Fox – sly.  Trots – left-leaning (Trotsky) plus its more insalubrious meaning.

Foxtrots – leading the industry in a dance.


March 11 2013


Markets/marketing. Lufthansa, Germanwings, Easyjet, Ryanair, nofrillsairlines, Air France, Hop!, Outbound China.



OME observations on recent developments in the travel business.




[] Lufthansa’s subsidiary Germanwings was created in 2002 as a NFA (no-frills-airline), although it seemed LH was not convinced of the need – keeping GW off important routes, for instance.


Partly for that reason, business was bad – bad enough that LH stopped publishing GW’s traffic results last year. In the last batch I have, the NFA Norwegian, for instance, was selling double the number of seats that GW was selling! Norway has a population of 5mn, Germany 82mn; say no more.


Now comes the news that GW will progressively take over most of LH’s Europe routes. GW is thus becoming what I call a LCA (low-cost-airline), serving as a lower-cost operation for LH as Jetstar does for Qantas. That is probably a good decision. But LH still needs an NFA. If not, Easyjet and Ryanair will gradually take more of the total Germany market.


I expect LH will eventually realise this, and create an NFA for the second time when E and R together get to about 40% of the Germany-intraEurope market.




[] Easyjet is catching Ryanair again. Back around 2001 they were level, but since then, Ryan has pulled away.


Yet in February, Easy sold 4.1mn seats, compared with Ryan’s 4.2mn. But Easy’s count was up 3% and Ryan’s was down 6%. I know some of the reasons (I am not sure if Ryan does or is in denial). It is that Ryan’s primary clientele is leisure travellers and there a lot fewer of them around in winter. Easy’s client base is more evenly balanced.


Ryan says the fall was planned, but that is PR BS; a fall is a fall. I suspect that those leisure travellers that do move in winter are price-conscious, and Ryan cannot get prices low enough, nor keep a wide-enough passenger-pleasing route network.




[] NFA (nofrillsairlines) penetration worldwide was at 26% of total capacity in 2012. In Europe it is 28%; in Asia Pacific 22%.

(Calculated by Travel Business Analyst from OAG data. See OAG Facts. More in the Travel Business Analyst newsletters.)




[] Air France has named three of its almost-combined subsidiary airlines (Airlinair, Brit, Regional; it has two others) Hop! – the exclamation mark is part of the name, not an editorial suffix!


That Hop* acts like a no-frills-airline in prices and flash, but a regular airline in certain aspects of service, indicates it will be a big lossmaker for AF – although it will also be a “success” because its low fares will attract lots of passengers.


But the real reason it will fail is because its CEO wears a tie. He obviously has not attended the NFA school where you are taught that NFA CEOs must wear a business jacket (or suit), plain shirt, but with the top shirt button open. (No obvious sartorial rules for the few women NFA CEOs.)

*Most French do not pronounce Hs – ie, ’otel not hotel. So I presume Hop means “Op”, used to mean, sort-of, “Ok, let’s go/do it.”




[] I am close to finalising my estimate of outbound travel from China in 2012. Fast growth to the US (near 40%), but to Macau it is falling!


That will be a big problem for Macau – because it is not getting growth from visitors from other markets either. I said earlier that Singapore had beaten Macau and become Asia’s Leisure Capital. Right again; but I am not rich or famous.




The Fox