May 2009 Archives

Photo credit: IaRuth

Hats off to our friends at Malaysia Airlines - they've got their fingers on the social media pulse.

The IATA AGM in Kuala Lumpur is fast approaching, so I approached the MAS press team for some local food and drink tips to share with conference attendees via the IATA Airline Business Daily.

They swiftly issued a plea for recommendations via their MAStravel Twitter account, with great instant results - including unexpected celebrity input from local TV personality Sazzy Falak.

Many thanks to Salina for all her efforts. Read on to see the full list...

Our sister publication Air Transport Intelligence reports that TUI Travel's airline operations chief, Christoph Mueller, is to step down.

David Kaminski-Morrow writes that Mueller is stepping down from the board today and will leave the company on 31 October.

TUI Travel says Mueller considers that "it is the right time" for his departure and that he is to "pursue other interests".

The former head of German airline TUIfly, Mueller took on his current role two years ago as TUI Group merged its tour operation with the UK's First Choice Holidays to form TUI Travel.

In this position he oversaw not only TUIfly but the other TUI carriers in Europe. During his tenure TUIfly agreed a strategic partnership with Air Berlin, while reorganisation of UK services has helped to cut unprofitable routes.

Irish budget carrier Ryanair has named Juliusz Komorek as its new company secretary and director of legal and regulatory affairs.

Komorek joined Ryanair in 2004 and has been deputy director of legal and regulatory affairs since 2007.

He previously held roles with the European Commission and the Polish Embassy to the EU in Brussels.

I was in Seoul last week to interview Korean Air's chairman and chief executive Yang Ho Cho for the next issue of Airline Business, where I saw at first hand how things have taken off in a slightly unexpected way for a group Korean Air's marketing team after they put together their own tribute to South Korean boy band Super Junior.

The Korean Air staff's parody of Super Junior's Sorry Sorry song, which they danced to at the company's occasional internal talent-style show, developed a life of its own after the accompanying video they made took off on the web. The story made the national news channels too that day, continued to rack up hits on the web (on youtube alone it already has nearly 80,000 views so far) and has led to an appearance on a prime time Korean television talent show.

You can check out the Korean Air Sorry Sorry parody here and, for those of you (like me) who are not familiar with the original, here's a link to Super Junior doing their version so you can compare....

Steve Ridgway (below) was not exactly effervescent on the radio this morning, talking about the fact that Virgin Atlantic had made a profit of £68 million in its last financial year, but he was clearly seriously chuffed about his airline's performance in such tough times, and his company's management foresight.

His mood was in sharp contrast to that a week ago when a doleful Willie Walsh, the chief executive of British Airways, talked of record losses.

A lot of Virgin's achievement is down to being conservative, which says something good about a brand that prides itself on bringing the fun back into flying, but clearly not at the expense of running a tight ship.

That conservatism meant it was beginning to trim back capacity and defer new aircraft deliveries long ago. It also meant it had a good fuel and currency hedging programme in place, meaning it did not get stung amid the extremely volatile fuel prices of the past year.

Contrast too Virgin's fortunes with those of that other UK based carrier bmi, which reported horrible losses recently and whose majority shareholder Sir Michael Bishop is in a wrangle with Lufthansa over the German carrier's plan to buy him out.

I wonder what the situation in the UK airline market will look like in a year. Today we have a seemingly healthy Virgin Atlantic, a stuttering BA and a chronically injured bmi.

Surely those who eventually see some kind of pairing of Virgin and bmi have been given greater fuel for their vision today.

Here is the analysis Victoria Moores wrote about the future of bmi in Airline Business.

The results were dire and the outlook is gloomy. British Airways dived to a record loss in modern times, a collosal turnaround of £1.2 billion over a year, and there was no evidence of recovery anywhere across its global network, a pessimistic chief executive Willie Walsh told BBC Radio 4's Today programme about an hour ago.

This is going to be the theme of the forthcoming IATA annual meeting coming up in Kuala Lumpur in a couple of weeks - where and when is the recovery going to start?

We will be doing our Airline Busines Daily at the event and producing video interviews for Flightglobal - what questions do you want us to put to these airline leaders?

Yesterday, at the launch of Air France-KLM's new transatlantic joint venture with Delta Air Lines, we caught up with KLM chief executive Peter Hartman.

In this three-minute video clip, he talks about the joint-venture and discusses a new long-haul 'economy extra' product, which KLM is planning to roll out in October 2009 to draw back business travellers.

