Looking at the past two years struggling to find investors for Kolibri, to change aviation and develop the proof-of-concept for carbon-neutral aviation, meeting with impact investors, family office principals, venture capitalists and others, European, Arabic, North American and even Asia resulted in quite some disillusioning.
Two lessons learned.
Lesson 1: It’s All About Energy
If. If we really want to stop global warming, it boils down to reduce our energy demand. On a global level. But the reality is quite opposite.
While the current clash with Russia should be another wake-up call, it just proves that and how far we are from saving energy. From removing our energy footprint. Instead our leaders travel the world buying fracking-gas, crude oil and “natural” gas (from crude) to feed the ongoing hunger. We can’t expand “sustainable energy” fast enough, to reduce, less to replace all the oil, coal and gas we consume for our energy hunger. And building windparks, water-power-plants, solar parks also comes with a toll. One we have no idea yet on how to avoid the negative repercussions to our world. Which I i.e. addressed last year in my question about Wind Parks and the Butterfly Effect and the fixed page on The Sustainability-Energy Dilemma…
If we use more energy to solve any of the famous United Nations Sustainable Development Goals, it’ll be a barrel burst! If we go for electric cars, is that more than putting a band aid on a purulent wound? Are the developments about electric flight or hydrogen aircraft anything more than delaying tactics by our industry to justify their lousy 2%-blending goal? Look at my whitepaper about #greenwashing if you want to find more examples.
Lesson 2: The Reality Behind Impact Investing
Now my litmus test to distinguish real sustainable investing from #greenwashing is simple: What is the Net Energy Impact? And yes. I’m kind’a sorry… But that includes many, if not most of those fancy “green tech solutions”. They are nothing but another distraction keeping us from the real challenge. And an excuse from governments and investors alike to avoid the real, industrial scale change we truly need!
Also known as #talkthetalk …
Call for Action
Part I: To investors: We are slowly running out of money on our plans for Kolibri. We have succeeded due diligences. We have a holistic approach covering the U.N. SDGs. And we plan to reach break-even within one, be profitable in three years. And to benefit from the “new normal” enforced by Corona and the Invasion of the Ukraine. But to do this we need a sizeable launch-funding and our ideas to establish the technology to fly Carbon-neutral is even more expensive. It ain’t cheap to turn an airline carbon-neutral, but it is possible! So there are three steps. Step 1: Launch a profitable new regional airline with competitive cost-levels to stand out in the shark-pond. Step 2. Expand to lower the cost and generate the revenue to fund Step 3: Establish the infrastructure to turn carbon-neutral … and our ideas for a truly sustainable airline – beyond climate.
If it’s not you, we need commitment to help us secure the funding. Less #talkthetalk
Part II: To All: And for you personally? We as a family reduced our energy consumption by 10% last year. Despite all that modern household-tech, home-office and other energy consumers. What’s your saving?
In the recent weeks, there were some discussions about hopes and expectations for 2022. Related to aviation, tourism, Corona and politics… So let me share some expectations here in a (fast forward) look into 2022/23.
And sure, let’s start with
The Pandemic …
In the first year of the pandemic, in the first wave in May, I voiced my expectation already of Corona CoVID-19 as the new Measles. It’s even less, it will be more like the Flu. Get vaccinated one year for the latest SARS-variants. And keep in mind that SARS is in the wild for almost 20 years, it ain’t new! So to take it with the former German Minister for Health Jens Spahn, we will (globally) have 3G; in German Geimpft (vaccinated), Genesen (recovered) or Gestorben (died).
Omicron being good, as it spreads aggressively with a focus on unvaccinated people, who will then be recovered (or dead). Yes, Yulia and I are boostered, the kids are “officially vaccinated”, got their second shot early January, about as quickly as it was possible for 5 to 11 year old’s. Both wanted it, both had friends suffering the infection with side effects.
But now a new variant hits from Portugal, that seems immune to the vaccines or body’s own defense from previous infection. And Germany is hit by another peak. Whereas the infection rates a mere year ago would have called for lock-downs…? But our airlines promote travel without masks… And what happens, if the next variant is a more hostile version again?
… Turning Endemic (in Europe and U.S.)
There was a very good article on Al Jazeera about why the WHO refuses to turn Covid from a pandemic to an endemic state. Including the graph linked here on the impact of existing endemic diseases.
So given we have covered European and North American countries with enough vaccine for anyone who wants to be vaccinated, three, even four times, the times for lock-down will slowly be past. That will have impact to recovery of intra-European and North American air travel.
The only reasoning allowing for lifting air travel restrictions will then be the the hospitalization rates, though I expect those to go down to more manageable levels. Though we have ongoing reports of countries less privileged with vaccine access that report problems:
The next big challenge is the look across borders and out of the “industry nations”. Over and again, news about vaccines that expired in the richer nations were met by the ones of i.e. African countries being delivered expiring vaccines or even ones that were not certified in the donor countries. At the same time, vaccines like the Russian Sputnik were still not “certified”. In turn, my own mother-in-law was denied entry into Europe as she got Sputnik, to visit to take care of my kids in my absence, while Yulia (my wife) works full time too.
