Greetings to all aviation nutters and enthusiasts ...
I have been accessing Airliners.net for quite some time, however this is my first post. I am Czech (and a true Budweiser from the city of Budweis in southern Bohemia who lives far far away in crazed Bangkok) and am following the new developments in connection to Korean air with great interest. Whatever happens, there is no doubt that it is definitely a positive development. A few weeks back we were under the impression that neither Korean nor Qatar would actually place an offer and the whole sale will be a bust and Czech Airlines will free fall into darker skies. The actual offer from KE
came almost a week later than the deadline set by the government. I presume they were completing some final "fine print" agreements and concluding the negotiations.
Many around have concrete information about the Czech market as well as the airline but I have noticed that the information was rather incomplete or based on certain stereotypes and outdated facts. Much has changed in terms of the aviation industry and for Europe and any "smaller" airline it's hard times indeed.
So since there is no "Czech Aviation" thread, I guess I can put my facts together here to paint a picture of the present, the past and hopefully the future. I am a frequent flyer and had aviation around me since birth (Father Pilot in MS
), however I will still try to avoid any "slapping jam around one's lips" as Czechs say. Meaning "sweetening" things up for better presentation. As much as I love OK
, I have to be critical as well.
I will just write and whatever comes to my mind, I'll put down... So my thought process could be messy as I always seem to veer off the main idea and always jump from one topic to another
))) And might be too long as well...
KOREAN and PRAGUE?
This is one of the few facts that many have hard time contemplating. I have to admit that even I am surprised. Prague is a GREAT airport and flying through and from/to this port is always pleasant, but we all admit that its a regional airport and it's ambition to become a hub were hurt by the situation of CSA.
There are only 10 million of us and a large portion are older, so the market is quite limited. The Charter business is very very good and almost all Czechs do fly away for their summers. Business and economy is doing fairly well compared to other European economies with very low debt rates. Very strong industry and an extremely solid banking sector and one of the most trusted and stable currencies in the region.
After Germany the biggest car manufacturer. Very strong in heavy industry, trains, locomotives, turbines and energy etc,,,This as well sustains the 3x weekly B747 cargo flights from China Airlines as well as Yangtse River Express.
Prague is mainly an A320/B737 airport with high frequency of flights mainly to European destinations and some Long Haul. The "front" portion of the planes are getting more full but Prague is still a holiday destination. We do still believe that a couple of Long Haul links could be sustained, but the market is changing and today so many destinations are so hard to get into due to fierce competition, only larger airlines are able to survive. We usually chat in Czech aviation posts and many present cases for reopening New York and hopping on the "go east" bandwagon that suits PRG
so well. Finding the niche is what is required.
The longhaul is alive to Prague but eaten away westwards mainly by Lufthansa, Air France and in a small portion BA
. When it comes to eastwards then Turkish, LH
, Austrain and other big players.
Lonh hope from Prague conspiracy theories
- Returning to American Soil with own metal. A route that was doing quite well, however no decent equipment;
- Vietnam where Vietnamese are one of the largest ethnic minorities in the country but HAN
are notoriously low yield. But there are rumours around that Vietnam Airlines are interested and awaiting to have new metal to open such a link;
- One of the strangest info that I have is "Taiwan", where it holds one of the highest numbers of pax from Asia coming to Prague in the last couple of years!
- Many throw in China and Japan, but I think this would be something that Korean is able to use to their benefit. An explosion of Chinese and other asian countries to Prague is visible in the last couple of years;
- Many of the destinations are eaten by Emirates as for Prague it's quite amazing to see a B773 daily! You have to realize that you see nothing around but narrow bodies (except KE
- I dare say that 50% of the EK
flights are for China and mainly to Bangkok (Same as OK
's cooperation with Etihad) but I am certain that it would be suicide for CSA to start such a destination (I would welcome it soooooo since I live in Bangkok for 8 years now and love to try a direct flight - almost got my hopes up since Thai airways was looking into a seasonal flights back in 2006. The amount of traffic is increasing incredibly from both sides as I see numbers from both embassies;
Korean has been flying to Prague since 2004 if I am not mistaken. They started at 3 weekly and not at 4 weekly. the flight started with A332 then A333 and upgraded to B772. However few know that in summer while KE
flies to many destinations in EU with A33X or B772, Prague gets a fully loaded B747. in 2012 they kept flying with the Jumbo Jet even through winter!
