Speculation over the future of Flybe accelerated last week.
Mark Kleinman of Sky News, one of the most consistently reliable sources of business scoops, revealed that Virgin Atlantic is actively looking at a bid for the airline. This was confirmed by both sides.
For an airline that has always attempted to exude glamour and has had only brief forays into the world of short-haul in its near 35 year history, short-haul regional flying is a world away from Virgin’s Clubhouses and Upper Class bars. We take a look at why Virgin may be interested in Flybe here.
The Sunday Telegraph also reported that according to “aviation sources” IAG is a front-runner to buy Flybe. Do bear in mind that, based on the track record of the Sunday papers, “aviation sources” could be anybody.
It is also hard to reconcile this with IAG’s historical approach of buying airlines that either buttress its existing hubs or have strong leadership positions at their own hubs.
Its airlines have also shown little relatively interest in regional airports. Both Aer Lingus and Iberia rely on franchise partners for regional flights. Indeed, Aer Lingus has actually scaled back from UK regional airports. It will also be recalled that BA sold its troubled “BA Connect” regional business to Flybe ten years ago and since disposed of a stake in the airline. IAG of course also has its sights set on Norwegian, which is exactly the sort of “transformational” deal it pursues.
BA Retires The Boeing 767
BA finally retires its last two remaining Boeing 767 aircraft today.
The last two remaining aircraft will fly from Heathrow to The Ministry Of Defence in St Athan. It completed its last passenger flight last night, BA663 from Larnaca, arriving at London Heathrow Terminal 5 at 22:34.
BA’s press photographer flew out to catch the final flight from Heathrow landing in Larnaca, so pictures of the final flights should be available shortly.
In other fleet news, BA took delivery of its first Airbus A321 Neo aircraft last week. This is the first of 10 to be delivered to the airline over the next two years.
2019 is a potentially interesting year for frequent flyer programmes.
In the UK, the field is dominated by the BA Executive Club and its Avios currency. However, a number of BA’s rivals are starting to make moves.
easyJet has confirmed it is to launch its own frequent flyer currency next year which members will able to redeem for as yet unspecified rewards.
Virgin Atlantic is to also spin-off its Flying Club frequent flyer programme in to a separate legal entity and launch a new loyalty programme which will partner with Air France-KLM.
Back to BA, at some point it is expected to revamp the Executive Club with the possibility of Avios awarded according to the price of the flight and dynamic pricing of reward flights.
BA Returns To Doha
In what must be the longest streak of cancellations without suspending a route, BA returns to Doha this Saturday 1 December after a break of 8 months.
Flights had been cancelled to release aircraft due to maintenance checks on the Boeing 787 fleet. It seems Doha has been spared further cancellations as BA is to continue to wet lease an Airbus A340 from Air Belgium to cover one return flight to Dubai until late March 2019.
Also of note this week:
Air France is to cut its Airbus A380 fleet in half as five aircraft will be returned to lessors. Expect this to be the first of many fleet changes under new leadership from Ben Smith. (Les Echos)
Finnair continues its retrospective to mark its 95th birthday, looking back at pilot uniforms. (Finnair)
The FT interviews Flybondi CEO Julian Cook on breaking into the Argentina’s domestic market. (Financial Times)
Late Post Publication Updates:
[Reserved for updates during the day.]
Our Monday Briefing is published every Monday at 06:00 GMT. If you have any comments, suggestions or tips then please drop us a line at mail [@] londonairtravel.com
If you want to receive this, and all other posts, directly to your inbox simply subscribe using the box at the foot of this page.
British Airways is wet leasing an Embraer E190 aircraft at London City, previously operated by Virgin Australia.
London Air Travel
Opinions have always been divided on whether business class on intra-European flights is worth it.
However, in the case of BA from London City, the general consensus it isn’t.
