Norwegian to set up bases in Barcelona and Madrid

Further proof that the European airline industry is becoming truly continental. Unlike telecoms, banking or courrier companies, airlines have, possibly, become one of the first industries to fully embrace the advantages of the common market (that, thanks to open skies treaties with several countries, goes well beyond the borders of the EU proper).

Easyjet and Ryanair became the first truly "pan-European" operators with Air Berlin (despite the name) and Wizz Air (with a strong regional focus on Estern Europe) following suit. New airlines already start with a multi-country approach, like Volotea, and airlines that started out of a strong local base, such as Vueling and Norwegian, are becoming also continental players by opening new bases far from their home countries.

One of the most ambitious airlines is Norwegian. Despite its local name, the massive order placed last year for over 200 aircraft can not be understood without a long term growth plan that goes well beyond the Nordic region.

In the last few weeks we have seen a frenzy of announcements from Norwegian: new bases at Barcelona and Madrid and a commercial agreement with London Gatwick.

In Barcelona's case, Norwegian is going to base three Boeing 737-800s and new routes to at least four cities in Northern Europe (Vueling has better keep an eye on its backyard!).

In Madrid it is going to start with two aircraft, to be later increased to three and launch six new routes.

At London Gatwick, an airport where Norwegian already has an important presence, the number of routes served will increase to 33, with a total of six aircraft based there. 

This will be a much more common sight at Barcelona airport. Vueling beware!

But what makes Norwegian's presence at these airports potentially more disruptive than if it was another airline is that Norwegian has made clear that is plans to venture into the long haul low cost market with its new Boeing 787s. This could have an effect on the competitive landscape at both London Gatwick and Madrid airports and open up some interesting new opportunities at Barcelona airport (that does currently not have a local long-haul player).

Vueling's Eastern Promises

It is not just local airlines that are benefiting from the growth of the Russian air travel market, some foreign airlines are also betting strongly on their Eastern routes.

In addition to tapping a large and relatively less price-sensitive market, Western European airlines can leverage time zone differences to optimize aircraft rotations by flying East during the night and returning to the West in the early hours of the morning. 

Vueling its betting strong on the Russian and Ukrainian markets. If last summer passengers traveling between the Catalan capital and Moscow could choose from up to four daily flights, Vueling is now launching four new routes in that direction: Barcelona to the Russian cities of Kaliningrad and Kazan as well as to Dontesk and Kharkov, in Ukraine. The Barcelona to Saint Petersburg route, in turn, is becoming year-round with two weekly flights.

The flight to Kazan is quite remarkable, since at nearly 4,000km, it might be about the longest in Vueling's network!

Between East and West: a look at Ukraine International Airlines

I couldn't have chosen a better time to visit Kiev...

A wave of protests is shaking the Ukraine after its goverment pulled out of an association agreement with the EU...The Ukraine might be at a cross-roads, debating whether it should lean towards the EU or towards Russia, but in the air travel field, at least, things look clearer. 

It has been overshadowed by the broader geo-political scuffle, but the Ukraine and the EU have already reached an agreement to liberalize the air travel market, which means that there will be open skies between the EU and the Ukraine. The agreement, that is similar to those signed between the EU and other neighbouring non-member countries will remove, from the summer of 2015, will allow EU and Ukrainian airlines to operate freely between the Ukraine and EU member countries.

If we are to expect the same that has followed other open skies treaties, we could expect European low cost carriers to move quickly into the new market (in this regard, Wizz Air plays with some home advantage as it has been operating a base in Kiev for already a few years).

In order to speak about the new scenario that this agreement represents for the Ukrainian air travel market and in order to get the pulse of the Ukrainian airline industry I went to see Richard Creagh, an Irish man that is executive advisor and former deputy president at Ukraine's largest airline and flag carrier: Ukraine International Airlines (UIA).

Open skies but not yet open borders

"Open skies mean little without a visa agreement", Mr.Creagh is clear on this point.

Indeed, while European Union citizens do not need a visa to visit the Ukraine, Ukrainians do need to apply for one if they want to travel to the EU. This factor alone has deep implications for the Ukrainian air travel industry, as it limits its growth potential. According to Mr.Creagh in the medium to long term air traffic in the Ukraine could grow two to three times faster than GDP. At the moment traffic stands at 14 to 15 million passengers a year, which, in a large country of 45M people, stands as an indicator of the still relative underdevelopment of the air travel market.

Another effect of the visa barrier is the strong focus of Ukrainian leisure carriers on countries such as Turkey, Egypt or Thailand, that do not have visa requirements for Ukrainian nationals.

