Size matters in the air

Courtesy Getty Images

Ryanair chief Michael O’Leary predicted that “within the next four to five years you are seeing the emergence of four or five large European airline groups.” He even named the airlines, Ryanair among them in a mix of full-service and low-cost operators: Lufthansa, IAG (International Airlines Group which owns British Airways, Iberia, Aer Lingus, Vueling and Level), Air France-KLM and, probably, Easyjet.

This sentiment has been opined before by others at a time when mergers, assimilations and acquisitions across the industry were trending as competition broke barriers of entry and intensified, and so-called safe niche markets became every player’s game.

Air France-KLM as the name suggests is a merger of the two European airlines in 2004. Rival British Airways (BA) viewed it as a step in the expected direction, predicting further consolidation within Europe. And in 2011 IAG came into being when BA and Iberia merged. BA chief executive Willie Walsh said at the time that the merger would enable the airline to compete effectively with low-cost carriers.

So there came a time when budget carriers began to pose a threat to full-service airlines, with Ryanair leading the pack. Many of the legacy airlines today have adopted the budget model of charging for ancillaries, and introducing a basic economy class to keep cost-conscious travellers from switching. However, many low-cost carriers have become victims of the competition – the reason why Mr O’Leary named only one other carrier, EasyJet, as a probable survivor.

EasyJet, founded in 1995 and headquartered in London Luton, UK, is Ryanair’s closest rival which has grown and spread its wings across Europe. It too has made a number of acquisitions which include Swiss TEA-Basle and Go.
Elsewhere around the world, the vibes are not unfamiliar, New in the circuit is Air Canada’s interest in Sunwing and Cathay Pacific’s interest in Air Hong Kong Express, And where acquisitions and mergers are not on the plate, airlines are working to form alliances that are more than mere code-sharing. Qantas did it in 2013 with its tie-up with Emirates, and now Malaysia Airlines and Japan Airlines have applied for waiver of government restrictions to form an alliance that will enable easier connections between the two carriers.

It looks like size matters in the air.

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Hidden city fares – Is it fair game?

News update: courtesy BBC

Courtesy Getty Images

http://www.bbc.com/capital/story/20190226-the-travel-trick-that-airlines-hate

Hidden city fares: Do airlines have a case?

Courtesy Lufthansa

This is an interesting test case. Lufthansa is suing a man who bought a cheap fare to Oslo flying via Frankfurt, but intentionally missed the connecting flight at Frankfurt.

This “hidden city” scheme has been around for quite a while. What happens is that if you want to travel from A to B, it may be cheaper to book a ticket from A to C via B instead of directly from A to B. Such fares take into consideration the inconvenience of a stopover which results in a longer journey.

Or, in some cases, if you are travelling from B to C, it may cost less if you had bought a ticket from A to C via B, and then use only the second sector ticket. This is particularly true of tickets bought across the border advantaged by a favourable currency exchange rate. However, airlines may now be restricting certain fares by nationality and may require proof of origin of travel if in doubt.

Then, it is no secret that a return fare costs much less than a one-way fare, and some travellers have taken advantage of it.

And why not? One may argue that the consumer, having paid for the fare, has the right to decide if they want to use it or how to use it. But airlines consider intentionally skipping a leg an act of cheating or the failure to comply with the contractual obligations governing the use of the fare. It may all boil down to the fine print and the terms and conditions of carriage. Some airlines do remind their customers that there may be a no-show penalty, which makes it obligatory for travellers to at least inform the airlines if they were not flying as booked.

The reality is that suing a customer may be costly and tedious, so travellers may not be averse to taking the risk even if it means breaking the rule. The Lufthansa case is meant to be more than just seeking compensation for an alleged loss of revenue to the carrier; if the airline succeeded in convincing the court, it will send a signal to travellers that the risk is real.

Proving “intent” may be the crux of the issue. Still you wonder – if it’s caveat emptor for the buyer, equally it’s up to the seller to plug the loop holes, short of taking every suspected case to court.

