IAG to bid for Vueling?

To bid or not to bid?

The news was out this evening that IAG is considering a bid for the share of Vueling it does not yet control (here is the official communication on the website of the Spanish stock-market regulator).

We will have to wait until Friday to know the details, but it makes sense...IAG is heading to an attrition war with Iberia's unions over the creation of its new low cost subsidiary, Iberia Express (and after this week's court ruling, there is no solution in sight anytime soon). The "new" carrier is IAG's attempt to stem losses at Iberia, particularly in the short and medium haul network.

And while Iberia is in turmoil, and as I already noted here a few days ago, Vueling (that is 40% owned by Iberia) appears to be in good shape. Such an irony, because Vueling is already exploiting successfully the sort of hybrid model that Iberia Express was trying to bring to Iberia's short and medium haul network!

What next then? 

As I said, it's early to say, the offer has not even been formalized, but things are getting interesting...

Could Vueling take progressively take over the Iberia Express project while Iberia focuses on the long-haul routes? After all, Iberia already had a "sister" company until the 90s, Aviaco, that was doing most of the domestic flights in Spain.

This option might not be good news for Barcelona airport, since there might be a risk, if Vueling "becomes Iberia" that the carrier will shift its focus away from its current base, where a major expansion is currently under way (or alternatively that it will split its fleet and network between Barcelona and Madrid).

Could the goal be merely financial, to consolidated the profitable Vueling operation in the not-so-good Iberia's accounts?

Is IAG planning to keep it as it is now, a stand-alone operation, while trying to extract more synergies and know-how from Vueling's experience in running a successful low-cost (or we should better say "hybrid") operation?

Let's wait until Friday to see whether anything new comes out of Iberia's results presentation!

A tribute to Spanair, in pictures...

I travel often through Spanish airports, where Spanair aircraft were a common sight. They came in different sizes and colours, the result of a convulse corporate history. Spanair, we will miss you! 

Here is my photo-tribute:

The old livery, here a Spanair Airbus at Madrid-Barajas

And the new livery...this one spotted at BCN

 Spanair was a proud Star Alliance partner

A Boeing 717, we'll see some more of these in the European skies soon!

 Spanair was positioning itself as "the Barcelona airline": here a map of its network in a commercial advert

A Spanair MD-83 with the city of Barcelona in the background

Spanair EC-GVO taxiing at BCN

Spanair's fleet was initially made of MD-83s, some of these have remained with the carrier until the end

The old and new liveries side by side at BCN

Despite management efforts, the outlook had always been really foggy for Spanair...

The Spanish airline industry, in a state of flux

A constant flow of news is coming out of the Spanish airline industry, making it one of the hotspots of the industry in Europe, so I thought about writing this post to summarize what is going on...

One of the most amazing things is that the deep economic crisis that Spain is currently going  thorugh is not enough to deter Spanish airline entrepreneurs...one of the most exciting developments we have seen in last few months is the set-up of "stealthy" Barcelona-based airline startup, Volotea. Little is known about this project so far, except the identity of the founders, the fact that it is going to operate in the short-haul market and that its fleet is going to be composed of Boeing 717s. All these details, that were already advanced in the post I wrote a few weeks ago, have now been confirmed. Some reports in the press pointed also to the fact that it might not restrict its operations to the Spanish market only.

This is certainly an interesting timing to get into Spain's regional market, as the main incumbent in this segment, Air Nostrum is grounding up to 15 aircraft, reducing the number of staff and considering to move its headquarters from crisis-hit Valencia, on the Mediterranean coast, to the Basque city of Bilbao.

Air Nostrum operates many regional routes within Spain on behalf of Iberia

At the same time Vueling has announced an investment of €325 million and a major expansion at its Barcelona base, with 5 new Airbus A320 based there and the launch of 23 new routes. This will bring Vueling's total number of cities served from Barcelona to 70, which makes it one of the largest short-haul networks in Europe.

Vueling's recent network expansion strategy is also worth of note, not only from a quantitative but also from a qualitative point of view...I wrote not long ago about how Barcelona could fulfill its hub ambitions by having an airline develop a network linking it to second and third-tier cities around the Western Mediterranean. The aim would be to become the reference hub for this region, in a way similar to what KLM does with its links between Amsterdam and British and Scandinavian regional airports. When I wrote this what I had in mind was more of a regional type of operation (as KLM does) and I still have serious doubts about whether the Airbus A320 is the right aircraft for this type of operation based on thin routes, but Vueling's route map, particularly in France, with additions such as Bordeaux, Lourdes, Marseille, Nantes and Brest, and Italy, with Genoa, Pisa, Verona,...plus its new "connection flight" service seem to fit well with this strategy. Whether this will ultimately lead to the materialization of the much-awaited long-haul hub at Barcelona remains to be seen...

It is also noteworthy that Vueling is finally launching its first UK routes out of Barcelona (it flies already between the UK and several Spanish regional airports), a territory that, until now seemed reserved to the likes of Easyjet and Ryanair (by the way, the Irish airline has finally closed a deal with the Catalan government that will provide for 19 routes being launched or reinstated at Girona airport (GRO), just one hour drive North of Barcelona, BCN).

