Category: Monday Briefing

London Air Travel » Monday Briefing

Welcome to our Monday Briefing for the week beginning 17 September 2018, summarising the main developments in air travel over the past week.

Hurricane Florence and Super Typhoon Mangkhut

Hurricane Florence and Super Typhoon Mangkhut have dominated the news over the weekend. Both have caused considerable disruption at a substantial human and environmental cost.

In terms of disruption to flights, Hurricane Florence has now been downgraded to a Tropical Depression. There is still disruption to some coastal airports in the Carolinas due to flooding and infrastructure damage. Transatlantic flights from London seem to have largely escaped disruption.

For US domestic flights, American Airlines has largely resumed operations at its hub in Charlotte. However, some cancellations remain. Delta and United have been progressively resuming flights throughout the region.

BA, Cathay Pacific and Virgin Atlantic resumed flights from London Heathrow to Hong Kong on Sunday after widespread cancellations on Saturday. Cathay Pacific is now progressively resuming flight operations at Hong Kong. However, there are widespread cancellations today.

BA Catering

BA and catering have long had a troubled relationship.

In December 1997, the airline outsourced its catering operation to Gate Gourmet. Matters flared up in a quite spectacular fashion in the summer of 2005 when an industrial dispute at the company resulted in no catering on BA flights at Heathrow. To make matters worse, some BA ground staff at London Heathrow took wildcat industrial action in support of the workers resulting in days of disruption in the height of summer at a cost to the airline of £40m and negative publicity worldwide.

Given how much the UK’s reputation for food has improved over the past 20 years, for an airline keen to emphasis its Britishness, it has been a source of mystery why BA hasn’t made this more of a point of differentiation.

One answer is that as the catering budget is one of the airline’s few controllable costs, it is an easy target for a repeated cycle of investment and cutbacks.

However, with new Club Europe catering being, by all accounts, well received and Do&Co securing a new contract for the entire Heathrow operation there does seem a genuine desire to improve matters.

If we had one criticism there is still a little too much emphasis on serving what people think Britons eat (eg Full English breakfasts, Afternoon Tea) instead of what Britons actually eat.

Given BA is due to refurbish its London Heathrow lounges in the coming years, a logical progression would be to review catering and service provision in the lounges.

BaxterStorey has been responsible for catering provision in BA’s UK lounges since May 2013. Unlike Qantas, for example, where Sofitel run its international lounges, BA not opted to appoint a premium hospitality brand to run the food and beverage service in its lounges. I would not be surprised to see this reviewed.
Continue reading “Monday Briefing – 17 September 2018”

London Air Travel » Monday Briefing

Welcome to our Monday Briefing for the week beginning 10 September 2018, summarising the main developments in air travel over the past week.

BA Customer Data Breach – Additional Guidance

BA has over the weekend updated its advice page on its well publicised data breach.

Additional advice published on Sunday 9 September includes:

– Telephone numbers provided during the booking process were not compromised.

– Customers who used PayPal to pay for a flight will not have had their PayPal accounts compromised, but there is some risk that personal information was accessed.

– Passengers who used Apple Pay to pay for a flight through the mobile app are not affected.

– Passengers who attempted to pay for a flight but the transaction was unsuccessful would have had their data compromised.

– Passengers who made changes to their bookings free of charge would not have had their data compromised.

– Bookings cancelled or refunded during the breach are not affected.

The Information Commissioner’s Office and the National Cyber Security Centre (part of GCHQ) will also be providing periodic updates.

We will also keep our page updated as the story develops.
Continue reading “Monday Briefing – 10 September 2018”

London Air Travel » Monday Briefing

Hello and welcome to our Monday Briefing for the week beginning 20 August 2018, summarising the main developments in air travel over the past week, and a look to the week ahead.

BA Boeing 787 Operations Return To Normal

BA’s Boeing 787 Dreamliner operations appear to be returning to normal after it was required to carry out additional maintenance checks on their Rolls-Royce engines.

The wet lease of Qatar Airways A330 aircraft comes to end this week, with wet leases on London Heathrow – Dehli (flights BA143/BA142) and London Heathrow – Muscat (flights BA79/80) routes ending today.

At present, just 1 Boeing 787-8 aircraft out of 28 Boeing 787 aircraft is grounded. Aircraft G-ZBJE last flew in March. This compares to 7 grounded aircraft in early June.

There’s less good news for the London Heathrow – Doha route. In what must be a record for the most cancellations without suspending a route, its period of cancellation has been extended yet further from the end of August to Friday 7/Saturday 8 September 2018.

Update: As has been pointed out on Twitter, there are still some tactical cancellations with some frequencies to Los Angeles cancelled. In addition, G-ZBJA has also not flown since 6 August, G-ZBJD has not flown since 16 August and G-ZBJI has not flown since 15 August.

Air France-KLM’s New CEO

Air France-KLM roused the ire of Air France’s trade unions when it announced that Benjamin Smith as its new CEO.

The source of their irritation? Monsieur Smith is not French.

