Friday, 23 December 2011

Meet Volotea: Spain's new airline

After months of rumors, we finally have a public announcement: Spain's new startup airline is called Volotea.

You have to be brave to start a new airline in Spain in the current economic climate, but its founders have done it before and their ability to pull an airline off the ground is beyond any doubt: Carlos Muñoz and Lázaro Ros were the founders of Vueling (now under Iberia's wings) whereas Román Pané used to be a manging director at Futura (a now-defunct Spanish charter carrier). They are backed by CCMP Capital (investor also in JetBlue).

There is not much information about the scope of the project and its planned roll-out, but all points towards the new Barcelona-based airline operating a regional network in Spain, along the lines of UK's Flybe or Finland's Blue1. This market niche, relatively shielded from the two LCC giants, has seen significant corporate activity recently, with Flybe's leading the way.

Volotea will be competing with Air Nostrum (that operates regional flights on behalf of Iberia) and with Spain's still growing high speed rail network.

If you wish to see what Volotea's livery will look like there are some pictures on (renewed chances for all those, like me, still waiting to fly for the first time on a Boeing 717!)

And of course, there is a Twitter account too, although it does not seem to have any public activity yet...

Thursday, 22 December 2011

Are European airlines becoming like football clubs?

This week we have got confirmation of the acquisition of a significant equity stake in Air Berlin by Eithad. The Abu Dhabi carrier will increase its stake to over 29% from the 2.99% it already owned, this will make it the first shareholder in Germany's second largest carrier.

What's interesting in this deal, though, it's not only that this is the first major foray by one of the emerging Gulf carriers in the European airline industry, although maybe not the last if we listen to the rumors coming out of Ireland, but the fact that this investment will have consequences that go beyond the financial sphere. And this raises important questions regarding the industry's competitive landscape.

As this CAPA thorough analysis underlines, Air Berlin and Etihad are going to be, from now on, close  partners: financially, as Etihad is injecting €255M in Air Berlin to help finance its fleet renewal and expansion, and also operationally, as Etihad and the airlines in Air Berlin group (including Austria's Niki and Switzerlands Belair) are going to codeshare routes across their networks. Air Berlin has already announced that is moving its Dubai service to Abu Dhabi to take advantage of the enhanced connectivity that its new partner provides. We can expect Etihad to benefit as well from Air Berlin's European network at the other end of the route.

Austria's Niki and Switzerland's Belair are also going to join forces with Eithad,a s they are part of the Air Berlin group

What this means, in effect, is that Lufthansa's long haul operation is going to be facing a larger passenger drain towards the emerging Gulf hub. Plus Air Berlin-Etihad have also the opportunity to develop an alternative German hub at Berlin's new airport, possibly not a coincidence that, in what looks like a preventive move, Lufthansa has recently announced plans to create a base in the German capital, an airport where it had had a very limited presence so far. It remains unclear whether this situation is going to affect Air Berlin's recent membership of Oneworld.

And it is precisely Oneworld who could be facing a similar situation in one of its home markets if Qatar Airways acquisition of Spanair is finally confirmed. As I write these lines the outcome of this negotiation is uncertain, although a deal must be closed soon as Spanair seems to be running out of cash. As I mentioned a few days ago, Qatar Airways would have its European beachhead, and, as in Berlin's case, it would be able to use a large brand-new airport with plenty of spare capacity to expand its European feeder operation.

Most important, and hence the title of this post, getting new entrants with access to a seemingly unlimited amounts of capital could significantly alter the competitive landscape (or distort it, depending on how you look at it)...which makes me think doesn't all this seem resemble what has happened with that other glamorous but chronically loss-making European

Wednesday, 16 November 2011

Iberia wants you to Fly Around the World with its new Facebook game

Gamification is the word of the moment in social media and airlines are starting to experiment with it. Spanish flag-carrier Iberia, now part of the IAG Group, is the latest airline to experiment with this channel in order to generate buzz and follower engagement.

Iberia has just launched "Flying Around the World", a Facebook game here users can accumulate "hours of flight" by answering questions related to the airline and its products and services, the goal is to accumulate these hours of flight, you start as a co-pilot on short haul flights and become "Long-haul Pilot" (Comandante de largo radio), you can answer up to five questions per day and each correct answer gives you "flying hours".

Each question is labeled as a "flight", for example to complete a Madrid-Milan flight I had to answer how Iberia's last minute discounted online booking service is called (answer "Los que Corren, Vuelan" ("those that run, get to fly"). Iberia will be progressively adding new flight sectors over time,as the goal is to keep users engaged. As any good social media "trap", you get extra points for liking Iberia's Facebook page and leaving them your email (not that they hadn't it already!).

The more "zones (Europe, Latin America, etc.) you complete, the more chances you have to win in the draw that takes place at the end of the contest (15th December). Iberia will throw in "special" sectors to cover from time to time, as a chance to accumulate more "flight hours".

The prize? You guessed it!
4 free flights for the select few to any of the 24 long-haul destinations on Iberia's network (or "Avios" Iberia's, and IAG's, frequent flier "currency")

I was playing around with it a little bit, an, although the mechanics of the game are not particularly revolutionary, it is a nicely executed project that makes for some good light entertainment while you recall the extent of Iberia's network...I'll let you know in case I win!

To Fly to Serve: British Airways' great retro commercial

Those of you that live in the UK and have been to cinema recently would have probably watched it, as it has been on the air for a few weeks already...I finally had the chance to watch BA's commercial "To Fly to Serve" a few days ago and quite liked it, so I thought about sharing it here for all readers to enjoy!

By the way, I am not sure what the first two aircraft shown in the video are...any clues? (the second one looks like a Dragon Rapide, but not sure)

Saturday, 12 November 2011

Routes Exchange: an innovative approach to route planning for airlines and airports

Route planning is one of the aspects of the airline business that I am more passionate about.

In the competitive globalized World we live in it is not only airports but whole communities that are affected by route planning decisions. Network quality is vital not only to airports but it can also have a dramatic effect on the overall competitiveness of the region they serve.

Just think what was the typical centralized route network in every European country twenty years ago (I still keep some flag carrier's in-flight magazines from those days!), you would have one or (eventually) two hubs per country with flights to regional airports and a handful of other major capitals, most secondary airports had to live off charter flights and the regular links to the country's hub...but then came Ryanair, Easyjet and all the other LCCs and proved that many more combinations were possible, that if you had the right business model you could make thinner routes work too and the overall air travel cake got bigger.

But the route frenzy is not over, just as we see the low cost model consolidating in virtually every major air market (except Russia), I would expect another wave of route development driven by the long-haul this time: better aircraft economics (think Boeing 787) will unlock potential on many thin routes, the emerging mega-carriers like Emirates and Qatar Airways will continue to build up their presence in Europe, China and the US, increasingly covering second tier cities (something they already do in India) plus the long-haul low cost model that is already succeding in the Asia-Pacific region is coming to Europe soon.

