Openskies
 

As you will have realized yourselves, we are facing very difficult times. With the worldwide
crisis in the financial markets, and the resulting global economic slowdown as major
countries move towards recession, the airline industry is suffering the worst crisis in its
history, compounded by the erratic nature of oil prices. (Although they are now falling
sharply, many carriers have hedged at higher levels). The crisis is deeper, more
protracted, more fundamental than 9/11, the Gulf War or any of the previous shocks that
have rocked our industry. All airlines are suffering – including the long established full
service airlines – and more than 30 airlines have gone bust this year.
OpenSkies and L’Avion are of course also impacted – the cities of New York, Paris and
Amsterdam that we serve are deeply affected by the financial and economic maelstrom.
Our revenues are below target through a combination of lower volumes and yields, and as
a priority we must take actions to ensure we keep within our cash reserves.
We must build on our strengths: we have people who care; we have a great product which
is exactly right for the market at this time; we have a single aircraft type which simplifies
our operation; we are small and can move quickly to respond to changing market
conditions. We must really maintain our focus.
We have decided to delay expansion: we will operate with our existing four aircraft and
defer delivery of the fifth aircraft (previously planned to enter operation in March 2009)
until the economic environment improves. We will also engage in a battle to reduce our
costs, examining each and every cost area for savings. We will look to all of you to help
us with these challenges – as well as continuing to do your job, and to make sure we
delight each and every customer.
It is imperative that OpenSkies and L’Avion act as one company so we are best placed to
get through these difficult times and achieve our shared vision of long-term success in the
point to point premium travel market. With immediate effect, we will use both company
logos and names in any external or internal communications. We will also act as one
company in commercial and financial decisions. In particular, we will have a two-way
codeshare between OpenSkies and L’Avion from 18 November, so we can sell tickets
under either the A0 or EC code from any of our distribution points on any of our four
aircraft.
Operational integration requires a decision on which Airline Operating Certificate (AOC)
we maintain as we become one single airline. We have now taken the decision to operate
under a single French AOC, after very detailed and careful organisational, commercial,
operational and cost analysis.

Paris was chosen for two major reasons:
- It is a strategic point on our network (at least half of our routes are likely to originate from
Paris)
- We can reduce cost and complexity and improve communications between managers
and operational employees by focusing our headquarters and European operations in
Paris.
The timing for full integration of our two great little airlines will be driven by a number of
factors and may proceed more rapidly in some areas than others, but will be completed
with determination as quickly and effectively as possible.


:yuk::yuk::yuk::yuk::*:*

Will this be the same detailed and careful organisational. commercial, operational and cost analysis that has them rarely breaking double figures on the AMS and 30% load factors on the CDG?

Good. I'd give it 6 months tops.

Is this part of some cunning "Trojan Horse" plan ?

Sooner OS is dead the better, for all the industry's sake.

... or they could have used BA mainline 757 crews who are currently being retrained onto other types rather than having to train their own. Maybe it's finally occurred to them that they can't escape the French social taxes after all. I give them until next summer.

Knucklehead.:=

French Social Taxes......Excuse my ignorance but would EC have to pay this when the Cabin Crew are JFK based

Yes one a/c type but both engine types.:uhoh:

And how long ago was the L'Avion acquisition? Did Dale do any planning prior to that at all?

It's a shame that when it does all come crashing down that the only one who will be safe job-wise is Knucklehead himself. Or maybe the BA board should get rid of him for wasting all that cash....

Excuse me, already flying out of AMS???
Oh yes, after searching the internet I see they fly the route since 15 october, but jeezz, what a bad marketing. Nobody around here (apart from the aviation community, and then still not many of those) has really heard about Open Skies.
How can you sell your tickets then?
I think you can safely blame marketing!

I always suspected that the whole open skies thing was ill conceived, and fear now that this is the beginning of the end. Not very long now till its wholly divested to the French, with BA holding only a minority stake.

Since when was OpenSkies supposed to make money? Can anyone else imagine starting a new business only airline with obselete aircraft in the current financial climate and expect it to be profitable?

