Wednesday, November 27, 2013

Emirates, A Force of Stability or Disruption

Emirates, the largest international carrier and the oldest of the three Gulf Global Airlines, evokes confidence, distrust, and a sense of foreboding  with every decision it makes from buying aircraft to announcing new routes

If you are Airbus or Boeing, you value Emirates as a force of stability in aviation. Six (6) weeks after 9/11, when legacy airlines all over the world were reeling from the events of that day: grounding aircraft and laying off employees specially in the USA and Europe. Emirates, during the Dubai Airshow 2001, did the unthinkable and ordered USD 15.6 Billions worth of aircraft.

  • Twenty five (25) B777s
  • Twenty Two (22) A380s
  • Eight (8) A340-600s
  • Three (3) A330s
In Dubai Airshow 2013 Emirates did it again it helped launch the B777X with an order of one hundred and fifty (150) plus another fifty (50) options and ordered another fifty (50) A380s helping Airbus to stabilize the A380 production line for the near future.

Undoubtedly, Emirates is (was) rewarded for its good deeds with very attractive pricing, well below what the competition gets. Something that reflects favorably on its yields and financial results.

On the other hand, legacy carriers specially Delta, American, Qantas, Air Canada, Air France and Lufthansa considered Emirates (Etihad and Qatar Airways) as mere toys of oil rich desert princes and heavily subsidized government airlines. They are considered by Delta and the A4A as the most disruptive force in the industry. 

Fast forward to the present and the critics of yesterday are the partners of today
  • Qantas has a great agreement with Emirates, resulting int the transfer of its Singapore hub to Dubai. The deal has been profitable for both airlines;
  • Air Canada whose position on additional frequencies for Etihad and Emirates escalated into a diplomatic rift between the UAE and Canada, now has a code share with Etihad;
  • Qatar Airways is a member of One World;
  • American Airlines and Etihad has a code share agreement; and
  • Air France KLM has signed a very deep and extensive code share agreement with Etihad.
It is understandable when EU airlines complain about the Gulf airlines, they actually compete with them; directly between their respective hubs and on connecting traffic to Europe, USA and Latin America. These new entrants have shifted the center of aviation, from Europe as a hub between the Americas and the other side of the globe, to their Gulf hubs. US airlines never really competed directly with Emirates or the other two global airlines, so the complaining and whining is somewhat surprising.

Emirates competes on service, passenger amenities and convenience. Their First and Business classes are rarely discounted and if you think their fares are low, think again, they are not. However, the service is exemplary, their seats and cabin are leading edge and ICE (their IFE system) is out of this world. Emirates knows how to fill its flights. They actually make money, not because they are subsidized but because they keep airplanes full at the right yields, and they buy their aircraft at the right time and the right price.

They also sponsor sports clubs and events, spending millions of dollars to make sure that the name of Emirates is seen by millions of people across the globe while watching soccer, tennis or Formula 1 among others. Emirates and the others invest in lounges, media promotions and sports to keep the brand global.

Emirates works hard at increasing the productivity and efficiency of its operations, but it pays attention to its expansion.

 Emirates Vision and Values clearly explains their methodology for success

A strong and stable leadership team, ambitious yet calculated decision-making and ground-breaking ideas all contribute to the creation of great companies. Of course, these have played a major part in our development, but we believe our business ethics are the foundation on which our success has been built. Caring for our employees and stakeholders, as well as the environment and the communities we serve, have played a huge part in our past and will continue to shape our future.











Tuesday, November 26, 2013

Etihad's Anniversary Splash

Etihad celebrated its tenth anniversary with a splash.
  • The Jet Airways 24% equity deal was finally approved by the Indian Cabinet setting the stage for expansion into India. 
  • Air Serbia 49% equity deal setting the stage for expansion in Central Europe
All this is old news. Dubai Airshow was the stage of its splurge on aircraft orders:
  • Fifty (50) A350s;
  • Thirty Six (36) A320NEOs;
  • One (1) A330F;
  • Twenty Five (25) B777X (launch customer for the -8)
  • Thirty (30) B787s (bringing the total Boeing orders to 1000 aircraft and becoming the largest operator of the type);
  • One (1) B777F.
All these aircraft are not intended for Etihad's fleet only, some will be used for their equity partners.