There is a world of possibilities out there, to make sense of all the different options?

Here is when "Route Exchange" comes into play...

I found the concept really innovative, "Route Exchange" is an online platform, managed by Routes Online, that airlines and airports can use to evaluate potential new routes. It is a tool that helps both sides (airlines and airports) identify market opportunities and facilitates the information flow between them.

There is also the possibility of proactively seeking new routes opportunities, this is for example what AirAsiaX did this summer, sending a Request for Proposals (RFP) for its upcoming European expansion. All European airports were invited to submit their RFPs to the innovative Malaysian airline...but this particular contest is going to be the topic of a separate upcoming post...

Saturday, 5 November 2011

Do airports need to advertise to the general public?

I was taking a ride on the London underground (aka "the Tube") the other day and an advertisement on the top of the wagon, just above my head, caught my eye...It was a London Heathrow airport ad (see picture) highlighting the airport's role in the UK economy by connecting the country to the World's fastest growing economies...all fine, no doubt about it, but...does the average commuter really care? will you choose to fly from LHR next time because of this? ok, I know, it's a public relations stunt...but, again:

if you are an airport, is an ad on the tube the best way to deliver the message?

Monday, 31 October 2011

Qatar Airways about to invest in Spanair and why this is good news for Barcelona airport (and II)

As a continuation of my previous post on Qatar Airways possible acquisition of a stake in Spanair, here are some interesting questions that come to my mind when thinking about the possible consequences of this deal:

1) What is going to happen with Spanair's current Star Alliance membership and how is this going to affect the agreements Spanair had with Star partners on several routes, some of were of strategic importance to the carrier, such as Singapore-Barcelona-Sao Paulo.

2) What designs has Qatar Airways for the new Spanair and what degree of control would be able to exert? Is this a purely financial operation, with Qatar Airways limiting itself to turn the company around and making it a stronger stand-alone carrier?  Or are we witnessing the first act of a much more ambitious project aimed at building a presence in Europe (possibly by acquiring other troubled European airlines). If the latter turns out to be the case, it would be interesting to know what is Qatar Airways plan: a feeder operation involving a transit through Barcelona from Southern Europe regional airports and onto the Gulf does not seem to fit into the global-connector strategy Qatar Airways is developing through its Doha hub. Or maybe using Spanair to code-share on flights beyond Europe, as Singapore Airlines is already doing with Spanair? or build a base in Barcelona to fly from there to destinations in America, along the lines of what Indian carrier Jet Airways tried to do in Brussels?

In any case, Qatar Airways is gaining access to a large and recently renovated airport, with plenty of spare capacity and a geographical position that makes it a suitable gateway to Europe and beyond when flying from the Gulf.

3) Another interesting question that comes up these days is: will Spanair keep its name? rumours are its name is going to be changed to Air Barcelona or Barcelona Airlines. I am, personally, not a big fan of airlines named after cities, but this change would possibly make sense, since the Spanair brand does not enjoy a particularly strong recognition, whereas "Barcelona" is certainly a powerful brand (coincidentally or not, the Emirate of Qatar is also sponsoring FC Barcelona and another of the World's emerging airlines kicked off its European brand building campaign by associating itself with Barcelona's name)

In any case, I will be posting more analysis as soon as more news will come out soon, as Spanair's current situation is hardly this space!

Sunday, 30 October 2011

Qatar Airways about to invest in Spanair and why this is good news for Barcelona airport (I)

I just learned that Qatar Airways might be about to acquire a 49% stake in Barcelona-based troubled airline Spanair. While I do not know the details of the deal, I can think of a few reasons why this could be a good move for all parties involved, as well as for Barcelona's airport.

First of all, is a matter of financial necessity and of urgency. Spanair is in a critical financial situation and, despite strong backing from the Catalan government, is quickly running out of cash. Since I wrote this note a few months back it seems Spanair's cash-flow position has only got worse.

An investor with deep pockets is needed in order to keep the airline flying and allow the Catalan government to save face and disentagle itself from an operation that is difficult to justify at a time of tough budget cuts, while claiming a partial success at keeping Barcelona's long-haul hub aspirations alive.

And this takes us to the next factor that I think it makes a tie-up with Qatar Airways a potentially interesting proposition and this is none other than opening a window to the East and to the globe's currently most dynamic economies. On June 2010 I commented on this blog how commercial aviation's center of gravity is moving East and any carrier and airport with aspirations should try to ride this trend. A link with Qatar would certainly help Spanair and Barcelona airport gain this intercontinental dimension they have been so much longing for.

A side effect of a re-capitalized Spanair is that it will put pressure on Vueling, Barcelona's other airline, that is already being squeezed by Ryanair's increasing presence at BCN. Having to face renewed competition from a stronger Spanair will certainly not help recover its margins. It will also prevent Vueling from becoming the only carrier able to build some sort of air hub at Barcelona. Although Vueling has been developing some flight connectivity at BCN there are serious doubts about Vueling's capacity to build a fully fledged hub at the shadow of Iberia, that remains its main shareholder, since any such move would risk cannibalizing Iberia's operations in its main Madrid hub.

In my next post I am going to present some interesting strategic questions that arise from the possible imminent completion of this deal...

Tuesday, 23 August 2011

Airbus and Rolls Royce in pole position to equip Russia's major airlines

It looks like the Airbus A380 had quite a successful first appearance at MAKS, the Moscow Aviation Show, that took place last week. Russia is one of the aviation markets where interesting things are currently happening, not least because of the resurgence of the domestic aircraft industry, lead by its star, the Sukhoi Superjet.

But there are no plans for a competitive very large commercial airplane to be produced in Russia in the foreseeable future at a time when Russians are increasingly traveling abroad, no wonder airlines are looking to upgrade their long-haul, wide-body fleets (it also helps that taxes on >300 seats imported aircraft have been recently abolished).

Whereas Boeing was the manufacturer of choice when Russian carriers first renewed their fleets in the post-Soviet era, Airbus is making important advances into the Russian market. First it was Aeroflot ordering A330s and A350s, now we hear that the Russian flag carrier might be interested in acquiring up to 5 A380s. This would be great news for Airbus, but also for Rolls-Royce, the possible engine supplier of choice with its Trent-900, the engine that powers the majority of A380s flying today (Rolls-Royce Trent-700 was already selected to power Aeroflot's new A330s), not because of the size of the order "per se", but because of what it represents in terms of visibility and its consolidation in the Russian market.

