Welcome to the return of London Air Travel’s Monday Briefing for 2021 with our first edition of the year.
The 24 Month Winter
In a little over two months’ time, airlines in the Northern Hemisphere are supposed to start their summer schedules.
It is safe to say that there is no prospect of a return to normal for airlines this summer travel season.
The UK has today closed its borders to international travel and will require all inbound passengers to present evidence of a negative PCR COVID-19 test and to also self-isolate on arrival.
Yesterday’s Sunday Times splashed with proposals for inbound travellers to the UK to self-isolate, at their expense, in dedicated hotels for two weeks. This was not denied by Foreign Secretary Dominic Raab when interviewed by Andrew Marr on the BBC yesterday.
As Tabby Kinger describes of her experience of Hong Kong’s strict quarantine regime in the Financial Times, whether staying in a soulless airport hotel or top-end luxury hotel suite at a cost of up to £65,000 “no amount of money makes it tolerable.” As experience in Australia has shown, quarantine hotels may themselves become a source of COVID-19 infection.
According to Politico, Greece and other EU Member States are pressing the European Commission to adopt a common standard (“vaccine passports”) to allow those who have been vaccinated against COVID-19 the freedom to travel. There are significant misgivings on the part of many Member States, both on privacy grounds and restricting freedom of movement – a core principle of the EU – based on health status.
Whilst BA and easyJet have secured additional state guaranteed loans, it seems clear that Virgin Atlantic will have to obtain new sources of cash. Last week it raised $230 million through the sale and leaseback of two Boeing 787-9 aircraft. This is unlikely to be sufficient to see it through continued travel restrictions in 2021.
Welcome to London Air Travel’s final Monday Briefing of 2020.Our next Monday Briefing will be published on 18 January 2021.
What A Difference A Year Makes
12 months ago the airline industry was certain of its trajectory.
Consolidation was the order of the day. State intervention was a thing of the past. The days of making money in the good times, only to lose it all in a downturn, would never be repeated. Airlines had the financial resilience to withstand whatever challenges came their way.
Delta had pulled off a major coup, swooping LATAM out of Oneworld. It acquired, for some $1.9 billion, a 20% stake in the airline. That, along with its stakes in AeroMexico and Virgin Atlantic, are worthless as LATAM has entered Chapter 11 bankruptcy protection.
Even as the COVID-19 outbreak was underway, former IAG CEO Willie Walsh confidently asserted:
“To be honest we’ve gone through all of this before. We’ve all seen it before.”
“We know whatto do in a time like this. We know how to respond.”
A planned near normal return to service for BA by the end of the year did not happen. There is at least positive news on the approval of vaccines against COVID-19 and pre-flight testing regimes underway.
That said, the fact that BA is barred from operating passenger flights to Hong Kong for two weeks following COVID-19 compliance failures, suggests airlines and passengers are going to have get used to extremely stringent measures in many territories for months to come.
Virgin Atlantic & Bain
What’s going on with Virgin Atlantic and Bain Capital?
Last week Sky News reported that Virgin had sold and leasebacked two Boeing 787 aircraft. According to recent filings at Companies House, there are further transactions involving Bain in connection with one of Virgin’s Airbus A350 aircraft.
Bain does of course have a connection with another Virgin airline as it owns the majority of Virgin Australia.
Staying with Companies House filings, Virgin Atlantic has yet to submit its annual accounts for the year to 31 December 2019. These should have been ready months ago. A cynic might wonder whether Virgin is waiting for a good day to bury bad news.
On a more positive note, Virgin is due to return to Cape Town this Sunday.
Coming Soon: The BA 747 Story
Over Christmas we will run a special series on the history of the Boeing 747 and some of its most memorable flights at BOAC and BA.
This will run over seven days from Christmas Eve to 30 December.
Welcome to London Air Travel’s Monday Briefing for the week beginning 7 December 2020.
BA Returns To Gatwick
BA should resume long-haul flights at Gatwick this week.
