I posted this in the Other European forum but it occurs to me it may be of more interest to OW flyers.

http://flyertalk.com/forum/showthread.php?t=842675

It means that after October, there won't be anymore ClickAir flights, i.e., no Iberia codeshares via BCN. This could have serious implications for people with OW itins that include BCN as a destination or connection. It remains to be seen if IB will restart mainline service from BCN or not (here's hoping).

Hi alan! ¡Cuánto tiempo!

You're a victim of what Iberia tried to make us understand with no reality at all. Well, let me clarify what's going on. Actually, Iberia didn't sell Clickair to Vueling. It's just the opposite way.

As you know, Spain is one of the domestic markets in Europe with more competitors per square km. There is a clear excess of supply, so that prices have to go down and down to have the aircrafts filled (and even with very aggressive pricing policies, load factors are pretty bad.)

Vueling had deep losses (Clickair too, but much less), and Magma Intro (the equity fund owned by Planeta and its CEO José Manuel Lara) that was the main shareholder of Vueling, decided that they had to merge with somebody or shut down. And... "oh, surprise, surprise", they (Lara) hired Josep Piqué as the Chairman (non-executive director, just a kind of "public relations") of Vueling.

I told "surprise, surprise" because Piqué was the Minister of Industry of José María Aznar in its first period 1996-2000. The ministry of Industry was at that time in charge of SEPI (the agency that owned and managed the state-run corporations --such as Telefónica, Endesa, Repsol, Gas Natural, Iberia, Aldeasa, Ence, Argentaria, Musini, among many many others --, and whose final aim was the privatisation). Piqué was the minister that was in charge of the viability plan of Iberia and of the privatisation. He knows how Iberia works, and he knows the top managers of Iberia, even if the directors that Piqué designated when Iberia was still state-run (Mr. Xabier De Irala, Chairman; and Mr. Ángel Mullor, CEO) left the company a couple of years ago (Irala went to the basque savings bank "BBK" and Mullor is now advisor of the equity fund Gala Capital).

The market undestood from the first moment that Lara hired Piqué because he was the right person to talk with Iberia about the possibility of taking over Vueling. Actually, IB created Clickair only to boom the market with very large aircrafts (180 seats) and increase the excess of supply and lower the prices way to much to make Vueling survive.

One can think that Clickair & Iberia lost the battle, but they didn't. The business plan of Clickair said that by December 2009, Clickair had to reach the following goals:

1st) Substitution of Iberia out of BCN and the rest of the non-MAD operations in order to transfer aircrafts from BCN to MAD. (status: done ^) Also cancellation of the European hub at BCN and centralisation of the hub at MAD, since the T4 had enough space to do that (before, they had to connect to Europe through BCN because MAD was unable to handle more flights.) (status: ^ before, Iberia had, for instance, Xerry-Barcelona-Zurich itineraries, and now everything --except the point to point -- goes through Madrid. This concentration enhances the hub because you can offer more frequencies to connect your long-haul network with the short-haul.)

2nd) Make the point-to-point network --that always had been loosing money -- profitable. (status: In 2007, Clickair had losses but these were far lower than the ones of Iberia out of BCN. Moreover, in 2009, Clickair + Vueling expect a positive result, even if they will need some years to cover the previous losses. Anyway, Iberia don't care because now they know that in the future they will have a profitable short-haul operating a point-to-point network: something that they never could have done with Iberia itself. This is a great result.)

