COMMENT: Jim French - Has your time come?

If very well founded rumours are correct, later this week Flybe will finally announce plans for a London Stock Market floatation.  It has been a long time coming.

Flybe is based at Exeter Airport, a Second World War RAF base and a grim 1970’s style operation now running at just 800,000 passengers a year.  Perhaps a fairly quiet backwater is the ideal location to build up what is today the largest regional airline in Europe and Britain’s biggest domestic carrier.   

Back in September the airline announced profits of £6.8m for the year to March (compared to £12.8m for the previous 12 months), a splendid effort during very difficult times.  Whilst the ash problems and its after-effects will impinge on the 2010/2011 trading, clearly the board is sufficiently satisfied with the current trading and prospects to consider the launch, said to raise £200m.  Over the last several years Flybe has nearly floated but each time outside events beyond its control have meant an aborted “take off”. 

Flybe has announced plans for a major aircraft acquisition and made noises regarding a serious expansion in Europe.

The history of Flybe is turbulent and an interesting combination of Blackburn and Jersey interests.  In the 1970s steel magnate the late Jack Walker created Spacegrand, a small charter airline, essentially to serve as his transport between Lancashire and the Channel Island tax haven.  He also built Blackburn Rovers into one of the leading football clubs in the country.

In 1983 Spacegrand acquired Jersey European Airlines (JEA) which became British European in 2000 and subsequently Flybe.  The Walker family interests are the largest shareholder to this day.

Jim French, Chief Executive, (57 and now a CBE) joined Flybe in 1991 after an aviation career that included long spells at Caledonian Airways and Air UK.  A native of Duns he shares the same passion for motoring as another product of the Scottish farming town, the late Jim Clark.  

French will probably admit that one of his better decisions was to dump a fleet of 50-seat Canadair passenger jets in 1995 for 70-seat Bombardier turboprops.  Whilst a BAe 146 enthusiast to the extent of ordering the doomed Avro RJX, he was quick to realise the potential of Embraer’s E series aircraft, becoming the first to commit to the 115-seat EMB 195.

A fine relationship with British Airways resulted in another very successful and far-sighted move.  BA acquired for £40m 15% of Flybe, the Exeter airline taking over the remnants of City Flyer Express and British Regional Airlines which the national carrier had purchased in a rash moment of expansion.  Combining routes and different staff attitudes was accomplished virtually seamlessly, a real achievement. 

On a different front one of the biggest criticisms of the UK airline industry over the last period has been a lack of leadership with APD and its appliance, a classic example of Government spotting a cash cow.  It is unlikely that Lord Marshal and Sir Michael Bishop in their time would have stood still and let it happen.  Downing Street would have been visited.

Let’s assume that Flybe gets its well deserved floatation under way.  Emirates President Tim Clarke spoke up heartily last week at World Travel Market (WTM) focusing on the dangers of a Heathrow demise.  One of the leaders of the airline business worldwide he received very little coverage.  What is needed is someone in the UK to beat the drum for the air travel industry.

Jim French your time maybe cometh.

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Almaty expansion

Air Astana, 49% owned by BAe Systems and flag carrier of the Republic of Kazakhstan, is launching a series of new routes from Almaty, Astana and Aktau to destinations in Russia, Tajikistan, Uzbekistan and Turkey during November and December.

The new services from Almaty include St Petersburg (twice weekly from 2 December); Dushanbe, capital of Tajikistan (three times weekly from 21 November) and Tashkent, capital of Uzbekistan (three times weekly from 2 December).  Twice weekly services from Astana, capital of Kazakhstan to Yekaterinburg in southern Russia will commence on 8 December.  A new once a week service from Aktau in western Kazakhstan to Istanbul will commence on 28 November.

The plan is for the routes to be flown by new Embraer 190 aircraft due in the Spring.  In the meantime the services with be operated by Airbus A320 family aircraft. www.airastana.com

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BHX stays BHX

Birmingham Airport is reverting to its original name, dropping “International” from the title.  AERBT has always called it Birmingham Airport and in fact it was once named Elmdon.  Heathrow is Heathrow (OK RAF Heath Row for a very short time) and Gatwick seems to have disposed of the ‘London’ moniker as well.  East Midlands Airport has quietly noted its allegiance adding Derby and Leicester, those cities joining the Nottingham name it took several years back.  In both cases the three letter codes remain the same, BHX and EMA respectively.

