Category: Monday Briefing

London Air Travel » Monday Briefing

Welcome to our Monday Briefing for the week beginning 9 December 2019.

South African Airways Enters Business Rescue Process

South African Airways has entered a formal process in South Africa known as “Business Rescue”.

This is a pre-insolvency process similar to Chapter 11 in the United States. A business rescue practitioner has been appointed to oversee the running of the airline and a restructuring process with the aim of avoiding a liquidation of the state owned airline.

Given South African Airways’ well documented and long-standing financial problems, this will, at a minimum, inevitably lead to substantial changes (though the process is highly political) particularly to its international network.

The Australian Competition & Consumer Commission on Loyalty Programmes

The Australian Competition & Consumer Commission published a report last week on loyalty programmes in Australia.

These of course include Qantas Frequent Flyer and Virgin Australia Velocity. The headline findings will not surprise those who are well versed in airline frequent flyer programmes, namely there’s no such thing as a free lunch and beware the fallacy of the sunk cost.

It does include specific recommendation such as greater transparency and protection against unfair contactual terms. The report also cites concerns about loyalty programmes acting as barriers to entry for new market entrants.

The report does also include some interesting comments on the psychological aspects of airline frequent flyer programmes, such as the “endowed progress effect” when members feel that as they have started on the journey towards a specific reward, they feel compelled to complete the journey to claim it.

Frequent flyer miles are of course currencies in their own rights. Around 110 billion Avios are issued across participating programmes every year. However, there is very little by way of consumer protection. Airlines can, and have, devalued frequent flyer currencies at very short notice with very little recourse.

Given the increasingly tough line regulators are adopting in favour of consumers in many territories (particularly the Competition & Markets Authority in the UK), do not rule out some form a formal regulation in the longer term.

Qantas & Air France-KLM Frequent Flyer Partnership

Staying on the theme of frequent flyer programmes, Qantas has today announced a new frequent flyer partnership with Air France-KLM.

Members of the Qantas Frequent Flyer programme will be able earn and redeem points across the entire Air France and KLM networks, as well as receive their frequent flyer benefits when flying on Air France and KLM. This follows the establishment of reciprocal codeshare last year.

Also of note this week:

The Civil Aviation Authority has appointed the consultancy Flint Global to advise on a possible break-up of Heathrow, whereby individual terminals would be operated by separate entities. (Sky News)

KLM has opened a new non-Schengen lounge at Amsterdam Schipol airport. (KLM)

Madrid Barajas airport is planning a series of changes to make the airport more welcoming to Chinese visitors such as accepting payments through WeChat Pay (UK airlines remain deeply frustrated at how the UK’s visa regime makes it much harder for Chinese visitors to come to the UK when visiting Europe). (El Pais In English)

Qantas launches a dedicated microsite to mark its centenary. (Qantas)

Continue reading “Monday Briefing – 9 December 2019”

London Air Travel » Monday Briefing

Welcome to our Monday Briefing for the week beginning 2 December 2019.

South African Airways

There has been considerable speculation about the long term health of South African Airways over the past week.

Last week the Financial Times reported that the airline was close to financial collapse. It had only paid 50% of staff salaries for the month having experienced a “sudden detoriation” in its finances following eight days of industrial action at the airline. Some insurers are also reported to have stopped providing insolvency protection for tickets issued by the airline due to fears over its future.

The South African Broadcasting Corporation has since reported that outstanding staff salaries have now been paid. However, negotiations are ongoing between South African Airways and the Government on securing state guarantees for further funding from commercial banks.

Virgin Trains Bows Out

After holding the West Coast Main Line railway franchise for 22 years, Virgin Trains bows out this coming Saturday.

It will be replaced by Avanti West Coast a joint-venture between First Group and Italian rail operator Trenitalia which will operate what will become known as the West Coast Partnership.

This is of course not strictly air travel related, but the upgrade to the West Coast Main Line from London Euston has had a significant impact on passenger volumes between London airports to Manchester. Whilst Virgin likes to take credit for the significant infrastructure upgrade, this should really go to UK taxpayers.

