Globe Merchant Travel Blog

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Aegean Airlines, whose proposed merger with competitor Olympic Air was blocked by the European Commission last month (ATW Daily News, Jan. 27), said it expects to report a net loss of €22-€24 million ($30-$33 million) for 2010 and warned that a loss for the current year is “very likely” owing to higher fuel prices and continued weak demand in the domestic market. It estimated 2010 revenue at about €590 million.

“Despite the difficult economic environment, the company will continue during 2011 to develop its international presence, with prudent gradual steps, in line with its strategic direction of the last five years,” MD Dimitris Gerogiannis said. “At the same time, we will continue to invest in further improving our productivity and unit cost efficiency toward international best in class levels.”

Aegean transported 6.2 million passengers last year, 5% fewer than in 2009. International boardings increased 9% to 3.06 million as it added new routes to its network. Passengers carried in the domestic network, however, declined 16% to 3.17 million with a significant reduction in average fare due to weak demand. To address the effects of the Greek economic crisis, it reduced fleet and capacity significantly, mainly in the domestic network, through the phasing out of four Boeing 737s, two ATR72-500s and two Avro RJ100s.

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New Europe

The case of the merger of two private Greek airliners, Olympic and Aegean is on the spotlight again as the European Commission has to decide, next week whether such merger is possible or not.

Almost a year ago, the boards of the two airlines agreed a merger. As we reported at the time, the establishment of such a brokered agreement between Olympic and Aegean risks resulting in an infringement to national and community competition rules since it could create a dominant position and subsequent abuse of the Greek domestic air transport market.

The Commission responded quickly to our remarks and opened an in-depth investigation under the EU Merger Regulation into the planned merger of the airlines.

The Commission’s initial market investigation indicated that the proposed merger could raise serious competition concerns, and they also had serious doubts as to the compatibility of the transaction with the Merger Regulation in connection with the provision of Public Service Obligation routes in Greece and the provision of ground handling services in Greece. The Commission expected a final decision by 7 December 2010.

Carry On As Normal
The decision was postponed until 12 January, 2011 and again to 2 February, 2011. Part of the reason for the delay was that there was high level pressure being applied, by those who wanted the deal to go ahead. The airlines are owned by the Vassilakis Group of companies (Aegean) and Marfin Investment Group (Olympic). The pressure, however, according to rumors comes only from Olympic because between the two, it is the one who is facing serious problems as if the merger is not allowed they will be obliged to proceed with capital increase.

These groups are also involved with shipping and have considerable lobbying skills and from the Greek shipping community of London, where from, according to rumors, the pressure on Brussels originates from. One example of how powerful Greek ship-owners are is the exemption from carbon emissions taxes for the maritime industry. Currently the tax negotiations have been passed to the International Maritime Organisation (IMO), who spent five years on the issue, without any progress. None is expected.

As to the merger of the two airliners, during this period, something unusual happened; the two companies acted as though the blessing of the Commission was a mere formality and made preparations for the post merger situation.

One example is the dismissal of up to 40 Olympic pilots. According to insiders, they were called in to the Flight Operations Manager’s office, where a lady from HR was also present, informed that their services are not needed any more and handed an envelope with their finishing salary.

Dismissed engineers are rumored to have extracted their revenge by destroying the logs and maintenance records of four A340 planes. Without these records, the planes are, in effect, unusable.

There also seemed to be a change in long distance flights, where a harmonious route sharing suddenly appeared. The golden rule in aviation is to keep hold of your slots. Without these, which allow you to take off and land at airports, there can be no scheduling of flights, no routes and therefore no business.

A Chance To Stand Up For Consumers
Commissioner Joaquin Almunia said in October 2010, “The big difficulty here is that the two companies hold almost all the domestic market in Greece,” Almunia added, “As with previous airline cases, we will need to ensure that consolidation in the airline sector does not happen to the detriment of consumers and businesses in Europe.”

Previously, the Commission disallowed a merger between Air Lingus and Ryan Air on competition grounds. There were some other factors involved, not least that the Irish government was opposed to the deal and the… abrasive character of the Ryan Air boss, who misses no opportunity to show his contempt for customers.

The case against the Greek merger is far stronger.

Airline experts pointed out that Aegean and Olympic Air are already the two leading airlines at Athens airport. Merging the two would give the combined entity between 65% and 70% of all flights and seats at the airport.

Not only that, but the flights are essential to the economies of countless Greek islands, who need fast and cheap connections to keep their economies going.

