Ryanair ‘should be forced to sell Aer Lingus stake’

By Phil Davies | 24 March 2015 at 07.44 GMT

The Irish government is reported to have urged the UK Competition and Markets Authority to force Ryanair to sell most of its stake in Aer Lingus.

It is the latest chapter in an ongoing attempt by British Airways owner International Airlines Group to persuade the Dublin government that it should sell its 25.1% shareholding in Aer Lingus and approve the takeover of the airline.

The UK competition watchdog should not be swayed from its previously stated position that Ryanair must be forced to cut its stake in Aer Lingus from nearly 30% to no more than 5%, according to a letter from a senior Irish transport department official to the CMA.

The CMA’s predecessor, the Competition Commission, ordered Ryanair to reduce its Aer Lingus holding two years ago, citing competition concerns. The watchdog also claimed that because Ryanair was such a big shareholder in Aer Lingus, it was likely to deter other airlines from making a bid to buy Aer Lingus.

Ryanair has claimed the fact that International Airlines Group has since made an approach to buy Aer Lingus negates a fundamental plank of the CMA decision to make it cut its stake in its smaller rival.

But the Irish Department of Transport said it agrees with the original finding and that it should still stand, the Irish Independent reported.

“The department considers that the IAG proposal confirms that merger and acquisition opportunities exist for Aer Lingus but that it also confirms that interest in acquiring Aer Lingus is contingent on Ryanair exiting Aer Lingus’ share register,” the letter to the CMA is reported to state.

“I can confirm that it remains the position of the government that it is unlikely to sell its shareholding in Aer Lingus while Ryanair continues to be a significant minority shareholder.

“The department considers that the CMA should…proceed with the remedial action.”

The CMA is proposing that a trustee be appointed to oversee the sale of the bulk of Ryanair’s holding in Aer Lingus.

However, IAG has asked the CMA that it instead give Ryanair permission to sell the entire Aer Lingus holding to IAG.

Ryanair has insisted it has strong grounds for not being forced to reduce its Aer Lingus stake.

Sourced from Travel Weekly

Flybe’s new route investment at Cardiff Airport is a good deal for now, but what about the future?

10:34, 19 March 2015
Aviation expert Martin Evans explores Flybe’s investment in new routes at Cardiff Airport but asks what will happen over the long-term

In the airport business it helps to have a short memory.

There are a limited number of airlines to do deals with so if one airline stabs you in the back, the next morning you offer to sharpen the blades for them.

So it was no great surprise when Flybe announced a triumphant expansion at Cardiff Airport thirteen months after abandoning some of the airport’s most important routes at very short notice.

The routes
This was a deal that both parties really needed but of the ‘eleven’ new routes, how much is really new?

Well, two routes, Belfast and Jersey were already being flown by flybe.

Dusseldorf had already been announced as a replacement for Germanwings.

Edinburgh, Glasgow and Paris Charles de Gaulle abandoned by Flybe a year ago, with Edinburgh and Paris Orly already served by City Jet leaving Cork, Dublin, Milan, Faro and Munich as the new routes but of these Dublin is already served by Aer Lingus.
The deal
Route network isn’t the only positive from this deal. Flybe has signed a ten year agreement with Cardiff Airport to base two aircraft at Cardiff.

Having based aircraft is very important, it brings jobs, it brings more convenient arrival and departure times and it helps the marketing of routes. It shows a commitment to the airport and more aircraft can be added later for future growth.

This was a deal that had to be done by Cardiff Airport.

The opportunity to become a base for a low cost airline now seems to have vanished.

The weakness at Cardiff is not only having a very strong summer market but a very weak Winter market but also competition from Bristol Airport where the UK’s two biggest low cost airlines have bases.

This is unfortunate because the smmer market at Cardiff is better suited to a low cost airline.

However, the traditional Spanish market is well served by low cost airline Vuelling who, by not having aircraft based at Cardiff, can offer more seats in summer than in winter.

The lack of a based low cost airline makes Cardiff an ideal base for Flybe. They don’t want to compete directly with the low cost airlines who use larger aircraft and have lower costs of operation.

Their business model is to use smaller aircraft offering high frequency services between major cities or routes that are too small for the low cost airlines.

An airport that doesn’t have a based low cost airline needs connections to major UK and European cities and as Europe’s largest regional airline, flybe is the best option available.

Related story: Chief executive of Flybe on the Cardiff investment.

Financial rationale
Flybe also had reasons to need this deal. Flybe has been undergoing a restructuring to take costs out of the business. As part of the restructuring they have grounded a complete fleet of 14 aircraft, the Embraer E195.

These aircraft are too large for high frequency services in the UK market but too small to compete with low cost airlines on leisure routes.

It is unusual strategy for an airline to ground a fleet if there isn’t a definite disposal plan, if the aircraft can cover their operating costs any contribution towards the lease costs would be better than nothing.

Even though the aircraft are grounded, the lease costs still have to be paid.

