Highlights in this Issue
Interview of Raphael Bejar (CEO of AirSavings)
Ryanair is Paying for Being Unhedged
French Government Support LCCs Challengers?
SWOT Analysis of French Low Cost Carrier Market
Comparing Airport Subsidies in Europe and the US
Air Scoop - March 2008
The Low Cost Carriers Analysis Newsletter
Oil Prices, High Loss... Bloodbath?
il, Loss and Blood… These words could be the motto of this month. According to easyJet, “the biggest danger facing the airline industry is the global oil price”. Same forecast forcompetitor Ryanair which expects another round of fuel surchargeincreases. Indeed, starting 1st of April 2008, the carrier will have nofuel hedged which means it remains unprotected from rising prices
(p. 3). Furthermore, Ryanair is now getting more prot from ancillary
revenues continuously increasing prices of add-ons and services (p.12). Therefore, some analysts believe that decline in passenger yields,fall in fares (by 4.4%) and rise in ancillary revenues (by 30%) alarm of the strategy failure.In our last issue, we analyzed the consequences of the slowdown of European LCCs Industry (Read Air Scoop February 2008). Some car-
riers are in great difculties, and among them we nd Vueling (Vueling
reported a sharp widening in full-year net loss to €63.2 million ($93.7million), nearly six times worse than the €10.8 million loss posted in2006), SkyEurope (SkyEurope has been forced to sell two Boeing 737-700s before they were due for delivery, and admits it failed to comply
with nancial conditions attached to half of the 737-700s it has on
lease from GECAS.), but also CentralWings (CentralWings is close tobankruptcy with a loss a loss of 73 million zlotys in 2007 comparedwith 65 million in the previous year) and clickair (JPMorgan estima-
tes clickair Loss up to 100 million euros). These nancial difcultiescould nally lead to the famous “bloodbath” many times announced
by Michael O’Leary…French Connect 2008 will be take place this year in Courchevel the9th to 11th of April. Air Scoop is sponsor of this event, and will releasefor the French Connect a Special issue. French civil aviation market islargely dominated by Air France. The legacy carrier is backed by thegovernment, so it was a big surprise to notice the presence of a go-vernment representative at easyJet’s little ceremony to launch its newbase at Paris-Charles de Gaulle, France’s biggest airport (p. 5). For its10th SWOT, we have realized a SWOT on French Low-Cost Carriers
market (p. 6) with its own specicities, difculties and challenges. Fi
-nally, subsidies to LCCs is a big issue nowadays (The European Com-mission recently said it was investigating an agreement on Irish low-cost carrier Ryanair’s use of Slovakia’s Bratislava airport on suspicionit may contain illegal state aid), especially in France (The EuropeanCommission has launched a state aid probe into the use by Ryanair of Pau airport, and would in particular examine a contract with the Pau-Bearn Chamber of Commerce, which operates the airport, that setsout the conditions for Ryanair’s use of the transport facility). In orderto better understand airports subsidies, we have realized a comparisonbetween Europe and the US (p. 13).
AIR SCOOP ANNOUNCEMENTSA Glimpse of Headlines News!
EU probes Bratislava Ryanair deal
The European Commission says it has laun-ched a formal investigation into an agree-ment between Bratislava Airport and Ryanair.This follows a complaint which alleged that theairport offers Ryanair reduced airport charges
for existing destinations and new scheduled i
-ghts. The commission says the discounts couldbe up to 31% for existing destinations and 48%for new services.
EasyJet fears damage to airlines from rising oil price
The biggest danger facing the airline industryis the global oil price, easyJet warned today,after it released strong passenger numbers.The no-frills carrier said the passenger load fac-
tor, or proportion of seats sold per ight, was
84.6% in February compared with 82.8% forthe same month last year. Passenger numbers,driven by the airline’s acquisition of more jets,rose by nearly a quarter to 3.2 million.
A revolution in the skies... a disaster for the planet
Cheap ights. More ights. Multiplying routes.
At the end of a week that has seen protestsagainst airport expansion, predictions of furtherairport chaos, and record oil prices, British tra-vellers are showing no sign of shaking off their
addiction to CO2-heavy cheap ights.