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The way to price for a profitable airline

How to set the pricing strategy for a profitable airline.

You start with the costs. It is important to know both the set and variable costs for each leg (city pair) you would potentially fly.  Include everything like cost of plane, crew, maintenance, fuel and taxes. Plus an ad on for other costs like managment, admin and marketing. Hence lowering the costs is alpha and omega for creating a competititive airline that is also profitable.

Ceate a pricing strategy fpr eah route that gives you a profit at 80% capacity, or lower if you think you can get away with it in the market. Create several steps in the pricing ladder so you have a low starting price for marketing purposes and the fuller the plane the more you get in. Now you have your base price model.

Add on a percentage premium for more poular times of the week, or of the day, and if there are any events scheduled for that market. Add also on a percentage for any premium services you offer, example a 50% add on for middle seat free …

Aircraft maintenance chickens coming home to roost

There are reports that some airlines have been light on aircraft maintenance during the CoVId19 lockdowns. This specially goes for they who have outsourced that maintenance and have done a light touch follow up.

Since airfreight is still massively behind some airlines like, EasyJet, have found that parts are hard to come by now when everybody are ramping up their flying and all need the same parts at the same time. The situation isn't helped by that freight and especially airfreight is far behind normal operation.
This has led to some airlines having to use their less fuel efficient planes insted of the newer and greener ones. Even if they have extras of the others in stock they just haven't been maintained to the standard required for an immediate return to service. Or even not so immediate since most airlines have had 2 to 3 weeks between announcing its uprated schedule to actually going live with it.

It is ironic that planes can't get back in the air because planes ain&…

Norwegian management not happy with just running an airline

Its presentation to the annual general meeting today showed a future where it is planning to be an "enterprise within future mobility".
Never mind whether that is planning to be "great", but few shareholders like to ambitious diversifications within an enterprise. Not only does it divert managments attention away from the core, but shareholders think they are the best judges of their investments and if they want to invest in other modes of transport they do that separately.

Norwegian managments shorter timeframe plan is to be just a "good organisation within the aviation industry". Good means mediocre in this context. Nobody has an ambition of that. Best in its field and revolutionise is words more used in future plans about ambitions.

This lack of airline focus shows also in the new organisational chart. Operations is twice removed from the CEO below not only a large stab and a separate airline chief but also a customer chief. Far from the Low Cost mantr…

Norwegian retrenching to a bleak future

This is what happens when an international airline get a top chief that have no experience from managing an airline. No experience from any other parts than a bit of consulting. Just thinks its about selling a ticket plus whatever extra you can add onto the purchase.
You don't make a Low Fares airline by lowering prices. You make the basis for it by keeping your costs low. And a key part of that is the single type of plane. But you need to spend time in engineering and ops to understand why that is so important. Just 1 set of spares and 1 type of engineer for all the planes, just 1 type of pilot so you don't have to double up on simulators and standbys, and the ability to swap any plane in on any route depending on what is available on the day. Did the company bosses visit other airlines that has done before the type of company they wanted to be. O'Leary of Ryanair did do a study visit to Southwest before forming his vision. 

If you want to play with the big boys and sourc…

If looking for where to start flying first look at where there is a lot of cross border cooperation

No matter how much blm flying to former colonies is still a stable revenue stream and among the most recession and CoVid19 proof among international passenger air-transport business you can do.
The first to come back and get was flying between Portugal and its former colonies in South America. It actually hardly stopped.
There are still a lot of connection between European states and their former colonies. And the later they where freed the more. It don't seem like resentment is the lingering frame of mind but more a continued sense of responsibility. Look at Britain and its consideration of offering immigration to all of its former colony Hong Kong residents. I mean the UK is keeping many of them in a continued cooperation arrangement even through sporting games.

There seem to also be a certain amount of continuing business and trade between such constellations, resulting in non tourist traffic that are allowed also in a time of crisis. A lot of overseas students also travel to t…

Time to change management in Norwegian before they run the company into a blind alley it can't be backed out of

More of the fictive crew rental straw companies that Norwegian created are being declared bankrupt. Reasons given; client (= Norwegian) won't pay their bills. And this time it is really closing in on them being in their neighbouring countries Denmark and Sweden.

This is going to end in tears. The management of Norwegian haven't solved neither the company finances nor its problems. They have just pushed them into the future. No other airline have tried to solve their CoVid19 problems by abandoning their legal responsibilities towards their employees. Whether they where hired directly or through fictive agencies. Fictive = the agency only supply staff to 1 company which is also the owner (or part owner) of said employment agency.

Others have tried to abandoned their crew at other times. But those companies always had the financial strength to pay themselves out of trouble when it went legally tits up. Norwegian do not have the money to pay out if different countries start taking…

Airlines slow to react to close up return of demand surge

Looks like some airline systems are not suited to quick adjustments in the necessary flexibility of the schedule.
As CoVid19 fears lightens the careful comeback steps of airlines are being overtaken by a surge in customer demands as a result of constant new re-openings of borders.

Prices are going up without airlines responding quickly with additional flights. Sample the prices close in for the 1 hour Oslo to Copenhagen route lay above Euro 500.- It used to be in the 120.- range and have been sold as low as35.- Many airlines are used to a long time perspective looking at the forward bookings weeks and months in advance. That is no good in what is more like a suddenly emerging market. When customers in addition are vary about booking long in advance due to sudden and the airlines lack of immediate refunds for previous  flight cancellations, they therefore book only for next week or the week after. Then you need to add flights in that time perspective.

