The Interview: Air Europa’s Colin Stewart

ABTN speaks to Colin Stewart, Air Europa’s UK general manager, about future plans for Madrid’s second largest airline…

Perhaps you could start by talking us through Air Europa’s network…

We’re a Spanish airline and our main strategy really is developing the long haul traffic via our Madrid hub. My job here in the UK is to try and attract passengers from the London market over to our key Latin American, Spanish, Caribbean and North American destinations. We have two flights a day from Gatwick to Madrid, serving passengers for a weekend getaway or business trip. We target business and leisure passengers and we have both a business class and economy product on board. Our broader business strategy is to use the hub in Madrid and fill the aircraft with our French, Italian, Portuguese markets. Everything is about filling those long-haul aircraft from Madrid.

Air Europa started UK operations two years ago…

I started in February 2009, and I was the first Air Europa employee in the UK. Over the last two and a half years we’ve built our team up to 10 employees. We’ve got three on the sales team, our own dedicated UK reservations team, back office, marketing, office management and sales support. We’ve also got a representative at the airport who meets and greets and takes care of passengers as they arrive into Terminal South, which we’ve found has been a real benefit. He is there for both flights at the check-in, to make sure the queues are reduced to a minimum. He will also go to the aircraft. We’ve had passengers call the office stuck on the motorway and we’ve patched them straight through to him on his mobile. There have been times when we’ve held the check-in open for an extra five minutes so they can actually catch their flight, which I believe is very unusual. It doesn’t happen every time, but it can happen.

I imagine that is very reassuring for your corporate clients?

Yes. Our corporate market demands the highest standards. I think they demand a little bit of extra care. We’re developing the corporate market at the moment. It’s a fairly new market for us. In terms of our mix of passengers, leisure is definitely a higher percentage, but we are working with some of the larger travel management companies (TMCs) and corporates to try and develop that business. Their demands are a little bit higher, a little bit more strenuous, but with John at the airport we hope we can provide that extra service.

I imagine Air Europa’s Latin American destinations would also be popular with the corporate market…

Yes, it’s interesting. Our background is many years ago as a charter airline, but in fact we’re celebrating our 25th anniversary this year as a scheduled airline. For the corporate market, our key destinations are long-haul – Buenos Aires, and Mexico city, which we launched in July. In the space of a month that went from zero to our third largest selling destination. It’s been a really successful introduction into the market for us.

I think with the recession a lot of markets have been hit – Asia, North America – which are starting to come back now. But the Latin American market for us has remained fairly strong and stable. In fact we’ve seen growth in Buenos Aires, Havana, and Lima. It seems to me a lot of airlines are turning their attention to Latin America, because it seems to be safer ground for them. For us that’s very much been our focus for the last two and a half years since we’ve been in London.

How did you find launching Air Europa to the British market?

Our launch was on March 30, 2009. I started in early Feb and was told we’re launching in March. It was quite an exciting time. Some people had some preconceptions of Air Europa when we first started. There was the challenge of overcoming the charter mentality from agents, or from passengers, and understanding that a lot of British passengers hadn’t heard of Air Europa.

We’re the second largest airline in Spain, and the largest privately owned airline in Spain, so if you speak to a Spaniard obviously he knows us very well. One of my key challenges was to build a sales team to get that message out – that we’re a scheduled carrier and that we have been operating for 25 years. We’ve been building that confidence, done primarily not by going direct to the consumer but by working through the trade.

You mentioned you are looking to grow the corporate market – how are you going about that? And perhaps you could share your thoughts on the corporate market in the UK…

When I first started in February 2009, I remember going to WTM and the business travel shows and really trying to engage in dialogue with some of these large TMCs. I think initially they didn’t really know who we were and it was all very much a consolidation approach – we’ve got enough customers at the moment, enough airlines on board, enough airlines in our portfolio – so it was a very tightly controlled environment. What I have noticed since then is that it is very much changing. There seems to be more of a willingness to grow and expand their portfolios, so for us, that’s a good opportunity. We’ve noticed some successes, where we’re able to get access or distribution through some of the TMCs. Obviously we are still working on that.