Flights to Punta Cana and St Lucia are currently scheduled to resume this Thursday, 10 December. A number of destinations follow on Friday including Antigua, Barbados, Bermuda, Cancun and Kingston.
Grenada, Montego Bay and St Kitts return on Saturday, with Providenciales due to follow on Sunday.
This restart of a number of the above routes has been postponed many times before, so this is all subject to change.
London Heathrow Route Updates
In other route updates at London Heathrow, BA continues to reinstate scheduled passenger flights.
Last week, BA reinstated scheduled passenger flights to Bahrain, Boston, Buenos Aires, Cape Town, Kuala Lumpur, Mexico City, Philadelphia, Riyadh, Santiago, Tel Aviv and The Maldives.
This week the airline is also due to return to Kuwait, Rio de Janeiro, San Francisco, The Seychelles and Tokyo Haneda.
In a sign of progress on at least some routes, BA will increase Dubai to three times daily from 10 December.
Also at Heathrow, Virgin Atlantic will operate its inaugural flight to Islamabad on Saturday and Lahore on Sunday.
London City Airport Publishes Its Masterplan
London City Airport published a revised masterplan last week.
The masterplan sets out its ambition to increase capacity so it is capable of handling 11 million passengers a year, with Air Transport Movements also increased from 111,000 to 151,000 a year.
The airport still has ambitions to expand its route network, with the return of transatlantic routes. However, with CityJet and Flybe having withdrawn from the airport – and a likely downsizing by BA CityFlyer which is serving just three destinations at present – this is going to be difficult to achieve.
Bonhams Vintage Poster Auction
If you are looking for a Christmas gift for an aviation enthusiast and happen to have a thousand pounds or so hiding down the back of your sofa, then look no further than Bonhams’ auction of vintage posters tomorrow.
The auction includes these vintage posters by Imperial Airways posters from 1936 and 1937.
Welcome to London Air Travel’s Monday Briefing for the week beginning 30 November 2020.
Willie Walsh Appointed IATA Director General
When Willie Walsh retired from IAG just under three months ago it seemed implausible that he could retire from aviation for a quiet life.
And so last week it was confirmed, after an official denial, that Willie will become Director General of IATA from April 2021.
Those who have followed Willie over the years know that whilst he has respected his peers at rival airlines – with one notable exception – he has a very low opinion of government intervention in the industry. He is also not afraid to publicly call out institutions, whether they be airports or government bodies, that hold back airlines.
On accepting his appointment last week, Willie wasted little time in criticising governments for their disjointed approach to keeping borders open during COVID-19:
My style will be different to what has gone before me. I too am a businessman. I too understand how Governments operate but I am even more unhappy and more critical of how they get things done or more importantly, in many cases how they have failed to get things done.
This year has been the most challenging ever but let us not forget that the Coronavirus did not stop us flying. We have continued to provide vital services and in many cases we were the key link in getting critical safety equipment to health services.
The virus did not stop our customers boarding our aircraft because we have demonstrated our ability to adapt and to ensure the safety of our customers and our people and we know they want to fly with us.
They have been denied the freedom we provide, not by a virus but by a disjointed political response and the restrictions put in place by certain Governments who have failed to adapt and to adopt the sensible measures that would have allowed almost normal air services to continue.
Willie will have to navigate competing agendas. IATA was quick to distance itself from widely reported comments by Qantas CEO Alan Joyce that positive evidence of having received a COVID-19 vaccine may be prerequisite to international travel.
Qantas of course has a large, and profitable, domestic network. Many of its rivals are wholly dependent on international travel.
Summer 2021 Airport Slot Waiver
Another issue where views of airlines diverge is the extension of airport slot waivers to the summer 2021 season.
Last week the Worldwide Airport Slot Board (WASB) which comprises Airports Council International, IATA and the Worldwide Airport Coordinators Group issued a joint recommendation for slot waivers to be extended, with some changes to usage rules, to the summer 2021 season.
