25.11.2012 Aviation

Aviation Network Planning – or: how the Crystal Ball works

There is an updated version of this article that we published on LinkedIn in March 2016

Two bad news hit the media this week. Ryanair removes flights from Budapest and Memmingen looses the scheduled services to Hamburg and Berlin. As Michael O’Leary (the Ryanair boss) had already announced that Ryanair will ground aircraft in winter (last year they grounded 80), this seems to be rather strategic and O’Leary’s argument it would be because of high airport charges may be just a smoke-ball, decepting the media. Memmingen on the other hand…

It gives me reason to highlight and explain a bit of the Crystal Ball used in airline route planning. It starts with an idea. Who brings the idea up is irrelevant, except it may be a good idea to do a bit additional research, if your boss does.

Having the idea, question is: Is it feasible? So as a route manager, you’ll talk to the airport, you check MIDT-statistics about flown passengers on the route or routes from neighboring (=competitive) airports, you check “facts”, such as official statistics on commercial relations between the two regions, attractiveness to potential tourists or “VFR”-traffic: Visiting Friends and Relatives. Statistical data…

The MIDT-data is by nature incomplete. Often it does not include direct sales with the airline, Internet sales, etc.. Even if it does, it is based on historic data that relies on facts that are meanwhile outdated. Have the commercial relations strengthened? Did they suffer from bad connection and have faded away? How much were, are and will the travelers be willing to pay for the ticket? If the flight failed, why … hard facts preferred, not guesswork or interpretations by the airports involved.

There is something called “catchment area”, based usually on isochrones, frequently a wild guesswork by the airport itself, more wishful thinking than reality. While working with Yulia on the basics of the CheckIn.com-isochrones, I found in all cases we checked discrepancy larger than 10% different from the airport’s own figures. And in all but one case, the “catchment area” did not cover at all that there are other airports competing with the traveler! An example: If you live in Minden, Germany you are about equally distanced to four airports: Hanover, Paderborn, Münster/Osnabrück and Bremen. For the CheckIn.com-isochrones, we took into account the size of the airport – number of passengers, as the more passengers, the more likely that people choose the larger airport. The distance – the closer it gets by driving time, the better. And other factors we considered relevant or only partially available – like flights to the destination and the weekly frequency and seats (the higher the more “competitive). But quite some more! From that, the system now calculates “fully automatic” the isochrones. And the results are devastating! Even on a “global” airport scale.

The smallest discrepancy of the catchment given by the airport of how many potential travelers would use the airport to the catchment we calculated was 50%. The high ones +90%. That is just basic statistics.

On top of it, you have the questions we did not take into consideration when we worked on the isochrones. Like VFR, like commercial relations, like tourism interest, like … And you better know, where you got it from, how likely it is to be overly optimistic or (sometimes, rarely) pessimistic…

Having that information, you start fine-tuning. You likely have several possibilities, depending on the passenger potential. Take a bigger airplane with more (cheaper) seats and lower frequency. Or take a smaller one with higher frequency, what the business traveler’s will like, but the seat being more expensive. OECD gave some figures for a rough calculation I found quite reasonable for a first idea: An Airbus A320 or Boeing 737 with 150-180 seats costs about 8c (Eurocent) per seat-kilometer (not mile). Use this form to multiply that with the distance for yourself. That is the “net cost”, so add the (increasing) taxes and surcharges onto that cost to come up with an idea about the ticket price you need as an average for flying break-even…

A route planner takes into account much more accuracy, such as real cost of operations, variables depending on aircraft and total hours of weekly/monthly operation. But for a start…

Now comes the next tricky step: How many seats can you likely sell from A to B at this average price, and how many might connect to C but use your flight from A to B? Do you have interline or codeshare agreements at the destination? What air fare do you get? Do you operate the long-haul-sector as well? The cost there likely is cheaper as the aircraft is bigger. But you got to have an idea on connecting services – a science of its own…

So now, at the end of that exercise, you can calculate your risk – how many passengers are you sure about using the offered flights? If you are unsure, your risk is 100%. If you have 50% guaranteed load, you risk less. You also get support from the airports usually, either financial, or “marketing support”. Compared to your operational risk, these are “peanuts”. And in the beginning, you run high risk, so it is wise to not calculate that on your predictive models – if you can’t succeed without, you likely loose.

But then comes the key-point, most airports today fail to have an answer for. Having finally calculated the risk, who takes it? In most cases the airline, virtually alone! Under such circumstances, why should an airline risk a new route with questionable return of investment? In charter flights, the tour operators (sometimes) take the risk, also mostly on their own. Lately, unused seats on some business charter flights, operated by large corporations are being made available to the public, either via Internet or GDS (travel industry flight booking systems).

