Just got through Ryanair’s latest newsletter, and it includes a chance to win a “5 star break in Inverness”. Hmm I’m thinking, Ryanair don’t even fly to Inverness - or at least not since they pulled their flights from East Midlands in July this year. So maybe they are talking about that Inverness which they otherwise know as Aberdeen West? But even then, the idea of getting to a five-star hotel on a zero-star airline just doesn’t make sense. And they only fly to Aberdeen from Dublin anyway, no much of a target market.
October 31, 2009
October 7, 2009
Is it time for Ryanair to start over-booking?
Right now, I should be somewhere in Scandinavia, probably crossing the glorious Oresund Bridge between Copenhagen in Denmark and Malmo in Sweden. I booked my outbound flight from Birmingham to Billund via one of Ryanair’s £1 special offers, but never got round to booking the rest of the trip, and then other commitments this week meant I couldn’t go anyway.
So what put me off booking the rest of the trip? Well, the problem is that when you can get a flight for £1, all taxes and hidden charges included (I have an Electron Card), everything else just seems so much more expensive. I wanted to head all the way up to Helsinki in Finland, mainly to visit the garden suburb of Tapiola, which is reputed to be one of the best places to live in the World. But by the time I had added in the cost of a ferry from Stockholm to Helsinki (I like to get in a couple of ferry trips each year), and all the rail travel, it all got out of hand very quickly - and that’s long before I’ve had my first pint of Carlsberg!
So I wonder just how many other people avail themselves of Ryanair’s free or £1 flights, and then don’t turn up? Or are people who do this so keen to protect their ‘investment’ that these special offer flights actually have a very good turn out? Whatever the case, Ryanair have always claimed that they never over-book passengers, i.e. if each flight has 189 seats, they only sell 189, and no more. This doesn’t sound like particularly sound economics, considering that there are always going to be no-shows, and logic would imply that the proportion of no-shows goes up as the fares get cheaper. With Ryanair’s keenness to put bums on seats at any cost, it does seem surprising that they won’t oversell their flights by even one or two seats.
Anyway, as I write this, Ryanair have just launched another £1 ticket sale. This time, I might see if I can nail down a return flight as well as an outbound one, and make sure I get to go somewhere a little bit cheaper than Denmark and Sweden.
Airlines put Heathrow’s Third Runway in the Dragon’s Den
And so to the final ‘dragon’ in my review of the arguments for and against Heathrow’s Third runway.
If we just looked at the airlines serving Heathrow, then support for a third runway would be overwhelmingly positive. But no frills airlines such as Easyjet and Ryanair, who are being asked to pay increased landing charges at Gatwick and Stansted in order to help fund Heathrow’s infrastructure improvements, are less keen. As I haven’t yet mentioned the alternative High Speed Rail, perhaps this is the place to consider what ‘rail based airlines’ might think.
Heathrow’s existing Tennants
British Airways are unsurprisingly the most vocal in favour of a third runway at Heathrow, as they already benefit from having a massive hub operation in Terminal 5, which they want to expand by having extra runway capacity. In terms of the environmental damage caused by airlines, BA boss Willie Walsh was in New York recently, arguing that airlines across the world could achieve a 50% reduction in CO2 emmissions by 2050 - but many environmentalists are cynical about the industry’s ability to meet such targets, and even those that believe they are achievable do not consider that a 50% reduction is enough. So how does this relate to Heathrow, which is after all, just one airport out of several thousands worldwide which operate passenger flights, albeit the busiest one in terms of international passengers? The current government have made reductions in CO2 emmissions part of the conditions which would have to be met in order for Heathrow to gain approval. Obviously, this is all immaterial if the Conservatives stick with their policy to block an additional runway at Heathrow, but as Willie Walsh argued on Questiontime back in January, politicians in opposition can always play a completely different role once the enter government. At last week’s CIMTIG meeting, BAA’s director for Runway 3 said that “Conservative policy is about going after easy votes. As a transport policy, it is indefensible.”
Virgin meanwhile are pinning their environmental credentials on a massive investment of ‘all Virgin profits for the next 10 years’ in alternative fuels. Clearly both of these airlines believe that the aviation industry can still grow and cut emmissions at the same time. BMI also support a third runway, although speculation is that they will have been snapped up by one of their larger rivals by the time it gets built!
Non Heathrow based airlines
Ryanair in particular have launched legal challenges against BAA over the fees they are charged at Stansted, and have repeatedly refused to pay passenger handling bills, as they claim they are being forced to payin advance for infrastructure which they will never actually use.
