Published on May 30th, 2016 | by Jim Lee0
Following handover of CityJet’s first Sukhoi SSJ 100-95, the aircraft is due in Dublin on 1st June as the airline continues its transformation
In a piece posted on 24th May, we noted that CityJet had accepted the formal delivery of EI-FWA (c/n 95102), ex I-PDVZ, the airline’s first Sukhoi SSJ 100-95 Superjet. This took place at a ceremony at Venice’s Marco Polo airport, where Superjet International’s (SJI) facility is located. The aircraft is expected in Dublin on Wednesday 1st June.
With the handover of EI-FWA, CityJet has becomes the first European airline to take delivery of the Superjet SSJ100, an aircraft which CityJet’s Executive Chairman, Pat Byrne, describes as a “game changer.” Belgian carrier VLM Airlines, a one-time subsidiary of CityJet, had earlier this year cancelled its order for the type. It was to have been the European launch customer, having announced plans In October 2014, to acquire up to 14 long-range versions of the Sukhoi SSJ100. Under a letter of intent with Ilyushin Finance, VLM took the option to lease up to four SSJ100LRs plus purchase rights on 10 more aircraft. The first two aircraft were due to arrive on 12-year operating leases from April 2015 but this was initially deferred until 3Q 2016 in March 2015.
CityJet is leasing 15 Superjet SSJ100 aircraft with an option for an additional 16. The deal is worth over $1 billion (around €897.5 million), including options and after-sales services. The airline is acquiring the aircraft through an agreement with aircraft financing firm Falko, who are purchasing the aircraft for onward lease to CityJet, These will replace the airlines ageing fleet of 19 less fuel efficient BAe Avro RJ85’s. Mr Byrne added that the airline will probably decide whether or not to exercise all its options, by the third quarter of next year.
This is largely dependent on the aircraft securing London City certification, something it hopes to achieve by year-end. The Superjet SSJ 100 had previously achieved European Aviation Safety Agency (EASA) certification in 2012. Pending London City certification, the aircraft will initially be deployed on charter flights, before eventually being used on CityJet’s scheduled services.
Present at the ceremony was the second aircraft, EI-FWB (c/n 95108), which was also in full CityJet colours, and it is expected to arrive in Dublin in the middle of June. Altogether, CityJet is expected to take delivery of three more of the type this year, with the remaining eleven to arrive from Sukhoi Civil Aircraft during 2017 and onwards.
Superjet International will also provide CityJet with the technical support through a SuperCare agreement for 12 years, while CityJet crews are being trained at the Training Centre in Venice. Among the terms in CityJet’s agreement, is a commitment by SJI, to deliver a retrofitable winglet upgrade, by the end of 2017. The fuel-saving winglet upgrade is one of several efficiency improvements planned by Sukhoi, according to Mr. Cauceglia. A team of engineers is also considering aerodynamic improvements and weight reductions to improve fuel efficiency.
The first flight of the Superjet SSJ100 was in 2008, with the first aircraft delivered to a customer in 2011. The total number of aircraft manufactured by May 2016 is 102. Currently, the SSJ100 is certified by EASA, IAC and AR. SJI are also proposing a stretched version of the Superjet, with up to 135 seats, by 2020. The aircraft will be equipped with the same PowerJet SaM146 turbofan engines, but with a software change to improve thrust.
The CityJet aircraft are being delivered in the 98-seat configuration with an exclusive interior designed by Pininfarina, featuring five abreast seating in a generous 32” (813 mm) seat pitch combined with a wider seat and cabin height of over two metres (6.56 ft.). The aircraft has been created with the latest technology and provides a high level of operational efficiency and designed to carry passengers as short-haul and medium-haul routes. The operating range for the basic version is 3,048 km (1,894 miles) and 4,578 km (2,845 miles) for the long range version.
CityJet calls time on its Cork to London City Service
In a statement on 12th May, CityJet confirmed that it is to discontinue its service from Cork to London City Airport, which commenced last October, with effect from 26th June. The decision was not unexpected; as the demand for the service had as Pat Byrne, put it “simply not taken hold in terms of sustainable commercial viability”. This was, he added, “in contrast to what we believed to be well-founded optimism when we launched this route last year.”
He went on: “All the indicators suggested there would be strong support from both business and leisure communities, especially in view of the very significant convenience of City Airport due to its close proximity to the City of London and indeed the West End. There is a cost of this convenience as London City is probably one of the more expensive airports in Europe for airlines from an operational standpoint.