On a quieter note Etihad announced the launch of its new route to Zurich in June 2014 and almost in the same breath announced the launch of Etihad Regional, not in the Gulf or MENA but in Europe. Darwin Airline in Switzerland, Etihad acquired a 33.3% equity stake in the regional airline. The idea is for Darwin Airline, which will be rebranded as ETIHAD REGIONAL is to feed traffic to Etihad and its equity partners' hubs in Europe for onward travel. Eihad Regional will add 21 new routes and 18 new destinations by mid 2014 to Etihad gateways in Europe (Geneva, Paris, Amsterdam, Dusseldorf, Belgrade and Zurich). Will this be the only regional airline equity acquisition or just the first in many more to come.

If the aircraft orders upset some US carriers and A4A, the European response to Etihad Regional has been almost non existent. 

Time will tell how this will evolve for now Happy Anniversary Etihad...


Friday, November 22, 2013

Saudi Arabia's Domestic Market, The Final Stretch.

When everyone almost forgot about the two operating licenses that GACA awarded to Qatar Airways and Gulf Air-Abdel Hadi Al-Qahtani and Sons Co in late 2012. 

During the Dubai 2013 Qatar Airways announced it will launch Al Maha Airways in the first half of 2014 using aircraft from Qatar Airways. However, the management of Al Maha Airways will be independent from the airline and staff will be directly hired.

Similarly, Al Qahtani Group announced the launch of Saudi Gulf Airlines based in Dammam. Gulf Air denied that it has applied for or was awarded an operating license by GACA. Gulf Air is a consultant to the new airline assisting it in obtaining GACA approvals. The airline will start operating in Winter 2014. To date Saudi Gulf Airlines have not indicated the type of equipment it will be operating.

Both airlines will start operating to major cities (Riyadh and Jeddah), second tier cities, regional and international route as they develop.

How much coordination, and there will be some, between Al Maha Airways and its owner Qatar Airways is something to look for in the near future. 

As we await developments of the new airlines; Nasair the low cost carrier has followed in the footsteps of flydubai and will introduce business class on some of its routes, primarily for religious tourism and eventually for corporate clients.



Wednesday, November 6, 2013

Anniversaries

It appears that everything I was involved with in my professional life has an anniversary and a milestone this year.
  • Royal Jordanian (RJA) is celebrating its 50th Anniversary
  • Air Arabia (ABY) is celebrating its 10th Anniversary
  • Etihad (EY) is celebrating its 10th Anniversary
  • Al Jaber Aviation (AJA) celebrated its 5th Anniversary
My involvement with each organization varied but I always managed to learn  and contribute.

I joined RJA at a time when the airline was expanding its fleet with new B727s, B747 and L1011s. A new cycle of  B707 heavy maintenance (D) checks was starting and the decision was made to bring the capability inhouse. The planning was done and the new hangar at QAIA was used before the airport was completed. It was an exciting time, then capabilities for B727 and L1011 was developed, it felt like routine. The next milestone was the introduction of the A310s and A320s into the fleet.

Of course there were other challenges some good others not so good. The development of third party contract maintenance that went a long way to cover the Maintenance and Engineering Department costs. Then the first Gulf War that shut down the airlines for four (4) months; but every challenge is an opportunity we performed a B727 D check and B707 D check for a customer. RJ has a pioneering spirit, it was always a tad bureaucratic, but when the chips were down everyone came together and made things happen, a real can do attitude.

At the age of 50 the airline still has this attitude, it has the ability to rebound from challenges; most of them global geopolitical (wars, uprisings, financial crisis, etc.).

RJ brought home the value of "if there is a will there is a way" and doing great things on a budget. I spent eighteen (18) years there and made life long friends.

Start ups are messy affairs. They are hard work and require focus, perseverance and resilience, and all that before first flight. Once operations start it is even messier.

