As we prepare to say farewell to 2017 and look forward to what will no doubt be a very eventful and exciting 2018, we take a customary look back at the year just gone. Here’s what we predicted might happen this time 12 months ago.
We should of course thank readers for your support over the past twelve months and hope you will continue reading over the next year.
1. The world of aviation is anything but predictable.
Who would have thought this time last year that a conciliatory Michael O’Leary would agree to recognise pilot unions in order to head off a Christmas strike at Ryanair?
Or that Qantas would reinstate London – Singapore – Sydney?
Or that someone could (allegedly) ground an airline by pulling out a plug?
Well, it all happened in 2017.
2. Airline brands are resilient.
United Airlines, British Airways and Ryanair all had opprobrium heaped on them this year.
United Airlines for the manner in which a passenger was forcibly removed from an overbooked flight. BA for its May Bank Holiday IT meltdown. And Ryanair for its cancellations due to pilot shortages.
Yet, at least in the case of BA and Ryanair, load factors have remained strong and their passenger numbers are rising.
Perhaps its the sheer speed of the news cycle that front page headlines are forgotten as quickly as they spread around the world. Or perhaps the scale of their respective networks that means that passenger loyalties cannot be easily switched.
3. European aviation is entering its next phase of consolidation.
This year we bid adieu to Air Berlin and Monarch who joined bmi British Midland, Cyprus Airways, Flyglobespan, Malev, XL Airways and Zoom in the great airline graveyard in the sky.
Sir Richard Branson also agreed to cede control of Virgin Atlantic by selling a stake to Air France KLM, which will then leave Delta Air Lines as its single largest shareholder.
There are still many independent airlines in Europe (Air Malta, CityJet, Finnair, Flybe, SAS, TAP). However, it is clear that European aviation is consolidating into the “Big Three” network groups (Air France KLM, IAG, Lufthansa) and easyJet and Ryanair. Some airlines, particularly those that are partially state-owned, will need to make decisions about their future in the coming years.
4. Aer Lingus is becoming a major player on transatlantic routes.
Under the umbrella of IAG, Aer Lingus has pursued substantial growth of its transatlantic route network from its hub in Dublin. Next year, it will add Philadelphia (from 25 March 2018) and Seattle (from 18 May 2018) meaning it will have coverage of all major East and West Coast gateways. Further growth is expected as it takes delivery of the Airbus A321 Long Range aircraft which may open up routes not served directly from London.
Aer Lingus is also expected to join the transatlantic joint-venture with American Airlines, BA, Finnair and Iberia. Frustratingly, there appear to be no imminent plans for Aer Lingus to join the Oneworld alliance.
5. The concept of low cost long-haul is here to stay.
Norwegian continued to pursue its relentlessly aggressive expansion this year. This year, it launched London Gatwick – Denver, Seattle and Singapore. Next year, it will launch London Gatwick – Austin, Chicago O’Hare and Buenos Aires. It has also purchased additional slots to launch more, as yet announced routes, at Gatwick.
Whilst legitimate question marks still remain over its debt levels and the sustainability of its expansion, its impact on long-haul travel will remain.
Many long-haul airlines now offer the equivalent of unbundled “hand baggage only” fares (Aer Lingus, Delta). It seems only a matter of time before British Airways and Virgin Atlantic follow suit. It’s also questionable how long the one-size-fits-all take-it-or-leave-it economy catering service (a la “Chicken Or Beef?”) is for this world.
6. Airline groups are developing brands overtly targeted at demographics.
The concept of the multi-brand airline group is nothing new. However, the brands of groups like IAG and Lufthansa have largely been defined by geography, whether through their brand identity or their regions served.
This year, IAG launched a new airline called LEVEL, aimed at millennials. Except it didn’t. LEVEL still does not exist as an airline. It is merely a brand operated by other airlines in the IAG group under different colours.
In the long-term, its feasible that the likes of IAG will become more like the hotel industry with large portfolios of brands based on demographics, not geography. The experience of BA this year has shown there are limits on how far one airline brand can serve different passenger groups. As airline groups standardise their fleets and operations so that aircraft can easily be moved between airlines, there is arguably great potential to develop more well-targetted brands.
