Low cost: short-haul nightmare

For more than a year, Iberiawarning of the situation of structural losses suffered by the short and medium haul, with an estimated 150 million loss for 2011, and the need to reach agreements with all groups to restructure the segment. He has also repeatedly warned that in the absence of agreements with Vueling proceed to outsource and / or Air Nostrum, without ruling out the possibility of creating a low cost carrier (CBC), which option they have opted in the end.

In order to avoid this, the groups of Iberia had long feasibility reports wages and working conditions more comparable to the CBC, the only way to retain the production of short and medium range within Iberia. But the company has turned a deaf ear.

A losing battle

The problem of short and medium haul for legacy carriers is a "losing battle," said an industry expert consulted preferente.com air. Low-cost airlines have been strong in this segment, last August, the percentage of passengers arriving in Spain on low cost was 58.8% - and have succeeded in changing commuter habits, something that has no turning back . "The short and medium haul will be for low cost and long distance for big airlines that are growing larger," the same expert. This leaves little room for companies like Air Europa, Spanair, Vueling and Air Nostrum.

Issue costs

"The connectivity feature of the operations of short and medium haul operations with long turnaround poses longer and therefore lower productivity," said Juan Luis Burgué, president of the Spanish Airlines' Association (ALA). This is one of the main problems of network airlines. The low cost, thanks to the planning of routes and flight frequencies, optimize the number of hours that aircraft are in the air and minimize their time on land (while easyjet planes fly about 12 hours a day, the airlines traditional rarely reach 9). The network structure of traditional companies is both its strength and its weakness: the positive side the possibility to continue the journey to the final destination of connection guarantees and commitments in case of delays, but also involves high costs, not only in case of loss of connection, is a much more complex in the face of airport services, baggage, and flight rhythms condition of the aircraft, a time scale of them, which hinder the depreciation costs of their investments.

Worse conditions

Iberia and Air Europa If you want to fight the short distance to creating low cost airlines low cost subsidiaries, should consider another problematic aspect, the working conditions. Faced with public companies that have been or a long life of labor relations and signed many agreements that have been a continuous improvement of the conditions of its workers, the low cost are most of the time without agreements with pay and conditions work much worse than before, allowing them to lower their costs substantially. As an example, personnel costs may reach 30% of total expenditure on an airline.

Within this framework, there are companies like easyjet who accept the rules of the Spanish social model and others such as Ryanair, which apply tactics much more advantageous, as the outsourcing of most of its staff to companies located outside ofSpain as they Save thousands in taxes.

As a result, their prices are what they are, and their market share is merely making up the short and medium haul in the rope that tightens more and more traditional companies.