2019 Skytrax World Airline Awards: Who are the real winners?

It’s that time of the year when the airline industry is abuzz with the Skytrax World Airline Awards announced recently at the Paris Air Show.

There are surveys and there are surveys, if you know what I mean. Skytrax, which launched its survey back in 1999 (according to its website) is generally viewed with some regard. It is said that more than 21 million respondents participated in the 2019 survey.

But what can we read of the results?

Which is the real winner: Qatar Airways or Singapore Airlines?

Qatar Airways switched places with last year winner Singapore Airlines (SIA) to be the world’s best airline.

As far back as 2010 until now, the two airlines have been ranked one behind the other in the top three spots, except in 2012 when Asiana came in second place between Qatar the winner and SIA in third position. In the ten year period, SIA came behind Qatar in eight years, except in 2010 when SIA was second and Qatar third, and last year when the Singapore carrier became the world’s best ahead of Qatar in second placing.

It looks like a tight race between Qatar and SIA for the top spot, and going by the survey results, Qatar has outranked SIA. It has become the first airline to have won the award five times, one more in the history of the awards.

But SIA is still ranked ahead of Qatar for first class and economy class.

In the first class category, Qatar is not even a close second to SIA in first placing but fifth behind Lufthansa, Air France and Etihad as well

In the economy class category, Japan Airlines is tops followed by SIA and Qatar in second and third placing respectively.

Besides SIA has the best premium economy in Asia, second only to Virgin Atlantic worldwide. But,of course, Qatar does not offer that class of travel.

Additionally SIA tops for cabin crew, and Qatar is farther down the list in 9th position.

But Qatar wins for business class, followed by ANA and SIA in second and third placing respectively. So it seems there is heavier weightage for this segment which has become probably the fiercest battleground for the airlines. First class included, it also suggests the halo effect of the premium product, but it is the business class that is the primary focus in today’s business.

It also attests to the impact of the recency factor. Qatar obviously impresses with its cubicle-like Qsuite that comes with its own door to provide maximum privacy. Quad configurations allow businessmen to engage in conference as if they were in a meeting room and families to share their own private space. And there is a double bed option.

Which brings up the importance of having to continually innovate and upgrade the product to stay ahead in the race.

The top ten listing: Consistency equals excellence

The ranking does not shift much from year to year. Besides Qatar and SIA, there are some familiar names: All Nippon Airways (3rd this year), Cathay Pacific (4th), Emirates (5th), EVA Air (6th) and Lufthansa (9th). So there is not much of a big deal as airlines switch places so long as they remain in the premier list.

Hainan Airlines (7th) is making good progress, moving up one notch every year since 2017. Qantas (8th) is less consistent, moving in and out of the top ten list, Thai Airways retained its 10th spot for a second year.

It is no surprise that the list continues to be dominated by Asian carriers which are generally reputed for service. You only need to look at the winners for best cabin crew: Besides SIA, the list is made up of Garuda Indonesia, ANA, Thai Airways, EVA Air, Cathay Pacific, Hainan Airlines, Japan Airlines and China Airlines. With the exception of Qatar, no other airline outside Asia is listed.

If you to look to find out how the United States carriers are performing, scroll down the extended list of the 100 best and you will see JetBlue Airways (40th), Delta Air Lines (41st), Southwest Airlines (47th), Alaska Airlines (54th), United Airlines (68th) and American Airlines (74th).

Home and regional rivalry

Rivalry between major home airlines or among competing regional carriers is often closely watched.

Air Canada, placed 31st ahead of rival WestJet at 55th can boast it is the best in North America. That’s how you can work the survey results to your advantage.

ANA (3rd) has consistently outdone arch rival JAL (11th). In fact, ANA has been the favoured airline in the past decade till now. It has Japan’s best airline staff and best cabin crew. Across Asia, it provides the best business class. Internationally, it provides the best airport services and business class onboard catering.

Asiana (28th) is favoured over Korean Air (35th ).

