Grupo Mexico, a mining company, stated it will appeal against the government’s rejection of its bid to build an airport in the Riviera Maya tourist destination on Mexico’s Caribbean coast (Reuters/Travel Weekly, 01-Jun-2011). Grupo Mexico stated it felt “obliged” to fight the decision made by the Mexican Communications and Transport Ministry, arguing the reasons for rejection were not sound. Grupo Mexico formed one of the two bidding contorsia for the site with airport operators Grupo Aeroportuario del Pacifico (GAP). The ministry did not say if or when the bidding process for the USD255 million airport project could or would be relaunched.
Grupo Mexico to appeal against government’s rejection of resort airport bid
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Air France-KLM: long haul low cost airline could be part of new CEO's vision as French Blue enters
Air France-KLM chairman and CEO, Jean-Marc Janaillac, who took charge in Jul-2016, has talked about the possibility of launching long haul low cost operations (Bloomberg/luchtvaartnieuws.nl, 20-Sep-2016).
If Air France-KLM were to enter this segment it would be the second of Europe's big three legacy airline groups to do so, after the Lufthansa Group. Ironically, there is no long haul low cost competition to Lufthansa in Germany. By contrast, IAG faces more such competitors in the UK than either of its two major rival groups in their largest home market, but currently has no plan for such an operator.
Air France-KLM management told analysts on a conference call in May-2016 that it was sceptical about the sustainability of year-round profits for long haul low cost. However, new competition has prompted Mr Janaillac to look more closely at this market segment. Since Jul-2016 Norwegian has commenced trans-Atlantic long haul operations from Paris CDG. In addition, since Sep-2016, the new-start long haul LCC French Blue now flies on routes to the Caribbean. Mr Janaillac is expected to report on his strategic vision for Air France-KLM in early Nov-2016. Labour relations will be crucial to the group's development – not least in the area of long haul low cost.
Air Europa Part 2: a record of labour productivity gains, CASK near LCC levels but RASK falling
After a period of unit revenue growth following the global financial crisis, Air Europa came under heavy pricing pressure in 2015. Renewed growth by Iberia has intensified competition to Latin America, while LCCs are putting strain on short haul yields.
Air Europa does not report profits, but it is its parent company Globalia's largest business by revenue. The privately owned Globalia group has been profitable since 2013 but suffered a fall in profits in 2015, when its Air Division's revenue declined by 3% in spite of traffic growth. The group balance sheet has low liquidity and Globalia is reportedly considering an IPO.
Widebodies now represent more than half of Air Europa's seats and 20 out of 27 outstanding orders. This reflects the importance of its Latin American network and its ambitions to continue long haul growth, as detailed in part 1 of this report. Moreover, the widebody orders are for Boeing 787s – to replace A330s, generating cost efficiency gains. CAPA estimates that Air Europa's unit cost is above that of LCCs, but closer to them than to FSCs. It has a good track record of labour productivity growth, which will be useful in its quest for further CASK reduction.