And if that works well, from such a “business charter” a “scheduled service” with a higher frequency can evolve. But in most cases, the airline is left alone. Any question, why they limit their risk, by pulling the plug when the losses pile up beyond their worse case scenarios?

With eroding net profits, eaten by kerosene, excessive flight crew salaries, taxes and fees, the ability to build a new route in two to three years is very limited. If the route does not take off immediately with a reasonable load factor, the losses pile up so fast, the airline risks extinction if it does not keep a tight control on it.

That’s a short summary into the “science” of airline route planning. If you are an airport who seeks a new route, better do your part of the homework. Can you convince your local “catchment area” population to support the flight, even if the schedule and fares in the beginning may feel higher than from one of the competitive big airports in reach? Will your travel agents sell your flights with fervor – I’ve seen travel agencies at airports offering flights from Frankfurt, Munich, Düsseldorf, but not from the regional airport they were living at! Do you have a grip on the local VFR market? And most important: Can you get commitments from your corporates, business associations (chambers of commerce) or politicians about guarantees on how many seats they could fill? If you are a touristic region: Can your tourism managers qualify, how many people they will have flying on the route? It is fantastic to see, how ingenuous most of the tourist boards are about such basic facts: “Fly and we’ll see”. Flown for a decade, not seen…

Okay. As I’ve put it in the past (as a German saying goes): I take a big long stick and grope in the dark. It requires expertise, experience and good guesswork to do something with all that information you get. Good luck is part of the business.

To summarize planning of new routes:

The quality of figures available, as well as my trust in them.
The cost of operations
From those: A more or less realistic load factor expectation.
Who takes the risk?

The first two factors are subject to an educated guess…

And what about Memmingen and Budapest? Memmingen likely has to do above homework now, there obviously was a discrepancy between expectation and reality. And Budapest? I honestly believe Ryanair simply cuts aircraft there for winter – they may want to talk to others if the routes justify a year-round traffic! That may convince Ryanair to consider the next winter. Or do the above homework as well to match expectations and wishful dreaming with the harshness of reality.

Food for Thought
comments welcome

14.04.2012 Aviation, Values

Ethics in Tourism

“Our Heads Are Round so our Thoughts Can Change Direction” [Francis Picabia]

There is quite a discussion in Germany these days about Tourisms and Ethics, ever since German politician (Klaus Brähmig of Merkel’s governing party CDU) called for a boycott of travel to Egypt and other “non-democratic” countries. It also comes up on Lufthansa’s latest move to not charge a “service fee” on their website.

All in all, I am being questioned by many friends about topics, that make me wonder, how you could call Germany “social market economy” and not what it is: Capitalism! But that is not just in Germany, we talk about a global trend. If you believe in Capitalism, the world is good. The rich get richer, the poor get poorer and the middle class erodes one way or the other (likely “the other”).

There was this video in 2006, I referred to ever so often: Shift Happens Narrated. I did not yet find a good update with 2011 figures, but believe it, it get’s worse.

Is capitalism the right answer? Everything that makes money is good? Do we learn from Exxon Valdez, Deep Water Horizon or the recent gas leakage in the North Sea? Obviously not.

Recent reports claim that the international hydra Monsanto intentionally spreaded gene-manipulated (GM) corn crops in Mexico – against the law and in attempted secrecy. This way, they try to get a hold on Mexican farmers, who will in return be charged the “license” fees for using GM corn of Monsanto origin! There is no way, the corn could have reached the fields in a natural way, where it was found. Is everything allowed if it brings money?

Lately (2010), a strong movement forced a political acknowledgement to the Human Right to Water! Do you see the little blue planet picture? But people starve to death, simply missing access to clear water! The consumption of bottled water in Germany exploded from 12.5 l in 1970 to about 130 l in 2006! Did you know that multinationals pump water in areas where the local people face a dry period? This happened even in Michigan, USA – it is not limited to third world countries. That is anti-social, unethical and simple capitalism of the worse kind.

And despite the growth of Solar Power and other alternative energy possibilities, our governments build atomic power plants where we don’t know how to get rid of the waste products, they support building of dirty coal power plants, emitting more Carbon-Dioxide than thousands of old cars could, simply dancing to the whistles of the energy lobbies. They let Greece go into a major crisis, simply to give the banks time, to move their foul papers to the state. Don’t believe it? There is extensive German coverage on Monitor, a bi-weekly report by public television channel ARD in it’s dossiers.

All that said… What about the travel industry?

Many years ago, there was a question about the difference of a Tourist to a Terrorist. With tourists, there are no bombs involved, but the results are even more devastating… Yes, this is exaggerating. But thousands of divers ruin the coral reefs around the world. Thousands of tourists skiing the alps (or Rocky Mountains) have a devastating effect to that natural preserve. Aircraft exhausts are in high altitude, having a worse effect than ground time. But even back in 2007/08, when I was involved in the feasibility study for a WIG, all development I hear about is “less kerosene”, bio-fuels replacing kerosene (with unknown new side-effects), but that project stalled with the world financial crisis and seems to be of a low priority. Coutries like the Maldives could replace their entire local aircraft fleet and replace by a clean alternative.

