So yesterday - quietly and without fuss, Alitalia's Chairman declared:
“Alitalia is finished,” Mr Colaninno said yesterday. “There is nothing left.”
And with that he placed Alitalia into Bankruptcy.
So the now very complicated dance of restructuring the valuable bits (allegedly there are some) will begin. It entails some of Silvio's friends putting in some cash. It entails merging assets from AirOne into a new company. Finally it means that AF-KL will take a share. (Lufthansa at the last moment has declined as it has too much on its plate digesting the rest of Germany, Austria and Belgium. Or at least their former national carriers).
Michael O'Leary is probably rubbing his hands with glee as he gets rid of the pesky AirOne and gives him SO much ammunition to blast the deal in front of the EU it is almost laughable.
Will the name survive? Probably not as it has become synonymous with plain old junk.
I like these two versions:
Alitalia: Airplane Landed In Tokyo And Luggage In Atlanta
Alitalia: Always Late In Take-off Always Late In Arrival
Too bad about the staff - they really did push the boat out too far. And any non-government investors well tough cookies to you too.
So now its up to Sr Tajani to rule on the legality (ironic don't you think). If he had any honour he would of course recuse himself from this situation but I doubt it.
Ciao Ciao
28 August 2008
The Germans Are Coming - Lock Up Your Beer
From the file called bizarre attempts at world domination. Lufthansa seems to be hell bent on putting its foot down as many places as possible. For now I think your daughters are safe.
At the risk of upsetting my German friends - the speed with which LH seems to be moving is almost frightening. The parallels of the 20th century are striking. Not content to acknowledge its bidding for Austrian, today LH is seen in talks with the parent of Brussels Airlines (what was once Belgium's national airline SABENA for whom this blog is so named) as reported by Bloomberg.
But not content with its international expansionist aspirations which seem to be insatiable (AirOne tie up, JetBlue investment and Swiss now a part of the group) at home it is making a play to mop up its domestic footprint.
It is buying out the rest of German Wings that it doesn't own and now this comes out:
Lufthansa said earlier today that it's in talks about a possible merger of its Germanwings discount affiliate with travel operator TUI AG's low-cost carrier TUIfly Germany and the Condor charter airline owned by TUI's largest competitor, Thomas Cook Group Plc. Lufthansa holds almost 25 percent of Condor.
Excuse me Sr Tajani (current EU Commissioner for Transportation) - are you paying attention or are you so consumed with rescuing your national airline that you don't care about the consolidation that is occurring.
At the risk of upsetting my German friends - the speed with which LH seems to be moving is almost frightening. The parallels of the 20th century are striking. Not content to acknowledge its bidding for Austrian, today LH is seen in talks with the parent of Brussels Airlines (what was once Belgium's national airline SABENA for whom this blog is so named) as reported by Bloomberg.
But not content with its international expansionist aspirations which seem to be insatiable (AirOne tie up, JetBlue investment and Swiss now a part of the group) at home it is making a play to mop up its domestic footprint.
It is buying out the rest of German Wings that it doesn't own and now this comes out:
Lufthansa said earlier today that it's in talks about a possible merger of its Germanwings discount affiliate with travel operator TUI AG's low-cost carrier TUIfly Germany and the Condor charter airline owned by TUI's largest competitor, Thomas Cook Group Plc. Lufthansa holds almost 25 percent of Condor.
Excuse me Sr Tajani (current EU Commissioner for Transportation) - are you paying attention or are you so consumed with rescuing your national airline that you don't care about the consolidation that is occurring.
Zoom No More - Application Pending for Administration
BBC is reporting that Zoom has been grounded. Down to 5 planes it had the first repossessed yesterday afternoon in Calgary. Then today one in Glasgow.
As noted in a post earlier today - niche carriers are not doing well
Sorry to see it go
Thanks to Professor Addison for the tip
As noted in a post earlier today - niche carriers are not doing well
Sorry to see it go
Thanks to Professor Addison for the tip
Aer Lingus starts bleeding again - Vulnerable to Ryanair?
