The Start of Airline shrinkage Ex UK-EU?

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This topic contains 20 replies, has 13 voices, and was last updated by  AMcWhirter 8 Aug 2019
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Viewing 15 posts - 1 through 15 (of 21 total)

  • MarcusGB
    Participant

    Are we beginning to finally see the peak of Low Cost Airlines growth, in fact a reduction in demand for flights in/out of the UK generally to Europe?

    It struck me today, hearing the news from Ryanair, that they will be making cuts to The Winter 2019 and summer 2020 schedules.
    This was covered with TV News as well as radio in the UK, with 500 pilots to be cut, 400 Cabin crew, and 600 less recruits!
    In recent weeks, i have heard from colleagues and friends all over the country, that they are staying in the UK, and not flying out to Europe this summer, especially those with children in the summer holidays.

    With the change in PM (again) here in the UK, the likelihood of a now firm “Leave” however anyone wishes to interpret or see the issue, is having an impact of holiday choices into Europe. Combine this with the lessening value of Sterling in many currencies i have found Worldwide, but especially for The Euro, there appear to be many events coming into place to set new Travel patterns. I get the gut feeling, we maybe seeing an end to growth, even reductions ahead from flights from the UK to Europe, especially for Low cost Airlines.

    KLM for eg, continue to “Slot sit” at LHR, with flights that can be every hour in the evenings AMS-LHR, now being provided on Embraer 190’s. A mix of 737 7/8/9’s run the other flights. I recall the days of a 767 and large 737-9’s with 10 rows of Business Class seats on this route. Now it is common for just 2-4 rows only in Biz, occupied by mostly leisure travellers travelling through to Intercontinental KLM services.
    For an airport with such capacity problems, it is remarkable their is not some sort of Push, to maximise these slots with larger aircraft, and adding capacity.
    I feel, we are seeing not just a levelling out here, but subtle reductions, becoming now more evident and overall travels
    UK – Europe will significantly change?

    I wonder if others have a niggling feeling, that we are going to see these equal a change in leisure travellers patterns in taking short breaks or holidays to Europe in general.
    Is it balanced by more Europeans travelling into the UK, or is this also lessening with the Immigration changes clearly soon ahead?
    Certainly Business passengers are all mostly now in Economy, and no longer occupy Some Short haul cabins, which makes me wonder why we call them “Business Class” anymore.

    This has been reflected on BT here also, that we have many more forum contributors who are Premium cabin travellers, but not travelling on Business, paying their own fares and on leisure.
    Is BT now not more “Premium Traveller”, regardless of work or leisure purpose…

    Do others also feel / see these fundamental shifts of Airline travel Patterns Ex UK, and shrinkage ahead??

    3 users thanked author for this post.

    SimonS1
    Participant

    Interesting post. Seems to me there is a tangle of different issues.

    Any UK airline is likely to be feeling the pressure a bit, fares in £ and fuel costs in $ is tough before you think of the uncertainties of Brexit.

    I’m also surprised there aren’t steps to eliminate smaller planes at Heathrow, with expansion light years away there is a need to maximise capacity and the use of Embraers plus the prop planes used by Flybe doesnt help.

    In many ways business class has become so cheap now that there is nothing premium about it, basically economy plus, with economy seating, an empty seat in the middle and a £5 meal.

    1 user thanked author for this post.

    BPP
    Participant

    Marcus GB’s comments at the end of an interesting piece certainly ring true in this household. I am now fully retired, but paying our (Mrs and I) own way to still travel in Business Class and stay in good Business hotels. Recent trips indicate that we are not alone in this respect.
    My great concern is that this continuing fall in the value of Sterling is having a big effect on both long haul airfares and hotel costs which may curtail our adventures a little. I will also I suspect lead to EU-GB travel being largely one way!
    BPP


    canucklad
    Participant

    O’Leary’s comments about the projected job losses at Ryanair last night pretty much sums up the challenges faced by the travel industry as a whole., and by extension us as consumers.

    Blame lies firmly at the door of 650 individuals who collectively chose to act like sanctimonious self-serving hypocritical ferrets fighting in a large burlap sack rather than doing their job.

    Not so much a perfect storm, but a leaking roof that’s been allowed to drip, drip and drip through mild showers and heavy rain . As the water damage to our collective house increased the ferrets seemed to take a perverse pleasure in ignoring the cause of the on-going damage.

