The Brussels Airlines press conference of 30 January 2014

[BAAV]

Hi Romax
the article about Gustin 'M/V of the week' gives primarily background about the person. Besides that some other useful points :
- Gustin's vision about SN being is that of an economic ambassador of Belgium to support the economy. For that Belgium needs a strong flag carrier, he makes the comparison with NL with Shiphol and KLM as an example
- De Tijd mentions his main achievements: star alliance membership and entry of LH into SN. Also focuses on his good marketing skills
- basis of future strategy: service, service, service + growth and investment are the only answer to Ryanair
- De Tijd alludes to the fact that Gustin is focusing on the mid term as a way to avoid attention to the weak financials

[RoMax]

Thank you, meanwhile I have also read the whole article after someone with acces to it send it to me.

[Boavida]

Hi Romax
the article about Gustin 'M/V of the week' gives primarily background about the person. Besides that some other useful points :
- Gustin's vision about SN being is that of an economic ambassador of Belgium to support the economy. For that Belgium needs a strong flag carrier, he makes the comparison with NL with Shiphol and KLM as an example

I understand they're trying to stimulate a sort of 'national feeling' among Belgians to choose the national airline SN over foreign airlines. But in that case, I think it was a mistake to name the company 'Brussels' Airlines. That doesn't sound like a national carrier at all. It sounds like the carrier of a city, and Brussels isn't exactly the most beloved city in Belgium... They should have named the company Belgian Airlines. That would appeal to all Belgians. And foreign people would associate 'Belgian' with Belgian beer, chocolate, waffles,... all positive things. But Brussels? That's only associated with boring EU bureaucracy...
Unfortunately it's too late now for a name change...

[convair]

Good point! Never too late for a change though...

[RoMax]

I understand they're trying to stimulate a sort of 'national feeling' among Belgians to choose the national airline SN over foreign airlines. But in that case, I think it was a mistake to name the company 'Brussels' Airlines. That doesn't sound like a national carrier at all. It sounds like the carrier of a city, and Brussels isn't exactly the most beloved city in Belgium... They should have named the company Belgian Airlines. That would appeal to all Belgians. And foreign people would associate 'Belgian' with Belgian beer, chocolate, waffles,... all positive things. But Brussels? That's only associated with boring EU bureaucracy...
Unfortunately it's too late now for a name change...

This is a very ancient discussion going back to 2001/2002. Brussels was chosen after a market analysis of the recognition of names such as Belgium, Brussels,... and it clearly showed that in the markets SN would be active in (basicly the same as currently) Brussels received a better and more positive recognition than Belgium. It's difficult to understand as a Belgian or even for large parts of Europe, but for many people globaly Brussels is much more known than Belgium. Though not always for the good things, but back in the days they decided to go for the name Brussels the market research pointed at a more possitive international response to Brussels compared to Belgium.

But in any case, it's too late to change the name. SN is now getting better recognition finally, changing it to Belgium Airlines (as an example) will not do them any good at this point. Not even when positioning themself as a national carrier, which they have been doing for years now so that's not new either.

[Inquirer]

What's in a name, you know?
Air Berlin has loads of flights which aren't going there even and the first time I saw an Etihad plane, I didn't know what that was... I couldn't even remember the name the next day when I wanted to look them up on the internet!

[Acid-drop]

http://www.lalibre.be/economie/actualit ... 6ba0b31366

Today on Lalibre they analyse again the SN reaction and they say :
The reaction of SN is brave but not very realistic because they have very different business models.
- SN's fleet is very disparate while Ryanair has optimized it to the max
- SN's load factor is far from Rynair's one
- SN need 80 employee per plane, Ryanair 30
- Ryanair "makes" 10.000pax per 1 employee
- SN is fighting again the leader of the low cost segment, which is immensely bigger and stronger

The consultant conclude : it's suicidal.
The pax may win a while, until real damage is done and we lose one player.

It's exacly my feeling since the press conference. SN is acting like a trapped animal who will try something stupid for survival. It's a big "double or nothing" game....
Rather dangerous, especially when you remember than SN is only a (small) player in between Ryanair and Vueling. These 2 made war, i'm not sure it's super clever to put yourself in the middle.

