Gulf aviation group Etihad is pressing ahead with plans with travel group TUI AG to create a new European leisure airline operating a fleet of about 60 aircraft and offering 15 million seats annually.

The move, which is still subject to approval by aviation regulatory and anti-trust authorities,  is also part of a restructure by financially struggling Etihad joint venture partner airberlin to improve its bottom line.

The new Vienna-based leisure airline is expected to begin operation in April to take advantage of the norther summer season and will service key holiday markets such as Balearics, Canaries, mainland Spain and Greece.

It aims to take advantage of Etihad’s aviation experience and TUI’s tourism expertise to keep overheads low. 

Ports in Austria, Germany and Switzerland will include Hanover, Berlin, Düsseldorf, Cologne, Frankfurt, Stuttgart, Munich, Nuremberg, Baden-Baden, Hamburg, Basel and Vienna.

Under the deal, Etihad Aviation Group’s board agreed to  pay 300 million euros for a 49.8 per cent stake indirectly held by airberlin in subsidiary airline NIKI.

Etihad's  holding company will contribute its share in NIKI to the new leisure airline while TUI will convert its subsidiary TUIfly to the joint venture. This includes 14 aircraft operated by TUIfly for airberlin under a wet lease agreement (where both the aircraft and the crew are leased).

The deal will see TUI holding 24.8 per cent of the shares in the new company, Etihad with 25 per cent and the remaining 50.2 per cent by the existing NIKI private foundation.

It will also see airberlin, which has a market value of 68.9 euros but has made losses of 1.27 billion euros over three years, adjust its European city network to concentrate on year-round business travel in the German, Nordic and Eastern European markets.

The German carrier will from next year's northern summer transfer slots for “certain touristic destinations’’ in Southern Europe, North Africa and Turkey to NIKI. This exclude slots in Italy but include the Canary Islands and Madeira.

Long-haul destinations in the US, the Caribbean and Etihad’s home base of Abu Dhabi will remain with airberlin.

Airberlin chief executive Stefan Pichler said airberlin would invest further in its business travel offering, network connectivity and the expansion of profitable long-haul routes, particularly to the US.

“We are delivering a decisive step towards our new strategy. This transaction simplifies our business, reduces our exposure to seasonal destinations and improves our financial position,’’ he said. “Step by step, we are transforming airberlin into a network carrier focused on domestic and European traffic to feed our two long-haul hubs in Berlin and Dusseldorf.”

Airberlin said its current schedule remains valid and available for booking and it would inform customers should scheduled flights be operated by NIKI.

The German carrier, a member of the oneworld alliance and 29.21 per cent owned Etihad,  flew more than 30.2 million passengers in 2015 and operates hubs at Berlin-Tegel and Dusseldorf.
 

Qantas and Virgin Australia have rejected claims by Australian consumer advocacy group Choice that carriers are breaching consumer law with practices such as posting   “no refund “ signs on their websites.

Choice has lodged a “super complaint” with the Australian Competition and Consumer Commission, calling on the competition watchdog to give high priority to  airline consumer issues  and conduct market study to assess “systemic consumer protection issues’’.

It wants this to include the true cost of cancellations, reasons for delays and cancellations, airlines’ complaints handling processes and remedies available to consumers.

“Excessive fees, unfair terms and poor complaints handling are parts of an entrenched culture in the airline industry,’’ the complaint says. “While the increase in competition in the industry has improved choice and lowered prices for consumers, remedies for consumers in the event of problems within an airline’s control – including delayed or cancelled flights – have not improved.’’

“Choice has found that airlines push the boundaries with, and appear to breach, the consumer law with no regard and little consequence.’’

But Qantas accused Choice of being selective about facts and mischaracterising the law around refunds.

“ As customers would expect, our terms and conditions are fully compliant with Australian Consumer Law and they are clearly disclosed on our website,’’ a spokeswoman said.

“ We understand life can get in the way of the best laid travel plans, which is why we do offer refunds under certain circumstances.  By the same token, if we let people move between flights at will, it would be very difficult to run an efficient airline and that would have an impact on the cost of travel for everyone.’’

