The Loco showdown??

[LBAir]

Recent press speculation suggest a LOCO showdown this summer with perhaps only THREE locos serviving. What are the opinions of US PPruNers on this subject??

I suspect that it will be the likes of BA, BMI and other FULL COST opertators that will suffer rather than any of the LOCOs. Will airports such as NEMA suffer with over capasity in the LOCO market?

Recent moves by THOMSONS to cancel certain flights from Humberside and mover them to ROBIN HOOD is certain to dilute the market further. Will the bubble burst at Manchester and new International flights operate from ROBIN HOOD?

from YORKSHRE:ok: the place to be is the city of Leeds.

[Mouser]

I would surgest that YOU boys at Leeds/Bradford are right in the firing line for the suffering, and it might your bubble bursting,the three left, Easy, Ryan, Baby.

[Caslance]

Dunno, no, and don't be daft!!! :ok:

[Mouser]

Daft me or him.

[Caslance]

Him, Mouser. :ok:

[HOODED]

Sorry boys, I disagree that only 3 will remain. I also doubt Jet 2 will disappear unless they sell out their sucessful operation to one of the big locos for an offer they can't refuse. If they did I would think the buyer will just repaint the ac and carry on the operation ex LBA, so no mouser I don't think LBA will take the hurt. Frankly the only hurt is likley to be felt by companies like BA/BMI as the locos continue to establish themselves where the demand is. BAs London policy is a bad one and BMI will suffer unless they transfer more routes to Baby(LBA/CDG for example , another JET2 target!). :}

[Young Paul]

Um. I think you'll find that BA/bmi now consider themselves to have their ducks broadly in line - their load factors and margins are now increasing, whilst the locos are decreasing - they are recapturing what were the low-cost airlines' high yield passengers (who have realised you don't need to spend £120 one way from London to Edinburgh, because the "low cost" airlines don't have a monopoly on the cheapest tickets). That's why BA and bmi are more bullish about their outlook at the moment, whilst the locos are issuing profit warnings and muttering about blood on the carpet.

[SNNEI]

Youngpaul,

I agree: their biggest threat is from the fight back we are now seeing by the likes of BA, bmi, and EI (The latter must be considered as being very succesful in this regard)

I really dont see just three loco's left. There may be three major presences, yes, but there are plenty of niches to exploit in Europe.

[Ambulance 'Charlie Alpha']

I'm with Young Paul on this one.

BA have certainly changed an awful lot over the last few years to meet the challenge of the Locos. BA domestic ticket prices are very competetive on the routes that matter and they are recapturing some of the pax market that they lost to the Locos initially. I work for a franchise and have seen our ticket prices fall dramatically, with loads still rising and actually making a profit. About bloody time! Fair enough, BA needed a kick up the a@*e to sort their pricing out, but have proved that they are still a very popular choice in today's market.

Come on, if you had a choice between racing to the aircraft for a decent seat and seat allocation at check-in, a Deli bag and complimentary drink (No matter how small) against a £5 stale sandwich, and leather seats against well, whatever turns up, all at a reasonably comparable price....who would you go for?

For the business traveller, I'm sure that BA are pitching the right prices at the moment. Heck, just read the papers. They're carrying more pax and even making a bit of money.

I think it's the Locos that have the challenge on their hands to get through this summer alive!

CA

[HOODED]

ACA, I'm not saying the loco's won't struggle or BA/BMI will. Jet2 however have been successful due to an untapped market, allocated seating, leather seats, excellent service and an superb on time record. They have won awards for customer service and as such I can't see them struggling if they continue to fill the nice in Yorkshire/Northern Ireland. Incidentally they delivered their newest ac G-CELB to LBA last night. Watch out for it, it's got a nice special scheme on it! My only worry is if they continue to expand at this rate LBAs infrastructure won't be able to keep up. The new ac is in Multiflights hangar probably because there are no spare stands on the apron!!

[Ambulance 'Charlie Alpha']

HOODED.

Some other nice toys in that Multi-flight hangar aswell!

I agree with you totally, but I don't class Jet2 in the same bracket as Easy and Ryan. They are low cost, but offer something very different to the latter two in their little LBA niche. They seem to have pitched very cleverly to a captive market in the LBA area. Good on them. I'm sure they'll be around for a long time, but like you am watching their expansion and hope that they don't over do it.

Good luck to them all.

CA

[alterego]

The trouble is we all think that we will survive and you others will fail.