3rd) Increase the number of aircrafts "controlled" by Iberia by 50, since Clickair had to have 50 A320s. (status: quite ^ for the current scenario, because Clickair + Vueling will have 45 aircrafts)

4th) Develop a low-cost structure (from the managerial point of view, not from the point of view of the client) able to stop the low-cost attack and to hit Spanair. (status: ^ Clickair has the second lowest cost per seat in Europe after Ryanair. This was a clear message to LCCs: "if you enter my market, I'll attack you". Actually, the result was that given they non-existant yields because of the presence of Clickair, Vueling ceased its growth out of BCN, they increased their losses, and they had to hide in markets where Clickair couldn't operate, such as Madrid or Paris. EasyJet also aborted its plans to open a new base in Barcelona, even if in my opinion they will do it once the market looses the excess of supply with the merger. In the case of Spanair, this carrier increased the number of passengers but this was a kind of poisoned apple, because as the yields were negative, each passenger gained was more loss for them. Consequence: Spanair will dramatically cut its network because of the heavy losses, and they should become only a "Star Alliance feeder" and not much more. The domestic flights will be deeply cut and they will focus in Frankfurt, Wien, Zurich, Stockholm, Copenhaguen...).

5th) Recuperation of the previously lost market share. (status: Clickair added more passengers to "Iberia" and they are the first carrier in Barcelona. Iberia + Clickair + Air Nostrum lead Madrid, Barcelona, Sevilla, Bilbao, Valencia... increased their market share in Málaga, etc. Vueling + Clickair will be the 3rd carrier in Spain after Iberia and Spanair.)

6th) Creation of a new contemporary product with a non-Iberia brand (because Iberia needs to keep its "two-classes" image). Madrid aside, because of the headquarters of big firms and the long-range effect, in Spain business class has a very low demand, mainly because our domestic (and even european) flights are very short. Some marketing studies show that Madrid aside, the "business" passenger is a freelance or an employee of a small firm (usually family-owned). This implies that there is not a real demand for a "beds & blowjobs (at high prices)" product (MOL dixit). Only London and Paris desserve this product, and there Iberia keeps operating from Barcelona. In the rest of the non-MAD network, the non-leisure passenger doesn't care about meals and so on. They just want flexibility (to change the ticket), low-costs (that's why Vueling caught a good number of non-leisure travellers), quickness, on-time flights, frequent flyer programs, and some frills such as specific seats for them to leave the plane as quick as possible. Clickair offers that: they have the greatest on-time performance (94%), they allow you to select the seat and print the boarding pass at the time of the purchase, you can earn Iberia Plus points (these flights even qualify for elite status), and they offer fares to premium passengers that allow 1 free bag, triple Iberia Plus milleage, a premium plus seat (first rows + middle seat empty), and freedom to change your ticket online through clickair.com up to 24h prior to the departure or 2hr prior to the departure through the call center.

7th) New labor conditions. (status: Clickair employees are non-unionised and they don't have a collective labor agreement. An employee of Clickair has a significantly lower salary -- ~60-70% lower in the case of FAs --, they don't go to a strike, and they are fully flexible. See that when Iberia tried to merge with Spanair, they had to agree that both carriers would never be the same company because of the unions. In the case of Clickair, Vueling and Clickair will fully merge, and jobs will be lost, and nobody protested. In the case of Iberia, SEPLA is going to accept subtantial changes for the outsiders, more "a la Air Europa" rather than "a la Iberia")



==> As you can see, the results are pretty positive from the Clickair + Vueling perspective. They reached the goals like 1 year before (January instead of December 2009) And now, back the the question: are IB and Clickair the "loosers"?

As always, Iberia tried to get everybody confused. It is as if Clickair had shut down in favor of Clickair but the reality is that behind what it seems you can find the reality. Actually, it's the project of Clickair who is surviving, but with the name of Vueling.

Vueling will merge with Clickair, and in order to do that, they will increase its capital and give 1 share of Vueling per each 1 share of Clickair. After the exchange... surprise, surprise:

- Iberia will be the first shareholder of Vueling and the only industrial partner, with a 45,8% of the shares. If we add the stake of Nefinsa (Air Nostrum: the regional carrier of Iberia), Iberia has +50%, so the majority in the board of administration.

- Iberia already set that the CEO of Vueling will be Alex Cruz (the current CEO of Clickair). Surprise: Alex Cruz is the man of Iberia, and he will be the person who really takes the decisions of Vueling.

