Highlights in this Issue

The Ten influential: Who’s Who p. 4

Air Berlin Goes Shopping, But Without TUI p. 5
LCCs In the Nordic Sky... p. 7
End of 2006: Hard Air Pockets for Ryanair p. 10
Germanwings Expansion to Eastern Europe p. 11
The Low Cost Carriers Analysis Newsletter
AIR SCOOP ANNOUNCEMENTS
EDITORIAL Air Scoop Special Search Engine

T
he end of 2006 has been paradoxical. On one hand, LCCs
have realized great profits, but on the other hand, they have
never been so much criticized. One after another, LCCs
launch their IPO (Air Berlin, Vueling…) or plan to do so in a near
future (Centralwings (p. 10)…). At the same time, consolidation of
the market has reached a higher step. Some LCCs succeeded to ac-
quire other airline carriers like Air Berlin in Germany (p. 5) or FlyBe
with BA Connect, but others didn’t: like Ryanair and Aer Lingus (p.
9). Low-cost carriers are also exploring new markets and expand in
Europe to widen current frontiers (p. 2, 7 & 11).
Meanwhile, LCCs have never been under so many attacks. Jet2, like
other LCCs before, has been caught for misleading advertising by the
Advertising watchdog (p. 8). easyJet’s offices in Paris’ Orly airport
have been raided by French police forces et social security inspec-
tors, because the carrier is charged with “concealed work” and “im-
peding staff representation bodies” (p. 5). Ryanair is the European
LCC which has faced the most opposition this last month. During
the takeover bid for Aer Lingus, Ryanair faced allied opponents
(Irish government, European commission, Aer Lingus executives
and employees…) and finally failed (p. 9). Ryanair is largely critici-
zed over the web by the website Ryanaircampaign.org, and the car-
rier has lost the battle to win the control over this domain name (p.
10). More disturbing for the airline are the recent revelations about
subsidies received from public taxes and about secret agreements
signed between airports and Ryanair (p. 9). The disclosures of these
deals with airports could really damage Ryanair’s system to earn
essential ancillary money…
The Air Scoop Team Wishes you a Great New Year 2007!
Air Scoop Team has created a search engine
dedicated to LCCs market. We have selected
the best of websites news about aviation, and
especially low cost carriers in Europe. Then
you will find all the information that you are
looking for through our search engine.
Use it, it’s free!
MOL Words of the Month!
“A lot of lies and misinformation has been
put about by eco nuts on the back of a re-
port by an idiot economist.”,
Michael O’Leary referring to the report of Sir
Nicholas Stern, World Bank chief economist,
on the economies of climate change.
“Minister Pearson and other equally foolish
politicians actually tackled the real cause
of climate change, which is road transport
and power generation”, Michael O’Leary re-
ferring to Ian Pearson, UK Environment Mi-
nister, who attacked Ryanair on environment
issues.

Air Scoop - In the Air

Air Baltic: A
New Route to
Roma?