7. Qantas is back in the long-haul game.
Five years ago, when Qantas announced its joint-venture with Emirates and that all of its London flights would be routed through Dubai the airline seemed destined to a gradual withdrawal from flying to Europe altogether.
However, next year Qantas will launch a non-stop flight from London Heathrow to Perth. It will also reinstate its former London Heathrow – Singapore – Sydney service. Qantas has also mooted non-stop flights to Sydney and other Australian cities. Needless to say, a confident Qantas investing in London is very welcome.
8. It’s harder to take something away than to never offer it in the first place.
BA bowed to what had seemed inevitable for some time and introduced Buy On Board catering on its European short-haul network from Gatwick and Heathrow.
Readers who, like this author, have flown on Europe’s short-haul airlines since the late 1990s could not fail to have noticed the gradual diminution in free catering. Indeed, there was a time when the free catering in economy short-haul was better than what you receive in business class today. At BA, the free offer that was widely inconsistent between between both Gatwick and Heathrow and by route was replaced with Marks & Spencer Buy On Board.
BA did itself no favours in not testing Buy On Board on a small scale to iron out teething problems with stocking levels and technology. And contrary to predictions by BA CEO Alex Cruz, its main legacy rivals have yet not followed suit in removing complimentary catering entirely. However, BA could still not have anticipated the wave of negative press coverage that ensued. And once the press get on to a narrative, it is very, very difficult to change it.
9. The growth story of the Middle East “Big Three” carriers is not as straightforward as first thought.
For a time it seemed that through a combination of headline grabbing aircraft orders, ever more capacious business and first class cabins, and ever expanding route networks the major Middle Eastern airlines were set on a path of exponential growth in perpetuity.
However, in 2017 geopolitical events in the United States and Middle East decided otherwise. And that’s before the near complete collapse of Etihad’s strategy of buying minority stakes in disparate European airlines. The Middle Eastern carriers are no less immune to economics and geopolitics than anyone else.
10. It’s good to surprise people.
BA Magic was utterly brilliant. Whilst it would be naive to ignore the PR motive, it’s a great example of an airline generously putting its substantial worldwide resources to good use for the benefit of others.
11. The automated airport is coming.
Automation has long played a part in the airport experience. Passengers have been accustomed to self-service check-in machines for well over 15 years. However, with self-service baggage drops, automated boarding gates, facial recognition technology and remote control airport ground vehicles, automation will increase significantly in coming years.
Also expect airlines to turn their attention to smart speakers which Amazon and Google are going to great efforts to get into people’s homes.
12. The frequent flyer game is almost over.
In recent years there has been a huge industry, particularly on the other side of the Atlantic, in squeezing every single last source of frequent flyer mile, often by selecting the most absurd and byzantine routings between two destinations as possible in order to obtain those coveted shiny frequent flyer cards.
Air France KLM and Lufthansa both followed many US airlines in changing their programmes so that miles are largely awarded by reference to cold hard cash than distance flown. BA and Virgin Atlantic have yet to respond.
It was good whilst it lasted. But the champagne always runs out at the party eventually.
13. The impact of “disruptors” is ridiculously overstated.
Legacy airline and hotel groups have been falling over themselves align with industry “disruptors”. Huge volumes of copy have been given over to celebrating disruptors and how they will leave legacy businesses in their wake. In the case of Uber, both Transport for London and the European Court of Justice were not so enthralled.
Such is the rule of law, it is utterly irrelevant what you call yourself when you are before the courts and regulators.
And hopefully this will finally put an end to the nonsense suggestion that someone needs to invent the Uber of the skies.
14. Alitalia continues to defy all predictions.
When Alitalia entered into administration in May of this year after its shareholder Etihad withdrew financial support, it seemed that its fate was sealed.
After numerous restructuring and recapitalisation exercises, it seemed that this was finally it. And yet, here we are nearly seven months on and Alitalia is still here. Not only that, it is carrying on in near blissful ignorance, adding new routes and planning for new staff uniforms.
Will Alitalia still be here next year? Probably.
16. If you like what you’ve read…
If you like what you’ve read then do check out our weekly Monday Briefing which resumes on Monday 8 January 2018.