New Thames Airport study

Some 30 years after  the concept of  a new airport for London sited in the Thames estuary was abandoned on the basis of both cost and practicality, the subject has once again reared its head.

The congested nature of London Heathrow operations is always going to  tax  the industry operators. UK domestic services into Heathrow  have slowly been withdrawn in recent years as valuable  Heathrow slots  find more lucrative long haul  uses.

London centric  air transport policies have long been moulding the shape of  the UK air transport infrastructure and result in  the current top heavy solutions favouring the UK south east.

But is Boris Island  International  a solution?  Delivery of this concept  clearly has financing costs of mega proportions

What are the business drivers here? Are the needs of travelling  public at the focus of this project? Is it state pride? Or are we massaging  individual egos who wish to leave a legacy after they have departed, once again  diverting  hard earned public taxes  into  the further development ( and by inference wealth) to  just one area of the  UK  at the cost to other UK regions. What invisible forces continue to influence air transport policy in what is already arguably the most capital centric country in the world?




The manufacturing  engine house of the UK largely exists away from  the  capital  and even the banking  input to  UK business success requires employment  in the hundreds of thousands  away from the 'square mile'.
With objectively good UK regional airport facilities already in place(and paid for) and  a significant proportion of the UK  public  already forced to  utilise London hub airports rather than these  far more convenient regional  airports, why are government looking to further exacerbate this issue?
The customers when asked, identify a preference for  a direct point to point service if available and just require a convenient  point to depart, arrive or alternatively transfer.


With BA all but abandoning  non  London operations  with its own fleet and runway capacity limiting  its further development, what has it got to loose by being confined by existing LondonAirport infrastructure limitations?- a great deal!.

Those in Government argue that  adequate runway capacity is critical  to maintaining London as one of the major focuses of global air transport- why ' London' ? why not  'the UK' ?

Low cost European carriers  have shown they can  successfully   encourage  travellers to   move to  other departure airports using price and departure location convenience as  drivers.

Is it not time to throw the full force of policy behind regional expansion where runway capacity already exists?  And incentivise  use,  if in fact one is needed by discounting regional APD ?

I'm not surprised that Scotland  and Wales  consider the merits of  regulatory independence from  the southern focus of the Westminster decision makers.  Will the West Midlands  and Greater Manchester be the next to declare independence as a gesture to avoid this ?

What do you think?

After the Ash

An unprecedented week in European aviation history  with barely an IFR movement in the northern sector for 6 days.

European air transport regulations  covering passenger compensation never envisaged this situation and now place the carriers in an unenviable situation unless government compensation under national emergency criteria can provide some relief.

And within  3 hours of UK airspace reopening the UK transport minister  blaming his experts for failing to accurately detail the problem and benchmark  it to previous situations.

The result - the industry forecast to lose $1billion as a direct result and politicians diving for cover to avoid verbal bazookas from all directions.

 So was it completely overblown ?  I seemed to  take forever for anyone in authority to ask the questions:

-What density of ash  are we seeing in the upper atmosphere? and how does it compare with the levels that caused the BA and KLM incidents of years ago? Clearly this type of contaminent has the ability to  turn any of our large air transports  into large gliders.

BUT ---What is  an acceptable level of contamination below which safety is not compromised?

It is very frustrating that such a simple question seems to  remain unanswerable -- 'Was it all necessary?' Such  fundamentally basic questions remain unanswered and result in incremental costs to an already beleaguered industry of banking proportions. The result -- the industry is left with  an uneasy feeling and an unexpected hole in the accounts .  It seems the pendulum only has 2 political positions- 'ignore the problem' at one extreme whilst at the other extreme, 'close the system down'.  Where's the middle ground?

Clearly the issue of aviation safety is absolutely paramount. But the level of condemnation from the operators immediately after the lifting of the ban was also unprecedented and suggests a level of anger at excessive imposition and the extent of the lock down.

Large air transport movements weren't the only casualties  with row upon row of business aviation units  parked up across Europe.

Low cost carriers - or are they ?

One market sector within air transport has fared better in the last 12 months than any other - the low cost carrier .

But are those who announce their low cost credentials genuinely offering such a product? That basic 'get you a seat from a to b' product where anything on top attracts a charge . Analysis identifies that relatively few 'low cost carriers' now pass the test- few are now exhibiting the basic service that defines the true low cost model.

