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Old 10th Jan 2017, 13:21   #3561 (permalink)
 
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May have been posted recently but did the link with CityJet fail because it was realised that SSJs could not be used due wet runway performance?
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Old 10th Jan 2017, 14:27   #3562 (permalink)
 
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Now that we know what this summer will bring for SEN, is there a consensus forming out there about Stobart's decision to support its airport with its own flights? Is this a smart move? Bad business practice? The jury still out? Most importantly - will it work?

Does anyone know if easyjet have a particular view on events, or any other notable players in the industry? It's just that if it does work for SEN, it could work for others.
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Old 10th Jan 2017, 21:14   #3563 (permalink)
 
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I think it's either going to prove to be very smart or exceedingly foolish. If the routes work they can then peddle them to other airlines saying hey look what we did and how well it performed or they will lose their shirts. Not dissimilar to the gamble that LTN took with Easy back in the day albeit in a much different landscape to today and they will be risking all their own money. It will be interesting to see how it unfolds.
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Old 10th Jan 2017, 22:39   #3564 (permalink)
 
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Been thinking about Stobarts claims that they have been making for years that they will hit 2.5 million pax by next year, latest figures suggest they are currently handling around 1m pa and have said that the new routes would mean up to 600k more per year, when I went to school 1m plus 600k equals 1.6m, so where are the other 900k pax coming from?
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Old 10th Jan 2017, 22:51   #3565 (permalink)
 
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And way before Easy LTN took a similar gamble with Monarch, providing them with a hangar- they were all but set on Stansted. Even before that maybe with Sky Tours and Euravia. I think there is a chance that the model will work from Southend- it has a catchment and is a very pleasant place to fly from all accounts compared with STN and LTN. I think SEN will be moderately successful in the long term but whether it will provide RoI to Stobart is another issue. As to whether the model will work elsewhere- well it is to some extent with Flybe deals with Cardiff and Doncaster/Sheffield although I that is a slightly different model. Where else could it work? I can't think of anywhere really - certainly not Durham or Carlisle nor I suspect Prestwick or Norwich. Where else were you thinking of?
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Old 11th Jan 2017, 00:12   #3566 (permalink)
 
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The model already works elsewhere, People's Viennaline was started by St Gallen three or four years ago and they are now expanding. Am I right in thinking that Humberside also run their own charters?
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Old 11th Jan 2017, 01:03   #3567 (permalink)
 
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The model may work elsewhere in certain cases to a limited degree (St Gallen had less than 92,000 passengers in 2015, much smaller than SEN), but it is often a bad idea in business when a company acts to a significant degree as its own customer - all sorts of perverse incentives can arise which makes middle management do quite strange things that are in the interests of their little fiefdom but not in the interests of the company as a whole.

It also makes other entirely separate companies start to wonder whether things are really being done at arm's length or whether there are some opaque dealings going on somewhere.
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Old 11th Jan 2017, 02:41   #3568 (permalink)
 
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The whole idea of this venture is to try and prove to airlines that SEN is a viable London arrival airport, especially on the city routes.

If Stobart do succeed, then it would demonstrate to other carriers that SEN does work and therefore they might consider flying from there too.

Although normally you wouldn't want a shared airline/airport venture, in this particular case it is a logical idea which could pay off in the long run.

AirportPlanner1 Humberside Airport is owned by Eastern Airways, and you are correct that they do provide holiday charters.
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Old 11th Jan 2017, 07:30   #3569 (permalink)
 
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It's probably Stobart's last throw of the dice. It's a bold move and it should work........to some extent. Caen and Rennes have worked fairly well out of the six routes started, and Groningen has clung on, so maybe six of the new 12 routes will work. If they do that's probably enough to convince one or two other airlines to dip their toe in the water. Or not......
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Old 11th Jan 2017, 07:57   #3570 (permalink)
 
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Quote:
Originally Posted by Barling Magna View Post
It's probably Stobart's last throw of the dice. It's a bold move and it should work........to some extent. Caen and Rennes have worked fairly well out of the six routes started, and Groningen has clung on, so maybe six of the new 12 routes will work. If they do that's probably enough to convince one or two other airlines to dip their toe in the water. Or not......
it all depends now on what advertising takes place. Using their poor airport website is not adequate enough. Plenty of advertising papers in Essex and Suffolk who would be happy to sell them some space.
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Old 11th Jan 2017, 10:17   #3571 (permalink)
 
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Quote:
Originally Posted by davidjohnson6 View Post
The model may work elsewhere in certain cases to a limited degree (St Gallen had less than 92,000 passengers in 2015, much smaller than SEN), but it is often a bad idea in business when a company acts to a significant degree as its own customer - all sorts of perverse incentives can arise which makes middle management do quite strange things that are in the interests of their little fiefdom but not in the interests of the company as a whole.
That's my view as well.