Should Ryanair decide to pit itself directly against any of its smaller rivals, who will survive?.... I would think Ryanair. The likes of Jet2, Eujet & Flybe could not compete.

[LBAir]

I think that there will be one or two supprises in the battle. God only knows who will win!! I think the problem with BA Young Paul is they have downsized to an extent, cutting back services around the country, closing bases. What passengers want is to fly from LOCAL airports BA cannot provide that service where the LOCOs can and do.

[Op checked Satis]

Perhaps the problem with Ezy & Ryanair is that they have
forgotten where they came from,a low cost airline needs a
to keep its overheads low ,any organisation as it expands will
find this increasingly difficult to do.
JET2 is a genuine low cost carrier owning all its A/C outright & is in great shape to hold its own & in the long run thrive in the current market

[Buster the Bear]

Jet2's owner is also then in a VERY good position to sell out with no peer pressure?

Sold as a going concern.

Mr M, the boss is a very shrewed business man.

[LBAir]

Yes, but he is at LBA all of the time nurturing his baby, he's not gonna sell yet I tell you!!!!! There is more to come, Belfast, yes Easy beat him to it, but where next? Mr M has a goal, that I cannot repeat, but look out big boys and be sure he will succeed, watch this space and learn.:rolleyes:

[Op checked Satis]

JET2 is here for the long term,operating cost are low,it the"big boys who are in trouble"

[Optical Illyushin]

Op checked Satis - is this a wind up?? You obviously know b'gger all about Ryanair! :confused:

[TruthSlayer]

If things are so rosy, why have Jet2 cut back on those little extras like crew transport (very necessary to the far flung stands at LBA) and suddenly about-faced and started charging new joiners for type ratings? Seems to me that when this kind of padding is cut there is likely to be a reason.

[trainer too 2]

That is called adapting to new market practices Mr Slayer! If did had not done it it would have been worth raising it :rolleyes:

:rolleyes:

[Special Limitation]

Very interesting to note the comments on this thread. Monarch have also been quietly ( or not ) been creating a niche market out of manchester. As a commuter to Malaga on a regular basis, £50 or thereabouts for an all inclusive scheduled service beats the local LOCO's in every way. Prices are going up a bit at the moment but the flights all seem full so the cost of success I guess.

[Op checked Satis]

Hey Optical
Jet2/Channel express made money last year whilst Ryanair
have started to feel the pinch,all those NG's must be costing
a lot of money the 200 's owed them nothing

[jmc-man]

It is highly unlikley that Jet2 has shown any profit at all IN IT'S OWN RIGHT.

All the figures published show Jet2 making a contribution to the group profits. The overheads will be conveniently covered elsewhere. If it's wasn't for the Channex Freight and Post Office work, Jet2 would be dead in the water.

Ryanair and easyJet are still making year round profits, just reduced profits as the overall competition bites. The problem they face is that they have no obvious ways to cut their costs further, something which the likes of BA can still do to help level the playing field a bit. You have to laugh at O'Leary and Webster complaining that business is difficult "because the competitors are offering seats at stupid rates "

EUJET, if it ever gets going, will be run on the basis that the Fokker 100's are already owned, so flying them ( and covering direct costs) is better than parking them. Overall it might grab a small niche, but will struggle to build average yield's because of the location/product. They will run head to head with existing carriers on many of their routes, and will only attract business on price.

MyTravelLite/ Monarch/ First Choice/ Globespan..all branding excercises for existing seat only sales.

The LOCO bubble is well and truly burst. The guys in Europe have started heading west, making it difficult for EZY/RYR to head east.

Lots of aircraft on order difficult to see whwre they are all going to end up.

The winners? The Consumer....low cost travel to a variety of destinations with a choice of carriers.

[Optical Illyushin]

Op checked Satis - Anyone who claims FR do not have a low operating cost knows NOTHING about Ryanair! As a result of their low operating cost compared with their turnover THEY have over a billion Euro in the bank and will probably make 200 million Euro on the year's operation in profit. Can your beloved JET2 make a claim ANYTHING NEAR THAT???

Wake up dude!

:confused:

Hehe...... just reread your post and realised how ridiculous it is you know! You must be a wind-up merchant?? Ryanair's "feeling the pinch" probably equates to:

The reduction in expected profit by FRA compared to last years would probably exceed the Value of JET2 as an airline by a factor of three. In other words Ryanair could probably buy JET2 three times over with the profit it doesn't achieve this year! Some pinch eh?