It is a sign of how far Air France-KLM lags its peers that the nationality of its parent company CEO is considered an issue. Over the past 20 years BA has had Australian, Irish and Spanish CEOs. Alan Joyce, CEO of Qantas, is Irish. Sir Tim Clark, President of Emirates, is British.

Benjamin Smith joins Air France-KLM from Air Canada where is was President, Airlines and Chief Operating Officer. Air France-KLM is keen to emphasise two particular developments during his tenure at Air Canada. The growth of its low cost brand Air Canada Rouge and securing long-term collective bargaining agreements with trade unions. Like many legacy airlines, Air Canada has had fractious industrial relations in the past. It also has to navigate delicate regional tensions. Under the Air Canada Public Participation Act and Canada’s Official Languages Act, Air Canada is required to demonstrably provide bilingual services across Canada.

Benjamin Smith will have a very full in-tray when he takes up his position in September.

Air France KLM’s previous CEO, Jean-Marc Janaillac, resigned two years into his post after Air France trade unions rejected a pay offer in a consultative ballot. His predecessor Alexandre de Juniac also resigned after three years having been unable to achieve meaningful reform at Air France. A little under three years ago a meeting between senior Air France managers and trade unions resulted in a physical assault and one senior manager fleeing with his shirt ripped off.

Air France-KLM’s financial performance is sharply behind its peers. It reported a first half operating profit of €228m compared to €1,115m for IAG and €967m for Lufthansa.

It also has a somewhat confused approach to low cost travel. It has a low cost brand Transavia. It has also launched Joon which is progressively taking over some Air France short and long-haul routes. Ostensibly aimed at millennials, Joon has its own livery and separate in-flight service standards and cabin crew, but is operated by Air France pilots.

Given industrial relations tensions have claimed two Air France-KLM CEOs, it is implausible that Air France will not reform itself without at the very least the French Government disposing of its stake in Air France-KLM (its owns 14% of the group and 23% of voting rights).

It should also be noted this is not the first time European airlines have tapped Air Canada for talent. BA also recruited its Chief Operating Officer Klaus Goersch from Air Canada.
Continue reading “Monday Briefing – 20 August 2018”

London Air Travel » Monday Briefing

Hello and welcome to our Monday Briefing for the week beginning 13 August 2018, summarising the main developments in air travel over the past week, and a look to the week ahead.

Trouble At Ryanair

As has been widely reported, Ryanair faced the biggest single act of industrial action in its near 35 year history last Friday.

Trade unions representing pilots of five countries (Germany, Sweden, Ireland, the Netherlands and Belgium) undertook industrial action, leading to the cancellation of over 400 flights. Ryanair was caught off guard in Germany by pilots giving only 48 hours’ notice of industrial action.

Politico has a good primer on the background to the dispute. In essence, pilots at Ryanair bases around Europe wish to be employed under contracts recognised under local employment law and benefit from better employee protection, rather than contracts recognised Ireland.

Ryanair has withstood knocks before and is no stranger to public opprobrium. It launched its “Always Getting Better” initiative when even institutional investors were questioning its approach of effectively putting tripwires in front of customers. It survived mass cancellations last year when it couldn’t roster enough pilots. However, it will have to be able to live with trade union recognition in perpetuity and that requires it to find long term solutions and not short term fixes.

Ryanair has earlier this year signed a recognition agreement with the UK pilots union BALPA. However, there is no immediate prospect of any industrial dispute between BALPA and Ryanair’s UK pilots. If there was, there is a relatively lengthy ballot period and notice of industrial action required.

Trouble At Jet Airways

The Financial Times reports that Jet Airways has delayed indefinitely the release of its latest financial results. This is whilst it is “exploring sources of funding [as a] priority”.

Airlines in India have been grappling with a double whammy of rising fuel prices and a weakening local currency. Jet Airways is 24% owned by Etihad which has not indicated any sign being prepared to recapitalise Jet Airways.
Continue reading “Monday Briefing – 13 August 2018”

London Air Travel » Monday Briefing

Hello and welcome to our Monday Briefing for the week beginning 6 August 2018, summarising the main developments in air travel over the past week, and a look to the week ahead.

Has IAG really given up on Norwegian?

IAG released its half-year results last week. As did Air France-KLM and Lufthansa.

Much of the press picked up on comments by IAG CEO Willie Walsh that it planned to sell its shares in Norwegian if talks don’t move forward, which they have yet to do. Does this really mean IAG has given up on Norwegian?

Don’t bet on it. Whilst IAG is unlikely to make a hostile take-over bid for Norwegian, it can be said with confidence that it has been studying for Norwegian for quite some time. Regardless of what happens with its shareholding, I would suspect IAG will sit this one out.

Air France-KLM and Virgin Atlantic

Two weeks ago, we reported on proposals for Air France-KLM and Virgin Atlantic to operate a combined transatlantic joint-venture with Delta.

