Changing Roles

As many of the readers of this blog know, I am somewhat personally attached to that little airport in Central Germany, Erfurt-Weimar.

Last week I was taken into a discussion by Thuringia’s Minister President Bodo Ramelow, about how to stop the down-spiral of emigrating Thuringians. Which reminded me about the likewise discussion we had in 2009 shortly before I joined Erfurt Airport with the task to stop their downward-spiral on their passengers.

Real Life Example

What I was faced with was an extremely negative image of the airport within the region. And a lot of demands on how to do business from amateurs in the industry, politicians, tourist offices, etc.

First day at work, the GM of Tourism Thuringia, Bärbel Grönegres was quoted in the local newspaper (TA, 02Mar09), having visited the United Arab Emirates to promote medical tourism to Thuringia. Having a Munich-Erfurt flight by Lufthansa-Partner Cirrus Airlines at the time, she recommended the Arabs to take a flight to Frankfurt, to be picked up with a bus for a +3 hour tour to Thuringia. Tourism material did not contain reference to the airport. Questioned about the reason, her reply was “Who knows, how much longer we will have that flight”. Ever since, that became a prime example I use for “negative thinking” or “calling for disaster”.

The next winter, the Thuringian Olympic athletes brought home a record number of medals. But at the following ITB, it was more important to promote Franz Liszt, who lived a dozen years in Weimar. The fact that the Russian-Orthodox chapel, Grand Dutchess Maria Pavlovna who’s invitation brought him to Weimar has built and got buried in is under direct protectorate of the Russion Orthodox “pope”, the Patriarch, such making it a pilgrimage site for the Russian Orthodox church has completely failed to trigger any support by Weimar or Thuringia Tourism. Air Berlin reported it to be a “known reason” for a substantial part of their Russian Berlin-passengers to add Weimar to their travel plans.

In order to promote the government-funded route, after fierce discussions, Cirrus Airlines agreed to offer a low-cost ticket at 99€ return, having only about 6€ after the high taxes on the ticket. That offer was made available especially to the Thuringian government offices and the state development agency (LEG). Nevertheless, LEG planned and executed delegations traveling with the train to Berlin to take flights from Berlin, instead of promoting the route. The same also for the ministries and ministers. Even the responsible minister taking flights from Frankfurt and Munich instead of using the PSO-route he signed responsible for. During the months we’ve actively promoted that 99€-fare also to the industry and the travel agencies and also had it largely available, not one of the flights used up the 99€ tickets allocated to them. Being at the verge of a bankruptcy, Cirrus Airlines finally ceased to operate that route in December 2010.

By the time, working with the local industry associations, political parties I have been able to increase the passenger numbers by about 20 percent. In fact, to date, the airport is far from the 320 thousand passengers I left them with. With Weimar being the neighboring but historically better known city internationally, I pushed forward the renaming to Erfurt-Weimar with the attempt to improve the incoming for the airport. Paid almost completely from the limited marketing budget. A strategic decision executed after our parting-of-ways in December 2010 after my two-year contract was not extended in the wake of the retreat of Cirrus Airlines. A strategic decision though made obsolete by the “political” decision by traffic minister Christian Carius to not replace the route as I recommended with an Amsterdam-service. Sad decision indeed, as with our parting ways, the discussions with KLM were simply discontinued (KLM calling my number reached someone speaking German only, I was gone) and despite their interest in a PSO (public service obligation) financial route support, we had discussed flights based on mere startup incentives and marketing support.

Opposing myself ongoing subsidies, to demand a route but to leave the (substantial) risk completely with the airline is neither the answer. Whereas comparing the CheckIn.com-data about airport catchment areas with the data provided by airports we found that data to be completely off-set in a majority of cases. It caused us to make basic data available for free. But if the data provided by the airport is not hard, but guesstimates or outright lies, when the airline starts a flight based on that data, the airline takes the risk. To not only does the airport sneak out of the responsibility, they increase the airlines’ risk – is that a game? Or serious business?

Fraport Bulgaria’s more than doubled “population within two hours” can not result from the “drive time off-sets implied by Fraport Bulgaria investigating the discrepancy.

Changing Roles

Now since I started in aviation 30 years ago, the market has drastically changed. In the good old days, there were (often highly subsidized) “national airlines”, used to promote the country. Back in my early days, the airlines were the executive for the tourist offices and also worked closely with commercial development agencies. But ever since, those national airlines have either adapted or went out of business. The emerging “low cost” airlines virtually evaporated the income of the airlines, competition becoming fierce.

As I keep emphasizing with my updated image of Purchasing Power and Airports, there is a relation between a strong airport and the regional purchasing power. It is indeed a hen/egg issue, but if you are a small airport in a weak region, maybe it makes sense to consider how to attract travel (tourism, commerce) to your region. Not how to drain your region of the money by sending the population to the Mediterranean for vacation, but by having incoming, scheduled services, by adding point-to-point routes and to attract low cost airlines.

