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W
hile LCCs have still difficulties to open routes in France, Conference (ARAC 2007)
French Connect 2007 took place in La Baule gathering
top executives from French airports and European low- November 14 and 15 in Frankfurt
cost carriers (p. 17).
Air Scoop is proud to be media partner of the
ARAC 2007.
The Ancillary Revenue Airline Conference
(ARAC) is the first global event in the air-
line industry to completely define and deve-
lop the concept of ancillary revenues. Airline
Information has teamed up with the leading
research consultancy in airline ancillary re-
venues, IdeaWorks to produce this ground-
breaking event.
Romania’s single LCC, Blue Air has been created in 2004 and is operating four aircrafts.
Blue Air is a young company. How is your evolution since your creation?
Our first destinations from Bucharest were Timisoara, Milan, Barcelona and Lyon. We now offer 18 destinations, in Italy,
Spain, Germany, Belgium, France, Turkey and Portugal. For some of them, we also start from the Romanian cities Bacau,
Arad and Cluj-Napoca.
We had 55 employees at the beginning, and now over 240. In 2005, we carried more than 240,000 passengers and a little
more than 443,000 in 2006. Our turnover exceeded 24,000,000 Euros in 2005 and 47,000,000 Euros in 2006. For 2007,
we expect 80,000,000 Euros, and over 800,000 passengers. All our destinations, including the new ones, have a good load
factor. For 2006, our total load factor was 77%.
Romania has a fast-growing economy and a strong Diaspora, but it still has weak wages, a small penetration of
credit cards… How do you adapt your model to this reality?
We offer our clients a large number of possibilities to purchase tickets: Blue Air tickets can be bought not only online or
through our call-centres with a credit card, but also in cash from our ticketing agencies and over 2000 tourism agencies,
in Romania and abroad. For our Romanian clients, we also offer the possibility to book the tickets and pay them at the
bank.
Romania has entered the EU in 2007. How does Blue Air react to the growing amount of European low-cost airlines
flying to Romania? Will your company be able to compete?
The entrance of Romania in the EU has opened the sky for everyone. This competition will ultimately increase the qua-
lity of service and lower the prices.
Since October, you are operating internal flights in Romania, challenging the national company Tarom. Do you plan
to develop this strategy?
At the moment, we do not intend to introduce other domestic flights. We are focusing on strengthening our current des-
tinations and open new international routes. In 2007, we intend to introduce flights to Stuttgart, London, Zurich, Greece
and Cyprus.
Will small companies like yours be able to survive on the low-cost market in Europe?
It will depend on the markets they are operating on, and how smart they will be to take advantage of market potentials.
My own point of view is that, in the near future, we will see a kind of consolidation on LCCs operations, most probably
on the regional level.
Consumers choosing the lowest-priced option receive a basic transportation experience. Readers should note, unless
otherwise described, all prices in this report are presented in U.S. Dollars. Tango requires the consumer to rely on self-
service, as booking a ticket through the call centre will cost an extra $17 per passenger. The service fee even applies if
rebooking is requested at the airport for changes that don’t occur on the day of departure. Advance seat selection costs
$13 each way, and a $7 (Canadian) snack voucher can be pre-purchased at the reduced price of $4 (or $5 Canadian).
Tango (and Tango Plus) travelers also accept a lower rate of accrual for Aeroplan frequent flier program mileage as a
tradeoff for a lower fare.
The a la carte options are presented to the consumer as they navigate the booking process on the web site. The choices
may at first seem overwhelming, but conversations with Air Canada reservation agents indicate most consumers are
quick to grasp the concept. Consumers may customize their choices for the outbound and return trips of a travel itine-
rary.
The following table (2) offers a sampling of some of benefits associated with each fare brand for domestic Canada, and
Canada-USA travel. “Yes” indicates the feature is included as a feature of the applicable fare brand.
Additional marketing elements have been integrated into 1. Air Canada management presentations, National Bank
the booking process. The Tango fare brand may detract Conference, March 28, 2007, AirCanada.com.
from the effectiveness of the Aeroplan frequent flier pro- 2. Information gathered from the Air Canada web site,
gram by allowing consumers to opt out of mileage accrual. Simplified Fare Options Page, April 17, 2007, AirCanada.