[Buster the Bear]

jmc-man speaks wise words and we do not always sing from the same hymn sheet!

I have predicted a bubble burst, simply due to consumer spending on credit. Disposable income during the latter part of 2004 will diminish, so will spend on leisure and business travel as interest rate increases BITE HARD.

This is why MOL and Webster are predicting tough times during winter 04-05, anyone with a brain can work that out! Telling the City early lessens the impact later.
http://whipsnade.co.uk/picturelibrary/jpeg150/br/brown_bear_120_wide.jpg

[682ft AMSL]

It is highly unlikley that Jet2 has shown any profit at all IN IT'S OWN RIGHT

The full year result's statement by the Dart Group Plc, released to Stock Market at 7am this morning, contained a statement to the effect that it did (pasted below). Sorry JMC, but I know who I believe.

"Jet2.com achieved a satisfactory load factor for the year to 31 March 2004 and made a positive contribution to Channel Express after all costs and expenses"

All the figures published show Jet2 making a contribution to the group profits

No figures were published externally that differentiaed Jet2 from Channex or the the Aviation Services Division in total. The specific comment above is the only mention of the financial performance of Jet2.

The overheads will be conveniently covered elsewhere

The Dart Group as a whole reported increased profits of c.14%. So if in a moment of madness, the statement that Jet2 made a positive contribution after all costs and expenses was a false one (and therefore in breach of stock market rules) where exactly have they hidden these 'overheads' to which you refer? They must be in the Group somewhere and the Group made more money.

Accept the fact that the statement to the city is the truth. Do you really know any differently? I doubt it.

682

[Harrier46]

Jet 2 are fortunate in that much of their head office costs are already covered by Channex (crewing, ops, accounts etc) whereas other operators have their costs showing in a more transparent manner. But then what a great way to enter the loco market with such low overheads. Aircraft are cheap, load factors are good, and as the cargo side of the business retreats (recent retirement of more F27s, extra A300 for UPS not happening, several loadmaster and pilot redundancies) then Jet 2 will eventually become the main revenue stream for Channex. More aircraft (including 737-400s?) and routes will be announced soon and possibly even a new base.
Cargo customers are crystallising into UPS and Royal Mail and Jet 2 has a lot more still to offer so look for more announcements in the not too distant future.

[Op checked Satis]

Hey Optical
Keep your hair on,I'm sure the Tipperary cattle dealer knows what he's doing.
I'm simply making the point that in any business the larger it gets
the more difficult it is to keep costs down
Jet2.coms cost are genuinely low !

[Vizcaya]

The guys in Europe have started heading west, making it difficult for EZY/RYR to head east. Spot on! Looks like EZY and RYR have missed the boat in Eastern Europe. As a matter of fact, some airlines like Wizzair are even challanging EZY on it´s own turf: LTN!

It will be difficult competing with airlines that pay an Eastern European captain half of what an F/O makes in Western Europe. Add to that the ´loose´ operating culture in Eastern Europe and the playing field is not so level anymore.

[jmc-man]

682,

Look, I don't want to get into a battle of semantics here. My stated view is that Jet2 would not be able to stand alone. I'll stand by that statement.

I have read the Dart Group report, and it is full of interesting stuff, but the quote you elected to put in your post is hardly a "shout it from the rooftops" statement about the profitability of Jet 2. What it states is that after paying all the direct operating costs of the airline, there was something left over to contribute to Channex's overheads. It could have been £20 for all we'll know.

And that is just my point. If Jet 2 were standing alone, and covering all their own overheads rather than making a contribution to the parents, the figures would probably look distinctly worse.

And the Group statement refects the concern that the success of Jet 2 is anything but guaranteed or even expected......Look at this for a statement of "confidence"...


However, we believe that with Channel Express’ low operating cost base and our careful aircraft acquisition policy, Jet2.com should succeed in this market.

"Believe" and "Should" could have been replaced with "are certain" and " will", if the Chairman felt the market was genuinely growing.


And a more interesting figure is the return on Turnover which comes 3.94% ( 3.98% last year, and 4.89% the year before)

I believe Jet2 will struggle to continue to grow, but will provide a good source of cashflow to the group, which is a reasonable trade in this day and age.

I don't think anyone will be in the frame of mind to buy it out. It's far more likely that EZY and RYR will become even more agressive in their attempts to keep market share.

My humble opinion...no more.