It is not a difficult operation no…

Could FlyBe/Connect be resuscitated

The first European airline to fail in the very beginning of CoVid19 was Connect Airways or FlyBe as most like to call it. Was that necessary.
From a pure financial standpoint it certainly looked that way. Running constant losses and with owners tired of constantly refilling it with money. I say money because it wasn't really cash but more promises of such.

As an airline it had some things going fore it. A good AOC for a multiple of types of aircraft that made it a vendor in a market of its own. Large enough but not a direct threat to the likes of easyJet and Ryanair. And for the network airlines it was more a supplier than a competitor.
However for many years it had leaders and management that took it in to many directions spending money on costly rebranding and too many different types of aircrafts.

Many thinks it would be better as a regional with the smallest of aircrafts but those kind of routes are better left to even smaller niche players. It could have carved out a market o…

Governments showing signs of Corona fatigue but will people follow

Many politicians in charge around the world are showing signs of CoVid19 fatigue. The number of previously daily press conferences are dwindling. Figures for the new infections and deaths are no longer daily. Less happens during the weekend. And the press are following suit. No longer are updates headline or given the most prominent space on the frontpages.
But is that enough to un-scare the populations of these countries. Make them believe the immediate danger is really over even though they for months have been touted that this will take years until either a vaccine is implemented or enough of us are immune. Neither of which have happened, anywhere.
And still the numbers for infected and new deaths are going up reaching ever higher daily numbers. Even in countries/states whit increasing numbers there seems to be a reluctance against new lockdowns with politicians only heeding positive results, ignoring negative and now following in many cases constructed re-infect rate numbers with …

Make Norwegian the most environmental airline

Constantly newer planes with better engines are not enough when one do both short haul and long haul and can't compete in the investments race. But Norwegian could become the most environmentally green combination airline by lightning the load and stuffing them in.

If one think the smallest fuel burn per passenger kilometer lightning the seats are one way. Get writhe of the heavy business class seats and fill the plane with the lightest seats you can find. But something that still don't feel like church pews to sit on.
And no business class means no extra heavy crockery or bottles of drink, or double set of trollies.
The single class system would also add seats for 12 or more extra passengers in long haul meaning more heads to divide the fuel burn on.
If you don't hand out newspapers and magazines you don't need seat pockets either. Away with them and even more weight saved, plus a bit of extra legroom or alternatively maybe even an extra row of seats.

You are already …

To turn Norwegian more comprehensive steps are needed

Last years plan of decorating the edges of the accounts with removing a few new non profitable routes seems like the equivalent of putting lipstick on a pig.

Much more needs doing and I doubt the current management are the ones to do it, except for some financial tinkering. They certainly do not  seem to have the airline experience needed, or from the right airlines, to know what makes a Low Fares carrier a Low Cost. Neither do the new ones added to the management team recently, who have absolutely no airline experience whatsoever. Are they trying to make Norwegian into a shopping mall or think the website rather than actually flying passengers and stuff is what will make the company profitable.

There are certainly many steps the airline can do to make it more like the model of the industry Southwest. Where the principle of Low Fares Low Cost was first modelled and who have been profitable in nearly all of the years since, with very little industrial strife to boot.

Take the best of S…

Norwegian still have much to learn from Ryanair regarding aircraft interiors.

In these CoVid19 times it is even more important to simplify the interior of your planes to create as few touch and other virus transfer points as possible.

Norwegian still practices having a cloth piece where you lean your head on rather than just the leather seat. Leather is much easier to clean with disinfectant than cloth that ideally should be removed and washed after each flight, but ain't. They might look nice with the airline name on them but one would think that by the time the passengers find their seats they already know they are flying with Norwegian.

The emergency procedures are still on a loose sheet, even if laminated. Sticking these permanently to the seatback in front removes the need of touching it. In all seat pockets is a contamination trap in these pandemic times. Away with them. 
And while we are on the theme of seats. Leaning seatbacks. Away with them. They are an extra unnecessary cost and mostly a bone of contention that add very little to the comfort over…

easyJet placates its largest shareholder in a roundabout way

Instead of cancelling Airbus order like Stelios requested easyJet is now deferring the deliveries of the order up to several years into the future.
Is this a way of pandering to Stelios wishes without actually being seen to cave in since management did win the shareholder vote on the matter. After all it can't have been pleasant for the management of the airline to have to work against the wishes of a 33% owner.

This way they could present it as a bit of a victory emphasizing the retention of the discounts obtained way back in 2013. A bit odd that an even better deal couldn't be obtained this time around but those might be reserved for they who can actually take deliveries of aircrafts now.
Good thing also that the delay fit nicely with most airlines forecasts on when the world will return to more normal times. At least that is the timeframe they use when negotiating with staff on t&c conditions.

However it is still against Stelios expressed opinion that 200 is the optimum…

What are the service distractions of Norwegian that could be ditched for better economics

Norwegian have tried to have a service level more like easyJet than Wizz, and that has not really worked out for them. Maybe they can never reach the really ULCC levels being based in a high cost country like Norway. But the loyalty from their core customer base is more based on regional belonging than a steadily eroding included service level through adapting the Ryanair way of everything is an additional extra. They should more try for bettering Ryanair by mimicking the early days of Ryanair when they where an ULCC Ultra Low Cost Carrier.

