Hello and welcome to our Monday Briefing for the week beginning 7 May 2018, summarising the main developments in air travel over the past week, and a look the week ahead.
IAG & Norwegian
What is going on between IAG and Norwegian?
In the three weeks that have passed since IAG announced it had acquired a stake in Norwegian, the group has tabled two proposals to Norwegian management, both of which have been rejected.
From the statements issued by IAG and Norwegian to date four things are clear:
a) Norwegian is prepared to entertain bids as it has appointed advisors
b) IAG has not yet submitted a formal takeover bid
c) IAG wants 100% ownership of Norwegian; and
d) IAG’s bid comes with, as yet undisclosed, conditions.
As Norwegian’s co-founders Bjørn Kjos and Bjørn H. Kise own a joint 27% stake in the airline, no takeover bid could go ahead without their consent.
Hello and welcome to our Monday Briefing for the week beginning 30 April 2018, summarising the main developments in air travel over the past week, and a look the week ahead.
Alex Cruz interviewed
Two years in to his role as CEO of British Airways, Alex Cruz has been something of a lightning rod for criticism of the airline.
Whatever the complaint, the finger of blame is pointed squarely at Alex. The reality is far more complex. Some decisions, such as not installing a new Club World seat on Boeing 787 and Airbus A380 aircraft, were made before his arrival. Many decisions, such as required levels of profitability on short-haul, are set by the parent company IAG and are outside of his control.
Alex made a number of public appearances last week, including the Routes Online conference in Bilbao, where he was interviewed by John Strickland.
As with any interview, Alex is constrained by the fact that some initiatives have to remain commercially confidential and City rules require any significant announcements to be announced by IAG to the Stock Exchange first.
However, there were some points of note:
– Alex is adamant that lessons have been learned from last May’s IT outage, both in terms of IT resilience and customer support.
– First Class is going to remain at BA, but it will continue to be downsized, as it has been over the past 20 years. It is expected that some four class Boeing 777-200 aircraft will be converted to three class and it seems inevitable that First will go from more routes as the Boeing 747 is retired.
– The much anticipated new Club World seat is still in development. So the seat you will see on Iberia’s soon-to-be-unveiled Airbus A350-900 aircraft will not be installed on BA’s Airbus A350-1000 when it arrives in 2019. Alex understandably did not give much away about the new cabin. However, it will be an entirely new seat and cabin layout for BA. There are 11 defined parameters such as direct aisle access for all and greater privacy.
– It has been known for some time that Club Europe catering is going to be reviewed again. However, as this was initially planned for April, it is going to be delayed for a few months.
– Buy-On-Board catering on short-haul is going to evolve with the possibility of pre-ordering food and improved options for the use of Avios and possible changes for Executive Club members.
– There is a strong emphasis on improving BA’s ground services, both in terms of departure punctuality and premium ground services. You may have noticed dedicated First Class areas at baggage belts for arrivals at Heathrow from New York JFK and initiatives such as this are to extended. Continue reading “Monday Briefing – 30 April 2018”
Hello and welcome to our Monday Briefing for the week beginning 23 April 2018, summarising the main developments in air travel over the past week, and a look the week ahead.
Boeing 787 Dreamliner Woes
Following a recent Federal Aviation Administration Directive limiting the ETOPS (Extended-range Twin-engine Operational Performance Standard) of the Boeing 787 Dreamliner with certain models of Rolls Royce engines, it is not known how many of BA’s 26 Dreamliners are affected.
However, in the absence of any official statement from the airline, it is clear that it is beginning to have an impact on its operations.
There have been tactical cancellations of Boeing 787 flights to Baltimore, Los Angeles and San Jose (California). In addition, some flights traditionally operated with the Boeing 787-9 have been substituted with a Boeing 787-8.
As the Dreamliner represents about 20% of BA’s wide body fleet it should have the capacity to absorb any additional maintenance requirements. However, this could continue for some time.
Hello and welcome to our Monday Briefing for the week beginning 16 April 2018, summarising the main developments in air travel over the past week, and a look the week ahead.
