BERLIN: Budget airline Ryanair is set to fly more passengers than Lufthansa for the first time this year, heaping pressure on the German carrier to make a success of Eurowings, its latest attempt to crack the low-cost market.
Lufthansa has already tried its hand at budget flying with the short-haul Germanwings service, which is now being merged into the new Eurowings business.
While Germanwings, whose brand was set to be phased out even before the crash of one of its jets last year, is set to turn a profit for the first time, its costs are still seen as too high to compete with easyJet or Ryanair, which carried 101 million passengers last year, against Lufthansa’s 108 million.
Through a combination of employing staff on more flexible contracts that reflect seasonal demand, replacing regional jets with larger A320 planes that can seat more passengers, and keeping onboard frills to a minimum, Lufthansa hopes to bring costs at Eurowings down to around those of easyJet.
“Eurowings is crucial for Lufthansa. The Germanwings experiment didn’t work because it wasn’t sufficiently low-cost, but Eurowings should have greater labor flexibility and lower unit costs,” Jonathan Wober, chief financial analyst at CAPA-Center for Aviation, said.
The stakes are high. Budget air travel in Germany, which has long lagged other markets, looks set to take off.
And a successful Eurowings could help Lufthansa push through the cost cutting and labor reforms that have been crucial in helping other traditional carriers, such as British Airways’ owner IAG, to thrive in a highly competitive market.
But the initial signs have not been encouraging. Eurowings has had to fork out hundreds of euros apiece to passengers in compensation after a spate of delayed long-haul flights, including one from Cuba delayed for 68 hours.
“It’s not gone too well to be honest, but now we are doing everything we can to stabilize the operation,” a spokesman said, adding the future of Eurowings was not in question.
TAKING OFF
Currently, low-cost carriers have only a 25 percent share of Germany’s short-haul market, against around 50 percent in countries such as Britain, Spain and Italy.
High costs at German airports and the dominance of Lufthansa and Air Berlin, which control about 60 percent of the short-haul market to and from Germany, have held back the likes of Ryanair and easyJet.
But with Air Berlin cutting routes as it struggles to return to profit and Lufthansa moving some routes to Eurowings, German airports keen to keep passengers coming through their shops and restaurants have become more willing to do deals with low-cost carriers.
Alongside Europe’s two largest low-cost carriers, IAG’s Vueling, Air France-KLM’s Transavia, Wizz Air and Iceland’s Wow Air are among those expanding.
“German airports ... are actively working with us and others, saying please can you come in here,” Ryanair boss Michael O’Leary said on the sidelines of an event in Amsterdam last month.
Ryanair aims to grow its market share in Germany to 15-20 percent over the next five years, from around 5 percent now.
The robust German economy, low unemployment and low oil prices are also driving expansion and serving as a magnet for low-cost players, Euromonitor senior travel analyst Nadejda Popova said.
LOW-COST THINKING
CAPA analyst Wober said making Eurowings work could help Lufthansa apply some low-cost concepts to its mainline brand as it battles to bring down the cost base there too.
That is a strategy Willie Walsh has used to great effect at IAG, which groups former state-run flag carriers British Airways and Iberia with budget carrier Vueling, acquired in 2013.
“Vueling gives us a new dimension, an aggressive and established low-cost base, a low-cost culture. That brings great value to IAG,” group CEO Walsh said in Dublin last month.
Lufthansa, which has faced a serious of strikes by pilots and cabin crew at its main brand over the last two years, is looking for 4,000 new employees this year. That includes 240 new pilots, of which 140 are for Eurowings.
“It’s a way of saying to existing staff that management will get on with it, find other people and on more flexible contracts,” Wober said.
Not everyone is convinced its strategy of offering cut-price long-haul flights in addition to routes to nearby destinations will work.
“Today’s planes are still too expensive for this business model,” Philipp Goedeking, managing partner at consultant Avinomics, said.
Rival Norwegian Air runs low-cost long-haul flights but uses new Boeing 787 Dreamliners with free wireless Internet to entice customers, while Eurowings uses older Airbus A330 jets.
“I couldn’t run a profitable long-haul operation with old aircraft,” said Norwegian Air CEO Bjoern Kjos.
Pressure on Lufthansa’s Eurowings as budget rivals eye Germany
Pressure on Lufthansa’s Eurowings as budget rivals eye Germany
Wizz Air aims to expand connections, attract more tourists into Saudi Arabia, says senior executive
RIYADH: Low-cost carrier Wizz Air plans to invest over half a billion dollars in flight operations in Saudi Arabia to enhance connectivity and attract more tourists, according to the airline’s president.