If we do not talk about PSO (Public Service Obligation) where the government pays for basic flight services, if you build an airport and wait for airlines to find you, keep on sleeping (and burning money). So if you are a small airport and you have little to no money, what can you do?

Having an airport is not enough any more.

The airport is part of the region’s infrastructure. As such, it needs to be integrated into a political and commercial strategy. Whereas in the example of Erfurt-Weimar, the airport is being kept as a scapegoat, being challenged in one sentence for the aviation noise (a good joke with so few flights) and for not having flights. A political punch-ball.

Other, successful airports like Memmingen in Southern Germany are integrated into and understood as a strategic value for the regional development. In fact, Memmingen is not politico-owned but owned by more than 60 co-owners from the region’s industry. Such, instead of being a scapegoat for political power games, everyone in the region understands the need to actively support the airport. Anyone harassing the airport confronts everyone in the region. A political suicide!

At Erfurt, I was asked to establish flights to Moscow. One company. 10 employees. Even with a small (expensive) 50-seat aircraft and weekly flights only (which are usually not sufficient for commercial demand), we talk about 40 seats by 52 weeks in two directions or 4.160 tickets to sell every year. But for a decent offer that is useful to the industry, you need at least twice weekly flights.

Leaving that task to attract airlines to the airport alone, at the same time running blame games and scapegoating, the airport cannot justify such flight. But what if the state development agency and the chambers of commerce, on demand by the political PTBs (powers-that-be) qualify the demand from all those small and midsized companies? Not on a low-cost, but with reasonable ticket prices. Not at prime time at the maximum risk for the airline. Maybe instead of a weekly, can the region sustain a double or even triple-weekly flight making it interesting for the companies in the region? Are those companies willing to support the launch period by committing to use the flight, even if slightly more expensive than a flight from Frankfurt or Berlin? Keep in mind, the people have to get there, you also pay for gasoline/parking or rail. Transport to those hubs is not free either. And the longer check-in times make them even less attractive, right?

Interesting approach. I’ve talked to several smaller airports where they agreed that their chamber of commerce and regional development agencies “pre-purchased” tickets at the cost of the average ticket price needed to cover the operational cost. Then they to sell it to their members. Not covering the full cost of operations, but simply taking their share of the risk! Why should they not, if they believe in the numbers and data they provide to the airline to promote their business case?

Then talk about Tourism. Given such flight, are the local tourism PTBs ready to promote such flight in the outlying region? What about other promotion? Don’t leave it to the airport! Is there a joint concept by the political PTBs, the state development and commerce PTBs, the tourism PTBs on what flight they want, how they will promote the flights?

“We have an airport”. That’s nice. But not enough.

And for a Minister President even only on a state level? You better think about a strategy. Or close down the airport. Having flight to summer vacation is not enough. It drains money from your region into those destinations. What’s in it for you? Why do you fund an airport? No scheduled services? No incoming? Do your homework.

Changing Roles

It’s no longer the job of the airline to promote your region! They simply don’t have the funds to do that. It’s not their business case.

It is the job of the political, commercial and tourism PTBs to qualify what they finance an airport for and come up with ideas and business cases for airlines to take the risk to fly there. And no, a “business case” is not necessarily paying subsidies. If you have a good business case that the airline will make money on the route by flying paying passengers, I can rest assure you that the airline will prefer that over subsidies that are usually associated to political nightmares.

Compiling sound numbers is a good start… And yeah, I might be willing to help you with that.

Food for Thought!
Feedback welcome…

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Airline Route and Base Considerations

This is a copy of the article published originally on LinkedIn.

(5. Apr. 2017) A mere three weeks ago, I was approached for a business concept for a substantial fleet of new aircraft and the intention to get them into the air this year. Coming up not with the “usual” business model to use A320/B737 and lease it to low cost airlines, but with a challenging, new (unique) business concept.

That comes along with the need to develop plans not only for the initial routes, but for an ambitious growth plan with expansion of routes and bases across Europe. Having initial interest not just from the aircraft investors group but also from the aircraft maker, I am now heading for Routes and have been asked, what I expect from the airports to bring along.

Based on my blog article My Routes Sales Pitch, I have meanwhile worked with several airports and found a very easy “challenge” to gain understanding of what the airline expects from the airport. The results of the challenge usually gains a better understanding of the airline, a sound SWOT-understanding (SWOT = internal strength and weaknesses, external opportunities and threads). The work usually ends up with a better chance to find a partner to establish the services.

The Airport Challenge

If you would have an aircraft yourself to operate from your airport. How would you utilize it?

Challenging Questions

Which routes? Do you have enough demand yourself? Or does it make sense to share the aircraft with another airport? Will you have the support from the politicians, media, industry and tourism on your side, as well as on the other (destination) side? What’s the incoming vs. outgoing, what is the seasonality? Who can you get to commit on a substantial risk share for the operations? Or is it just “good will” but no commitment?

