Willie Walsh: Hey Branson nach bhfuil rud ar bith do bhranda fiú

Rough translation:

Hey Richard Branson your Virgin brand is worth squat but I will take your slots.

I didn't think it was appropriate to translate the rest of his statements...

However if you would like to read them in English go here:

http://www.flightglobal.com/articles/2011/02/24/353562/iag-very-interested-in-virgin-but-only-for-slots.html

Cheers

BAAABI All But Dead in Its Current Form

The now stalled negotiations between British Airways, Iberia and American Airlines to form a true joint venture are all but dead in their current form after BA's leader Willie Walsh told a Spanish Newspaper that “These negotiations aren’t a distraction for our management team,” he said. “BA and Iberia know each other very well, so I don’t feel under any calendar pressure.”

Perhaps not so for him - but in March his opposite number at the former Spanish National Carrier indicated that a decision was both imminent and would indeed be made at the end of March. Well that came and went with no public announcement. So pretty much that puts paid to the possibility of a BA+IB merger in the short term.

So this leaves the proposed BA+AA+IB (BAAABI to you and me) JV in limbo. American might just start to get impatient with their European cousins.

In my opinion the IB+BA merger has lost its luster and wont regain it for some time. Willie has many more urgent issues on his plate. When he says this topic "isn't a distraction for our management team" that is somewhat of an understatement. BA has many pressing issues on its plate that far outweigh the merger. Not least of which of course is the current situation with its traffic numbers. March is likely to be awful at the very time when the US market is actually showing some signs of life. Whereas total US travel agency transaction numbers were off by a lesser amount in March that the disastrous numbers in Jan and Feb, International yields went into the toilet.

So does the transatlantic JV make sense in this environment? Specifically booking numbers for March show that international transaction numbers were off by 8% vs the total transactions off by 11%. However when the value of all US agency issued tickets is counted the proportion was reversed 27% vs 25%. I guess those Wall Street Types have either stopped traveling or are slumming in Coach - or more likely on domestic airlines. Anecdotally we are hearing that many recipients of US government bailouts are quietly instituting a buy American policy. The logic is that the US public would be really outraged if they thought that their tax dollars were being used to fly in business or first on a foreign airline when their own carriers are hurting so badly. Thus BA is clearly hurting badly and their numbers show it. BA's profile on the Transatlantic that represents such a large part of its business right now just stinks.

However with Continental getting its Star anti-Trust immunity nod this week - AA at least must be thinking that things are looking up. Not so fast quickdraw. AA+IB+BA's share of traffic at LHR is not dropping - actually it has climbed. With AA closing LGW and STN last year all their eggs in the Southeast of England are now concentrated at LHR. The dominant position that the triumvirate comprise at Fortress LHR is not likely to change any time soon either. Thus the dominant position they would exert on the Transatlantic market remains a threat to any competitor.

QED I think my supposition is that BAAABI is still dead.

Let's hope that they can come up with something magical to revive this.

Cheers

LHR 3rd Runaway Approved by Brown Administration

More details to come - but the project is GBP 9 billion and includes Terminal 6

Cheers

T

Perhaps I shouldn't Look at the Bad News

The numbers are still coming in - and they are still bad.

I wont bother re-hashing the details but we are seeing continued bad news from all sectors and all geographies.

December it seems was particularly bad in Europe and Asia. Cathy Pacific said it that its premium traffic is tanking and that Cargo - "is even worse". Surprisingly bad numbers from LHR. down nearly 3 % and a whopping 13% drop at Stansted UK base for Ryanair.

Campaigners against LHR's 3rd runway are very happy as it bolsters their claim that it isn't necessary. However with traffic set to resume growth in 2010 I think that is unlikely to happen. Some good news perhaps?

Cheers

Saver Tip at LHR.

Here’s a little tip. If you are at LHR and stay at one of the local hotels along the Bath Road – there is usually the Hotel Hoppa bus that you need to pay 4 Pounds each way. But if you take the 423 Bus – it runs with slightly less frequency but it is (wait for it…) free. It’s a service of the local council. So look out for it.