The big three Gulf carriers are ranked Qatar first, followed by Emirates (5th) and Etihad (29th).

Among the European carriers, Lufthansa (9th) leads the field, followed by Swiss International Air Lines (13th), Austrian Airlines (15th), KLM (18th), British Airways (19th), Virgin Atlantic (21st), Aeroflot (22nd), Air France (23rd), Iberia (26th) and Finnair (32nd).

What about low-cost carriers?

Worthy of note is how some budget carriers are ranked not far behind legacy airlines. AirAsia (20th) is best among cohorts. EasyJet (37th) and Norwegian Air Shuttle (39th) are not far behind the big guys in Europe. Among US carriers, Southwest Airlines (47th) is third after JetBlue (40th) and Delta (41st).

Also, pedigree parents do not necessarily produce top-ranked offshoots. Placed farther down the list are SIA’s subsidiary Scoot (64th) and the two Jetstar subsidiaries of Qantas – Jetstar Airways (53rd) and Jetstar Asia (81st). So too may be said of so-called regional arms. Cathay Pacific’s Cathay Dragon is ranked 33rd, but SIA’s SilkAir is way down at 62nd.

Pioneer of the modern budget model Ryanair is ranked 59th.

Down the slippery road of decline: Aisana Airlines and Etihad Airways

If it is difficult to stay at the top, it is easy to slip down the slippery road of decline. Asiana and Etihad are two examples.

Asiana was ranked world’s best airline in 2010 and became a familiar name in the top ten list up to 2014, after which its ranking kept falling: 11th (2015), 16th (2016), 20th (2017), 24th (2018) and 28th (2019). Its erstwhile glory has been whittled down to being just best cabin crew in South Korea.

Etihad did reasonably well for eight years until 2018 when it was ranked 15th, and a year later suffered a dramatic decline to the 29th spot. That, despite beating Qatar to be this year’s best first class in the Middle East.

As I stated at the onset that there are surveys and there are surveys. Some are not specifically targeted , whether its interest is business or leisure for example. There is always an element of subjectivity and bias in the composition and weightage, and this renders no one reading as being definitive. At best, we can read across several creditable surveys to know with some conviction how the airlines really measure against each other.

Read also:

https://www.todayonline.com/commentary/can-singapore-airlines-overtake-qatar-worlds-best-airline

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New MAX issues will keep jet on the ground

Courtesy Getty Images

Just as you think all that’s left remaining to be said of the Boeing 737 MAX 8 saga is waiting for the Federal Aviation Administration Authority of the United States (FAA) to announce the lifting of its grounding, new developments – whether directly or indirectly related – continue to stand in its way, making the delicate job of regaining customer’s confidence even more challenging.

Even as one is willing to put past issues aside – issues such as poor oversight and shoddy work at the Boeing plant, FAA’s laxity at certification, tardy reaction to warnings by pilots of potential issues with the MAX – adding new ones can only shake that confidence. What other beasts are out there to be discovered?

Latest, Boeing is warning airlines about potential flaws on the wings of some 737 jets including the MAX. More than 300 aircraft across the world may be affected, said to be the result of “improper manufacturing process” leading potentially to premature failure or cracks of the faulty parts. The aircraft manufacturer’s transparency is to be appreciated, but coming after two fatal crashes of the Max jet with a definitive conclusion still pending is unfortunately ill-timed. Of course, it is good to know that Boeing is committed to giving attention to the potential problem top priority.

Going forward, Boeing may have fixed the software glitch of the MAX, but airlines and regulators are still grappling with the issue of pilot training. Boeing, FAA and US carriers such as American Airlines, Southwest Airlines and United Airlines all of which are big Max customers do not think simulator training is necessary, believing training on computers or tablets is sufficient for seasoned pilots.

It recalls how Boeing had said pilots familiar with the B737 aircraft would know what to do and that there were procedures in place to handle the kind of malfunction that some pilots had reported to have encountered. Ethiopian authorities had insisted that the pilots of the ill-fated Ethiopian Airlines flight had followed the procedures but were unable to control the aircraft.