Airbus A380: Big is not necessarily beautiful

Courtesy Airbus

BIG is not necessarily beautiful. Now that Qantas has cancelled its order for eight Airbus A380 superjumbo jets while Emirates, the largest operator of the double-decker jet, is also considering switching some orders to the smaller A350, the future of the world’s biggest aircraft hangs in the balance.

A Qantas spokesman said: “These aircraft have not been part of the airline’s fleet and network plans for some time.”

Clearly things are changing and the preference is trending towards a smaller but more fuel efficient aircraft.

The A380, which can carry as many 850 passengers, is supposed to cater to the rising demand for seats and at the same time relieve airport congestion. However, ten years after its inauguration, the industry is yet again shifting. It may seem the ideal solution moving more people at the same time. But as more airlines compete with non-stop flights, filling to capacity becomes increasingly challenging.

Qatar Airways Group CEO Akbar Al Baker said: “As an aircraft, it is very well suited for routes that require high capacity. We have successfully deployed it in markets where we see this large volume of passengers and operate to slot-restricted airports.” However, he was of the opinion that “this aircraft is very heavy (and) has very high fuel consumption.”

Besides, its size does not allow the flexibility to use it on other less populated routes which are dependent on seasonal demands.

Qatar has 10 A380s in its fleet. Other major operators include Singapore Airlines (24), Lufthansa (14), Qantas (12) and British Airways (12). But none comes near Emirates’ fleet of 109 with more than 50 on order.

2018 Skytrax airline awards: Largely the same winners

Top airlines remain largely the same ones as last year’s.

Yet again we note how the top ten airlines remained largely the same ones as last year’s. If you’re good, you’re good, so it seems, and consistency won the day.

Singapore Airlines (SIA) which was second last year switched places with last year’s winner Qatar Airways. All Nippon Airways (ANA) and Emirates Airlines held steady in 3rd and 4th position. Cathay Pacific moved down one rung to 6th,, exchanging places with EVA Air. Lufthansa held its 7th position. Garuda Indonesian followed Hainan Airlines up one notch to 8th and 9th position respectively. The only new entrant to the list was Thai Airways International, which actually only moved up one rung from 11th last year, edging out Etihad Airways as it fell from 8th to 15th position.

So much for the excitement as the winning airlines, going by the result of the survey, continued to please their customers who found no reason to think otherwise of them.

Unlike some high-brow surveys whose results lean heavily on the premium class, Skytrax does readings across all classes.

Best for First Class was SIA followed by Etihad and Air France. This used to be the realm of Asian and Middle-East carriers, and let it not be a surprise to see two European carriers in the ranking. Lufthansa took 4th place.

Best for Business Class was Qatar followed by SIA and ANA. You would imagine that if an airline is good in First, it should not be too far off in Business. However, Air France was not placed in the top ten list and Lufthansa ranked 8th.

Best for Premium Economy was Air New Zealand followed by Qantas and SIA. It looks like the Pacific airlines are pretty good with this product. Lufthansa and Air France ranked 4th and 5th.. There was an absence of Middle-east carriers because they didn’t believe in such a class. Qatar chief CEO Akbar Al Baker had said: “We won’t roll out premium economy… I don’t think there is room for premium economy in our region, and of course in Qatar Airways. We give you a premium economy seat with an economy class price.” Sounds familiar if you recall the early days when SIA too expressed the same skepticism. However, Emirates has said its new Airbus A380 expected to be delivered in 2020 will feature premium economy.

Courtesy Star Alliance

Best for Economy Class was Thai Airways followed by SIA and Qatar. This category was dominated by Asian carriers with the exception of Lufthansa in 9th position.

Only these six airlines were placed in all three categories of First, Business and Economy (excluding premium Economy since not all airlines offer this sub-class): ANA, Cathay, Emirates, Lufthansa, Qatar and SIA. You can then rest comforted that whatever class you travel with these airlines, you will be treated without discrimination.

