16 DECEMBER 2013

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Article from BTNews 16 DECEMBER 2013

COMMENT: A final observation for 2013

A good year or bad year for business travel?  That is the question.
 
Two upcoming items have dominated the last 12 months.  The future of the London airports and HS2, the proposed new railway to the north.
 
Starting at the very top the UK government has let politics rule the roost.
 
David Cameron had scrapped the Heathrow third runway within days of coming into power, a move of political expediency.  He has now put any decision off until after the next General Election, when he may well be out of government.  The Airport Commission dominated in 2013 (and will in 2014 too).  There may be some light at the end of the tunnel with the Autumn Statement (see last week’s BTN) supporting more improvements to the Gatwick railway station, and Sir Howard Davies, Chairman of the Airport Commission, calling for the resurrection of ideas to link Heathrow via Staines and Waterloo.
 
Clearly air travel governmental decisions are not made on what is the best for the country, or for airlines, nor for travellers, but what suits Downing Street, both number 10 and number 11.  The December interim pronouncement is just what it says: “interim” but at least Sir Howard has made it clear that another runway is needed in the South East.
 
This year the Treasury was again active in getting as much blood out of the aviation stone as possible.  No matter what they were told by just about everyone, and the same ‘experts’ whom they themselves also employ, at great cost, the Chancellor will not move regarding Air Passenger Duty (APD).
 
BTN might just concede that some revenue will be generated from air travel to pay for airport border controls and as a contribution towards the cost of the Department for Transport.  But to tax twice on a return journey from London to Scotland, whilst going to, say, Amsterdam, which only attracts a single fee is madness.  The Dutch quickly dropped APD when they saw travellers were transferring to German airports.  No wonder easyJet (and others) prosper from long haul connections via the Dutch airport.  To operate the tax on a capital city mileage basis is just daft.  Travellers to Barbados pay more than those going to Hawaii.  Her Majesty’s subjects in the Caribbean are not impressed. 
 
In 2013 Boeing finally got the 787 into airline service whist Airbus launched the A350 on (its revised) schedule.  Bombardier’s CSeries did fly but trips into the sky are scarce as are orders.  The A380 also failed to sell with the exception of Emirates, who live in a different world to the rest of us. 
 
One of the success stories of the year is Aer Lingus who have now thrown off the Willie Walsh yoke and are expanding in an aggressive way by linking at Dublin its UK and near continental routes and North Atlantic operation.  In a modest way it is replicating what is happening in the Gulf.  Michael O’Leary’s designs on the airline seem to have evaporated and he has other problems.  Tony Ryan, the founder of the low-cost airline never did like O’Leary’s gang ho ‘sod the passenger’ attitude.  From the grave he may have the last laugh over his protégé.
 
easyJet and Ryanair continue their battle over inter-Europe air travel, with the Luton-based carrier the winner in 2013.  It has upgraded itself as an airline fit for the business traveller.  Ryanair is trying to catch up but still insists on using steps to the aircraft rather than a jetway.  Yes in theory it is quicker by offering two access points but what happens when it rains?  Carolyn McCall at easyJet kept a relatively low profile but was certainly around when needed.  Michael O’Leary did the opposite, Ryanair justifying the title “The World’s most annoying airline”.
 
British Airways remains an enigma.  The very, very low profile Keith Williams becomes Chairman on 1 January 2014 (but remains Chief Executive – is there any significance?)  With the exception of the limited Virgin Little Red services to Aberdeen, Edinburgh and Manchester, BA monopolises domestic services to the UK hub at Heathrow as a result of the collapse of bmi.  It is still sometimes a gamble with the long haul on-board services.  Some people swear by BA, others swear at it.  The A380 and Boeing 787 were both introduced with little fanfare and seemingly few problems.  London City grows and grows.  It may even be making a profit for the airline and is certainly a flag carrier.  As the fares are ‘common rated’ with Gatwick and Heathrow there is little chance of it becoming a monopoly if CityJet fails.  The bottom line is that the Iberia gamble has probably cost BA shareholders £1bn and is still some way from making a proper profit.  The hugely successful Vueling falling into the IAG lap is helping.  No management changes there!
 
In 2013 the payback of breaking up BAA really began to take hold, Gatwick benefiting from four years Global Infrastructure Partners (GIP) ownership and continuing major infrastructure development.  Ominously GIP now owns the South London airport, London City and Edinburgh.   Will there be unforeseen problems for the future?  How long will they remain proprietor and investor, and which one will be sold off first?
 
The same could be said for Heathrow Holdings Ltd with Glasgow and Southampton, but in the meantime 2014 will see the new T2, a bold and welcome statement.  Manchester Airport Group (MAG) purchased Stansted and quickly got on with the job of refurbishing the terminal, the results of which we are already seeing the benefits.  MAG has acknowledged that good rail communications for the airport is the way ahead, but that problem is for the most part unresolved.  Improvements to the A14 will help.  The biggest problem for MAG is attracting long haul airlines to the airport.  The dominance of Ryanair and to a lesser extent easyJet is sending out the wrong message to business travellers and other airlines.
 
Roll on 2014.  It is a Farnborough year with the first proper airshow appearance of the A350 promised, and the CSeries.  As mentioned, Heathrow T2 should be in operation but with the chaos at Brandenburg (Berlin) and Doha (Qatar) still unresolved, a soft opening is planned with the airlines moving in over a two-month period. 
 
More and more we will rely on IT for the so-called ‘paperwork’ part of our travel.  For the younger generation it is second nature.  Your Editor in Chief is of an earlier age band.  Perhaps a new year's resolution for 2014 should be for the airline industry to be more patient with his like when travelling.  All this technology is the right way forward but please be tolerant on planes, at airports and in railway stations.  Hire car people too.  And if you remotely check-in at your hotel via your phone, make sure it connects with the system.
 
All the very best to you and yours.
 
See you next year.
 
Malcolm Ginsberg
Editor in Chief

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