Ryanair - Looking At All Options

Ryanair is not letting the moss grow under its feet. Having been spurned by Boeing while it ponders what to do with its aging 737 - clearly Airbus is not biting yet either with the A320NEO; so what other options does the spunky Irish LCC have at its disposal?

Well the answer is several.

At the moment there is no need for either of the two big boys to play the Two Michaels game. With Fuel Prices at nearing historical heights due to the conflicts in the Middle East Region - there are many others looking to cut deals to meet Ryanair's demands for a low cost aircraft. Remember that Ryanair is still shopping a 300 plane order. Probably the largest order for jet aircraft ever. As I wrote in January this is a story that will run for a bit.

So now the Michael Crawley (Ryanair #2 man) has hinted at the Russians or the Chinese as options. The Bombardier or the Embraer aircraft are likely to be a bit too small for the pack 'em in crowd.

So I have a suggestion - and I am prepared to throw my hat into the ring with another idea.

Re-engining Low Time MD80/90s and B717s with a GTF engine. There is a huge number of these aircraft. The total cost of this process would be about half of the new aircraft in small numbers - in volume the savings could rise to about 60% or more for a fuel load penalty of perhaps 10 - 5% over the existing 737NGs. Another factor in its favour is that they come in varying size which would enable FR to serve additional smaller markets. I thought about 737 Classics and NGs but the cost to re-engine these machines while attractive requires the addition of fixing the undercarriage which has so far stumped some of the best minds.

Just a thought.

Cheers

Where Have All The Low Costs Gone?

I must be having a fit of deja vu or something even worse. I thought LCCs were supposed to be about low cost and eschewing the trappings of conventional airline services such as Big PSS systmes, Interline, FF marketing partners, Interline, Codeshare, Legacy GDS etc etc.

Here are the bigger news items:

WestJet, JeBlue and Volaris are all migrating (or have migrated) to Sabre from Navitaire.
jetBlue is doing a deal with AA and BA for codeshares and feeders.

Gol is joining IATA. It already participates in ARC.

So let's talk about interline...

Not content there:

Air France-KLM and Jetstar sign interline agreement. Agreement covers the 60-odd destinations served by Jetstar, Jetstar Asia/Valueair and Jetstar Pacific, as well as Air France and KLM gateways Paris and Amsterdam.

Jetstar has also announced deals with LH

Virgin Blue are sharing across the Tasman sea with ANZ

Even Air Asia and Jetstar are doing deals with Delta for FF use. Check this out!!!



Am I missing something or is there a quiet revolution going on....

What I find interesting here is that there is a downside to all of this - the use of the more expensive distribution tools such as these things are beginning to drag down the profitability of the LCCs. Yet this week LCC champ Ryanair once again showed us that the true LCC model is very much alive. And very profitable now thank you very much.

Perhaps now that everyone is flush with cash they will spend a little to assess the true cost of these programs.

iPads all round anyone?

Cheers

Easyjet V4,0 = V1.5?

Andy Harrison the Third leader for U2 is to leave in June 2010. Since taking over from Ray Websterin 2005 he has presided over the transition of the airline from pure startup to mature hybrid airline.

However the long running battle between Founder Stelios and first the board and more recently the senior management over expansion plans has probably contributed to what many will consider Andy's early exit.

So the critical question is who the new chap will be and what will this signify to the airline's future direction. Will the next leader go back to the future?

It would seem that the more conservative approach adopted by Harrison will be replaced by an aggressive market footprint expansion. With Ryanair having grown significantly since 2005, Easyjet has pursued profitability over pure growth. There is however an opportunity to grow the airline with over 100 planes on order over the next few years. Y2 has shown its ability to compete as a hybrid carrier and optimize yields better than its Irish larger "LCC Cousin".

I would probably think we are going to see a more aggressive stance to new markets with U2 and even the opportunity to export the business model to other markets.

Stay tuned

Cheers

O'Leary to Retire.... Say It Ain't So!

Once again MOL is threatening to retire to the Irish Countryside if media reports are to be believed.

This time he sets a 3 year time threshold. It used to be less... but I digress.

The airline is now mature enough to survive without his positive/negative impact. However there is no doubt that MOL will be a figure in history in the LCC phenomenon.

If he does - what's the betting he stays on to create FR - Long haul

Cheers

Air New Zealand's IT "Melt Down" vs Ryanair's "Planned Outage"

Air New Zealand is one of those airlines that has had its fair share of ups and downs. Nearly brought down by the Ansett Failure and a disastrous set of relationships, the carrier in recent years has operated shall we say a more realistic business model.

