Showing posts with label Low Cost & Regional Airline Business. Show all posts
Showing posts with label Low Cost & Regional Airline Business. Show all posts

Monday, 1 January 2018

Interview: Adel Ali, Air Arabia CEO

Full article in PDF format

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...

Saturday, 1 July 2017

Interview: Blair Pollock, Qazaq Air CEO

Full article in PDF format

Looking back, 2015 seems like an unfortunate time to have launched an airline in Kazakhstan, the central Asian nation whose economy relies heavily on commodity earnings.

The collapse in oil prices from $115 per barrel in mid-2014 to $30 in early 2016 had a crippling effect on the former Soviet republic, choking off both domestic spending and foreign investment. While the government responded prudently by floating its currency, a subsequent halving of the Tenge’s value only heaped more pressure on Kazakh workers and businesses.

Having launched operations at the height of the crisis, there was little chance that Qazaq Air would enjoy the smooth entry into service its management originally hoped for.

But chief executive Blair Pollock is quick to find a silver lining, arguing that headwinds create opportunities for ambitious start-ups – particularly state-owned ones that have a political mandate to drive long-term development...

Low-cost long-haul coming of age?

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In March 2015, after years of teasing passengers with the promise of £10 transatlantic fares, Ryanair formally ruled out moving into the low-cost long-haul (LCLH) marketplace.

“The Board … has not considered or approved any transatlantic project and does not intend to do so,” it said in a terse statement, backtracking on plans announced just days earlier to connect Europe with a dozen cities in America. Chief executive Michael O’Leary insisted that the industry needs to enter a cyclical downturn before widebody aircraft become available at suitably discounted prices.

Ryanair’s scepticism of LCLH models has not changed over the past two years, but the once-vacant sector is now advancing leaps and bounds without it. Two rivals – Norwegian Air Shuttle and Iceland’s WOW Air – have grabbed sizable chunks of the transatlantic market with their no-frills offerings. Responding to the new competition, three of Europe’s legacy carriers have launched or promised to launch their own LCLH subsidiaries...

Wednesday, 15 March 2017

Air Baltic gaining altitude

Full article in PDF format

Martin Gauss is a man who understands only too well the perils of running a state-owned airline. In 2012, shortly after he stepped down as chief executive of Malév Hungarian Airlines, the European Union ordered his former employer to repay €130 million of illegal state aid. Unable to do so, Malév, one of Europe’s oldest flag-carriers, ceased operations.

Its demise came just three months after Gauss had agreed to steer another troubled eastern European flag-carrier: Air Baltic. Within one year, history was repeating itself and Brussels was launching a new investigation into the Latvian airline.

The similarities, however, end there.

Whereas Malév relied on subsidies from its government owner to stay afloat – violating competition laws in the process – Air Baltic deployed private-sector efficiency and commercial sustainability to get its house in order. The EU’s two-year investigation failed to unearth any wrongdoing by the state-owned carrier, clearing the way for a bold new future in Latvia’s picturesque capital Riga...

Loganair's independence vote

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Loganair’s decision to end its franchise agreement with Flybe amounts to a dramatic vote for independence by the Scottish carrier, returning commercial decision-making to Glasgow after 24 years as a white-label operator.

The airline has promised to create a “bold new corporate identity” when it parts ways with Flybe in September, most noticeably by phasing in a Scottish livery with an eye-catching red and black tartan design. An in-house reservations system should also go live by March, enabling the company to take direct bookings through its website.

Independence will further allow Loganair to take back control of its product and pricing strategy, amid accusations of poor service standards and exorbitant inter-island fares under Flybe’s watch...

NG conversions struggle to take off

Full article in PDF format

Aviation consultancy Flight Ascend predicts global demand for 1,530 jet conversions over the next two decades – more than 70% of them narrowbodies – as passenger airlines switch to the latest generation of fuel-efficient planes, and older models are re-purposed for a new life flying cargo. The work is conducted by a handful of highly specialised companies that obtain Supplemental Type Certificates (STCs) for their designs from national regulators.

Aircraft valuations are the main factor in determining the viability of such projects, with cargo customers routinely shelling out $3.5 million for conversions and $1.5 million for maintenance on top of base prices for narrowbodies. Older, more affordable models like the Boeing 737 Classics (-400s and -300s) therefore dominate the conversion market. But as the availability of Classics dwindles, the industry is turning its attention to younger – and much pricier – 737NGs (-800s and -700s), the current generation of narrowbody passenger jets...

Sunday, 1 January 2017

Interview: Ashraf Lamloum, Nesma Airlines Managing Director

Full article in PDF format

At the time of writing, Egypt’s Nesma Airlines had just launched domestic flights in the Kingdom of Saudi Arabia (KSA) with a pair of ATR 72-600s. The Saudi unit will initially operate from the northern city of Ha’il, before basing aircraft elsewhere in the country and eventually adding international flights.

