Aviation: the trouble with airports and airlines

“e dietro le venìa sì lunga tratta

di gente, ch’i’ non averei creduto

che morte tanta n’avesse disfatta.”

“and from behind came such a long queue

of people, that I could not have believed

that death had undone so manyⁱ.”

Dante Alighieri (c.1265-1321), La Divina Commedia, Inferno, Canto III

Heathrow hell

There are few cheap flights out of London’s number-one airport anymore. Getting there on public transport is becoming more expensive too. If you ask a friend to drop you off, they will have to pay a charge of at least £5. And there are supplements if one outstays one’s welcome. The cost of parking a car in a long-stay car park comes in at about £18-£20 a day, although there are deals available.

The airport workers who supposedly look after you are mostly on the minimum wage or just above. Such workers usually aspire to move airside, where wages are higher, but can only do so once they get Home Office approval. And yes – you’ve guessed it – the Home Office security-clearance team is short-staffed so there are long delays to this process. Reportedly, the Home Office has outsourced this function to private third parties – and the delays have got even longer.

On entering the terminal, you are invited to visit a bag-drop machine, assuming that you can find one which is working. In the good old days, a smiling operative might be prepared to overlook that little extra kilo tipping on the scales. No longer. The machine will immediately demand £65. Once you have suffered that indignity, the security queue awaits, and it has recently taken up to two hours to get from one end to the other.

The word has got round that airlines, in connivance with airport operators, have been losing travellers’ luggage with remarkable regularity. Travellers have therefore attempted to carry on all their luggage as cabin luggage. This often results in passengers being ordered to transfer their oversize luggage from the overhead lockers to the hold. That takes time and effort, and often results in further delays.

All this naively assumes that the flight will go ahead and will not be cancelled, in which case, you will have to rebook. Pre Covid, there were booking desks where such rebookings could be transacted on the spot. Nowadays, the rebooking function has almost universally been outsourced to entities that communicate via call centres in India.

The staff of UK Border Force at Heathrow and elsewhere are also said to be demoralised by overwork, inadequate pay and erratic shift times. Queues to get into the UK are getting worse, although the new robotised gates for e-passport holders have proven successful.

In response to scenes that could have been taken from Dante’s Inferno, the powers that be at Heathrow Airport Holdings decided last week for the first time to cap the number of passengers travelling through the airport each day at 100,000. That prompted British Airways (BA, part of IAG) to cancel 10,000 scheduled flights over the autumn and winter seasons. Lufthansa has drastically pared back its schedule too.

Staff shortages at airports and the companies which service them have resulted in miserable airline experiences as well as delays and cancelled flights. Airport operators are accused of laying off staff in the first wave of the pandemic, and then being quite unprepared for the return to relative normality. Airport chaos is not just a British phenomenon but has been manifest all over Europe too this summer.

The view from the air

This year, airlines have been confronting upward pressure on fuel costs, airport landing fees and air-traffic-control fees. Plus, of course, staff costs – the second biggest cost after fuel – have been soaring. Labour rates for air crew since the pandemic have risen much faster than in the hospitality industry.

Way back in February, just as Russia invaded Ukraine, we learnt that clever Ryanair had hedged its fuel costs 15 months forward, but Wizz Air had not. As a rule of thumb, aircraft fuel (kerosene) accounts for about one third of an airline’s operating costs. It may well be much more than that this year.

Last December, Ryanair bid farewell to the London market where it had been listed for more than three decades, in compliance with EU aviation ownership rules. It is now listed on the Euronext Dublin exchange and on the NASDAQ. I admit that Ryanair is the business-school case study par excellence of how to transform an industry with flair and verve. But I also admit to an ingrained prejudice against the airline after it left me stranded in Valencia during the Icelandic ash-cloud event of 2010.

Heathrow’s landing fees have approximately doubled since the pandemic. Amsterdam’s Schiphol has raised landing fees by at least 40 percent. And air-traffic controllers across Europe are keen to recoup the billions of euros in lost revenues accrued during the pandemic when flight volumes more than halved. Air-traffic-control fees are a function of the number of flights and the number of passengers transported.