Cheers

The Battle for LHR's 3rd Runway

The approval from the Central Government for LHR’s 3rd runway is likely to be given this week. All the signs are that the combination of Mandy, Hoon and Brown (Lord Mandleson – Business Minister, Geoff Hoon Transport Minister and Gordon Brown PM) plus the need for a giant works package that will benefit the UK will overcome environmental concerns and the demolition of the village of Sipson.

Strangely the Tories are not for this but are split on the alternatives. Personally I think the development of the Thames Estuary Airport and/or a massive improvement in intermodal transport will be the better option. However don’t hold your breath. The current delivery date is 2012, and if T5 is anything performance wise to go by – 2013 or even later is a better bet.

Oh yes and GreenPeace purchased a plot right in the middle and then promptly subdivided it sold it to several prominent people including MPs, movie stars etc.

Reports of a delay are also surfacing - but Gordo wants to put a stake in the ground on this one as part of his legacy.

Cheers

A Silver Lining For the UK from the Global Crisis?

This may sound a little weird but there may be a silver lining from the current global crisis. And this one is very obtuse but bear with me.

It is about the intersection of Gordon Brown's popularity and the need for expanded capacity at London's Airports.

So the UK process for airport infrastructure expansion is shall we say very complicated and extremely long winded. So it comes as a great surprise that the UK is rushing through 2 major projects. The second runway at Stansted and the contentious third runway at LHR.

Determined to thwart the attempts of the Tories who only weeks ago were this close to securing the downfall of the dour Scotsman who currently occupies Number 10 Downing Street, the current Labour Government has pushed through the processes to get the public inquiries out the way.

In the case of Stansted they are going to great lengths to rush this through. Even to the extent of holding hearings in different rooms to shorten the time by 50%. For LHR the public comment and inquiry process was not expected to start until 2010. Now we hear that they are going to shortly start the public process with Gordon promising to rubber stamp it within weeks of the conclusion. Much to the chagrin of many unions, the mayor of London (Tory Boris) and many many in his own party.

Never say there isn't a silver lining in everything.

Cheers

The Battle for Heathrow - in the Blue Corner....

Surprisingly this is making for some strange bedfellows.

For the expansion of LHR (3rd runway and demolition of zillions of homes) is the current Labour Administration.

Against is...

The Mayor of London
Probably the Conservative Party
The Lib Dems
The Unions (in a full page ad in many newspapers yesterday).

As for the building of a new airport to the east - well that one is not so clear.

However I support the full option - new airport in the Thames Estuary.

Cheers

Bad Airport, Naughty Airport - go to your kennel!

Martin Broughton is BA's Chairman - also head of the CBI and various other entities, was waxing lyrically yesterday to e-tid on the launch of T5. Broughton says T5 fiasco lost BA passengers
and he "was ‘mortified’ at the debacle following the opening of Heathrow Terminal 5."

‘There is no question we lost passengers as a result. However, we have now had 9m passengers travelling through T5, and the vast majority have seen that it is a dramatically better terminal.’

I am not sure he ever really experienced the joys of the former deadbeat terminals 1,2, and 4 that BA occupied. T4 was a complete joke. T1 has wonderful moments on YouTube showing the awful state of the processing of people through the security and immigration lines.

But for now BA's chairman can chide the BAA since they have now become everyone's favorite whipping boy.

The interesting battle to follow pits David Cameron's "New" Conservatives against the Tories' long time backer BA. I can well remember the moment when Maggie Thatcher draped her scarf over Robert Ayeling's "theme" tails at the Tory Conference in Blackpool. The new battle is less prosaic than about the airline livery but about what to do with LHR. And I am firmly in the camp of developing a new airport rather than continuing to shoe horn traffic into LHR. While The Thames Estuary is a nice place and would make the best choice - we should make sure that they reconsider Gatwick.

Cheers

Why I love Fridays - The BA vs Virgin fight

Gotta Love Fridays. People put out such wonderful stuff for us all to read over the weekend.