I hear a lot about the “reduced noice levels” of aircraft, but in the discussion about the night flight ban in Frankfurt, I asked publicly, where there are hard facts about this? How did the noise levels reduce and why are the airports then paying new millions every year in counter-noise-modifications in their neighborhood?

Many meetings could be replaced by professional video conferencing, but our managers keep the “need” to meet for their routine meetings “in person”. Trains focus on high speed route networks in competition to air (and that makes sense), at the same time neglecting the local traffic – how to commute from a small township to the bigger town for work?

Yes, I love aviation, I am an airliner by vocation. But yes, I have a soul and yes, I question the tendency to keep status quos without need. The feasibility study provided figures that such a solution would pay off within maximum three years, then it’s a cash cow. It could revive the old harbor cities (the ones on the seaside). But such revolutionary developments are opposed by the “old school”, all the investment going into the airport infrastructure.

Responsibility begins with each and everyone of us. We are supposed to be Christian’s, but Christian behavior would call for social behavior and I cannot see such. The question is: Where will we be in 100 years? Watch the “Shift Happens” video again:

Name this country

Richest in the World. Largest military. Center of world business and finance. Strongest education system. World center of innovation and invention. Currency the world standard of value. Highest standard of living.

… England … In 1900!

How did travel develop in the past 100 years. People traveled by ships, horse carriage and some railroad systems. Just a 100 years ago, Titanic sunk. Today it takes less than six hours to travel from Frankfurt to Boston. In the 60’s, American Airlines and IBM invented Sabre and revolutionized the distribution of airline seats. I was with American, when they started to provide Sabre terminals to the first travel agencies in Germany – which have already gained experience with the START-system, accessing the Lufthansa “Res”-system through a pre-windows environment! In 1996, as the “GDS Coordinator” I was primary element for the development of the first Internet Booking Engine for business travel (air, hotel, car). We had “e-Mail” (called “SITA-Telex”) in the late 80’s, no one spoke about “Internet” then. But I also introduced the “Internet” and the new “World Wide Web” to the Airline Sales Representatives Association back in 1994, recommending i.e. Continental Airlines to register their domain name for a few bucks quickly. They sure ignored my recommendation and for years used “www.flycontinental.com” instead.

Is that “you”?

What is our business? Is it to manage a GDS? Many travel agents (seem to) believe so. Then we are database operators. AN20MAYFRAHKT18 – that is a database request. Is your business to issue tickets? Then you are no longer needed, as eTicket is the new standard.

What was “your business” 100 years ago? It was not to book the air ticket and the hotel. It was a complete consulting, how to get Grammy from her home in Middlesex to Aunt Cathy, who emigrated with her husband to this new colony Swaziland in the South of Africa. Could she use some of the new airplane-routes? Where could she use trains? Where were carriage routes? What vaccinations would she need, where would she stay overnight, what could she do on the multi-day-stops en-route?
Or you booked the summer seaside. If you lived in England, you were lucky, you could book one of the “packages” offered by some “Thomas Cook”. Else, you had to read a lot about the “common” spas, recommend and explain you client the advantages, book the trip, the hotel, the treatments.

And yes, it was expected from you to be knowledgeable about the countries, their political, cultural, economical and social systems. If you traveled to an Islamic country, what are the rules? Why to be careful and patient about cows in India. And to know that India was British colony. Sometimes I wonder, how many of the people selling “Seidenstraße” ever learned some detail about Marco Polo. Venice, Genoa have been the center of the world those days – the “seafaring nations”. Frankfurt, London, Atlanta, Peking are the centers today – of the “airfaring” world. What are “nations” in a globalizing world? But U.N. is a toothless tiger. Lybia, Tunesia and Egypt were (as Kuwait) some years ago immediately targets of military – for the sake of crude oil. But in Syria thousands are slaughtered, but they are not a capitalist necessity, so the world looks and doesn’t do.

An old saying says: Don’t talk about ethics to a hungry man!

Ethics begins with myself. Do I fly or drive – or do I take a train? Is the trip necessary? Can I achieve the same outcome with a video-conference and e-Mail? It is also about: Is this to the best of my employer – or do I justify the trip, simply because I want to see someone – or get somewhere. And it is about: Can I help to make this world a better place?

Yes, companies are about making money. But if only money rules, we adore the Golden Calf again. How un-Christian can we get? Talk to me about Ethics in Tourism. Yes, we got to survive. But at all cost?