The launch of a new airline in Saudi Arabia is a landmark event for a sector that has long shied away from competition. Until late last year, state-owned flag-carrier Saudia provided 77% of capacity in the domestic market, with privately-owned Flynas offering the only alternative for travellers. Efforts to launch two other carriers – SaudiGulf Airlines and Al Maha Airways – moved at a glacial pace since 2012, although the former announced progress just as this article went to press.

The establishment of Nesma KSA is also the latest in a series of strategic rebirths by Nesma Egypt, which began life as a charter operator connecting Red Sea and Nile River resorts with Europe in July 2010 – just before President Hosni Mubarak was overthrown and Egypt’s once-flourishing tourism sector nosedived...

Friday, 1 July 2016

Interview: Nathalie Stubler, Transavia France CEO

Full article in PDF format

Even by the standards of France's pugnacious trade unions, the mobbing of senior Air France executives near Paris Charles de Gaulle Airport in October 2015 was an appalling incident.

News channels around the globe broadcast images of two senior managers scrambling over fences – their shirts literally torn off their backs by enraged workers who had come to protest against plans for 2,900 redundancies at the flag-carrier. Five Air France employees and two police officers were wounded in the clashes.

Though unprecedented for their violence, the ugly scenes were just the latest in a string of tense face-offs at the French flag-carrier...

Ryanair all grown up

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Ryanair is now in the third year of its 'Always Getting Better' programme – a corporate makeover designed to rehabilitate its toxic reputation for customer service.

It was back in September 2013 that chief executive Michael O'Leary finally acknowledged the need for change at Europe's most uncompromising low-cost carrier (LCC). His commitment to no longer "unnecessarily piss people off" came after Ryanair suffered its first profit warning in a decade, prompting angry shareholders to revolt against the airline's harsh treatment of passengers.

"I have seen people crying at boarding gates," one shareholder complained at the time. "There is simply something wrong there that needs to be addressed...

Tuesday, 15 March 2016

Interview: Colin Copp, Jazz Aviation President

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On 19 February, an unremarkable statement by Chorus Aviation, the parent company of Canada's Jazz Aviation, announced that the airline's maintenance workers have ratified a new labour agreement.

To many observers in the fast-paced airline industry, the 92-word press release will have failed to stir even the briefest flicker of interest. But to anyone who has been following the twists and turns of Canada's aviation market, this crucial maintenance deal consummates an extraordinary change of direction for one of the world's most operationally accomplished – yet commercially exposed – regional carriers...

Tuesday, 15 December 2015

Interview: József Váradi, Wizz Air CEO

Full article in PDF format: page 38-41 & cover

József Váradi, the founder and chief executive of Wizz Air, coined a new term for the aviation industry at last year's World Travel Market in London: "lazy low-cost".

His neologism drew a line between two types of low-cost carriers (LCCs): on the one hand, true LCCs that have an obsessive focus on cost-cutting and ancillary surcharges; on the other, "lazy" LCCs that allow legacy expenses to creep into their business models.

"Only Wizz and Ryanair are [true] low-cost," he told delegates at the industry conference. "The likes of EasyJet and Norwegian [Air Shuttle], we would call them 'lazy low-cost'."

Fast forward to this summer's World Low Cost Airlines Congress in London, and Váradi took to the stage in a more nuanced environment for the fast-paced LCC sector...

Made in the USA... by Airbus

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At some point in the middle of 2016, for the first time in history, an Airbus aircraft will roll off the production line on American soil.

JetBlue Airways is lined up to receive the first of the US-made jets, followed later in the year by American Airlines. Both carriers have ordered A321s, though Airbus's new $600 million facility in Mobile, Alabama – which opened amid much fanfare on 14 September – will also produce A319s and A320s. Its output is due to reach four aircraft per month by late 2017...

Tuesday, 1 September 2015

Interview: Stein Nilsen, Widerøe CEO

Full article in JPG format: page 14/15 & page 16

For an industry as financially perilous as the regional airline business, few operators can ever expect to match the track-record of Norway's Widerøe.

The 81-year-old regional carrier, Scandinavia's largest, has been consistently profitable for more than a decade – staying in the black through the September 11th 2001 attacks on America, the 2007 global financial downturn, and even the 2009 Eurozone debt crisis.

Newly appointed chief executive Stein Nilsen attributes its success to a mixture of timeworn expertise and high barriers to entry in the Norwegian marketplace...

Interview: Maunu Visuri, Nordic Regional Airlines CEO

Full article in JPG format

Flybe Finland was guaranteed a name-change this year following the departure of founding shareholder Flybe, but beyond rebranding the company as Nordic Regional Airlines – or NORRA for short – few strategic decisions have been taken by the Finnish regional carrier.

