September 2006 Archives

Security and who pays was not surprisingly the hot topic at the European Regions Airline Association (ERA) general assembly in Barcelona this week, writes Airline Business deputy editor Brendan Sobie.

ERA president and Aegean Airlines chief operating officer Antonis Simigdalas said there was "an endless discussion during the presidents meeting" on security costs and a top ERA priority is to push for state funding of the extra layers of security which were added first after the September 2001 terrorist attacks and the August 2006 terror scare in the UK.

"There is a big percentage of agreement the latest security measures have serious cost implications for all of us," he says.

In the keynote address, Iberia chairman Fernando Conte joined ERA in advocating for public funding of security. "We're not talking about airline or airport security. We're talking about public security. And our customers are paying their taxes and our European customers are paying their taxes in Europe. We must convey this message."

He says European carriers need to join together and urge European government to harmonise their policies on security costs. He complained the airline industry is often overlooked by European Union politicians and airlines have no influence despite its importance to European economies. "We are easy pray," he says.

Conte says the UK terror scare from August resulted in "a major distortion to our operation" and the extra security has since been a big inconvenience to Iberia's best customers, business class connecting passengers. Conte says many airports do not enough equipment to handle the current security requirements and the passenger really needs a "one stop security in Europe".

"We need to take into consideration higher security measures are here to stay. We need to make sure infrastructure and resources are (put in place at airports) for that scenario."

Aer Arann executive chairman Padraig OｴCeidigh said the additional security over the last several weeks has "cost implications for all ERA members and all airlines and airports". He adds "it's our companies that carry the can".

In an odd move, the European Regions Airlines Association (ERA) is leading an initiative to improve the transparency of prices on airline websites.

The ERA board approved at its annual general meeting in Barcelona on 28 September a resolution urging member and non member airlines to adhere to its recommendations for making clear on their websites how much tickets cost. Those airlines which adhere to the ERA standard for transparency of ticket prices will be permitted to publish a special logo unveiled by ERA at a press conference during its annual general meeting.

The logo (see below) looks similar to the ERA logo but instead of saying ERA it says "plain fares". The ERA plans to later make the logo available in several foreign languages.

ERA director of air transport policy Andy Clarke says the ERA decided to launch the initiative to mitigate passenger confusion caused by the omission of taxes and charges on some airline websites. Some airline websites do not display taxes and charges until the end of the transaction. To qualify for the "plain fares" logo, airlines must display a fully inclusive ticket price with equal prominence as the base fare. If the airline charges a booking or credit card fee for internet transactions, this fee must also be displayed prominently.

Clarke says the campaign is a step ahead of new European Union regulations which will take effect at the end of 2007.

The ERA is hoping other industry association will follow its lead and launch similar initiatives. "We cannot think of any precedence for this," ERA president Mike Ambrose says. "We think the idea should be picked up by other associations and airlines that are not part of any association."

But what value does this new ERA logo give passengers? ERA or any airline association does not have a recognisable brand outside the industry and ERA does not have the budget to launch a public awareness campaign. So what incentive does an airline have to listen to ERA, especially those that are not members and are even from different regions of the world?

Airline Business deputy editor Brendan Sobie asked Ambrose if it was unusual for an airline association to launch a campaign geared towards the passenger and he responded it was not only about building a profile for ERA with passengers but with the European Commission. "We want it to become a universally recognised hallmark," he says.

We will have to see if airlines now rush to prove to ERA they are worthy of the catchy "plain fares" slogan.

One day, perhaps sometime soon, travellers wishing to transfer seamlessly from one low-cost carrier to another may be able to do so. The key word here is seamlessly.

At present, do-it-yourself travellers who want to connect from say Canada's Zoom Airlines to Ryanair or easyJet at London Stansted Airport have to collect their bags after their transatlantic flight and recheck them in for the European leg of their journey. Sounds pretty painful, but a surprising number do it.

There is no baggage transfer, or through ticketing, because there is no-one to pay for it. Certainly not the airlines involved. Many are seeking a way of "interlining" passengers where at least one leg of the journey involves a low-cost player, but the stumbling block keeps coming back to the payment question.

Recognizing the rising demand for such connections, airports are at least trying to help. Denmark's Copenhagen is the latest. It has designed a page on its website called "Via Copenhagen" that shows the 130 or so connections available. London Stansted created a similar page some while ago but after a quick check it seems to have disappeared.

Copenhagen has also gone a step further by tying up with an insurance company to offer travellers insurance against missing a flight.

But, as the Emerging Allies feature in Airline Business October suggests, the time when some traditional and low-cost players will need to resolve this issue, as their commercial ties grow, is approaching.

Seat backs that is. Europe's low-cost giant Ryanair is exploiting yet another opportunity for ancillary revenue generation by selling advertising on the seat backs across its fleet.