Today, in the air, just BA serves the route from Heathrow with occasional weekly summer flight from London City. Previously bmi British Midland, Virgin Atlantic Little Red and VLM have operated between London and Manchester.

With Virgin Trains’ East Coast Main Line franchise having been terminated early, this does significantly reduce the brand presence of Virgin in the UK. One consequence of the new franchise is that BA may introduce an interline agreement Avanti West Coast, as it has with London North Eastern Railway.

Clive James

The renowned author, critic and poet Clive James passed away last week.

Clive James’ long and distinguished career included the 1991 “Postcard From” series for BBC Television. The edition below is from his beloved home city of Sydney.

Clive was also a contributor to BBC Radio 4’s “A Point Of View”. This is one edition from April 2008, in which Clive revelled in the chaotic opening of London Heathrow Terminal 5.

Continue reading “Monday Briefing – 2 December 2019”

London Air Travel » Monday Briefing

Hello and welcome to our Monday Briefing for the week beginning 25 November 2019.

Qantas Tells Airbus & Boeing To “Sharpen Their Pencils”

After Qantas’ much hyped non-stop flight from London to Sydney a little over a week ago, Qantas revealed at its annual investor day that it is not currently satisfied with bids offered by either Airbus or Boeing for new ultra long range aircraft.

Airbus and Boeing have submitted proposals for the Airbus A350-1000ULR and Boeing 777-8X aircraft respectively. According to comments made by Tino La Spina, Chief Executive of Qantas International, Airbus and Boeing have been told to “sharpen their pencils”.

The business case for non-stop flights between London and Sydney is also described by Tino La Spina as “almost there”. Though, the previous deadline of the end of this year for a decision now appears to be an aspiration.

New Qantas Singapore First Class Lounge

Qantas officially opens its new First Class lounge in Singapore on Monday 2 December 2019.

Qantas has teased some images on social media this weekend. The Qantas website advises that access to the lounge may be available to a limited number of customers ahead of its official opening next week.

Gatwick Slot Trades

A couple of relatively minor slot trades at Gatwick were confirmed last week.

TUI Airways has transferred 27 weekly slot pairs to BA for the summer 2020 season. It has been suggested that this may be to facilitate charter services to be provided by BA to TUI.

3 weekly slots have also been transferred from Thomas Cook to BA. These appear to be the return of slots that were previously leased.

The End Of The Annual Christmas Film?

For the past few years, the release of an annual Christmas film by the world’s largest airlines and airports has been a firm fixture in the calendar.

Aided by direct distribution channels on social media, WestJet was the pioneer of this genre. Heathrow has for the past three years run very successful campaigns featuring the Heathrow “bears” Doris and Edward.

It does now feel that every permutation of the theme of the surprise flight / reunion has been exhausted, and Heathrow has wisely decided to take a break this year.

Disruption Advisory

Disruption is expected to flights to Italy today due to a general strike.

BA has in advance retimed the following return flights to Italy today:

BA2608 London Gatwick – Naples – STD 08:50 New ETD 13:55
BA2609 Naples – London Gatwick – STD 13:30 New ETD 18:30

BA576 London Heathrow – Milan Linate – STD 09:20 New ETD 08:40
BA577 Milan Linate – London Heathrow – STD 13:15 New ETD 12:20

BA2688 London Gatwick – Genoa – STD 10:25 New ETD 14:25
BA2689 Genoa – London Gatwick – STD 14:10 New ETD 18:20

Other flights are likely to be delayed and may also be cancelled at short notice. easyJet has also given warning of delays and cancellations on flights to Italy.

Finnair is also advising of possible disruption today at Helsinki airport due to secondary industrial action called by the Finnish Aviation Labour Union following a dispute at the Finnish postal service, Posti. (Finnair)

Continue reading “Monday Briefing – 25 November 2019”

London Air Travel » Monday Briefing

Welcome to our Monday Briefing for the week beginning 19 November 2019.