Despite a turnaound that has astounded many - EI has slipped back into the red in H1 2008.
Dermot Manion has had his work cut out for him - far from the nice cushy life at EK but by all accounts he is doing a good job.
But Ryanair is now a big fish and despite taking a huge hit on EI's stock earlier this year they are a significant shareholder. MOL is likely to use this opportunity to strike and undercut the former national airline. He has the power and the cost base.
I think that the amount of the loss is not that great compared to others out there - but it shows how vigilant all airlines have to be on their costs. Here the Unions need to think if they need to give back more to keep the carrier's costs down.
Ryanair didn't hedge for 2008 and it has shown. EI needs to be smarter and as (now) the smaller carrier it needs to be religious in its approach to fending off the more dynamic and dare I say predatory FR.
Cheers
Dermot Manion has had his work cut out for him - far from the nice cushy life at EK but by all accounts he is doing a good job.
But Ryanair is now a big fish and despite taking a huge hit on EI's stock earlier this year they are a significant shareholder. MOL is likely to use this opportunity to strike and undercut the former national airline. He has the power and the cost base.
I think that the amount of the loss is not that great compared to others out there - but it shows how vigilant all airlines have to be on their costs. Here the Unions need to think if they need to give back more to keep the carrier's costs down.
Ryanair didn't hedge for 2008 and it has shown. EI needs to be smarter and as (now) the smaller carrier it needs to be religious in its approach to fending off the more dynamic and dare I say predatory FR.
Cheers
Fuel Takes Another Victim - Niche Flying from Europe
A lot of noise has been made about the impact of the dramatic rise in the cost of fuel affecting US airlines. However everyone is affected. Now comes news that those airlines who offer niche services from Europe are starting to cut back. Even though the price of Jet Fuel is down from its all time highs in May the price is still about $200 more than this time last year. (See chart attached)
This week XL the UK Based leisure group and airline announced it was canceling its winter program to the Caribbean.
Their airline XL Airways will stop flying charters to Grenada, Tobago, St Kitts, Antigua, Barbados and St Lucia from November because, it said, rising fuel costs had obliterated margins on the routes.
As a result BA and Virgin (the surviving airlines on many of these routes) must be breathing a sigh of relief. However pity the poor passenger who bought a package based on these charters as they will most certainly lose their deposits on hotel rooms over Xmas unless they can find alternative arrangements - at this stage very unlikely. It will be particularly devastating to the smaller islands like St Kitts which now loses its only direct EU-Island link.
Cheers
Southwest to Government, "erm we are a little short this month."
OK so maybe I am exaggerating a little but this is somewhat bizarre behavior, Southwest is telling the government (according to Travel Weekly) that it wont meet the deadline for paying the fine for various Inspection Infractions.
It hardly seems likely that Southwest - the US's most profitable airline since as long as most people can remember - is short of the odd $10.2 Million it owes.
If it fails to meet the deadline then the case will be turned over by the DOT to the Department of Justice. The latter has the power to seize assets amongst other things.
So let's see what could they do... What Aer Rianta did to Ryanair once and impounded its plane? Or worse freeze bank accounts which would actually be a lot worse because that would cripple the airline's ability to take in revenue.
Most bizarre....
It hardly seems likely that Southwest - the US's most profitable airline since as long as most people can remember - is short of the odd $10.2 Million it owes.
If it fails to meet the deadline then the case will be turned over by the DOT to the Department of Justice. The latter has the power to seize assets amongst other things.
So let's see what could they do... What Aer Rianta did to Ryanair once and impounded its plane? Or worse freeze bank accounts which would actually be a lot worse because that would cripple the airline's ability to take in revenue.
Most bizarre....
So how much will you spend on your lifetime of holidays?
Inquiring minds want to know. Well someone actually did a bit of research and asked a specific question - the total lifetime expenditure on accommodation.
RCI - The Timeshare company was formerly part of Cendant now still part of Wyndham when the hotel part was spun out RCI went with them.
The poor hapless subjects they chose to ask were the Brits. No slouches when it comes to spending time on vacation.
