January 2007 issue

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Ryanair bids for Aer Lingus

An Irish takeover bid by ambitious airline Ryanair could lead to the domestic air travel market in Ireland being dominated by one major player. Europe's most successful low-fares airline has bid to take a controlling stake in the former state-run Irish airline Aer Lingus.

If merged, both airlines would transport 50 million passengers a year, a size comparable to large European airline alliances such as Air France-KLM and Lufthansa-SAS-Swiss. Ryanair already owns a 16 per cent stake in Aer Lingus, and wants a controlling stake in the company. Michael O'Leary, Ryanair's Chief Executive, is aiming for 50.1 per cent ownership, but said that Aer Lingus would keep its own branding and management.

"Ryanair has grown to be Europe's largest low-fares airline by continuously lowering prices and funding these reductions through cost savings and efficiencies," he said. "We believe there is an opportunity to apply this successful low-fares formula to Aer Lingus where currently, in its short-haul operation, fares and costs remain far too high." O'Leary added that the offer was an opportunity to form one strong airline group "for Ireland and for European customers".

Aer Lingus currently offers a mixture of long- and short-haul routes, 17 of which overlap with those routes offered by Ryanair. It is expected that the planned takeover will be subject to a competition investigation by the European Union. O'Leary said the merger should be treated in the same way as Air France, SAS and Lufthansa in previous agreements.

Lufthansa expansion plans

German carrier, Lufthansa, is planning to expand its global network in order to increase passenger capacity by 3.3 per cent overall. The airline hopes to increase services in the European market by six per cent and its long-haul services by 2.2 per cent.

On the Asian subcontinent, Lufthansa remains the strongest European airline, having recently introduced Kolkata (former Calcutta) as a new destination. According to a spokesperson from the airline, Lufthansa is resuming services to Cape Town, as well as to San Francisco and São Paulo, for its winter timetable. In the European market, the airline has increased services to Moscow, Innsbruck, Geneva, London, Palma de Mallorca and Valencia.

The carrier has also launched two new routes from London City Airport to Hamburg and Nuremberg in Germany. Dieter Grotepass, Lufthansa General Manager for UK and Ireland, said: "London City Airport has allowed [Lufthansa] to develop its offering to the business travel market and enhance its Star Alliance presence."

New low cost carrier from HK to London

A new low-cost carrier, Oasis Airline, has been launched, offering daily flights between Hong Kong and London for HK$1,000 (US$128) plus tax or HK$6,600 (US$849) in its business class.

Despite its competitive pricing, the new airline is offering all the frills of full-fare services such as meals and films, at a low-cost price. The company also plans to establish a cargo service and use other subsidiary airports in the future. Flights to California, Berlin, Cologne and Milan are at the planning stage.

On its current Hong Kong to London route, Oasis competes with Cathay Pacific, British Airways, Qantas, Virgin Airlines and Air New Zealand.

Flybe takes over BA routes

An agreement reached between British Airways (BA) and UK regional carrier, Flybe, will see the Exeter-based budget airline take over most of BA's domestic and European routes that do not fly out of London's Heathrow and Gatwick.

British Airways has announced that it will sell its regional subsidiary BA Connect after a fall in operating profits for the second quarter last year.

The airline suffered a downturn last year after a security scare in August forced it to cancel hundreds of flights, resulting in losses of £100 million (US$191 million) for the quarter. BA also expects its fuel bill to be higher this year due to continuing rises in oil prices.

The deal will significantly increase Flybe's route network from 101 routes to 159 and the airline will operate from 23 UK and 36 European airports. Chief Executive, Jim French said, "We believe this announcement means that the UK regions will now have a strong and well-financed airline."

Travel Update

Ryanair has been voted the world's least favourite airline. According to travel service TripAdvisor, 4,000 users deemed the low-cost carrier to have the most cramped seating, unfriendly staff and the most delays. Despite the criticisms, Ryanair was estimated to have carried 42 million people in 2006 and still remained popular with customers because of its low fares. Easyjet was considered to be the second worst airline in the poll.

Philippine Airlines is expanding its 24 international routes to the USA and Canada and re-entering the European market after nearly 10 years. Asia's first commercial airline plans to purchase eight wide-bodied planes to enlarge its fleet of more than 30 aircraft and is currently in negotiations with both Boeing and Airbus.

Sweden has been voted favourite European country to visit in a survey of The Guardian, Observer and Guardian Unlimited newspapers in the UK. Second- and third-place holiday destinations were Italy and Norway. Commercial bed nights in Sweden from the UK have increased by 16 per cent over the last five years, according to the Swedish tourism council, VisitSweden.

Singapore Airlines has reduced its fuel surcharges from USD$20 to USD$18 for flights between Singapore and Southeast Asian countries, and from US$90 to USD$82 for flights between Singapore and the USA and Canada.

A new Nigerian airline, Arik Air, started operating in October. The airline services 10 destinations in Nigeria and three international flights to African destinations. The new airline took over most of the resources of the former Nigerian Airlines Ltd and plans to expand in 2007.

In China, Shanghai's two main airports, Pudong Airport and Hongqiao Airport, are being restructured to handle nearly 120 per cent more passengers and 126 per cent more cargo over the next few years. The first phase of expansion will take place in 2007 and will push the capacity of Pudong and Hongqiao to 50 million passengers and 3.1 million tons of cargo annually.

Malaysia is hoping to expand tourism from Asia's two most populous nations, China and India, through a series of initiatives including sales missions to both countries. Various events are planned for the Visit Malaysia Year to attract a target of 400,000 Indian and 700,000 Chinese tourists for 2007.

Taiwan's Taoyuan International Airport celebrated the introduction of a second Hello Kitty flight, run by Eva Air, last year. The first route has been running from Taipei to Fukuoka and Tokyo for over a year and is now complemented by Kitty Jet 2, flying to Nagoya, Osaka and Sendai. The jet itself is designed with Hello Kitty murals, and the staff are dressed as Kitty characters.

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