BUSINESS TRAVEL NEWS (BTNews)

18 NOVEMBER 2019

The Business Travel News
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COMMENT: Aurigny under scrutiny

This week's COMMENT comes from Paul Simmons, former UK director at easyJet and chief commercial officer at Flybe, and currently a non-executive director at Blue Islands.

The just-published Aurigny “Efficiency & Benchmarking Review” into Guernsey's state-owned airline (BTN last week) is well written and full of detail, but what is it really saying?

The document produced for the island's Scrutiny Management Committee (SMC) and the Trading and Supervisory Board (STSB) was greeted with positive headlines, largely driven by the paragraph at the top of the Executive Summary section. This appears to have been written under the influence of rose-tinted eyewear. A closer inspection by the cold light of day highlights a number of underlying problems that cannot be swept away by the headline-orientated summary.

As all Guernsey residents are effectively shareholders of Aurigny, it is reasonable to explore what the body of the report actually says. There are frequent references to the challenges of running a small airline on an island, which are all true and not in dispute. But what was not picked-up by much of the recent reporting was the number of self-inflicted wounds that will contribute significantly to the taxpayer funded loss of close to £10m next year.

For example, directly under the positive puff of the summary, we are told that Gatwick is the airline’s only profitable route (Exec Summary point 2);  utilisation, revenue management and network planning need improving (point 3), ancillary revenue is poor (point 4) and basic things like an app need fixing (point 5).

To an airline executive, there are few really important points after safety and reliability. But core to these are network management, utilisation (how efficiently you use the assets at your disposal), revenue management and pricing. To have these all flagged as major issues is catastrophic. The tone in which the report is written does not naturally ring alarm bells – unless you know what you are looking for in terms of underlying importance.

Key Points

1   Lack of strategy and shareholder involvement is an issue. In the Observations and Recommendations section, point 7 is particularly pertinent “…..Airline profitability is highly cyclical and airlines typically making significant capacity cuts in the downturn that isn’t necessarily in the economic interest. In the Guernsey case, there is one profitable route and the rest are unprofitable.

In a downturn, reduced profitability could lead to significant cuts in the Aurigny network to achieve the break-even. Where a government-owned business has started the cycle with a cumulative surplus, then riding out the cycle is easier and doesn’t require drastic action. This is not the case here.”

2   The strategy issue also appears earlier in point 3, highlighting the lack of alignment to the current mandate: “The STSB’s published guidance to Aurigny includes: maintenance of the lifeline Gatwick route and slots; maintenance of the Alderney services pending the outcome of a PSO process; breaking even on a rolling five-year basis on its Gatwick and other UK regional services; and, acting as an asset to maintain and improve the Island’s connectivity.”

No one is suggesting in this report that Aurigny is remotely on course for a break-even. This is due to ongoing and increasing losses on the non-Gatwick routes and lower profitability on the core route itself. In fact, in Section 6 of the Observations section, the report muses on moving the break-even goalposts. In other words, give-up on the break-even objective and settle for a perennially loss-making airline.

3   Heathrow: The report also debunks the conclusion that the Economic Development Committee’s decision to support a Heathrow connection is the main cause of all recent woes. Point 7 of the Government Policy section says “…. while we consider any subsidies in overlapping markets as not being good practice and likely to distort the market, it would be hard to attribute Aurigny’s recent revenue decline solely to this factor”.

4   Fleet: The report points out that “in summer 2018, Aurigny’s utilisation in hours (the Jet & 3 ATRs) was the lowest of the airlines” [in the report’s competitive benchmarking survey]. The issue is that there are no obvious additional routes to fly in the ATR, although the report points out that 3 new routes are under consideration.

It also states that all ATR routes are loss-making. A logical conclusion could be that maybe the airline has too many ATRs. But instead, by buying three new ATRs, the issue is set to be exacerbated under the inevitable pressure to fly the new aircraft more extensively.

5   Gatwick: The report highlights a 35% growth in market capacity to London and the South East this summer, and also the fact that Aurigny’s charges or costs at Gatwick will increase by 25% next year. The consequential fall in average fares, load factors and increase in costs does not bode well for the lifeline route next year and beyond.