Koreans are very conservative and this investment is their "FIRST" attempt to buy an airlines and invest in this way, so I am under no illusion that it took them a long time to research and make an informed decision, while reaching a conclusion that this venture could prove beneficial and successful. Many factor can help make this a good decision indeed.
There is no doubt that Koreans have somehow created a liking to the Czech Republic and not only in tourism (Always love to fly to Seoul for Czech beer!) but in business as well as Korea seems to be one of the biggest investors. The theory is that they simply got used to the Czech market and decided to use it as a gate to the rest of Europe and it is Western Europe that they are interested in (not only in aviation but in business as well).
PRAGUE AIRPORT and CSA PLANNED / CONTROLLED FALL
The Czech government made a rather controversial step lately and that would be the creation of the "CZECH AEROHOLDING"
The aeroholding covers:
- Czech Airlines (loss making);
- Holidays Czech Airlines (new project. The charter market is extremely strong but OK
management is unable to make it happen compared to Travel Service;
- Prague airport (The crown jewel and an extremely profitable and always has been and in the aeroholding considered a way to push some cash into OK
- Czech Airlines Handling;
- Czech Airlines Services (call centres, check-in and other services);
- Czech Airlines Technics (one of the most profitable parts of OK
This step raised some flags as the aviation sector is going exactly the opposite way, while the Czechs went back to consolidation of these entities under one roof. CSA tried to get cash year on year by selling everything else they had from CSA Catering, Hangars...etc...
Czech Airlines ( CSA / OK
) was doing rather fine in the beginning of our new century with double figure growth for the airline as well as the airport. The future was bright and big plans to made a "central European" Hub. In our region Prague likes to present itself as a competition to Vienna, Budapest and Warsaw. I'm taking Munich out of this list since you need to be able to compare the comparable and these two airports are still worlds apart in their list of destinations and strength of the main national airline. Back then the airport plans for 2018-20 was to be 20 million pax per year, but at the moment we are stuck at 11-12 million with 8-9% fall in the last couple of years or stagnation.
Now with the demise of Malev, Budapest lost the plot and is thrown years backwards in its development. Poland is a very large and attractive market but LOT seems to be in a bad shape and LH
is less and less inclined in saving its new daughters. LOT is predicted to slim down considerably, is asking for cash and still preparing steps for restructuring. So CSA seems to have passed that phase and now to a new level of stabilisation and development.
Czech airlines has a great value not only in it's status as a European carrier that seems quite attractive for Korean air, but Prague since their plans seem to be not only for passenger transport but Cargo as well due to a very very good location in the heart of Europe and the most dense railway network in the developed world and good infrastructure allowing to have it as a stepping stone to other countries.
Let410 Turbolet here and andrej seem to know a lot about OK
and their information is concrete. Presented in the past partnership with AirFrance, where the relationship even turned sour and many blamed AF
but we (mortals) do not have all the facts so it's hard to make a real picture. Let's just say that it was a BIG mess. I do remember how AF
stormed out with certain damages caused to OK
that took time to resolve.
I am still proud of Czech airlines ... Even today the service is superb only thanks to the cabin, always the saving grace. Some loss in service is visible on short flights as in other airlines but I am hopeful that Korean would be a positive factor as hold flight services on "Asian expectations" and that in my book would be above average for sure compared to other European short flights. Perhaps no more "cookies" and pseudo wanna-be C class seats on narrow bodies, etc...
