September 2008 Archives

I'm afraid this is a pretty sick blog if you are a lover of the airline industry for I can report that Irish gambling website PaddyPower (www.paddypower.com) is taking bets on which airline is going to go bust next.

Now I like a flutter at the races now and then but I can't bring myself to put a little wager on the likelihood of FlyGlobespan, SkyEurope, Spanair etc etc going pop. That is even if I could, which I can't from my office as this gaming site is filtered out by our big brother web monitor, as it should be.

You might have to check out PaddyPower at home as I did to get the following prices!

How's this for transparency? Saudi low-cost start-up Sama has counted the cost of operating some of its domestic routes and decided it's just not worth it. Why? Well how about the fact that it loses the not unprincely sum of 40,000 Saudi Riyals - some $10,600 - per flight on its services between Damman and Riyadh.

Ouch!

Qantas CEO designate Alan Joyce made his international press debut at last week's roll-out in Toulouse of its first Airbus A380. Our man there Niall O'Keefe, the European editor of Flight, spent some time with Alan. As fellow Dubliners they got on like a house on fire.

On one of the major topics of the day, Joyce says he expects Qantas to be an active player in airline industry consolidation. The airline would make an "attractive partner", he says, and hence it would have flexibility in its merger position.

It has favourable fuel hedges in place and has ridden the wave of the commodities boom (resource companies make up a sizeable chunk of its corporate accounts). Joyce notes that the airlines hardest hit by the global slowdown are those based at financial centres, such as Hong Kong - the Australian economy, by contrast, remains strong. However, he recognises his airline's weaknesses an "end-of-line carrier" with a domestic market of 21 million.

That was the text message I received this morning from a friend informing me that a certain airport in the south of England was up for sale.

The airport in question? London Gatwick of course.

So BAA and owner Ferrovial have given in to the inevitable break-up of its Gatwick/Heathrow/Stansted threesome and announced it will sell. The competition authorities in the UK have already said they will most likely demand BAA sell at least one of them (and don't rule out a forced Stansted sale as well).

The asking price will be north of £2 billion, and it could fetch a lot more. My features editor Kerry Ezard was recently in Adu Dhabi and the airports group there has expressed an interest. Others mentioned by pundits are Macquarie Airports, Hochtief, The Virgin Group and Manchester Airport Group.

We've already said this is good thing.

Last week I was interviewed by a journalist at UK newspaper The Independent about whether more airlines are likely to go bust in the wake of the XL collapse.

It was strange being on the receiving end of being interviewed rather than doing the interviewing myself. Anyway, today I went to their website to see what my words looked like in print only to find that I'd been quoted as "Kenny Ezard" instead of Kerry. Harrumph - how many women have you heard of called Kenny?! Here's a link to the article.

The week before I was interviewed by the Daily Mail newspaper. Now I don't normally have a positive word to say about the Daily Mail, but in fairness to them at least they spelled my name right!

In our Comment piece in the May issue we talked about the previous month being cruel - it was the month when several carriers went to the wall (Aloha, ATA, Skybus and Oasis Hong Kong).

We went on to say that "as far as the airline industry is concerned it is a month when the cruelty may only have just begun".

As the summer faded the axe fell on Irish and UK leisure carriers Futura and XL Airways. UK/Canadian carrier Zoom had succumbed a couple of weeks earlier. The list of casualties grows.

OK, so Naresh Goyal, one of our favourite airline bosses, is always smiling.

But that smile got even broader the other day when he was honoured with the Business Person of the Year award at the prestigious UK Trade and Investment India Business Awards.

Mr Goyal, the chairman and founder of Jet Airways, received the the gong in a ceremony in Mumbai on Tuesday from the British High Commissioner Sir Richard Stagg (below centre right) before a gathering of senior business leaders from both the UK and India.

"I "I am deeply honoured and humbled to receive this award," said Naresh. "At Jet Airways we are committed to redefining the international travel experience with our acclaimed in-flight product and service standards. The UK was our first long-haul venture and continues to be popular with our international travellers, for both business and leisure."