“Unfortunately, with the route now in its eighth month of operation, we have been unable to achieve our passenger load factor and average fare targets. Consequently, our 36 weekly flights failed to gain a market foothold sufficiently to ensure a continuity of this service. This is despite strong and appreciated support from Cork Airport and business organisations in the region, in addition to a significant investment in marketing of the route.’’
On a more positive noted he added that “CityJet is firmly committed to operating its new summer routes form Cork to La Rochelle and Nantes and its charter series to Menorca. While this spells the termination of CityJet flights from Cork to London, the airline believes there are potentially viable routes to other European destinations which could prove particularly attractive in the light of the deliveries of our new Superjet SSJ 100 jets. This is a high tech next generation 98 seat jet with long range capability and superior operating economics.”
In conclusion, Mr. Byrne said that “the airline business demands the adoption of commercial risk in building new routes. When the signs of insurmountable challenge become clearly visible, as they have in our Cork-London City experience, then like any pragmatic business management, action must be taken. The message is clear that the demand for this service is just not there in sufficient volume and at a sustainable price. I am convinced that there are good potential opportunities for CityJet at Cork and we will continue to assess the market in the region and pursue other opportunities if and when they arise.”
CityJet confirmed that it would be in direct contact with all affected passengers who have booked on www.cityjet.com, or via the CityJet Contact Centre, to offer a full refund. Anyone with queries can contact them on 01-5251823 (Ireland), 0207 660 6060 (UK) or email@example.com. Customers who booked via a travel agency will be contacted directly by their agency.
Naturally, Cork Airport expressed its disappointment at the announcement, but was relieved that CityJet has confirmed that its summer services to Nantes and La Rochelle from the airport will operate as scheduled. CityJet is also operating a charter to Menorca for Stein Travel and Lee Travel, which is not affected by the decision to withdraw from the London market.
Mr, Niall MacCarthy, Managing Director at Cork Airport, commenting on the decision said: “It’s very disappointing that CityJet has decided to discontinue its innovative London City route having invested significantly to develop the market over the past eight months”. He added “Airlines make decisions based on the commercial viability of routes and unfortunately the service to London City was not profitable for CityJet. Quite simply, not enough people were using the service despite intensive and exhaustive marketing campaigns. The nature of the aviation industry is that aircraft are mobile assets and airlines make decisions based on economics. In this instance, it simply did not make sense for CityJet to continue this route as it was incurring ongoing losses.”
According to CAA statistics 6,735 travelled on the route in March, whereas around 15,000 seats were available. With a load factor of around 44%, it is easy to see why CityJet was faced with the reality that demand for this route was insufficient to make it a sustainable commercial viability. Figures from the Irish Central Statistics Office from October, give a clearer picture on the performance of the route and a month by month breakdown is given in the table below:-
Many in Cork argued that CityJet had put too much capacity on the route, which currently has a 17 per week frequency in the summer, with three services on Mondays, Wednesdays, Thursdays and Fridays, two on Tuesdays and Sundays and one on Saturdays, as follows:-
WX310 ORK 06:50 – 08:15 LCY x67 WX311 LCY 08:45 – 10:10 ORK x67
WX310 ORK 08:00 – 09:25 LCY 6 WX311 LCY 09:55 – 11:20 ORK 6
WX314 ORK 12:15 – 13:35 LCY x36 WX315 LCY 14:05 – 15:30 ORK x36
WX318 ORK 16:00 – 17:25 LCY x6 WX319 LCY 17:55 – 19:20 ORK x6
CityJet was faced with the classic problem of getting the best utilisation out of its single based aircraft, versus the implications of this on frequency. Obviously, another route might have helped, but then the airline was also trying to provide high frequency to suit the business market. Despite the loss of the CityJet service, the London market will continue to be very well served from Cork Airport over the summer, with 56 flights each week to Gatwick, Stansted and Heathrow and over 629,000 seats available to London.