High Speed Rail as an Alternative
The Conservatives have said that they will spend £20 billion on a high speed rail line between London and Manchester, and that they will encourage more people to travel to Continental Europe by train, in order to reduce the demand for a third runway at Heathrow. However, as BAA management have pointed out, offering easier rail access to Heathrow will only end up making it far more attractive for customers from the North of England. Meanwhile, Eurostar already have a 75% market share for point to point travel between London and Paris and Brussels, so there is little that government policy could do to switch more people onto the trains, apart from ban these flights entirely - a move which would be very un-Conservative! Although there is potential to see Eurostar services extended to cities such as Cologne and Amsterdam, this is a commercial matter for Eurostar to decide, and there is very little that a UK government could do to influence this, when the track and station access needed to make this happen is in other EU countries.
Verdict: Just as it goes without saying that most of Heathrow’s neighbours will be against further expansion, it can also be taken for granted that the main airlines using Heathrow would want to see it expand. But this misses out on the wider picture, especially as it is the no-frills airlines who are investing most heavily in new aircraft and new routes. It is therefore not a foregone conclusion to assume that the airline industry as a whole would say ‘we’re in’.
Final score - some of the referee’s decisions may be controversial, but my verdict is 2-3 against.
October 5, 2009
Environmentalists put Heathrow’s third runway in Dragon’s Den
Continuation from Heathrow’s Runway in Dragon’s Den | Neighbours | Passengers | Economy
I’m not going to look at the local environmental issues - these are covered under ‘Neighbours’. This section is about the contribution of Heathrow and the aviation industry in general to climate change.
So, the arguments against are well known and well practiced - aviation currently represents around 5% of the UK’s contribution to greenhouse gas emmissions, and this figure is set to keep rising as other industries clean up their act. There is a suggestion that if current trends continue, all other sectors would have to reduce their emmissions by 90%, rather than the previously suggested 80%, just to allow people to keep flying. The most efficient form of flying in terms of fuel usage per passenger kilometre travelled is to use no-frills airlines, as they offer the following environmental advantages:
- Point to point service meaning no wasteful connections.
- Younger business model almost certainly means newer fleet - especially in the case of Flybe, Easyjet and Ryanair.
- No frills airlines tend to operate routes with higher load factors, and are quicker to withdraw unprofitable routes.
- No frills airlines use less congested airports, cutting down on ground taxiing and pre-landing stacking.
- No frills airlines tend to ruthlessly cut costs - and lower costs usually go hand in hand with better environmental performance.
So how can Heathrow’s third runway possibly be justified in the face of such serious environmental concerns, and the lower environmental performance of traditional ‘legacy’ carriers?
Time to play devil’s advocate:
A new runway would reduce airfield congestion and stacking
More capacity means less congestion - this is a fair point, except that more capacity also means more flights to take up that capacity. And in Heathrow’s case, this would almost certainly mean going from being 99% full on two runways to 99% full on three runways. Result - some efficiency improvements might be created, but these would be counterbalanced by the increase in flights.
We still need hub and spoke networks
However much better the no-frills airlines might seem on paper, there will always be a need for some hub and spoke routes, and only Heathrow can serve these - not Gatwick or Stansted, even though those airports might have smaller noise footprints.
If Heathrow doesn’t expand, somewhere else will - and the UK loses out without any CO2 reduction
This is true to a point, but the passengers would still need to get to the other hub airports. Taking up slots with feeders into Frankfurt or Amsterdam will use up more runway space per passenger than operating direct flights to the destinations people want to go to (assuming long haul flights use larger aircraft), so whatever BAA claim, Heathrow will always cherry pick the most important and profitable destinations, rather than serve every route it can.
Expanding Heathrow means more direct flights, so less need for connections
With regards to flights into European hubs from other UK regional airports, passengers from cities such as Birmingham or Bristol are already more likely to transfer through Amsterdam or Paris, as they have feeder routes from most parts of the UK, whereas such a short route into Heathrow would not be viable. This is obviously more wasteful than a direct flight from Heathrow, so adding more capacity and building a high speed rail link into Heathrow would partially alleviate this problem.
Verdict: The environmental dragons would always be expected to shoot down any proposal for expansion at any airport. Although there are clearly some environmental benefits, these are often outweighed by other factors. For example, for every seat which an expanded Heathrow would enable to be filled on a point to point bases, how many other seats would just be filled by transfer passengers who might have gone elsewhere? Even if a clear distinction is made between the need to minimize the contribution made to climate change by aviation as a whole and the effects of one single airport, there is still an obvious correlation between more capacity and more flights. However much BAA try to massage the arguments, the concept of ’sustainable aviation growth’ is always going to be an oxymoron.
