South African Announces Washington – Accra Service

by: Siva Vayali - May 28th, 2015   Filed under: Airlines Add Comment

South African Airways (SAA) today announced a new routing for its daily flights between Washington (IAD) and Johannesburg (JNB): Accra’s Kotoka International Airport (ACC) will be the stopover for four times a week. South African will reduce Washington to Dakar, (DKR) flights to three times a week. Currently SAA serves the IAD-JNB route with a stopover at Dakar for all seven days. The new schedule takes effect starting August 3, 2015. South African also flies a daily nonstop service between New York JFK and Johannesburg.

It should be noted that Accra was the original stopover when South African started its service to Washington. But it could not secure the fifth freedom rights to pick up passengers between Washington and Accra and hence shifted its operational base to Dakar, Senegal. The router is now being reinstated with rights to carry passengers between Washington and Accra. Washington, DC area is home to the second largest expatriate African population in the United States. Ethiopian Airlines (ET) serves a daily nonstop between Washington and Addis Ababa (ADD).

Both South African and Ethiopian flights arrive early in the morning at Dulles to take advantage of the connections offered by fellow Star Alliance member United Airlines (UA).

 

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Turkish Airlines Announces flights to Houston

by: Siva Vayali - June 19th, 2012   Filed under: Airlines, Airports Add Comment

Turkish Airlines (THY), one of the fastest growing airlines in the world, yesterday announced flights to Houston George Bush Intercontinental Airport (IAH) from its hub in Istanbul’s Atatürk International Airport (IST). Starting in April 2013, the airline will operate four services per week using Boeing 777 – 300 ER aircraft.

Houston is a logical expansion point for Turkish Airlines. The airlines is a member of Star Alliance and Houston is a major Star hub. Houston, being the energy capital of the United States, has strong business traffic and Turkish can tap that using its excellent connections to oil producing regions of Asia and the Gulf. It will compete head-to-head with other airlines operating in the region: Emirates and Qatar Airways (Turkish bills itself as more of an European carrier than a Middle Eastern one as its main base Istanbul is in Europe though the rest of the country lies in Asia).

Turkish Airlines already operates daily services to New York JFK (JFK), Washington Dulles (IAD), Chicago O’Hare (ORD), Los Angeles International (LAX) and Toronto Pearson International Airport (YYZ), the last four being major star hubs. By operating flights to all major Star hubs, Turkish can provide onward connections to almost all points in North America. By the way, United Airlines (UA) starts its Istanbul flight from Newark (EWR) hub on July 1, 2012. United will use a B767 – 300 on this route.

One thing is clear: US Flyers will have more options to travel to one of the fast growing economies in the world and beyond.

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Etihad Announces Daily Service to Washington Dulles

by: Siva Vayali - February 23rd, 2012   Filed under: Airlines, Airports 4 Comments

Etihad Airways (EY) today announced its plans to launch services to Washington Dulles from its hub in Abu Dhabi (AUH), its fourth North American destination. The service will start from March 31, 2013 using Airbus A340-500, subject to regulatory approval. Etihad will join a growing number of airlines that offer flights to Middle Eastern region from Washington Dulles (IAD).

Etihad’s announcement shows that there is a strong demand from the Washington metropolitan area for services to Middle East. Etihad expects strong O&D traffic between Washington and Abu Dhabi, with less reliance on any connections, because its code share partner American Airlines has minimal carriage from Dulles (mostly to American’s hubs). Washington metropolitan region (which also includes Baltimore metro) has strong political, military and institutional ties with the Middle East and hence the demand for first and business class cabins should be high. The region also has large populations from Indian subcontinent and Middle Eastern countries, which should take care of filling the economy class.

In recent years, United Airlines and its Star Alliance partners have steadily added services to Middle Eastern and African destinations from Washington Dulles, making the airport a primary transit point to these regions. Qatar Airways has been flying the Doha-Washington route since 2007. It is a very popular route with travelers to Middle Eastern countries and the Indian subcontinent. United Airlines already operates daily flights from Dulles to Dubai, Kuwait and Bahrain (extension of Kuwait flight) and Accra. Recently United Airlines announced extension of its Dubai service to Doha. Qatar Airways already has code sharing agreement with United Airlines, with most of its connections to US cities routed through United’s Dulles hub. Ethiopian Airlines has been serving the Washington-Addis Ababa route for a while.Turkish Airlines is flying to Istanbul. And South African Airways is flying to Johannesburg. The only missing link is the Emirates’ service to Dubai. One reason could be to avoid competition with United Airlines which already operates in that route. But it is only a question of time before Emirates announces the Washington service. May be 2013?