Qantas “Project Sunrise” Test Flights

You have to credit Qantas for the amount of PR they have managed to generate from its “Project Sunrise” test flights to Sydney.

You can read reviews of the latest flight from London Heathrow to Sydney from CNN and The Sunday Times.

Of course, PR is all about expectations management and timing. Qantas has said a final decision on whether to order ultra long-range aircraft will be made by the end of the year. Given that a final go ahead also requires regulatory approval from the Civil Aviation Safety Authority of Australia, and agreement with Qantas trade unions, it seems implausible this will all happen in the next six weeks.

Qantas is holding its annual investors day at 09:00 AEDT on Wednesday 19 November 2019 and may provide more detailed timescales then.

South African Airways Strike

South African Airways’ local and international flights have been subject to significant disruption over the weekend due to open-ended industrial action called by the South African Airways Cabin Crew Association (SACAA) and the National Union of Metalworkers of South Africa (NUMSA).

South African Airways’ flight from London Heathrow to Johannesburg has been cancelled on Saturday and Sunday, but is expected to resume from today.

The strike follows the announcement of a restructuring plan by the state-owned airline which has not submitted financial statements to the Parliament of South Africa for the past two years.

The South African Broadcasting Corporation reports that National Union of Metalworkers of South Africa is to call a secondary strike which may result in broader disruption to the aviation industry in South Africa.

The latest guidance for passengers is available from South African Airways.

Lufthansa Sustainability Measures

Lufthansa has announced a number of group-wide sustainability measures to encourage passengers to offset the carbon emissions from their flights.

Both Lufthansa and SWISS have adopted the “Compensaid” platform which allows passengers to offset CO2 emissions from their flights. Lufthansa also plans to introduce a new corporate fare which automatically includes carbon offsetting from 2020.

Virgin Australia “Up, Up and Toupee”

Virgin Australia has launched a new TV advertising campaign in Australia. In a somewhat “different” advert under the banner of “Feel Good Flying”, it features a flying toupee taking off from its owner and making its own way to the airport.

This marks a retreat by Virgin Australia which had sought to become a full service, second force rival to Qantas Group and positioning itself somewhere in the middle of its budget airline origins and Qantas.

The Age Melbourne features an interview with Virgin’s recently appointed CEO Paul Scurrah.

Continue reading “Monday Briefing – 18 November 2019”

London Air Travel » Monday Briefing

Welcome to our Monday Briefing for the week beginning 4 November 2019

International Airlines Group To Acquire Air Europa

IAG has announced to the stock exchange this morning that it has reached an agreement to acquire Air Europa for €1 billion.

IAG claims the acquisition will consolidate its position in the Europe – South America market and the competitiveness of its Madrid hub against European rivals. Last year, Air Europa carried 11.8 million passengers operating a fleet of 66 aircraft.

Air Europa will initially operate as a standalone airline in IAG but will co-operate with other IAG airlines through codesharing and adoption of the Avios frequent flyer currency. The transaction is expected to complete in the second half of 2020. This will be the first acquisition by IAG in nearly five years following the purchase of Aer Lingus.

The full press statement can be viewed at IAG and a full write up of the deal is here.

International Airlines Group Capital Markets Day

IAG holds its annual Capital Markets Day this coming Friday, 8 November 2019.

It’s at previous events we have learned of BA’s plans to “densify” its Boeing 777 aircraft and its investment plans for Club World.

Given IAG’s recent announcement to achieve net zero CO₂ emissions by 2050, the group’s response to climate change is likely to feature prominently.

At a minimum, we should have an updated fleet plan for IAG airlines. Hopefully, there will be further details of planned BA lounge refurbishments, a firm timetable for the roll out of its Club Suite and plans for long-haul expansion at London Gatwick.

It is also often the case that developments you expect to be announced aren’t. We have been waiting some time for IAG to implement single Avios account balances across IAG frequent flyer programmes and dynamic pricing of Avios rewards.