There’s no lounge at London City. The seating configuration is the same as economy. And, due to the overall number of seats being capped at less than 100 for industrial relations reasons, there is relatively generous leg room in economy.
However, there is now one aircraft where business class is at least a tangible improvement. Some time ago BA announced a wet-leasing agreement with Stobart Air to provide additional capacity at London City.
The first aircraft, registration EI-GHK, entered into service this weekend. The aircraft used to be operated by Virgin Australia.
It does benefit from a separate business class cabin. It comprises two rows, each with three seats in a 1-2 configuration. Passengers also benefit from more generous leg room of 38 inches.
There is of course a certain irony in a BA flight operating with a cabin from a Virgin branded airline.
Virgin Atlantic has confirmed it’s looking at a potential bid for Flybe.
London Air Travel
Following Sky News’ exclusive report on Thursday evening, Virgin Atlantic has confirmed it is in discussions about a possible bid to buy Flybe.
Flybe announced a little over a week ago that it had put itself up for sale and has appointed advisors to manage the process.
At the outset there are some caveats.
When a business announces it is up for sale, it is to be expected that many parties will come forward to have a good look at the books. Few will ultimately submit a bid.
Ordinarily, their identities are supposed to be confidential. When prospective purchasers are leaked to the media, it is usually deliberate and for a reason. More names may appear in the press this weekend.
Given Virgin’s existing codeshare relationship and the potential impact of a change in ownership it is to be expected that Virgin will take an active interest in the process.
With Virgin’s track record you could be forgiven this was simply a means of generating press coverage. When Lufthansa sold bmi seven years ago Virgin made a lot of noise about making a bid. It was not seen by Lufthansa as anywhere near as credible as the bid by International Airlines Group. So much so that the only alternative was liquidating the airline.
However, the fact that Virgin has appointed Rothschild to advise suggests it is serious in its intent.
Why would an exclusively long-haul airline want to buy a regional airline that barely touches the airports it serves?
Virgin Atlantic and Flybe
Virgin Atlantic does have an existing codeshare relationship with Flybe.
It relies on Flybe to provide short-haul feed, principally at Heathrow and Manchester. Flybe’s routes from Heathrow to Aberdeen and Edinburgh use remedy slots released by BA as a condition of its merger with bmi. Virgin tried unsuccessfully to use these slots itself, wet leasing aircraft from Aer Lingus under the brand “Little Red”. Should Flybe withdraw from Heathrow for any reason, these would revert back to BA.
There is another factor: Air France-KLM. It is due to take a stake in Virgin next year. Air France-KLM and Virgin will combine their respective transatlantic joint-ventures with Delta into one to compete more effectively with American Airlines and BA. Air France relies on Flybe to provide feed to Paris Charles de Gaulle from some UK regional airports. Flybe’s UK regional network could be optimised to feed all four airlines.
That said, there are a lot of things that don’t make sense.
Virgin is loss-making and has much else to do next year. Long-haul and short-haul regional operations are radically different. Flybe has substantial operations at airports of little strategic interest, Cardiff, Exeter, London City, Norwich, Southampton. A lot of politically unpopular decisions would have to be made. If Virgin wants to acquire more short-haul feed at Heathrow and Manchester – and this is the dilemma facing any potential purchaser – there are other ways to go about it than buying Flybe.
Expect this to run and run over the next few months.
Flybe will transfer its flights to Newquay from Gatwick to Heathrow from Sunday 31 March 2019.
London Air Travel
Heathrow Airport has snatched another route from Gatwick as Flybe is to transfer its service to Newquay from Sunday 31 March 2018.
Currently, Flybe flies from Gatwick to Newquay up to three times daily, typically with an Embraer E195 aircraft.
From Sunday 31 March 2018, this will operate from London Heathrow up to four times daily with a smaller Bombardier Dash 8 Q400 turboprop aircraft.
This was Flybe’s last remaining route at Gatwick which means the airline will leave the airport. The London – Newquay route is a Public Service Obligation route and is supported by funding from Government and Cornwall Council.
