Ryanair posts first third quarter loss in three years

Ryanair has reported its first third quarter loss since 2010 as it cut fares to boost demand over winter.

The low cost carrier made a loss after tax of €35.2m (£29m) for the three months to December 31 compared to a €18.1m post-tax profit during the same period in 2012.

Although airlines usually make losses over the winter, it is the first time Ryanair has made a third quarter loss since 2010.

Passenger numbers during the period increased 6pc to 18.3 million but revenue dipped to €964m from €969m previously as revenue per passenger fell 6pc.

The carrier, which issued two shock profit warnings in the autumn, grew ancillary charges – which include food and drink onboard – but fares declined 9pc.

Ryanair is facing growing competition from expanding low cost rivals such as Vueling and Norwegian and has also admitted easyJet “wiped the floor with us” by introducing customer service improvements much earlier.

The airline is still guiding towards full year profits of around €510m – a figure which was revised down twice following profit warnings in September and November.

Ryanair chief executive, Michael O’Leary, said the third quarter loss was “in line” with previous guidance.

Mr O’Leary, who is known for his colourful outbursts, is taking a step back from the public spotlight as Ryanair introduces a more corporate image. It has rolled out a raft of customer service improvements including, most recently, the introduction of fully allocated seating across all of its flights.

Michael Cawley, deputy chief executive, admitted that Ryanair had been “beaten by the competition”, speaking to Radio Four’s Today Programme on Monday morning.

Daily Telegraph

Norwegian Air Plans Expansion In US Market

Budget airline Norwegian Air Shuttle plans to set up bases in New York and Fort Lauderdale next year and will significantly increase services between the Nordics and the US as it receives more Boeing 787 Dreamliners.

Norwegian, the first budget airline in recent years to offer transatlantic services, will fly to Los Angeles, San Francisco and Orlando in addition to its routes to Fort Lauderdale and New York, chief executive Bjoern Kjos told a news conference on Tuesday.

Norwegian placed Europe’s biggest aircraft order last year, 222 planes from Boeing and Airbus. It has been one of Europe’s most successful carriers, taking market share from SAS and also moving outside its traditional Nordic market with bases in London and Spain.

It is also one of the most successful stocks on the Oslo bourse with its shares up 105 percent over the past 12 months.

Still, many analysts consider the stock undervalued as it is trading at 7.8 times its expected 2014 earnings, well below an average of around 10 for European peers.

Norwegian launched long-haul services earlier this year when it received the first of eight 787s, and it has recorded a 96 percent load factor on those flights.

The firm says it can operate long-haul flights 30 percent cheaper than traditional airlines, primarily because of the 787′s lower operating cost.

ANA To Buy AirAsia Out Of Japanese Budget JV

ANA will buy AirAsia out of a Japanese budget airline joint venture for JPY¥2.45 billion (USD$25.11 million), the Malaysian low-cost carrier said, dissolving a loss-making alliance after less than two years.

The venture, based at Tokyo’s Narita airport, has failed to win over Japanese passengers since it was set up in August 2011. ANA, which owns 67 percent of the venture, has blamed the poor performance of AirAsia Japan on ineffective marketing and a non user friendly booking website.

Differences in opinion on issues ranging from cost management to where the business should be based contributed to the breakup, AirAsia said in a statement on Tuesday.

The split comes at a time when AirAsia is planning to expand overseas. The pullout from the venture, however, is consistent with AirAsia’s past decisions to drop loss-making routes.

“I remain positive on the Japanese market and believe there is tremendous opportunity for a low-cost carrier to succeed,” AirAsia Group chief executive Tony Fernandes said in the statement.

“We have not given up on the dream of changing air travel in Japan and look forward to returning to the market,” he added.

AirAsia Japan has been reporting losses since it began operations with flights to five local destinations and two in South Korea.

The venture cut ANA’s operating profit by about JPY¥3.5 billion in the year ended March, ANA’s senior vice president Shinzo Shimizu said on Tuesday.