I understand why Stobart are doing this, but it's a high risk strategy. It failed when Manston tried it with EUJet and ultimately took down both airline and airport owner Planestation. Granted Planestation were already financially distressed, but if this doesn't work then it will still hurt Stobart, both financially and in terms of credibility.
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Old 11th Jan 2017, 11:00   #3572 (permalink)
 
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Manston isn't a fair comparison in my opinion. Southend is in a far more viable location and has a much larger local population. Planestation created a comprehensive route network from day 1 that echoed operations at other more established airports that had developed over a few years. All utilising an airline no one knew from an airport many didn't know existed, starting after the summer peak. It was always going to end in tears.

If it doesn't work I accept that credibility will be impacted, but the choice of routes is fairly safe and plays to SEN's strength which is primarily leisure. I can't see any of them being an outright disaster.
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Old 11th Jan 2017, 11:10   #3573 (permalink)
 
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There's been some fantastic opinion here in the last 24hrs. No wonder this thread is coming up to nearly a million visits.

I totally agree with davidjohnson6 about the company acting as its own customer not being best practice, although oddly if Stobart were the only ones flying from SEN then it could be argued it was part of one core activity.

However, it is what it is. They had to do something. If they make a reasonable fist of things and they still are able to offer 15 routes in 2018 then I can see the airport moving forward and drawing in new business.
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Old 11th Jan 2017, 11:36   #3574 (permalink)
 
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Even if they don't draw in new business so long as the operation isn't loss-making as a whole (when considering ancillary revenue created, rents from concessions etc and not just the flights themselves) I can't see the issue. As noted, plenty of other airports across Europe and beyond pay for airlines to fly there so running your own services isn't that different. I'd be more wary if this was Stobart Air's only activity, but as they have multiple aircraft flying around elsewhere and fingers in other pies it makes the whole thing far less risky than my St Gallen example or Manston.
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Old 11th Jan 2017, 14:23   #3575 (permalink)
 
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So the routes could all make a loss but Stobart could still make money through its airport.
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Old 11th Jan 2017, 14:48   #3576 (permalink)
 
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Which is no way to carry on. There are many fixed costs that can be carried by the airport that would make it easier to make a 'profit' on the flying side if they want to.
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Old 11th Jan 2017, 15:06   #3577 (permalink)
 
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Quote:
Originally Posted by AirportPlanner1 View Post
Manston isn't a fair comparison in my opinion. Southend is in a far more viable location and has a much larger local population. Planestation created a comprehensive route network from day 1 that echoed operations at other more established airports that had developed over a few years. All utilising an airline no one knew from an airport many didn't know existed....
I partly agree. To be fair to Manston, 400,000 or so people found their way there. But I agree that they had the wrong routes (and the wrong aircraft). The comparison is still valid though – Eujet was supposed to kick start Manston’s growth but ended up being a millstone around its neck. If Stobart get this wrong it’s going to be painful, and there’s the risk that if the new venture does struggle then they won’t have the objectivity to abandon it.

Quote:
Originally Posted by AirportPlanner1 View Post
As noted, plenty of other airports across Europe and beyond pay for airlines to fly there so running your own services isn't that different.
The difference is that these tend to be public sector airports with – how can I put it – a significant degree of support from the local authority. Stobart doesn’t have that advantage; they have to stand or fall on their own business merits.
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Old 11th Jan 2017, 15:39   #3578 (permalink)
 
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Stobart still trying to complete a €14m acquisition of aircraft leasing firm Propius from Aer Lingus:
Stobart revives ?14m buyout of leasing firm from Aer Lingus despite scrapping Cityjet merger - Independent.ie
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Old 11th Jan 2017, 21:34   #3579 (permalink)
 
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Stobart group have many fingers in many pies .. a big logistics set up including a port and railways . Some eco green forest burning thing .. a large share of the old trucking business and a couple of airports. It's a cash generating machine, hence the big dividend increase and large share price increase last year. They can afford a gamble on the airport and for some time.
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Old 11th Jan 2017, 21:43   #3580 (permalink)
 
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I think you'll find dividends were funded through asset sales.
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