The travel industry prospers, but for some reason, the employees do not participate. It’s all about money. Is it?

Food For Thought

And as usual, your comments – private or in the blog – are appreciated…

07.03.2012 Aviation

Tourism in Europe – Economic Factor or Cash Cow

Referring to the air traffic taxes in the U.K., Ireland and Germany, a renowned consultant lately compared tourism politics in the Middle East / Emirates and in Europe. In the Emirates, aviation and tourism are considered economic factors – in Europe a cash cow for the politicians…

Now we have the ITB in Berlin, the most important trade fair for Europe in the World. Our chancellor, having recently opened CeBIT computer fair in Hanover was not seen in Berlin yet. Instead, Philipp Rösler, Commerce Minister and head of the minority party FDP (currently 3%, unlikely to make it into government again), was sent to the opening ceremony. Following a scandalous interview by Merkel’s fellow party member Klaus Brähmig, who advised Germans to boycott travel to Egypt, following publications of negative impact on the “ecological air travel levy” (simply “the aviation tax”), the signal could not have been clearer. The value of Tourism in the mindset of our political elite is non-existing, except for being a possible cash-cow. This is also confirmed, looking at the bureaucratics and the political “non-support” for the German airports in the question of night operations.

An airplane that is on the ground costs money. And if you fly transcontinental, flights may arrive and leave at night. On regional flights, utilization is a key driver for economic operations. By limiting flights to daytime-operations, Germany strengthens surrounding countries and regions, without such limitations. And the airlines in those countries, as they can utilize their aircraft more.

Another topic of the same issue: The European Safety Umbrella (ESFS or whatever new name they give it). Currently Germany guarantees 230 Billion Euro of that one – the country’s household last year was 355 Billion Euro… We better hope that Greece survives. But what I miss to see, is an active political support for the Greek tourism industry. All the experts emphasize Tourism to be the major economic driver and business for Greece, but thanks to the political hick-hack, the Tourism is in recession there! It might be wise to invest some of the money to stabilize (maybe provide guarantees and affordable credits to businesses) to assure Greece tourism companies to survive and even prosper…? But the politicians now focus on Tunisia, Egypt and other areas, neglecting Greece and thus giving the wrong signal.

What “strategy” does the political elite in Germany and Europe have for Tourism as an economic factor? What are the lobbying organisations doing – and why is the tourism industry so weak?

Your feedback is appreciated!

Food for Thought

03.03.2012 Aviation, IT

Always Online – the Smartphone Revolution

How the smart phone changes my life – and will change yours if it hasn’t already…

First a quick review, how I got “addicted”… First Yulia “fried” the mobile phone that she brought from Russia. 2009, being the year the first real “smart phone”, the iPhone 3(GS), hit the German market, it was virtually impossible to get any other “smart phone” that would allow us to install and use the phone to write Cyrillic SMS – a must have for my wife. So I had the choice to order a phone from Russia – or get her an iPhone…

As she got the iPhone, I “inherited” her iPod (1st gen.) and started to use it. To read e-Books, to hear music, to go online and quickly check things, to do many things. One of the short-comings of that iPod was the missing camera, so I could Skype, but I could make no video calls at that. So getting the opportunity, I got myself upgraded to the (at the time brand-new) iPod 4th generation and started using Skype and do again many more things with it… No, I did not take an iPhone as – at the time – I had a dual-SIM-phone and appreciated the ability to have one phone for business and private. One major disadvantage remained – I needed WLAN to use online (= smart) functions… So when iPhone 4S came out, I had waited for iPhone 5 but decided to wait no longer… So here I was… Having predicted always onlineback in 2004 at my annual ASRA presentation about e-Commerce-trends, I finally am…

c't Schlagseite 1/2003 — Always Online: *New Device found: Airbus A320 – Installing*

Another issue I mentioned in the last years was the evolution of RFID (Radio Frequency Identification), which is virtually the same as the NFC (Near Field Communication) that is expected to be part of the next smartphone generation. A sender transmits a signal that triggers the “passive” RFID chip. “Powered” by the radio waves, the otherwise “passive” RFID chip (where NFC may use “own” power) returns a given code, that can be used to identify the passport or ticket number, the suitcase’s ID, the frequent flyer number …

c't Schlagseite 15/2005 — Dear valued customer! The RFID chip in your tampon reports to be filled to the brim. Fantastic offers on tampons in the next aisle, shelf 7…

Receiving that RFID it is the server to be able to use and interpret these short codes. Following the Security by Obscurity-idea, such solutions increase the security, by removing unnecessary (and time-consuming) “checks”, bothering the passengers today.