Then there is the threat of green taxes on aviation. The UK’s Climate Change Committee (CCC) of ‘green’ notables, chaired by ‘born-again’ climate catastrophist Lord Deben, insists that we must eat less meat (or none), cycle everywhere and cut flying to a minimum. If flying were more expensive, they argue, people would fly less. The CCC wants to reverse the cut in air-passenger duty enacted by Rishi Sunak in 2021, favouring instead something called frequent-flyer levies. Meanwhile, Brussels is planning to introduce measures to oblige airlines to use more sustainable aviation fuels.

Ryanair’s unique selling point used to be that it was the cheapest of the cheap. However, it has warned that the age of €10 fares is over. Its feisty chief executive, Michael O’Leary said as far back as last September that future fares would be “dramatically higher”. Carsten Spohr, the chief executive of Lufthansa, said at about the same time that “prices were too low before Covid”.

The budget-airline model began in the 1990s by stripping out all the fixed costs built into the lugubrious, state-sponsored airline model – paring them down to almost nothing. But the hollowing out of costs could only go so far, even when growth forecasts looked exponential. Market forces were always going to prevail in the end.

At the height of the pandemic, BA cut 10,000 staff out of a total of 42,000. That was described as “wanton destruction” by a parliamentary committee. The airline is now desperate to fill vacancies.

While some headline fares are still alluring, budget airlines continue to ramp up fares for add-on services such as insurance; cabin and hold luggage; seat selection; in-flight drinks; and snacks. Thankfully, O’Leary’s proposal that passengers should pay to use the bathroom never caught on.

A return to normal? Not really…

By the beginning of spring this year there was huge pent-up demand by travellers, particularly in northern Europe, to make up for holidays lost and cancelled during the pandemic. Summer holiday bookings were well up compared to 2020 and 2021 and people were prepared to pay much higher prices for their annual getaway. Ryanair claimed that the main objective was to generate full capacity on every flight, but we know that its fares have steepened sharply.

The new hand-to-hand combat in the European budget-airline space is between Ryanair and Wizz Air. Wizz Air is backed by American billionaire Bill Franke, who is in turn backed by Singapore sovereign-wealth fund Temasek. The airline, headquartered in Budapest but with its hub at London Luton, is still in growth mode: it aspires to expand its fleet from 150 to 500 aircraft by the end of the decade.

Despite the upswing in business and the keenness to travel, airline shares have not fared well. Air France-KLM shares are down by around 30 percent this year. Ryanair’s are down by about a third year-to-date, as are shares in IAG (which owns Iberia and Aer Lingus, as well as BA). Wizz Air’s shares have more than halved in value.

But not everyone thinks the only way is down. Last month, Germany’s richest man, logistics tycoon Klaus-Michael Kühne, spent nearly one billion euros buying into the industry, increasing his stake in the German flag carrier Lufthansa to 15 percent. Simply put, Kühne is looking past the turbulent summer of 2022 to more stable times ahead. That takes vision – and nerve.

The rise of semi-private air travel

Back in 1983, Sir Richard Branson had an epiphany. A frequent transatlantic flyer on such ghastly behemoths as Pan Am, TWA and the pre-privatised BOAC, he realised that discomfort was built into the customer-service proposition. You fly economy – and you will suffer. That was the spark that lit the flame that became Virgin Atlantic, which, for all its faults, was a massively disrupting force which changed the shape of air travel for good (we supposed).

Sadly, however, in the post-Covid dystopia where we now live, the budget airlines (though that is now a misnomer) once again seem to dislike their passengers.

Little wonder, then, that some people who can avoid scheduled airlines altogether are opting for something more tailored to their needs. The rich will always be able to hire private jets as and when they wish – assuming they don’t already own one. Now, the not-so-rich can participate in a kind of flying carpool to popular destinations on semi-private jets which carry about 16 passengers.

Farnborough Airport, Hampshire (the venue for the military Farnborough International Airshow) is reporting a 20 percent increase in flights relative to pre-pandemic levels, while Biggin Hill Airport in Kent is up 75 percent. Biggin Hill offers a six-minute helicopter hop to the London Heliport. The number of micro-airlines in the semi-private jet space continues to expand. Leaders include Aero, Blad, JSX, XO and Wheels Up. All these brands claim to be sustainable in so far as they offset CO2 emissions by planting trees for every flight they make.

A one-way ticket on Aero from Biggin Hill to Ibiza this Sunday (28 August) will cost you £1,400ⁱⁱ. Aero was launched last year by Garrett Camp, the Canadian entrepreneur who co-founded Uber with Travis Kalanick back in 2009. Passengers are requested to book in 45 minutes before departure. Check-in and security procedures are reportedly ultra-smooth. Expect cream-leather seats with mahogany trim – and as much champagne as you need.