In the engineering section, the report also points out that the Jet is entering mid-life and care needs to be taken with engineering costs and reliability. “…the Jet, it is now a mid-life aircraft requiring greater maintenance focus and cash cost will rise significantly”. There is also a question on the residual asset value of the jet. So, what is the plan?

The report hints at a return to ATRs at Gatwick, and also at outsourcing options that maintain the slot portfolio at Gatwick by transferring the flying to someone else. If there is a core focus of a second report, this could be it. Without the Gatwick golden goose, the near £10m loss next year will look like heaven.

Conclusions

To blame Aurigny’s issues on outside factors is not a fair reading of the report. Major issues are raised on the network, which is the heart of any airline, and on aircraft utilisation. Both are objectively not good. Just read the report. There are also flaws in pricing, ancillary revenue, marketing, HR planning, fleet and engineering.

However, perhaps the biggest issue, dotted around the report, is the need for someone to define what Aurigny is for and then to structure a business around the objective. The current mission cloud – protection of lifeline routes; economic enablement; and the maximisation of current aircraft assets – leads to conflicting decisions from a number of well-meaning and good people. With the taxpayer picking-up the increasing losses.

My reading of the report is that someone needs to grab the strategy nettle, and quickly.

25 years of Eurostar

Passengers at London’s St Pancras International Station last week were greeted by a woodland scene (below) as Eurostar marked its 25th anniversary by pledging to plant a tree for every Eurostar train service from 1 January and running its first plastics-free train.

Previewed in BTN this month by Eurostar CEO Mike Cooper, the anniversary sees the company celebrating by continuing to champion the environmental benefits of high-speed rail and encouraging the switch to sustainable modes of transport.

The plastic-free train between London and Paris featured new wooden cutlery, recyclable cans of water, glass wine bottles, alternative paper-based coffee cups and environmentally-friendly packaging for food served to customers.

Cooper said last week: “Over the past 25 years, we have led the way in cross-Channel high-speed rail, revolutionising the links between the UK and mainland Europe.

“We have always had a strong sense of responsibility for the environment but as the demand for sustainable travel becomes increasingly critical, we believe we can raise the bar with our general approach and our tree-planting programme.”

With the long-standing Tread Lightly environmental programme, established in 2007, Eurostar says it has reduced its carbon footprint by more than 40%.

www.eurostar.com/uk-en/25years

Airspace for the Future

NATS has published a video, https://vimeo.com/370880987, on its work toward creating initial designs for future airspace. The project will soon open for consultation.

All agree airspace is in urgent need of modernisation. More people are flying than ever before and if growing numbers are to be accommodated safely and efficiently, a modern route structure fit for the 21st century needs to be created. It is agreed if we do nothing, it is forecast by 2030 passengers could face delays of more than 30min per flight.

Even if traffic levels do not increase as predicted, redesigning the skies will end arrival stacking as we know it, enable improvements to continuous climb and descent profiles, shrink the noise footprint on the ground and burn less fuel.

Modernising means making the skies work more efficiently, says NATS, and one of the ways to do this is to increase the systemisation of the airspace, reducing the need for interactions between aircraft and air traffic control (ATC).

Performance-based navigation standards (PBN), a modern aircraft satellite-based navigation system that allows aircraft to follow a route with precision and consistency, is essential for modernisation. 

www.nats.aero/discover

Busy agenda for AOA conference

A powerful list of speakers has been lined up for this year’s annual conference, exhibition and awards dinner of the Airport Operators Association (AOA) at County Hall Westminster on 28-29 November.

The theme this year is Airports for a Changing World, with the event focussing on some of recent dramatic events and how they are affecting aviation, and on the impact of the climate change protest.

Also in the spotlight will be the political scene and the possible effect of the general election on the aviation agenda plus some of the forthcoming technological developments that are planning to disrupt the sector.

Attendees expected from the world of politics include former transport secretary Sir Patrick McLoughlin, former aviation minister Jim Fitzpatrick and the Lib Dems’ transport spokesman in the House of Lords, Baroness Randerson.

Airport speakers include John Holland-Kaye (Heathrow), Stewart Wingate (Gatwick), Andrew Cowan (Manchester), Derek Provan (AGS – Aberdeen, Glasgow, Southampton), Karen Smart (East Midlands), Nick Barton (Birmingham), Robert Sinclair (London City), Andrew Bell (Regional & City – Bournemouth, Coventry, Exeter, Norwich, Blackpool), Deb Bowen-Rees (Cardiff) and Graham Keddie (Belfast International).