The whole concept is to introduce new T&C's for pilots /cabin crew and a low cost management structure. It will take time, but gradually more and more aircraft and routes that BA Mainline could operate will go to OS. BA already has the spare aircraft, crew and product, so why mess about with OS?

British Airways are so desperate to make it work, they are putting tent cards advertising OpenSkies on the meal trays of its own Club World passengers out of North American stations. In other words BA taunts its own customers with the fact that they paid twice as much (or more) to fly BA with a proper flat bed, than OS.

What is not advertised is that the OS 757's do not have BA's AVOD entertainment system as weight is critical (especially in the winter).

Now Air France has put its tanks on BA's lawn by switching their B777 from LHR/LAX to JFK, arguably the world's most prestigious route. What is BA's response? An OS 757? What a joke.

Clearly linked with the re-registering of the B757 on the new Isle of Man register as M-ERDE.


( with thanks to human factor )

Quite. They should have started the routes using the full BA brand, which is the valuable asset in the BA business as a whole.

Instead, the whole exercise has been an avoidance of mainline Ts & Cs, which while understandable, should not have been the main driver behind the business proposition.

... and there's a high probability that none of the Club World passengers will get to see the advertising cards. ;)

I may be wrong but cabin crew aside, French AOC, French base and inevitably a number of French employees means a company having to pay French social taxes, which aren't cheap. I thought EZ was caught out with this...?

There has got to be another explanation as to why the company is adopting a French Aoc and intends to be run as a French company. Anyone who has ever tried to start a business in France, or indeed had French employees knows that the costs are considerably more than in other European countries. Not only that, the employment laws are very much geared in favour of employees, and it is extremely expensive to get rid of staff if redundancies are required, so much so that it is easier and cheaper to cut back on non-French staff.

You simply don't go to France if you want to cut costs, so there must be another angle.

Possibly preparing a sacrifice to allow a BA-AA deal to proceed

Now you have been thinking...and more than likely correct.

"I dont believe it" - a Victor Meldrew Moment - for once I agree with 411a.

Un-needed airline....enough transatlantic J/F capacity already, given the economic climate.

Open Skies will go to the wall rapidly with a French AOC, and pourquoi pas?

Sorry for the permanent employees, less so for the over-paid sub-contractors from TCX, FCA and the rest.

RoyHudd.

That's interesting. I didn't know OS had subcontractors working for them. If so it would certainly support this thread direction re sacrificial airline.

Ready for this:
Different AOC allows new traffic rights and enables ....

I wouldn't say I was an overpaid subcontractor!!

French employees....Open Skies strategy...
 

Hmm....the issue of strategy and French AOC is an interesting one ...

Why would BA want to push Open Skies in the UK ? They would cannibalise their customer base, disrupt their own revenue management and generally cock things up for themselves.

Surely BA are chasing AF/KL premium passengers ? Not existing BA passengers and probably not EOS, MaxJet and SilverJet passengers...
...they could (maybe) force AF to lower some prices to compete and therefore be less inclined to try and do battle from LHR for these passengers...

Locating in France may make some sense therefore ....

BTW AF operates a profitable airline with crew in France...why couldn't Open Skies ? ...

Maybe Mr Knucklehead and his people aren't so daft after all....

Just imagine what LH / BD and VS combination could do to their thinking and position particularly at LHR.

Maybe starting up in France could be a peace offer to AF in a new World, rather than a way of getting the AA / BA deal done...especially in this weird economic climate.

Just another perspective ....

shortfinalfred

Scary isn't it when one agrees with 411A:ugh:

Flying a 757 across the Atlantic with pax numbers that barely reach double digits: What would you call yourself?

Anyone care to nominate a pub for the piss-up when Dale Moss has to eat a !!!! with a spoon?

Watching that man and his whore of an outfit fail miserably will warm the cockles of the heart.

http://bp0.blogger.com/_EIzw9NI4n5U/...0/Roobarb1.jpg
I’ll take on the opposition anyday. It’s my management I can’t beat!

Better start warming that !!!! up Roobarb,

BA.Com have listed loads of cancellations for the OS AMS/JFK route in November and December. Perhaps reality is setting in.