Virgin's Branson today responded to Willie's 6 Questions. The questions and the responses deserve a good reading, so for your reading pleasure I republish them here.

Happy Reading and have a good weekend

Cheers



Virgin Atlantic sent yesterday a letter for publication to BA's in-house newsletter, BA News, after its Chief Executive (Walsh) posed six questions to Virgin Atlantic's Sir Richard Branson about the planned alliance between BA and AA.

Virgin Atlantic is publishing the answers in full from Sir Richard so that BA staff and the public can see the true facts and the damage that such a monster monopoly between BA and AA would do.

1. Why is it fair for Lufthansa and Air France/KLM to have anti-trust immunity (ATI) with their US alliance partners but not British Airways?

The truth is that the Star and SkyTeam alliances, from their own hubs, cannot match the capacity to the US that BA already has from Heathrow, even before any tie-up with AA. In July, from Heathrow to the US, BA flew 11% more Available Seat Kilometres (ASKs) than Star from Frankfurt and 14% more than SkyTeam from Paris Charles De Gaulle. BA/AA immunity would increase their ASKs at Heathrow sharply. Crucially, BA is already bigger than Star and SkyTeam at Heathrow. Anyway, it's not a question of what's fair for an airline but what's fair for consumers.

(Comment from the Professor - to see the numbers please go to: http://t2impact.blogspot.com/2008/08/baaabis-argument-for-immunity-at-lhr.html ).

2. What is there to stop Virgin Atlantic seeking an alliance partner and applying for ATI itself?

Virgin Atlantic may wish to enter into an alliance and may one day seek anti-trust immunity where such an alliance and immunity would lead to consumer benefit. We are not saying that all alliances are bad and no doubt the regulators would scrutinise such an alliance in the same way as we are asking them to scrutinise BA/AA. But any Virgin Atlantic alliance would be a world away from seeking anti-trust immunity with the biggest airline in the world, AA. It doesn't matter what we do as we could never replicate the scale of BA/AA's dominance at Heathrow which would reduce competition on transatlantic, European and domestic routes.

3. If BA and American Airlines used their alliance to put up fares and reduce service levels, as Virgin alleges, surely this would give Virgin a huge competitive opportunity?

The stranglehold that BA/AA would have over travel agents and corporate customers, let alone over nearly half of all slots at Heathrow, would be used in an attempt to destroy its competitors. Any ability to respond would also be restricted due to the power of BA/AA's dominant shorthaul network which can channel passengers onto its own transatlantic flights, therefore diverting feed passengers away from other carriers.

4. If BA/AA is approved, there will still be seven EU or US airlines flying to America from Heathrow - and nothing to stop others starting. This is far more than from any other European airport. Why is it uncompetitive?

The seven EU and US airlines flying to the US from Heathrow offer limited services to only a few destinations. A price tag of £30m for decent slot pairs is a huge barrier to any airline looking to start a profitable service at the airport. There are actually only two new competitors that have entered routes where BA and AA overlap. In one case, this has been negated by a withdrawal and in the other it is simply one daily flight to LA. On all routes between Heathrow and the US, the removal of AA as a result of BA/AA immunity would severely reduce consumer choice.

5. BA/AA’s market share on transatlantic routes from Heathrow (51%) is much smaller than Lufthansa/Star alliance from Frankfurt (80%) or the Air France/SkyTeam alliance from Paris (73%) Why would the competition authorities regard BA/AA’s position as unfair?

Heathrow is absolutely at the heart of this debate as nearly a quarter of all passengers between the EU and the US go through Heathrow, more than travel from Frankfurt or Charles de Gaulle. Misleadingly, BA has been using data which hides the 6 million passengers who book direct or transfer onto transatlantic flights. This allows BA to claim a smaller share of passengers than the more accurate onboard picture shows. Transfer passengers are a vital part of an airline's route profitability. As for direct bookings, under what logic would you leave out all those passengers who book direct through BA and AA's call centres! Or websites! Or at airport ticket desks!

