Does Air Berlin’s demise signal end of the road for budget carriers?

Courtesy Reuters

Air Berlin is folding up its wings, caused by falling pasxsenger numbers. Last month alone saw a dip of 25 per cent compared to July last year. Its biggest shareholder, Gulf carrier Etihad Airways which owns a 29.2 per cent stake, is not forthcoming with the needed financial support.

Does Air Berlin’s demise signal the end of the road for unaffiliated budget carriers, many of whom are benefitting from the currtent low price of jet fuel? Or that it is at least a forewarning of a more difficult time ahead for them in the continuing battle between them and legacy airlines which are at the same time supported by their own budget offhsoots?

That’s what Ryanair fears, accusing the German government and national carrier Lufthansa of conspiring to carve up Air Berlin. Ryanair said: “This manufactured insolvency is clearly beign set up to allow Lufthansa to take over a debt-free Air Berlin which will be in breach of all known German and EU competition rules.” A Lufthansa-led monopoly, it said, would drive up domestic fares.

How then will the game play out after Air Berlin?

Ryanair’s apprehension as a competitor is real. Air Berlin’s exit will mean a stronger Lufthansa and its budget offshoot Eurowings. Yet already Lufthansa is a dominant player with 76 per cent of its capacity focused on the German market. The Lufthansa Group posted record earnings for the first six months of 2017, increasing revenue by 12.7 per cent to €17 billion and net profit by 56.6 per cent to €672 million. Eurowings and other airlines in the Group including Austrian Airlines, Brussels Airlines and Swiss Interantional Airlines, also posted positive results. So as a group, Lufthansa has quite some msucle to flex in Europe, and the vacuum left by Air Berlin is likely to be filled by Eurowings.

On the other hand, it may be countered that competition is all but dead since airlines such as Ryanair and EasyJet also have access to the German market. However, comparatively, their market share is small; Germany represents only 7 per cent of Ryanair’s capacity and 9 per cent of EasyJet’s. There is possibility that Air berlin’s demise may mean more demand for seats on these carriers, if not opening up the market for more competition. Hence the German government has denied Ryanair’s accusation that it had breached anti-trust rules.

Clearly the competition will intensify, whether it is a battle between legacy airlines and unaffiliated low-cost carriers or one between budget airlines themselves is not any more a matter of note. The competition has levelled, with budget carriers attempting to do more and legacy airlines even adjusting down to match. Legacy airlines including Lufthansa, British Airways and Air France are fighting back, and the old strategy of doing it through a subsidiary equivalent is receivign a revival. Besides Lufthansa, British Airways (as part of the International Airlines Group which is already supported by Spanish low-cost carrier Vueling) has introduced Level, and Air France annoucned plans to launch Joon which, however, it says, is not a low-cost carrier.

The competition does not stay the same for long in the aviation business. Little surprise that Etihad has decided to step back from its acquisition spree.

Joon: Basic yet chic

Courtesy Air France

What’s basic yet chic? That, says Air France, is the design of the uniform for cabin crew of its new subsidiary airline, Joon. You can expect to serve flight attendants in trendy casuals that include blazers, polos, ankle pants and sneakers. Apparently it is Silicon Valley inspired.

A statement issued by Air France said: “Its visual identity is based on an electric blue colour code symbolizing the airline’s dynamic attitude, as well as the sky, space and travel.”

Believe it, the colour has much to do with the kind of image projected by the airlines. Targeting millennials, Joon moves away from the convention of a neutral and sedate hue for something more in line with the outgoing disposition of younger jet-setters.

Many years ago when Singapore Airlines (SIA) launched a regional carrier called Tradewinds, there was much ado about the crew uniform to project the more casual mood of leisure travel – something you might wear on a vacation. That changed when its successor SilkAir took over to target business travel and other more serious travellers as well.

Courtesy Scoot

But it is Joon that is going completely millennial, right down to white trainers.

