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.
While we have sound plans to establish a profitable airline, planning to operate carbon-neutral, #greenwashing and lip-services dominate responses we get from “impact” investors, why our model cannot be supported. And the same what is heard and seen from politicians and public funds.
Now the last weeks, the “green strategy” is a big issue in the media. European Investment Bank claiming to be be the “Sustainability Bank”. The Mission Hydrogen 24 hour workshop. The reality check on to German Rail’s sustainability. Or the facts about the “global recycling champion” Germany. So let me summarize these reports. And call for any serious investors interested to make a true impact, to talk to us and learn the big impact we want to make. While establishing a profitable, future-focused airline.
German Rail & 100% Sustainable Power?
Don’t get me wrong, this ain’t new. There have been reports about this ever since they started their fake promotion about 100% sustainable power. But just this week, German Television did a reality check, with rather devastating results!
Just 61% of German Rail’s power comes from renewable energy. 28% come from coal and natural gas, where German Rail partly owns the latest built coal power plant, built against all public opposition. German Rail has long-year delivery contracts for atomic power. And only 33 out of 5,679 railway stations are powered from renewable energies, 0.5 % … And by 2038 (17 years from now) German Rail wants to increase the use of sustainable power to only 80%, targeting 100% only for 2050.
That excludes non-rail business, like Schenker logistics, clearly focusing on Dieseltrucks. Where container transport by rail is more than six times more ecofriendly than trucks. But having demolished most of the industrial accesses, parallel tracks and being delayed on major infrastructure projects like the European North-South rail axis, now backfires and cannot be remedied quickly.
ECB & EIB – the Sustainability Banks?
While we talk with impact investors, we do also understand the European Central and the European Investment Bank claiming to be “Sustainability Banks”. Talking with the very same investors being “naturally” and clearly interested in sustainable projects, we asked why they would not make use of those funds to complement an investment into Kolibri or other impact investments.
The feedback I get is painfully clear. They do not work with the EIB (or other government fund programs) for the bureaucratic process required to be “approved” as an investor. I have multiple statements that attempts to support the investment failed. Assumption being voiced that those funds again go to the big players and into unqualified “green projects” that are mostly about #greenwashing. That includes a claim that EIB funds new aircraft for the dinosaurs – without any requirement(s) for those aircraft or the airline to develop a strategy to reduce their carbon footprint.
I also reached out to one of the experts in my network, working closely with those banks and doing studies on their sustainability, asking why venture capital or family offices don’t work closer with such government funds: “But what you report from your interactions with public investors is true even for smaller and less ambitious projects and companies in that public VC funds invest only if the concept is validated by the market in one way or the other. In other words, only if someone else confirmed the commercial success elsewhere.
Germany – the Global Recycling Champion?
Reality is, that Germany is the global champion in export of plastic trash. Instead of a strict recycling regime, 80% of the trash collected from the recycling bins is being either exported or burned.
The drop in export results directly from China having stopped and banned the import of plastic trash. So now, the pictures of plastic from African countries dominate the respective stories about German “recycling”.
At the same time, the plastics industry is booming. And instead of developing sustainable packaging, the trend is clearly towards mixed-use, the known bad example being “Tetra Pak®“; a packaging made of several layers that make it exceptionally difficult to recycle. And the few recycling factories being more for greenwashing than for recycling any meaningful amounts of that stuff.
There was also a report on TV this week on Coca Cola and how they changed from the recycling glass bottles to throw-away plastic bottles and Aluminum cans. Which was the beginning of the end of bottle recycling. And how their lobbyists ever since fight any recycling requirements…
Aviation – the Scapegoat?
Now, how about “my industry”, how about aviation? And why is it constantly the scapegoat and blamed for global warming?
When the aviation industry claims that it’s only responsible for 2% of the CO2-emissions, this is also green-washing. As aircraft engines exhaust contains also other “greenhouse emissions” and many if not most not on ground level, but at high altitude. The “contrails” being a visual reflection that people “know” and can identify. Experts in a report about Airbus this week accounted the greenhouse emissions by aviation to 6%. Not much, but only 4% of the world population flies. And 6% is substantial.