However, the Latitude and Executive Class fare brands com/en/travelinfo/destinations/simplifiedfare.html
strengthen Aeroplan’s allure by allowing hotel and car 3. Information gather from the Air Canada web site,
rental partners to make highly-targeted offers to upscale Simplified Fare Options Page, April 17, 2007, AirCanada.
travelers. The airline likely realizes additional ancillary re- com/en/travelinfo/destinations/simplifiedfare.html
venues through the commissions paid by partners when
travelers choose special offers. Sources used in this article: Unless otherwise noted, the information
described in this analysis were gathered at JetStar.com during February
and March 2007.
Air Canada’s pricing strategy has evolved since its in- IdeaWorks cannot guarantee, and assumes no legal liability or respon-
troduction in 2003, and will probably continue to change sibility for the accuracy, currency or completeness of the information.
as the carrier learns how to best market and sell airline
tickets and ancillary services through its web site. There is EVENTS
room for improvement, but the current strategy appears
to already surpass the efforts of most low cost carriers,
and probably all legacy airlines. It’s an amazing achieve-
ment for an airline that was once on the precipice of ex-
tinction and was not regarded as an industry innovator.
Clearly, Air Canada has changed the fare game in the Ancillary Revenue Airline Conference 2007. Ideaworks
Canadian marketplace, and perhaps has influenced how co-organizes the event with Airline Information. ARAC
legacy airlines compete with low cost carriers. 2007 will be held November 14 and 15 in Frankfurt.
Air Scoop launches a new range of articles called ‘SWOT Team’. Each month, we will publish a SWOT analysis of an
European low-cost carrier. In this issue, we start with a global SWOT of the market.
The no-frills carriers have created new markets, and ope- nal flight with a 15 seat turboprop aircraft flying between
ned up air travel. A greater proportion of their passengers Waterford and London Gatwick. In 1986, adding a second
are people who previously were using other modes of route between Dublin-London Luton, they carried 82,000
transport for travel, while a certain proportion are from passengers in one year.
traditional carriers. Relying as they do on linking region
to region and by-passing ex¬pensive big-city hubs, low- Today, Ryanair is Europe’s largest low fares airline with
cost carriers have caused rise in local employment. There 19 bases and 456 low fare routes across 25 countries. It will
is parallel growth in tourism; a rise in property investment have 19 European bases by the first quarter of this year.
and new businesses credited to good, cheap logistic con-
nections. Michael O’ Leary, the current CEO of Ryanair was res-
ponsible for launching the first unique low fares, ‘no-frills’
One of the strongest characteristics of the no-frills busi- airlines in Europe. Flights were scheduled into regional air-
ness model is the ability to adapt rapidly to circumstances. ports that were keen to attract new airlines, and offered
Cost savings of the no-frills business was achieved by ef- lower landing and handling charges than larger established
fectively supplying a single standard service on all routes international airports. Michael O’Leary, known for his
and improving both labor and aircraft productivity. pugnacious and aggressive management style, employed
a flat management hierarchy and vigorously followed the
Ryanair’s Chief Executive, Michael O’Leary’s, once low cost policy, on all fronts.
claimed that “Low-cost airlines are the new Europe». This
seems to have been amply proved by the tremendous im- The EU deregulation of aviation industry in 1997 helped
pact LCC have had on Europe. Ryanair’s growth and expansion into Central and Northern
Europe. It made a successful floatation on the Dublin Stock
Ryanair and easyJet are the leading low cost players ow- exchange and NASDAQ, making it rich in capital enabling
ning around 50% of the share in the European LCC mar- it to place a massive US$2 billion order for 45 new Boeing
ket. 737-800 series aircraft in 1998. Since then Ryanair has not
looked back, but grown stronger and currently is the most
Ryanair is an Irish airline headquartered in Dublin. Its dynamic airline in the European markets.
biggest operational base, however, is at London Stansted
Airport. It is Europe’s largest low-cost carrier and one of Current Status: This year Ryanair Holdings plc (on
the world’s largest and most successful airlines in terms Feb.12, 2007) has a NASDAQ listed market capitalization
of profits, number of flights and number of passengers of $5.6 billion, which will be used in the NASDAQ-100
flown. Index weighting, and a worldwide market capitalization
of $12.3 billion.
Ryanair is also one of Europe’s most controversial com-
panies, praised and criticized in equal measure; praise for In the year ending December 2006, Ryanair’s average re-
its commitment to low fares, radical management, and its venue was $2,190 million, with a growth rate of 28%. Its
willingness to challenge the ‘establishment’ within the air- net income was about $314 million with a 5-year growth
line industry and criticized for its trade union policies, hid- rate of 23% approx. The increase in passengers for the rol-
den «taxes» and fees, and limited customer services, and ling 12 month period ending February 2007 was 24%. Over
misleading advertising. In October 2006, Ryanair was vo- the period Oct 06 - Feb 07, stock value rose by nearly
ted the world’s most disliked airline in a survey conducted 50%. Increase in EPS was 29% in Q3, 2006.
among 4,000 of its users by TripAdvisor website.