We are also targeting the small to medium sized enterprises. Some of those companies maybe don’t have travel programmes, they’re not restricted in terms of who they use or how often, or even that they have to use a TMC, so maybe they book their own travel. For us that is a perfect market, because we can negotiate directly with them and offer them the best deals to book through Air Europa.

As Spain’s second largest airline, how has the BA-Iberia merger affected Air Europa?

I’ve been asked that question so many times. Interestingly enough, initially a lot of people were suggesting that it was bad news as a bigger entity with a bigger network was going to be challenging for Air Europa. We haven’t seen that. What we’ve seen is actually a lot of agents wanting a personal relationship, that personal approach, and the bigger something gets, it doesn’t always mean the better. We’re coming in and we’re smaller, we’re nimbler, we’re able to work for their business and adapt to their business. We’ve really used that to our advantage and we’ve tried to enhance our visits with these agents to push the fact that they can speak to someone at the end of the phone and they can, if there’s a problem with their booking, call and speak to a reservations agent here in the UK. Our intention is to try and resolve and try and support them in whatever way we can. So in the short-term I think actually it’s going to be good for Air Europa. I think it gives us an opportunity to push ourselves, and it raises the profile of Spanish airlines. As people are trying to understand who Iberia are, instinctively they’ll maybe move on and find out a bit about Air Europa as well. For us, we’re excited for the challenge ahead.

Are there plans for new destinations?

Yes there are. In February last year we launched Lima and Miami, and then in July this year we launched a four times a week service to Mexico City. We’re looking at developing our long-haul Latin American network, so there are discussions under way to look at what is the next step for Air Europa. It’s no secret that we’re considering Colombia as a potential option. There’s nothing confirmed, but we’re developing the relationship there, we’re looking at options. We are trying to react to the demand that we’ve received from our agents, who are telling us that they need more capacity into that part of South America. Hopefully we’ll have some news in the near future.

Tell us about Air Europa’s fleet…

Air Europa has a fleet of more than 40 aircraft. It’s a mix of short-haul and long-haul planes. For our short-haul aircraft we use the Boeing 737-800. We have 26 of those. We also have 10 Embraer 195s. That’s a lovely aircraft – two-by-two configuration, leather seats. People have compared it to a private jet experience. We use the Embraer for the majority of our flights from London into Madrid.

For long-haul, we use the Airbus A330-200, which is our flagship carrier. We have business class and economy, seat back on demand TVs – all the kind of perks you would expect. We do have a couple of Boeing 767-300s, which we tend to use on more of our Caribbean destinations, which are more leisure-focussed. Our our strategy is probably to phase out the Boeings and introduce more Airbus A330s. We are looking at the Dreamliners as well in the future.

Are you planning to update the product on board?

We feel we’ve got a very good product at the moment. From the passenger perspective, from Latin America there doesn’t tend to be the best products available, in terms of the seat, or the entertainment system. The average age of all our aircraft is about three years old, so it’s one of the most modern fleets in the industry, and very efficient. We have seatback TVs, not just in business class but in all of our economy seats on the A330-200, which is not common if you’re flying into Latin America.

Do you see a future for short-haul business class?

I think there is still a need and a demand. I think you’ll always have companies who want to travel in the front of the aircraft, but I think that with business or economy there has to be value for money. From our perspective, I don’t think the demand for business is going to reduce, but I think people are looking for a good deal still. Whereas maybe in the past people would just pay for business and not worry about it, I think companies are becoming a lot smarter, and are having to justify their spend. So what we try to do with our yield management is offer a very competitive business class offering.

You are a member of the Skyteam Alliance – does that have its benefits?

Yes. I think for us it’s a great membership. We’re actively involved and we get the benefits of the other network airlines that are also part of Skyteam. We’re excited about the future. I think we’ve had a very good start to our time here in London and the UK and the idea is that we continue to grow the team and also the network.

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