spantax
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Easyjet Closes Down Madrid Base

Wed Jun 20, 2012 5:45 pm

Only in Spanish:

http://economia.elpais.com/economia/.../actualidad/1340206339_153860.html

But it says:

- beginning winter 2012-2013
- reason: high taxes, at Barcelona and Madrid taxes should be increased by 50%
- 8 planes leaving, 310 people
- Easyjet expects to reduce by 7% its flights to/from Spain

Well, good news for a highly tricky Spanish market. I presume Ryanair is going to take advantage of the situation.
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LJ
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RE: Easyjet Closes Down Madrid Base

Wed Jun 20, 2012 6:06 pm

Quoting spantax (Thread starter):
- Easyjet expects to reduce by 7% its flights to/from Spain

AMS-BCN is rumoured to go away

Quoting spantax (Thread starter):
Well, good news for a highly tricky Spanish market. I presume Ryanair is going to take advantage of the situation.

I reckon that FR probably will have to pay these increased taxes as well (at least if they want to continue using MAD).
 
2travel2know2
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RE: Easyjet Closes Down Madrid Base

Wed Jun 20, 2012 6:30 pm

U2 isn't the kind of LCC which would look to relocate to an alternate airport when the premium one it uses has risen taxes and operating costs.
Be sure that Ciudad Real (Madrid Sur) airport isn't to MAD what LTN is to LHR.
I'm not on CM's payroll.
 
migair54
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RE: Easyjet Closes Down Madrid Base

Wed Jun 20, 2012 6:31 pm

Very bad news for people in Madrid.

Quoting LJ (Reply 1):
I reckon that FR probably will have to pay these increased taxes as well (at least if they want to continue using MAD).

For sure they will have to pay if they want to continue using MAD, no airline will get a discount.
 
DunaA320
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RE: Easyjet Closes Down Madrid Base

Wed Jun 20, 2012 8:00 pm

In English

http://corporate.easyjet.com/media/l.../news-year-2012/20-06-2012-en.aspx

A sad day for all the crew in Madrid, especially feel for the ones I know.

I know that over the past year the MAD operation has been downsized considerably with routes being axed as well as aircraft and crew being moved to other bases. Just a shame it hasn't managed to work out in the end.
 
Talaier
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RE: Easyjet Closes Down Madrid Base

Wed Jun 20, 2012 9:43 pm

Blaming in on taxes is a nice way of putting it but I very much doubt that is the whole story. MAD is a bloodbath in terms of prices and yields, especially now that IB has tak

And I doubt FR will take over too much. There is still overcapacity in the market.
 
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BasilFawlty
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RE: Easyjet Closes Down Madrid Base

Wed Jun 20, 2012 11:42 pm

So, it will be interesting to see which routes will survive and which routes will be axed.
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r2rho
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RE: Easyjet Closes Down Madrid Base

Thu Jun 21, 2012 7:40 am

This is terrible news for MAD customers. It is one thing for U2 to make capacity cuts, and a whole other to close one of their major bases with 300 employees. While it is true that airport fees (not taxes) at MAD and BCN have increased, it has been only to bring them more in line with other EU airports as up to now they had been significantly cheaper. The construction costs of the new terminals have to be paid off.

But if U2 claims (whether it is true, I have my doubts) they can't make any money in MAD... what about FR? Surely, airport fees would make up a higher proportion of their ticket price. And FR are usually the first ones to leave when an airport increases its fees. There's definitely something more behind this.

Either way, this is a clear victory for IB Express. UX could benefit too.
 
Pe@rson
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RE: Easyjet Closes Down Madrid Base

Thu Jun 21, 2012 7:54 am

Quoting r2rho (Reply 7):
But if U2 claims (whether it is true, I have my doubts) they can't make any money in MAD

Not directly related, but EZY also ceased all their various Morocco-Spain services.
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BA777
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RE: Easyjet Closes Down Madrid Base

Thu Jun 21, 2012 7:58 am

An interesting decision, I have seen plenty of U2 flights in MAD packed to the rafters..but that doesn't mean they make a lot of money. Time will tell how other airlines react to this. I imagine IB express will try to accelerate their growth to maximise summer profits, or bide their time to make a plan for next year.
 