Boeing too had said it would make an already safe aircraft “safer”, so to the lay traveller, why not be “doubly” sure?

Canada is one country that had said the US proposal of computer-based training which some pilots had received in the transition from the older B737 jet to the Max was not good enough. According to a Reuters report, Canadian Transport Minister Marc Garneau said: “It’s not going to be a question of pulling out an iPad and spending an hour on it. Simulators are the very best way, from a training point of view, to go over exactly what could happen in a real way and to react properly to it.”

Airlines favouring simulator training include Ryanair and Ethiopian Airlines.

According to some industry sources, part of the MAX’s appeal was that it did not require costly simulator training. Again, the old question surfaces, if at all it is pertinent, what price safety?

It looks like the MAX will have to stay on the ground longer than expected.

Is the Boeing Max ready to fly?

Courtesy Boeing

Airlines looking forward to fly their fleet of Boeing B737 Max 8 aircraft have just got their planned schedules jiggered up by the Federal Aviation Administration (FAA)’s announcement that it may take up to a year before the jet is cleared again for commercial flights.

According to the BBC, FAA chief Daniel Elwell said: “If it takes a year to find everything we need to give us the confidence to lift the (grounding) order so be it.”

It may be read that underlying this is the FAA’s understanding that time is needed to regain the world’s trust – in both the aircraft and the FAA as regulator. While Boeing seems ready to sign off the improved jet, saying it has finished updating the pertinent flight-control software, FAA in an apparent redeeming move following censure of its lax oversight is assuming control as the final authority to certify the jet’s safety.

According to Bloomberg, Mr Elwell added at a meeting with representation from across the globe, “If there is a crisis in confidence, we hope this will help to show the world that the world still talks together about aviation safety issues.”

In Boeing’s favour, some airlines have voiced their support of the Max. Understandably so, particularly if the airline owns a sizeable fleet of the jet. American Airlines (AA) for one is confident of an “absolute fix” but CEO Doug Parker was also quick to add, “But…it’s not for us to decide whether or not the aircraft flies. It needs to be safe for everyone.” The airline, which has a fleet of 24 Max jets, has cancelled thousands of flights and has now cancelled Max schedules through mid-August.

Another airline which has pledged its commitment to Boeing is Singapore Airlines (SIA). The airline is pledging its commitment to purchase 39 Dreamliner jets and its re-commitment for a previous order of 30 planes. Although this is not related to the Max aircraft of which its subsidiary SilkAir has six of them, it gives Boeing a boost of confidence after reports of shoddy production and poor oversight at the Boeing plant in North Charleston surfaced, and following grounding of some Dreamliner jets because of problems with the Rolls Royce Trent engine fitted to the aircraft.

Read also:

https://www.todayonline.com/commentary/grounding-boeing-max-and-dreamliner-planes-how-can-singapores-airlines-reassure-customers

It’s good to have friends, indeed. But while it’s not yet known if airlines such as AA and SIA have sought or will seek compensation from Boeing, others which have made known their intention include Norwegian Air Shuttle, Ryanair and the big three Chinese carriers of Air China, China Eastern Airlines and China Southern Airlines. A strongly worded report from the Chinese Global Times newspaper said: “We must use punishment and tell the Americans their practice of using concealment and fraud to extract benefits from others, while benefiting themselves, is unfair.”

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.

Etihad Airways goes green: Working towards zero single-use plastic

Courtesy Etihad Airways

Etihad Airways marked Earth Day (22 April) by becoming the first Middle East airline to operate a flight without any single-use plastic item on board. This is commendable considering that the carrier uses some 27 million single-use plastic coffee cup lids every year. So on the flight from Abu Dhabi to Brisbane, passengers got to eat their coffee cups as well.

Etihad says it is committed to improving its environmental policies beyond the Earth Day flight. The carrier hopes to be able to reduce usage of single-use plastic by 80 per cent by the end of 2022. No fewer than 95 such items will be replaced.