Obviously now with no based aircraft, operating the two seasonal routes from Cork to France, which are being operated from 18th June to 28th August, with two services a week to La Rochelle and one per week to Nantes, will provide some challenges. The published schedules are:-
WX326 ORK 11:30 – 14:05 LRH 2 WX325 LRH 14:45 – 15:20 ORK 2
WX326 ORK 12:00 – 14:35 LRH 6 WX325 LRH 15:05 – 15:40 ORK 6
WX330 ORK 08:00 – 10:30 NTE 7 WX331 LRH 15:05 – 15:40 ORK 6
Finally, CityJet had also planned a reduction in its Dublin to London City route, which is scheduled to drop from last year’s 43 services a week, to 38 per week this year. This is based on a frequency of seven services on Mondays, Wednesdays and Fridays, six on Tuesdays and Thursdays, four on Sundays and one on Saturdays. In addition to its own schedules primarily from London City Airport, its network includes 14 major European destinations in Belgium, France, Ireland, Italy, and the Netherlands. It has also announced two seasonal routes serving Bastia in Corsica. The weekly services to Avignon and Beziers commence on 25th June and runs until 3rd September.
CityJet is also operating wet lease services on behalf of European airline customers SAS and Air France and a significant level of charter operations. The airline now employs 670 staff with bases in Finland, France, Ireland, Sweden and the UK. To cater for these services, CityJet continues to recruit additional staff, particularly cabin crew. In March, CityJet also opened a new Customer Contact Centre in Swords, Co. Dublin, creating 18 new jobs. It replaced its previously-outsourced facility which was located in Mauritius and the new centre operates from 07:00 to 19:00.
CityJet’s agreement with SAS and its acquisition of new Bombardier CRJ900s
In a piece posted on 11th April, see here we noted that CityJet had entered into the agreement with SAS – Scandinavian Airlines (SAS), last October, which will see the Irish airline acquire eight new Bombardier CRJ900s. These will supplement the 12 CRJ200s SAS already operates, through its subsidiary, Cimber. Bombardier has confirmed that Trident Jet (Jersey) Limited, a sister company of Falko Regional Aircraft Limited, is the actual customer that signed the firm purchase agreement for the eight CRJ900 aircraft, together with six options last October and which are assigned to and operated by CityJet on a wet lease basis on behalf of SAS. It also confirmed that Trident Jet (Jersey) Limited had exercised four of its options during April, also to be operated by CityJet. Based on the list price of the CRJ900 aircraft, the value of the exercised options for four CRJ900 aircraft is approximately $183.9 million (around €165 million). To date seven aircraft have been delivered starting with EI-FPA on 18th March, followed by EI-FPB on 25th March, then EI-FPC on 1st April, EI-FPD on 9th April, EI-FPE on 22nd April, EI-FPF on 28th April and most recently EI-FPG on 18th May.
In an unrelated move, SAS has withdrawn these ten CRJ-900ERs Cimber wet-leased aircraft from service, pending the conclusion “of technical inspections of all their landing gear assemblies”. The airline confirmed in a statement that the aircraft have been out of service since 21st May. OY-KFH (msn 15240) is the only Cimber aircraft not affected by the temporary grounding. The sudden reduction in capacity has seen a number of flights out of Copenhagen cancelled over the past few days including: Manchester Int’l, Bergen, Helsinki Vantaa, Dusseldorf, Brussels National, Vienna, Amsterdam, Newcastle, Aberdeen Dyce, Munich, Stuttgart Echterdingen, and Hamburg Fuhlsbüttel.
Separately, to support the CRJ900 fleet, CityJet had earlier confirmed that it had entered into a long term contract with Fokker Services, for its ABACUS programme. Fokker Services will provide Nose-to-Tail PBH component management; Lease, Availability and Maintenance services for the aircraft. Commenting on the agreement Eugene Quigley, GM Technical of CityJet said; “CityJet is pleased to have signed the ABACUS agreement with Fokker Services. The nature of our business mandates efficiency, flexibility and reliability. Therefore, we see great value in the Fokker Services’ ABACUS programme and know that their support will help us to provide the highest level of dispatch reliability to serve our customers.“ ABACUS is a well-known and proven Component Availability programme, serving worldwide more than 30 operators of regional aircraft such as all Fokker types, Bombardier Dash 8 aircraft and CRJ series aircraft. It focuses on cost predictability and increased component reliability for more time on-wing, by providing ABACUS members, with access to extensive exchange pools located in the USA, Europe and Asia, supported by a 24/7 staffed AOG desk.
CityJet’s future looking brighter
With the delivery of CityJet’s fleet of Sukhoi SSJ 100-95 Superjets now underway and its wet lease agreement with SAS to operate a network of regional routes from Helsinki, Oslo and Stockholm, now up and running, CityJet’s future is looking brighter. At the time of the announcement of its agreement with SAS, CityJet said it was in talks with two undisclosed European regional carriers over the possible start of so called ‘white label’ flights for them. It was expected that the airline would be in a position to finalise an arrangement with at least one of these prospective carriers, during the first half of this year. There has also been repeated speculation of a tie up with Stobart Air, which would in fact see CityJet flying for Aer Lingus. However, nothing definite has so far emerged.