In an interview with Arab News on the sidelines of the Future Aviation Forum, Robert Carey emphasized the impact on tourism, noting that inbound visitors typically stay for three to seven days and spend money on various services like hotels, car rentals, and food.
“We’ve invested over half $1 billion into our flying in the Kingdom so far. we’re going to keep growing that. I think we’ve got a lot to do. Just keep connecting the destinations we’ve already got, connect more of those points together,” Carey said.
Wizz Air is the third-largest low-cost carrier in Europe and the fifth-largest airline e-commerce site globally. It aims to bring more tourists to Saudi Arabia and enhance its accessibility, with plans to continue connecting existing destinations and expand further.
“We’re operating to seven different destinations from Saudi Arabia. We have four points here. You know, we’re seeing really great consumer response to this. Roughly two to one external like people coming into the Kingdom versus people leaving the Kingdom, on trips,” Carey said.
He added: “But that’s giving a great benefit. We’ve got tourists coming in. We’re giving access to Saudi customers who have travel.”
He also expresses the airline’s positive passenger experience, praising the airline’s clean, new planes, welcoming flight crew, and on-time scheduling.
Additionally, Carey stated that Wizz is working with the minister of tourism, the minister of transport, the General Authority of Civil Aviation, and the Saudi Tourism Authority on their connectivity program.
“If you look at the airline planning season, we’re just coming up on the period where everybody starts announcing what they’re going to do for this winter, so all I’ll say for right now is stay tuned. There’s more to come,” he said.
Carey noted that Wizz Air celebrated its 20th birthday this week, and to mark this milestone, the airline will launch a special promotion on May 21.
He hints that the promotion will be closely related to the anniversary, suggesting significant discounts on every flight. They encourage people to visit the website to take advantage of the upcoming offers.
AI to help optimize Saudi aviation supply chain management: official
RIYADH: Saudi Arabia’s aviation industry’s supply chain management is set to receive a boost thanks to the use of artificial intelligence in logistics, a top official said.
Speaking on the first day of the Future Aviation Forum in Riyadh on Monday, Suliman Almazroua, CEO of the National Industrial Development and Logistics Program, said that AI implementation will also enhance productivity and customer experience.
“AI in logistics, for example, is shaping and optimizing the supply chain management, improving productivity, productivity maintenance, and enhancing customer experience,” he said.
The official said the rapid technological advancements are reshaping the future of industries.
The CEO highlighted the Saudi aviation sector’s achievements in terms of increased number of passengers, cargo handling, fleet expansion, rise in infrastructure investment, and global connectivity.
Addressing the forum, Luis Felipe de Oliveira, director general and CEO of Airports Council International shed light on how the aviation industry suffered from different crises.
“I remember from 9/11 to (the 2008) financial crisis to SARS to COVID-19, we always faced an issue, but we are a very resilient industry and we always come back,” Oliveira noted.
He said: “That’s why when you talk about macroeconomic stuff, we see that geopolitical risks are something that can affect us. That we have the inflation going up, of course, affects our business as well. We have the interest rates that affect our GDP.”
“But it is incredible that even considering all these headwinds, the unemployment rate is going down and people are eager to travel,” Oliveira justified.
He also talked about how jet fuel prices, which are the main cost for the industry, are very high nowadays.
“Of course, this affects our ability to fly and also affects the cost of the tickets,” Oliveira said.
Stefan Schulte, CEO of Fraport AG in Germany, clarified that the focus on innovation, sustainability, and connecting people and culture resembled the beginning of a new era.
“The expectations of our customers are constantly increasing. They want consistent, digitalized, resilient, and seamless processes, but they also want us to go green,” Schulte said.
Organized by the General Authority of Civil Aviation, the three-day event will see discussions on issues related to the global flight sector, air transport, and environmental sustainability in civil aviation, as well as talks on enabling advanced air transport and enhancing global connectivity.
The event also aligns with the Kingdom’s ambition to become a leader in the sector within a decade, including securing $100 billion worth of investments by 2030.
Electric passenger drones set for a year-end launch in Saudi Arabia, says Front End CEO
RIYADH: Electric passenger drones are set to be launched in Saudi Arabia by the end of this year with Alkhobar-based firm Front End set to introduce the service to the Kingdom, revealed its CEO.
Speaking to Arab News on the sidelines of the Future Aviation Forum, Majed Al-Ghaslan, who is also the chairman of the company, stated that Front End’s collaboration with the Chinese electric vertical take-off and landing vehicle developer EHang is facilitating the deployment of such electric flights in the Kingdom.
