Not world class, five-star is still a winner

Not world class but five-star as named by the Airline Passenger Experience Association (APEX). The distinction may not raise too many brows. Five stars are as far as you can go by definition in the universal ranking of service excellence.

Only 23 airlines made it to the APEX five-star list which of course includes the magnificent seven also named by the orgnisation. (See APEX names world cass airlines, none from North America, Dec 13, 2021). Asia tops the list with seven airlines, followed by Europe (six), Middle East (five), North America (four) and Latin America (one).

According to APEX, the result was based on passenger surveys collected over nearly one million flights operated by 600 carriers worldwide.

Courtesy Boeing

Asian carriers are the familiar brands of Cathay Pacific, China Airlines, EVA Air, Japan Airlines, Korean Air and Singapore Airlines with the notable absence of All Nippon Airways (ANA). The seventh carrier in the list is the comparatively new Xiamen Airlines which outperformed the larger three competitors o Air China, China Eastern Airlines and China Southern Airlines. Hainan Airlines is another notable omission.

Courtesy Getty Images

No surprise either of the winning Gulf carriers, namely Emirates, Etihad Airways and Qatar Airways. Joining them are El Al and Saudi Arabian Airlines (Saudia).

Courtesy Turkish Airlines

The European list of five-star winners is made up of Aeroflot, KLM Dutch Airlines, Lufthansa, Swiss International Air Lines, Turkish Airlines and Virgin Atlantic. One may note the absence of aAir France and British Airways.

Courtesy Getty Images

While none of the world class airlines in the Apex list came from North America, four of them made the five-star grade, namely Air Canada, American Airlines, Delta Air Lines and United Airlines.

Courtesy Boeing

Outside these regions, only Aeromexico from Latin America made the cut.

Once again, neither Qantas nor Air New Zealand in Sputhwest Pacific achieved any mention.

If there is one key to winning, it is one of consistency. According to APEX, the winning airlines require “the vast majority of their independently verified customer ratings to be five-star.” As an example, APEX says it “requires four times the number of five-star votes to counteract a single one-star vote. This provides tremendous power to customers when they are disappointed by their customer exoerience.”

At a time when many airlines are hard-hit by the coronavirus pandemic as they struggle to stay afloat, cutting back on frills, it is a challenge to maintain service standards and meet, let alone exceed, cusotmer expectations. Theefore, to be five-star recognized is no mean feat.

APEX names world class airlines, none from North America

IF you’re good, you’re good. It’s almost like a DNA thing. But if you’re bad, change, which is not impossible, will not be easy. That’s how familiar names keep appearing in “best airline” surveys by different organisations.

The Airline Passenger Experience Association (APEX) has named its seven “World Class” airlines, and none of them are from North America. Three are from the Middle East, two from Asia and two from Europe. The survey considers among other things service, safety and sustainability. It cuts across all classes of travel.

Courtesy Singapore Airlines

Singapore Airlines (SIA) is one such ubiquitous presence in honours list. It is placed consistently among the top three airlines by Skytrax, winning the title four times since since inception of the awards. It is also a top favourite of Conde Nast readers. APEX recognises the airline’s “elevated service standards, notable brand integrity (and) best in class customer retention”.

Courtesy Getty Images

The other Asian airline named by APEX is Japan Airlines (JAL), which was fifth in last year’s Skytrax survey but lagged behind rival All Nippon Airways which is absent in the APEX honours list. APEX commends JAL for “outstanding hospitality”.

A notable absence is Cathay Pacific, another familiar name in the Skytrax awards. But Cathay seems to have suffered from diminished presence internationally because of the COVID-19 pandemic. honours

Courtesy EPA

According to APEX, Emirates has the best inflight entertainment product, a “quality first” mindset and an engaging crew. Qatar, which was crowned this year’s Skytrax winner, is praised by APEX for “impeccable dish presentations (and) distinctive design”, innovative guest experience and spacious cabin.

Courtesy AFP

Another notable absence in the APEX list is Etihad Airways which together with Emirates and Qatar form the formidable, big three Gulf carriers of global standing.

