Category: Monday Briefing

London Air Travel » Monday Briefing

Hello and welcome to our Monday Briefing for the week beginning 4 June 2018, summarising the main developments in air travel over the past week, and a look the week ahead.

Oneworld introduces “Oneworld Connect” membership

Ever since International Airlines Group acquired Aer Lingus there has been the perennial question as to when the airline would rejoin the alliance after it left in 2007.

In spite of early promises that Aer Lingus would rejoin the alliance, there appears to be no evidence of any imminent activity.

Perhaps we now have an answer. On Sunday 3 June 2018 at the IATA AGM in Sydney (fortuitously for the delegates timed to coincide with Vivid Sydney), Oneworld announced a new form of membership known as “Oneworld Connect”.

Oneworld Connect places significantly lower obligations on members. They only have to offer priority check-in and boarding to all Oneworld frequent flyers.

Other Oneworld benefits such as mileage earning and redemption and lounge access will only be offered to customers of “sponsoring airlines”, of which there must be at least three. More benefits can be offered by agreement with individual airlines.

This is clearly a tacit admission that Oneworld has gone as far as it can in securing new members. There are lots of airlines which with Oneworld members have varying levels of co-operation. Not just Aer Lingus. But also its fellow IAG subsidiary Vueling. Other potential candidates could include Air Italy, Alaska Airlines, Bangkok Airways and Royal Air Maroc.

It has also been confirmed that BA and Fiji Airways are to explore areas for co-operation. BA and Fiji Airways have already sought regulatory approval for BA to codeshare on Fiji Airways flights from Los Angeles and San Francisco to Fiji. An announcement about this could come as soon as this week.

IAG Negotiations with Airbus

When IAG released its first quarter results last month, Willie Walsh confirmed that the group was in discussions with aircraft and engine manufacturers on a new aircraft order.

It is expected that the order will be announced in the next 12 months. Talks with Boeing and General Electric were described as “particularly constructive”. And now we can see why.

Bloomberg reports that IAG has suspended talks with Airbus over an order for new Airbus A380s.

Airlines of course have regular discussions with aircraft manufacturers and conversations are leaked for a reason.

The real story here is that BA/IAG do want more Airbus A380 aircraft, but clearly not at any price.

IAG has previously mooted leasing second hand Airbus A380s, but this has evidently not come to anything. So now it’s back to looking at new aircraft. IAG has options for a further seven aircraft. Whilst Willie Walsh has suggested Airbus A380s could be deployed at Aer Lingus and Iberia, this seems unlikely. Aer Lingus doesn’t even have plans to introduce the Airbus A350.

The A380 is clearly serving BA well on major trunk routes and there is scope to add more year round capacity to more routes.

On a related note, BA took delivery of its 18th Boeing 787-9 Dreamliner (registration G-ZBKS) and its 27th Dreamliner aircraft in total on 31 May 2018. It is due to complete its inaugural scheduled passenger flight to New Orleans today. It will no doubt provide some welcome additional capacity as it addresses engine issues with the rest of is Dreamliner fleet.
Continue reading “Monday Briefing – 4 June 2018”

London Air Travel » Monday Briefing

Hello and welcome to our Monday Briefing for the week beginning 28 May 2018, summarising the main developments in air travel over the past week, and a look the week ahead.

BA Winter Schedules

BA has started to update its schedules for the winter season, which officially starts on Sunday 28 October 2018.

The changes at Heathrow are detailed fully here.

In addition to changes in Africa below, Warsaw moves from Heathrow Terminal 3 to 5. Palermo is suspended for the winter. BA also returns to Moscow Sheremetyevo International Airport.

There has been a conspicuous lack of announcements at London Gatwick so far. We have detailed here known seasonal changes to long and short-haul routes.

BA has yet to announce how the 20 or so slots it has acquired from Monarch will be used beyond the end of September. It is known that some slots have been leased to other airlines, notably Qatar Airways which has now relaunched Gatwick – Doha. However, that still leaves a substantial number of slots to be used over the winter.

The mixed fortunes of BA in Africa

BA announced the suspension of another route in Africa last week: London Heathrow – Luanda is suspended from Thursday 7 June 2018.

