p22 air dec12 9/12/08 15:38 Page 22
Air
Chris Gray
020 7921 8003
cgray@ttglive.com
For the latest news about flights, airlines and airports, visit ttglive.com/air
Key aviation figures gathered last week to discuss the sector’s future. Chris Gray reports from London
FORECAST.
Legacy carriers
No-frills airlines
‘will prosper if
they modernise’
seek new charges
TRADITIONAL network carriers will still carry NO-FRILLS carriers believe they are reaching aircraft as an opportunity to get away from
more than three-quarters of the world’s air the limit of how much ancillary revenue they being constantly available.
passengers by 2026, British Airways claimed. can extract from passengers by charging for He said there was more potential in charges
Research for the airline predicted so-called so-called extras. for extras in economy class, and Aer Lingus was
legacy carriers will account for 76% of “revenue Aer Lingus and Flybe chief executives agreed considering charging for movies or video games.
passenger kilometres” – a measurement of the that without a new “big idea”, airlines were He claimed this would be popular with families
distance travelled by paying customers. reaching the limits of ancillary revenue. and had been successful on domestic US routes.
This meant the legacy carriers would still Aer Lingus’s Dermot Mannion described his Flybe’s Jim French agreed that the tipping
be the dominant model 30 years after no-frills airline as full service on long-haul routes but point was close and said he was concerned about
airlines started in Europe, said British Airways no-frills when short-haul. consumer irritation at the lack of transparency
commercial director Robert Boyle. “We are getting pretty close to a tipping point on charges.
Boyle said no-frills airlines’ passenger for the level of charges on ancillary revenue But he said in short-haul there was a sector of
numbers would continue to increase, and there products such as car hire, insurance and bag the market that preferred to build its own costs.
would be more new airlines, but full service charges that passengers will pay for,” he said. French was more optimistic about the
carriers would continue to prosper. “There is work going on at Aer Lingus and potential of phones, saying they could be
However, full service airlines would disappear other organisations to identify the next value- popular on short-haul routes.
unless they got rid of “legacy characteristics” enhancing product that passengers will pay for.” Emirates’ Keith Longstaff said the airline had
such as restrictive practices, ageing fleets and Mannion said charging to use mobile phones tried offering passengers phone services but the
excess capacity, he warned. was not the answer as passengers saw time on take-up rate had been low.
DOWNTURN.
‘Cash-rich airlines will weather storm’
NETWORK and no-frills carriers are heading into through acquisitions or by stepping into routes
the 2009 recession in far better shape than they vacated by airlines that went bust.
did in the downturn after the Aer Lingus chief executive Dermot Mannion
2001 terrorist attacks. agreed and said one of the reasons Ryanair
British Airways, Lufthansa, wanted to acquire his airline was because it
Air France/KLM, easyJet and was one of the most cash-rich in Europe.
Ryanair are better placed because Lobbenberg said the drop in the
they have healthy cash reserves oil price would not help struggling
that are a sizeable percentage of carriers, as it was being
annual revenue, according to Andrew cancelled out by the fall in
Lobbenberg, aviation analyst for the value of sterling against
Royal Bank of Scotland. the dollar.
Lobbenberg said Lufthansa’s cash
reserves in particular
meant it had the oppor-
tunity to “paint Europe
British Airways’ healthy cash reserves will help it through the downturn orange” (the colour of its logo)
22 12.12.2008
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