The President’s Shuttle

Mr. Trump operated his own airline

Following the recent US presidential election, it is worth noting that the new President-elect Mr. Donald Trump was, at one time, owner of his own airline.

In 1989 Mr. Trump established Trump Shuttle, Inc. operating as Trump Airlines, following the purchase of Eastern Air Shuttle. The carrier operated scheduled domestic flights onboard Boeing 727s from New York La Guardia airport (LGA) to Boston, Washington and Orlando. The premium full-service airline operating under IATA designator code TB, featured luxury interiors redecorated as maple wood veneer with gold-coloured lavatory furnishing.

Mr. Trump had previous experience in aviation industry with operating regular helicopter services to Atlantic City, as well as those from downtown Manhattan to the La Guardia Airport.

However, the Trump Shuttle ceased its operation in 1992 when it was merged into a new corporation, Shuttle, Inc., which began operating as the USAir Shuttle, and subsequently merged into US Airways (IATA: US). US Airways also ceased operations in October 2015 and merged with American Airlines (IATA: AA) – one of the founding members of the Oneworld alliance.

– JG –

25 Years of Transition: Airlines of the V4 Countries

For the first issue of the JetGazette we interviewed Tomas Levy, airline industry specialist & consultant about the development and mixed fortunes of the legacy airlines of the Visegrad Group countries (V4), which celebrated its 25th Anniversary this year

– JG – PRAGUE | INTERVIEW

How would you describe the current state of the commercial aviation in the Visegrad Group’s countries?

The V4 Group [formed by Czech Republic, Slovakia, Hungary & Poland] celebrated its 25th anniversary during the Czech presidency earlier this year. The Central & Eastern Europe enjoys relatively steady and solid growth in both – the air traffic and capacity. However, the V4 countries don’t represent the whole CEE region. If we take a closer look at the V4 countries [originally V3 till the dissolution of Czechoslovakia in 1993, the Czech Republic and Slovakia became independent members of the group], then we see these contribute significantly to the overall solid performance and growth of the CEE region’s aviation sector; however, these are not facilitated by the legacy or flag carriers of these nations.

Why is that so? And who are the key players then?

The main reasons are indeterminable business models and strategies of the [V4’s legacy] airlines as well as their degree of adaptability to the industry’s downturns, turbulent periods and challenges. This unfortunately, applies to all legacy carriers [of the V4], except for the recent concept of the flag carrier of Poland. The main benefitors are the 3 European consolidated airline groups, the flag carriers of Turkey and Russia respectively, on one side, and on the other, of course, the Big Three from the Arabian Gulf. In addition, the low-cost carriers also have significant market share, but these are not part of this assesment.

So the flag carriers should have taken a different path? Weren’t their governments interfering too much?

Speaking of the time 25 years ago, in 1991, all 3 legacy and fully stated owned airlines [of then V3’s countries] had pretty much the same starting position. They had their first western-built aircraft joining their fleets, they had global networks. Whereas now, in 2016 those who still exist, and again except for Poland, they have relatively very small networks which can’t even be described as regional or niche networks. Correspondingly, their fleets have downsized dramatically. Back then, around 1990/1991 the flag carrier of Czechoslovakia had an impressive presence and network spanning from the Americas (Mexico City, Havana, New York) to the Sout East Asia (Hanoi, Singapore or Jakarta), to name just a few, covered most of the Middle East, North Africa and, of course Europe. The Prague-based airline probably had the most potential to become a truly global airline. While the ones of Poland and Hungary followed, served several destinations in the North America, Asia and the Middle East – connecting to their strong European networks and vice versa. The privatization processes were initiated in the early 90’s with mixed results, some are still ongoing to this day or were finalized just a few years ago.

Who are the winners and where do the others stand?

Out of the V4 countries only 2 still have their flag carriers – those being Poland and the Czech Republic. Slovakia had its national airline operating only from 1995 to 2007, while Hungary’s legacy airline demised in 2012 after 66 years of continuous operation. As already indicated, the flag carrier of Poland – the current host of the V4 presidency – has recently embarked on an international expansion strategy that is based on rational and solid fleet and network planning. It is followed by the flag carrier of the Czech Republic, which unfortunately doesn’t enjoy the similar positive prospects.

As we are talking in Prague – Could you elaborate on the Czech Republic’s flag carrier and its story?

The airline is one of the world’s oldest carriers and now in its 93rd year, which is very impressive. By 1990, the airline served more than 55 international destinations, on 4 continents, the induction of Western-built aircraft was started and the carrier was poised to become a truly world class international network airline. This trend of focused growth continued until approximately 1999, when it [the growth stopped]. Although already since the mid 90’s the airline’s long-haul network had a much greater emphasis on the North America market, unwisely leaving important markets of Asia. That strategy not only proved to be wrong, but was further challenged by the 9/11 events. At that time, and while the carrier was still financially well off, it shoud have immediately focused on expanding and nurturing the existing and exploring new Asian and Middle Eastern markets. However, the opposite was initiated – slowly pulling off from all long-haul Asian destinations and subsequently shifting the capacity and sticking onto North America. Then the airline went through mixed states, at one point (around 2003/2004) it seemed the airline would start growing again, started acquiring new fleet and opening some interesting destinations. Sadly, soon after, the carrier started to decline and downsize. Due to various reasons, including the industry’s and overall economic downturn, the carrier was on its sink into severe debt. Selling-off valuable assets, downsizing the fleet and laying-off staff seemed to be the main strategy until recently. In 2012, the government issued another tender for a sale of the state owned carrier after previous privatization attempts had not been successful. Year after, in 2013, South Korea’s flag carrier acquired significant stake with a right to purchase further state owned shares. The Korean airline exercised its option and decided to sell the available shares to the [Czech Republic’s] largest charter and low-cost operator in 2014. There were high expectations [among the professional and also political circles] of the entry of the strategic Korean partner, however to this date, the  only outcome has been a lease of a single long-haul aircraft to co-operate solely on the Prague – Seoul and vice versa route. The involvement of the other co-shareholder hasn’t (at least visibly) contributed to the airline’s full service, network carrier model. We can see new destinations being added usually seasonally, in a trial and error mode, or leasing out equipment as an ACMI [aircraft, complete crew, maintenance, and insurance] to various airlines. Although this can generate some income, the overall long-term business model and strategy are not easy to determine. We can only hope that the main strategic partner – Korean – will get more involved and make strategic use of its co-ownership, or alternatively sell its stake to someone who will.

Tomas Levy is Head of a Multi-Industry & Cross-Sectolar Group of Investors and Advisers (tomas.levy@consultancy.com)

Jet Gazette November, 2016