Monday Briefing – 25 June 2018

Welcome to our weekly Monday Briefing on the main developments in air travel in London and around the world, as published every Monday morning at 06:00 BST.

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Heathrow Expansion CGI Image
Heathrow Expansion CGI Image (Image Credit: Heathrow)

Hello and welcome to our Monday Briefing for the week beginning 25 June 2018, summarising the main developments in air travel over the past week, and a look the week ahead.

Heathrow Third Runway Vote

The House Of Commons will vote on the Government’s Airports National Policy Statement this afternoon, which proposes a third runway at London Heathrow.

The Conservative party has issued a “three line whip” for its MPs to vote in favour. The Labour Party has allowed its MPs a free vote, though its front bench is not in favour of a third runway. The trade union Unite, which is a significant donor to the Labour Party, has come out in favour of the third runway.

The Conservative party position has prompted Gregs Hands, MP for Chelsea & Fulham, to resign from the Government as minister for trade policy.

Estimates on Sunday evening are that around 15 Conservative MPs will vote against the Government and that around 100 Labour MPs will defy their front bench to vote in favour of the runway.

There has been a deafening silence from Boris Johnson, MP for Uxbridge and South Ruislip, who said in 2015 “I will lie down in front of those bulldozers and stop the construction of that third runway.” Boris Johnson is reported to be out of the country at an undisclosed location.

Irrespective of the outcome of the vote, there will be a judicial review which is supported by the Mayor Of London, Sadiq Khan. A judicial review is a legal challenge, not to the actual merits of the third runway itself, but the manner in which the Government reached its decision. It is an expensive process that is not easily won.

There is also disquiet about the cost of the third runway, notably from BA’s parent company, International Airlines Group.

Assuming there are no further obstacles, construction of the third runway could begin in 2021.

Craig Kreeger to retire from Virgin Atlantic

In 12 months’ time, Virgin Atlantic will be different in many ways from today.

It should have taken delivery of its first Airbus A350-1000 aircraft. It should have launched, or at least be close to launching, a new expanded transatlantic joint-venture with Air France-KLM and Delta.

Perhaps more significantly, Delta should be the single largest shareholder as Sir Richard Branson is due to sell a 31% stake in the airline he founded to Air France-KLM.

Virgin will also have a new CEO, Shai Weiss, who will replace Craig Kreeger from 1 January 2018. Craig Kreeger was the architect of Virgin’s “Plan to Win” which was intended to achieve record levels of profitability this year. That has proved elusive, thanks to a number of factors, notably Boeing 787 engine issues. Virgin is due to launch a new business plan “Velocity” next year. Details are scant at the moment, but given that Virgin is some distance from consistent profitability, further changes to the business are expected.

Hoovering Up Avios

For a long time there has been a huge industry on both sides of the Atlantic dedicated to squeezing out every last possible frequent flyer mile at every opportunity.

In Europe this has been aided in part by the adoption of the “Avios” currency across a number of frequent flyer programmes, notably BA Executive Club and Iberia Plus. In addition, there is ability to move Avios between these programmes and take advantage of arbitrage opportunities.

Iberia sparked a frenzy this week by launching a seemingly too good to be true promotion whereby 9,000 bonus Avios would awarded for flights booked on the airline, subject to a cap of 90,000 Avios. 90,000 Avios is enough for a return flight to New York in BA Club World (travelling off peak and subject to a surcharge of nearly £500).

Bonus frequent flyer promotions are nothing new. However, this was unusual in that the Avios are awarded immediately and won’t be forfeited if the flights are not taken, meaning passengers can book the cheapest possible flights anywhere on Iberia’s network and effectively throw away their tickets. This is a radical break with convention. The Avios do expire if not used by December of this year, but this appears to be circumvented by transferring them to another account eg BA Executive Club. (At some point in the future, a single “Avios Bank” will be introduced across all Avios frequent flyer programmes.)

In spite of the relatively short promotional period (which has now ended), it has attracted a huge amount of attention worldwide. It must have prompted booking activity far beyond what could have been expected. It does have shades of Hoover’s notorious free flights promotion. Suspect this will be one to watch.

About the Airbus statement

The news agenda in the UK on Friday last week was dominated by a statement by Airbus that a “No Deal” Brexit would severely impede its ability to do business in the UK.

