This will be the last Monday Briefing for a few weeks as it takes a break for the summer.
Does this mean a quiet summer? Not at all. Next week we begin a special series for the summer which will run until late August.
The Monday Briefing will return on 2 September 2019. We will of course report any major stories throughout the week as normal.
In terms of things to be looking out for over the next few weeks:
This coming Saturday, 20 July 2019, the Red Arrows will perform a fly past with a BA 747 in BOAC livery at the Royal International Tattoo.
Next Monday, 22 July 2019, BALPA’s ballot for industrial action at BA closes. It is likely that BALPA will announce its intentions immediately after the result of the ballot is known.
BA’s first Airbus A350-1000, G-XWBA, is expected to arrive at London Heathrow next week and we should see the first official pictures of the actual cabin interior.
Milan Linate airport will close for three months from Saturday 27 July 2019. Alitalia will transfer all Linate routes to Milan Malpensa. BA will also operate from London City to Milan Malpensa.
International Airlines Group announces its half-year results on Friday 2 August 2019. Given last week’s announcement that the Information Commissioner’s Office intends to fine BA £183m, Willie Walsh no doubt has a lot say about the matter but given a pending appeal and numerous group litigation actions, he may have to bite his tongue.
Qantas announces its annual results on Thursday 22 August 2019. Qantas usually has something to announce with its annual results. Whilst this may be too soon for a final announcement on whether it will place an order for aircraft to fly non-stop from London to Sydney and Melbourne, we should at least learn of the project’s progress.
Hello and welcome to our Monday Briefing for the week beginning 8 July 2019.
Connect Airways Bid For Flybe Approved
The Connect Airways bid for Flybe was approved by the European Commission on Friday.
Although the takeover completed some months ago, Flybe has been effectively “held separate” and remained operationally independent from the consortium until now.
As a condition of approval, the European Commission has required Connect Airways to make available five daily slot pairs at Amsterdam Schipol and three daily slot pairs at Paris Charles de Gaulle to any entrant wishing to fly from these airports to Birmingham International.
The airline will eventually operate under an as yet unspecified Virgin brand. It will be no surprise to anyone with a cursory knowledge of Flybe’s operation over the past few years that it is likely to be some time before a rebranding takes place.
On the subject of regional flying, it’s worth noting that in the slot allocation reports from Airport Coordination Ltd for the winter season that Loganair has, albeit unsuccessfully this time, put in a request for 42 weekly slots at London Heathrow.
Also unsuccessfully bidding for slots at Heathrow were China Airlines, Luxair, JetBlue and SpiceJet.
Singapore Airlines Lounge Revamp
Singapore Airlines is to spend £30 million revamping its lounges at Terminal 3, Singapore Changi Airport.
Singapore Airlines promises that passengers travelling in First Class and Suites will enjoy a new Private Room with a full service fine dining section and a new First Class lounge with a new Flagship Bar.
The Business Class lounge will be expanded with a cafe, dining hall and a full service bar.
The refurbishment will be carried out in four phases starting in August 2019 and is expected to complete by mid-2021. In spite of its reputation, Singapore Airlines has never been lauded for its lounges, so it will be interesting to see how these turn out.
Singapore Airlines’ lounges in Terminal 2 of Singapore Changi are not affected by these works.
Hello and welcome to our Monday Briefing for the week beginning 1 July 2019.
KLM Celebrates 100 Years
British Airways is not the only airline celebrating a centenary this year.
Monday 7 October 2019 will mark the 100th anniversary of the founding of KLM in 1919, ahead of its first flight in May 1920.
In a rather pointed reference, KLM says: “On 7 October, KLM will become the world’s first airline still operating under its original name to mark its 100th anniversary.”
The centenary celebrations launched at an official event at Amsterdam Schiphol on Saturday. Yesterday, KLM also took delivery of its first Boeing 787-10 aircraft “Orange Blossom”.
There’s a dedicated microsite with a history of KLM at KLM100.
There were quite a number of fleet developments in the past week:
Staying with KLM, its parent company Air France-KLM announced a reallocation of future deliveries of Airbus A350-900 and Boeing 787-10 aircraft between Air France and KLM. 6 Boeing 787s intended for Air France will be delivered to KLM, taking its total Boeing 787 fleet to 27 aircraft. 7 Airbus A350-900 aircraft ordered for KLM will be transferred to Air France. The Airbus A350-900 will enter service at Air France in October.
BA retired one of its Boeing 747s, G-BNLN, last week. This leaves 33 Boeing 747 aircraft in service at BA.