IAG confirms interest in Norwegian
The big story this week has of course IAG’s expression interest in Norwegian.
As reported last week, there is very little that is known at the moment, beyond the fact that IAG has acquired a 4.61% stake in Norwegian. However, that will not stop us indulging in speculation and guesswork.
According to The Sunday Times IAG had been quietly building up its stake over a period of time. Both IAG and Norwegian were clearly caught by surprise when Bloomberg first broke the story.
If IAG does ultimate acquire Norwegian, it would be the fourth airline to join IAG since its original formation after Aer Lingus, bmi and Vueling.
It can be said that confidence that IAG has been studying Norwegian for quite some time and this bid is the sort of “transformational” acquisition of a strong brand that leads a market segment that IAG seeks. IAG will also disregard what it would call “noise” in the press, online and from other quarters about any bid.
In terms of what happens next, it is worth recalling that IAG’s first approaches to Aer Lingus and Vueling were rebuffed. IAG’s negotiations with Lufthansa to buy bmi were punctuated by counter-bids and protests from Virgin. The original merger of BA and Iberia which led to the formation of IAG was also dogged by uncertainty as to whether it would go ahead.
What is unique about a possible Norwegian bid is the strength of the brand in both its home market and in the UK. Neither Iberia nor Vueling have made any significant in roads into the UK market under IAG. Indeed, both airlines have suspended some routes from London. There is no question that IAG would maintain the Norwegian brand given its strength in Northern Europe. The most significant question is what happens at Gatwick.
Norwegian has built up a significant operation at Gatwick with approximately 40 departures a day and whilst there would no doubt be a review of Norwegian’s operations at the airport, it is far from certain they would all be subsumed into BA. When IAG bought bmi in 2012, even though it seemed obvious that it would be merged into BA, some at IAG were pressing for it to remain separate and BA pilots offered productivity concessions for the two operations to be merged.
There has also long been the question as to whether a “twin brand” approach as per Qantas/Jetstar is a better approach for BA as opposed to trying to compete with low cost carriers whilst still trying to maintain its premium positioning. However, these decisions will ultimately be made by IAG, not BA. Continue reading “Monday Briefing – 16 April 2018”
Hello and welcome to our Monday Briefing for the week beginning 9 April 2018, summarising the main developments in air travel over the past week, and a look the week ahead.
Etihad scales back
For a time it seemed that the world of air travel had pivoted permanently towards the Middle East, specifically the “Big Three” airlines Emirates, Etihad and Qatar Airways who were set on a path of exponential growth in perpetuity.
With a relatively favourable operating environment and Government support on their side, it seemed that all these airlines needed to do was announce headline grabbing aircraft orders at air shows, run celebrity endorsed ad campaigns highlighting their capacious and luxurious cabins and they would able to syphon off ever more passengers on to ever more routes to their respective hubs.
And one of the most successful indicators of this strategy in Europe has been the volume of passengers flying from UK regional airports, bypassing hubs in Europe.
However, proving that the world of air travel is anything but predictable, Etihad has experienced a considerable downturn in its fortunes. In part, this is due to its disastrous strategy of buying minority stakes in failing European airlines. Etihad has confirmed to the media (BBC News) that it will suspend flights from Edinburgh to Abu Dhabi from October of his year.
Hello and welcome to our Monday Briefing for the week beginning 2 April 2018, summarising the main developments in air travel over the past week, and a look the week ahead.
Rest assured, there are no April Fools stories in this update.
BA suspends London Gatwick – Oakland
Over the past 18 months or so, BA has had its sights set firmly on taking on Norwegian at Gatwick.
It reinstated London Gatwick – New York JFK and added Fort Lauderdale and Oakland at Gatwick to take on Norwegian head to head.
It has also begun to “densify” its Boeing 777 fleet so that, according to BA, it will have a lower seat cost than Norwegian’s fleet of Boeing 787s.
Last week it emerged that taking on Norwegian at Gatwick may not be as straightforward as first thought. BA has announced that Oakland is suspended from Monday 22 October 2018.
This is all BA has said so far. It is not clear whether the route may return on a summer seasonal basis in 2019. BA has also not issued any rebooking guidance to passengers.