[Going loco]

JMC – Channex and Jet2 are one and the same. Trying to argue the point that one wouldn’t exist without the other is a pointless hypothesis. And why the implication that just because Jet2 is a trading name of Channex that this somehow undermines its ability to be a success or to grow. Many of the most successful businesses in the world achieve what they do because they have mastered the art of running different brands off of a common infrastructure – described by some as the ‘one kitchen – many restaurants’ scenario. Keep everything different that your customer sees or interacts with, keep everything the same and at lowest cost where they don’t. This is exactly what Channex have done with Jet2 and rather than sniping about it, step back and recognise it is exactly the right way to run a diverse, multi-brand business.

As for your suggested re-word of the Chairman’s Statement, what a load of b@@@cks. No Chairman of any business would ever use those words in a forward looking statement to the investment community. You give an opinion on how you think trading will pan out over the next financial year and you are then obliged to provide an interim update if things are doing substantially better or worse.

Having read PM’s comments and the report myself, it sounds as if in terms of profitability and fleet size, Jet2 is performing much as they forecast it would be when the venture was first made public back in Q4 2002. In a period where others have come, gone or even failed to make it beyond the planning stage, this should be recognised as something of an achievement.

loco

[bmibaby.com]

Returning to the topic temporarily on the views of what next for the no-frills airlines, (if the Jet2 people don't mind) I just thought I would like to share my ideas.

I don't think that we will ever only have two no-frills airlines in Europe. America has five long standing no-frills airlines (Southwest, AirTran, Spirit, Frontier, ATA [and the new JetBlue]) and all of these airlines are continuing to do well in their own respective markets. I think it will be the same in Europe, not two, but a few big no-frills airlines, instead of many with small fleets.

Also, we'll probably see the demise of airline-within-airline, low-cost brands, like we saw in the US. Airlines will instead focus on how to make their services more attractive system-wide, and the small units like MyTravelLite & Snowflake will eventually be merged back into the system.

There will be some airlines who need a no-frills subsidiary like TUI have with HLX and Lufthansa with Germanwings, but I have no idea where bmibaby, thomsonfly or jet2 are going. ThoughtS?

[Eh Hello?]

Anyone know when Ryan's 732's have to go? Whatever about their UK-Europe routes, the introduction of 738's on some of the Ireland-UK routes will be interesting to watch. Unless they're totally coining it on the 732's on the likes of Newcastle, Teesside, Blackpool and Aberdeen and have enough of a margin to sustain the additional fixed and operating costs of the 738, I wonder will these routes deliver a margin to make them viable in a 738 world?

It doesn't totally pull the rug from under the FR model (which is the best of all LoCo's) but surely this must be a major concern in Ryanland and be viewed by others as an opportunity to pounce? At a minimum, some frequencies must be threatened whilst certain routes must be heading for the 'seasonal operation' bin.

[colegate]

Some of the things to bear in mind are;
1. There are currently 54 so-called low cost airlines in Europe.
2. Only three of them can be regarded as large airlines, Ryanair, Easyjet and Air Berlin. They have all acquired rivals. This is a process that is likely to continue.
3. All three of them appear to have very different business plans and diffferent strengths and weaknesses.
4. A major strength in Ryanair is its domination of the Irish Sea routes. The continued strength of both the British and Irish economies will be a major strength for them in any battles that are likely to start this autumn. A weakness for them is that they also serve some small and relatively unknown cities from London. They also have big aircraft.
5. The Easyjet model is substantially based on increasing market size and gaining market sahre in large cities especially London. Having small but highly efficient aircraft de-risks their operation. All their routes to popular Spanish resorts is a major strength.
6. Air Berlin has large aircraft and seems to be trying to serving two rather ddifferent market segments, namely Germany to London and Germnay to Spain. I am not clear where their Palma hub fits in.
7. All the others are vastly smaller and therefore vulnerable but some of them (German Wings for example) have powerful shareholders but whether they will support loss making activities is not known
8. A major difference between Europe and The United States is that in Europe there are the holiday airlines. Between them they operate around 650 aircrfat and the Revenue Passenger Kilometres they generate make them the dominant European airline product by far. They will fight to protect their businesses. Just look at HLX and Thonsonfly to see the stirrings in this sector.
9. London is by far the largest airline market in Europe and around 40% of all European flights involve London. This means that an opeerator based in London is likely to be able to do the most effective marketing in this huge market. An example of how not to do it in London was dba who put in so little effort that their operation was closed after a few months.
10. The next biggest market is Paris and that has the smallest number not only of LoCo flight but holiday airline flights as well. To gain strength an airline must be prepared to slug it out in that market. Easy jet is the clear leader there.
11. To work out who is likely to succeed of fail just draw up a SWOT (Strengths, Weaknesses, Opportunities., Threats) table for each. If the Weaknesses and Threats dominate then that is who is going to fail or get taken over.
12. My guess is that MyTravel will walk away from Lite as it does not fit their core business. Flybe will have to decide which business it really is in. Their route amd marketing strategies seem confused and the 146 is entirely the wrong aircraft. EUJet will find Manston to be an almost impossible marketing proposition. Their marketing profile is so far close to zero and they start operations in a couple of months time. Snowflake has no prospect of competing successfuly with Sterling European and will be abandoned. bmibaby seems to have little consistent strategy particularly on the markets that it serves. It will keep chopping and changing until it realises that to succed you have to have a clear niche or you have to be one of the big boys. The market in the Ruhr Valley is beginning to look very messy. There is bound to be some shake out there. Airlines from new EU countries will need to be exchane optimism for realism if they are going to compete with the likes of Easy jet. If Easy jet decide to operate from the UK to Poland, for example, then Wizz will start to bleed. That is a scenario that is very likely to happen.

