What’s working; what’s not. Airlines in Europe.

FOXTROTS*

 

What’s working; what’s not. Airlines in Europe.

Our summary of traffic results for the leading airlines (not airline groups, where relevant) in Europe, excerpts from the current editions of the Travel Business Analyst newsletter, over January-February.

 

Seat sales (RPKs for British; our estimates for Ryan), in alphabetical order: Air France (no longer separated out from AF-KLM); British +2%; Easyjet +4%; Lufthansa +6%; Ryanair +5%.

 

Notes (on notable details; on whole-group for Air France, British (=ICAG), Lufthansa):

 

-Air France. As noted, the unhappy managers at AF-KLM, who are mainly AF despite the faster-growing strength of KLM, have elected for results-opacity. Starting this month, data for AF and KL are no longer separated – probably because AF is doing badly. And no data for new subsidiary Joon either.

We are surprised that the Dutch stockmarket allows this (we understand that the Paris market would be sympathetic). The group’s no-frills-airline Transavia not doing well (+6%); is Joon getting favoured treatment (in all forms?).

The whole group at +4%. Because figures are now hidden, we cannot determine what is doing what, and thus we are left with just one observation – the group is not doing well.

 

-British (=ICAG). Iberia +7%, good for a full-service-airline. AerLingus’s +8% (our estimate) should be better. Barcelona-based Vueling’s +17% (our estimate) good; are the Barcelona troubles over (that’s travel; political ones are not).

 

-Easyjet. Whoops on traffic, but at least its already-impressive seat factor grew 1pt to 93%.

 

-Lufthansa. Austrian +16%; is this a market-share war as a number of players push their product in the market? Brussels, at +17%, is becoming a big player; it is almost the same size as the much-longer established Austrian.

The Eurowings story should be covered in all the trade (and consumer) media, but relatively, it gets little attention. Yet in seat sales, it is the biggest airline in the group after Lufthansa itself! And look at that growth – +44%! Swiss is the weakest (although one airline must always be last), with +3%.

With group growth at an impressive +13%, the Lufthansa group might even be able to relax with AF-KL in disarray, and ICAG troubled and soon to be more so as one of its members, British, gets caught up in the UK’s coming exit from the European Union.

 

-Ryanair. Growing slower than rival Easy is close to becoming the norm, after years when Ryan was fastest as well as biggest. Norwegian is growing faster, but with its (too?) fast medium/long-haul route growth, is no longer a direct competitor. Today, Europe’s No3 no-frills-airline is Wizz, +24%, with a 92% seat factor.

 

 

The Fox. Remember, I’m an industry expert in the parallel world.

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

Foxtrots – leading the industry in a dance.

Scoop*! Peach & Vanilla to merge!

TROTTINGS = Trip Jottings

 

Scoop*! Peach & Vanilla to merge!

The All Nippon Airways group plans to merge its Peach and Vanilla airline subsidiaries**, starting this year and finishing before March 2019.

 

It wants the merged airline to become the leading ‘low-cost airline’ in Asia.

 

Our comments:

 

-Neither Peach nor Vanilla is what we define (according to a set of our definitions) no-frills-airlines, see below.

 

They are an attempt by ANA management to follow an NFA businessplan, but are basically just lower fares and some lower costs. More like an LCA, see below.

 

-ANA management has shown no clear understanding of the NFA business-model. They thus seem incapable of making Peach-Vanilla bigger than the region’s current biggest, Air Asia, whose various divisions sold about 70mn seats in 2017, according to our counts.

 

-In 2014 we called ANA’s businessplan for Vanilla ‘soft’***.

 

-One further indication of this incompetence is the long time to merge these two – 12 months. We believe this should take no longer than three.

 

 

 

Notes:

 

*Headline-convenience only; this is not news.

 

**Peach started flying from its Osaka Kansai base in March 2012 (another mistake; it should have used Osaka Itami airport). ANA’s JV with Air Asia, from Tokyo Narita (it should have been Tokyo Haneda or best Tokyo Ibaraki), started in late 2011 and stopped in late 2013. After that ANA launched Vanilla, also from Tokyo Narita, in December 2013.

 

***What we said in 2014:

-Its base is Tokyo Narita, the worst choice of three Tokyo airports – best would be Ibaraki, then Haneda.

-It has three destinations in Japan plus Tokyo, plus international to Hong Kong, Kaohsiung (due next February), Seoul, Singapore, Taipei. Generally, a 2-hour maximum flight is better for NFAs – which means Hong Kong, Kaohsiung, Singapore, look to be financial risks.

-Even domestic routes seem to be chosen for their length – Japan’s top north or top south.

-Fares look cheap – US$60 (¥6300) one-way for the shortest route, NRT-Sapporo. But they are fixed – no discounts if travellers book early, no higher if they book late. That is bad for Vanilla’s profits.