One of the new apps (smart phone programs) I got was Barcoo, giving me information about products I saw in the store, identified by its barcode I scan with the inbuilt camera. And one of the more recent trends is the QR-code (Quick Response), the “next generation barcode”. Different from the good old barcode, the QR-code has the ability to contain more complex information, it can give you a simple URL (internet address), a vCard (virtual business card), event information (calendar data), WLAN access information, … Many, many possibilities! All you need is a smart phone, maybe a small “app” (application, a program) to interpret the QR code. To create one, go online, there are tons of generators around, many are free to use. Abusing the high quality error correction being part of the QR-code, you can even add a logo or icon to personalize it (which the scanner interprets as “faulty data”):

Same principle as QR-code, just one reference area in the center

So airlines us QR-codes to manage check-in-data and get you your “online boarding pass”. They will use RFID and NFC to identify your suitcase, to identify your passport and it’s “public” data, check you in automatically, enable the lounge access and charge you directly and automatically over your phone in case you are not entitled for free access. A sticker at the entrance provides you with the current (changing) access code to enter the free WiFi, etc., etc. pp.

Now… Computer hardware looses about 50% in size every two years, doubling the capabilities in the same time. Only the necessary screen size today is an issue, why that technology is not (yet) in a watch – or any other “aesthetic” jewelry or gadget you may prefer.

iPhone’s Siri to me is still a female bitch. Usually she simply claims not to understand me… But as soon as that improves (and it will), you can have a small hearing device behind your ear to telephone. The microphone being a stylish necklace (or the entire thing a small headset). If you need to go online, you unfold an external flex-screen or put on some stylish sun glasses. You won’t need a mouse, as Siri’s grandchild will understand your wishes and/or your eye movement is tracked: “Blink to Enter”… Remember the Visa advertising?

https://www.youtube.com/watch?v=PQBEePXH-rI

What did they know 2000 about “smart phones”? Where will be in another 10 years?

Yes, please share your thoughts: For those who agree or disagree, it is the exchange of ideas that broadens all of our knowledge. [Richard Eastman]

Food for Thought…

02.02.2012 Aviation

Cheap Pizza…

“You can make a pizza so cheap, that nobody wants to eat it”
[Gordon Bethune, former CEO of Continental Airlines]

Being asked about my sanity to invest into Join!, the start-up of an airline network, this article is about “cheap pizza” or why I still think it is a good idea to start a regional airline today.

In order to complete my statistics about the passenger development before / during / after I’ve been working at Erfurt Airport, I had a look at the monthly development, as well as the annual one of Erfurt and Germany (published by ADV.aero) and Europe and the world (published by IATA) as a comparison.

IATA reports EU, with 9,5% growth 2011, the second strongest market in the world. That is behind Latin America, but before Asia! The market being challenged by political mistakes, increasing the tax burden on aviation. Milking aviation until it collapses instead of strengthening it in its role to attract and support commerce is sure short sighted expression of ignorance. Unfortunately, this political development makes Europe at the same time the global area with the lowest profits world-wide and – to my understanding – has forced the collapse of a number of routes, airports and airlines in the past year. Where the failure of one, opens the opportunity for the other.

ADV confirms Germany, having added aviation tax in 2011, to have only grown by 5,0%, visibly below EU-average. This may also be a result of the struggling by Air Berlin and Lufthansa to cover up for the resulting strain on profits, closing down a number of routes, focusing on their hubs. Which opens opportunity on several of these abandoned routes.

Recently, Cirrus Airlines and Spanair, the one being a code share partner of Lufthansa, the other being a Star Alliance member, ceased their services and filed for bankruptcy, leaving more routes unserved. The failure of one opens the opportunity for others.

Airplus (leading credit card provider for companies and business travel) reports that the business travel in Germany will increase exponentially compared to other markets. At the same time, the average air fares are increasing.

There are some airline operational models, that can be used exclusively or in a combined operation.

Hub & Spoke (Network) Airlines
Low Cost Carriers
Regional Aviation
Business Charter
Tour Operators

Hub carriers usually operate one or several hubs, routing passengers from and to smaller places through their hubs into their networks. This is mostly the classic way, airlines operate since the 1980s. In those days, the airline took the financial risk to establish new routes. Challenged and responding to low cost carriers, their ability to do so has eroded.

Low Cost Carriers compete with, making them virtually a mix between hub carriers, regional airlines and charter operators. They operate point-to-point-services with larger aircraft, offering ability to start with lower air fares. They temporarily profited from the fact that airlines had to build war chests to finance the establishment of new routes. Meanwhile they come to recognize that operating an airplane is a cost factor and as the established airlines responded to their threat, the advantages they built upon increasingly eroded.

Regional Aviation is usually referred to as the operators of smaller aircraft of up to 100/120 seats maximum. Their focus is to establish air services for regional airports with limited passenger numbers. Using smaller aircraft, they can operate higher frequencies required by business travelers, still being of less interest to the low cost airlines, usually operating mid-size jet aircraft (100-180 seats) with a lower frequency and focusing less on the business traveler’s needs.

