Ryanair in trouble over ads

(click on both to enlarge)

Irish discount carrier Ryanair is facing a bit of trouble after recently running two advertisements. The first features French president Nicolas Sarkozy with his girlfriend, French singer Carla Bruni. "With Ryanair," thinks Bruni in the advertisement, "all of my family can come to my wedding." This is a reference to the rumors of marriage between the two. A Ryanair spokesperson called it a "humorous comment on a matter of great public interest in France" and said that the airline apologizes "sincerely for any offence caused", but that's not satisfying either Sarkozy or Bruni: they're suing the airline separately for 1 euro and 500,000 euros in damages, respectively.

The second advertisement, touting "hottest back to school fares," apparently caused the British Advertising Standards Authority (ASA) to receive 13 complaints about it. "We considered that her appearance and pose, with the heading 'Hottest', appeared to link teenage girls with sexually provocative behavior and was irresponsible and likely to cause serious or widespread offence," the ASA said. Ryanair was ordered to recall the ad. But Peter Sherrard, head of communications for Ryanair, remained defiant: "It is remarkable that a picture of a fully-clothed model is now claimed to cause 'serious or widespread offence', when many of the UK's leading daily newspapers regularly run pictures of topless or partially-dressed females without causing any serious or widespread offence... This isn't advertising regulation, it is simply censorship. This bunch of unelected self-appointed dimwits are clearly incapable of fairly and impartially ruling on advertising."

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United would consider leaving Star Alliance

photo by striatic

According to United Airlines CEO Glenn Tilton, if United had to leave Star Alliance in order to finalize a merger, it was prepared to do so. "You can assume that absolutely everything goes into the mix of consideration," he said in a Chicago Tribune article published yesterday. The quote has sparked rampant speculation on internet forums as to whether or not United would actually seriously consider withdrawing from Star. United is one of Star's founding members, and is close partners with another founding member, Lufthansa. United makes a lot of money off of the feed that it gets from Star members (and vice versa).

There's no reaction yet from Lufthansa, arguably United's closest member. United does provide Lufthansa with a significant amount of connecting traffic, and losing United wouldn't be good. Lufthansa has covered its bases in the US market a bit with last year's investment in jetBlue, but jetBlue can't give them anywhere near the same amount of feed that United can. Perhaps Tilton's comments might be meant to scare Lufthansa into making an investment in United (as it did in jetBlue) - in this case, United's ties with Lufthansa and Star would probably be stronger than ever.

Of course, all of this is assuming that United is actually serious about leaving Star. United will probably remain in Star as long as it is financially viable; if a better alternative arises, United will probably do the sensible thing and 'go for it', even if this means dropping in Star in favor of another alliance. (A United-Delta or United-Continental merger might mean that the airline could join SkyTeam, but this seems more likely with the former.) For United, the most important item on the agenda is making money, and if this means merging with another carrier and leaving Star, then a United-less Star could indeed be a possibility.

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Delta moves toward merger talks with United, Northwest

photo by Franco Folini
Publish Post

Delta Air Lines, which has reportedly been interested in a merger for some time now, has requested permission from its board to start "formal" merger discussions with United Airlines and Northwest Airlines soon, with a plan to choose one of the airlines with which to merge.

In the last few years, Delta has carried opposing views on mergers: it exited Chapter 11 bankruptcy last year after successfully fighting off a hostile takeover proposal from US Airways. But soon after leaving bankruptcy, it started exploring its merger options, and has been the target of merger rumors before (such as this past November, with United Airlines). And with a stagnant economy and oil prices at nearly $100 a barrel, mergers might help relieve some of the pressure that the US airline industry is feeling right now.

A Delta-Northwest or Delta-United deal would probably create the world's largest airline (currently American). So which airline could it be? Back in November, Northwest was (and still is) seen as the most likely candidate, because the route structures of the two airlines has less overlap. And Delta CEO Richard Anderson has ties with Northwest, having worked there for 14 years and ultimately rising to the rank of Northwest CEO. But the main problem with a Delta-Northwest tie-up is the fact that two hubs - Delta's Cincinnati and Northwest's Memphis - would probably be shut down, due to their close proximity to each other. This might create trouble from both unions and politicians.

The possibility of a combined Delta-United has been raised before, and United management has been advocating industry consolidation for quite some time. But it will be some time before any merger plans become concrete, and even then, they can still fall apart quite easily. But this time, it appears that the unions - at least at Delta - are more supportive of the merger idea than they have been in the past. Lee Moak, chairman of the Delta pilot's union, said in a letter that “consolidation may indeed be at our door... We do not oppose consolidation, and may even determine that consolidation is desirable.”

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British Airways launches OpenSkies

Although it’s no secret that British Airways has been looking to expand in the transatlantic market, the airline made an announcement yesterday that it is starting an “airline within an airline”. OpenSkies, as the new entity is called, will start flying in June with a single Boeing 757-200 from New York to either Paris or Brussels. Another 757 is planned to join the fleet later this year, with six aircraft in all by 2009. In a statement, Willie Walsh, BA CEO, said that "by naming the airline OpenSkies, we're celebrating the first major step in 60 years towards a liberalized US/EU aviation market which means we can fly between any US and EU destination”. Future cities will probably include Milan, Frankfurt, Amsterdam, and Madrid.