At the moment BA are loading Club Menus on longhaul routes 50% to save money, yet there is £millions available for OS to squander. Where are the shareholders? It is about time they had another chat with Willie.

I never complain about other people being overpaid; whether it's J Ross, BA Pilots on APS pensions after milking the system for humungus amounts over the years, or indeed OS pilots or subcontractors. Whatever they negotiate - good luck to them all!

Never wish bad joss on employees of other companies, however much you may object to the culture of a particular outfit. They are just earning a crust like you are.

One of the things I have learned over the years in aviation is that, as EKG would have it, we are all hostages of fortune; there is very much a limit on how much of our luck we make ourselves - most of it is entirely out of our control.

So good luck to all, including BA and OS - I was bloody devastated when Sterling went down this week.

(Yes - I have been to the pub.)
Cheers

Thanks for the helpful tips, 6.
 

You are soooo right, Reg 6. Everyone is entitled to earn whatever they can grab, right? .....Just like some of our colleagues in the financial institutions, whose monumental greed is now bringing down airlines, among others.

The reality of overpaid subbies in OS is something you cannot understand unless you know the inside track, which I happen to in this case.

The problem with Open Skies is that they are being paid to a job that ought to be done in house with BA staff and aircraft though I see what you are saying.

I wonder about the knock on effects of the change in AOC. Will OS staff be entitled to a job in BA mainline under French labour laws when it all turns to worms? I suspect not. No doubt they will get a few months redundancy....(I gather around a months pay per yr served) then told to go away.
In a way it would be ironic if the OS pilots get left in the cold as BALPA predicted. Perhaps they should have supported joining the mainline seniority list? Or perhaps I am mistaken and have read the situation incorrectly. I certainly wouldn't trust any of the people running OS.

the whole open skies project seemed doomed from it's conception.757 is not the aircraft of choice across the atlantic,twin aisled aircraft are much better suited.low capacity configuration,over capacity to new york in the existing market,point to point traffic only with no connections at either end.add on fuel price fluctuations and the economic meltdown we are now in and you do not have to be a genious to realise this operation will not be profitable.how much money can be poured down the drain before the plug gets pulled ?

Here at Waterside we are proud at the amount of money we continually waste on whatever project is flavour of the month. You may have noticed that we are starting to tire with OS and CX and have to focus on the income that is greatly reduced at LHR. I think our next course of action will be to outsource ramp and terminal staff at LGW, it worked OK at MAN. This may well be announced just prior to the Xmas break for completion by the end of Summer 2009 or before if things get worse. Thats is exactly how things are looking - worse.

You can't compare ~30 based aircraft at LGW with handling the London Shuttles at MAN. Outsourcing LGW would light the blue touch paper as having done so on that scale, there is no reason that the same couldn't be done at Heathrow.

if things at gatwick are looking as bad as HZ predicts,why not pull out altogether and concentrate on LHR operations.saving money on the ground handling will not make an unprofitable base profitable.either it makes money or it looses money,the long term plans for gatwick have never been defined and many of the routes are bucket and spade,competing with the locost operators around europe and carrying cheap,inclusive package tourists to the caribbean,generating very little revenue.gatwick as an airport is fabulous to travel through as a passenger,but i fear the route structure will never enable it to reach it's true potential.hard fact to swallow,but heathrow is the money generating hub for BA and with the success of T5 now apparent for all to see,i believe the future for BA operations at gatwick is very unsure.i hope i am wrong.

Have any of the Golden Parachute managers run back to mother yet? If BAcon is anything to go by, that is the first indication that the shutters are coming down.

Big problem for them now is the lack of movement/transfers within the airline for the foreseeable future.

I think LGW long haul is pretty good, newish B777s and high prices to the Carribbean, not cheap cruises as the chap above said. We'll see how well the re-introduced JFK does over the summer, poor timing on that one methinks. I disagree actually, outsourcing ground handling might save a Hell of a lot of money and cut a lot of the dead wood.
I have never found BA's ground staff any use whatsoever. Air crew are great but let down by frumpy, grumpy and surly timeservers in the Terminal.

Chances are you would get exactly the same people now working for Aviance or Groundstar and they would be even more surly towards BA.:rolleyes: