Post by Humberside on Oct 25, 2011 14:15:10 GMT
Headline point is capacity reductions this winter through the use of smaller aircraft on some flights
www.yorkshirepost.co.uk/business/business-news/jet2_to_reduce_winter_capacity_as_household_incomes_squeezed_1_3901082#.TqZz8uIHHPU.twitter
THE managing director of Jet2.com said the budget airline is being forced to trim its winter capacity and reduce its prices as the squeeze on household incomes hits spending on holidays.
Jet2.com’s parent company Dart Group recently updated the market on trading and said it had a “satisfactory summer” despite the tough economy.
Passenger numbers increased 32 per cent in the six months to September 30 to 3.2 million. Load factors – a measure of how full its planes are – increased by over two per cent to almost 90 per cent.
Ian Doubtfire told the Yorkshire Post that the airline’s customers are booking their holidays later as they look for the best deals.
“The current UK climate is obviously making people think very carefully about their holidays with inflation costs, high fuel prices and less disposable income.
“We’re finding that we’re having to lower prices. We’re having to make sure that our prices are very low.”
Consumer price inflation spiked to a three-year high of 5.2 per cent in September, according to recent figures from the Office for National Statistics.
This was at the top end of expectations, driven up by higher utility prices and transport costs, as well as increased food prices. Economists expect inflation to fall in 2012, although much depends on oil prices.
Dart Group was hurt by higher fuel costs during its first half, which will drive margins below last year. Overall, the group said pre-tax profits for the first half of the year will be ahead of the same period in the prior year, with a similar level of losses expected in its normally loss-making second half.
The company said it still hopes to meet market expectations for the current year and announces its interim results on November 17.
Mr Doubtfire said: “We will tailor our capacity to demand and the demand is less in the winter so we’ve reduced capacity.”
He added that rather than axing routes, the company is using smaller aircraft on some routes, relying on the flexibility of its fleet of 24 Boeing 737-300s, 12 Boeing 757-200 and two Boeing 737-800s.
“It’s more about the size of aeroplanes. We’re taking full advantage of that.”
Mr Doubtfire added that Jet2.com is looking to increase capacity next summer.
He said: “We’re looking for opportunities to add capacity. There’s going to be a lot of demand around public holidays and the Jubilee.”
He declined to quantify the capacity changes.
Mr Doubtfire added that the company is combating the squeeze on household incomes by promoting its holiday arm, Jet2holidays, as a way of allowing consumers to spread the cost of a break.
He said: “We are offering package holidays and that allows people to fix their holiday budget. They can have variable length stays.
“People are very reluctant to give up their holidays.”
The company is also driving a harder bargain with its hotel partners, to bring down the cost of packages.
“The hotels are very keen to maintain their levels of bookings so we say ‘We’ve reduced our prices and want you to reduce your hotel costs’.
“They do accept it and we see a lot of support from tourist boards in places like Spain where tourism is very important to the economy.”
The aviation industry has struggled with high fuel costs in recent years, squeezing margins.
Mr Doubtfire said the company is combating higher fuel costs with a flight planning system introduced about a year ago.
Its FWZ programme optimises routes so that aircraft use less fuel and avoid congested airspace.
“For example, a lot of airspace gets closed for military exercises. It looks at the available airspace and chooses the optimum route in relation to the wind.
“We’re trying to get a situation where we get a tail wind. When flying to the Canary Isles we can go further to the west. It may be more track miles but can actually reduce flight times.
“With the global demand from emerging economies I think fuel is going to stay at a high level. All businesses have got to realise that this current economic situation is going to last quite a long time.”
The airline has faced increased competition at Leeds Bradford in recent years from rivals including Ryanair.
“We are confident in our product and continue doing our own thing,” said Mr Doubtfire. “We are here for the long term.”
Jet2.com’s parent company Dart Group recently updated the market on trading and said it had a “satisfactory summer” despite the tough economy.
Passenger numbers increased 32 per cent in the six months to September 30 to 3.2 million. Load factors – a measure of how full its planes are – increased by over two per cent to almost 90 per cent.
Ian Doubtfire told the Yorkshire Post that the airline’s customers are booking their holidays later as they look for the best deals.
“The current UK climate is obviously making people think very carefully about their holidays with inflation costs, high fuel prices and less disposable income.
“We’re finding that we’re having to lower prices. We’re having to make sure that our prices are very low.”
Consumer price inflation spiked to a three-year high of 5.2 per cent in September, according to recent figures from the Office for National Statistics.
This was at the top end of expectations, driven up by higher utility prices and transport costs, as well as increased food prices. Economists expect inflation to fall in 2012, although much depends on oil prices.
Dart Group was hurt by higher fuel costs during its first half, which will drive margins below last year. Overall, the group said pre-tax profits for the first half of the year will be ahead of the same period in the prior year, with a similar level of losses expected in its normally loss-making second half.
The company said it still hopes to meet market expectations for the current year and announces its interim results on November 17.
Mr Doubtfire said: “We will tailor our capacity to demand and the demand is less in the winter so we’ve reduced capacity.”
He added that rather than axing routes, the company is using smaller aircraft on some routes, relying on the flexibility of its fleet of 24 Boeing 737-300s, 12 Boeing 757-200 and two Boeing 737-800s.
“It’s more about the size of aeroplanes. We’re taking full advantage of that.”
Mr Doubtfire added that Jet2.com is looking to increase capacity next summer.
He said: “We’re looking for opportunities to add capacity. There’s going to be a lot of demand around public holidays and the Jubilee.”
He declined to quantify the capacity changes.
Mr Doubtfire added that the company is combating the squeeze on household incomes by promoting its holiday arm, Jet2holidays, as a way of allowing consumers to spread the cost of a break.
He said: “We are offering package holidays and that allows people to fix their holiday budget. They can have variable length stays.
“People are very reluctant to give up their holidays.”
The company is also driving a harder bargain with its hotel partners, to bring down the cost of packages.
“The hotels are very keen to maintain their levels of bookings so we say ‘We’ve reduced our prices and want you to reduce your hotel costs’.
“They do accept it and we see a lot of support from tourist boards in places like Spain where tourism is very important to the economy.”
The aviation industry has struggled with high fuel costs in recent years, squeezing margins.
Mr Doubtfire said the company is combating higher fuel costs with a flight planning system introduced about a year ago.
Its FWZ programme optimises routes so that aircraft use less fuel and avoid congested airspace.
“For example, a lot of airspace gets closed for military exercises. It looks at the available airspace and chooses the optimum route in relation to the wind.
“We’re trying to get a situation where we get a tail wind. When flying to the Canary Isles we can go further to the west. It may be more track miles but can actually reduce flight times.
“With the global demand from emerging economies I think fuel is going to stay at a high level. All businesses have got to realise that this current economic situation is going to last quite a long time.”
The airline has faced increased competition at Leeds Bradford in recent years from rivals including Ryanair.
“We are confident in our product and continue doing our own thing,” said Mr Doubtfire. “We are here for the long term.”
www.yorkshirepost.co.uk/business/business-news/jet2_to_reduce_winter_capacity_as_household_incomes_squeezed_1_3901082#.TqZz8uIHHPU.twitter