Qatar Airways to sponsor FC Barcelona, advertise on team's shirt

 Today we get into the fascinating World of football sponsorship, because it has been announced that Qatar Airways is going to become an sponsor of one of the World's top football ("soccer" for American readers!) sides: FC Barcelona. So we are going to see Qatar Airways on the FC Barcelona's shirt next season!

This deal consolidates the relationship between FC Barcelona and the emirate of Qatar (whose Qatar Foundation already sponsors the team) and mirrors similar sponsorship deals that top European football teams have sealed with the emerging airlines of the Gulf (the so called "MEB3"): Emirates is currently sponsoring English team Arsenal, Italy's AC Milan and is also adding FC Barcelona's arch-rival Real Madrid in the coming season, while Etihad Airways, of Abu Dhabi, and Qatar Airways are sponsoring Manchester City and Paris St.Germain, both owned by investors of their respective emirates.

The official accouncement, that can be found on FC Barcelona's website, does not disclose financial details, although sports daily El Mundo Deportivo reports that Qatar Sports Investments would pay €170 million for a six year sponsorship. Qatar Airways logo will then replace Qatar Foundation's one on the FC Barcelona shirts and merchandising. Apparently the possibility of replacing the sponsor's name was included in a clause of the original contract between FC Barcelona and Qatar Foundation.

Another point this announcement does not disclose is what is going to happen with FC Barcelona's current sponsorhip deal with Turkish Airlines. The Turkish flag carrier has invested heavily in sports sponsorship in its quest to position itself as a global super-connector and a competitor with the Gulf carriers and was, until now, the "official airline" of FC Barcelona. This relationship might be now "in the air" (if you allow me the bad joke).

By the way, all these airlines sponsoring several teams at the same time are starting to produce some slightly embarrassing situations: for example, a specially-painted Turkish Airlines aircraft flew FC Barcelona to the 2011 Champions League final, that the Catalan side played against non other than...Manchester United, a team that happens to have a similar sponsorhip agreement with the Turkish airline!

However, in this occasion, the final was conveniently played at Wembley stadium, in London, which made it unnecessary for Manchester United to fly...and, made a bit less blatant Turkish Airlines' alleged support for both teams!

Airline alliances & the Gulf carriers: if you can't beat them, join them!

Making new friends

Interesting times ahead for the airline industry...While old European, Asian and American flag carriers are still adapting to the tectonic shift that the emergence of the Gulf super-connectors (plus Turkish Airlines) has represented. We start to see another wave of strategic movements.

Today it's been confirmed that Qatar Airways is joining Oneworld, while Etihad has inked a codeshare agreement with Air France-KLM and Air Berlin (that despite being in Oneworld is partly owned by the Abu Dhabi carrier). And all of this with the Emirates-Qantas agreement that, although more limited in geographical scope than the three main alliances, promises to transform the Europe to Australia air travel market.

What next? A growing role for Turkish Airlines within Star Alliance? Emirates joining one of the alliances (they were talking with American Airlines' parent AMR) or creating its own alliance by striking deals similar to the Qantas one with other airlines?

What's clear is that the old saying still holds true: if you can't beat them, join them!

UPDATE: (or in this case it would rather be: "if you can't beat them, try to get them join you!)

The weekly airline business recap

While many in the airline industry will be enjoying the warm weather at Abu Dhabi for #Routes, I thought about putting together some of the airline stories that caught my attention this week...

Starting with Thai Airways. getting its first Airbus A380 (the first of 6 ordered by thailand's flag carrier). I had the chance to attend the delivery ceremony in Toulouse and will certainly be publishing a longer blog post about this event shortly, but in the meantime you can check out what Flightglobal wrote about it.

By the way, Thai's A380 fleet will be growing soon, aircraft number 2 and 3 are already in Hamburg to  get all the necessary fittings, while number 4 is already out of the assembly line, you can see it here, next to two Malaysian A380s (there was also a China Southern A380 next to them).