This is a smart move on BA’s part – the Open Skies agreement signed between the US and the EU would add a lot of pressure at BA’s London Heathrow hub. Currently, only United Airlines, American Airlines, BA, and Virgin Atlantic can fly from the US into Heathrow, but this is expected to change soon as more US carriers add the airport. It’s also a smart idea that British Airways decided to buck the “premium transatlantic” trend that pushed MaxJet into bankruptcy last month – OpenSkies will have business class, premium economy, and economy class (each with 24, 28 and 30 seats, respectively). But BA isn’t alone in this area – British carrier bmi, Delta Air Lines, and Air France/KLM are all expected to follow suit with Heathrow-US routes.

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Aeroflot retires Tupolev 134

photo by Leonid V. Kroujkov

First off, happy new year! It's been a while since my last post, so here's a short story that might be of interest: Russian carrier Aeroflot retired the Tupolev Tu-134 on Monday, December 31, with a flight from Kaliningrad to Moscow. The 14-strong fleet of 134's will be replaced by Airbus A319s and A320s, as well as the Sukhoi Russian Superjet-100 (starting in late 2008). It's too bad that the Soviet aircraft are being retired, since they provide a nice contrast to the rather boring stream of short-haul Boeings and Airbuses that are so common nowadays. But the Soviet models are rather noisy and polluting (the Tu-134 was banned from flying to Europe since 2002 for this reason). I'm not sure when the rest of the Soviet planes in Aeroflot's fleet will be retired (the Tu-154 is the main model left), but I've heard rumors that it will happen before 2010.

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Lufthansa to buy stake in jetBlue

jetBlue announced earlier today that Lufthansa would "make a minority equity investment" in jetBlue. The agreement between the two airlines states that Lufthansa will buy about 42 million newly issued shares of jetBlue (19% of the airline) at $7.27 a share, about $300 million. Lufthansa would also get a seat on jetBlue's Board of Directors. (Per US law, Lufthansa would be limited to under 25% voting rights.)

Lufthansa CEO Wolfgang Mayrhuber said that Lufthansa was "very pleased to become an investor in JetBlue" and that "this investment presents Lufthansa with a compelling opportunity to invest in the U.S. point-to-point carrier market as the industry continues to evolve." Dave Barger, jetBlue CEO, was pleased with "this significant endorsement of JetBlue's franchise from one of the most respected leaders in global aviation" and said that the investment "will also improve our balance sheet and give us greater financial flexibility as we move into 2008."

In a conference call this afternoon, it was revealed that Lufthansa was the one that approached jetBlue (sometime during the late summer). The deal should close sometime during the first quarter in 2008. This seems to have been the right time for Lufthansa to move in for a deal; shares of jetBlue are relatively cheap at the moment, and the airline could use some extra cash. jetBlue has had some trouble over the past years with high oil prices and increased competition (especially now that Virgin America's competing in the transcontinental market). Shares of jetBlue have fallen by half since last February's mess at JFK involving passengers stranded on planes for several hours, an event which damaged the airline's reputation. In addition, with the low value of the dollar versus the euro, Lufthansa's getting a pretty good bargain.

As of now, the two airlines haven't said that they would cooperate in any areas other than "operation cooperation". No code-share deal was announced, either, and besides, jetBlue's reservation system doesn't allow for code-sharing (at least not yet). If the airlines were to integrate schedules, Lufthansa would certainly benefit from US domestic feed at JFK. Then again, Lufthansa's premium passengers might not want to go from Lufthansa's premium classes of service to jetBlue's all-economy service (even if they do have DirecTV).

But there are still a few unanswered questions. Lufthansa is close partners with United Airlines and US Airways, all three of which are Star Alliance members. It's unknown if Lufthansa's US partners had any say-so in the deal or not, or what the potential ramifications of the deal are for the two. And there's no word yet if this could eventually lead to jetBlue becoming a Star Alliance member. United has been rumored to be interested in jetBlue as a potential merger partner, and if Lufthansa were to increase their stake to 25% and if United were to buy 26%, then the two airlines would have a controlling interest in jetBlue. Right now Lufthansa is limited to 25% ownership, like all foreign carriers, but if this cap is lifted (and with the Open Skies deal announced earlier this year, it might be soon), then Lufthansa might eventually purchase a controlling stake in jetBlue.

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A319 service to Antarctica

© Australian Antarctic Division 2006

The Australian government has started air service from Hobart, Australia to the Wilkins Runway in Antarctica. The route is flown by a single Airbus A319-115LR, which is capable of flying from Hobart to Antarctica and back without refueling (the flight takes about 4.3 hours). The first flight, which was made earlier this week, was a proving flight and only carried operational personnel - regular passenger flights will hopefully get approval from authorities to commence soon. (View a video of the landing here.)

According to the website of the Australian Antarctic Division, the service will operate during the summer months only (too cold during the winter!). The Wilkins Runway is basically 'paved snow' on top of blue ice, but is still capable of handling an Airbus A319. If all goes well, the flights will take about 19 passengers in a highly flexible configuration, which allows it to transport a combination of both passengers and cargo. It can also serve as a medical evacuation plane, too.

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