6. Why does Virgin have a ‘monster monopoly’ on fast train services between

London and Manchester - and why does it want to create another one running

Gatwick Airport?

Virgin Trains competes against BA, bmi, some other train operators and millions of vehicles between London and Manchester, so it certainly doesn't have a monopoly. In fact, BA had an almost dominant share of business travellers until Virgin introduced new trains and now BA's monopoly is dwindling fast. Transatlantic passengers are more limited in their choice as they can't drive or take a train, or even swim, and will be more limited if BA/AA immunity was granted. At Gatwick, Virgin Atlantic wouldn't have a monopoly as it doesn't want to own the airport outright but hold a small stake with partners, in order to improve the quality of customer service, something which BA should be interested in too.

O'Leary Slams Regulator; Demands Boss's Resignation, The Professor Says Breakup.

Normally most of us have reactions ranging from a wry smile or a smirk to a rearranging of the clothing when we read or hear something from the flamboyant CEO of Ryanair.

Today's outburst is aimed at Dr Harry Bush the head of the UK Aviation Regulator the CAA.

The somewhat abrupt U-Turn by Dr Bush on the privatization of BAA plc is the issue. Earlier this week the CAA came out publicly in support of the breakup of BAA. And here MOL has a good point. For the past 20 years the CAA has rubber stamped what ever BAA wanted. While the charges, to those who follow Ryanair vs Dublin Airport (in all its guises), may sound remarkably similar - MOL does indeed have a solid case that the CAA as regulator has been somewhat asleep at the wheel while London's airports have deteriorated in service and capability over the last 20 years.

Veteran readers of this blog will recall the Professor's rants about the state of BAA and its service offerings over the last 3 years. Terminal 2 is a disgrace and now thankfully will be put out of its misery. Terminal 1 is finally starting to get some attention and Terminal 4 well the best description I can give it is downright grungy. T5 while a distinct improvement still has some fundamental flaws in its design and the quality of the workmanship was just appalling.

Compared to the simplicity of design of other new terminals for high volume airports elsewhere in the world - the CAA supervised BAA designs have been a major disappointment.

It seems that only now the regulator has woken up to the fact that there may be a problem.

So I will go one better than MOL and demand that the CAA be broken up into at least 2 possibly separate entities.

Airport/Airways infrastructure should be handled by a single entity. This is distinct function. Aircraft licensing and everything thing to do with registrations - should be kept or even placed into another.

Finally the bonding issue is not something that the regulator should be involved in. Make a decision and move on. This can be handled by a commercially mandated company. In the same way that the slot committee (Airport Coordination Ltd) is run.

Cheers

Timothy

Could This Be Boris' White Elephant ? I Hope Not.

In the 1960s and 1970s there were many conversations about developing a so called London's 3rd Airport. Ultimately Stansted was developed at a time when in fact there were 3 already (they kinda forgot about Luton). The controversy over developing LHR (a 3rd Runway) or LGW (a second Runway) has raged long and hard. In reality it will probably be another 10 years or so before we get any form of change.

The proposal for LHR's 3rd runway has been floated for many years but recently received some added attention. Now of course it may be too late. Demolishing homes is not a politically smart thing to do. Even if a 3rd runway is added - the layout of LHR would be hard pressed to deal with a true 50% increase in traffic potential. What to do?

Boris Johnson, the erudite new Mayor of London, wants to look at a different alternative altogether. His idea is to revive the Maplin Sands/Foulness idea. In 1969 the then Wilson government proposed several sites but only one was a coastal site. I remember well the protest from the local people where my family lived to make sure it didn't come to Nuthampsted. The Roskill Commission was charged with evaluating it. Voila end result was Stansted started its development 20 years later.

Boris wants to build a 4 runways on the water where it is only 10 feet deep with landfill, expanding it to 6 runways if necessary later. His idea merits a lot of attention.

Let's start with the fact there is no good answer to the problem. London needs an decent airport. The current "third world" edifice that is LHR is a disgrace and just plain bad in terms of how an airport should be. The impact of the environment is actually worse keeping it. The lack of planning by successive UK Governments has now come back to haunt the current administration (if Gordon Brown survives). A Conservative Majority at the next election could easily be given a mandate for change. This is one of those key changes that is required.