Between East and West

As current political tensions highlight, the Ukraine has traditionally been a land torn between East and West, but what came as a revelation to me is up to what extent UIA is leveraging this geographical factor to quietly build a considerable hub operation at Kiev Borispol airport: I was stunned to learn that 40% of UIA's traffic are connecting passengers.

UIA focus is on connecting Western Europe with destinations in Ukraine, the Russian regions and the former Soviet Union. The challenge in this market is to position Kiev Borispol as a convenient alternative to Moscow, the traditional conencting point for this type of traffic. In this regard, and as a side note,  I must say that my experience as a passenger in newly renovated Borispol airport was quite satisfactory..

This is a specialisation that is going to take a whole new dimension as the Ukrainian flag carrier leases Boeing 767s for long haul operations. It has already received two of them and is starting flights to Bangkok. Two more Boeing 767s are due in Kiev in the Spring, UIA is then going to launch new routes to Beijing (UIA is going to operate 6 flights per week to the Chinese capital), New York and Toronto (with Chicago, a city with a large population of Ukrainian descent, likely to follow later on).

These leased Boeing 767s are, admittedly, not the most modern aircraft out there, but they are a reliable cost-efficient solution until UIA decides on longer-term options for its long haul fleet (it is evaluating the addition of either Boeing 777s or Airbus A330s to start operations after 2015). UIA's Boeing 767s have had their cabins have totally renovated under UIAs specifications in a three class configuration, business, economy premium ( a first for UIA) and economy.

UIA is also adding new Boeing 737NG to its fleet (it already has 12 of them as well as 5 Embraer E190s) although Mr.Creagh remarks that it is not just about replaciong the Boeing 737 Classics it currently has in the fleet (Boeing 737-300s and -500s) but also about growth.

More like this soon in Kiev

Despite its leading position in the Ukrainian market and its amazing 65% increase in number of passengers in the last year (helped in part by the demise of its main competitor Aerosvit), UIA is facing some important challenges, some of them not unlike those faced by other full service carriers elsewhere in Europe, such as the downward pressure on prices, something that is likely to intesify if European low cost airlines start entering the Ukrainian market "en masse" following the Open Skies treaty.

The low cost factor

The Ukrainian market has already seen the arrival of new airlines in the last few years: Wizz Air has set up a subsidiary in Ukraine that operates out of nearby Kiev's Zhulianyi airport and  Russian airline UTair is also developing its own operation, not only to feed its Moscow hub, but also operating domestic and charters flights in the Ukraine.

The market leader

The air travel market is ultimately driven by price. As Mr.Creagh puts it, "we are not naive, ultimately it will all come down to being super competitive in our cost structure", even business travelers are cost consciuous nowadays (business class traffic represents about 5% of UIA's traffic). The effects of competition have already been felt on the Kiev to Moscow route (the largest market so far out of Kiev), where, at the last count up to 6 airlines where comepting, with the corresponding low fares.

Add to that he potential arrival of new foreign low cost carriers on Western routes (for example, Vueling has already announced the opening of routes between Barcelona and several Ukrainian cities) and Middle Eastern carriers siphoning traffic out of Kiev to their own hubs and the squeeze can be considerable.

Consolidating UIA's position as a connecting airline is also key and a factor that can give it an edge over competitors focused on point to point routes, Mr.Creagh points out at how competitors have found it difficult to rely only on point to point domestic traffic, to the point that UIA has 2/3 of the domestic Ukrainian market. This figure represents only represents about 15% of UIA's total traffic, though, which gives a measure of the relatively small size of the domestic market (it must be factored in that train tickets are subsidised in the Ukraine).

So, UIA has devoted consderable effort to optimize its operations and concentrate resources on this East-West connecting role, for example organizing its schedules so that it can have two waves of arrivals and departures at Kiev Borispol.

It is not enough to provide refreshments on board, you need to stay competitive in price

It looks like whatever direction the Ukraine finally takes, Ukraine International Airlines, is firmly positioning itself to make the most of its location at the crossroads between East and West.

The Italian airline industry: in a state of flux

A couple of years ago we titled one of our posts "The Spanish airline industry, in a state of flux"...well, now it seems to be Italy that is in turmoil and anything can happen...

On one hand we have Alitalia's chronical financial problems. The Italian flag carrier is desperately short of cash, its Skyteam partners of Air France/KLM won't be giving a hand this time (and rightly so, in my opinion). Alitalia needs €300M immediately in order to keep flying, but even after the intervention of government-owned Poste Italiane, the Italian postal service, only €173M have been secured. No wonder there are serious doubts about Alitalia's survival. 

