3 AUGUST 2009
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BAA was in a defiant mood as it announced last week losses more than tripled to £545m for the first six months saying that if it could not get the price it wants for Gatwick it might not sell. The airport operator put Gatwick on the market just before the Competition Commission said it had to. It is appealing against the measure. The huge loss is mostly technical and includes a revaluation of its pension fund, the write-off of Heathrow T2 (which will be replaced by Terminal East) and with fair value losses on financial instruments. Revenue actually increased by 12.8% to £1.1bn in the first half despite a 7.4% decline in passenger numbers to 55.2m. The net retail income rose by 7.3% from £4.39 to £4.72 per passenger. www.baa.com
El Al, the Israeli airline now privately owned, is to dip its feet into the low cost market in a novel way. Instead of launching a semi-independent budget airline, as per BA’s failed GO and bmi baby, the carrier is planning to offer just four rows at the back of its twice daily two-class Boeing 737 Rome – Tel Aviv service. A return price of $199 has been suggested. El All says that its Luton – Tel Aviv service is going well in spite of easyJet about to launch on the same route on 4 November and Jet2.com confirming that its service from Manchester will be doubled to twice weekly next spring. www.elal.com
BRITISH AIRWAYS is to cut back on its offerings to passengers, the airline making no official announcement but responding to leaks, presumably from disgruntled staff. However it emphasized that it is a full service carrier and will continue to offer complimentary food and drink to all customers. With the new catering arrangements breakfast will be served on all flights. There will be no further meals unless the flight is over 2hr 30min. In-flight tuck boxes go on flights under ten hours, pretzels are removed as is canapés, Jacobs Crackers and chocolates from First; removal of hot towels in Club Europe; removal of the long haul second service deli box, substituted with a sandwich offering; replacing the water bottle on the World Traveller tray to a small water cup. Rival bmi responded in the name of Peter Spencer, Managing Director: “At bmi, as a contrast, we will continue to offer our customers a choice of catering plus outstanding value fares and the best customer service in the industry. Every airline has to operate cost effectively but we don’t believe stripping away customer benefits is the right strategy.” www.ba.co.com www.flybmi.com
HELSINKI VANTAA AIRPORT will see changes on Wednesday (5 August) with a major relocation of airlines. Finnair, easily the dominant carrier, is to concentrate all traffic and customer services into T2 as will its oneworld partner airlines. The airline says it has invested E15m in the terminal expansion at T2, along with E24m on other modernizations. Over the coming months further improvements will be rolled out including the Via Lounge and Via Spa facilities with a customer service capacity of 400 people at any one time. Also on the move are Blue1 and SAS whose home for the future is now T1. http://www.helsinki-vantaa.fi
LUTON TOWN, of the Blue Star Premier League, is to be sponsored by easyJet whose headquarters are at Luton International Airport. The two-year deal includes the home and away kit with easyJet emblazoned most prominently. When Luton won the League Cup in 1988 beating Arsenal the airport was a major sponsor but this it the first time in its14-year history that the airline has officially supported a football club. This is without doubt the biggest deal in the history of the Football Conference. Controversially last season Luton Town were demoted from the Football League after draconian penalties levied against the club but not against the individuals concerned. www.lutontown.co.uk
ROLLS-ROYCE has reported a 9% increase in first-half pre-tax profits and expects to meet its full-year goals. Engines makers are seldom in line with general economic trends as they make deliveries on orders often made many years previously. Pre-tax profit rose to £445m (£410m a year ago). On an underlying basis sales rose 17% to £4.9bn. Also very satisfying is the order book which has grown to £57.5bn (£55.5bn at the end of 2008). www.rolls-royce.com
MARRIOTT’S Pinnacle Downtown Hotel in Vancouver, sited just steps away from the new Vancouver Convention Centre, has completed a $5.5m upgrade. All 434 guestrooms have been remodelled including a 32 inch flat screen TV which can be directly connected to a laptop. The 31-floor property has a fitness centre and indoor swimming pool. There are 14 meeting rooms and the Pinnacle Ballroom can seat up to 600. The hotel is pet friendly. www.marriott.co.uk
Mike Carrivick is Chief Executive of the Board of Airline Representatives in the UK (BAR UK). Mike is a total airline man having started his career at BEA in 1965, spent 20 years with Qantas followed by a short interlude with Brymon Airways, then Maersk and finally IATA before his appointment as Chief Executive of BAR UK in 2004. In this role he represents the interests of 93 scheduled airlines in their dealings with the Government, relevant departments and the Opposition in aero-political matters.