[sean1982]

http://www.lalibre.be/economie/actualit ... 6ba0b31366

Today on Lalibre they analyse again the SN reaction and they say :
The reaction of SN is brave but not very realistic because they have very different business models.
- SN's fleet is very disparate while Ryanair has optimized it to the max
- SN's load factor is far from Rynair's one
- SN need 80 employee per plane, Ryanair 30
- Ryanair "makes" 10.000pax per 1 employee
- SN is fighting again the leader of the low cost segment, which is immensely bigger and stronger

The consultant conclude : it's suicidal.
The pax may win a while, until real damage is done and we lose one player.

It's exacly my feeling since the press conference. SN is acting like a trapped animal who will try something stupid for survival. It's a big "double or nothing" game....
Rather dangerous, especially when you remember than SN is only a (small) player in between Ryanair and Vueling. These 2 made war, i'm not sure it's super clever to put yourself in the middle.

I agree 200% with that ... that's why my reaction initially was to spend that 100million EUR somewhere else (like the long haul)

[RoMax]

http://www.lalibre.be/economie/actualit ... 6ba0b31366

Today on Lalibre they analyse again the SN reaction and they say :
The reaction of SN is brave but not very realistic because they have very different business models.
- SN's fleet is very disparate while Ryanair has optimized it to the max
- SN's load factor is far from Rynair's one
- SN need 80 employee per plane, Ryanair 30
- Ryanair "makes" 10.000pax per 1 employee
- SN is fighting again the leader of the low cost segment, which is immensely bigger and stronger

The consultant conclude : it's suicidal.
The pax may win a while, until real damage is done and we lose one player.

It's exacly my feeling since the press conference. SN is acting like a trapped animal who will try something stupid for survival. It's a big "double or nothing" game....
Rather dangerous, especially when you remember than SN is only a (small) player in between Ryanair and Vueling. These 2 made war, i'm not sure it's super clever to put yourself in the middle.

In my opinion it is once again an extremely short sighted vision making it a direct war SN vs FR on costs and amount of pax. IT IS NOT!! Yes it's a step in the competition against FR, but not one they want to win on costs and capacity (which they can't as stated in the article) and that's the only element I see they point at in that article. SN wants to differentiate themself making themself a suitable carrier for pax ranging from transfer (long haul), business, to leisure. But they do not aim to win a price war with FR. They know they are in average more expensive and it's not their goal to change that.

[FlightMate]

But then, why launch similar 'leisure only' routes as FR?
There's little way they're going to 'steal' passengers thanks to better service on these routes.
Maybe a few business passengers, but how are they going to make the routes profitable if they can't steal all the leisure pax as well?

[sn26567]

But then, why launch similar 'leisure only' routes as FR?
There's little way they're going to 'steal' passengers thanks to better service on these routes.
Maybe a few business passengers, but how are they going to make the routes profitable if they can't steal all the leisure pax as well?

Most of the seats on these leisure routes are sold through deals with major tour operators. The routes are profitable even before SN sells a seat by itself.

[RoMax]

But then, why launch similar 'leisure only' routes as FR?
There's little way they're going to 'steal' passengers thanks to better service on these routes.
Maybe a few business passengers, but how are they going to make the routes profitable if they can't steal all the leisure pax as well?

Those leisure destinations were the 'big and popular' announcements of the press conference, but is nothing more than putting the attention on expansion. SN had a great summer in 2013 on their existing leisure destinations and probably thanks to new/larger contracts with the touroperators they work with, they expand the leisure offer this summer. That's not a decision they took because of FR (it are CRL served destinations anyway, so there is no reason why they would do it exactly now when FR starts different routes from BRU).

Further improvement of the cost base, introduction of a fourth product in Europe, introduction of a dedicated loyalty program for the European market, improved online services,... That's where SN wants to show themself as a flexible carrier for people ranging from budget leisure pax to business pax. But combine that with a range of new leisure destinations and the recent announcements of Ryanair and you let it seem like a head-on war (in the sense of a pricing war and a fight for the highest amount of leisure pax), which it isn't.

[teddybAIR]

When fighting competition, you should do so with your strengths and try to avoid to fight the battle on the core competency of your opponent. It should be clear that entering a negative pricing spiral with FR is going to be detrimental to just about any airline out there, simply because the overhead costs of FR is best practice in the industry. However, we should realise the following:

FR does not have a 'magical recepy' and is only able to offer a limited amount of really low fare seats provided that they can maintain a high load factor and an acceptable mean ticket price on their flights and generate sufficent ancilary revenues from the low yield pax.