But is the Skytrax survey a good guide in choosing which carrier to fly with? Generally people can agree on makes a good airline. What matters when you travel with an airline? For the long haul, seat comfort is an important feature. Inflight entertainment, if you look for some distraction and are not otherwise doing something else or trying to catch up on shuteye. A good meal, if you are not one who will not eat airline food no matter what (unfortunately this is not featured in the Skytrax survey). Cabin cleanliness, of course, and that includes the condition of the washrooms. How often do you see the crew give it a clean-up and spraying some kind of deodorant to try and make it as pleasant as it possibly can be? Above all, the service provided by the cabin crew, to be treated in a friendly manner and with respect. Not forgetting service on the ground in the event that you may need assistance, as when your bag is damaged or has not arrived with you.

Perhaps the ranking for some of these more specific services may be of some help:

Best Economy seat (First and Business should be way better anyway): 1st Japan Airlines, 2nd SIA and 3rd Thai Airways.

Best cabin crew: 1st Garuda, 2nd SIA and 3rd ANA.

Best inflight entertainment: 1st Emirates, 2nd SIA and 3rd Qatar.

Cleanest cabin: 1st ANA, 2nd EVA and 3rd Asiana Airlines.

Best airport service: 1st EVA, 2nd ANA and 3rd Cathay.

But, of course, you can’t expect a single airline to be best in all categories, but you get a pretty good idea of where they all stand, perhaps with exceptions.

Much Ado About China’s Geography

Since the United States (USA) have recognized the one-China policy (following a resolution of the United Nations in the early 1970s that legitimized the sole representation of the People’s Republic of China), it would appear groundless, even against logic, that it should protest the Chinese demand for US carriers to reflect Taiwan as a Chinese territory (this applies also to the autonomous regions of Hong Kong and Macau) on their websites.

While many airlines including British Airways, Air France, Lufthansa and Singapore Airlines have reflected the change in their booking itnerfaces to comply with the ruling, US carriers – United Airlines, American Airlines and Delta Air Lines – have yet to agree, apparently at the urging of the Trump administration. But China is not budging while extending the deadline from May 25 to July 25, at the same time rejecting the US request to discuss the issue.

It may be said that there’s a fine line between politics and business, that it is difficult to separate the two. Yet it seems only expected that any company that wishes to engage in business with a country should respect its sovereignty. A way out – even if it means turning a blind eye – is to recognize the independence of business operations, that the decision of the airlines concerned is purely commercial.

So it is with Qantas, which has decided to comply with Beijing’s request after the initial resistance. As with the USA, the Australian government, while embracing the one-China policy, was critical of the Chinese ruling, but conceded that how Qantas structured its website was a matter for the company. Australian Foreign Minister Julie Bishop said: “Private companies should be free to conduct their usual business operations free from political pressure of governments.”

So, will US carriers comply or be prepared to stop flying to China?

Why would IAG be interested in acquiring Norwegian Air Shuttle?

Courtesy Norwegian Air Shuttle

The International Airlines Group (IAG)’s interest in acquiring a stake in Norwegian Air Shuttle reflects the rising threat of the budget long-haul. Norwegian is among the few budget carriers that have broken the barriers to take budget operations beyond the limits of the 4-hour convention.

The competition is felt especially on the trans-Atlantic routes, where Norwegian and WOW air have made waves and which in turn have spawned budget offshoots by European legacy airlines, among them Lufthansa’s Eurowings, Air France’s Joon and British Airways (BA)’s Level as well as caused some carriers on both sides of the pond to introduce basic economy fare on their flights.

In fact, IAG which owns BA, Iberia and Aer Lingus, already has a Spanish budget arm known as Vueling. Yet why would it be interested in acquiring Norwegian?

Let’s face it: A legacy airline’s budget offshoot is understandably never quite like an independent budget operator. Otherwise the like of Level should have no fear of the competition posed by the like of Norwegian. Unfortunately the influence of the parent airline, however unintended, may be hard to disguise, and this could be the hitch.

Apparently IAG had already acquired a minority 4.6% stake in Norwegian. And if IAG seeks to increase its interest in the budget long-haul carrier, it may be seen as an attempt to “normalize” the playing field by the rules of the big guys. It would be a dent in the competition, if not eliminating a threat, at least limiting its influence.