Aviation Business Briefing – Monday 16 October 2017

Here’s our weekly aviation business briefing for the week beginning Monday 16 October 2017.

Air Berlin flying into the sunset (Image Credit: Air Berlin)
Air Berlin flying into the sunset (Image Credit: Air Berlin)
Welcome to our weekly aviation business briefing for the week beginning Monday 16 October 2017.

Air Berlin confirmed last week that it is to suspend operations from Saturday 28 October 2017. The airline has already suspended long-haul operations. Its frequent flyer programme TopBonus, which operated as a separate legal entity, had also closed. Flights operated by NIKI will continue. easyJet announced late on Friday afternoon that negotiations are still underway for it to acquire a substantial part of Air Berlin’s operation at Berlin Tegel airport. Lufthansa is due to acquire a substantial number of Air Berlin aircraft and its subsidiaries Niki and LG Walter. It is now something of a given that the Air Berlin brand will not survive. Oneworld has yet to announce when Air Berlin will leave the alliance. For legal reasons, it may not officially leave the alliance until some time after it has suspended operations (this was the case with former member Mexicana).
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Aviation Business Briefing – Monday 9 October 2017

Here’s our weekly aviation business briefing for the week beginning Monday 9 October 2017.

Monarch Notice
Monarch Notice
The big story last week was of course the collapse of Monarch (Financial Times) which now joins bmi British Midland, Flyglobespan, XL Airways, and Zoom in the great airline graveyard in the sky. The Civil Aviation Authority fielded an impressive rescue to operation to bring passengers back to the UK. As of Saturday 7 October 56,000 Monarch customers have returned to the UK.

It now falls on KPMG to complete the administrative process. As no buyer could be found, it is near certain that the Monarch brand will not take to the skies again.

One asset that will be of interest to buyers will be Monarch’s slot portfolio at London Gatwick. easyJet will be keen to solidify its market leading position at the airport. BA parent company International Airlines Group will also be keen to stop this happening. Both bid for Flybe’s London Gatwick holding of 25 slot pairs in 2013. easyJet won and was able to significantly increase capacity at the airport as a consequence. However, according to the Financial Times doubts have been raised as to whether the administrator can sell the slots or has to forfeit them.
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What are BA’s plans to replace and refurbish its short & long-haul fleet?

The latest on BA’s plans to replace and refurbish its short-haul and long-haul fleet.

We receive a lot of enquiries regarding BA’s plans to replace and refurbish its short and long-haul fleet.

We suspect this is, in part, due to the wide variation in the condition of many of its long-haul aircraft in particular!

BA has a conservative approach to fleet expansion and refurbishment. This is unlikely to ever change. Here’s a run through of recent and forthcoming deliveries and refurbishments by aircraft type:

Airbus A380
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Is BA “losing the plot”? Why is BA getting so much negative press coverage?

Why has British Airways been receiving so much negative press coverage in 2017?

British Airways Club World Boeing 747 (Picture by: Stuart Bailey / British Airways)

Poor Alex Cruz, CEO of British Airways, is having a hard time of late.

Barely a week goes by without a negative news article or comment piece in the British press (the latest from Victoria Coren-Mitchell in Sunday’s Observer) lamenting service cut backs on British Airways.

Alex Cruz, who arrived at the airline last year from Barcelona based low cost carrier Vueling, has become a lightening rod for criticism that the airline is hell bent on becoming no different to Ryanair.

The catalyst for this was the introduction of Buy on Board catering (with significant teething problems) on short-haul flights earlier this year.

This was one of the first decisions made by Alex Cruz (though it had been considered many times before his arrival).  After grumblings online a number of newspapers have picked up on other service cut backs and there is now a clear PR narrative of cut backs and decline.

On long-haul it’s also been criticised for service cut backs (such the offer of a single solitary chocolate bar as the second meal service on long-haul economy and premium economy flights to the East Coast of the USA) and for doggedly sticking to its 2006 Club World business class seat whilst other airlines which were once light years behind BA (notably American Airlines, Delta and United whose products former BA CEO Willie Walsh once dismissed as “frankly crap”) have leapfrogged BA.  The airline is also due to switch from 9 to 10 across seating in economy on many of its Boeing 777s.

This isn’t the first time BA has made cut backs to its service. After the events of 11 September 2001 and the collapse of Lehman Brothers which triggered the global financial crisis, BA reduced cabin crew numbers on flights and made substantial cut backs to in flight catering and amenities.