So aside our plans to use Kolibri.aero to establish the infrastructure and certify the use of 100% synkerosene to fly carbon-neutral, we also understand the issue of the aircraft-engine exhaust will require further research into greenhouse-effects of the remaining exhaust. But which only can start, once we start flying “carbon-neutral”! And yesterday, I was challenged twice about synfuel and that we’d need to look at use of battery, hydrogen and fuel cells. Referring to a very academic presentation by Prof. Dr.-Ing. Josef Kallo of the German Aerospace Agency (DLR) about How to fly with Hydrogen, addressing fuel cells at the European Hydrogen Workshop by Mission Hydrogen GmbH (Ltd.).
Electric, Fuel Cells and other Aviation #greenwashing
Speaking with one of those “challengers”, he argued that in 10 years the first regional aircraft will fly on fuel-cells. Being “project planning”, I’d say better add 50% reserve to that, then we talk about 15 years. And personally I still doubt that time line. And then we will have aircraft with 10, 20 or maybe 30 seats. With a range of one to two hours. When we will have aircraft that transports 100 seat? Or ones that can replace the 150-250 seats used by the low cost airlines? When do we expect aircraft to transport 250-350 passengers long haul? Hiding behind “Research”? Science Fiction…
The argument given was that batteries and fuel cells will become more effective. Which I file under “cognitive dissonance“. What excess in miniaturization results in, we all experienced with the B787 batteries self-enflaming. Or the Samsung Galaxy Note 7 “fiasco”. Trying to mend the rules of physics is a true challenge. And that does not even cover the devastating ecological footprint not only of Lithium. If you want to wait for that to be resolved, we talk about “dirty” kerosene still in use in 20, 30 years!
And if that happens, our industry is worth being used as a scapegoat…
Change Happens – NOW!
Sustainable economy and global warming are big issues today, but most that we see is lip services. An investor group just recently checked impact investments for the “real” impact. They reported about 4% of all investments having a quantifiable impact or quantifiable targets. Only 4%. All others to be #greenwashing. On the “impact programs” of the 100 largest companies in Europe they found not a single one having more than one or two percent impact to global warming. Most of them being “lighthouse projects” that are being developed inside a “bubble” that does not immediately impact the company. Mostly lip-services addressing already established programs, but don’t really change the existing processes.
One example mentioned being the Electrolyzer delivered to Salzgitter AG for delivering hydrogen to be used in their steel-making process. A “research project”, largely funded by the hydrogen program. And now, being still in research phase, trialing it’s impact, it’s a “lighthouse project”?
The Fight against #Greenwashing + Lip-Services
And today I was confronted again with “avoid flying” as the first and foremost advise to stop global warming. While people will fly, economy needs flight connections as well. What we need is to stop blaming aviation, but start changing it. And the governments and public funds won’t help, so we need bold investors with a mission to help establishing the environment that allows us to work together on the common goal. Clean flying. Flying without remorse. Flying with a conscious mind.
We choose to fly Carbon-Neutral in this decade. And do the other things. Not because they are fashionable and easy, but because they must be done. But we can’t do it alone, we need investors that are interested in more than greenwashing their conscience, but the ones supporting the real thing. Investors that understand this is a big deal, it’s disruptive, it’s a journey. A journey that needs conviction, founders with the commitment and vision to make it happen…
This week and last I attended two aviation financing conferences by Airfinance Journal, one in Japan, one in Latin America. Then I read an article by National Geographic, demanding that travel should be considered an essential human activity. But that is something I find so very often. Thinking Outside the Box and understanding psychologically different mindsets is Not Everyone’s Cup of Tea.
Whereas a conference for me is a place we do networking, for which I am immensely grateful for Airfinance Journal (AFJ) to allow me attending the event. I sure couldn’t have afforded travel to Japan and Latin America. And thanks to their added focus on networking, it turned out some very promising new contacts to discuss KOLIBRI.aero with.
Let us have a look at the Latin America event which ended yesterday.
The Great Pretender
Whereas AFJ added a virtual networking lounge, there were the same, I’d say ten, people in there, only once the (too small) window showing the delegates forced me to scroll with more than four delegates in the networking lounge.
