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Let the Budget Airline Dogfight Begin!

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Let the Budget Airline Dogfight Begin!

Old 30th Aug 2001, 12:37
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The Guvnor
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Cool Let the Budget Airline Dogfight Begin!

From today's Scotsman:

Budget airlines launch dogfight for Scotland

ANALYSIS


TODAY marks the opening salvo in the war to control Scottish skies. No-frills carriers Ryanair and its rival easyJet will this morning launch their inaugural flights from Edinburgh to the Emerald Isle within hours of each other. First off the blocks at Turnhouse will be Ryanair’s debut flight to Dublin, quickly followed off the runway by easyJet’s maiden voyage to Belfast.

And the rush to get flights on and off Scottish soil to Ireland will be matched in a few weeks by rival budget carrier Go.

Suddenly, Scots business travellers and holiday makers have found themselves at the centre of the price war between the no-frills airlines, and are set for a bonanza of low flights after the decision by the three principal budget carriers to use Scottish skies as a testing ground for their services.

Today Ryanair and easyJet will have their big guns in Edinburgh for their respective launches, ready to go head to head to capture the limelight. Rumour has it that Ryanair chief executive Michael O’Leary will be in attendance wearing a kilt. Not to be outdone, easyJet will be represented by commercial director Mike Cooper, doubtless wearing one of the airline’s famous orange sweatshirts as he stands in for chairman Stelios Haji-Ioannou.

Go, the former British Airways subsidiary, is ducking out of the first bout, opting to fly solo when its launches its new routes to Dublin from Edinburgh and Glasgow on 19 September.

But behind the bluster and the bravado, a deadly game is being played. The three-way dogfight in Scotland will put a large dent in the balance sheets of the airlines.

All three carriers are using Scotland as a testing ground to see how they fare when competing directly against each other.

Chris Avery, an aviation analyst at JP Morgan in London, said: "It is significant that these new routes are being launched in Scotland, and not at Stansted. The low-fare carriers are not risking any core route.

"The three-way battle in Scotland represents a skirmish. It will not seriously hit their financial position."

And away from their heartlands, the three carriers can afford to cut prices for the foreseeable future. Whichever one blinks first will give away a key psychological advantage to its rivals. As networks expand, their paths will cross more frequently in the future, and business models will be tested to breaking point.

It is difficult to determine which carrier will emerge triumphant in Scotland, but the war of words has already started. Go, which offers the most direct threat to Ryanair, claims that the Irish carrier is running scared.

"Ryanair always stated it wouldn’t fly out of Edinburgh. It only changed its business model on a whim, whereas ours was a planned move," a Go spokesman said.

Ryanair’s O’Leary, famed for his uncomplicated way with words, and loaded with a soundbite for every occasion, is determined to send Go packing. His airline claims it makes a profit with lower customer yields than its rivals, because its operating costs are smaller.

Industry watchers believe as long as the Go challenge does not extend to other routes, Ryanair can continue to offer cheaper tickets than the opposition. Ryanair has already sold 100,000 seats for its Edinburgh-Dublin route at £5 (including tax) each way. Although this is significantly cheaper than Go’s £35 return (including tax), both carriers could fill their aircraft by creating a new market, as demonstrated by previous expansions.

However Go is fighting a war on two fronts, by competing against Ryanair on its Dublin routes and easyJet on its Belfast routes. This might turn out to be a crucially expensive decision.

Ryanair believe its new routes from Edinburgh will add 200,000 Scottish passengers to its current total of one million per year.

Go believes it can achieve a similar increase and points to its good punctuality record as a potentially deciding factor. It compares favourably with easyJet’s performance on routes to London.

A total of 79 per cent of Go flights from Edinburgh to Stansted and 81 per cent from Glasgow to Stansted landed on time. EasyJet can only manage 73 per cent on its Edinburgh to Luton route and 81 per cent for Glasgow to Luton. It believes that for a few extra pounds customers will choose it over Ryanair if there is a better chance of landing on time.

EasyJet has hinted in the past at big plans for its Scottish operations. Earlier this week it announced its intention to build a centre at Paris Orly Airport.

If it gets regulatory approval from the French authorities, direct flights from Scotland to Paris should follow next year. That would place it in competition with Ryanair, which flies from Prestwick to Paris Beauvais, and add another dimension to the three-way tango for supremacy of the skies.