Al-Ghaslan said: “We’re pushing the boundary of air traffic, also urban traffic management systems. So we’re discussing this with the Civil Aviation Authority (General Authority of Civil Aviation) here in the Kingdom. We’re very closely aligned with the Ministry of Transport.”
He added: “We have electric buses and cars now; you’re going to have electric flights for passengers. And this is already running in many cities around the world. We want Riyadh and the major cities around the Kingdom to be the first as well. The idea is to launch the pilots this year and hopefully start launching this service as well this year.”
The official also added that the deployment of these electric drones, capable of carrying passengers, in the Kingdom is very feasible, as such services are running effectively in countries like China, Indonesia, and Japan.
During the talk, he revealed that these proposed electric flights, which take off vertically, can be used for both carrying passengers and for logistics purposes.
According to Al-Ghaslan, these flights are capable of traveling up to 30 minutes with two passengers, and with more advanced batteries, the distance can be extended further.
He explained, “You can do a 30-minute flight, but still, 30 minutes is a long flight. For example, in Riyadh, you can cover end to end because you are going direct path to anywhere, with two passengers. So you can take up to 250 kilograms. And then with more advanced batteries, the distance can be even higher.”
The official added that the drones capable of carrying passengers, which will be introduced in Saudi Arabia, will be autonomous and will operate using advanced technologies like artificial intelligence.
Discussing Front End’s eagerness to enter the air mobility sector, Al-Ghaslan noted that the Kingdom’s transformative Vision 2030 program has facilitated the firm’s entry into the industry.
“Typically, what we do is partner with and localize companies, bringing them into the Kingdom. I never thought I’d be in aviation, but because of the new frontiers that include electric vehicles that vertically take off and land, and advancements in passenger-level drones, that is our interest. We run drone services for our clients, but we are now getting into the air mobility sector,” said Al-Ghaslan.
He added, “The Vision 2030 program actually enabled this transformation to take place, and there are now national-level strategies. We are at the forefront of making it happen from the private sector at least.”
The official also noted that Front End is planning to introduce a ride-hailing service in Saudi Arabia using a fleet of electric vehicles, under a partnership with an Indian company named Blue Smart.
“We’re also launching a ride-hailing service. So, this is something we’re also going to be announcing at the right time, again, electric. So, our theme is around sustainability as well. It’s a company from India called Blue Smart. And this is also going to be announced this year,” he concluded.
Riyadh Air to unveil its crew uniform at Paris Fashion Week, says CEO
- New attire will ‘become instantly recognizable as the Riyadh color’
RIYADH: Saudi Arabia’s new airline, Riyadh Air, is set to unveil its cabin crew special uniform at the upcoming Paris Fashion Week, according to its CEO.
On the sidelines of this year’s Future Aviation Forum in Riyadh, Tony Douglas, CEO of Riyadh Air, shared in an interview with Arab News a series of strategic developments that are set to propel the new airline into the global spotlight.
With Riyadh Air scheduled to launch in the summer of next year, Douglas highlighted the airline’s upcoming milestone at Paris Fashion Week, which will take place from June 18-23.
“Our next milestone will be (in) June in Paris,” he said. “This is going to be about Paris Fashion Week. Now, what would we possibly do in Paris Fashion Week? For the first time ever as an airline, we will reveal our haute couture fashion collection. So our cabin crew won’t wear cabin crew uniforms. It’ll be cabin crew fashion,” he added.
Drawing inspiration from the fashion depicted in the film “Catch Me If You Can,” Douglas emphasized the airline’s commitment to style and sophistication.
“If you can ever remember the movie ‘Catch Me If You Can,’ where DiCaprio goes through the terminal building, and everybody stops to photograph them because they look glamorous. They look fashionable. They look refined. And we want to bring that back with a modernist twist. And that’s what we’ll be revealing at Paris Fashion Week at the end of June,” he explained.
The new uniforms will feature a unique color that Douglas believed would become “instantly recognizable as the Riyadh color.”
He added: “We want to get that kind of glamor into aviation to make sure that this brand, because of course, the brand is Riyadh wherever it’s identified around the world, that immediately speaks to quality, grace, refinement, and fashion.”
In addition to fashion, Riyadh Air is rapidly building its operational capabilities, according to the top official.
“We now have our first group of pilots who’ve joined us. So we’ve got over 30 instructor pilots, they’re the highest qualified pilots you can get from lots of different international airlines. They’re, of course, engaged with us at this stage to assist with our certification flying. And we’ll start our certification flying in September of this year. So literally months away now,” Douglas revealed.
He added: “Yesterday, our third batch of cabin crew started with us, so this feels like a real airline now.”