Whilst BA has also announced the launch of a seasonal London Heathrow – Marrakech service, this latest news follows the suspension of Dar es Salaam, Tanzania in 2012; Lusaka, Zambia in 2013; Freetown and Monrovia in 2014; and Entebbe, Uganda in 2015.

It also suspended a number of routes it inherited from bmi including Addis Ababa, Casablanca and Khartoum.

In South Africa, it’s a very different story.

Aided by the withdrawal of South African Airways and Virgin Atlantic from London – Cape Town, BA is the sole operator of the route from London Heathrow where BA can dispatch up to three Boeing 747s in the winter.

BA is also launching a new direct route to Durban. Not only that, BA also adding more flights to Johannesburg in the winter, with four weekly flights operated with a Boeing 787. This is on top of two daily Airbus A380 departures.

There are of course economic and geopolitical reasons behind many of these suspensions, but its network in the region is diminishing rapidly behind other European airlines. If BA ever follows Aer Lingus in ordering the Airbus A321 long range aircraft, this may change matters.
Continue reading “Monday Briefing – 28 May 2018”

London Air Travel » Monday Briefing

Hello and welcome to our Monday Briefing for the week beginning 21 May 2018, summarising the main developments in air travel over the past week, and a look the week ahead.

IAG plays it cool with Norwegian

IAG CEO Willie Walsh spoke at the CAPA Airline Leader Summit last week.

Willie did speak to Reuters on the sidelines of the conference.

Willie confirmed there has been no progress on IAG’s bid for Norwegian after two proposals were rejected by the airline. IAG would not enter into a bidding war for Norwegian, with Willie stating “This isn’t a deal I have to do.” That is true. However, there is a big prize, namely a strong brand with a significant presence in Northern Europe (where IAG is weak) and at Gatwick.

easyJet also confirmed last week it has no interest in bidding for Norwegian. There is no reason to question the veracity of that statement. However, should in any alternative scenario, easyJet acquire a substantial part of Norwegian’s slots at Gatwick, this would be very bad for IAG.

IAG has never given much away about possible acquisitions, so any further announcements are likely to come only through official announcements to the Stock Exchange.

Update: The Financial Times, citing Spanish newspaper Expansion, that IAG may be about to make a third bid. It has to be said that Expansion has not always been a reliable source on IAG matters in the past.
Continue reading “Monday Briefing – 21 May 2018”

London Air Travel » Monday Briefing

Hello and welcome to our Monday Briefing for the week beginning 14 May 2018, summarising the main developments in air travel over the past week, and a look the week ahead.

How do you solve a problem like Air France-KLM?

Air France-KLM’s Chief Executive, Jean Marc-Janaillac, is to leave the airline group tomorrow.

As has been well documented, Jean Marc-Janaillac, tended his resignation after Air France staff rejected a pay offer.

Bloomberg and the Financial Times have extensive reports on the possible successor candidates. These include internal candidates from Air France and Pieter Elbers, Chief Executive of KLM.

Whilst the decision in theory rests with the company, as the French state owns 23% of the voting rights of Air France-KLM, there is a considerable political dimension.

The fact that the nationality of the Air France-KLM Chief Executive is considered significant is a sign of its divergence from IAG and Lufthansa Group.

All three groups began consolidation by bringing two de-facto national European airlines together: BA and Iberia in the case of IAG; and Lufthansa and SWISS in the case of Lufthansa Group.

IAG is no longer thought of as simply a marriage of two airlines from the UK and Spain. Whilst there were tensions and local political difficulties in its early years, IAG has a pan-European brand LEVEL and a Global Business Services centre in Poland. It has acquired a hub in Dublin through its purchase of Aer Lingus. BA’s CEO is Spanish, having previously had Australian and Irish CEOs.

Talk of the demise of Air France is premature. The local Paris market is simply too big to let it go. However, the rest of aviation in Europe has largely moved on and it’s time for the French state to let Air France-KLM go.
Continue reading “Monday Briefing – 14 May 2018”

London Air Travel » Monday Briefing

Hello and welcome to our Monday Briefing for the week beginning 7 May 2018, summarising the main developments in air travel over the past week, and a look the week ahead.

IAG & Norwegian

What is going on between IAG and Norwegian?

In the three weeks that have passed since IAG announced it had acquired a stake in Norwegian, the group has tabled two proposals to Norwegian management, both of which have been rejected.