It was sensible of Flybe to grab the opportunity of earning some revenue with them at Cardiff.

However, we will have an airline at Cardiff operating two aircraft that it doesn’t want to operate any more because it is the wrong aircraft for the UK market.

The problem then becomes one of how is the airline going to grow the business at Cardiff over the ten years of the agreement?

Five of the E195 fleet have already been disposed of and if flybe see an opportunity to dispose of the rest of the fleet will they still retain two of the aircraft for Cardiff or take the more sensible option of disposing of all of them?

Will they extend the lease on these aircraft in 5 years time or will they be returned? What if there can be further expansion of the Cardiff base, will another aircraft type be operated?

Future options
What is probable is that in the second half of this agreement we will see smaller aircraft being operated, probably turboprops.

Clearly the deal works for both parties in the short term, Cardiff gets more routes and passengers, flybe earns revenue from two unwanted aircraft.

However, we should expect the route network to evolve over the next ten years to one that uses smaller aircraft flying more frequently.

That would be not be a bad outcome for the business traveller but it would be one that doesn’t serve the leisure market that Cardiff is currently so dependent on.

If Flybe doesn’t develop a profitable business at Cardiff Airport over the first few years of this agreement with a strategy that fits in with the rest of the UK business then we can expect the knives will be kept polished for future use.

Sourced from walesonline

Former CityJet boss appointed by American Express Global Business Travel

By Phil Davies | 18 March 2015 at 17.44 GMT
Former CityJet chief executive Christine Ourmieres-Widener has been named in the newly-created role of chief global sales officer for American Express Global Business Travel (GBT).

She will be responsible for the organisation’s global sales organisation and global client group as well as its global business consulting division.

Ourmieres-Widener, who starts in the London-based position in June, will report to chief commercial and technology officer Philippe Chérèque.

Chérèque said: “Companies with complex global operations and corporate travel needs look to GBT to go beyond best-in-class booking and servicing to integrate policy development, traveler engagement, compliance and business intelligence into end-to-end travel solutions.

“Combined with investments in information, technology and products, this newly-created role will capitalise on the synergies within our global sales, client management and consulting teams to advance our customer relationships.”

He added: “With her proven track record of delivering growth in line with a strategic vision, combined with her experience leading travel companies across Europe and the US, Christine is the ideal executive for this role.

“She is widely recognised as a progressive leader and an industry luminary, and I am delighted to have her join our team at this time of great change and growth.”

Source   Travel Weekly

Chancellor says nothing on APD or travel in final Budget

18 March 2015 at 14.15 GMT
Chancellor George Osborne made no mention of Air Passenger Duty in today’s Budget, but Treasury Budget documents confirm APD will rise at the rate of the Retail Price Index (RPI) from April next year.

Changes to APD from this spring, already announced, will see the overall tax take from the duty fall by about £250 million in the next financial year.

But the Treasury still expects to extract £3.9 billion in annual duty from the tax by 2018-19, up from £3.2 billion in the current year.

APD will be charged at two rates rather than four from the start of April, with a short-haul economy rate of £13 and £71 for medium and long-haul flights.

Fares for children under 14 will no longer be subject to APD from May.

The Chancellor made few direct references to travel in his final Budget before the general election on May 7.

However, his pledge to “ensure Britain is the global centre for the sharing economy” could have repercussions for sections of the travel industry.

Budget documents state the Government’s intention to “enable government employees to use sharing economy solutions to book accommodation and transport when travelling on official business”.

Osborne promised “new investment in transport infrastructure for London”, “a comprehensive transport strategy for the North” and “over £7 billion of transport investment” for the South West.

A cut in corporation tax to 20% and review of business rates were calculated to please businesses.

The Chancellor appealed to households by announcing a freeze on fuel duty, a reduction in beer duty and a rise in the personal tax allowance.

Osborne announced a so-called Google Tax on companies seeking to avoid taxes by registering overseas would be introduced next week and apply from next month.

Raising APD by the RPI rate is likely to mean an above-inflation rise next year.

RPI has been consistently higher than the official Consumer Price Index (CPI) since 2009 and the former rate is no longer used by the Government as an official measure of inflation.

The annual RPI rate in January of this year was 0.5% against a CPI rate of 0.3%.

Sourced from Travel Weekly

Ryanair sets out plans for new long-haul routes

By Phil Davies | 17 March 2015 at 08.19 GMT

Ryanair is talking to manufacturers about acquiring long-haul aircraft as it plans to develop low fare transatlantic services.

The airline said it would like to offer flights between 10 European cities and a similar number of US destinations.

But it would be four to five years before services would start, according to the Irish low-cost carrier, confirming plans reported by Travel Weekly earlier this month.

The venture’s planned European bases would include Stansted, Dublin, Cologne and Berlin, plus others in Spain, Italy and Scandinavia.

Flights would connect between 12 and 14 European cities with US destinations including Boston, Chicago, Miami, New York and Washington.

