Editorial

Take the Money & Run

In our November 2023 editorial, we wrote a rather cynical piece about the state of play of SAF (Sustainable Airline Fuels), the underlying question about the whole concept was whether airlines adapting the use of SAF was either an exercise in feel good PR or at worst, a scam. Two years on, an article put together by Reuters only adds fuel to the fire; if you pardon the pun.

Aviation accounts for just 2,5% of the world’s carbon emissions though you would be excused for thinking that it was much more than that if you listen to the Greta Thunberg’s of this world. That however may only be a slight diversion from a wider game taking place with the travel industry and the supply lines.

Some 20 years after the worlds first test flight partly using biofuels, the notion that we will all soon be flying on planes using purely biofuels, is a pipedream and an expensive one at that. IATA reckons that SAF will accounts for 0.7% of total jet fuel used this year, up from 0.3% last year and it has also set a Net Zero emissions target by 2050. This would require airlines to ramp up the use of SAF to 118 billion gallons annually, itself a 300 fold increase on current levels. So, where will it come from?

Out of some 165 SAF projects lauded by airlines et al over the past 12 years, only 36 projects have materialised. Of the 165 projects, 44 disappeared of the face of the earth with no further mention, of the other 73%, 4 were actually carbon offsets and no physical fuel was ever made (scam?), of the 94 left, 27 are (quote) delayed and 31 have yet to produce any fuel whatsoever. Of the 36 left standing only 10 have reported any volumes of manufactured SAF, that’s 6% of the total. If all those left standing produce to their full capacity, that will total 12 billion gallons of SAF annually, remember the industry needs 118 billion in the next 25 years!

Back in 2019, the United Airlines CEO, amid much fanfare was at the front of the queue with its partnership with a SAF refinery in Los Angeles, today the refinery is derelict. Then in 2022, the US aviation sector pinned hopes on a super SAF refinery in Panama with a start date of 2025, it now plans to start operations in 2027; the problem being – it’s not even built yet!

In Europe, the BA/Iberia led IAG Group has been as active as anyone in being seen to do the right thing and it partnered with a SAF producer back in 2015 and whilst pilot production has been made, none of the projects of its chosen partner has reached the commercial stage. The commercial production, the IAG airline group say/hope will commence in 2029, the actual SAF partners they chose had a production facility in the USA, it has now closed down and the second in Immingham Near Hull in the UK, is still a brown field site.

Despite the hidden farce connected to SAF, the message from the airlines is they are still piloting a new green future in airline travel, oh and by the way the travelling public can help by paying more on their fares for SAF fuel your plane may or indeed likely not, be using.

Technology innovation will enable the airline industry to reach carbon emission targets in the next decades as already the new generation of planes are 25% more fuel efficient than the previous generation. We are however, missing the plot, ever thought to ask how much government aid, grants and funds and how much venture capital has been supplied to the black hole that is SAF and how much of that has walked into offshore bank accounts?

So, SAF a cynical analysis – yes, with a liberal dose of pragmatism. 

Mark Thomas

Go West

The AI Route

It’s hard to know when an airline is crying the poor tale, whether is a smoke and mirrors exercise or they really are struggling. It’s hard to put the Lufthansa Group into the latter category with record revenues in 2024 of 37.6 Billion Euro’s with profit settling at 1.6 billion Euro’s, that comes despite the now habitual strikes by direct and indirect parties connected to the airline. That however hasn’t stopped them announcing that they intend to shed 4000 jobs by 2030. This reduction will take place mostly in Germany and be in the admin areas of the airline rather than in operations. The 4000 will be replaced with ‘increased digitalisation and increased use of AI” (Quote).

AI seems to be the saviour of the world as we know it and if it can deliver even greater profit to shareholders then the means will justify the end. As for the humans who are replaced by it; that’s another conversation.