Business Charter usually fills the gap, where the operation for a scheduled service between two airports is not supported by the passenger numbers needed, but business travelers need to go either on a customized schedule and/or traveling between airports not connected by existing scheduled services.

Just to complete the picture: Tour Operators have aircraft flying leisure travelers seasonal between their point of living and their place of vacation. The aircraft can be owned by the tour operator, it can be charted exclusively by a single one or a group of tour operator(s), or it can be offered to the tour operators. As such, there is a business opportunity for airlines focusing on operations for business travel, to offer their aircraft on weekends, midday or night to tour operators.

On the positive side: Hans-Rudolf Wöhrl, who already founded NFD (today Eurowings), later bought and turned arouned DBA, now joined into the board and invests in Intersky, a smaller regional airline in Friedrichshafen, Germany.

So why attempting to launch a regional airline just now?

The major carriers straighten out their networks, focusing their routes to serve into and out of their hubs. Low Cost operates usually larger aircraft, accommodating the leisure traveler with lower frequency. Many routes are served once to trice a week only, making them less likely to be of interest for business travelers. On the other end, business aviation reports a surge in demand.

Likely the increasing demand for business aviation reflects the reduction of flight services by scheduled airlines (be it major airlines or low cost). Business travelers are not as focused on the air fare. It must be competitive, but their focus is frequency. If needed, they charter the aircraft to enable the necessary business trip.

So it needs careful route analysis. How many people will travel between A and B? Flying between A and B with a 50-seat aircraft twice-daily service (daybreak) plus twice on the weekend at 80% load factor generates 25.000 seats a year. That means 25.000 return tickets to be sold – of 50.000 one-way tickets. Double this for a 100-seater… And when you fly that, what do you do with the aircraft between the morning and the evening rotation? Can you utilize it at night? An aircraft standing around looses money. So you better consider the options for a secondary service that utilizes the aircraft in midday. And if you have local tour operators interested to charter the smaller aircraft for their services, utilizing it on the weekends or at night adds to improve the return-of-investment for the aircraft and its operations.

But yes, no matter how well you qualify your route potential, it remains a risk. So you got to find investors to believe in your route analyses and believe (or need) it. You can also talk to other involved parties or bodies, such as airports, chambers of commerce, politicians, companies and reduce the risk by having commitments for tickets. Remember, we talk about 50.000 one-ways every year… But in the end – this does not have to be subsidies, it could be commitment to sell a certain amount of tickets.

That said: There are many routes, which require business-frequency with smaller aircraft and would not work with lesser frequency but bigger aircraft (and fares), as the business traveler would not fly only one-way. Increasingly, the retreat of the major carriers from the regional airports opens up opportunities for smaller airlines. Our idea of a “network” offers those small, “individual” operators access to know-how, distribution, services and quality usually available only to larger scale of operations.

Every failure or retreat from a route or airport opens opportunity for someone else. Though the times, the airlines’ take the risk alone are over – if you start up, you better find out, who comes with you on the journey.

Food for Thought. And yes, I appreciate your thoughts.

As Richard says: “For those who agree or disagree, it is the exchange of ideas that broadens all of our knowledge”

01.01.2012 Aviation, Hotel, Values

Crisis? What Crisis?

German Tourism Association DTV reports a record year in German Tourism¹, German Airport Association ADV reports a passenger record² – the same news reaches us from all over the world… Crisis? What Crisis?

Airplus³ and American Express⁴ published their outlook for 2012, expecting a stable market, more meetings, but increasing cost for air and accomodation… Crisis? What Crisis?

Airbus Industry reports a record order backlog, with the Airbus 320-family (mostly 319+320) being the most demanded aircraft in the world today… Crisis? What Crisis?

Yes, what crisis? The average income of a senior manager in the “Fortune 500” across the world has multiplied in the past five years (at least doubled), at the same time, the average income of a worker in the same company has decreased (thanks to inflation and loss of monetary value)… My tone now becoming sarcastic: Crisis? What Crisis?

Throughout the world, increasing natural disasters are reported to be a result of Global Warming. But our politicians cannot agree on counter measures. The EU Emission Certificate Trading is challenged by the main emitting countries, namely China, the U.S., but also Russia… Crisis? What Crisis?

The Greece Prime Minister informed the EU years ago about the inevitable bankruptcy. The politicians avoided that at all cost, their delay tactics gave the banks the opportunity to move all risk from the banks to the tax payers. Thank you Mr. Ackermann, thank you Mrs. Merkel! Thanks to such “politics”, no longer the banks are “challenged”, but the European states are! This is no “sitting it out” of our representatives of state, but I call it criminally corrupt! Crisis? What Chrisis?