Virgin Australia  said it always complied with Australian consumer law and customers were required to confirm they were familiar with terms and conditions before buying a ticket.

"We offer a range of different fare types to suit the varying needs of our customers,'' a spokeswoman said. "Virgin Australia encourages its customers to familiarise themselves with the fare type they are purchasing, as inclusions and exclusions for each fare type are clearly outlined during the booking process.''

The consumer group argues the ACCC should take action against airlines that refuse to remove prominent, blanket “no refund’’ claims in the booking process, fare rules and conditions of carriage.

The competition watchdog should also require simpler terms and conditions and provide clearer guidance to the industry about acceptable fee levels. This should include situations when it is unacceptable for the airline to charge a cancellation fee, such as when a ticket is cancelled well before a flight and the airline has a chance to resell a seat.

Also in the consumer group’s sights are definitions of failures in the airline industry and when when a service is not" fit for purpose" as well as “no-show” clauses it sees as unfair..

Choice spokesman Tom Godfrey said he expected the ACCC to look at the details of the breaches in consumer law the advocacy group had outlined and it would be pushing for the issues to be  viewed as priority over the next 12 months.

“What I would say is ere are a number of things there that the airlines could fix immediately,’’ Godfrey told AirlineRatings. “The display of no-refund signs in the online checkout, they could get rid of that today if they wanted to.

“They could end excessive cancellation fees immediately and make them more reasonable. And the ACCC’s  already given guidance to the industry that they think about 10 per cent in most cases is fine.’’

Godfrey said Choice’s campaign for fixed compensation for delays and cancelations within the airline’s control, similar to systems in Europe, had been out there for six months.

“So all of these things could be acted on immediately but I have a feeling it will take regulatory intervention for them to be brought into line,’’ he said.

Virgin Australia cabin crew have combined with Supercars driver Jamie Whincup in a race around Australia’s famous Mt Panorama racetrack in the airline’s new on board safety video.

The new video is another example of how airlines are striving to engage their passengers with the safety message.

This trend was launched by Air New Zealand in 2009 with its Bare Essentials of Safety.

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As the naming rights partner of the Virgin Australia Supercars, the safety video is being introduced on board its fleet of wide-body Airbus A330 and Boeing 777. 

In the video, Virgin Australia cabin crew challenge Jamie Whincup to complete a lap of the track before they can finish delivering the safety briefing. Whincup is joined in his Red Bull Racing Australia Supercar by veteran Virgin Australia Captain Bradley Clarke who is normally found in the cockpit of a

Boeing 737. The video also features Supercars drivers Mark Winterbottom and Rick Kelly. The video was filmed at Mt Panorama following the Supercheap Auto Bathurst 1000 in October.

Virgin Australia Airlines Group Executive John Thomas says: “Virgin Australia and the Supercars are both high-performance, safety-led organisations which make this the perfect partnership for delivering our onboard safety message to guests.”

“We believe our guests will find the new safety video both entertaining and informative.” 

Supercars Chief Executive James Warburton said the sport was pleased to partner with Virgin Australia on its new onboard safety video.

"Our drivers Jamie Whincup, Mark Winterbottom and Rick Kelly jumped at the opportunity to be part of this video which delivers an important safety message and also showcases Supercars at one of the world's most famous racetracks.

"We are delighted to partner with Virgin Australia and we look forward to launching the 2017 season with great travel packages for fans."
 
 

Australian airports are seeing another influx of next-generation aircraft with Cathay Pacific introducing Airbus A350 XWB services to Brisbane and Melbourne, LATAM starting Boeing 787 flights to Melbourne and Vietnam Airlines switching to B787s on Sydney and Melbourne.

Cathay announced Monday it would be flying its new Airbus A350-900  to Brisbane from March next year after starting services to Melbourne  using the plane in February. The airline is promoting the daily Brisbane service, the first using the A350 for the Queensland capital, with launch fares starting at $A756 to Hong Kong.