Although some subsidised promotional fares would cost £10, other one-way tickets would be priced at £99 or more, and the airline would fill up to half its aircraft with more expensive premium seats, head of marketing Kenny Jacobs was reported as saying.

Ryanair said: “The board of Ryanair, like any plc, has approved the business plans for future growth, including transatlantic.

“We are talking to manufacturers about long-haul aircraft but cannot comment further on this.

“European consumers want lower-cost travel to the USA and the same for Americans coming to Europe. We see it as a logical development in the European market.”

Noting Scandinavian budget carrier Norwegian’s transatlantic services, Jacobs told the Financial Times: “We’ve seen what others have done, we’ve listened and observed what’s gone on in the past 12 months and now have a better view on how we’d like to launch it and market it, and what the product would look like.”

Ryanair’s service, pitched as part of an ambitious growth strategy over the next five years, would be different from that of Norwegian because “we’re a bigger business — a bigger brand with more traffic and a much more efficient cost model,” Jacobs said.

The transatlantic flights would not be branded under the company name, he added.

Confirmation of the long haul plans came as the carrier released its winter flying programme three months earlier than last year, covering more than 1,600 routes.

Jacobs said: “Ryanair is pleased to launch our biggest ever winter schedule, with more flights, routes and destinations, as we continue to grow Europe’s biggest route network.

“Ryanair will continue to connect Europe’s key centres of business, with more flights and improved schedules to and from major cities, including Berlin, Edinburgh, London, Madrid, Milan, Rome and Warsaw.”

Sourced from Travel Weekly

Glasgow airport reports busiest February in eight years

By Phil Davies | 11 March 2015 at 13.07 GMT
Continued demand for eastern European destinations served by Wizz Air and Ryanair helped push passengers using Glasgow airport up by almost 14% last month.

The Scottish airport handled more than 510,000 passengers in February – its 24th consecutive month of growth.

International traffic was up by almost a quarter over February last year while domestic numbers grew by 6.9% with British Airways, Flybe and Loganair all reporting a strong February.

Ryanair’s three daily services to Stansted also continued to perform well, according to the airport.

Aer Lingus launched flights to Donegal last month and Citywing confirmed an increase in services to the Isle of Man to 11 a week during the summer. Flybe launches a new double daily service to Bournemouth on March 29 and flights to Cardiff in June.

Airport managing director, Amanda McMillan, said: “Our success in securing new routes and attracting airlines to Glasgow has translated into sustained passenger growth and we could not have asked for a better start to the year.

“The next three months will see the launch of a further 13 new routes including direct flights to Las Vegas, Munich, Prague and Halifax, Nova Scotia.

“We are continuing to make improvements to the airport in order to accommodate this growth and are making excellent progress with the £3 million extension of our east pier.

“It is an exciting time for Glasgow airport and there is much to look forward to with major events such as the World Gymnastics and IPC Swimming World Championships still to come.”

Sourced from Travel Weekly

Gatwick vows to cap landing fees for 30 years

By Phil Davies | 11 March 2015 at 08.14 GMT
Gatwick is reportedly promising to cap landing charges for 30 years and cover the main risks of expansion.

Airport chairman Sir Roy McNulty has written to the Airports Commission setting out five promises including a guarantee to keep charges per passenger at £15 plus inflation for 30 years and a pledge to have a new runway operational by 2025.

The guarantees would only hold if Gatwick were the only airport chosen for a new runway.

The project does not work economically if both go ahead,” he said. “If part of the incremental traffic is taken by [one airport]…it would be very difficult. The economics do not work for two at a time.”

Sir Roy said the guarantees would make clear the commercial basis of Gatwick’s bid for expansion, the Financial Times reported.

“There is a lot of talk about the pros and cons of the schemes,” he said. “In the end . . . this is about what sort of deal this is for passengers, for the government and for those communities around the airport.”

As well as the cap on airport charges, and a firm start date for operation, Gatwick promised that it would “bear all the main risks of the expansion programme . . . including long-term risks related to traffic levels, market pricing, construction and operating costs”.

The airport also reiterated its pledge to pay £1,000 a year towards the council tax of local residents affected by significant levels of aircraft noise and to maintain air quality levels within current legal limits.

Sir Roy added: “Choose Gatwick and any government can do so knowing that airport expansion will not be a drain on the public finances – and even more importantly it can actually happen.

“These guarantees give airlines and passengers confidence that they will not have to pay much higher air fares through higher airport charges.

“These guarantees also provide a progressive solution where those most affected by noise are directly compensated and the environment is protected. I believe that increased spending on noise mitigation and direct compensation for local communities must be an essential element of any plan for runway expansion.

“Both Heathrow and Gatwick have support. But after years of delay most people agree on one thing – something needs to happen.

“This is the first time Gatwick has been seriously considered for expansion, and only Gatwick can guarantee that Britain gets the runway it needs.”

Sourced from Travel Weekly