leverage. Most of all affected groups have moved into the areas in which they now live well after the jet age really got going from 1960 onwards so they moved in the full knowledge of the noise issue and that the airport would continue to grow. Mr Johnson knows that the airport is bursting at the seams right now and that the new 3rd runway provided the quickest and best way to meet it. He also knows that the possibility of another airport being built is extremely remote and if it were the UK's pedestrian approach to planning, approving and building anything, would ensure that it would take at least 20 and probably nearer 30 years to open. It is obvious to all that in a development averse country every possible obstruction would be thrown in its way and the citizens of Kent and Essex are unlikely to accept a new airport on their doorstep without a massive struggle. Sundry varieties hitherto unsung wildlife would have their support groups too. The reality is that the Thames estuary idea is unlikely to fly and a new inland site is unthinkable. Either would solve London's strategic problem while not asking inner Londoners in particular to take any of the downsides. The Mayor also does not seem to have considered the issue of the loss of tens of thousands of jobs and behind that a wave of further jobs dependent on them in western London.
Next there is Wille Walsh, now no longer with the single concentrated focus on the BA brand. He is perhaps flying more than one kite. The first is final call on the government to reconsider the third runway for one last time before it is totally dead for ever. Politically this appeal couldn't have come at a worse moment. Faced with accusations of having recently done around 15 U-turns,it will not be willing to do another on what is portrayed as a vital environmental issue. They will want to play tough and square jawed on a few high profile items. Heathrow is an ideal one , albeit negative, and may be balanced out by the more positive support for the HS2 high speed rail line to the north announced by the Prime Minister yesterday. Walsh is quoted as saying "We've already lost because the growth in Dubai could have come to London" and that following the transfer of the BA and Iberia brands to ICAG "We will access growth outside the UK". In other words UK Plc is about to discover the downside of no longer having what was seen as a national airline whose success and future depended almost wholly on what it could achieve at Heathrow plus a bit of overflow at Gatwick. Foreign registered ICAG can let its investment in London stand still or decline and just make its money elsewhere. Secondly the fact is that the growth at the Gulf (and other) airports up to now has not been lost by Heathrow's overcrowding. Until very recently and even now there have been been additional and transfered (bought) slots available and airport runway capacity has not been the main constraint. BA itself has enormous potential to juggle slots between its marginal shorthaul services and its long haul ones. It has chosen not to do so. It has also chosen not to expand its long haul fleet over the last ten years despite growing markets. It has grown its dependency on trans Atlantic services and not responded to the growth of the Gulf carriers by increasing destinations or frequencies in its eastern and southern markets.It has focused primarily on hubbing to North America from Europe, the Middle East and parts of Africa rather than the rest of the world and it does that well.Elsewhere BA has been remarkably passive and unadventurous while others have feasted from its table. It has also downsized its economy cabins so that it caters less for the mass lower yielding business which has had to gravitate to other carriers, thereby fuelling the competition's growth in both aircraft size and frequencies. Completing the circle, this has increased their competitivness with BA for business traffic as well. The BA brand's passenger throughput and connectivity at London Heathrow is therefore concentrated very much on the higher end of the Atlantic market and is well below its potential in other segments including volume .The BAA and its army of concessionaires can not be delighted.
The third player is the Her Majesty's Government. Labour's transport minister Lord Adonis was the most dynamic in the role seen in recent years and truly championed air and rail travel and enthusiasticaly mastered all aspects of his brief. He was determined update the infrastructure for both and to align with growth projections so that Britain remained competitive. This would probably be the first time since the 1930s that demand and facilities were in step. He was to be further helped by recently introduced Regional Spatial Strategies which would cut the red tape and speed approvals of major national projects and rid them of countless running battles with local authorities lying on the runways or rail tracks. This leading edge , cut-through-the-proceses-and-get-it-done body was quickly scrapped by the incoming coalition and the planning powers returned to the local levels. From May 2010 the very able Philip Hammond has been the new minister. He has driven rail modernsiation and capacity increases with successful vigour but has gone the other way with aviation. Not only was the third Heathrow runway abandoned but even the prosposed small slot improvement by allowing parallel arrivals and departures on its existing two was rejected. This put the cork in the movements bottle. The second runway at Stansted was also ditched and Gatwick can not build one until 2018 at the earliest thanks to a Michael Heseltine deal with the surrounding local authorities in return for the original building of the North Terminal. Now increased passenger numbers at London's two prime airports will only come from larger aircraft. New destinations may only be added at a cost to existing ones. Heathrow therefore will inevitably decline in relative importance as an aviation hub and the growth will go elswhere in Europe and/or to the geographically very fortunately located Gulf.