Courtesy Getty Images

Saudi Arabian Airlines (Saudia) seems to have taken Etihad’s place. APEX commends Saudia for its hospitality, impeccable dining experience and commitment to safety and innovation. The airline offers inflight chefs to personalize meals.

Courtesy KLM

That leaves two others named by APEX in its list of world class airlines, and they are from Europe – KLM and Turkish Airlines. Unlike Asian and Middle-eastern carriers, European airlines command a lesser if sporadic presence in the Skytrax awards.

Courtesy Turkish Airlines

APEX commends KLM for “leadership in sustainability, circular mindset evident at all levels, remarkable efficiency and engagement on short sectors.” In the case of Turkish Airlines, it is “excellence in cuisine, extraordinary generosity, brand integrity (and) safe travels”.

So how can one explain the absence of North American carriers in the APEX list of world class airlines? And, for that matter, the major carriers of Southwest Pacific namely Qantas and Air New Zealand?

American carriers seem not to fuss too much about international awards, perhaps acknowledging how they fare not as good compared to Asian and Middle-eastern carriers, particularly in the department of service and hospitality. They are less prone to pampering their passengers. Forget the frills. They seem to be more focused on functional efficiency and the highly competitive domestic market. You may not be spoilt by the crew, but you can hope that you depart and arrive safely on time with with your bags.

Qantas and Air New Zealand are probably disappointed not to be named by APEX. But mind you, seven is a small number.

But winners who readily lap up the cream from all and sundry must also be prepared to accept the flak. Perhaps the reason why once a winner, there is always the pressure to stay one.

Airlines brace for the hard times of a troubled Europe

Two British Airways aircraft, with British Airways plane taking off in background.

IT is easy to blame Brexit. International Airlines Group (IAG) which owns British Airways (BA) and EU carriers Iberia, Vueling and Aer Lingus, says the weak pound has caused its operating profits for Q2 (Apr to Jun) to fall below forecasts, even the number (€555m) (USD618m) is higher than a year ago ((€530m). The weak pound has cost the airline €148m.

But, of course, BA is a key contributor to IAG’s bottom line. IAG is not too upbeat about the immediate future as it “continued to experience a weaker trading environment in our UK point-of-sale business, which represents around one third of total revenue.”

The situation is definitely not helped and in fact made worse by the slew of terror attacks across the continent. Other European airlines such as Air France-KLM and Lufthansa are also under a lot of pressure to keep the numbers up, warning that travellers would avoid coming to popular destinations in their home countries.

Air France-KLM reported a 5% dip in revenue for Q2 to €6.22bn. The airline said: “The global context in 2016 remains highly uncertain… resulting in an increasing pressure on unit revenues and a special concern about France as a destination.”

So the problem is not entirely Brexit. And as the pound weakens and reduces purchasing power, and so too as travellers stay away from popular tourist destinations across Europe, the paradox is that airlines will be persuaded to reduce fares to shore up the demand for seats.

Ryanair CEO Michael O’Leary, referring to recent bombings, said: “Airlines have to respond with lower prices to keep people flying.” This will at the same time exert pressure on rival airlines to similarly take the same course. Mr O’Leary predicted average fares to fall approximately 7% this year.

Fortunately the continuing low fuel prices are working in the airlines’ favour although many are already complaining about the need to lower prices. So don’t expect the fuel surcharge to come down.

Europe’s aviation challenges

HOPE of Europe-based airlines bouncing back into good times on the back of an improved economy is not turning out to be as expected. Much of the good news reported last year seems to be short-lived.

Air France-KLM is among the airlines that have issued profit warnings, even though it expects higher earnings compared with 2013. The issue is the trending back down in growth. The airline is expecting to fall short of the forecast with revenue falling from 2.5 billion euros (USD 3.39 billion) to between 2.2 billion and 2.3 billion euros. It has cited rising competition from other carriers on the long-haul especially to North America and Asia, over-capacity as a consequence of the competition, weak cargo demand, and currency restrictions in Venezuela for the negative impact on its profitability.

