Feature: Airline Update Qatar Airways ➔
Parkes points out. “It’s certainly true that suppliers are far more flexible during challenging times and a TMC, like Portman Travel, can really make a difference in these situations due to formidable buying power,” he says.
PERFORMANCE BONUS Light at the end of the runway is evident in some impressive – and surprising – financial perform- ances so far this year. Virgin Atlantic bounced back from a record loss
in 2009/10 to post a pre-tax operating profit of £18.5million in the 2010/11 financial year, despite the winter closure of Heathrow Airport and the second ash cloud crisis costing the business an estimated £40million. Virgin Atlantic CEO Steve Ridgway says,
“We have demonstrated the resilience of our business by weathering the toughest economic period for aviation and have now returned the business to profit. “While we have been very focused on trading
the airline back to profitability, we have worked hard to introduce new aircraft, new routes and extra rotations to the existing network where there has been high demand. This year we are investing heavily in new product innovation so that we retain and enhance leadership in customer service and experience. “Since the turn of the year market conditions
have become tougher with increased capacity, faltering consumer confidence and high fuel prices. We are also seeing softer trading in the areas that are hit hardest by the continued rises in APD. While business traffic remains strong, demand in the economy cabin is more challenging,” says Ridgway. The Lufthansa Group (Lufthansa, Swiss, bmi
and Austrian) also put in a good showing, posting an operating profit of three million euros for the first six months of 2011 – a 174 million euro improvement on last year’s figure. Marianne Sammann, Lufthansa’s UK and Ireland general manager, says: “We’re fit, lean and competitive. It’s a good market, albeit competitive, and we are cautiously optimistic about what lies ahead.” Sammann says UK to Germany passenger numbers are up 13.4 per cent year to date and that the airline is now the third largest at Heathrow with 4.3 per cent of slots. “We have a very competitive product. During
the past two or three years we have continued to invest in our product and fleet renewal. We have
Cathay Pacific
more A380s entering the fleet this summer, better ground product, new lounges, and cabin upgrades to ensure the experience is top-notch. It is so important to keep investing. This business is cyclical.” She continues, “There is no lack of competition.
The industry is healthy and it keeps us all on our toes. It’s a competitive business, well regulated and open – no one can sit back and relax. It’s tough to stay competitive and only the smartest airlines can do it.” Some Asian carriers have not fared so well,
with Cathay Pacific and Singapore Airlines’ profits falling in 2011, and Korean Air stabilising. Cathay’s turnover for the first half of the year
was up 13 per cent, but its net profit was down 59 per cent following a strong 2010 performance. The airline is just one of a long list to cite high fuel prices as the reason for its increasing operating costs. “After an exceptionally strong 2010 in which
we made record profits, 2011 is proving to be more challenging. The current high fuel prices and economic uncertainty are a reminder that we operate in a challenging and unpredictable industry and accordingly must continue to manage our finances prudently,” says the airline’s chairman Christopher Pratt. “Despite the uncertainties and challenges, we
are confident of our position and that we can meet those challenges. We have a superb team, a strong international network, exceptional customer service, a strong relationship with Air China and our position in one of the world’s premier international aviation hubs, Hong Kong. We expect these core strengths to ensure the continued success of the airline.” Cathay’s change of fortune was mirrored by regional rival Singapore Airlines which posted an 82 per cent drop in profit for the first quarter of the 2011/12 financial year. Its operating profit came in at $11million for the quarter, compared to $251million for the same period last year. Back in Europe, the International Airlines Group – the combined British Airways and Iberia operation – carried 4.6 per cent more passengers in the first half of 2011 than it did in the same 2010 period. It posted an operating profit of 88million euros compared to a loss of 309million euros over the same period in 2010, while premium traffic grew by 14.2 per cent in July but – and this really should sound familiar by now – fuel costs were up 34.8 per cent. IAG’s chief executive Willie Walsh said:
By 2050 air passengers will be able to join an interactive conference onboard, enjoy a game of virtual golf mid-flight, read the kids back home a bedtime story, and relax in a revitalising seat while watching the planet spread out beneath their feet. This is the seemingly far-fetched vision of the future outlined in ‘The Future by Airbus’ report published earlier this year by the aircraft manufacturer. ‘Cruising’ the sky is another possibility, with aircraft featuring swimming pools, spas, restaurants, bars and casinos In the company’s defence, its head of engineering, Charles Champion, says, “The Airbus concept plane and cabin are just engineers’ dreams... but they offer a glimpse of some of the very real possibilities that existing technology and talent can offer with the right investment, support and cooperation.” As for the actual design of aircraft, Airbus says we
can expect to see ultra-long and slim wings, semi- embedded engines and a u-shaped tail all helping to cut carbon emissions. Hundreds of kilometres of cables and wires found in aircraft today will be eliminated and absorbed intro structural materials, while holographic imaging could be a new addition to inflight entertainment. Airbus says first, business and economy class could be replaced by zones tailored to different passenger interests such as relaxing, playing games and socialising. Airbus has also explored the world of ‘biomimicry’ to
draw on the best design elements of nature, with the cabin of the future based on the efficiency of bird bone “which is optimised to provide strength where needed, and allows for an intelligent cabin wall membrane which controls air temperature and can become transparent to give passengers open panoramic views,” hence the 360-degree views on show in the image above. See:
www.thefuturebyairbus.com.
“This is a good first half performance with a return to operating profitability. Capacity was up 11.7 per cent in the quarter while traffic was up 15.7 per cent. “IAG is on target to deliver its year one synergies. We are already making cost savings through joint procurement in areas such as insurance and airport handling. Customers are also directly benefiting through airline website cross-selling, more fare and schedule choice on overlapping long-haul routes and easier access to more destinations via new codeshares.”
MERGERS & ACQUISITIONS Airline mergers, acquisitions and joint ventures have gained pace during the tough trading years of the recession. Besides the British Airways and Iberia get together, United and Continental have joined forces and South American carriers LAN and TAM have also teamed up. But opinion is divided on the merits of such tie-
ups. Airlines say they are able to offer better ➔ THE FUTURE BY AIRBUS
70 I THE BUSINESS TRAVEL MAGAZINE
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