The interest in joining Riyadh Air has been extraordinary, according to Douglas.
He noted the overwhelming response to their careers page, saying: “The statistic that I still almost struggle to comprehend in a very positive way is if you go onto RiyadhAir.com, our website, there’s a careers page, and it allows you to put in your personal details. In just over a year, we’ve had 1.1 million people send the details, their qualifications and their contacts to be considered to become part of the Riyadh Air family, 146 different nationalities, and we think that that’s just completely staggering.”
He added: “We ask ourselves why I would never have imagined so much interest and my only explanation is it’s because it’s under the leadership and the decree of His Royal Highness, the Crown Prince Mohammed bin Salman.”
Looking ahead, Douglas confirmed that Riyadh Air’s headquarters will soon be visible near Riyadh International Airport.
“Our brand new headquarters building will be available for us to start occupying in the summer of this year. And just out by Riyadh International Airport, people will see their biggest brand logo lit up in the skyline, probably in the next two months. And that’s when you will know where the home of the Riyadh Air family is,” Douglas announced.
The CEO acknowledged the challenges and opportunities ahead by reflecting on the industry’s current dynamics: “What a difference two or three years makes pre-pandemic. It was actually difficult to make any money in aviation. Ticket prices for a decade were almost at an all-time low.”
Douglas added: “Here we are today, where demand is significantly ahead of supply in many markets and, in particular, our market. But also we all know ticket prices are actually expensive at the moment. I don’t think that will last because it is a cyclical industry and it’s one again where classic Keynesian economics supply and demand at the moment.”
The Riyadh Air head confidently predicted ongoing market growth and outlined the carrier’s mission, saying: “Is the market going to continually grow? The answer is very simply, yes it is. Back to the proposition of Riyadh Air. We’ll bring a full-service carrier, the sort of carrier that the Kingdom needs and quite frankly, demands such that we’ll have global connectivity.”
Douglas invited guests to witness Riyadh Air’s debut at Paris Fashion Week and teased future technological innovations.
“Come and see us in Paris. Come and see the incredible fashion, which will stand out, but also later on in the year will start to reveal what our digital proposition is, and that will be another standout case for our industry,” he concluded.
Closing Bell: Saudi Tadawul closes in red across all indexes
RIYADH: Saudi Arabia’s Tadawul All Share Index slipped on Monday, losing 73.02 points, or 0.60 percent, to close at 12,125.36.
The total trading turnover of the benchmark index was SR6 billion ($1.6 billion) as 68 of the listed stocks advanced, while 155 retreated.
On the other hand, the Kingdom’s parallel market Nomu also slipped 25.51 points, or 0.09 percent, to close at 27,036.50. This came as 24 of the listed stocks advanced, while as many as 40 retreated.
Similarly, the MSCI Tadawul Index also dropped 13.53 points, or 0.89 percent, to close at 1,515.07.
The best-performing stock of the day was Al-Baha Investment and Development Co. which saw its share price surge 7.69 percent to SR0.14.
Other top performers include Almasane Alkobra Mining Co. as well as the Mediterranean and Gulf Insurance and Reinsurance Co., whose share prices soared by 7.05 percent and 6.72 percent, respectively, to stand at SR63.80 and SR25.40.
In addition to this, other top performers included Almunajem Foods Co. and Methanol Chemicals Co.
The worst performer was Fawaz Abdulaziz Alhokair Co., whose share price dropped by 8.04 percent to SR10.06.
Al-Babtain Power and Telecommunication Co. as well as Ash-Sharqiyah Development Co., also saw their share prices dropping by 7.39 percent and 4.45 percent respectively, to stand at SR41.35 and SR20.20.
Moreover, other worst performers also include Arabian Contracting Services Co. and East Pipes Integrated Co. for Industry.
On Nomu, Future Care Trading Co. was the top gainer with its share price rising by 11.05 percent to SR15.28.
Other best performers on Nomu were Professional Medical Expertise Co. as well as Osool and Bakheet Investment Co., whose share prices soared by 8.42 percent and 4.53 percent to stand at SR103 and SR 41.50, respectively.
Other top gainers also include Sure Global Tech Co. and Ghida Alsultan for Fast Food Co.
Leen Alkhair Trading Co. experienced a significant drop in its share price on Nomu, with the company’s shares falling by 7.72 percent to SR26.90.
The share prices of Almuneef Co. for Trade, Industry, Agriculture and Contracting as well as Riyadh Steel Co. also fell by 7.68 percent and 6.25 percent to stand at SR51.70 and SR30, respectively.
Other major losers include Molan Steel Co. and Mayar Holding Co.