Through 'economy extra', which is only a tentative name, KLM will charge passengers a premium for long-haul economy seats with a 35" (89cm) seat pitch. Unlike Air France's new long-haul premium-economy offering, it will not be a separate cabin. The new product is also likely to include on-ground extras, such as lounge access. 

BMI chairman and majority shareholder Sir Michael Bishop has gone public over the emerging tensions between him and Lufthansa, which is acquiring his shareholding.

Over recent days UK media reports pointed to a brewing spat between Bishop and Lufthansa over whether Bishop should have to recapitalise BMI.

But Bishop's shareholding company the BBW Partnership has today revealed it is taking Lufthansa to the High Court to force it to press on with the acquisition.

Read the latest news story and catch up with some of the background as the dispute emerged.

Here are some interesting figures on the decline of international business travel just released by the UK CAA - the study covers 2008 and shows the extent to which business travel was already on the decline last year.

IATA, while offering a more upbeat prognosis that a floor might have been reached in the sharp cargo decline after a steadying in falls, is warning the slump in premium passenger traffic has not yet hit rock-bottom after premium travel was down almost a fifth in March.

For more on the current mood within the industry - which I think is succintly summed up by business travel executives during a recent ACTE event as "flat is the new up" - read our latest story here and comment piece here.

Former Cirrus Airlines chief executive Martin Gauss has become the latest in a long line of executives to take the top spot at Hungarian carrier Malev. 

He has nearly 20 years' airline industry experience and has worked as a consultant at the airline for several months. Gauss succeeds Geza Fehervary, who has been acting chief since February and will now return to his role as chief operations officer.

Gauss says: "We will have to decide on a new course to navigate Malev through the current market crisis and make the airline fit to face the future. I am looking at a significant conversion and turnaround of Malev."

The 40-year-old German began his aviation career as a Boeing 737 pilot for Deutsche BA. He went on to become Deutsche BA managing director, overseeing the airline's integration into AirBerlin.

We were saddened to learn that Jazeera Airways human resources vice-president John Turnipseed passed away over the weekend. Arrangements for his funeral and repatriation to the US are underway.

Turnipseed, who studied at Southwest Texas State University, was an HR development specialist with over 23 years' experience in the airline industry.

He became Jazeera Airways personnel chief in October last year, taking responsibility for all HR functions and the airline's cultural development in Kuwait. Prior to this, he served as chief people and culture officer at Eos Airlines.

During his career, Turnipseed also spent 11 years at US low-cost carrier Southwest Airlines, where he was responsible for all aspects of employee relations.

I took a day out to look at the business aviation industry yesterday at the EBACE exhibition - see this link for lots of information, news and views from the Flight and Flightglobal team.

The show was certainly busy but the orders were thin on the ground.

Celebrity watchers were pleased to see Spanish golf superstar Sergio Garcia at the Hawker Beechcraft stand who was signing autographs and getting his picture taken with plenty of fans. For those who don't know, Sergio is the guy in the middle of this shot.

Any snippet of information relating to the eagerly anticipated sale of UK carrier bmi to Lufthansa is welcome. So hats-off to Messers Marlow and O'Connell for this story - Lufthansa's bmi bid hit by cash row in yesterday's Sunday Times.

There will be plenty of this over the coming weeks and months as the deal for Lufthansa to take over bmi - at a price agreed a decade ago - comes to fruition.

Our recent coverage on bmi has included:

* bmi posts large loss for 2008.

* Victoria Moores investigated the future for bmi in Airline Business last year.

* We looked at Virgin's ambitions for bmi if it could get hold of it.

* What value does bmi put on its large slot portfolio at Heathrow?

The personal touch is often a feature of flying with regional airlines. So being asked by the Air Southwest flight attendant if I wanted a taxi booked on arrival in Plymouth was a practical and much appreciated gesture.

I didn't in fact because I was visiting Air Southwest chief executive Peter Davies, whose office overlooks the tiny apron at Plymouth City Airport, but for several of the other 27 passengers on the Bombardier Dash 8-300 this was an essential service, especially as the airport doesn't have a permanent taxi rank.

The mission of Air Southwest, which is only six years old, is described by Peter on this video.

It operates on routes linking travellers from Cornwall and Devon to London, Manchester, Leeds, Glasgow and Newcastle with a fleet of five Dash 8-300s. Air Southwest carried around 300,000 passengers in 2008.