Air Travel Industry #testingregime
“Principle Hope” and the Saint-Florian’s Principle dominate our industry: “Oh holy dear Saint Florian, don’t burn my house, take the neighbors one.”
During the recent handball European Championships, the German’s team played. With a mere four players from the core team, all others infected. Airlines and their lobbyists demand to end mask requirements and testing regimes in gross negligence and full knowledge that all those new variants can only spread that quickly globally by means of air travel.
It is my personal understanding that aviation needs to improve health rules and not hide behind the individual, political rules in place somewhere. How expensive would it be to have temperature scanners added into the check-in- and or security-process? And if someone has high temperature, to demand wearing of an FFP2-mask in flight. A mask that should then be provided if needed. They are no longer excessively expensive. A requirement shared by security with the airline, to ensure safety of the other passengers (and the flight crews). We must think beyond the current pandemic, as this is nothing new, just the worst case so far in “aviation history”.
Airports would be well advised to have processes in place to ensure #testingregime for the current and future infections., demanding and assuring the ability for pre-flight testing.
Given the issue of #vaccinationalism, I expect a first “recovery” in the rich industry nations, but also future variants swapping across those countries like Tsunamis from the neglected countries. Again, what happened to #weareallinthistogether? Or #thenewnormal?
This week I got reminded that the next variant-rise in infections that the experts predict for coming fall (again) is so much like airline winter ops. It hits every year again. To the surprise of the airport and airline managers…? Why is it that the mask requirement is liftet in Germany and I still enter shops with a mask? With about 50% of the shop visitors doing likewise – while the others play Russian Roulette?
Airline Loads and Revenue
Also “again”, we had discussed load and revenue just recently. Whereas aviation experts report own experience with flights cancelled on short notice. Which is met by reports from many airports, that airlines register more flights than sensible, with a large number cancelled in advance due to lack of passengers/revenue.
I keep voicing my concerns that airline management must rethink. The KPI “load factor” is useless by itself, even dangerous. The KPI we must focus on is “revenue”. But in the recent IATA Regional Economic Briefs stopped reporting KPIs that reflect on revenue. Likely as they try to avoid “bad news”? Good-weather-mentality. Works well, when there is sunshine, but we are now in a thunderstorm. Even with some brief respite, we’re anywhere but “back to normal”.
Reports I read fed hopes again about a summer recovery in Europe. A recovery now threatened by the new BA.5 variant spreading throughout Europe. And again, what is the airlines’ role in spreading those new variants so quickly across countries? And Lufthansa recently cancelled 600 flights (5%) for lack of staff. A main reason being the infection of their own. Mainly infected “at work”. What was that again about employee health protection? Naaaw, let’s not play it safe, let’s go back to old normal?
Personally, I’m a bit afraid, we are just in the eye of the storm…
Back to (the new) Normal?
Speaking to airline and airport managers, they prioritize no “new normal” which they promoted in the beginning of the pandemic. But they focus to “renormalize” back to the old normal. Which bites them in the butt over and again. Demands are to lift mask and testing requirements. In an obvious ignorance of the pandemic development. In line with political developments, but not in line with the infection rates.
As I asked before: Why do the new variants spread globally in a matter of weeks, if not days. I am quite sure, they are not contracted that quickly by air. Nor by rail, bus of freight. This should have been a wake-up-call for aviation to understand their role in globalization, not only in commerce, but also in health, in the spread of diseases. How many pandemics does it need for us to start “new thinking” and take responsibility?
What about #weareallinthistogether and #thenewnormal? Ain’t this the “safest industry in the world”? Safety first? What happens if we stray from that priority towards maximized returns, we have learned all watching and commenting on Boeing and the Max (and the 787) disaster(s).
There can be reasons to fly an aircraft even empty.
One being to avoid aircraft hibernation. If an aircraft is not used for too long (and that time frame is rather short), the requirements to “reactivate” the aircraft explode the complexity and cost to do it. So it makes sense to consider which aircraft to take into hibernation, which ones may come soon back into service. And rotate the reserves to make sure they are ready to fly when needed.
Another would be to rotate the pilots to make sure they all keep their “type rating”, their license to fly the aircraft. Which also expires just too quickly. And while airlines now recognize the shortfall on pilots that they had either “laid off” (fired) and (or) didn’t support in keeping their type rating, the current feedback from pilots is that airlines still fail to have programs in place to rotate the pilots as good as they could to keep the type-ratings.
The Role of IATA?
I am very much missing the leadership I’d expect from IATA. Not a leadership towards the next disaster, but same rule for all. Like requirements to implement measures helping to identify sick passengers. Standards how to handle such. What if it’s not a single traveler, but a small child traveling with its family? But in the end, I believe if in doubt, a medical flight readiness certificate may be required. But also made available at airports offering commercial flights. Maybe demanding FFP2 mask. Maybe even plastic gloves or a hazmat-suit. What about the ticket? Will it be allowed to rebook. Airlines and/or travel insurances may need special rules for handling medically denied boarding? Maybe that we must add certain insurance as default to tickets?
