Analysis for Europe/MEA

BA and KLM’s Highland fling turns into happy Inverness marriage

5 May, 2017

UK airport operator Highlands & Islands Airports Limited (HIAL) is an excellent example of the essential role hub airport connectivity plays in supporting regional airports and developing economic trade. It controls a plethora of small airports across Northern Scotland, its largest being in Inverness, the most northerly city in the United Kingdom and the main gateway to the highlands region in Northern Scotland.

SAS shouts about new Miami link; but what’s the big deal?

4 May, 2017

SAS Scandinavian Airlines (SAS) has secured a lot of publicity from the launch of its new weekly winter flight between Stockholm and Miami, its fourth US route from Arlanda Airport in the Swedish capital after New York, Chicago and Los Angeles. The carrier already serves Miami from Oslo and Copenhagen, so this growth was not unexpected and is actually being facilitated by the reduction of its existing Stockholm – Los Angeles route from six to five times weekly from the end of October 2017 so there is no real growth in terms of its capacity in and out of the US. So why the big interest?

Turkish Airlines: yields and passenger mix in the Australia-Turkey market mean Australia is not currently in the network plan

2 May, 2017

While it seems unlikely that Turkish Airlines will launch services to Australia to, it is aiming to grow its presence in this market through new and stronger partnerships with Asian carriers and more capacity on the Istanbul-Singapore route. Over the years, Turkish has looked as though it would serve Australia with direct flights, primarily one-stop service via Indonesia or Singapore, but its new management team has no plans to operate flights to Australia in at least the short to medium term.

Who is the odd one out… Malev, Olympic, Sabena, Swissair or Alitalia?

2 May, 2017

Across all industries a respected and well recognised brand is not enough to guarantee survival. Aviation is no different and over the last two decades we have already lost famous flag carriers such as Olympic Airways in Greece, Swissair in Switzerland, Sabena in Belgium and most recently Malev in Hungary. Others have come close to collapse – JAT Airways was rejuvenated as Air Serbia for example. Some have joined forces such as Air France with KLM; British Airways with Iberia; and Austrian Airlines, Brussels Airlines and Swiss International with Lufthansa, all restructuring again and again to remain operational, but a couple remain close to the precipice, none more so than Italy’s Alitalia.

Philippine Airlines becomes aggressive competitor in Sydney-London market

12 April, 2017

Philippine Airlines (PAL) has emerged as one of the most aggressive competitors on the kangaroo route between Sydney and London since rescheduling some of its Sydney flights in late 2015 to connect with London. PAL could potentially further increase its market share in the highly competitive Australia-Europe market in 2018 as it adds more flights to Australia and launches a second European destination.

Airline safety videos – epic productions with a bit of safety thrown in

6 February, 2017

Airline safety videos used to be boring. Very boring. Wooden flight attendants pointing out how to fasten a seatbelt or explaining where the emergency exits are may have ticked all the regulation boxes, but they left most travellers reading their newspapers.

That’s all changing. No-one reads newspapers (what’s a newspaper?) – and lots of people watch the safety videos.

Lufthansa and Etihad – Perhaps a tipping point in global alliances

19 December, 2016

Although it happened on the other side of the world, the potential change this weekend’s partnering agreement between Lufthansa and Etihad will have for Australia and New Zealand can’t be understated.

SAS and Finnair celebrate restructuring progress but Norwegian intensifies competitive pressure

13 August, 2012

As in the rest of Europe, the airline industry in the continent’s Nordic region is undergoing a structural change characterised by bankruptcies and intense competition from low-cost carriers with full-service network airlines implementing cost reduction programmes aimed at securing long-term sustainability or just survival. The region saw yet another operator cease operations in 2Q2012, Air Finland, following on the bankruptcy of Cimber Sterling, Skyways and City Airline in the first three months of the year.

Finnair made outstanding progress in 2Q2012 to lower its cost base and heighten revenue although it could not attain profitability while SAS Group’s pre-tax earnings halved year-on-year to SEK371 million (EUR45.1 million ) despite a one-off SEK346 million (EUR42.1 million) capital gain attributable to property transactions. Norwegian Air Shuttle improved in all operating parameters in the three months ending 30-Jun-2012 and reported a consolidated net profit of NOK90.5 million (EUR12.4 million), up 69% over the year-ago period. The LCC’s operating profit expanded to NOK322.3 million (EUR44.3 million) from NOK72.8 million (EUR10 million) in the year-ago period, and 2Q2012 EBIT margin was a respectable 10.2%.

Air Canada touts continuing transformation as 2Q2012 losses widen

9 August, 2012

Two major elements driving Air Canada’s 2Q2012 negative financial results – labour strife and pressure created by the sudden shutdown of its major maintenance provider Aveos – are the areas where the carrier sees prime opportunities in the future as new labour agreements allow for the creation of a new low cost carrier and negotiations with new suppliers ensure a substantial improvement in the costs of airframe maintenance.

Air Canada management during the last year has often cited the transformation that needs to occur at the carrier in order for the airline to compete in the new competitive environment ushered in by LCCs and spiking fuel prices. But in the short term the company still must deal with disgruntled employees and increasing competitive pressure that will not pause as Air Canada works to complete its transformation.

During 2Q2012 Air Canada widened its losses year-over-year by CAD50 million (USD50.2 million) to CAD96 million (USD96.4 million), while net losses for 1H2012 expanded by CAD241 million (USD242 million) to CAD306 million (USD307 million).

IAG vows it will take legacy out of Iberia as losses deepen

7 August, 2012

International Airlines Group (IAG) is drafting a comprehensive restructuring plan for Iberia that will include short-term downsizing, network reshaping to deliver higher unit revenues and a re-evaluation of all aspects of the business. Job cuts will be an inevitable consequence of the overhaul. Efforts to address the Spanish carrier’s uncompetitive cost structure are not new and date from before the merger with British Airways (BA) in Jan-2011, but results have been insufficient and losses are spiraling out of control as the economic crisis in Spain worsens and the onslaught of LCCs persists.

While Iberia’s pilots continue to fight change other legacy carriers are restructuring and this is threatening Iberia’s leadership position in the Europe-Latin American market. The doubling of the departure taxes at Iberia’s main Madrid and Barcelona bases since 01-Jul-2012 is putting salt on the wound and diminishing the airline’s appeal.

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