All-2018 indicators – what’s working, what’s not – airlines in Europe – world’s top-3 no-frills-airlines

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All-2018 indicators – what’s working, what’s not – airlines in Europe – world’s top-3 no-frills-airlines

 

January-November data – which will be a near-match for all-2018 results.

 

 

Airlines in Europe

Our summary of traffic results for the leading airlines (not, where relevant, airline groups) in Europe. Excerpts from the current editions of WYSK: What-You-Should-Know, published by Travel Business Analyst,

 

Seat sales (RPKs for British; our estimates for Ryan), in alphabetical order: Air France (from February 2018 available only combined with KLM, but we now have obtained separated data) +0.4%; British +3%; Easyjet +7%; Lufthansa +5%; Ryanair +8%.

 

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

 

AFKL a disappointing +3%, with AF hardly moving (see above) and KLM slowing; at +4%, compared with +10% in Q1, for example. Transavia at +7%, which is not as fast as a no-frills-airline should be. And still no data from Joon which, based on our calculations on data released by AFKL, did not sell any seats in 2018! (Where is AFKL hiding the figures – and why?)

 

ICAG looks good at +8%, but the problem is the slow growth at its biggest airline, British; is this pre-Brexit nerves? Our estimate has Iberia at +11%. And at its two lower-cost airlines, AerLingus was at +12% (our estimate), Vueling +10% (our estimate).

 

-Easyjet. Varying results; also pre-Brexit nerves?

 

LHG an impressive +10%.

 

But a negative move – the group is hiding data for Brussels and Eurowings. For some time these have been reported as a combined total, but we could calculate EW data by extracting data from Brussels. That has now stopped.

 

We find this LHG move strange because 1 LHG is usually more open than most groups; 2 The two airlines are/were doing well; 3 LHG separates out its other main subsidiaries, Austrian, Lufthansa, Swiss.

 

However, we have made some calculations to estimate Brussels at +13%, Eurowings at +21%. As time passes, however, our estimates will become less strong, but we hope by then – six months? – LHG will have corrected this current backwards-step.

 

For LHG’s other three big airlines – Austrian +9%. Lufthansa +6%. Swiss +9%.

 

Ryanair. +8%, including its Lauda acquisition, although Lauda’s counts were not added to Ryan’s 2017 counts. This means the comparison is not correct, but we estimate the difference is less than 1pt.

 

Others of note:

Virgin Atlantic had another bad year, about +3%; previous five years – flat, -10%, -3%, +1%, +8%. And the outlook does not look good. Perhaps its business-model – bright, friendly, full service – is no longer there? Has it been superseded by bright-friendly-cheap, such as at Norwegian? And why has VA not opened more routes? Surely owners Delta and Air France (a stunningly bad recent move) are looking to get out – but how?

 

Talking of Norwegian, it is still looking ok at +13%, but will Brexit reduce its routes? It operates more than a few routes out of the UK, technically 5th-freedoms. The UK might not change this (it is desperate to keep as much unchanged post-Brexit as it can), but will the other countries? Will, for instance, the US allow a Norwegian airline to fly UK-US?

 

-Much data shows Asia Pacific as the region with great potential. If so, Europe’s airlines are not doing well at capitalising on that. At the AFKL group, growth on its Asia Pacific routes was +3%, matching group growth. But results were not so good compared with their totals at ICAG (+1% AsPac, +8% total) at LHG (+3% +10%).

 

 

 

World’s top-3 no-frills-airlines

Our calculation of seats sold by the leading NFAs (no-frills-airlines) January-November in the world’s three main regions, from WYSK:What-You-Should-Know, published by Travel Business Analyst, shows: Ryanair +8%; Southwest +4%. Air Asia is less transparent, reporting Qs only; Q3 +9%; other Q3s Ryanair +5%, Southwest +4%.

 

 

 

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.

 

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Southwest’s co-founder Kelleher dies

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Southwest’s co-founder Kelleher dies

An excerpt from our monthly People-in-Travel report and/or our WYSKs (What-You-Should-Know).

 

Herb Kelleher, co-founder of US airline Southwest, has died, aged 87.

 

I am surprised how many in the business, report a partial- and sometimes-incorrect-history of what we call NFAs (no-frills-airlines; a much clearer  term than the shifting ‘low-cost carriers’).

 

An example is Skift, usually a good reporter on the travel business. Skift reports have Kelleher’s Southwest the world’s first NFA. And not appearing to know that it operated within the state of Texas because intra-state airlines were not controlled by the CAB, only inter-state operations.

 

But along with Kelleher, there were two others who can be credited with starting the NFA business. Their names will not mean much to many, even those in the airline business – Floyd Andrews and Rollin King (sic).

 

I put Andrews as the person who established the first NFA. Here is a wrap-up of the three.

 

[] Floyd Andrews. In the late-1960s, he converted PSA (nee Pacific Southwest Airlines) into a NFA operating within the state of California, primarily on Los Angeles-San Francisco. At the time, no commercial limitation was placed on an airline that operated entirely within a US state. Only inter-state was controlled, and tightly, although that has now long gone.

