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EDITORIAL
T
his month,
Air Scoop 
has decided to launch several recur-rent topics will be detailed issues after issues. Environmentis definitely an important issue for LCCs in Europe whichwill deeply influence strategies of carriers but also habits of travelersin the future. European LCCs leader
Ryanair 
has been “fighting”against British Environmental Minister over this problem (p. 11).We also provide you the first part of an exclusive Public relationsstrategy for LCCs about environmental issues (p. 10). After
Carlos Munoz 
, CEO of 
Vueling 
(Read Air Scoop June 2006), we completeour analysis of Spanish market with the exclusive interview of 
Alex Cruz 
, CEO of 
ClickAir 
, who has accepted to answer our questions(p. 2). On the German market, after
Air Berlin 
(Read Air Scoop January 2007), we complete our analysis of players on the Germanmarket with
TUIfly 
(p. 12).
IdeaWorks 
provides us this month withan analysis of 
Austrian Airlines 
declaring war against mediocrityby bringing full service back to economy class (p. 5). In our lastissue, we had a global view of the Scandinavian, so now we havefocused on
FlyMe 
, the Swedish low-fare airline (p. 9). Central andEastern Europe countries are not forgotten as we will provide youwith complete analysis of each market of this area: We have startedwith Hungary (p. 7). Some legacy carriers launched their own LCCsto counter low-cost carriers on their market. This article analyzesadvantages and disadvantages of being a legacy’s daughter (p. 4).In our next issue: Analysis of Delays in Air Transport…
Highlights in this Issue
Advantages / Disadvantages of Legacy’s Daughters
 p. 4 
The Hungarian Low-Cost Market and its Limitations
 p. 7 
A Proposed Environmental Public Relations Strategy
p. 10
Ryanair and UK Minister: Face to Face
 p. 11 
TUIfly Aims To Become A European Leader
 p. 12
Air Scoop - February 2007
www.air-scoop.com
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BIRD’S EYE VIEW
Air Scoop - February 2007
www.air-scoop.com
2
Exclusive Interview of Alex Cruz(CEO of ClickAir)
Alex Cruz 
CEO of ClickAir
Could you please present ClickAir to our readers? What are your speci-  ficities compared to other European LCCs? What do you do better than your competitors? 
The clickair project has been ope-rating since 1 October. In Septem-ber 2006, the company became apublic limited company known as
Clickair SA 
, with its head office inEl Prat de Llobregat (home of the ElPrat Barcelona airport). The founderpartners, each with 20% of the sha-reholders, are
ACS 
(through its sub-sidiary
Cobra 
 ), airline
Iberia Líneas Aéreas 
, the tour operator
Iberostar 
,the company
Nefinsa 
(owner of 
Air Nostrum 
, the regional carrier) andthe risk capital fund
Quercus Equity 
 (Grupo Agrolimen). The company’sBoard of Directors consists of tendirectors, two representing each par-tner.The operations base of 
ClickAir 
isthe Barcelona airport of El Prat. The2006-2008 strategic plan agreed bythe shareholders predicts the deve-lopment of more than 70 routes in55 Spanish and European cities witha fleet of 30 Airbus 320 airplanes. Thefixed objective by the end of 2008 isto transport around ten million pas-sengers. If the current guidelines of air industry development are main-tained, this will make
ClickAir 
thesecond Spanish airline in volume of passengers and it will put it among the four greatest LCCs (low-cost car-riers) in Europe.The company has committed a 120million euro investment until theend of 2008 in order to start and con-solidate the project, which will be re-flected in the progressive creation of 1,000 direct jobs and between 8,000and 10,000 induced jobs. With itshub in Barcelona, clickair will contri-bute to the Catalan tourist, economicand commercial development andwill support Barcelona in becoming the core of the Euro-Mediterraneanregion.
ClickAir 
(www.clickair.com) isborn from the will of its partners tocreate an European leading actor inthe so-called “low cost” airlines ca-tegory, currently the fastest growing commercial aviation segment in theworld. The main reason for the suc-cess of this type of companies is, apartfrom the low fares, the optimizationof the daily number of flights by air-planes, high levels of direct sales anda general structure of costs –exceptfor safety and technical maintenancequality— sensibly inferior to the ave-rage figures handled by conventionalairlines.Another important fact is operating in highly-demand routes, aiming atgreater occupation of planes in eachflight. These factors, and some others,eventually lead to provide the finalcustomer –that is to say, the passen-ger– with a very adjusted price op-tion which enables him/her to flywith safety, flexibility, reliability andto a variety of destinations.
How do you analyze the competi- tion in Spain with Ryanair, easyJet and Vueling? Which one is for you the main competitor? 
Our main competitor, without muchdoubt, is our own ability to keepcosts down. If we are able to keepcosts below the level of the lowestoperator in our market, we will armourselves with multiple choices forroutes and product.Having said that we have noticed thatthere is a strong focus in Madrid at themoment, probably facilitated by thenew terminal and the extra capacityit has created. We understand that
Ryanair 
,
easyJet 
and
Vueling 
haveset up bases there. At this time, Ma-drid is not a market of interest to usas a great deal of investment is being made by the other operators. We be-lieve that there are significant oppor-tunities to grow the Spanish domes-tic and international traffic from ourmain hub base, Barcelona, and fromother Spanish regional airports.
Why did you choose Barcelona as your base? What are the advanta- ges to be there? 