There have been some tough restructuring measures implemented by German turnaround specialists Intro Aviation’s shortly after they took control of the airline on 30th April 2014. At that stage it became a wholly owned subsidiary of Romscope Limited, a company controlled by INTRO Aviation GmbH (‘Intro Aviation’), following the completion of a sale transaction by Air France Finance. CityJet managed reduce its pre-tax losses by 21% for the financial year ended 31st December 2014. The loss of €30.556 million in 2014 compared to the €38.607 million the previous year should be seen in the context of a number of significant events. During the year, the company assessed the carrying value of Its Investment held in its subsidiary, VLM Airlines, N.y (‘VLM’). This resulted in an exceptional impairment charge of €10,867 million (2013: €1.318 million) based on the underlying value of VLM. This investment was subsequently sold to the immediate parent undertaking, Romsoope Limited, for its carrying value of €1. It also completed the adaptation of its business model to transform all its hub operations at Charles de Gaulle to contract flying for Air France. This change from Franchisee operations to contract flying reduced the top-line turnover by over €9 million. Turnover for the financial year was €1 77.3 million (2013: €220.5 million). The company recorded an operating loss, before exceptional items and net finance charges, of €22.7 million (2013:€36.9 million).
Further details are found in the following table:-
In January 2015, CityJet announced the sale and leaseback of seven Avro RJ85 aircraft and said its restructuring plans were progressing ahead of schedule. It also stated that it continued to experience improving trading conditions. This was due in part to the sale of loss-making VLM. In spite of these improvements Intro Aviation decided to open talks with investors, which were said to be “keen on acquiring the carrier”.
On 24rd March of this year, it was confirmed that the airlines founder Pat Byrne and a group of private investors had purchased the airline. Mr Byrne founded CityJet in 1992, prior to its first flight in 1994. He resigned as chief executive in 2000, but had remained as non-executive chairman of the group until its sale to Intro in 2014. He declined to reveal precisely who his new co-owners in the airline are, other than to say that, they were “European experts in aviation finance”. He also declined to say what was paid to Intro Aviation, who had purchased CityJet for virtually nothing. He did confirm that CityJet is likely to pursue a stock market flotation in two to three years’ time and expects annual turnover to jump to about €300 million, within two years, from the €177 million it generated in 2014.
CityJet extends sponsorship deals
CityJet are well known for their sponsorship of Leinster Rugby, a partnership that was renewed in 2013, and its most visible sign is BAe RJ85, EI-RJX which wears a special Leinster Rugby Club colour scheme. Sponsorship is a very important part of CityJet’s marketing strategy and more recently, and indeed more locally, it was named earlier this year as Official Airline of the country’s largest and most successful rugby sevens event, the Kinsale 7s, which took place over the May Bank Holiday Weekend. Kinsale 7s attracts teams from across Ireland and internationally and has grown in participation since its inception 28 years ago. Sevens rugby has grown dramatically in popularity in recent years and Ireland now fields both men and women’s teams.
Separately on 15th March, CityJet announced that it had has been appointed Official Airline Partner of the Football Association of Ireland. The announcement was made at the FAI headquarters at Abbotstown, Dublin, which was attended by the FAI Chief Executive John Delaney, team manager Martin O’Neill and Pat Byrne, Executive Chairman, CityJet.
As part of its role as the Official Airline Partner of the FAI, CityJet will fly the squad to the European Championships in France this June. In addition, Republic of Ireland Season Ticket holders will receive a 10% discount on all CityJet flights, as part of the partnership between the airline and the FAI.
Finally on 5th May, CityJet announced that it would become new sponsors of both London senior football and senior hurling championships. London GAA is affiliated to Ireland’s major national sporting organisation, which boasts hundreds of thousands of players and members, mainly in Ireland but also with affiliates across the globe. Making the announcement, Cathal O’Connell, CityJet’s Chief Commercial Officer, said: “We are delighted to sponsor competitions for an organisation that is at the centre of Irish life for so many in London and offers a home from home. The GAA helps in linking Irish people together when abroad but also in integrating them with their neighbours and the wider community.”