Airline News

Budget airlines will be the biggest victims of soaring fuel costs as fares rise across the industry, the global aviation body warned today.

The head of the International Air Transport Association warned passengers that the era of cheap air travel, spurred by the no-frills carrier phenomenon, will be ended by the oil price spike. The fuel bill for the global airline industry could rise by $50bn (£25.5bn) this year and has put businesses in "emergency mode", said Giovanni Bisignani, Iata chief executive.

Echoing recent comments by British Airways chief executive, Willie Walsh, Bisignani said low-cost airlines face the greatest shock because their business models rely on cheap fares.

"When you add $50bn to the bill, somebody has to take care of the cost. Clearly the fare will have to reflect a cost structure that is different. In this picture, the low-cost carrier will be more affected," he said. Bisignani added that fuel represents 50% of costs for some no-frills carriers, such as Ryanair, while it accounts for 34% of the cost base among Iata members.

In response, Toby Nicol, director of communications at easyJet, said Bisignani represented "vested interests" because Iata is the global body for traditional network carriers such as BA, Air France-KLM and American Airlines. Ryanair and easyJet, in keeping with their low-cost ethos, refuse to sign up to Iata, which charges a membership fee. Nicol added that the biggest casualties in the UK airline market are business class-only carriers. Last week, Luton-based Silverjet joined Eos and Maxjet in closing its operations.

"Those airlines are the polar opposite of easyJet. They are high-fare and long-haul, whereas we are low-fare and short-haul." He added that carriers with the most cash and least debt on their balance sheets, led by Ryanair and easyJet, are more likely to survive the high oil price and weak consumer demand squeeze.

"Those people who have the cash to ride out the storm will be the winners and those who don't will be the losers."

EasyJet said rising fuel costs will benefit short-haul operators because the fuel cost passed on to the passenger is much lower. For instance, fuelling a BA return flight to Miami cost around £60,000 per journey when oil was at $80 per barrel. At $135 per barrel, the cost has climbed to £100,000, which equates to an increased fuel cost of around £133 per passenger. By contrast, the cost in fuel of flying from Luton to Alicante and back with easyjet has doubled to around £20 over the same period, easyJet said.

"If you want a week in the sun, with easyJet you will be paying around £20 per return in fuel costs. If you want to go to the US, you are looking at paying between £180 [for San Francisco] and £130 per person."

Today, a barrel of US crude oil was trading at $126.27.

Source: guardian.co.uk

Labels: EasyJet, low cost airline

Plans by Korean Air to launch a low-cost international airline next year hit a snag Wednesday as authorities introduced strict guidelines on the booming budget carrier business.

theage.com.au

Labels: Korean Air Lines, low cost airline

Major U.S. airlines, struggling to keep pace with their younger low-cost rivals, are rushing to enable wider use of credit and debit cards for in-flight purchases, a step that could spur both revenue and cost savings for the recovering industry.

uk.reuters.com

Labels: low cost airline, US

ELFAA press release – 26 September 2007:

The European Low Fares Airline Association (ELFAA) met in Stockholm on 24-25 September for its 4th Annual General Meeting. Members debated a range of EU legislative proposals in the field of air transport, some of which risk re-regulating an industry that is already over regulated resulting in a reduction of the overall competitiveness of European aviation.

In particular members considered the European Commission’s legislative proposal for the inclusion of aviation into the European Union’s Emissions Trading Scheme (EU ETS)....

For the full text of the press release click on the link below:

http://www.elfaa.com/documents/ELFAA_Press_Release_AGM_2007.pdf

Labels: ELFAA, low cost airline

Low-cost airlines transported a total of 2.7 mln passengers to Spain in August, up 42.9 pct from a year earlier, and representing 40.2 pct of the total passenger arrivals by air, the Ministry of Industry, Trade and Tourism said.

forbes.com

Labels: low cost airline, spain

The continued growth in budget airlines in Europe is helping to increase the number of flights worldwide, a study has found.

independent.co.uk

Labels: europe, low cost airline

Europe's two biggest low-cost airlines, Ryanair and easyJet, have stepped up their competition in Spain, forcing down fares and causing turbulence for the nation's domestic carriers like Iberia.

afp.google.com

Labels: europe, low cost airline, spain

Asia's low-cost airlines are set for "explosive" growth and are likely to equal the market share of their counterparts in the US and Europe in two decades, according to Airbus.

theaustralian.news.com.au

Labels: Asia, low cost airline

FlyMe (Fly Me Sweden AB), low cost airline from Sweden, has filed for bankruptcy. The Gothenburg based airline announced that it would file for bankruptcy on 2 March 2007, and all flights have been cancelled.

Labels: bankrupt, flyme, low cost airline, sweden

A new UK based lost cost airline is scheduled to be launched later in 2007. Flyforbeans will be based at Cardiff International airport and will fly to European destinations.

flyforbeans.com

Labels: flyforbeans, low cost airline, uk, wales

Virgin Blue's shift from being purely a low cost carrier is proving to be a lucrative move, with the airline predicting a 60 per cent rise in annual profits.

theage.com.au

Labels: low cost airline, profit, Virgin Blue

Singapore based low cost airline Tiger Airways is about to expand its opeations to Australia. The airline is conducting a survey on their website to find where to fly to in Australia. Vote for your selection here:

tigerairways.com

Labels: australia, low cost airline, Singapore, Tiger Airways

Sky Express, Russia's first low cost airline, has commenced operations on the 29th of January with a flight from Moscow to Sochi.

Fares are currently being advertised on their website starting from 500 roubles, including tax (approx 14.50 euros).

Sky Express

Labels: low cost airline, moscow, russia, sky express, sochi