Courtesy Air Canada

Meantime, Air Canada is going retro. Its maple leaf logo design returns to the airline’s look 24 years ago, incorporating the circle loop. Black replaces red in the letterings on the aircraft, and flight attendantswill match with black uniform highlighted with a red tie or scarf.

Looks like you either go hip or nostalgic if you want to make a statement.

What do millennials want?

Courtesy Air France

Air France may have struck it right in launching Joon as a “lifestyle brand” targeting millennials, designed to meet the requirements and aspirations of a young working clientele whose lifestyles revolve around digital technology.

Goodbye baby boomers, hello millennials!

Air France defines the new generation of travellers as aged between 18 and 35 years. Quite aptly, the name Joon is a play on the French word “jeune”, which means “young”.

What do millennials want, travelling?

Millennials are IT-savvy and rely on electronic tools and applications going about doing the things they do. For them, for example, a paper boarding pass is a thing of the past when a smart phone can do the job. Social media is very much a part of their lives.

Millenials value immersion in cultural experiences more than mere sightseeing and collecting souvenirs of the places where they have been. Instead of popular tourist destinations, they prefer adventures to exotic places that are usually off-the-beaten-track.

While millennials are not particularly thrilled by frivolous frills, that does not mean they travel cheap. Far from it. They are in fact brand conscious, and would pay for something that they fancy or must try. But they will not spend on stuff that do not value-add their experiences. That way, they can afford more experiences, travelling more frequently.

Millennials are the NOW generation, who are prepared to rough it out if they had to. For them, travel is more a means to an end. They are therefore less likely to complain about not being pampered by the crew on board, but they do expect efficiency and immediacy of result. Hence, the absence of fuss, boosted by technology capability that allows room for them to exercise some degree of control of what they need and want, appeals to them.

It is this new generation of travellers, says Air France, who inspired the formation of Joon which will take to the sky in fall.

Airlines target millennials with lifestyle branding

http://www.todayonline.com/commentary/airlines-target-millennials-lifestyle-branding

Travelling across Europe in summer: Expect flight delays

Travelling across Europe during the summer can be a nightmare should anything happen to disrupt the flow of the peak traffic. It may be worse this summer, and travellers should expect delays. Already there are stories of a number people who have missed their flights.

British Airways, Ryanair and EasyJet have advised their customers to allow plenty of time to get through the airport because of enhanced immigration checks. Ryanair suggests that customers arrive at least three hours before departure time.

The European Commission said this is “the price of security”. It is not something most people want to argue about for their safety. New measures to check potential terrorist threats have been introduced, but it looks like some airports are not ready for the implementation. Passengers complained about inadequate border control booths and staff to handle the usual surge in summer travel.

The summer months in the past had also experienced disruptions caused by industrial action. For now, strike action by security workers at Barcelona Airport every Friday, Sunday and Monday since August 4 to last throughout the season has added to the woes of travellers. Let’s hope other disgruntled airport staff and airline crew do not see this as an opportune time to join them.

It may make sense to put off travel to outside the peak months, but for many people this just isn’t possible because of work, school and other commitments.

Did Air Transat flout Canadian aviation rules?

Courtesy Air Transat

Following up on complaints about the delays of two Air Transat flights on July 31 at Ottawa International Airport, Canada’s air transportation agency is said to be investigating whether Air Transat has flouted the rules. (See Air Transat delays raise passengers’ ire, Aug 2, 2017)

The agency said the airline signed a document that sets out, among other things, an airline’s rights and responsibilities towards its passengers. According to that tariff, in the case of an on-board delay of more than 90 minutes, Air Transat promises to offer passengers the option of getting off the plane.

Air Transat’s defense was that the exceptional congestion at the airport because of several flight diversions caused by bad weather at Montreal had resulted in airport staff not being able to cope with providing bridges for disembarkation. This claim was refuted by the airport authority, which maintained that air stairs and a gate were available but the airline did not make the decision to disembark its passengers.