The carrier is owned by the Sutton Harbour Group, which also owns marinas and fisheries and develops property.

One of the first things Peter has done is launch a new route between the southwest and London City Airport. This is taking on the train and offers a faster service at competitive prices.

Peter has only been at Air Southwest for a couple of months. His career has taken in leadership roles at Caribbean Airlines, SN Brussels Airlines and DHL.

The apron at Plymouth City Airport (seen below) - which is also owned by Sutton Harbour Group - has room for three Dash 8s. The airport has a short runway - the largest aircraft it can handle is a Dash 8 or an ATR-42.

Below: Leaving on Air Southwest flight number WOW 103 from London Gatwick to Plymouth. Note the huge walkway that connects a remote pier with the terminal.

Jim Young, the executive at Denver-based Frontier Airlines and the man behind the carrier's new AirFair's revamped fares structure, has left the airline about a year after he joined. His title was vice-president, distribution, sales and marketing.

This is a blow for Frontier as it beds the new structure down and tweaks it to help drive revenues at the carrier and help it exit Chapter 11 bankruptcy later this year (it hopes).

At least Young departs when the system is up and running. We don't have any news on where he is going - please tell us if you do - but Frontier says "the position will not be filled until sometime after we emerge from bankruptcy".

Here's a story describing AirFairs in more detail.

EasyJet founder Sir Stelios Haji-Ioannou has served up a reminder of the boardroom split at the UK budget carrier, reiterating his view the carrier should postpone delivery of some of its Airbus aircraft on order.

"Stelios remains of the view that easyJet's current financial performance the outlook for the European economy requires a significantly more conservative approach to the biggest single issue facing the company, namely the Airbus order for an additional 91 aircraft," said a spokesman for Stelios. The comments came just as the carrier reported its first half results yesterday. "The company currently plans to buy too many new aircraft from Airbus too soon, and the passenger numbers are not keeping up with the aircraft numbers," the Stelios spokesman adds. "Stelios continues to advocate that the company should continue to postpone certain deliveries."

The strategic rift at the carrier first ingited last November when Stelios, who remains a shareholder in the airline, publicly outlined his concerns at the carrier's expansion plans given market developments. He also refused to sign off the airline's accounts at the time, in particular citing concerns at the company's valuation of London Gatwick slots picked up along with the acquisition of GB Airways.

EasyJet yesterday announced wider first half pre-tax losses of £116.5 million, but while cautious about the consumer economy, still expects to be profitable for the year.

For more on the recent boardroom moves at easyJet, check out my colleague Victoria Moores' recent blog here

EasyJet's senior management team is evolving at a rapid pace these days, with 2009 losses including chairman Sir Colin Chandler, group finance director Jeff Carr, procurement director Neil Mills and chief commercial officer Saad Hammad.

Picture credit: easyJet airline company ltd.

The latest of these departures, Carr and Mills, have been announced over the last week. Carr is leaving to take on the chief financial officer's role at UK transport firm FirstGroup and the search has begun for his successor. Andrew Lobbenberg of ABN AMRO believes Carr to be very highly regarded by investors, adding: "This news will and should be regarded as a loss to the company."

Procurement director Mills, who has gone to Middle East start-up budget carrier FlyDubai as chief financial officer, was with easyJet for 12 years and saw the airline evolve from just four aircraft. He left in early April and will be replaced by former Mandala Airlines chief Warwick Brady on 6 May.

Brady was chief of Indonesian carrier Mandala Airlines, chief operating officer of India's Air Deccan and he used to head Ryanair's London Stansted operations. Lobbenberg says he has a tough reputation as a cost manager.

The loss of Carr and Mills comes on top of the imminent retirement of chairman Sir Colin Chandler and the departure of chief commercial officer Saad Hammad, who left earlier this year to become managing director for operations, Europe, at private equity firm The Gores Group.

EasyJet has named Sir Michael Rake, who is chair of telecom company BT and a former chair of financial firm KPMG International, as deputy chairman. Senior independent director Sir David Michels will become interim chairman once Chandler leaves, until a permanent successor is named.

Last year there was conflict between easyJet founder Stelios Haji-Ioannou and the airline's board over the carrier's strategy. While expressing a like for easyJet's short- and long-term trading prospects, Lobbenberg says: "Management and board instability will weaken sentiment and offer sceptics more fertile ground for their views."

There is going to be a big cheer going up shortly for frequent Delta Air Lines customers to Nigeria. The US major is upgrading the route from a Boeing 767-300 to a 777-200ER. And not before time some might say, and have been saying on the Airline Business blog in recent days.