You can read a recap of last year’s events here as well as the BA specific announcements from the day.

If there are any announcements of note, we will share them throughout the day on Twitter.

Air France-KLM is also holding its annual investor day tomorrow, 5 November 2019 and Finnair holds its event next Tuesday, 12 November 2019.

Norwegian’s Challenge

At IAG’s third quarter results announcement last week Willie Walsh said of Norwegian that it is “clearly not out of the woods yet” and “they still have a long way to go”.

The Financial Times documents the scale of the challenge for its new CEO Geir Karlsen.

The airline has a debt burden of $6.8 billion. Its credit card companies are holding back funds, depriving the airline of vital liquidity. Like many other airlines, it is also contending with the grounding of the Boeing 737 MAX and some Boeing 787 aircraft.

It has obtained some breathing space by deferring the redemption of two bonds. Other measures to shore up liquidity are on the table such as selling off all or part of its frequent flyer programme.

Qantas “Project Sunrise” Update

Qantas has set itself a hard deadline of December of this year to make a decision whether to order capable of flying from London to Sydney non-stop.

This is subject not only economically viable offers from Airbus and Boeing, but also regulatory approval and agreement with Qantas trade unions.

Qantas CEO Alan Joyce of course has form on not being afraid to play hard ball with Qantas trade unions. The Sydney Morning Herald reports of tensions emerging between Qantas and its trade unions, who are making it clear they will not be boxed in by an arbitrary deadline.

Continue reading “Monday Briefing – 4 November 2019”

London Air Travel » Monday Briefing

Welcome to our Monday Briefing for the week beginning 28 October 2019.

European Airlines Third Quarter Results

Air France-KLM and IAG announce their third quarter results this coming Thursday, 31 October 2019. Lufthansa follows next Thursday, 7 November 2019.

In the case of IAG we know that results will be severely impacted by the three days of planned industrial action by BA pilots in September. Protests in Hong Kong will also have had an impact.

Last week Qantas stated that the collapse in traffic to Hong Kong had cost the airline AUD$25 million. Qantas also cited weakening demand and the global trade war having an impact on cargo volumes.

Whilst any significant announcements are likely to be reserved for IAG’s Capital Markets Day next Friday, IAG will be asked by investors about the state of industrial relations at BA and its response to the planned departure of LATAM from the Oneworld alliance.

“Airline Maps”

A new book chartering the history of the airline map is published this coming, Wednesday 29 October 2019.

“Airline Maps” published by Particular Books features archive route maps from airlines such as Air France, British European Airways and British Overseas Airways Corporation.

The authors Mark Ovenden and Maxwell Roberts have given an interview to Citylab.

Dreamflight Takes Off

The annual “Dreamflight” departed London Heathrow for Orlando yesterday, Sunday 27 October 2019.

Founded in 1986 by former BA staff members Patricia Pearce MBE and Derek Pereira, Dreamflight is a registered charity that raises funds to charter a BA Boeing 747 carrying hundreds of children with a serious illness or disability on a once in a life time trip to Orlando, Florida.

Approximately 200 children travel on each annual flight together with BA cabin crew and a dedicated medical team, including doctors, nurses and physiotherapists who are on hand 24 hours a day throughout the trip. The flight is also supported a team of BA volunteers who assist with its departure at Heathrow.

Since the first flight in 1987 around 6,000 children have flown on Dreamflight. There’s more information at Dreamflight.

Continue reading “Monday Briefing – 28 October 2019”

London Air Travel » Monday Briefing

Welcome to our Monday Briefing for the week beginning 21 October 2019.

Winter 2019 Timetable

This coming Sunday, 27 October 2019, marks the beginning of the winter timetable, as well of course, the clocks going back one hour.

Here are the main changes for BA at Gatwick and Heathrow. There are some Heathrow terminal switches. BA flights to Billund, Hanover, San Diego and Zagreb move from Terminal 5 to Terminal 3. Luxembourg, Lyon and Phoenix move from Terminal 3 to Terminal 5.

