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Low-cost Airlines Are Often Cheaper than Rail Travel



There are ongoing protests against the aviation industry and its environmental impact. This pressure is now being felt in the political mainstream, with European policymakers debating whether airlines and airports should be mandated to decrease the number of flights to slow emissions growth.

Recently, Spain followed France in announcing a limited ban on short-haul flights. Other countries, such as the Netherlands, Denmark, and France, are considering higher taxes on flying. The Dutch government previously attempted to impose a hard cap on the number of flights at Schiphol. In contrast, even cross-border short-haul flights are expected to shift towards rail travel, such as trains from Copenhagen to Stockholm or Barcelona to Paris.

However, policymakers must also recognize the popularity of affordable flying and the lack of viable alternatives. The European Court of Auditors, which evaluates EU policy, reported that of the €54 billion required for eight cross-border transport “mega-projects,” the EU had only spent €3.4 billion. Although efforts have been made since then to improve the rollout, it concluded that the core network is unlikely to be workable by 2030.

Although aviation is a highly competitive industry with frequent price wars, rail travel is still dominated by state-run operators whose domestic priorities often hinder efforts to improve international connectivity.

Despite the many advantages of flying over rail, many aviation executives worry about facing increasing regulatory scrutiny if they are not seen to be making progress on decarbonization.

As one airport investor admits, “everyone realizes this industry is doomed unless there is a clear plan to achieve net-zero emissions.”

Ryanair’s Dublin-based CEO, Michael O’Leary, plans to expand rather than cut back despite being located around 750km northwest of Amsterdam.

Over his 30 years in charge and with the help of successive rounds of deregulation, O’Leary has transformed Ryanair from a small carrier with only a few planes into Europe’s largest airline, with expectations to carry up to 200 million passengers in the next financial year.

As employees in the operations room silently monitor screens displaying the nearly 3,000 flights Ryanair operates on a typical winter’s day, O’Leary outlined how he aims to carry 300 million passengers within a decade.

Aviation is an essential industry in the EU, providing jobs for almost 5 million people and contributing €300 billion (or 2.1% of the GDP) to the European economy. However, it is also responsible for around 4% of the EU’s carbon emissions, making it one of the fastest-growing sources of pollution. Therefore, it faces a significant technological challenge to decarbonize.

European airlines and airports have developed a detailed plan to achieve net-zero emissions (carbon) by 2050 to address this challenge. The plan involves transitioning to sustainable aviation fuels (SAFs), produced from feedstocks other than fossil fuels, and emitting less carbon from production to combustion.

Despite the industry’s efforts to reduce its carbon footprint, European airlines face stringent environmental regulations. For example, they are subject to a carbon tax on intra-European flights and must ensure that 6% of the fuel used on every flight is sustainable by 2030.

In 2022, a report by Oxera, a consultancy firm commissioned by the airline industry, revealed that a ban on flights up to 500km within the European Union would only reduce overall EU aviation emissions by 1-2%. This is mainly because it would exclude the longest and most polluting flights. The airline industry argues that the EU’s emissions regulations would drive up ticket prices, causing some people to avoid flying, and that this contributes to 15% of the net carbon emissions reduction within the industry’s net zero roadmap.

However, environmental groups believe a crackdown on cheap flights should go further. T&E has called for higher carbon prices, a tax on aviation fuel, and a value-added tax to be added to airline tickets. According to T&E, airlines currently pay no duty on their fuel, while tickets are exempt from VAT, and airports and aircraft makers often receive state subsidies. This gives flying a cost advantage, as a Greenpeace study comparing ticket prices on more than 100 routes between major European cities last summer found that, on average, trains were twice as expensive as flights.

Paul Morozzo, a transport campaigner at Greenpeace, believes that flying appears to be less expensive only because airlines are not required to pay for the devastating cost of their pollution. The aviation sector’s failure to be adequately taxed for the fuel it consumes and the pollution it causes has resulted in an uneven playing field.

However, cost is only one of the factors hindering more rail travel. A more significant issue is that the network must provide travelers’ required connectivity.

In 2020, a Eurobarometer survey revealed that the cost of greener forms of travel was the main obstacle for people, but 40 percent of respondents also mentioned that speed was an issue. At present, flights are usually quicker than trains, despite the time required for traveling to and passing through airports. According to O’Leary, there are only six routes across Europe where two-hour train journeys are competitive.

However, Brussels is working to change this situation by investing more in the TEN-T network – a trans-European network of roads and rail lines designed to connect the continent’s major hubs. This network is the backbone of the EU’s land transport policy. The commission aims to double high-speed rail traffic by 2030 and triple it by 2050. This will ensure that passenger trains on the TEN-T network travel at a minimum speed of 160km/h. The Green Deal climate law requires the bloc to reduce transport greenhouse gas emissions by 90 percent to reach net-zero emissions by 2050.

Despite Brussels’ efforts to stimulate growth, land-based connections have needed to develop faster than the vast expansion of airline routes in recent decades.