But BA is not losing money. It’s profitable. Last year it made a record operating profit in excess of £1.4bn.  It’s also expanding, carrying 44.5m passengers last year.

So what’s going on?
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International Airlines Group to launch new low cost long-haul airline “Level”

After months of speculation, International Airlines Group (“IAG”) which is the parent company of Aer Lingus, British Airways, Iberia and Vueling, has today confirmed is to launch a new low cost long-haul airline.

The airline is called “Level”.  This is the first new airline launched by IAG in its six year history.

The airline will initially be based in Barcelona.  It will launch on 1 June 2017 and its inaugural route will be Barcelona – Los Angeles which operate twice weekly.

Routes from Barcelona to Oakland California (three times weekly) will follow on 2 June 2017.  Barcelona – Punta Cana (twice weeky) on 10 June 2017.  Barcelona – Buenos Aires on 17 June 2017 (three times weekly).

The airline will intially operate with two brand new Airbus A330-200 aircraft with 239 seats in economy in a 2-4-2 configuration and 21 seats across three rows in premium economy in a 2-3-2 configuration.

In economy a seat pitch of 30″ will be offered with a 9″ personal entertainment screen.  Checked baggage, extra leg room seats and hot meals can be purchased in advance.  Food and drink, duty free goods, in flight comfort amenities such as blankets and pillows can be purchased on board.

In premium economy, a seat pitch of 37″ will be offered with a 12″ personal entertainment screen and noise-cancelling headphones.

Checked luggage (in addition to a free cabin bag), hot meals drinks and snacks, priority boarding, and in flight entertainment will be complimentary for customers flying in premium economy.

High speed internet connectivity will also be available for a charge for all passengers.

The availability of refunds and flight changes and seat selection will depend on the type of fare purchase in both cabins.

IAG promises one way fares economy from €99 and one way premium economy fares from €599.

Direct flights are on sale now at Flylevel.com

Connections will be available from Vueling’s short-haul network at Barcelona which, of course, operates from London Gatwick and Heathrow and a number of UK regional airports.  However, flights with connections need to be booked via Iberia.com

Members of the Aer Lingus, British Airways and Iberia frequent flyer programmes will be able to earn Avios on all flights operated by Level.

The launch of Level is a clear competitive response by IAG to Norwegian which is launching new routes from a number of IAG markets in Europe.  We have already seen a number of moves such as the launch by BA of routes from Gatwick to New York JFK, Fort Lauderdale and Oakland.  BA is also planning to “densify” (that’s add more seats) some of its Boeing 777s to compete against Norwegian. We are likely to see further moves such as the launch of “unbundled” long-haul economy fares by Aer Lingus and BA.

As IAG have adopted a trans-national brand name, the airline will no doubt explore more routes from other European cities where connections from Vueling are available, such as Rome and Paris.  Looking at the branding and marketing materials, IAG is actively pitching this airline at a younger market than many of its existing airlines.  It will of course be interesting to see how this develops and whether it launches any routes from the UK.

Seasonal Christmas & New Year Greetings from the world’s airlines & airports for 2016

The release of an annual Christmas film from the world’s major airlines and airports is now a regular fixture in the calendar. In previous years some videos and PR stunts have attracted audiences in the hundreds of millions worldwide on social media.

Here is our collection of films released by the world’s airlines and airports for 2016.

As ever, these films are a timely reminder as to what aviation is really about: bring people together.

Heathrow Airport: Coming Home For Christmas
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BA delays launch of London Heathrow – Tehran to Thursday 1 September 2016

British Airways has delayed the relaunch of its route from London Heathrow to Tehran, Iran from Thursday 14 July to Thursday 1 September 2016.

No specific reason has been given for the delay.  However, we surmise that the delay is either due to a shortage of suitable long-haul aircraft or operational and regulatory delays in establishing operations in Tehran.

Affected passengers have the option of an indirect reroute on the following airlines: Lufthansa (via Frankfurt/Munich), Alitalia (via Rome Fiumicino), Turkish Airlines (via Istanbul), or Aegean Airlines (via Athens).  Connections to the aforementioned airlines flights will be via British Airways operated flights from London Heathrow.

Full details are available on BA’s trade website.

BA has also revised its schedule for London Heathrow – Tehran which is now as follows:

London Heathow – Tehran

Flight BA153 Depart London Heathrow 20:30 –  Arrive Tehran 05:45 (Daily, except Sundays)

Tehran – London Heathrow

Flight BA152 Depart Tehran 08:35 – Arrive London Heathrow 11:10 (Daily, except Mondays)