But looking at the current line of communication by IATA, it does show a frightening ignorance, promoting future infection spread.
All things, the IATA could set up and require. Or ICAO if IATA doesn’t have the balls. #talkthetalk #discouragechange …
Being married to a Russian with close friends in the Ukraine, I would have never, never-ever believed an invasion of Ukraine. And while NATO-expansion threatened Russia – reminding of the political uproar when Khrushchev attempted to base nuclear missiles on the U.S. “doorstep”. Whereas NATO territory in fact is as close or closer to the Russian capital cities of Saint Petersburg and Moscow. That taken into account, there is no reasoning for an invasion of the Ukraine or the claims of a denazification. C’mon, I’m from Germany and Russia is the aggressor, too close to comfort following the propaganda and strategies of the Third Reich.
It became more obvious, when the “special operation” failed to achieve the Russian targets, when they invaded from Belarus towards Kiev and when they leave scorched earth (and hundred of massacred civilians) behind. The entire Donbass region now looks like Donetsk Airport, as does Mariupol.
The streamlining of the Russian media is totally in line with German propaganda. Control the media, promote your side, anyone voicing other opinion is taken to jail. Gestapo like. The next level being Stasi-methods jailing people already if there are unqualified claims of opposition. I am indeed afraid we will see that coming.
So with a focus on the impact of aviation? We are back into cold-war times. No overflying of the Russian territories is #thenewnormal for years to come. There will be exceptions – there are still flights between Russia and Turkey or Russia and China. How that will backfire on long-haul airlines though? There are discussions in the U.S. to ban those airlines from connecting to U.S. airlines. Which in turn would sure be followed by Europe. And then? This war has a big impact on our industry.
The Energy Crisis 2.0
While the aviation industry and it’s Powers-That-Be (PTBs) argue that we must delay sustainable flight in face of the crisis, I am on a complete opposite belief. We must, but we failed, to take the crisis as a chance for overdue change. Instead of investing into sustainable fuels and developments, into optimizing the airspace, our PTB try to go back to old normal. Then finding reasons to delay the change further.
It’s the very same with the necessary transition on ground, in Germany, fuel is subsidized now, not forcing consumption to be reduced, but we keep using more and more energy. Which in turn does result in increasing demand for crude oil, not in a reduction.
All “sustainable investors” come up with is “green tech”. Demanding more power, not less. And we produce more plastic every year, even in this crisis and even knowing we hit the 1.5°C target by 2026 most likely, not even by 2030. As we consume more and more crude oil, wind, solar and even nuclear power being a drop on a hot stone. And while there are ideas aplenty out there, I know of too many projects that happen to fail triggering investor interest.
In my humble opinion, most “impact investors” are greenwashers. It’s beyond cognitive dissonance when they focus their investments on “green tech” but in turn increase the energy demand instead of focusing on solutions that safe and conserve energy. Yes, I can sing not just a song but an entire opera about “green investors” that either look for max-profit under a green umbrella or they look for the next “tech unicorn”. It’s what I said before. If you want to invest into sustainability, pick your industry. Pick your “brown” company and invest into solutions that change that industry. Or. Look at energy consumers and how you can improve their energy consumption. Or replace them. And yes, any of your investments should target a reduction of energy consumption. Which can be, to provide the same service in demand, but having a clear strategy on your energy source.
And we talk about leveling the energy to a sustainable level. Use as much energy as you return. Like Kolibri. Not just launching the airline, but having plans to develop your own sustainable fuel-source. Which can be Synfuel. Which still uses energy and creates CO2, but no more than it takes from the air to create it. A circular solution. Which we assume would trigger the use of SynFuel locally, which works better on a global scale than e-mobility, which has the worse life-cycle impact then. But so far, all “impact investors” we talked to expressed our idea to be very good and worthwhile, but they did not intend to invest themselves. Then they invest into money-graves like Uber or
The Fairy-Tale of Travel Recovery
Just like last year (2021), we will have a careless “Corona summer”. We will very likely hit another infectious peak by fall – all the pandemic experts are warning of that, we better start listening. With BA.5 now spreading and aircraft full of mask-free travelers likely much faster. So here I go early this year with the update of LaLinea Corona extending into 2023.
While most our political and industry leaders lead us from the darkness into deception and back into the cold.
The war in the Ukraine will impact not just long-haul travel, like the reestablishing of the polar route avoiding Russian air space. And that we can not trust in “neutral air space” we learned when Belarus took down a civil aircraft from transit with the sole reason to jail a political opponent living in exile abroad.
We have rules. But I see too many of them “bent” to commercial or political benefit. Rules the international and aviation communities leave unpunished if broken or bent.
