ammunition From United Kingdom, joined Feb 2002, 1064 posts, RR: 4 Reply 1, posted (3 months 2 weeks 4 days 11 hours ago) and read 8312 times:
Pricing errors resulting in people being able to book a return ticket for less than 2-300 Euro return on much of their long haul network may have been a contributing factor. I suspect also that skyteam would rather route via CDG etc.
gabrielchew From United Kingdom, joined Aug 2005, 2512 posts, RR: 13 Reply 4, posted (3 months 2 weeks 3 days 20 hours ago) and read 6816 times:
I'm very surpised that AZ can't make PEK work. In the past year, I've flown a few AZ routes to NRT...they're pretty busy, and average fares are high. The Japanese love coming to Italy. And the Chinese? They love it too. Air China has twice daily flight to MXP (not sure about FCO). The demand must be there. I guess AZ just haven't marketed their flights correctly to the local market/travel agents. They've sucessfully shown that they can tailor to a tricky Asian market (Japan), so China really shouldn't be so different.
BestWestern From Ireland, joined Sep 2000, 6431 posts, RR: 58 Reply 5, posted (3 months 2 weeks 3 days 20 hours ago) and read 6778 times:
Quoting gabrielchew (Reply 4): I guess AZ just haven't marketed their flights correctly to the local market/travel agents.
The local market ex China either flies the state airline (Air China) on government business, or goes on an inclusive tour package. Neither are high yielding. The tour packages are bargain basement seat filling yield.
I would wager that the vast majority of capacity between China and Europe is loss making at present.
Quoting gabrielchew (Reply 4): I've flown a few AZ routes to NRT...they're pretty busy, and average fares are high.
NRT and PEK are two very different markets - one is a mature wealthy economy, and one is an immature growing economy.
rutankrd From United Kingdom, joined Sep 2003, 1997 posts, RR: 5 Reply 7, posted (3 months 2 weeks 3 days 19 hours ago) and read 6608 times:
Quoting BestWestern (Reply 5): The local market ex China either flies the state airline (Air China) on government business, or goes on an inclusive tour package. Neither are high yielding. The tour packages are bargain basement seat filling yield.
I would wager that the vast majority of capacity between China and Europe is loss making at present.
The Chinese airline "industry” is smoke and mirrors !
BestWestern From Ireland, joined Sep 2000, 6431 posts, RR: 58 Reply 8, posted (3 months 2 weeks 3 days 18 hours ago) and read 6361 times:
Quoting rutankrd (Reply 7): The Chinese airline "industry” is smoke and mirrors !
I disagree - All I am saying is that International flights from China to Europe are yet to demonstrate long term profitability. For example I understand that KL is still loss making to CTU, yet 2013 will see new services to FRA, CDG and LHR on top. I would wager that the vast majority of secondary hub routes are loss making - LH dropping CAN for example.
Secondary carriers, such as AZ, LO and HU will find it difficult to make money to Europe also.
AussieItaliano From United Kingdom, joined Jan 2005, 441 posts, RR: 0 Reply 9, posted (3 months 2 weeks 3 days 17 hours ago) and read 5770 times:
Quoting miaintl (Reply 6): AZ should look to Milan to establish a hub.
That's been tried before, and failed. It can't work as long as LIN remains open. LIN is much closer to Milan's city centre than MXP, but it can't handle long haul flights. In order to remain competitive, AZ has to offer flights to Italian and European destinations from LIN, otherwise LH, AF, LX, BA and KL will take all of the European traffic.
Part of MXP's problem is that it's so far away from the city centre, so everyone going to/from Milan would much rather use LIN. In Rome, FCO is more easily accessible than CIA, so carriers fly to FCO. Since FCO is also the long-haul airport for Rome, this makes it easier for AZ to build a hub there.
To build a hub, you need both local and connecting traffic. If the local traffic has a more convenient airport to use for short-haul, but not long haul, this kills the possibility of a comprehensive hub in that city, because the long haul traffic has to be at a different airport than the short haul traffic. This is why DEN and MUC were success stories (because Stapleton and Riem were closed), whereas MXP and YMX were not (since LIN and YUL remained open for short-haul traffic).
This is entirely relevant to this topic, because the reason for the failure of many of AZ's long-haul routes is that while Rome is a good structural place to build a hub, the demand for business traffic is predominantly from Milan. The only way that AZ will be able to build a sustainable long-haul network will be if either:
1) Rome becomes Italy's business centre instead of Milan (highly unlikely), or
2) LIN is closed, and all Milan traffic is forced to relocate to MXP.