On the airline front, the list includes two CEOs – Shai Weiss of Virgin Atlantic and Mark Anderson from Connect Airways, plus Professor Penny Endersby of the Met Office.

www.aoaconference2019.com

Canada – passport free

The World Economic Forum (WEF) and the governments of the Netherlands and Canada met at Montreal Airport last week to launch the first pilot project for paperless travel between the two countries.

Known as Traveller Digital Identity (KTDI), it is the first platform to use a traveller-managed digital identity. It has been integrated with partner systems and tested internally throughout 2019, with the first end-to-end journey expected early next year.

Officials say the pilot initiative is a collaboration between government and industry – border authorities, airports, technology providers and airlines – to create an interoperable system for secure and seamless travel.

WEF head of mobility Christoph Wolff said: “By 2030, international air travel is expected to rise to 1.8bn passengers, up 50% from 2016. With current systems, airports cannot keep up.

“This project offers a solution. By using inter-operable digital identities, passengers benefit from a holistic system for secure and seamless travel. It will shape the future of aviation and security.”

Partners in the pilot group with Canada and the Netherlands are Air Canada, KLM, Montreal-Trudeau International Airport, Toronto Pearson International Airport and Amsterdam Airport Schiphol.

The group is supported by technology and advisory partner Accenture, with Vision Box and Idemia as technology component service providers.

www.weforum.org   https://ktdi.org

www.accenture.com

www.vision-box.com   www.idemia.com

Cruz at the Air League

“If we manage successfully through a committed investment of £6.5bn, I can't see why will not be the world's favourite again.” The speaker BA chairman and chief executive Alex Cruz, on the podium at Royal Aeronautical Society last week for the Air League’s Sir Andrew Humphrey Memorial lecture.
A packed audience heard Cruz outline how he saw air travel for the future. “We are going backwards” he said. “The first jets across the Atlantic, the Comet and Boeing 707, took longer than their present-day successors,” pointing out the speed of the aircraft was much the same. The catch is the time on the ground lining up for a pier, Cruz explained, noting problems at JFK. It was a relaxed and confident speech.

Later on, at a dinner, Cruz welcomed as special guests four young people starting out on their aeronautical careers. Each made an introductory speech, led by David McDermott, an aerospace engineer working for Airbus on the A320 series.

The others were Jenny Ramsdale, a perfusionist at Bristol Royal infirmary, who is aiming to become a pilot; Francis Yalung, a 19-year-old Air League Scholar and aerospace engineering and pilot studies student at the University of the West of England, Bristol; and finally Dipeet Metha, formerly of Thomas Cook, who has been selected as a BA co-pilot. Cruz was the first to congratulate him.

www.airleague.co.uk

Emirates app airport upgrade

Layouts of four of the most important airports on the Emirates Airlines system – Heathrow, Gatwick, Hong Kong International and the Dubai International hub – have been added to the carrier’s app to help passengers find their way through the facilities.

The new feature, logically called Airport Maps, can detect a user's location via Bluetooth and wi-fi and provide point-to-point navigation through the airports’ main areas, including check-in desks, Emirates lounges, shops, restaurants or ATMs.

The Emirates app, supported in 19 languages, currently has 1.5m active users each month and allows customers to search for, book and manage their flights as well as their Emirates Skywards accounts.

In the past year, the app has been enhanced with new technology so passengers can create bespoke playlists of their inflight entertainment ahead of their travels and sync it to their seats once on board.

Last year, Emirates became the first airline to introduce web virtual reality (VR) technology on its digital platform by introducing a 3D seat model visualisation engine that displays a 360deg view of the Emirates A380 and B777 aircraft interiors.

The Emirates app is free to download on ioS or Android devices.

(See also AND FINALLY in this issue).

www.emirates.com

Kayak turns to business travel

A new free platform for business travellers is being introduced by the travel search site Kayak designed to help staff to plan and manage corporate journeys by providing a streamlined approval process.

The company says the new portal, called Kayak for Business, gives those organising travel access to corporate fares and helps to ensure bookings are within policy. A spokesman said: “Our team needed a better way to plan business travel, so we built one.”