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Aquila3
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RE: Easyjet Closes Down Madrid Base

Thu Jun 21, 2012 10:09 am

Sad decision and sad times for Spain as well.
I hope they do not decide to do the same with MXP. That would be the "coup de grace" for the airport and for the economy of the area as well. The politcs aiming to raise taxes for covering all the money that they waste does not pay.
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Talaier
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RE: Easyjet Closes Down Madrid Base

Thu Jun 21, 2012 12:36 pm

Quoting BasilFawlty (Reply 6):

So, it will be interesting to see which routes will survive and which routes will be axed.

UK routes should be relatively safe. Italy and France are the ones I see with more potential to fall off the cliff.
 
acelanzarote
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RE: Easyjet Closes Down Madrid Base

Thu Jun 21, 2012 1:09 pm

easyjet seem to be re-trenching a bit, and certainly in Spain/the Canaries.I don´t believe the taxes at MAD or BCN are the real reasion, with Spanair having also left the field I would have thought easy would have picked some of their pax up for a start.
Wonder if anywhere else after MAD is heading for the chop....
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lehovec
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RE: Easyjet Closes Down Madrid Base

Thu Jun 21, 2012 1:38 pm

Well Carolyn McCall said in her communication:
"The Madrid base is delivering returns well below all of easyJet’s other bases. This is due to a combination of over capacity in the Spanish airline market, leading to low revenue per passenger, combined with high airport charges which have more than doubled in the last two years and will be subject to further above inflation increases in the coming years."

She also said:
"As you know we have tried to improve the profitability of Madrid in recent years through removing underperforming routes and attempting to increase revenue through a range of marketing and sales initiatives. However, any improvements have been more than offset by significant increases in the airport charges."

So, it is not just the fees that killed MAD base but they certainly were the last straw. Probably most of the routes that can be operated by non MAD based a/c will be kept.

Hopefully there will be positions for all crew at other bases. I can see a/c going to France and Italy.
 
TWA85
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RE: Easyjet Closes Down Madrid Base

Thu Jun 21, 2012 2:34 pm

Would there be any bennift if U2 and IAG were to develop some sort of partnership in which IAG/VY operate services from Spain and possibly LHR, while U2 operates services throughout the rest of Europe?
 
Talaier
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RE: Easyjet Closes Down Madrid Base

Thu Jun 21, 2012 6:54 pm

Quoting TWA85 (Reply 14):
Would there be any bennift if U2 and IAG were to develop some sort of partnership in which IAG/VY operate services from Spain and possibly LHR, while U2 operates services throughout the rest of Europe?

Not really. They target different passengers. U2 wants point to point. IB wants short haul to feed long haul. Not too long ago only London, Paris and Brussels actually made money out of short haul routes from MAD (with IB's previous cost structure).
 
f4f3a
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RE: Easyjet Closes Down Madrid Base

Thu Jun 21, 2012 6:58 pm

A bit of a shock
To pull out of Madrid I think France is still expanding for ezy and is unlikely to go
The same way. Higher yields and less competition make it a better
Prospect. Italy is also quite big 15 plus a/c in mxp alone can't see that one
Going . I think maybe sxf may be the next to give concern
New airport charges and problems with staff there etc.

The key here is mad may be making money but as with U2
Before they can make more elsewhere . They are limited
In expansion plans due to stelios argument so have to be ruthless
With roi on each aircraft.

The best routes will prob be kept via w patterns etc while dropping
The bad ones
 
LJ
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RE: Easyjet Closes Down Madrid Base

Thu Jun 21, 2012 8:14 pm

Quoting r2rho (Reply 7):
Either way, this is a clear victory for IB Express. UX could benefit too.

But the question is whether IB Express and UX can make money in these markets. It's relatively easy for easyJet to redeploy their aircraft in more profitable markets. However, IB Express and UX don't have this option, thus must stick to the Spanish market or downsize.
 
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enilria
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RE: Easyjet Closes Down Madrid Base

Thu Jun 21, 2012 8:23 pm

Quoting spantax (Thread starter):
- reason: high taxes, at Barcelona and Madrid taxes should be increased by 50%

Taxes on the airline or the residents? I guess they have to pay off their country's massive debt.  
 
reifel
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RE: Easyjet Closes Down Madrid Base

Thu Jun 21, 2012 8:25 pm

However IB Express is also heavily used as feeder for mainline IB and for other Oneworld partners (i.e. AA/LA). This will give them easialy more loads and yields, since it's part of a european/medium haul/long haul tiket.
UX is a little different, as they don't have such a big "hub" operation in Madrid, but they still can feed their longhaul flights to South America/Caribbean and their few US destinations, but obvisouly in a much lower scale than IB and Oneworld (UX can't really feed a lot of Skyteam longhaul in MAD...).