Courtesy Reuters

Lufthansa has already announced a similar profit warning ahead of Air France-KLM. The German flag carrier is expecting lower than forecast profits – 1 billion euros compared to a high of 1.5 billion euros. Consequently it is also reducing its 2015 earnings forecast from 2.65 billion euros to 2 billion euros. Also citing competition for its woes, Lufthansa faces the same currency restrictions in Venezuela, which would reduce its profitability by 60 million euros. Additionally, the airline was plagued by a pilot strike in April that cost it another 60 million euros. The slowdown is evident in reduced seats offered over the winter, according to Lufthansa chief financial officer Simone Menne.

Irish airline Aer Lingus has also issued a warning on reduced profits estimated to be 10 to 20 per cent lower than last year’s, following a strike by cabin crew last month that caused disruption to some 200 flights and, according to a statement issued by the airline, “significant damage to Aer Lingus’ trading and forward bookings for several months into the future.”

The International Air Transport Association (IATA) was optimistic about a positive year for the global industry, expecting 2014 profits (US$3.2 billion) to almost double that of 2013 (US$1.7 billion). Although it has revised its forecast a little downward on account of new uncertainties in fuel prices as a consequence of geopolitical risks threatening Ukraine and the Middle East, and of capital outflows moving away from emerging economies largely to a strongly revived US economy, it will still be a much better year globally. But compared with other regions, the latest performance statistics for June showed that breakeven load factors are highest in Europe – the result of low yields and high regulatory costs. So, even though the region scored the second highest load factors, its financial performance fell behind the United States, the Middle East and Asia Pacific.

Of the top 10 countries ranked by the number of international passengers identified by IATA, five are in Europe: United Kingdom, Germany, Spain, France and Italy. About a quarter of the world`s tourist arrivals are concentrated in Europe (excluding Russia). Yet the situation is not all that rosy. The weakness of Europe seems to stem from inherent issues that have caused home airlines to direct their umbrage at the competition posed by foreign carriers, rather than the other way around as impacted first by external factors.

While foreign carriers in the Middle East and Asia Pacific have often been accused of unfair competition from a lower cost base and in some cases allegedly supported by government subsidies, the corollary is that airline operations in Europe are faced with high costs that include wages and airport charges, high taxes, cumbersome regulations and the propensity of costly industrial strikes. Some of the costs are levied directly on air travellers or through the airlines, since invariably the fees are passed on to the passengers. The UK is notorious for the suite of fees, among them the Air Passenger Duty which continues to escalate and which has become a significant source of revenue for the authorities. A new carbon tax would have been introduced in 2013 if not for the protest by the international community.

Courtesy Etihad Airways

On the competition posed by foreign carriers, the biggest threat appears to come from cash-rich Middle East airlines. When Lufthansa`s newly appointed CEO Carsten Spohr took over the helm in May, he identified the Gulf carriers as the most daunting challenge for his tenure, and that tackling this would be a priority for him. The Gulf carriers are widely recognized as the big three in the Middle East, namely Emirates Airlines, Etihad Airways and Qatar Airways. Mr Spohr suggested that Gulf carriers are not competing on a level playing field. The rate at which Etihad picked up stakes in European carriers (and around the world) has raised concerns of a Middle Eastern dominance that would be detrimental to their survival. Among the carriers that Etihad has bought into are Air Berlin, Air Serbia, Darwin Airlines and most recently Alitalia. Etihad`s CEO James Hogan defends his airline`s strategy as one of rescuing ailing European carriers on the brink of collapse, though not denying it is at the same time seeking growth through partnership.

Yet, to be fair, European carriers themselves have seen much consolidation among themselves too. Air France and KLM have merged. Lufthansa owns Swiss International. British Airways, Iberia and Vueling make up the International Airlines Group. According to IATA, improved profitability in Europe may be attributed in part to efficiencies brought about by consolidation, not necessarily among airlines within the region itself but also across borders such as the partnership between British Airways and American Airlines and the acquisition of a 49-per-cent stake by Delta Airlines in Virgin Atlantic. But it is a hard fact to swallow when, as an example, Air France-KLM could have had upped their ante in Alitalia and become majority stakeholder but have had their stake reduced substantially instead with the participation of Etihad.

