Sunday, 21 October 2012

Iberia and Vueling on diverging flight paths

I just read an article on a Spanish news portal (in Spanish, "Iberia tenemos un problema"-"Iberia, we've got a problem") that warns about the difficult situation Spanish carrier Iberia is currently in.

Nothing that I had not brought up on this blog before: see my article of just a few days ago ("IAG's Spanish problem, Iberia Express and Vueling").

There are not many successful cases of network carriers creating spinning-off profitable low cost airlines, as noted recently by industry blogger Cranky Flier, not to mention the adverse effect it could have on your brand.

In Iberia's case, the problems are compounded by ongoing labour litigation that could take away all the labour cost reductions achieved with the creation of Iberia Express, its new low cost subsidiary...

Going through turbulence...

The ironical thing here is that, while this happens, Vueling, an airline that is 40% owned by Iberia, seems to be going from strength to strength, and it is actually "upgrading" its brand and services and recently announcing a major fleet and network expansion at its Barcelona base (although some Vueling frequent fliers tell me that the carrier has still some way to go in terms of reliability and customer service in order to shake off the "low cost" label completely).

An interesting case of business-fiction prospective would be the situation where Vueling ends up taking over Iberia's short and medium haul operations...seems quite far fetched at present, but about a decade ago we saw former regional operator Crossair taking over its bankrupt parent, the once mighty Swissair and more recently Austrian Airlines corporate structure being gradually folded under Tyrolean Airways (although keeping its brand).


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