IAG announced that it has converted two Airbus A320neo options into firm orders for Iberia. These will replace existing Airbus A320ceo aircraft and will be delivered in 2021.
If Apple designed aircraft cabins?
As has been widely reported, Apple’s Chief Design Officer, Sir Jony Ive is leaving the company after 30 years to set-up is his own creative business, LoveFrom.
Marc Newson will also join the new firm from Apple. Marc has significant aviation experience having been Creative Director for Qantas from 2005 to 2015.
Projects for Qantas included its first lie flat seat the “SkyBed”, cabins for the Airbus A330 and A380 aircraft, as well as its acclaimed international First Class lounges in Melbourne and Sydney.
There has been no shortage of innovation in premium cabins and lounges over the decades. However, there are still areas ripe for change.
Whilst there has been talk of bunk beds and some attempts such as short-lived economy seat that reclines without intruding into the space of the passenger behind, no airline has managed to fundamentally reinvent the experience of economy passengers.
Jony Ive no doubt has a fair few air miles under his belt and a collaboration with Marc Newson, subject to willing clients of course, could produce interesting results.
It’s been a busy week for aircraft orders at the Paris Air Show. Here are the main headline orders:
American Airlines has ordered 50 Airbus A321neo XLR aircraft. This was secured through the conversion of delivery slots for 30 Airbus A321neo aircraft and a new order for 20 aircraft.
International Airlines Group has signed a Letter of Intent for 200 Boeing 737 MAX 8/10 aircraft. IAG has also ordered 6 Airbus A321neo XLR aircraft for Aer Lingus and 8 for Iberia.
Indigo Partners has ordered 50 Airbus A321neo XLR aircraft which will be deployed at 3 of its airlines, Frontier, JetSMART and WizzAir.
JetBlue has ordered 13 Airbus A321neo XLR aircraft through the conversion of existing orders for Airbus A321neo aircraft.
Qantas Group has ordered 36 Airbus A321neo XLR aircraft. This was secured through the conversion of orders for 26 Airbus A321neo aircraft and a new order for 10 aircraft. These will be operated by either Jetstar or Qantas.
Virgin Atlantic has ordered 14 Airbus A330neo aircraft which will replace its existing fleet of Airbus A330-200/300 aircraft.
In terms of what wasn’t announced, IAG has yet to announce an order to fulfil its growth ambitions for LEVEL. IAG has also not announced an order for the Airbus A321neo LR/XLR aircraft for BA.
It’s possible that IAG does not see it as big enough for long-haul routes at Heathrow. However, there are gaps in BA’s worldwide network, notably Africa, where the Boeing 787 does not appear to be an economic option. IAG can hardly be criticised for playing to geographic strengths of its Dublin, London and Madrid hubs, but it is becoming heavily geared towards transatlantic traffic.
It will be some months before IAG gives a full update on its fleet plan but its fleet announcements this year have been distilled here.
Airline fleet plans are of course at the mercy of economic and geopolitical events.
In the past week, we have seen rising tensions between the US and Iran. HSBC also gave warning that more airlines would follow Lutfhansa and issue profit warnings due to “rapidly weakening demand”. Cathay Pacific also highlighted indications of declining demand and intense pressure on yields in a traffic update last week.
“The Conversation: Female Flight Attendants” on BBC World Service
Kim Chakanetsainterviews two female cabin crew in “The Conversation” on the BBC World Service today.
Kim’s guests are Heather Poole, author “Cruising Attitude: Tales Of Crashpads, Crew Drama And Crazy Passengers At 30,000 Feet” and Gretchen Ryan, formerly cabin crew for South African Airways in the 1980s and has just published “Secrets Of A Stewardess”. The programme airs shortly after 11:30 BST. (BBC World Service)
Hello and welcome to our Monday Briefing for the week beginning 17 June 2019.
Is “Basic Business Class” on the horizon?
Over the past few years, most network airlines have introduced some form of “basic economy” long-haul fare.
The rationale for this was that low cost airlines such as Norwegian introduced fares that do not include, inter alia, a checked luggage allowance or free seat assignment. As many customers choose fares through price comparison sites, airlines believed that they have to offer a similarly competitive fare to capture these customers.
Like low cost airlines, these fares are offered based on the ability, whether the customer intended to or not, to up-sell at little marginal cost additional services after booking. It is intended to, at best, be revenue neutral.
Emirates confirmed last week that it is launching a new form of business class fare that does not include a car service to the airport nor lounge access. Seat selection privileges are also restricted and frequent flyer mileage accrual is also reduced.
This fare is not available on all routes and from a cursory scan of Emirates booking engine it does not appear to be available on any flights from London to Dubai.