Saving the delegate list and not counting the dupes I came up with 720 delegates. An awesome conference. 42 of which “filled out” their profile. Only. The others failed to use a free way to promote who they are and what they, respectively their companies do.
I happen to believe from what I have seen that most of the delegates of the online conference were obviously pretenders, signing up, but not showing up. Not even taking the time to log in and fill out their profile. Do they know there are such?
Then there was a “dedicated networking”, where more than 50 registered for (I think the host said 64). We were seven (plus AFJ moderator, plus one totally unresponsive), so roughly 9 out of 10 having registered for it did not show up. For some reason, being in aviation so long, “no shows” is something I consider exceptionally rude. Not just careless, but outright rude. Because there are people, taking the effort to organize something good and then people simply don’t show? It is extremely frustrating for whoever works this out to provide you a service!
For the few being there, I believe it was better than if it would have been crowded. I just hope I didn’t talk too much!
Overall, it just confirms my assumption that less than 10% of the registered delegates showed up at all. Of which again, how many have been speakers? 21?
Not My Cup of Tea?
Again, these two events showed that there are different mindsets at play and it should be worthwhile to understand the motivation behind it.
I’ve seen that before, 20-odd years ago, when I organized the Airline Industry Stammtisch in Frankfurt. Many sign up for the event, to show their bosses, never intending to go there and spend their “valuable” time off elsewhere. Others, like me at AFJ do see the opportunity and value in networking.
A very good and valuable event, especially in Corona times. But it seems, at least from the outside, that most of the “delegates” were pretenders and never showed up on the website, never “participated”. Those people missed out on supporting a good event and torpedoed a valuable effort. From my side, I can only thank AFJ. The next step to improve the events in my opinion will be to automatically add the delegates to the networking lounge to enable messaging. Let them “opt-out”… There’s no e-Mail or other personal information shared, beyond the attendee list that delegates have access to anyway.
And they might want to promote to the delegates to fill out their profile… That’s free marketing and free networking!
The next event coming up in two weeks as Airfinance Journal China, then followed by Asia Pacific. Hopefully the “delegates” are motivated to not only register to show-off to their bosses, but to really attend? And use the networking opportunities AFJ provides?
Because else, such virtual conferences turn to be a barrel burst. And that would not value AFJ but do them a big disservice! Did I mention? Aside failing on your job (or why would you sign up?), it backfires; no-one really likes “Dateileichen” (file corpses).
Which is another example of people focusing on their own life style, ignorant to others’ needs, motivation, life style. As I commented right away on LinkedIn:
A dozen years ago, I spoke with a friend/student, trying to convince her to join the aviation industry. There’s three types of people.
Nestlings, staying all their life in one place, except for the one or other vacation. A flight of more than two hours takes them to the unknown they fear.
Precocials, leaving home to move elsewhere and get settled. They travel for vacation and VFR.
Birds of Passage. They go, where live takes them, are open to the new and for them travel is a reward and each destination an adventure they embrace.
If you talk to nestlings, they will oppose your notion that travel would be “essential”. At the same time, they tend to be nationalistic and protective about their local environment. And the first to shut-down borders and travel. It’s those, “thinking different” being “in power” we have to catch and convince. To do that, we must understand their different “gut feeling”.
That said, if you talk crisis these days, it showed (most of) us, what privilege it is to be able to travel. And how quickly such privileges can be taken from us by forces beyond our control. And the lousy standing of travel lobbyists and lobbies with the decision makers.
A Lesson for the Crisis
Convincing the People to Fly Again
In all the discussions, it seems to be common opinion that we must regain the travelers’ faith to fly again. Given the (painfully) slowly sinking-in fact that we never might have “the” super vaccine, we better adjust our communications. We must understand that there are us “birds of passage”, looking forward to new experiences and adventures, but also the ones that are afraid of the new, the conservatives, the nestlings. And some of them being politicos, in my humble experience a lot of them narrow-minded, cover-your-ass-types that do not make a move unless they have to. As seen at the beginning of the crisis. Then they overreact out of fear, understanding they made a mistake, trying to cover up hysterically to distract from the mistake. Or like Trump now was caught in the act, lying to the U.S. people to “not spread panic”. Whereas a healthy panic is good! It keeps us alert. And then we must adapt. It’s called evolution. But that’s something many people are mortally afraid of.