I have always been vocal about how OK
's crew is always great including my inside knowledge of how GOOD the technical service of the planes are in, professional attitudes of CSA technics as well as the training of the deck crew.This always balanced the schizophrenia in the management that got poisoned by its link to politics who were put there without having anything to do with aviation. I might get arrested for inciting violence, but a certain "CEO" of CSA who was mentioned here with initials of M.T was as healthy to Czech airlines as a cyanide injection. So he deserves to be thrown in a hole somewhere to rot. Otherwise of course i am for world peace
failed to realize that selling tickets is not the only part of their service and their before and after "customer care" became rather bland with no real attention to business travellers and their specific needs, with an overworked and under-trained call centre. Ground crew that transferred under CSA services with lower salaries and lacking motivation and resulting in an incredible turnover of employees. Marketing that was less the effective and simple waste of money, website that is full of inaccurate info and technically non-intuitive with loads of errors. Very very and I'll add one more "very" - very strange ticket pricing and opening and closing destinations with no real research. And most of all the late company "spokeswoman" who I need to gulp 3 pills of antihistamines when I read or hear her "press releases". Writing information and repeating it so long expecting us to believe it as a fact insulting the very basic intelligence of clients and consumers. It is very sad when using Marketing as simple justification to bad moves.
The situation even if not ideal, changed a bit and through all the criticism of the Czech Aeroholding, the CEO openly admitted what was on our minds. That CSA was being slowly in a controlled fall. They were trying to clean up the company from older employees who were in the Union that seemed to disregard the company's financial situation and adamant on higher benefits and salaries. Prague airport was to be a sponsor while OK
was being brought back from the red numbers. the temporary shrinking of the airline was to be gradual allowing other airlines to fill these destinations with their own metal thus causing no sudden drop as seen from the scenario in Hungary. This would have hurt Prague airport.
CSA "GO EAST" ATTEMPT
Czech Airlines is to be considered as a regional European airline. they were strong in the baltic and the near east but the latest political situation changed this as OK
used to fly to Cairo, Beirut, Damascus, Allepo, Tel Aviv and even Kuwait for a very short time. Only TLV
remains strong and the new "attempt" to work with Etihad throgh AbuDhabi.
CSA was quite popular to take passengers from Scandinavia and the Baltics to the near East.
I am convinced that for an airline can succeed, it needs to specialize with attention to what works best for the Czech market. This is why Czech airlines is trying to distinguish itself. OK
's building its image as an airline that is an "expert" (maybe a strong word) on Eastern European, Russian and CIS countries. They are trying to build up a respectable destination list even if the frequencies are still too thin. All is governed by bilaterals. Prague is extremely popular in these countries and PRG
is to benefit as mainly its O&D. They probably want as well to add the "connection" factor for European countries to these destinations.
Czech Airlines currently flies to (will need to check the latest schedules in case of any changes):
34x weekly (one of the strongest flights from PRG
and many are O&D) and well as Saint Petersburg, Novosibirsk, Samara, Rostov on Don, Ufa, Nizhny Novgorod, Yekaterinburg and the new route to Perm
Minsk, Almaty, Astana, Baku, Tashkent, Yerevan, Tbilisi.
With better management, it is quite possible to create a solid ground for having PRG
as a hub for these destinations but the talk of open skies with Russia could change the whole reality on the ground and in the skies! But OK
has a very good name in these airports, so a brand awareness is as well something valuable.
This is a parallel "strategy" that CSA will have since Korean is openly vocal that it is interested in Western Europe, while Eastern Europe and Russia will be handled as to the European client's interests. KE
has it's angle of attack by using Prague for its "Asian" clients preferences. Both in my opinion could work perfectly in harmony.
Step 2 would ofcourse be where business is = Asia.
CSA LAST SALE ATTEMPT AND
THE CURRENT ONE
NOTE: The latest European Commission approval of the money given to Czech airlines is great since if a refusal loomed, OK
would cease to exist the same way Malev did. As explained here by some informed members, the EU commission could deem "money" given to airlines as legal loans ONLY if a valid, workable and active restructuring plan is in place. Czech airlines had one and was already hard cutting the fat and trimming, while Malev was still lost and the "plans to save MA
" were very unconvincing.
CSA will not borrow any money. This decision from the EU commission was in connection to the money it got years ago and was deciding whether it was legal or illegal. No new money is to be given to the airline.