There are definitely an alternative way forward for Norwegian with less frills freeing up many costs and more important removing distractions for the staff and management. Anything other than a single menu offering should sample be avoided. All cabin staff should serve the whole cabin that should be of a single type configuration even on long haul. Let other airlines take the premium segment and simplify the product offered. That would also give ex…

Who in the European LCC market really have the lowest costs and price - comparison

Never mind what Ryanair states in their annual presentations about the cost and price differences of the market. These umbers are usually adjusted for a purpose and often do not reflect all of neither revenue streams nor costs.

A quick calculation of the 2019 numbers gives:
(All numbers in Euros and per passenger)

Company  -  Costs  -  Average Ticket Price

Ryanair:  -  51.5  -  59.4
Wizz:  -  60.5  -  69.0
easyJet:  -  70.0  -  74.0
Norwegian:  118.5  -  116.0

So even though Ryanair's comparisons have the right order they do understate what is their average price for a ticket. And the difference between that and Wizz's cost are not that much. If the last grew to what Stelios says is the ideal size of 200 planes they could very possibly fight very competitively with Ryanair on a cost basis, as long as they stick with the concept. Ryanair is upping there's with constantly adding additional paid for service that increases the true cost of flying with them

Norwegian on the oth…

Airplane seats spoils faster than strawberries

What some fresh airline ceo's with no relevant airline background don't seem to get is that airplane seats are fresh produce. When the plane have taken off the unsold seats are no longer sellable so spoilt. Actually even 2 hours before it takes off. That is why hibernation is a bad solution for an airline. You can hibernate the planes, at a cost, but not the potential seat kilometers those planes could have produced.

Every day you have a potential for selling so and so many seats based on your resources available and they largely need to be sold before the day begins. It's like preselling strawberries you haven't picked yet. Every day you know there will be so and so many to sell and by the end of the day they are spoilt and thrown out. Even though fruit and veg are easier because some can be sold on sale tomorrow and in worst case sold as animal feed thereafter. Seats not sold and routes not flown, and where the plane haven't been utilized elsewhere, have no value…

Norwegian moving at a snails pace, even at boardroom level

The boardroom changes planned for Norwegian seems small compared to that the entire ownership structure have changed since the current board was chosen. Only 2 representatives from leasing companies that now owns a very large part of the airline. And only 1 other new board member.
That is shockingly lazy work from the consultants hired in to assist in the process. But maybe not so unexpected since the same people where responsible for finding the new management just being put into action at the company.
For an airline with only 8 planes flying they on the other hand certainly  have decided to reward the board handsomely for the coming year.

One would hope the planned reduction from 3 to 2 weeks for notifications of emergency general meetings is a sign that other changes are planned in the near future by some of the soon to be elected members of either the board or the selection committee.
Changes are needed, and quickly before the current management squanders on a hibernation mode the…

Should industry chiefs be free to encourage civil disobedience for profit

We find now a number of airline chiefs actively working against different governments regarding their CoVod19 prevention activities. Some even go so far as stating or encouraging that some rules like quarantines won't be followed.

Today O'Leary of Ryanair is reported to have said that people can go ahead and book because the from today UK government policy of mandatory 14 day quarantine on return from abroad will be abandoned. Well we all knows what happens to money paid to Ryanair for travels one after all won't be able to perform. They are very difficult to get back within any sort of reasonable timeframe.

Should these chiefs be free to sprout whatever they want with their considerable media power. There is a thin line between expressing ones personal opinion and suggesting that others to break the law. This is not really about free speech but about already wealthy people for personal financial gain encouraging others to behave illegally. Time for some fines or time behi…

Can a Low Cost have 2 cabin classes

The Ryanair principle is all passengers are the same. However none of their basic principles seems so strong they can't be broken. Take the free seating. Fallen by the wayside. Single queueing always with families and they who needed help boarding first. Also gone. Anything to make an extra buck looks like their new way.
Could this lead to a 2 or more class division of the cabin. After all full service airlines saw it as a cheap way of charging twice as much, or more, for the tickets. But when does it then stop to be a Low Cost and just becomes another full service with slightly lower fares.

Norwegian is running a 2 class principle with more spacious seating in its premium cabin. But then it is more a Low Fare than a fully Low Cost competitor. Yes is tempting for those quite a few extra quid some are willing to pay for a little more be it space, food or service. But how much does it cost to have 2 sets of cabin standards, 2 types of meals and, 2 types of queues. And how distractin…

Should an airline be headquartered at an airport

Most startups place their HQ at or near their main airport to keep a close eye on operations. It can also give combined advantages. Sample the DUB based flight crews used to meet up at the Ryanair hq and transport in a van directly to the planes, needing no extra office space within the terminal.
Ryanair management used to walk or drive up to the airport complex frequently and many of their top management where known to be very hands on. Sample during the baggage handler strike of 98 they where all handling suitcases. In fact every male employee in the White House (nick name for then Ryanair HQ) was. And most of hq staff had airport airside passes hither and tither. Even after the move to larger premises the DUB airport main terminal is less than a 5 minute drive away.

Airlines like Norwegian on the other hand seem to have missed that the Oslo airport have moved from Fornebu to Gardermoen at the opposit end of the city. Not only that but they are paying rent at what is rumoured to giv…

Airlines presentations of numbers in a crisis leaves a lot to be desired

Norwegian came out with its may figures today. The only numbers was total flown in May and how many seat kilometers had been offered. That is like comparing grapes and melons.