Delta has been on the receiving end of plenty of criticism about the quality of its service on this route. After reading this flurry of activity I thought it was high time to interview the carrier and find out what it thinks about its Nigerian operations.

The man is the frame is Delta's commercial manager west and east Africa Bobby Bryan. He's been responsible for the airline's operation in Nigeria for 18 months and is an experienced hand in the region having before that spent two-and-a-half years with Air France-KLM in the country.

Bryan is delighted that from 1 July, the carrier is putting 777s on the route: "These 777s are brand new with AVOD (audio video on demand) throughout the cabin and all-leather seating - it is very much a state-of-the-art aircraft."
The 777s will offer 50 business class seats and 218 seats in economy, compared to 36 and 181 respectively for the 767.
Delta has come in for a lot of stick about its service quality on the 767s and in particular about the quality of its in-flight entertainment product. "We don't think a lot of it is accurate," says Bryan, but he is open about another issue - baggage.

Bags, bags, bags
"Most of the customer service issues focus on baggage. The average Nigeria passenger travels with five bags - this was something we had not anticipated," says Bryan.
Delta launched the Atlanta-Lagos route (its first as part of the African element of its international expansion) in December 2007. "In the early days we were leaving bags behind and we did run some extra segments with 777s to bring bags over," says Bryan.

To get over this problem, Delta imposed an embargo on excess baggage (giving only the standard international bag allowances), which avoided bags behind left behind but did irritate those Nigerian traders who liked to move goods on this route.
"The 777 will enable us to go into different markets in Nigeria," says Bryan. "Those traders who want to go to the US to buy consumer goods [can now use the Delta 777 flight]. Before we were not able to carry their bags. Now we will be able to join in that market, and it is not insignificant."
In addition, Delta has worked with the Nigerian authorities to change the outbound flight from Lagos to a nighttime departure. "This means we will have connecting opportunities we didn't have before to destinations in the oil producing areas in the south [of Nigeria]. Previously people had to come the night before and then take the morning flight."
From 10 June, Delta will begin its second route to Nigeria. The service between New York's JF Kennedy Airport and Nigerian capital Abuja will tap a different market to that of Lagos. "It is not an oil and traders market it is very much government, NGOs and a students market. There has never been a direct service from Abuja to the US," says Bryan.
Delta will use an ex-Song (Delta's former low-fare brand) 757-200 with 16 business and 155 economy seats on the route. "This is a premium aircraft to open up a new route," says Bryan. The 757s feature AVOD across the cabins and are refurbished with leather seats.

Strong market
Delta is pleased with its Nigerian routes, which averages loads of over 80%. "It is a premium market not only up front but also in the back," says Bryan.
After the UK, the USA is the next biggest market in terms of traffic for Nigeria. Until Delta's arrival, the direct market had been underserved. "Our African expansion has gone very well - cities in this region are strong performers and we are serving markets that were crying out for additional service to North America," says Bryan.
"Nigeria is a country with incredible potential. Over the medium-term we expect to develop our activities there," says Bryan.
But there is more competition coming, with local carrier Arik Air planning to begin service from Lagos to New York in the third quarter.
Bryan claims Arik's arrival is no bad thing. "Competition develops the market and we would welcome Nigerian carriers to North America. The market is large enough to handle several carriers. We see them as co-developers of the market."

Dedicated aircraft
Some of the comment about Delta's operations centred on whether it dedicated aircraft to this route or not. According to Bryan: "Very few airlines allocate a specific aircraft to a specific route."

By the end of June Delta will serve nine cities in seven countries in Africa.

Kazakh carrier Air Astana has found an unlikely driver for first quarter profitability - red tape.

In an interview with The Bangkok Post, Air Astana chief executive Peter Foster says legal, tax and bureaucratic constraints thwarted the airline's attempts to secure fuel hedges. This unlikely saviour helped Air Astana avoid a damaging financial hit. 

Instead the airline swung from a $500,000 first quarter loss last year to a $2.3 million profit for the first three months of 2009, despite the turbulent economic climate.

In the interview Foster, who previously headed Royal Brunei, jokes: "We were professional in hedging without ever doing it."

Earlier this year Foster told Airline Business Air Astana's inability to hedge was a "blessing in disguise", as it avoided being caught out. The full Airline Business fuel hedging article can be found here.

Picture credit: OJO Images/Rex Features