Handing over control of the domestic flights, even more so to companies associated with the ferry services, could create a situation where the islands and those who do business with them, would be at the mercy of a monopoly.

This is an opportunity for Joaquin Almunia to stand up for citizens, if he can resist the pressure being applied. He may well be more than tough enough.

I get a lot of sale notices from both major and discount airlines, both European and American and I have stopped holding my breath trying to find good fares with the major European ones. I subscribe to Lufthansa, Air France and Iberia and every time I get one of their notices which advertise low fares, I say to myself “Here we go again”.

Lufthansa recently sent me a flyer with rates “as low as $261 to Milan” and of course they don’t mention that it’s one way based on a round trip purchase(but that has been a given, although a slightly dishonest one because it isn’t $261, it’s $522 right off the bat!). I went to the site and look for the lowest fare and put in my dates within the parameters that they outlined. The lowest fare that came up was $1106 and when I went through the booking process I ended up with $469.72 in taxes and a total fare of $1114.72. That is a far cry from the $261 round trip that was advertised.

The problem with European airlines is that they have incredibly high taxes(sometimes even over 100% of the fare itself). The US Airlines usually have something below $200 in taxes which makes the final fare a lot lower. You will also have the same problem if you try to book a USAirline flight that originates in Europe- super high taxes will be added to the basic fare!

I’ve actually been checking the European Airlines for years and have never flown with them because their rates are high. Actually that is not true, Delta has a codeshare with Air France so I’ve purchased Delta tickets and flown on a plane that said “Air France” on it for a reasonable fare… so your best bet is to look at the USAirlines first if you want to get the best fares!

There was a time when airlines used to offer discounts to children…. Two nice discounts were available: 1) a 25% discount for children between the ages of 2-12 whereas they would get their own seat and 2) an 80% discount for children under two who would travel as lap babies. These discounts helped to cut down the expense of air fare for families.

The 2-12 year old discount has pretty much disappeared on most airlines(although there may be the odd airline that still offers a child’s discount) and now they pay full fare while there is still a discount for the lap babies.

When traveling with a lap baby on the larger wide body jets you should ask about the front middle bulkhead seats and if there is a bassinet that can be inserted in the bulkhead. This is generally good for children up to 20 pounds and we used it on one flight to Greece. It was nice to have since it meant that we had the option of not having Anastasia on our lap for 10 hours. You will want to keep your eye on the little one though as she is right under neath the movie screen and should she stand up it will look to the other passengers like a giant baby is invading the scene. It may be cute for a second, but after anything longer than that you run the risk of having a planeload of unhappy passengers! You’ll also want to keep an eye on your baby because the bassinet has low sides so it is very easy for a child to fall out of it….

There is also another restriction that you will want to check up on before purchasing your tickets and that is the number of children who can travel per parent. I’m pretty sure that a single parent with three children is not acceptable but you’ll want to check with the airline to find out if their limit is one or two.

The other issue is sending an unsupervised minor on a flight alone. Each airline has different age requirements, rates and procedures so you will want to check with the specific airline so you don’t have an unwelcome surprises to deal with. My brother in law bought tickets on Delta for his 14 year old to fly cross country but when she arrived at the airport and found out that Delta requires the traveling youngster to be at least 15 years of age. As a result her father had to purchase a new ticket, at a higher price because it was purchased last minute and now will also lose the cancellation fee on the original ticket. His daughter had done this trip alone a number of times in the past but never on Delta, and the thought that there would be different age requirements with different airlines never crossed his mind.

Air travel across much of Europe was paralysed for a fourth day on Sunday by a huge cloud of volcanic ash, but Dutch and German test flights carried out without apparent damage seemed to offer some hope of respite.

By Patrick Sawer and Robert Mendick
Daily Telegraph

Volcano chaos could continue for months

Britons stranded as Iceland volcano grounds flights

British Airways and Irish Aer Lingus highlighted uncertainty over any resumption of flights in the immediate future by cancelling all of its flights for Monday.

Dutch airline KLM said inspection of an airliner after a test flight showed no damage to engines or evidence of dangerous ash concentrations. Germany’s Lufthansa also reported problem-free test flights, while Italian and French carriers announced they would fly empty airliners on Sunday.

British Airways were also said to be planning to carry out a test flight from Heathrow to Cardiff this afternoon amid growing pressure to lift the ban, which has left hundreds of thousands of passengers stranded around the world.