So my outlook 2022/23 is kind of bleak. Given our own and our leaders ignorance, the pandemic ain’t over, Putin will continue wreaking havoc (not just to the Ukraine) and the planet will continue warming. And the people who could make a change keep focusing on maximum financial ROI, wearing a cheap “green” mask.
#talkthetalk #greenwashing #cognitivedissonance #cheapexcuses #nochangeleadership etc.
Discussing about the individual impact we make, the topic gains interest. What is your own, personal net-impact to our planet? So I decided to summarize some of the posts and comments I had on the topic on LinkedIn.
In line with previous posts about #lipservices, #cognitivedissonance and #wishfulthinking. And a #realitycheck for others, claiming “sustainability” that they do not deliver upon.
Self-Esteem over Sustainability
A clear article on it was today’s post by SEDO-founder Tim Schumacher Search: “People should only be classed as billionaires when they remove a billion tons of CO2 from the atmosphere.” referring to the CNBC article questioning the sustainability investments of Jeff Bezos (Amazon), Elon Musk (Tesla, SpaceX) and Bill Gates (Microsoft founder).
In my comment, I emphasized that we need no ESG, but #sustainabilityaccounting. And much of what I see from these and other investors is showing their response to their conscience, focusing their activities on things they understand, but also things that have an impact to their self-esteem. And there was also this Open Letter to Bill Gates, reflecting on his #cognitivedissonance or #lipservices. I believe it’s simply cognitive dissonance. Keep in mind, these people also live in their social (media) bubble.
Yesterday, there was a report about industry leader/face James Hogan, former CEO of Etihad, caught in the act, trying to circumvent the Corona rules in place. It underlined my post two weeks ago, that we have airlines skipping pre-flight corona-testing regime. A disservice to an industry trying very hard to make flying safe! I’m sure he regrets that idea now, not having considered the repercussions of being caught.
#cognitivedissonance: While flying itself may be safe, passengers aren’t! Anyone claiming flying to be “safe” shall better keep in mind that the virus spreads and new variants keep spreading by travelers. Also and a lot pre-tested passengers are infected but not yet positive, they then spread the virus in their destination.
Then, let me talk about the decision makers at European Investment Bank (EIB). Claiming to be the European Sustainability Bank. In a conference by Geneva Macro Labs, I asked their head of climate office Elina Kamenitzer on her claim that they do green investments: Are there any success stories that proof the impact, the “impact” targets achieved ever since? Well, no. They “have to look into that now.” It’s about time.
I also reached out to my now ex-point of contact in EIB, about a co-investment into our impact plans. With (a cheap) reference to their Roadmap and the decision there to not finance conventionally fueled aircraft (page 102), he disqualified any investments into aviation. In utter ignorance of what I believe he understood (I did remind him), that we have plans that are not aircraft-funding related. But i.e. development into a synfuel-ecosphere. Our plans cover all of the 17 SDGs, mostly with quantifiable targets that we sure plan to exceed on. If you’re convinced to do the right thing, that comes as a natural.
But that ain’t what the bureaucrats at EIB look at, is it?
So back to the article topic:
What is Your Impact?
There is a petition against greenwashing on Change.org I urge you to sign! Discussing on that one, we had several discussions on how to define greenwashing. Whereas family office principals told me ESG would be the role model for greenwashing. A good idea, meanwhile abused. There may be some investors who understand the meaning of it. But not many.
It is the same about claims to be “sustainable”. Another family office principal told me, that out of the 2020 impact investments, only 4% were having clear impact to improve on SDGs. 96% were disqualified as they just claimed without goals and targets but simple claims misreading the causes. Nice if you plan SDG5 Gender Equality on your hiring process, but without clear targets on how to improve. Or if you abuse SDG9 Industry, Innovation and Infrastructure for your “innovative IT project”.
Only Net Impact is Real Impact
We came to the conclusion that real impact is about net impact. And that “impact” is about reduction of the strain we put on the planet. To reduce power consumption by 10% but planning to increase the total power needs by 30% is intentional abuse of the sustainability claim.
There are many good examples out there, beyond what we plan at Kolibri. But we speak a lot with investors that want to cash-in on us before we launched. And investors, investing little money into small projects, more like a philanthropy, but an impact investment. Paying for a clean conscience, paying for their other daily sins. I just told one of the family office principals. We are looking not for those classic investors. We are targeting the family office space, as there are more investors than elsewhere wo take sustainability to heart. Who focus on it. Who are understanding that an impact investment might not be as profitable as i.e. Bitcoin. But it’s the right thing to do. And
Impact Investment ain’t philanthropy. Do good and make money!
So this time, not just Food for Thought, but a clear question:
Last week it started with a analysis by the German Association for Environment and Nature (BUND), hitting the headline news claiming that seven of the 14 regional airports in Germany would be expendable. Which was a welcome story for the media. While I still hope that they come to senses, I am afraid that history shows their sole focus on populism (next election) and hypocrisy. Including their attempts to distract from their failures managing the ongoing Corona crisis.
