Thursday, 1 March 2018

Ukraine's aviation fiasco

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Russia’s annexation of Crimea in 2014 opened a dark chapter in the history of Ukraine’s civil aviation sector, lighting a fuse that would see Donetsk International Airport razed to the ground and Malaysia Airlines Flight 17 shot out of the sky. Though hostilities rumble on in the eastern Donbas region, life has gradually returned to normal for most Ukrainians. The number of passengers carried by local airlines grew 22 per cent in 2016 to reach 5.7 million – just shy of pre-conflict levels – thanks in large part to flag-carrier Ukraine International Airlines (UIA), which has stepped up its role as a transit carrier linking Asia with Europe. Kyiv’s Boryspil International Airport, UIA’s home base, accommodated more than ten million passengers last year and expects 20 million by 2023.

However, market dominance by UIA – which provides 67 per cent of capacity at Boryspil, and a whopping 89 per cent of domestic seats nationwide – is antagonising Ukraine’s pro-western government, whose lawmakers are desperate to inject foreign competition and disempower the post-Soviet oligarchs...

Wednesday, 14 February 2018

How to ensure Ryanair foots the bill for flight delays

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There is little doubt that Ryanair takes umbrage at EU261, the piece of European law that guarantees passengers compensation in the event of most flight delays and cancellations. Michael O’Leary, the airline’s boss, insists that he complies with the “ridiculous” piece of legislation. But many say otherwise. Last year, when a pilot rostering mishap grounded thousands of Ryanair flights, the UK’s Civil Aviation Authority (CAA) accused it of “persistently misleading” customers about their rights. Which?, a British consumer group, agreed that Ryanair fell “woefully short” of its obligations. Media reports exposing poor treatment of passengers abound. Yet, in the past five months, your correspondent has received two EU261 pay-outs from Ryanair. Claims that the company swindles its customers are exaggerated...

Thursday, 1 February 2018

Interview: Stefan Pichler, Royal Jordanian Airlines CEO

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When Royal Jordanian Airlines ran a series of advertisements mocking Donald Trump, the US President, and making light of his laptop ban for Middle Eastern flights, many of the people sharing its messages on social media had never even heard of the airline – let alone flown with it.

Despite flying its country’s flag for more than half a century, Royal Jordanian still lacks the scale and brand recognition of its Gulf competitors. It has also become a financial burden on the government of Jordan, its 26% shareholder, posting net losses in four of the six years since the Arab Spring.

New chief executive Stefan Pichler admits that regional instability has held the airline back. Neighbouring Syria used to be a major source of connecting traffic before civil war closed its skies, while routes to Iraq, Libya and Yemen were also abandoned when violence flared in their borders. Surrounded by conflict, Jordan’s own tourism sector has nosedived as Westerners steer clear of what they perceive to be a dangerous neighbourhood...

Interview: Ilyes Mnakbi, Tunisair CEO

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The European Union’s delegation to Tunisia could not have struck a more optimistic tone in December, when EU Transport Commissioner Violeta Bulc met with officials in Tunis to conclude negotiations over the looming Open Skies treaty between the two sides.

Tunisia’s government has been inching towards the treaty for several years, emboldened by the success of Morocco’s deal with the EU in 2006. That landmark agreement saw tourist arrivals rocketing by 60% over five years, propelled by an influx of European low-cost carriers to the country’s popular holiday resorts. Tunisia’s treaty, Bulc predicted, will be no less transformative...

Bridging the Gulf

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When SaudiGulf Airlines applied for an operating licence in the Kingdom of Saudi Arabia in 2012, owners Al Qahtani Group believed that a winning bid would grant them access to a heavily under-served duopolistic market.

By the end of the year, it was clear that SaudiGulf would not be the only company emerging from the tender process with flying rights. Al Maha Airways, a subsidiary of Qatar Airways, was also approved to launch operations. And while its plans ultimately came to naught, two other market entrants were waiting in the wings: Nesma Airlines, a regional carrier formerly based in Egypt; and Flyadeal, a low-cost subsidiary of flag-carrier Saudia.

