INDUSTRY / COMPETITION

Short-hauling: Spanish regional airline Air Nostrum wants to operate high-speed rail routes

As short-haul flying is mostly a tedious, uncomfortable experience with lots of queuing and waiting, while at the same time a growing number of consumers have become more conscious about the environmental impact of air travel, the popularity of high-speed rail as an alternative to short-haul flying has steadily been growing.

Compared to air travel within a range of around 700 kilometer, high-speed rail means less hassle, because of direct connections between city centers, lighter security and luggage regulations, and a much more comfortable journey.

In Europe, for example Eurostar’s London-Amsterdam service – which was launched in April this year – has proved such a success that the train operator expects to operate a third and possibly even a fourth daily service from next year on.

And on many city pairs, high-speed rail now has a much higher market share than air travel. For example, between Madrid and Barcelona, 65 percent of the market has moved to high-speed rail, while ItaloTren has a market share of 75 percent between Milan and Rome. In Japan, the Shinkansen for a long time has a market share of over 85 percent on the routes between Tokyo and Osaka and between Kyoto/Osaka and Fukuoka.

And as Google Flights nows shows Deutsche Bahn as alternative to a flight when searching for a fare between for example Amsterdam and Frankfurt (a journey of over 400 km), ‘short-hauling’ via high-speed rail is on track for further growth.

High-speed rail as feeder
Several airlines and rail companies are already working together to provide travellers with a seamless ‘intermodal’ connection, effectively using high-speed rail as feeder service to long-haul flights.

For example, Lufthansa Express Rail is a collaboration between the airline and Deutsche Bahn and provides passengers with an integrated booking from 8 destinations throughout Germany to and from Frankfurt Airport. This means reserved seats on the train, remote baggage check-in, plus a guaranteed connection. Lufthansa will expand its Express Rail service to 20 German destinations by mid-2019. Read full article »

As it turns Dubai into a global hub, Emirates embraces a diverse passenger base

By Vivek Mayasandra

Over recent years, Gulf-based carriers Emirates, Qatar Airways and Etihad have dazzled the global airline industry with their aircraft orders, premium services and rapid expansion. Besides targetting traditional routes such as Europe – Australasia, Emirates, the leader of Gulf aviation growth, has aggressively capitalized on new passenger flows, connecting Asia with Africa and with Latin America via its Dubai hub – markets which will collectively occupy over 60 percent of passenger flows by the year 2030, according to Boeing’s latest market forecast.

As Emirates states in its latest annual report: “The future of our industry is being written not only in long-established air routes, but also in places like China, India and Africa – markets where the demand for air transport, both passenger and cargo, is growing at an incredible rate.” […] “Our strategic hub in Dubai plays a key role in establishing new trade routes by linking emerging markets to more developed ones, such as connecting Moscow to Durban, Beijing to Luanda or Hyderabad to Sao Paulo.”

This focus has enabled Emirates to position and brand itself to a newly global customer base – and more importantly – develop solutions in service, dining and entertainment for a wide array of diverse passenger tastes.


Cabin crew
In the air, Emirates’ diverse cabin crew is indicative of its global focus – the airline employs cabin crew from more than 130 nationalities. This lets Emirates typically staff their flights with speakers of Arabic, English and the local language of the flight’s destination. Being an Gulf-based carrier, Emirates’ crew are also trained for a variety of Arab and Muslim cultural situations – from being taken to mosques, learning how to serve the traditionally Arab meal of coffee and dates, to properly serving veiled Muslim passengers.

Read full article »

Latest high-speed trains in Asia offer airline-like business class cabins

The advantages of high-speed rail have been well documented. Compared with flying, travelling by fast train offers city-center to city-center connections, no need for checked baggage, or repeated queuing for security and boarding. Also, trains are not prone to delays caused by bad weather, slow baggage handling, crowded runways and air traffic. Research has shown that business travellers are willing to travel to destinations by rail for up to 4 hours, while leisure travellers are even prepared to use trains for journeys of up to 6 hours. 

In an effort to make rail travel even more attractive for business travellers, high-speed rail operators in China and Japan have recently introduced airline-like business class cabins on their latest fast trains. 

BeijingShanghai ‘Harmony Express’
China is in the process of building the world’s largest high-speed network in record time, with rapid passenger lines already criss-crossing much of the country. The recently opened Beijing to Shanghai high-speed railway is the latest portion of a network the government hopes will stretch 45,000 km (27,960 miles) by the end of 2015. Construction of the 1,318 kilometre (819 mile) high-speed rail connection between Beijing and Shanghai began in April 2008 and track laying was completed only 2,5 years later in November 2010. The USD33 billion rail line has been operating on a trial basis since mid-May and was officially opened at the end of June 2011. 