The best solution for the Italian flag carrier (and for the Italian government) would be to find a deep-pocketed investor to sustain the airline in the longer term, but it is unclear who would want to invest in a company that is a loss-leader in an already not too profitable industry. Russian airline Aeroflot has been mentioned in repeated occasions as a potential investor, but, according to the latest reports, this is not to be.

What seems clear is that whatever happens to Alitalia, Italian travelers are not going to be left without options.

Vueling has announced a new base at Rome's Fiumicino airport. Vueling is not a new comer to the Italian market, but this time the scale is unprecedented, with 8 aircraft based at Fiumicino and 24 routes, it aims to be an important player in Italy.

Pretty much at the same time as Vueling, Ryanair announced its own base at Rome's Fiumicino airport with 6 new aircraft (Ryanair also has had a historical presence at nearby Rome's Ciampino airport). This expanded presence in Rome will make it possible for Ryanair to operate many frequencies a day between Rome and several domestic destinations, mainly in Southern Italy.

Somehow it looks as if Vueling and Ryanair have already discounted Alitalia (even if Ryanair's Michael O'Leary apparently surprised everyone by offering his cooperation to Alitalia) and now have decided to go head to head against each other.

And, in the meantime, and far from the spotlight and the major capital airports, Volotea keeps building its network out of its Italian bases, in line with its strategy of connecting second-tier cities.

So maybe time to get some popcorn and watch the show...how is the Italian air travel market going to look like one year from now?

The Thai Airways experience continues: flying to Bangkok to use an A380 flight simulator

Regular readers of this blog might already be aware that Thai Airways is currently adding new Airbus A380s to its fleet (for more details about Thai’s new A380s check my reports from Airbus’ Delivery Center and from the Airbus' Aircraft Design and Mock-Up Center in Toulouse, or check this video).

These new A380s are adding capacity to some of Thai’s most popular routes, such as Bangkok to Tokyo Narita and Bangkok to Hong Kong.  Thai Airways has a long haul fleet renewal programme under way that, in addition to the A380s will also see some Boeing 787s, Boeing 777s and Airbus A350s added to the fleet in the coming years. 

Thai Airways long-haul fleet is going to look considerably newer by the end of this decade

A journey to the heart of Thai Airways

Thai Airways' Royal Silk Lounge

The cabin interior of a Thai Airways Boeing 777-300

A new fleet means also training the pilots that will fly it, so, as a continuation of my Thai Airways A380 experience in Toulouse I headed for Bangkok together with a group of European bloggers, in order to see for myself Thai's state-of-the-art A380 simulator.

So, I took off from Moscow on one of Thai Airway's Boeing 777-300s and changed the cold of Russia for the balmy temperatures of Thailand for a few days.

Oh, and did I mention that the food on-board was excellent!

An introduction to Thai cuisine at 30,000ft

Would be glad to eat these noodles again

After a couple of days adjusting to the new time zone and climate, enjoying the magnificent hospitality of the Dusit Thani resort in the seaside vacational town of Hua-Hin (a favourite among Thai elites!), headed for the capital, where, at Thai Airways' headquarters, the A380 simulator was waiting... 

A familiar sight greeted us at Thai Airways' headquarters

Simulating an A380 flight

It might look unassuming from the outside, but once you get in you realize the A380 simulator is such an an amazing technological wonder!

The most impressive thing of all is the level of detail of the landscapes you see "outside" the simulator, when you look through the cockpit's "windows". You immerse yourself in a totally different reality, a virtual reality World that is an exact representation of the real one: vehicles moving along the runway, airport facilities, other aircraft...

The following video gives you an idea of what is it like to taxi an A380 through Bankok International Airport, all simulated of course, like a sophisticated videogame with plenty of special effects (the simulator's cabin moves and shakes as well)...

The flight plan for our simulated plan was simple, basically, take off from Bangkok in adverse weather conditions, a strong tropical storm was conveniently programmed for the occasion, make some turns above the Thai capital and then perform a night landing.

All of Thai's A380 pilots go through the simulator periodically to train their reactions under a range of different flight conditions (for example, during our simulated flight we went down to just three operating engines, instead of the normal four!)...I just wish I had something like this when I was preparing to get my driving license!

Preparing for the flight, French blogger Catherine Merveilleux of "Le Jour et la Nuit" acting as flight captain

As we were told, despite its size and weight, the A380 is quite a smooth aircraft to fly thanks to its advanced electronics

Ready for take off

"Maybe I will send them a tropical storm..."

Taking off...and heading towards a tropical storm...that showed up on opur radars as soon as we had "taken off"!

Night landing...some people that saw the following video asked me if it was real!

The crew for this special flight