Why don’t no frills airlines offer more cheap flights to Greece?

I was asked on twitter by @Korb0s why there aren’t any Ryanair flights to Greece. The question could of course be extended to why there aren’t more cheap flights to Greece from all of the budget airlines, with Easyjet and Jet2 perhaps being the main exceptions. I narrowed down the 140 characted twitter answer to two words (airport monopoly), and said I’d give a bit more explanation later. So here are the key reasons:

  1. Airports monopoly. Greek airports operate on a monopoly basis, and to paraphrase Ryanair’s route development manager, ‘they wouldn’t know a commercial deal if it came up to them and slapped them in the face’. One of Ryanair’s biggest driving factors in developing new routes is the ability to secure the best possible deals out of the airports it wants to fly to. This can make or break a route decision just as much as whether or not they actually forecast demand to be there. If they get their sums wrong about demand, they can quickly drop the route, if they can’t screw a good deal out of the airports, they are stuck with paying high handling fees forever – that is the crux of the matter.
  2. Seasonality - no-frills airlines prefer to operate routes which have demand throughout the year. The market for flights to Greece has traditionally been dominated by charter companies, who offer packages during the summer season. Greece is not typically seen as a winter sun destination, and unlike destinations like Barcelona (Girona) or Granada, there aren’t any Greek airports which are close to ski resorts.
  3. Dispersal - when no-frills airlines have competed well against charter operators, they have opened up routes where they can put on a reasonable frequency of flights, and where a good range of resorts can be accessed from the destination airports. Apart from the capital Athens, Greek destinations are scattered around a plethora of islands, making no-frills flight routes to any one island less likely to be viable.
  4. Distance – a flight from London to Alicante is 914 miles, whereas a flight to Athens is 1,485 miles. This extra flying distance doesn’t just burn up a lot more fuel, it also means more crewing time, and more usage of the aircraft. For example, Easyjet’s 6:20 flight from Gatwick to Athens doesn’t arrive back into Gatwick until 14:20 – effectively half the day gone to service just one route. Sure, passengers have a higher perception of value for the longer routes, but it is still easier to juggle slots around two shorter routes than one longer one. At a regional level, Flybe have opened up a number of routes into various regional airports in France, but Greece would simply be out of the range of the Bombardier Q400 aircraft that they use on these routes – although flights to Athens from Birmingham using their Embraer 195 jets would seem to make reasonable sense.
  5. Ancilliary revenue – this is just a theory, but I would guess that as many Greek island destinations are fairly small, a large proportion of passengers use transfer buses to get to and from the resorts they are staying at. There is less benefit from having a hire car, and people who do might be more likely to rent a car just for the day. If this is the case, it means less chance of earning extra money for the airlines – but they should at least sell a few more sandwiches onboard their flights.

As always, this is just my tuppence, but I hope it gives a few insights into why there aren’t more flights to Greece from the UK. James

What does Warren Buffett’s train investment say about airlines?

So, Warren Buffett has invested some $26 billion buying American freight operator BNSF, with news commentators hailing this as an ‘all-in’ bet on the future of the US economy. But there’s more to it than that – it is, of course, a huge leap of faith into the future of railways, even if lumping coal isn’t exactly as glamarous as swish new high speed train sets. But Buffett has never been about style over substance, and trains in Europe are usually associated with massive subsidies.

In typical long-term Buffett style, he has talked about growth potential of rail in the USA over the next 3 decades, and even if this investment is in freight railways, there is no doubt that passenger rail networks will also see substantial development over this period.

Compare this to Buffett’s attitudes towards airlines, after he lost 75% of his $385 million investment in US Airways back in 1995. He pointed out that the he didn’t think the US airline business had ever made money – and this was in an industry without the kind of state carrier subsidies which were common elsewhere in the world. Buffett is quoted as saying, in respect of the Wright brothers’ first flight:

“If there had been a capitalist down there, the guy would have shot down Wilbur. One small step for mankind, and one huge step for capitalism.”

Has anything changed in the airline industry since 1995? Well, there’s been plenty of deregulation across the pond, and plenty of former big names are no longer with us. In Europe, we have Ryanair’s Michael O’Leary echoing many of Buffett’s sentiments, describing the current situation facing European airlines as a ‘bloodbath’, and the ‘perfect storm’. Of course, Ryanair are one of the few airlines to buck the trend, whereas this morning’s announcement from Lufthansa that they can’t find a suitable bidder for bmi, and that consequently bmibaby are shedding jobs hardly comes as a surprise.

Despite all this, Warren hasn’t been put off from investing in flying alltogether, having ditched his own private jet, aka ‘The Indefensible’ back in 1998, in favour of buying private jet hire company NetJets.

May all United Airlines flights to Rome land safely tonight

So tonight, Rome is playing host to two of the finest cities in Europe, and I couldn’t help resist coming up with a few very lame puns to celebrate the occasion:

  • All roads may lead to Rome, but where will one champions league trophy end up tonight?
  • I don’t think I’ll hear this being chanted at the ref — Amo, Amas, Amat, you are El Prat (from my early attempts to learn Latin at school — a phrase my dad always told me, changed to ‘El Prat’, which is the airport and Barcelona)
  • Title hopes Ruined In A Day (New Order song)
  • Ball of Frustration (after James — Born of Frustration)
  • Don’t Look Back In Anger (Oasis)
  • He’s Not The Messiah, He’s A Very Naughty Boy (Ian Brown – Resurrection / Life of Brian)
  • Biggus Dickus (Life of Brian) – http://www.youtube.com/watch?v=2K8_jgiNqUc
  • Threw him to the Floor, I mean he threw himself to the floor (after Biggus Dickus speech)
  • Friends, Romans, City Fans?
  • Veni, vidi, left empty handed from Da Vinci
  • Young Offender (New Order)
  • We Hate It When Our Enemies Become Succesful (Morrissey)
  • Manchester United airlines — fly the unfriendly skies