Economic Arguments for Heathrow’s Third Runway in Dragon’s Den
Continued from - Heathrow in Dragon’s Den | Neighbours | Passengers
According to the Institute of Directors (IOD), delaying further investment in Heathrow is costing UK PLC £1 billion each year in lost opportunity and congestion. Heathrow employs 72,000 people, making it the largest single-site source of employment inthe UK. Yet a third runway is projected to cost a massive £8 billion. How will this investment be recouped? Clearly, BAA believe that they will get their investment back, and the IOD figure would suggest that UK PLC would see a return in just 8 years - not bad for such a huge piece of infrastructure. But what if the airline industry continues to see weak demand?
Heathrow’s attraction
In the current downturn, Heathrow has stayed steady whilst other UK airports have seen demand fall. Heathrow operates at 99% capacity, whereas its main three European rivals (Frankfurt, Amsterdam and Paris Charles De Gaulle) all operate at around 75% capacity. Neither Amsterdam nor Frankfurt has the population to support airports of such size in their own right - these two airports only thrive because of the huge volumes of transfer passengers they attract. Only London and Paris can claim to be true hub cities, where there is substantial latent demand together with the demand for inter-connecting flights, which makes more routes viable.
But does UK PLC really want all these transfer flights?
There is a legitimate argument to say that transfer flights are the most wasteful form of air travel, and that it would be better to encourage people to make such connections at airports like Paris, where there is a lower noise footprint. This is, of course, a blatant ‘not in my back yard’ argument, but in terms of economics, is it really worth building an extra runway just to encourage more transfer passengers? The argument behind such transfers is that they enable huge numbers of routes to be profitable, when they would not otherwise be viable. Typically, 25-40% of passengers on long haul flights to and from Heathrow are making transfers - without these passengers, there would be much fewer routes.
Of course, point to point flying is the most efficient way of getting from A to B, but there are always going to be journeys where the hub and spoke system will be needed - for example from Edinburgh to Entebbe or Oslo to Osaka. Is it really right that these passengers should be forced to be funnelled through Paris, Dubai or Amsterdam, just because Heathrow doesn’t have the capacity?
Verdict: UK PLC clearly sees the advantages of Heathrow’s third runway and says ‘I’m in’. Score so far: 2-1 in favour.
Continue to: Environment | Airlines
Passengers put Heathrow in Dragon’s Den
Continuation from: Heathrow in the Dragon’s Den | Neighbours
The recent deregulation of flights to the USA has shown very clearly that passengers vote with their feet, and choose Heathrow over Gatwick every time. Why else would Continental Airlines shell out £100m for two slot pairs at Heathrow in order to operate flights to New York, when they already have access at Gatwick? Despite the current economic woes, Heathrow has remained resilient as passenger numbers at almost all other UK airports have plummeted.
Do passengers like the Heathrow (or is that Hellthrow?) experience? Well, according to BAA’s own surveys, the user experience is slowly improving. Within two years, over half of Heathrow passengers will be using facilities that are less than 4 years old. Heathrow is already ‘moving up the table’ in terms of passenger surveys, and management claim they are hot on the heels of Amsterdam.
So would a third runway enable freer flowing traffic, or would it just snarl things up even more? Management claim that the new runway would preserve important feeder routes, and stop the airport ‘robbing destinations to pay for frequency’. Since 1990, Heathrow has gone from serving over 220 destinations to around just 180 today. This argument over hubbing is very persuasive. Most other arguments are essentially linear - i.e. more flights means more pollution and more contribution to the economy. The power of a hub increases dramatically due to the fact that doubling the number of routes means four times as many opportunities for connections.
Consider:
1 route = o connections.
2 routes = 1 connection pair (A to B via LHR).
3 routes = 3 pairs (A to B, A to C, B to C)
10 routes = 45 pairs - and so on.
This presents a very compelling argument on behalf of passengers. The key question to ask is what effect extra airfield capacity would have on the terminals. It is only natural to assume that BAA would want to build a sixth terminal in order to recoup their investment. Details of this are patchy at present - but anything which needs new terminal space to move outside the area in between the existing two runways is going to get very messy, considering how current rail infrastructure has to split to serve the central area (T1,2,3), T4 and T5.
Defending such claims, Heathrow’s Runway 3 Director argued that new capacity would make it easier to group flights according to airline alliances. Terminal 5 was already putting most BA flights under one roof, whereas Star Alliance would be hosted in the central area. This still doesn’t help passengers much who are connecting between different airline networks, or who might be using Sky Team airlines, who don’t offer feeder flights from within the UK and Ireland. However, these are in the minority, compared to BA or Star passengers.