An Offbeat Note: James Bennett is the CEO of Abu Dhabi Airport Company (ADAC). Before taking over that position, he was the President and Chairman of Metropolitan Washington Airports Authority (MWAA), which manages both Washington Dulles and Washington Reagan National Airports. May be it is a coincidence that Etihad has announced the AUH-IAD route?

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Lufthansa bringing in its subsidiaries BMI, Austrian and Swiss into Transatlantic Joint Venture

by: Siva Vayali - April 15th, 2011   Filed under: Airlines 1 Comment

Lufthansa is quietly bringing its European subsidiaries into the Transatlantic Joint Venture (formally called the A++ Joint Venture) it formed with United Airlines and Air Canada. The UK based subsidiary British Midland International (BMI) has joined the JV on April 1, 2011. Two other Lufthansa owned airlines Swiss International Air Lines (Swiss) and Austrian Airlines are set to join on July 1, 2011. Lufthansa is working to bring in Brussels Airlines also, but the date is not finalized because the airline is not yet completely owned by the German carrier.

Lufthansa Passenger Airline Group - Courtesy: Lufthansa

Lufthansa Passenger Airline Group - Courtesy: Lufthansa

Lufthansa wants to consolidate its position as a major force in the transatlantic market because competition is heating up. In addition to competing with other major European airlines, Lufthansa wants to prepare itself for the onslaught from the Middle East carriers, especially from Emirates Airlines, Qatar Airways and Etihad. Even though these airlines cannot directly serve the Europe – North America market, Lufthansa feels it is very important to offer the widest network choices so that it can maximize its revenue potential. According to one of its investor presentations, Lufthansa feels greatest threat from ever expanding Emirates Airlines. Bringing its subsidiaries into the Joint Venture will allow it offer wider choices for the corporate travel market.

US Airways Still not in the JV

Even though a part of the Star Alliance, US Airways is still a member of the Joint Venture. Its president Scott Kirby has indicated many times the willingness to join, but, I guess, United (still integrating the merger with Continental) is still not ready. The sooner US Airways joins the venture, the better for it. The reason is that all other major network carriers in the United States already have JVs – Delta Air Lines with Air France/KLM; American Airlines with British Airways and Iberia. US Airways will lose the revenue sharing opportunity if it takes more time to join the venture.

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Thoughts on Lufthansa’s selection of Miami as the next A380 destination

by: Siva Vayali - March 31st, 2011   Filed under: Airlines, Airports 1 Comment

Lufthansa today announced that Miami would be the next US destination to be served by Airbus A380. The world’s largest passenger airplane would replace the Boeing 747 currently operated on the Frankfurt – Miami route.

Lufthansa A380 - Courtesy: Lufthansa

Lufthansa A380 - Courtesy: Lufthansa

Lufthansa’s selection of North American destinations for A380 is interesting:

New York JFK is currently served four times a week using A380. The JFK service will become a daily on A380 starting April 10, 2011 (this means LH will delay the resumption of A380 service to Tokyo Narita, suspended due to the recent Tsunami and Earthquake, for a longer period). San Francisco will be served using A380 starting May 10, 2011. Miami will get A380 service starting June 10, 2011.

The JFK service is a no-brainer. The interesting thing to note here is Lufthansa’s preference of Miami and San Francisco over Newark Liberty (EWR), Chicago O’Hare (ORD) and Washington Dulles (IAD), all Star Alliance hubs and major gateways for LH. As more A380’s join the fleet, these gateways would get the service, but right now, they are not included.

There could be several reasons for this. I believe the following reasons played a major role in the selection process.

1. Single daily flight is easy to upgrade: Miami, with just one flight per day, and virtually no connection traffic, gives Lufthansa the flexibility to switch the metal from B747 to A380. San Francisco, though a Star hub, is also served by a single Lufthansa flight. So, it is easy for LH to replace the B747 with A380. Newark, Chicago and Washington need multiple flights from Frankfurt, as Lufthansa connects majority of its US bound traffic from these hubs through Star partner United. From these hubs, Lufthansa needs multiple frequencies a day to provide better connection options to its frequent flyers.

The exceptions to this theory are Toronto (YYZ) and Los Angeles (LAX), both Star hubs with a single Lufthansa flight (though Toronto is served by 2 daily flights from its anchor Air Canada).

2. A380 better than B744 on non-hub cities: Operating an A380 is more cost effective than a B744. Lufthansa’s B744s have poor customer reception. Replacing them with A380 would provide a better chance to protect its turf in hubs dominated by other carriers (MIA is a good case – it could deter American Airlines from starting a competing service).