Full-fare carriers operating on these routes are understandably nervous. Aer Lingus, along with BA, its code sharing One World Alliance partner, has enjoyed a monopoly on its routes to Dublin from Edinburgh and Glasgow. From having no opposition it will now have to confront two hungry upstarts.

"Experience suggests that mature carriers retain some traffic, but some portion of leisure and business travellers will switch to low cost alternatives," Avery said. "There is no doubt that no-frill carriers represent a significant competitive threat."

EasyJet chief executive Ray Webster is adamant in his opinion of what will happen.

"British Airways has undoubtedly made plenty of money from its Scotland to Belfast routes but its fares haven’t done anything to grow business traffic.

"For the first time ever business travellers can get their hands on £25 day return fares and get from airport to airport in under 50 minutes."

Given the flair for publicity demonstrated by easyJet and Ryanair in the past, today’s launches will go with a bang.


Andrew Murray-Watson Senior Business Reporter
Thursday, 30th August 2001
The Scotsman
 
Old 30th Aug 2001, 13:48
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Is the market big enough for three low cost airlines?

Rgds K.I.L.
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Old 30th Aug 2001, 15:00
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Perhaps the populations won't sustain three low cost carriers ,but I am willing to bet that the losers will be the established carriers when EVEN MORE NI and Scottish punters discover to what extent traditional carriers have been shovin' the arm in for years !!It can only grow business as is evidenced by the load factors from EDI-BFS-EDI and GLA-BFS-GLA.(Might make it easier to park your 'bus in BHD ...bit more space where the atp's used to be!! )
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Old 30th Aug 2001, 15:23
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EI have been shafting me for approx £300 for midweek returns for years. For a 40 minute flight its a rip-off . Whether the route can sustain both EZY and FR I doubt it, but only time will tell.
 
Old 30th Aug 2001, 19:20
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Re "Scotsman" article .It never ceases to amaze me how journos accept airline pr speak as gospel when even a cursory examination would lead one to at the very least qualify these statements. Example, "Ryanair have already sold 100,000seats on their Edinburgh/Dublin route at £5 per seat." A simple check would have revealed thet the £5 offer was only for a two month period which if they sold every seat on every flight would at the most amount to 60,000 seats.Ryanairs own website would have confirmed this.Makes you wonder if all the other stuff you read even in quality papers is also suspect .
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Old 30th Aug 2001, 20:13
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Like ignoring the fact that Go has already been successfully flying the Scotland-BFS routes for months now...

[ 30 August 2001: Message edited by: Go&Fly ]
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Old 30th Aug 2001, 20:23
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Hang on,

FR EDI-DUB, EZ EDI-BFS.

2 different airports, poles apart (considering the standard of roads between the two)..........where's the competition?

I'll take a wild guess that passengers wanting to fly to Dublin or thereabouts will take the .................DUBLIN flight!

I can't believe EZ are trying to poach DUB pax to BFS.

BTW, GO seem so confident of their pax loads they've borrowed a 146-200 to fly the routes for them.
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Old 30th Aug 2001, 21:00
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There is a mistake in there talking about EZY to DUB. It should be GO to DUB.

Two battles are starting, one to DUB and one to Belfast as follows:

EI EDI/GLA to DUB
FR EDI/PIK to DUB
GO EDI/GLA to DUB from 19 Sep

and

BA EDI/GLA to BHD
EZY EDI/GLA to BFS
GO EDI/GLA to BFS

The GO flights to BFS currently operated by a Titan 146 will be replaced by a GO 737 from 19 Sep.

Either there is a huge untapped market or something will have to give, I suspect the latter but we will have to wait and see.

FR have been bragging about the take up on the DUB/EDI flights. If that is true then this would be a strong case for other flights ex EDI or at least additional DUB flights, regardless of the so called "rapacious" charges, as quoted by MOL (which he seems happy to pay at STN!). Somehow I think it is all hype and publicity stunts, something that MOL and Stelios are past masters at.

The fact that EZY, GO and FR are all active demonstrates that a market for budget flights exists in Scotland, the problem may be that excess capacity may discourage all three from future developments.

Any thoughts on the next developments/skirmishes?

HZH
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Old 31st Aug 2001, 02:11
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I think FR are on to a winner here, the stag/hen nights will soon discover that the queens silver is good in BFS, but in Dublin, its better! They will get £1.25 Irish Punts for every £1 G.B.P and so, the more they drink--they more they save!!
Belfast, as beautiful as the city itself is, will, I think, lose out to the trill of coming to Dublin, which has all the U.K. High Street stores and booze brands, but at Irish prices!!