Air France-KLM has confirmed that the planned launch date is 1 April 2019. Air France-KLM and Virgin Atlantic are to also explore co-operation on non-North Atlantic routes. This is a logical progression of Air France-KLM soon becoming a shareholder in the airline. It would help Virgin Atlantic compensate for its lack of non-North American routes. Assuming it goes ahead, together with reciprocal frequent flyer recognition, this would help Virgin and Air France-KLM become a much stronger competitor in the UK market, particularly in UK regional airports.
Continue reading “Monday Briefing – 6 August 2018”

London Air Travel » Monday Briefing

Hello and welcome to our Monday Briefing for the week beginning 30 July 2018, summarising the main developments in air travel over the past week, and a look to the week ahead.

Is the aviation industry heading for its next crisis?

The notoriously cyclical aviation industry has had a relatively good run of late.

There have been some failures such as Air Berlin and Monarch, and there are others that are clearly struggling. However, the majority of major airlines have experienced consistent profitable expansion. Alitalia, of course, continues to manage to suspend economic reality and survive in a financial theme park of its own.

Buoyant demand and relatively low fuel prices combined with new aircraft have facilitated a significant number of new routes, notably on transatlantic. BA continues to add more Boeing 787 routes, with the launch of Pittsburgh in April 2019.

However, there was a string of bad news from airlines around the world last week.

American Airlines announced a 45% fall in its 2nd quarter pre-tax profit to $769m. The principal cause is its fuel bill which has increased by more than 40% (approximately $2 billion) this year.

Ryanair, whose pilots are due to strike again this coming Friday 3 August, reported a 20% fall in first quarter profit to €319 million. Ryanair cited a shopping list of fuel prices, weather, Air Traffic Control strikes and the World Cup. Ryanair has also issued protective notices to its pilots and cabin crew that it plans to cut the number of aircraft at its Dublin base this winter from 30 to 24.

Singapore Airlines, widely regarded for having a near impeccable financial track record, reported a 52% reduction in operating profit for its first financial quarter.

There were similarly subdued updates from Flybe and WizzAir. There are signs that at the very least capacity growth is moderating. Most airlines should be able to absorb higher fuel prices. However, should this be combined with a demand shock, there could be trouble ahead.

On a related note, International Airlines Group reports its 2nd quarter financial results this coming Friday.

Sunday Times: Thomas Cook mulls sale of airline

The Sunday Times has reported Thomas Cook is considering a partial sale of its airline to help pay down debt.

At Gatwick, Thomas Cook has a relatively small long-haul presence, serving Cancun, Cayo Coco, Holguin, and Orlando, It also has a number of short-haul routes. It has also built up a substantial long-haul presence at Manchester serving Boston, Cancun, Los Angeles, New York, Orlando, San Francisco and Seattle.

The Sunday Times’ track record of aviation business stories citing “industry sources” is patchy at best. However, very often these stories are deliberately leaked (with a non-denial denial on the record) to drum up interest from potential buyers.
Continue reading “Monday Briefing – 30 July 2018”

London Air Travel » Monday Briefing

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.
Continue reading “Monday Briefing – 23 July 2018”

London Air Travel » Monday Briefing

Hello and welcome to our Monday Briefing for the week beginning 16 July 2018, summarising the main developments in air travel over the past week, and a look to the week ahead.

Farnborough Air Show

The Biennial Farnborough Air Show gets under way this week.

Historically, this been the stage for muscular displays of headline grabbing aircraft orders, notably from Middle Eastern airlines. With Emirates parking aircraft and Etihad downsizing its route network, some of the blockbuster orders of the past are unlikely to be repeated.

Judging by news coverage over the past few days, the UK press has clearly been briefed in advance about possible Government announcements to reinforce its commitment to aviation and space technology after the UK leaves the European Union. It has already announced on Sunday funding for horizontal and vertical spaceports around the UK. However, this will not make the very real issues surrounding the UK’s departure from the EU, such as pan-European supply chains, regulation and traffic rights, go away.

As far as aircraft orders are concerned, commentators will tally up the relative numbers of orders for Airbus and Boeing. Last week Airbus officially launched the Airbus A220, which is effectively the Bombardier C-Series rebranded, and it will no doubt be keen to announce more orders in addition to JetBlue’s order last week.

BA has never been one to announce orders at aircraft shows. That said, it is known that its parent company IAG is in discussions with Airbus and Boeing on an aircraft order, so you never know.

Iberia’s A350-900 comes to London Heathrow this Friday

Iberia’s first A350-900 aircraft will be operating selected flights on the London Heathrow – Madrid route from this Friday 20 July 2018 until Friday 3 August 2018:

Flight BA7058 / IB3166 Depart Madrid 15:55 – Arrive London Heathrow 17:20
Flight BA522 / IB3167 Depart London Heathrow 18:50 – Arrive Madrid 22:15

It will then resume from Monday 23 August to Tuesday 31 August 2018. This is to allow pilots and cabin crew to become familiar with the aircraft before it begins long-haul operations. Note this may be subject to change at short notice.

Iberia has yet to unveil images of the A350 cabin interior. When Iberia does so, it should provide some clues to what to expect when BA takes delivery of the Airbus A350-1000 next year. This is at least as far as economy, premium economy and in-flight entertainment are concerned. However, BA is expected to have a different business class cabin.
Continue reading “Monday Briefing – 16 July 2018”