Let the Germans to take over Lot and bring the airline back on the European aviation map!

For quite some time, my Airline interest has particularly stopped at Warsaw International airport, mainly because the state-owned airline Lot which my mind has picked as the target, has its biggest and the only hub in Poland. I heard a lot about this carrier, whether it was positive news such as – and I quote” First European Airline to fly the Boeing 787 Dreamliner” or the negative. Sadly, the latter was more common to hear! Actually, this Airline has been struggling for many years showing negative annual results – although, occasionally we noticed a small plus on financial reports. But that was mainly due to selling its asset rather than income from a well prospering business. Thus, no one needs to be a medium to figure out that the Polish Government played an increasingly important role in supporting or by re-framing the word, helping this carrier to survive by almost bombarding Lot’s bank account with hundreds of thousands sacks of money! I truly believe this trend would have easily carried on if the EU commission didn’t decide to provide significant aid for the struggling company for the price of immediate reforms and wise restructuring its firm. Or to simplify, to make its operating cost more efficient and reduce the unit-cost! Oh, and of course, no more concession for international flights from any other Polish airports, except Warsaw as well as all other hubs outside the capital must be closed! In my humble opinion, this was a big favour for Lufthansa especially in Krakow where Lot since the deal was reached, can’t provide direct flights to/from Germany where as we know, there is a big Polish community. However, I don’t want to concentrate on that – arguably I feel there is a way more important field of interest.

 The Polish aviation market has been almost a gold mine for budget airlines since the country joined the European Union and allowed Poles to travel freely and more importantly, work abroad – which essentially means, earn money and afford to pay for an airline ticket.  EasyJet, Ryanair or Wizzair are the strongest LCC players in Polish market offering a high number of inbound and outbound connections to other EU states – the UK is firmly the top destination in the number of total flights.

I have been watching how the aforementioned players have been successfully expanding their services across major and regional airports and from time to time ask myself, why can they, while Lot can’t?

Why is it so easy for them to open new routes, attract more passengers? I think there are too many whys in this part, so I am kind of willing to skip it.

My first theory about their success was – price! Second theory – flexibility to fly to random Polish airports (as I mentioned above, Lot due to EU restrictions, can’t provide international flights outside Warsaw Chopin airport)

Whilst the second option seems to be pretty right, I’m not so sure about the first one. Here is the explanation!

I decided to do my own quick market research for both Warsaw airports and compare ticket prices to the UK for Ryanair, Wizzair – both airlines offer direct connections. And for a contrast I checked Lufthansa flights – with one stop. The main reason why I chose the British destination is a high number of Polish immigrants already living in the UK.

Ryanair – all flights from Warsaw Modlin (regional airport – none Lot’s services to/from the airport)

Warsaw Modlin --> Manchester (02.08.14) ca. £152

Manchester --> Warsaw Modlin (09.08.14) ca. £174

Warsaw Modlin -->Liverpool (09.08.14) ca. £118

Liverpool -->Warsaw Modlin (09.08.14) ca. £174

Warsaw Modlin --> Glasgow Prestwick  (02.08.14) ca.£180

Glasgow Prestwick <-- Warsaw Modlin (09.08.14) ca.£142

Wizzair – all flights from Warsaw Chopin airport ( Lot main Hub)

Warsaw Chopin --> Liverpool (03.08.14) ca.£123

Liverpool  <-- Warsaw Chopin ( 10.08.14) ca.£100

Warsaw Chopin --> Glasgow International (01.08.14) ca.£179

Glasgow International <-- Warsaw Chopin ( 08.08.14) ca.£100

Luftansa, part of Star Alliance – all flights via Munich or Frankfurt

Warsaw Chopin --> Munich--> Manchester (02.08.14)

Manchester--> Munich --> Warsaw (09.08.14) Total price ca.£223

All of the above examples are showing that the price between Warsaw and the UK market isn’t as low as someone could think when they hear the name of one of the LCC. But what is more, even by going for a premium Airline which in my opinion is Lufthansa, it would be cheaper than for Wizzair or Ryanair  including the return flight)

So here is the question – Why can’t Lot open new routes to, for example; Manchester, Birmingham, Glasgow, Liverpool and bring on board many Polish, British customers who would definitely pay £150 or £180 for a flight with checked-in baggage, extra leg room, free snacks and Polish/English speaking crew? Maybe I’m too blind and I don’t see certain obstacles that for the Polish national carrier are too difficult to avoid or tackle? But, if for others those routes are prospering well, so what is stopping Lot adding new destinations to its list?

The only thought suggesting a hypothetical answer is: apparently nobody wears the trousers in Lot’s office, thus it’s only a matter of time before the airline will die!

Bottom line – Don’t wait too long with decisions making as without brave changes, you  gonna look like Death Valley waiting for a drop of rain

Summer trip

All of a sudden, warm summer has arrived in Europe and shockingly, as well as in my Island!

Without thinking too much, I decided to pack my little suitcase and travel down south – Dover. However, as I almost live in the heart of England, B’ham I couldn’t simply teleport myself to my destination point. Thus, I decided to check how much it would cost me to get there by using public transport, particularly a train!

As my laptop was already on, I simply typed www.nationalrail.com updated my journey details, and that is where my story starts;

A return trip for Monday 21^st of July – Outward 6:10, Return 16:45 for total price of £242!!! It took a while for my usually quite fast thinking brain to adopt the fact that this journey is going to be more expensive than some people earn on a weekly basis based on a national minimum wage in England!