However, AZ makes a good amount of money on their short-haul from LIN, so it's unlikely that they'll push for it's closure. Perhaps, now that AZ is being forced to hand over slots to U2 to compete on the LIN-FCO route, AZ might see a dent in the revenue from this route and at that point, having LIN closed might not be as bad for them.
Until then, we'll probably all be commenting on topics like this one about AZ's long-haul network. Many of their FCO long-haul routes are in jeopardy because the business traffic from Rome is not as huge as that from Milan.
rutankrd From United Kingdom, joined Sep 2003, 1997 posts, RR: 5 Reply 10, posted (3 months 2 weeks 3 days 16 hours ago) and read 5439 times:
Quoting BestWestern (Reply 8): I disagree - All I am saying is that International flights from China to Europe are yet to demonstrate long term profitability
When I say smoke and mirrors I was specifically referring to the Chinese operators (All remain tools of the state) and effectively regional divisions of the CAAC.
I am not doubting that there is money to be made just a more cautionary approach - Its not a gold mine for tapping SLFs.
As others have said the East- West traffic flows remains very controlled.
b2319 From China, joined Jan 2013, 80 posts, RR: 0 Reply 11, posted (3 months 2 weeks 3 days 16 hours ago) and read 5387 times:
All,
I can't really comment so much about the Italy end, however pairs of airports, one close to the city, and one further out, do work in other places- SHA/PVG, HND/NRT, TSA/TPE etc. I think the difference to LIN is that all of these city centre airports can handle the 'big boys'.....?
Whilst a little reticent to disagree with BestWestern, whose views I respect greatly, I think airlines would be reluctant to publish individual revenue or profit details for individual routes. First, I'm hearing that cargo from CTU is an important factor. Next, within China, I see a large difference between PVG demographics (mainly commerce and manufacturing) and PEK (mainly politics).
Travelling in China, I am constantly educated with the sheer 'numbers game' here. I go to a new city, and my colleagues state it is a 'small city'. This 'small city' turns out to have a population greater than some European countries, for instance. Independent of the province I travel in, the Chinese middle classes are on the rise and aspire to travel.
I'm too lazy to retrieve the quotes, however there are many people here who simply refer to AZ as a 'basket case'. Maybe that's the real reason they are pulling out of PEK? If you've a high cost structure, prominent unions, interference from government, etc, etc, etc.....all simple questions, NOT allegations, maybe this motivates you to market your fares at relatively high cost.....?
In summary, whilst PEK and FCO may be outliers in that neither are capital cities closely connected to business and manufacturing, overall, China should be an opportunity for well-run airlines. I don't doubt KL, LH & BA know what they are doing regarding direct routes to the secondary and tertiary cities in China.
Just my views, that is all, and time will tell, I am sure.
BestWestern From Ireland, joined Sep 2000, 6431 posts, RR: 58 Reply 12, posted (3 months 2 weeks 3 days 14 hours ago) and read 4478 times:
Quoting rutankrd (Reply 10): When I say smoke and mirrors I was specifically referring to the Chinese operators (All remain tools of the state) and effectively regional divisions of the CAAC.
That is an over simplistic view of things - the airlines do compete, albeit in a semi-controlled fashion.
You see carriers like CZ really getting their act together in terms of quality, and the positive effect this is having on yield - although they miss the Shanghai market yield - their RASK is now higher than MU, whose service really is poorer. Although we may criticize skytrax - at least the Chinese carriers are aiming towards service quality, and getting there. CZ safety record is also excellent.
The fantastic (and cheaper) Hainan air is mostly independent of the state and has the potential to rival the Qatar's of this world in terms of service quality - their hard product is already better.
miaintl From United States of America, joined Jun 2010, 825 posts, RR: 0 Reply 14, posted (3 months 2 weeks 1 day 14 hours ago) and read 2457 times:
Does anyone know if AZ will eventually drop ORD, EWR, and LAX? I know their yields are pretty bad out of FCO which is why they can only operate seasonally instead of year-round. AZ has to either ditch the Rome hub idea or reconfigure their cabins and seats to make it high-density so the Rome hub can have at least some chance of working
But why are all these long-haul routes failing? Its because of FCO and poor yields and connections. AZ desperatly needs to change their strategy and become a different airline if it is to survive and remain competative in the long run. Joining AF will help them out.
flyyul From Italy, joined Jun 2000, 4930 posts, RR: 53 Reply 17, posted (3 months 2 weeks 1 day 12 hours ago) and read 2231 times:
Quoting miaintl (Reply 16): But why are all these long-haul routes failing? Its because of FCO and poor yields and connections. AZ desperatly needs to change their strategy and become a different airline if it is to survive and remain competative in the long run. Joining AF will help them out.