The new aircraft include refreshed business, premium economy and economy cabins in a fuel – efficient aircraft that offers a quieter, more comfortable flight. The 280-seat plane represents an increase in capacity over its predecessor of 12 per cent, or an additional 10,000 new inbound seats per year, plus a significant rise in cargo capacity.

“As a larger aircraft, the A350 also enables us to bring more passengers into Brisbane and take Queenslanders seamlessly to more than 170 destinations around the world,” Cathay general manager South-West Pacific Nelson Chin said.

Read about Cathay’s A350.

LATAM, which already flies Boeing 787-9s to Sydney, will start using the planes on the first non-stop service between South America and Melbourne in October next year.

Like the A350, the 787-9 offers lower operating and maintenance costs while giving passengers a more comfortable environment with higher cabin pressure and humidity. LATAM’s aircraft offer 30 flatbed seats in business, 51 in Space+ and 232 in economy.

The South American airline group  has signed a deal with Tourism Australia and the Victorian Government to promote the Melbourne- Santiago route, which will take less than 14 hours and complements daily  B787-9 services between Sydney and Santiago via Auckland. It also codeshares with alliance partner Qantas on non-stop Boeing 747-400 Sydney-Santiago services.

“As Latin America’s largest airline group, LATAM has an important role to play in providing greater accessibility between Latin America and Australia,’’ LATAM Asia-Pacific managing director Patricio Aylwin said. “Together with these industry partners, we will be able to create even greater opportunities to increase the number of Latin American tourists and business travellers flying to Australia with us.’’

Vietnam Airlines has switched from Airbus A330s to Boeing 787-9s for its Melbourne flights, and from a Boeing 777-200ER to the new planes on its Sydney services. The airline’s 787-9s fly with 28 flat bed business seats, 25 in premium economy and 211 in economy.

One notable feature of Vietnam’s Dreamliners is that the nine-abreast seats in economy are 18 inches wide, rather than 17.5 inches or less.

While the A350 is still a novelty at this stage, airlines operating Dreamliners on Ausrtralian routes include Scoot, United Airlines, Jetstar, Air India, Air New Zealand, Xiamen and All Nippon AIrways. Qantas will also begin introducing 787s next year.

The boss of Europe’s biggest airline, Ryanair, has vowed that passengers will be flying “free” within a decade as he hones a radical plan to tap into the monopoly profits of airports.

Michael O’Leary reckons he can let travellers board and pay only for optional add-ons  if he can do more deals to increase the number of high-value retail customers he brings into airport  shopping centres, through which flyers must pass on their way to and from aircraft departure gates.

O’Leary has long dreamed of being able to announce the ultimate marketing incentive – free travel – and opened up on the subject last week at a conference of the Airport Operators Association in Britain — an organisation with which O’Leary and most other airline managers have at best a love-hate relationship.

(Because of the ruthless competition, airlines average a return of less than five per cent a year on turnover where airport monopolies can bank more than 80 cents in every dollar as profit.)

Even though he sniped that he had “far better things to do than to talk to a bunch of overcharging airports”, he said Ryanair had to keep cutting fares to keep flying more people in order to meet its aggressive long-term targets —  200 million passengers a year by 2024 compared with the current 120 million.

“I have this vision that in the next five to 10 years the airfares on Ryanair will be free, in which case the flights will be full, and we will be making our money … getting a share of the shopping and the retail revenues at airports,” he said.  “I think it will happen. It just won’t happen at Heathrow or those big hub airports. But most of the other airports who are looking for big traffic growth, that process is already starting to happen, lowering airport fees and some of the charges.”

But O’Leary said, for his free-fares strategy to come true, governments had to stop being so greedy, insisting the UK’s hated Air Passenger Duty (APD) —  the world’s biggest travel tax that can slug long-haul travellers up to $US121 per head for visiting the country —  must be abolished.

“If air passenger duty is gone — at many airports, I’m paying more than £20 ($US25) already with APD and fees —  if I start getting that back, why not?” O’Leary said. “I’m doing seat sales this week at £4 and I’m paying the £13 APD —I’m paying you to fly with me. Instead of promotional tickets being £9 or £5 they will be free.”

