January 2004 issue

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More low-cost airline activity

As the low-cost sector of the aviation industry continues to outperform the mainstream sector, low-cost operators are increasing their products and mainstream players are expanding into this area.

Ryanair, one of Europe's most successful low-cost carriers, has announced new routes to Spain, Italy and Ireland from the UK. Services from Glasgow Prestwick Airport to Shannon in Dublin began last year, while flights from Glasgow to Milan in Italy take off on January 7.

New Spanish destinations include Reus-Barcelona and Valladolid, offered from London Stansted. 'Spain has long been the traditional stronghold of charter airlines but Ryanair's low fares have changed that,' said Ryanair Chief Executive, Michael O'Leary, who said he expected to carry 100,000 passengers on the Valladolid route in the first year.

The first no-frills service from the UK to Budapest in Hungary has also been launched. SkyEurope Airlines began a daily flight to Budapest from November, with fares starting at UK£17 (US$29) one-way.

Elsewhere, in the USA, low-cost operator JetBlue has announced it will start services from Boston Logan Airport, to complement services operating out of New York. Routes from Boston to Fort Lauderdale, Orlando, Tampa and Denver are planned for January.

Finally, more low-cost airlines may soon be flying in the Asian skies. Thailand has announced its intentions to develop a budget carrier operating out of Chiang Mai in the north,

Singapore Airlines is also expected to make a decision by the end of the year about creating its own budget airline, while ValuAir, set up by former executives of Singapore Airlines, hopes to launch in the first half of 2004. Air Asia, a low-cost carrier in Malaysia, is also planning to expand operations. It currently flies up to 150,000 passengers a month to in-country destinations.

Germanwings plans expansion

Germany's premiere low-cost airline, Germanwings, which operates routes internationally, celebrated a successful first year of operation last year and announced that it wanted to increase the number of destinations it flies to by 50 per cent. 'As we have seen from our passenger numbers during our first year, if the price and quality of service are right, Europeans want to travel, and we are providing them with that option,' said Joachim Klein, Managing Director of the carrier.

Germanwings hopes to add further destinations this year to its route network in Scandinavia, Eastern Europe and the Mediterranean. Other plans for the carrier include the introduction of Stuttgart as a second hub, in addition to the current Cologne/Bonn airport base.

USA-Vietnam agreement signed

Direct flights between Vietnam and the USA could soon be introduced, following the signing of an agreement between the two countries last year. Although a timeframe for direct flights was not discussed, several US carriers are reported to be planning flights from March.

Pham Vu Hien, Deputy Head of the Civil Aviation Administration of Vietnam, commented that the agreement paved the way 'for further economic and cultural exchange' between the two countries. Laura Faux-Gable, from the US State Department, was positive about the new initiative. 'This [agreement] is a good stepping stone and will help to integrate our economies much better,' she said.

A spokesperson for Vietnam Airlines commented that air traffic between Vietnam and the USA had been growing steadily, at a rate of between five and seven per cent per year.

Travel Update

Nationals from Angola, Bangladesh, Cameroon, India, Lebanon and Pakistan all face tougher visa rules if they plan to transit through the UK en route to a third country. Since October, the UK government has insisted that nationals from these countries obtain a transit visa to pass through the UK, in an effort to stamp out illegal asylum applications. Similar rules are now also in effect for transit passengers passing through the USA, excepting 27 countries that have exemption arrangements.

Munich Airport's new Terminal 2 building has now opened, doubling the airport's capacity to 50 million passengers a year. Lufthansa and other Star Alliance members have exclusive use of the terminal.

Singapore is aiming to secure its future as an Asian aviation hub with the announcement that it has reduced its landing and parking fees for aircraft. 'What we aim to do is not just help our airline partners through this difficult period, but more importantly, position Singapore for the long-haul,' said Singapore's Transport Minister, Yeo Cheow Tong.

Air New Zealand is axing 1,500 jobs over the next four years in a bid to return to profitability. But forecasts for the future remain gloomy, given that NZ competition regulators have rejected the airline's proposed alliance with Qantas. Air New Zealand had previously admitted that it needed a deal with an Australian carrier to ensure its survival in the future. The Commerce Commission in New Zealand ruled that the alliance would lead to higher fares, fewer flights and less incentive for New Zealanders to travel overseas.

No-frills airlines have increased their market share of the European aviation market by 50 per cent in the past year, according to an American Express report of business travel trends, with the sector now estimated to represent 28.7 per cent of all air passengers in Europe. The report said the increase in passenger volume was in part due to new entrants in the market, particularly from airlines in the UK and Germany.

European Union (EU) Transport Ministers have voted to introduce a system that will allow the EU to penalise airlines that are deemed to benefit from unfair government subsidies - in a bid to level the playing field in terms of competition. This follows complaints by EU airlines that competitors, such as carriers in the USA and Switzerland, had been getting government aid. The final go-ahead from the European Parliament was being awaited at the time of going to press.

The World Tourism Organisation (WTO) is set to become a specialised agency of the United Nations (UN). Francesco Frangialli, Secretary General of the WTO, said, 'The transformation will give increased visibility to the WTO and greater recognition for the work it does, putting tourism on an equal footing [with] the other great activities of humanity - industry, agriculture, transport, education, culture, health and labour - for which there already exist leading institutions within the UN.'

Japan had to bail out its two leading airlines, All Nippon Airways (ANA) and Japan Air Systems, last year by granting emergency government loans. Both airlines have been suffering as a result of Sars and the Iraq war.

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