The announcement was met with either nonchalance and surprise concern from politicians. This is despite the fact that MPs had just waved The EU Withdrawal Bill through the House Of Commons which ruled out the UK staying in the European Economic Area, the Single Market and Customs Union.

Be under no illusion, Airbus is only stating publicly what it and businesses in many other sectors have said in private to Government for two years.

At this stage, it is impossible to predict how the current Brexit impasse will be resolved. However, that a strategically important European business like Airbus felt the need to go public and the dismal response is a damning indictment of Britain’s political class, on both sides of the House of Commons.

Also of note this week:

Airlines for Europe rails against Air Traffic Control strikes in Europe. (Airlines for Europe)

Cathay Pacific receives its first Airbus A350-1000 aircraft. (Cathay Pacific)

Etihad introduces a programme to second pilots to Emirates. (Reuters)

The Financial Times interviews Norwegian founder and CEO Bjorn Kos amid continued speculation about the airline’s future. (Financial Times)

How to miss a flight. (Financial Times)

Virgin Atlantic reflects on 34 years of its Flying Lady. (Virgin Atlantic)

Late Post Publication Updates:

[Reserved for updates during the day.]

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Monday Briefing – 18 June 2018

Welcome to our weekly Monday Briefing on the main developments in air travel in London and around the world, as published every Monday morning at 06:00 BST.

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BA Boeing 787 at British Airways Maintenance Cardiff
BA Boeing 787 at British Airways Maintenance Cardiff (Image Credit: British Airways)

Hello and welcome to our Monday Briefing for the week beginning 18 June 2018, summarising the main developments in air travel over the past week, and a look the week ahead.

BA Grounds 7 Boeing 787 Dreamliner Aircraft

BA has now grounded 7 of its 28 strong Boeing 787 Dreamliner fleet.

2 Boeing 787-8 aircraft have long been grounded. 5 Boeing 787-9 aircraft were grounded almost simultaneously a little over a week ago.

Rolls Royce also announced last week that checks may be required on “Package B” engines as well as “Package C” engines. BA has not made any public statements since the latest Rolls-Royce announcement. However, IAG CEO Willie Walsh has not hidden his dissatisfaction with Rolls-Royce and the latest announcement will not instil confidence.

We have summarised the impact on BA’s operations here. The Seattle Times has an excellent article on the broader industry issues affecting all aircraft and engine manufacturers.

Etihad Reviews Aircraft Orders

Etihad has announced a loss before exceptional items of USD$ 1.52 billion for 2017. This compares to a loss for USD$ 1.95 billion for 2016.

These headline figures are only for the airline’s core operations and do not include losses from exceptional items or investments. The group has of course been beset by its disastrous strategy of buying minority stakes in airlines, notably Air Berlin and Alitalia.

Etihad has already undertaken a number of network changes including the suspension of Dallas Fort Worth, Entebbe, Jaipur, San Francisco, Tehran, and Venice.

It is now reported to be in discussions with aircraft manufacturers to review its aircraft order book, which is substantial. Etihad has 21 Boeing 787-9, 30 Boeing 787-10, 25 Boeing 777X and 62 Airbus A350 wide body aircraft on order. Given recent network developments, it is likely that any new aircraft will only act as replacement for retiring aircraft. Therefore, it is implausible that a large number of these orders won’t be cancelled.
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Monday Briefing – 11 June 2018

Welcome to our weekly Monday Briefing on the main developments in air travel in London and around the world, as published every Monday morning at 06:00 BST.

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Her Majesty The Queen officially opens Gatwick on 9 June 1958; the North Terminal on 18 March 2018; Gatwick check-in area 1958
Her Majesty The Queen officially opens Gatwick on 9 June 1958; the North Terminal on 18 March 1988; Gatwick check-in area 1958 (Image Credit: London Gatwick)

Hello and welcome to our Monday Briefing for the week beginning 11 June 2018, summarising the main developments in air travel over the past week, and a look the week ahead.

Qatar Airways now operating for BA

Qatar Airways is now operating selected long-haul flights for BA.

It is operating all BA flights to Kuwait until 30 June / 1 July, Muscat until 20 / 21 August, as well as one of its two daily flights to Dehli, also until 20 / 21 August.

