Published on October 4th, 2015 | by Jim Lee0
CityJet launches inaugural Cork service to London City as it announces major contract to operate SAS regional routes and acquisition of Blue1
On 1st October, CityJet launched its inaugural flight between Cork and London City Airport, with the first flight, the WX310 departing Cork at 07:47, just seven minutes behind schedule. The flight, operated by British Aerospace Avro RJ85, EI-RJT, which is in the new CityJet colour scheme, landed at London City airport at 09:05, right on schedule. The aircraft had positioned to Cork from Dublin the previous evening (30th September), as the BCY319P, departing Dublin at 17:45, and arriving in Cork at 18:14. The aircraft continues to be based in Cork and was noted most recently on 4th October in Cork after operating the WX314.
The Minister for Agriculture, Food and the Marine and Minister for Defence, Simon Coveney TD, was on hand to launch the new route, which will include 18 flights weekly between Cork and London City which is in the heart of the financial and tourist districts. The schedule provides for three flights daily on weekdays – rising next year to four daily on weekdays – as well as, one flight on Saturday and two on Sundays.
CityJet’s Executive Chairman Pat Byrne, who was also in Cork for the occasion, said they were confident and excited about the new route. He added that early bookings indicated that both the business and travelling public saw real value in flying into an accessible airport with fast turnaround times and great transport links in London.
Mr Byrne said: “We are delighted to launch our new Cork to London City Airport route which emphasises the progress we have made in building our passenger numbers and expanding our services across Europe. Great plans are underway at Cork Airport and we see great potential in delivering access to London’s most accessible airport for the people of Cork and Munster in general.”
“Cork is a vibrant, progressive city and county, boasting many leading ICT, pharma and biotechnology companies. This airlink into the heart of London’s financial district can help propel investment and growth in the local economy and provide ease of access to many thousands of leisure and holiday travellers,” he noted.
Mr Byrne added: “Today’s inaugural flight follows our recent brand launch and announcement that we plan to create 15 jobs in a new call centre in Dublin next Spring. CityJet now employs almost 500 staff, with over 300 based at our headquarters in Swords, Co. Dublin, and additional crew bases in London and Paris”.
Minister Simon Coveney said: “This is great news for Cork and the region. As an island nation we are heavily dependent on our air routes to drive investment and our tourism sectors. Adding London City Airport as a destination and departure point for Cork will be a huge benefit to the local economy.”
“CityJet along with other carriers serving Ireland have seen a resurgence in passenger numbers following the downturn and this has been a bumper year for tourism, not least in Cork and the South West. We in Government have played our part in cutting passenger tax and promoting Ireland as a tourist destination and we look forward to continued growth in the aviation sector” the Minister added.
CityJet will carry over two million passengers this year on its own scheduled services network, on its wet lease programme for Air France, and its charter services. The airline’s flagship Dublin to London City route has seen a 40% growth in the last six months. CityJet is, Pat Byrne confirmed, also considering operating summer routes from Cork to regional airports in France and Italy. Among the destinations under consideration are some from where CityJet already operates services to from Dublin including Avignon, Brive and Toulon as well as Florence.
CityJet wins major contract to operate SAS regional routes
Also on 1st October, CityJet announced that it had been awarded a major wet lease contract by SAS (Scandinavian Airlines), to operate a network of regional routes from Helsinki, Oslo and Stockholm. Commencing in March 2016, CityJet will operate services on behalf of SAS, using a fleet of eight new aircraft. It also has the option to increase this to 14 aircraft in 2017.
“The SAS contract has immense strategic significance for CityJet’s growth and development, strengthening its market position across Europe and facilitating ongoing investment and growth. Securing this contract with SAS is a major vote of confidence in our team and in our expertise, and will help support future business expansion”, Mr Byrne, said at the announcement of the new business win.
CityJet to acquire eight 90-seat Bombardier CRJ900 regional jets
On the back of that major wet lease contract, CityJet has also announced that it is to acquire eight 90-seat Bombardier CRJ900 regional jets, major components of which are manufactured by Bombardier Aerospace, in Belfast. The new CRJ900 fleet will be operated exclusively on behalf of SAS, with all aircraft in SAS colours and crewed by CityJet staff. SAS will be put it into service from March 2016 on routes and at times when there is a need for smaller aircraft. SAS already operates twelve regional jet aircraft of this type through its (Copenhagen-based) subsidiary, Cimber. The new wet lease agreement with CityJet is for three years and as noted above, covers eight Bombardier CRJ900s with an option on a further six aircraft.
With the potential to add six further aircraft in 2017, it brings the total aircraft value of the aircraft order to over $650 million (almost €580 million).
“We are looking forward to working with CityJet to further expand our regional route network and thereby strengthen SAS’s offering to frequent travellers. The eight brand new CRJ900s from CityJet will provide us with efficient and flexible production of regional flights that will complement SAS’s production on the larger traffic flows,” said Rickard Gustafson, President and CEO at SAS.
