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July 31st, 2009

Ryanair has become the champion airline of Europe

Posted by: John Bowker

Ryanair is the best airline in Europe.

Yup, that’s right. The most hated and ridiculed carrier on the entire continent is the best. The uber-loathed, toilet-charging, seat-removing Michael O’Leary leads an airline that carries more passengers, makes more money and is worth more than any other airline in Europe.

The business side of the argument is easy. After a week of trading updates from Europe’s main airlines, Ryanair emerged by far the strongest. The Irish no-frills carrier put out a profit warning, but compared to rivals it was like the Queen complaining of a shortage of horses.

It said it would make profit ‘only’ at the lower end of a 200-300 million euro range, but 200 million euros? BA lost 110 million euros in the first quarter alone, and the shares rose. Even Lufthansa, the strongest of the main European airlines, is forecast to make a measly 8 million euros this year.

EasyJet is doing well, and will make a profit this year - just. Ryanair is streets ahead.

Now for the service argument.

Ryanair -bashing is a popular past-time among the very tedious, but the company’s mission is very simple - fill planes at all cost regardless of ticket prices. People complain about the so-called ‘hidden costs’ of flying Ryanair, but many of them are avoidable and the total fare is not exactly hard to obtain — just tick the boxes and press submit.

As for the service, Ryanair spends as little as possible on luxuries and staff and is totally up front about it. What is wrong with this? Air travel is not a public service. If you want so-called luxury (although frankly I have never felt comfortable on an aeroplane) fly Virgin first class.

If you want a cheap flight fly Ryanair.

The one worry is that Ryanair could become too powerful. In the past year BA has ditched its model of keeping prices high and sacrificing passengers to the other way around — the Ryanair way.

This week it said it would ditch ‘free’ meals on some short haul flights. Again, like Ryanair. If the current downturn continues, it stands to reason that airlines will become more and more like your favourite Irish airline.

And wouldn’t the Ryanair bashers love that.

July 14th, 2009

BA attempts to talk its way out of trouble

Posted by: John Bowker

British Airways has become a real chatterbox of late.

Chief Executive Willie Walsh is attempting to stage a recovery from a year of record losses and a business-class focus that has proven rather ill-suited to a recession. He has been scaring staff and shareholders rigid with his ‘fight for survival’ rhetoric, but how does he plan to wage this battle?

By talking.

He talks to pilots, he talks to engineers, he talks to ground staff and cabin crew. He talks to trade unions, he talks to shareholders - and apparently he talks to his allies over at Spanish rival Iberia. Today’s annual general meeting was dominated by news of these talks - they are making progress, apparently — all of them are making progress.

But are they really? It is true the pilots have been amenable to Walsh’s silver tongue. On Monday they agreed to pay and productivity changes in order to help save the airline cash, in return for some future equity. But that’s about the limit of the carrier’s achievement to date.

Trade union members representing cabin crew loitered outside the London meeting, handing out leaflets to attendees. These detailed proposals — rejected by BA – for a 2.6 percent pay-cut, plus 4,000 job losses so long as they are voluntary. We don’t know what BA has offered in return — Walsh uncharacteristically  keeps saying he doesn’t want to talk about it — but as the deadline for these negotiations was the end of June it’s safe to say things are not going well. “We don’t know what else we can do,” said one 20 year cabin crew veteran. Strike action is a distinct possibility.

Then there are the talks with shareholders. These ones centre on plans to raise more cash. BA is hoping to have 1 billion pounds in the bank by next March, but this would involve burning money at a slower rate than some analysts predict. It wants to raise money in the bond market — something that will no doubt involve plenty of late night discussions in the City.

Then there are the merger talks with Iberia. These chit-chats have been going on so long they are about to celebrate their first anniversary. And the way things are going we could be blowing out two candles before anything gets decided.  Last week Iberia CEO Fernando Conte resigned, meaning Walsh will have a new friend to talk to — something he is very excited about. ‘Splendid chaps’ - ‘known them for years’ - went the tone of his comments after the meeting. We’ll see about that.

British Airways has long been full of fine talk. It’s time for some action.

March 19th, 2009

BAA airport sell-off: consumer boost or weak compromise?

Posted by: Ross Chainey

The Competition Commission has ordered airport operator BAA to sell Stansted and either Edinburgh or Glasgow aiport, once it has completed the sale of Gatwick. The commission has been looking into BAA’s dominance of airports in Scotland and England’s south-east for two years and decided that the lack of competition between airports has been detrimental to passengers.

The commission’s final report also recommends that the airports be sold within two years and that they be sold in sequence, starting with Gatwick.

BAA was acquired by Spanish company Ferrovial in 2006 for 10 billion pounds but has been hit hard by the economic downturn. The firm has said that it may challenge the order to sell because such quick sales in such conditions could be impractical.

Whether the order to sell will actually benefit air passengers is a much debated issue. A spokesperson for Virgin Atlantic told The Times that the airline supports the move. ““The break-up of BAA is something Virgin Atlantic has requested for many years and it will undoubtedly benefit consumers. Better airport facilities in the UK and lower prices will be the result and we therefore congratulate the CC on its findings.”

Paul Whelan, head of industry body the Small to Medium Airports Group, disagrees, telling the BBC that it will do nothing for the consumer. “There are a lot of airlines including Ryanair using Edinburgh and it is doing a good job, while Stansted has also been good for airlines.” The BBC also has this Q&A which asks if this is a good move for air passengers.

The Telegraph’s Transport Editor, David Millward, meanwhile writes that the Competition Commission’s report is a ‘weak compromise.’ “After all it is not BAA that has suddenly decided to charge for the clear plastic bags people need to carry liquids through security. It is Manchester Airport, whose owners have been tipped to bid for Gatwick or Stansted.

“In many ways the Competition Commission report is a weak compromise. Many are disappointed that Heathrow was not broken up with terminals competing against each other for business. That worked at JFK in New York and it could well have worked here.”

So who will possibly step in to buy the airports up for sale? It’s a complicated business; the commission has ruled that each should be bought by a different company and potential owners will be put under tough scrutiny. The Guardian has published this guide to the companies in the running.

What do you think of the Competition Commission’s decision? Do you think forcing BAA to sell some of its airports will improve customer experience? What do you think of the current standard of the airports in question?

February 19th, 2009

Ryanair launches inflight mobile phone service

Posted by: Stephen Addison

Ryanair has become the latest airline to make it possible for passengers to use  their own mobile phones to make calls in the air. 

They will be charged international roaming rates with the tariffs set by their mobile providers.

Shares in Europe’s biggest low-fare airline were down a touch after the announcement but surely this can’t be the prospect of all those “I’m in the plane, darling” calls — can it?

What do you think of the idea of being able to use mobiles in the air? Is it potentially useful, say perhaps in the case of delayed flights, or a nightmare at 36,000 feet?