Early users are predicted to be small- to mid-sized businesses, but Kayak noted there was “nothing structural that would stop a larger company using the service as well”.

A spokesman said the new service would operate like Kayak, showing users a comprehensive picture of their travel options in one place, but would have added features for business travellers.

Kayak for Business is following the path of similar travel management start-ups including Lola, whose co-founder and chief technology officer Paul English was the co-founder of Kayak.

More information about the new venture is due to be released by Kayak before the planned launch date later this month, but the company is meanwhile compiling a waitlist of interested companies seeking early access.

www.kayak.com

KLM £2.5bn Embraer order

An amended agreement with Embraer for 21 E195-E2s, with an additional 14 purchase rights, worth up to $2.5bn at list prices, was signed by KLM last week. KLM’s original order was for 15 of the aircraft with 20 purchase rights.

Destined for KLM’s regional subsidiary KLM Cityhopper, all 21 of the firm order will be acquired via operating lease from Aircastle which is supplying 11 aircraft, and ICBC Aviation Leasing, providing 10.

KLM, Europe’s largest Embraer operator, signed a letter of intent for the order at this year’s Paris Airshow (BTN 24 June) but said last week the adjustment and confirmation represented its confidence in the refreshed E-Jet line.

President and CEO Pieter Elber said: “For KLM, this aircraft is a significant part of our commitment to improving our environmental impact. The E195-E2 is the most fuel efficient lowest emission aircraft in its class and the quietest by a big margin.”

Deliveries of the first E195-E2s configured with 132 seats will start in the first quarter of 2021, either to replace Cityhopper’s existing E190s and E170s or to pave the way for network expansion.

Embraer Commercial Aviation president and CEO John Slattery said: “With 30% lower emissions compared to KLM’s E190s, yet with a further 32 seats, the E195-E2 will increase capacity at slot-constrained Schiphol and deliver huge reductions in emissions.”

www.klm.com

www.embraercommercialaviation.com

Loganair quits Glasgow – Southend

Glasgow is facing another airline defection with Loganair scrapping its service to and from Southend from 3 January. It leaves the Scottish airport with Heathrow, London City, Luton and limited Stansted flights.

The Southend decision is a rare step back for Loganair. It has been highly active this year, most recently (BTN 23 September) when it took over routes linking Edinburgh and Glasgow with East Midlands following Flybe withdrawing its services.

A spokesman said: "We made the decision due to the high number of low-fare options in the Glasgow to London market for which our size aircraft are unsuitable." Loganair will instead increase Glasgow – East Midlands services to three times a day from 24 February.

Elsewhere, Loganair has welcomed its 25,000th passenger (below) since starting operations from Newcastle International Airport. The business traveller from Belgium was handed free tickets for a return trip to the North East.

The tickets were handed over by the airport’s aviation development executive Chris Ion and marketing and communications manager Kate Hall.

Loganair opened a base at Newcastle in March when it took over flights to Brussels and Stavanger following the administration of flybmi and has added six routes since.

www.loganair.co.uk

London – Sydney in 20hr

A non-stop commercial air link between London and Sydney moved several steps closer last week as Qantas pulled off a second success in its Project Sunrise programme (see infographic below) with a research flight between the two cities.

A fresh-from-the-factory Boeing B787 Dreamliner in the airline’s new centenary livery left Heathrow at 06:00 on Thursday with a minimal payload of passengers, landing in Sydney at 12:28 local time on Friday, 19hr and 19min later.

It followed a Qantas New York – Sydney non-stop flight last month (BTN 21 October) organised as part of the Project Sunrise programme to research crew and passenger wellbeing on ultra-long-haul services.

The airline is expected to decide before the end of the year whether to go ahead with non-stop New York – Sydney and London – Sydney services, with a potential start date of 2023. Airbus and Boeing are vying to supply a suitable aircraft.

If the plan goes ahead, Qantas CEO Alan Joyce, who has been aboard both test flights, says the aircraft used will have at least 30% of space assigned to executive class cabins selling at a premium of 20-30% over stopover routes.

Qantas is also planning events to mark its 100th anniversary next year with the livery seen on last week’s Dreamliner part of the celebrations. The airline was founded in Winton, Queensland, on 16 November 1920.

www.qantas.com

Norwegian on the move again

With a new injection of cash in the coffers leaving it with what is described as “fully funded through 2020 and beyond”, Norwegian has returned to the expansion trail with good news for Manchester and the US.