Never before has it been so vital that the aviation community work together to ensure that aviation in the UK remains a world leader and to safeguard the jobs of hundreds of thousands of industry staff.
Two key issues of vital concern right now are the planned redevelopment and expansion of Heathrow as well as the proposed increases to Air Passenger Duty (APD).
Heathrow needs to remain a global hub for the continued success of the UK economy and as an essential part of the UK’s national infrastructure. It is already operating beyond its design limits with runway capacity being used to the full (+99%) in addition to limits being reached on taxiway, manoeuvring and aircraft stand capacity. It is this daily scenario that causes aircraft to queue in the air (stacking) which not only increases fuel usage and emissions over the South East but causes late arrivals and departures. Everybody suffers.
The historical delays in approving additional capacity have already created the situation where the number of air routes are falling. The continuation of that trend is likely to see some airlines reduce or even close UK operations and fly from competing airports abroad.
It’s the possibility of a change of government that provides even more challenges as both the Conservatives and Liberal Democrats are publicly opposed to another runway.
The expansion is supported not just by the UK airlines but all 90 BAR UK foreign airlines as well. They acknowledge that any added capacity at Heathrow will have to comply with the environmental limits placed upon it and that fully-developed rail links at Heathrow are essential.
Why expand Heathrow instead of building a new airport including one possibly in the Thames Estuary?
Quite simply, it is Heathrow that the customers want. This is demonstrated by the relocation to Heathrow that occurred after the implementation of the Open Skies agreement for trans-Atlantic air travel and by a number of other airlines that previously also operated at Gatwick. Long-haul flights out of Stansted have tried and failed on a number of occasions.
As for the Thames Estuary, previous governments have investigated and found it to be impractical on safety, economic, environmental, commercial and social grounds. It would be a ‘dead duck’ and quite literally due to the masses of migrating birds in the area. If the airlines saw merit in an estuary airport they would support it. However they don’t because it is in the wrong place for much of the population that uses Heathrow and has failure built into its concepts.
No public funding is required for the new runway and new terminal at Heathrow which will be self-funded by the airport operator and its airline customers. This is another compelling reason why Heathrow expansion should be considered the prime option.
The airlines fully support integrated rail connectivity at Heathrow but the notion that High Speed Rail is a replacement for domestic flights is a complete fallacy. What’s more, it would require 200-300sq miles of land, billions of pounds of public finance and take 20 years to build.
Moving on to aviation taxation, airlines and their customers seem to be considered as easy prey through the continued increases to Air Passenger Duty (APD).
The Treasury’s initial objective for the planned increases is to collect an additional £520m per annum from APD, over and above the £2bn it is already receiving, demonstrating that APD has shifted from an environmental tax to a tax-grabbing opportunity. Airlines recognise that aviation must pay its environmental dues but the revenues raised by the current APD tariff already exceed them by over £100m per annum (DfT report: Aviation emissions costs assessment 2008, based on APD charges in 2006). Since then, APD has already been doubled.
In discussions about the new charges, the Treasury gives every impression of hearing the objections about APD without actually listening. This is a great pity as its own revenues could ultimately suffer as well as the economy of the UK.
This revised tax structure will result in increases of between 140% and 325% between January 2007 and October 2010 and will also result in some serious anomalies. In many cases the APD charges are likely to equate to the cost of one return ticket, with families particularly hard hit since there are no child discounts.
For visitors to the UK, be it tourists or visiting friends and relatives (VFR), these new APD levels will become a tariff barrier and many will be deterred from travelling to the UK altogether. Reduced numbers of visitors will affect hoteliers, sightseeing organisations and all other sectors of the inbound tourism market with significant effect on local communities. And what message does this send out about the UK as a leading tourism destination in the lead-up to the Olympic Games?
No other form of transport, all of which have an environmental impact, has this level of taxation placed upon them either in the UK or abroad.
So, what is BAR UK doing about these major industry issues?
BAR UK is in regular dialogue with the Department for Transport and other interested parties lobbying for added capacity at Heathrow. BAR UK is also an active member within two campaigning organisations, Future Heathrow and Flying Matters. (see Flying Matters in AERBT this week)
We have written to all MPs in both parties advocating a change of policy on APD and Heathrow expansion. We have also encouraged our members to write to their local MPs.