Ryanair currently employs a team of 4200 people and
Overview of Ryanair: expects to carry approximately 45 million passengers this
year, making it the world’s largest international scheduled
History and Growth: Ryanair, founded in 1985 by Irish airline. It operates 134 new Boeing 737-800 aircrafts with
businessman Tony Ryan, started operations as a regio- firm orders for further 117 new aircraft to be delivered
Air Scoop is proud to be media partner this year again of the 2nd Air Transport Conference for CSEE.
Following the success of our Inaugural event last year, this year we are continuing in dealing with the issues Air Transport
is facing in this region. http://www.transport.easteurolink.co.uk/air_Upcoming.html
Ecological food and ecology friendly cars were the first. change was the number one question, Peter Gabriel, for
Then companies that seriously care of the environment example, assumed that overall flights in the world would
grew in favour. Apparently, people’s world view is gra- be reduced in a short span of time since they would sim-
dually changing towards the idea that it is good to be ply become unpopular amongst people. And Prince Char-
“green” and a vast number of passengers with nature frien- les in turn cancelled his ski trip to Switzerland to reduce
dly behaviour is about to emerge. his personal carbon footprint. It seems like executives and
other Cabinet members are about to accept virtual com-
The idea that air travel poses a grave threat to the envi- munication which would undoubtedly have an impact on
ronment was first scientifically proved in 2004 when the common people’s mind.
University of York think tank group published its report
saying that air industry expansion placed the whole planet Obviously, responsible-traveler-behaviour contradicts
under risk. Emission limiting cannot be achieved unless budget-traveler-behaviour. With LCCs people could tra-
flights are reduced, said the report. Scholars also suggested vel more often than they do it with legacies. Shop-tour in
businessmen using technological advancements such as vi- Barcelona, culture-vulture-trip to Stockholm, weekends
deo and internet conferences and live link-ups instead of somewhere in the UK have become usual things for many
traveling. Governments were recommended introducing people and not all of them are ready to give up air trave-
“environmental taxes” for each flight. Today anyone is of- ling in favour of alternative means of transport. However,
fered to offset his/her emission by buying special carbon statistics shows that in Britain people are willing to travel
offsets either with the carrier or at special online shops slower, longer and less in sake of the environment. No
such as CarbonFootprint after calculating his/her per- wonder ethic traveling is popular in the UK since the Bri-
sonal CO2 emissions with a carbon footprint calculator. tish are Europe ecology pioneers. The question is whether
For example, London –Barcelona return flight will pro- those tendencies will find fertile ground in other coun-
duce 291 kg of CO2 and it costs £4.29 per passenger. That tries.
money would be invested into tree planting in the Great
Rift Valley in Kenya. There are numerous other web-pro- Hardly any would doubt the idea that anything good in life
jects that advocate the idea of flights reduction and people is either illegal, immoral or harmful. Such sort of things
changing their consumer behaviour, such as Responsible should be chosen consciously, for people to be ready to
Tourism Awards and Climate Care. pay for them. Apparently, that was the logic of Institute
for Public Policy Research that called for a visible warning
Passengers are encouraged to change their consumer be- message to be placed on any product related to air travel-
haviour not only by scientists but by public figures. Du- ling. “Flying causes climate change” will say a travelling
ring the World Economic Forum in 2007, where climate line at the end of any airline commercial.
Thxxxx
Fridaxxxx
www.airlinebulletin.com
Sam Sellers provides analysis and commentary on the airline industry at his website,
www.airlinebulletin.com. He is the author of Take Control of Booking a Cheap Airline
Ticket, an ebook for travelers in the United States who are interested in purchasing
cheap airline tickets. The ebook provides step-by-step instructions that readers can use
to purchase the cheapest airline tickets. It can be purchased for $10 at
http://www.takecontrolbooks.com/airline-ticket.html
The 4th French Connect took place on 25-27th April 2007 at the Atlantia Conference Center in La Baule whe-
re some 45 French airports and 25 LCCs were present. This unique event offered the opportunity to network
with some of the most influential people in European Low Cost aviation.
French airports, the legislators and Europe’s low cost operators all in one place with first-class conference faci-
lities, superb hotels and dining, and a relaxed, entertaining business environment.