In 2016, the EU introduced new regulations to promote competition between state railways and private companies to enhance cross-border rail services. Due to these changes coming into effect in 2019, some operators have expanded into new markets. Brussels has also aimed to reduce bureaucracy for operators and make competitive bidding necessary for public service contracts to liberalize the industry further.

Transportation consumes the most significant portion of the EU’s Recovery and Resilience Facility, worth €723bn. Rail accounts for most projects within the €25.8bn allocated for transportation in the EU’s Connecting Europe Facility.

However, constructing new rail infrastructure is expensive, frequently experiencing delays, and it takes a long time to pay back the capital invested in its construction. This makes it less appealing to private financing and makes it easier for governments to justify when public finances are tight.

Therefore, Europe should invest in rail infrastructure and convene with national governments to establish a European rail travel strategy. No such strategy exists currently. In the meantime, aviation expansion is expected to continue despite environmental opposition.

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Certares-led consortium enters into an investment agreement with the FTI Group



FTI GROUP partners with Certares-led Consortium to secure €125 million for growth and digital transformation, positioning itself for enhanced profitability in the European tourism sector.

The FTI GROUP, the third largest tour operator in Europe, announces that an agreement has been reached which concludes the process to strengthen the capital and restructure the shareholder base of the Company originally launched in September 2023.

A consortium led by Certares, an investment firm specialized in the travel and tourism sector, with capital provided by co-investors (the “Consortium”), has signed an agreement on the proposed acquisition and funding and will assume control.

Under the terms of the Agreement, FTI will receive new capital of € 125 million to support its next phase of growth and fund digital transformation. The current shareholder has accepted to provide financial support and further investment. The transaction is subject to customary regulatory approvals and other condition precedents as are typical for transactions of this type.

Karl Markgraf

Karl Markgraf, CEO of the FTI Group

Karl Markgraf, CEO of the FTI GROUP, stated: “We are delighted to announce our partnership with the Certares-led Consortium. Certares is a leading investor in the global travel and tourism sector. With support from Certares and its extensive experience in the sector and capital provided by the Consortium, FTI is uniquely positioned for future growth and profitability which benefits all the stakeholders, including our customers, commercial partners and employees. We are committed to start our next chapter of success and to further consolidate our position as a leading player in the German and European tourism sector.”

Who is who

Established in 2012, Certares is a global investment firm focused exclusively on the travel and hospitality industries, leveraging deep sector experience, proprietary transactions and hands-on partnership with management teams to drive growth. With approximately $ 10.1 billion of assets under management, including co-investments, as of 31 December 2023, Certares brings together a team with decades of both operational and investment experience in private equity, travel, tourism, hospitality and travel-related business and consumer services.

Delta, Certares and Knighthead in a strategic partnership

With its numerous brands and subsidiaries, the FTI GROUP is the third largest tour operator in Europe. It includes FTI Touristik as well as the short-term tour operator 5vorFlug, the car rental broker Drive FTI, the destination management company Meeting Point International, which is active in over 40 locations worldwide, and the tour operator for promotional goods BigXtra.

Under the umbrella of the hospitality company MP Hotels, the company bundles its hotel brands Labranda Hotels & Resorts and Design Plus Hotels, Kairaba Hotels & Resorts, Lemon & Soul Hotels, Club Sei and Managed by MP Hotels. TVG Touristik Vertriebsgesellschaft mbH combines the franchise systems with the brands sonnenklar.TV Reisebüro, 5vorFlug and Flugbörse. Around 10,000 partner agencies sell FTI products throughout Germany.

The TV travel shopping channel sonnenklar.TV, an FTI GROUP partner, and the online B2B provider for accommodation Youtravel are also important sales channels. The consolidator FTI Ticketshop is responsible for the sale of scheduled flight tickets. In Austria, FTI Touristik is represented by a branch in Linz.

FTI expects highly successful winter 2023/24

The subsidiary FTI Touristik AG, based in Basel, represents the tour operator in Switzerland. The French tour operator FTI Voyages has been part of the FTI GROUP since 2012. With FTI Reizen, the group has also been active in the Netherlands since 2016. The seven service centres handle numerous bookings for the FTI GROUP and external customers. Headquartered in Munich, the Group employs over 11,000 people worldwide and generated consolidated sales of around € 4.1 billion in the 2022/23 financial year.

Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.

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Air New Zealand Buys 9M Liters of SAF from Neste



Air New Zealand has agreed to purchase 9 million liters of
neat sustainable aviation fuel from producer Neste, the carrier announced
Monday. Neither company disclosed the value of the deal. 

The fuel will be produced at Neste’s Singapore refinery and
will be blended with conventional jet fuel and supplied to Los Angeles
International Airport between April 1 and Nov. 30, 2024, according to the
carrier. Air New Zealand expected its total fuel uptake during that period to
be about 850 million liters across its network.

The carrier said the deal is the “largest purchase of
SAF from Neste by any airline outside of North America and Europe for delivery
before the end of 2024.”

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AmaWaterways reports best UK sales month in history



March traded 74% up year on year, sales director says

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