Archive for March, 2009
- What happened to the FedEx MD11?
- What is the impact to Narita Airport and to Passengers?
- Some real-time passenger stories
- Our Summary of the situation
Having just arrived in Tokyo on Sunday evening, I can personally attest to how the winds were already causing a few delays on the arrival of our flight from London. As we approached Runway 34L the on-board “birds eye view” camera gave us a wonderful view of the runway as we pitched slightly from side-to-side. I often forget how tired you can be after nearly twelve hours on an airplane. I was to learn today, however, that my long trip was nothing in comparison to what some passengers were about to go through.
I was awake at 0500, as travellers often do on long trips. My wife and I got up and wandered around the early morning streets of Tokyo. While still a little dark, the wind was howling through the clean streets of the city. Having watched a bit of the local news earlier, we had heard it was going to be a beautiful day, but the Japanese Meteorological Service had issued a warning for high-winds through the Tokyo area.
Then this morning at approximately 0650 Tokyo London time, FedEx Flight 80 from Guangzhou, China was landing at Tokyo Narita. As the MD11 flared up, just before touching down, the aircraft appeared to come down onto the runway in an uncontrolled manner. Bouncing up again only to clip its wing causing the aircraft to fatally lose control and in a fiery explosion come to rest with the front of the fuselage turned upside down.
We watched in horror as the Japanese fire and rescue response was immediate and efficient, and it took the fire-fighters just under an hour to cut their way into the MD11’s cockpit area to rescue the two pilots. While initial reports from the Japanese Fire Services advised that both the pilots were alive after being extracted, they later both later died.
The impact of this tragic event is being felt at Tokyo Narita, not only by the Fire and Rescue Services, but also by the passengers. The closure of one of the runways at Japan’s busiest airport is having a serious ripple effect on travellers.
While waiting at Tokyo Station for the Airport Express train I met the Hanson family from New York. Doug and Anna Maria Hanson were booked to travel today on JAL’s flight to Honolulu. They, and their two teenage daughters, had been travelling the world for over a month visiting South America and Asia. They had just finished enjoying a one week stay in Tokyo and said “We are looking forward to the Hawaii portion of their trip.” Now as we approach Narita airport the Hanson’s are not sure if they will be going at all today.
Anna Maria said, “It is a terrible tragedy. If there is a delay, we can handle it.” They had the air of seasoned travellers. When asked what she thought of their trip so far, she said, “People we have met here in Japan, and in Asian countries in general, have been among the most polite and organised that we have encountered. I am sure that we will find a way to make it to Honolulu.”
The Departures Hall was full of queues that one might expect, and on the far side of the airport check-in area, the queue for the information desks was full of passengers and their baggage that were not heading anywhere, at least for today. In typical Japanese fashion, everything was calm, and orderly, and there were plenty of airport staff available to answer questions and direct passengers.
At Narita I met William Oliver, a British businessman who came to Tokyo last week for meetings and stayed over the weekend to do some sight-seeing. Learning that his flight home JAL flight, JL401 to London was now cancelled he said, “I wish I had just gone home as originally planned; but there is nothing for it is there? Understandably, and for obvious reasons, there is just not another airplane available“ He said that his airline has been very accommodating, and helpful, “… but I am still not sure how, or when, I am returning home.”
What could be worse than not being able to get a flight out of Tokyo?
The news is actually worse for those who were already heading for Tokyo, especially for passengers who were in the air and on their way from European destinations. Generally these flights are set to arrive in the afternoon. Flights from the UK, Germany, and the Gulf Region are particularly affected. In the case of JAL’s London inbound flight, it was diverted to Nagoya airport. Some flights have been diverted as far away as Sapporo on the north island of Hokkaido, not an easy rail trip for passengers.
There were a few passengers who were luckier, and were diverted to Central Japan. I spoke to Jennifer Tolliver, a University student from Liverpool, as she was slumped over a cup of coffee in the Departures Hall. Bleary-eyed she relayed the story of how she was on her way to China to visit friends, and had chosen to fly via Tokyo to save money. “Our flight was diverted to Nagoya. I had no idea where exactly that was in Japan. Now, I have had to spend so much time and money on a train ticket that I could have just flown directly.” Her airline has managed to get her another flight later tonight, but with all of the other cancellations she voiced a concern that she would actually be able to make it. “I am just afraid I will need to spend more money for a hotel, if I can even find one.”
Emily Logan, a Australian on an extended “around the world trip” had been helped out significantly by her airline. Her next stop is San Francisco, and JAL was able to transfer her to a Cathay Pacific flight leaving tomorrow via Hong Kong. “We are not actually upset, but we are little annoyed that we are going to miss so much of our time in San Francisco.” At one point an airline representative had told her that things may not return to normal at Narita until Thursday. While we were speaking her travelling companion was on the phone checking to see if their travel insurance would cover extra expenses in this particular situation.