BAR UK has visited the Treasury officials on numerous occasions with regards to taxation, in our own right, as part of wider UK travel industry delegations and also as a co-opted member of the IATA team that visited from Geneva. Collectively we were instrumental in forcing the Treasury to abandon the proposed tax-per-plane scheme. Again, Treasury has heard but were they listening?
Previous successes, individually and collectively, include saving airlines huge costs on proposed border control processes overseas, the retention of the Gatwick Express and dropping the mandatory requirement of National ID Cards for airport workers. BAR UK will continue to campaign on a host of industry issues.
Our ultimate objective is to gain approval for Heathrow redevelopment and expansion plans and the abandonment of the new APD structure, for which we will continue to campaign.
Chief Executive, BAR UK
ONEWORLD and its partner airlines are to move to the new Terminal 1 at Barcelona's El Prat Airport on 9 September. Five of the alliance's carriers serve the airport – Iberia along with its affiliate Iberia Regional Air Nostrum, American Airlines, British Airways, Finnair and Royal Jordanian. Iberia's associate, Vueling, which is not part of oneworld, is also moving to Terminal 1 at the same time. Details of lounge arrangements for premium passengers will be announced nearer to the date of the move. With 101 boarding gates, 43 air bridges and more than 100 shops, bars and restaurants, the terminal will be able to handle 30m passengers a year, almost doubling the airport's capacity. www.oneworld.com
ETIHAD AIRWAYS will move its Heathrow operations from T3 to T4 on 30 September. The airline currently operates three daily flights to its hub at Abu Dhabi and also offers a single daily service from Manchester. The transfer of flights will see enhanced facilities for Etihad’s passengers at T4 which will include a new premium lounge as well as improved check-in areas, including a designated check-in zone for its premium customers. www.etihadairways.com
MONORAIL LINK between the South and North Terminals is to close for a major upgrade in September. Completion of a state of the art system should be by the end of July 2010. The trains, which date back to 1988, have completed more that two million miles in their 20-year history. Journey time is just two minutes. A bus service will offer a replacement and travellers should allow for more transit time between the railway station area and North Terminal. The cost of the refurbishment programme is put at £37m. The airside shuttle link in the South Terminal is not affected. www.gatwickairport.com
INDIA’S independent airlines, in an unprecedented move, are themselves threatening to go on strike for a single day on 18 August in protest at the lack of government relief for the ailing industry. International operations would not be effected. These privately run operations normally carry over 80% of India's air passengers. High operating costs and a fall in demand in the global economic slowdown have hit India's aviation industry. It is expected to lose US$2.1bn in 2009/10 from an average annual growth of more than 25% in the past few years, when the economy was booming. The biggest gripe is over fuel tax which is not uniform over the various states and currently is on average 26%. They want it reduced to 4%. The airlines are the key to the Indian economy, which like others all around the world, are struggling. Federation of Indian Airlines (FIA), which includes the country’s five largest independent carriers, is coordinating the campaign. www.fiaindia.in
NEWQUAY CORNWALL AIRPORT has again come under scrutiny after the publication of a report into its closure for three weeks just before Christmas. Whilst the review, by Cornwall County Council former Chief Executive, John Mills, is critical in some respects it has also called the changeover “a success”, comments that have been challenged. Speaking after a well attended press conference last Friday (31 July) to unveil the review, Mark Kaczmarek, Council Member for Housing, said: "The report could have been stronger – it would have been better to have someone with an aviation background carrying it out.” The changeover, from an RAF base to a civil operation, cost Cornwall taxpayers more than one million pounds and seriously disrupted airline operations. www.newquaycornwallairport.com
RYANAIR plans to stop passengers actually checking in baggage next year but says it will allow two or more pieces of carry-on luggage, as it steps up its drive to reduce airport handling costs. From the beginning of October Ryanair expects to abolish conventional check-in facilities forcing all passengers to do so before leaving home or office. There is an opinion that this discriminates against people who for one reason or another cannot use a computer. Assuming it is allowable by the airport the travellers will need to lag their hold baggage to the aircraft including the descent to the apron. According to Ryanair boss Michael O’Leary his anti-luggage policy is working, only 30% of Ryanair passengers placing baggage for the hold, compared with 80% two years ago. www.ryanair.com
In just three years time the London Olympics will be opened. The winning of the 30th Olympiad is probably the best thing that has happened to this country in at least the last decade. Whilst the cost is prodigious work is continuing at a pace. Think of East London, and the country, without the Olympics. No target, no future, no hope. Nothing to brighten us up. Yes it is costing a great deal but the guess is that if the money had been diverted elsewhere it would have either been frittered away or the project/scheme abandoned as a cost saving. London 2012 cannot be cancelled.