Tony Douglas, Group chief executive officer, said “as a leading airline, it’s our responsibility to act on this, to challenge industry standards and work with suppliers who provide lower impact alternatives.”

H.E. Mohamed Mubarak Fadhel Al Mazriuei, Group chairman, said: “This step is an extension of Etihad’s pioneering environmental efforts. Inaugurating 2019 with the locally sourced biofuel flight and the operation of the longest single-use plastic free flight are testament to our commitment to leading effective change towards sustainability.”

Now that should set an example for other airlines to emulate if they are serious about saving the environment. In fact, some airlines are already doing their part.

Portuguese charter airline Hi Fly is already flying plastic-free since December.

Alaska Airlines, which in 2011 declared a policy to go green when it launched 75 commercial flights using biofuel and replaced traditional holiday card with e-cards, has ceased using plastic straws.

And Ryanair has pledged to scrap single-use plastic by 2023.

We wait to hear what other airlines will do. Action speaks louder than words.

Never say never: Cathay Pacific enters budget market

Courtesy AFP

In 2015, Cathay Pacific together with Hong Kong Airlines opposed Qantas’ application to set up Jetstar Hong Kong Airways – co-owned with China Eastern Airlines and billionaire Stanley Ho’s Shun Tak Holdings Ltd. Cathay was particularly vehement about there being no room or need for budget travel in Hong Kong. The authorities were convinced and Jetstar HKG never took off.

Today, Cathay announced its decision to buy Hong Kong’s only budget carrier, Hong Kong Express Airways, for HK$4.93 billion (US$628 million). This expands Cathay’s stable of airlines to three, which includes regional carrier Cathay Dragon. It will boost Cathay’s market share to 50 per cent in Hong Kong.

A Cathay spokesperson said: “We intend to continue to operate Hong Kong Express as a stand-alone airline using the low-cost carrier business model.”

Now what caused Cathay to change its mind?

Cathay is not alone in facing stiff competition in the long-haul and premium market, from not only neighbouring rivals such as Singapore Airlines (SIA) but also Middle east carriers such as Dubai Airlines. Besides, Chinese carriers from mainland China are also fast expanding, flying direct and more services to Europe and North America.

At the same time, Cathay can no longer ignore the encroachment by the flourish of budget carriers in the region, particularly those operating out of mainland China. The Hong Kong authorities too may begin to realise how all this may be reducing Hong Kong International Airport’s hub status, particularly when limited options are resulting in Hong Kong being bypassed.

It could be a matter of timing. In 2017 Cathay reported its first annual net loss in eight years and introduced a three-year transformation program. It was later in that same year that Cathay CEO Rupert Hogg affirmed that Cathay had no plans to start a low-cost carrier. But the debt-ridden HNA Group which owns Hong Kong Express offers a timely opportunity not to be missed even as Cathay posted its first full year profit in 2018 of US$299 million.

The business climate can change fairly quickly, but unfortunately airlines may be slow in catching up with the changes because of the huge investment and lead time to implement many of the changes, apart from a host of other reasons, some of which could be largely circumstantial.

Many legacy airlines pooh-poohed the threat of budget airlines to their traditional market when it was first mooted, and as many of the carriers fell by the wayside before they could assert any impact.

SIA for one came on the scene later than most others, setting up Tigerair jointly with Ryanair, and then Scoot. Its strategy has changed yet again with the merger of Tigerair and Scoot, and now SIA is in the process of assimilating SilkAir into the parent airline.

One wonders if this is the path that Cathay may take should Hong Kong Express and Cathay Dragon find their services overlap as they expand.

Whatever the reading, it would be discreet to never say never. The question is always if so, when?

Joon’s failure re-validates old lessons

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In just a year after its launch, Air France is shutting down its low-cost subsidiary airline Joon which promised to carve out a new niche market among millennials. The reason, said Air France, is because the brand had been “difficult to understand from the outset.”

Strange as that may sound, it shows how a major player like Air France itself has failed to understand the market forces at play. Or, an ill-timed miscalculation of the market trend.