On the UK front, the airline’s newest route to Scandinavia has taken off with a new non-stop service from Manchester to Norway – a twice-weekly seasonal service on Mondays and Fridays to Bergen.

In the long-haul arena, Norwegian has announced plans for two seasonal non-stop US – Europe routes from next summer, adding Chicago to Paris and Rome, and Denver – Rome.

Senior vice-president commercial Matthew Wood said: “The US is now our largest and most important source market, and we will continue to invest in expanding our network to offer more non-stop service to highly sought-after European destinations.”

Norwegian has been in the news for having to cut back on long-haul flights after running into financial troubles blamed on over-ambitious growth plans, but has now said it has raised some £212m from a share sale and bond issue to enable it to carry on.

www.norwegian.com

Plaza Premium £42m growth plan

A US$55m (about £42m) global expansion with 15 new hotel or lounge openings and enhancements across 11 international airports has been launched by hospitality services provider Plaza Premium Group.

Founder and CEO Song Hoi-see said this year and next marked “a big leap forward”, with the group committed to serving more than 16m travellers by the end of 2020, a 10% increase on present figures.

Among the changes, Plaza is planning an expansion of its airport meet-and-greet service Allways, claimed to be the first of its kind to be available to all travellers, with a launch at Dallas Fort Worth International, joining Toronto, New Delhi and Macau.

The group’s main brand, Plaza Premium Lounge, will launch at Dubai International Airport next month, followed by Sydney Airport Terminal 1 in the first quarter of 2020.  The brand will also debut in the US next year with a domestic lounge and an international lounge at Dallas Fort Worth and an international lounge at Denver.

Plans for the group’s one-of-a-kind in-terminal airport hotel concept, Aerotel, include an opening at Sydney Airport in the third quarter of next year, while increased demand has led to the expansion of the Kuala Lumpur property with 17 rooms added.

www.plazapremiumfirst.com   www.plazapremiumlounge.com

www.myaerotel.com

www.allwaysvip.com

Prince of whales

The latest version of the iconic transport machines used by Airbus to carry aircraft parts, the BelugaXL (below), named because it resembles a whale, has received its Type Certification from the European Aviation Safety Agency (EASA).

This clears the way for entry into service by early next year for an aircraft Airbus describes as an integral part of its industrial system and a key enabler for production ramp-up requirements beyond 2019.

The BelugaXL, 7m longer and 1m wider than its BelugaST predecessor and with the largest cargo bay cross-section of all existing cargo aircraft worldwide, has an extra 30% extra transport capacity.

It can carry two A350 XWB wings compared to the BelugaST, which can carry only one. With a maximum payload of 51 tonnes, the new aircraft has a range of 4,000km (2200nmi).

The XL went through an intensive proving campaign involving more than 200 flight tests totalling some 700 flight hours. Six aircraft will be built over the next four years, gradually replacing the current fleet of BelugaSTs.

Launched in November 2014, the BelugaXL is based on an A330-200 Freighter, re-using a large number of existing components and equipment, and is powered by Rolls-Royce Trent 700 engines.

www.airbus.com/aircraft/freighter/beluga.html

Pullman brand opens in Melbourne

Melbourne’s central business district has welcomed its first hotel under Accor’s upmarket Pullman brand after a £16m investment to rebuild the former Swanston Grand Mercure.

Owned by Erdigroup and operated by Accor, the new Pullman Melbourne on Swanston has 15 storeys and offers 204 guestrooms and suites at the gateway to the Little Bourke Street precinct, home to Melbourne’s best shopping and dining.

Erdigroup chief executive Ricky Jeffs said the team behind the project had "challenged convention", raising the bar on hotel product in the city after the original building was stripped-back to its structural bones.

He added: “Nothing was left untouched in the major overhaul, which has delivered a striking façade, re-designed guest rooms, a designer lobby, a brand-new restaurant and an exclusive club lounge overlooking the city.”

Four interior designers, Rothelowman, Studio Mac, interiors by Foster and P49, were engaged to create special spaces throughout the hotel to offer guests an element of the unexpected at every turn and create what Jeffs described as “an eclectic mix of sophisticated urbanism”.