Air Scoop - January 2007 www.air-scoop.com


Exclusive Interview of József Váradi
(CEO of Wizz Air)
Could you please present Wizz Air
to our readers? What are your speci-
ficities compared to other European
LCCs? What do you do better than
your competitors?
Wizz Air is Central & Eastern Euro-
pe’s largest low fare – low cost airline
by number of carried passengers. The
airline was launched to coincide with
the EU accession of 10 new countries
in May 2004. The first flight took off
from Poland, the largest of these new
EU countries on 19 May. Today the
airline operates flights from Poland,
Hungary, Bulgaria, Croatia, Slovenia
and Romania to many destinations
across Europe. Wizz Air flies a young
fleet of 180 seater Airbus A320 air-
crafts. With 32 new A320 aircrafts on
order plus 12 options Wizz Air’s fleet
should consist of up to 53 aircrafts by
2012. Wizz Air has carried close to 5
million passengers since its start of
operations in May 2004.
Wizz Air’s key success factor is its
cost structure, which is the most ef-
ficient in the CEE region. Wizz Air’s
lowest cost is the key to its long term
success.
You recently announced an overall
expansion of Wizz Air in Poland.
easyJet and Ryanair have also an-
nounced the launch of new routes
to polish market. How do you plan
to manage such competition in this
market? What are your advantages
on this market?
Wizz Air has already proven itself as
the leading low cost airline in all its
countries of operation. According to
the latest report of the Polish Civil
Aviation Authorities published on 19
October 2006, Wizz Air strengthe-
ned its market position as the largest
low cost carrier and the second largest
airline in Poland well ahead of com-
2 Air Scoop - January 2007
BIRD’S EYE VIEW
József Váradi
CEO of Wizz Air
petitors, taking 15% of the total mar-
ket (4 percentage point up from last
year’s 11 %). Wizz Air reached 28%
share of the low cost sector transla-
ting into 8% share of the total market
in Hungary. The share of Wizz Air in
Bulgaria, the airline’s new market, has
reached 52% just 6 months after its
launch in the country.
As I mentioned the key focus is on
keeping the costs as low as possible
and offering low fares continuously.
The market has been very competi-
tive and has shown signs of consoli-
dation already, as some competitors
had to withdraw or downsize their
operations. The key, again, will be
the most efficient cost structure.
“Islanders” (Ryanair and easyJet)
need to find new attractive destina-
tions to maintain their growth; The-
refore Central Europe represents an
important market for these LCCs.
Who are your most dangerous com-
petitors: ‘Centralers’ (SkyEurope,
CentralWings, Estonian Airlines…)
or ‘Islanders’: Now? In near future?
The competition is with other means
of transportation as well as within the
airline industry itself. Low costs will
be the key to succeed, as it is vital
to both drive the market growth and
successfully compete on the market.
Our experience has proven us right:
low costs always win. This made us
the market leader in our base coun-
tries already and this will keep us in
the top league of European market
players.
The European Low cost carriers
market has reached a certain matu-
rity which leads to its consolidation.
During this transition, what are, for
you, the greatest threats to the Euro-
pean Low cost carriers? Fuel rising?
Overcapacity? Evolution of airports?
Regulation?...
There are a number of factors which
represent a challenge to further de-
velopment and need to be addressed
in efficient way. Fuel price is one
of them, however as it concerns all,
we have a competitive advantage of
flying large (180 seater), very efficient
(A320) and new aircraft, while our
competitors mostly fly smaller equip-
ment losing on the economics of unit
cost. Airport infrastructure needs to
be developed in the region, especial-
ly from a technical perspective. And
new market entries are still limited
by regulatory specificity of individual
non-EU countries. However, new
markets open, but the competitive
nature of the business remains with
local challenges to overcome.
Many LCCs look after extra-re-
