Low cost airlines all scaling back at BRU

[Inquirer]

De Tijd has an interesting article today about a phenomenon we've exposed here some time ago already: the fact low cost carriers are scaling back quietly at BRU.

http://www.tijd.be/ondernemen/luchtvaar ... 1487057109

the takeaways for me are:

1- Ryanair, Easyjet and Vueling are all scaling back at BRU, although they don't like to say so

2- While some try to blame the recent uncertainty about noise regulations for this...

3- commercial underperfomance is key.

4- Some -like easyjet- timidly admit to this when explicitly asked about it, yet others like ryanair refuse to admit so with a CEO recently pretending "their offer from BRU remains stable" and a spokesman saying "they're regularly evaluating all of their routes", yet their own website clearly shows they now offer overall far less flights from BRU than they did last year.

5- According to Eddy van de Voorde (UA) the strategy in 2013 clearly was to try to blow Brussels Airlines away quickly, but the Belgian airline reacted unexpectedly by overhauling its commercial strategy and offering low budget tickets for 'seats only' on their European routes at prices which make any remaining price difference with low cost competitors largely irrelevant.

6- Short term, BRU may suffer a bit from less volume through reduced flights, but in the long run, it is expected to benefit even as this will create more room and breathing space for others and allow them to set up a more diverse route network.

[Acid-drop]

I think the point 5 is the key ... ryanair tried yo kill everyone, and succeeded for most except brussels airlines.
Now that the close competition is reduced, they can fly cheaper from CRL...
Quite super vilain and super clever...

this will create more room and breathing space for others and allow them to set up a more diverse route network.

It will.
But not only in BRU.

[OO-ITR]

What I'm witholding from this article is that Ryanair is not profitable and successful on all their routes in BRU. Unlike some posters on here pretended. Now that low cost competition with Vueling and Easyjet has been reduced, Ryanair can now lower their offer in BRU and focus and getting their routes more profitable. Even having a high load factor

[DeltaWiskey]

I agree with ITR. Contrary to what one person makes us believe, load factor doesn't indicate anything about revenue or profitability. What is the point of flying a route with >90% load factor, if it doesn't make money?

[Boeing767copilot]

I agree with ITR. Contrary to what one person makes us believe, load factor doesn't indicate anything about revenue or profitability. What is the point of flying a route with >90% load factor, if it doesn't make money?

Ancillary revenues?? 90% LF on 189 seats, every flight. That can make the difference, no?

[Poiu]

I agree with ITR. Contrary to what one person makes us believe, load factor doesn't indicate anything about revenue or profitability. What is the point of flying a route with >90% load factor, if it doesn't make money?

Correct, but despite SN offering 29€ fares, they are struggling with a decreasing loadfactor. SN only survived the war on BRU due to state aid and Lufty support.
To be healthy an expansion needs to be supported by an increasing loadfactor, if not, the expansion is artificial and will have a negative effect on the balance sheet as soon as the expansion ends. (Aviation is an a-typic business, custumors pay several months before suppliers have to be paid, so during an expansion phase the balance sheet looks a lot more rosy than it actually is.)

[DeltaWiskey]

Ancillary revenue is (always) included in revenue, isn't that what I have written?

[Poiu]

My point is that despite SN offering historic low fares the are unable to fill their airplanes.

[nordikcam]

My point is that despite SN offering historic low fares the are unable to fill their airplanes.

...In january ! Yes some !But not all flights...!

[DeltaWiskey]

My points is that you should not solely focus on LF/SOF to determine profitability.

Despite Ryanair arriving in BRU in 2014, SN has been profitable in 2015 and 2016.

[Boeing767copilot]

My points is that you should not solely focus on LF/SOF to determine profitability.

Despite Ryanair arriving in BRU in 2014, SN has been profitable in 2015 and 2016.

Don't forget the Belgian State Aid (17 mio euro/year) and the LH support.

[Stij]

(Aviation is an a-typic business, custumors pay several months before suppliers have to be paid, so during an expansion phase the balance sheet looks a lot more rosy than it actually is.)

Balance sheet yes, the bottom line stays the same...

Cheers,

Stij

[Poiu]

My point is that despite SN offering historic low fares the are unable to fill their airplanes.

...In january ! Yes some !But not all flights...!

The average LF is under pressure several months in a row! The January LF of 65% is simple unsustainable.

[Poiu]

(Aviation is an a-typic business, custumors pay several months before suppliers have to be paid, so during an expansion phase the balance sheet looks a lot more rosy than it actually is.)

Balance sheet yes, the bottom line stays the same...

Cheers,

Stij

No, the bottom line will only reveal the real figure the year after the expansion stops. A good example is the recent sale of Omega Pharma.

[Poiu]

My points is that you should not solely focus on LF/SOF to determine profitability.

Despite Ryanair arriving in BRU in 2014, SN has been profitable in 2015 and 2016.

Don't forget the Belgian State Aid (17 mio euro/year) and the LH support.

And the initial 125 mio investment credit which was transformed into worthless shares (2.5 mio for 55%...)

[DeltaWiskey]

Please do not forget the subsidies that Sabena received in the last century...

[sean1982]

My points is that you should not solely focus on LF/SOF to determine profitability.

Despite Ryanair arriving in BRU in 2014, SN has been profitable in 2015 and 2016.

Mostly because of historic low fuel prices and some state aid, but don't let me try to convince anyone. What FR did is not hurt SN in the short term, but in the long term; by forcing them into an unsustainable growth.

[OO-ITR]

My point is that despite SN offering historic low fares the are unable to fill their airplanes.

what is the use of having full airplanes if they can make a profit with a load factor that is not 98% like some low cost airlines but who have to scale back their operations???

[OO-ITR]

My point is that despite SN offering historic low fares the are unable to fill their airplanes.

...In january ! Yes some !But not all flights...!

The average LF is under pressure several months in a row! The January LF of 65% is simple unsustainable.

says who? you???

[OO-ITR]

My points is that you should not solely focus on LF/SOF to determine profitability.

Despite Ryanair arriving in BRU in 2014, SN has been profitable in 2015 and 2016.

Mostly because of historic low fuel prices and some state aid, but don't let me try to convince anyone. What FR did is not hurt SN in the short term, but in the long term; by forcing them into an unsustainable growth.

oh is it the long term now? oh dear... yawn..
and FYI the fuel prices are going up in case you didn't notice it yet. And the state aid. Well guess you have not been reading the 100s of previous messages. Or probably totally ignored like you usually do. It is not if you repeat the same bullshit over and over that it will become truth...
And how do you think that Ryanair can sustain a loss making hub like brussels? By using it profits that they are making in less costly airports and aiports where they get 'advantages'