More A380s ready to head East, where growth is

And the "low-costization" of European short haul continues with Lufthansa's announcement that it is going to launch a low cost airline of its own, integrating Germanwings operation along the way. While the new brand will be, for a start, restricted to Germany's non-hub airports, will see if it ends up like Iberia Express, taking also a sizeable share of the flag carrier's mainline operations.

By the way, Airbus marketing VP Bob Lange reaffirmed to a group of journalists attending Thai Airways' A380 delivery ceremony that the European consortium is sticking to its sales goals for the year, that is, of selling 30 more A380s. This was hours before Emirates Tim Clark expressed interest in acquiring another 30 to 40 A380s in the near future...coincidence?

In any case, with more A380s or not, the story of growth in the United Arab Emirates airline industry is simply amazing, as this report confirms, from 18 million in 2001 to over 70 million in 2011 and I guess it would look even more spectacular if we went 20 years back in time.

Oh! and I almost forgot...I got to fly BA's "Dove"!

Emirates two newest destinations...in London!

If you are flying to London for the Olympics, Emirates can take you via its Dubai hub to either Heathrow (now a four-daily A380 service!) or Gatwick...and now also across the Thames.

Dubai's carrier is launching London's first cable car that runs over the river Thames from the conveniently renamed Emirates Greenwich Peninsula, next to the O2 arena to the Emirates Royal Docks, on the North bank.

Not sure how many Skywards miles you get though...!

A380: white elephant or the plane of the tomorrow?

Here is a nice A380, banknote-themed, ad that is on The Economist's this week edition, just ahead of Farnborough airshow. The message is clear: the A380 is a profitable airplane.

The point here is that Airbus is trying to dissipate the image that is forming of the A380 as big (indeed!)"white elephant". The reality seems to be a bit more dire, the initial break-even point for the A380 project was around 250 deliveries, but later delays and cost overruns might have put this figure beyond the 400 aircraft mark as The Times pointed out in its day. At the moment, according to Wikipedia, there are 234 outstanding orders for the A380 at the time when I am writing this (not far from the initial profitability threshold). It is true, though, the A380 is a project for the long-run unless some disruptive new technology changes the competitive landscape on long-haul routes (sub-orbital flight anyone?).

So, it seems that it has not been very profitable for its manufacturer so far, but is it profitable for airlines? Well, nearly half of this orders come from one single airline: Emirates (that possibly has got large discounts for bulk orders), it looks like most airlines are not overly enthusiastic about the economics of the A380...or maybe they simply do not have the sort of routes that can accommodate this capacity. Or maybe is just a matter of time, when the economic crisis is over, before trends in global trade and tourism, airport and route congestion and environmental concerns make a plane like the A380 irreplaceable?

Emirates is often credited with having anticipated, to its advantage, the emerging trends in global travel, which makes me think: maybe they are onto something...

What airlines does Barcelona need in order to become a truly global airport?

As a continuation to my post about the arrival of Qatar Airways to Barcelona I am going to do an exercise on airline fiction and try to imagine what airlines could best complement Barcelona's airport current network and put it in the league of the major global airports. In short, if I was Barcelona airport's manager which airlines I would like to fly into my airport in order to maximize my travelers' options?

As in real life resources are limited, and in order to make this exercise look a bit more real, and, thus, more interesting, we are going to set some constraints. The airport manager will only be able to choose one airline per continent (well, actually Asia will have two, but it's ok as we are not considering Australia for technical reasons: to far away for direct flights), the choices would also need to be realistic and take into account the market realities at BCN (for example, a route to the Maldives might be nice, but there might not be enough realistic demand for it or the connections to feed it).

These constraints would likely tip the balance in favour of Star Alliance airlines. Why? because of Spanair, the only network airline that is currently intent on building a hub at BCN while working together with one of the major alliances. This is not to say that the other airlines at BCN are not doing a good job, but frankly, I think that their current operational model would make it difficult to reach the type of coordination and code-share agreements that Spanair's membership of Star Alliance could facilitate. Moreover, it looks like Star Alliance's networks really fills the gaps at BCN quite nicely...here are the choices, in no particular order:

United Airlines to Chicago



The American carrier's hub at Chicago O'Hare (ORD) would be a good complement to Barcelona's current connections with the East Coast of the US, particularly with, recently merged, Continental's service to New York-Newark (other direct routes BCN-US are New York-JFK served by Delta and American Airlines, Philadelphia, PHL, served by US Airways and Atlanta, ATL, served by Delta). Flying into Chicago will open the door to the Mid-West and Western states for the Barcelona travelers, and Barcelona's tourist sector would surely benefit from having a direct connection to one of America's biggest and more prosperous cities.

