{"id":19271,"date":"2011-07-25T12:34:28","date_gmt":"2011-07-25T11:34:28","guid":{"rendered":"https:\/\/www.voyages-d-affaires.com\/strategie-quel-avenir-pour-les-compagnies-alternatives-20110725.html"},"modified":"2016-02-10T09:56:58","modified_gmt":"2016-02-10T08:56:58","slug":"strategy-what-future-for-alternative-airlines","status":"publish","type":"post","link":"https:\/\/www.voyages-d-affaires.com\/en\/strategy-what-future-for-alternative-airlines","title":{"rendered":"Strategy - What future for alternative airlines?"},"content":{"rendered":"

What do the Luxembourg national airline Luxair, the British regional carrier Flybe, the French private airline Aigle Azur and the long-haul specialist Virgin Atlantic have in common? All, in their respective fields, are so-called niche airlines, designed to serve well-defined markets or market niches, alongside the major airlines. \"Offering a global network, they are now concentrating on increasing the density of their mega-hubs. In addition, they are increasingly using franchises or partners to serve a back-up network. This is leading to a reduction in short-haul services\".<\/em>explained Rigas Doganis, a member of the Easyjet board and honorary professor at Cranfield University, at the French Connect conference in Lille.<\/p>\n

It is true that in Europe, the cards have been reshuffled in recent years. Air France, for example, has refocused almost all its international services on Paris Charles de Gaulle and, to a lesser extent, on Lyon Saint Exup\u00e9ry, leaving regional airports with no alternative but to court new carriers in order to benefit from international routes. But what still seemed like a real handicap for these hubs a dozen years ago is now proving to be a godsend. \"It's true that we have managed to free ourselves from our often exclusive dependence on the national airline. And that a new, more aggressive commercial approach has enabled us to attract new carriers, and therefore to offer an extremely efficient air network, more developed than most other provincial airports\".<\/em>says Filip Soete, Director of Marketing and Operational Communications at A\u00e9roports de la C\u00f4te d'Azur, which manages the Nice airport. Another example is Orly, where, if we exclude Air France's domestic network, the two most active carriers on international routes are now the low-cost carriers Easyjet and Vueling.<\/p>\n

Redistribution of the cards<\/strong><\/span><\/span>
France is not the only country undergoing an overhaul of its airline offering. In the UK, for example, British Airways is now present only at its two hubs in London Heathrow and Gatwick, since it abandoned its last long-haul routes from Manchester in 2008. The British national carrier now occupies only a marginal place in what is nonetheless the UK's second-largest air hub, with some 19 million passengers a year, leaving carriers such as Easyjet, Etihad and Emirates to take up the slack. In Geneva, the number one airline on the Swiss hub has long since moved from Swiss to low-cost carrier Easyjet...<\/p>\n

The search for profitability by the major European carriers therefore represents an exceptional opportunity for so-called secondary or alternative airlines. However, this term encompasses very different concepts. Firstly, there are the national carriers positioned in markets of regional importance. Increasingly rare in Europe, these independent players serve sparsely populated markets or operate on the fringes of the continent, when they do not combine these two handicaps. This is the case of Cyprus Airways, Air Malta, Icelandair, Serbia's JAT, Russia's S7 and Air Baltic, a Latvian carrier with bases in Riga and Vilnius and the only national carrier to apply the low-cost model. From their bases, these carriers generally have a virtual monopoly on many routes.<\/p>\n

\"Places<\/p>\n

1 ) Cyprus Airways<\/strong> has signed a cooperation agreement with Olympic Air to rationalise routes between Cyprus and Greece.
2 ) Darwin Air's acquisition of Baboo<\/strong> has enabled the Swiss carrier to extend its offer to some twenty destinations in Europe from Geneva and Lugano.
3 ) Aigle Azur<\/strong> is positioning itself on niche services with routes to Algeria, but also to markets reputed to be difficult such as Mali, Burkina Faso and, soon, Niger and Iraq.<\/em><\/p>\n

Luxair in Luxembourg and Adria Airways in Ljubljana, Slovenia, also embody this position of strength. These two airlines totally dominate their respective markets. Luxair's offer represents 65 % of all flights departing from this financial and administrative stronghold. And in Ljubljana, it would be just as difficult to imagine the development of air traffic without the presence of Adria.<\/p>\n

\"Our national carrier accounted for 77.4 % of our passenger traffic in 2010. The fact that Adria is a member of Star Alliance has meant that over the last few years we have lost the services of Brussels Airlines, Austrian, Lufthansa, LOT and Swiss, which are now only virtually present with us via a code share. And our domestic market, with 1.9 million inhabitants, remains relatively unattractive to external players, even if niche opportunities do exist\".<\/em>says Janez Lapajne, Ljubljana airport's marketing director. A notable exception is Air France, the only major global airline to operate its own frequencies to the Slovenian capital.<\/p>\n