Think Outside the Box
There are a lot of posts and speakers emphasizing that we must adapt to the crisis, think outside the box, then in the next minute turning back on why them keeping the status quo and doing as they always did would be the right thing. As they obviously fail to understand the thinking of their customers, shutting down the crisis, falling back to “safe thinking”. Just as most investors do.
As painful as it was, in fact it was truly funny. A speaker at Airfinance Journal Japan, an aircraft lessor, emphasized the time being right for new airlines. When I approached him, he retreated to the fact that they neverlease to start-ups and would never invest in a start-up airline. Oh yes: Cognitive Dissonance at it’s best, right? This is a quite common stance when we talk to “aviation investors”, failing to understand that “aircraft investor” is not “aviation”, but just one piece of the puzzle. We represent an opportunity to place 200 aircraft in 10 years. Which is big business. Once we get the launch funding secured.
Me too … Or doing things different?
While many still focusing “blindly” on “Airbus/Boeing” aircraft investments, they lost and loose money. It’s been a shark pond before the crisis, now that bubble imploded. At Airfinance Journal Latin America event, the best speaker was Walter Valarezo of DAE (Dubai Aerospace Capital), outlining the “abnormal normal” in the market pre-crisis. Now most investors curl up into a ball falling back to “old habits”.
USP is about “unique”. You don’t have a USP if you only copy what the others did. And stick to your modus operandi.
Fortunately there are some – very few but some – who do understand the opportunity, the need to think outside the box. Those are the ones we talk with. Will they help us launch the Kolibris? I guess they will. Let’s see how quickly we can convince them and their PTBs that change is good and our business plans are safe and sound. And benefits a great deal from this crisis.
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.
“2020 will unlikely be able to keep up with 2019. But more speaks for shares than the lack of alternatives”
I’m kind of p***ed off by that statement by German DWS’ CIO and his conservative, visionless analysis headline. It reflects exceptionally well on German investors and asset managers (yes, I also talk about those banks) believing in risk-free, high-return investments. ECB frequently accused German banks to not understand the reason for their negative interest: To make deposits at ECB unattractive and force the banks to invest into companies, ideas, visions. Instead to such do their own job and a proper due diligence on good ideas, they focus to co-invest after others did the job, on “established models”, investing into aircraft available in surplus (A320/B737). Or in shares, as there would be no alternatives. Yes, if you have blinders on, you might be right.
Bold investments? Investing into sound ideas and business concepts developed by seasoned managers? Not in Germany. Nor much in Europe. Invest in shares, for the lack of alternatives? Or for the lack of vision? Blinders.
Disrupt. Or be Disrupted!
It’s our experience seeking funding for Kolibri.aero. A disruptive aviation business concept. Different. It’s called “USP”. It’s not “me too”. If you know investors that are open to vision, change and “something new”, please refer them to the Kolibris. Or me.
… and the Ongoing Demise of Small and Mid-Sized Airlines
P.S.: While I wrote this article, Germania, an airline that I know from the beginning of my career, who’s team I booked at American Airlines to Seattle to pick up their first 737s, an airline I have had a personal attachment to, went into insolvency grounding all aircraft after many years of financial losses. The demise of Air Berlin 2017 brought easyJet on their home-apron in Berlin in force, no longer some competition, but clear one-on-one. Such the chance to establish lucrative routes in Berlin evaporated. Instead of benefiting from the demise of their largest local competitor, Germania had to sit aside, watching the threat growing.
Germania did, what they had to do, they focused on niches. Niches that were too small, to fragile to give them safety. Routes they developed well always threatened to be taken over by their competitors operating with lower cost. Erbil, under threat of war, Beirut, …? They announced a base in Pristina (Kosovo). They ordered A320neo, in an attempt to stay somewhat competitive to their competitors like easyJet also introducing the modernized aircraft. Else they operated tourism charter flights – which are in great demand in summer, but one after another airline in that market files for bankruptcy at the end of the season. And Germania published financial troubles as early as August 1st, 2018. So they could not do what needed to be done: Generate enough money in summer to succeed across the harsh winter.
You cannot succeed if you play it small, if your cost is not competitive to your competitors. Not the small virtual airline competitors, the other “day flies” lasting one summer season, two at best, but the big ones. The easyJets, Ryanairs, Wizzes, etc. It’s not fuel cost development that kills you. It’s bad management. It’s a strategy without USPs or with very weak ones – there’s reason, the other airlines don’t bother the routes Germania did.
And as I outlined in an article I published on LinkedIn, this was no sudden issue, they lost money for years!
As it is being said, the unexpected increase on EU261-expenses, the “EU passenger rights” also had it’s impact on the financial situation. If you sell a ticket for € 100 and you must compensate € 300, it does impact your revenue. So back to the topic – flight disruptions.
Having worked last year on the business plan for KOLIBRI.aero as well as on projects related to Airport and Airline Operations Control Centers, flight disruptions have reappeared as an ongoing topic of increasing concern. And my experience doing a study a few years ago at delair together with Zürich Airport (ZRH) about the impact of the deicing forecasting and management tool on Swiss (airline) operations at Zürich became a strong source for my advise to airport operations managers.
When working with ZRH “Ice Man” Urs Haldimann on the study, I also got some feedback from Swiss. While managing the deicing in winter is not that much a problem, neither airports, nor passengers understand the rippling effect to the schedule. And often enough, not the airline’s own managers. That in the evening in warm Mallorca, the flight may be late, because of a deicing delay in the morning. So while higher force is accepted for the flight cancelled in Zürich, very often, the airline is required to pay EU Passenger “compensation” multiple the price for the ticket. So a major delay can be far more costly than just related to the immediate flight.
The harsh winter 2013/14 in North America (as likely this recent one) became known in the deicing industry as the Polar Vortex. The accumulating delays forced JetBlue into a “two day network reset”. Crews and airplanes were anywhere but where according to schedule and crew planning they were suppose to be. It took the better part of two days to relocate aircraft and crews back to the planned position, also to make sure the crews received their legally due rest, to then start the new day with a fresh start. As needed as that decision was, imagine the impact to passengers on flights that are booked usually 80-90%.
Disruptions can also be thanks to airport closures for other reasons, delays can be caused by as trivial as a broken baggage belt, a common thunderstorm or a ground handling crew doing a coffee break in the wrong time window – all things I experienced in my professional life. Flight crew duty times and technical delays are more common. Did you know that the Top 10 of “punctual” airlines have 15-20% of their flights delayed? That means 1 out of 5 flights is late. To “celebrate” such achievement is beyond me, I honestly feel embarrassed that our industry cannot do better! Don’t come with the typical “explanations” covering for the incompetence to do better. Needless to mention that this is about “departure delay”, whereas passengers truly don’t care about those as long as the flight arrives on time, right? I was recently on a flight that left “on time”. Doors were close, the aircraft was sitting at the gate, waiting for it’s slot in the deicing and departure.
More recently, Primera Air, Azur Air or Small Planet Airlines closed down. Cobalt Air followed shortly after I published the blog post. At least for two of those airlines the cause was said by their respective CEOs to have been “unexpected” cost for delays and disruptions. Though not reconfirmed, rumors have it such were also the cause for the financial troubles Germania faced in Mid-January 2019, filing insolvency early February (see P.S. above). “Refund portals” organizing refunds for delayed passengers result in higher number of refunds. Small fleets with no spare aircraft causes the ripple-effect to sometimes swap over into the next day(s).
Lesson learned from my research about Zürich delays: It very often is cheaper for the airline to cancel the flight to make sure the further aircraft “rotation” (planned flights for the remaining day/week) are not impacted. Especially if i.e. winter operations allow for “higher force” reasoning of the cancellation. While the airline can show goodwill and help the stranded passengers, in such situation they are not legally forced to add the legal, excessive passenger compensation for delays. It also in fact reduces the overall passenger upset. And Zürich can predict the delays!