On Sunday (October 11th) an airline's worst operations nightmare was realized. Their IT systems crashed - specifically check-in went down. Interestingly it happened on the quietest day of the week in a relatively light weekend. The total number of passengers impacted was estimated at 10,000. The outage did not meet the threshold of compensation as the actual outage was less than the mandatory period. So in reality it was not such a huge deal.

The next day the staff of NZ were treated to a blistering memo from CEO Rob Fife. Here is one link from Computerworld which was probably the most prosaic of all the commentaries.

Now this was interesting in two ways and this is the point of my post here.

The press over Ryanair's planned outage during its cutover from OpenSkies to NewSkies was quite moderate in comparison. And the system was actually down for days not a few hours with operational impact that lasted for several weeks after. Even more recently there have been issues reported at Stansted with check-in systems going down. Remember FR is now 100% web or kiosk check in. Ryanair typically moves more than a million passengers per week.

So the setting of expectations and managing the message becomes quite clear. However perhaps more important it illustrates the love hate relationship that Airlines have with IT.

A final point is a demonstration of why I think Ryanair is actually actually behind the scenes a model for a lot of other airlines. The fact that the airline (FR) can revert to running essentially on paper is nothing short of miraculous. The fact that today they are one of the top 5 airlines for branded passenger operations shows that perhaps there is a lot of stuff that other airlines have that is really useless.

Now that is what I call food for thought.

Cheers

Southwest to Europe, Ryanair to USA – LCCs Spread Wings

These days it seems that Southwest has started to copy Ryanair more and more.

First it introduces priority boarding. Then it starts charging for extras. Now it seems to be following the mouth of Michael O’Leary by announcing that Southwest Airlines plans to open international routes to Europe and South America, although so far there is "no timetable" for the move, Lee Lipton Director-Network Strategic Planning has told this publically at the Routes 09 Conference just ended in PEK. Ryanair is more than a little famous for its CEO describing some of the - er amenities - on the long haul flights he has proposed.

The interesting thing will be a view of what the travel experience will be like. As for the equipment, WN has had a Transatlantic capable aircraft for many years. However none of its 737-700s are equipped for ETOPS. With big and mid size twins regularly serving the Atlantic and Latam markets this should not be a stretch. 737-700Ers and 737-900ERs are already plying their wares in markets around the world and of course light loaded BBJs have this capability as indeed does Airbus ACJs although today no Airbus narrow body is currently flying transatlantic commercially in ETOPS configuration (watch for someone to prove me wrong).

The launch of Air Asia X in 2008 has shown that irregular schedules integrated into a regular operation can work quite nicely thank you. One thing you can be sure of… this has sent network planners scurrying for their slide rules and laptops.

Cheers

Ryanair - The First Airline Ever To Publicize An Outage

Well you have to hand it to the boys and girls in Dublin. Calling a spade a spade has never been a problem

So announcing that they will shut the site down on June 24th is a bold but actually pretty fair move.

It is one of the only times I can remember when an airline says it will shut down its site and sets the expectations for how it will handle itself in the process.

I find this very refreshing

Cheers

Speculating On The Ryanair Order

So Ryanair is getting a lot of interest in its potential order for up to 300 Aircraft.

Most people poo poo Michael O'Leary as a crank. He frequently floats ideas just for effect. 1 Pound Toilets anyone?

This time however we think he is in deadly earnest and no one can afford to ignore him.

In a year when the NET airline bookings for both Airbus and Boeing have JUST cracked double figures, these sort of numbers are astronomical and terribly important to the stock of both companies. (EADS and Boeing).

The big question really is the likely outcome. So there are 4 doors:

Behind Door #1 is an all Boeing deal. Conventional money is on this one because its somewhat obvious.
Behind Door #2 is an all Airbus deal. This is the risky profile by JL is the master salesman.
Behind Door #3 is a composite deal. This will be expensive for both parties because both suppliers will have to pay extra to allow it.
Behind Door #4 is the goat. IE a laughing MOL.

I am not making any bets - just yet... except the side bet that THERE WILL BE A PR statement during Paris.

I also have a secret bet on something else. I will share with you if it happens. It has to do with a slightly different proposition.

Cheers

Plane Mad at Michael O'Leary

So the Irish version of Plane Stupid - Plane Mad - had one of their chaps come and disrupt the Ryanair AGM a little while back.

Here is the Video link. http://www.planestupid.com/?q=content/plane-mad-disrupt-ryanair-agm

However MOL is wrong on one point - there is scientific evidence that Aviation contributes to Global Warming and yes there is an impact by Humans on Climate Change.