In the meantime, Barcelona's other carrier, Spanair, is languishing while awaiting its possible acquisition by Qatar Airways. Senior officials from the Catalan government and Barcelona City Council flew to Doha a few days ago to discuss the sale of Spanair to the Gulf carrier. As pointed out in this post, it will be interesting to see how petro-dollars affect the competitive landscape in the European airline industry. These negotiations, however, have not been obstacle for Qatar Airways to cooperate closely with Spanair's rival Iberia, to the point that it will be the only non-Oneworld airline to use Madrid's gigantic T4 terminal. Qatar Airways' passengers will also be able to use Iberia's domestic network for onward flight connections.

And I finish this post, precisely, with Iberia, as it is preparing the launch of its new low-cost airline Iberia Express. In reality, I think this move will be hardly noticeable to the average passenger: Iberia Express will be using the same aircraft and fly the same routes that Iberia already does, plus it will also offer business class. Iberia's on-board service on short-haul economy is already barely different to that of low cost airlines so not much of a change here either. So Iberia Express is more of a way to end a bitter labour dispute and lower operating costs in its short haul operations, a necessity for Iberia considering how entrenched Ryanair and Easyjet have become in the Spanish market, rather than the launch of a truly "new" airline.

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)

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 exercise...as 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...

The legendary air shuttle Barcelona-Madrid: the "Puente Aéreo"

Early morning at Madrid airport, a familiar view for many Barcelona-based passengers

If in my previous post I explained how the Spanish airport authority is using replicas of some venerable aircraft to advertise her state-of-the-art facilities and, for this post, we are not leaving Spain yet, because during my recent trip to Madrid I had the chance to experience another of Spanish aviation's legendary institutions: Iberia's "Puente Aéreo" (the Air Shuttle Barcelona-Madrid).

For those who are not aware, Barcelona-Madrid happens to be the air route with most traffic in the Europe, with nearly 3 million passengers per year and around 70 daily frequencies in each direction.

A large share of this traffic went through Iberia's "Puente Aéreo", an air-shuttle that was conceived as a commuter service, where you do not need a previous booking, you just show up at the airport and get on the next available flight. If a plane is full another one departs shortly after, with frequencies at peak hours could rival those of overground public transportation, every 15 minutes or so. The idea is to provide plenty of flexibility and short waiting times at airport.

The "Puente Aéreo" has its own brand identity and fare structure, separate from Iberia's other flights, even when they are doing the same route (around half of Iberia's frequencies on the Barcelona-Madrid route correspond to the "Puente Aéreo" service, with the rest being regular flights that require reservation.

The "Puente Aéreo" has been a sort of second home to generations of businessmen and politicians, ready to pay for all this flexibility and convenience and it is no wonder that, for years, it has been Iberia's most profitable route (in a way, the "Puente Aéreo" is to Iberia what LHR-New York is to British Airways)

However, a number of changes that have affected the competitive environment in which the "Puente Aéreo" was born and developed.

The first one was the liberalization of European skies. As soon as European skies opened up, new entrants Spanair and Air Europa decided to give it a try. The route quickly became a mainstay of Spanair, that now boasts 8 daily frequencies on the route and has branded the service with a similar name, making use of the concept of "air bridge", although for legal reasons it can not call it "Puente Aéreo", so it has "Puente a Barcelona/Pont a Madrid" instead. Next came low cost airlines, with Vueling entering the fray, it has now 11 daily frequencies. Surprisingly Easyjet chose not to compete on the route in spite of having a base in Madrid. Despite all this new competition, Iberia's market share on the Barcelona-Madrid air market remains at around 45%

The completion of the high-speed railway between Barcelona and Madrid has had a stronger effect on the route as it has emerged as a real alternative in terms of frequency and comfort for business travellers, taking half of the market on the Barcelona-Madrid corridor. It has forced Iberia to reduce capacity, maintaining frequencies but deploying smaller aircraft. However, the 600 kilometers between Barcelona and Madrid are really at the edge of what is considered to be a competitive distance range for high-speed railways and the airplane remains competitive, even for origin-destination traffic. Competitive pricing and the high volume of Catalan transit passengers at MAD have helped the airplane hold its ground on this route.

I am wondering what will happen the moment Ryanair starts flying between the two cities, it now has a base in both so it sounds like a logical next step...but I think the other airlines operating the route will feel the pinch, as they rely on a more price-conscious type of travele. My guess is that the "Puente Aereo" itself will be relatively inmune.

Spain's empty airports (IV): Logroño

The Spanish region of La Rioja is famous worldwide for its great wines and its cellars attract numerous visitors every year, but few get there by plane if we are to judge by the traffic figures at the regional airport Logroño-Agoncillo. The airport was inaugurated in 2003, after an investment of €40 million, and after a few years of growth, peaked in 2007 at 56,000. It has been in falling since then and it currently stands at around 20,000 passengers per year.

