Big Mess at Ryanair

Courtesy Getty Images

The world’s biggest budget airline has found itself floundering in a big mess. An apaprent mistake in leave schedulign of pilots as it claimed has led the airline to cancel 2,100 flights over six weeks until November – 40 to 50 flights a day. That means inconveniencing some some 300,000 customers who would receive or had already received emails informing them of the cancellations.

Ryanair said it would arrange alternative flights or refund the fares. Under the European Passenger Rights legislation, passengers are entitled to compensation for flight cancellations. Ryanair estimates it will cost the carrier 20m euros (US$24m).

The unpredented slew of cancellations may also subject Ryanair to penalties imposed by the authorities. Italy’s competition regulator – Italian Competition and Market Authority – has started a probe into the matter, on whether the cancellations could have been prevented. It is hard to believe that Ryanair had nto anticipated the problem and, if found guilty, could be fined as much as 5m euros.

Ryanair chose to cancel flights first at its busiest airports so that it would be eassier to arrange alternative flights. But, of course, in the mess of events, this has a knock-on effect.

Ryanair chief Michael O’Leary denied the airline was experieicning a shortage of pilots, even as many as 140 of them have left to join new rival Norwegian Air Shuttle. Mr O’Leary insisted it was because the airline had “messed up” the rosters which left it without enough pilots to operate all the scheduled flights.

One thing for sure, Ryanair will certainly feel the heat of the competition brought on by Norwegian and other carriers such as EasyJet, if advanced bookings for October at 70 per cent comapred to September at 90 per cent are any indications.

Will this mess cause Ryanair any further loss of customers in the future? The airline has a dotted history of going from zero customer service to attempting improving that aspect in the face of rising competition. Much depends on how it handles the current crisis. In a price sensitive market, people’s memories tend to be short while most people are actually more forgiving than expected under the circumstances. The real threat for Ryanair remains the competition particularly if the rivals are seen to be more reliable.

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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.

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.

Standing room only on this flight

Those of us who go to the theatre often enough will be familair with the term “Standing Room Only” (SRO). But SRO on a flight?

Budget airline Viva Colombia has just that in mind. Its founder and CEO William Shaw told The Miami Herald: “There are people out there right now researching whether you can fly standing up. We’re very interested inanything that makes travel less expensive.” So, wey not? After all, he said, “Who cares if you don;t have an in-flight entertainment system for a one-hour flight? Or that you don;t get peanuts?”

This thought isn’t new. As far back as 2010, Ryanair flaoted the idea. (See Standing room only up in the air, July 23, 2010) Actually, instead of standing upright as in a bus, passengers will have “vertical seats” to leab against, complete with seatbelts and a small cushion to support the lopwer back – which is said to be good for people with back problems.

Ryanair chief Michael O’Leary was of the opinion that people flying very short hauls (say, up to two hours) wouldn’t mind standing all the way if the fare was that dirt cheap. Then he was thinking of fitting only the rear of the aircraft with vertical seats as a choice.

Vertical seats, otherwise known as saddle seats. Courtesy Airbus.

In fact Airbus put forth the concept in 2003 with the hope that it might be implemented by 2010. Now the South American carrier based in Medellin, Colombia, is reviving the idea. Guess what, the low-cost operator is partly owned by the founders of Ryanair.

Still, the question that hangs in the air is when and if it happens the regulators will approve the operations as safe-worthy.

Air France to “boost” performance with new low-cost carrier

Legacy airlines in Europe have long been feeling the pinch from low-cost carriers such as Ryanair and Easyjet. Now it looks like Norwegian Air Shuttle and WOW Air are pushing them to look farther before they lose more ground.
Lufthansa already offers a low-cost trans-Atlantic option from Europe to Las Vegas, Orlando, Miami and Seattle in the United States.