Where I absolutely agree with him is that additional Green Taxes on Aviation is hardly likely to impact air travel and we need better all round policies not just taxes that will just be spent elsewhere as has been proved so many times.

Cheers

Eurosharks - and when the smoke cleared there were 4

For Austrian Airlines - not surprising to some - but perhaps a shock to others - the game of musical ownership shares/chairs now looks like this:

There are 4 declared short listed bidders for Austrian Airlines' publicly held shares. They are (drum roll please):
BA, AF/KL and LH plus a dark horse bid from S7.

This sets up the battle for the big boys to buy something. So the battle lines are drawn and everyone is going to battle for each and every one of the little/poorly guys. And dont count out the rich chaps. Austrian has no value to someone like Ryanair or Easyjet but dont expect them to sit on the sidelines when Sabena (excuse me I mean Brussels Airlines) comes on the block more formally.

Interestingly I was doing some filing over the weekend and came across an old copy of Air Transport World April 2008 entitled "SAS Alone" which was the cover story. Judging by the recent frenzy the task to reform SAS just got a WHOLE LOT harder.

All airlines are now keeping their heads down. I hear that many airlines are canceling participation in conferences. Now why do you think that? it can't just be that they dont want people to travel does it?

Do we hear any fat ladies warming up? I think I hear quite a few. Certainly the dogs around me are howling in anticipation of the final chorus

Exclusive: O’Leary Quits Ryanair – to start new Long Haul LCC

Exlusive to T2. O'Leary resigns as CEO of Ryanair.

After 3 years of saying “Maybe” Michael O’Leary has finally taken the plunge and will leave the Irish airline he has nurtured to great success. Today is his last day.

O’Leary is reported to have come to terms with the FR Board and using his position as a director of Ryanair Direct has in fact made himself redundant along with the other 40 employees in Dublin.

Clearly he has his eye on something bigger. Beaten to the punch by David Neeleman of jetBlue in starting a new airline in Brazil, O’Leary will be starting a new airline to be based in Dublin and will start service exactly one year from today 1st April 2009.

T2 can exclusively reveal that the new airline will be built on the pure low cost model. It will feature long and short haul flights but mostly long haul. Its first destination is the Island paradise of San Seriffe in the Indian Ocean where the flights will land at the Capital Bodoni. It’s a bit of a stretch to make a 737-900ER get there but the canny O’Leary was able to snag several in a fire sale at Boeing’s Renton plant now that the original purchaser – Adam Air – has gone out of business. He will initially purchase 4 of the green tails. He is planning to fly next to Hawaii and take over routes previously flown by now defunct Aloha Airlines.

The airline has already been named and the website address Myegoair.com has already been allocated. Commented O’Leary “I am F***ing tired of listening to other S***heads telling me what to do.” Now he feels he can really tell them where to get off. Advanced reservations are already being taken at a brisk pace.

For further details please contact Mr O’Leary directly at tightwad@myegoair.com

BA Customer Service Model - Ryanair

You would thing that the "World's Favourite Airline" would not want to emulate the World's Cheapest Airline. But it seems that BA wants to do just that.

I am a member of OnBusiness their small business corporate account program. I could not access the account - my fault - cannot remember the password. So I follow the onscreen instructions which fail to let me reset my password. (OK I gave it a good shot 5 times for me and one for another more deliberate and less impatient human being).

OK so the site advises me to contact BA OnBusiness customer service. This is where the joke starts to get funnier. The web instructions are incorrect - redirecting me as a US account to the UK service centers. OK - I deal with that by finding the right information in another area on the website. So I do.... a nice BA agent lets call him Fred (Who is a real BA employee not a contractor). Duly takes the information and after being on the phone for 5 minutes I realize that he has to speak to another desk who has the ultimate power. Nope they dont want to help - contact us by email. We will get to it later. Of course the REASON I want to use the account is so I can make a booking. Silly me.

This process took over 20 mins including trying to speak to a Supervisor who also didn't want to help and directed me to the same (broken and lame) process.

So my only option is to follow the bouncing ball on the website. Customer service contact information - it AGAIN incorrectly directs me to the UK centers. So US customer service options of course are nothing like what I would need... the best option for logging my "issue" was "Corporate Policy".

Even Ryanair is easier to deal with - they at least tell me NO up front.

Memo to BA... you lost a biz class trip US to Europe. You will lose more unless you can figure out a way to deal with this.

Oh yes and I am a Gold Card holder on BA. Boy do I feel special.....