- The shareholders of Vueling will be gone and also the shareholders of Clickair (other than Iberia and Nefinsa). Only Magma Intro will remain, but with a "ridiculous" stake: 15% with no real political power against the +50% of Iberia and Nefinsa. Magma Intro will set the Chairman (Josep Piqué). No problem since Piqué has good links with the Catalan politicians (Iberia needs this), he is a "friend" of Iberia, and on top of that, he doesn't have any executive power. In other words: he only gives interviews, speaks in the shareholders assembly, etc. etc., but he cannot take decisions. Just to show how symbolic the chairmain is, Carlos Losada (current Chairman of Clickair), only devotes at most 4 hours per month to Clickair, because he only attends the reunions of the board of administration, and that's it.

- Iberia said that as the costs of Clickair are lower, Vueling will "copy" the cost structure of Clickair. This implies that Iberia will very likely sign handling and maintenance contracts with Vueling (as the current ones with Clickair), so that this is $$$ for Iberia and also activity. Remember that in BCN now most of the ground services work for Clickair (as Iberia is mostly gone) and that Iberia will open a maintenance center in BCN by 2009 (mostly working for Clickair... now Vueling, ¡with more aircrafts than Clickair!).

- Iberia already said that Vueling will copy the sale structure of Clickair. The flights of Vueling will have a double code: VY (available at vueling.com) and IB5xxx (available at Iberia.com and GDS such as Amadeus, Sabre, and so on.) So, the IB number will remain.

- At least for the IB5xxx-coded tickets, Iberia will give Iberia Plus points. I can imagine that the VY tickets will also give Iberia Plus points, just as now the XG-coded flights of Clickair do. We still don't know if "Punto" (the FFP of Vueling) will remain or will merge with Iberia Plus.

As you can see, it's Clickair with a new name and Iberia behind.

And you may wonder why Iberia tried to hide the victory of Clickair?

- Because of the image: nobody wants the cruel former monopoly have more power. Also, in Catalonia Iberia and Clickair are like the devil (for the politicians) because they are considered as part of Madrid. On the contrary, Vueling was born in Catalonia and its main shareholder was the fund of Planeta, which one of the most powerful catalan-based firms. Vueling was considered by the Generalitat and the Barcelona as the "flag carrier" of Catalonia.

- Because of the brand: Vueling is older than Clickair, so the brand is more identified by the consumers. Also a branding agency told Iberia that "Clickair" was not a good name because it doesn't seem modern, as laptops don't have traditional mouses and they don't "click". On top of that, Clickair had Madrid as a "non-entry" airport, so that Clickair is unknown in Madrid. Also in Paris, Vueling did an intense campaign when the opened their base at CDG.

- Bacause Vueling is a public company (listed on the stock exchange) whereas Clickair is private. They want a public company.

- Because the new firm will implicitely "break" the impossibility to make Clickair operate at Madrid, since Vueling already operates there. Before, Clickair couldn't start routes from MAD because it was a "territory of SEPLA-Iberia". Now, they have a good excuse to start these flights, even if they will only operate point-to-point and Iberia promised that they will not cut any IB flight (and as a matter of fact, IB and SEPLA agreed that the new labor agreement with the pilots will tell what the boundaries of Vueling are, as the pilots don't want Vueling to inferfere Iberia.)

Much ado for nothing.

Hmmm ... thanks for that ... "The reality is not what it seems"

Fantastic analysis Gatovolador!

The big question for me is: how will this affect Oneworld flights and connections? I travel in/out of Valencia, connecting to AA in either Madrid, Paris, or London usually, with California as my final destination. Once the merger is finished, do you believe it will be possible to have an itinerary like IB5XXX/AAXX/AAXXX booked as a single ticket? The current arrangement seems to only allow this in the case of full fare Y tickets. If you try to book for instance IB7704/AA135/AA3140, the price comes out to over $5,000 in Economy. So for some reason, the IB5XXX and IB7XXX inventory available to Oneworld partners is only full-fare.