Does this mark the start of the unbundling of business class?
This is not the first time airlines have discriminated between different groups of business class passengers.
BA requires Club World passengers who are not Silver & Gold members of the Executive Club to pay a fee to select a seat at the time of booking. Virgin Atlantic only provides a car service to the airport for passengers booking certain types of Upper Class fare. Indeed, business class was born out of airlines wanting to provide more to passengers buying full fare economy tickets.
Airlines have also got better at targeting different passenger groups – there are competitive Club World fares available for passengers willing to fly mid-week and book more than six months in advance.
It is a slippery slope if airlines start a full unbundling of business class. Airlines have always been fearful of business class passengers trading downwards, hence why so many took long to introduce premium economy – a stepping stone between economy and business class that Emirates does not yet have. The whole structure of airline fares and ground and onboard services is to encourage passengers to trade upwards.
Whilst price is a factor in securing business class passengers, there are many other factors too, namely networks and schedule, ground services and onboard product.
Successful business class products come from really understanding the needs of business passengers. It is this that led to valuable innovations such as fully flat beds, arrivals lounges and Fast Track immigration channels. If airlines start dismantling this – the clue is in the brand name most synonymous with business class “Club” – then it is a slippery slope downwards.
Heathrow Expansion Consultation
Heathrow will launch a statutory consultation on the expansion of airport tomorrow, Tuesday 18 June.
This follows an earlier consultation exercise this year. The significance of this exercise is that its fundings will be incorporated into a final proposal to the Planning Inspectorate next year.
After a period of public examination, the Secretary of State will then make a decision whether to grant a Development Consent Order which will encompass most of the authorities required to construct the third runway. This process is expected to take at least 18 months.
The consultation will cover four areas:
Heathrow’s preferred masterplan for expansion, including the layout of the new north west runway (CGI image above) and supporting airport infrastructure, as well as the pace of expansion in the number of flights.
How the airport will operate with a third runway such as how it will alternate flights between the three runways, a possible ban on scheduled night flights, and how additional flights may operate before the third runway opens.
Heathrow’s assessment of the impact of expansion on the environment and local communities
Heathrow’s plans to mitigate the impact of expansion in areas such as air pollution, carbon and noise.
Airbus is widely expected to unveil its Airbus A321XLR aircraft, the latest variant of its largest single range aircraft. Bloomberg reports that American Airlines is considering this as a replacement for the Boeing 757. It is claimed Airbus A321XLR would be capable of flying from American’s principal hub in Dallas Fort Worth to Central Europe – where its presence is weak due to the lack of Oneworld alliance partners.
In the UK, American currently uses the 757 aircraft to fly seasonally from Edinburgh to Philadelphia. American has cut its presence at UK regional airports, notably Manchester, and this may help it reinstate previously suspended routes.
IAG has also been cited as a potential purchaser, but is likely to want to see how the Airbus A321LR performs for Aer Lingus first.
On an Airbus related note, every month it publishes an updated list of aircraft orders and deliveries.
Based on the update for May published last week, BA has reduced its orders for Airbus A320neo aircraft from 25 to 22 aircraft and increased Airbus A321neo aircraft from 10 to 13 aircraft. Based at London Heathrow, the Airbus A321neo has a capacity for 220 passengers, compared to 180 for the Airbus A320neo.
Staying with BA and Airbus, BA’s first Airbus A350-1000 aircraft emerged in its full Chatham Dockyward livery in Toulouse last week. The airline has not yet confirmed the exact delivery date to London Heathrow and will do so when Airbus gives one months’ notice. You will be seeing more of BA’s Airbus A350-1000 in production as Title Role Productions (who produced “British Airways: 100 Years In The Sky” for Channel 5 last year) have been filming in Toulouse for a forthcoming TV series recently.
The Boeing 747 Centenary Flights That Weren’t
There was a blip last week in what has so far been a well choreographed year of BA centenary celebrations.
BA has removed from its schedules three Boeing 747 flights to Glasgow, Manchester and Newcastle on the day of its centenary, Sunday 25 August 2019.
BA described as coverage of these flights as “speculation”, a common form of non-denial denial. What exactly has happened behind the scenes isn’t known. However, the airline may have been deterred by negative coverage – written by some who really should know better – of the environmental impact.
UK Bank Holidays
The Government has announced that the next early May Bank holiday will be moved from Monday 4 May to Friday 8 May 2020 to mark the 75th anniversary of VE Day.
Alas, Prime Minister Theresa May did not feel inclined to give the UK an extra public holiday as parting gift.
Reuters: Virgin Atlantic in talks to order Airbus A330neo
Reuters reports that Virgin Atlantic is in talks with Airbus to order up to ten Airbus A330neo aircraft.