“We judged it would be better to operate the carrier as a wholly owned unit,” Shimizu said at a press conference in Tokyo.

OPTIONS

ANA has another budget joint venture Peach based at Osaka’s Kansai airport.

Local rival Japan Airlines operates Jetstar Japan, a joint venture with Qantas Airways that has bases in both Narita and Kansai.

Shimizu said ANA will decide in July how to operate the former AirAsia venture and will choose a name for the unit.

A possible merger with Peach was one option being considered, he added.

The unit will use the AirAsia livery until November.

(Reuters)

Vueling To Pass Iberia In Five Years

Spanish airline Vueling will be bigger than loss-making flag carrier Iberia within three to five years, IAG chief executive Willie Walsh was quoted on Wednesday as saying.

International Airlines Group, the parent company of British Airways and Iberia, took control of the latter’s low cost domestic competitor Vueling in April. It is in the process of laying off thousands of workers at Iberia, which has suffered because of a recession in Spain that has left 27 percent of the workforce out of work.

“In short and medium-haul routes it will definitely be in five years and possibly even before, in three years,” newspaper Expansion quoted Walsh as saying.

According to figures from Spain’s airport authority Aena, Vueling carried 5.7 million passengers in the first fourth months of the year, while Iberia and Iberia Express combined carried 5.6 million.

300 world ‘super routes’ attract 20% of all air travel

New analysis from Amadeus Air Traffic Travel Intelligence solution reveals that worldwide air traffic volume grew 5% between 2011 and 2012, with Asia being the largest, fastest-growing and most competitive market for air travel. Asia experienced year over year growth of 9% between 2011 and 2012, followed by Latin America, at 6%.
• Each ‘super route’ carries over 1 million passengers per annum, according to the research.
• Air travel in 2012 was higher than 2011 in all regions of the world with significant growth of 9% in Asia and 6% in Latin America.
• Asia is the world’s most competitive aviation market with 75% of routes served by three or more airlines and just 25% of routes by one or two carriers.
• The Middle East is a rapidly growing hub as shown by traffic volume between Europe and Asia routed via the Middle East, growing by approximately 20% between 2011 and 2012.
• Low Cost Carrier penetration is highest in Europe at 38% and North America with 30%

Among other key findings, the study reveals that 22% of all global air travel is concentrated on just 300 origin and destination ‘super routes’, each of which carries over 1 million passengers annually. Furthermore, 69% of all global air travel is made on major routes with 100 thousand annual passengers.

The analysis also shows Asia as the market with the highest airline competition, 75% of the region’s air traffic is operated by 3 or more airlines and 27% by five or more airlines, making this a region with a very intense competition in all its air travel routes.This contrasts sharply with other regions such as the Middle East and Europe where just half of all air traffic on its routes is operated by three or more airlines[2]

Analysis of the busiest routes in the world by passenger volume shows that seven out of the top ten world’s busiest air travel routes are in Asia. Jeju-Seoul in South Korea remains the world’s busiest air route with over 10 million pax per annum.

35% of air travel in Europe and North America is made on smaller routes with fewer than 100 thousand annual passengers. This contrasts sharply with other regions such as Asia where 85% of air travel is concentrated on routes that carry over 100 thousand passengers each year.

This concentration of Asian air travel suggests the region’s growth may continue as there is an opportunity for airlines to develop secondary links beyond the heavily competitive super routes. In addition, the analysis shows that in Asia, the larger routes with over 100 thousand annual passengers have a 4%-9% growth range, but the smaller and medium sized routes in the region are growing at approximately 19%-21% per annum.

Globally, the airline industry has become consistently more competitive over the past three years. The percentage of air traffic served by just one or two airlines has fallen by 2% each year from 39% in 2010 to 35% in 2012. Concurrently, the percentage of air traffic with four or more competing airlines has also risen consistently from 35% in 2010 to 38% in 2012.

Asia is the market with the highest competition between airlines in the world, with 75% of air traffic volume served by more than 3 airlines and only 25% of air traffic served by one or two airlines.

