VLM’s takeover by Air France/KLM creates dominant force at London’s City airport

VLM may be the perfect example of what the liberalisation of EU air transport hoped to achieve. It is a Dutch-owned airline, based in Belgium (Antwerp), with its main operational hub in the UK (London City) and has just been acquired by a French airline. While most people were preparing for Christmas VLM’s owner Panta Holdings BV was agreeing to sell the airline to Air France-KLM for an undisclosed sum. Combined with Air France’s existing operations (through its ownership of Irish-based CityJet) this means that the Air France-KLM group now has over 50% of flights at London’s fast-growing downtown City airport.

Niche fleet for London City

Image: VLM 200,000th passenger
VLM celebrated the 200,000th passenger on its Amsterdam-London City route last year.

VLM’s fleet of 18 50-seat Fokker 50s and one 92-seat BAe 146 may not seem that exciting, but it has helped it to carve a niche for itself as the busiest airline at London City with over a quarter of all movements. Passenger numbers for the airline’s network (which also includes a handful of routes which do not involve London City) have grown steadily in recent years, while the airline has maintained a consistent level of profitability.

Chart: CHT VLM 00-07
Source: VLM

Since starting in 1993, the airline has carried over five million passengers and traffic in the first half of 2007 was up 16% thanks to the increase in frequencies on existing routes and the introduction in April of the airline’s first jet aircraft, on the Rotterdam route.

At London City the airline currently has the most flights of any airline, though Air France through CityJet (which also recently took over Scot Airways) offers more seats and destinations.

Airline Frequency Share Capacity Share Number Of Routes
Air France (CityJet) 24.5% 24.9% 10
British Airways 14.9% 22.1% 6
VLM 26.7% 19.1% 8
Swiss 11.5% 15.0% 3
Lufthansa 7.0% 6.4% 4
Others 15.2% 12.5% 8
Source: OAG Max Online for w/c 7 January 2008

Competition on only three routes

Map: VLM routes

VLM faces competition on just three of its eight London City routes. Once part of the Air France-KLM group it will be interesting to see how the Amsterdam route is developed given that KLM is currently a direct competitor.

Services to Liverpool were dropped during the first half of 2007, though new direct services to Manchester were added from both Antwerp and Rotterdam.

Route Weekly Frequency Competitor (Weekly frequency)
Amsterdam 53 KLM (40)
Manchester 44
Rotterdam 39
Antwerp 28
Luxembourg 24 Luxair (22)
Brussels 21
Isle Of Man 6 Euromanx (18)
Jersey 5
Source: OAG Max Online for w/c 7 January 2008

Passenger profile research

Image: vlm researchThe airline’s own survey of its passengers in March 2007 revealed that over 80% were travelling on business, 72% were male and that 28% were making a day return trip. Nearly half of all passengers were British, 29% Dutch and 9% Belgian. The share of bookings made via the airline’s website is growing strongly and has now reached 32%.

Award winning airline

Image: Belgium’s man of the year
Belgium’s ‘Man of the Year’ (at least as far as the travel trade is concerned), VLM CEO Johan Vanneste, receives his award.

In 2006 the airline won the Regional Airline of the Year category in the annual Air Transport World awards, while more recently CEO Johan Vanneste won the ‘Man of the Year’ award from the leading Belgian travel industry publication Travel Magazine. This was partly in honour of the airline delivering profits for the last nine years. Based on the 2006 figures, which showed revenues of just under €100 million, this means that average revenue per passenger is around €146 (or £100/$200). For examples of day return fares from London City with VLM see this week’s farewatch.

Image: VLM

In November 2007, VLM also received the ‘Anglo-Dutch Award for Enterprise’, in recognition of its growth in the Anglo-Dutch market. Pictured are Martha Hiddink, sales & account manager; Monique van Der Kroft, sales executive Corporate Accounts and William Vet, regional manager, The Netherlands.

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