Everything that U2 and FR can't.
 
richardw
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RE: Easyjet Closes Down Madrid Base

Thu Jun 21, 2012 8:34 pm

Quoting Lehovec (Reply 13):
Well Carolyn McCall said in her communication:
"The Madrid base is delivering returns well below all of easyJet’s other bases. This is due to a combination of over capacity in the Spanish airline market

Was this over capacity present when they set up the base at MAD?

Do the Madrid residents prefer to fly on airlines without free seating and speedy boarding?
 
reifel
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RE: Easyjet Closes Down Madrid Base

Thu Jun 21, 2012 8:43 pm

Quoting richardw (Reply 20):
Do the Madrid residents prefer to fly on airlines without free seating and speedy boarding?

Maybe someone in Spain can tell more, but my impression is that in Spain basically all the airlines are similar when it comes to point to point...
VY, FR, U2, IB Express... All serve major airports, all charge for nearly everything (however some of them would assign you a seat)...
Now compare this with IB, ex JK, UX (which could be considered as "legacy" carrier) on the same routes, and servicewise there is no real difference: No free food on board, no drinks etc...

Obviously when it come to frequent travellers, some offer frequent flyer programs, some have lounges, some offer hub operations (IB, IB Express, UX, VY), but once you are on the plane the difference in my eyes is marginal....

All Spanish airlines, except maybe Air Nostrum, from a passenger point of view run a low cost operation once seated when it comes to intraeuropean flights.
 
GT4EZY
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RE: Easyjet Closes Down Madrid Base

Thu Jun 21, 2012 11:21 pm

MAD wasn't performing. Increase the fee's at MAD and it's not going to help that situation. I don't think it was a Ryanair style knee jerk reaction.

In response to some previous comments.

MXP: Safe. Even with a failing economy Italy is still important and MXP is EZY's second largest base. LIke other bases however, a reduction in aircraft is always possible but in MXP's case I think we'd be talking two or three.

France: Alot of focus has been placed on France and this will continue. EZY is determined to increase market share in this important market.

SXF/BER: New airport next year but in my opinion, this is perhaps the Continental base that would see a similar situation as MAD rather than MXP etc. Still unlikely though.

Despite all that, aircraft will be redeployed between various bases. The economic uncertainty plus the fleet cap (Thanks to Stelios) means that aircraft may get sent to where they can make the absolute best return. Gone are the days, atleast for now, where delivery's come thick and fast and Easy could literally throw them across Europe. Opportunities and expansion will probably come at the cost of other bases. Probably not base closures but certainly the number of based aircraft at a base could change one way or the other.
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spantax
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RE: Easyjet Closes Down Madrid Base

Fri Jun 22, 2012 7:29 am

Quoting reifel (Reply 21):
All Spanish airlines, except maybe Air Nostrum, from a passenger point of view run a low cost operation once seated when it comes to intraeuropean flights.

Since a couple of months ago Air Nostrum charges also for beverages-food on board.
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UALWN
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RE: Easyjet Closes Down Madrid Base

Fri Jun 22, 2012 10:38 am

Quoting enilria (Reply 18):
Taxes on the airline or the residents? I guess they have to pay off their country's massive debt.  

At the end of 2011 Spain's debt stood at 68% of GDP. Large, but not particularly massive when compared to that of, say, Germany (82%), the USA (103%) or Canada (85%).
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r2rho
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RE: Easyjet Closes Down Madrid Base

Fri Jun 22, 2012 12:02 pm

It is true that there is cut-throat competition in the Spanish airline market, together with UK the most competitive in Europe. Air traffic at MAD has stagnated last year (crisis probably didn't help), so you have lots of airlines competing for a limited market that is not growing in the short term, and somebody has to give. An with U2 no longer having an "unlimited" supply of new a/c coming in, they will redeploy their limited fleet to where it can make more money.

Quoting spantax (Reply 23):
All Spanish airlines, except maybe Air Nostrum, from a passenger point of view run a low cost operation once seated when it comes to intraeuropean flights.

Since a couple of months ago Air Nostrum charges also for beverages-food on board.

That is pretty much true. Well, on IB / Air Nostrum you get a free bag and seating selection, I think(?) UX too, but otherwise not much difference between all of them once you're on the plane.
 
