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xairGroup saw its operating profit fall in 2016 to 1.3 million Euros compared to 6.4 million Euros the previous year. Nevertheless, the company oozes confidence and has a clear vision for the future
In its annual report for 2016, LuxairGroup acknowledged that it is “facing considerable pressure in an unpredictable political and economic environment” as well as a great deal of competition from low-cost carriers in its home-market, changing patterns of passenger demand and fluctuations in the air cargo business.
“LuxairGroup is constantly having to change, to be more innovative and to anticipate trends. Today, reaction is no longer sufficient!” states Adrien Ney, president and CEO of the group – which comprises handling division LuxairServices, freight arm LuxairCARGO, carrier Luxair Luxembourg Airlines and package tour operator LuxairTours.
There are positive signs, though: 2017 has got off to a good start as Luxair Luxembourg Airlines saw an increase of 7% in passenger numbers from January to March; LuxairTours reported a 17% increase in ‘flight only’ tickets during the first five months, whilst bookings for package tours increased by only 2% due to continuing geopolitical instability; and LuxairCARGO has had “several record performance months” since the beginning of the year.
Noting LuxairGroup’s role in supporting the Luxembourgish and Greater Region’s economy as well as its importance as an employer in the Duchy, Paul Helminger, chairman of the board of directors, affirms: “Innovation, boldness, differentiation and high quality are the keys to a sustainable future for LuxairGroup – which will be beneficial for our customers, our staff, as well as the Greater Region’s social and economic fabric.”
Joe Schroeder, corporate communications manager at LuxairGroup, observes: “LuxairGroup is indeed continuously investing at multiple and very different levels in order to stay competitive and to meet tomorrow’s challenges. In respect of LuxairServices only, not less than 2 million Euros will be invested during 2017. A new maintenance hangar is being planned (an investment of over 20 million Euros). LuxairCARGO will implement a new operating system (an investment of around 2 million Euros).”
Other major investments will concern digital transformation, improvements to the customer experience and dynamic real-time operations management tools. The existing infrastructure at Luxembourg, meanwhile, is “in excellent condition”.
The four business units of the group are each responsible for their own activities, but they work together when it makes sense for them to do so. Indeed, Schroeder notes that collaboration between all parties at Luxembourg airport is “very close and good”.
LuxairServices is the only handler active at Luxembourg airport and it serves all 15 commercial airlines established there, although a second handler has also obtained a valid licence and could, theoretically, immediately start operating there.
Schroeder remarks: “Our biggest challenge is to handle the growth. Passenger traffic increased by nearly 12% from 2016 to 2017. Aircraft movements [rose] by 8%. This requires a lot of energy, professionalism, business knowledge and understanding and as previously said, also regular investments of all kinds.”
All the equipment used for handling services at Luxembourg airport is owned by LuxairServices and is maintained by the company’s own garage. Just in terms of motorised equipment, the handler uses 500 vehicles.
LuxairServices acquired a brand new de-icing truck in July, taking its de-icing fleet to nine vehicles in total. It also acquired a de-icing simulator earlier this year and has invested in six new power stow systems for its snake conveyor belt.
The business unit provides 34 hours of recurrent training per staff member every year on average, on top of an average 200 hours of initial in-house training.
“In fact we constantly invest in many different topics in order to be prepared to the future. Infrastructure, equipment, staff, training…It’s very important for us to always guarantee top quality and service. In line with this, we have obtained ISAGO (IATA Safety Audit for Ground Operations) certification.”
LuxairCARGO “outperformed itself in 2016”, according to the group’s annual report. 822,000 tons were handled, close to the record levels achieved in 2007, and LuxairCargo reconfirmed its position amongst the top 10 largest European cargo hubs – moving up to sixth place.Jean-Marc Reynaerts, vice president business development at LuxairCARGO, sums up the reasons behind that success in three key words: quality, rapidity, diversity. “LuxairCARGO Cargocenter is the ideal place for cargo handling. The installation fulfils all the requirements and expectations of our clients, whatever they might be.
“In addition to this our clients experienced also a certain growth. Qatar Airways increased its rotations. Generally speaking, 2016 was a very good year and expectations for 2017 look very promising. We are confident to achieve 900,000 tons this year.
“LuxairCARGO has been built as a handler for full cargo operations; belly cargo handling is part of the business but accounts for max 2% of our activity,” Reynaerts goes on. “Our first competitive advantage is the full service: we manage from landing to take-off, including de-icing, full ramp services (including ramp parking) and all document and warehouse activities.”
He cites the size and quality of the infrastructure, coupled with 1,200 highly experienced staff, as other advantages. And then there is a focus on customer satisfaction through constant communication and a strong quality team.
Outlining some of LuxairCARGO’s investments, he says: “In 2016, we realised new export zones to cope with the growth of our main customers, built a new fast lane (four trucks and 32 positions) and doubled the size of the ‘Big & Heavy’ handling area to reach 12,500m2.”
In addition, four new parking positions for large aircraft such as Boeing 747s are currently under construction.
“Investments at the human resources level are as important as hardware and infrastructure,” Reynaerts continues. “Permanent training teams working with our operational and quality departments allow us to remain at the service levels required by all carriers.”
Luxair Luxembourg Airlines currently operates 11 Q400s and six B737s. The latest Q400 was delivered at the end of July. Although no more new aircraft acquisitions are planned just now, a new fleet analysis process is set to begin in 2018. “Such reviews are made on a regular basis,” Schroeder says, and they take into account clients’ needs, the current destination network and potential new routes, competitors’ behaviour and development, Luxair Luxembourg Airlines’ future strategy and how new technologies are developing.
A very successful route at present is for example the one between Luxembourg and London City Airport. The airline offers seven daily rotations connect the two financial centres.
Schroeder admits that competition is increasing, mostly due to low-cost airlines developing at Luxembourg airport. It was also hit hard when Lufthansa took over the Frankfurt route. However: “Luxair offers and will continue offering a perfect upper quality for a correct price. We are a quality carrier and offer excellent value for money.”
LuxairTours uses Luxair aircraft exclusively; one of the reasons for this is that it enables the division to maintain its high quality standards.
The business unit had a tough time of it last year. “Terrorism has become a global phenomenon and the incalculable geopolitical context and instability has had an impact on travellers’ behaviour,” the 2016 annual report notes.
“Destinations in Egypt and in Turkey literally collapsed (passenger numbers decreased by 99%, and 72% respectively), which meant that LuxairTours had to shift offers to popular and trusted destinations. General flight overcapacity to these European holiday destinations brought down flight prices, whereas limited hotel capacity led to a significant price increase. LuxairTours packages and pricing structures therefore needed to be adjusted accordingly.”
As Schroeder puts it: “Some markets broke down (such as Turkey and Tunisia). A shift to other destinations, less politically exposed, could be observed. We could nevertheless generate growth, although unfortunately margins decreased.”
Still, as LuxairTours adjusts its model in line with changing customer behaviour, it is confident that its new www.luxairtours.lu website should attract new customers.