Mr Hogan said: “Gulf carriers are not the cause of Europe’s aviation challenges.” Rather, an airline like Etihad has seized the opportunity availed by the region’s weakness, itself blessed by its rich resources and thanks no less to Europe’s liberal aviation policies for which it (Europe) should be commended.

European carriers have said that the competition has forced down ticket prices and resulted in over-capacity. It is easy to see what happens to margins if costs are not similarly managed, Interestingly Lufthansa sees the answer in low-cost services to be launched to Asia and possibly extended to Australia, packing in more seats in its wide-body jets to lower seat costs which will in turn mean lower fares. The elusive dream of a viable budget long-haul in spite of the failed Hong Kong-London run by Hong Kong’s Oasis Airlines and the short-lived services to London and Paris from Kuala Lumpur by AirAsia X continues to lure. Norwegian Air Shuttle became the latest operator to take up that challenge when it launched services from London’s Gatwick Airport to Los Angles, Fort Lauderdale and New York. But Norwegian’s derring-do is on a different plane as Lufthansa’s strategy aimed at countering the cheap fares offered by the competition, that if you can’t beat them, join them and hopefully beat them at their game.

On that score, Lufthansa may have already been defeated if Mr Spohr is thinking of targeting the Gulf carriers, which have so far deemed it not necessary to go down that road which continues to be lined with the usual financial risks of high costs and low yields, and the traveller’s reservations about the lack of basic creature comforts for the long hours of flying. It is therefore not the safest of bets for Lufthansa.

Mr Spohr has not decided whether Lufthansa would go it alone or join hands with Turkish Airlines. There is a redeeming feature here. Turkish and Istanbul’s Ataturk Airport could be the challenge to Gulf carriers and Dubai International in the race to be the hub connecting Europe and the rest of the world with some help. This is the kind of counter move that can really reshape the competition rather than merely playing the same game that has been mastered by the competitor.

This article was first published in Aspire Aviation.

Recovery in Europe will benefit Asia Pacific carriers

IT looks like the good times are finally rolling back. Or so, at least in Europe.

Courtesy British Airways

The International Airlines Group (IAG) which owns British Airways, Iberia and budget carrier Vueling swings back into the black with a profit of 527m euros (US$728m) in 2013 compared to the loss of 613m euros last year. Mr Walsh said: “In 2013, we strengthened the group by acquiring Vueling, embarking on Iberia’s transformation and enhancing British Airways’ revenue performance.”

Although Iberia incurred a loss, it made “huge progress” according to Mr Walsh. He said: “Recent pay and productivity agreements between Iberia and its pilot and cabin crew unions are key to reducing the airline’s costs further and providing the foundation for profitable growth.”

Courtesy SkyTeam Cargo

It is also good news for Air France/KLM which posted a profit of 130m euros in 2013, reversing the loss of 1.22bn euros in 2012 attributed to stringent cost and staff reductions. Chief executive Alexandre du Janiac said: “We are clearly benefiting from the successful implementation of new working conditions and of the industrial plans adopted in all our businesses.”

However, things aren’t as rosy in Asia Pacific although Asia is supposed to be the most promising region for growth.

Courtesy Qantas

Qantas posted a loss of A$252 million (US$225) for the first half-year (Jul-Dec 2013), deepening the loss of A$91 million incurred last year. At the same time it announced axing 5,000 jobs as part of a three-year plan to reduce costs by A$2 billion. (See Qantas’ dismal performance: The Singer or the song, Mar 3, 2013) It looks like the Australian flag carrier is some steps behind Air France/KLM, but in reality it has embarked on a transformation program for some three years now. Qantas continues to struggle to avert what Mr Joyce once referred to as an Australian “tragedy”. He said: “We have already made tough decisions and nobody should doubt that there are more ahead.”