The Club Lounge, a Pullman brand signature, is a further feature of the new Pullman. Operating across a whole floor, it is on level 15 with views of the city as a major attraction.

www.pullmanmelbourneonswanston.com.au

www.erdigroup.com.au

Record numbers for Virgin Trains

The number of people opting to travel on Virgin Trains’ Anglo-Scottish services instead of flying has reached record levels while also contributing to a drop in carbon emissions, the operator said last week.

Figures for the 12 months to July show 29% of passengers chose to travel with Virgin Trains as opposed to flying between Glasgow and London, the UK’s second-busiest domestic air route.

This is nearly two percentage points more than the record in 2014, when numbers were boosted by the Commonwealth Games, and comes as passenger numbers between England and Scotland’s biggest cities grew 6% to a record 717,592.

Virgin said convincing people to choose train over plane had increased rail’s overall market share relative to airlines on total journeys between Glasgow/Edinburgh and London to a new record of 35% in the 12 months to July.

New analysis by sustainable transport charity Transform Scotland had shown rail’s increased market share and a reduction in flights had helped to reduce carbon emissions between Glasgow and London over this period, the company added.

Virgin Trains managing director Phil Whittingham added: “The number of people choosing train over plane is testament to the investment and improvement Virgin Trains has made in Anglo-Scottish services over the past two decades.”

www.virgintrains.co.uk

Rezchain joins hotel bookings arena

New blockchain technology which is claimed to enable error-free hotel bookings has been launched by global digital travel specialist Webjet, the owner of the WebBeds B2B accommodation provider.

The system, Rezchain, is said to enable users to eliminate costly discrepancies that occur in up to 5% of hotel booking transactions. The technology was pioneered in collaboration with Microsoft.

Webjet says using blockchain, which also underpins crypto currencies, makes Rezchain the technology’s first application to verifying hotel reservations as a way to combat a situation where a third of such bookings have to be amended.

Similarly, Webjet says, a tenth of bookings experience some manual intervention with discrepancies occurring typically in price, duration, booking status, currency, board basis or room type because amendments were not recorded properly.

Webjet managing director John Guscic said: “Settlement between hotel suppliers and travel partners can be a complex, time consuming and ultimately costly process.

“With multiple IT systems speaking different languages, mistakes are probable and the default position is often to write off debts when the situation is not clear.

“For years, the industry considered it a cost of doing business. With Rezchain, it doesn’t have to be that way any longer.”

www.rezchain.com

www.webjet.com.au

Rolls-Royce at Aviation Club

A view on the Boeing B737MAX controversy and updates on the emissions debate are among items likely to be on the agenda for the Aviation Club UK lunch on 5 December at the Institute of Directors at 116 Pall Mall, London.

Guest speaker will be Rolls-Royce plc CEO Warren East, appearing toward the end of a turbulent year on the aviation front which has ensured his company has rarely been out of the headlines.

Earlier this month, Rolls-Royce announced plans to expand its global network of engine overhaul services to support growth in its fleet of large aero engines from more than 4,000 today to some 6,500 in the mid-term.

In doing so, the company said it was also confronting one of its problems this year, saying: “This further expansion of our network of engine overhaul facilities also underpins our commitment to reducing the impact on customers of in-service issues with the Trent 1000."

In other news, the Rolls-Royce Trent 700 engine last week received certification to power the new Airbus BelugaXL air transporter, along with the aircraft itself (see story this issue), which the company said marked another milestone for that engine.

https://aviationclub.org.uk

www.rolls-royce.com

SITA hails technology advance

Airlines and airports spent a record US$50bn (about £38bn) on IT in 2018 to support improvements to the passenger journey and are starting to enjoy the benefit of that investment, according to SITA (Société Internationale de Télécommunications Aéronautiques).

Figures published last week show the investment has resulted in a significant improvement in both the satisfaction levels for passengers and average processing time.

The SITA 2019 Air Transport IT Insights report shows 60% of airline chief information officers (CIOs) recorded up to a 20% year-on-year improvement in passenger satisfaction.

During the same period, 45% of them recorded up to a 20% improvement in the rate of passengers processed. The same strong returns on investment in technology were also seen at airports.

