Tuesday, 1 March 2016

Kuwait Airways turns a corner

Full article in PDF format

It was no great shock when Kuwait Airways announced last summer that its troubled privatisation programme has effectively been abandoned. The state-owned flag-carrier is still officially looking for equity buyers, though only through a watered-down proposal that will leave politicians firmly in the driving seat.

Taken in isolation, the decision to keep Kuwait Airways in the public sector might have been disastrous. The airline has performed miserably over the past two decades, steadily losing ground to a new breed of more efficient, better funded Gulf rivals. Parliamentary bickering over strategy and fleet renewal are largely to blame for its sclerotic performance – creating an opening for Dubai's Emirates Airline, Abu Dhabi's Etihad Airways and Qatar Airways to funnel Kuwaiti passengers through their own hubs.

However, the move away from privatisation did not occur in a vacuum...

The early bird catches no returns

Full article on economist.com

Few issues drive a wedge between airlines and their customers like the thorny matter of compensation. In Europe, anyone whose flight is delayed by more than three hours can claim between €250 and €600 ($270 and $650) for the inconvenience, provided the delay is not caused by “extraordinary circumstances”. Airlines, as you would expect, interpret force majeure more broadly than passengers, lumping all manner of disruptions under the get-out clause. Along with extreme weather, terrorism and industrial action—events that are universally deemed “extraordinary”—airlines have attempted to withhold payment over bird strikes and technical faults. Successive court rulings have come down on the side of passengers, forcing the industry to stump up compensation more often...

Saturday, 27 February 2016

Spirit Airlines nears its 'Ryanair moment'

Full article on forbes.com

The new chief executive of Spirit Airlines, Bob Fornaro, is vowing to soften the airline’s uncompromising approach to customer service, mimicking the charm offensive pursued by Europe’s Ryanair three years ago.

Spirit, Ryanair and other ultra-low-cost carriers (ULCCs) base their business models on an extreme interpretation of airline economics – stripping fares to the bone and imposing surcharges for all non-essential services. Whereas most airlines show flexibility over fee structures in order to build customer loyalty, ULCCs compete solely on price and use punitive penalties to influence passenger behavior.

The strategy clearly works: Spirit’s no-nonsense persona under former chief Ben Baldanza secured the lowest unit costs in the US airline industry (5.15 cents per Available Seat Mile). Its parsimony fed through to lower airfares, catalyzing price-sensitive demand and driving 30% capacity growth last year.

But the airline’s bad-boy image creates a different type of cost...

Tuesday, 9 February 2016

Another bomb is detonated aboard an international flight

Full article on economist.com

The extraordinary events that unfolded over the skies of Somalia on February 2nd have now become clearer. About 15 minutes after Daallo Airlines Flight 159 departed from Aden Adde International Airport in Mogadishu, the Somali capital, an explosive device carried by Abdullahi Abdisalam Borleh, one of the passengers, blew a gaping hole just above the right wing of the plane (a spot identified in al-Qaeda literature as being the most effective place to detonate a bomb). Mr Borleh, who is suspected of being a suicide bomber, was sucked out of the aircraft and fell to his death. Everyone else survived. Had the incident occurred minutes later, once the plane reached cruising altitude, the resultant explosive decompression would almost certainly have killed all aboard. To say that the 73 innocent passengers on Flight 159 had a lucky escape is an understatement...

Saturday, 6 February 2016

Freed from sanctions, Iran’s airlines go on a spending spree

Full article on alarabiya.net

In the 1970s, just before the Iranian Revolution, Iran Air was considered one of the fastest growing and safest airlines in the world.

The company operated daily flights to New York with Boeing 747s; it had two supersonic Concordes on order; and its marketing department billed Tehran as an ideal stopover for flights between Europe and Southeast Asia.

No one could have predicted what was to come. The founding of the Islamic Republic in 1979 triggered a wave of international sanctions that decimated Iran’s domestic industries – including civil aviation...

Thursday, 4 February 2016

Bigger than Dubai?

Full article on economist.com

Aviation geeks love Iran Air, but for all the wrong reasons. Decades of sanctions have left Iran's flag-carrier with one of the oldest fleets in the world, featuring museum-vintage aircraft like a 39-year-old Boeing 747SP, the only passenger aircraft of its type still in service. Blocked from ordering Western-built jets for three decades, Iran Air and the country's 15 other carriers have extended the lives of their obsolete planes while scouring the black market for second-hand ones. The results are predictable: 37 crashes of Iranian aircraft since the turn of the century, claiming more than 900 lives...

Monday, 1 February 2016

Interview: Abdul Mohsen Junaid, Saudia CEO

Full article in PDF format: page 19-22 & cover

When the Kingdom of Saudi Arabia began the privatisation of its flag-carrier in 2006, everyone understood that the mainline airline would be the last of the group's six business units to be sold off.

One decade on, the passenger division remains firmly under the wing of its well-endowed government owner. That is no surprise given the company's ongoing financial troubles: chief executive Abdul Mohsen Junaid freely admits that Saudia is "nowhere close to break-even on domestic routes" – a segment that accounts for two-thirds of its seating capacity.

But while Saudia-the-airline is not yet ready to leave the nest, Saudia-the-group has made impressive strides towards privatisation...

Interview: Abdullah Al Sharhan, Kuwait Airways CEO

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In 2014, the average age of an aircraft in Kuwait Airways' fleet was a whopping 20 years.

Today that figure has nearly halved thanks to the induction of a dozen new Airbus jets. Next year it will plummet close to zero as the last ageing units are replaced, completing the flag-carrier's re-birth after decades of political indecision and commercial stagnation.

"By mid-2017 we will go to a completely new fleet, and we will be youngest in the region," beamed new chief executive Abdullah Al Sharhan. "That is after being almost the oldest...

Interview: Sherif Fathy, EgyptAir Chairman

Full article in PDF format

Egypt's all-important tourism sector has been dealt successive blows since the 2011 Arab Spring uprisings, with repeated waves of political unrest warding off foreign visitors.

The country's tourism revenue is expected to have fallen below $7 billion in 2015 – a far cry from the $12.5 billion raked in the year before the revolution.

Flag-carrier EgyptAir has been front and centre of the downturn, sinking about $1.5 billion into the red since 2011 as holidaymakers turned to perceived safe-havens elsewhere in the region. The airline's fortunes had seemed to be rising in 2014/15, but were derailed again in October when a charter flight operated by Russia's Metrojet crashed in the Sinai Peninsula...

Interview: Samer Majali, SaudiGulf Airlines President

Full article in PDF format

Anyone who has been following the liberalisation of Saudi Arabia's aviation sector will be aware of one thing above all else: it moves at a glacial pace.

The kingdom's civil aviation authority, GACA, awarded economic licences to two start-up carriers back in December 2012, promising to inject much-needed competition in the local market. Al Qahtani Group-owned SaudiGulf Airlines and Qatar Airways-owned Al Maha Airways were selected from a shortlist of seven bidders.

There followed a woefully predictable succession of missed deadlines, with 2015 marking the third year in a row that both SaudiGulf and Al Maha have failed to get off the ground...