Rather than simply waive the 80 / 20 rule it is proposed that airlines either have to temporarily hand back slots or, for slots they retain, they have to use them for more than 50% of the season.
This is resisted by some airlines and airports, including London Gatwick.
On the subject of slot usage, last week Airport Coordination Ltd, which oversees slot allocations at London airports, estimates Air Transport Movements (ATMs) will fall by 60% year-on-year over the three weeks covering Christmas and New Year.
That said, ATMs will increase by 50% week-on-week for the week beginning 14 December. BA probably accounts for a fair proportion of this and is subject to the airline not cancelling flights at the last minute.
The busiest days are expected to be 18 and 27 December and 3 January 2021.
Welcome to London Air Travel’s Monday Briefing for the week beginning 23 November 2020.
UK Government To Relax 14 Day Quarantine?
As airlines trial their own COVID-19 testing regimes on transatlantic flights, there are now hopes for at least a partial relaxation of the UK’s mandatory 14 day quarantine regime.
Airline CEOs remain deeply frustrated at the lack of clarity on government policy on quarantine and testing. Though, many are still keen to talk up their individual prospects.
United Airlines is in the second week of its trial to test all passengers flying on flight UA14 from Newark to London Heathrow on Monday, Wednesdays and Fridays.
You can see a report from the first flight by Richard Quest from CNN International’s “Quest Means Business”. The pre-flight testing process is clearly aided by very light passenger numbers.
Also speaking to Richard Quest last week, Virgin Atlantic CEO Shai Weiss was optimistic about the prospects for recovery, pointing to a less than expected impact from England’s second lockdown. Bookings for 2021 are also said to be improving, possibly due to positive news on a number of vaccines against COVID-19.
Delta, which owns 49% of Virgin Atlantic, is less optimistic about the prospects of a London – New York travel corridor. CEO Ed Bastian told the Financial Times it would be easier to relaunch transatlantic flights to “just about any” other European capital.
Ed Bastian added “I think you will find on the continent several countries that are more open” and, due to the mandatory quarantine regime “I think New York – London is complicated.”
American Airlines and BA are starting their own testing trial on select inbound flights from Dallas / Fort Worth, Los Angeles and New York JFK from this Wednesday.
BA CEO Sean Doyle was quoted in The Times as saying “We’ve got an immediate crisis to deal with in the industry and we think testing in lieu of quarantine is a solution that’s staring us in the face. We just need clarity of policy.”
The Telegraph reports that the Transport Secretary Grant Shapps will today announce that England’s quarantine regime will be reformed from mid-December.
Passengers arriving from countries deemed to be a high risk will be able to stop self-isolating as soon as they receive a negative test result for COVID-19. However, this test must be taken from an approved supplier on arrival. In practice, this is expected to cut the mandatory quarantine period from 14 to around 5 days.
BA To Return To Dhaka?
The Daily Star Bangladesh reports that BA is in discussions with local authorities on a return to Dhaka after a hiatus of 11 years.
The route was previously suspended in 2009. Like the launch of Lahore and capacity increases to Islamabad, this points to a pivot by BA towards “Visiting Friends & Relatives” (VFR) traffic.
If you were to consult the Ministry for Speculation and Guesswork they might suggest that other VFR routes BA could reinstate include Kolkata.
It’s plausible that, if post COVID-19, passengers are less inclined to take indirect flights over direct flights, BA may also be able to return to destinations where it had lost traffic to Middle Eastern carriers. These could include routes in East Africa such as Dar Es Salaam, Entebbe and Lusaka.
An interesting experiment in the use of aircraft in the outback regions of Australia is to be made by the Queensland and Northern Territory Aerial Services Limited.
This is a company which is being formed to operate in the Cloncurry, Winton, Longreach, and Charleville districts of Queensland.
It is to begin operations early next month with two three-seater machines, and a large machine carrying four passengers with a comfortable cabin will be on service by the end of the year.