The U.S., it’s currency being the lead world currency, is brought close to a bankruptcy in itself, thanks to the Republican “opposition”. How stupid can such a (Republican) “representative of state” be?
But: The German Minister is caught having copied his doctorate work – “Guttenplag” has been a nominee for the word of the year. Our Federal President is being caught taking credit and other benefits (free flights or holidays) from industry managers. And while corruption is forbidden and you can go to jail for it, lobbying invests record amounts last year – securing the politicians to vote in their favor. And not just our former Chancellor Schröder is safely and well paid employed by an industry, he secured long-term deals and commitments with during his state of power… Bunga-Bunga! Crisis? What Crisis?

Russia is corrupt? At least you know that! The Arab Spring is in danger to become a barrel burst in Egypt? Global Warming is no issue, but the tourism industry is the milk cow to the politicians (whereas in the Middle East they are a factor to support commercial development). Crisis? What Crisis?

I tell you what crisis we have:

The Bank Crisis: The banks are the real power in governments.

The Political Crisis: Our politicians do not represent the people, nor any strategies or ideas: They simply represent the lobbies that pay them fortunes and do everything to keep in power, not to loose these honey pots!

If they would have any “strategy”, they would make the beer-tab-tax-report a reality and safe millions of Euro in tax administrative cost. They would make travel and tourism a strategy. They would seek minimum wages and support future development like solar industry – and not add tax burdens on them. As they would support families, enabling them to combine business and family – and have day care for the children (something I found painfully amiss myself last year!)

Crisis? What Crisis?

Food For Thought…

Sources:
¹ FVW | ² FVW | ³ FVW | ⁴ FVW
ARD Monitor Dossiers

22.10.2011 Aviation, IT

CheckIn 2015

No, this has nothing to do with my CheckIn-domains. After having discussed that topics at various options, I think it’s time to bring the topic up here to simply refer to it and not always repeat myself 😉

What will the check-in-process look like in 2015? How will RFID and NFC change the check-in-process?

You may have seen these ornament-like looking stuff on the back of the supermarket labels, electronics superstores and such and may have wondered what it is. It is the future…

It is called RFID (Radio Frequency IDentification) and in short: A radio sender sends out a signal on a special wave length, that triggers the antenna and generates a little energy – just enough to reply with a small radio signal with the code that is on the little chip. Which is a binary code similar to a barcode.

Depending on the strength of the original signal and the quality of the RFID antenna+chip, RFID may reply over the distance of several meters. Such chips are in your passport, can be in your frequent flyer card, about anywhere.

Now a similar technology is NFC (Near Field Communication), you may have heard about to be implemented in the next generation mobile phones (they were expected to be in the new iPhone, but).

Now consider this scenario:

Your frequent flyer card and your passport contain a RFID chip. The airport provides you “preferred parking”, for which you also put a sticker (with such chip) behind your window. Your suitcase is equipped with an RFID. Your telephone identifies you via NFC.

Your car approaches the airport. The intelligent airport parking system directs you to the best (or pre-reserved or VIP) parking lot available. When you exit the car, your suitcase (known from a previous flight to be yours) is identified. You need no bag-tag, as it is already tagged with it’s own RFID. While you enter the terminal dropping of the bag at one of the default baggage check-in-machines, your passport is triggered and directly identified. It contains a (chipped) visa for your destination. Your seat and boarding gate, together with an invitation to the VIP-lounge is transmitted to your smart phone. As you accessed the airport WiFi before, you are automatically connected to it, no 3G-charges apply. You walk through security, having your carry-on and your retina (eye-identification) checked, but as your boarding pass is your RFID and your passport is known, you are not further held back. As you miss your departure time while working in the lounge, the system detects you. You are not called out publicly, but the lounge manager approaches you and reminds you to get to the gate quickly.

In the aircraft, it is automatically checked that you take your seat in the right area of the aircraft, you sure have access to the onboard-WiFi.

Arriving at your destination, your passport and your visa is triggered the moment you leave the aircraft. Your ID is checked, as you approach customs and imigrations, you are not bothered about your passport, but leave the airport. Noone can leave the baggage area with your bag, as your other RFID signals show you away from the bag – an alert immediately calls in security.

Sounds futuristic? But it makes the painstaking airport security easy again, for passengers and the controllers alike, at the same time increasing the security level. It also reduces manpower needed to process the flight, once established, it’s simple decreasing the cost and improving customer (traveler) satisfaction. And the first steps are already taken! A chip label costs 3-5c or even less. There are customer cards having them available – many trade fairs allow the quick access with RFID-tagged tickets. The boarding pass printers supporting RFID are available and in use (so far local benefit only). It’s nothing that needs to be invented, simply requires some standardization for the chips.