“French don’t travel too much because they have a marvelous country”
Jacques Sabourin, Delegate General, Union des Aeroports Français
Martin Saxton (Director of Commercial Planning, FlyBe)
With the acquisition of BA Connect, FlyBe has become the largest regional airline in Europe with 41
routes in France. FlyBe has added UK density in Manchester, Inverness and Isle of Man, but has also a
major presence in Paris and Germany, and has increased its slots in main European airports.
The strategy of SkyEurope is to connect main cities of Western Europe, but the company also aims Eastern countries such
as Russia or Ukraine. SkyEurope has difficulties to grow in France as the destinations of the carrier are slots restricted and
highly competitive, like in Orly airport for instance.
Only 12% of French people travel outside of France, and most of the time, they prefer French speaking countries.
“There is no real LCC market in France yet as easyJet and Ryanair have 85%”, Karim Makhlouf
“Wizz Air has a Ryanair strategy with secondary airports destinations”, Karim Makhlouf
“France has one of the lowest LCC market penetration in Europe”, François Bacchetta
“easyJet flies longer routes because Europe is expanding”, François Bacchetta
“Joining the dots first if relevant!”, François Bacchetta
“We always need to find the right balance between secondary and primary airports”, François Bac-
chetta
Transavia is positioned as a web-based travel brand with air travel as the core activity. This
new company is established in France with its head office in the surrounding of Orly airport. Its
structure is a limited liability company with a supervisory Board and a Board of directors, and
its 4 aircrafts are based is Orly, south terminal.
The carrier aims at profitable growth, sophisticated route network and revenue management.
Transavia pays maximum attention to customer demands and presents itself the “Low Cost
Low Fare with care”.
“Short turn-overs are not so important for us as we have longer flights, Norbert Zoet
Clickair plans to carry 10 million passengers by the end of 2008, and around 17 million by the end of
2012. In 2007, Clickair has a fleet of 24 aircrafts and expects to reach 30 in 2008 and 50 in 2012. The
carrier has a one-type fleet of A320 with a capacity of 180 passengers in a one-class configuration.
The aircrafts are used 12.3 hours per day with a 25 minutes turn-over on the ground on main air-
ports.
The Costs per Available Seat Kilometer (including fuel) is currently 4.2 euro cents for Clickair. The
carrier aims 3.8 for 2007. Clickair will be ready for France beyond main markets in summer 2008.
Flybaboo is a Swiss low-cost carrier operating from Geneva which had its first commercial flight in
November 2003.
Vueling is a European low-cost airline, headquartered in Barcelona, which had its first commercial
flight on July 1st 2004.
Gilles Gantelet (Deputy Head of Unit Internal Market, Air Transport Agreements & Multilateral
Relations, Directorate-General for Energy and Transport, European Commission)
Gilles Gantelet explained the simplification of existing legislation in European air transport. The Euro-
pean Commission will revise the “Third Package” (Regulation 2407/92 on operating licences, Regulation
2408/92 on market access, Regulation 2409/92 on air fares) to finally have one single regulation for the
internal aviation market.
Jet4you is the first private Moroccan Low-cost carrier. Jet4you had two Boeing 737-400 in 2006 and
plan to have a fleet of 10 by 2010.
Tourist arrivals to Morocco are steadily growing, reaching an all time high performance 6.5 million
in 2006 from 4 main sources: France : 2.577 million (+8% vs 2005), Spain : 1. 444 million (+8% vs
2005), Belgium : 370.000 (+12% vs 2005) and England : 344.000 (+41% vs 2005). Casablanca ac-
counts for 49% of 6.5 million total traffic. Marrakech and Agadir in 2nd and 3rd with 27% and 12%
(2006).
Jet4you has a strategic partnership with CorsairFly from TUIFly.com on a Code Share agreement.
There is a commercial synergy between both airlines on each home market, and a joint communi-
cation between Jet4you & Corsair on the Moroccan and French Market.
Jet4you has a strategic partnership with CorsairFly from TUIFly.com on a Code Share agreement. There is a commercial
synergy between both airlines on each home market, and a joint communication between Jet4you & Corsair on the
Moroccan and French Market.
«French Connect brings together senior key speakers to address industry issues during the conference programme, and
also provides unequalled networking opportunities for all interested in French aviation», declared Karin Butot, Founder
of The Airport Agency.
For its 5th edition in 2008, French Connect will take place from 9th to 11th April 2008 in Courchevel.
Keep checking www.FrenchConnect.net for updates on the new programme format.