All Nippon Airlines to Tokyo



A connection with Japan would be very important for BCN. Many Japanese companies are based in Catalonia, such as Nissan and Sony, and, as anyone visiting Barcelona's famous Gaudí monuments might have noticed, Barcelona remains a very popular destination among Japanese tourists. All Nippon Airways has a relatively small international network, but does fly to cities where it can code-share with Star Alliance partners, such as Lufthansa in Frankfurt, why not Barcelona then?

TAM to Sao Paulo



A regular and frequent connection with Latin America is missing at BCN despite the strong business links and the large Latin American community in Barcelona (there are some weekly flights to Buenos Aires and Bogota but with very sporadic frequencies) and where else to start other than Sao Paulo, the largest city and economic capital of up-and-coming Brazil, with its growing economy and large population? It's geographic position would also enable travelers to connect with TAM's regional network to access the rest of the continent. Moreover this route could fit well in the European expansion plans of TAM, also a Star Alliance member.

Air China to Beijing



No need to repeat what everyone has already heard about China, the World's new economic giant. A direct connection to China, with an airline that can give access to a large domestic and regional network is a must for any airport with aspirations. Air China is a member of Star Alliance as well and, like its home country, is also in a period of expansion. Great potential for this route that could handle a mix of business and leisure traffic both ways.

South African Airways to Johannesburg



This is not just a World Cup-related stunt...because of its geographic position Barcelona could be a good connection point for Europe-Africa traffic. At the moment many travelers in the Western Mediterranean area go North to Paris, Brussels or Frankfurt in order to then travel South again, a direct flight from Barcelona would save time to travelers in Barcelona's catchment area and could also feed flights to other parts of Europe with South African Airways' Star Alliance partners. This route and the possible regional onward connections at Johannesburg would also facilitate new business and tourism opportunities in the Southern part of Africa.

Emirates to Dubai




This is the only one of the lot that it is not a Star Alliance member, but Emirates has shown that it can do it alone...plus Emirates is becoming so big that I think any self-respecting airport would like to have it on-board...If Emirates came to Barcelona it would be competing with Qatar Airways on all routes to the Middle East and beyond: Australia, India and South Asia, East Africa, the Far East. In short, a global super-connector.

What else?

Well, given that this post is about wishful thinking, if Singapore Airlines' (another Star Alliance member) current Barcelona-Milan-Singapore route could become nonstop another portion of the World would be much better covered from BCN!

I would also keep an eye on two other Star Alliance members: Air Canada and Asiana of South Korea. I have not included them, in part to keep with the self-imposed constraint regarding the number of choices available. Their local markets are relatively small compared with their giant neighbors but both countries are economically doing well and there might be interesting opportunities ahead!

The absents

I would have liked to include an Indian airline in the lot, specially considering the dynamism of the Indian economy and its aviation sector. I haven't because I had the feeling that business and tourist flows between the two markets are not big enough yet, particularly given the lack of alliance partners that might help feed the flights at both ends. Moreover, the Gulf carriers Qatar Airways and Emirates already cover most of the major and even secondary destinations in India. I have no doubt that if the Indian economy continues to grow, it won't be long until we see Indian airliners at BCN, in fact, last year it was rumored that Kingfisher Airlines had some interest in operating the Barcelona-Mumbai route (it might help that its owner is regular visitor to the Catalan capital).

Given the complicated political situation in Thailand and the fact that there already is a Singapore Airlines flight to Barcelona that provides connections to South-East Asia, I have decided not to include Star Alliance member Thai Airways in this list this time. Once the political issues are sorted out I am sure that Thailand will remain a popular tourist destination as ever and hopefully we will see the Thai Airways's orchid livery at BCN some day!