Transaero is another airline said to be interested in the A380. Russia's second largest airline is adding long-haul capacity at a frantic pace, it is adding Boeing 747-400s with high-density configurations (ex-Japan Airlines aircraft fitted with up to 525 seats) as well as former Singapore Airlines Boeing 777s (by the way, also equipped with Rolls-Royce Trent engines). If it is able to fill all these Jumbos, why not go for the A380, then?

Thursday, 30 June 2011

More airline archaeology

When I was doing some research on communist-era airlines for my previous post on my visit to Belgrade's aviation museum, I came across this interesting photo on Flickr of a Tupolev TU-134 that belonged to East German flag carrier Interflug.

This photo stream is worth a look if you are an #avgeeks with a passion for history!

Wednesday, 29 June 2011

Revisiting the history of European aviation in Belgrade

I was being driven to Belgrade's Nicola Tesla international airport to take my flight back home after a couple of fruitful days in Serbia's capital when something caught my eye...right to the side of the main airport terminal there was what looked like a spectacular display of old aircraft types.

Fortunately enough the field in question was within walking distance of the terminal and I had plenty of time before the departure of my flight, so, trolley in hand, I walked towards this open-air museum to have a closer look...the 7min. walk was well worth it!

The place itself has a somewhat derelict look, like a legacy from a bygone era, when other architectural styles were in fashion (somehow the main building reminded me of the Atomium, in Brussels!), but this is possibly the best setting for one of the most amazing displays of communist-era aircraft that I have ever seen.

I am not an expert in military aviation but I think most of the airplanes are old Yugoslav-made Galebs (that curiously enough, happen to be in the news these days because of the conflict in Libya!). However, what I found to be the star of the exhibit, and certainly of much interest to someone like me interested in the history of commercial aviation, is this JAT-Yugoslav Airways Caravelle, an icon of European commercial aviation history.

The SUD-Caravelle was one of the first jet-powered commercial airliners and a big commercial success in its day. This French-made aircraft came to dominate European short and medium haul routes in the pre-Airbus era. It carried around 80 passengers, although the latest version, developed in the early 70s and called Super-Caravelle, could carry up to 140 passengers. I ignore whether there is any Caravelle left flying in some remote corner of the planet, but, in any case, Belgrade's open-air aviation museum is a great opportunity to come face to face with this mythical aircraft!

As per JAT Airways, what used to be the flag carrier of the former Yugoslavia has reinvented itself as the flag carrier of Serbia and it operates under a new logo and a renovated image and fleet. It flies to some 35 scheduled destinations with a fleet of Boeing 737s and ATR-42s.

Saturday, 4 June 2011

Amazing video taken from a Vueling airliner while intercepted by a French Mirage fighter jet

Ever since the terrible events of 9/11 in the US, commercial airlines that can not be properly identified or that report some sort of incident are regularly intercepted and escorted by fighter jets...How does it feel to see fighter jets approaching while you look through the window in mid-flight? Thanks to this extraordinary video that is making the rounds on social media channels we can see how it looks like!

Vueling flight VY8366 was flying from Málaga (AGP) to Amsterdam (AMS), when it was intercepted by a French Air Force Mirage 2000 fighter jet on May 27th at around 21.30 CET.

According to Dutch blogger FMCNL (that became famous in aviation blogger circles because of its excellent and timely coverage of NATO's Libyan campaign), the intercept took place just South-West of Paris and was what it's called a "QRA Tango" or Quick Reaction Alert Training.

You can watch it here. It is really spectacular!

Saturday, 14 May 2011

Unusual planespotting opportunities

I am by no means an expert planespotter, but when I come across some interesting sights at Europe's airports, I like to share them here. On this occasion the pictures are of two airlines that operate very limited schedules to European airports, so it is not too easy to spot them!

An Uzbekistan Airways A310 taxiing at Madrid-Barajas (MAD) before taking off for Tashkent

An Aeromexico Boeing 767 at Barcelona-El Prat (BCN)

Friday, 6 May 2011

The frustrated merger Olympic-Aegean and the competitive situation in the Greek air travel market

The Olympic-Aegean merger, unlikely to happen anytime soon

The Greek aviation industry has been flying through turbulent times in recent years and one of the consequences has been the proposed merger between the country's two main airlines: Olympic Airlines and Aegean Airlines.

But it looks like industry consolidation will have to wait, since this merger has recently been blocked by the European Union on the basis that such a merger would bring about a virtual monopoly on Greece's domestic air routes. The people at Anna Aero have been doing some research on the competitive environment in the Greek aviation market. In a couple of articles (beware if you click on the links from work, as they contain some animations and sounds!) they have assessed what the market share of the merged airline would be, it would account for nearly 95% of the Greek domestic routes, but the situation would be significantly different on European routes, were it would be competing with foreign airlines in practically all city pairs.

They have also looked at what is the market concentration at other European markets. Greece would be at the top of the table after the merger, but France is, already now, not far behind. Although it is also true that overland communications might be easier in France, that has a well developed high-speed rail network and that Greece's many islands lack a fast transportation alternative.

The Greek aviation sector has been transformed and has got a face-lift recently but the islands remain dependent on the same old links to the mainland

When reading these articles other considerations come to my mind, maybe material for further analysis, for example, when considering the long-haul market. There is currently no Greek airline flying long-haul (these were large loss-makers for the old Olympic) and there aren't many international airlines flying long-haul into Athens either, so the offer is quite limited. A merged Greek airline would possibly have a better chance to do them, increasing capacity on this market segment.

Another point to consider is whether the resulting airline would join Star Alliance, of which Aegean is already a member, or Sky Team, as Olympic was on track to do. So how the competitive analysis in European routes would vary once taking into account code-sharing agreements and the alliance's partners routes?

In any case, the latest news is the an appeal has been filed regarding the blocking of the merger, so this story might go on for still quite a while...

Thursday, 5 May 2011

Spectacular photo of Moscow at night taken from an airliner

I recently came across a site with amazing photos, all of which had in common that had been taken from aircraft in flight.

I then went to my archive and posted on Twitter what is possibly the best picture I have ever taken from an airplane. I took last winter from a Brussels Airlines A319 on a flight from Moscow to Brussels and it enjoyed an immediate success upon posting it, so I decided to post it on this blog too...I hope you like it!

Wednesday, 4 May 2011

Why I like Amsterdam Schiphol airport so much?

I have been fortunate enough to live in The Netherlands for over a year at one point in my life and I know Amsterdam Schiphol (AMS) very well...I recently had the chance to visit it again after a long absence...and I still think is one of the best airports in the World, and possibly the best in Europe for plane spotters!

Is not only modern, clean, convenient and perfectly connected with regular and frequent ground transportation (it sits on a main railway trunk line), it's got great shopping, restaurants, even an art museum! is the small details that end up delighting the aviation enthusiast and planespotter! Here is a sample:

Aviation shop: all sort of memorabilia, aircraft models and other aviation-related stuff can be bought here. the shop is conveniently shaped as a KLM aircraft!