Flights will be on sale at Flybe before the end of November 2018.
It’s worth noting that the existing Gatwick – Newquay is codeshared with a number of airlines including BA, Emirates and Virgin.
It’s a safe assumption that to support four flights a day and connectivity for the South West region there will be a substantial number of codeshares with airlines at Heathrow.
If you have an existing booking for travel after Sunday 31 March 2019 to connect to/from a long-haul flight at Gatwick it is strongly advised to change your connection to Heathrow if possible. Otherwise, you will probably have to avoid have to cross London at your own expense. This is best avoided at almost all cost. Continue reading “Flybe launches London Heathrow – Newquay”
easyJet is to launch a new frequent flyer scheme in 2019 which promises new ways to earn and redeem points when flying with easyJet.
London Air Travel
By far the most dominant frequent flyer currency in the UK is “Avios” used by British Airways, its fellow IAG airlines and many partners such as Flybe.
The sheer range of earning opportunities through flying and everyday expenditure as well as the redemption opportunities on flights from the UK, means that rival airlines struggle to offer a competitive alternative.
That may change next year. Virgin Atlantic will partner with Air France-KLM when the two combine their respective transatlantic joint-ventures with Delta into one.
easyJet also promises to relaunch its frequent flyer proposition next year.
easyJet Plus is paid for membership scheme which affords certain benefits such as free seat selection and fast track ground facilities.
Flight Club is a scheme for frequent flyers who book more than 20 flights a year with easyJet. They are invited to join at the discretion of the airline and afforded benefits such as free flight changes.
easyJet’s New Programme
easyJet intends to relaunch its frequent flyer programmes with a new currency where points can be earned in a range of ways.
The new programme will be announced next year and rolled out across Europe in 2020.
It will be behaviour led. It will be possible to earn points in a variety of ways, specifically those that contribute to easyJet’s bottom line. This includes using certain online services or buying easyJet branded financial services such as travel insurance. Third parties will also be invited to participate in the programme.
Points can then be redeemed on “exclusive rewards to enhance the trip” and reward flights for points and a cash payment. easyJet also suggests that the programme will have tiers which will provide additional benefits.
easyJet’s approach to loyalty to date is to focus on activities that generate additional revenue without adding significant expense or operational complexity. This is likely to continue. Do not expect a full blown replica of the Avios programme. However, easyJet clearly sees this as a means to win more passengers from legacy airlines.
What easyJet’s programme may lack compared to the Avios currency is an “aspirational” reward, such as business and First Class long-haul flights. However, given easyJet has a very extensive short-haul network from Gatwick, this is one we’ll keep a watching brief on. Continue reading “easyJet To Relaunch Frequent Flyer Programmes”
The Atlantic Update is a weekly bulletin on transatlantic travel, published every Wednesday at 06:00 GMT.
London Air Travel
Welcome to the The Atlantic Update for Wednesday 21 November 2018.
This week of course marks the Thanksgiving holiday.
US airlines expect to carry more than 30 million passengers across the 12 day travel period up to Tuesday 27 November 2018. The busiest days are expected to be Sunday 25 November and Monday 26 November 2018. At the time of writing, whilst it will be very cold in the North East, there are no major weather disruptions expected to travel.
Delta launches La Guardia – Key West
Delta has announced a new seasonal Saturday service from New York La Guardia to Key West, Florida.
The route launches on Saturday 9 March 2019 and operates until Saturday 31 August 2019. Flights are operated with an Embraer E-170 aircraft. Flight DL6007 departs La Guardia at 09:00 and arrives in Key West at 12:43. The return flight DL5914 departs Key West at 13:13 and arrives in La Guardia at 16:24.
Brightline to become Virgin Trains USA
Sir Richard Branson’s Virgin Group has announced it is to take a minority stake in the privately owned rail company Brightline.