I think MOL, will do it again, but lets see?

But how long, can he sustain £5 flights for, and will the Fiver Flights, really be available, when the punters go looking for them?
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Old 31st Aug 2001, 03:04
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Well personally I find Dublin a very expensive weekend away.

WWW
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Old 31st Aug 2001, 09:52
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WWW,

You see thats what happens when you come to Dublin wearing that Welsh rugby top of yours and go drinking in temple bar. You just scream tourist and everyone rips you off.

Apart from that. I would have thought that FR was streched as it was to have enough a/c on their current routes let alone add EDI. From a pax point of view and especially in light of recent mis-haps would you rather fly DUB-EDI with FR on a rustbucket or take one of GOs nearly new 733s?

This also begs the question, with the poor standard of FR customer service in the low cost sector in recent years, will the GO service do better than FR as pax see this as a breath of fresh air with a new service?

Time will tell, but the first few weeks load factors from GO should be interesting. Good luck to all in GO, youre in for a hell of a bitch fight!!
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Old 31st Aug 2001, 12:53
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From today's Scotsman... could the future be orange for MO'L?



O’Leary in attack on BA and tourist
board


Michael Glackin Business News Editor
([email protected])

RYANAIR chief executive Michael O’Leary fired a fresh broadside at British Airways yesterday, locking horns once again with Europe’s largest airline.

At the same time, O’Leary also renewed his assault on VisitScotland, saying it was run by "50-year-old, beer-bellied men" who have been "doing the same old tired act for 40 years".

O’Leary, who was in Edinburgh to promote the launch of Ryanair’s service to Dublin, claimed VisitScotland and its forerunner, the Scottish Tourist Board, had been too close to BA in the past and insisted that because BA offered few direct flights to Scotland from European destinations, had done little to boost Scottish tourism.

He said: "Until now getting to Scotland from Europe cost hundreds of pounds and you had to go to Heathrow first. We’re changing that and bringing new visitors to this country."

BA refused to discuss O’Leary’s comments in detail. But a spokesperson said: "Mr O’Leary’s comments fail to recognise the vital role BA plays in Scotland, particularly within the tourist industry.

"We have provided air links between Scotland and the rest of the world for more than half a century.

"We operate 300 flights a day from and within Scotland, and carry more than four million passengers in and out of Scotland each year. Does Ryanair do this?"

O’Leary’s latest salvo in the war of words with BA comes in the wake of last year’s row between the two, when Ryanair successfully defended a court action brought by BA after the no-frills carrier ran a series of advertisement which described BA as "Expensive BA****ds".

Continuing his attack on VisitScotland, O’Leary again criticised the tourist board for failing to promote any of the budget carriers abroad. He said: "We’ve been trying to get VisitScotland to get up off its arse for years."

He added: "They sell Scotland with pictures of old castles and kilts and stone walls, but there is more to Scotland than that."

He added: "Europeans all say that Scotland is a great destination, but expensive to get to. We’re offering direct flights at low fares, but VisitScotland continues to be geared towards high-budget travellers.

"VisitScotland has got 50-year-old blokes with beer-bellies running around trying to sell Scotland at posh dinners.

"Keep the picture of the castles, but put the telephone number of all the budget carriers that fly direct - not just us, but easyJet and Go as well - on their advertisements."

A spokesperson for VisitScotland dismissed O’Leary’s comments and said it had spent £400,000 promoting Ryanair over the last year, highlighting airlines services, while it had spent only £50,000 promoting BA over the same period.

The spokesperson said: "It is very disappointing that he is unable to give credit where credit is due."

She added: "We’ve also got a young, vibrant team here. O’Leary has never been to our offices to visit. It would be fantastic if Ryanair gave the same deals it offers to people to leave Scotland to some of the Europeans so that they can travel to Scotland. We’re hoping to meet with him soon, but clearly he has been misinformed."
[ 31 August 2001: Message edited by: The Guvnor ]
 
Old 31st Aug 2001, 13:49
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Thats 100,000 seats on DUB - EDI and DUB - PIK at £5, they've just missed out on the second route
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Old 31st Aug 2001, 13:51
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I gotta hand to ye, Mick,

I hope you have magnetic shoes, on that lose tightrope!
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Old 31st Aug 2001, 13:53
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F.Y.I there are (or were until now) 2.7 million passengers using the ferries between Scotland and Northern Ireland.

