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Hello and welcome to our Monday Briefing for the week beginning 23 July 2018, summarising the main developments in air travel over the past week, and a look to the week ahead.
Delta, Air France-KLM & Virgin Atlantic’s New Joint-Venture
Delta, Air France-KLM and Virgin Atlantic have submitted a request for regulatory approval from the Department for Transportation in the US to combine their two respective transatlantic joint-ventures.
The submission, set out in more detail here, gives a flavour of what to expect in the UK from the combined joint-venture:
– The airlines have expressed a desire to co-locate at London Heathrow. Given Virgin Atlantic’s significant investment at Terminal 3, this would most likely mean Air France and KLM moving from Terminal 4 to 3. This is of course subject to Heathrow being able to accommodate such a move.
– Virgin Atlantic will codeshare on Air France and KLM flights from UK airports to their respective hubs in Paris Charles de Gaulle and Amsterdam.
– Virgin Atlantic will also codeshare on Air France and KLM flights around the world, thus offering significantly more booking options to Virgin Atlantic passengers.
– Virgin Atlantic will retain its own frequent flyer programme, but with earning and redemption opportunities on Air France and KLM flights.
It should be emphasised that these are broad-brush submissions. Once regulatory approval has been obtained, these are likely to be rolled out progressively as there is a lot of detail to be worked through. Indeed, it took a year from the airlines announcing their plans to combine their joint-ventures to agreeing commercial terms between themselves.
A clear theme is a desire/need for Virgin Atlantic and Delta to be a stronger competitor against BA and Oneworld at London Heathrow and in the UK market, particularly for corporate customers and frequent flyers.
The combined joint-venture sees it itself as a much stronger competitor in UK regional airports by offering competitive connections via Amsterdam and Paris Charles de Gaulle.
Air France and KLM can also compensate for Virgin’s relatively weak non-US network where it can offer codeshares to a very large number of worldwide destinations. Indeed, Air France and KLM serve very many destinations in Africa and Asia that are not served by BA.
It will be interesting to see how BA and American Airlines respond, both at London Heathrow and at UK regional airports.
Europe’s Long Hot Summer
It is proving to be one long hot summer in Europe in many ways.
easyJet, Ryanair and Vueling continue to rail against Air Traffic Control strikes, notably in Marseille, and staff shortages.
For short-haul airlines, it is critical that the “first wave” of morning departures leave on time to avoid delays cascading throughout the day. Ryanair claims that Air Traffic Control staff shortages are delaying around 20% of its “first wave” flights.
Ryanair has also been progressively recognising cabin crew and pilot unions in many European territories. It has already faced industrial action by pilots in Ireland. Cabin crew in Belgium, Portugal and Spain are due to go on strike on Wednesday 25 and Thursday 26 July. Ryanair has proactively cancelled 300 out of 2,400 daily flights.
In Berlin, easyJet is finding it harder than expected launching its new operation at Berlin Tegel, citing inefficient schedules and higher than expected competition. Load factors are below that of the rest of the network. easyJet is forecasting a wider loss than expected of €175m for the year.
In the UK, an unedifying Parliamentary session comes to an end with the summer recess beginning on Tuesday. Prime Minister Theresa May continues to walk a political tightrope trying to assuage different wings of the Conservative party to get Brexit legislation through Parliament. The spectre of a “No Deal” crash out of the European Union has been raised again. There should be no illusion that this would be disastrous. There are of course signifiant implications on air travel, including traffic rights, ownership laws and certification requirements.
It is going to be a very long 8 months before the UK leaves the European Union on 29 March 2019. Given the fundamental disconnect between the methodical orderly rules-based approach of the EU and complete chaos in Westminster, matters are likely to get worse before they get better.
One small positive note: If you’re flying BA from Gatwick to Venice, Limoges, Bordeaux, or Jersey over the next couple of days you may find yourself on a PrivatAir Boeing 737 which has been wet-leased to cover some flights.
Farnborough Air Show
The Farnborough Air Show took place last week.
In terms of aircraft orders there was not much activity from European airlines. BA confirmed, as had long been expected, that it will order three Boeing 777-300 aircraft which it will lease from an undisclosed third party. IAG’s LEVEL will also acquire an additional 2 Airbus A330 aircraft.
HiFly’s Save The Coral Reefs Airbus A380
Portugal’s HiFly provides wet lease capacity to a number of airlines. Notably, it has provided Airbus A330 and Airbus A340 aircraft to Norwegian at Gatwick in recent months.
A big attraction at the Farnborough Air Show was a recently acquired second hand Airbus A380 by HiFly in a special livery to support the Mirpuri Foundation Save the Coral Reefs campaign.
The campaign seeks to stop the destruction of coral reefs. One side of the aircraft shows a pristine ocean with colourful and healthy marine life and the other displaying destroyed corals. The livery was created using AzkoNobel products.
HiFly say they expect to use the Airbus A380 to provide wet lease capacity to as yet unspecified European airlines to cover transatlantic flights.
Also of note this week:
Almost everything you could possibly want to know about BA World Traveller Plus. (London Air Travel)
BA launches winter seasonal London Gatwick – Cologne (London Air Travel)
New scanners at London Heathrow could bring an end to restrictions on liquids in hand baggage. (The Guardian)
Five London councils are to take legal action in concert against the Government’s decision to support a third runway at Heathrow. (Wandsworth Council)
Late Post Publication Updates:
[Reserved for updates during the day.]
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