From the statements issued by IAG and Norwegian to date four things are clear:

a) Norwegian is prepared to entertain bids as it has appointed advisors
b) IAG has not yet submitted a formal takeover bid
c) IAG wants 100% ownership of Norwegian; and
d) IAG’s bid comes with, as yet undisclosed, conditions.

As Norwegian’s co-founders Bjørn Kjos and Bjørn H. Kise own a joint 27% stake in the airline, no takeover bid could go ahead without their consent.

However, it can be said with confidence that IAG has been studying Norwegian for years and time is on IAG’s side. There’s much more to come.
Continue reading “Monday Briefing – 7 May 2018”

London Air Travel » Monday Briefing

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

Alex Cruz interviewed

Two years in to his role as CEO of British Airways, Alex Cruz has been something of a lightning rod for criticism of the airline.

Whatever the complaint, the finger of blame is pointed squarely at Alex. The reality is far more complex. Some decisions, such as not installing a new Club World seat on Boeing 787 and Airbus A380 aircraft, were made before his arrival. Many decisions, such as required levels of profitability on short-haul, are set by the parent company IAG and are outside of his control.

Alex made a number of public appearances last week, including the Routes Online conference in Bilbao, where he was interviewed by John Strickland.

As with any interview, Alex is constrained by the fact that some initiatives have to remain commercially confidential and City rules require any significant announcements to be announced by IAG to the Stock Exchange first.

However, there were some points of note:

– Alex is adamant that lessons have been learned from last May’s IT outage, both in terms of IT resilience and customer support.

– First Class is going to remain at BA, but it will continue to be downsized, as it has been over the past 20 years. It is expected that some four class Boeing 777-200 aircraft will be converted to three class and it seems inevitable that First will go from more routes as the Boeing 747 is retired.

– The much anticipated new Club World seat is still in development. So the seat you will see on Iberia’s soon-to-be-unveiled Airbus A350-900 aircraft will not be installed on BA’s Airbus A350-1000 when it arrives in 2019. Alex understandably did not give much away about the new cabin. However, it will be an entirely new seat and cabin layout for BA. There are 11 defined parameters such as direct aisle access for all and greater privacy.

– It has been known for some time that Club Europe catering is going to be reviewed again. However, as this was initially planned for April, it is going to be delayed for a few months.

– Buy-On-Board catering on short-haul is going to evolve with the possibility of pre-ordering food and improved options for the use of Avios and possible changes for Executive Club members.

– There is a strong emphasis on improving BA’s ground services, both in terms of departure punctuality and premium ground services. You may have noticed dedicated First Class areas at baggage belts for arrivals at Heathrow from New York JFK and initiatives such as this are to extended.
Continue reading “Monday Briefing – 30 April 2018”

London Air Travel » Monday Briefing

Hello and welcome to our Monday Briefing for the week beginning 23 April 2018, summarising the main developments in air travel over the past week, and a look the week ahead.

Boeing 787 Dreamliner Woes

Following a recent Federal Aviation Administration Directive limiting the ETOPS (Extended-range Twin-engine Operational Performance Standard) of the Boeing 787 Dreamliner with certain models of Rolls Royce engines, it is not known how many of BA’s 26 Dreamliners are affected.

However, in the absence of any official statement from the airline, it is clear that it is beginning to have an impact on its operations.

There have been tactical cancellations of Boeing 787 flights to Baltimore, Los Angeles and San Jose (California). In addition, some flights traditionally operated with the Boeing 787-9 have been substituted with a Boeing 787-8.

As the Dreamliner represents about 20% of BA’s wide body fleet it should have the capacity to absorb any additional maintenance requirements. However, this could continue for some time.

There’s more detail in this article which we will update over the next week.
Continue reading “Monday Briefing – 23 April 2018”

London Air Travel » Monday Briefing

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

IAG confirms interest in Norwegian

The big story this week has of course IAG’s expression interest in Norwegian.

As reported last week, there is very little that is known at the moment, beyond the fact that IAG has acquired a 4.61% stake in Norwegian. However, that will not stop us indulging in speculation and guesswork.

According to The Sunday Times IAG had been quietly building up its stake over a period of time. Both IAG and Norwegian were clearly caught by surprise when Bloomberg first broke the story.

If IAG does ultimate acquire Norwegian, it would be the fourth airline to join IAG since its original formation after Aer Lingus, bmi and Vueling.