Food for Thought
Comments welcome

04.03.2011 Aviation, Management, Values

What does an airline do with 90 A380

In LinkedIn, based on a recent analysis by RBS, someone raised the concern about 90 A380. Will it impact Europe? I disagree with the question, it’s point of view and the analysis.

The main mistakes most “Western” analysts and experts do in looking at the Emirates (and the greater Middle East) is the trained focus on shareholder value, fiscal year (results) and political elections.

Long term thinking in “The West” has been replaced long ago by the above obstacles. But it is a vital part of the cultures in other parts of the world. First and foremost is the family. Followed by the clan. Then the neighboring clans, then by the “same people” (i.e. Muslims, other Sheiks, …). The main rule is that the family and the clan must prosper. Until very recently in such terms, the Sheiks survival was simply a matter of following these simple rules – which by the way are also described in the bible.

So what will ‘the Emirates’ (not just talking about the UAE) do with hundreds of A380s, with thousands of seats? Why do they build the largest number of luxury resorts worldwide? The Palm? The World? Free Zones for commerce? Because having the – what thes DO understand to be temporary – “Gift” of Cruide Oil income, their expressed target is to establish the Emirates regions as a crossroad for international tourism and commerce – and the “it-destination” for the rich and famous.

When the crude oil is gone, they will be remembered by their own for their foresight and to not just have spend the riches but at the same time made a lasting impact.

Will Europe, India, other markets suffer from that? Yes. Because the Emirates and their development tries to take away long-haul-connecting passengers. They will expand. They started on the racetrack Europe-Asia. They slowly expand now to Russia-North-Africa, connecting Asia with North Africa at the same time. They will not be competing much on the ruinous Europe-America-market, except to take the passengers connecting in Europe from North America to Asia…

They play by the rules, as long as these rules don’t interfere with their goal. when politically advisable. Else, always be aware: Their family and the clan comes first! If they have to bend or break other people rules for the benefit of the family or clan, they will do.

Their goal is so easy – but hard to grasp for too many of so-called “experts”, as their goals are so long-term…

Food For Thought…

08.03.2009 Aviation

Fresh Breeze at Erfurt Airport

Many of you have heard or seen that I became responsible Head of Marketing at Erfurt Airport. It was a very busy first week, we all face ITB next week and sure it is a lot of new faces and there is also a lot to do. This airport is an excellently located international airport in the heart of Germany. As you can see on the image, it is rather modern and supports CAT IIIb Instrument Landing. Air freight facilities as well as the four large car rental firms and a General Aviation Terminal complete the excellent impression.

Addressing the necessity to give the airport a positive reputation and position it in its due place on the map of international aviaiton, the airport has received a new management in the past months: Matthias Köhn has been managing the Kiel Airport before, after a six months transition period he is now the General Manager at Erfurt Airport. The second key position, the Manager Operations (Verkehrsleitung) is taken over by Susann Hörl, before having been General Manager at Jena’s Air Field. With Marketing now in my hands, we have an excellent and competent team to properly address the necessary changes to position Erfurt locally, nationally and internationally as a reliable and valuable partner to airlines, travel managers, travel agencies and all other partners. As this is a long-term, full-time commitment, please see my address changes reflected on the website already and coming up. Pending jobs at Barthel.eu Consulting are taken over by excellent partners I have worked with for many years and who are competent in the required jobs. And I am sure that more news will be addressed before the end of the month.

I appologize to the readers, I have no real “Food For Thought” this week. If you have topics you think I shall address, please let me know!

So yes. Food For Thought: What do you wish me to address?

01.03.2009 Aviation

The Power of Regional Airports

There was quite some buzz the last weeks as I decided to take over my new job at a regional airport (more details I assume to be allowed to release next Sunday). Aren’t they doomed, especially in today’s crisis?

In addition, the Russian regional airports project develops well, Russia is very well aware of the need of regional airports.

So no. I do not agree. I do see regional airports to prosper. Not with point to point traffic, but feeding into the international hubs. Time remains a necessity. Four hours ground travel time are about the maximum business allows before air travel becomes a business case. Some will find their niche, even maybe a major one as I suggested to the Saratov PTBs as part of my side study on their situation. Which is a good example for other communities and their airports.

I also got the new figures of airport developments this month and I find quite interesting examples where and how airports position themselves. Globalization is here and air travel is vital to many businesses for sheer survival – may it be scheduled, charter or freight!

My example in the past years: Compare sizes of cities in the world with the existing of an airport and air travel. It’s a mutual development. But only cities with an airport having good flight connections nearby prosper. And I started in the business booking VIP passengers from the U.S. on the precedessors of Eurowings and other small airlines – flying little Cessna’s in scheduled service between Frankfurt and Paderborn, Dortmund and other such cities.

Food For Thought…