Airlines have somthing to learn from Trump. Instead of focusing on the total number of unemployed in todays press conference he was all about how many had gone back to work. That is a positive number and was taken positively by the stock market. Airlines should do something similar and get used to that this year is different. I'm sure in Europe May's numbers would have compared favourably with April and that is what should have been emphasised.
How many more passengers in May than April. How was the load factor on the planes that did fly. How was the payment willingness among they who do fly. How many planes in use compared to total fleet and add to that the percentage number of earlier total staff brought back and what the production was in the same period last year to see the theoretical potential. The…

Time for a rethink about all costs and incomes, also taxes, fees and slots

The Ryanair costbase have in the later years been steadily creeping upwards as they have added frills and abandoned smaller airports for more mainstream ones only sometimes closer to city centers. Yes they have charged extra for the extras but it have let an airline like Wizz creep up under its radar and end up with a lower costs per passenger, according to Ryanair's own presentations.

Is a perceived segment of potential customers, the business traveller, worth going after so much you'd give up the single most important competitive advantage you have had within the industry for years. The one that let you gain market share and dominance by your most important marketing tool, lower prices than everybody else.

Wizz abandoned Frankfurt when the initial discounted deal on airport fees ran out. Ryanair have moved their flights from nearby Hahn and have stayed put even when costs went up. Maybe the need for deeply discounted prices to entice people back into the air will require som…

Social distancing versus ExMax

Where airlines like Ryanair could really muddle the waters are if they used the extra capacity of the ExMax over the NG to offer social distancing through middle seat free.

The way to sell the ExMax to a flying public that don't care how much it saves the company money or if it is marginally more environementally friendly, is by offering something on it that matters for them and that other planes don't have.
An ExMax-10 have about 54 extra seats more than an NG. If sold to the capacity of an NG that would give 27 rows of middle seats free for CoVid19 nervous fliers. Distancing sold as an extra only on ExMAx would really give potential passengers something to think about.

All depending on Boeing getting approval for the thing before the pandemic is over by everbody having it or a vaccine is found and distributed.

Why clean aircrafts for viruses after a month in storage

With the rule that the virus lives hours on the skin, days on cloth and a week or so on hard surfaces, I don't follow this obsession of cleaning planes, or even business premises, that no customer or staff have been in for weeks or months. It seems like cleaning have become the back to use virus mantra without rational thought for when and where it is needed. Dust yes, but just parking things for a couple of weeks is the ideal way of disinfecting it from viruses. With cleaning by hand it is more likely the cleaner bring new virus on board than that any have survived the last month. Bacteria is a different story. But then we are back to normal cleaning routines and not obsessive CoVid19 ones. And btw a simple cloth with a bit of disinfectant is not enough for a whole plane, or a store, or a hairdresser. After a certain point you are just smearing things around.

Is Stelios right that 200 is the ideal size for an airline

An airline with less than 100 planes in their fleet are at constant risk of being taken over. A tempting proposal for shareholders knowing the risks associated with airline stocks and therefor suceptible to larger airlines wanting to quell sudden upstarts.
More than 200 planes and you are becoming a real threat and can no longer hide your size. Unions beome focused and all of a sudden you are coming to the top of size statistics and a sharpened view from the established.
Around 200 you are to large for a swept under the carpet buy out and can continue to play the I'm still catching up game without another airline going after every route you try. You are also still a manageable size where a small top managmenet team can have full control on all aspects and a CEO can get into the details and reach out to everyone where necessary.

Ryanair have certainly not succeded profit wise with their expnsion. Their profit at 400 was hardly 20% more than when they had 200 planes. And in the mean…

Well the tide ran out and the ones left standing naked was surprise surprise the germans

Maybe their towels was left on a sunbed somewhere. 
Lufthansa have been negotiating with the German government for a multi billion euro package. Howeber german pride within the company have topped them from actuallya ccepting the money offered. For the first they don't want to give up slots iin the german airports they hold a stranglehold on. For the second they don't want civil cervants or even worse politicians keeping an eye on how they run things, or god forbid how large a new Mercedes top managmenet changes to every year.

Pehaps it shouldn't have been so surprising, at least for they who knew luftie couldn't make money on transporting tourists. Well according to some insider commentators that is. But are instead depending on they who don't pay for the ticket themselves, and hopefully are not looking at the costs. That in a downturn is a castle built on sand. 
Letting foreign Low Costs in and showing the natives how little they really could get away with paying f…

One have to spend some money to earn money

Even i a downturn, or a crisis, airlines need to keep looking and preparing for opportunities. An old saying is saving until bust, meaning keeps on saving and shrinking until there is nothing left.

In these time airlines like Norwegian should instead of going into complete hibernation mode be constantly looking for opportunities. If pairs of countries open up for travelers from 14 days in the future they should schedule flights between these pairs today and sell them from tomorrow. Specially since all new(ish) routes need to be advertised and sold beforehand to build up a certain load factor even on opening day.
Airlines should start by looking at all historical pairings they flew. Even if you home primary country is still restrictive don't mean that other scandinavian, european or world contries are.
One should also be looking at expanding and capturing new marketshares from airlines that are more slow movers. Every crisis bring opportunities for they with the wherewithal and gut…

Travel insurance in CoVid19 times

Airlines will hve to negotiate with insurance companies to come up with a soulution for that most travel insurances have been suspendd for the time being.
If a solution could be found for that insurances sold with an airline ticket could have a certain minimum of cover also during these pandemic times, a lot more potential passenger would be reassured that they wouldn't just be abandoned to their own fate in some foreign country. This would of course include that airlines commit to arrange rescue flights if travel restictions will again be increased while people are away on a holliday. And that at a ticket price not overly goughing.