While walking along Schiphol's corridors you will find these indicators whose aim is to help the public recognise the different types of airplanes that are visible across the glass

Panoramic Terrace, although this photo contains only KLM aircraft, a very diverse mix of airlines from all over the World fly to AMS, which makes for a very interesting plane spotting opportunity!

The panoramic terrace is great for plane spotting!

Monday, 2 May 2011

Highlights of the annual Airneth conference (& V): low cost carriers ultimate frontier, long haul and connectivity

What is going to happen once low cost carriers become the dominant force in the European short haul market. What's next?

This is precisely the question that two separate presentations by speakers Wolfgang Grimme, of the University of Giessen, and Peter Morris, of Ascend Worldwide addressed.

Mr.Morris covered the topic of low cost long-haul carriers, a product that has not yet succeed in Europe, despite some attempts like that of the bankrupt Hong Kong-based airline Oasis. However, innovation in this area is coming from the Asia-Pacific region, with a number of successful airlines making inroads in long haul low cost aviation, despite the challenges and constraints of this type of operation. Jetstar, from Australia, might be an airline to keep an eye on as it successfully deploys its business model.

Mr.Grimme's presentation focused on different models to operate connection flights within low cost networks. Airlines and airports in Germany (particularly German Wings and Cologne-bonn and Berlin airports) have attempted to develop this concept, with mixed results so far. It seems the two most promising ways for low cost carriers to successfully operate connection flights are

  • Operate under feeder agreements for long-haul airlines (such as JetBlue is doing already and Vueling is planning to do with Iberia)
  • Facilitate connections when there are multiple low cost inter-hub frequencies.

German Wings tried it...

One of the main challenges when trying to connect between low cost carriers is that many destinations have very limited frequencies and uncoordinated schedules. If there is a network of low cost bases with very dense connections between them, potential connections might arise spontaneously. Once this point is reached, low cost carriers can facilitate these connections: this is what Southwest already does at some of its main bases. In Europe Ryanair has the type of dense network that would allow them to do it too, if they wanted (although I do not think this is going to happen anytime soon!).

...and some Dutch humor to close the conference...!

Tuesday, 26 April 2011

Highlights of the annual Airneth conference (IV): de-hubbing, re-hubbing and Amsterdam Schiphol

One expected consequence of any futher consolidation in the airline industry is that some airports are going to experience de-hubbing. This is actually one of the worst things that can happen to an airport (from a business point of view, of course).

Renato Redondi, from the University of Brescia (Italy), presented some very interesting results from his investigation in the area of de-hubbing and re-hubbing, something that airports with hub aspirations should take note of (thinking about Barcelona airport here!): only three cases of re-hubbing were identified by the research (and all of three were re-hubbed by the same airline that had previously decamped, so no known cases of an airport being re-hubbed by a different airline!)

If your flag carrier de-hubs, why not add some low-cost colour to your airport?

Low cost carriers play an ambiguous role in de-hubbing processes, since their entry into a market can pressure network carriers into abandoning secondary hubs, but at the same time, once de-hubbing has happened, low cost carriers offer one of the fastest ways to recover traffic volumes!

This last point was very present in the minds of both the attendees and the speakers, since, given the conference was taking place in The Netherlands, the case of Amsterdam Schiphol, was the focus of particular attention. The importance of Schiphol for the Dutch economy is difficult to overestimate, and the fact that the flag carrier, KLM, is now part of a larger group, that keeps and even larger hub as close as Paris, makes this a very sensitive topic. There was some debate over whether the entry of more low cost carriers was a good thing for Amsterdam or it would end up putting too much pressure on the home carrier KLM.

Schiphol airport and KLM are key for the Dutch economy

The idea that more competition from low cost carriers would be beneficial over the long-run, as it would keep KLM competitive, seemed to carry the day...moreover, the KLM representative in the panel, Pieter Cornelisse, expressed a lot more concern about the strengthening of Lufthansa's hub at Frankfurt after the completion of a new parallel runway (extra capacity will allow the German airline to open new routes to the UK and Scandinavia, traditional feeder markets for KLM) and the increased capacity the Gulf carriers are deploying in their European routes.

Monday, 25 April 2011

Highlights of the annual Airneth conference (III): "the airline industry is structurally unstable"

The title of this post refers to the words of Rigas Doganis, author of Flying Off Course, possibly the most-read book on the airline industry to date (a revised and updated fourth edition that has just been released!)

Flying Off Course is the reference book about the airline industry

Mr.Doganis was one of the speakers at the Airneth conference and there he outlined his vision of the future of the airline industry. A future that passes necessarily through further consolidation, something that will have serious implications for several European hubs.
  • The largest network airlines (all 9 largest airlines by capacity all had losses last year!) will focus on long-haul operations at large hubs and contract out the feeder services
  • Smaller regional airlines will focus on their niche business-oriented traffic
  • Mid-sized traditional network carriers have a bleak future ahead!
  • Low cost carriers will increase their dominance of short haul European routes and will see some additional consolidation until only 3 or 4 will be left (Michael O'Leary has also been anticipating such an scenario, although he does not spare any fellow low cost carrier!).
  • Charter airlines will have to concentrate on long-haul leisure destinations as the LCCs take more of the short-haul holiday market.
Next, it was the turn of Nigel Dennis, of the University of Westminster Transport Studies Group, that presented a fascinating analysis of the different levels of competition each major airline alliance is facing at its own hub and presented some evidence of how this is affecting pricing on key routes (Easyjet competing on a given route could result in flag-carrier prices up to three times higher!). When comparing the competitive position of the three main airline alliances, it turned out that Oneworld, and in particular, IAG (that includes both British Airways and Iberia) is under much stronger pressure from low cost carrier at its own hubs (London and Madrid) than its counterparts at Star Alliance and SkyTeam.

This is something that was also noted by Jan Veldhuis, of The Netherlands Institute for Policy Analysis (KiM), in his presentation, as he remarked that, whereas Skyteam has increased its dominance at both CDG and AMS, Oneworld is loosening its grip on LHR.

And low cost carriers have often been mentioned throughout the conference...but, how do you define a low cost carrier?

Richard Klophaus presented a method to evaluate how "low cost" a carrier is, based on a set of 14 criteria, such as fleet homogeneity or use of major airports. Although he admitted the algorithm might need some refinement it provided an objective way to classify different airlines and the results were not always coincident with popular perception or even the airline's own marketing message. for example in a scale of 0 (no low cost) to 1 (pure low cost airline), Ryanair scored 1, whereas airlines traditionally that market themselves as "low cost", such as Vueling or Aer Lingus got 0.53, which means that they are, in reality half-way between a low cost airline and a network carrier.