Winning the Olympics can be paralleled with Maggie Thatcher’s decision to develop the crumbling London docklands with the LDDC. The LDDC has an awe inspiring legacy. Hopefully the same will be for the Olympics.
Last week an important part of the transport infrastructure was completed with the inaugural (VIP) passenger run from St Pancras to Stratford International, the station at the heart of the Olympic complex. The extremely comfortable air conditioned 140mph Javelin train took just 6min 15sec for the journey. At its peak during the Olympic athletic events up to 12 trains per hour will serve the route, each one carrying just over 1,000 passengers.
Even before this official preview of the service travellers from Dover have been able to take advantage of a Javelin shadow operation now working and being well received by travellers from the south east. A full service will begin in December.
For some it has been something of a culture shock, actually crossing (under) the Thames to reach central London, their previous goal Waterloo, a world away. The scheduled train journey time from Dover Priory is likely to be 1hr 7min via the two Folkestone stations, Ashford and Ebbsfleet. Currently there is a single train in the morning from Dover to Waterloo taking a shade under two hours, the normal twice hourly service longer. Stations from Canterbury East to Margate will also be served direct from St Pancras.
Southeastern Trains, who run the operation, point out that another hidden benefit form the Javelin services is the connection at both St Pancras/Kings Cross and nearby Euston, to the north. For the first time travellers to and from Kent will have easy access without having to traipse across London
Stratford International has been designed as a dual purpose operation capable of taking both domestic services and Eurostar trains non-stop from the continent. Full passport and immigration and customs controls are being built in along the lines of the existing Ebbsfleet operation. Stratford to Gar du Nord in the heart of Paris could be as little as 2hr 5min, Brussels 1hr 45min. Amsterdam is expected to be linked to Eurostar by 2012.
Also built into the plan, and nearing completion with the track already laid, is a DLR operation which will run from the new Woolwich Arsenal station south of the river, past London City Airport (LCY), through Canning Town and Stratford Regional to the heart of the Olympic complex. July 2010 is the target date for the introduction of services using three-car equipment. London City to Stratford International will be just 15 minutes. The same journey by road from LCY is a difficult four miles of single carriageway through some of London’s most deprived areas.
Much improved, and with new trains arriving all the time, is the London Overground service from Stratford Regional through Hackney and connecting up with both the Victoria Line and First Capital Connect at Highbury & Islington and on to Richmond.
ODA (The Olympic Delivery Authority and not to be confused with LOCOG – London 2012 Organising Committee, responsible for actually putting on the games – they both share the same offices), responsible for the facilities, says that construction work is on time and on budget. 250,000 people have already registered their interest with LOCOG to be a 2012 volunteer. Over 6,000 schools and colleges have signed up for Get Set, the London 2012 education programme.
Early details of London 2012 ticketing strategy will be released in 2010, ahead of actual sales in 2011.
Viewing the site
Viewing of the Olympic Park, except for the privileged few (which does include local schoolchildren), is not easy at this stage, the construction having priority . By car it is possible to take the A12 south from its junction with the A406 – M11 extension and find a safe parking spot on what is high ground to the north of the site. At all times there is building work and scaffolding going up, and being taken down, and therefore it is not possible to note a specific watching point. By foot take the DLR to Pudding Mill Lane and walk along the Greenway. You will get a good perspective of the site. An alternative is Strafford Regional where the views are not so good but you can appreciate the whole magnitude of the operation. A local map is essential if you decide on this track.
The ODA will be opening up the Olympic Park to the public on the London Open House weekend 19-20 September. There will be free, organised bus tours and an exhibition featuring models of the venues and the opportunity to hear first-hand from people working on the project. Check the London 2012 website after 1 August for more details.