It recently launched a new rail service between Miami, Fort Lauderdale and West Palm Peach, with ambitions to extend to Tampa and Orlando. The service will be rebranded as Virgin Trains USA in 2019.
Virgin Group has long been keen to extend its brand presence in the US, which has diminished of late due to the sale of Virgin America. It does of course retain a presence through Virgin Atlantic, Virgin Galactic and Virgin Hotels. There is clearly scope for significant cross promotion.
Also of note this week:
Nashville International Airport sets out its expansion plans. (BNA Vision)
Late Post Publication Updates
[Reserved for updates during the day.]
The Atlantic Update is published every Wednesday at 06:00 GMT. If you have any comments, suggestions or tips then please drop us a line at mail [@] londonairtravel.com
The latest developments in media and technology, published every Tuesday at 06:00 GMT.
London Air Travel
Hello and welcome to our weekly travel media and technology bulletin, published every Tuesday at 06:00 GMT.
Facebook Under Fire (Again)
Trouble at Menlo Park.
An extensive investigation by the New York Times, based on interviews with many current and former employees, has found Facebook adopted a strategy of “Delay, Deny and Deflect” when faced with evidence of misuse of its platform by Russian intelligence agents during the 2016 US Presidential Election.
It also hired a Washington based PR firm Definers Public Affairs to seed opposition research on Facebook’s critics – which both Mark Zuckerberg and Sheryl Sandberg deny any knowledge of.
The New York Times investigation drew an equally defensive response from the company, threatening to sack employees who speak to the press.
Bloomberg reports that continued questions over the company’s strategy has had a bruising impact on internal morale.
Meanwhile, Apple CEO Tim Cook has conceded that regulation of the technology sector is inevitable.
On a related note, investigative journalists Carole Cadwalladr and Peter Jukes have launched a new podcast Dial M for Mueller on why the UK hasn’t followed the US in investigating interference by malicious actors in democratic processes.
Its profit before tax fell 54% to £7.4m. Revenue fell 2.4% to £409.2m following cuts in capacity and net debt increased 40% to £82.1m.
The all important number however is cash. As at 30 September 2018, the airline has £70.6m of cash compared to £101.3m in the previous year. £16.4m of this is deemed “restricted cash”. Flybe has had to provide partial collateral to two companies that handle its credit and debit card transactions. This may rise and fall in line with seasonal sales patterns.
Flybe has given warning that its ability to trade as a going concern is dependent on card handling companies not demanding additional collateral and it carrying out certain asset sales to raise cash. One of these is the sale and leaseback of its aircraft hangar at Exeter airport for £5m. This was subsequently announced last week. The airline is also being advised on cash flow by the professional services firm KPMG.
The airline has also officially confirmed that it has put itself up for sale. It is unlikely that any buyer would be another airline group. BA sold its former “BA Connect” regional business to Flybe more than 10 years ago. It has since divested of a 15% stake in Flybe. Air France-KLM sold CityJet five years ago. And Lufthansa would not want to repeat its experience with bmi. It can be said with confidence that these groups will have already been approached privately.
That said, there are a lot of parties with a vested interest in the future of Flybe. Of 19 scheduled departures from Exeter airport today, just 1 is not operated by Flybe. Flybe also has dominant positions at Cardiff, Norwich and Southampton airports.
All airlines ultimately depend on cash flow from forward bookings and credit from suppliers. Speculation in itself is not helpful. It would be remiss not to also acknowledge the human impact of any airline failure. The sensible measures that apply to any airline ticket purchase, namely using a credit card and having adequate travel insurance, should not deter anyone from booking with any airline.
On a related note, easyJet announces its annual results tomorrow and should provide an update on recent initiatives in the areas of easyJet Holidays and its loyalty programme.
Of all the American imports into the UK, Black Friday makes the least sense.