In the spring of next year the airport will unveil a £13m redevelopment programme linking the two current terminals as one, offering new shops and restaurants, and offering an increased security search area. 

CEO Paul Kehoe explained the reasoning behind the name change at WTM.  He admitted that the last two years had been difficult for Birmingham, the airport failing to meet its targets.  “There are around 8m people living within an hour’s drive of the airport but less than 40% of this demand uses Birmingham; we are determined to increase this figure over the next few years.  We want people to think about their journey in a new way, and not to be bound by old habits.” www.birminghamairport.co.uk

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Cargo cartel broken

Air France has topped a list of 11 airlines fined by the EU for cargo price fixing.  Others involved include Air Canada, British Airways, Cargolux, Cathay Pacific, Japan Airlines, KLM, LAN Chile, Martinair, Qantas, SAS and Singapore Airlines.  The decision leaves the carriers vulnerable to major compensation claims .

The EU Competition Commission said the cartel was “deplorable” and fined the companies €799m (£688.4m) in total, following a four-year investigation. 

Lufthansa, which blew the whistle on the secret deals, was found guilty of price fixing but was not given a fine.  BA said that provision had been made for a possible fine in 2006. http://ec.europa.eu/competition/index_en.html

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First to Las Vegas

British Airways is to introduce its First service onto the Heathrow – Las Vegas route from the start of the summer season 2011.

A four-class B747 offering BA’s First cabin will replace the three-class Boeing 777 that has been operating the service since October 2009.  The new aircraft will offer an extra 124 seats in all, including the 14 seats in First.

BA Head of Marketing and Sales Richard Tams said: “Our direct service from Heathrow to Las Vegas has been one of our most successful launches in recent years.  It is one of the star performing routes on the BA network and such a winner with our customers that we are increasing capacity by 18% from next summer and offering that extra touch of luxury."  Virgin Atlantic also offers Las Vegas, from both London and Manchester. www.ba.com

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London City French Christmas specials

CityJet, a division of Air France, will be offering flights during the festive period to Brive in the Dordogne and Deauville, Normandy.  Additionally the new route to Florence, due to start on 10 January will operate with a limited service from 22 December 2010.

Says Christine Ourmières, newly appointed CEO of CityJet: “Demand for the newly launched routes to Brive and Deauville has been very positive.  As a result we’re happy to announce these extra services over the Christmas period and to give our customers flying to Florence an early Christmas present in the form of a very competitive price promotion.  Passengers can take advantage of CityJet’s convenient schedule out of London City Airport and fit their festive plans around our services.  The popularity of these routes proves that there is a very strong demand for select leisure destinations from the City Airport catchment area.”

The flights to Brive and Florence will be by Avro RJ85 and to Deauville with the Fokker 50. www.cityjet.com

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Russian airline joins oneworld

S7 Airlines, Russia’s leading domestic carrier, has today (15 November) officially become a member of the oneworld alliance.  Its subsidiary Globus joined at the same time, as an affiliate member.

S7 and Globus between them serve 90 destinations and 28 countries.  They add 55 destinations in Russia and the Commonwealth of Independent States to the oneworld schedule, and nine countries, in Armenia, Azerbaijan, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan and Uzbekistan.  This has almost tripled the number of destinations served by oneworld in Russia, the CIS and other parts of East Europe to a total 84 destinations in 26 countries.

Currently seven of oneworld’s established airlines – British Airways, Cathay Pacific, Finnair, Iberia, Japan Airlines, Malev Hungarian Airlines and Royal Jordanian – serve Moscow, plus St Petersburg and Ekaterinburg in Russia.  British Airways has been supporting S7 through its 18-month alliance implementation project, as its oneworld sponsor airline. www.s7.ru/en

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ON TOUR: World Travel Market

WTM opening day reveals
cautious optimism of travel industry

World Travel Market (WTM), now well established at London’s recently extended Excel exhibition centre, opened last Monday with its usual fanfare and train problems.

The Dockland Light Railway (DLR) was keen to promote that there would be services every two minutes to Custom House (the traditional way into the show) or via Prince Regent, nicely re-built, but a very long walk to the press centre.

