Will the magic work on TAP?

It takes a brave man to buy the troubled Portuguese airline, TAP. The government’s sale of 61% of the airline only attracted two viable bidders and a consortium led by the Brazilian-American, David Neeleman, won.

Mr Neeleman is an optimist, as he clearly needs to be in view of the challenges faced by TAP. The airline has all the problems of a traditional, small scheduled airline combined with the specific problems of Portugal, notably a bad economy and a truculent workforce. However, the airline is not without its selling-points. They have a unique network from Lisbon to almost every major city in Brazil. For many Brazilians, it is easier to fly to Europe with TAP and change in Lisbon than it is to risk the excitement of changing in Sao Paulo. As the owner and founder of Brazil’s Azul Airlines, he clearly hopes to build on this and link the two airlines to make TAP the dominant force between Brazil and Europe.

Passengers might currently choose to fly with TAP because it is more convenient or because it is cheaper but they will rarely choose to fly with them because they are nicer. TAP customer-facing staff tend to combine the traditional surliness of Southern Europeans working for a state institution with the reserved (or, some would say, rather miserable) nature of the Portuguese. Making money as a full-service carrier does not just depends on routes and prices. To get over that waver-thin dividing line between profit and loss, an airline has to ensure that enough people fly with them out of choice – simply because they are a good airline to fly with.

This is where Mr Neeleman comes in. He made his name as the original boss of jetBlue in the US. That airline became hugely popular with passengers because it brought high standards together with friendly customer service. Group hugs with the flight crew and cabin staff before flights were encouraged and staff were told to “have fun” flying. The happy working atmosphere rubbed off on passengers and jetBlue succeeded when most had expected it to fail.

Converting the sullen staff of TAP to this “have a nice day” culture will be difficult but we must hope it works. Europe needs its strong airlines to withstand the overseas competition. At least now they have a small chance.

 

Lufthansa – not again, surely?

After the debacle of having to sell British Midland at a huge loss, you might have thought Lufthansa would have learned their lesson, but apparently not. According to the Financial Times, they are seriously interested in bidding for another airline basket-case, TAP.

Lufthansa have had a mixed – to be very polite – record in their recent investments. Aside from British Midland, they have had serious trouble with Austrian Airlines, Lufthansa Italia had to be closed almost as soon as it had started and Brussels Airlines is also looking dicey. Only Swiss has been a success.

Lufthansa is now very much under new management and the new bosses have been openly critical of their predecessor’s strategy. So why do they seem to be falling for the same trap?

Maybe they have learned one lesson from past errors. There is some point in going after a country’s flag carrier but no sense at all in trying to establish a second-string airline. Most European countries struggle to support one full-service airline and none have successfully managed to have two which compete head-to-head across the network. Of course, Portugal is in a very weak state financially, and has been since long before the current round of crises. The real attraction for Lufthansa lies in its routes to Brazil and its strong connections to South America. Oh, and the other big plus is that IAG are also interested in buying TAP and Lufthansa do not want to let them get a monopoly.

They are getting their towels out ready to reserve their space across the South Atlantic. You have a feeling that yet more hard-earned German cash is about to be blown in their determination to be a European leader.