The story behind Black Friday is well known. This Thursday is the Thanksgiving Holiday in the US. Black Friday is the equivalent of the UK’s Boxing Day sales and, legend has it, the day that US retailers go into the black. This Friday is of course not Boxing Day in the UK. It’s an ordinary working day. Most people haven’t neither the time nor inclination to plow through scores of e-mails from online retailers and airlines which are more of an irritation than anything else. The vast majority of efforts are also pretty half-hearted. Continue reading “Monday Briefing – 19 November 2018”
A look at the latest version of the Boeing 787 as airlines take delivery of the Boeing 787-10.
London Air Travel
The Boeing 787 Dreamliner is now a firm fixture in the fleets of many long-haul airlines from London.
The Boeing 787-8 has, with great success, opened up many new transatlantic routes such as Nashville and New Orleans and, from next year, Charleston and Pittsburgh. The Boeing 787-9 has established the first direct scheduled route between London and Australia, to Perth.
This year, airlines have begun to take delivery of the latest variant of the 787, the Boeing 787-10.
However, it’s not clear whether the 787-10 will be as revolutionary as its older siblings.
It’s a larger aircraft, with a length of 68m, compared to 57m for the 787-8 and 63m for the 787-9, but with the same height and wingspan. The most significant difference is that it has, based on official figures from Boeing, a shorter range of 6,430 nautical miles, compared to 7,355 nautical miles for the 787-8 and 7,635 for the 787-9. The total number of aircraft ordered is relatively small, 169 out of over 1,400 for the 787 in total.
Always one to pride itself on world firsts, Singapore Airlines took delivery of the first Boeing 787-10 in March of this year.
Singapore Airlines now has 7 aircraft, out of an order of 47. These operate in a two class configuration with 337 seats in total. It’s used on what the airline terms “regional” routes of less than eight hours from Singapore to Manila, Nagoya, Osaka, Perth and Tokyo Narita.
United Airlines has taken delivery of its first Boeing 787-10.
It has ordered 14 aircraft in total. It will operate on transcontinental flights from Newark to Los Angeles from Monday 7 January 2018. Next summer, it will progressively operate on transatlantic routes from Newark to Barcelona, Dublin, Frankfurt, Paris Charles de Gaulle and Tel Aviv. United has yet to reveal interior images of the aircraft, but it will feature its “Polaris” business class seat as well as premium economy and economy cabins.
Etihad has very recently taken delivery of 2 out of 30 Boeing 787-10 aircraft. However, given its current financial situation, its fleet plans are likely to be reviewed.
British Airways plans to take delivery of 12 aircraft from 2020 to 2023, with the first six due to arrive in 2020. This will take its total number of 787s to 42, making it very close to the largest series of aircraft in its long-haul fleet.
BA is the only UK airline to have ordered the Boeing 787-10. Like the Airbus A350-1000, it is intended to replace the Boeing 747. The first Airbus A350-1000 aircraft to be delivered next year will not have First Class and will replace many 52 Club World seat Boeing 747s. As such, it is likely the Boeing 787-10 will have First Class and a higher Club World configuration to replace the 70 Club World seat Boeing 747s on routes such as New York JFK. It will of course feature BA’s new Club World seat.
Other airlines to take delivery of the Boeing 787-10 include Air France-KLM (though its new CEO has indicated that the fleet plans of Air France and KLM will be reviewed), ANA and Eva Air.
Airlines will be keen to showcase their latest cabins and advanced in-flight entertainment systems on the 787-10. However, with its larger size and relatively limited range, the Boeing 787-10 is likely to be a replacement for aircraft on many existing routes, rather than a gateway to new routes. The principal benefit seems to be its fuel efficiency and commonality with the 787-8 and 787-9.
For aircraft that will open up the next phase of new long-haul routes from London, we’ll have to turn to the Airbus A350 Ultra Long Range and the Boeing 777X which are currently under consideration by Qantas for non-stop flights to Sydney.