What I expected quite a while ago is the information of upcoming delay situation to the inbound planned airlines. The example I keep using: Once Zürich (or any other airport) learns about arrival-, turnaround- or departure-delays would inform KLM before their flight leaves, that it would likely develop delays in Zürich and may have an excessive delay departure, maybe KLM would cancel the flight?
The concern: But if those airlines cancel their flights, then the flights will leave early, so KLM could operate on-time…?
Ain’t that shortsighted? Oh holy dear Saint Florian – don’t burn my house, take the neighbor’s one…
So what would be needed would be a bonus/malus system. If an airline “volunteers” for the sake of the overall operation, to cancel a flight in such a situation, maybe it’s relatively empty, could be merged with the following flight – the airline gets a priority the next time, so the full flight gets an on-time departure. An airline deciding not to join that system will never get prioritized and take what they get – including the delays.
Another ongoing discussion is the promotion of the big players for “SaaS”, Software-as-a-Service, more commonly known as “Cloud Computing”. What in my experience lacks of one vital thing, the fallback for a “line down”. There have been three cases that I (just me) know of last year, where line-down caused major flight delays. Because there is no fall-back in place.
That problem is multiplied by data silos. As Daniel, VP at IBS points out, there are too many screens an operations manager in the typical airline Operations Control Center (OCC) or also in the AirPort Operations Center (APOC) have on their desk, using old-style Gantt-charts, weather maps and other “sophisticated tools” that show them what happens out there. Very little tools that analyse the data automatically, giving you decision support on a disruption. Or warning you of potential disruptions giving you decision support how to avoid them.
While we do need to replace those multiple screens with dashboards, highlighting what to look at, I disagree to some extend with Daniel’s implications, as I believe we will need to be able to expand from the problem, onto the relevant Gantt charts, graphs, tables and maps. Worse in my eyes is the underlying reason for those screens, as they are clearly attributed to data silos. And if the left tool does not know what the right does, if the airport, the ground handler, the airline have different “realities”, no wonder we have friction that results in ineffective operation causing “issues” and delays. As I mentioned in my article about APOC, OCC, NMOC five years ago. And if I ask about interfaces and am told “XML” or “ASCII”, we talk about triggered “push” or “pull”, but not about a live interface. Another data silo.
Coming back, to close this FoodForThought-article, let’s come back to Germania and other airlines which we have lost recently. If you have no assets (aircraft leased or sold/leased-back which is the same), if you outsourced everything (to which I include “cloud”), if you don’t have “spares” for covering up disruptions, you make a very good business case on the old joke: “How do I become a millionaire in aviation? I start with a billion.” Or the other one: “Saving, no matter the cost”. It’s called a “virtual airline”. And I predict we see increasingly those virtual airlines to fail, as they lack size, assets and revenue (RASK) to compete with their competitors.
Almost three years since our launch, we could not make CheckIn.com a full scale business.
We knew that targeting airports would not justify the development and were confirmed – airline use is more than 10 times of what airports use our tool. Unfortunately, the majority use is access to our free data. Approaching the existing users, they have no money for such information, though they confirm the value in their day-to-day life. Even a SVP Network Development of a large airline, praising me for the unique value of our tool, knowing from the analysis we keep maintaining for him, that many airports use false “facts” for their catchment areas, confirms he compares with our data as an indicator to the quality of the airport data.
But nevertheless he expects the airports to deliver the (biased) information. “In the end, it’s a look in the Crystal Ball”. Expressing the fact that he does not understand the value of good data, even for the look into that Crystal Ball. Garbage in – garbage out.
Unfortunately, only the network departments of the smaller airlines frequently access our airports, but we suffered some painful losses on the larger airlines of which two have started to use our data. The large airline having recently expressed some interest and receiving some “combined” analyses, now having turned down the discounted flat offer we made. Such we decided to unregister the company and run it as a personal side business only. Yulia takes care of that, I will focus on other projects and only help on demand.
If you need know how in airlines, airports, specifically corporate strategy, marketing and distribution, disruption management you might want to talk to me…
This website uses only standard Wordpress cookies, not used for any analysis. We'll assume you're ok with this, but you can opt-out if you wish. AcceptRejectRead More
Privacy & Cookies Policy
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.