Courtesy Singapore Airlines

Singapore Airlines (SIA)’s profit for Q3 (Oct-Dec 2013) plunged 65 per cent from S$142.5m (US$112.4m) to S$50.1m the previous year. Unlike Vueling in the case of IAG, budget carrier Tiger Airlines, of which SIA owns 40 per cent, was a dent in the group’s profit, contributing to a loss of S$40.8m from associated companies. The parent airline’s profit, however, improved S$43m year-on-year, from $87m to S$130m. Looking ahead, SIA continues to be wary of the aggressive competition that it faces. It will be interesting to see how it will fare for the full year ending Mar 31.

One or two birds may not a season make. There is a silver lining in the grey cloud over Asia-Pacific as Europe recovers, especially for long haul carriers that include Qantas and SIA.

Etihad on a roll picking up stakes in other airlines

Courtesy Etihad Airways

IN October last year, ailing Alitalia sent out signals of an impending bankruptcy and needed help. Then rumours were rife that Air France-KLM – already the biggest shareholder of the beleaguered airline – might double its 25-per-cent stake, to gain greater access to the Italian market. But Air France-KLM was concerned about Alitalia’s debt. (See It’s the age of mega carriers: Will Air France-KLM raise its stake in ailing Alitalia? Oct 14, 2013)

Waiting at the sideline was cash-rich Middle East carrier Etihad Airways, which did not have to wait long to make the kill. Jointly with Alitalia, it announced they were close to an agreement for the Middle East carrier to own up to 40 per cent of the Italian airline. This would make Etihad a leading player among its rivals in the European market.

Alitalia chief executive Gabriele Del Torchio referred to the agreement as “an important step in creating a solid and competitive Alitalia.”

In fact, the focus is not Alitalia but Etihad. That probably explains how Air France-KLM baulked at pumping more money into the ailing airline, focusing on its debt, and paved the way for Etihad to add yet another acquisition to boost its global network. It already has stakes in Virgin Australia, Air Berlin, Air Seychelles, Aer Lingus and Air Serbia. Only recently did it take up a 24-per-cent stake in India’s Jet Airways, giving it inroads to the growing Indian domestic market.

Whose next, one might ask.

IAG’s performance augurs well for industry

WHILE Ryanair paints a gloomy picture of the future of aviation out of London, warning that the market will soften resulting in dip of profits despite expected falls in fares, British Airways (BA) all but dispels that as a myth. BA chief Willie Walsh even went as far as suggesting that it was a publicity ploy adopted by Ryanair chief Michael O’Leary to shape the market to the Irish budget carrier’s advantage.

Courtesy British Airways

The International Airlines Group (IAG) which owns BA, Iberia and Vueling, turned in a triumphant performance, reporting pre-tax profits of 609m euros (US$680m), an increase of % year-on-year, for the quarter July to September. This was an impressive recovery from the last full year operating loss of 418m euros even though BA was profitable because of the huge loss incurred by its Spanish partner Iberia.

So if any one should doubt BA’s wisdom in merging with Iberia, it is time to realign that thinking. The honour goes to Mr Walsh for his tough hand in restructuring the Spanish carrier, introducing drastic cost-cutting measures that include reducing staff numbers. Profits at Iberia for the July-September quarter rose from 1m euros last year to 74m euros. Indications are that it will be a good turnaround full year for IAG, which reported a pre-tax profit of 103m euros for the first nine months of the current year compared with a loss of 121m euros last year.

Between Ryanair and BA, the interesting question should be what all this augurs for the future of the travel industry.

Mr Walsh said: “The mood across Europe is improving.” He attributed this in particular to the growth of traffic out of London. Indeed, that has long been coming – a prospect that is being monitored closely not only by British carriers but also long haul operators from around the world based as far away from the British hub as Cathay Pacific, Singapore Airlines (SIA) and Qantas. Delta Air Lines which acquired a 49-per-cent stake in Virgin Atlantic would have made a fortuitous investment.

Cathay reported improved performance for European routes last month, singling out London as a star performance. Overall it has been seeing revenue growth staying above the increase in capacity. Cargo is the bugbear, but there are signs that the world economies are improving. Cathay reported that exports out of Europe in particular are growing.