venues to offset the low price of
their tickets. What are the projects
of Wizz Air in terms of Extra-reve-
nues?
Ancillary revenue is an area with a
lot of potential. There are a number
of services already available on wiz-
zair.com, such as car rental, accom-
modation, insurance, travel packages,
week-end breaks, tickets, etc. This
circle will be further enlarged as well
as products which are on sale on
board. There are also other services
and products on consideration to be
launched in the near future, which
are sources of non-ticket revenue.
Do you believe that consolidation
of the market will lead to 2-3 main
LCCs in Europe, or do you think
there will always be many LCCs on
niche markets?
www.air-scoop.com
 BIRD’S EYE VIEW
As I mentioned the market already shows signs of con-
solidation. There is place only for efficient airlines. The
market will be dominated by 4-5 big players with some
small marginal players to take the rest.
Are you worried about the shortage of pilots and crew
hitting LCC market?
No.
What are the options for Wizz Air to transform its busi-
ness model in order to make more costs savings?
Wizz Air’s business model does not require transformation
as it has been designed to be ultra-low cost from day one.
Efficient, new Airbus A320; over 13 hours aircraft utiliza-
tion; use of secondary/regional airports; 100% internet sa-
les; highly efficient organization (7500 pax/employee/year)
and best practices result in the lowest costs. And this to-
gether with the continuous benchmark against the best ma-
kes Wizz Air the winner on the market.

Find all our exclusive interviews of top

LCCs managers on our website
www.air-scoop.com

Already available online:

Maciej Kwiatkowski
(CEO of Centralwings)

Chris Mandl
(CEO of Sky Europe)

Carlos Munoz
(CEO of Vueling)
Bertolt Martin Flick
(CEO of AirBaltic)
Maunu von Lueders
(CEO of FlyNordic)
3 Air Scoop - January 2007 www.air-scoop.com
 BIRD’S EYE VIEW
ANALYST PORTHOLE
The Ten influential: Who’s Who of the Most Influential People in the Online
Travel Industry Over the Past Decade
The english media portal Travolution has gathered the votes and opinions of its readers to finally
released a list of the 10 most influential people in the online travel industry over the past decade.
“The final 10 is, we believe, a collection of the finest thinkers and strategists since 1996, and someti-
mes those just simply brave enough to try to break new ground.”
Rather than simply pick senior figures who created or ran successful businesses, Travolution wanted
to recognize the innovators and pioneers in the sector.
Among these 10 most influential people, we noticed Stelios Haji-Ioannou and Michael O’Leary...
“Stelios, the London School of Economics graduate and 39-year-old son of a wealthy shipping magnate,
is one of few businessmen, never mind human beings, who can proudly boast they have joined the likes
of Pele, Madonna and Jesus in the list of people universally known by a single name. (…) “I am not sure
who voted but it’s probably higher name recognition than other more important players,” he says of his
selection as an online travel pioneer.
Name recognition extends to his empire of businesses. There can hardly be a person living in the UK
who, after easyJet was launched in 1997 when Stelios was a youthful 28, would not recognize the cor-
porate orange of the easyGroup.
“The most crucial business decision I made when starting out was to discount £5 to those who booked online at easyJet
in 1998,” said Stelios. Like Richard Branson and Freddie Laker before him, Stelios was the latest airline entrepreneur to
believe he could take on the giant of British Airways and arguably, by embracing the Internet as a form of distribution,
he has scored most direct hits.
easyJet is now Europe’s largest low-cost carrier, with a fleet of 100 jets that welcomed 30 million passengers on board
in 2005. Stelios is now a household name but he is well aware of the fickle nature of success. “If I had my time again I
would have exercised more caution at the speed of rolling out some of my ventures during the dot-com bubble years.
Luckily, I survived to tell the tale,” he says.”