O’Leary already relies on so-called ancillary revenue – payment for optional extras —  for 25 per cent of the cash he makes from each customer, around $US1.5 billion a year.

He’s not relying on expanding that to make flying “free”. Instead he’s talking about new confidential commercial deals with airports.

The owner of London’s Stansted airport —  80 per cent of whose passengers fly with Ryanair —  signed a 10-year, $US1.9 billion deal with the airline in 2013, under which Ryanair won lower charges in return for a $100 million revamp of the terminal, which added 50 per cent more space to the departure lounge.

As part of the deal, the airline relaxed its strict policy on carry-on bags, allowing passengers to bring their airport shopping aboard.

That concession increased the commercial value of the shopping precinct and therefore the rentals the airport can charge its shopping tenants.

An examination of Stansted’s accounts shows that the big money for the airport is in retail, not in servicing airlines.

The airport’s aeronautical charges —  revenue from airlines for use of runways, taxiways and departure gates — fell this year fell from £148 million to £141 million ($US185 to $US176 million), even as passenger numbers rose by 11 per cent to 23.1 million.

That added two million additional customers to Stansted’s shopping centre traffic, with higher average spending of £5.70 per person (including parking),  meaning that Stansted’s overall revenue still rose five per cent.

“If airlines can grow that pie, that would be a very attractive proposition,” British aviation consultant John Strickland told the Guardian newspaper. “It would have to go beyond the airline-airport dynamic as it is today: they would have to jointly sell something new, by convincing airline customers to buy at the airport.”

For O’Leary, it is the way of the future – even though he despises the accountants who run the world’s airport monopolies and don’t have to compete for profits like he does.

“(It’s) great news for all the bankers and robbers assembled in this room who will not be reducing their charges, and who will all be making out like highwaymen and bandits as they continue to see rising passenger numbers at their airports, rising retail sales and rising restaurant sales,” O’Leary hissed at the airports operators conference. “All on the back of the poor stupid Irish (like him) who will be carrying all these people at even lower prices.”

Australia’s competition watchdog will focus on international airlines whose booking sites continue to pre-check options such as travel insurance after the nation’s two major low-cost carriers today confirmed they were ending the practice.

Tigerair Australia and Jetstar followed in the wake of Virgin Australia by announcing they were abandoning the practice after warnings against it from the  Australian Competition and Consumer Commission .

The ACCC is  worried that the “opt out’’ model, which is not used by Qantas,  was leading consumers to unintentionally pay for unwanted extras that were “pre-ticked’’ on the airline websites.

A survey by Australian consumer group Choice found families could save hundreds of dollars on travel insurance by unticking the boxes on some airline websites and buying their insurance elsewhere.

The Australian action mirrors a similar campaign by the New Zealand Commerce Commission, which last year called on all New Zealand businesses to end “opt out” pricing and which has also pursued international carriers.

However, the Australian airlines are moving at significantly different paces when it comes to axing the practice.

Virgin stopped pre-selection travel insurance earlier this week and Tigerair said it had removed pre-selection of travel insurance and checked baggage from today (Friday).

It vowed to continue to highlight available  options  throughout the booking process.

“Tigerair Australia recommends that customers purchase travel insurance given its importance in the event of any disruption or change of circumstance,’’ the airline  said. “Additionally, Tigerair Australia gives customers the opportunity to purchase checked baggage at a cost-effective price during the booking process as it is always much higher to pay it for at the airport.’’

Jetstar told the ACCC it would stop pre-selecting extras checked baggage, seat selection, travel insurance and charity donations on its online booking platforms from July next year.

The commission said it would have preferred the Jetstar change to have been made earlier but it welcomed the decision as a positive move for Australian consumers.

 “Jetstar’s announcement is another step forward in the ACCC’s continuing effort to end pre-selection conduct in the Australian airline industry,’’ ACCC chairman Rod Sims said.“The ACCC will continue to engage with the remaining domestic airlines that still pre-select extras, and urge them to follow suit.
“The ACCC will also turn its attention to international airlines operating within Australia which continue to pre-select extras.''