    Now as the thunderstorms approach , we’re all left wondering if our ferrets have left it too late to find an affordable roofer to fix that once small hole that’s now a gaping torrent of trouble.

    3 users thanked author for this post.

    capetonianm
    Participant

    Thanks Marcus, as always very apposite and insightful comments from you.

    There is no doubt that aviation is going through challenging times. Climate change activism is having an effect, and in many ways that is not a bad thing. I would like to see shorthaul flights banned where there is a viable alternative, sadly there often isn’t, and rail travel is usually more expensive and cumbersome than flying. I remember in my younger days when rail travel was for backpackers and air travel for the elite. That has now reversed itself, something I often think about when I consider that in 1960, a typical airfare from LON to most western European cities was £40-60 return. That was the equivalent of roughly £1000 in terms of purchasing power now and then, no wonder aircraft were more spacious and travelling by air was for the ‘elite’ and was not the ghastly bunfight it is now. The overhead racks on aircraft were for hats and coats and a small handbag or briefcase, not the voluminous and heavy cases people now fight over as they cram them into the bins. A Gin and Tonic was 2/6d, which for the benefit of our non-UK audience was the pre-decimal currency, £0.125, but in spending power, about £3.

    As to how this will affect people, I can really only answer for myself. I used to work for a major global company and at the beginning our travel budgets were unlimited and there was little or no control. Gradually as people took advantage it was whittled away and business class travel by default became business class for >5 hours and then it became restricted to senior employees, hotel budgets were reduced, and so on until travelling became a misery as they used to source the cheapest fares.

    Then I left and worked as a contractor and saw a similar pattern emerge, for example hotel allowance in major UK cities went down from £200/night to £80, rail travel was no longer allowed in first class, etc. I ended up doing my own thing and travelling and staying in comfort but paying the difference myself, which made working pretty pointless so I stopped. Happy day!

    Now I travel only for leisure and as they say, once you’ve turned left, it’s hard to turn right. For shorthaul most of my travel is on EZY and we have the easy+ cards so we get priority boarding (in theory) and ‘free’ seat selection. It takes some of the nastiness out of LCC travel. For longhaul I look for good value business class fares on the small number of airlines I am prepared to travel on, and will compare with Premium Economy and often use the latter as the price difference is not justifiable in many cases. Having a lot of flexibility with dates is of course a huge plus and often enables me to find good business class fares.

    I don’t stay in ‘business’ hotels as I don’t like them and at one time spent 100 or so nights a year in them. I prefer to find a homely comfortable small hotel or B and B, and I don’t use AirBnB as I inherently distrust it.

    I have some income in Euros so for travelling in the Eurozone the currently poor GBP/EUR RoE is irrelevant, however most of my assets and spend are in GBP. I decided some while ago not to worry about it as you can ruin a trip by agonising over the cost. Also as I voted for Brexit I know I’m partially responsible for the current low value of sterling so I have to bite that bullet.

    That said, I know I am fortunate. I am planning to go to Vancouver later in the year with a friend and his budget is about £400 for the flights. I am eternally thankful that I do not have to operate within such constraints, as I know most people do.

    1 user thanked author for this post.

    pheighdough
    Participant

    Regarding the reduction in services from Ryanair, let’s not forget that the non-delivery of the B737MAX is a causal factor for these job losses. Ryanair only keep their aircraft until a certain point, when they need a major service, and these planes that leave the fleet are replaced with new ones. For Ryanair these planes are leaving but their replacements aren’t coming, hence the job losses.

    With the reduction of services I see that they are asking airports to ‘complete’ to retain their flights on the shirnking fleets and services. Money is KING!

    There is an element of EU-UK relations, and the uncertainty of Brexit…


    Inquisitive
    Participant

    I believe the actual economy fare (excluding taxes, airport fees but including fuel surcharge) within EU is reasonably low from a full service Airlines angle.

    This is based on my experience from USA domestic airfare and even Asia Pacific airfare for similar flying time (2-3 hours) or distances.

    Also the competition in Europe and Asia Pacific is much more. So full service Airlines will struggle if the fare remains like this. 50% Economy class travellers are not on business so they can easily switch to a low cost airlines even if the airports are far from city.

    Will the situation improve in future, I don’t think so, hence we have to live with strategy that each airlines take.