Onboard experience
Besides second and first class cars, the Beijing – Shanghai Harmony Express features a business class car with 24 lie-down seats with a nearly full recline. Each seat is equipped with a foldable LCD TV, a tray table, socket and reading lamp. Travellers are waited on by uniformed stewardesses and even the galley area and restroom have been upgraded. 
Read full article »

Low-cost carrier Virgin Blue transforms itself into a full-service airline, with lower costs

In a bid to become a more potent, direct competitor to Qantas, Australia’s Virgin Blue is planning to transform from a cheap and cheerful low-cost carrier to a serious business and leisure airline that has low costs. With the remake Virgin Blue wants to double its share of Australia’s domestic corporate travel market from 10 percent, cut its reliance on leisure travel in the process and limit investments in its network by creating international alliances. The carrier is targeting business flyers as competition from low-cost airlines Jetstar (part of Qantas) and Tiger (50% owned by Singapore Airlines) is driving down leisure fares. The catalyst for the changes at Virgin Blue has been the appointment in May 2010 of John Borghetti, formerly Qantas’ executive general manager.

Consolidating brands
The Virgin Blue Group has a number of substantial issues to resolve. The first one is consolidating its four disparate brands: Domestic carrier Virgin Blue, short-haul international airlines Pacific Blue and Polynesian Blue and long-haul carrier V Australia. Virgin just hired Hans Hulsbosch, who designed the Qantas flying Kangaroo logo, as creative director for the airline. While it is unlikely the Virgin Blue brand will be abandoned, it is possible a number of the sub-brands such as V-Australia and Polynesian Blue will be scrapped. An agreement between Virgin Atlantic and its 49% stakeholder Singapore Airlines however prevents the Virgin name from being used outside Australia. 

Business travelers
The second challenge is to position Virgin Blue for a head-to-head battle with Qantas for a significant stake in the Australian business passenger market. As of May 2011, Virgin Blue will introduce A330s on domestic trans-continental trunk routes such as Sydney to Melbourne, Brisbane and Perth. The A330s will have a separate business class cabin (details have yet to be announced), which may also bring a bit of V Australia’s ‘boutique experience’ to Virgin Blue. To compete with Qantas’ Business class cabin, Virgin Blue launched Premium Economy seating in 2007. It was not successful, however, because there was no clear distinction with the rest of the cabin, and it left Virgin Blue somewhat stuck in the middle. Read full article »

New long-haul low-cost airlines prepare for take-off in Scandinavia

So far, the only region where the low-cost, long-haul business model has truly taken off has been the Asia-Pacific. In Europe, airberlin is currently the sole low-cost carrier to have established a long-haul operation, operating 13 A330s (it also ordered 15 B787s). The airline uses its extensive domestic network to feed its long-haul flights from Dusseldorf to New York, LA, San Francisco, Vancouver, Dubai, Beijing, and holiday destinations in the Caribbean, Africa and Thailand. Airberlin also just entered the Oneworld alliance and, amongst others, will codeshare with American Airlines to feed/connect its passengers in the USA. Ryanair has been hinting to start trans-atlantic routes with a separate company (rumoured to be named Ryanair Atlantic), but has shelved these plans until 2015. 

Now, two airlines in Scandinavia aim to take advantage of the Nordic region’s geographic location between North America and Asia (as Finnair successfully does with its ‘Via Helsinki’ hub). Norwegian, the fourth-largest low-cost carrier in Europe has plans to established up to 20 long-haul routes from Scandinavia to Asia and the USA, capitalizing on its large regional network. The airline plans to start operations in 2011, in time for summer season, and eventually may order up to 15 widebodies, possibly B787’s. Norwegian has listed New York and Bangkok as initial destinations and has also mentioned Miami, the American west coast, New Delhi and Beijing. Flights will mainly be from its Oslo-hub, but also from Copenhagen and Stockholm. Norwegian plans to operate a 2-class configuration, with prices from Euro 200/400 return in Economy/Business to New York.
Read full article »

Emirates orders 32 more A380s, grows A380 fleet to 90 aircraft

Dubai-based Emirates has signed a deal to buy 32 additional A380 aircraft in an order with a list price of USD11.5 billion. This brings the airline’s total A380 order to 90 aircrafts, nearly 40 percent of worldwide orders for the superjumbo. Emirates president Tim Clark said that all 90 A380s will be operating at the same time in the future, as “The first A380 aircraft we ordered will be retired from the fleet in 2020, and the last of this order will be delivered in 2017.” 

