Vueling keeps growing, plans to fly to a 100 cities from Barcelona

More like this coming soon!

There was quite a lot of expectation today to hear what Vueling had to announce.

And there were interesting novelties, as Vueling continues to upgrade its product with the introduction of a business class. One step that was anticipated as it fits into the carrier's strategy to target business travellers.  So, this announcement did not really come as a surprise, as I had already pointed out in these pages how there were objective measures to qualify Vueling as a hybrid airline rather than a low cost carrier and the airline's top managers had already provided some hints about the imminence of this move.

Regarding fleet renewal and expansion programme Vueling will be getting some 9 brand-new aircraft of the A320 family shortly (at the moment is still flying some Iberia-then-Clickair 1990s-vintage A320s) and some of them will be equipped with wi-fi.  The first (unanswered) question that comes to my mind is whether this means the end of Vueling's flirtation with Bombardier's CSeries...

Another important novelty is the massive route expansion out of Barcelona and into Europe and Africa.   The new twice daily service between Barcelona and London Gatwick really stands out, because until now Vueling had avoided head-to-head competition on this route with Easyjet and Ryanair. Also of note is the airline'e first foray into sub-saharan Africa, where it is "taking over" the niche route to Banjul, that used to be operated quite successfully by now-defunct rival Spanair. New routes to Morocco reinforce the growing presence of Vueling in Africa, that I commented already a few months ago. 28 new routes in total for the summer season (you can find the list here) that will bring to 100 the number of direct destinations operated by Vueling from Barcelona.

In another example of the company's hybridisation, Vueling's CEO Alex Cruz said that he aims to make of Barcelona one of Europe's top hubs (I guess he was referring to intra-European connections, since there are still few long-haul flights at Barcelona that Vueling's passengers can connect too). In order to support this claim he revealed that transit passengers already make 20% of total traffic (not a bad number for a company that was not initially conceived as a hub-and-spoke network carrier!).

The hub-in-the-Med possibility that I outlined nearly two years ago might finally come to fruition after all...

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.

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, but...how 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...

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.