“Ryanair introduced Europe to budget flying and will carry 35 million passengers this year – a far cry
from the 5,000 it ferried between Ireland and mainland UK in 1985. Michael O’Leary is fierce when
defending its business model against attacks from environmentalists, politicians, rival airlines and the
traditional travel trade alike. (…) Ryanair, along with the likes of easyJet, has been at the vanguard of
making travel, along with porn and gambling, one of the most profitable and patronized retail sectors
online – and this is why high-street travel agents have demonized people like O’Leary, who have led the
revolution. (…) In 1993 he was made chief operating officer and everything was in place for Ryanair to
join easyJet in pioneering the online no-frills airline revolution.”

LCC EVENT

The 4th French Connect takes place on 25-27th April 2007 in La Baule. This unique event offers you the op-
portunity to network with some of the most influential people in European Low Cost aviation.
French airports, the legislators and Europe’s low cost operators all in one place with first-class conference faci-
lities, superb hotels and dining and a relaxed, entertaining business environment : book your place today!
For further information, please check www.frenchconnect.net

4 Air Scoop - January 2007 www.air-scoop.com

 BIRD’S EYE VIEW
easyJet Accused of Breaking French Labour Laws Faces Justice
In December, easyJet’s offices in Paris’ Orly airport were
raided by a 40 strong team composed of French policemen,
tax officials and social security inspectors. The operation
was ordered by the State Prosecution office. Employing
there 170 staff, easyJet has been charged with “concea-
led work” and “impeding staff representation bodies”. An
easyJet manager was even taken into police custody on
Thursday and released Friday. Ryanair could face similar
charges as the carrier opened a base in Marseille employing
about 60 people.
French government tries to force “Islanders” to move
their staff employed in France from British employment
contracts to French contracts. Indeed, since a new decree
published in November 2006, airlines with permanent
Air Berlin Goes Shopping, But Without TUI
At the end of November, Air Berlin made public an or-
der of 60 new Boeing 737-800 aircrafts expected to be
delivered between 2008 and 2014. Combined with the 25
planes already ordered by the company DBA, bought by
Air Berlin in September 2006, it is now 85 Boeing planes
that are on the order form. This is Boeing’s biggest deal
ever with a German company. At the present time, Air
Berlin runs 91 aircrafts, and has already ordered 60 Airbus
planes two years ago.
This huge deal has several goals: to replace the leased air-
crafts Air Berlin is currently running, to make savings (to
run new planes is cheaper), but also to contribute to the
company’s development (Air Berlin wants to increase the
number of its passengers from 10% to 13% in the coming
years). But as the deal became official, Air Berlin’s sha-
res suddenly slumped in price by more than 13%. The
reason: shareholders wondered how Air Berlin will be
able to afford those planes, and feared an increase of ca-
pital. Indeed, the « official price » for the aircrafts is about
4.3 billion Euros (5.7 billion USD), though Air Berlin will
surely be offered a discount of up to 30%.
Air Berlin immediately denied speculations about an in-
crease of capital. The company declared it will finance
the aircrafts with its own liquid assets, over several years,
with help from external capital, and also by mortgaging
the planes.
In Germany, rumors said this deal was hiding a coming
closer of Air Berlin and the world leader of tourism TUI,
which is running several airlines in Europe. Indeed, the
two firms had discussions at the beginning of December
5 Air Scoop - January 2007
presence in France must register as French firms and give
local contracts to their staff. Islanders resist this switch
as French contract are more expensive: they would have
to pay higher security charges and improve union repre-
sentation. According to the French Directorate of Civil
Aviation (DGAC), this switch would cost a 4% increase
to LCCs.
This episode is just another step that opposes Islanders to
French government and institutions. LCCs have many dif-
ficulties to break into French market due to many known
reasons (Read Air Scoop April 2006). Both parties have
lodged complaints against the other one: a trench warfare is
going on. France definitely doesn’t welcome LCCs…
about a minority holding of TUI in Air Berlin’s capital,
which would have helped to finance Air Berlin’s new pla-
nes. Furthermore, TUI just merged its two German air-
lines, HLX (low-cost) and Hapag Fly (holiday charter),
into one new company, TUIfly.com. TUIfly.com is ex-
pected to develop TUI’s air transport activity... eventually
through partnerships with other airlines.
But according to German press, the negotiation failed be-
cause of TUI’s too strong demands. Indeed, suffering from
a weak development on the Internet, TUI wanted exclu-
sive commercial links (hotels, special offers...) on Air Ber-
lin’s website. Will the relationship between two strong
German touristic actors be restored in the future? Both
TUI, with TUIfly.com, and Air Berlin could have interest
in building a strong partnership, unless they finally decide
to compete against each other...
Read Air Scoop October 2006 for a complete mapping
of the consolidation of the LCCs German market
www.air-scoop.com
 DOWN TO EARTH
About charity and an invitation to join the world’s largest
online travel auction to benefit kids
I wish you a happy and successful New Year from the
IdeaWorks Company and the Kids First Fund. Readers
of this column recognize the name of my consulting firm,
but likely don’t recognize the name of the non-profit or-
ganization I started in 1999 to help sexually and physi-
cally abused children. I write this month on the topic of
corporate charity and to ask you to join the 2007 Great
Online Travel Auction for Kids.