The answer was surprising to me - GBP 40,000. Actually not a heck of a lot during the lifetime of the subjects. that's a good 70 years.
Have a read about the survey here:
http://www.traveldailynews.com/pages/show_page/26888
Cheers
RCI - The Timeshare company was formerly part of Cendant now still part of Wyndham when the hotel part was spun out RCI went with them.
The poor hapless subjects they chose to ask were the Brits. No slouches when it comes to spending time on vacation.
The answer was surprising to me - GBP 40,000. Actually not a heck of a lot during the lifetime of the subjects. that's a good 70 years.
Have a read about the survey here:
http://www.traveldailynews.com/pages/show_page/26888
Cheers
27 August 2008
Winter is coming early - September 2nd
So we are in the last week of the US summer and the first week of "un" summer in Europe. As people head back to work from their summer vacations. BBQs will be put away, Swimming Pools closed for the season. etc etc
For the travel industry as a whole this marks the first few days of a different world. A world where planned cuts are going to amount to at least a 5% global drop in flight capacity and probably a drop of 15+% in the world's largest market - the USA.
This is a pretty significant loss any way you present or try to spin it.
We recently reviewed all the cuts that have been announced so far in the airline market and then we looked at the impact. We have examined the likely changes that will occur within the airline sector both in the US and other worldwide markets. Its going to be sobering.
So far our assessment is as follows: (this is just a headline - we have lots of empirical data).
A) We don't think the cuts in aircraft have been fully reflected in the number of staff cuts. Even accounting for more efficient use of the remaining aircraft - there is still a significant amount of human resource cost that has not been removed from the equation. We believe therefore that there will be further redundancies and shedding of labour from all levels of an airline. Some more than others.
B) Accommodation needs to ratchet back capacity and costs. We believe that there is not enough cost and reduction in capacity in the accommodation market to mirror the reductions in airline capacity cuts. Further we believe that there are certain sectors who will be disproportionally affected. Specifically at the mid-upper segment of the market which has now a surplus of capacity.
C) Selected markets will be adversely affected. We are already seeing cuts in key markets which will feel a disproportionate impact. Specifically - we believe that Las Vegas will feel a greater degree of chill. Key markets like Los Angeles will show dramatic reductions.
D) Some vendors will be affected far greater than others. Again specifically those who are tied to declining sectors or dependent on declining suppliers. Steer clear of United in Denver for example.
E) We will see some more failures. The big 7 carriers have all made strong efforts earlier this year to reduce their operations, some more successfully than others.
Now it is time to see if the impact will be positive. Let's pay attention in the next few months to the key indicators. Passenger count, Load Factors and Yield.
Good luck everyone - this is going to be a rough ride.
For the travel industry as a whole this marks the first few days of a different world. A world where planned cuts are going to amount to at least a 5% global drop in flight capacity and probably a drop of 15+% in the world's largest market - the USA.
This is a pretty significant loss any way you present or try to spin it.
We recently reviewed all the cuts that have been announced so far in the airline market and then we looked at the impact. We have examined the likely changes that will occur within the airline sector both in the US and other worldwide markets. Its going to be sobering.
So far our assessment is as follows: (this is just a headline - we have lots of empirical data).
A) We don't think the cuts in aircraft have been fully reflected in the number of staff cuts. Even accounting for more efficient use of the remaining aircraft - there is still a significant amount of human resource cost that has not been removed from the equation. We believe therefore that there will be further redundancies and shedding of labour from all levels of an airline. Some more than others.
B) Accommodation needs to ratchet back capacity and costs. We believe that there is not enough cost and reduction in capacity in the accommodation market to mirror the reductions in airline capacity cuts. Further we believe that there are certain sectors who will be disproportionally affected. Specifically at the mid-upper segment of the market which has now a surplus of capacity.
C) Selected markets will be adversely affected. We are already seeing cuts in key markets which will feel a disproportionate impact. Specifically - we believe that Las Vegas will feel a greater degree of chill. Key markets like Los Angeles will show dramatic reductions.
