Intense competition is starting to take its toll on Spanish low-cost carriers.
Vueling unveiled plans to slow down its ambitious expansion programme after reporting in early August a €34 million ($45 million) loss for the first half of 2007 compared to a €6.5 million loss for the same period last year. The Barcelona-based low-cost carrier says it will add one fewer Airbus A320 this year and six to 10 fewer A320s next year than originally planned. Vueling launched services in 2004 and will have 24 A320s in service by year-end.
Spanair also cited intensifying competition and overcapacity on domestic routes for driving a $36 million first half operating loss compared to a $10 million loss for the same period last year. Barcelona-based Clickair, which launched operations last October and has not yet reported any financial data, says the fare war also has affected its profitability but it is still 3% "above target".
"The fare war in Spain has affected everyone including us, but we've been able to offset it with our high load factor," says chief executive Alex Cruz. He says Clickair will not slow down expansion plans, which include growing from its current fleet of 20 A320s to 24 at the end of 2008 and 30 at the end of 2009. Clickair is now drafting its fleet plan for phase two of its rapid expansion, which will begin in 2010.
EasyJet and Ryanair also have been expanding their operations in Spain and competition will likely become even more intense when Ryanair opens later this year new bases in Alicante and Valencia. All the additional capacity growth has had an impact on on-time performance, especially in Barcelona where there are not enough gates and check-in counters. "Space is tight and punctuality isn't good," Cruz says, adding 22% of Clickair's flights arrived late in the first half but the delays have been much worse in July and August.
Clickair, however, has launched a new internet check-in service designed to minimise the hassle at the airport. Clickair claims it is the world's first carrier that checks passengers in when they purchase a ticket. Clickair also has switched from free seating to pre-assigned seating with an extra charge for seats at the exit row and bulkhead.
Source: Airline Business