Charitable involvement provides numerous benefits for
an airline by adding depth to the brand and creating stron-
ger connections with consumers. Working with commu-
nity-based charities in primary markets can deepen brand
loyalty among local consumers - - “my airline cares about
my community too.” Establishing relationships with lar-
ger charities on a global or continental basis can align a
brand with positive attributes such as caring for children,
historic preservation, and environmental concerns. Many
consumers prefer to support socially-responsible compa-
nies.
During January 2006 IdeaWorks issued a report on Inno-
vative Reward Alternatives for the World’s Largest Airli-
nes. The report described how these airlines have integra-
ted charities into their frequent flier programs. Reward
options at these airlines go beyond air travel to include
airport club memberships, hotel stays, merchandise, and
even donations to charities. Six of the world’s largest air-
lines included nearly 100 charities that benefit from the
miles donated by program members.
The list of airlines was dominated by US-based carriers,
with one European entry. Air France and KLM support
seven charities through their Flying Blue frequent flier
program: French Red Cross, Enfants de la Terre, La
chaîne de l’espoir, L’Envol, Mécénat Chirurgie Cardia-
que Enfants du Monde, UNICEF, Right to Play, and
Save a Child’s Heart. These charities convert the dona-
ted miles into tickets that directly benefit children or are
used to reduce an organization’s travel expenses.
Airlines can also support charities by donating tickets, or
travel certificates, to charitable auctions. Well-designed
auctions provide effective product exposure among an
attractive audience of consumers. Airlines should seek
auctions that reach target markets of vacationers, business
travelers, media representatives, and community leaders.
Hopefully not lost in this article is the primary motivation
for “good works” - - because it helps make the world a
better place.
6 Air Scoop - January 2007
‘‘IDEAWORKS AISLE’’
by Jay Sorensen
(President of IdeaWorks)
www.IdeaWorksCompany.com
The auction operated by the Kids First Fund has been
designed to meet the needs of donor travel companies by
creating substantial exposure among travelers and mem-
bers of the travel media. This will be the 4th year for the
auction. Last year’s auction featured 25 brands and inclu-
ded global airlines and low cost carriers such as Air Cana-
da, Delta Air Lines, JetBlue, Southwest Airlines, Swiss
International Air Lines and Virgin Atlantic Airways.
Condor became the first Europe-based LCC participant
when it donated tickets for travel within its European
network. The auction featured over 100 item such as
airline tickets and hotel stays.
I hope more airlines in the LCC industry join the 2007
event. The auction will feature a new promotional web
site at KidsFirstAuction.com to operate as a gateway to
the eBay.com auction site. Donor airlines receive the fol-
lowing benefits:
• Promotional exposure at KidsFirstAuction.com to in-
clude airline logo, aircraft image, and a link to the airline’s
home page.
• Similar exposure at the eBay.com auction site operated
by the Kids First Fund which will include a thorough des-
cription of each travel item donated.
• Inclusion as a donor in two press releases distributed to
150 travel reporters at major news publications.
• Final statistical report listing the number of bids and
final price of items donated by all airlines.
Editor and publisher Randy Petersen, along with his Insi-
deFlyer Magazine and WebFlyer.com web site, has been
invited to be an official sponsor of the 2007 auction. This
would be Randy’s 3rd year of sponsorship. The invitation
this year includes the potential for participation in the
annual Freddie Awards.
Please consider donating 2, 3 or 4 roundtrip tickets to this
year’s auction. The event opens on March 1, 2007. Do-
nated items will be auctioned to the highest bidder at the
eBay.com site. All proceeds benefit the Kids First Fund
www.air-scoop.com
 BIRD’S EYE VIEW
and its current shelter project for abused children in the
Latgale region of Latvia. You may contact me via email to
learn more about the auction: Jay “at” IdeaWorksCom-
pany.com. Items should be confirmed to me by January
20, 2007.
Thank you for helping to make the world a better place
through the magic of travel.
LCCs In the Nordic Sky...
Although the overall growth of discount airlines has notably
decreased in Europe, Scandinavian region still demonstra-
tes vivacity. LCCs market in Northern Europe just as like
many other spheres here is rather stable. To describe each
and every budget airline in Scandinavia (Sweden, Norway,
Denmark and Finland) two words should be enough: “dy-
namically developing”. LCC network in Scandinavia pre-
sents three categories: independent airlines, merged and
daughter airlines, regional airlines.
The largest low cost carrier in Scandinavia and the 4th lar-
gest in Europe, Sterling was once just a promising Danish
low cost airline but after it had been bought by Fons Ei-
gnarhaldsfélag investment group together with Maersk
Air it evolved into the biggest Nordic low fare carrier with
direct flights within Northern and Southern Europe. It co-
vers almost all popular destinations and is hard to compete
with. But rivalry over the Nordic sky is rather high. Being
the youngest and very ambitious low fare airline Swedish
FlyMe based in Gothenburg intended to buy Sterling to
gain strong positions at once. But the acquisition project
was terminated. Nevertheless FlyMe shifted from a regio-
nal carrier to an international one expanding its destina-
tions as far as Southern Europe. Some of those destinations
were already covered by Sterling.
In the same line of independent low cost airlines stands
Norwegian Air Shuttle. Like many others it was formed
on the basis of a regional airline that went bankrupt and
evolved into a strong and prosperous LCC that operates
flights in more than 50 destinations. NAS is particularly
