A couple of weeks ago it was announced from one day to the next that NIKI, the Austrian low cost carrier, would cease operations.
Niki was a wholly owned subsidiary of airberlin, and airberlin ceased operations in October, after Etihad withdrew their financial support. Despite that, Niki has continued to operate as usual. That’s because they received funding from Lufthansa, as Lufthansa was planning on taking them over in order to expand their Eurowings division.
Unfortunately that plan collapsed, as the European Commission said that they wouldn’t approve Lufthansa’s takeover of Niki over concerns of lack of competition. As a result, Lufthansa withdrew their bid for Niki, and stopped funding them, so they were forced to cease operations.
Yesterday we learned that IAG, the parent company of British Airways, Iberia, Aer Lingus, Vueling, LEVEL, etc., was planning on taking over Niki. They were the only remaining bidder for Niki’s assets. Well, this is now official.
The FT is reporting that IAG will acquire Niki, and will pay a total of €36.5m (including €20m to acquire the carrier, their 15 A320 aircraft, and their slots, plus €16.5m of liquidity). IAG’s strategy here is brilliant. Niki will become part of Vueling, which is IAG’s Spanish ultra low cost carrier. They plan to employ about 740 former Niki employees to run the operation.
Here’s what Willie Walsh, IAG’s CEO, had to say about this takeover:
“Niki was the most financially viable part of Air Berlin and its focus on leisure travel means it’s a great fit with Vueling. This deal will enable Vueling to increase its presence in Austria, Germany and Switzerland and provide the region’s consumers with more choice of low-cost air travel.”
This was very well played on IAG’s part. Vueling is to IAG as Eurowings is to Lufthansa Group, so Vueling was basically able to snatch Niki out of Lufthansa’s hands, and allow them to quickly grow in a market where they were previously weak (and where the Lufthansa Group had a stronghold). Presently Vueling has 107 planes, so adding 15 planes is significant, but more important is the new region that it easily gives them access to.
While Vueling has been successful, most of their flights have been further west in Europe, so having a hub further east should help them expand and compete with Eurowings.
The bad news is that since Niki will be part of Vueling, it’s unlikely that Niki will join oneworld, or be a oneworld affiliate airline. Oneworld has a big hole in Europe with airberlin missing, and unfortunately Vueling isn’t part of the alliance. So you won’t be able to earn or redeem oneworld miles, or take advantage of your oneworld privileges, when flying with Vueling.
So the IAG European monolith is about to drag yet another good airline down to its swamp level (see BA, service cuts at).
Vueling is cheap but you get what you pay for - everything is extra and cabin ‘service’ very basic. The state of its A320s reminds me of Pan Am’s Pacific 747 fleet just before they gave up and sold up to United in 1986 - ancient, scruffy, unkempt - you often see...
So the IAG European monolith is about to drag yet another good airline down to its swamp level (see BA, service cuts at).
Vueling is cheap but you get what you pay for - everything is extra and cabin ‘service’ very basic. The state of its A320s reminds me of Pan Am’s Pacific 747 fleet just before they gave up and sold up to United in 1986 - ancient, scruffy, unkempt - you often see them with mismatched engine covers (they have both engine types), grease streaks across the white paint. In contrast, Niki kept its planes immaculate, like Air Berlin and Lufthansa.
The move is strategically sensible for Mr Walsh, I’d love to hear what Mr Lauda thinks.
I actually quite like Vueling. For the price of LH/LX's "light" economy fare (i.e. without luggage and seat reservation) you can book VY's "excellence" fare, which consists of front row seating, middle seat blocked, checked bag and a snack. VY's "Excellence" is basically equivalent to european style business class - but for a much lower price.
The only downside is that you cannot book "excellence" und the BA code/ticket.
@Henry LAX
I'm with you there. You have to wonder to really wonder why Transvia left MUC even though their flights were always fully booked and they had load factors of over 90%. With the demise of Air Berlin forseeable you'd have expected Transavia to stay in MUC.
Why didn't (hasn't) Norwegian jump(ed) at the chance of launching new long haul flights from DUS? I wonder if IAG will be tempted to launch some...