This report has emerged ahead of the Paris Air Show which is due to begin in two weeks’ time on Monday 17 June 2019.
There are two Airbus A330neo models, the A330-800 and A330-900. The Airbus A330-900 has a range of 7,200 nautical miles and is designed to accommodate 260-300 passengers.
Virgin Atlantic’s 49% shareholder Delta Air Lines has also ordered 35 of the aircraft, having increased its order from 25 aircraft in late 2018.
The aircraft is currently operated by TAP Air Portugal, which will have 19 of the aircraft in its fleet by the end of this year, and Air Mauritius. Other airlines to have placed significant orders for the aircraft include Air Asia X which will take delivery of its first aircraft later this month.
In terms of where this fits into Virgin’s fleet plan, the airline has 12 Airbus A350-1000 aircraft on order and is currently leasing three Airbus A330-200 aircraft to compensate for Boeing 787 issues. Virgin has taken delivery of all ten Airbus A330-300 aircraft and 17 Boeing 787-9 aircraft it has ordered. Its last remaining 5 Airbus A340-600 and 8 Boeing 747-400 aircraft are due to be retired in the coming years.
Vuyani Jarana will leave the airline at the end of August and the South African Airways board has started a search for a successor. A lack of progress in its turnaround strategy has been cited as the reason for his departure.
South African Airways has not reported a profit in eight years. It has significantly reduced its presence in London, having cut Cape Town and reduced Johannesburg to once daily.
Vuyani Jarana recently gave an interview to the Centre for Aviation for the IATA AGM on the challenges facing the aviation industry in Africa.
BA returns to Islamabad this Sunday after a more than ten year absence.
BA had suspended all flights to Pakistan in September 2008 following the bombing of the Marriott Hotel in Islamabad.
In recent years BA has relied on codeshares with Qatar Airways to serve a number of destinations in Pakistan including Karachi and Lahore.
This is a relatively tentative return with three Boeing 787-8 flights a week. The route used to operate six times weekly with a Boeing 777-200 aircraft.
It was clear from the route announcement last year that there had been discussions between the governments of the UK and Pakistan on restarting the route. It is going to be watched very closely, both in terms of commercial performance and any potential security issues.
Air New Zealand Aircraft Order
Air New Zealand has this morning announced a new aircraft order.
It has ordered 8 Boeing 787-10 aircraft, with options for a further 12 aircraft. These will be delivered from 2022 to 2027 and will replace 8 Boeing 777-200 aircraft. Air New Zealand also has 13 Boeing 787-9 aircraft and 7 Boeing 777-300 aircraft in its fleet.
There are more signs that regulators are taking a tougher stance against airline co-operation and joint-ventures.
More than three years ago BA, Iberia and LATAM announced plans for a joint-business on routes between Europe and Latin America. Regulatory approval, which was initially expected to take 18 months, has been granted by Brazil, Uruguay and Colombia.
Approval was also granted by Chilean Free Competition Defence Court late last year but was subject to an appeal by a consumer group to the Chilean Supreme Court. Last week, the court has denied approval for the joint-venture.
Meanwhile in Australia, the International Air Services Commission has issued a draft decision denying approval for Cathay Pacific to codeshare on certain Qantas flights from Australia to Hong Kong.
There was more bad news for Thomas Cook over the weekend after it announced its half-year results with a loss of nearly £1.5bn on Thursday.
The bulk of the loss was a goodwill writedown in respect of its acquisition of MyTravel in 2007. However, the loss prompted Citigroup to claim Thomas Cook’s shares are worthless.
Sky News reported on Saturday that one credit card acquirer company that works with Thomas Cook in the Nordic region is reported to be seeking to hold on to customer payments for longer.
Key for Thomas Cook is the sale of its group airline. Whilst this has attracted interest, given it is known that Thomas Cook must complete the sale, and quickly, in the cold hard world of commercial negotiations, it is going to face demanding terms from potential purchasers.
Qantas Flight 72
More than ten years have passed since Qantas flight 72 was involved in an incident en route from Singapore to Perth on 7 October 2008.
The A330-300 aircraft, carrying 303 passengers and 12 crew, experienced two uncontrolled nosedives following a computer failure. It made an emergency landing at Learmonth Airport in Exmouth, Western Australia. A large number of passengers and crew were injured, and some experienced life changing physical and psychological injuries.
The Captain of the aircraft, Kevin Sullivan, has written a book “No Man’s Land: The Untold Story Of Automation On QF72” which will be published in the UK by HarperCollins on 27 June 2019.