All flights are being operated by Airbus A330-200 aircraft in a two class configuration. Qatar has sent three aircraft to Heathrow for these flights.

It is worth noting that since BA first published rebooking guidance for passengers, this has been updated.

Passengers in Club World can also fly to Kuwait and Muscat via Abu Dhabi on Etihad by connecting from a BA flight from London Heathrow to Abu Dhabi. Club World passengers due to fly to Delhi can also fly on Air India by connecting from one of BA’s own services from London Heathrow to India.

According to publicly available flight data, two out of ten BA Boeing 787-8 aircraft have been out of service for some weeks (Registrations G-ZBJD & G-ZBJE). At the time of writing, four out of eighteen BA Boeing 787-9 aircraft have not flown since at least Friday 8 June 2018 (Registrations G-ZBKC, G-ZBKJ, G-ZBJK & G-ZBKO).

The following flights also remain cancelled:

– BA280 / BA281 London Heathrow – Los Angeles until Thursday 5 July 2018
– BA278 / BA279 London Heathrow – San Jose until Sunday 17 June 2018
– BA5 / BA6 London Heathrow – Tokyo Narita until Tuesday 26 June 2018

Update: Rolls-Royce has this morning issued an update advising that a similar component issue to the one in “Package C” Trent 1000 engines has been found in some “Package B” engines. Therefore, precautionary checks will be carried out on these engines. This is likely to lead to further disruption.

IAG CEO Willie Walsh speaks at the IATA AGM

IATA held its Annual General Meeting together with the World Air Transport Summit in Sydney last week. It did of course generate a lot of headlines for the wrong reasons.

Although many airline CEOs were in attendance, as most of them lead public companies, they can’t actually say much beyond what they have already told their investors. IAG CEO Willie Walsh is always good value at a conference, expressing incredulity at Alitalia spending €7m on new uniforms whilst in administration.

The Centre For Aviation has published an interview with Willie Walsh as part of its daily publications during the event.

A couple of quotes of note on IAG’s bid for Norwegian and the Airbus A321 long range at Aer Lingus, which may ultimately be ordered by other IAG airlines such as BA:
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Monday Briefing – 4 June 2018

Welcome to our weekly Monday Briefing on the main developments in air travel in London and around the world, as published every Monday morning at 06:00 BST.

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Fiji Airways & Oneworld Connect
Fiji Airways & Oneworld Connect (Image Credit: Oneworld Connect)

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.
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Monday Briefing – 28 May 2018

Welcome to our weekly Monday Briefing on the main developments in air travel in London and around the world, as published every Monday morning at 06:00 BST.

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The books of Paul Jarvis on British Airways
The books of Paul Jarvis on British Airways (Image Credit: Amberley Publishing)

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.
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Monday Briefing – 21 May 2018

Welcome to our weekly Monday Briefing on the main developments in air travel in London and around the world, as published every Monday morning at 06:00 BST.

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British Airways 100 Years Of Aviation Posters (Image Credit: Amberley Publishing)
British Airways 100 Years Of Aviation Posters (Image Credit: British Airways)

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.
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Monday Briefing – 14 May 2018

Welcome to our weekly Monday Briefing on the main developments in air travel in London and around the world, as published every Monday morning at 06:00 BST.

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Air France KLM
Air France KLM (Image Credit: Air France-KLM)

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.
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Monday Briefing – 7 May 2018

Welcome to our weekly Monday Briefing on the main developments in air travel in London and around the world, as published every Monday morning at 06:00 BST.

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Qantas Boeing 747-238B "City Of Canberra"
Qantas Boeing 747-238B “City Of Canberra” (Image Credit: Qantas Airways)

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.
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Monday Briefing – 30 April 2018

Welcome to our weekly Monday Briefing on the main developments in air travel in London and around the world, as published every Monday morning at 06:00 BST.

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BOAC Boeing 747-136 aircraft
BOAC Boeing 747-136 aircraft (Image Credit: British Airways)

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.
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Monday Briefing – 23 April 2018

Welcome to our weekly Monday Briefing on the main developments in air travel in London and around the world, as published every Monday morning at 06:00 BST.

London Air Travel » Monday Briefing » Page 4

BA Boeing 787 at British Airways Maintenance Cardiff
BA Boeing 787 at British Airways Maintenance Cardiff (Image Credit: British Airways)

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.
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