The central location of the Gulf Region on the world map lets aircraft access almost every destination non-stop, as 85 percent of the world’s population is located within a 8,500 km range from the Gulf. Governments in the region have been developing their carriers over the past decades to help diversify their economies and reduce dependence on oil revenues. The so-called ‘Gulf Gullivers’ are increasingly redirecting passenger flows from Europe, Asia and the Americas through their hubs, making them serious competitors for established airlines.
Read full article »

Gulf Gullivers keep expanding amidst global downturn

The rise and rise of Emirates (Dubai), Etihad (Abu Dhabi) and Qatar Airways has been well documented. These so-called ‘Gulf Gullivers’ have placed multi billion-dollar aircraft orders, expanding their airports and developing their tourism infrastructure, with the aim to  turn the geographically ideally situated Gulf region into the world’s aviation hub. Some of the ingredients of their model: high frequencies to major urban destinations, target large metropolitan areas without direct connections (for example, Manchester, Birmingham in the UK, Düsseldorf, Hamburg in Germany) so passengers can bypass busy hubs in their region and transfer at the carrier’s 24/7 Gulf hubs, and large investments in their premium services.

The past year, major airlines in Europe, North-America, and Asia-Pacific have put their brakes on fleet expansion amid significant drops in passenger volumes and yields. Nevertheless, Emirates, Etihad Airways and Qatar Airways have continued their aggressive fleet and network growth, introducing more than 30 new widebodies between them during 2009. Middle East airlines saw passenger grow 11.2 percent in 2009 according to IATA. By contrast, passenger demand dropped 5 percent in Europe and 5.6 percent in the Norh America, as well as in Asia Pacific. And plans remain bullish: With a new wave of aircraft coming, most notably Emirates and Qatar Airways are now turning their attention to other European metropolitan catchment areas and to Japan.
Read full article »

10 trend predictions for 2010

Looking forward to what will be another challenging year for the airline industry, here are 10 quote that sum up what’s on the horizon for 2010. From increased awareness of security to legacy-low cost convergence, the real-time web and business as unusual.

1. The State of the Airline Industry. “Following a decline of 4.1% in 2009, passenger traffic is expected to grow by 4.5% in 2010. A total of 2.28 billion people are expected to fly in 2010. Industry revenues are expected to rise 4.9% to USD478 billion in 2010. However, revenues remain 11% below the peak of USD535 billion in 2008 and 6% below 2007 when passenger traffic was at similar levels to what is expected in 2010. Airlines will remain firmly in the red in 2010 with USD5.6 billion in losses. In 2009, passenger yields plummeted by 12% (the world’s airlines will lose USD11.0 billion in 2009) […] and are not expected to improve. This is being driven by two factors: excess capacity in the market and reduced corporate travel budgets. […] For 2010, some key statistics are moving in the right direction. Demand will likely continue to improve and airlines are expected to drive down non-fuel unit costs by 1.3%. But fuel costs are rising and yields are a continuing disaster. […] The industry is structurally out of balance. The precipitous fall in yields will likely never be fully recovered” (IATA Industrial Forecast 2010).
Read full article »

9 airline quotes for 2009

 

As 2009 has come to an end, here’s our take on some of the most interesting quotes of the past year. Together they give a nice indication of the major trends currently shaping in the airline industry. Happy New Year!

1. Customer Experience. “They [legacy carriers] basically should get out a clean white sheet of paper and start again. Most of them are beyond repair. They got far too big and have management groups that don’t care about customer service. The experience the traveling public gets on those other carriers is pretty dire. […] If I was them, I’d start a new airline. I just don’t see how they can rescue their current airlines.” – Virgin CEO Richard Branson on what legacy carriers could learn from Virgin America (in Advertising Age).

2. The New Normal. BA’s CEO, Willie Walsh, recently observed a “structural shift” was occurring, noting “it may be that demand in the highest-yielding, fully-flexible premium business market will never recover to the levels we were seeing in 2007. […] That is a sobering message for all traditional airlines. Premium travel has been central to the viability of their business model for a very long time”. – What to do with a broken airline model? (Centre for Pacific Aviation). 
Read full article »