So there is no point in arguing about it. Developing the site and delivering it would take about 6 years AFTER final approval. Since in the UK that will take at LEAST 4 years - I believe that this should start now and in earnest.

The economic and environmental benefits far outweigh all the negatives. Imagine if you will an airport powered in a large part by low cost wave energy in a location that reduces its environmental impact. The Southeast of England would have new land available for development on the old LHR site. it would open up a corridor to the east of London and benefit the country as a whole.

And your problem with this is what?

No more BAAABI - now it's No Slot Back Willie

Just when I was getting very happy with the BAAABI acronym for the OneWorld super alliance, i find I have to include Finnair (AY) and Royal Jordanian (RJ).

dang it...

I was so close to such anagrams as I BRA AJAR, or I GRAB A BRA. So I will have to go back to the drawing board and hope that QF and CX dont join as well....

Which leaves me to the point about Mr Walsh and his resounding - "what me give back slots at LHR - are you nuts" attitude.

BA has not yet put a value on its slots at LHR. While BMI values its slots @ GBP770 Million which given the number of slots that means GBP 10 million per slot pair. Given the number of slots and the current market value of each slot pair - shall we say $75 million - then BA is surely not going to be letting any go any time soon.

So Willie is not going to let the slots go. Which means that my argument for dominant position holds and even with the best intentions - the shares that the alliance holds at LHR is still pretty dominant. Anyway you cut it its darn close to 50%.

I think Mr Ridgeway has a point.

Cheers

Ayling to BAA - Don't expand LHR

Robert Ayling who was ousted from BA in 2000 as its head, has entered the fray on the BAA breakup and expansion of LHR.

His alternative proposal is to expand either Gatwick or Stansted.

His logic is based on the supposition that the Hub and Spoke model is dead. He may have a point. However the UK needs Heathrow no matter what and the airport is at overcapacity. So unless someone comes up with an idea that will anchor a new airport in the Thames in 15 years at the same landing fees as LHR then I don't think this is going to be anything more than a pipe dream.

The LHR airport expansion with a new third runway is vital to the UK. In 15 years time (the minimum time to build it) the problems of the UK will be severe without the runway.

Just my 2 cents.

Very Sad Story - LHR Homeless

As you probably know I am pretty hard on BAA and LHR's management. But this shows another side. One of the world's busiest airports is also "home" for about 100 people who are homeless compared to the approx 60 Million who pass through it as passengers.

http://www.cnn.com/video/#/video/world/2008/05/26/powell.uk.heathrow.homeless.itn

If you are reading this you are probably more fortunate than the people depicted in this story. Good for LHR to actually take steps to take care of these people.

Cheers

Timothy

The shame of T5

From the outside it is a shining edifice ( a bit grubby with all that glass. I hope someone has remembered that glass needs to be cleaned to look nice). Landing at LHR these days is an impressive sight because T5 dominates the airport. It is a like a well choreographed ballet to watch. I enjoyed today BA’s hospitality for 7 hours between flights. I sampled as much as I could of the fare and facilities. Here are my impressions. Will T5 be able to handle the future volume? Will the $800 million emergency cash injection be enough. Can BAA recover, Will BA recover??? Read on.