It has announced a deal with a company called InviseoMedia to install seatback advertising on its entire current and future fleet of 239 Boeing 737-800s. The "Inviseo Table" is a special tray table with an advertising panel built into it. Ryanair stresses that this latest money making venture will only make a couple of million Euros annually, but that every cent counts.

Ryanair is an arch exponent of raising ancillary revenues, which it is growing rapidly. The mainstays of this area are website click-through bookings for car hire, hotel and insurance. Other plans in the pipeline are the use of inflight mobile phones and inflight gambling.

In the seat back initiative, the trays are significant pieces of advertising real estate, being seen by the carrier's 40+ million passengers for an estimated minimum of 40 minutes per flight. Several advertisers are already interested, says Ryanair.

The first carrier to use this type of advertising was germanwings, which began installing them last year. Daimler Chrysler, Nikon, Pentax, Canon and Microsoft have bought space. The revenue is shared with the airline, with Inviseo handling the installation, handling and marketing costs. "Costs to the airline are virtually non-existent," says Inviseo. Now that is music to the ears of the Ryanair boardroom.

"We talk about the Far East - it's not the Far East any more - it has come very close to us." This was Lufthansa chief executive Wolfgang Mayrhuber addressing assorted local dignitaries, ex-pat customers and European journalists in Beijing (seen below), during a three-day tour to celebrate the 80th anniversary of the German carrier's first flight to China, and its involvement in the country ever since, writes Helen Massy-Beresford, business reporter of Flight International, the sister title to Airline Business.

Back in 1926 the trip from Germany to China took 10 days. Now it takes more like 10 hours, and Lufthansa operates 52 flights a week between Germany and China, and has 8,000 of its 92,000 employees based there.

Mayrhuber himself has been to China six times already this year, a statistic that serves to underline how important the carrier's engagement with this market is to its strategy.

As its economy booms, China has become a byword for future sales potential in aerospace, providing a significant proportion of the expected growth in passenger numbers, and Western airlines are increasingly committing to the market, not just by flying there, but by creating their own footprints in the region.

Lufthansa is at the forefront of this journey east - the trip began with a ceremony to lay the foundation stone for the Lufthansa/Air China joint venture Ameco's Airbus A380 maintenance hangar at Beijing airport. Mayrhuber says Lufthansa's "stronghold" is Europe, but China is clearly an extremely significant market too.

Its investment in China over the last 80 years began early on with joint venture, Eurasia and today includes its Ameco maintenance and training joint venture with Air China and its investment in Jade Cargo International, a new cargo carrier.

Amid the flurry of positive comments about the Chinese market during the visit, however, Mayrhuber kept coming back to one sticking point for the airline's future development, taking the chance to call for a resolution to the issue of US-Europe Open Skies, as he wondered aloud how there could even still be debate over Open Skies when Lufthansa was able to form a joint venture in China all those years ago.

But the overall theme of the visit was of celebration of the airline's ongoing success in the Chinese market, in which Mayrhuber insists it is important for the airline to be a "corporate citizen". As well as helping to lay the a foundation stone for the A380 hangar, Mayrhuber presided over the opening of a Lufthansa gallery at the Imperial Art Museum, with a selection of photographs documenting the last 80 years of the carrier.

"In 15 years there will be more than 4 billion people flying - this is not a dream, this is reality," said Mayrhuber during the trip, and there's no doubt that China will make a significant contribution to this growth as its economy booms. Lufthansa is taking advantage of this growth already, but it remains to be seen whether other European carriers will follow suit to the same degree.

The much hyped Indian low-cost airline industry could be in for a period of major contraction and consolidation rather than more explosive growth. 

Some in the aviation industry have been questioning for months the realistic size of the Indian low-cost market, which has seen explosive growth with several start-ups and mega aircraft orders over the last two years. Air Deccan's first results since going public three months ago provide the first hard evidence that all is not rosy in India. The carrier has just reported to the Bombay Stock Exchange a loss of Rs3.4 billion ($74 million) for the 15-months from 1 April 2005 to 30 June 2006 and a shocking negative 22% operating margin.

Bangalore-based Air Deccan became India's first low-fare carrier when it launched in 2003. Three carriers have since followed, SpiceJet in May 2005, Go Air in November 2005 and Indigo last month. The four carriers combined have over 200 aircraft on order but many have been questioning if the market can handle all these aircraft - even some of the manufacturers.

While the demand is almost certainly there, the sceptics point out India is simply not ready for low-fare carriers. Airport costs are some of the highest in the world and cannot be avoided because there are no secondary airports. Low-cost carriers also do not have any advantage over traditional carriers when it comes to most other operating costs, including fuel and labour. In fact, manpower shortages in India has forced low-cost carriers to pay their pilots and mechanics more because that is the only way they can woo them away from traditional carriers.