 

PSA introduced no-frills, low-fare, high-frequency, tight cost-control, and bright-marketing. US$21 one-way when full-service-airlines would be charging at least US$75.

 

Andrews died from lung cancer in 1989 aged 69. He had left PSA in 1976 after fuel price increases, starting 1974, hit the airline and passengers did not want to pay higher fares. PSA folded into US Air in 1986.

 

[] Herb Kelleher, and Rollin King.

 

Kelleher is generally credited as founder of Southwest, also generally considered the first sizeable NFA. However, SW’s founder and financial backer was actually King. Kelleher was (only) King’s lawyer, but who was also given the job of SW CEO.

 

According to the legend, SW’s start-up-businessplan was written by Kelleher and King on a restaurant napkin. I think that if it that is true, it read “Copy PSA”. Most people do not give credit to PSA, but Kelleher did.

 

And so SW started operations in 1971 on routes within Texas. He added some elements to the PSA plan – such as using secondary airports. SW was based at the Love Field airport (named after a man, not a sentiment) in Dallas, whereas until then all main airlines operated from the Dallas Ft Worth airport after it opened in 1974.

 

SW directly copied from PSA many other marketing tricks – most notably with sexy stewardesses.

 

King died in Dallas in 2014, from complications from a heart attack he had a year earlier.

 

 

Europe’s most-successful NFAs, Easyjet and Ryanair, copied the essence of the SW/PSA businessplan. So did Asia Pacific’s Air Asia (although its CEO credits Easyjet for inspiring him).

 

 

 

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.

 

December travel stocks – another bad month

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December travel stocks – another bad month

Following almost-universal falls in travel stock prices in October, they were almost as bad in the last month of 2018. In Asia Pacific, Europe, US in December:

 

Airlines: biggest growth, Korean +4%; biggest fall, Hawaiian -34%. Hotels: Shangri-La +5%, Wyndham -14%. Tech: Lastminute +8%, eDreams -27%. Others: Genting +27%, Hertz -27%.

 

Previous month: Airlines: biggest growth, China Southern +26%; biggest fall, Easyjet -7%. Hotels: Wyndham +16%, NH Hoteles -16%. Tech: Travelport +2%, cTrip -13%. Others: HNA +37%, Thomas Cook -33%.

 

TBA Travel Stocks Index: World 206, Asia Pacific 96, Europe 175, US 345. Index previous month: World 222, Asia Pacific 98, Europe 184, US 384.

 

NVTT (Net Value Travel Tech) Stocks Index: 115; previous month 126.

 

Stockmarkets. Biggest growth Kuala Lumpur +1%; biggest fall Tokyo -10%. Previous month: biggest growth Hong Kong +6%; biggest fall Dublin -4%.

 

Comments:

Of the 81 travel stocks we track monthly, only 17 grew, of which nine were in Asia Pacific.

 

Among airlines (14 in AsPac, 10 Europe, 7 US) only Air New Zealand, Korean Air grew – none in Europe or the US.

 

Among hotels (10 in AsPac, 5 Europe, 9 US), we show Shangri-La as fastest. It was actually Belmond, +38%, but during the month that company agreed to be bought by luxury-group LVMH, boosting its stock price. However, it was actually one of the few companies to have grown in 2018; it was +50% above its end-2017 price before the LVMH offer was made public.

 

Of note is the market’s reaction following Jinjiang’s offer to buy the rest of Radisson Hotels from the (still)-troubled HNA group – JJ’s shares fell -10% in the month.

 

(Separately, HNA’s price – in our ‘Others’ category – fell in nine of the past 12 months, and ended the year -65% below its end-2017 price.)

 

We have long-thought that travel-tech companies (0 in AsPac, 3 Europe, 5 US) would perform better than other travel stocks. But more often more recently, travel-tech has matched the market.

 

In December, only two of our eight grew, and only three (including those two, Lastminute and Travelport) were above their end-2017 prices.

 

Among ‘Others’ (3 in AsPac, 8 Europe, 7 US) one notable fact in 2018 was the fall of the world’s two leading car-rental companies, Avis and Hertz. They almost take it in turns to be worst performer in our ‘Others’ category each month. Over the year Avis was -49% below its end-2017 price, Hertz -38%.

 

Stockmarkets (10 in AsPac, 9 Europe, 5 US) also had a bad month. Our best performer, Kuala Lumpur, was actually the only one to grow. And almost as bad as Tokyo was the -10% of Travel Weekly’s stock index in the US. (They are rounded; Tokyo was -10.5%, TW -10.3%.)

 

China stocks (6 plus 2 US-quoted) all fell – even its three main airlines (Air China, China Eastern, China Southern) which are do so well in business terms. If these falls are a reaction to the trade war started by the US, surely this is over-reaction?

 

 

Info from Travel Business Analyst. Details in next month’s editions of WYSK: What-You-Should-Know, published by Travel Business Analyst – which will include annual comparisons, as well as 5-year, 10-year, and millennium comparisons.

 

 

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.