D) Some vendors will be affected far greater than others. Again specifically those who are tied to declining sectors or dependent on declining suppliers. Steer clear of United in Denver for example.
E) We will see some more failures. The big 7 carriers have all made strong efforts earlier this year to reduce their operations, some more successfully than others.
Now it is time to see if the impact will be positive. Let's pay attention in the next few months to the key indicators. Passenger count, Load Factors and Yield.
Good luck everyone - this is going to be a rough ride.
26 August 2008
Ancillary Revenue Scams hit the Car Rental Market
For many years you were supposed to feel special if you were a Hertz #1 Club member. Sounds very special, but like many things in the Travel Industry it isnt quite what it purports to be.
So Hertz invented Gold to match the Avis Preferred program. Avis upped the Ante recently with Avis First.
Well now Hertz not to be outdone will give you a very special deal. Here is the benefits package:
Accept this special invitation to upgrade your status to Hertz #1 Club Gold® President's Circle® and enjoy:
• Guaranteed availability during our busiest periods on just two hours' notice
• Guaranteed one-car-class upgrades*
• Preferred parking space assignments
• 600 Hertz #1 Awards® Points for every 15 rentals**
• A 25% Bonus on #1 Awards Points on your Hertz rentals
• Exclusive members-only offers with limited blackout dates*
No real catch other than it costs $450 big ones!!!
Well I am sticking with Avis as a result of this. Unless Avis starts the same thing. Then I will defect elsewhere.
Frankly I am just amazed at how stupid the suppliers seem to be in trying to screw their loyal customers. Maybe I am missing something. The numbers I am sure will look good - but the cost of reduced loyalty and creating ill will for the consumer is nothing short of - well stupid.
Cheers
So Hertz invented Gold to match the Avis Preferred program. Avis upped the Ante recently with Avis First.
Well now Hertz not to be outdone will give you a very special deal. Here is the benefits package:
Accept this special invitation to upgrade your status to Hertz #1 Club Gold® President's Circle® and enjoy:
• Guaranteed availability during our busiest periods on just two hours' notice
• Guaranteed one-car-class upgrades*
• Preferred parking space assignments
• 600 Hertz #1 Awards® Points for every 15 rentals**
• A 25% Bonus on #1 Awards Points on your Hertz rentals
• Exclusive members-only offers with limited blackout dates*
No real catch other than it costs $450 big ones!!!
Well I am sticking with Avis as a result of this. Unless Avis starts the same thing. Then I will defect elsewhere.
Frankly I am just amazed at how stupid the suppliers seem to be in trying to screw their loyal customers. Maybe I am missing something. The numbers I am sure will look good - but the cost of reduced loyalty and creating ill will for the consumer is nothing short of - well stupid.
Cheers
Surrendering your privacy for speed
So today dear friends I gave up (yet again) my privacy to another government. This time to the USA government. I went for the new Enhanced Drivers License process in Washington State (my home state and one of the first to adopt the EDL program). The new EDL allows me to pass quickly between the USA and its neighbors by land - Canada and Mexico.
Frankly if this is the process of change then there is not much to commend it. But obviously it will speed my life up.
So far this makes the 12th country to whom I have surrendered the right to investigate my background and allegedly be able to continue poking around.
Is it worth it?
I have may tales to tell of early glitches and poor assumptions. (Please dont let me get started on the issue of root names). In general though the systems should work. However once mass adoption occurs then there will be lots of issues and then someone will find a back door and we will all be in trouble.
Anyone who has read William Gibson will understand that this is an imperfect world and getting scarier by the minute. Sadly a clear and unequivocal policy is not made nor is any real attempt made to engage the citizens and users in the process of adoption.
This is my personal opinion only
Cheers
Frankly if this is the process of change then there is not much to commend it. But obviously it will speed my life up.
So far this makes the 12th country to whom I have surrendered the right to investigate my background and allegedly be able to continue poking around.
Is it worth it?
