Spendthrift Shoestring

SkyEurope's February

In comparison to Ryanair's performance in February, SkyEurope this past month saw greater increases in passengers numbers and greater declines in load factor. All in all, it was a very dramatic month for the Slovak low-cost carrier. SkyEurope managed a very impressive 25.5 percent spike in passengers in February 2008 against February 2007 stats. Less impressive—in fact, mind-dizzyingly so—was their load factor drop of 18.1 percent, from last February's very strong 85.3 percent to this February's tepid 67.2 percent.

The airline attributes this free-fall of a drop to a huge increase in seat capacity and "a focus on continuous yield growth." Fair enough, though these are hardly the sorts of goals that axiomatically trigger load factor decline.

I'm not shy about the fact that I'm a fan of SkyEurope. I hope that these numbers don't scare investors and analysts. I'm crossing my fingers that the airline will continue to hone its product and deepen its route map to include more underserved airports in Central and Eastern Europe. Profitably, of course.

Ryanair's Mixed Numbers & Proofreading Difficulties

Ryanair just announced their February performance numbers. The airline claims a 20 percent rise in passenger numbers in February 2008 against February 2007 numbers, and a two percent drop in load factor in February against last February's stats. Load factor, or the number of passengers as a proportion of the number of seats available to passengers, was at 75 percent in February.

Last year at this time Ryanair posted a passenger increase of 24 percent and a load factor decrease of one percent, both against February 2006 numbers. If anything, there's a slight downward drift here, though nothing approaching a dramatic trend.

I hate to venture into snarky territory, but Ryanair could really stand to proofread a bit more diligently. It's February, not Frebruary.

As soon as some other European low-cost carriers publish their February 2008 numbers, I'll write about them.

Ryanair vs. SkyEurope Jan Face-Off

Since I wrote my December Ryanair/SkyEurope passenger and load factor comparison last month, there has been a great deal of print devoted to the ever more difficult conditions faced by European low-cost carriers.

Almost every day brings more grist for the mill. Three notable developments are Ryanair's dramatic drop in third-quarter profits, easyJet and Ryanair's plunging share prices, and Clickair's canceled plane orders and abandoned routes.

And then there's talk of the antidote to tough market conditions, namely mergers. There are rumors from Spain of a big low-cost consolidation, possibly binding Clickair and Vueling. From Germany, there is more concrete evidence of a far more massive merger in the works, which would consolidate Germanwings, TUIfly, and Lufthansa Regional's Eurowings.

It's against this turbulent backdrop that I look at Ryanair and SkyEurope's January performances. Ryanair took in 17 percent more passengers in January 2008 against January 2007: 3.68 million against last year's 3.14 million.  SkyEurope coaxed a rather more modest 227,000 passengers into its planes in January against last January's 184,000, resulting in an impressive passenger tally increase of 23.4 percent.

On the load factor front, things get a little scary for the airlines in question. Ryanair's load factor dropped 2 percent to 69 percent in January against last year's numbers, while SkyEurope's load factor plummeted 14.2 percent to 58.4%.

Last month, I speculated about Ryanair's practice of blocking rows of seats off from passenger use, wondering if this might actually be a way of increasing load factor numbers. I'm still wondering, especially after taking a look at the very slippery language used to define "load factor." This language ("the number of passengers as a proportion of the number of seats available for passengers") certainly provides ample wiggle room for Ryanair to exclude those blocked rows from load factor calculations.

The airline is crafty like ice is cold.

Since I wrote my December Ryanair/SkyEurope passenger and load factor comparison last month, there has been a great deal of print devoted to the ever more difficult conditions faced by European low-cost carriers.

Almost every day brings more grist for the mill. Three notable developments are Ryanair's dramatic drop in third-quarter profits, easyJet and Ryanair's plunging share prices, and Clickair's canceled plane orders and abandoned routes.

And then there's talk of the antidote to tough market conditions, namely mergers. There are rumors from Spain of a big low-cost consolidation, possibly binding Clickair and Vueling. From Germany, there is more concrete evidence of a far more massive merger in the works, which would consolidate Germanwings, TUIfly, and Lufthansa Regional's Eurowings.

It's against this turbulent backdrop that I look at Ryanair and SkyEurope's January performances. Ryanair took in 17 percent more passengers in January 2008 against January 2007: 3.68 million against last year's 3.14 million.  SkyEurope coaxed a rather more modest 227,000 passengers into its planes in January against last January's 184,000, resulting in an impressive passenger tally increase of 23.4 percent.