What aircraft size do you see the business case for? Usually airports today look at low cost airlines with 150-200 seats. How does the model look with a smaller aircraft (i.e. 100 seats), what ticket prices can you sell? The price levels often do not increase in line with the sector length, so shorter sectors may be good, but they compete with ground transportation (car, bus, train). And what is the average income and the GDP in your region? Are there commercial, ethnic or cultural ties between your region and the destination? Is it more incoming or outgoing or equal split?

How is the availability qualified personnel on your local labor market? Flight crews, (line-)maintenance? How about disruptions, crew and passenger hotels? How about aircraft parking or hangar maintenance?

Make me a business case. Convince me. Or other airlines you talk to.

It’s a Trust Thing

At CheckIn.com I developed a case study about the airport “facts” on catchment areas, compared to the reality check by the CheckIn.com pan-European algorithm. It was, it is devastating. Bad enough.

Fraport Bulgaria is 230 and 250% above CheckIn.com calculations on the simple isochrones (x minutes from the airport lives y population). Their response to the facts first was rather aggressively voiced denial; “we don’t know which brochure you refer to”. And when I’ve send them photos, they accused us of incompetence; “we have sophisticated tools, our numbers are right”. We asked. We did neither get any sound explanation, nor did they even try. Nor would they provide the name of their tool or how they came to those numbers. And +200 percent is simply beyond any “drivetime variation”. My guess: Someone made a (less) educated guess about those numbers and now don’t know where they came from; but it sure has to be an unquestionable source, everything else would be heresy, right? CheckIn.com must be wrong, because Fraport Bulgaria is beyond doubt! … Would I trust them on any demand forecasting? You got to be kidding me. And I actually thought them as a possible aircraft base. Oops…? And yes, we have a lot of airlines using our data to compare and we get the very same feedback from them, why they like CheckIn.com. Oh. And CheckIn.com is open about their “Numbers Game“.

We also worked from early February to early April on the Passenger numbers of airports. We talk just 600 airports in Europe, but for more than 50% we receive different numbers from different sources. It’s not uncommon to have different numbers even from the same airport. Or the monthly numbers not summing up to what the annual number is said to be. It’s your main KPI (key performance indicator). If you don’t manage that simple value, how should I trust any other numbers you provide? (more)

We made the basic isochrones and population total together with other data available for free on CheckIn.com to overcome the airlines’ distrust in airport data and especially airport catchment data. Quite embarrassing if you think about it, ain’t it. So you better come up with a sound business case. And at least check your base data and reference your sources.

If you have a wishlist of routes to be served, I will take them as that. A wishlist. I can get them in RoutesOnline (Opportunities) and TheRouteShop (unserved routes).

Have a sound business case compiled for certain routes, I will very likely consider how they fit aircraft rotations.

Have a sound business case for an aircraft? 24/7/365? Then I am very happy to talk to you.

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Route Planning Events

aviationconferencesWhile “the world” meets at World Routes, we received inquiries, why CheckIn.com is not there.

Sure, there are “obvious” reasons, but when it boils down, you need to prioritize where your money comes from. So while World Routes is an important event, I believe in the reasoning behind the split into multiple Routes events.

World Routes for the global players, regional routes for the regional players. Whereas at Routes Europe earlier this year, the “regional focus” is blurred already, attracting “foreign” long-haul airlines. As CheckIn.com currently focuses on Europe, Routes Europe is a must go for us. So we will be in Ireland next April. As an airline client requested Russia before North America, we won’t be ready for Routes Americas in Vegas in February.
If we get North America up in time, it may make sense to look at World Routes 2017. May make sense.

Likely still not, as the focus of the event is the networking between airlines and airports. As close as we are related to the aviation network development industry, we are secondary, we are supplier. World Routes is simply too busy, too packed, to give us a lot of opportunity to promote our services. That’s much more focused and such reasonable at the smaller (and targeted) events.

ConnectAviation2017Right after Routes Americas, there’s the second (annually first) European event which we now have as a “must go” on the agenda: Connect°

Which motivated the question, why or how that event differs from Routes Europe and why I believe this is even more valuable…? The answer is rather easy. Where Routes attracts all those big shots, it is already becoming a “major player event”. Many small airports and airlines expressed towards us that they feel uncomfortable at Routes, even on the Routes Europe. Too big. Too big-focused.
Connect° and Karin Butot focus the event to the small and mid-sized players. So if you look for big traffic and big routes, go to Belfast. But if you focus on small airports, regional airlines and more local business, you’re very likely better off at Connect°.

So if you want to meet us…

22.-24. Feb 2017: Connect°, Ajaccio, Corsica, France
23.-25. Apr 2017: Routes Europe, Belfast, Ireland

Or call us to make an appointment elsewhere.

P.S.: Have you registered for CheckIn.com access? Registered users enjoy free access to basic airport data for more than 570 airports in Europe, including an isochrones map and the population in it! Free as in “no charge” and “free to use” (as is).


Food for Thought
Comments (and Likes) welcome!

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