More articles and posts surfaced this week that airports should be privatized.
Focus on votes reminds me too much on “shareholder value”, being accused to have a sole short-term profit-maximization interest and none for long-term success, sustainability or social responsibility. Same stupid.
Today the headline news is about the Thuringian president of their Court of Auditors recommending the closure of Erfurt-Weimar Airport, building on the above analysis.
Closing Erfurt-Weimar Airport? And others Regionals?
As you may recall, 2009/10, I’ve been managing Marketing, Press/P.R. and Corporate Communications at the Erfurt Airport, one of the seven now questioned. Which is my example of why German airports fail thanks to populistic airport bashing by the local politicos and most of the media. And an idiotic, short-sighted focus on “outgoing” holiday charter flights. I am adamant about my justified opinion that given a positive support and strategy, the airport would be worth a million passengers and an economic operation. If they’d cash in on incoming.
Back 10 years ago that was the reason I made the name change from Erfurt to Erfurt-Weimar possible from Marketing budget. Just before the shortsighted politicos – lead by then Minister for Traffic (“C.C.”) who saw it more important to invest into streets and highways – decided to “strategically” end all support for scheduled flights, which I had recommended to replace Munich-service with a sole Lufthansa- but without Star Alliance codesharing, with a KLM-service to Amsterdam to be connected to the world. With having compiled justification and statistical data supporting the case.
As I wrote three years ago, airports must embrace their changing role – which many airport managers and owners fail upon. And that is simply another example where the Corona crisis highlights the shortcomings. These shortcomings have been there before. We have too many “good weather managers” that keep running a company (beyond just airline, airport) and have no vision for it, no strategy. They handle day-to-day work and live inside their microverse without understanding or concern about the bigger picture.
Should they now close Erfurt-Weimar (or either of the other questioned airports), it is a direct result of the local stakeholders failing to envision, demand and support a long-term sustainable strategy for the airport. And giving the public airport bashing by the stakeholders, I wouldn’t justify scheduled flights to Erfurt-Weimar either. It’s an example how short-sighted stakeholders run an economic driver into the ground. And just an example how politicos don’t think and guide, but brainlessly worship an implied public (voters) opinion and not act but only react to developments (incl. Corona).
CYA in action: Cover Your Ass. Don’t think, don’t move, don’t risk.
Strategic Indecision and Short Sight
As I’ve written in the two Food for Thoughts in December, there is the Financial Impact of Air Travel for the regions and their economy. If you understand and focus on the need for “incoming”, passengers coming into the region, bringing money to the region. Instead of the sole “outgoing” focus we see with most airports in the “developed countries”. And without this, there is no valid argument to invest into the airport, is there? But with a strategy, it makes sense to invest. Not to subsidize!
The other post in December was about Why Airlines Keep Failing, which is mostly the same reason why airports keep failing to live up to their expectations. No strategy, no stakeholder management (politicos, industry, media, public opinion, etc.). Erfurt-based Thuringian state development agency funding travel for delegations from Berlin, instead supporting the subsidized flights from and to Erfurt. Politicos publicly promoting to travel to Erfurt and Thuringia flying from Frankfurt, Berlin or Leipzig, then taking the train. And even with a Biathlon World Cup taking place in Thuringian Oberhof, places like Weimar, Eisenach and the Thuringian Forrest recreation are, travel to Thuringia not coming through Erfurt in their empty heads.
Scheduled Incoming vs. Charter Outgoing
Again ,there is no reasoning to invest into an airport that only looks at outgoing summer charter flights. The money leaves the region and benefits the destination. Why would I subsidize that?
Without a strategic vision to use an airport incoming as an asset to connect the world to the region and cash in on the incoming air travel, it is a logical consequence to shut down an airport and write it off. In turn, you write off an asset for your region. If I call anything short sighted, this is a very good use case.
I keep explaining “seasoned airport managers” that airports need three foci.
Connection with the global hubs and connectivity there
At Erfurt, it was a barrel burst to have a flight into Munich by Cirrus Airlines as “partner of Lufthansa”, but with only some Lufthansa code-share, but not even Star Alliance. It was why I very quickly promoted to replace that one with a KLM-Amsterdam-service. With very promising talks ongoing until the political stakeholders decided to shelve all support for scheduled flights. A good reason to end my work there. Aside me being told later that the discussions ceased as they called my number, reaching someone not able to communicate in English.
So connectivity to global hubs with code-sharing and/or interlining must be prime on any regional airport’s agenda.
Strategic Point-to-Point travel
Depending on commercial and strategic regional relations, direct flights between economic partner regions can and should be established.
With “airport bashing” being too common, it is vital to promote the airport as a partner for the region. As a vital infrastructure to improve commerce and industry, incl. but not limited to tourism!
And yes. Summer charter flights are nice to have, and may contribute to the revenue, but they are commercially and strategically not a priority.