As I stood in the nearly empty Arrivals Hall on what should be a busy Monday night, watching the cancellations, an automated message was playing overhead. “The NAA (Narita Airport Authority) is advising that some aircraft have been diverted for operational reasons. Please contact your airline for further information, and we apologise for any inconvenience.”
Nothing to apologise for, but plenty of other emotions to express.
In my opinion, there is nothing to apologise for. I personally observed the Japanese Authorities, the airport, and the airlines handling issues and doing their best given the tragedy that they are also dealing with. While everyone I spoke to may have been inconvenienced, and it may take days for Narita to return to normal, people were still acutely aware that two pilots lost their lives today. That puts it all in perspective.
From all of us at TWC, we wish the FedEx pilots friends, family, and co-workers our sincere condolences for their loss. To the brave firefighters and rescuers who tried their best to reach the pilots in time, we stand in awe of your bravery.
In my view, there are few carriers that can compare to Lufthansa for both strategic vision and execution. Their move to acquire the Austrian Group is just another in a series of decisions that demonstrating this strength. Unfortunately for Lufthansa something went a little amiss in this latest anschluss, but we do not think it is irreparable.
Ripe for Takeovers; but who can spare the cash?
Everyday more and more carriers are seeking shelter from the stormy marketplace through alliances, investment, and mergers. In just the past few months alone we have witnessed Ryanair’s hostile attempt to takeover Aer Lingus, as well as Italy’s new “Alitalia” emerge from a massive state-sponsored bailout. There has also been unprecedented consolidation in the Russian markets.
What is the source of Lufthansa’s Strength?
While certainly not a secret, Lufthansa goes about its business in such a way as to not court attention. While there has been some negative news for the Lufthansa Group, particularly in terms of their Cargo operations, they are still posting overall respectable €599 M profit today for the combined group which includes wholly owned SWISS, and Germanwings. Have a look at just how diverse the Lufthansa holdings really are. (Please note, this opens a new window to the Lufthansa site, and the source file is in German- but you can get the idea.)
In February, Lufthansa made public its intention to add struggling carrier Austrian to its portfolio of fully owned subsidiaries. During the months of failed bids which included Russia’s S7, as well as several Gulf funds, Lufthansa carefully put together a deal to see that the integration of Austrian would success
What is wrong at Austrian and how does it affect the consumer?
Austrian suffered from the credit crunch much like any other carrier, and their latest strategy to expand their focus on long-haul connecting traffic did not get them either the load factors or yields that they had hoped for. After months of offers and due-diligence from an array of suitors, nothing materialised other than the deal from Lufthansa who are now offering €4.49 a share.
Even Austrian’s COO has gone on record as saying “the global economic crisis has now reached all markets, demand is collapsing and the outlook offers very little reason to be optimistic. We will continue as an airline, but not independently.” Now Austria’s State Holding Company obtained permission from the EC to keep the airline with a bridging loan flying while the deal with Lufthansa is being finalised.
From our view the integration of Lufthansa and Austrian makes sense. It has a complementary fleet type, the cultural ties are obvious, and Austria as a nation needs a carrier with a more diverse network of connections. Have you ever tried to fly from London to Salzburg? Your choices are fairly limited.
So what went wrong in Europe?
Enter stage right the cries of “foul state support and aid” from SkyTeam carriers who filed a motion with the European Commission to investigate the possibility that this deal could violate laws prevented so called “state support”. Where were these carriers when Italy’s Prime Minister was re-writing Italian Bankruptcy Code and making back end deals that resulted in the Italian State owning all of Alitalia’s debt, while it continues flying? Oh wait, Alitalia was one of SkyTeam’s very own.
Where are we now?
What we have now is a 200M Euro bridging loan that is keeping Austrian afloat, as the immediately slash costs and cut capacity while the issue of Lufthansa and Austrians tie-up is finalised by EU officials. In the meantime, SAS is looking to sell its stake in British Midland (bmi) along with their other holdings such as Spanair in a fight to get cash. Who might be the prime buyer for the bmi shares? I would think Lufthansa would have an interest.
One has to stand in awe of the Lufthansa strategic ability to position themselves in a weak market. From their negotiating majority ownership of British Midland (bmi) to their new investment in Lufthansa Italia the carrier has a strong strategic portfolio that is likely to pay off in the long term. They possess the diversity and required cash to survive this current economic downturn.
TWC’s Carter Stewart says, “If I were playing cards with Lufthansa I would be very conservative. We all know that Lufthansa is holding a winning hand, and unlike most carriers today they have the cash to make the bet. The question for all of us is how and when they are going to play it.”
In our next installment
In our next blog we will have a look at what we think the “Fantasy Playbook” for Lufthansa’s bmi holding could be.