The trains did run pretty effectively for most of the four days.  What the DLR failed to publicise was that Custom House and Prince Regent do not have extended platforms yet and only two-coach trains can use the stations rather than the three units used on the rest of the system.  Next year we are promised three-car trains and a direct service to Stratford. 

Canning Town was very unpleasant at times due to overcrowding and yes a train did break down mid-morning on the first day. 

From the start on Monday WTM had a real buzz about it although an industry report revealed caution among top executives.  The survey found that it will struggle to return to pre-downturn demand levels and profitability until 2016.  Four out of ten executives see increased taxation as one of the biggest issues facing the industry over the next five years.

But for all their caution guests and exhibitors were at WTM 2010 in record numbers with 24,000 visitors supported by 17,000 exhibitor personnel and nearly 3,000 press.  The catalogue listed 5,121 exhibitors representing 187 countries.

Jeff Cacy, Managing Director of Global Airline Marketing Services at Boeing, opened the show and announced a Saudi Arabia order for eight Boeing 787 Dreamliners and 12 777-300 ERs with an option on another ten 777s.  The 787s maiden flight was on film for all to see. 

People go to the show to network; to make serious business enquiries; and to attend the many symposiums and press conferences on a whole range of travel related subjects.

Typical was a ‘Low Cost Carrier’ master class hosted by John Strickland on the Tuesday.

In what might be seen as a “classic” of his company in getting something for nothing Ryanair was not actually exhibiting at the show.  Ken O’Toole, Ryanair Director of New Route Development, said the airline has 22 new aircraft coming into service next year, 13 of which still have to be allocated to routes.  Rumours do exist of white tailed Ryanair ‘planes sitting at various airports. 

“We will engage with the local and regional governments to focus on the development of these facilities and increase inbound tourism to them,” he told a packed audience.  He quoted both Dublin and Stansted losing 25% and more of traffic due to high charges. 

“Airline Industry in Turnaround” was another seminar with air travel participants of the highest quality.

Colin Matthews, BAA CEO; Stephen Kavernagh, Aer Lingus Commercial Director; Paul Kehoe, Birmingham Airport Chief Executive; Sertac Haybat, CEO Pegasus Airlines and perhaps most interesting of all Tim Clark, President of Emirates, a regular at WTM.

The ash cloud crisis in May was discussed, highlighting the importance of air travel and its benefits.  “The ash cloud crisis brought a degree of balance to the debate about the costs of aviation and showed the extent to which we are dependent on aviation for our global economy,” said Colin Matthews. 

Matthews also warned of the long-term impacts: “If it’s more expensive to fly from a UK airport, people will make other choices.  The new affluent Chinese middle-class for example will holiday in France – in fact, France get six times more Chinese visitors. ’

Stephen Kavernagh added: “You can’t take chances with safety but there was enough experience globally to have re-opened air space earlier.  Prolonged further, many airlines could have gone under.”

Birmingham Airport’s Paul Kehoe blamed a lack of leadership but credited airline bosses from BA and KLM for getting onto planes to check the severity of the ash.  He said the airline industry lacked its own Al Gore, “someone saying what a brilliant job you do.  Otherwise we’re always on the back foot and we lose out to environmentalists.”  We were reminded that the BBC’s Aaron Heslehurst said much the same thing at a recent Middle East air travel conference.

A current controversy is increase in Air Passenger Duty (APD).  Tim Clark was emotive when he said that the world wants to come to Heathrow, “but the Government seems to be working in the opposite direction,” adding that Emirates will “adjust if demand falls off.”  Citing Newcastle he noted that since Emirates introduced a service, trade to the Middle East had gone up from £100m per year to £300m.

Pegasus Airlines’ Sertac Haybat reported that after domestic taxes were lifted in Turkey, revenue increased and passenger figures went from 10m to 20m.  “European governments should learn from this.”

Emirates and Oman Air took significant stand space, and Continental again exhibited, for the last time under that name. 

Many smaller carriers took space in the national areas, or as part of a consortium, a sensible way of being seen in difficult times.  Whilst something in the order of 40% of overseas visitors came in on BA the UK’s largest carrier chose once again not to be seen.  Partner Iberia took a small stand.

Next year's World Travel Market takes place Monday 7 November – Thursday 10 November.  Book it in your diary. www.wtmlondon.com

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