Hope this all helps to clarify things on this topic.

[TruthSlayer]

Flying Scotsman,

Update your facts and lose your attitude! I know 2 direct entry Captains, one of whom is joining Jet 2 imminently and the other who has been offered a job but as yet has no start date. Both of them have been told that they have to PAY for their type rating, rather than being subject to the old bonding process.

[ILS 119.5]

Truthslayer,
Watch what you are saying to the Flying Scotsman. He knows what he is talking about. You don't know who he is. I do.
ILS 119.5

[KAT TOO]

BASE CAPTAIN ME THINKS, SO HE SHOULD KNOW WHAT HE'S TALKING ABOUT AND HE AIN'T BEEN WRONG YET

[TruthSlayer]

Well, unless Jet2 are in the habit of employing liars, and I suspect these individuals are not, 2 independent sources have informed me that they will have to PAY.

I really don't give a sh*t who Scotty is. I just raised a point.

[ILS 119.5]

So who's lying, the two individuals you know or the flying scotsman. I think someone here has been misinformed about what is really going on. A far as I am aware Jet 2 do not make pilots pay for type ratings, at the moment certain airline companies could not get the staff if they did. Bonding seems a more logical way of attracting staff therefore a better way to get the staff they require. If, they have been asked to pay for a type rating then there must be something wrong. Maybe their qualifications are not up to what Jet2 require and therefore extra committment is required. I'm sure if I applied to Jet2 with my out of date 737 rating I would be accepted without having to pay for a new one.

[Stick Flying]

Well strangely enough I too have met a chap who is paying for his type rating (dont know what part jet2 have to play in the administration of this). Now if this guy dont have enough ticks in the boxes to be type-rated by Jet2, I would suggest Chuck Yeager is a student pilot.


ILS 119.5, you are dead right, there is something wrong if they have been asked to pay for their type rating. Problem is how can we buck this trend, and I dont mean just with Jet2 (that is if the truth ever surfaces). I know how I choose to fund my next Type Rating and it wont be by means of my bank manager.


Stick

[TruthSlayer]

No lack of experience, both are exisiting jet Captains, both high time, one has VERY heavy experience. Tons of it. Both are paying £ up front. No mistake.

[ILS 119.5]

Unfortunately the only way to alter this trend is, "supply and demand". there will be a shortage of pilots soon. There will and is a shortage of Controllers now. I have seen the industry work for the last thirty years and the employment works on a cyclic basis. We cannot stop this but in my view you have to be in the right place at the right time. All companies will change entry criteria to suit the market at the time. The whole aviation employment industry can be blamed on the employers as they have caused it to be. Lack of foresight, reactive management and run by financial wizards and witches. If we ran the business with guidance from the financial department, then it would be far better.
Any comments.
ILS 119.5

[TruthSlayer]

hehehe

I withdraw the crew transport comment. See that's still running just fine.

Rumbled, so might have to change my name again.

[bacardi walla]

Any mileage in FR changing some of their new build -800's into -700's to remain competitive ie. fly them into the smaller airports where an -800 struggles ??

[brabazon]

No, not while they got such a good deal from Boeing and airports are willing to pay for "improvements" to allow Ryanair to operate 737-800s.