If only 10% of these transfer to air (or travel more frequently) all the flights will be full...

But wouldn't want to be in Aer Lingus' position, that's for sure!
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Old 31st Aug 2001, 14:08
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Also from today's Scotsman...

easyJet ready to switch base to Scottish airport
Andrew Murray-Watson
EASYJET, the no frills airline, which launched a new route from Edinburgh to Belfast yesterday, said it could create a new base of operations in Scotland if it does not get the landing slots it wants at Paris Orly Airport.

The budget carrier wants 20,000 slots in a bid to expand low-cost air travel in the French market, and has applied to Cohor, the body responsible for the allocation of slots at Orly and Charles de Gaulle airports.

But yesterday, easyJet commercial director Mike Cooper said he rated the airline’s chances of expanding in France as no better than "50-50" and added that should it not get regulatory approval from the French authorities, Scotland was "high in the list of alternatives" for the new mini-hub.

easyJet is looking for a base for five new aircraft, following its ongoing protracted dispute with TBI, the owners of Luton Airport, over landing charges. It is understood that it is no nearer finding a solution than at this time last year and has stated that it will not invest anymore in the airport unless the issue of charges and the upgrading of facilities is promised.

The new mini-hub would create a bonanza of new routes for the recipient airport and create hundreds of new jobs.

Cooper said that market performance would dictate where an alternative base would be sited: "We are very comfortable with the performance of the routes from Scotland to Amsterdam. It is clear that there are sufficient markets outside Luton."

He added: "easyJet has a different business model from its rivals. We want to attract business customers and that means putting more flights on existing routes."

easyJet said its fleet is set to grow from 25 aircraft to 44 by May 2004, and will need proven markets for its enlarged fleet.

The carrier is kick-starting its Edinburgh to Belfast route by giving away 1,000 seats using text messaging.

Customers are asked to text the word "easyJet" to a special hotline number - 07786 40 40 40 - by midnight on 3 September to enter the draw. Winners will receive a pair of free seats from either Glasgow or Edinburgh to Belfast.

"We are convinced of the attraction of low-cost flights from Scotland to Belfast. We want to switch the balance of traffic completely so that next year most people will travel to Belfast by air rather than by sea," Cooper said.

By the start of September easyJet will operate up to 27 daily flights out of Scotland over eight different routes. Across its wider network, it has a total of 35 routes servicing 16 destinations.
 
Old 31st Aug 2001, 14:52
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airbourne, their doing it by cutting capacity and obviously aircraft , on the following routes .Ex Dublin, cutting one daily flt.to Leeds, Liverpool, Stansted, cutting two weekly flts to Luton and three weekly flts to Beauvais.
Considering Dub/Std is their highest yield route average £90, and the other routes averaging prob around £50, they will be replacing these yields with a £10 yield out of EDI/GLA-at least in the short term.This gives an idea of FR's determination to keep GO out of Dublin .I suspect that the next GO route will be DUB/STD. It's enough to set the pulses racing.
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Old 1st Sep 2001, 00:10
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Do fight,its turning into a cat fight!!!!!!

Rgds K.I.L.
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Old 1st Sep 2001, 00:40
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Sorry, but am I thick?
Paris won't give us slots, so we will go to "Scotland"????
we aim to please, it keeps the cleaners happy
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Old 1st Sep 2001, 01:58
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We have a perfect case study of the concept of Low Cost Carriers here in Canada.The previously government funded, now private Air Communist.....er Air Canada...sorry.. is a virtual monopoly here having swallowed Canadian Airlines and are living up to their motto..'WE ARE NOT HAPPY TILL YOU ARE NOT HAPPY"
Along came Westjet with private funding including the Ontario Teachers fund, a bunch of straight pipe thirty sevens,a VERY motivated staff and they are kickin' Ars*
Roughly, Air Communist have 60 staff per aircraft and Westjet have less than thirty.
Westjet seem to have NO grumpy people and get paid less than half. Mind you, the profit sharing and stock options help.
Air Communist got scared and decided to operate a LCC with the clapped out '37's inherited from Canadian and intend to compete with Westjet with the same grumpy people, pilots making double their Westjet counterparts and a money losing parent corporation.
My money is on Westjet.
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