In terms of other airlines at Heathrow, Eurowings suspends London Heathrow – Berlin Tegel from Sunday. SAS launches a new Saturday seasonal service to Scandinavian Mountains Airport from Saturday 28 December 2019. Virgin Atlantic also returns to Mumbai from Sunday.

Over at London City, Flybe suspends Dusseldorf, and TAP Air Portugal suspends Lisbon and Porto.

A large number of airlines will resume flights to Milan Linate as the airport reopens this weekend following runway works.

Just How Big Are Frequent Flyer Programmes?

There has been much commentary in recent weeks suggesting that airlines should ban frequent flyer programmes to combat unnecessary flying.

There are shades of anti-elitism in this from those who would prefer air travel to be more egalitarian, with no special privileges for frequent flyers.

That belies what frequent flyer programmes have become – frequent flyer miles are simply now a currency in their own right.

As in indication, in 2018 over 115 billion Avios were issued to 8.7 million active users of Avios based frequent flyer programmes. Of these, 54.5 billion were actually issued though means other than flying. Withdrawing these, which would take a long time to unravel, would be deeply unpopular.

It’s also worth recalling that although the BA Executive Club was first introduced in 1982 (shortly after US airlines introduced frequent flyer programmes which had a dramatic impact on passenger behaviour), it did not become a true mileage accrual programme until the mid 1990s. Even if the accrual of frequent miles was banned, airlines would still find a way to incentivise and reward high value flyers.

Continue reading “Monday Briefing – 21 October 2019”

London Air Travel » Monday Briefing

Welcome to our Monday Briefing for the week beginning 14 October 2019.

Aviation Prepares For Climate Change Scrutiny

Events were dominated last week by the ongoing “Extinction Rebellion” protests in London, which involved a day of disruption at London City airport.

Whilst the protestors generated a lot of press coverage, they have not yet won over the “hearts and minds” of the public. Many representatives did not perform well when some of their apocalyptic claims were put to question in TV interviews.

That said, the airline industry is now preparing itself for much greater scrutiny on its impact on climate change.

Last week BA’s parent company IAG announced it plans to achieve net zero carbon emissions by 2050. BA will also pay to offset the carbon emissions from UK domestic flights from next year. Though, note BA has not yet changed its plans to keep the Boeing 747 in service until 2024.

Whilst the concept of “flight shaming” has entered contemporary lexicon and some in the commentariat are calling for higher taxation on frequent flyers (Financial Times) there is no sign yet of a wholesale shift in public opinion against flying.

That said, public sentiment can change. Witness the near wholesale change in attitude towards single use plastics following the BBC series “Blue Planet II”. A single image with the right messenger can have a powerful impact. This is an industry where even a small percentage fall in demand can have huge financial consequences.

Qantas “Project Sunrise” Test Flights

Qantas will carry out the first of its ultra long range “Project Sunrise” test fights this week. A Boeing 787-9 aircraft will fly from New York JFK to Sydney on Friday.

A test flight with another Boeing 787-9 aircraft will operate non-stop from London to Sydney later this year. Qantas has confirmed that Airbus and Boeing have submitted final offers to supply aircraft capable of flying non-stop from London to the East Coast of Australia.

A decision is expected by the end of this year. As well as economics, a final decision is dependent on regulatory approval and reaching agreement with Qantas’ trade unions. It has to be said if Qantas does not go through with the project, it will be a considerable failure in expectations management.

Also of note this week:

Air New Zealand appoints Greg Foran, currently President & Chief Executive Officer of Walmart US as its CEO. (Air New Zealand)

Guernsey based Aurigny is expected to report losses of £9.6m in 2020. (BBC News)

Late post publication updates:

[Reserved for updates throughout the day]

The European Commission has approved a bridging loan from the German Government to Condor. (Condor)

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

You can follow us on Twitter for breaking news throughout the day. Also, please join us on Wednesday for our weekly Atlantic Update.