BA said that, subject to approval, its test flight would involve a Boeing 747 jumbo jet with a four-strong crew and BA chief executive Willie Walsh aboard.

It was planned that the aircraft would take off from BA’s southern runway, flying over Windsor and Reading in Berkshire and heading off over the Atlantic.

The flight would last around two to three hours with the plane landing at BA’s engineering and maintenance base at Cardiff.

The Association of Dutch Pilots (VNV) said that along with sister organisations it believed a partial resumption of flights, with some restrictions, was possible.

“The concentration of ash particles in the atmosphere is in all likelihood so little it poses no threat to air transport,” said VNV chairman Evert van Zwol.

Through Sunday, a clampdown held across much of Europe, posing a growing problem for businesses including airlines, estimated to be losing $200 million a day, and thousands of travellers stranded worldwide.

Many countries, including Austria, Britain, France and Sweden, closed their airspace into Monday, and weather experts said wind patterns meant the cloud was not likely to move far until later in the week.

They said the dark grey plume rising from an Icelandic volcano and drifting southwards through the upper atmosphere could become more concentrated on Tuesday and Wednesday.

More countries were forced to close their air space yesterday as the ash cloud continued to expand across the continent.

Volcanic ash cloud latest: live

More than 17,000 flights to and from European airspace were cancelled, including all flights from Britain’s major airports.

The Met office reported that volcanic ash had begun to fall across Britain, coating surfaces with a fine layer of dust and raising fears for people with breathing difficulties.

Meanwhile experts warned of shortages of some foods with produce destined for British shops rotting in airport warehouses in other parts of the world.

Geologists reported that activity at the volcano increased yesterday, spewing a plume of ash 5.3 miles high into the atmosphere.

The Icelandic Meteorological Office said the winds blowing the volcanic ash south east to Europe and up into Scandinavia and Russia will continue in the same direction for at least two days and could go on until Wednesday.

But scientists fear there could be more eruptions from the 5,466-foot volcano, Mount Eyjafjallajökull.

Sigrun Hreinsdottir, a geophysicist at the University of Iceland, said: “From what we’ve seen, it could erupt, pause for a few weeks, and then possibly erupt again. It could go on for months.”

As the no fly zone expanded yesterday, so did the chaos.

FLIGHTS AND TOURISM

The National Air Traffic Control Service (Nats) extended restrictions on flights from British airports to 7pm on Sunday, with the expectation of further extensions.

Tens of thousands of Britons stranded abroad were forced to check back into hotels or seek sea or rail routes home.

Ferry operators have reported record bookings. P&O took 6,000 foot passengers across the Channel on Friday compared to the 100 to 200 it would expect on a normal Friday in April.

Eurostar trains were fully booked until tomorrow, with 50,000 more passengers than normal since the airline disruption began on thursday, including comdeian John Cleese who arrived back in London last night after a mammoth overland journey from Norway.

The operator is charging passengers a minimum £223 for a single ticket from Paris to London over the next two days prompting accusations of profiteering. A return ticket can normally be bought for as little as £69. Eurostar denied it was cashing in.

Some 4,000 British tourists have been stranded in South Africa.

Paul and Catherine Newman and their daughters Francesca, eight, and Natasha, six, were among those stuck in Cape Town. Mr Newman, 44, said: “I have to get back to my business on Monday, and the girls are due back to school. We took our hire car back to the airport and used up all our holiday cash. After paying pounds 650 for each of us to fly, it’s very bleak.”

The British Embassy in Athens said there were currently “many thousand” British holidaymakers trying to leave Greece after the holidays, in many cases anxious to get back in time for the start of the school term this week, with some of those desperate to return resorting to renting cars or embarking on long trains journeys.

Several hoteliers on the Greek islands have begun offering free meals to help stranded guests cope with the extra cost of an enforced extension to their stay.

ASH

The Met Office reported that ash from Eyjafjallajokull had settled over much of Britain, with a thin coating detected at its monitoring stations in the North, the Midlands and the Thames Valley.

It said: “Evidence of ash dust over the UK is being detected by Met Office observations and there are reports of dust reaching the ground.”

The British Lung Foundation advised people with a lung condition to carry their medication as a precaution as they may experience short-term worsening of symptoms. However it stressed that the ash does not pose a significant health risk to the public.