In this column penned for the Daily Mail - but impossible to find on the newspaper's own trashy website so I've linked to it via this site - British Airways boss Willie Walsh explains why consolidation is needed in the airline business.

That's not a new thought, but it's well argued and the reference to Virgin boss Richard Branson as the oldest rocker in town is a gas.

Branson himself has plenty to say on the subject as well - consolidation that is, not rocking.

Kingfisher's chairman VJ Mallya is following in the footsteps of Virgin's Richard Branson and Niki Lauda of Lauda Air in taking a personal interest in choosing the cabin crew that walk the aisles of his airliners.

Find out what this great Indian looks for in this good piece in the Telegraph today.

We talked recently to VJ at Farnborough and got him on video.

Here's the cover interview our Singapore Editor Nicholas Ionides did with VJ and the latest on Kingfisher's international route plans.

That well-respected airline analyst at ABN Amro, Andrew Lobbenberg, has pointed the readers of his regular industry commentaries to this piece on the website of the UK's Times newspaper. And following his lead I will too.

It is a graphic example, in the UK at least, and I am sure readers around the globe can offer similar ones, of carriers slashing fares to keep people flying.

In this case the story is not about the economy section as such but about great offers on business class fares from British Airways, bmi and Virgin Atlantic.

Now here at Reed (the parent of Airline Business/Flight) we are not allowed to fly business but I can tell you the same applies to Premium Economy fares.

I recently booked a New York return with BA in this souped up economy class for just over £600 return - now that's not a half bad price.

In his conference call yesterday to unveil yet another downgrade in the industry's financial forecast, IATA director general Giovanni Bisignani was unusually mild in this comments about airports.

Usually they get a good "basta" or two, and some good old monopoly bashing.

The stick was wielded less ficiously than before I thought. Although he said "our partners need to bite the bullet" on being more efficient and helping airlines through this difficult time, the response from airports was a "bit disappointing".

IATA has written to 134 airports and 66 air navigation service providers (ANSPs) asking them to help contribute to the troubles airlines are finding themselves in (these providers suffer too of course if traffic falls). This is essentially a plea for price cuts. No harm in asking is there?

Not content with throwing the Virgin brand behind a string of airlines, a radio station, a media company and even cola, Sir Richard Branson is now reported to be mulling a bid for London's Gatwick Airport as part of a consortium.

The UK's Daily Telegraph quotes Branson as saying he is "open to being courted by anyone who is interested in bidding" for Gatwick, should BAA eventually be ordered to sell two of its London airports, as has been recommended by the Competition Commission.

What an interesting development that could be. With the long-simmering rivalry between Virgin Atlantic and British Airways hotting up again amid BA's third attempt to secure antitrust immunity with American Airlines, one can only imagine the sparring that might take place if Virgin became the owner of one of BA's biggest bases!

Whatever ends up happening to Gatwick, most of the people I've spoken to who have used the facility believe things can only get better under new ownership.

A recent example is a colleague of mine who was on a flight from Austria to Heathrow earlier this week. His flight circled Heathrow for 40 minutes, unable to land, and instead decided to land at Gatwick.

Once on the ground at Gatwick, he and other passengers were forced to remain on the aircraft for THREE HOURS because...wait for it...there were no stairs available to allow them to disembark. You couldn't make this stuff up!

It helps to speak Icelandic to get all of this clip, produced by Sveinn Gdmarsson, the London correspondent of the Icelandic National Broadcasting Service, but yours truly is in there giving the Airline Business perspective of the industry's outlook.

That bit, you'll understand, but the rest of it you won't because it is in Icelandic, unless of course you come from the island. In it, I make the hardly earth-shattering revelation that more airline failures are likely in the second half. This was shot before the Zoom grounding, so my prediction already came true.

The INBS naturally keeps tabs on its home flag carrier Icelandair. Sveinn tells me the latest from the north is that it has announced further lay-offs. I can't confirm this because all the newspaper reports in the past few days are in Icelandic - can anyone help?