Do you think Vueling will eventually be added to Oneworld as an official Iberia affiliate?

It seems that everything will remain as in the past: Clickair was/is a point to point airline and Vueling will keep this philosophy. IB5xxx cannot be mixed with IBxxxx / AAxxxx / etc. etc., because Clickair is not a OneWorld carrier.
The exception was a couple of VLC-LHR flights operated by Clickair, that have 3 codes: XG, IB5, and IB7. In the case of IB7, connections are allowed. Even if in principle Clickair was suppose to extend the IB7 code to all its flights to/from London Heathrow (in order to make OneWorld connections possible), they never extended the code, and only connections on Clickair are possible for travellers holding a IB7-coded VLC-LHR ticket. This has some explanations, mainly costs, since connections mean $ in terms of aircrafts having to wait for a delayed passenger, the costs of reallocation of passengers, baggage handling, and also the necessity to adapt the Spain-UK schedule with the UK-World flights.

An Iberia worker told me that evenif the IB7 existed, there was no real possibility to connect because the schedules didn't match with "any" flight. I don't know if this is true, but for sure connections are very limited.

The price is very expensive because actually you get the fare of a 2 stops ticket: VLC-MAD-LHR-LAX/SFO. They put high prices in order to have close to zero connecting passengers on each flight.

One "interesting" (actually one of the best) solution for passengers willing to travel with AA is LAX/SFO-JFK-BCN on AA, and then BCN-VLC on Air Nostrum.

I don't think so. Unless they change, neither Vueling nor Clickair want to be part of OW because they would be obliged to connect with OW carriers (Iberia doesn't want low-cost connecting flights because this would make its hub weaker and Clickair/Vueling don't want it because they wouldn't be able to make 30 min stops at big airports such as BCN, they wouldn't be able to maximize aircraft utilisation if they had to match their scedules with the ones of Oneworld, they would have to compensate the passengers that lost their flights, they would have to give BAEC, AAdvantage, etc. points, .... and this is more cost, and more cost is ).

Also OW would not accept Clickair / Vueling. Some quality carriers following the American low-cost model, such as WestJet, were interested in OneWorld but OW (and particularly some carriers such as BA) were against this kind of partners. Only "Click" (by Mexicana) will enter the alliance being a LCC. Anyway, they are a sui generis LCC, since they offer free food and so on. It's more an ad-intra LCC (lower cost structure) than an ad-extra LCC. They are an "economy plus" carrier more than LCC. Very good quality.

OneWorld was born because of connections and business class passengers, and LCC do not offer that. Maybe they could at some point start a new "category": something as "Oneworld associated airline" or non-full member. This category could include LCC linked to OW such as Vueling, Jetstar, FlyBe, even one former partner such as Aer Lingus, and I think that JAL also has a LCC. This category could basically give points/miles to the OW FFP cardholders and could offer some premium services to the elite categories (for instance, Clickair allows to Iberia Plus Oro and Platino the access to the VIP lounges of Iberia) without having to offer connections, coordinated schedules, etc. However, this is only part of my imagination. It will probably never happen.

Yeah, I know all about this because I've tried every possible way to get from California to Valencia. When Clickair first started, you could book IB7704/5 as connecting flights to OW and there were no problems. I did this once or twice. It connected really well actually to the AA135/AA136 LAX/LHR services. Then one time I booked it and was called by AA to say they would have to remove that segment and offer me a refund. Ever since then, it always seem to book into full Y.

Yes but there are problems with this too. I was so happy to hear AA serving BCN but just around the same time, IB and Nostrum cut back between BCN and VLC, so there is no way to connect now on the return through BCN. So not the great option I was expecting.

I guess with regards to OW and Clickair/Vueling, the best I can hope for is like you said, some kind of very limited codesharing on the few major OW feeders like VLC-LHR.