On the load factor front, things get a little scary for the airlines in question. Ryanair's load factor dropped 2 percent to 69 percent in January against last year's numbers, while SkyEurope's load factor plummeted 14.2 percent to 58.4%.

Last month, I speculated about Ryanair's practice of blocking rows of seats off from passenger use, wondering if this might actually be a way of increasing load factor numbers. I'm still wondering, especially after taking a look at the very slippery language used to define "load factor." This language ("the number of passengers as a proportion of the number of seats available for passengers") certainly provides ample wiggle room for Ryanair to exclude those blocked rows from load factor calculations.

The airline is crafty like ice is cold.

Not Waiting for Porter Anymore

It was announced last week that Canada's Porter Airlines will soon, at long and anticipated last, be flying to New York. As of March 31, the swankiest commercial carrier in North America will be flying between Newark and Toronto City Centre. The lowest fare I was able to find for the route: C$278.99 with taxes (US$277.37 as of this moment.)

Bargain hunters, note that fares jump a few weeks in.

My expansion hopes for Porter: several routes in and out of Winnipeg and an Ottawa-DC link.

Hubbub & Change for Three LCCs

Three interesting developments over the past few weeks caught my attention.

First, Ryanair announced on Wednesday that it is raising its baggage and checking-in fees. In the airline's words, this decision is part of their "continued drive to encourage passengers to travel without checked in bags and avail of Ryanair’s free of charge online check in." In practical terms, this means that checking in a single bag will cost £6 (up from £5) and that checking in at the airport (as opposed to online) will now run £3 (up from £2). These are modest increases, though they do have the effect of making it even more difficult to navigate an actually low fare on Ryanair. For the time being, bargain hunters—who aren't checking any luggage and who are checking in online—will continue to book Ryanair flights. But it is beginning to seem conceivable that with the steadily growing litany of charges Ryanair's most natural customers will soon be discouraged from flying with the airline.

Next up: SkyEurope's partnership with Czech Railways, from the Prague Daily Monitor via AirScoop. Dubbed the "CD Sky alliance," this partnership will allow people to purchase combination train-air tickets from train stations around the Czech Republic. The airfare component of the combination tickets are lower than those offered on SkyEurope's site, with advance fares cheaper than last-minute fares. Yesterday, the program kicked off in Brno. Pardubice, Ostrava, and Prague Liben train stations will begin offering combination tickets in February. What's most interesting about the partnership is its legacy. Until last year, Czech Airlines operated a similar arrangement with Czech Railways, abandoning it because it was judged to be less than seriously profitable. It will be interesting to see if and how the new partnership works out for SkyEurope.

And lastly, yowza, the Air Berlin rebranding! Until recently, Air Berlin's brand carried the aesthetic promise of a 1990 supermarket sale in some chain-drenched corner of the world. No longer. Earlier this month, the airline launched a new font (sexy), a new Web site (beautiful, and, um, is that a Finnish-language option?), and a new tagline (in German: "Genau deine Airline"; in English, the rather less precise "Your airline".)

Air Berlin's rebranding is especially sweet because it follows the creation of a good product that previously suffered from a ho-hum brand identity. Air Berlin has distinguished itself from other low-cost carriers in Europe by offering free newspapers, snacks, drinks, and seat assignments, maintaining a significant base of business customers, checking luggage without a charge, and guaranteeing some connecting flights. The rebranding itself comes at a good time for the airline. After acquiring dba in 2006 and LTU and Condor in 2007, Air Berlin is in the process of becoming an entirely new beast, one that straddles the low-cost and median-cost airline worlds, and that offers long-haul journeys (Beijing! Phuket! Windhoek!) as well as the more typical Germany-to-the-Med routes.

Um, wow.

The Wall Street Journal linked to my post of a few days ago on SkyEurope and Ryanair! I hope that my finance world friends are duly impressed.

This and That

Tomorrow I'll head to Eleuthera for three nights with Matt Armendariz. We'll be scouring the incredibly long and skinny Bahamian island for treasures. Matt and I will return with a collaborative project, and I'll also write a few posts suggesting how budget-minded travelers can spend a few days in the Bahamas without going broke.

Also on my mind...

1. On Friday, I looked at Ryanair and SkyEurope's December statistics in comparison. It's not just the Irish and Slovak budget airlines that are grappling with falling load factors. In December 2007 (against December 2006 numbers) easyJet's load factor fell 2.3 percent, Aer Lingus saw a 4.6 percent slip, and Air France-KLM stumbled .8 percent. See this MarketWatch piece (via Air Scoop) for more information.