Managing director Maunu Visuri makes no bones about the uncertainty surrounding the company's future. Indeed, it is precisely this precarious state of affairs that motivated the new branding.

"We selected it because it actually works whatever we decide to do as an airline," Visuri tells Low Cost & Regional Airline Business. "Obviously we had to get away from the Flybe brand. We're Nordic, and we're regional, and we're an airline – so it works quite well!"...

Monday, 15 June 2015

Interview: Arthur White, VLM CEO

Full article in PDF format

Arthur White knew he had his work cut out in July 2012 when he became managing director of VLM Airlines, the Antwerp-based charter and ACMI (Aircraft, Crew, Maintenance and Insurance) operator.

Parent company Air France had already subsumed the VLM brand under CityJet, its exclusive ACMI customer, and was supposedly pursuing a full merger. Yet the flag-carrier’s new restructuring programme made no mention of either subsidiary, and within weeks of White’s appointment it was clear that a sell-off was the only option being considered in Paris.

German turnaround specialist Intro Aviation would soon emerge as a white knight for the sister carriers, offering to buy them in December 2013. But it was not long before VLM faced yet more headwinds...

Ryanair's transatlantic trip-up

Full article in PDF format

Michael O’Leary, the chief executive of Ryanair, Europe’s largest low-cost carrier, has always been economical with the truth when it comes to headline-grabbing antics.

Though by no means shy about dishing out facts and figures on the airline’s phenomenal success, O’Leary’s best performances have tended to encroach on the realm of fiction. His purported product innovations are the stuff of legend: a fat-tax for plump passengers; a standing-only section for cheap ones; even a toilet charge for those caught short. Something as inconvenient as the truth, he discovered long ago, will rarely stop journalists from writing up a good story...

Wednesday, 1 April 2015

Interview: Skúli Mogensen, WOW Air CEO

Full article in PDF format: page 22-25 & cover

When Iceland’s WOW Air began flying between Europe and North America this March, it was staking its claim on a market that has confounded no-frills operators for decades.

Laker Airways is the name that typically crops up in discussions about the mythical low-cost, long-haul business model. The airline operated out of London Gatwick Airport until its demise in 1982. But it was in fact another Icelandic carrier, Loftleiðir, that first opened up affordable transatlantic flying to the masses – albeit with the annoyance of a stopover in Reykjavik.

Loftleiðir was dubbed the ‘Hippie Express’ throughout the 1960s, proving popular with American students who were visiting Europe on a shoestring budget...

Monday, 1 December 2014

Interview: Giorgio Callegari, Aeroflot Deputy General Director for Strategy

Full article in JPG format: page 12 & page 14

If there was any doubt that Russia remains defiant in its ongoing sanctions battle with the West, state-owned flag-carrier Aeroflot drove home the message in October by branding its new low-cost subsidiary ‘Pobeda’, or ‘Victory’.

To a domestic audience, the word is most commonly associated with 9 May: the national holiday that marks the Soviet Union’s victory over Nazi Germany in World War II. It is a term steeped in patriotic fervour, evoking all the sentiments that Moscow wants to stir up at home during the current geopolitical crisis.

To Russia’s Western neighbours, meanwhile, the brand will be interpreted as a cheeky reference to Pobeda’s defunct predecessor, Dobrolet, which succumbed to EU sanctions in August after just two months of operations...

Interview: Guliz Ozturk, Pegasus CCO

Full article in JPG format: page 36/37 & page 38/39

For several years Europe’s network carriers have been fighting a losing battle on two competitive fronts, pinned down by both the lower costs of no-frills rivals at home and the superior products of full-service rivals in the Middle East.

Though the continent’s flag-carriers are beginning to adapt, they have already relinquished huge traffic volumes to the market leaders of both new airline breeds: Ryanair and easyJet in the low-cost camp; and Emirates, Etihad and Qatar Airways in the Gulf. The unwillingness of European governments to foster healthy competition in their capital-city hubs has only accelerated this transfer of power.

And now, in a further blow to their fortunes, yet another competitive dynamic is emerging on the fringes of the continent...

Monday, 1 September 2014

Interview: Puttipong Prasarttong-Osoth, Bangkok Airways President

Full article in JPG format: page 16/17 & page 18

Thailand’s low-cost carrier (LCC) sector turned 10 years old in 2014, and even in the midst of political upheaval it continues to go from strength to strength.

The country’s largest LCC, Thai AirAsia, may have trimmed its growth projections after the 22 May military coup in Bangkok – reducing this year’s aircraft deliveries from eight to five – but its 39-strong fleet still operates more flights per month than flag carrier Thai International Airways (THAI).

Together with Nok Air, THAI’s low-cost offshoot, and Thai Lion Air, an affiliate of the Indonesian group, LCCs now account for 60% of domestic and 20% of international seats in the country...