Aer Lingus: not as low cost as it pretends...

Saturday, 23 April 2011

KLM retro and SkyTeam liveries

Here are some interesting KLM liveries that I have seen on a recent trip to Schiphol:

KLM retro livery, spotted @AMS . This Boeing 737 was painted this way in order to celebrate the Dutch airline's 90th birthday, but I am not sure to what historical period does this livery correspond. Comments and suggestions welcome!

A KLM Boeing 737 in SkyTeam livery, alliance-themed liveries are becoming more and more common!

Thursday, 21 April 2011

Highlights of the annual Airneth conference (II): analyzing the Delta-Norwest merger

As I anticipated in my previous post, the annual Airneth conference was a very interesting opportunity to listen to major airline industry experts and learn first-hand how they envisage the future of the airline business. The following is not an exhaustive account of the conference, but only some highlights I picked up that I hope will be of interest to readers of this blog, that I assume share with me their interest and passion for the commercial aviation industry.

Shortly after the usual introductory words, the conference kicked-off with Perry Cantarutti, senior VP at Delta airlines, explaining his experience of the recent merger between Delta (DAL) and Northwest Airlines (NWA).

He highlighted how DAL and NWA could extract significant value out of their very complementary networks and fleets: Delta had a strong network in the South and East of the US as well as a large transatlantic presence, whereas Northwest was strong in the upper-Midwest and the Pacific. Similarly, NWA had a fleet with lots of small (and I would add quite old too!) aircraft, such as DC-9s and also very large ones (B747s), whereas DAL had many mid-sized aircraft (B737s and B767s). So, the merger allowed them to rationalize fleet use and frequencies, for example deploying A320s at SLC to fly routes to the East coast, whereas shorter-range MD-90s are used at MSP to fly shorter sectors.

The resulting airline is now #1 (in average seat miles capacity) domestically in the US and in the US to Europe, Africa and Asia and #2 in the US to Latin America market. Although, when analyzing the competitive situation on transatlantic routes, it might be more accurate to consider capacity by alliances rather than individual airlines, and here DAL-NWA benefit from an increasing cooperation with AF-KLM and Alitalia, to the point that Skyteam now has a share of 27% of transatlantic capacity, just 1% below the largest alliance (Star Alliance).

Skyteam partners have already achieved a significant amount of integration in areas such as joint revenue management on transatlantic routes and we can deduct, from Mr.Cantarutti's words, that we are going to see increasing integration within Skyteam, for example, by looking for more commonalities in aircraft cabins.

Monday, 18 April 2011

Highlights of the annual Airneth Conference in The Hague (I): Consolidation and new business models in the air transport industry

The Hague: an excellent choice to host the annual Airneth conference

Last week I had the opportunity to attend what is possibly one of the most interesting aviation-related events in Europe right now: the annual Airneth conference in The Hague, The Netherlands.

The line-up of speakers sounded impressive beforehand, it included professionals of the caliber of Rigas Doganis, of "Flying-off Course" fame, but after attending most of the sessions I can just say that the conference totally exceeded my expectations. In addition to the quality of the debate that went on in the conference room, I must congratulate the organizers for the perfect set up (as well as the choice of city!).

Given that the conference was being held in The Netherlands, the case of Schiphol airport deserved some special attention, with its symbiotic relationship with KLM, of outmost importance for the Dutch economy. I could detect some concern among the attendees about the survival of Schiphol as a major hub in the constantly-changing airline industry scene, something of particular relevance now, with KLM as a junior member of the Air France group, the industry's centre of gravity shifting eastwards and a growing market share for low cost carriers...

In coming blog posts I will try to summarize my impressions of the conference and outline some of the major topics that centered the discussion, some of which are much in line with what I have usually been writing about in this blog: the future of competition between network airlines and low cost carriers, evolving business models in the airline industry, airport de-hubbing and re-hubbing, airline alliances and route development.

Watch this space!

Friday, 15 April 2011

Vueling and Spanair: two different strategies to develop Barcelona into an airline hub

A few weeks ago I presented my vision of Barcelona airport as at potential Mediterranean hub. But are there any airlines able to turn this idea into a reality?

Actually, the chances of this happening, although small, have never been better, as there are currently two airlines aiming to develop a hub-style operation at BCN: Vueling and Spanair, however each of them has its particularities.

Spanair MD-83 EC-GVO with the city of Barcelona in the background

On one hand, Vueling started as a pure low cost play, although its model has been going through an hybridisation process that has seen it progressively adding more of the features of a network airline. On the other hand, Spanair's troubled existence as a conventional full-service airline, took a radical turn when a group of investors supported by the Catalan government purchased it with the mandate to develop an international hub out of Barcelona.

Spanair is actively marketing itself as "Barcelona's carrier", the only one able to take Barcelona to the first division of European airports. Spanair's latest marketing campaign, Jo Crec en Barcelona (which means "I believe in Barcelona" in Catalan language) goes in this direction. But how does this translate in terms of network development?

Until now most of Spanair's growth, which has been constrained by the carrier's delicate financial situation, has been aimed at leveraging its Star Alliance links, new routes and frequencies between Barcelona and Germany and code-sharing with Singapore Airlines, as well as developing some niche markets out of Barcelona with routes to North Africa and the Sahel (Algiers, Nador, Banjul, Bamako and the, now abandoned, Tripoli). This niche market strategy would fit well with the concept of a Star Alliance South-Western European hub, by offering a diversified and unique route network and channeling traffic through Barcelona, however, given Spanair's weak European network outside Germany, it remains unclear to me what traffic is going to feed these specialty routes other than a limited domestic Spanish demand and some spillovers from Star Alliance's main hubs in Central Europe.

In my post about the Mediterranean strategy I pointed at the need to achieve some critical mass by linking those cities that are within easy reach from Barcelona and are somehow underserved buy their own flag carriers. And this is what Vueling seems to be doing. This airline, partly owned by Iberia, is strengthening its network by opening routes from Barcelona to a number of airports in Southern France (Bordeaux, Toulouse) and Italy (Genoa, Pisa) in addition to a very strong Spanish and European network, at the same time it is enabling connections between different flights and feeding Iberia's new transatlantic services at Barcelona (to Miami and Sao Paulo). Does this mean the hub status for Barcelona is getting closer? yes and no, in a way the seeds of a potential Mediterranean hub are being planted, but at the same time, Barcelona is still far from enjoying the sort of coordinated waves of arrivals and departures, network reach and feeder frequencies that even secondary hubs have.

Vueling A320-200, EC-ICS, landing at BCN

Another question is whether is there enough space at BCN for two airlines aiming to make it its hub, particularly when factoring in the increasing competition from Ryanair...maybe developing a hub would require combining Vueling's European reach with Spanair's niche network...but this is another story!

