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Air Scoop March 2007

Air Scoop March 2007

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Published by airscoop
Air Scoop provides market analysis on the European Low-cost carriers market.
Air Scoop provides market analysis on the European Low-cost carriers market.

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Published by: airscoop on Oct 28, 2009
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EDITORIAL
E
nvironment, environment, environment! It seems these daysthat environment has become the main issue concerning Eu-ropean low-cost carriers.
Sam Sellers 
, from
Air Bulletin 
, pre-sents us the second part of his exclusive article on environmentalpublic relations strategy for LCCs (p. 11). Two trends are clearlybecoming apparent (p. 9): On one hand, some LCCs, such as
easy- Jet 
(p. 9), have realized the “clear and present danger” on the planetand have prepared a strategy to reduce their carbon emissions; andon the other, some LCCs led by
Ryanair 
refuse to accept their roleand accuse government and institutions to add more taxes and toregulate the market. This attitude goes against associations such as
Plane Stupid 
which has declared they will continue to target directactions against LCCs (p. 10).
Air Scoop 
starts this month a deep investigation on LCCs subsidiesin Europe (p. 8). Further articles in our coming issues will followthis global introduction. Just before the recent announcement of bankruptcy of 
FlyMe 
(Read Air Scoop April 2007),
Air Scoop 
hadan exclusive interview of Finn Thaulow, CEO of the Swedish car-rier (p. 2). From the same region, we made a focus on Blue1, thesecond largest airline in Finland (p. 4). Whereas Nordic skies are stillmostly held by local carriers, it is not the case of the Austrian LCCmarket, largely dominated by foreign companies (p. 7).
IdeaWorks Company 
gave us once more a clear analysis of frequent flying pro-grams. This month
Jay Sorensen 
explains why frequent flyer exe-cutives are concerned about reward availability (p. 5). One of ourcorrespondents covered the FITUR 2007 in Madrid (p. 12). We hadthe opportunity to ask few questions to representatives from
Ger- manwings, Meridiana 
and
Blue Air 
(p. 13).At last but not least,
Air Scoop 
is proud to announce it will be me-dia partner of the main LCCs’ European events:- 2nd Air Transport Conference for CSEE (4th of May 2007) – Bra-tislava ( 
EastEuroLink 
 )- Low Cost Air Transport Summit (13th and 14th of June 2007) – London ( 
MarketForce 
 )- World Low Cost Airlines Congress (17th to 19th of September2007 – London ( 
Terrapinn 
 )
Air Scoop 
will of course cover all these events starting next monthwith French Connect (25th to 27th of April 2007) in Nantes - LaBaule Atlantia.
Highlights in this Issue
Blue1: Low Prices - High Standards
 p. 4 
Frequent Flyer Executives...
 p. 5 
The Austrian LCC Market
 p. 7 
LCCs Subsidies: The Birth
 p. 8 
LCCs and Environment: «Green Wars»
 p. 9
Air Scoop - March 2007
www.air-scoop.com
The Low Cost Carriers Analysis Newsletter 
 AIR SCOOP ANNOUNCEMENTSAir Scoop and TripVision:A Partnership for Polls
Air Scoop 
is proud to announce a par-tnership with
TripVision 
, the UKs onlytravel specific tracking survey collecting attitudes and behaviors of the travel con-sumer.The UK travel industry can now benefitfrom a major new research program that,for the first time, aims to give meaningfulinsight into all aspects of traveller behaviourpatterns - including future intentions.
TripVision 
is a mixture of quantitative andqualitative research combined with dataanalysis to give a complete picture of thesize of the market, the traveller patternsand how different categories of travellersapproach their individual trips.Therefore, with
TripVision, Air Scoop 
 will be able to provide more trends frompassengers and other sources.http://www.trip-vision.com
Air Scoop - In the Air
PlovdivAirportopenning?
 