2. The December/January Monocle, which has been around for weeks and weeks and really shouldn't be cited in a blog, came with a "Travel Top Fifty 2007/8" booklet. As one might expect, Monocle's universe is no budget paradise, but it is seldom about spending money for the sake of spending money. This translates into a true interest in value and some surprisingly inexpensive recommendations. To wit: two family-run hotels in Barbiano near Bolzano, Bad Dreikirchen and Briol. Rooms at Bad Dreikirchen start at €54 per person including half-board in low-season; at Briol, rooms start at €60 per day per person, also including half-board. Very nice. I've been sensing an upcoming moment for Süd Tirol for a while; this sort of coverage of glamorous yet affordable properties can't hurt.

Budget Airlines Battle, Dec 07: Ryanair vs. SkyEurope

I got into the habit of blogging about the monthly passenger traffic statistics of two of Europe's low-cost carriers months ago at EuroCheapo, and I think I'll continue doing so here. Both Ryanair and SkyEurope make monthly passenger traffic information available a few days into the following month, allowing for easy comparisons.

Over the first months of 2007, SkyEurope had the edge over Ryanair in terms of increase of passenger numbers and load factor, which designates the number of "earned" seats, that is, seats sold or booked via some promotional guise. They've never had the edge in numbers of passengers flown—Ryanair flies almost 15 times the passengers that SkyEurope does. By the middle of the year, Ryanair was performing better than SkyEurope on both passenger number increase and load factor.

In December, SkyEurope achieved a 40 percent increase in number of passengers flown against December 2006 stats. Their load factor was 9 percent lower in December 2007 than it was in the previous December. Meanwhile, Ryanair managed an 18 percent increase in number of passengers flown against December 2006 numbers, with a decrease in load factor of 2 percent.

SkyEurope cut back on bases and routes in 2007 and even sold some airplanes; their passenger numbers probably aren't going to continue to rise in 2008; Ryanair's no doubt will continue to rise modestly. The drop in load factor at both airlines in December is a bit surprising. Could it be that more Europeans stayed put over Christmas this year?

Lastly, I've long been curious about the Ryanair habit of blocking rows of seats off. Could this be some crafty way of increasing load factor numbers, by identifying some rows as nominally off limits? Any ideas?

EasyJet! GB Airways Routes!

On Sunday I predicted that easyJet's profile would continue to improve in 2008. Part of the evidence I marshaled toward this end was the airline's purchase in October of BA franchise GB Airways, which will be dissolved into easyJet at the end of March. It became apparent shortly after the purchase that easyJet's main strategy was to increase routes at Gatwick, and that GB's specific routes were almost incidental to the endeavor.

Yesterday, the airline announced that they're going to be flying all of the routes they're inheriting from GB Airways in and out of Gatwick, originally on a codeshare basis. This means that all sorts of destinations currently underserved by budget airlines will soon be reached affordably from Gatwick—including Ajaccio, Bastia, Gibraltar, and Paphos.

According to this article in the Independent, the routes will be maintained as long as they remain profitable, which, um, makes sense.

Five European Low-Cost Air Predictions for 2008

Facts and route information about Europe's biggest low-cost carriers are easy to master; the business of Europe's budget airlines remains more opaque and difficult to predict—for me at least. So take the following with a grain of salt. If nothing else, these predictions will be interesting to return to in 12 months.

1. EasyJet will continue to thrive. The airline is moving from strength to strength, and is even employing the competitive, bravado-based strategy more commonly displayed by their arch rival Ryanair. EasyJet's purchase of GB Airlines earlier this year means that the airline will be operating just under a quarter of all routes in and out of Gatwick by the spring.

2. There will be one big consolidation. Will it involve Vueling, which suffered resignations and a lowered Goldman Sachs rating in the fall? Will it be SkyEurope that falls? The Slovak airline is selling planes but increasing revenue. Or will it be another airline altogether?

3. Eastern European routes will continue to boom. Ryanair's recent addition of Constanta is the latest sign. EasyJet flies routes to Bucharest, Sofia, and Istanbul, and SkyEurope flies to Timisoara, Bucharest, Sofia, Varna, and Bourgas. Romania and Bulgaria will see more budget air traffic, in particular to destinations in Italy and Spain. Moldova and Ukraine have barely been tapped—among budget airlines, only On Air flies to Ukraine, and only Meridiana schedules flights to Moldova. Both countries will see more budget air routes relatively soon, though possibly not within the next year.

4. There will be more destinations beyond Europe served by European LCCs. Ryanair will probably begin to fly to Tel Aviv.

5. Flyforbeans will finally launch, with the quirkiest route map around. (Ok, this last one is complete guesswork.)