It was not until a passenger on one of the two delayed Air Transat flights called 911 that emergency crew finally brought bottled water to the stranded passengers cooped up in the aircraft without air-conditioning.

According to Ottawa Airport spokesperson Krista Kealey, emergency crews had to deal with several medical calls and getting the Canada Border Services Agency to approve the opening of the cargo hold to check on a pet. The aircraft also had mechanical issues and needed to be refuelled.

The first Air Transat flight from Brussels sat on the tarmac for six hours after a journey of some nine hours. The second flight which was similarly diverted from Montreal was delayed for four hours.

The airport said there were 20 diversions, not 30 as claimed by Air Transat.

Air Transat said the situation was beyond its control. Yes, the weather bit, but the contention is its failing in not attending to the needs of its customers as a consequence. It is likely that following investigations by the transport agency, Air Transat may be required to compensate its passengers if it had not already thought about it. But this may again be a long road to resolution dependent on the terms of carriage.

Low-cost carriers that offer attractive travel packages may not be as equipped as full-service airlines in handling unexpected situations arising from delays and cancellations. And that’s not saying full-service airlines are necessarily better at the job all the time although it is expected so, since they are more likely to have the resources to deal with unplanned situations. Besides, from the customer’s point of view, that’s the price of their willingness to pay a higher fare.

Still, whether you fly low-cost or full-service, it is good to know your rights. And transport agencies administering civil aviation may be the traveller’s only hope of protecting his or her rights when it comes down to a case of David vs Goliath.

Air Transat delays raise passengers’ ire

Two Air Transat flights from Europe bound for Montreal in Canada on July 31 were diverted to Ottawa because of the weather. Such diversions are not uncommon and no one should take an issue with that. But what an airline does next in such an event is critical, as this will likely decide how its customers will react, whether with anger and criticism or with understanding, even praise.

The first Air Transat flight from Brussels sat in the tarmac in Ottawa for 6 hours, with all the passengers kept on board after a journey of more than eight hours. The second flight was held at Ottawa airport for four hours.

One passenger on the first flight said that “people are just losing their minds”. There were complaints about no air-conditioning, the loss of power also causing the cabins to plunge into darkness, the lack of information, and the absence of adequate refreshments. So it seemed that whatever Air Transat was doing (or not doing), it was not enough. Subsequently one of the passengers called the police.

Most airlines would disembark their passengers if a delay is expected to be unduly long, notwithstanding there may be some restrictions pertaining to customs and immigration procedures. Passengers usually relish a change of environment instead of being cooped up in a plane especially when power is cut. Equally annoying is what is known as a creeping delay when the time for take-off keeps pushing back.

Air Transat said airport staff – because of the unusual amount of traffic – were unable to provide bridges or stairways to allow passengers to disembark. But Ottawa International Airport Authority spokesperson Krista Kealey said there were buses on standby in case the airline decided to disembark their passengers and process them through customs. “However,” she explained, “That decision was not taken by the airline, and ultimately it is the airline that is responsible for making those decisions about whether a flight disembarks.”

The Canadian government has been in the forefront advocating the protection of air travellers’ rights., having introduced legislation setting out national standards and measures that will apply to all airlines operating into and out of Canada. (See Canada acts to protect passengers; rights, May 20, 2017) Perhaps under the circumstances when an unduly long delay is anticipated, disembarking passengers should be made a mandatory requirement.

Yet did Air Transat even consider that option? And why not?

All airlines know that an aircraft delay can be a costly affair – from the use of airport facilities and engaging airport agency staff to handle the situation to catering to the needs of passengers and incurring crew’s overtime. There may also be demands for compensation. Such are unnecessary costs, but things do not always go as planned.

By the way, Air Transat was not the only airline that was affected. According to Ms Kealey, there were 20 diversions due to severe weather. Wondering what the other airlines did?