There, 63% of CIOs reported a year-on-year improvement of up to 20% in passenger satisfaction levels while 44% recorded quicker passenger processing times. Both airlines and airports also recorded an improvement in their business performance.

SITA Air Travel Solutions president Matthys Serfontein said: “This is a real success story, particularly when we expect passenger numbers to double over the next 20 years with physical airport infrastructure struggling to keep pace.

“Technology is key to alleviating the industry’s capacity crunch and avoiding negative impacts on passengers.”

www.sita.aero/resources/type/surveys-reports/air-transport-it-insights-2019

Vietnam Air eyes London – Bali market

New flights between Ho Chi Minh City and Bali with convenient connections from and to London have been launched by Vietnam Airlines with ceremonies at Tan Son Nhat Airport in Ho Chi Minh City and Ngurah Rai Airport in Bali.

Flights depart from Ho Chi Minh City at 11:10 every Monday, Tuesday, Thursday, Friday and Sunday, connecting with Heathrow flights which arrive at 06:15 on Sundays, Tuesdays and Thursdays.

On the return, flights from Bali arrive at Ho Chi Minh City at 19:45 every Monday, Tuesday, Thursday, Friday and Sunday, connecting with Heathrow flights departing at 00:20 on Mondays, Wednesdays and Saturdays.

The service is the second Vietnam Airlines flight connecting Vietnam to Indonesia, adding to the Ho Chi Minh City – Jakarta route which has operated since December 2012.

Flights, which take 3hr 50min, are by 184-passenger Airbus A321 configured for 16 Business Class seats and 168 seats in Economy. Features include free checked baggage and cabin baggage allowance.

Vietnam Airlines’ 15th and 16th routes to China also start this month in response to growing demand, with non-stop flights between Ho Chi Minh City and Shenzhen from 27 November plus Hanoi – Shenzhen from 28 November.

www.vietnamairlines.com

Wizz Air: Ban Business Class

A plea from Wizz Air CEO and co-founder József Váradi for airlines to ban Business Class stirred up the debate last week on the continuing climate scrutiny on the aviation industry.

In what he called an “industry call to arms”, Váradi said: “Business Class should be banned. These passengers account for twice the carbon footprint of an Economy passenger, and the industry is guilty of preserving an inefficient and archaic model.

Váradi called on fellow airlines to commit to a total ban on Business Class travel for any flight under 5hr and said sustainability pledges by rival airlines to be carbon neutral by 2050 were “a joke – we're all going to be dead by that time".

Forbes magazine reported other airlines declined to comment on the call. They included Lufthansa and the International Airlines Group (IAG), which includes BA, Aer Lingus and Iberia.

Norwegian said it did not offer Business Class, only a premium product with wider seats that did not fold flat, which is claimed to be the main issue on long-haul Business Classes.

Wizz Air says it operates with the lowest CO2 emissions per passenger among competitor airlines and will reduce this by 30% for every passenger in the next 10 years.

https://wizzair.com

ON TOUR: EU261 and flight delays. More capacity needed

In a change from our usual ON TOUR format, we highlight a piece by the independent aviation analyst Chris Tarry, a member of the "Vision 2050" Group established by the director general of IATA to consider the future of the airline industry. The following is a slightly revised version of an article that has appeared in Airline Business magazine. 
 
Summers in Europe usually coincide with an increase in airline delays. Airline managers bemoan the situation and generally direct the blame towards air navigation service providers (ANSP) and airports. The reality is the capacity provided by these suppliers is a known constraint and the delays suffered by passengers are often the result of airlines attempting to maximise utilisation. If more aircraft and crews are provided, there would be an associated cost.

Generally, students of economics and business start their courses with an introduction to the consequences for all interested participants of decisions taken where there are finite resources and while the usual examples are around how you might administer, say, a healthcare budget. The reality is the same approach is almost universally applicable to every industry including air transport, as indeed are the underlying issues.

At the simplest level, airline managers seek to establish a schedule that will maximise utilisation and minimise the costs of operation, including compensation payable to passengers for delay and associated disruption. There are many examples in Europe that while a schedule may work in May it is not always the case by the time you get to even early July. In this respect, all airlines based in or operating from Europe will be only too aware of the provisions of EU261. The delay-related compensation was an attempt to encourage better timekeeping.