Places up for grabs<\/strong><\/span><\/span>
As the saying goes \"when the cat's away, the mice will dance\".<\/em>other secondary carriers have swooped on destinations deserted by the \"big players<\/em>This is, for example, the strategy of the British airline Flybe, which has made a remarkable rise to prominence. The former Jersey European, which has become Flybe since its conversion to a semi-low-cost carrier, is Europe's largest regional airline, with some 200 routes and more than 70 airports served.<\/p>\n

Flybe also signed a cooperation agreement with Air France in July 2010, enabling it to develop routes between the British provinces and Paris, as well as between around 15 French cities and the UK. Bergerac, Brest, La Rochelle and Rennes are all linked to Manchester, while Avignon, Clermont-Ferrand and Perpignan have connections to Southampton. Aigle Azur is another perfect illustration of this development. \"We are a niche market company\".<\/em>confirms Fran\u00e7ois Hersen, Chairman of the Management Board of the French airline. Now France's leading carrier to Algeria, Aigle Azur connects Paris with around ten Algerian cities, as well as the country's main regional cities, Algiers, Constantine, Oran and S\u00e9tif.<\/p>\n

Aigle Azur has also positioned itself in relatively underserved markets on the African continent and in the Middle East. It has signed agreements with Air Mali and Air Burkina for services to Bamako and Ouagadougou respectively, and is now seeking to establish itself in Niger. Last October, during an international trade fair, the carrier also became the first French airline to land in Baghdad, paving the way for regular services to the Iraqi capital. A strategy that is paying off: from 157,000 customers carried in 2002, Aigle Azur carried more than 1.7 million passengers last year, generating sales in excess of 300 million euros, positioning it as France's second largest scheduled airline.<\/p>\n

\"Nice<\/p>\n

4 ) Nice airport<\/strong> is the best-served regional hub, with flights to over a hundred destinations.
5 ) Icelandair<\/strong> has positioned itself as a low-cost air carrier to the North Atlantic. The airline offers connections via Reykjavik to eight North American cities.<\/em><\/p>\n

Despite a very uncertain economic climate, we are still seeing the emergence of new companies positioned in these famous niche markets, such as Sky Work Airlines. While Bern airport welcomed just over 100,000 passengers in 2010, experts estimate that another 170,000 passengers from the canton will be flying to Basel, Geneva or Zurich. Sky Work Airlines has therefore decided to move into this niche and has been offering regular services to Berlin, Hamburg, Barcelona, London and Palma for some months now. In October, the airline will be making another major move by adding seven new destinations to its network, including Amsterdam, Madrid, Milan, Budapest and Vienna.<\/p>\n

Also in Switzerland, Darwin Airlines has specialised in services to Lugano in Ticino, and has also just taken over part of the assets of Baboo in Geneva. As for Airlinair of France, it operates its own routes, although 55 % of its business involves chartering on behalf of Air France, according to its CEO Lionel Gu\u00e9rin. From Paris, for example, the airline offers a fairly dense network in the South-West, with daily frequencies to Agen, Aurillac, Brive and Castres, as well as services to Lannion and Limoges.<\/p>\n

Network densification<\/strong><\/span><\/span>
Leaving regional transport behind, there are still a few secondary airlines willing to play the global card, offering a substantial intercontinental range. These carriers generally originate from the largest European markets, led by Germany, the UK and Spain.<\/p>\n

Airberlin, the giant of secondary airlines, is almost an anomaly in today's airline landscape. Firstly because it is a group, since the German is also the main shareholder in the companies Niki in Austria, Belair in Switzerland and the LTU brand in Germany. Originally a charter airline, which later became a low-cost carrier, Airberlin grew in the 2000s through a series of takeovers, adding charter airline Germania and low-cost carriers Dba and TUIFly to its roster alongside leisure giant LTU. It is now Europe's sixth busiest airline, with 33.6 million passengers carried in 2010, a figure higher than that of Scandinavian SAS or Turkish Airlines!<\/p>\n

This gives Airberlin a strategic position in D\u00fcsseldorf and Munich, as well as in the German capital. This puts the airline in pole position in the race for market share when the new Berlin Brandenburg International airport opens in 2012. \"We are already the number one airline in Berlin with 40 % of the total capacity offered from the capital. Our entry into Oneworld in 2012 will enable us to establish Berlin as a major hub thanks to the realignment of our frequencies and our cooperation with alliance partners\".<\/em>promises Joachim Hunold, Chairman of the company.<\/p>\n