Fiction or reality?

So this is it! You just add six carriers and practically the whole globe is within one stop of BCN...

I admit there was a lot of wishful thinking in this post, but, who knows? on one hand, I think there is a latent demand for long-haul flights at Barcelona, that is now using other alternatives, on the other hand there are emerging markets and airlines that are fast expanding into new and under-served markets. There is plenty of capacity now at BCN...I know there are people working hard to make things happen...we might not become a super-hub but we can certainly be a spoke of many interesting hubs, providing convenient access to a vast number of destinations across the globe and this might happen sooner than we think!

New connections between the Iberian Peninsula and the Gulf

Foto from Wikipedia: Qatar Airways Boeing 777, by Timothy Dauber from Everett, USA - Washington

At the moment there is quite a large number of direct routes between the Iberian Peninsula and America, connecting Barcelona, Madrid and Lisbon to the main cities of that continents (or continents, if you consider North and South America separately), however connections towards the East are very few (Singapore airlines flight to Barcelona and Qatar Airways flight Doha-Madrid being the exceptions), so to fly to the Middle East, Asia or Australia a transfer at other European hubs such as Frankfurt or Paris was required. From this summer there will be more choice, as we will see the launch of two new scheduled services: Qatar Airways will start daily flights Barcelona-Doha, whereas Emirates will open its first Spanish route connecting Dubai to Madrid. My guess is that the bulk of the traffic would be transfer passengers, as these new routes will significantly reduce journey times from South West Europe to Asia and Oceania.

What airlines go for an all wide-body fleet?

Photo: Japan Airlines Boeing 747 taking off, by Yamaguchi Yoshiaki from Japan under a Creative Commons Attribution ShareAlike 2.0 License.

The typical European or American network carrier has a mix of narrow and wide-body aircraft. The goal is to serve an heterogeneous mix of destinations, long and short haul, that have different densities of traffic. However, there are a few major airlines in the world that have opted for the all wide-body, long haul fleet. In what is their model different with respect to the mixed fleet carriers?

The only European one of the lot, Virgin Atlantic, is a rare bird, it is not a network carrier, but a long haul point to point carrier. It is remarkable that, although it has a network of partner airlines, Virgin Atlantic does not have feeder operations of its own. It is difficult to think of a city other than London that could currently generate enough international traffic to support such business model. Singapore? Dubai? Well, these are different stories...Singapore Airlines and Emirates are actually network carriers, we could call them global network carriers, because, whereas most European network carriers operate a short-haul to long-haul network, these two airlines operate primarily a long-haul to long-haul one, connecting people across continents. A wide-body fleet is a necessity for them, and although they also fly to some destinations that are close to their bases, the savings that arise from having a more homogeneous fleet probably more than compensate for having a long-range plane making short hops. This business model has got a tremendous impulse with the increase in global commerce and international traffic of the last decade, and other airlines, particularly in the Gulf have also gone this way (Etihad of Abu Dhabi, Qatar Airways,...). Building such an intercontinental network requires a huge capital investment (a brand new Airbus A380 can cost up to $275M)...and then you need to fill lots of seats! so it shouldn't come as a surprise that most of the airlines following this model have been set up by investors with deep pockets for whom building a hub is part of a grander economic and financial strategy for their respective territories.

And now we turn our attention to Japan, because to the European observer it is simply amazing to see an entire fleet of jumbos serving only the domestic market. Japan is not a huge country in terms of landmass and it is also well served by an efficient high speed rail network...high population density must have been the main reason behind the fact that some short domestic routes in Japan being served by Boeing 747s, that in other parts of the world would be reserved for the densest long-haul routes. If capacity (some Japanese jumbos can carry up to 550 passengers) is the main factor, why then this model has not been adopted elsewhere in high density routes, for example in China or India or in the busiest European and American routes (London-Amsterdam, Barcelona-Madrid, NY-LA)? Also, and surprisingly enough, no Japanese airline seems to have shown interest in the A380, maybe it has to do with the critical financial situation of Japan Airlines? or with Japanese airlines having a historical preference for Boeing?