There is hardly any regular traffic at the airport, only Air Nostrum operating a regional jet to Madrid-Barajas (MAD), but it is possible that there is not really a critical mass of passengers to sustain more flights, particularly when considering that land transport in the area is quite good (Logroño is in the middle of the Ebro Valley, a major communication line) and Bilbao airport and its much broader choice of flights and frequencies, is 1,5 hours away by car.

In the meantime the airport keeps losing €4,42 million a year, or €220 per passenger, and its debt stands at €52 million.

Around Europe with Ryanair

First stop: Stansted (STN)


Boarding the flight at sunrise

Second stop: Girona (Barcelona) (GRO)



It's amazing to think that Girona airport used to be always literally empty all winter less than a decade ago...

Third stop: Orio al Serio (Bergamo-Milan) (BGY)


Judging from the view, Bergamo has become an important base for Wizz Air, the main low-cost from Eastern Europe.


More Eastern European conection at Bergamo: a Boeing 737 of Romanian carrier Blue Air, serving the demand that arises from the important demographic and economic links between Italy and Romania


Next Stop: Madrid (this deserves an entirely separate post...)

Planespotting at Madrid Barajas

While we wait for the volcanic ash to dissipate, here are some pictures that I took on a recent trip to Madrid Barajas (MAD) a very interesting airport for planespotting and one of Europe's main connecting hubs if you are flying towards Latin America. It is certainly the best place in Europe to spot planes from that part of the globe. I hope you enjoy the pictures!


An Easyjet A319, Easyjet has built an active base at MAD in the past few years despite strong competition from Ryanair, Vueling, Iberia, Spanair and Air Europa, all of them with an important presence at Madrid Barajas.


A Boeing 767 of Venezuelan airline SBA (formerly known as Santa Barbara Airlines), that covers the route to Caracas.


One of Air Europa's A330, Air Europa is the Spanish member of Skyteam


A Philippines Airlines A340. Despite being a former Spanish colony, the air links between the Philippines and Spain are very few. This is actually the first time I see a Philippine plane at Madrid Barajas.


If this post is about MAD, Iberia could not be missed. Here a McDonnell Douglas MD-87, one of the few left in the fleet, that is progressively becoming Airbus-only.


A Boeing 757 operated by Spanish carrier Gestair Cargo. The image quality is not very good as I got some light reflected on the terminal's windows...


An Aerolineas Argentinas Boeing 747 getting ready for the daily night flight to Buenos Aires (EZE)



Swiss A320, a regular visitor at MAD.


A colourful livery by Brazilian airline TAM. Already in a World Cup mood!


A pair of Jumbos operated by Spanish charter carrier Air Pullmantur, usually flying Spanish tourists to the Caribbean beaches.

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 happens when a major airport loses all of its traffic overnight?

Foto by Flickr user Berto Garcia under a Creative Commons Attribution Generic 2.0 License.

Last week I landed at the old terminal (T2) of Barcelona airport for the first time since the new terminal (T1) became operational at the end of last summer. Both terminals are actually part of the same airport (BCN), but they are physically separated, and they actually look like two separate airports, with the new terminal duplicating the capacity of the old one (see this story I wrote a few months ago)...and this is the problem! All three major airline alliances have moved to the new terminal, and the old one, that used to handle over 30 million passengers a year, is now virtually empty...well, not totally, a handful of airlines, with Easyjet and Air Berlin the largest of them, and some charter flights still use it, but the drop has been dramatic (the night that I landed, my Easyjet flight was the only one on sight). This is not totally bad for the passenger, that can enjoy plenty of space and no hassle, but it must have required a strong readjustment to the many shops and businesses that used to operate (or that still are) in the old terminal, and, most important of all, it sets a challenge upon the airport managers to find new traffic to fill the void.

Is Ryanair the solution?


Foto by Flickr user Andy_Mitchell_UK under a Creative Commons Attribution Generic 2.0 License.

The Irish airline has been quick to grab some of the extra available capacity and it has already announced its landing at BCN. Ryanair has already proven it can do well in the Catalan market, that already hosts two of its bases (Girona and Reus), both within one hour drive of Barcelona and I have no doubts that it will also do well in BCN. The airport authorities deny that Ryanair will enjoy any discount on its operating fees (a previous request that the Irish airline seems to have finally dropped), but one of the concerns remain: will Ryanair grab market-share up to the point where BCN becomes, over the long term, a Ryanair-dominated airport? this thought surely worries all those local stakeholders that over recent years have been working to make Barcelona a real contender in the European aviation scene (the lack of intercontinental routes is still BCN's main weakness). A precedent exists and it is positive, Ryanair also moved to take spare capacity after the T-4 terminal at Madrid-Barajas was inaugurated and its presence in that airport has contributed to a more competitive scenario that has benefited travelers. However, it must be said that whereas Madrid could count with the solid presence of Iberia as the dominant carrier, the situation at BCN is a bit more volatile, and the situation of the two main carriers currently operating out of BCN, Spanair in the full-service segment and Vueling as low-cost, looks (at least on paper) a bit more fragile...They have reasons to worry when seeing Ryanair at the gates...