3. Alliance Partners have a say in equipment upgrade: United and Air Canada have a transatlantic joint venture with Lufthansa and the schedules at Star hubs are coordinated between these carriers for optimal connections. United, being the anchor at EWR, ORD and IAD, has to make sure parity of service quality with Lufthansa in these hubs. So, United may be less receptive to LH upgrading these routes with A380, because its own product would fall behind in quality. The same argument goes for YYZ and Air Canada.

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So, my prediction is this: the next Lufthansa destination for A380 will be Los Angeles, followed by Houston and Boston.

Newark, Chicago, Washington and Toronto will have to wait get their turns.

Moral of this analysis: sometimes, being a hub with multiple daily flights to a destination can be a drawback to get better service!!!!

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Jet Airways talking to Delta, Air France and KLM – A gain for SkyTeam?

by: Siva Vayali - March 15th, 2011   Filed under: Airlines, Airports Add Comment

Jet Airways is reportedly in talks with Delta Air Lines, Air France, KLM and Alitalia to form a transatlantic joint venture with SkyTeam. As India’s largest and most respected airline, currently Jet does not belong to any of the major alliances. It has code sharing pacts with many airlines from different alliances.

Jet Airways Boeing 777 - Courtesy: Jet Airways

Jet Airways Boeing 777 - Courtesy: Jet Airways

Why considering a Joint Venture with SkyTeam now?

Ideally, Jet would like to join Star Alliance. It has strong relationship with Star through its code share pacts with Brussels Airlines, United, US Airways, Air Canada, and ANA. Majority of Jet’s European traffic is routed through Brussels Airlines. Jet uses Brussels Airport as a transfer point for connecting passengers between India and North America. It also has strong ties with Oneworld carriers through code share pacts with American Airlines and Qantas. Jet has no code share partner from SkyTeam, except with Alitalia through its recently launched Delhi – Milan Malpensa route.

SkyTeam Partners - Courtesy: SkyTeam

SkyTeam Partners - Courtesy: SkyTeam

So, why Jet would consider the option of joining SkyTeam or a JV? With Air India joining Star and Kingfisher Airlines joining Oneworld, Jet is running out of options. It has been reported that the Indian government was against Jet joining Star as it might dislodge Air India as a second tier partner. SkyTeam does not have any major airline from India in its kitty. So, the deal could be mutually attractive.

Is it good for Jet?

Jet Airways has built a nice little operation at Brussels Airport. It is an efficient operation with all flights arriving and departing within the same short window of time. This makes transfers easy. Brussels Airport, being small compared to other European hubs and a one-terminal facility, also helps (but, I have heard few complaints about passport control and security scrambling to handle high passenger volumes in short window of time). Code share partner Brussels Airlines (now part of the Lufthansa group) provides decent connections throughout Western Europe and Africa. Jet Airways can keep the revenue from lucrative North American traffic to itself as the later does not have flights across the Atlantic.

Joining an alliance with SkyTeam would involve Jet transferring its hub from Brussels to Amsterdam’s Schiphol airport, where KLM operates a mega hub. KLM offers much better connections throughout Europe, Africa and North America than Brussels Airlines. Delta Air Lines also has significant operations at Schiphol. This greatly expands Jet’s ability to offer connections. If Jet starts a flight to Atlanta, it would virtually put the entire North America under its map through Delta’s network.

But, the downside is that Schiphol has a much better transatlantic connectivity and competition than Brussels and how much control would Jet get on the transatlantic routes from there. Media reports suggest that SkyTeam is willing to allow Jet to takeover only one route from Amsterdam. Currently Jet Airways operates its own metal on Chennai – New York JFK, Mumbai – Newark, and Delhi – Toronto sectors, all routed through Brussels. It has plans to add more North American destinations in future. If Jet has to shift the hub to Amsterdam, would it be able to offer these routes? KLM serves to Delhi and Delta servers to Mumbai currently. From Schiphol, KLM and Delta pretty much cover the entire North and South American continents. Under these circumstances, what could Jet offer using its own metal? How the revenue would be shared? What would happen to Jet’s existing code share agreement with American Airlines? All these questions need to be answered.

A win for SkyTeam and a loss for Star Alliance

If this happens, it would be a major win for SkyTeam.  It was scrambling to find a partner in India. It could not ask for a better one than Jet Airways. Jet connects the length and breadth of India. SkyTeam instantly gains access to the second fastest growing economy in the world.