    AMcWhirter
    Participant

    Thanks Marcus for starting an interesting discussion.

    As far as I can see ex-UK air fares haven’t risen in line with the declining GBP.

    Quite different to the situation in IATA times when fares were adjusted quickly in line with currency values.

    Maybe we will see the situation (that we last saw when GBP was so weak) whereby more travellers / companies from overseas will be buying their long-haul tickets in the UK.

    1 user thanked author for this post.

    capetonianm
    Participant

    Without sidelining the discussion, there was a time when airfares ex-ZA were so low that you could buy a JNB-LHR-NYC return using in F (or even Concorde for the LHR NYC segments) for less than the cost of buying just the LHR NYC segments in GB. In those days they weren’t cancelling the remaining segments if you didn’t use the outbound, so we even sold them to people in the UK.

    I hope sterling won’t weaken to that extent.


    Swissdiver
    Participant

    There are in my view three different aspects:
    – Low GBP does affect British people interested into international holidays. Now doubt it has a negative impact.
    – “Traditional” airlines economy product is now at par with the LCCs. Interestingly Easyjet is now proposing extra services and some sort of club. This should not affect the total amount of flights, but rather change the market shares.
    – Uncertainty: this is probably huge. UK must have a stable base asap. I am not a particular fan of BoJo. But if he can manage to stick to his October date, then the UK will be better off, no matter what the exit plan is, for the simple reason market players will know the rule of the game. Today, they don’t.


    TimFitzgeraldTC
    Participant

    Hi Alex

    Fares have risen with the declining £. Speaking to various account managers there have been base fare increases each year with inflation, but the biggest factor in rising air fares in Premium cabins is that airlines are releasing fewer seats in the cheapest fare brackets for applicable cabin. A few airline managers have told me this. So advertised cheapest fares are broadly in line with before. But now instead of selling 10-15 seats on a given flight in lowest fare class – now only release 7-10 for example (this is a very crude example).

    It is evident to see on many routes where flights are reasonably busy / in demand, that airlines in UK market are releasing seats in higher cabin codes than used to be the case before. I can only base this on what I see – but that is a lot of searches each day!

    On the AMS point with KLM. I believe LON-AMS is the busiest point to point route in Europe (not including connecting traffic). That does take into account all 6 LON airports and with the LCC’s KLM/s share has been eroded. But they won’t drop to many further flights from LHR. But I agree the slots at LHR should be used for appropriate aircraft sizes given the constraints and like others would love to see stricter rules around flying sectors that can easily be done by rail (where rail is max 3-4 hours journey for example – can debate relative merits of a given cut off).

    But yes – have many friends who want to cut out European flying and change holiday habits (people in 30-45 aged bracket) given climate issues and holiday in the UK – and/or explore travelling to Europe by rail. Huge opportunity for operators to really take advantage of the green market if they could get product right and also be more family friendly.

    9 users thanked author for this post.

    PhilipHart
    Participant

    A dish of Mixed Metaphors accompanied by a Word Salad does not make for easy intellectual digestion.


    Mikeact
    Participant

    Still pretty difficult to get Avios CE seats though

    2 users thanked author for this post.

    MarcusGB
    Participant

    I will find out from a contact Senior Pilot within Ryanair, what is going on!

    Thanks for the interesting comments, it really does seem we are all feeling or sensing some changes afoot!


    canucklad
    Participant

    Huge opportunity for operators to really take advantage of the green market if they could get product right and also be more family friendly.

    For those of us who see aviation / flying as a force for good around the world , I despair at what’s happening right now.

    There is no doubt that aviation contributes to global warming, yet the airlines and manufacturers are losing the bigger argument, simply because they’re scared to take on a little girl from Sweden and her very emotive simplistic message.

    To properly tackle our climate crisis /emergency there has to be a more nuanced open debate between governments and global corporations.

    By staying quiet, and allowing the loudest NOISE to be created by schoolgirls and demonstrators the aviation industry is going to turn itself and its users (us) into societal lepers .

    Why shouldn’t Michael O’Leary be nominated for a Nobel Prize,?
    After all Ryanair has almost single handily allowed millions of us to become Pan – European . Removing suspicion of those pesky foreigners as we actively interact with them, as they have with us .
    It’s hard to hold prejudices with people you party with and share your wealth with !!

    1 user thanked author for this post.
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