\"Network<\/p>\n

At Toulouse-Blagnac airport<\/strong>International traffic is growing steadily thanks to the opening of new routes operated by national airlines such as Air France to Paris and D\u00fcsseldorf and Turkish Airlines to Istanbul, as well as by low-cost carriers Easyjet and Vueling.<\/em><\/p>\n

Airberlin has codeshare agreements with American Airlines, Finnair and Russia's S7, which will be joined by Iberia and British Airways from June. Its network of intercontinental routes from Berlin includes Bangkok, Dubai, Cairo, Miami and New York.<\/p>\n

In the UK, Bmi (formerly British Midland) has long positioned itself as an alternative to British Airways in the European market. The appeal of this British carrier lies in the number of slots it has at London Heathrow. A precious war chest which has led to it falling into the lap of Lufthansa, now a shareholder in the airline. \"We have 10 % slots at London Heathrow, the biggest aviation market in the world. And we intend to maximise this asset as soon as the company is financially stable\".<\/em>explained CEO Wolfgang Prock-Schauer recently to the British magazine Airlines Business. Bmi has significantly reduced its domestic and short-haul routes in Europe - Paris and Amsterdam in particular - in order to reposition itself on the markets of the Middle East and the former Soviet Union. Since 2007, its network has expanded to include Amman, Beirut, Cairo, Damascus, Khartoum, Teheran, Almaty, Yerevan and Tbilisi.<\/p>\n

Open question<\/strong><\/span><\/span>
The only truly independent carrier left is long-haul Virgin Atlantic. Its success was initially built around the charismatic figure of its founder Richard Branson, who never hesitated to present himself as a Samson against the Goliath embodied by British Airways. Founded in 1984, Virgin Atlantic took advantage of the deregulation of air transport introduced by Margaret Thatcher's government to become a real alternative on the UK-US route. After launching an initial route between London Gatwick and Newark, Virgin expanded its American network throughout the 1990s, adding services to Miami, Orlando, New York JFK, Boston and Los Angeles. The Asia-Pacific region is also served, with Australia via Hong Kong, as well as Shanghai and Tokyo.<\/p>\n

Today, Virgin offers 28 exclusively intercontinental destinations from London, Glasgow and Manchester. In 2010, the airline carried 5.3 million passengers on its 39 aircraft, down from a record 5.7 million in 2008. Virgin's appeal owes much to its innovative service, which sometimes borders on the eccentric. A concept that is a faithful reflection of the personality of its CEO. But its reputation and network have made it a prime target for other companies. Although 49 % of the airline's shares are in the hands of Singapore Airlines, Virgin retains its total independence and does not belong to any alliance. For a long time, there was talk of a merger with bmi - which is no longer on the table - and more recently, a rapprochement with Delta Air Lines. Time will tell whether Virgin will be able to afford the luxury of remaining without a strategic partner for much longer...<\/p>\n

Among the other players present on intercontinental routes, Air Europa embodies the successful conversion of a purely leisure airline into a truly global carrier. Owned by the Globalia tourism group, the Spanish airline carries over nine million passengers every year with a fleet of 43 aircraft. A member of SkyTeam, its main strength today lies in its extensive network to Latin America. After launching a service from Madrid to Lima in 2010, Air Europa inaugurated four weekly flights between Madrid and Mexico City in June. The airline also serves Buenos Aires, Caracas, Havana, Cancun, Punta Cana, Salvador de Bahia as well as Miami and New York.<\/p>\n

Business products<\/strong><\/span><\/span>
In France, Corsairfly could follow in the footsteps of its Spanish counterpart. Part of the powerful TUI travel group, in recent years the carrier has developed a network of intercontinental routes which are also proving attractive to business travellers, particularly with the reorganisation of its services last winter. Corsairfly now offers a more extensive programme, with year-round services to Senegal, Reunion, the West Indies, Mauritius, Madagascar, Florida and Canada. On its aircraft, the airline offers the Grand Large class, a premium product which also gives access to business lounges at the main airports and, more recently, to its own Grand Large lounge inaugurated last June at Orly. The check-in area dedicated to passengers in this class has also been reorganised.<\/p>\n

The battle is in full swing between Corsairfly, Air Austral and Air Cara\u00efbes for services to the French overseas departments. Today, Air Cara\u00efbes is in second place behind the Air France group on the West Indies, with a market share of 27 % in 2010, while Air Austral manages to capture more than 40 % of the Paris-La R\u00e9union market. Both carriers offer daily frequencies on their main routes, as well as a business class offering good services. And these airlines are not without ambitions. Air Cara\u00efbes and Air Austral intend to cooperate in the operation of the two Airbus A380s, which are due to enter service around 2014\/2015. Secondary airlines? An alternative worth considering, especially as their fares generally enable savings to be made.<\/p>\n