Yet under immediate circumstances, European carriers such as Lufthansa and Air France/KLM are still falling short of expectations and struggling with cost issues. Therein lies the reason why IAG’s performance was all the more impressive, and therein lies the challenge of competition in good and bad times. Both Walsh and O’Leary are visionaries, market movers and risk takers. In their own ways, they are preparing their airlines ahead of time.

What may have favoured BA is the return of the lucrative business class travel, especially for trans-Atlantic flights. The British flag carrier reported an increase of four per cent for premium passengers in October. “That’s all coming out of London,” said Mr Walsh. “The London economy has performed most strongly, and we’re benefiting from that.”

That spells good news for legacy airlines that made most of its money from flying premium travellers before the global economic meltdown. In good times, airlines such as SIA earned more than 40% of its profits from filling up the front end of the aircraft. However, the anticipated recovery has taken a long and painful road. In the interim, airlines such as Cathay and Qantas have introduced new or improved premium economy class products to stimulate the market. Cathay reported loads to Frankfurt, London and Paris exceeding 80%.

IAG’s performance augurs well for the industry. It remains to be seen if this holds true as more airlines post their earnings in the coming weeks.

It’s the age of mega carriers: Will Air France-KLM raise its stake in ailing Alitalia?

Courtesy Wikipedia Commons

Alitalia is fighting bankruptcy as its shareholders initiate efforts to raise funds in light of its main fuel supplier threatening to cut off supply. The Italian postal service will contribute 75m euros (US$101.6m) to the rescue package of 500m euros.

Meantime, Air France-KLM – already the biggest shareholder of the beleaguered airline – waits to see if it should increase, possibly double, its stake of 25 per cent. Air France-KLM chief executive Alexandre de Juniac is in favour of the takeover to gain greater access to the Italian market, but the Franco-Dutch board is cautious about the debt incurred by Alitalia. The Italian flag carrier last made a profit in 2002 and has so far lost 294m euros in the first half of this year. Air France once made a bid in 2008 to take over the airline but was thwarted by a consortium led by then Prime Minister Silvio Berlusconi. The timing today may not be right as the new Air France-KLM is itself struggling with restructuring and cost issues.

The age of the mega carriers has long arrived and it appears the trend, predicted in as early as the ‘80s, looks set to continue. In Europe, besides the Air France-KLM merger, there is the International Airline Group comprising British Airways and Iberia. Lufthansa wholly owns Austrian Airlines and Swiss, and owns 45 per cent of Brussels Airlines, 14.44 per cent of Luxair, and varying interests in a string of other airlines. The competitive field – not only in Europe but also in the United States and to a lesser extent elsewhere – has narrowed to a few mega groups of airlines with fiscal partner interests beyond mere marketing alliances.

In the United States, United Airlines is merged with Continental Airlines under United Continental Holdings; Northwest Airlines is merged with Delta Air Lines; and American Airlines is merged with US Airways. Delta made news when it acquired a 49-per-cent stake in Virgin Atlantic, the stake bought from Singapore Airlines (SIA) which until then had maintained a passive interest in its holding. For Delta, more than for SIA, it would materially increase its presence across the Atlantic.

In South America, LAN Airlines of Chile absorbed TAM Airlines of Brazil to form LATAM.

Somehow the trend is less prominent in Asia and the extended region where flag competing flag carriers generally prefer marketing alliances such as the partnership between Qantas and Emirates, and that between Singapore Airlines (SIA) and Virgin Australia. But it is changing as the competition intensifies in a tight market and as blocs begin to form to make bigger bites, and as countries relax their rules on foreign ownership. SIA now owns 19.9 per cent of Virgin, which is also 19.9 per cent owned by Etihad Airways and 23 per cent owned by Air New Zealand (ANZ). ANZ has announced it will increase its stake to 25.9 per cent, and thus continues to be Virgin’s largest shareholder outside the Virgin Group.