Why did Shanghai Delhi San Francisco Dubai Bombay Dakar all fail out of MXP?
miaintl From United States of America, joined Jun 2010, 825 posts, RR: 0 Reply 18, posted (3 months 2 weeks 1 day 11 hours ago) and read 2161 times:
Because MXP was dehubbed in 2008, due to pressure of AF. Plus alot of people in Italy oppose an AF takeover because AF plans to make AZ a feeder carrier. So Silvio Berlusconni is correct to oppose such a takeover. Dont forget that the idea to move AZ's hub to Rome was Air France's, and the reason was to weaken AZ.
flyyul From Italy, joined Jun 2000, 4930 posts, RR: 53 Reply 19, posted (3 months 2 weeks 1 day 11 hours ago) and read 2106 times:
No - Alitalia had publicly mentioned they wanted to pull out of these markets due to unprofitably. They wanted to redeploy assets to Rio, Los Angeles, and Montreal at the time.
AF has no involvement in the AZ planning process - not even sure they have antitrust.
miaintl From United States of America, joined Jun 2010, 825 posts, RR: 0 Reply 20, posted (3 months 2 weeks 1 day 9 hours ago) and read 2022 times:
But the idea to shift hubs was AF. AF made it clear that it would take over AZ o the condition that it shifts its hub to FCO. This was all back in 2007/8.
mozart From Luxembourg, joined Aug 2003, 2008 posts, RR: 14 Reply 21, posted (3 months 2 weeks 18 hours ago) and read 1839 times:
Quoting miaintl (Reply 18):
Plus alot of people in Italy oppose an AF takeover because AF plans to make AZ a feeder carrier. So Silvio Berlusconni is correct to oppose such a takeover.
Why is he "correct" to oppose such a takeover? The result was that indeed AZ did not become an AF feeder, but the other result was also that AZ is still a company that finds it difficult to perform well financially. As a matter of fact the "consortium of Italian investors" want to sell their stake as soon as possible, hence also the renewed discussion about AFKL now buying a share.
Quoting miaintl (Reply 18):
Dont forget that the idea to move AZ's hub to Rome was Air France's, and the reason was to weaken AZ.
That doesn't sound very convincing... If indeed AF had that influence that would have been purely because it was going to be the next big shareholder. But as a next big shareholder they wouldn't have any interest to weaken the airline they were just buying. Alternatively they were not the next big shareholder, in which case they wouldn't have had any influence on AZ's discussion to move the hub to FCO.
leftyboarder From Turkey, joined Apr 2008, 648 posts, RR: 1 Reply 22, posted (3 months 2 weeks 18 hours ago) and read 1830 times:
In any case, I hope AZ finds a way to work long haul. I can't imagine a country of 60m people left without their own long haul airline. Hungary I can understand, but Italy?
That way is to focus their long-haul operations in Milan and only have a focus city in Rome. There is a reason AZ dehubbed FCO back in 1998 in favor of MXP:
flyyul From Italy, joined Jun 2000, 4930 posts, RR: 53 Reply 24, posted (3 months 2 weeks 15 hours ago) and read 1714 times:
And there's a reason why MXP was dehubbed 10 years later to go to Rome. Now we're just going around in circles
25 miaintl: I think MXP as a hub could work in priciple but there where too many things AZ did wrong at the time which hindered MXP becoming a success. For exampl
26 flyyul: Right - its AZ management that decided to build MXP and not close LIN. Give AZ management some credit, they work in a highly charged political environ
27 AussieItaliano: flyyul, I agree with you 100%. If anything, I think that keeping LIN open in Milan enabled AZ to dominate the Italian domestic and European market fro
28 miaintl: Closing LIN to mainline carriers is one option. Let Easyjet fly out of LIN and let the legacy carriers all fly out of MXP. The distance between MXP an
29 AussieItaliano: Italian politics would never allow for this. AZ is partially state-owned. There's no way that the government would allow U2 to have the best access t
30 LipeGIG: I see as main reason the competition from Gulf carriers together with the small level (compared to UK and Germany for example) of business ties betwee
31 miaintl: Exactly but we dont see AZ expanding to those places. Rather they prefer expanding to cities like CPH, WAW, and PRG. AZ is not expanding smartly in o
32 dtfg: If you look at the prices offered by AZ,CA,EK,EY,QR and SU, for Beijing-Rome, AZ still have the advantage. So I do not see the Gulf carriers as a maj
33 alitalia610: Absolutely false. Remember that AZ decline started right after moving its hub from FCO to MXP.
34 miaintl: I highly doubt that is the case. What evidence do you have of that? AZ is bleeding tons of money right now whilst it is based in FCO. So FCO does not
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