Countries like Cyprus have shown the way forward by guaranteeing that a certain minimum amount of care will be given also to foreign CoVid19 patiens.

Only if the different sectors within the travel industry come together with solutions and agreed on sharing the burdon can customers be entized back in numbers that will make things commecially viable aga…

How would you organize Sanitized and Couldn't Care Less classes

Specially Low Fares airlins without distinctly different seat configurations for where passengers can choose to pay more for a more separate seatig arrangements, should at this time consider to give ereryone an option to increase the amount of potential customers.
Some have suggested to call the Couldn't Care Less class (CCLc) the CoVid19 class but that could give the wrong associations and suggest the airline actually accept infected people on board. Something that should of course be avoided with all possible measures.

Sanitized class (Sc) would have middle seat free and cleaning would be done between each flight. Cleaning would include wiping down all touch surfaces like armrests, tray tables, seat backs and similar, including anything you are likely to touch when boarding and disembarking. In additional each passenger should be supplied with packed sanitizing napkins if they want to do additional wipe downs themselves. They would also board from the front. and their toilets wo…

Keep crews together to avoid the risk of superspreaders

For the time being roster the same crews together to avoid the risk of many sets of crew being infected and out of action.
The risk of an asymptomatic crew member becoming a superspreader wandering from plane to plane and infecting a large number of crews should be tken seriously. These asymptomatic superspreaders do not show any sign that would let you stop them coming to work. No temperature and no constant coughs. They are still harbouring the virus and can spread it simply by talking. Or by hand transfer and that would not be stopped by mask wearing.

Many crew are young and this increases the percentage of individuals that when infected will be asymptomatic. In addition the hunt for costs among airlines have resulted in a lower than average availability of sick benefits and paid days off, leading to many crew going to work even if feeling slightly under the weather. Actually this behaviour is encouraged by many airlines.

You might have many additional crews at this time that  can …

Norwegian not utilizing what earning potentials there are

It is disapointing that Norwegian as one of only a few airlines in the world have not made a success of flying cargo with the 787.
In these CoVid19 times the demand for cargo flights have been immense and many airlines with belly holds capable of taking air containers have been grabbing the chance to get some hard needed cash into the business. Some have even manually loaded cargo in the seats or temporarily taken the seats out for easier loading of both bagged and palletized cargo. All loaded through the normal aircraft doors.

Why not Norwegian. It is not like Norway or the other places it used to fly to and between don't have airfreight needs. All we hear from the company is they can't do it profitably.
Have the way they layed off people made it to difficult or expensive to take some back for possibilities. Including also constantly new openings for passenger flights.
Is their cargo department to unimaginative when it comes to spotting, utilizing and negotiating deals that w…

Norwegian constantly on the back foot in fast developing regulative environment

Norwegian came out with its plan to serve the norwegian market with norwegian package hollidays at the same day as the government opened up for travel within the Nordic countries.
Only work related for now but this government have proved so wobbly when it comes to standing by its decisions that anything could happen. actually most countries governments have in this crisis proved that any reopening schedule tends to be fast forwarded as the lightest political pressure appear from all sorts of groups.

This means an airline like Norwegian that have and still should serve an international market need to be planning far ahead to take advantage of all planned opening dates for borders and relaxation dates for quarantines. In addition to having contingency plans for when these move forward. As they also should have plans for if they get more restrictive again.
If something is announced by any of the countries they could fly to Norwegian as an airline should within hours come up with a plan f…

Have Gustafson overstayed his time in SAS

He was on a loose footing during the crew strikes last year when his own milking of the company, shortly after getting his crews agreeing to personal cuts, came to the fore. Now it is clear he neither built up enough buffers in the good years or took action fast enough when the millions started running out seriously much faster than they where coming in.

How do you manage to loose all your shareholder funds in a quarter where the pandemic for the  mostly was somewhat absent and only did real damage in the last 2-3 weeks.
Qustions need to be asked whether loosing all the funds during the winter and then reestablishing them during the summer has been a regulaire thrait over the years. In that case somebody have been compensated way to well, including the CEO himself. Not at all according to the comapany's real overall results.

In general the pandemic learns us that top managment compensations need to be even less concentrated on short term quarterly and yearly goals, and much more o…

Current management in Norwegian has gone into hiding

Or is it hibernation for the year. They refused to hold a press conference when the first quarter results came out and issued just a written statement.
There where no new plans for this year at a time when other airlines left, right and center come up with their back to business plans from June/July. Instead just what had happened from January to March, so pretty much pre CoVid19.

A company like Norwegian should squander no time or opportunity getting a momentum going by presenting a basic timeline for coming back from the nearly dead. It can always be adjusted as more countries opens up, or closes down again, but get something up there you can sell and get those prepayments in. Something that will make the lease holder share owners happy that there is lights not only at the end of the tunnel but also in it. And a chance for some early payback also for the power by the hour deal. Not to mention that any positive news on more planes in the air can only lead to a real upswing in the sha…

SAS has squandered its share holder funds, and more, but keep on going

Scandinavian Airline Systems divulged today that its its share owner value at the end of the quarter were -65 million Skr and the company is technically bust.
That explains why it didn't take up the loan offer from the Norwegian government that demanded a ownership ratio of 8%.The swedish and danish loans can then neither been seen as normal business loans since they where given to a company with in reality no share holder funds whatsoever.