It can be said that confidence that IAG has been studying Norwegian for quite some time and this bid is the sort of “transformational” acquisition of a strong brand that leads a market segment that IAG seeks. IAG will also disregard what it would call “noise” in the press, online and from other quarters about any bid.

In terms of what happens next, it is worth recalling that IAG’s first approaches to Aer Lingus and Vueling were rebuffed. IAG’s negotiations with Lufthansa to buy bmi were punctuated by counter-bids and protests from Virgin. The original merger of BA and Iberia which led to the formation of IAG was also dogged by uncertainty as to whether it would go ahead.

What is unique about a possible Norwegian bid is the strength of the brand in both its home market and in the UK. Neither Iberia nor Vueling have made any significant in roads into the UK market under IAG. Indeed, both airlines have suspended some routes from London. There is no question that IAG would maintain the Norwegian brand given its strength in Northern Europe. The most significant question is what happens at Gatwick.

Norwegian has built up a significant operation at Gatwick with approximately 40 departures a day and whilst there would no doubt be a review of Norwegian’s operations at the airport, it is far from certain they would all be subsumed into BA. When IAG bought bmi in 2012, even though it seemed obvious that it would be merged into BA, some at IAG were pressing for it to remain separate and BA pilots offered productivity concessions for the two operations to be merged.

There has also long been the question as to whether a “twin brand” approach as per Qantas/Jetstar is a better approach for BA as opposed to trying to compete with low cost carriers whilst still trying to maintain its premium positioning. However, these decisions will ultimately be made by IAG, not BA.
Continue reading “Monday Briefing – 16 April 2018”

London Air Travel » Monday Briefing

Hello and welcome to our Monday Briefing for the week beginning 9 April 2018, summarising the main developments in air travel over the past week, and a look the week ahead.

Etihad scales back

For a time it seemed that the world of air travel had pivoted permanently towards the Middle East, specifically the “Big Three” airlines Emirates, Etihad and Qatar Airways who were set on a path of exponential growth in perpetuity.

With a relatively favourable operating environment and Government support on their side, it seemed that all these airlines needed to do was announce headline grabbing aircraft orders at air shows, run celebrity endorsed ad campaigns highlighting their capacious and luxurious cabins and they would able to syphon off ever more passengers on to ever more routes to their respective hubs.

And one of the most successful indicators of this strategy in Europe has been the volume of passengers flying from UK regional airports, bypassing hubs in Europe.

However, proving that the world of air travel is anything but predictable, Etihad has experienced a considerable downturn in its fortunes. In part, this is due to its disastrous strategy of buying minority stakes in failing European airlines. Etihad has confirmed to the media (BBC News) that it will suspend flights from Edinburgh to Abu Dhabi from October of his year.

Etihad has also recently suspended Abu Dhabi – Dallas Fort Worth, in this case pointing the finger of blame at American Airlines for withdrawing a codeshare agreement.
Continue reading “Monday Briefing – 9 April 2018”

London Air Travel » Monday Briefing

Hello and welcome to our Monday Briefing for the week beginning 2 April 2018, summarising the main developments in air travel over the past week, and a look the week ahead.

Rest assured, there are no April Fools stories in this update.

BA suspends London Gatwick – Oakland

Over the past 18 months or so, BA has had its sights set firmly on taking on Norwegian at Gatwick.

It reinstated London Gatwick – New York JFK and added Fort Lauderdale and Oakland at Gatwick to take on Norwegian head to head.

It has also begun to “densify” its Boeing 777 fleet so that, according to BA, it will have a lower seat cost than Norwegian’s fleet of Boeing 787s.

Last week it emerged that taking on Norwegian at Gatwick may not be as straightforward as first thought. BA has announced that Oakland is suspended from Monday 22 October 2018.

This is all BA has said so far. It is not clear whether the route may return on a summer seasonal basis in 2019. BA has also not issued any rebooking guidance to passengers.

Whilst Norwegian can claim a victory in this instance, its own financial and operational performance remains under scrutiny. Passengers flying from Gatwick to New York JFK in particular have been beset by cancellations and delays. The performance of recently launched routes from Gatwick to Austin and Chicago will also provide an indication of how much more scope there is to grow on North Atlantic routes.
Continue reading “Monday Briefing – 2 April 2018”