Cash-rich Middle-East carrier Etihad seems to be particularly active on this front, picking up stakes in Air Berlin, Air Seychelles and Aer Lingus, and targeting to complete a 49-per-cent acquisition of Air Serbia in January next year.

Yet the interest seems more as a matter of pure investment or hedging against a shifting competitive landscape. There is no white knight appearing in the horizon to rescue ailing Kingfisher Airlines while many foreign carriers have expressed interest to enter the large and growing Indian market now that India has relaxed its policy on foreign ownership. Etihad is more interested in the less vulnerable Jet Airways. Malaysian budget operator AirAsia and SIA have initiated separate deals with local investors to start new airlines. There is really no valid reason to buy into debts unless the potential for recoup plus growth is visible, almost tangible. But the Indian market has been somewhat of a come-and-go melee, susceptible to changing regulations.

Yet what should make the Alitalia case different for Air France-KLM? It is probably one of market proximity, where the impact may be more immediately felt by the suitors. It goes beyond passive investment – a case in point as mentioned earlier is the SIA/Virgin deal compared with Delta/Virgin deal – to more strategic considerations of how the acquisition would advance the Air France-KLM cause vis-à-vis its competitors within the same region. It becomes an issue of survival in itself.

Interestingly, Etihad was asked if it would be interested to buy into Alitalia, and chief executive James Hogan sidestepped the issue, telling AFP: “At the moment I’m focussed on India, transactions in India. We look at many businesses but we are primarily focused on Jet Airways.” Yet it is rumoured that Hogan has been meeting up with Air France-KLM to discuss the matter, purportedly to persuade Air France-KLM to raise its stake or let someone take its place. Does it appear obvious enough who that “someone” may be? You make a guess.

KLM advances green effort

Courtesy Boeing

KLM last week becomes the first airline to operate a regular weekly transatlantic flight, using an eco-friendly fuel mix of 25 per cent Dutch airline cooking oil and 75 per cent jet fuel.

The cooking oil, which comes from restaurant wastes, is able to reduce carbon emissions by up to 80 per cent. This is noteworthy, considering that aviation is responsible for 2 per cent of global emissions, and that number continues to grow.  

Captain Rick Shouten, who piloted KLM’s maiden transAtlantic biofuel flight from Amsterdam’s Schiphol to New York’s JFK, told the New York Post: “For pilots, it’s totally transparent. It’s as if you’re flying a normal aircraft.”

Back in Jun 2011, KLM too was the first airline to operate the world’s first commercial biofuel flight when it carried 171 passengers from Amsterdam to Paris, also using cooking oil. It was a major step forward in the green pursuit. Since then, a number of airlines have powered either test flights or commercial flights using a mix of jet fuel and plant alternatives that include jatropha, algae, camelina, carinata, coconut and babassu.

The list of airlines championing the green effort include Virgin Atlantic (which flew the first biofuel test flight from London to Amsterdam), AeroMexico, Air Canada, Air China, Air France, Air New Zealand, Alaska Airlines, Continental Airlines, Etihad Airways, Finnair, Brazil’s GOL, Iberia, Interjet, Japan Airlines, Lufthansa, Canada’s Porter Airlines, TAM, Thomson Airways and United Airlines.

However, still in its infancy stage, biofuel is expensive, and may cost as much as three times the price of regular jet fuel. “A lot still has to happen before biofuel will be available on a large scale and for it to be economically competitive in relation to fossil-fuel kerosene,” said KLM. “We cannot achieve this alone. We absolutely need the commitment and support of all the relevant parties: business, government and society.”

For it to be sustainable there has to be cheaper refining methods and widespread use across the industry. Support from national agencies at this stage is imperative, if only because saving the environment is everybody’s business.

Air Canada introduces premium economy: Is the trend finally catching on?

Photo courtesy Air Canada

IS the premium economy trend slowly catching on? Air Canada becomes the latest airline to announce its introduction as “a new class of travel”, starting with the Montreal-Paris non-stop in July 2013. New, perhaps for the Canadian carrier, but not quite globally.

