Now that the industry’s two previously near-autonomous airline categories, LCCs and FSCs, are increasingly feeling the need to connect, the repercussions are being felt at every level, by airports, IT providers, government regulators and more.
Even the global alliances are looking at ways of integrating the new models into their systems. Code sharing, partnering, interlining and simply co-operating are all taking on new levels of significance.
Today, definitions of airports’ roles are being stretched, as self-connection between point to point operations becomes commonplace. Airlines have different needs and airports are responding differently, some more effectively than others. As the role of national airlines is redefined, is there a need to reassess the nature of national connectivity?
This report is based on an article published in May-2015, in CAPA's Airline Leader journal for industry CEOs.
In the space of 30 short minutes a phalanx of widebodied aircraft passes through the UK’s upper airspace east-west track UL26.
Numbered amongst them are - all destined from points east for North America: four Qatar Airways services from Doha, one after another and almost in formation; three Lufthansa services from Frankfurt; two United Airlines flights and an Air Canada flight, all also from Frankfurt; a KLM service from Amsterdam; Air France from Paris and an airberlin from the city of Berlin to New York.
It is not so long ago that the majority of the passengers on those flights could be accounted for as point to point flyers
But with codesharing and partnering blossoming, the Qatar Airways flights alone could be ferrying passengers from anywhere in the Middle East, Asia and the CIS (where the airline is particularly strong) either directly into those four gateways (New York JFK, Washington Dulles, Houston and Montreal) or onwards from there on partner airlines such as American /US Airways (network) and JetBlue (LCC) Airways.
To take another example, the hybrid LCC airberlin might well be carrying most of its passengers merely from Berlin to New York JFK, which is more of a US gateway than a hub. But at the same time those passengers might have transferred on to the airberlin service from codeshare partners such as NIKI, Air Serbia, airBaltic, Alitalia, Bulgaria Air, Finnair, Meridiana, Pegasus and of course part-owner Etihad, to name but a few. (Etihad has an extensive independent alliance network of its own).
This short list of examples gives some immediate insight into the growing complexity of the organisation of air travel across differing modes. airberlin itself is a hybrid airline that was once a LCC. It operates out of what is regarded as Berlin’s main network airport (Tegel) rather than the acknowledged LCC one (Schoenefeld).
Those partner airlines mainly fly into Tegel, but Pegasus uses Schoenefeld while Meridiana does not fly into Berlin at all. Of those eight partner airlines six are classed by CAPA as full service/network, while Pegasus is a LCC and airBaltic a hybrid LCC.
Despite the labels placed on these airlines, passengers have often widely differing expectations of the service levels they will receive both in the air and on the ground
Differentiation between full service and low-cost airport types is as well established now as that terminology is within the airline sector. So any passenger can find him or herself, on one journey, travelling on both full service and budget airlines, using both full service and budget airports. The industry “norm” is no longer.
Connectivity, when it is not applied to the power or CIT industries, merely means “in the state of being connected or interconnected.” Ideally, in the air transport business it would be manifested by way of any person being able to travel anywhere in the world (connected) by means of a single air journey.
Of course that is impossible but to be able to do that with only one airport change (interconnected) appears to be a reasonable goal. Indeed, any city wishing to attract global delegates to a conference in 2015 needs to be able to demonstrate that degree of connectivity (accessible by one change from most major cities) as a minimum.
The plethora of formal airline alliances (no less than 63 airlines belong to Star, oneworld or SkyTeam in addition to innumerable affiliates) has been boosted latterly by ad hoc strategic alliances between individual carriers such as Qantas-Emirates and Etihad-Air Europa and there are many in the business who believe these linear arrangements will multiply, globally, in order to deal with specific needs that are outwith an overly rigid framework.
There are no LCCs amongst the three formal alliance members - and only a handful among affiliates
Yet the LCCs, which are increasingly powerful and ambitious, several coveting long-haul services and some having already introduced them, will need to come progressively more to an accommodation with the alliance members as their business models evolve. LCCs will typically still shun established global hub airports on account of turnaround time and other constraints, and they will seek to co-operate with the alliance members on their own terms at non-hub airports.