The upside for semi-private jets could be huge – and prices will surely edge down, though they will always be at a fat premium to conventional air travel. I’m also bullish about flying taxis – the Uber cabs of the skies that will facilitate short, swift hops very soon. Long-haul air travel might be transformed by emerging technology such as hydrogen-powered flight – something I’d like to examine soon. But, as for short-haul budget airlines – the paradigm has changed.

Hill’s three air-travel tips

Tip one. Choose your airport before you choose your airline. Let it be an airport that you can comfortably reach by public transport, ideally by train in reasonable time. But be aware of train-strike days. I had a reasonably benign experience with London City airport recently. BA told me “not to arrive too early”. On the return leg, I was back on the Docklands Light Railway within 20 minutes of touchdown. Small airports are much more pleasant than large. There may be some good news forthcoming shortly about Manston International Airport in east Kent, for which local MP Sir Roger Gale has campaigned so persistently. And I’m hearing good reports about Stansted of late. It scores highly for not being Gatwick and is surprisingly accessible by train from both north and south.

Tip two. When travelling short haul, always try to go for lunchtime flights out and back as far as possible – even if they are more expensive. Early-morning flights are stressful because crepuscular journeys are always fraught, and travellers need to keep their blood sugar stable. Don’t skip breakfast – eat it at home. Try to avoid airport catering as much as possible. Food never tastes decent in an airport. Ideally, you will arrive at your destination before dark, looking forward to the possibilities of dinner. Similarly, arriving back home late in the day is stressful and tiring – and you will need recovery time. Remember that as the day passes, delays accumulate. EasyJet used to offer five flights a day from Gatwick to Toulouse, Blagnac. Now it’s down to one. It used the same aircraft shuttling there and back. The first flight out was always pretty much on time; but the late, late show was always – late. I often used to bump into the great Lord Lawson on those flights, who always claimed to be ‘speedy boarding’.

Tip three. Here I am grateful to a reader – Paul – who wrote in response to my piece two weeks ago on demographics. He says that to avoid taking one’s shoes off at the security check one should travel in tennis pumps. (I believe Jim Mellon was wearing a pair of these for his keynote address to the Master Investor Show in March – and nobody seemed to mind). Also, Paul recommends travelling in tracksuit bottoms so that one is not obliged to take off one’s belt at security.

As for luggage, he says: “Be FRUGAL and make do with carry on only….so much easier and quicker”. On that theme, the last time I travelled EasyJet, at Easter, there was a to-do with my hand luggage, even though my boarding card stated precisely the dimensions of the bag I was permitted, and I had measured it accordingly. In contrast, BA generally avoids torturing people over reasonably sized hand luggage. Last time I flew with BA, I even paid for hold luggage and yet carried it on – more fool me. Paul also advises that paying extra to choose your seat is a waste of money. He is right.

Happy travels, Paul and other friends.

PS

My sources in Kenya are nervous. Things are quiet for now but the country, which has the seventh-largest nominal GDP in Africa, is holding its breath while the election results of the presidential and legislative elections of 9 August are challenged in the Supreme Court. It looks like William Ruto, who took a swathe of counties in central Kenya, will emerge as the final presidential victor, but a lot of Kenyans distrust – and fear – him and his entourage. Raila Odinga, the outgoing president is considered to have got things done.

My main concern is how Kenya-China relations pan out. The Kenyans have been taken for a ride by the Chinese on the Mombasa-Kigali railway. The old British-built railroad could have been upgraded at a fraction of the cost. For how much longer will aspirant developing nations like Kenya continue to be bamboozled by the Chinese Communist party? And for how much longer will they swallow the Russian narrative on why global food supplies have been disrupted? These are questions I would like to consider here soon.

PPS

The vegetables continue to amaze. The beans are abundant. There are juicy beef tomatoes now. But the sweetcorn are pitiful mutants – and tasteless at that. As summer’s lease expires, no doubt there shall be more victims of drought.

Listed companies cited in this article which merit analysis:

• International Consolidated Airlines Group SA (LON:IAG)
• Ryanair (NADAQ:RYANAIR)
• Lufthansa (ETR:LHA)
• Wizz Air Holdings PLC (LON:WIZZ)

i^ My translation.

ii^ Site accessed 24 August.