I have may tales to tell of early glitches and poor assumptions. (Please dont let me get started on the issue of root names). In general though the systems should work. However once mass adoption occurs then there will be lots of issues and then someone will find a back door and we will all be in trouble.
Anyone who has read William Gibson will understand that this is an imperfect world and getting scarier by the minute. Sadly a clear and unequivocal policy is not made nor is any real attempt made to engage the citizens and users in the process of adoption.
This is my personal opinion only
Cheers
24 August 2008
Amadeus Lobbying vs Consumer Protection - MEPs to decide this week
This week (or shortly depending on their demanding summer holiday schedule) the nice people who are supposed to represent the interests of the European Consumers - namely the Members of the European Parliament - will vote on the new CRS rules and code of conduct. Most of the rules are common sense. However one rule remains open to abuse. As a direct result of Amadeus Lobbying (and no doubt some nice amounts of contributory political expedient cash) The Commissioner (now an Italian) will rule on one contentious issue that of the definition of "Parent" carrier.
The issue is simple. Does Amadeus board of directors which includes voting representatives from the 3 former majority owners - Iberia, AirFrance/KLM, and Lufthansa constitute a totally open and transparent separation of interests with the Amadeus GDS. (The Commission and European Parliament persist in using the term CRS even though the rest of us correctly use GDS?
Each of these airlines is dominant not only in its own markets but exert significant influence over a very broad swath of the Travel Industry. Amadeus too is now without any shadow of doubt the dominant market force in distribution of airline and travel products throughout the European Community and the other members of the ECAC states.
If the MEPs follow the path they are on - they will free the Madrid based company from any and all restrictions. This is blatantly anti competitive and must be stopped.
The EU parliament's TRAN committee (the group who reviewed the proposal) agreed by an overwhelming majority to place restrictions by creating a new definition of airline parent type control. This was essentially if one or more airlines with board representation owned a chunk of GDS stock then they would be subject to the parent restriction which would ensure open competition between Aamdeus and those GDSs who did not have Airline ownership. Despite this vote the Commission pressed the so called "Independent Rapporteur" appointed to look into this situation to withdraw his original recommendation and table it for the future review - past when the MEPs would vote.
Comically this makes for typically hilarious political quango reading. Sadly this makes for a potential disastrous monopolistic situation in all ECAC markets.
Some might say that the issue is moot from two perspectives.
A) the market is in open turmoil anyway as witnessed by the Lufthansa vs Amadeus spat in Germany over the new fee structure to be imposed on Amadeus generated travel agency bookings
B) the real market has moved direct with the LCCs and the FNC airlines fighting it out directly.
In my view Amdeus is already too dominant. The level of dominance of Amadeus demands a totally fresh look at its businesses. Rather than giving it new freedoms - it should be split up into its component parts:
Airline Hosting and IT services
Distribution services
Non-Air Services including branded products such as Opodo.
The current interlocking relationships of Amadeus and its airline owners has been held in check for many years under the current ECAC code of conduct. To sweep that away now as the market consolidates both on the airline side and on the GDS side would be tantamount to a license to print even more money by Amadeus and its airline owners at the expense of the consumer. It is anti-competitive, It is anti-consumer and its not within the spirit of the EC laws.
Not sure that the MEPs will pay any attention. They know but frankly they don't seem to care.
Check out what BTC has to say about this.
Cheers
The issue is simple. Does Amadeus board of directors which includes voting representatives from the 3 former majority owners - Iberia, AirFrance/KLM, and Lufthansa constitute a totally open and transparent separation of interests with the Amadeus GDS. (The Commission and European Parliament persist in using the term CRS even though the rest of us correctly use GDS?
Each of these airlines is dominant not only in its own markets but exert significant influence over a very broad swath of the Travel Industry. Amadeus too is now without any shadow of doubt the dominant market force in distribution of airline and travel products throughout the European Community and the other members of the ECAC states.
If the MEPs follow the path they are on - they will free the Madrid based company from any and all restrictions. This is blatantly anti competitive and must be stopped.