Cheers

Timothy

Ryanair does it again... Sarkozy objects to ad featuring him

Te he....

The French are not amused. At least the Elysee Palace is objecting to the current ad that appeared today in Le Parisien.

It features Sarkozy and his main squeeze who has a little speech bubble that says - now all my family can come to the wedding. It is actually very funny.

http://www.ibtimes.com/articles/20080128/sarkozy-objects-to-ryanair-ad.htm

Some people have no sense of humour

Its Official! EasyJet is not a Full Blown HVC

Throwing out the pure LCC (Low Cost Carrier) model in favor of the HVC (Hybrid Value Carrier) has been on the cards for some time for Stelios's Orange clad heros. Now they big step, they have agreed to go into the GDS - Amadeus and Galileo for sure. Given their reach these make sense. (Sorry Tex!)

Using the model developed for Norwegian Air Shuttle, the GDS will be charging out a fee for this "service" This fee will be listed in the final pricing.

Impact?

So GOOD for Easyjet - they needed to do this for the broader reach. This gives them what they want and at a model that makes sense

VERY RISKY for Amadeus and Travelport. I believe this is a short sighted decision and will ultimately result in many conventional carriers adopting the model. However so far Amadeus has proved adept at surfing over this issue. However the number of Masterpricer transactions will be a big sticking point. I would love to have listened to that conversation. I doubt that Easyjet had good advice on this subject.

SIGH OF RELIEF for the travel agents - they now have less competition but more work and more cost

NEUTRAL for corporations - not sure its a benefit though - its more paper/processing work

BAD for LCC scanning vendors. But not that bad since Ryanair is not going to follow suit.

GREAT for Ryanair.They wasted no time in crowing over this one. Read the great press release:
http://www.ryanair.com/site/EN/news.php?yr=07&month=nov&story=gen-en-051107

For the other competition, expect Air Berlin however and several others (eg German Wings) to follow suit.

Hertz owes it all to Ryanair?

Well not quite but the numbers are pretty good. Outpacing both domestic and international regular growth by a factor of at least 2 - Hertz cozy relationship with Ryanair goes from strength to strength. So far in their best quarter of the year for Leisure activity - Hertz went as far as to comment on the value of the exclusive relationship between the two companies.

PS Sorry if the image is a bit fuzzy... use your glasses!

https://images.hertz.com/pdfs/Q32007HTZPressRelease.pdf

Pricing Power hits - er India?

The headline is not a mistake.

While there has been a lot of attention paid to the stellar growth of the Online Travel Sector in India and the spectacular explosion of LCC traffic - the hotel sector has been quietly suffering. There are essentially no hotel rooms in India. So anyone with any can charge a premium. Up till now the paucity of product has been tempered by the lack of available distribution channels. With all the Online players and even the airlines now able to offer hotel rooms in combination or seperately - the hotelliers can rightly flex their muscles. In a recent report in Travel Weekly OZ one tour operator described the situation as "out of control". Duh... wake up people. Just look at the US market and for a REALLY tight supply situation look no further than the world's most expensive city... Moscow

Mr O'leary - you do have a point. EC logic failure

While the ever ebullient Mr O'Leary can hardly be described as the most diplomatic of folks, he certainly does have a point over the EC's recent ruling on the moribund EI/FR merger.

The EC has been considerably adroit at avoiding a formal confrontation on the aid issues to "sick" European airlines. Particularly Alitalia and Olympic (whatever it’s called this week). But it goes back further to Sabena, Air France TAP and others. To disallow the valid merger between the two certainly goes totally against the grain of the EC's stated and legislated policies.
As this is a family blog I will not repeat some of the more colorful statements of Mr O’Leary on the subject but you have to admit there is a significant logic disconnect going on here.

I believe the merger was a non-starter due to the Irish Government's blocking shareholding and the Union's opposition. But in the next down turn, this is a dangerous precedent of the EC reacting to member state pressure. However when you are judge, jury and executioner (as is the EC's rights in law) then I guess you can do whatever the heck you like.

Personally I think the Commission has done itself a huge disservice and should be publically flogged.

Cheers
Timothy

LCC with a real difference - the All Veggie airline

New airline with the catchy name of MDLR Airlines http://www.mdlrairlines.in/ has a new and definitely different twist offering Vegetarian "Exquisite Cuisnine" to its patrons on a definitely not LCC Avro RJ70.

With the Indian market very crowded - lets hope these guys do well. Maybe this is the start of an all new trend - Niche LCCs. We can just see Mr O'Leary starting his own PottyMouth Air.

Cheers

Timothy