65 million Skr might not be such a large sum for an airline, but normally one would adjust sample the Goodwill account to see too that one at least was on the postive side with shareholder funds. Have the company maximized the crisis for the purpose of gaining political momentum for their bailouts, to such an extent they are in legally murky waters.

Even though they are going for a crisis issue of new shares it doesn't change the fact that in the meantime the company is being run for the creditors money. Is this the new normal. As long as y…

Management changes needed in Norwegian due to weighing and found to light during time of crisis

The one part of Norwegian's top leaders that seems to be doing ok even in Corona times is Finance represented by Geir Karlsen. But then he was the CEO for a few months. On the other hand this concurrent story of delayed aand abandoned presentations of the current staate of affairs is wearing a litle on the mantle gained during the financial restructuring of the airline.

Operations is not doing well in neither running an airline consiting of a fleet of 7 planes. Nor can they organize the and neither do they have a plan for how to expand and test the waters for other possiblilities.
With that we can put a minus on the PR and press handling department because the way they have defended this shambles reminds us of the days of Comical Ali.
Engineering also seems pretty distant if they think having only 7 planes in action instead of rotating the whole fleet to keep it current and avoid massive maintenance costs at the end. And what about that other Dreamliner fleet where nothing is movin…

Ryanair top management is shrinking

Some years back both the Chief Pilot and the Director of Engineering disappeared from the MOL's Z table. Last year the Chief Operations Officer, representing both the aforementioned and the rest of operations left and was not replaced. This spring it was the Chief Marketing Officer after for Ryanair to be a relatively few years both at the company and at the top table.

One would think Wilson after so many years in Ryanair would know it's resources and could quickly find some new Chiefs. Or is the airline a bit struck by MOL's role and struggling to find its footing as a multi airline group. Should O'Leary have his Chiefs table with all the Airline CEO's plus some legal and joint services like IT. Then Eddie could create his own Z table with managment controlling all the branches of the core Ryanair airline.

They must be struggling now when 75% of the staff do not have direct leadership representation at the Monday morning meeting.

The Norwegian share value benefits from inexperienced investors

One would think a price of 4.50 Nkr for Norwegian shares that with all the new shares values the company higher than when the share was worth 300 Nkr would scare of any buyers. But no. Institutional and experienced share owners sell while small savers buy in and think the share over some years will again rise to the 300. That would in case value the company at more than 9 times the value of Ryanair and probably more than all the other publicly traded airlines in the world combined.

Norwegian should take advantage for this surge for the share and expand the share capital again. The last expansion was seriously oversubscribed. It seems like at every turn for some reason the company is issuing seriously fewer new shares than the market could swallow. Except that is for when it decided to force them on bond holders and leasing companies.

What should Norwegian do right now

Hibernation is not the right path for any airline. Neither planes nor crew nor admin or financials benefits from it. They should:
Start to rotate planes so all of them get an airing on a regular basis.
Utilize freight opportunities so also 787's can get flight time.
Start to rotate pilots so they are all ajour with license requirements and up to date on their flying skills. Negotiate with government for flexible utilization of percentage return to work schemes for all employees.
Flexibly add additional later departures for those departures that fill up quickly. It is not like they don't have neither slots, planes or crew available an mass.
Look for near future opportunities in other scandinavian countries where governments may not keep their travel advice for foreign travel as restrictive aw Norway.
Prepare their spanish bases for Scandinavia to the sun as soon as that and other med countries opens up for summer seasonal travel. This would also placate possible lawsuits loomin…

Norwegian should show some goodwill towards it's hopefully temporarily laid off pilots

It have been suggested that Norwegian could give their (ex)pilots some at least simulator time so they can keep their licences current during the CoVid19 crisis.
A pilot must have ompleted 3 take offs and landings in the last 90 days to be able to fly a jet with passengers without pairing with an instructor. Having decided to park most of its fleet for 12 months a lot of their pilots will become uncurrent. Keeping their certificates alive should be a very small outlay in a difficult situation.

Think of it. Norwegian is flying no ne of their 787 fleet whatsoever as part of their 7 planes in the air program. That could lead them with no current pilots whatsoever, including instuctors/examiners, to start up again. That could be a massive headache. Not to talk about that parking planes outdoors in Europe without flying now and then is a maintenance nightmare.

Pretending they don't know these pilots is the worst they could have done and places the company in a difficult and uncler lega…

A growth future for Norwegian

Over time Norwegian should be split in 2 units under an umbrella managments to purify the single aircraft type principe of a true Low Cost airline. There can be no profitable Low Fares without Low Costs.

The short haul (NSH) 737 part should concentratte on servinf te scandi/nordic market where it can capitalize on its namerecognition and customer belongingness. with additional routes from there to sun destinations and other Norwegian long haul hubs.

The long haul (NSL) 787 part should be based elshewhere like Dublin or London Gatwick. Together with overall management of both companies. From here it would become the only really independent Low Fares Transcontintal airline. All others are just offspring of full service airlines where the core of the company are not really in it 100%.