A little history is appropriate here. When budget travel first emerged on the scene, legacy airlines were inclined to dismiss the upstarts as unlikely competitors, believing their markets to be markedly different. The established carriers, so to speak, were not interested in the budget market and were quite happy to let low-cost operators be.

The failure of many an ambitious budget carrier supported that view, particularly at a time when the volatile fuel price moved like a yo-yo but largely trending upwards. That hit the budget carriers hard since fuel is a significant component of their cost, and cost is all that budget travel is about.

But some like Ryanair and easyJet survived the storm and made good progress. That was when the big boys decided they too wanted in on a flourishing market. A number of them set up their own budget arms, such as United Airlines’ Ted and Delta Air Lines’ Song. They didn’t last long.

As the line of competition began to blur with low-cost carriers soon attracting business away from the traditional sources, more legacy airlines carried the battle cry into the fray. Among them, British Airways which started Go, which it later sold; Singapore Airlines (SIA) which went into partnership with Ryanair to start Tigerair; and Qantas which set up Jetstar.

The budget threat heightened with low-cost carriers venturing into the long-haul. There were casualties along the way, a notable one being Oasis Airlines which flew from Hong Kong to London as well as Vancouver. Hailed as a trail blazer for good service on a shoe-string budget, it could not survive the barrage of rising costs.

But that didn’t stop others to boldly go into a domain dominated by full-service airlines, a move which many observers thought was foolhardy. Today, low-cost carriers such as Norwegian Air Shuttles, Wow! Air and AirAsia continue to rattle the hitherto safe market of the Goliaths.

It seems independent low-cost carriers are more successful than budget offshoots of legacy airlines with few exceptions such as Jetstar. Why so is this? The failure of Joon only serves to revalidate the lessons of past failures.

The overall market has shifted from one distinct full-service vs budget scenario to a common market for all airlines. For many travellers, it is a conscious choice between legacy and budget carriers, the consideration not so much in name as in value for what it costs. For many travellers, the comfort and convenience of full-service still outweigh the savings of flying budget, particularly for the long haul. But for a growing number too, despite the higher risk of flight disruptions by low-cost carriers, why not?

Studies have shown that millennials have different priorities, and the budget model of paying for only what you want may have some appeal as it means control over how you spend your money. The new and younger travellers are more adventurous and not averse to taking chances.

The shift in the market is becoming more evident in how legacy airlines are in fact no longer completely full-service as they used to be, adopting increasingly the budget pricing model in charging for ancillary services what used to be part of the package deal, such as seat selection, priority boarding, and checked baggage.

It is not a given that a successful legacy airline will be as successful in operating a budget subsidiary. On the contrary, it faces the challenge of separating the two entities to operate them on their own terms. Too often this may be compromised with the parent airline subsidising the struggling offshoot. At the same time, the parent’s product may be diluted.

Much as the parent airline likes to maintain its distance and many of them have declared that their budget offshoots are running on their own steam, the reality is far from being so. Their influence is inevitable, however indirect and unintended. That may lead to tweaking the low-cost model to be less budget and more a copy of the old block, resulting in higher costs.

This is also not helped by the expectations of the customer when the budget offshoot carries the association with the reputable parent’s brand name. For example, while SIA has earned the reputation of being one of the world’s best airline, the same could not be said of Tigerair whose customers were sadly disappointed when the carrier ran into frequent bad patches.

What can be worse is when the budget subsidiary begins to compete with the parent company for the same low-end business.

American carriers however have found a solution to that: instead of operating separate budget offshoots to compete with independent low-cost carriers, they have introduced basic economy fares with similar terms to be accommodated within the same aircraft. The practice of offering different fare types even within the same class of travel is not new, but basic economy is aimed at keeping customers who may switch to budget carriers. And the model is gaining popularity across the industry.

Some observers may think Air France’s decision to shut down Joon premature as it has not allowed the latter time to grow. But not being clear about the product or the direction it is heading, it would be a hazy road ahead. It might as well nip the problem in the bud.