The EU parliament's TRAN committee (the group who reviewed the proposal) agreed by an overwhelming majority to place restrictions by creating a new definition of airline parent type control. This was essentially if one or more airlines with board representation owned a chunk of GDS stock then they would be subject to the parent restriction which would ensure open competition between Aamdeus and those GDSs who did not have Airline ownership. Despite this vote the Commission pressed the so called "Independent Rapporteur" appointed to look into this situation to withdraw his original recommendation and table it for the future review - past when the MEPs would vote.
Comically this makes for typically hilarious political quango reading. Sadly this makes for a potential disastrous monopolistic situation in all ECAC markets.
Some might say that the issue is moot from two perspectives.
A) the market is in open turmoil anyway as witnessed by the Lufthansa vs Amadeus spat in Germany over the new fee structure to be imposed on Amadeus generated travel agency bookings
B) the real market has moved direct with the LCCs and the FNC airlines fighting it out directly.
In my view Amdeus is already too dominant. The level of dominance of Amadeus demands a totally fresh look at its businesses. Rather than giving it new freedoms - it should be split up into its component parts:
Airline Hosting and IT services
Distribution services
Non-Air Services including branded products such as Opodo.
The current interlocking relationships of Amadeus and its airline owners has been held in check for many years under the current ECAC code of conduct. To sweep that away now as the market consolidates both on the airline side and on the GDS side would be tantamount to a license to print even more money by Amadeus and its airline owners at the expense of the consumer. It is anti-competitive, It is anti-consumer and its not within the spirit of the EC laws.
Not sure that the MEPs will pay any attention. They know but frankly they don't seem to care.
Check out what BTC has to say about this.
Cheers
Beijing Olympics - And the Real Winner is....
OK - I am going to deviate from our usual focus and play a little game.
If you look at the medal tables - http://news.bbc.co.uk/sport2/hi/olympics/medals_table/default.stm
You will see the results that the media has been using. However the medals table seems to acknowledge only that the results are binary with a gold having the same value as a bronze. Given the extraordinary feats during these Games that seems hardly adequate. So I went back and looked at a handicap method. This is a common value of Gold = 4 points, Silver = 2 points and Bronze = 1 point. I then reordered the table.
The top 10 changes a bit!
Old Rank
United States
China
Russia
Great Britain
Australia
Germany
France
South Korea
Italy
Japan
New Rank
China
United States
Russia
Great Britain
Germany
Australia
South Korea
Japan
Italy
France
And here is the kicker....
If we used the old USSR as a full country - the medal count would be different . The Soviets would have just blown away both China and the USA for the undisputed crown. So the real winner is.... the USSR!
Ah the good old days........... ;-)
Oh yes - and bragging rights to the British over the Aussies for the first time since we don't know when they last had a better Olympics.
So till we meet again in London in 2012!
Cheers
Timothy
PS if you wish to challenge my mathematical skills please send me a note and I will send you the calculations.
If you look at the medal tables - http://news.bbc.co.uk/sport2/hi/olympics/medals_table/default.stm
You will see the results that the media has been using. However the medals table seems to acknowledge only that the results are binary with a gold having the same value as a bronze. Given the extraordinary feats during these Games that seems hardly adequate. So I went back and looked at a handicap method. This is a common value of Gold = 4 points, Silver = 2 points and Bronze = 1 point. I then reordered the table.
The top 10 changes a bit!
Old Rank
United States
China
Russia
Great Britain
Australia
Germany
France
South Korea
Italy
Japan
New Rank
China
United States
Russia
Great Britain
Germany
Australia
South Korea
Japan
Italy
France
And here is the kicker....
If we used the old USSR as a full country - the medal count would be different . The Soviets would have just blown away both China and the USA for the undisputed crown. So the real winner is.... the USSR!
Ah the good old days........... ;-)
Oh yes - and bragging rights to the British over the Aussies for the first time since we don't know when they last had a better Olympics.
So till we meet again in London in 2012!
Cheers
Timothy
PS if you wish to challenge my mathematical skills please send me a note and I will send you the calculations.
Subscribe to:
Posts (Atom)