European Commission President Jose Manuel Barroso stated that the inclusion of aviation into the EU Emissions Trading Scheme is now European law and the commission is not considering altering the legislation (Reuters, 08-Jun-2011). Authorities, airline associations and individual carriers from China, Russia and the US are planning or have threatened legal action to block the EU from including them in the scheme. European airlines and Airbus wrote to the commission, concerned that the dispute could lead to retaliatory measures and a trade war. EU Climate Commissioner Connie Hedegaard stated that the inclusion of the aviation sector in the EU ETS is a “practical example” of steps that need to be made to fight global warming (Bloomberg, 08-Jun-2011).
EU stands firm over inclusion of aviation in EU ETS
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Vueling NEXT Part 2: new CEO to lead IAG's LCC in restructuring bid to achieve IAG targets
Vueling's new CEO, Javier Sanchez-Prieto, is leading a programme ('Vueling NEXT') to improve its profitability, both through revenue enhancement and cost efficiency gains. Among other aims this hopes to reduce Vueling's high levels of seasonality, to raise aircraft utilisation and to improve labour productivity. Given ambitious financial targets by IAG – action is needed.
Part 1 of CAPA's analysis of Vueling examined its capacity growth and profitability trends since its acquisition by IAG in 2013. Vueling's operating margin and return on invested capital are on a downward trend, hence the new initiative to reverse these trends.
This second part of CAPA's analysis considers the profit improvement programme. During this programme Vueling's fleet will remain broadly flat to 2018, before resuming growth thereafter. Focus markets for Vueling are domestic Spain and Spain-Europe. It has strengths in these markets but faces growing competition from its lower-cost rival Ryanair, which has also been raising its service quality – closing the gap to Vueling's more premium positioning on the LCC spectrum.