EVA Air of Taiwan was one of the first carriers to introduce the premium economy, when it launched its operations in 1991. There was a limited number of seats, that boasted more legroom. Since then, a number of airlines have dabbled with the idea and more of them started to introduce an expanded “middle” class particularly when it became clear that the global financial ciriss has taken a toll on business (and first) class travel.

The concept has taken on an international dimension, with many major airlines pushing the trend. They include British Airways, Virgin Atlantic, Air France, United Airlines, American Airlines, Delta Airlines, Cathay Pacific Airways, Japan Airlines, All Nippon Airways, Qantas and Air New Zealand.

There are noticable exceptions. Singapore Airlines introduced the class on non-stop flights between Singapore and Los Angeles but did away with it when it upgraded the flights to an all-business class configuration. Since then the airline has insisted that it has no plans to revisit the concept anywhere in its network. Some analysts think it may be a mistake for SIA to not go with the flow as it banks upon recovery of the business class traffic.

Noticeably too, one may wonder why there is no premium economy on Emirates Airlines which may have prided itself as providing an economy class that is as good as any other airline’s premium economy. In the same way, one may ask: Do you fly legacy economy or budget business class?

Indeed, what makes the premium economy any better than the normal economy? The early model was not that much visibly different, and that probably explained why it was slow in catching on.

Air Canada offers:

• priority check-in with personalized service. It is not clear what “personalized service” entails, but priority check-in can assuage the nerves if the line for the normal economy means an inordinately long wait.
• priority boarding. It means getting to your seat before others and assessing the overhead compartment for your hand luggage before space runs out.
• priority baggage handling, which entails up to two free pieces of checked baggage and amonmg-the-first placement on the arrival belt. While Air Canada restricts free carriage to only one piece for economy, many other airlines such as Cathay, SIA and Emirates still allow up to two pieces (or equivalent). First on the arrival belt? There is no guranatee; much depends on what happens at the airport where you arrive. Reputable Asian airports such as Hong Kong and even Beijing are known for speedy delivery of arriving baggage even for economy, whereas many airports in the west have questionable standards even for priority-tagged baggage.
• wider cabin seat with more recline and legroom. This has been the main selling point for premium economy, offering more comfort for the long-haul. Increasingly, airlines are competing on the comfort factor even for economy.
• a larger screen for in-flight entertainment. This is a good-to-have but not critical feature, especially when you may prefer to squeeze in some hours of sleep and good only if the airline offers a wide range of programs.
• power outlet at the seat for electronic gadgets. Many travellers are already powering their gadgets with portable battery.
• premium meal service served on china dishware with complimentary wine and spirits. Does it really matter the kind of dishware? If you do not know, you get complimentary wine with meals in economy on Air Canada, perhaps not the premium brand.
• hot towel service. No big deal. SIA hands out hot towels in economy as well.
• a larger pillow. Some people do not need pillows. You can get two in economy if you are resourceful enough.
• a handy amenity kit. Some airlines such as Qantas and Cathay boast brand-name amenity kits for their premium economy passengers. You will find even business class passengers leaving behind the kits on disembarkation.
• earn higher mileage. This may be the best deal, depending on how generous is the specific airline’s frequent flyer program.

For the premium economy to sell, downgraders from business and upgraders from economy must be adequately tempted with visible advantages to make the trade-off vis-à-vis the cost, whether it is saving on the otherwise higher fare or paying the difference additionally. As the name suggests, premium economy is more an economy than a business class product. Thisa could be the reason why airlines such as SIA and Emirates probably prefer to market a superior economy and at the same time not be detracted from the truly premium product of the upper classes.

 But it may all be a case of nomenclature. The early days of the business class was really an upgrade of the economy status. Swissair (the predecessor of Swiss International) swore it would not bow to the fad, believing there was no room for a three-class configuration. But it did in the end. In the same way, today’s premium economy looks set to take on an exclusivity of its own, though it is unlikely to evovle to the same degree as the business class which, for some airlines, has in fact replaced the first class product. Quite on the contrary, carriers that susbcribe to the concept may be compelled to do even more for their business class to maintain an enviable difference.