We have been spending some time examining the performance of a number of European airlines against their timetables from a business and operational perspective. Unsurprisingly, there has been an inevitability of history repeating itself not just in delays increasing as the summer season progresses but also where this is the almost “given” result of “overscheduling” against the background of what are entirely predictable and repeatable constraints associated with ANSP and airport capacity.

The airlines’ schedules and resulting performance would not appear to take sufficient or necessary recognition of such constraints and where in most cases it is the passengers that incur the problems associated with the delay and disruption.

In many cases, it is clear there is little need for sophisticated mathematics to identify flights that are likely to be late to cause passenger annoyance and disruption but fall short of the delays that will trigger compensation.

Against this background, it was of particular interest to read the recent easyJet interim management statement, where it was reported on-time performance (OTP) in the quarter had improved, with cancellations in Q3 falling from 2,606 flights to 847 and delays of more than 3hr falling by 32% in the quarter compared with a year earlier. Management, however, also noted the operating environment in the summer remained challenging.

To put this in context, easyJet’s performance data from the CAA suggested that in 2018, excluding cancellations, there were some 6,800 easyJet flights operating to/from the UK that were more than 3hr late. At the simplest level, assuming all the passengers on these flights would be eligible for EU261 compensation, and that they claimed it, it is reasonably straightforward to calculate that if the flights were all up to 1,500km and the average load was 150 passengers, the potential maximum liability arising from these late arrivals alone would have been in the order of £250m!

On the basis of our calculations, the maximum potential compensation payable for each such easyJet flight delayed over 3hr, and where EU261 compensation is due, is equivalent to the average profit that it earned from 40 flights in 2018 – something that clearly focuses the mind in respect of meeting the schedule.

Beyond this, if we look at the number of flights that for a passenger are “annoying and disruptive” as they are late but not sufficiently late for compensation under EU261 to be payable, the same CAA data suggests that in 2018 there were some 32,200 easyJet flights that were between 31-60min late, some 18,360 between 61-120min late and 4,470 between 121-180min late. As part of our ongoing exercise, I also examined the extent to which delays have shifted from above 3hr to below reducing the exposure to EU261 liabilities.

As suggested earlier, having a timetable that works in May but not in July is really not good enough today, particularly where in the case of flights that are significantly delayed but not sufficiently so to attract compensation, cost is borne by the passengers.

Clearly, in order to reset the balance, there is a cost to the airlines where some airlines, including easyJet, have introduced back-up aircraft and crews – something that was a feature in the past but where the reason then was related to the dispatch reliability of the aircraft.

However, returning to where I started, the fundamental issue is who bears the cost of delays, in whatever form they might be manifest but where it is important to recognise that passengers' tolerance is not infinite and there are equally good reasons for the threshold for, in the case of EU261, compensation in respect of late arrivals to be set at 2hr rather than 3hr given the way in which targets become “norms”.

Similarly, while there are good reasons for seeking to maximise utilisation against the background of the wider “system outcomes”, there would appear to be grounds for suggesting for some airlines the need is to apply more capacity to deliver fewer delays and less passenger dissatisfaction - but then, is this latter issue something that the most affected airlines are concerned about and prepared to allocate resources to resolve?

www.ctaira.com

AND FINALLY: The world’s best app

BTN does not have the time or resources to evaluate the best app in the world but a straw poll in this office came up with a strange winner.

First for us was the Transport for London (TfL) “Tube Status” site which on the face of it is the provider of essentially bad news.

The London Underground carries up to 5m passengers a day, and for the most part it gives a really good service.

BTN suggests using  the app before descending into the depths. Tube Status.

In case of problems, you will know straight away and have to make a decision. Previously one only found out about delays and so on while waiting, frustrated, on a platform.

The app is informative, up to a point. 

Should you go down, look for an alternative route, or try and book into a hotel for the night?

Most stations now have wi-fi and one assumes it will reach the tunnels, rather like the Heathrow Express. As your train comes to a halt, you will straight away know how long the wait is.

In a perverse way, the Tube Status app is good news.

And just like Harry Beck's famous route map of 1931, the London idea will be copied around the globe.

BTN’s best apps of 2019. 

Second place, for European readers, goes to easyJet, for a very easy app that virtually gets you on to the aircraft. Hilton Hotels is third for a visual and descriptive production that is really useful.