Editor in Chief
AIR FRANCE, LUFTHANSA AND SINGAPORE AIRLINES have in the last week all announced dramatic drops in their respective financial performance. AF/KLM and SIA reported for the quarter and LH for the half year, all to the end of June. Air France's operating loss stood at E244m, excluding the negative impact of fuel hedges of E252m. The adjusted operating loss was E434m against a profit E256m a year earlier. In the case of Lufthansa revenues dropped by 16% and operating profits for the first half from E677m to a breakeven result of E8m. Passenger traffic in the first six months was down by 7%, revenues had fallen by 12% and air freight traffic by 22%. Premium passenger traffic fell by 15%. Even Singapore Airlines managed to register its first quarterly deficit since 2003, a S$307.1m ($212.6m) loss that compared to a S$358.6m profit in the fiscal first quarter of 2008-09. www.airfrance.com www.lufthansa.com www.singaporeair.com
BRITISH AIRWAYS has had an awful three months until the end of June publishing an operating loss of £94m (2008: £35m profit) under very difficult market conditions. The figures are much in line with the other carriers noted above. Revenue crashed 16.8% with no visible signs of improvement. While traffic volumes are down considerably compared to last year, they have stabilised during the quarter and show some signs of improvement for the peak summer months. BA is vigorously cost cutting throughout the airline, aircraft are being delayed and a voluntary redundancy programme pursued. Catering is being cut back, see below. Capital expenditure will be reduced by 20% this year, from £725m to £580m. No mention in Willie Walsh’s quarterly revue of the London City – New York service which will compete with the airline's own Heathrow operation, or the well developed upgrade of First. www.ba.com
FLYING MATTERS, a national campaign for flying, has launched a newly redesigned website, alongside an internet advertising campaign. The movement, which represents a coalition of pro-flying organisations including business, trade unions, tourism, organisations, farmers in the developing world and the aviation industry, plans to make greater use of social media tools such as Twitter to contribute to the public debate on the economic and social benefits of aviation. Last week it placed adverts on leading political blogs and the websites of the Spectator and New Statesman magazines. Chairman is the Right Hon Brian Wilson, a former MP, who stood down at the last election after 18 years in Parliament. Between 1997 and 2005, he held five Ministerial posts, including Minister for Trade and Minister for Energy. www.flyingmatters.org.uk
HEATHROW’S PERSONAL RAPID TRANSIT (PRT) system reached a significant milestone last week as the system was officially handed over from construction to operational testing. PRT is a world first and is being trialled at Heathrow to make passenger journeys quicker and reduce congestion on airport roads. Operational testing will now begin on the system, ensuring that PRT is fully integrated into Heathrow’s infrastructure. The vehicles will operate from the Terminal 5 business car park and transport passengers to the main terminal building. The track can easily be seen as you approach on the road to T5. When the system is launched, passengers will board PRT vehicles at one of three stations and select their chosen destination using a touch screen. The programmed vehicle immediately takes them directly to their destination, at speeds up to 25 mph, without the need for any stops in between. The journey time from the Terminal 5 business car park to Terminal 5 will be around five minutes. http://www.atsltd.co.uk
BAA has submitted detailed plans for the Heathrow Airtrack rail link to the Secretary of State for Transport. The proposed new track will connect T5 to Waterloo, Guildford and Reading through Staines which will also benefit with Heathrow Express services direct to Paddington. Under the scheme it is hoped that the disused Eurostar platforms at Waterloo will become a major gateway for Heathrow. Once the Secretary of State has had an opportunity to consider the application, a decision will be made on whether a Public Inquiry should be held into the proposals. Even if it went to a hearing, work could start by the end of 2010. www.heathrowairport.com/airtrack
QATAR AIRWAYS is to increase its flights from Doha to France, Greece, Spain and Sweden by 40% over the next six months. Athens and Paris are to go twice daily, Madrid daily whilst Stockholm is increased from four flights per week to five. With a huge Greek community living and working in Australia, the additional Athens flights will help facilitate travel between the two countries, via Qatar. Stockholm will see its first frequency increase since flights to the Swedish capital were launched in November 2007. The Qatar Airways fleet is currently 69 aircraft with new planes being added every month. www.qatarairways.com
SHANGRI-LA’S Villingili Resort and Spa (Maldives), has officially opened and welcomed its first guests (see Shangri-La Maldives in archive). Among the 142 spacious stand-alone, luxury villas, the resort boasts 16 tropical tree house villas – a first in the Maldives – perched three metres above the ground, complete with elevated infinity pools overlooking the sea and the island’s lagoons. The resort is also the first in the Maldives to offer nature trails both above and below water, for divers. More adventurous visitors can try a 17-kilometre cycle route that links the adjoining archipelagos . From the neighbouring island of Gan, a former RAF base, there are scheduled services to Male and international connections. www.shangri-la.com
Seb Coe was full of himself last Monday when he announced over the public address system on the inaugural Javelin service from St Pancras to Stratford International.
"First of all I would like to give you the good news," he said. "I am not driving this train."
"And the bad news. Daly Thompson is!"
It was that sort of a day.