Taiwan’s Taoyuan International Airport Co president and CEO Samuel Lin stated the airport is considering transforming the disused Grand Hotel building near the airport into a terminal for LCCs with the proposed facility to be “equipped with basic facilities for the airlines to operate”. As reported by CNA, Epoch Times and Taipei, construction work on the facility could commence next year and ready for use after two years. Mr Lin’s comments comes as Peach entered the Taiwan market on 16-Oct-2012, launching daily Osaka Kansai-Taipei Taoyuan, becoming the 11th LCC to operate to Taiwan. Mr Lin stated the airport has been receiving complaints that queues for LCC flights were so long that they affected passengers on other carriers. Taiwan Civil Aeronautics Administration previously reported LCCs had a 3% market share in Taiwan, lower than the average 24.6% in the Asia Pacific region.
Taoyuan International Airport considering transforming disused building into LCCT
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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.
Monarch Airlines: group receives new cash from Greybull Capital but profit outlook is down
The latest investment in the Monarch Group by its majority shareholder Greybull Capital avoided the loss of its ATOL licences and the possible suspension of operations. Moreover, it has given Monarch the opportunity to bridge the gap between now and the planned delivery of the first of its new 30 Boeing 737MAX aircraft in 2018.
Nevertheless, Monarch continues to face significant challenges. Europe's short/medium-haul markets are feeling significant downward pressure on unit revenue – particularly in the leisure markets that Monarch serves. This is due to overcapacity and concerns about terrorism in key Monarch markets. Brexit and the sharp devaluation of GBP (it has fallen by 30% against the EUR over the past 12 months) are further challenges for the LCC.
Although Monarch quickly quashed rumours of its financial difficulties in late Sep-2016 and then secured new funds, its commentary indicated that its profit for the year to Oct-2016 would be lower than in the previous year. It has an uneven track record of profitability and has often flown with close to empty cash reserves. Those reserves have been partially replenished, but only sustainable improvements in profitability will avoid the need for further cash calls in the future.