Talaier
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RE: Easyjet Closes Down Madrid Base

Fri Jun 22, 2012 6:11 pm

Quoting reifel (Reply 21):
Maybe someone in Spain can tell more, but my impression is that in Spain basically all the airlines are similar when it comes to point to point...

They are all similar in terms of service but their income streams are different. Given competition in national routes is brutal (high speed train + overcapacity easily make it the most competitive market in Europe) the only way to keep yields decent is with long haul feed and/or corporate contracts. UX has a very strong retail travel agency network behind, which is what keeps its operation sustainable. IB has travel agencies plus a lot of corporate contracts.

U2 and FR are pure point-to-point and have no big corporate contracts nor big travel giants behind. They live out of individual passengers and small business pax that are very price sensitive. The moment IB and UX lowered their prices pressure has increased on their yields.
 
RCS763AV
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RE: Easyjet Closes Down Madrid Base

Sat Jun 23, 2012 9:15 am

No no no! Not only is MAD a much more expensive airport to fly out of than the other spanish stations, one of the cheaper options is leaving!
 
richardw
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RE: Easyjet Closes Down Madrid Base

Sat Jun 23, 2012 12:08 pm

Is it the Ryanair effect or the airport charges effect that upsets their operations?

EZY tried Irish routes from LGW and Ryanair competed head on, EZY pulled off the routes.

EZY's base at EMA was inherited from their takeover of Go-Fly, flights were operated well before FR opened a base there, FR expanded at EMA, EZY closed the base.

EZY's base at STN was inherited from their takeover of Go-Fly, flights to Spain and the Balearics were operated well before FR expanded into these markets from STN, EZY moans about STN charges, EZY splits some aircraft off from the STN to base aircraft at SEN.

Was FR at MAD before EZY?
 
Pe@rson
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RE: Easyjet Closes Down Madrid Base

Sat Jun 23, 2012 12:34 pm

Quoting richardw (Reply 28):

Was FR at MAD before EZY?
Quoting richardw (Reply 28):
Is it the Ryanair effect or the airport charges effect that upsets their operations?

Almost certainly the increased fees and that MAD has become something of a competitive bloodbath.

But about EZY and FR, a more important question is to what extent did the two directly compete? From a three-second glace at their pull-down menus, only on 4 routes (BIO, IBZ, MAH, MAN), allthough there was a variety of routes on which they indirectly completed (e.g. BGY v. MXP; FCO v. CIA; CDG v. BVA; LGW/LTN v. STN).

Per another website:

anna.aero: The statement says airport charges have doubled in MAD – is this because of real increases or as a result of the scheduled ending of incentive packages?

Lynn: “Prices have doubled at Madrid in the last two years – these are real increases. They have also said that RPI will be +5% going forward. They will say that this is competitive with London Heathrow, but, of course, Madrid is not Heathrow.”
"Everyone writing for the Telegraph knows that the way to grab eyeballs is with Ryanair and/or sex."
 
LJ
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RE: Easyjet Closes Down Madrid Base

Sat Jun 23, 2012 1:04 pm

Quoting reifel (Reply 19):
However IB Express is also heavily used as feeder for mainline IB and for other Oneworld partners (i.e. AA/LA). This will give them easialy more loads and yields, since it's part of a european/medium haul/long haul tiket.

Feeding the long haul operation doesn't mean automatically a higher yield. It depends on how IB distribute the revenue from the fare between its long haul and IB Express.

Anyway, MADs traffic figures will go down even further than the current -/-7.7% YTD in passenger numbers and -/-12.6% YTD in movements. Good news for AMS though as U2 dismanteling their MAD base will help maintaining their position as 4th largest airport in Europe.

BTW UX has won a contract from a large Dutch touroperator for their passengers to CUN. As a result UX will put a B737-800 on the AMS-MAD run as of W12. Wouldn't surprise me if will U2 axe MAD-AMS as well as of W12.
 
richardw
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RE: Easyjet Closes Down Madrid Base

Sat Jun 23, 2012 1:26 pm

Quoting Pe@rson (Reply 29):
But about EZY and FR, a more important question is to what extent did the two directly compete? From a three-second glace at their pull-down menus, only on 4 routes (BIO, IBZ, MAH, MAN),

That may be currently but considering the route history

Quoting Lehovec (Reply 13):
Well Carolyn McCall said in her communication:

"As you know we have tried to improve the profitability of Madrid in recent years through removing underperforming routes


Were the under performing routes because of FR?

[Edited 2012-06-23 06:35:02]

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