Want a ramp agent to place your bag in the hold - you pay for it ! Want a beer on board,want to pay for your ticket by credit card? - you pay for it ! Want a widow seat? - well that depends how fast you can run to the aircraft steps! Paying for each additional product facet has become the norm for 10s of millions of passengers worldwide. Those who will turn on the Ipod and listen to or watch their choice of entertainment and fore go the onboard in flight entertainment selected by someone else, bring their own drink on board and cram a weeks worth of clothes into the sports bag that with effort just passes the cabin bag size check at the gate.


Some who originally planned their business model with low cost foundations are adopting certain additional product features whilst the legacy carriers adjust their back end products taking them in the reverse direction to reduce costs. In times of difficulty there is the temptation to deviate from the known comfortable business model .

Enter the Hybrid carrier. Product creep towards the full service carrier whilst the legacy carriers creep backwards in terms of product in order to reduce cost has created this mongrel.

So does pre-boarding seat selection qualify under the low cost business model ? How about a hold baggage allowance? Free drink on board? Queuing for the traditional airport check in ?

Well many of the self stated 'low cost' carriers are exhibiting product creep by offering some of these additions in order to become attractive to the wider audience. In doing so they must now classify themselves as hybrid - parked between the genuine low cost business model and the traditional full service legacy model.

And with this comes additional cost - does the provision of these new products facets to attract the new 'need to have ' market set against offering them for the already converted and thus 'nice to have' market result in a net revenue improvement ?

So who is left on the loco ramp - by definition maybe 1 in Europe and 5 globally.

Of course the measure of success is the ability to take a product and deliver a return on investment when the market tours sour . This industry is good at re-inventing itself.

Who have been true to their no frills roots? Does it even matter that many of the low cost carriers are becoming Hybrid? Or is it something only marketing academics ponder over ?

What do you think ?

Sense prevails on European airport slots

Some support for the embattled industry has at last come from the European parliament this week with the announced holiday on the 'use it or lose it' policy for European airport slots.

The industry - already trying to make sense of the serious decline in passenger and cargo revenues caused by the global economic turbulence found itself with an additional dilemma. That of balancing new reduced demand with supply and frequency reductions, leading to the potential for losing rights to airport slots if they remained unused.

No carrier is escaping the fallout from this economic contraction. The asset value of these slots is considerable for many airlines. Faced with the prospect of loosing both the slot and its asset value or wasting hard earned cash by flying for no commercial reason other than to protect its ownership had the potential creating a farcical situation . It would further stress the balance sheets of the already pressurised carriers and make the policy makers look stupid.

Sense has prevailed and operators are with immediate effect no longer required to fly loss making schedules solely for the purpose of slot protection.

Sense prevailing at last in Europe? Why has it taken 9 months to put in place a fix for which the arguments weighed so heavily in favour of the change? Good news for the airlines but with a downside for the airports, seeing a decline in their airside revenues now these slots become at least temporarily dormant.

The fragility of this industry

For an industry already badly impacted upon by economic issues, what was not needed was another global situation to negatively impact customer confidence and further erode business performance.

History shows that this is an industry more badly affected than other industries by external factors- territorial conflicts, economic cycles, pandemics etc- especially in an era where news broadcasting is instantaneous .

Like the SARS speculation some years ago, current media speculation and over reporting causes concern in the minds of the travelling public. In the case of the SARS issue, media output was much overblown compared with reality and history shows the final issue was far less dramatic than the media forecasts predicted.

Stock market parallels can be seen- an industry driven entirely by speculation rather than objective fact sees stocks take a dive as a result of comment , only to be followed by an equivalent bounce the following day when the realisation of a more balanced view restores confidence!

Airline stocks in Europe witnessed just that over a 48 hour period this week. All associated with the Swine flu announcement and driven by sentiment alone rather than clear objective understanding. This, then followed within 24 hours by a bounce back to the original levels. This must call into question the relative intelligence levels of those leaders 'trusted' in managing these large finance portfolios whose reaction seems more 'follow the leader' rather than 'lead the followers' !! For anyone denied access to any news of any kind, a look outside the front door first thing in the morning would see little or no change for many compared with 6 months ago.