BIRD’S EYE VIEW
Air Scoop - March 2007
www.air-scoop.com
2
Exclusive Interview of Finn Thaulow(CEO of FlyMe)
Finn Thaulow 
CEO of FlyMe
Could you please present FlyMe to our readers? What are your specifi- cities compared to other European LCCs? What do you do better than your competitors? 
FlyMe Sweden 
was founded in 2003and started its commercial flights inApril 2004. The business model wasto operate a limited number of do-mestic flights plus charter flights. Theutilization was very low, approx 4hours per aircraft /day.
FlyMe Swe- den 
is owned 100% by
FlyMe Eu- rope AB 
which is traded on the FirstNorth at the Stockholm Exchange.New owners and a new Board of Directors took over in August 2005and it was decided to turn
FlyMe Sweden 
into a true LCC airline byinvesting in the
FlyMe 
brand. Num-ber of frequencies were increased onthe domestic routes and 12 new Eu-ropean destinations were introducedfrom Gothenburg from the Summer2006 traffic program.
FlyMe 
present-ly operates a fleet of 5 leased aircraft(4 Boeing 737-300 and 1 Boeing 737-500). From the Summer 2007 trafficprogram the fleet will be increased to7 aicraft (6 737-300 and 1 dampleasedMD87). The domestic operation hasbeen increased in terms of frequen-cies and FlyMe has achieved a marketshare of 34% on the route betweenGotehnburg and Stockholm/Ar-landa and 38% between Malmö andStockholm/Arlanda. European des-tinations have been introduced fromStockholm in November (Alicanteand Nice) and more will be addedfrom Summer 2007 when also Malmöwill have flights to European destina-tions. Stockholm-Luleå will be addedon the domestic route net.
FlyMe 
 expects to carry around 1.5 millionpassengers in 2007 and the growthin turnover will in principle doublefrom 2006.
FlyMe 
is financed throu-gh equity and has therefore postedlosses in the build-up phase. With thecurrent trend and size of the airline,the financial results will improve andprofits are expected from the secondquarter of 2007.”
How do you analyze the compe- tition in Sweden, especially with Ryanair with its base in Stockholm? Which LCC is for you the main competitor? 
“The LCC airlines are taking more andmore market share but also growing the market by being able to offer at-tractive fares and thus enable morepeople to fly. The important thing isto keep very tight cost control as ul-timately the one with the lowest unitcost will be the winner”
Why did you choose Gothenburg as your main base? What are the ad- vantages to be there? 
“Gothenburg has historically been anunderserved area. The national car-rier,
SAS 
, offered very few non-stopservices to and from Gothenburg trying to channel as much traffic apossible via its main hub in Copen-hagen. Consequently, there was anuntapped potential in Gothenburg and its catchment area; stretching also far into Norway.”
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? Evo- lution of airports? Regulation?...
 “Overcapacity and lack of airportslots pose the biggest challenge.Again, it is important to monitor thecost base continuously and also thetraffic program in terms of frequen-cies and destinations. A high degreeof flexibility is needed to respond tochanges in the market and competi-tive actions”
What are your expansion projects  for the coming year(s)? 
FlyMe 
will continue to grow and gra-dually increase its network betweenStockholm and Euope as well as Mal-mö and Europe. Furthermore, flightson intra-Scandianvian sectors will alsobe introduced.
FlyMe Europe 
has an-nounced the purchase of 51% of Ri-ver Don, which owns 51% of GlobalSupply Systems. The transaction isconditioned by necessary approval bythe British Civil Aviation Authoritiesas well as an endorsement from theGeneral Assembly of 
FlyMe Europe 
.Global Supply System is a profitable747-400 cargo operator today and hasthe potential to partly develop theexisting cargo business but could alsoserve as a platform for the introduc-tion of long haul LCC in due time.A project is looking into this exciting possibility right now. A proposal orrecommendation will be made to aGeneral Assembly by the 28th of Fe-bruary 2007.” 
Many LCCs look after extra-reve- nues to offset the low price of their tickets. What are the projects of Fly- Me in terms of Extra-revenues? 
“Ancillary revenue is very important.FlyMe is presently strengthening thispart and will put in a lot of effortsin 2007 to substantially increase re-venues from non-airline products.The website is being up-dated andancillary services presented more at-tractively and efficiently. It is a mostprioritized area”
 
BIRD’S EYE VIEW
Air Scoop - March 2007
www.air-scoop.com
3
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? 
“There will certainly be consolida-tion in the market with maybe 3-5main LCCs.
FlyMe 
aims to be partof this group. Additionally, there willalways be a number of smaller LCCsbut probably shrinking”
Are you worried about the shortage of  pilots and crew hitting LCC market? 
 “The overall airline market is growing by an estimated 5% annually the co-ming years according to
IATA 
. TheLCCs continue to grow faster and torepresent a higher share of the to-tal number of passengers traveling  – reaching around 20% of the totalin 2007. This high development ratewill definitely put pressure on get-ting sufficient number of pilots alsoconsidering that other parts of theworld have an increased demand andcorresponding shortage as well. The-refore, it is important to be regardedas a good and attractive employerand first and foremost to have anexcellent relationship and working climate”
What are the options for FlyMe to transform its business model in order to make more costs savings? 
 “Cost savings is a matter of continuousimprovements and the right menta-lity throughout the entire organiza-tion. Additionally, it is the flexibilityto respond to changes in the marketand being able to make adjustmentsin a reasonably short time.”Read Air Scoop February 2007 for acomplete analysis on FlyMe.Six European consumers’ protection organizations from differentcountries (Belgium, France, Italy, Portugal, Spain and The Nether-lands) have evaluated more than 36 000 flights from legacy airli-nes, charter airlines and low cost carriers.The 9 000 passengers questioned gave detailed information ontheir travel experiences on board flights from July 2004 until Sep-tember 2005. With a rank at the 14th spot,
GermanWings 
is the-refore the German airline with the highest evaluation marks. Thisresult is particularly due to the punctuality of its flights, the goodrelation between price and performance, the cleanness on boardand the efficiency of the ground staff.
GermanWings: Best German Airlines
 
UP & DOWN
According to a French judicial source, French prosecutors haveopened a preliminary inquiry into allegations that
Ryanair’s 
ad-vertisements were misleading after receiving more than 40 formalcomplaints. Indeed,
Ryanair 
highly publicized the launch of newroutes from Marseille to Morocco scheduled to begin in Novem-ber 2006. But the flights have been cancelled indefinitely as thenecessary licenses had just not materialized on time.The company denies any responsability for this fiasco. A spokes-man of the airline accuses the French government of «delibaratelytrying to damage
Ryanair 
».Passengers of these cancelled flights accuse
Ryanair 
of selling tic-kets before getting the green light for the routes, and sue the carrierfor misleading advertising. Although
Ryanair 
has paid back thecost of the tickets, the carrier failed to reimburse related expenses,such as deposits for hotels and hire cars.
Ryanair Cancelled Flights andFrench Investigations

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