This contrasts strongly with other regions, for example in Europe 45% of air traffic volume is served by just one or two different airlines and in the Middle East 50% of all air traffic has only one or two competing carriers.

The rise of low cost airlines has been significant over the past decade, but this has been largely limited to traditional markets. Today, Europe has the highest concentration of LCC traffic, representing 38% of total air travel in 2012.

Within specific regions, the spread of LCCs varies strongly. In Europe, Spain has the highest share of departing LCC traffic at 57%, followed by the UK where 52% of all originating air travel is now made on low cost airlines, up 4% from 2011 and passing the 50% milestone for the first time.

The Middle East is becoming an increasingly important global air travel hub. The region’s three key airports of Dubai, Doha and Abu Dhabi, are all experiencing strong overall air traffic growth of around 10% per annum and they have very high levels of connecting traffic, with each airport seeing around 50% of its total air travel volume connect. These figures demonstrate the region’s increasingly important role as a hub between Europe and the emerging markets of Asia and the South West Pacific.

amadeus.com

Italy Fines Ryanair Over Online Booking

Italy’s competition watchdog fined Irish budget airline Ryanair EUR€400,000 (USD$522,500) for falling down on commitments to simplify online ticket sales.

The regulator said the airline failed to provide an overall clear price at the very outset of the online booking procedure.

In the period December 1-February 7, Ryanair introduced at the end of the online booking process a 2 percent processing fee on a series of credit cards, the antitrust body said.

It said ticket prices should be “clearly and fully indicated from the very first contact with the consumer in such a way as to make the final price immediately clear,” it said.

Consumer association Codacons said all commissions on online air tickets should be eliminated.

“The commission costs for buying with credit cards are very high and are kept hidden by some airlines until the last moment,” Codacons president Carlo Rienzi said in a statement.

The fine follows a similar reprimand by the Netherlands Consumer Authority last month which fined Ryanair EUR€370,000 for hidden costs associated with tickets purchased online by Dutch travellers.

Ryanair rejected the accusation.

“Ryanair will appeal the unfounded decision by the Italian competition authority,” a spokesman for the airline said.

(Reuters)

AirAsia profit soars, bullish on outlook

AIRASIA, Asia’s largest low-cost carrier by fleet size, says its fourth-quarter profit has jumped 168 per cent year-on-year amid increased passengers.
AirAsia said in a statement that net profit for the quarter ending December 31 stood at 350.65 million ringgit ($A111.42 million), up from 130.68 million ringgit in the same quarter the previous year thanks to “a seasonally strong quarter”.
Revenue for the quarter was a record 1.41 billion ringgit, up 10 per cent, as more people flew the airline, which increased its aircraft in Malaysia to more than 60.
“It has been another good quarter and overall a great year for AirAsia as we continue to defy the industry in terms of operational and financial performance,” said Malaysia AirAsia chief executive officer Aireen Omar.
For the full financial year, AirAsia recorded a 238 per cent jump in net profit to 1.88 billion ringgit despite a 1.0 per cent rise in the average fuel price this year.
Its 2012 revenue increased by 11 per cent to 5.0 billion ringgit.
Group chief executive officer Tony Fernandes was bullish about the year ahead as AirAsia expands its model – no frills and keeping operational costs low.
“The aviation landscape is constantly changing with high fuel prices and new competition, but through all these challenges AirAsia will continue to defend our leadership titles,” he said.
AirAsia has grown rapidly since Fernandes, a former record industry executive, bought the failing airline in 2001. It initially had only two aircraft in operation.
The group now has a total fleet of 120 A320s and has set up subsidiary budget carriers in Indonesia, the Philippines, Thailand and Japan.
The airline, one of the biggest customers for European aircraft maker Airbus, is expecting 360 more aircraft to be delivered by 2026.
Last week it announced a new airline joint venture with India’s Tata conglomerate.
www.theaustralian.com.au

New low-cost train service launched in France

The French national rail operator SNCF is offering a new low-cost long-distance service to passengers, in a bid to compete with budget airlines and cars. Tickets went on sale this week for Ouigo, a train service with numerous similarities to no-frills carriers such as Ryanair and easyJet.