If those alliance members sought only to operate at hubs there would be no opportunity for a deal. However, the introduction of more economical aircraft models such as the Boeing 787 and 777X, and the A350, will mean that operations to and from less congested non-hub airports - at one end of the route at least - will become increasingly viable.
Typical of the longer, thinner routes which are being flown now, or are planned, and which benefit from these new aircraft types, include Helsinki to Bangkok, Beijing and Shanghai; Addis Ababa to Shanghai; Beijing to Boston and Delhi to Birmingham.
Currently, Norwegian, which has a long-haul network from London Gatwick airport to the US, says it will operate between Billund in Denmark (the home of Legoland) and New York. In this instance the enabling aircraft is not the 787 or A350 but the 737 MAX, which will permit Norwegian to “create” this route.
While the number of available routes continues to increase, that concept is hardly a new one
Canada’s WestJet has been flying a 737-700 between Canada and Ireland since 2014, British Airways uses an A319 on its prestige all-business London City-New York JFK service and Qatar Airways has been operating the same aircraft type in an all-business configuration between Doha and London from 15-May-2014. Icelandair has in the past deployed the 737-400 on transatlantic routes.
It is against this background that a number of British airports made submissions to the Davies Commission (UK Airports commission), which will make its recommendations on an additional runway in the south east of the country within the next two months, following the UK General Election on 07-May-2015.
(a) origin and destination, point to point traffic will grow at a greater rate than hub traffic (for which the principal UK airport is London Heathrow, even though hub traffic there is only 30% of the total);
(b) formal alliances have peaked in size and scope and that there will be greater activity in linear alliance agreements and consequential behind-gateway route building; and
(c) the typical air passenger today is sufficiently sophisticated to be able to self-connect or self-interline himself through an airport from one point to point flight to another without his hand being held.
Many of the trends prevalent in the industry indicate the need for all airline types to co-operate on improving connectivity at airport
At present many passengers are doing it for themselves. An excellent example may be found at London Stansted airport, which is dominated by LCCs (mainly Ryanair), and which account for 98.2% of all available seats.
While the corporate objective there might be to attract more full service and network airlines, at the moment almost all the passengers are travelling on point to point tickets. But because of the size of the airport’s network there is a multitude of ad hoc self-connections already taking place, where the passenger buys two independent tickets.
A passenger might fly in to Stansted on Ryanair for example from Budapest, and from there take a separate domestic flight to Edinburgh, or an international one to Shannon in Ireland or Nykoping (Stockholm Skavsta) in Sweden. Or he might connect internationally from Santander in northern Spain to Krakow in Poland, or to Chisinau on an Air Moldova flight.
There are many connections like this that it would be very difficult to replicate via other, more formal, hubs. Which network airline(s) or alliances can offer such routes involving secondary level airports at each end of the journey, and with how many en route changes?
Some estimates put the number of self-connecting passengers at Stansted as high as 40% of the total
If correct this would be around 10 ppts higher than formally connecting ones at Heathrow. In a 2008 UK CAA document, the Authority said that around 10% were connecters there, “despite little or no airline encouragement… indicating that a sufficiently wide network of routes alone may generate a certain level of connecting traffic.”
Indeed, connectivity statistics like that encouraged long-haul legacy airlines like Air New Zealand to consider Stansted as an alternative UK/European gateway as it might fit the plans of the ever growing band of independent travellers and backpackers who are prepared to take a chance on a missed connection even after a 24 hour flight.
What is Stansted doing to facilitate the journeys of these passengers? After all, some airports do. Germany’s Cologne-Bonn Airport for example introduced a self-service transit system, enabling travellers to transfer comfortably between LCCs (in that case Germanwings, TUIfly, easyJet and Wizz Air).
An important feature was a flight search website that placed all such random schedule connections in one place. The pay-off from creating what was effectively one of the first low-cost hub airports came in the form of substantially increased traffic.
But in Stansted’s case it believes it does not need to do anything. Its USP is that it is a single terminal building, where the two extensions since it was opened in 1991 have simply been tacked on to the existing infrastructure. Thanks to the layout, which is all on one level, it is not taxing to collect baggage and immediately check-in for another flight owing to the proximity of the respective features.