Together with privately-owned Flynas, five separate carriers now ply routes across the kingdom. Though fantastic for passengers, this explosion of competition has left SaudiGulf re-evaluating a business model that presupposed rapid growth and untapped demand...

Thursday, 18 January 2018

Legacy airlines are facing new competitors on transatlantic routes

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Even for a global industry like aviation, Primera Air’s business model seems remarkably cosmopolitan. The Icelandic-owned airline is headquartered in Latvia, but mainly operates flights from Denmark and Sweden to sunspots in the Mediterranean. This summer, it will begin flying from the UK and France to America. The company bears more than a passing resemblance to Norwegian Air Shuttle, another nominally Scandinavian airline with global aspirations. More than two-thirds of Norwegian’s capacity now bypasses its home country, and the rapid growth of its long-haul operations is proving to be a serious challenge for legacy carriers such as British Airways...

Thursday, 11 January 2018

Turkish Airlines: Flying to the moon

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A little over a year ago, Gulliver gave a downbeat assessment of the prospects for Turkey's aviation sector. Having enjoyed a decade of uninterrupted growth of more than 10% a year, Turkish Airlines, the country’s flag-carrier, was grounding aircraft and closing routes amid growing unrest at home and violence across its border with Syria. Concerns about regional security were also making life difficult in the United Arab Emirates (UAE) and Qatar, two other countries that have built aviation empires by connecting far-flung parts of the globe through their hub airports. Yet whereas the Gulf carriers remain in the doldrums, Turkish is gaining altitude again...

Monday, 1 January 2018

Interview: Adel Ali, Air Arabia CEO

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Compared with Europe, few people would describe the Middle East and North Africa (MENA) as a liberal aviation market. Restrictive traffic rights, bureaucratic visa regulations and state aid for flag-carriers conspire to make life immensely difficult for the few private airlines based in the region.

Heavy regulation is particularly burdensome for low-cost carriers (LCCs) as they rely on commercial efficiency and free-market access to unlock new demand among price-sensitive consumers. This explains why most Arab LCCs adopt a hybrid business model that eschews point-to-point flying in favour of hub economics, and replaces no-frills service with a whole host of complimentary perks. Airfares, inevitably, remain higher than average.

The one noteworthy exception is Air Arabia, the privatised flag-carrier of Sharjah in the United Arab Emirates (UAE), which was founded in 2003 and now operates 48 Airbus A320s out of ten bases stretching from the Persian Gulf to the Maghreb...

Interview: Hrafn Thorgeirsson, Primera Air CEO

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Amid a recent flurry of activity in the low-cost long-haul sector, one new operator stands out as relatively unknown on both sides of the Atlantic.

Primera Air stormed onto the scene last year by announcing plans to fly from London Stansted, Birmingham and Paris Charles de Gaulle airports to New York, Boston and Toronto – a radical departure from its short-haul charter specialism.

The company has an eclectic history that defies easy classification. Having started life as an Icelandic airline, JetX, it was acquired by and renamed after Primera Travel Group, a conglomerate of Scandinavian travel agencies and tour operators. Newly formed Primera Air then ditched its Icelandic identity, first by acquiring a Danish operating licence and then another in Latvia...

Pegasus gallops back to profit

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By the time Turkey had suppressed the military coup d'état of July 2016, it was clear that tough times lay ahead for the country’s aviation sector.

A series of high-profile terror attacks – including one devastating assault on Istanbul’s Atatürk International Airport – had already shattered Turkey’s appeal as a tourism hotspot and intercontinental aviation hub. Political unrest only looked set to damage its reputation further.

With flag-carrier Turkish Airlines and low-cost rival Pegasus Airlines both posting operating losses for the year – their first in recent memory – concerns grew that Turkey’s era of double-digit passenger growth was grinding to a halt. The subsequent election of US President Donald Trump and the imposition of his laptop ban on Turkish and Middle Eastern carriers made 2017 appear no less ominous.

Yet, despite battling headwinds on multiple fronts, the two network carriers rebooted their growth plans last year after bouncing back into profit. Amid a vastly improved security climate and a better-than-expected recovery in outbound demand, Turkey’s aviation sector now looks stronger than ever...