There were reports lst night of cars as far afield as Heathrow and north Wales covered in a fine coating of the dust

FOOD SUPPLIES

The Freight Transport Association said that even if British airspace finally begins to open up in the coming days it would take a fortnight to clear the backlog of flights and food destined for the UK. Reports have already emerged of food beginning to rot at airports, with millions of pounds of vegetables and flowers destined for British supermarkets being destroyed in Kenya.

If disruption continues into this week shoppers will begin to notice a shortage of a number of food products normally airfreighted into the country, particularly from south east Asia and Africa.

The Freight Transport Association (FTA), warned that some imported fresh fruit and vegetables could soon be in short supply.

Jo Tanner, the Freight Transport Association spokeswoman, said last night: “We will start to see food shortages this week and we will not see a return to normality for at least two weeks”

Matthew Albert, head chef at Michelin starred Thai restaurant Nahm, in London, said they had been fortunate in receiving their weekly supply of produce from Thailand last Wednesday, a day earlier than normal because of a local holiday. Any later and it would have been grounded by the eruption. “But if flights don’t resume soon this week it will become increasingly difficult to source Thai ingredients in Britain and we will have to make changes to our menus,” he added.

BUSINESSES

The grounding of all flights has already cost the British economy at least £920 million, with losses set to rise at the rate of £230m for every day of further disruption.

The airline industry alone will have lost an estimated £520 million by the end of today, with losses of £130m for every day of disruption. Economists at the Centre for Economic and Business Research estimated that the wider economy is also expected to suffer losses of at least £100m a day from lost revenue and extra costs.

Steve Bond, a senior lecturer in airline operations and business aviation at City University, in London, said some of the smaller airlines could be “tipped over the edge” if the disruption of the past three days continues into the middle of this week.

Logistics company DHL confirmed that it expected significant disruption on several European air traffic routes, due to the temporary closing of air space through northern Europe and parts of western Europ.

The British Chambers of Commerce said the disruption could not have come at a worst time for business.

Its Director General, David Frost, said: “Business is still recovering from recession and for the first time in some years we are just beginning to see improvement in our exports.”

Mail from Britain to the far East was delayed, while post and parcels to the US were being taken by road to southern Spain to be flown across the Atlantic.

EDUCATION

Schools face major disruption this week with teachers stranded abroad and unlikely to return in time after the Easter holidays.

Mark Southworth, head teacher of Woodcote High School in Croydon, said 12 of his teachers were stranded abroad, amounting to one in seven of his workforce. He has supply teachers on stand by to fill in for regulars who cannot make it back to the UK.

“We have made the decision that we are going to open and are planning for the worst-case scenario,” he said.

Martin Ward, the deputy general secretary of the Association of School and College Leaders said: “No doubt many schools will be short staffed on Monday because of teachers being stranded abroad.”

Cambridge University was forced to cancel examinations because dozens of students and examiners were still trapped abroad. Oral examinations at the Faculty of Modern & Medieval Languages which were due to take place tomorrow and Tuesday have been postponed.

SPORT

The travel restrictions also hit the sporting calendar.

Olympic champion Bradley Wiggins was forced to miss a cycle race in the Netherlands and football referee Steve Bennett, who was due to officiate the Manchester derby yesterday, was stranded in Romania.

Great Britain’s opening match at the Ice Hockey World Championships in Slovenia yesterday was delayed to allow the team to alter its travel plans by swapping a flight for bus and train.

The ash also affected rugby league’s Challenge Cup, with Widnes Vikings and Lezignan being postponed after the French club’s flight to England was cancelled.

The aftermath of the eruption also had an impact on cultural events. Russell Watson, the tenor, was forced to call off a concert in Ireland after his flight was one of thousands cancelled, while singer Mika postponed a concert in Portugal and members of “cartoon” rock band Gorillaz, due to headline at California’s huge Coachella festival, were stuck at Heathrow.

Meanwhile, Liverpool and Fulham faced finding alternative ways of getting their players to the Europa League semi-finals in Madrid and Hamburg on Thursday (April 22).

CLOUD

The first detailed analysis of the molten rock thrown out by last week’s eruptions has given clues to why the impact has been so severe – and suggested that it could cause protracted chaos for Britain. While last month’s initial explosion involved magma made of basalt, the rock exploding through the ice now is composed largely of andesite, scientists at the University of Iceland have discovered.

The significance is that andesite has a markedly higher gas content than basalt. This may mean that even after all the ice in the crater has melted, the exploding volcano will continue to throw ash into the air rather than simply produce lava flows.