While the management keeps an open mind about providing a transit facility of sorts it is not yet considered necessary. Frequent travellers in particular will be aware of the ease of passage/transit and that they can use the airport in that manner if the need should arise.
A problem may arise as and when full service/network carriers – and especially long-haul ones – return to Stansted and budget airline passengers attempt to do the same with them. Legacy airlines require more certainty about the arrival of their passengers at the boarding gate for many reasons including security and timekeeping.
Gatwick Airport is another example where self-connection matters
It is a major plank of Gatwick’s submission to the Airports Commission that point to point travel as opposed to hub travel will predominate and as of Apr-2015 almost 64% of Gatwick’s seat capacity is on LCCs. easyJet’s base there is one of the largest in the world. But at the same time 30% of capacity in this 35 million passengers per annum airport is on full service and regional carriers and there is formal hub activity taking place, albeit on a much smaller scale than at Heathrow.
Gatwick does have a strategy to deal with self-connection - the Gatwick Connect service in the arrivals baggage hall, which it operates itself. It ensures that arriving passengers can quickly re-bag-drop checked items as soon as they have collected them from the reclaim belt – regardless of the airline they arrive on and then move directly to security.
The scheme was launched originally with Norwegian, and then expanded. It is now open to passengers arriving on any airline, in either terminal, and departing from either terminal – providing the onward departing flight is operated by easyJet, Norwegian, Virgin Atlantic, Thomas Cook, Flybe or WOW. Where a change of terminal is needed a 24-hour shuttle bus is in operation.
Connectivity opportunities exist at many airports, DIY and with a little help
There are opportunities elsewhere for airports to benefit from this new breed of traveller. In Spain for example, spare capacity became available at both Madrid Barajas and Barcelona El Prat airports when new terminals were constructed built, into which the legacy airlines funnelled. Vueling has started to offer connection at its Barcelona hub, selling the two tickets together, and this represents around 5% of all Barcelona passengers. This is a trackable activity.
Wilful passenger self-connectivity though is unknown in Spain. But support from AENA for any sort of self-connection there is low. There is an airside bus that connects both terminals and Qatar Airways seems to have been the trigger for its introduction. But that is about it. The regional Catalan government is believed to support self-connectivity as a long-term aspiration, but Vueling’s efforts apart there is no evidence it is happening.
Examples such as Gatwick Airport may be unique in the UK but they are not so worldwide. One of the few examples of a genuine major hub airport to make provision for self-connecters, Singapore Changi, has its Tigerconnect facility that was introduced in response to the rapid rise in LCC traffic there.
Tigerconnect gives passengers the option to make only one booking to purchase two connecting flights throughout its network of 50 destinations in 13 Asia Pacific countries shared by Tigerair and its partner airline, Scoot. For flight connections under eight hours, airport transfer has been incorporated in the flight purchase. For flight connections of more than eight hours, passengers can purchase the airport transfer feature online. Checked luggage is sent to the onward flight so passengers can use the facilities in the transit area, or they can explore Singapore via a free city shuttle. Tigerconnect transiting passengers who have at least five hours to spare before their connecting flight can register for a free two-hour sightseeing tour of Singapore.
There is clearly a need for airports to revisit their provision for these DIY travellers. However, the airports need guidance. In the UK, the Airports Commission has admitted during its long deliberations that there is some uncertainty about the long term efficacy and continuity of the now 20-year old system of strategic airline alliances and about the even more fundamental question as to whether the hub and spoke mechanism they support will continue to dominate, or whether it will be overtaken by O&D point to point travel and a looser set of individual arrangements between airlines.
These are arrangements that can be brought into play at any airport. In fact, airports like Stansted and Gatwick could become the new hubs if traditional alliances do start to break down.
The conclusion the Airports Commission reaches is awaited eagerly; it will determine the allocation of new runways and it will have ramifications far beyond the UK.
In the interim all there is to rely on is the (Mar-2015) report from the independent National Connectivity Task Force, which in a 174-page document finds largely in favour of London Heathrow Airport for expansion, a global hub where self connection is hardly required at all, and which is only mentioned once (as ‘self-interlining’) in the document. The old guard stands firm.