I was at GAMCO now ADAT at the time Air Arabia and Etihad started. I was tasked to ensure an MCC and a scheduling unit are operational at the time the airline begin operations. Both airlines started within a week of each other, ABY on 28 October and EY on 5 November 2003. Small beginnings leading to greater things.

Working for an LCC is a life changing experience. I joined Air Arabia on November 1, 2004, a year after commencing operations. An LCC is a way of life that looks at value for money, efficiency and productivity in a way no legacy airline ever does. I worked for RJA and we were frugal, ABY took that to a higher standard.

Legacy airlines ignored ABY at first as a flash in the pan and an experiment that is bound to fail. Until they felt the heat and then we felt the pressure. Ten profitable years later, ABY is there to stay, true to its business model when others came and failed or changed.

I joned Al Jaber Aviation in October 2008 going from an LCC to a VVIP Corporate Jet Operator. Getting an AOC must be one of the most challenging things a person can do. I heard stories in ABY of working out of a few offices in Sharjah Cargo Building. Well at AJA it was a few offices out of Al Bateen Airport when it was still an air base. Having GCAA inspections while still building offices and  getting manuals approved and licenses accepted before starting operation requires staying power. The first aircraft, an Embraer Legacy 600 was delivered three weeks before the AOC was issued. The proving flights and final GCAA inspections were performed and the AOC was delivered on June 1, 2009 at the time of the second Legacy 600 delivery. The AMO Certificate was issued on 28 May 2009. Operating business jets is totally different than scheduled carriers. There is no schedule and flights are launched at relatively short notice, because even planned flights change at short notice as clients' change plans.

Thirty Five years later, I am starting all over again. Start ups are still messy and require focus, staying power and resilience.

Well 2013 is definitely a year of challenges and milestones. These four (4) airlines regardless of their age still face challenges some are internal but most are external. They all need to look internally and determine what is needed for them to thrive in the next decade. What brought them so far may not and probably is not what will take them forward. After all, successful companies fail because they insist on doing what made them successful in the first place, ignoring the ever changing environment they operate in. Things change and so should organizations.

For now, Happy Anniversary to all four airlines and to my friends and colleagues who are still there, moved on or retired. We all shared experiences, challenges and yes good times. Looking forward to the continued success of Royal Jordanian, Air Arabia, Etihad and AJA.



Sunday, November 3, 2013

Spirit Airlines, the ULCC

Spirit Airlines one of the few Ultra Low Cost Carriers (ULCC) in the USA and indeed the world.
Spirit does not have the best of reputations mainly because its customer service due to the unwavering and rigid adherence to its internal rules.

I have flown Spirit in late 2006 when seats still reclined and carry on luggage was free, things have changed since. Spirit charges for everything, it is displayed clearly on their website; from checked baggage, to carry on luggage, to seat assignments and a few other things. I, personally think that all airlines should charge for carry on luggage just to stop people from going around the checked baggage fees and clear some overhead bins for others.

One feature of its aircraft are the first two (2) double seat rows and extra leg rooms, well worth the fee. I had mixed feelings about the non reclining A320 seats, on the one hand they get to be uncomfortable on a long flight but on the other hand you tend not to get the back of the seat in front of you in your face.

So going to NBAA 2013 in Las Vegas I flew with Spirit from Detroit. It was the perfect flight as far as a ULCC goes.
  • I received the email advising me of online check in. 
  • The staff at the airport were smiling and helpful. 
  • The boarding was flawless and we departed on time.
However, the return flight was totally different. I never got the email to advise me about online check in.
It happens but I tried anyway and the system did not let me; the aircraft was delayed for two hours. So now
I know, same thing happened at the airport with self checking kiosks. That by itself was not a problem, a helpful ground agent got me my boarding pass.

Things went downhill when past the 10:10 pm departure time the flight departures monitor still showed the original timings, this was changed to delayed past midnight. No announcements were made, no explanations given and after five hours we departed. I understand that passengers are told to check the departures information monitors, but at least keep them updated!! This total disregard of basic customer service tends to wipe out all the goodwill gained throughout the check in and boarding processes.

Would I fly with them again, only if I have to.



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