interested in Eastern Europe and entered the market ope-
ning the second hub in Poland. Another airline developing
“exotic” destinations is Swedish Scand Jet with hub in Go-
thenburg that works on a consolidation basis. It was esta-
blished in order to provide cheap transportation between
Scandinavian countries and Croatia and Bosnia connecting
northern parts of Europe with major Croatian and Bosnian
cities as well as resorts.
Since low cost carriers in Scandinavia have to operate their
flights under the permanent tension of such aviation mons-
7 Air Scoop - January 2007
Sources of Information used in this article:
• “The IdeaWorks Report on Innovative Reward Alternatives
for the World’s Largest Airlines”, issued January 19, 2006.
www.IdeaWorksCompany.com
ter as SAS they need to team up and co-operate otherwise
they could leave the market as Swedline Express AB did.
On the other hand, LCCs are considered to pose a threat
to full service airlines. When a first class carrier establishes
or acquires no-frills it is not only profitable but good from
the perspective of competition.
Two recently established airlines belong to SAS group that
are Blue1 (Finland) and Snowflake. Although Blue1 started
to operate flights as Air Botnia in 1988 it became well-
known after being purchased by SAS and its further re-
branding. Lately it was awarder admission to Star Alliance
as the first regional carrier.
To hold strong positions on the LCC market Finnair bought
Swedish FlyNordic that is based in Stockholm and ope-
rates flights within Northern Europe and on international
routes. Alliance was also formed between Sterling and Fly-
Nordic which involved route and material and technical
basis sharing that allowed to reduce overall expenditure
and to increase passenger flow. Such a threesome started a
new phase of co-operation between first class airlines and
LCCs.
Besides “common” Scandinavian low cost airlines Swedish
market presents regional carriers that operates their flights,
with some minor exceptions, within Sweden and based in
Gotland region (Kullaflyg), in Malmö (Malmö Aviation)
and offer low fare tariffs.
What is special about Scandinavian LCC market is that
there to be found budget airlines that are somewhere in
between low cost and full service airlines. Some companies,
such as Sterling, Blue1 have occupied niche between LCC
and first class airline. Regarding that Scandinavian LCCs
market development is shaped by such factors as SAS pre-
sence, handling at airports that are among the European
leaders and assuming that it (the market) has reached a
saturation boundary with respect to destination develop-
ment we may expect LCCs there evolving into airlines of
a new type -like Sterling and Blue1 – airlines that are in-
between low-cost carriers and full service airlines.
www.air-scoop.com
 BIRD’S EYE VIEW
Exclusive Interview of Klaus Martin Enders
(Responsible for Marketing of Germanwings)
Could you please present your plans and your further
development, what are you goals for the future?
We have a lot of plans and we are increasing much. In the
next year, we will fly 26 aircrafts, which are 3 more than
this year. We will fly then from four hubs: Cologne, Stu-
ttgart, Berlin and Hamburg to more than 60 destinations
Non Stop. In Cologne and Stuttgart, we are also right now
the leading carrier on the airport, while in Berlin and Ham-
burg we are quite a bit smaller, and we want to increase
there in the next future very much. Now outside of the
UK, we have some strategic destinations like the East and
South East of Europe. We started this year, for example,
flights to St. Petersburg, to Moscow and I believe, in a near
future, destinations like Bulgaria are possible. In the South
East, we are very strong now in the Ex-Yugoslavia, we have
three destinations in Croatia, we fly since in September to
Belgrade in Serbia, we also fly since this year to Pristina
and also to Tirana in Albania. As you may see, we have
some strategic destinations, where we think in the East and
South East part of Europe there are some good possibilities
and interests for us.
The second part of our strategy is towards the Mediterra-
nean Sea. We opened a lot of routes in the Mediterranean
Sea like in Greece, Malta or in South Italy. We are today in
London, and I can say that the UK destinations are doing
very well as well. Since this year, we also fly three times per
day from Cologne to Stansted. From Stuttgart, we fly twi-
ce daily to Stansted and from Hamburg to Gatwick twice
daily also. The UK routes are doing very well!
You have mentioned the Central and East European
Market. Are the operations on these routes already profi-
table for Germanwings?
Yes, of course. We also begun to fly to Czech Republic,
Hungary and Poland one year ago, and I may say that these
Klaus Martin Enders
Marketing of Germanwings
markets are very good for us, because of the foreign wor-
kers (gastarbeiter). We have for example Warsaw in our
program; we were said that we were crazy flying from
Cologne to Warsaw. But on the other hand, there are
hundred buses going every day from Poland to Cologne
and Düsseldorf area. We have now daily flights to War-
saw, and this route is very good for us because we have a
lot of people traveling between these areas.
Does it mean you are more concentrated in this area
on Labor workers than on business and holiday tra-
velers?
Generally the best way would be to separate it in three
parts. One third is labor market, on third is business mar-
ket and last third is tourist market.
What is your opinion on consolidation in the European
LCCs Sector? Do you believe that in a near future there
will be just two Low-Cost Airlines operating the mar-
ket?
Consolidation did already begin and a lot of airlines disap-
peared from the market. We hope to stay on the market.
We do not make big increases just a little bit, 6 aircrafts a
year and not in a massive way. I am convinced we are on
the right way. I believe that few big airlines will operate
around 70-80% of the market, and the rest by smaller
LCCs.