Saturday, 2 April 2011

A brand new airport opens in Spain, no flights expected in the near future...

I had no plans to continue writing about Spanish airports and overcapacity this week, when I learned about the opening of the latest Spanish airport: Castelló-Costa de Azahar (CDT), on Spain's Eastern coast, filling the gap between Valencia (VAL) and Reus (REU) airports. Well, I said "open" because it has been actually been "inaugurated", but it will take some time until an airplane is seen taking off or landing at this facility. In reality the timing of the official inauguration has more to do with the Spanish political calendar than with the readiness of the facility (the run-up towards the upcoming local and regional elections).

This is the third airport in Spain to be built and managed outside Aena's network. It is going to be managed by a private consortium, although much of the investment so far has come from the regional and provincial governments, and presumably public money will also be needed to fund the facilities for quite a while, since the airport management company will get €6 per passenger unless the 600,000 passenger/year threshold is reached during the. This figure looks like a distant goal at a time when only Air Nostrum, Iberia's regional franchise has shown some interest in operating from the new airport.

Unlike other Spanish ghost airports, Castelló is located in an area with considerable economic potential, including many export industries (for example, ceramics) and a tourism industry that, until the crisis arrived, had put its sights on massive development schemes to rival those of neighbouring Costa Blanca and Costa Daurada...and here lies the problem: it seems to be that the airport's business plan, its capacity and its management contracts were elaborated under the assumption all these massive development plans were going to be a reality by the time the airport was ready. They aren't. In fact, construction activity in the area has all but collapsed..and it looks like there is going to be another empty airport in Spain, at least for some time...

In the meantime, the Castelló airport has become a sponsor of Villarreal Football Club, that is conducting an excellent campaign. It might not have scheduled flights, but Castelló Airport might well be at the Champions League next year!

Saturday, 19 March 2011

Zaragoza (ZAZ): an airport below potential?

Zaragoza has a opportunity to become strong in cargo
(photo: a Lufthansa Cargo MD-11F at Frankfurt International airport)

I my recent series about "Spain's empty airports", I wrote about the amount of public money that has been devoted to create or upgrade airports in a number of cities that are unlikely to ever generate enough traffic to justify this investment.

However, I came across a case that might be just the opposite: Zaragoza airport (ZAZ) has little activity, which is a bit striking when taking into account the size of the city it serves. If you look at the 2009 ranking of Spanish airports by number of passengers, ZAZ ranked 28th (out of 48), only above airports with very little traffic, such as Leon or Logrono, or those devoted to private aviation. However, Zaragoza is the 4th largest metropolitan area in Spain with a population of around 700,000. The city is also home to a major logistics center, that takes advantage of its position at a crossroads between the Ebro Valley and the Barcelona-Madrid route.

But it is precisely this strategic geographical position, at the intersection of major overland transport routes, including high-speed railway lines, that might have prevent the city from developing a larger airport. The problem is simply that it is too well connected with Barcelona and Madrid and it is also just close enough to these two cities for air travel not to be competitive (there is admittedly a ZAZ-MAD daily flight operated by Air Nostrum, but this is an almost exclusively connection flight targeting a really niche market). It is this availability of good rail and road links where the opportunity lies: it is already the third airport in Spain in volume of cargo, still far from the top two, but growing strongly.

It must also be taken into account that ZAZ is an airport with a mixed civilian and military use (it is also designated as one of the alternative landing places for the Space Shuttle). The Spanish Air Force keeps a strong presence at ZAZ and air traffic and some other service remain in military hands.

I wonder to what extent military use has acted as a constraint on the airport's civilian development. Surprisingly, at a time of exuberant spending at many Spanish airports, including in nearby Huesca, it seems that ZAZ was left out of the party...

Saturday, 12 March 2011

How Air New Zealand drives innovation in the airline industry: lie flat in economy class

In this video you can see how Air New Zealand's Skycouch works

Great innovations often come from small things, and this is what Air New Zealand has achieved with its Skycouch for economy class. This idea, that emerged from within the company, is going to make the very long flights to and from New Zealand significantly more comfortable for many travelers that can not afford the luxuries of business class (or even those of premium economy).

On the kiwi-airline's new Boeing 777-300ER you can turn a row of three seats into a comfortable couch.

How this is done?

Very simple. The seats come with totally retractable armrest, while the leg-rest can go up to fill the gap between your own seats and the seat in front. Each row of three becomes a single, almost flat, surface and there are even specially adapted seat-belts. Add some real pillows and you are all set!

This innovation is ideal for couples and families with children...the only if is that you have to buy the three seats together. Pricing can be a delicate thing, specially if you do not want to devalue your premium products (premium economy and business class), but it seems that Air NZ has finally gone for a pricing structure where you can buy two seats at full price and the third one at half price. According to this article, this could result on an extra cost of $1,400 on a typical trip from Auckland to London (based on base fares), however it will still be considerably lower than premium economy or business class seats, that go for about $6,000 and $10,000 each (let alone buying two of them!).

This is in fact one of several imaginative solutions that Air New Zealand has devised to improve its passenger's in-flight is not a coincidence that when designated the World's 10 most innovative airlines, Air New Zealand came on top!

You just need to look on a map where New Zealand is located to understand a lot of things...necessity is the mother of invention!

Wednesday, 2 March 2011

What next for Girona airport?

Transavia is currently the only airline other than Ryanair operating at GRO

Girona has been possibly the fastest growing in Spain during the last decade. From a sleepy charter-only airport, GRO has gone on to become one of Ryanair's major bases in the continent...or was it?

In fact, GRO is now going through a delicate moment, and the responsible is none other than the same airline that helped it get out of obscurity: Ryanair. The Irish airline started operating from Barcelona last September and it has been opening new routes since then, most of Ryanair's traffic at GRO are actually originating or have as final destination the city of Barcelona, an airport that has now plenty of spare capacity for the Irish airline to grow.

Ryanair's base at Girona will go from 11 to 6 aircraft permanently-based aircraft

In a recent post at AirObserver's blog I already mentioned how its arrival to Barcelona has strengthen considerably Ryanair's bargaining power at Girona. And the Irish airline has put all this market power to work: a new agreement has supposedly been reached with the Catalan authorities, providing €7.5M to keep Ryanair at Girona until. But the recent government change in Catalonia has changed spending priorities and now is uncertain whether the agreement is going to be implemented or not.

According to some reports, Spanair is being asked by the Catalan government (that has been supporting it through direct capital injections) to take over some of the routes previously operated by Ryanair, namely the Girona-Madrid one. This move would not make any sense to me.

For a start, I doubt it would work without heavy public subsidies. Spanair already tried operating this route a few years ago and it did not work. Why should it be different this time? and if subsidies are to be paid, why then all the fuss about paying them to Ryanair? the Irish airline was at least capable of bringing to Girona a volume of traffic that no one else in the industry can match.