Though initially triggered by theprogressive withdraw of 
Iberia 
frommany Barcelona-based routes, wesee Barcelona as one of the biggestgrowth platforms in Spain. With itsown brand new terminal ready tooperate in late 2008, we would liketo position ourselves as the airline of choice for the region, as well as ex-pand to other bases within Spain andEurope.We currently see three types of routeopportunities:- Domestic routes, principally con-necting North-South and/or East/West coastal cities- European and North African con-nections from Barcelona and some of the other coastal cities- Mid-haul routes from Barcelona: 3-4 hour flights, likely to be operatedat night, which will maximise ouraircraft utilisation and open up newroutes from our bases
The European Low cost carriers market has reached a certain ma- turity which leads to its consolida- tion. During this transition, what are, for you, the greatest threats to the European Low cost carriers? Fuel rising? Overcapacity? Evolu- tion of airports? Regulation?...
Factors such as fuel costs or the com-
 
BIRD’S EYE VIEW
Air Scoop - February 2007
www.air-scoop.com
3
plexity or emissions trading are com-monly shared by all players in theindustry. We hope to be active andsmart players in dealing with thoseissues.However, the largest, perennial riskwhich our industry has always suffe-red from is the cyclical nature of thebusiness: airlines do well, buy moreaircraft, reach a point in which thereovercapacity and are unable to fillthem, consolidation and bankrupt-cies arrive, few players are left, whorecover, they begin to do well, andthe story repeats itself all over again.Only one airline in the world has beenable to profitability break throughthese cycles in competitive environ-ments:
Southwest 
. Since airlines like
Ryanair 
and Southwest were initial-ly modelled after Southwest, and solong as they don´t grow overly fastforever, one should expect them tobe survivors.It appears that we have seen signs of overcapacity in Europe. Recent M&Aactivity in the UK ( 
Flybe/BA Con- nect 
 ) and Germany ( 
LTU/DBA/Air Berlin 
, etc) would lead us to believethat those home markets are starting to reach capacity levels which requirea significant slow down of growth.In Spain, we are not there yet, butwe should reach this capacity level inlate 2008, as we bring in another 25aircraft (committed),
Vueling 
placesfurther orders,
easyJet 
and
Ryanair 
 grow further in Madrid as well as, po-tentially, open other bases in Spain.We are ready for that challenge. Webelieve that the resulting marketpla-ce in Spain 2008 onwards will be dif-ferent and we will be leaders. Our in-vestors are absolutely convinced that
ClickAir 
is an excellent platform forEuropean growth and are absolutelyadamant, with the support of theirlarge companies, that they make ithappen.
What are your expansion projects  for the coming year(s)? 
We are mostly focused on the firsttwo years of operations. 2007 will bea very high growth year for us. Weare adding 16 aircraft and 500 staff tohelp us fly over 4,5 m passengers in45 routes.
Many LCCs look after extra-reve- nues to offset the low price of their tickets. What are the projects of Clic- kAir in terms of Extra-revenues? 
Ancillary revenues are crucial for us.We have three different categoriesof ancillary revenues planned at themoment:• Next week we will launch our non-air product offer in what will be thefastest ever launch of ancillary pro-ducts by any airline ever. By March,we will complete this phase by ad-ding some additional products whichwill make us the airline in the worldwith the largest number of travel-re-lated ancillary products. In this area,we have been careful not just to addservices, but to integrate them intoour booking process in order to mi-nimise and keystrokes and clicks byour users.• Flight related ancillaries include anumber of on-the-day related servi-ces which will provide the customerwith further comfort and options atthe time of travel. From preferentialboarding to
Iberia 
PLUS frequentflier points, we expect to deliver dif-ferentiation and additional revenues.• New payment methods is our lastcategory of ancillaries. Traditionally,airlines in Europe, LCC and othe-rwise, have “kidnapped” users forcing them to use credit or debit cards forpurchases made online. We will notdo that – we will unleash a collec-tion of alternative payment methodswhich will address both ends of theinternet-buyer spectrum: the riskadverse, and the frequent Internetshoppers.We want our travellers to have choi-ces. Two of our passengers may besitting next to each other on an air-craft having paid significantly diffe-rent sums of money for their overalltravel experience – we are convincedthey will both be satisfied with theservices which each has paid for.
Do you believe that consolidation of the market will lead to 2-3 main LCCs in Europe, or do you think there will always be many LCCs on niche markets? 
What´s clear is that there won´t beas many LCCs as there are today.The pressure that
easyJet 
and
Rya- nair 
will impose in many carriersthroughout the different regions willlikely result in some losing the batt-le. I believe that there will conti-nue to be gradual consolidation, notonly throughout LCCs, but throughtraditional airlines of small and me-dium size.
Are you worried about the shorta- ge of pilots and crew hitting LCC market? Will you benefit from staff  from Air Madrid? 
No. The first add from
ClickAir 
inthe Spanish press in May resulted in997 CVs received in 3 days. Sincethen, we have received as manyagain. And yes, we will benefit fromthe very unfortunate collapse of 
Air Madrid 
. In two days after the of-ficial close down of the airline, weinterviewed 110 pilots who cameto our offices in Barcelona to learnmore about
ClickAir 
. Our growthplans demand a constant hiring pro-cess and yes, we will extend offers tosome
Air Madrid 
pilots.
What are the options for ClickAir to transform its business model in order to make more costs savings? 
Our October-to-December CASKsplace us right above
Ryanair 
andwell below
Vueling 
and
easyJet 
– webelieve that this is an excellent baseto start the operation. However, ourobjective is to go significantly fur-ther. We believe that we have someopportunities in cost reduction inseveral areas, such as further groundhandling framework agreements forEuropean operations, and internali-zing some tasks which are currentlyoutsourced. We have a benchmarkto lower direct operating costs by afurther 20% by 1 April.
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