“We took up civil aviation not sure where it would lead us” said Hudson Fysh. Conscious of the need to encourage interest in flying and convince passengers that it was safe, Qantas initially offered joy flights. Early achievements included being first airline to carry a maternity patient in Australia by air and carry out an aerial photo shoot.
Qantas opened its first regular service on 2 November 1922 between Charleville and Cloncurry – a 577 mile flight with an overnight stop in Longreach.
In 1924, Qantas received its first aircraft with a cabin, a De Hallivand DH50. Two years later, Qantas built its first own aircraft, a De Hallivand DH50A.
By 1928, Qantas had its own flying schools in Longreach and Brisbane. In the same year it started providing aircraft to the Australian Inland Mission Aerial Medical Service, now better known as The Royal Flying Doctor Service. It also began to operate flights between Brisbane and Toowoomba, Australia’s first daily air service.
Next year, Qantas founder Hudson Fysh flew the Brisbane – Darwin section of the first experimental mail service between Australia and England. After becoming interested in operating the Brisbane – Singapore section of the proposed Kangaroo route between Sydney and London, Hudson Fysh met with Imperial Airways and Qantas Empire Airways was formed between the two carriers. And the rest, as they say, is history.
Welcome to London Air Travel’s Monday Briefing for the week beginning 9 November 2020.
Qantas Prepares To Mark Its Centenary
Next Monday, 16 November, Qantas will mark 100 years since its incorporation as Queensland and Northern Territory Aerial Services Ltd.
With the aviation industry in a state of crisis, there is little cause or scope for celebration. At least Qantas can say this wasn’t of its own making.
It was rather fitting that in one of the earliest advertisements for the airline in November 1920, its name was printed incorrectly (this time as Northern Territory and Queensland Aerial Services Ltd), something that has continued for decades.
It was in the 1930s that Qantas began international services, forming Qantas Empire Airways with one of BA’s predecessor airlines, Imperial Airways.
The two airlines jointly operated the first regular air mail service between the UK and Australia in December 1934, with Qantas Empire Airways operating the route between Singapore and Australia.
Regular scheduled passenger service between the UK and Australia would begin in April 1935. The first trips took no less than 12 and a half days.
When commercial aviation resumed after the Second World War, Qantas began operating services to London in its own right using the Lockheed Constellation aircraft
In 1954, Qantas operated the “Southern Cross” route to Sydney via New York, San Francisco, Honolulu and Fiji. This would later be operated as a single around the world route with Super Constellation aircraft.
In the 1960s, aided by the Boeing 707, Qantas would introduce a second eastbound service to Australia via Hong Kong and another westbound service to Australia via Bermuda, Mexico and Tahiti, known as the “Fiesta route”.
The Boeing 747 introduced in 1971 transformed services between the UK and Australia, eventually enabling Australia to be reached with just one stop in Asia.
By the end of the 20th century Qantas remained the dominant international airline carrying passengers to Australia. Its status as the global airline for Australians was illustrated in its most famous TV advertising campaigns featuring children’s choirs performing Peter Allen’s “I Still Call Australia Home”.
When the guidance was first published, the only exception was for “work”. Yesterday, this was extended to include “education and other legally permitted reasons.”
This officially applies until 2 December. Few expect the government, which has proven extremely reticent at managing expectations and giving bad news, to lift restrictions in four weeks.
There is the question of how this will be enforced. If the experience of existing rules on face masks is anything to go by, airlines will only enforce the rule if mandated to do by the government.
It has however clearly shaken confidence in the sector. Based on broadcast interviews given by Michael Gove yesterday, there are no indications that the government is contemplating sector specific support for aviation.
Virgin Atlantic yesterday alluded to the fact it is likely to cancel flights. easyJet and IAG may well release updates to the stock exchange today. Michael O’Leary will appear on Ian King Live on Sky News at 10.30 this morning, and will no doubt have plenty to say.