But if we then look at the relationship between Spanair and Catalan public institutions we have that public money has been used to support this ailing airline on the grounds that it intends to develop a hub-and-spoke operation at Barcelona El Prat (BCN) that might, in the long run, make of BCN a major European airport. Making Spanair fill the gap at Girona while Ryanair is itself increasing its presence at BCN would be a total departure from this strategy!

This situation might be mitigated if Girona airport had the autonomy to set its own fees and pursue a more aggresive commercial policy (Mr.O'Leary himself said recently that Girona's fees were too high to compete effectively with Barcelona El Prat. If we are to judge from the fact that Ryanair is currently expanding at BCN despite not getting any subsidy) that includes actively looking for new routes and airlines.

At this point in time the only non-Ryanair regular route at GRO is Transavia's to Rotterdam. Have the airport managers any other option on the table? It would be a good idea to start looking for some...

Friday, 25 February 2011

Cool KLM commercial

As promised in a previous post, here is another imaginative airline commercial, this time from KLM. It is remarkable how KLM seems to be one of the airlines that best understand the power of new media when it comes to marketing and have not hesitated to experiment: we have seen it in situations of crisis as well as on a more pleasant context. Keep it on!

(h/t @brandedskies)

Wednesday, 23 February 2011

Allplane quoted at AirObserver blog: commenting the new scenario at Girona airport after Ryanair's massive route cancellation

In this blog I speak often about the constantly evolving situation at Barcelona and Girona airports. It is a very interesting case of interaction, in one single metropolitan market (Barcelona-Girona-Reus) of pure low cost players (Ryanair), airlines developing an hybrid model (Vueling), an airline trying to develop a hub-and-spoke operation (Spanair), a retreating flag-carrier (Iberia) and all of this while it is becoming an emerging destination for major global carriers (Singapore Airlines, Qatar Airways, Delta Airlines).

This environment has not gone unnoticed to other European bloggers and AirObserver has just written a piece where it quotes me and presents my point of view about an hypothetic post-Ryanair Girona airport. This is a topic on which I am going to write a piece soon...In the meantime, great thanks to AirObserver for presenting my thoughts on the issue to its readers!

Tuesday, 22 February 2011

Airline adverts on Youtube

If Ryanair made the headlines recently with its educative hand-luggage packing videos on Youtube...other airlines are also using the popular video-sharing service to successfully launch new promotional campaigns. In this video Virgin Atlantic positions itself miles away from Ryanair, making a display of exuberance that evokes the long-gone glamour of air travel.

PS: in a coming post you will see a totally different but also very creative video by Dutch airline KLM!

Saturday, 19 February 2011

Why low cost carriers have not taken off in Russia

Russia has had its fair share of revolutions in the last century, but a more recent sort of revolution has totally skipped it: the low-cost airline revolution that has swept through Europe in the past 15 years has barely touched the Russian airline industry, only Sky Express and Avianova seem to have fully embraced the low-cost concept, and these remain really small operators.

To be fair, some European LCC have made timid forays into the expanses of Russia, for example Vueling operates a Barcelona-Moscow flight and so does Air Berlin with some flights to Germany. However, these are little more than anecdotes and the positioning of these two airlines is not that of a pure low-cost, but more of a hybrid model straddling the business and leisure segments of the market.

There are some factors at play that have prevented the development of a low cost airline industry in Russia.

According to Vladislav Filev, chief executive of Russian airline S7, and recently interviewed by Flightglobal, the conditions for low cost aviation simply do not exist in Russia. He mentions long flying sectors between Russia's main cities and lack of secondary airports as deterrents.

These are certainly obstacles on the way, I remain unconvinced about the distance factor being so deterministic, though. Many destinations in European Russia can be reached in a 2-3 hour flight from Moscow and, after all, low cost carriers elsewhere are successfully operating even longer sectors (see Ryanair's new base in the Canary Islands).

Regarding airports, not sure whether it is the lack of adequate facilities (would be interesting to know what is the spare capacity at Russia's regional airports) or rather their pricing policies that are making it difficult for low cost carriers to take off. If we read what Ural Airlines director says about this matter, it seems that airport fees are the obstacle.

No prospects for a low cost airline industry in the short term in Russia, according to Ural Airlines management

Low cost carriers in Western Europe have managed to extract very favourable terms from regional airports wishing to boost their traffic as well as from regional and local authorities. A certain degree of management autonomy is required to achieve such an outcome and I ignore if this is the case in Russia, however, we have the example of two very different countries, Spain and India, where, in spite of their heavily centralized airport management, low cost carriers have flourished in the last few years. Could this happen in Russia too?

Red tape is another story, starting with taxes on imported aircraft, that denies any would-be Russian low cost carrier the flexibility to define its own optimal seat configuration, unless it wants to pay a 20% for the aircraft (just ask Avianova!)

In fact, Russia has moved to abolish import taxes for some types of aircraft, including those on the 110-169 and 220-299 seat ranges, but the restrictions that remain in place are still a considerable hurdle, as they affect configurations that have proven to be popular among low cost carriers elsewhere (as an illustration, Ryanair would have trouble operating its 189-seat Boeing 737-800).

Why then, we do not see Western low cost carriers opening more routes into Russia? I suspect a lot has to do with the regulatory and institutional framework.

In particular flying rights, as there are still frictions between the EU and Russia regarding bilateral agreements regulating who can fly the routes between Russia and each European country. These regulatory framework has been progressively dismantled in with the implementation of the Single European Sky and deregulation has been extended to North American routes (the EU-US Open Skies agreement) and to some of the EU's neighboring countries, such as Morocco, with whom the EU has signed treaties liberalizing air traffic. This has allowed European low cost carriers, particularly the largest, Easyjet and Ryanair, to expand their networks beyond the borders of the EU.

But getting Russia to negotiate such an agreement with the EU as a whole is going to get more complicated, as Russia keeps a stronger negotiating position by talking to each country individually, and in the background there is the still unresolved issue of Siberian overflights, with European carriers paying several hundred million dollars a year to a competitor (Aeroflot) for the right to fly to Asia through the shortest route (over Siberia)

An additional factor must be taken into account: low cost travel relies on independent travelers, and Russia is not an easy market for independent travel. This goes both ways: there is a limited flow of European budget travelers to Russia: visa requirements, the lack of a modern budget and mid-range hotels and the fact that Russia is far from being a mainstream tourist destination, all play a role.

Russians also need visas, this is possibly the main cause that most Russian holidaymakers buy packages supplied by tour-operators that usually include the charter flight. There is obviously an elite that is used to travel independently, but I am not sure that words such as "budget" and "low cost" would be really sell well in this market segment. In summary, not the best environment for the Easyjets and Ryanairs to thrive...