The Czech Government tried to sell CSA a couple of years ago (2009) and some airlines showed interest but the EU commission was still investigating, thus no one would dare make a real offer. Back then AirFrance was on the list along with Turkish, Aeroflot and an unnamed Middle eastern and Asian airline. Aeroflot was really interested however the government decided to exclude them on basis of security reasons. This is a thread on aviation so I dislike bringing politics here as it definitely makes generalizations towards another country, but this was the main explanation for the refusal by the government on basis of the "local Czech National Security" bureau. So not the security of the airline as in technical terms but the use of companies to infiltrate local governments. I know this sounds like a major conspiracy theory but certain proof was submitted.
The only company that made a real offer was Czech Travel Service, a successful charter airline with loads of 737NGs, but they wanted the company for 0.00CZK and no debt. So all fell through as in 2009 the government was hoping for a lot more. I am content this did not go through since this would have offered no real benefit for OK
The current sale was more sincere in my opinion as no one even tried to pretend that CSA would be worth more in cash, especially after selling all what it had. They sold the Hangars they had for their planes, their catering, Slots to JFK
after they got rid of their ageing A310s. Sadly the sale of the LHR
slots that BA
got from them - a step that is still being criticised today by many aviation experts.
So the value of CSA is surely somewhere else. The Airline even if not at all healthy is not terminally ill since the last activities in the last years were extremely unpopular and painful but were needed. The airline shrunk, less employees, less destinations but from what I gather this was all temporary and once things are in place, a return to growth -with a strong partner- would be a new trend. And what better that an Asian partner indeed!
The "rules" of the sale were extremely concrete and very logical. The price played no importance in this sale attempt (The latest valuation was made by E&Y and the amount corresponds with the actual value). The initial "sale" offer was sent to 52 carriers but who buys airlines these days? They needed someone who knows Prague and is interested in Europe. this combination is not the easiest.
The main requirements were:
- IATA legacy carrier with a strong long haul network;
- Ability to develop OK
's network as well as PRG
- Attempt of rebuilding a small Long Haul capability from Prague airport;
- Long term strategy
between the lines they even openly "preferred" an Asian or Middle Eastern Airline. In all honesty there were no other options. When it comes to the winner, KE
had the upper hand since it has very strong commercial relationships with the Czech Republic and knows Prague inside out. A healthy amount of pax not only tourism but business as well. KE
is able to get passengers from Korea and Japan as well. They are in the same alliance and seems to seek a stronger foothold in Europe. So I believe this could prove very beneficial for both Airlines.
Qatar was active in their process, management visited PRG
but they decided not to make the final due diligence after all. I would dare say that the outcome is great and depends on how good both airlines work together and slowly we will see the concrete results from this partnership. I cannot see how would PRG
benefit Qatar in any way and their joining One World probably was a point in their decision as well.
One of the benefits of Prague as well is that the airport is simply great and has a big chance and space to grow. A second parallel runway has been finally approved and will be built soon, Train link is approved increasing the capacity of the airport. The rendering of the development of Prague airport also shows an extension of terminal 2. (named "D"). There's a great presentation video of the plans but not certain if I can post here... can I post a link to Youtube???
ENEMIES NOW FRIENDS
One very interesting news this week that surprised me is that Czech Airlines and Travel Service talks on potential European destinations Code-Share for some destinations. For some who do not know about TS
, it's like North Korea and South Korea frolicking and holding hands.
It is not sure if the flights to Seoul would be discussed but seems it won't be the case. SO only European destinations. TS
flies to so many "leisure" destinations. Could be interesting. Finally I can see OK
moving it's ass looking for partners and making individual alliances since SkyTeam hasn't really offered much to OK
other than being trampled by AF
Korean and Czech Airlines seem to be quite comfortable together and I was very curious why there was no more cooperation between the two since KE
used the PRG
flight for itself. OK
never promoted ICN
and ticket prices were set stupidly high to allow only KE
to have it all for itself. About time I guess!