The Kolibri Offer
KOLIBRI.aero is looking for funding of the development of first and further bases. With seven aircraft, maintenance, infrastructure and several hundred jobs a € 15 million funding is needed. No subsidies but a bold investment with minimized residual risk, to be paid back with interest. Investment into local infrastructure will reflect long-term commitment. Further development of profit centers being part of the plans. Should you know airports being interested in such a joint development having regional funds to provide the capital but also demand for the new routes, we are happy to discuss details.
Today I had a conference call and a major topic was Spain and how our (German) governments banned travel again. And publicly justifies under gross neglect of their own rules. Those “development” showing persistence to deny change. And the “Wag the Dog” syndrome, pointing the fingers at others to distract from own mistakes.
The second topic was about the way, aviation “recovers”, the managements’ strategies.
Political Lock-Down on Travel
This week, our (German) government issued an official “travel warning” for Spain. It is legal requirement that German travel industry must enable free unplanned returns from regions a travel warning is issued for, which in turn also results in tour operators shelving all offers for regions such warnings are issued for. In line with that legal impact, TUI instantly cancelled all flights and packages to Spain.
In clear ignorance of those facts, the German Health Minister Jens Spahn claims that it is still possible to do vacation in Spain, travelers just needing to be careful… Say what?
Either this is cognitive dissonance, or – and I am afraid it’s that – Spahn and German government tries to distract from own mistakes by “pointing finger” at Spain. It’s the old “wag the dog”. Make up a crisis elsewhere.
Spain is said to be extreme in its adherence to the Corona rules. It is not “Spains” fault if German tourists party and ignore those rules intentionally. And then return with infections. So this is a cloud screen by Minister Spahn and his political cronies.
A German proverb: “Who sits in the glass house shouldn’t throw with stones.” Taken residence for the pandemicfor the pandemic with the family in Germany again, I can assure you, we have our own problems with Corona here and the politicos still fail to follow a clear strategy. Exceptions to their own rules being the rule, not the exception…
The Myth of Aviation Recovery
The past weeks, I had ongoing disagreements with my friends at OAG, ch-aviation, RDG, Routes, ANNA.aero, etc., etc. Disagreement on the media-focus on recovery of flight services as a sign of recovery of our industry. As I mentioned in my recent blog on Corona Cognitive Dissonance and Whitewashing Statistics, to bring all those aircraft back to the air while the load factors plummeted from ~85% to ~35% (April) in line with evaporating ticket prices, dropping by 20-30%, depending on the statistics source.
Now in May the load factors recovered to ~43%, though from a business travel management company I heard that those loads were “bought”, by lowering the ticket prices even further. And there was a slight decline in available seat kilometers in that month.
For years, I complain about the state of airline statistics availability. Nowhere “real time”, IATA statistics come three months after, the commercial sources report on flights and seats but have no clue about the load factors or ticket revenue. Real time? Really?
In today’s discussion, it was emphasized that airline managers try to survive using the “classic” approaches. First of all: Be cheap. Second: Push flights to the air. By doing that, they have obviously lost all track of their cost of operations. And the conference call group agreed that we will see quite some groundings in Europe ongoing for the next year. As the airlines keep piling up Corona Debt. Even Lufthansa is said to have already started on demanding further bail-out in spring, when they burned up the € 9 billion they recently got.
Time for New Thinking
Is it really “new thinking”? Last December, pre-Corona, I outlined Why Airlines Keep Failing. The reasons are still the same, just multiplied by Corona.
Any little startup understands the need for USPs, unique selling propositions. What makes them different? In the eyes of the customers, in the eyes of the investors. They understand the need for profitability. They know their cost. If you have a big war chest (or get it funded by a government bailout), you can temporarily “invest” in competitive routes. Often enough the likes of Lufthansa pre-crisis abused their market power forcing competitors, even so-called “partners” into insolvency. My own experience includes the first German Wings (the remainders then acquired by Lufthansa), Cirrus Airlines, Contact Air (Lufthansa regional partners) or more recently Air Berlin.
And when I wrote about Air Berlin three years ago, I asked “Lessons Learned?” … Hmm. Obviously not. And when I wrote about Why Airlines Keep Failing, it wasn’t any “new rules” either.
And while Jens Spahn emphasized the solidarity inside the company and that Lufthanseaten (what Lufthansa employees call themselves) stand together in crises… What a cognitive dissonance. His “shareholder value” focus is legendary – I don’t believe he ever learned what “loyalty” meant. Given “short work” in Germany, there would not be real need to fire employees. But he and his manager-cronies, the moment they got the € 9 billion warned of 22,000 layoffs being “necessary”. Hypocrite!
Doing Things Right…
If you need some help to map out a strategy to survive this crisis, I could need some paid consulting. The unpaid kind keeps me busy but not the family paid. Which is the same for so many others “made redundant”.
And if you are or know an investor interesting to do things right, we are seeking funding for an Airline 2.0 – focused on USPs and profits. But also on real aviation sustainability (not the typical whitewashing we see in aviation to date). And on real corporate social responsibility. Which starts with your own. Either contact me or come 8-9 December to the Prestel & Partner Family Offices Forum in Zürich at The Dolder Grand.