As it stands now the minimum wage for people whose age is 21 or above, must be no less than £6.31 per hour. So realistically, If we assume that a person works a standard 40 hours per week in 2014, then the math is going to be;

Gross income per year  £13,124.80,weekly £252.40

It looks great doesn’t it? However, now it’s time for Mr Cameron to take his portion of money out of taxpayer’s pockets – hence, the math must carry on

Gross income per year, £13,124.80 - Taxable Income £3,124.80 – Tax £624.96 – NI £620.26

So that equates to £11,879.58 which weekly will be £228.45

Thus, as the math shows, a traveller with a minimum wage will have to work more than a week to afford a three hour and approx. 212 mile trip!

Since I discovered how much my mind wants to learn or explore, I had only one option – check what it would look like, if I were looking for a similar trip somewhere in Continental Europe.

My first choice was pretty much evident – Germany and the Deutsche Bahn

Journey from Munich to Frankfurt on the same day and time as mentioned above which is also a comparable distance – approx. 243 miles! Ok, to be more precise – a bit further.

Total fare – 148,00 EUR!  Only because I like to stay classy - no matter what,  I won’t paraphrase what my mind said loudly seeing this price. The only question I’m dare to ask here, is why the heck I used the currency exchange calculator?  £117,16 – Huston we got a problem!!!

Psychologically, I had already reached the level of self-destruction. I almost felt like I’m on a suicide mission. Nevertheless, my research continues.

Amsterdam to Brussels – same story, £124.50

Paris to Lyon - £115.50 (288.39 miles)

...................

I shall unpack my suitcase and turn on the Discovery channel as I’m not going anywhere – Oh, and there is a documentary movie, how to travel in time – coincidence? 

Monday's thought

The debate about raising minimum wage in the USA is still on the go.  President Obama, has been desperately sharing his idea about the positive aspects of introducing the $10.10 per hour. Recently, his philosophy has been strongly supported by a new mixture of statistics, graphs, data, and etc showing how he believes that this new proposal would boost the economy.

What is more, he’s trying to encourage his supporters to not be afraid to challenge the elected local representatives with questions such as;  “So ask your senator, ask your representative in the House, do you support raising the federal minimum wage to $10.10 an hour. If they say yes, tell em good job. … If they say no, be polite, don’t just yell at them but say, ‘Why not?’

In theory, that looks like a great plan to utilize this proposal and tick another box on Obama’s “things to do” list. Just like he did after implementing Obama Care. However, maybe he should let the economy decide for itself what is best? Or perhaps, the recent data from Washington which is showing the highest number jobs added in the past two months (288,000) since April 2008, should make the president to hold on for a moment, and re-think the whole idea – that can be done with a Cuban cigar and a glass of whiskey.

Sometimes I can’t keep up with all the websites where each say something else – clearly this debate isn’t going to be over anytime soon!

In the meantime the German Parliament adopts minimum wage! Yes that is right. The German lawmakers approved the country’s FIRST national minimum wage, despite complaints from trade unions, pointing out too many loopholes in the act. After months of tough negotiations, the minimum wage equivalent to $11.61 has been approved. The reform is undoubtedly a victory for Chancellor Angela Merke and her allies.

So Mr Obama, I shall suggest that you pick up the phone and call Mrs Merkel for a little advice... Oh, damn it, I forgot that you already know everything – NSA is working 24/7 obviously.

Bottom line - practically, the US can’t have Angela Merkel on its board – but hey! There is a suggestion, Hillary Clinton. 

Additional point - C

 About 4 weeks ago I read a book about Globalization – I felt like this would be a great addition to ongoing Business news. The first chapter took me through ( in details ) the History of Globalization. A huge portion of details to be memorized thus, my brain decided to go on strike almost after 20 minutes, but before that happened, I managed to take a few notes. Which are;

Globalization comprises two components

  a)      Modernization – involves the upgrading of technologies and living standards that occur  as ideas, products and services

  b)    Westernization – Involves the emulation of lifestyle and behaviours of Western societies most notably those of North America and Western Europe.

Surely I accepted those two aforementioned points and quickly turned the page. Although, within a few seconds a thought came to me, to be more precise – I reminded myself of a quote which said “globalization is really another name of the dominant role of the United state” That quote was said by Henry Kissinger - the former US secretary of state. No surprise at all! 

There would not be anything special about it if, on the same day, I didn't watch news relating exactly to the developing topic.- Is China about to overtake US as the world's largest economy?( BBC, 2014) That headline appeared on the official BBC website making me think that the book is like a good story about something someone said or happened in the past. But what about the present day, not to mention the future!

So as it stands now, I kind of dare to add another point which in my humble opinion, should be written in bold;

   c)      China-zation – involves all the facts that take China ahead of the USA and following economies.

To conclude – we can’t only rely on books; we must pay attention to on-going news more than ever before, as the XXI century business, changes quicker than the British weather!

       Bottom line – don’t let your brain to become an old Museum

Begining

Before I started writing this very first post on my Blog, I had a hundred other versions of my introduction – none of them were right. Thus, off the top of my head I’m going to say a few words about myself and then get to the business. At least I will try to stick within business issues.

For someone who will be going through my posts - I am an International Business student who decided to leave his Logistics job, and join the Uni with an enthusiastic assumption that within three years time, after my graduation, I will be in a better job hunting position, than I was in before I made that step.  However, the more time I spend at the University, the less convinced I’m about my theory.