@Henry LAX
I'm with you there. You have to wonder to really wonder why Transvia left MUC even though their flights were always fully booked and they had load factors of over 90%. With the demise of Air Berlin forseeable you'd have expected Transavia to stay in MUC.
Why didn't (hasn't) Norwegian jump(ed) at the chance of launching new long haul flights from DUS? I wonder if IAG will be tempted to launch some Level flights from DUS. Either way, Lufthansa has such a stronghold in this market it's unbelievable
@Lukas
Since flights have been grounded they won't resume. Niki/Vueling is expected to start flying as from March. Just the same way Easyjet has also had to wait about 2months to start operations - this ofcourse to allow the takeover process to be done.
Does anybody know if there is any chance that already bought Niki tickets might become valid again and the (Niki) flights are going to be operated like planned, e.g. from the beginning of January? Or is that out of the question?
OWE get lounge access flying vueling if bought under a BA code. (In addition to what Greg said about BA Gold)
Oliver - I just checked the Munich to Barcelona route and on most dates I can see in the near future, Vueling is over 40% cheaper than Lufthansa...
if you have some fantasy that Vueling would somehow magically have some strong centrally located hub for omnidirectional routing at VIE, let's just say RECENT history has given us examples of what happens when you can try to challenge LH Group in their home turf -
Air Berlin
Niki @ VIE
Transavia @ MUC
The only real challenge to the 3-way oligopoly in Europe is Norwegian (*if* they can prove long-term financial sustainability),...
if you have some fantasy that Vueling would somehow magically have some strong centrally located hub for omnidirectional routing at VIE, let's just say RECENT history has given us examples of what happens when you can try to challenge LH Group in their home turf -
Air Berlin
Niki @ VIE
Transavia @ MUC
The only real challenge to the 3-way oligopoly in Europe is Norwegian (*if* they can prove long-term financial sustainability), which is even more telling regarding LH Group's grip that despite Norwegian launching long-haul from various IAG and Skyteam hubs, they have yet to launch *anything* long-haul from any one of FRA-MUC-ZRH-VIE-BRU.
@vlcnc, agree to your comment about Vueling. Such movements to the super LCC are just tearing down the total quality of the entire market. And for people who don't have an ultra flexibilty on their travel plans, I don't see much of price advantage with those LCCs.
For instance on the MUC to BCN leg, Vueling charges quite often regular fares, which are almost same as by the quality carriers, but offering then this kind of crappy (non) service.
Since some months ago you can earn and spend Avios flying with Vueling as they joined the Avios system. As they are part of Avios you can Combine your Avios to your BA Executive Club or Iberia Plus account and let the game start.
This is very bad news for flyers in those markets. Niki was well known for its great service before Air Berlin took over and even than its parent once it had. Vueling is easy one of the worst airlines in Europe - it's worse than Ryanair and gets away without much flack, which it is very much deserving of. Their customer service is atrocious and they have utter contempt for their passengers.
My partner...
This is very bad news for flyers in those markets. Niki was well known for its great service before Air Berlin took over and even than its parent once it had. Vueling is easy one of the worst airlines in Europe - it's worse than Ryanair and gets away without much flack, which it is very much deserving of. Their customer service is atrocious and they have utter contempt for their passengers.
My partner is Italian and Italians fear Alitalia going bust not because Ryanair will proliferate but because of the fear Vueling might become dominant thus leave people dominant on them. Be very afraid, it really tells you something about Alex Cruz and his damaging of BA and when you experience where he came from!
BA Gold card holders can use BA lounges if flying with Vueling on a 125 ticket.
Vueling is a redemption partner of Iberia as well, so these flights will be able to be purchased with Iberia Avios.
I thought it was now possible to earn Avios with Vueling/BA codeshare flights. To the extent that arrangement is extended you will presumably be able to credit to British Airways Exec Club etc and then use those miles to redeem on other OW carriers.
The European got it right. Low cost carriers under the same umbrella instead of basic economy fares. Scott Kirby should be shot after the basic economy fiasco goes away.