The International Airlines Group which owns British Airways, Iberia, Aer Lingusm and Vueling has just added another low-cost carrier – Level – to its stable. Level, based in Barcelona, will fly to Los Angeles and Oakland in California USA, Punta Cana in the Dominican Republic, and Buenos Aires in Argentina. Fares start at the familiar €99 reminiscent of the Norwegian and WOW Air’s promotions.

Courtesy Air France

Following in their footsteps is Air France, which announces the formation of a new subsidiary low-cost airline – Boost as its working name – planned to commence operations in winter. The airline will fly from the main hubs of the Air France/KLM group to destinations in Italy, Spain and Turkey initially, and then farther to destinations in Asia. Norwegian is already flying to Bangkok and will in October connect London with Singapore.

But Boost will be taking on full-service airlines as well, such as the Middle East carriers of Emirates Airlines, Etihad Airways and Qatar Airways which are already ruffling the feathers of the regional big birds of Singapore Airlines and Cathay Pacific.

The developments point to a gradual convergence of the low-cost and full-service product perceived value wise. It’s the antithetical success of low-cost carriers pushing to bridge the gulf and the failure of legacy airlines not being able to maintain if not increase the differentiation. It looks like the European tug-of-war is pulling the legacy airlines towards the centre line.

British Airways is becoming more “budget” than Ryanair

Courtesy Getty Images

NOT too long ago, British Airways (BA) did away with complimentary meals on short flights. (See No more free meals for BA short haul, Jan 16, 2017) Now, in yet another move to operate like a budget carrier, it is squeezing in more seats in its planes and that means less legroom.

According to some media reports, BA seat space will be the same as budget carrier Easyjet, even less than Ryanair.

A BA spokesman said the initiative would keep the fare low. But, of course, that’s to be expected. Air travellers will do better to recognise the new BA as belonging to the same category of low end operators when they are booking flights. And, sadly for BA, it can only mean it is facing tough competition.

BA’s partner airlines – Iberia, Vueling and Aer Lingus – under the International Airlines Group (IAG) are also offering the same seat space.

And, if you’re thinking of complaining about any aspect of BA’s service, think again. There is a £25 fee. If it makes you feel any better, that applies to Easyjet as well. Just don’t make the mistake of expecting more from a legacy-but-no-longer-full-service airline!

Budget and transatlantic competition heat up

Courtesy Vueling Airlines

Courtesy Vueling Airlines

International Airlines Group (IAG) announced plans to commence low-cost transatlantic flights from Barcelona to the United States by budget carrier Vueling. IAG also owns British Airways (BA), Iberia and Aer Lingus.

Legacy airlines (and airline groups) are increasingly recognizing the competition posed by budget carriers, and it is not new that some of them have set up budget operations such as Lufthansa’s Eurowings, Qantas’ Jetstar, and Singapore Airlines’ Scoot. In the US, the Big Three airlines of American, United and Delta are introducing no-frills fares on normal services to compete with low-cost counterparts such as Southwest, JetBlue and Frontier.

Where the competition is most felt is the transatlantic sector, which has seen a surge of cheap fares offered by operators such as Norwegian Air Shuttle and Iceland’s WOW Air, discomforting both US and European counterparts.

WOW Air is well-known for its $99 fare for travel between the US and Europe – destinations such as Copenhagen, Stockholm, Edinburgh and Bristol – with a free stopover in Reykjavik. It has begun enticing US Westcoasters with fares as low as $65.

Norwegian also offers $99 fares with promotional offers as low as $69.

Budget doyen Ryanair has long announced its ambition to also ply the transatlantic routes.

While home-based US airlines are protesting the entry of Norwegian, European airlines are taking a more active approach to compete head-on. IAG will be able to advantage Vueling with the network of partner airlines. Eurowings is already operating nonstop from Cologne and Bonn to the US, and it has plans to add more destinations.

In a price-sensitive market for as long as the current situation holds, budget carriers may be driving the trend. Legacy airlines will be challenged to make their advertised difference in product worth the additional dollars in fares, at the same time keeping their budget rivals at bay in a two-prong approach to the competition.