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Bernard Gustin, CEO, Brussels Airlines

Bernard Gustin, CEO, Brussels Airlines

» Interview | Monday, September 17, 2012 • Air News Times
How does the current crisis affect your daily operations?

BG: It’s an everyday business where basically you have to take into consideration the capacity and  where you put this capacity. I think there are two different types of crises. There is a crisis that you believe it will stay and a typical example of that is the fuel: we know that the fuel-price will not go down and we need to organise ourselves to offset higher fuel costs in the future so, what we do is we reduce our capacity in Europe and, to cite an example, we stopped some summer destinations in the winter that in the past were still profitable because the variable cost was below a certain threshold. In addition, we are  reviewing our fleet by harmonizing it and by introducing at the same time some turboprops that are less fuel consuming; and within a working-group, we look for additional structural steps to enhance our fuel-efficiency .

Then, you have the other type of crisis like the one of last year at the Ivory Coast; in this case you know that it’s more temporary, so you remove capacity at the right moment and come back when it’s necessary. Our Abidjan office was completely destroyed, there was nothing left but then later on we just restarted and today we are flying daily where we used to  fly five times a week. So it’s very important to make the distinction between these two kinds of crises, knowing that’sthe job of any airline to deal on a daily basis with crises.

What are your predictions for the rest of 2012 and 2013?

BG: Well, I think we will remain in a very difficult and challenging environment for many reasons: first, we have to adapt to higher fuel prices, and second, the lack of sufficient support and the level playing field-issue from the Commission are critical and certainly do not help with competitors being able to enjoy or play on this level playing field difference.There are some LCCs in Europe who should have a clean support from their region and I refer also to the Middle-East carriers. Again I don’t blame them, I rather envy them.We are very correlated to the economic development of Europe and we see today that the European economy is not exactly the leader in the world.

What type of passengers do you focus mainly on, business class, economy and what is the percentage of each?

BG: No, we don’t focus on any particular type of passengers. I think that within Europe the mere point-to-point business class passengers don’t exist anymore. We are an airline that basically focuses on three markets, the first market is Europe and there we want to be present on a Europe point-to-point basis for all types of customers serving the cities we are serving with a specialty on what I call the west coast of Europe (UK, Italy, Spain, France,  where we go beyond the capital cities). Second, we have Africa with twenty-one destinations and there of course we have a mix of business and leisure travelers. Business Class is important for this segment and for that reason we have reviewed our cabin offering a completely new product.

From June 1st we have started a third market, the US east coast with New York as a gateway and we are offering a very strong product, by far the best of its Class in the market with a brand new cabin and valuable price, for the point-to-point businessmen, leisure persons but also for the people doing Euro- and Africa connecting via Brussels.

Do you plan also to offer other destinations in United States or in North America?

BG: Yes, this is our strategy but first we need to succeed in New York; and if we succeed, I will feel strong to go back to my board and propose other destinations at the east coast of America as it makes full sense and as it’s part of our vision and strategy; but we should first win the match before starting another one .

What is the percentage of connecting passengers for Brussels in total?

BG:  We have doubled this percentage., It used to be  very low- at about 12-13%- but thanks to the collaboration with Star Alliance and the Lufthansa Group, we are for the year 2012 at 23%.

How important is to be part of the alliance?

BG: Well, it depends on the strategy you have..We have a hub strategy because Brussels has the potential to be one  with its large catchment area and its network. However, while you can do everything with your hub and serve as many destinations as possible, you also still need to have partners. Since we are part of Star Alliance, Air Canada operates a Montreal-Brussels route, United is going to operate Chicago-Brussels and Thai recently started  with a Bangkok-Brussels connection. As such, it’s not part of our present strategy to start operations in Asia, but as there are some people in Asia coming in from Bangkok and who are willing to proceed to the rest of Europe, Brussels provides them  a perfect gateway to Europe. It’s extra business for us and it makes the airport even more attractivewhat is  excellent news for all involved – including the passengers. Concerning Canada, we are not sure yet whether we will start one day with our own operations. . At present,  we don’t have the “savoir faire” and so we are closely working with our partner Air Canada. During this cooperation, we have seen that a high proportion of the passengers are continuing to Africa but also to the  French provinces; so for us it’s only positive.

How important is to be under the Lufthansa group, that is a strong European brand and also to be part of the Miles and More programme

BG: It’s of utmost importance, knowing that Lufthansa goes along with Star Alliance, because just the fact of being a member of the allianceis of course positive but  it’s also good for a small airline such as Brussels Airlines to have a very strong godfather when you enter such a big group. In addition we are not only a Star Alliance member but we are also part of the A++ Joint Venture, which is a joint – venture between  United, the Lufthansa Group and Air Canada. on the transatlantic route.As a small stand-alone carrier , I am not sure whether we would have had the chance to be member of a A++; however  as a Star Alliance carrier we have. Our godfather Lufthansa was and still is with us all along and wants Brussels Airlines to participate, what is extremely valuable to us.

And what about the Frequent Flyer Programme (FFP), that Lufthansa used?

BG: Well, that’s the same logic. We had a very good frequent flyer programme and I was very proud of it but it had one drawback: it was not global. We would never have had a global strategy. I think it would be a mistake to believe that a small passenger airline can start to fly on a daily basis to Tokyo, Beijing, Dubai, Cape Town, and wherever else. But, our customers and main  competitors, have interesting programmes and if we come with one  that is basically a single programme it puts us at a competitive disadvantage. The fact of offering Miles & More makes us offer an even more attractive programme that is global and if our passengers want to spend their miles to go to any “exotic” destination,or exchange them against a wide choice of other goodies they can do so whereas in the past they couldn’t.

As a chairman of the Association of European Airlines, how do you predict the European environment to be in the next year?

BG: Well, I think there will most likely  be more mergers but I have to be prudent in my comments. A bankruptcy is part of the life of a private company and every sector knows bankruptcies, so we shouldn’t be shocked every time there is one, but we should make sure that we don’t focus on the individual cases. If some companies are not well managed or operate on markets too small to sustain them and that their main problem is to survive, why should they continue their operations?. But what strikes me is not that companies disappear, but that the overall European aviation industry has a profitability of 0.3% while for the rest of the world this figure is 1 to 2% better and that’s the real issue because that means there is something in Europe that makes that airlines are less profitable. Given that, except for the Middle East area - and I am not sure even for that – we all have paid our aircraft the same way, we are not having such difference in terms of economic vitality and we pay our fuel at the same cost. The difference must then come from somewhere else and that somewhere lies in the fact that there are far too many airlines, that there is fragmentation, that Europe is far too complex and creates distortions and that, sorry to say so, Europe is part of the failure of its own European airlines. Now, again, it wouldn’t be the same if it was not a strategic industry but I am convinced that European airlines are critical, as they are important vectors for the development of the European economy. As such,  the day  - and this is what some people think- we will have an industry run by foreign carriers and only some point-to-point carriers in the country I think we will regret it. I take my example from the case of Brussels Airlines in Africa: if we disappear one day, well, they won’t be a hub in Europe anymore that connects Europe with Africa as we do. That’s a fact of life, the hub will be in Dubai, in Istanbul or I don’t know where but it won’t be in Europe anymore.
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Yorumunuzu Sendin

Unhappy write

10/24/2012 12:07:11 AM

I think that the problems that Bernard Gustin has at Brussels Airlines are more fundamental, his customer services team (so called) are a complete joke!!
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