The Government has so far played the aviation card badly.It promises a "new aviation policy" in spring 2013 with a consulatation paper to be launched in spring 2012. A policy is not of itself a solution. It is a declaration of intent. It simply encourages investment, building of facilities, infrastructure and the rest. It doesn't guarantee anything and all these things can take years to appear, if they ever do. This makes the abandonment of Heathrow's runway 3 look even more precipitate and ill advised. There is just about time for a last minute handbrake turn. It looks unlikely though. Boris and Willie are providing a smokescreen which is distracting attention from this very urgent last chance possibility.
The fourth and final player in the Heathrow game has been the BAA and Heathrow. Until privatised it behaved very much as any monopoly supplier in a state of holding investment down and in frequent conflict with its customer airlines in particular. The relationship with the primary resident airline, BA, was for years adversarial although it improved considerably from the opening of T4 in 1986 onwards. A base carrier and its landlord often have conflicting interests and views of their own position in the scheme of things and Heathrow was no exception. The nationalised origins of both coloured and restricted their thinking .The BAA saw itself very much as an "Authority" not a service business with customers to woo and cherish. Their view of airlines and passengers tended to be coloured very black and yellow by this starting point. There have recently been encouraging changes. The opening of T5 has given the airport a facility to match the best anywhere. The demolition of T2 and Queens Building and creation of "Heathrow East" in its place promises another transformation and should enable the bulldozers to deal appropriately with T1, and by then a new T1 ,- currently not planned,- may be required . Heathrow was gearing itself to a much better future with at last some useful additional runway space to use both for expansion and to relieve some of the pressure of operating at maximum capacity for much of the day. The loss of that runway has come as a huge setback to the BAA as well as the UK itself. Again,the talk of a new aiport is a serious distraction diverting attention away from the real issue. It's not quite too late. The decision could and should be quickly reversed and building commence. Meanwhile the alternative hubs and their resident airlines are smiling from ear to ear and ICAG's UK eyes are glazing over as their future investment focus moves elsewhere. Unfortunately for UK Plc, others- and not just airlines,- will inevitably do the same.It's a rather tragic story for all concerned in Britain. If there were anything like effective strategic short, medium and long term national planning it would not have happened.
Tuesday, 21 June 2011
Paris moments- and media nonsense.
The Paris Air Show got off to an awkward start for Airbus yesterday when its display A380 damaged its wingtip on one of those buildings placed just a little too close to the taxiway for comfort. Not a big deal but of course an opportunity for the thing some members of the media like best,- a bit of derision.
The Times, describing the incident as "a spectacular own goal" relates that it "was in danger of eliminating the A380 from the aviation industry's premier event". It does then get back on track with relating that "Airbus has been able to borrow an aircraft from Korean Air" and then veers off again by finishing up with ."... to perform stunts" as the original aircraft "can still fly but would not have been capable of low altitude stunts". What, we wonder, did they have in mind ? A high profile airline supremo and a clutch of stewardesses standing on the wing as it ballel rolled past the enclosures? Short take offs ,steep climbs and tight turns yes, but stunts? We think not. Come on the former top people's paper,- could we be just a little less tabloid?
Meanwhile, far more grimace-forming in the Airbus box will have been the news that Air China has ordered 15 of Boeing's ultimate stretch of the 1960s 747,- the -8i. That order would have been a nice little booster for the state of the art A380 which is only just beginning on what looks like a long life of further development and stretches towards being the definitive 1,000 seater.The wings are there so it's just for engines and fuselage length to follow. Airbus should not fret though. This one looks far more to do with a nod towards the US/China trade imbalance arguments than necessarily the merits of one aircraft against the other.
The Times, describing the incident as "a spectacular own goal" relates that it "was in danger of eliminating the A380 from the aviation industry's premier event". It does then get back on track with relating that "Airbus has been able to borrow an aircraft from Korean Air" and then veers off again by finishing up with ."... to perform stunts" as the original aircraft "can still fly but would not have been capable of low altitude stunts". What, we wonder, did they have in mind ? A high profile airline supremo and a clutch of stewardesses standing on the wing as it ballel rolled past the enclosures? Short take offs ,steep climbs and tight turns yes, but stunts? We think not. Come on the former top people's paper,- could we be just a little less tabloid?
Meanwhile, far more grimace-forming in the Airbus box will have been the news that Air China has ordered 15 of Boeing's ultimate stretch of the 1960s 747,- the -8i. That order would have been a nice little booster for the state of the art A380 which is only just beginning on what looks like a long life of further development and stretches towards being the definitive 1,000 seater.The wings are there so it's just for engines and fuselage length to follow. Airbus should not fret though. This one looks far more to do with a nod towards the US/China trade imbalance arguments than necessarily the merits of one aircraft against the other.
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