-Schedules are not standard. It is better to have, say, 10.00 daily departure to Sapporo. Vanilla has different times and different days.

-Its initial publicity noted flight destinations, aircraft types, flight times, etc. But not fares. For us, the essential items to be included in NFA publicity are two only – Route, Price.

 

 

 

*Notes: Our airline-type definitions:

-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 example), fewer fare types, may have first and business cabins as well as economy, 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: shorthaul point-to-point routes; market freedom in terms of fares, routes; single aircraft type; where relevant, competition against parent airline allowed; extremely-low fares when bought at least three months in advance, say US$25; one fare at one time (no wholesale rates, travel agency commissions, etc); no refunds; no (free) service frills; single economy-class cabin; no (free) 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’m an industry expert in the parallel world.

 

 

 

Double WYSKs. Airlines in Asia Pacific, Europe; what’s working, what’s not.

FOXTROTS*

 

Double WYSKs. Airlines in Asia Pacific, Europe; what’s working, what’s not.

WYSK = What You Should Know.

Airlines in Asia Pacific

Our summary of traffic results for the leading airlines in Asia Pacific, excerpts from the current editions of the Travel Business Analyst newsletter, in January. Seat sales at biggest FSAs (full-service-airlines) in Asia Pacific (whole-group results for all) , in alphabetical order: Air China +2%; Cathay -2%; China Eastern +13%; China Southern +3%; Japan +1%; Singapore flat.

 

Notes (on notable details):

 

-Air China. And the same for international. Looks slow (for China) but this is mainly a Lunar New Year factor. The LNY holiday was in January in 2017, but February this year.

 

-Cathay. When will it realise its businessplan must change? Cathay Pacific should stay as full-service-airline, but Cathay Dragon should become a low-cost-airline or no-frills-airline (our definitions). Then create a third airline as LCA or NFA.

 

-China Eastern. Funny figures, which we are surprised the stock market accepts. For the past two years, calculated growth does not match the figures given earlier – sometimes by sizeable amounts. We cannot get an explanation.

 

-China Southern. As for Air China, mainly a LNY factor .

 

-Japan. As is becoming usual, growth around +1-3%. International, for instance, was only +2%. Poor results considering growths in the visitor business +19%, and even outbound +5%.

 

-Singapore. Oops. Silk was also flat, and seat factor at a probably-lossmaking 71%, and -3pts. We have long proposed a reworked strategy for Silk. The group followed our ideas for its no-frills-airline Scoot (merging with Tiger, although we actually said Scoot should not have been created, and Tiger expanded instead). We propose Silk becomes the group’s low-cost-airline (according to our definitions) . But Scoot not doing well either; just +9%, not good for an NFA.

 

 

Airlines in Europe

Our summary of traffic results for the leading airlines (not airline groups, where relevant) in Europe, excerpts from the current editions of the Travel Business Analyst newsletter, in January. Seat sales (RPKs for British; our estimates for Ryan), in alphabetical order: Air France+Hop +3%; British -2%; Easyjet +9%; Lufthansa +6%; Ryanair +6%.

 

Notes (on notable details; on whole-group for Air France, British (=ICAG), Lufthansa):

 

-Air France. KLM growing fast, +9%; on this basis it will be two-thirds the size of AF this year. Transavia back to fair-growth (for a no-frills-airline), +13%, and seat factor almost touching 90% – which is the minimum we reckon it needs. But transparency at the group is reducing, see https://wp.me/pTv9-lI

 

-British (=ICAG). The group’s growth coming from Iberia – whose +10% compares with BA’s -2%, although BA is still 60% of all-ICAG. Barcelona-based Vueling’s seat sales (our estimate) is now back to good growth, +17%, and although seat factor is still a low 79%, that is for January and a +2pt improvement. Not so encouraging at AerLingus – seat sales only (our estimate) +6%, seat factor a lossmaking 71%, only +1pt better. Needs to do better. No figures for its new subsidiary Level (sic). As the group always hid the results of its now-to-be-closed failure Open Skies (sic; an airline, despite that name), will it do the same for Level – unless traffic is good?

 

-Easyjet. Managed to get seat factor up +2pt to 88% – good for January.

 

-Lufthansa. Most is looking good; only Swiss’s +4% looks weak. The star is still Eurowings, +33% although seat factor is still only 75% even though that was +2pt growth. We thought EW would take growth from Lufthansa, but the parent still managed +6%, although SF was -2pt. The group’s Austrian and Brussels also doing well.

 

-Ryanair. Is that +6% a worry because low (for Ryan)? Growth in the past three Januarys was +17% +25% +31%. But seat factor up +1pt to 91% – at that level SF is hard to grow, but Ryan is doing it.

 

The Fox

Remember, I’m an industry expert in the parallel world.

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

Foxtrots – leading the industry in a dance.