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...