1. It reminds me of the New BKK airport. That is not a positive comparison with other new terminals like the those in the Gulf.
2. The T5 design is a mess, I had heard other travelers describe it as good but not great. I will be more critical in saying there are some distinct design flaws and both BAA and BA are at fault
3. It is a very bad flow control airport.
4. The transfer features from T4 (where I landed ) to T5 were bad. However when more traffic is transferred then this should iron itself out.
5. Signage inside the terminal is confusing, the change in methodology will annoy many a frequent traveler, I guess we will have to get over it.
6. The boarding areas are simply too small. They are also WAY too complicated. The two story levels are just not good. Understandably this is due to the lack of space. However who ever came up with this idea should probably be shot. There are many other examples of better designs than this. New USA terminals like Seattle’s do a much better job.
7. Focus on smaller aircraft will come back to bite the airline as LHR continues to be restricted at its home base. Watching several flights board – I believe that BA better start having some flow control people come in and take over because when more Wide Bodies are in place then the airline is going to have a lot of problems.
8. Its too small. WHAT??? Yes it is just too small. Operating at about 50% capacity the terminal is going to have serious problems in the gate areas and other air side areas.
9. BA has abolished the Gold and First Class areas in the New Gallery concept. Gee – I don’t feel special any more. At the moment only the North area is open. If the South doesn’t have it then it wont exist. BA might as well abolish First Class and forget about the top tier of its FF class.
10. There is some VERY expensive and unnecessary kit – specifically the bag screening system is SLOWER than that of the conventional airports. It must have cost a fortune.
11. The entrance to Galleries, is both stupid and insulting. Its in a bad place its got very poor.
12. The quality of the build is clearly – well I could sugar coat it – but its crap. Poor fitting, bad finish, poor selection of materials. It is not going to wear well.

The only bright spot I was able to avoid the BAA Bag Gestapo. The measurement is enforced at security with the new bag screening system. They use the standard IATA size and the bags fit, YEA!!!

I guess you can say that T5 is better than T4. However my verdict? I think that BAA and BA should be chastened over the worst possible implementation of a new airport. However there is one positive thing we can say. Its better than the sewage farm who was the former occupant of the site. If you need to connect in Europe – avoid LHR.

Cheers

Timothy

T5 Walsh admits it was OK to go ahead even though the staff weren’t ready.

You have to wonder about the arrogance of BA and its CEO. He freely admits in front of a UK parliament Select Committee on Transport that BA was not ready but it took a calculated risk. At the same time he laid the blame of delays on BAA, pointing that their failure to keep to the timetable deprived BA’s staff from completing training. So he was quite happy to take the risk and eat the cost as a delay of 6 months would have been the alternative at a much higher cost (presumably to BA).

You have to wonder why this was allowed to be like that. Perhaps Willie should admit that perhaps his training at Aer Lingus was not quite good enough for his real job at BA.

You can be the judge of that.

BAA - How to make a bad situation worse LHR new carry-on policy

If you thought BAA was just the text book example of how not to do things - think again. They have instituted a new policy at LHR which is bound to drive even more passengers away.

After the debacle at T5 and the previous collapse of the baggage system (actually on going) at T4, one thing you would not want to do is to increase the amount of bags going through the baggage system. Well guess again.

As of this week BAA has implemented a NEW policy of draconian proportions in carry-on bags.

BRAVO BAA! No this is not the UK Dept. of Transportation, No this is not the airlines, YES this IS BAA.

It doesn't matter if you are an economy or premium traveler. What works everywhere else in the world - is no longer allowed at LHR.

If you don't believe me - I do have some nice pictures.

Cheers

Timothy

So the fall guys for the T5 Fiasco are...

Ladies and Gentlemen - the Imperial Majesty of Airlines has spoken. There will be no follow up and the airline "did not have any intention of making any announcements about further departures of BA directors today, nor in the not too distant future."

So there.

Gareth Kirkwood, director of operations, and David Noyes, director of customer services, will be leaving the company.

The airline said the departures follow the airline's move to London Heathrow's new Terminal 5.

The Concorde nose is now leaving from Gate 1 in the up position.

T5 Chaos now to stretch out till June.

There used to be a be nice signed around LHR which would advertise "FlightSwitch" This would tell the story of airlines switching terminals. It was broadcast on signs all over the place.

Today those signs would have to change almost by the hour. LHR has been a complete chaos not just for BA but for the other airlines who were similarly waiting for BA to vacate the space.

Well further bad news... it is not going to get better till at least June. Even then the move by BA long haul to T5 will improve BA's life. But there is still going to be a lot of renovations as the other airlines shuffle schedules around to accommodate the BA's revised schedule.

This will continue to enhance LHR as the world's best airport... not.