The summer 2021 season is not that far away. A lack of confidence in flying will put off many passengers from booking trips for next summer in the New Year, which provides a vital source of cash flow to airlines in the winter months.
BA Merges Heathrow Cabin Crew Fleets
BA’s combined Heathrow cabin crew fleet officially came into effect on Sunday.
The three fleets, Euro Fleet, Mixed Fleet and Worldwide have combined into one who work across BA’s Heathrow short-haul and long-haul networks.
BA first introduced “mixed” flying on a permanent basis at Gatwick, often a test bed for changes at the airline, in 2006.
The main aim is that due to the annual legal maximum of flight time hours (which long-haul cabin crew can easily reach) and duty hours (which short-haul cabin crew can easily reach), combined short-haul and long-haul flying is intended to smooth these limits. The annual savings for Gatwick were quoted as £16m per annum, so across Heathrow these will be substantial.
Euro Fleet and Worldwide previously operated exclusively short and long-haul routes respectively. Mixed Fleet, who operated both short and long-haul routes, was introduced as a separate fleet in 2010.
Mixed Fleet also had radically different working practices, particularly around rostering, disruption and the responsibilities of senior crew members.
Although BA frequent flyers are familiar with the different fleets, one of the much lesser commented aspects was that, unlike on Euro Fleet and Worldwide, the senior cabin crew grade on Mixed Fleet was a BA manager grade. This was intended to encourage senior crew members to move on to other roles in the airline. This was much less the case with Euro Fleet and Worldwide.
It was inevitable that the three Heathrow fleets would merge at some point and this has been accelerated by COVID-19. Whilst this is less so when the in-flight service is limited, it will take crews doing either short or long-haul flights for the first time to get used to working with different aircraft and service routines.
Berlin Brandenburg Airport Opens
Berlin Brandenburg Airport finally opened to scheduled passenger flights on Saturday.
This follows no less than nine years of delays and countless defects. easyJet positioned an aircraft from Berlin Tegel to Brandenburg on Saturday and operated its first flight to London Gatwick on Sunday morning.
Assuming BA is still flying to Berlin this weekend, it will transfer flights from Berlin Tegel to Brandenburg this Sunday, 8 November.
Welcome to London Air Travel’s Monday Briefing for the week beginning 26 October 2020.
Luis Gallego Unveils His First Results As IAG CEO
This Friday, 30 October 2020, Luis Gallego will present his first set of quarterly results as CEO of IAG.
Sean Doyle will also address investors for the first time in his capacity as CEO of BA.
We have a preview of what to expect. Last week, IAG announced a preliminary operating loss of €1.3 billion for the quarter to 30 September.
Revenue declined 83% to €1.2 billion, with revenue passenger kilometres falling by 88%. Average load factors fell by 38.8 percentage points to 48.9%. None of these numbers were broken down by airline.
Capacity for the 4th quarter will be no less than 30% of last year’s levels. BA has pulled at short notice some long-haul routes that were due to resume next month including Denver, Las Vegas and Seoul. IAG has also abandoned any hope of breaking even on a cash flow basis by the end of this year.
On a more positive note, IAG’s cash balance remains strong with €6.6 billion of cash at the end of September, plus €2.74 billion from its recent rights issue.
However, some debt has to be repaid in the first half of next year. With IAG’s three European markets, Ireland, Spain and the UK, facing tighter restrictions, traffic is likely to be severely depressed well into 2021.
Air France-KLM and Lufthansa will also announce their third quarter results on 30 October and 5 November respectively. Ordinarily at this time of year, IAG also holds its annual Capital Markets Day, but no event has been scheduled yet.
Heathrow is also due to report its third quarter results this week, on Wednesday 28 October at 15:00.
Yesterday’s Sunday Telegraph reported Heathrow has warned its shareholders they may have to provide financial support to the heavily indebted airport. Heathrow owes, through a horrifically complicated structure, a large number of banks and bondholders no less than £17 billion with an annual interest bill of £500m.