Both parts should initially during the pandemic offer a Sanitized class and a Couldn't Care Less class (see other post) to appeal to the broadest market and get more flying. As time goes on they should …

CoVid19 shows that what have floated to the top in the airline world is people talking bull

Many of them are talking about how good their air conditioning are but would probably them selves not thrust sample a packed pub that relied on their ac instead of physical separation in CoVid19 times. They talked against temperature checks at airports unitl they discovered that that meant they themselves had to take action. Then they where all for it. Masks was unworkable until the only alternative was middle seat. All of a sudden the masks where the bees knees.

While Joyce, Walsh, O'Leary, Wilson and others are again and again touting the same frase that nobody have been infected on a plane, they know at the same time that that the opposite would be difficult to prove without reasonable doubt. It would require you driving directly from a 14 day quarantine to the airport in a car by yourself and all the way to the aircraft stairs. Then doing the same in the other end. An impossibility.

When listening to these characters you need to interpret every word as widely as possible. Thi…

Ailines missing a trick with masks

Airlines that don't supply masks free in CoVid19 times could let the demand for masks improve their income. Sell them at checkin and when they check at boarding that all passengers where masks they should at the same time offer them for sale. Also on board for they who need a replacment.
Charge somthing that can easily be bagged and counted later. The mask itself is the receipt for they who asks. Since Lidl is charging 49 Euro for a pack of 50 masks I would suggest to charge 2 Euro per masks to passengers. Or 20 Nkr. Basically something round at a common coin size that can be easily collected handsfree and don't require change.

Refunds, changes and unclearity about passengers rights, and airlines fulfliment of same, in uncertain times

Airlines that normally do not allow changes or give refunds should draw a line in the sand and say bookings after such and such a date will be to the rules unless travel advice changes and we can no longer fly you.
For tose more service minded airlines who always used to issue refunds for a number of reasons, it would help on passenger confidence that historic refunds were actually issued and one could see a current timeline for waiting time for refunds of potential new bookings. If one changes once mind or travel advice changes. Few will commit to booking new flights if they are still awaiting refund of old bookings. And even less so if they think new purchases will just end up with no actual flying and their money gone into an uncertain black hole. Who would book today with an airline pleading the poor mouth to governments in the news every day, and risk being left with just an usecured worthless voucher.

It should also be made clear to all passengers that government mandated penalt…

If narrowbodies take over long haul what about the freight

If smaller single aisle planes are introduced on longer and longer routes post CoVid19, due to preferences for maintaining frequencies even with reduced demand, somebody better convert some more widebodies to dedicated cargo planes pronto.It is not all about passengers and departure conveniency. Containerized or palletized airfreight at scale in a narrow would be a stuffing and  handling nightmare.
Of course Amazon is developing a fleet of Prime marked 737 NG dedicated freighters, so we will not totally depend on continued production of widebodies when the current stock of ex passenger aircraft to convert runs out.  However it is not only about the transatlantic Europe to New York market. Other flights are much longer and beyond the reach of even the Aibus 321 XLR.

Why are airlines so divided on best CoVid19 procedures

Some airlines, like Ryanair, demand all online check in while others, like Emirates, demand desk check in. Some want more checked in baggage and less carry on while others demand more carry on and less checked in.
It seems that full service airlines want more control and less obstacles demanding check ins where they can hand out kits of sanitizing measures and less passenger handling by hand of anything in the cabin. Low Fares airlines go for more of what the passenger can do and less of what they have to do. A policy they have pushed for years. So no real change there then, even in a communicable disease crisis.

Do airlines survive on unearned money

Not issuing refunds means airlines have been living on unearned revenue and were for all sense and purpose trading while technically bust even before this crisis. The longer they are allowed to go without paying back what they haven't earned, the longer they are in reality now trading on their passengers money as well as their other creditors.
All this money should technically have been in a similar to escrow account until either the airline earned it or they refunded it. These airlines have been paying out dividends and share buybacks with money that wasn't theirs. I know large amount of cash sitting in bank accounts are very tempting but when one do a lot of advanced sales is it part of being an honest business.
This goes also for they who don't normally issue refunds. The unexpected will always arrive. Hoping it won't arrive during your time at the helm is not an example of good leadership. Prudent is not a negative word in finances.

Airlines should give passengers a choice on how much CoVid19 precautions they would like

Take the analogy of going for a walk and you meet people that don't care about social distancing. You just know that if they are careless when you meet them they will be just as careless in other aspects of dealing with the spread.  Always choose a route where you are the one that controls the distance.

Always choose an airline that has taken more precautions than the absolute minimum that won't cost them much. Smart travellers will make up their mind about what amount of precautions is necessary and will choose an airline that supplys them. However I'm not saying an airline, even a low fares one, couldn't cater for both. Instead of a class divider curtain they could have a CoVid19 precaution divider curtain. In front you get free middle seats, cleaning of toilets between each customer and cleaning of cabin between each flight. Behind, for a bit less money, you get nightly cleaning and shared armrests.

Serve safely from the trolley

If your airline continues an albeit limited trolley service in CoVid19 times, it is important that your staff don't become super spreaders. They should of course wear masks and gloves. But the gloves  should also be cleanable so they can be treated with hand sanitizer between each customer. This hinders immediate transfers of viruses from the card/cash of one customer to the items of the next. Remember that virus stays alive for minutes on skin, hours on clothes but days on hard surfaces.

In general, if you are doing to much with your hands to clean them constantly, just wear gloves and clean them. The same goes for they who are allergic to cleaning stuff or get sores from washing their hands to often.