Recent developments and posts really bug me. Don’t the writers of those posts recognize the cognitive dissonance? Yes, we must think positive. But there is a clear distinction between thinking positive and whitewashing or daydreaming. We have a crisis at hand and the “positive signals” aren’t as “positive” as those posts try to make them look like. They look at the marketing messages on the surface but fail to look the slightest bit deeper.
We need positive thinking, but we must also stay realistic!
Yes, the latest statistics are not there (yet), but we have enough experience to understand that the classic statistics, that I questioned as incomplete and intentionally misleading before the crisis, now in the crisis not only proof insufficient, but even dangerous for all of us, trying to grasp the repercussions to our industry!
Many of our media friends take up the old focus on unrealistic data packages. Yeah, hurray, the airlines add flights, bring the aircraft back in the air. Are. You. Kidding me???
The reason behind is mostly that the aircraft can only be parked for up to three months without the recovery into operational readiness getting substantially more expensive: >100 manhours, replacement and thorough components checks, etc., etc.
So the “losses” from flying empty might well be a cost-saving long-term. Depending on how long the aircraft must be stowed, when the passengers “come back”. But this adds to the “Corona Debt”, that must be funded and some day payed back.
The current IATA Regional Briefing, Europe, June 2020 reports on the beginning of the crisis. Available seats for April plummeted by 95%, the load factors of the remaining flights to 32%! At the same time Gridpoint Consulting analysed the London-Heathrow figures with similar devastating results, an average load factor (2Q20) of 35.5%! And ForwardKeys published some nice figures on air fares, plummeting 20-30% in average.
Now the airlines are reported to bring flights back to the air aggressively. Whereas the German Airport Association (ADV) published in their latest (June) traffic statistics: “Privater Reiseverkehr findet nicht statt”: Private travel does not take place. So those added flights mostly cannibalize the existing, low passenger numbers. Which we will likely see reflected in the next statistics. But keeping the aircraft grounded comes with it’s own bill. Adding to the “Corona Debt”.
So aviation media, please do not simply publish those statistics on how many seats are added to the market, but also check the demand = load factors and the revenue = average ticket prices. It would be worthwhile to look behind those numbers and check the reasoning for those flights. Looking only at the first statistics (increase of available seats) is negative, if the revenue and loads drops further. We need the full statistical picture I was demanding for many years: ASK (available seat kilometers), load factor (how many seats sold) and the average revenue (ticket price). In combination with the CASK, the cost per available seat kilometer) it would allow to understand the real development. And commercial viability, success … or failure! And I do look forward to real “success stories”, a.k.a. “profitable routes”. Routes not piling up more “Corona Debt”.
The Fairy Tale of the Corona Super Vaccine
Yes, as you can see in the archive of my Corona Papers, I also believed what those lying politicos and virologists told us. Though having brought up in a medical household, I looked early behind that cloud-screen. My (published) assumptions were based on a recovery following the common availability of the vaccine – and the treatment. We’ve learned a lot on the treatment meanwhile. And now, like with the face masks they initially called “unnecessary” for pure hidden motives to cover their unavailability, they slowly let the fact surface that:
We must not expect a “super vaccine”!
Corona will turn out more to be like the flu. Okay, not so much like the Measles I referred to earlier. The first infected people in Germany have ceased to have antibodies in their blood a mere three months after their infection. Now they, along with the WHO start slowly telling us the “new truth” (like with the masks), that we will have a long journey ahead, getting used to Corona. And as I kept emphasizing for months already, the time to stop the virus is long over, all we can do – and must do – is to #flattenthecurve. Keep the infections at rates our medical systems can manage. Until the first vaccines are there – to further limit the spread of the disease. Just like we get (or according to statistics mostly don’t) get our yearly flu-vaccination. By which time we will also hopefully by able to “manage” the severe cases with standardized treatment.
But hold it, ain’t that telling, all that lock-down was for nothing???
No! The lock-downs were a vital necessity and still can be! Because the reasons to flatten the curve are still undeniably valid! As I just wrote in the previous paragraph. But we must return to a life that embraces the Corona-virus (and it’s future variants) as what they are. A new “flu”. Maybe more hostile, sure different. But here to stay. And once we will have learned to manage the recurring “waves”, just like the annual flu, we will live on. Without masks if you ask me. Without “social distancing”. And without lock-down. And with air travel and real-world conferences.
Bailing-Out the Dinosaurs
I know, being a German and having taken residence with the family in Germany for the pandemic, I am somewhat biased on what happens here and especially Lufthansa. And that makes me puke. No, I can’t say that nicely.