One wonders how effective airline AI will be in dealing with humans or if it will still think that re-routing a passenger originally travelling from Lisbon to Finland via Frankfurt, instead re-routing them via New York is the way forward? See last months Newsletter. On the flip side, at least the Lufthansa AI is unlikely to strike.

On the Bounce

As air travel continues to rebound and to surpass pre covid levels, London Heathrow Airport for the third year has held on to the title of the worlds most connected airport. Data shows it offered 59,240 possible connections to 226 destinations.

Second came the ever-growing Istanbul Airport. Rising from 8^th the previous year thanks to a 25% increase in its numbers. Amsterdam climbed to 3^rd from 4^th despite the Dutch Governments ongoing attempt to limit flights in and out of Schiphol.

Other worthy mentions are Frankfurt which came in 5yh and Paris CDG in 10^th. In North America, the highest ranked airport was Chicago in 7^th spot.

Note this is “most connected airport’’ and not the one with the most flights or passenger numbers.

Peas in a Pod

Ever fancied sleeping in a windowless capsule with 1000 other people? Then from around 30 GBP per night (35 Euro) you can do just that and you can even have a shared bathroom facility with shower stalls for good measure. This is all at the new Zedwell Capsule in Piccadilly Circus in the centre of London.

The PR blurb says that by opening the capsule shutters, people can engage with like-minded people in the largest facility of its type in the world! Just for good measure the facility also has dedicated dormitories for women (equality?).

If this gets too much, the Zedwell has a normal hotel next door.

Lufthansa and Marriott Link Up

Not sure if this is a first within the travel and hospitality industry but a new link up between the Lufthansa Group and the Marriott Hotel Group makes a lot of sense.

Members of the Lufthansa Frequent Flyer programme Miles and More and the Marriott Bonvoy Programme will be able to link their accounts to earn loyalty points. Senator and HON Circle level members from Lufthansa will automatically receive Marriott Gold Elite Status.

The concept of this link up is simple and may well not be the first example of its kind but it is an easy and cost-effective way to drive traffic into each other’s travel related brands.

The Numbers Game

Revenue globally from airline ancillary sales (bags, seats etc) broke new records and surpassed 148 billion USD in 2024. Across the revenue board, ancillary income increased by 2.5% year on year but at the same time, revenue from other sources i.e., the actual airline base fare, decreased by 3.8%. American based airlines topped the pile in terms of this ancillary income as a percentage of total income with Frontier reaching 62% followed by Spirit with 58.7%. the fact that Spirit is in its second bankruptcy in less than a year is immaterial! @#$%^

From Europe, Wizz Air, Volotea, EasyJet and Pegasus made the global top ten with a percentage ratio ranging between 34 – 45%. Also in Europe, Norse Atlantic Airways, another airline that operates on a Low-Cost model achieved a first by being the first airline to average over 100 USD per passenger in ancillary fees.

Traditional airlines are now competing with Low-Cost Airlines by introducing their own “Basic Economy’” fares which are broadly similar to the basic fares on Low-Cost Airlines. The impact of these is starting to reveal that more passengers are encouraged to trade up for that little bit more comfort. The potential down side for such moves by the so-called Traditional Carriers is that they weaken customer loyalty. Low-Cost Airlines tend not to worry about driving loyalty so much as driving their fares down and market share up and passengers who choose such fares re usually the most fluid in whom they choose to travel with.

The Devil is in the Detail

There are, what feels like, a million different ways to book a flight these days and a process that was once simplistic and transparent is now far more complicated and if anything, opaque; think add ons that double the fare quoted. To coin corporate speak, the process of booking travel is fragmented and with this fragmentation comes another sort of opaqueness – accuracy of data and facts.

Comparing apples with apples as it’s been done over may years, the IATA aviation figures for Bulgaria, historically the only yardstick that showed how the demand and supply of airline seats was shaping up, shows that for 2025 so far, the revenue airlines gained from the local market was up 3.17% year on year. So, the thought will be that more people are travelling, the reality is though that for those same airlines, the tickets sold has decreased by 5.54% which means simply that less tickets are costing more. Might that also mean that demand for air travel has decreased due to economic worries? Nope.