However,the EU-Russia air market is a 10.7 million passenger per year reality and the forecast is that this amount could double in this decade and some new entrants might be needed in order to exploit the full potential of this growing market. In the meantime, talks go on...

Most Russian holidaymakers travel in charter flights, such as those operated by this Transaero Boeing 747

Tuesday, 15 February 2011

A hub in the Med? What strategy should Barcelona airport follow

Barcelona airport is a sort of unusual case in Europe, it is one of the continent's top ten airports by number of passengers, however it managed to get this spot without having a flag-carrier based there and with a minimal offering of long-haul flights.

So Barcelona has been mainly a feeder market for Europe's main airlines and an important short haul destination on its own right. I have already expressed my point of view of what routes would enhance considerably the reach of Barcelona's airport but this was based on the idea of BCN becoming a spoke of other hubs. But what could be the strategy to make of BCN a hub on its own? is it feasible?

It is too late for Barcelona to become a generalist hub, it does not have the sort of legacy carrier that would make this possible. In think that any small chance of Barcelona achieving hub status depends on its ability to find a market niche and becoming incredibly good at serving it (think Finnair and its Asian strategy!).

In my opinion Barcelona should focus on becoming the gateway of the Western Mediterranean.

If you take a close look at the map you can see how Barcelona is at the centre of a Mediterranean arch that goes from North-Western Italy to South-Western Spain, the contour of its coast clearly lit, a densely populated area. Destinations such as Marseille, Nice, Turin, Genoa, Cagliari, Algiers or Alicante can all be reached within 1-1.5h from Barcelona, that itself has a large airport with plenty of capacity and considerable Origin-Destination traffic.

The hub of the Western Mediterranean?

If you have visited the city of Barcelona and strolled down the Ramblas towards the sea, you might have noticed a large medieval building at the end of this promenade. It now hosts the maritime museum, but in its time this was one of the largest civilian buildings in the World, the Royal Drassanes (Shipyards) are a vivid reminder of an age when Barcelona managed to become the main trading port of the Western half of the Mediterranean...the example might be a bit anachronistic, but that shipyard seating at the edge of the town was the medieval equivalent of today's largest air facilities... and not too far from there, some 12km. further South, now sits the largest air terminal on the Mediterranean rim. Can we reinvent Barcelona as the hub of the Mediterranean?

Let's do some SWOT analysis!

BCN has some strengths to show for:

It has some critical mass of its own (it is capable of generating a traffic of 30 million passengers a year with virtually no transit passengers) and, despite the surge of tourist numbers in the last two decades it keeps a fair number of business traffic too (just look at the visitor figures of the Mobile World Congress that is taking place in the city as I write these lines)

It has a magnificent new terminal that has added plenty of spare capacity

It has quite a good geographical position to fulfill the role of West-Med hub, with the whole Iberian Peninsula, the Southern half of France and the coastal towns of Italy and North Africa all within 1,5h. flight time.

Plus it has reasonably good (although they need to improve in some areas to reach full potential) overland connections with its hinterland, the Mediterranean coastal corridor (the big arch going from Marseille to Alicante) and the Ebro valley (that links with the interior of Spain and the Atlantic), including high-speed railways (although at the moment these do not pass through the airport). The main passenger port in the Mediterranean (with both cruise and regular shipping lines) is also next door.

Now the weaknesses:

And the first and most obvious one is...there is no local airline currently able to run the mix of long-haul, short-haul services that would make it possible to develop BCN as a hub. True, Vueling is coordinating with its part-owner Iberia in order to provide connection flights and to start feeding some long-haul flights, but there are reasons to doubt the scale of Iberia's commitment to operating long-haul flights at BCN, not least because its main hub is so close!

And Spanair has also expressed interest in the hub option (this is actually its "raison-d'etre" and the only reason the airline has managed to survive through public support) but it needs to sort out its finances first.

The outlook remains a bit foggy for Spanair

We will get back to the airlines later, because there are other weaknesses that I must mention and these are more structural.

One of them is the peripheral nature of the Mediterranean market and the fact that a large share of the traffic this area generates is related to tourism, and this is a segment where any hub-and-spoke airline would have a hard time competing with low cost carriers and charters focusing on origin/destination traffic.

But some uncertainties surround Vueling's competitive position too...

And let's not forget that all European hubs, including the most consolidated ones are currently under pressure, as the center of gravity of aviation is moving East (to the Gulf, to Turkey) and this will certainly have an effect on traffic patterns.

Moreover, whereas emerging markets in Eastern Europe are making steady economic progress, the Med remains plagued with political unstability and sluggish economic performance...

Are there opportunities? Of course!

First of all, there is currently no strong hub on the Mediterranean rim, Madrid is not far, but it has a rather transatlantic orientation, Alitalia's chronic problems and underinvestment at Italian airports have prevented Rome and Milan from taking this role and Paris is a long way up North.

I said previously that the lack of long-haul airlines is a weakness, but the fact that there are not one, but two airlines, is, actually, a great opportunity. And both have links to strong alliances, in the case of Spanair, it looks as if a Mediterranean hub would fit really well in its current network, that is strongest in Northern, Central and Eastern Europe.

The gap in Star-Alliance's network

And then we have the aircraft industry producing models that seem well suited for the sort of niche positioning that Barcelona should pursue. The Boeing 787 will improve the economics of long-haul thin routes and the next generation of regional jets, such as the Bombardier CSeries or Embraer E-Series could do the same for the short haul sectors.

There would be threats of course, as competitors would not seat idle. Iberia, Alitalia and Air France would not be happy with an hypothetic Star Alliance hub in their backyard and Vueling is already facing a tough fight with Easyjet and Ryanair in its own main base.

The high degree of political control over the Spanish air travel and airport industry (even after an eventual partial privatization), including commercial and pricing policy, slot allocation and bilateral agreements with non-EU countries, is something to be accounted for. Infrastructure management and politics often mix in Spain...

Finally, the increasing share of low cost carrier traffic, although not necessarily bad news, might have some long-term implications for BCN's aspiration to become a hub. The perception that BCN is becoming a mostly tourism-oriented low cost airport could become a reality if low cost carriers take enough market share to make routes operated by full-service network airlines unprofitable, this could result in a self-reinforcing process, whereas BCN ends up being a limited choice of carriers, limited connectivity to other major airports and an almost exclusively low cost traffic.

In any case, I admit there was a lot of wishful thinking involved in this the goal here was just to summarize the multiple factors that can play a role in the development of a hub at Barcelona airport. But most of these are secondary factors, and whether Barcelona will become a hub or not is something that ultimately depends on the airlines that choose to operate there. And this is something I am going to write about soon...