Lufthansa, with a pre-crisis value of four billion (Source: Fortune) and burning five billion in the first three months of the crisis receives a bailout from the German government of € 9 billion. For a 25% silent stake, not allowing them to influence Lufthansa, i.e. relating to job securities (prime CSR), sustainable developments or a less hostile behavior towards smaller airlines they kept and keep walking over, their latest “victim” Air Berlin. No, lesson not learned. The next they announce is to make 22,000 (twenty-two thousand!) jobs redundant. Quite recently, they had to admit that 25% of the refunds for unflown tickets due to Corona have still not been paid back, the media claiming a 1-billion backlog!
I was kind of shocked this week, when German Tagesthemen, one of the main news channel mentioned already that this may not be the end, but just the beginning of an expensive further bail-out series for the airline and it’s many subsidiaries. But if they burned 5 billion in three months, how long can they sustain the drought before they burned up the added nine billion?
Don’t get me wrong! I belief that aviation will recover, but that will go slow and take time. What I see now is activism and lots of wishful thinking, piling up more debt and risking the airlines’ long-term survival.
But I keep my emphasis, that bailing out the dinosaurs is not good for anyone, except the dinosaurs. At KOLIBRI.aero, we have a concept in the drawer to invest € 1.6 billion into an airline with 200 aircraft. Okay, establishing the airline in Germany would be a bit more expensive. But no more than € 2.5 billion. Give another € 3-4 billion as a reasonable amount to add a global network, we could develop a “Lufthansa 2.0” based on sustainable aviation (not the Lufthansa greenwashing), true corporate social responsibility (way beyond Lufthansa whitewashing), looking after our own, but also after the regions we serve and the overall responsibility of a major player. There are others like us out there. I’m sure, given € 9 billion, given only € 5 billion, they could make a change. No Corona debt, but a clear profitable business, paying back the debt within 10 years with (above-market) interest. € 9 billion without any strings attached? € 11 billion for Air France/KLM? And meanwhile Austrian – a 100% Lufthansa-owned subsidiary also received a bailout by Austrian government, though “only” € 600 million and with environmental demands attached. But with another € 150 million to go into equity in Austrian parent Lufthansa (Source: CAPA). Swiss received a 1.25 billion loan guarantee for its poor mother Lufthansa (Source: Reuters).
And at the same time, one airline after the other is being grounded, Level’ed. No bailouts for Air Berlin pre-, flyBE early into the crisis. None for Level (IAG), Germanwings (LH Group), Laudamotion (Ryanair). And expecting no real “recovery” of the passenger numbers this year, I foresee a large number of the small airlines with one, two, maybe even five or ten airplanes to fail this year. And I get a lot of feedback that this is the time for KOLIBRI.aero. But we struggle not for billions, to launch we struggle to get funding of a mere € 30 million.
But given feedback from “experts” out there, to start it small as a virtual airline, or “aviation investors” not seeing beyond aircraft leasing? I now have hopes that our invitation to attend Prestel & Partner later this year at their real-world conference in Zurich will open the doors of more visionary family office owners, understanding the opportunity such a crisis provides to a business concept like KOLIBRI.aero. As those bailouts must be paid back one day. If the airlines don’t go bankrupt, once KOLIBRI.aero is kicking their butts.
A few days ago someone on the media compared Corona to the “new measles. Ever since I use the analogy and sure gave it some thoughts how that will impact our industry.
Like the Measles, Corona is a virus that is in the wild. About 5 March, WHO admitted Corona containment to have failed, taking another six days to declare Corona officially a pandemic. While in hindsight it shows the failure of the world health system and China to contain the virus quickly and efficiently, pointing fingers is futile and does not help.
Ever since, political and health care PTBs (powers-that-be) started a spiral that now pushed the world on the brink of commercial collapse. Sweden and other countries going less wild where accused to spread the virus but again in hindsight seem to have done everything right.
Crisis Communication – Scaremongering
To date, the PTBs communicate in the sense to stop the virus. That is crap and they should know it. The time of containment has been missed, see above. So it is not about stopping it, but to flatten the curve. To make sure our health care systems, our hospitals can manage the infected cases with severe, life-threatening symptoms. Until we have a standard treatment and can avoid infections with a commonly available vaccine.
While there will be reasons why aviation will recover slowly, it will likely be mostly economic reasons. People recovering from the economic impact to their lives are more likely to “safe the money”. But in Europe, U.S. and other “developed regions”, there have been crises and travel recovered relatively quickly.
P.S. 24. May 2020
I have been asked to add the referral I usually use here: We came to live with the Measles, with the Flu, SARS (since 2003), HIV (no treatment or vaccine yet), Polio, Malaria, Ebola and many other threatening viruses.
A brief lock-down was possibly called for to make people aware of the need of social distancing, but like in Sweden, it is time governments lift the bans and return their countries to life. And trust their citizens to be careful – and if they aren’t, live with the consequences.
And our (aviation) lobbies to make a case that airplanes are safer than hospital operation rooms, that travel is at own risk and that use of disinfection at airports and in the aircraft cabin and there also the use of face-masks is useful. But we must hold the horses and come back to the new normal. A normal that takes into account another lesson learned but won’t require acrylic seat shields, empty middle seats or other such placebos.
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