“We welcome CityJet as the newest member to the CRJ family. With its unique operations, CityJet has forged strong business relationships with many of Bombardier’s long-standing customers such as SAS who now look to CityJet’s expertise for their network growth” said Ryan DeBrusk, Vice President, Sales, Europe, Middle East, Africa, Russia and the Commonwealth of Independent States, for Bombardier. Bombardier has also confirmed that CityJet will acquire the aircraft from a customer that signed a firm purchase agreement for eight CRJ900 aircraft and took options on an additional six. The customer has requested to remain unidentified at this time.
However, based on announced orders and deliveries, only two companies, both airlines, have outstanding orders from which the CityJet aircraft could come. The two likely sources are therefore American Airlines which has 24 outstanding at the end of June. These were being acquired for operation by wholly-owned subsidiaries or lease to third-party regional carriers which would operate for American under capacity purchase arrangements. The other is China Express who has an order for ten. Given these scenarios American seems to be the more likely source.
About the CRJ Series Aircraft
According to Bombardier every 10 seconds a CRJ Series regional jet takes off somewhere in the world. The CRJ Series family of aircraft has transported almost 1.6 billion passengers to become the world’s most successful regional jet program – linking people and communities like no other. The CRJ Series regional jets have revolutionised aviation with their proven efficiency, reliability and profitability. The CRJ Series regional jet family (see here), share commonality benefits that provide flexibility to operators and allow them to optimise their fleets to meet specific market demands. All three models share a common engine, the proven General Electric CF34-8C, helping to reduce ownership and operating costs. No other regional aircraft deliver this capability. Optimised for medium-haul regional routes, these aircraft can provide up to 10% cash operating cost advantage over competing jets.
Each of the three CRJ aircraft models offers its own distinct advantages. The CRJ700 regional jet is the lightest aircraft in its category, delivering impressive efficiency, performance and fuel burn savings, while the CRJ900 regional jet offers tremendous flexibility and is ideally suited for growing markets. The CRJ1000 regional jet, which has the highest passenger capacity in the family, delivers the lowest seat-mile cost in the regional jet market and burns up to 13% less fuel than its competitors. Since its launch, the CRJ Series family of regional jets has stimulated the regional jet market. In North America alone, it accounts for over 20% of all jet departures. Globally, the family operates more than 200,000 flights per month. However, none of the CRJ variants is approved for operation from London City, meaning in effect that this aircraft is not an effective replacement for CityJet’s existing Avro RJ85 fleet or for its own operations.
Looking specifically at the CRJ900 (see here),it has the flexibility to easily seat up to 90 passengers in a single-class configuration although when configured in a 76-seat dual – or triple-class configuration, it offers extra legroom and superior comfort. This capacity, combined with enhancements that result in 5.5% lower fuel burn, means the CRJ900 delivers the best economics in its class. It has an external length of 36.2 m (118 ft. 11 in.), a wingspan of 24.9 m (81 ft. 7 in.) and a maximum fuselage diameter of 2.7 m (8 ft. 10 in.).
“The long-term profitability and development of our airline is dependent on the addition of modern, fuel-efficient aircraft to our fleet. The CRJ900 jetliners with their lower operating costs, outstanding operational flexibility and enhanced cabin amenities were key factors in our successful tender for our new SAS contract,” Mr Byrne noted.
CityJet is also acquiring 100% of SAS subsidiary Blue1
As part of this new collaboration with SAS, CityJet is also acquiring 100% of the shares in SAS subsidiary Blue1. Blue1 is a Finnish airline which has been a part of the SAS Group since 1998. Its primary business is wet lease and charter operations, delivering operational flight services for airlines, tour operators and for other ad hoc flight needs, both long and short term. As a wet lease airline, Blue1 focuses on delivering operational excellence and high-quality customised services, including scheduled services for SAS. Its current fleet of Boeing 717-200 jet aircraft and it almost 200 currently enables what it describes as cost-efficient operations across Europe, the Nordic countries, the Baltic states and Russia. It is unclear how these staff will be affected by the sale as it is not mentioned in the CityJet statement.
According to SAS, the sale of Blue1 will lead to a marginal impact on SAS’s income before tax, cash and net debt. The Group’s income after tax during Q4 2014/2015 will be negatively impacted of around SEK 90 million (around €9.6 million), primarily due to write down of capitalised loss carry forwards. However, the sale and the new wet lease agreement are expected to increase cost efficiency and flexibility at SAS.
A fantastic opportunity for CityJet
Over the last nine months, CityJet has put in place the right people and infrastructure, such that the management team believes it now has a stable platform on which to roll out its proposed strategy, which is to consolidate its position at London City Airport, to develop other niche markets and extend its aircraft, crew, maintenance, and insurance (ACMI) or ‘wet lease’, business beyond its existing Air France contract. The SAS contract represents the first significant step in this regard.
“This is a fantastic opportunity for CityJet to work with a leading airline such as SAS. We are looking forward to a long-term cooperation, where we will deliver a high level of quality in terms of efficiency and customer service for SAS passengers. We are also keen to benefit from the experience and knowledge of the Nordic airline industry that the acquisition of Blue1 will give us,” CityJet’s Executive Chairman concluded.