Double WYSKs – Malaysia Airlines grows; Year-end for Europe’s big-3 airline groups.

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FOXTROTS

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

Foxtrots – leading the industry in a dance.

 

Double WYSKs – Malaysia Airlines grows; Year-end for Europe’s big-3 airline groups.

WYSK = What You Should Know.

 

Malaysia Airlines grows!

Our indications are that international seat sales at Malaysia Airlines grew in September – the latest month we have. That would be the first monthly growth since December 2014 – the year of its two tragic incidents.

 

Despite the fact that growth in September was a strong 7%, the airline is unlikely to show growth for the whole year. Current YTD is -22%.

 

 

 

Europe’s big-3 airline groups – year-end

We estimate all-2016 growth in seat sales for Europe’s big-3 airline groups:

 

-Air France + KLM + Hop + Transavia = +4%.

-British + Iberia + Vueling + AerLingus = +4%.

-Lufthansa + Swiss + Austrian + Eurowings = +3%.

 

 

The Fox

Remember, I’ll be famous after I’m dead.

 

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Double WYSKs – UK post-Brexit surprise; US flashback.

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FOXTROTS

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

Foxtrots – leading the industry in a dance.

 

Double WYSKs – UK post-Brexit surprise; US flashback.

WYSK = What You Should Know.

 

UK travel trends post-Brexit

No brainer, right? Post the July Brexit vote to leave the European Union, and following big fall in value of UK currency against most others – inbound travel would get a boost, and outbound a threatening drop.

 

Well, catch this:

 

-July worked right – +3% out, +4% in.

 

-August must have been a hiccup – +6% out, +4% in.

 

-Er, September – +11% out, +3% in.

 

Don’t worry; it’ll correct.

 

-Whoops, October – +11% out, -3% in.

 

 

US flashback

The US has counted about 30,000 air passengers in each direction this year between the US and Yugoslavia. Musing:

 

-Those inbound passengers must be quite old, presumably leaving Yugoslavia the last year it was a country, in 1992.

 

-For outbound passengers heading for Yugoslavia, we wish them bon vent!

 

-The US shows no air passengers on routes between the US and the Austro-Hungarian empire.

 

 

The Fox

Remember, I’ll be famous after I’m dead.

Singapore Airlines Group: They’ve been flying on the Dreamliner too often.

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FOXTROTS

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

Foxtrots – leading the industry in a dance.

 

Singapore Airlines Group: They’ve been flying on the Dreamliner too often.

Read the departing and arriving soundbites from Singapore Airlines’ in-and-out chairman, below. You must wonder if they have been flying too often on the B787 Dreamliner.

 

We expect company leaders to say anodyne things when they are appointed. Nevertheless, we look for indicators  – somewhat like reading-between-the-lines/China-watching.

 

But we are disappointed with statements from Peter Seah Lim Huat, due to take over from Stephen Lee Ching Yen next month. We found few indicators, and not anodyne comments but almost puerile.

 

 

Viz:

PSLH: “Singapore Airlines is one of Singapore’s strongest companies and best-known brands, and it has successfully weathered many challenges under Stephen’s tenure as chairman. I look forward to building on the work that Stephen has overseen during his time as chairman, in steering the SIA Group through the global financial crisis, a change in CEO and the implementation of numerous strategic initiatives to better position the group for the future.”

 

SLCY: “I am honoured to have had a good run as chairman of one of Singapore’s most iconic companies. I am proud of what we have achieved with the unwavering support of my fellow board members, a strong management team, employees who are always striving to better meet the needs of our customers, and unions that work with management as partners, rather than adversaries. I have an excellent successor in Peter and am confident that SIA will go from strength to strength under his watch.”

 

CEO Goh Choon Phong joins in: “The management team and I could not have asked for a more supportive Chairman over the past 11 years. Without the invaluable guidance of Stephen and the rest of the board, SIA would not be in the strong position that we are in today. I very much look forward to working with Peter and the rest of the board as we take this great company to the next phase of its development.”

 

 

Duh!

-Singapore Airlines is an excellent airline, and one that all those that have made it successful can rightfully be extremely proud.

 

-What I call SAG – the Singapore Airlines group – has been an almost-unmitigated disaster.

 

-There have been many attempts to expand into other areas and/or with other airlines. The biggest disasters/losses were investments in Ansett and Virgin Atlantic. Of the others, there have been failed corporate links with Air India, Air Lanka, China Airlines.

 

-SAG’s Tiger Air no-frills-airline. Its Australian subsidiary was shut down briefly for technical (= safety?) reasons, and is now sold. Its Singapore operation had schedule credibility problems. Its Philippines subsidiary was sold to a rival.

 

-Tiger’s traffic has stopped growing – partly to help Scoot, see next, grow!

 

-Scoot, another NFA, was proposed as a longhaul NFA. Yet it has never operated a longhaul route – just short- and medium-haul. Sometimes in competition with Tiger!

 

-Now, Scoot and Tiger are under one holding company, and Tiger is due to, in effect, merge into Scoot in 2017.

 

-Silk Air. What’s the point? Why create another airline just to operate some shorter routes? Why can’t Singapore Airlines operate them?

 

 

Look again at what those three men said. And then at their record. And then wonder about the sideline benefits of flying the Dreamliner.

 

 

Merry Christmas.

 

 

The Fox

Remember, I’ll be famous after I’m dead.

 

Double WYSKs: Paris growth! Virgin falls.

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FOXTROTS

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

Foxtrots – leading the industry in a dance.

 

Double WYSKs: Paris growth! Virgin falls.

WYSK = What You Should Know.

 

Paris. Despite the terrorist attacks, strikes, street blockages (including by the police!), traffic through Paris CDG airport grew nearly 5% in November.

