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Aviation History
1987
1987 - 0591.PDF
Spanish charters go upmarket Majorca's two young charter air lines, Hispania and Air Europa, have discovered the secret of success—good service and new aircraft. This may seem obvious, but it is a marked change of tactics for Spanish charter carriers. As a group they have traditionally had a pretty poor reputation. Even when the Spanish Government has tried to insist that foreign tour companies place a per centage of their business with a national airline, it has largely been ignored, partly because capacity is scarce and partly because the standard was so low. Air Europa is 25 per cent owned by the huge UK company International Leisure Group (ILG). It started operations last November with new 737s and service stan dards that had to conform to those of ILG's UK airline Air Europe. It has done so well that it expects to show a profit of ptas 700 million ($5 • 5 million) in its first full year of operation. Hispania has been slower to take off. It started life as a workers' co-operative formed by 80 airline staff left unemployed by the collapse of TAE (Trabajos Aereos y Enlaces) in 1982. They each put £25 into a pool and leased two Caravelles. Hispania struggled to find its feet, but now has a fleet of five new 737s and expects to make a profit of $5 million this year. Thomson, Hispania's largest customer, says that it likes the airline because "it is more competitive than other Spanish Two charter carriers in Majorca are breaking the mould of Spanish airlines. Julia Hayley reports from Palma, and talks to new sub-charter carrier Canafrica in Madrid. airlines" and behaves like a UK carrier would in its terms, contracts, and service. For three years the staff tried to squeeze money out of a resistant holiday market, using four ageing Caravelles. They failed. In April 1986 they decided to change to new aircraft, and took on the first 737s. The airline came into profit immediately, with $4 • 2 million to show. Hispania has the advantage of its position—it can tap the German, UK, Scandinavian, Austrian, and Swiss markets. Labour costs are low, only 11 per cent of total expenditure, and many of the employees are founders and shareholders. Capt Juan Jose Irizar, its director general, believes that Hispania is more competitive simply because it is less profit-orientated than other carriers. Some 38 per cent of its Air Europa finds that using sister company Air Europe's colours, above, gives it a certain prestige business is from the UK, while 35 per cent comes from the higher-yield German market. It expects to carry 800,000 passengers this year. Being a co-operative imposes limits on Hispania's growth. Finance is difficult to come by, says Capt Irizar. It has had to lease all its aircraft so far, although it would prefer to buy. Banks do not like co-operatives, let alone airlines. "They seem to run away when they see an aircraft," Capt Irizar says. Hispania is looking for a foreign partner to give it some financial muscle. Whether an investor will accept the company in its present form or will insist on a move away from co-operative management remains to be seen. Its most serious flirtation has been with Aer Lingus, which was inter ested in buying 50 per cent of Hispania. The Irish flag carrier has a small home market and would like the chance to gain a toehold in Spain. It also wants the contract to do Hispania's maintenance. Besides, "Hispania is a good Catholic airline", it says. It is a good Catholic airline with modest ambitions: "We do not want to build a huge business, just to keep people working and living," Capt Irizar says. "We are not a business enterprise. But of course every body wants to make a lot of money," he adds, waving his arms. He would like to have some scheduled routes before 1992. The first priority would be regular flights to the UK. These FLIGHT INTERNATIONAL, 30 May 1987 25
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