Airlines and regulators have understandably balked at the suggestion that Heathrow’s lost income should be compensated for through higher passenger charges.
Heathrow clearly expects to benefit from airlines consolidating London operations at the airport and available slots being filled by new entrants, but it will be expected to take its share of the pain of COVID-19.
Quarantine To Be Waived For The “Jet Set”?
Somebody briefed yesterday’s Sunday Times, possibly not with the intention of encouraging support for the government, that the mandatory quarantine regime may be waived for the “jet set”.
This is said to include those most loved professionals “senior bankers, hedge fund managers and executives involved in high-value deals” who “come in private jets and have a chauffeur-driven car”.
Given the way the UK government has been harangued in recent days for its inability to “read the room” this could well have been leaked to torpedo these plans.
Welcome to London Air Travel’s Monday Briefing for the week beginning 19 October 2020.
Sean Doyle Replaces Alex Cruz
When Keith Williams was promoted from Chief Financial Officer to become BA’s first CEO after the formation of IAG in 2011, Willie Walsh left BA with a not particularly subtle message about who was really in charge.
He was reported to have quipped to reporters that Keith had been promoted from the 2nd most important job in BA to the 2nd most important job in BA.
Last week, Sean Doyle was promoted to the 2nd most important job in BA after Alex Cruz departed the airline. This was the first major management reshuffle by IAG CEO Luis Gallego. For a group that likes to make much of the fact that it can move executives around the group, no alternative role in IAG was found for Alex.
Although Sean has a relatively low profile, his appointment has been welcomed. Colleagues praise his attention to detail and knowledge of the industry. This is clearly not seen as the time to bring in an outsider. One former colleague told the Financial Times:
“He will make the decisions that will need to be made, but will be able to bring people with him. There really are not that many people with the depth and breadth of experience of the company,”
Before becoming CEO of Aer Lingus, Sean was responsible for fleet and network planning at BA, as well as its joint-business with American Airlines. All of these will be a focus in the coming years.
As for Alex Cruz, there’s been no shortage of comment on his departure. The most balanced comes from John Strickland for Forbes who rightly points out that some of things BA has been criticised for during Alex’s leadership were not of his making.
It was, after all, Willie Walsh’s insistence a few years ago that BA did not need to change the layout of its Club World cabin. Decisions on aircraft density, as well as many other matters like new aircraft orders and capital expenditure, sit with IAG not BA.
That said, a lot of unnecessary negative publicity could have been avoided with a little foresight. Saying BA might withdraw free meals in long-haul economy when there was nothing close to a plan to do so, caused a lot of unnecessary negative headlines. Many negative headlines about the introduction of buy-on-board in short-haul economy could have been avoided if it was properly tested on a smaller scale at Gatwick first, before being rolled out at Heathrow.
Few who have followed BA’s approach to industrial relations over decades would have believed it would have ever gone ahead with a threat, no doubt the work of lawyers, to “fire and rehire” staff. But it was clearly wrong-footed by how this was seized upon by staff and trade unions. Hence what felt like an overly rehearsed performance by Alex before the Transport Select Committee last month.
Back to Sean Doyle, he is due to speak at the Airlines 2050 virtual conference at 10:15 BST today. Luis Gallego will also present his first IAG quarterly results next Friday, 30 October.
The clocks go back one hour in the UK on Sunday 25 October. This also marks the start of the winter timetable.
Ordinarily, we should be able to present a long list of schedule changes for the winter season. Not this year.
At London Heathrow, BA will resume short-haul flights to Basel, Billund, Gran Canaria, Malta, Vienna and Zagreb. Flights also resume to Amman which, along with Moscow Domodedovo, switches to short-haul configured aircraft.
Next month, BA will also resume scheduled long-haul flights from London Heathrow to Bangkok, Denver, Las Vegas, Phoenix, Santiago and Seoul. Many other routes benefit from frequency increases, including Boston which switches to twice daily. BA will also return to Orlando and Mauritius at Gatwick.