London Air Travel » Monday Briefing

Welcome to our Monday Briefing for the week beginning 7 October 2019.

100 Years Of KLM

Today marks 100 years since the formation of KLM. As KLM is keen to point out it is the oldest airline to operate under one name.

The first flight wasn’t until May 1920 when, in conjunction with Air Travel & Transport Ltd (a predecessor airline to BA), it flew from Croydon to Amsterdam.

In its 100 year history KLM has played a significant role in UK aviation, thanks to the close proximity of its Amsterdam hub and coverage of UK regional airports. It has also been a pioneer with its transatlantic joint-venture with Northwest Airlines and the first (if not always harmonious) major pan-European merger with Air France.

History could have taken a very different course had BA merged with KLM. Talks in 1992 and 2000 both fell through. IAG CEO Willie Walsh has never hidden the fact that this is a deal that should have happened and wouldn’t have fallen through on his watch.

In the future we can expect much greater co-operation between KLM and Virgin Atlantic with a combined transatlantic joint-venture with Delta and a frequent flyer partnership.

KLM is marking its centenary with a TV advertising campaign in the UK.

You can also explore more of KLM’s history on a dedicated microsite.

Continue reading “Monday Briefing – 7 October 2019”

London Air Travel » Monday Briefing

Welcome to our Monday Briefing for the week beginning 30 September 2019.

Thomas Cook

The Civil Aviation Authority’s “Operation Matterhorn” to bring Thomas Cook customers back to the UK is expected to continue until this Sunday, 6 October 2019.

Yesterday, 70 flights were scheduled to operate to bring 15,000 people back to the UK, taking the total number of passengers returned to nearly 110,000.

Whilst the Civil Aviation Authority’s exercise is expected to conclude this week, the recriminations over the company’s collapse will continue for considerably longer.

Thomas Cook’s CEO Peter Fankhauser gave an interview to the Mail On Sunday yesterday effectively pointing the finger of blame at the level of debit he inherited from his predecessors and the cost of serving it.

The closure of Thomas Cook is expected to have a significant impact in Spain with the company having been responsible for carrying 3.6 million passengers to the country and a substantial minority of visitors to the Balearic and Canary Islands. (El Pais In English)

In Germany, Thomas Cook subsidiary Condor has received a bridging loan from the German Government to enable it to continue to trade. (Condor)

Following the precedent set in a court case following the collapse of Monarch the liquidators will be entitled to sell off Thomas Cook’s Gatwick and Manchester slots. IAG, Virgin Atlantic and Wizz Air have expressed an interest in Thomas Cook’s slots at Gatwick.

Thomas Cook’s auditors will also face scrutiny. The Financial Reporting Council, which is responsible for regulating the audit profession, has said: “In light of recent developments at Thomas Cook we are considering whether there is any case for investigation and enforcement action as a matter of urgency and in cooperation with the Insolvency Service.”

Finally, the Business Archives Council is seeking to preserve Thomas Cook’s historical archives. (Organizational History Network)

Delta Swoops LATAM from Oneworld

Airline alliances are fragile constructs. They are loose gatherings of airlines who are often intense rivals and are also distracted by local priorities.

Delta stunned Oneworld last week by prizing LATAM away from the alliance. Whilst American Airlines, the Oneworld member with the most to lose, and Oneworld, initially put a brave face on the news, there are already signs that LATAM’s departure may become acrimonious.

Whilst LATAM is contractually bound to meet all of the obligations of its membership (such as reciprocal recognition of frequent flyers) until it leaves the alliance, it appears that codeshares between American Airlines and LATAM have already been withdrawn from sale.

It’s not immediately clear which airline was responsible for instigating this move, but American Airlines had to issue a statement on Saturday confirm that those passengers with existing bookings should have their itineraries honoured.

Delta’s move does also have an impact on IAG with BA and Iberia both having codeshares with LATAM. IAG is not an organisation to leave others to control events and its plans will no doubt be known in due course.

Also of note this week:

Continue reading “Monday Briefing – 30 September 2019”