Advertising Watchdog Warns Jet2

Jet2 has been rapped by the Advertising Standards Authority (ASA) about a misleading ad-
vertising campaign promoting “free” tickets. The ASA received many complaints, including
those from Ryanair and Flybe, two competitors of Jet2. The advertising watchdog declared
that Jet2’s adverts breached its code as the fees and duties added to a flight are not an optional
extra, and therefore must be quoted. Jet2 has been told to quote inclusive price in its future
adverts.
Jet2 is not the first LCC to get caught by the ASA for misleading advertising. Ryanair has
already been sanctioned by the ASA over a TV ad promoting 4 million «zero fare» flights
following a complaint from its rival Monarch airlines.

8 Air Scoop - January 2007 www.air-scoop.com

 DOWN TO EARTH
Ryanair Under Heavy Attack About Subsidies Received from Public Taxes…
Last December, Ryanair has been accused to have recei-
ved public money from indirect payments.
First, Derry Airport had to reveal its financial deals with
Ryanair. This is the result of a two year battle of journa-
list Brian Hutton, through a Freedom Information request,
to make public the terms of the contract between the
private carrier and the public airport. Ryanair was gua-
ranteed more than 1 million pounds in a five year marke-
ting agreement to fly to Derry Airport and to promote its
London Stansted route. Moreover, the carrier was given
free landing, navigation and parking facilities, security…
Till December, these massive subventions were hidden
in a secret agreement. Council Chief Executive Anthony
McGurk has admitted the airport was costing ratepayers
about 1.3 million pounds a year.
The second broadside came from Deutsche Lufthansa
AG. Lufthansa has accused Frankfurt-Hahn Airport to
have granted Ryanair with indirect payments. These sums
reach up to 2.7 million Euros received in reduced airport
fees. The German carrier has filed a complaint against
Frankfurt-Hahn’s operators and has demanded Ryanair to
European Commission Investigations on Failed “Operation Bargepole”
At the end of September, Aer Lingus finally made it to
the stock market after years of deliberations from the go-
vernment. In the weeks that followed, Ryanair launched
an ambitious 1.48 billion Euros takeover bid for Aer Lin-
gus after increasing its stake from 19% to 25%: “Opera-
tion Bargepole”
From the beginning Aer Lingus rejected this offer com-
plaining to the European Commission that this project
was “anti-competitive”. The European Commissioner
Neelie Kroes decided to open a Phase II enquiry. “The
commission’s initial market investigation indicates that
the proposed acquisition would raise serious competition
concerns in the passenger air transport sector and in par-
ticular could reduce choice for consumers and could give
9 Air Scoop - January 2007
RYANAIR’S
BAD DAYS
return these sums. Lufthansa also asked for information
regarding money received by Ryanair since 2002 in the
form of marketing support. The German legacy carrier is
now calling for no further state money to be paid to Rya-
nair without European Union approval.
These cases followed declarations of Prime Minister in
his 2007 budget speech: “Earlier this year, we took the first
steps and introduced schemes to attract a low-cost airline
other than those already operating here. At this point, it
is pertinent to point out that these schemes will cost the
government more than 1 million pounds. I am saying this
to explain to everyone that the price of a low-cost airline
ticket is cheap because we are all paying part of it.”
In the past, Ryanair has already been criticized by Euro-
pean Union for taking substantial subsidies from regional
airports. No doubts that 2007 will see similar actions to
get more transparency of deals made between airports and
LCCs.
rise to higher fares than would be likely if the two re-
mained separate”. This Phase II investigation should take
between 3 and 5 months to mull the impact on competi-
tion if a deal ever goes ahead.
Michael O’Leary immediately accused European compe-
tition commissioners of bias against his carrier. “We are di-
sappointed with the delay in the European Commission’s
approval of Ryanair’s offer for Aer Lingus”, he declared.
Ryanair still wants to acquire Aer Lingus through a se-
cond offer, but to do so, the carrier will need the per-
mission of the EC. The trial of strength for Aer Lingus
control is not finished yet…
www.air-scoop.com
 DOWN TO EARTH
End of 2006:
Hard Air Pockets for Ryanair
The last months of 2006 have been tough for Ryanair. Af-
ter the failure of its bid for Aer Lingus and the revelation
of its secret deal with some airports (Read p. 9), Ryanair
had to face multiple issues.
In December, Ryanair lost a battle to win the control
over a hostile Internet domain name. Last July, Michael
Coulston, a disgruntled former customer, set up a critical
website against Ryanair’s business practices: www.ryanair-
campaign.org. To stop these critics, Ryanair claimed that
this domain name infringed its trademark and should be
transferred into its possession. In the past, the Irish carrier
won against Michael Coulston who had to hand over ano-
ther domain name: www.ryanair.org.uk. But this time, the
World Intellectual Property Organization (WIPO) de-
clared that Michael Coulston had the right to use www.
ryanaircampaign.org as he was running an online campaign
aiming to inform Ryanair passengers.
Centralwings sold on the Warsaw
Stock Exchange, but not to Ryanair…
The Polish Government plans to list its national carrier
LOT in 2007. “The Ministry of the Treasure wants to keep
a controlling stake. This solution should be advantageous
for LOT bankruptcy officer”, declared Ireneusz Dabrows-
ki, the deputy Minister of the Treasure.
After the IPO of LOT, Mr Dabrowski would like to sell
Centralwings, still owned by LOT. “There are offers from
investors interested in acquiring this company so it may be
sold”. With 17% of the market, Centralwings is the third
low-cost carrier, and together with LOT, they have 42% of
the Polish market. Following the takeover bid of Ryanair
on Aer Lingus, the Polish government will refuse Ryanair
to acquire Centralwings. “Centralwings is supposed to
compete with this company”, Mr Dabrowski explained.
Governments seem to be very wary now of Ryanair ex-
pansion through LCCs IPO.
Read our Exclusive Interview of Mr Maciej Kwiatkowski,
CEO of Centralwings (Air Scoop December 2006).
10 Air Scoop - January 2007
Beginning of December, Ryanair also faced a report of
the European Consumer Centre Network specifying
the carrier was the most complained against in Europe.
The network recorded more than 1300 complaints and
