London City Airport

As CityJet finalises restructuring it might escape Air France’s short-haul overhaul

Air France is undertaking a significant shake-up of its short and medium-haul operations as part of its Transform 2015 plan, but the Irish regional unit CityJet appears to be spared from the cost-cutting brooms after it initiated a profound restructuring in Jan-2011. CityJet, which comprises the Irish airline CityJet and the Belgian regional carrier VLM, trimmed its workforce, cut costs, increased productivity and streamlined its network and is now in better shape than some of its French peers in the Air France Group. Air France’s short and medium-haul operations amassed EUR700 million losses in 2011. But its parent company Air France-KLM Group, which is looking to reduce its massive EUR6 billion debt, could also opt to divest the airline to generate cash. 

While CityJet’s bottom line has improved, it is not yet delivering strong profits and competition at its main hub in London City Airport is intensifying. British Airways has been growing strongly at the small airport in the London Docklands in recent years, expanding its range of routes to European destinations and adding an innovative service to New York JFK. And it could be planning to expand this.

Olympic Games, despite conventional wisdom, present no large benefit to airlines

Some members of the public were incredulous last year after Qantas announced it would cut its London capacity by over a third in Mar-2012, months before the summer 2012 Olympic Games being held in London. They saw the Games presenting a large traffic opportunity and thought Qantas should wait for the Olympics to pass before reducing London capacity. But in fact the Olympic Games or any sporting event when held in a large city present little uplift. While leisure demand increases, corporate traffic tends to whittle.

British Airways and Virgin Atlantic, some of the most exposed to London, expect no notable uplift from the Olympics. During the 2008 Olympic Games in Beijing, airlines recorded traffic – and financial – losses as security measures stunted growth. 

London City Airport optimistic for remainder of 2011

London City Airport (LCY), on the doorstep of London’s commercial and financial districts and London’s developing EastEnd, reported a broadly level number of passengers in 1Q2011 to 1Q2010. However, the airport remains confident that 2011 will be a positive year and that traffic should surpass last year’s 2.8 million passengers.