Market your strict following of the social distancing rules as a good thing

Some airlines see their strict adherence to social distancing as a marketing opportunity. Promising doubting passengers that they won't be seated within touching distance of somebody they don't know will attract people nervous about being infected in an environment they have little control over.
https://simpleflying.com/jetblue-july-social-distancing/

This is the way to get more people up in the air. Not coming with unconfirmed swada about that nobody gets infected on an airplane just because it yet haven't been proven to the full extent of the law. If airline executivess really think their Hepa filtered airconditioning systems are so excellent in stopping all contamination would they approve if pubs and all other indoor crowded spaces also just demanded masks and turned their airconditioning up. They also suffer economically if they can't stuff people in to the degree they did before.

Airlines taking advantage of Covid19 to lower t&c's for their staff long term

Some airlines are singing the poor man tune to their staff at the same time as they are announcing postivity about the future to the stock markets. Can their eagerness to plead the crisis to get support and cheap loans from governments combine with the need to keep their share prices high to please owners and secure the share price their own bonuses and share options depends on.

The Ryanair unions are certainly copping on to that not every thing is like it seems and telling the airlines management they can't have it both ways. Themselves agreeing only to a 1 year cut in their own salaries while saying to their staff that they must take a 5 year cut.
https://uk.reuters.com/article/uk-health-conornavirus-ryanair/unions-say-ryanair-exaggerating-covid-threat-to-undermine-conditions-idUKKBN22W1YZ

This reminds me of how healthy a bonus the SAS CEO got out of negotiating down his staff terms and conditions while that airline was in a crisis a few years back. Even in a crisis the have'…

Norwegian management changes lacking in situational awareness

Did Schram forget that the world has changed when he today presented his new'ish senior managment for Norwegian. The plan from last winter should have been put out to pasture and a new one created more suited to corona and a return.
Getting in old sales colleagues to sell more inflight stiff to passengers no longer existing is a bit to late. Will these new brooms first start in April next year when the company plans to have more than 7 planes in the air. The won't sell much aboard a plane where everyone wears a mask. And the experience is more about not getting infected rather than anything else.
The position, in addition to Karlsen's, that is most of importance is Chief of Operations. And they haven't filled that. No wonder they have problemes handling even 7 planes.

The CEO must have been in a hurry to present his plan before the new owners get control of their shares, get organized and come up with their own plan. Or person/team that will form that plan.
Will the ne…

What are the plans of Norwegian's new loanprovider owners

What is the plan for the lenders new shareholdings in Norwegian. Why did they not just take the planes back and finished with it. A loss is a loss and better be over and done with it and move on.
Are they just leaving the Dreamliners there hoping the Norwegian government through unsecured loans to Norwegian will pay for maintenance and parking for them until the market returns. Then take them back only at such a time when existing or new airlines make signals to move on the Transcontintal markets Norwegian left behind.
Unless Norwegian's management in the near future quickly turns around and show they have a plan for all those aircrafts one would assume the planes real owners will take them back. In the meantime they can always make some extra cash by selling the billions of new Norwegian shares to upset norwegians.

On the other hand would they not be better off getting in a new management with a vision for the company. A vision for how planes could be utilized whatever it takes i…

Converting plane orders to cash against leaseback come back and bites you

Financing your airline by selling your planes on delivery at price+ to a leasing company against paying extra high rents for a contracted amount of years, is proving to be a bit of a trap in times when you can't make an icome from said planes.
A company like Norwegian have proven that to all when they saw the necessity of handing over control to their lenders by converting some of the debt to shares and making the before 100% shareowners into mere 5% owners.
This type of financing is more like the old fashioned cropholder, but on a company level. A practiche that ultimately lead to you becoming a pure tenant of your own holding, and possibly to eviction from it, the first time the harvest failed.

According to IATA air conditioning is the worldwide solution against CoVid19 transmissions

If you are ok on a plane because of the excange rate and filtlering capacity of its air circulation system, should pubs be ok to stuff them in at full capacity as long as they install Hepa filters in their aircondition and turn it up to the same rate as on a plane. What about supermarkets, shops and hairdressers. Would the corona world be able to go back to normal .
Well they could according to IATA. The argument from there and pushed by many airline chiefs is that due to the advanced airconditioning and the filtering capacity of the Hepa filters airlines hould be excempt from the physical distancing required on al other business premises. That and for economical reasons off course that they can't make as much profit if their capacity is reduced due to having middle seats blocked off. But the economical argument against social distancing is no different for any other type of business on the planet.

Is Airline chiefs fibbing about middle seat free on flights being economically usnsustainable

Let's take som quick math to Ryanair's O'Leary's claims that middle seat free is unsustainable.
According to the Ryanair results presentation their average fare is 37 euro. Add 50% and it becomes 55.5 Still below Easyjet's current of 59 according to the same presentation. Will an extra 18 euro 50 cents really stop people from flying if it means they could be safer from viruses.
It seems more of a pshycological problem for top brass rather than for any real economic reason, that airlines think they should be excempt from the physical distancing that every other business have to put up with. Some will always persist on squezing the last of capacity out of both materiel and staff, even at the cost of suffering, for others.

The only thing a temporry 50% rise in ticket prices put an end to is O'Leary's plans about releasing a rush of Low Fares to get further market share from competitors, as long as they don't do just the same with borrowed money. I am sure…