Whilst Norwegian can claim a victory in this instance, its own financial and operational performance remains under scrutiny. Passengers flying from Gatwick to New York JFK in particular have been beset by cancellations and delays. The performance of recently launched routes from Gatwick to Austin and Chicago will also provide an indication of how much more scope there is to grow on North Atlantic routes. Continue reading “Monday Briefing – 2 April 2018”
Hello and welcome to our Monday Briefing for the week beginning 26 March 2018, summarising the main developments in air travel over the past week, and a look the week ahead.
Qantas completes inaugural non-stop Perth – London flight
There will no doubt be a great sense of relief at Qantas that its inaugural flight from Perth to London Heathrow, with a fuselage brimming with journalists and politicians, went without a hitch.
Alas, our invitation to the inaugural flight was lost in the post. However, you can read first hand accounts from Natalie Richards of The West Australian and this video report from Beau Pearson of Network Ten Australia:
Qantas CEO Alan Joyce told the Sydney Morning Herald that non-stop flights to Paris are under consideration, subject to the performance of London – Perth.
Many UK journalists will be on board the inaugural London – Perth flight QF10 which left Heathrow at 13:09 Sunday afternoon and should arrive in Perth at around 06:00 BST / 13:00 AWST. They will no doubt be filing their own reports shortly after landing.
Qantas is naturally upbeat on forward bookings for the route. Whilst airlines never give away exact numbers on the performance of individual routes we should know in a couple of months from Civil Aviation Authority data how the route is performing in terms of passenger numbers.
Qantas has also opened a new international transit lounge in Perth dedicated to passengers transiting in Perth when travelling on QF9/Q10 services from/to Melbourne and passengers travelling from Perth to London. Continue reading “Monday Briefing – 26 March 2018”
Hello and welcome to our Monday Briefing for the week beginning 19 March 2018, summarising the main developments in air travel over the past week, and a look the week ahead.
Summer Schedule Changes
This coming Sunday, 25 March 2018, marks the beginning of the summer travel season (though the weather clearly thinks otherwise!).
The big headline is of course the launch of the first non-stop scheduled passenger service between London and Australia.
At 05:10 on Sunday 25 March, if all goes to plan, flight QF9 will arrive at London Heathrow Terminal 3 having completed a 17 hour and 20 minute journey from Perth. After eight hours rest, the aircraft will make its way back to Australia for a 16 hour and 45 minute flight back to Perth.
Qantas has made on secret of the fact it wants to launch more non-stop services to Australia and is actively inviting Airbus and Boeing to generate aircraft capable of doing so. As well as the technical capability of aircraft, the future of non-stop services to Australia will fundamentally depend on whether passengers are willing to pay a premium for a non-stop service when there are countless one-stop options.
At the same time, Qantas will also replace London – Dubai – Sydney with London – Singapore – Sydney. Qantas will continue to codeshare with Emirates on flights to Australia via Dubai, but will cease flying its own aircraft via Dubai. Continue reading “Monday Briefing – 19 March 2018”
Hello and welcome to our Monday Briefing for the week beginning 5 March 2018, summarising the main developments in air travel over the past week, and a look the week ahead.
UK & Ireland Weather
The big story over the past week has of course been the weather with very significant disruption across the UK and Ireland.
There has also been significant disruption on the US East Coast with Delta cancelling 900 flights on Friday.
Although it will be little comfort to those whose flights from Heathrow were cancelled, the airport’s preparedness and response to the snow was vastly better than in December 2010.
Consider that on Saturday 18 December 2010 there was the absurd sight of Heathrow’s then Head Of Media participating in a Day Today-esque interview on BBC News immediately after BA cancelled its entire schedule claiming that the airport was operating normally. That very same night no less than 9,500 passengers spent the night sleeping in Heathrow and some 4,000 flights were cancelled over five days. So credit to Heathrow as its investment in more equipment and resources has clearly paid off. (Heathrow’s Media Relations team was also completely overhauled shortly afterwards.) Continue reading “Monday Briefing – 5 March 2018”