LATEST INFORMATION IN
CZECH MEDIA CONNECTED TO
CZECH AIRLINES AND
1. Korean Air did make an official offer on 44% of OK
valued at almost 2.68 Million Euro; The government already agreed the sale and as a formality the the EU commission was informed (antitrust); Official signing of Contract is on 9th of April;
The Czech Finance Minister conformed that this "sale" is the culmination of the painful restructuring that took several years. Development will ensue.
2. Korean air will have 1 member placed on the Board of Directors. Even though Korean will have a minority stake. "Czech Aeroholding's" CEO that owns OK
and Prague Airport confirmed and openly stated that decisions will be made only upon consensus, thus nothing will pass without KE
3. Korean Air has currently the buying rights to ALL
CSA minority shares. It has been reported that KE
is interested in a majority (all shares) of OK
but the current European laws will not allow this. It seems though that there is already a discussion in the European Commission about on a majority stake by non European entities. If such a situation happens, then KE
is reported to want all shares;
4. We already know that CSA will get in a couple of months an Airbus A330-300 and it's confirmed it will be Korean Air HL7701. This plane has a refurbished interior (from 2011) with Prestige C class seats and new Economy with PTVs. It will be flying under Czech Airlines registration and colours (OK-YBA) with fuzzy memories of the Ilyushin Il-62 under the same registration / Named Praha from the 70/80s.
Even though having 1x plane isn't anything to celebrate about but for Czech fans we don't care even if the plane flies Prague-Prague, but seeing a wide body in CSA is a great thing and hopeful it's an indication of better days. We believe OK
can sustain 5-6 planes for some long hauls and part of the potential development. And I dare say It'll look great as well...
This plane will be flying 2x a week from PRG
and during the week OK
needs to use it so they will be sending it as well to Moscow, Ykatringburg and Almaty. OK
's flights to Korea will complement KE
to make it 6x weekly between both capitals.
Czech Airlines knew how to use their planes at full capacity since I remember OK
received an award from Airbus on how they heavily operated their A310s while keeping them in the air most of the time and having them in great shape.
CSA phased out the last older 3 B737-500s, so it has a fleet of really young A320s and rebuilding their small ATR fleet with the -500 series for regional routes; The company will stay with an all Airbus Fleet and with regionals ATRs
5. Korean Air today closed it's "call centre" in Ireland and transferred it to Prague. CSA Services and Call centre will manage all Korean Air European assistance from its Prague call centre. I'm certain that more training will ensue, but seems like one of the first small steps and visible results of the cooperation;
6. Czech Aeroholding's CEO confirmed that OK
is now reworking the flight schedules and routes' destinations to correspond with OK
's and KE
's flights from/to PRG
allowing the transfers of passengers to onward destinations. From Prague's side, KE
is most interested in more frequencies and destinations to Western Europe, thus it looks like Prague will surely be a hub for some extra frequencies and some new cities that KE
doesn't serve directly. I seriously doubt KE
will stop cease flying to important destinations on own metal, but OK
will help in increasing capacity, frequency as well as more smaller destinations. From ICN
it seems the interest would be Korea and Japan mainly.
Terminal 1 which serves non-Schengen destinations and where KE
lands in Prague will get a face lift. It's still in GREAT shape and no need for any real work but what I understood is certain modification for "transfer" services as well as the "navigation" in the airport. I gather this means more Asian staff to assist the passengers and Korean signing, documentation, etc..
7. Korean Air included in the Contract that the government will NOT change/sell or alter any management ownership of "Czech Aeroholding" for a minimum of 5 years otherwise they would pull back immediately. I believe that they will be interested in Prague airport itself;
So all we need to do is wait and see how this pans out. The decision I believe is positive and of great benefit to OK
as well. There will be 2 parallel developments as mentioned. The first will be Korean's needs and destinations in Europe for its clients, Here OK
will be the feeder and "bus" to take them onwards from Prague to other destinations in Europe.
Part of this would be using ICN
as onward hub for Asia but the majority of the flow will be from Asia to Europe and not the other way around,
The second is OK
's position in Europe and the development of its identity in connection to European destinations, Russia and CIS countries which is a gold mine at the moment.