Verdict - the most likely to say ‘we’re in’
Airport Neighbours put Heathrow in the Dragon’s Den
Well, naturally you’d expect people living near Heathrow to be the first ones to declare ‘we’re out’ - except of course that Heathrow employs vast numbers of people in the immediate vicinity.
To give a true assessment of neighbours attitudes, we’d have to look at Heathrow in comparison with other London airports. Here, Heathrow doesn’t fare so well, as aircraft usually approach over Central London, giving a much wider noise footprint than any other London airport, when measured in terms of people disturbed per passenger carried. Of course, the quietest option would be an airport out in the Thames Estuary (aka Boris island), but before that idea gets Londoners running for their cheque books, one has to consider the costs involved, estimated last week at £40bn, or £4,000 per head, assuming a division between 10,000,000 people living in and near London.
As the main argument in favour of a Thames Estuary Airport (TEA) is one of nuisance minimisation, rather than the facilitation of growth per se, should the costs of such a proposal be loaded onto the 400,000 or so people who are most affected by Heathrow’s current noise? If so, the cost moves up to £100,000 per head, so I think this idea gets thrown overboard very quickly when using this argument!
Verdict: Turkeys will never vote for Christmas, and airport neighbours will never vote for expansion. The first group to say “We’re out”.
Heathrow’s third runway in the Dragon’s Den
Last week, I attended a discussion organised by CIMTIG regarding the future of Heathrow Airport, and the aviation industry in general. Sadly, because of limited time, and the attempt to discuss the whole industry, rather than just Heathrow’s third runway, they didn’t explore as many of the issues as I would like them to have done - but it was still a very informative evening.
This week is the Conservative party conference, and we expect some further discussion from the government-in-waiting about why they believe there are better ways of handling demand than building another runway.
I’d like to put Heathrow’s third runway into a ‘virtual Dragon’s Den’ and see how it gets along. Prior to last week, I’d say I was probably against the plans, but the presentation from the BAA director responsible for the third runway gave a very strong case, so I’m firmily back on the fence. Let’s see if the proposal can survive in the den. So here we have it - billions sitting on the table, rather than the usual £250,000, and I think we need a majority of the ‘Dragons’ to ‘invest’, rather than just the usual one or two.
Introducing the dragons.
In other parlance, they might be known as ’stakeholders’ or ‘investment solutions partners’, but as I hate both of those terms, I’ll definetely stick with Dragons!
- Airport neighbours
- Passengers
- The Economy
- The Environment
- Airlines
The article will follow later in the week. What do you think? Would you ‘invest’?
October 2, 2009
Don’t fancy flying all the way to Australia? Why not go by bus?
When I first read about Oz-bus.com, I thought that April fools day had come early. A long distance bus service running all the way from London to Sydney - someone had to be taking the xxxx!
But it turns out that the service is real - and that they will take you by bus as far as the prevailing conditions will allow. This should essentially mean an overland journey to Iran, a possible flight across the border into Pakistan and then again to get through Burma, and a final flight between Bali in Indonesia and Darwin in Australia - but the rest of the journey is exactly as it says on the tin, by comfortable long distance coach, apparently limited to 35 passengers per trip, so I would presume a little bit more roomy than your average scoot through London on a crowded #73 Boris-baiting bendy bus!
With a one-way journey starting at £4399, you are going to spend a lot more than a business class flight, but we think this journey is going to be more about what you see on the way than what you do when you get there, so for a three month trip, this works out at a very reasonable £50 per day, including breakfast and basic accommodation.
I’ll have to admit to being a bit ‘bussist’ myself. If I’m going to do long distance surface transport, I’d rather go by rail or sea - but given a choice between a professional bus driver and the company of a 35 strong group, or going by car, I’d still take the bus any day. Oz-bus also offer an eastbound journey to New York - via China and Alaska, and journeys through Africa, so it really does look like they are carrying on where Eurolines and Greyhound leave off. It will be interesting to see if this kind of travel ‘takes off’ (very lame pun I know) as people look for low-carbon alternatives to flying, and it will certainly be an indicator of the ability for different countries to stimulate cross-border co-operation. Iran, Pakistan and Burma might be problem areas for now, but how long before the Facebook generation catches up and reaches parts Heineken can’t reach! Twitter has certainly lead the way in Iran at least, so let’s see!
- Prefer ‘regular’ plane flights to Australia (from the UK)