Trains depart from Marne-la-Vallée to the east of the French capital – almost 20 miles away from central Paris, a scenario reminiscent of the budget airlines’ strategy to use airports away from city centres.

Services will connect Paris to Lyon, Marseille and Montpellier on the south coast, with tickets starting from €10, significantly cheaper than tickets for the normal TGV train.

There will be no compromise on speed, with the new service using the same trains as the TGV. The journey from Paris to Marseille will take three hours and 15 minutes.
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As with the budget airlines, space will be tighter – there will be no first class section, nor will there be any café or bar. There will be room for around 20 per cent more passengers than on a regular TGV service.

Guillaume Pepy, the director of the SNCF, says the new rail service is mostly aimed at people living on the outskirts of Paris, who are more likely to take their car on long journeys.

However it may also be considered by British visitors on a budget. Passengers on Ouigo will, however, need to factor in other additional costs – as well as the journey from central Paris, there is a €5 charge for a second piece of luggage, use of a power point costs €2, and transporting a pet costs €30.

After the €10 starting price – for which there will be 400,000 tickets available – tickets rise to €25 and reach a maximum of €85, depending on the demand.

According to calculations published in Le Figaro, the average price for a Friday journey from Paris to Marseille booked three months in advance costs €72 on the TGV, €50 on Air France, €34.23 on Ryanair, and €25 on the Ouigo.

Three or four return journeys will operate every day, with the first services beginning on April 2.

Ryanair’s Aer Lingus bid blocked

Ryanair has been notified that the EU Commission intends to reject the low-cost carrier’s attempt to takeover Aer Lingus.

The airline says it will appeal the decision in the European courts, as it is “being held to a much higher standard than any other EU airline” and described the decision as political and unfair. However the European Commission said a final decision had not yet been taken.

Ryanair added it had “met every competition concern raised” by the EU during the process and provided “irrevocable commitments from not one, but two, upfront buyers to eliminate all competitive overlaps” between the airlines, as IAG and Flybe stepped in to take over a number of routes.

The airline’s head of communications Robin Kiely said, “It appears clear from this morning’s meeting, that no matter what remedies Ryanair offered, we were not going to get a fair hearing and were going to be prohibited regardless of competition rules.”

Ryanair, which has indicated that this third bid for Aer Lingus would be its last, said it would launch an appeal in European courts against the decision by the Commission, which acts as the European Union’s competition authority.

“This decision is clearly a political one to meet the narrow, vested interests of the Irish government and is not based on competition law,” Keily added.
The government, which has said it is against the merger, declined to comment, as did an Aer Lingus spokesman.

Reuters

Air Asia X unveils child-free zones

A Malaysian airline has launched “quiet zones” on selected flights, where children under the age of 12 are not permitted to sit.

Air Asia X – the long-haul arm of no-frills carrier Air Asia – announced the initiative last year, but only installed the child-free zones this week. A new booking system allows passengers to reserve a seat, at no extra cost, in the designated area when booking through the airline’s website.

The policy means that youngsters are banned from rows 7-14 – the first seven economy class rows – on Airbus A330-300 flights to China, Taiwan, Japan, Korea, Australia and Nepal.

Passengers booking online can choose to sit in that section by paying the standard seat reservation fee of RM35-RM110. Any group containing a passenger younger than 12 will not be able to book these seats.

The zones also contain “special ambient lighting”, according to the Air Asia X website, providing a “more relaxing atmosphere”.

The new seating plan follows a move by rival Malaysian Airlines to ban children from the top deck of its Airbus A380 “superjumbo” aircraft.

A number of surveys have claimed that the majority of passengers find noisy children their biggest gripe when flying.

A poll of Telegraph Travel readers carried out last year found that nearly 70 per cent would support the introduction of child-free flights.

http://www.telegraph.co.uk/travel/travelnews/9851933/Budget-airline-unveils-child-free-zones.html