What this historical “official” data doesn’t show is the numbers associated with the Low-Cost Airlines amongst others. If you then look at the data coming from Sofia Airport which accounts for the vast majority of scheduled air travel (as opposed to charter flights), the number of passengers year on year has increased by 5.06%; might this be the missing 5,54% reported in the IATA data? To support the theory that demand for travel is thriving, the number of takes off and landings at the capital’s airport has also increased year on year by 3.34% (51,351 between January and September). The total passenger numbers for the year is expected to hit 8.4 million. This, number, it should be noted, needs the numbers generated by Bourgas and Varna Airports; 1.8 and 1.5 million respectively, to gain an overall picture of activity for the country as a whole.

What does all this show? Nothing more than not to take figures at first impression and that people still want to travel.

Tax and Die

We have long advocated the point that politicians are the very last people who should manage a country’s economy. Running a country’s economy is the same as running a business and politicians are largely incapable of the latter having no such experience themselves of life in the real fast lane. Thus, thinking that you can raise taxes by X to generate extra income is not quite so straightforward and Ryanair have made that point in three major Eu countries: France, Spain and now Germany.

In France, the hard-up government have bizarrely announced increased taxes from 2.63 Euro to 7.40 Euro per airline passenger; a move that will result in less tourists and less tax revenue collected especially as Ryanair responded by closing its bases at Brive, Bergerac and Strasbourg and pulled 750,000 seats out of the market. The airline has also pulled 1.2 million seats out of the Spanish market due to Spanish Airports plans to hike landing fees and has now done the same in Germany where the government has reneged on promises made to reduce passenger levies to stimulate economic growth. 24 routes and 800,000 seats have been removed from the German market.

The net result of all this is that unless other airlines step into the breach, which is unlikely not least because there is a general shortage of actual planes across Europe, less people will travel, less money will be spent and thus less taxes will be collected. You don’t have to be a rocket scientist to work that out.

Equally, its another conversation as to whether Ryanair should take the high and mighty stance and for sure, if they thought that such actions would impact them financially; they wouldn’t take such steps, they probably figure out that the planes and crews from these markets can be moved elsewhere to other Ryanair bases where operations can then be ramped and also be more profitable.

Many Countries these days tend to run a deficit (loss) Ryanair don’t.

Off We Go

The long delayed European EES border control system kicked off on the 12^th October, this requires non EU nationals who arrive on the EU’s Schengen territory to have their fingerprints taken in addition to undergoing a biometric facial scan. The data from this will then be used on each future entry into the Schengen area. Whilst the roll out started on the 12^th October, in an attempt to reduce the potential for chaos, the roll out is being staggered with airports and countries given until 10^th April next year for the adoption to be completed. When the EES is fully working the new process will replace the need for passports to be stamped.

It should also be considered that when the EEs is fully operational, the financial side will then kick in. This is the ETIAS which is in effect a visa and for which non EU citizens will be charged a fee of 20 Euros to obtain and will be valid for three years then it has to be renewed again, though by which time 20 may no longer be 20.

There is a price on everything!

Which Passport

This year’s list of the world’s most powerful passports has just been made and  countries from Asia top the list with Singapore once again coming top of the pile. Its passport enables visa free entry to 193 countries ahead of South Korea and Japan. Europe’s first representatives come in 4^th place and is shared by four European countries.

Honourable mentions also go to the Greek passport in 16^th place, whilst Bulgaria ranks alongside Cyprus in 40^th place; a position only marginally behind the USA which sits in 37^th place and is sliding fast.

1. Singapore 193
2. South Korea 190
3. Japan 189
4. Germany/Italy/Luxembourg/Spain/Swiss 188

Just for the record the bottom three countries are North Korea, Sudan and Yemen.

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