Tuesday, 18 March 2014

Fragmented flag carriers

Full article on economist.com

Back in 2012, The Economist reported that four flag carriers from the Balkans were considering a merger. The logic was sound. When the seven former Yugoslav states went their own way in the 1990s, each set up its own flag carrier as an affirmation of independence. But some, such as Kosovo, a state which is only recognised by 100 or so countries and which covers just 11,000 square miles, needed a national airline about as much as they did a space programme. Kosova Airlines thus ceased operations in 2006. MAT Macedonian Airlines followed suit in 2009...

Saturday, 1 March 2014

Re-inventing revenue management

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

Revenue management has passed through numerous phases since its widespread adoption in the 1980s. The discipline continues to evolve today, experimenting with different ways of matching the right price to the right customer.

Following deregulation in the US, the airline industry's initial focus was on maximizing revenue in an increasingly competitive marketplace. Seat inventory controls used historical demand forecasts to assign optimal price points for distinct passengers, factoring in the length of time until travel and the gradually shrinking pool of seat availability. Hence the sharp rise in ticket prices on last-minute bookings.

The mathematical algorithms making these calculations became more sophisticated over time, incorporating ever-more complex considerations ranging from competitors' offerings to seasonal holidays and events. But the overarching goal remained matching passenger demand with a perishable supply of seats in the most revenue-maximal way...

Interview: Kapila Chandrasena, SriLankan Airlines CEO

Full article in JPG format:
page 39 & page 40/41

As the country's fourth highest earner of foreign exchange, tourism has long been considered vital to the economic health of Sri Lanka.

The sector has withstood numerous shocks in recent times, overcoming a major terror attack on Colombo's Bandaranaike Airport in 2001, the Boxing Day tsunami in 2004, and the global financial crisis in 2007. Each time the tourists withdrew at first, only to flock back in still-greater numbers.

But since the end of the civil war in May 2009, the 'Pearl of the Indian Ocean' has enjoyed its largest growth spurt ever. Visitor numbers have almost tripled to 1.27 million in four years, with flag carrier SriLankan Airlines leading the charge to revitalise the island's fortunes...

Queue jumping, Etihad style

Full article in JPG format

With little prospect of supersonic air travel making a comeback any time soon, flying between the Gulf and the USA is likely to remain a testing experience for most passengers. Direct flights from the UAE to America’s East Coast take about 15 hours, and are typically followed by lengthy queues at US Customs and Border Protection (CBP).

Efforts to develop a successor to Concorde – the supersonic jet that halved transatlantic journey times until its retirement in 2003 – have to date been confounded by a mixture of economic, environmental and technological challenges. Mindful of this, Etihad Airways, Abu Dhabi's flag carrier, is instead tackling the secondary issue of customs delays on the ground. On 24 January, Abu Dhabi became the 16th location in the world to offer pre-clearance of US customs on foreign soil...

Air cargo feels the heat

Full article in JPG format

For an industry that is often described as a bellwether of global economic health, any under-performance in the air cargo market rightly rattles nerves across all sectors and regions. African airlines fared worse than most in 2013, growing freight volumes by just 1% compared with 7.1% the previous year.

Tony Tyler, chief executive of IATA, the industry body representing most of the world’s large carriers, describes air cargo as the “biggest worry for the airline industry right now”. About $6.4 trillion of goods are transported by air each year, and although world trade is growing roughly in-line with economic expansion, exports have historically expanded at twice the rate of global GDP growth. As well as hurting airline’s bottom lines, analysts fear that this sluggishness could point to a slowdown in the global economic recovery...

SriLankan Airlines after the war

Full article in JPG format: page 27, page 28 & page 30

When Sri Lanka’s 25-year-long civil war ended in May 2009, the government rightly placed tourism at the heart of its economic recovery.

Visitor numbers have almost tripled since the guns fell silent, with 1.27 million tourists last year re-discovering the island’s pristine beaches and wildlife resorts. Much of the growth has been driven by SriLankan Airlines, which increased its traffic 55% between 2009 and 2013.

But the loss-making flag carrier is not solely focussed on the top line. Chief executive Kapila Chandrasena has also committed to a five-year turnaround plan, and he sees upcoming Oneworld alliance membership as the best vehicle for growing sustainably...

Friday, 21 February 2014

Socialising in the sky

Full article on economist.com

Social media is nothing new for the airline industry. Most carriers understand that peer-to-peer social networks like Facebook and Twitter offer a cost-effective and direct means of engaging with passengers—typically for service updates, conflict resolution and marketing. Even longstanding sceptics like Ryanair now pay their staff to interact with customers on social media. The airlines don’t always get it right, of course, but they are no more prone to blunders than anyone else. And yet one thing has been noticeably lacking from the industry’s social media landscape: a means for passengers to converse with one another not before or after their flight, but during it. Virgin America has now changed that...

Saturday, 15 February 2014

Interview: Adel Ali, Air Arabia CEO

Full article in PDF format

As the Gulf's other low-cost carriers shift towards a hybrid business model, Air Arabia is standing by its decidedly no-frills approach. Chief executive Adel Ali explains why to Martin Rivers.

Middle Eastern low-cost carriers (LCCs) continued their unstoppable march in 2013, growing seat capacity by another 17.7% during the first half of the year.

But in a region where double-digit growth has become the norm, their expansion amounts to only modest inroads by the still-fledgling sector. LCCs today account for just 13.5% of Middle Eastern traffic, compared with nearly 40% in the more mature European market...

Interview: Ahmad Alzabin, ALAFCO CEO

Full article in PDF format

Kuwait’s flag-carrier may be on life support, but the emirate has still produced a major success story for Gulf aviation. Martin Rivers meets Ahmad Alzabin, chief executive of Kuwaiti leasing firm ALAFCO.

The announcement by Kuwait Airways that it has signed a contract to purchase 25 aircraft and lease a further 12 was, on the surface, a welcome step forward by the heavily loss-making flag-carrier.

Airbus will deliver 15 A320neos and ten A350-900s over an unspecified timeframe, Kuwait Airways said in December, while also facilitating 12 short-term leases beginning in the second quarter of 2014. For an airline whose average aircraft age is 19 years, the long-awaited order would breathe new life into its fuel-guzzling fleet...

Interview: Wayne Pearce, Oman Air CEO

Full article in PDF format

Perched on the south-eastern tip of the Arabian Peninsula – with the United Arab Emirates just across its border – the large, sparsely populated sultanate of Oman exists in an aviation neighbourhood dominated by mega-hub expansion.

Unlike Dubai or Abu Dhabi, however, Muscat has little interest in becoming a major bridging point between East and West. The Omani capital’s airport handled just 7.5 million passengers last year, and although officials want to grow that figure, sixth-freedom traffic looks set to remain a peripheral contributor...