 

That’s the first growth since April, and may mean fractional growth for all-2016. Largely-shorthaul Paris Orly has been growing all year, and maybe +5% all-2016.

 

 

Virgin Atlantic. As noted before, our source of VA data is not the airline, but we think its seat sales fell 11% over the first three Qs. Its 49%-owner Delta will not want to afford such a loss.

 

VA’s founder Richard Branson is so adored in the UK that this may not mean a shutdown is close. But watch for a change in the next six months.

 

 

 

The Fox

Remember, I’ll be famous after I’m dead.

 

Cathay Pacific. On endangered list.

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FOXTROTS

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

Foxtrots – leading the industry in a dance.

 

Cathay Pacific. On endangered list.

An excerpt from our monthly Travel Business Analyst newsletter.

 

We’re not sure if the Hong Kong-based Cathay Pacific group, CPG, realises business trends are threateningly bad, or is in denial.

 

Based on traffic trends so far, we reckon the two airlines’ total (the group’s Dragonair has been renamed Cathay Dragon, CD) will end this year with a fractional fall in seats sold. And possibly also in traffic – RPKs.

 

CPG has not changed its strategy to match today’s traffic realities. Over-simplifying, economy passengers today want cheaper fares, and are ready to accept fewer frills – even if they say they still want them.

 

CPG does not need CD as it is currently formed. CD’s flights could simply be operated as Cathay Pacific, CP. However, CPG does need CD to operate lower-cost flights – whether to current destinations, CP destinations, or new destinations. But at lower costs; CD should be an LCA*, not part-LCA/part-FSA*.

 

(As an aside, that makes CD’s new name irrelevant, and Dragonair better. Because of the name’s association with Asia’s economic dragons and tigers. But that is not an important fault.)

 

CPG’s main shortcoming is having no NFA*. Having successfully lobbied to stop Australia’s Jetstar NFA from starting up in Hong Kong, CPG should take up with one of Jetstar’s would-be partners (Hong Kong-based/Macau-operating gambling group Shun Tak) to start an NFA, primarily for mainland China routes.

 

(Jetstar’s other partner was to be China Eastern, but CPG is already partly owned by Air China.)

 

If CPG continues to resist this move, its mainline CP will continue to fade. Its part-FSA/part-LCA CD will do reasonably well – but not enough to grow the whole CPG. And without an NFA, not only will the future be growth-light, but others will fill that LFA space.

 

 

*Notes:

-FSA = full-service-airline. Offering first/business/economy, travel agency bookings, meals/bookings/baggage/cancellations included, etc. As its name indicates – full service.

 

-LCA = low-cost-airline. (Not a no-frills-airline; see next.) An FSA but with lower operating costs – cheaper longer-hours flight-deck crew, younger/new longer-hours cabin crew, tighter cost control (twinned 3-star hotel rooms, for instance), fewer fare types, which may have first and business cabins, and which allows bookings through travel agencies etc. If relevant, usually similar to the parent airline, but a different name, and competition against parent airline allowed.

 

-NFA = no-frills-airline. We believe that among the many essential elements that make a successful NFA are: market freedom in terms of routes and aircraft choice; single aircraft type; where relevant, competition against parent airline allowed; fares that are extremely low when booked at least three months in advance, say US$25; one fare at one time (no wholesale rates, travel agency commissions, etc); no refunds; no service frills; single economy-class cabin; no seat selection; two toilets for 150-seat aircraft; 25-minute turnaround time; cabin crew do daytime cabin cleaning; name and flight change charged at least US$25 each; no trade shows; plenty of consumer advertising and promotion; and much more.

 

 

 

 

The Fox

Remember, I’ll be famous after I’m dead.

Qantas changes the Gulf’s game

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FOXTROTS

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

Foxtrots – leading the industry in a dance.

 

Qantas changes the Gulf’s game

At first, I did not get it. Qantas talked of a game-changing plan for nonstop B787s Perth-London – albeit not until 2018.

 

Okay, it is a change, and impressive. But not in the sense that ‘game-changing’ should be used. This PER-LON flight would be just a new long nonstop – but in the same game as Singapore-New York, Dubai-New Zealand.

 

Qantas CEO Alan Joyce confused matters further by saying “Australians have never had a direct link to Europe before”. Of course he’s wrong; Australians, and indeed all other nationalities, have direct flights to Europe daily from Asia, the Americas, Africa.

 

Perhaps he meant from Australia?

 

But even then he’s wrong. There are about 100 daily direct flights to Europe.

 

Perhaps he mean nonstop from Australia?

 

(Professionals in the industry, of which I assumed Joyce was one, use ‘direct’ for same flight even if there are stops, and ‘nonstop’ for what Joyce probably meant. Do you see how hard it is to always understand precisely what important people are saying?)

 

Now I get it. But no help from official announcements and all those media outlets that repeat those official announcements.

 

But ‘it’ (the game change) is nothing to do with Qantas, Australia, or Europe. It has to do with the Gulf.

 

As a reminder, Emirates, Etihad, Qatar (EEQ, and to a lesser extent the now-fading Turkish), thrived because they offered a one-stop-shop between, among others, Asia Pacific and Europe. In the past, when no aircraft could fly Asia-Europe without a stop, there was no need for EEQ. When aircraft could do nonstops, it was a ‘game-changer’ for EEQ.

 

This new game-change is not great at all. Not even all of Australia; just the west with its tiny population and a quaint capital, Perth. That means EEQ will have a smaller market Perth-UK, but not much smaller.

 

Nevertheless, the game has started to change. And when Boeing produces the next range of its B787, enabling East Australia-Europe, that will be a more important change.

 

 

 

The Fox

Remember, I’ll be famous after I’m dead.