Airlines in a Crisis

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 m...

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 sou...

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 t...

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 tak...

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 oper...

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 mar...

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...

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 al...

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 ...

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 ...

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 op...

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 e...

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 addi...

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 valu...

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 ...

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 b...

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 distract...

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 g...

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 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 ...

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.

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.

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 m...

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 pay...

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 ...