If they would attack my business model with low fares (their turf), my response would indeed be to focus on the higher yielding passengers (my turf). It is far less likely that FR will win the battle over high yielding customers versus the ones seeking for the lowest fares. The nice bonus of defending the core of your business (which is supposed to be your own strength) is that it will not be sustainable for FR to maintain rock bottom pricing levels if you can make it hard for them to sustain load factors and average ticket price. Complement that with an extremely limited offering of low fare tickets and I think you got yourself a compelling answer.

The probable outcome then is that you have succeeded in 'loosing the right customers' which is according to me the best strategy in SN's situation.

[Inquirer]

I have to agree with André, Romax and TeddybAIR here!

La Libre is a fair bit too eager to turn this into a one-on-one fight, similar of the way in which the public press likes to play out the 787 vs the A380: sure, both operate (partially) on the same routes and both target (partially) the same kind of passengers too, but it's not like Ryanair is becoming a second Brussels Airlines when it comes to service, or Brussels Airlines wants to beat Ryanair on price, is it?

Let's look it at in a more rational way, shall we?
For years, FR has operated from CRL successfully and at very low prices by offering a very basic service.
Recently, they have felt the urgent need to do something about these very basic service levels because they know very well that a significant part of their customers are defecting to other airlines which offer more service/comfort/facilities/whatever than they only offer at present and are asking a fair premium for it. This is not just limited to the obvious ticket related stuff like seating, check in, boarding etc, but also to the airports served itself: clearly operating from BRU iso CRL is also one of those things which Ryanair thinks is worth paying more for to a sufficiently large number of passengers as they have decided to move some routes from CRL to BRU even, something which I think is right indeed.

Well, in that case, it's probably not just true for the handful of routes which they have decided to move to or operate out of BRU right now, but it likely is also valid for many/most(?) of their routes which they now still operate from CRL, is it?

As such, it's not so insane at all what Brussels Airlines is doing: it makes lots of sense even and it has a big chance of success. I am sure they'll have no problem getting satisfying numbers of (ex FR) passengers on their new flights this summer, as I can very well image there are sufficient passengers who won't mind paying a bit more to be able to leave from BRU over having to go to CRL for a flight to for instance Corsica, especially if they can also combine those with a contract with a tour operator and feed from the rest of their network. Ryanair may really feel this, similar to how they clearly feel a vueling or a Germanwings competiting with them on overlapping routes: one doesn't need to come to CRL for that.

[sn26567]

Deleted a few posts that were completely out of topic.

Back to topic, please: the press conference of Brussels Airlines and its consequences.

[sean1982]

I can't believe you andrë ... And then you still claim not to have an agenda. It was about it's consequences and more specifically about someone claiming to have the holy grail when it comes to comparing FR to SN. Off course, as his post fits your point view ... ITS not deleted. Pathetic!

[RoMax]

I can't believe you andrë ... And then you still claim not to have an agenda. It was about it's consequences and more specifically about someone claiming to have the holy grail when it comes to comparing FR to SN. Off course, as his post fits your point view ... ITS not deleted. Pathetic!

Sean come one, the posts he deleted had nothing to do with the essence of this topic. It was not even anymore about FR vs SN, it was once again a personal fight. I wanted to react, but decided not to, certainly after I saw André deleted the posts, but seriously Sean...this way you are ruining the atmosphere at this forum and that has nothing to do with you defending FR, but HOW you do it.

[sn26567]

I have no agenda, sean. With regard to Ryanair, I opened many FR topics, I reproduced many FR press releases, I reported about the two MOL press conferences I attended. And I do not continue this discussion in public: there is a private PM section for that.

[sean1982]

So why is it that my Posts systematically get deleted while inquirers who's post are filled with assumptions and guesses and things that are factually untrue with the sole purpose of putting FR in a bad light of day are allowed to be up. There is NOTHING in that whole post that has to do with that press conference and the only thing I did was point out the lies which are:

1. Service between both airlines is about equal: both have the a la carte product.
2. FR passengers are not running away to other airlines: in fact as the figures will prove, pax numbers are still on the rise. The only thing FR wants to do is broaden the passenger profile. In both directions: by lowering fares at the LCC side and by offering a premium product on te other side.

Don't take my word for it ... It's only from the horses mouth.

Btw RoMax, that's why I hardly ever argue with you, because you obviously know what you are talking about, something which can't be said from everyone.

[Malaysia]

Oke, you have made your point, can we go back ontopic now? Every topic I see you posting it is or about you defending Ryanair or praising Ryan...