It would be a major loss for the Star Alliance. Star would be better served with the inclusion of Jet than the current proposed partner in Air India. The government owned Air India is in survival mode and it’s joining the alliance has been delayed due to several operational reasons. Air India is also financially bleeding, with massive debt and labor issues and it is steadily losing market share in both domestic and international routes. I don’t know why Star, especially Lufthansa, preferred Air India over Jet. One reason could be that, Lufthansa has a major presence in India and did not want a stronger carrier that could compete with it.

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Virgin Atlantic at the Crossroads: Good Opportunity for Delta and the SkyTeam?

by: Siva Vayali - February 25th, 2011   Filed under: Airlines 2 Comments

Virgin Atlantic Airways is in a peculiar situation. The airline, promoted by Sir Richard Branson, does not belong to one of the three major alliances (Star, OneWorld, Sky Team). The airline’s viability is now threatened by the industry consolidation, the Open Skies agreement between the European Union and the United States and Anti Trust Immunity (ATI) granted to the airline alliances for the transatlantic services. The ATI for OneWorld partners British Airways, Iberia and American Airlines especially threatens Virgin’s long term ability to compete in the important UK-US aviation market.

Virgin Atlantic A340-600: Courtesy - Virgin Atlantic Airways

Virgin Atlantic A340-600: Courtesy - Virgin Atlantic Airways

Virgin Atlantic has been a long time opponent of any alliance between AA and BA (no wonder its tagline was “No Way BA/AA”). Rumors have been that Virgin is finally evaluating its options and the SkyTeam is trying to come up with a bid to acquire Virgin.

Virgin Atlantic’s strengths

Virgin Atlantic’s important strength is its slots at London’s Heathrow Airport (LHR).  LHR is the biggest international airport in the world and London is the most important transatlantic business market along with New York. Virgin is an important player in that market.

Virgin Atlantic has an excellent product which is consistently ranked as one of the best in the world, well above that of the mainline European and North American airlines. Only carriers like Singapore Airlines and Emirates can challenge Virgin’s product. Virgin’s lounges and airport clubs have been top notch and it has a stellar brand loyalty.

Virgin through its subsidiaries Virgin Blue and V Australia, has a decent footprint in Australia.

Virgin Atlantic’s weaknesses

Virgin’s route network is mostly long haul, point-to-point. Passenger traffic is mostly to O&D. It was setup that way by the management. In this world of alliances and frequent flyer loyalties, it is difficult for Virgin to develop new markets.

Virgin has no flights within the UK except at London (LHR and Gatwick), Manchester and Glasgow. Virgin has no flights to the rest of the Europe as well. This makes Virgin a niche player, making it difficult to expand its market share.

Virgin’s fleet primarily consists of B747s and A340s. Most competitors utilize more efficient B777s and A330s (which are slowly showing up in Virgin’s fleet now). This means Virgin’s operating cost will be higher than its competitors.

Sir Richard has his footprint all over the airline. Even though this is a good thing in general, the industry may view it the other way. He might not be open for outright acquisition and liquidation of Virgin brand.

Opportunity for Delta and SkyTeam

Rumors are on the rounds that Delta, along with its SkyTeam partners Air France-KLM, is preparing a bid to acquire Virgin. This is a great opportunity for Delta and SkyTeam. They can acquire the 49% stake currently held by Singapore Airlines. There are immediate benefits.

Delta and SkyTeam resolve their biggest missing link – a strong foothold in London and UK in general.

Delta gains the new additional slots at LHR. This greatly enhances its ability to serve the busiest transatlantic market: London – New York. Combining Delta’s and Virgin’s flights would give the BA/AA combo a better competition (still BA/AA would be the strongest player in this market for the foreseeable future). It will move Delta to the second place in this market ahead of Continental. Delta will have flights to the top five US-UK air travel markets: New York, Chicago, Los Angeles, Washington, San Francisco. Except New York, Delta does not operate in any of these markets. Combine this with Delta’s growing London – Boston and London – Miami routes, and its dominance at Atlanta and Detroit, the SkyTeam becomes the second biggest players in the US-UK market ahead of Star.

Delta gains a mini hub at San Francisco, thanks to the growing Virgin America operations.

Delta’s fledgling transpacific operation could get a boost from a partnership with V Australia and Virgin Blue.

Upside for Virgin too

Virgin Atlantic has some upsides as well.

It can retain the Virgin brand and its unique product.

Joining the SkyTeam means, it has better chances to gain the connecting traffic in US. Virgin can start services to Atlanta and Detroit using its own metal, paving the way for its UK passengers to connect through these fortress hubs operated by Delta.

Better Pan European connectivity through  Air France and KLM.

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