disputes in 2005, and some 33% were against “Islanders”
(UK and Ireland). While European legislation is failing to
protect passengers, the report says that airlines are adop-
ting “a cynical approach” to these complaints: one in three
valid complaints was not resolved. Airlines often blame
“exceptional circumstances” such as weather conditions or
security issues for refusing to compensate passengers. The
survey finally highlighted several serious stories of passen-
gers left stranded at airports, without any refreshments or
information, forced to find their own solution to get back
home. easyJet is the second Islanders which received the
most complaints just behind Ryanair.
ECCN is a network of consumer information centers
across the European Union which are co-funded by the
European Commission and national governments. The
ECCN only investigates complaints involving cross bor-
der-issues.
Air Madrid: Wings Clipped
The Civil Aviation authority has finally suspended Air
Madrid’s flying license and rejected its proposals to re-
solve security issues and flights delays.
Security became a too important issue; the government
had to cancel seven flights in the last four months due
to security reasons, and Air Madrid has recently come
under criticism for repeated delays that frequently left its
passengers stuck in airports for days.
The decision of the Civil Aviation authority left thou-
sands of passengers stranded in Spain and abroad. Accor-
ding to Spanish National Radio, 130 000 ticket-holders
could have been affected. “This decision has been taken
with total independence of the absolutely irresponsi-
ble and unilateral behavior of the company”, declared a
member of the Civil Aviation authority.
Founded in 2004, Air Madrid, which operates nine Air-
bus aircrafts mainly on routes to Latin America, now
faces legal actions from the Spanish government which
claim back 6.6 million dollars for emergency flights.
The disappearance of Air Madrid satisfies other LCCs
operating in Spain. Indeed, few days after the revocation
of Air Madrid’s license, over 100 of the airline’s pilots
went to Barcelona seeking to be hired by Vueling and
ClickAir. These two LCCs will definitely need pilots
next year to go with their expansion projects. ClickAir
plans to buy over 15 aircrafts next year and to hire 120
pilots, whereas Vueling will need 80 new pilots.
So long for the first long-haul European LCC…
www.air-scoop.com
 BIRD’S EYE VIEW
Germanwings Expansion to Eastern Europe and Some Implications
Following the trend, Germanwings has decided to make a hand, since the main national rivals, like Air Berlin, DBA
strategic commitment and expand further into Central and and HLX so far have largely stayed away from the Eastern
Eastern Europe by opening up new routes served from the market, it is an evident consequence that Germanwings
four operating bases of the airline (Cologne/Bonn, Berline tries to strenghten itself by entering a market which is
Schönefeld, Hamburg, Stuttgart). Given the size and the unserved by the main competitors.
steady growth of the Eastern market coupled with price- This strategy seems to be the right one, as for the first time
sensitive passengers, Thomas Winkelmann, the CEO of in its history, Germanwings was reported to turn profi-
Germanwings sees a great opportunity for low-cost car- table in 2006, however, the exact figures will be revealed
riers in this region. later this year. The forthcoming years will see a major ex-
pansion of the uniform Airbus A319 fleet as well; by 2009
In 2006, roughly 14% of all Germanwings passengers came the air carrier plans to increase its fleet size to 42 from the
from Central and Eastern Europe, a rate, which is expec- current 24.
ted to rise with the announced new routes. This year, Ger- Germanwings counts on both leisure and business tra-
manwings starts to serve the cities of Burgas, Varna and vellers, and this is the reason why it refrains from flying
Sofia (Bulgaria); the Romanian capital, Bucharest; Zadar into out-of-the-way, remote airports, unlike many of its
and Split in Croatia, the Bosnian capital Sarajevo and the rivals. It may imply a cost disadvantage especially relative
popular Hungarian tourist resort, Lake Balaton. to Ryanair, however, if Germanwings is able to create
Even though the company has long been considering ope- more value than rivals by offering superior service, it is
ning a new permanent base in Poland, so far it has refused likely to reach a competitive advantage based on benefits
to disclose the exact location. While once Winkelmann to customers. The German air carrier so far has succeeded
named Poland as the most important country for Ger- in this strategy, this is reflected in a survey conducted in
manwings in the region, it is also possible that instead April, 2006, in which Germanwings was ranked the best
of undertaking such a potentially risky and costly invest- German airline for punctuality, cleanliness and value for
ment, the management has chosen to pursue a geographi- money.
cal focus strategy based on strengthening its position in the
home market, Germany. Regarding these, two questions may arise. First, whether
All routes of Germanwings are served from one of its a price-sensitive market environment like the Central and
four German hubs; the new ones are not an exception to Eastern European allows for pursuing a strategy based on
this. Therefore, on the one hand the Eastern expansion benefit advantage, second, whether the parent company,
can be viewed as preventing the Central and Eastern Eu- Lufthansa is not cannibalising its own business to a cer-
ropean rivals from opening up new routes to these hubs tain extent by having established the low-cost, low fares
thereby stealing market opportunities away. On the other Germanwings?
BLOGS TREND
easyJet Best Covered by Weblogs
We notice that global weblog coverage of our three
LCCs has decreased, and for the first time easy-
Jet has taken the advantage over Ryanair. Indeed,
even if Ryanair had many interesting stories to blog
about, for instance the setback in the Aer Lingus
takeover case or against the domain name ryanair-
campaign.org, easyJet has constantly increased its
presence in side weblog communities. The carrier
announced new routes for 2007 that inspired a lot
of bloggers. And finally, the raid against easyJet’s
offices in France by policemen has been widely dis-
cussed over and commented. Labor conditions in
the LCCs industry, especially with “Islanders”, are important issues for employees and
governments. In 2007, we should notice an increase of labor opposition in this market.
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