Virgin Australia contemplates frequent flyer programme sale
Staying in Australia, Virgin Australia issued a profit warning last week, citing weaking demand.
The airline which has a complex history and ownership structure, with multiple shareholders with competing interests (Singapore Airlines, Etihad Airways, HNA Group, Nanshan Group and Sir Richard Branson’s Virgin Group), expected profits to be AUD$100m lower than last years profit of AUD$64.4m.
Its entire strategy is under review by its recently appointed CEO Paul Scurrah, which may explain the desire to get bad news out early, and some route network changes have already been made.
It is also contemplating a sale of a stake in its Velocity frequent flyer programme, of which it currently owns 65%. Like an airline selling off Heathrow slots, this is an easy means to raise cash in the short-term, but is of little benefit in the long term.
Heathrow “Britain’s Busiest Airport” Returns
Heathrow “Britain’s Busiest Airport” returns for a fifth series at 20:30 on ITV (UK) tomorrow.
Across no less than 12 twelve parts, it uses the all too common production devices of familiar recurring characters, this series covers the fall out of the Gatwick drone closures last Christmas.
It’s been more than ten years since the aviation industry experienced a major crisis, which was of course the collapse of Lehman Brothers and its impact on the global financial system.
Since then, in Europe there’s been a clear delineation between the three major airline groups (Air France-KLM, IAG, Lufthansa), low cost carriers (easyJet, Ryanair) and smaller airlines, many of whom such as Air Berlin and Monarch, have gone out of business.
The larger airlines and groups have certainly had individual challenges to deal with, but they have been aided by buoyant demand and the absence of a single major economic or geopolitical shock.
There are signs of trouble ahead. Last week, International Airlines Group reported a fall in profits for the first quarter of 2019. Whilst IAG can claim to be the only big three European group to be profitable in the quarter, that profit came only from BA. Other IAG airlines such as Vueling reported very sharp falls in profit. Demand in mainland Europe appears to be softening and there is industry-wide over-capacity. There are also tensions in the Middle East and the prospect of a growing trade war between China and the US bubbling under.
On Saturday, The Times reported that easyJet is expected to unveil its worst half-year losses on Friday in the region of £275m. The Sunday Times also reports that Thomas Cook will report half year pre-tax losses of around £227m this Thursday.
Virgin Atlantic has expressed an interest in buying Thomas Cook’s long-haul UK airline business. It’s far from unusual for Virgin to make its interest known when an airline is up for a sale. However, Virgin is in expansion mode and buying part of the airline would give it a much stronger position in Manchester. The one big the risk factor is the age of Thomas Cook’s Airbus A330 fleet which is around 20 years’ old.
BA Fleet News
A few items of BA fleet news in the past week:
As reported last week,Boeing 787 Dreamliner issues are not going away for BA. There are blanket cancellations over the coming months to Abu Dhabi, Doha and Mumbai and many more tactical cancellations up to the end of August. Full details are here.
BA is now around two-thirds of its way through its Gatwick Boeing 777 refurbishment programme. A ninth aircraft is currently in Singapore for refurbishment. Full details of the routes on which refurbished aircraft are operating are here.
BA has taken delivery of its fifth Airbus A321 Neo aircraft at London Heathrow. There are two ten Airbus A320 Neo and five Airbus A210 Neo aircraft at London Heathrow.
In case you missed it:
Cathay Pacific unveils a refreshed brand identity with the strapline “Move Beyond”. There’s nothing particularly groundbreaking here, but as a historically conservative with a small c airline, Cathay is clearly trying to shout a little louder. (London Air Travel)
Also of note this week:
The Airline Insolvency Review, established following the collapse of Monarch in 2017, proposes a Flight Protection Fund, financed by a fee of up to 50p on passenger tickets issued in the UK, to pay for the repatriation of UK passengers when airlines fail. This has drawn short shrift from airlines. (Gov.UK)
Finnair, which has previously expressed a desire to play a part in European consolidation, foresees remaining an independent airline. (Financial Times)
A Boeing 787 pilot and train driver swap simulators and compare notes. (Virgin Atlantic)
Monocle magazine, through the prism of its editorial worldview, selects its annual Travel Top 50. (Monocle)
Late post publication updates:
Qantas launches “Points Plane” – – a one-off flight from Melbourne to Tokyo in October which will be available solely to frequent flyers redeeming frequent flyer miles. (Qantas)
Air France plans to cut domestic short-haul capacity by 15% by 2021 and will cut 500 jobs through voluntary redundancy. (Financial Times)
WestJet has announced it is to be acquired by private equity firm Onex Corporation. (WestJet)