Yet the sentiment in the press sees a far different response. This is not taking lightly the potential for a global illness . However Europe sees many thousands on average die each year from Influenza or complications caused as a direct result. Populations and commerce gets on with life and business worldwide plan for growth in the knowledge of this background issue.


Some in the industry are reporting light ahead. Is the smart money on some recovery signs at year end. To what extent will the reported pandemic interfere with this small yet positive sign and further pressurise traffic levels ? Or will another 48 hours see the media become bored with this story, it becomes old news and all can get back to managing the recovery ?

It had to happen sooner or later

In this age of expanding waistbands it was only a matter of time before airline operators would react and enforce additional charges for those of us of a 'larger disposition' .

The average customer weight has risen visibly over the last 20 years but for a certain proportion of individuals, it has turned into a sport. How many times have our regular customers found that they are having to share half the seat they have bought with the burger and fries loving guy sitting next to them - not only have the armrests become unavailable for use but half the seat is occupied too!

Still to make an appearance in Europe and the Far East, there are now a good half dozen U.S carriers resolving this problem of transporting sumo size customers with a second seat purchase condition. True, they will try to accommodate these customers on a no charge basis on the flight in question if possible. But on full flights if all else fails , its a bump onto the next available flight for the big guy (or gal!) and a second visit for the customers' credit cards to the PDQ machine.


Meanwhile the number in the global air transport fleet currently ''resting'' in dry desert conditions due economic impacts has risen beyond 2000 airframes. It's good business for the specialists who maintain these cocooned planes in anticipation of better times and proves that someone's crisis always seems to be another's opportunity. Whilst operators use the downturn to retire the less economic high time airframes, there are also unfortunately a growing number of relatively new beasts on the desert line . With fading painwork and removed engines, some will never make it into the air again.

At the same time the cutback in executive jet manufacture as a result of the economic climate is causing shortage in this market in certain territories. This sees potential buyers trawling the used market to the extent that demand exceeds supply and second hand values for low hour models of some of the marques now exceeds new unit prices . Is the 'high nett worth individual ' market less impacted upon ?

As ever the industry can always surprise !!

Back in the mass market transportation sector, who will be the first in Europe to adopt the 'buy two get one ' product ? Will we ever get a situation in corporate travel where only the non-obese can expect to travel by air on company business as part of their employment contracts? Seem far fetched? So was mass market air travel 40 years ago !

Mixed fortunes for the global air transport community

The state of the industry globally has recently been described as woeful with decline in global passenger forecast carryings next 12 months likely to be in the 5% territory and cargo volume decline at 13%.

Premium cabin passenger revenue and cargo revenues are the big losers over the last 6 months and forecast to continue at least in the short term. A cumulative industry $4 billion forecast loss for 2009 on top of a $8 billion loss for 2008.

New aircraft deliveries from the major manufacturers will fall from a recent high of 1100 units annually to below 800 over the next 2 years.

Regionally the airline picture varies with Far Eastern markets taking the biggest hit , but with Europe less so. The U.S is matching volume decline with capacity reduction and thus profit performance treading water and the Middle East market showing small revenue improvements.

It is rare to see an annual 10% return on investment for this industry and the cumulative profits banked over several years are easily lost in a 12 month period. The old joke that the only way to make a small fortune in this industry is to start with a large one becomes embarrassingly accurate!

How much less pain could have been felt if the fuel buyers had not hedged at the ridiculously high 2008 prices . Sometimes the airline industry is too clever for its own good!

As in life though , problems for some will be an opportunity for others .

There is no doubt that no one involved in the industry is escaping pain. The strategists would far rather focus on continued measured expansion than being moved away from their comfort zones to delivering survival strategy. Some will fail in that delivery.

However, some have business models more adaptable and less exposed in the changing market. Some are showing an extra eagerness to appeal to the customer, manoeuvring to capture new volumes, eying the availability of aircraft delivery positions deferred by others, identifying new opportunities.

Who will see opportunity and pick up the new aircraft delivery slots deferred by others? Who will take those opportunities and emerge from the downturn relatively stronger and sharper? Who will suffer the business cardiac arrest that although not killing them now, will leave them so weakened they limp along and finally keel over just when the green shoots of recovery are seen ?
Who are the names in your minds eye?