Air Deccan has quickly grown and now has about 20% of the Indian domestic market, second only to Jet Airways. But its first set of financial results seem to indicate that its low fares are too low to be profitable and unless there is a sea change in India low-cost carriers could be doomed.
"We have the highest yield in India now and we're barely making it," says Kingifsher Airlines executive vice-president Hitesh Patel. "How can you make it with a Rs2,000 ($44) return air fare?"

Although it is often labelled as one, Kingfisher does not consider it itself a low-cost carrier and has kept yields up by offering several frills and introducing a business class. It is more going after Jet Airways, which is also generally in the black having reported profits in four of the last five quarters, than low-cost carriers. Jet had an initial public offering early last year and is also traded on the Bombay Stock Exchange. According to the Centre for Asia Pacific Aviation, Jet Airways estimates the Indian airline industry overall will rack up almost $500 million in losses for the year ending 31 March 2007.

Air Deccan in June joined Jet and Spiecjet on the Bombay Stock Exchange although it had a disappointing debut, raising Rs3.6 billion, about Rs700 million less than it expected. It is now trying to raise another $100 million from European banks but after releasing less than stellar financial results could be in for another disappointment.

Spicejet earlier reported a net loss of only Rs414 million for the year ending 31 May 2006. But it is much smaller, operating only six aircraft and generating revenues of only Rs4.2 billion since launching in May 2005.

In contrast, Air Deccan now serves 55 destinations with a fleet of over 30 aircraft and generated Rs12.4 billion over the 15 months ending 30 June 2006. That equates to a net margin of negative 28%. It released its financials over a 15 month-period because it recently changed its financial year from 30 June to 31 March.

Air Deccan also reported an operating loss of Rs2.7 billion, equating to an operating net margin of negative 22%. To put that in context the only airline in Airline Business' top 150 ranking for 2005 that had a worst operating margin was US low-cost carrier ATA Airlines, which operated in bankruptcy protection all of last year. Based on its revenue figure, Deccan now falls just short of making the top 150 ranking but given its planned growth it will almost certainly make the list in a years' time.

Air Deccan and India's other low-cost carriers are betting the cost of operating aircraft in India is quickly reduced. For this to happen, infrastructure must be expanded and the government must unveil new policies which results in a reduction in landing, parking and other charges. But by the time this happens it could be too late.

"2007 and 2008 will be key years for India," Patel says. "I think you'll see some consolidation. I think you'll see some going under."

"It is clearly crunch time for the Indian low-cost-carrier sector," says CAPA chairman Peter Harbison.

So, is Dave Neeleman, the ever-loquacious cofounder of JetBlue, taking to the blogosphere or not? The airline just redesigned its website and on it Dave has a page called David's log, with a word from the chief. http://www.jetblue.com/about/ourcompany/flightlog/

No airline executives have yet taken the leap into full blog-dom, unlike some of the big shots at Boeing. Southwest was the first airline to blog in a big way but its offering, "Nuts about Southwest", is compiled by its people and its customers. Neeleman's first offering promises folks a weekly update, mentions JetBlue's newest city (Sarasota/Bradenton, Florida), and reminds people that he flies the airline once a week or so.

When he does, according to JetBlue's Jenny Dervin, he is the flight attendant, asking as many passengers as he can for ideas on making JetBlue better. Dervin tells AB that JetBlue is thinking of making the log into a blog. The log invites readers to send an email to JetBlue.

No airline chief executive has yet taken to the blogosphere, says Josh Hallett, a Winter Haven, Florida-based consultant to corporate blogs and websites because "It's just a matter of time before one does. As long as it's an airline with good customer relations, with customer advocates, that's not a bad thing. Southwest and JetBlue are about the only airlines that come to mind", says Hallett, director of a consultancy called Hyku. Like Hallett, AdWeek advertising writer Barbara Lippert says companies should be wary of letting their executives take too public a role in building their brand identities. She notes the recent premature withdrawal of a major Daimler Chrysler advertising campaign featuring its chief executive, Dieter Zetsche. The walrus-moustached German engineer appeared in widely shown television spots called 'Ask Dr. Z.' The ads led large numbers of Americans to ask if Zetsche, a tall, briskly spoken Teuton, was a real person.

Few would suggest that the intense, wiry Neeleman was or indeed could be made up, but these brand-conscious types caution that airline brand identity is a delicate commodity since it involves perceptions of safety that could easily be undermined by the wrong hint of humour. And airline brand identity and the public perception of the airline stems from the people the public deals with, from check in to in-flight people. After all, your entire experience of an airline takes place (or should) in close proximity to the carrier's people, and it is they who do the most to create loyal customers or give flyers reason to shop elsewhere. By contrast, it's not as if you see the Chrysler guy every time you get into one of their cars.

Their cups runneth, er flyeth, over

Southwest, like most airlines, wants two things: to save money and to be liked. In that sense, perhaps, airlines aren't that different from normal people except that Southwest is very good at letting people know why they should be liked. They're clever that way. Their latest trope is a celebration of their latest weight-saving cost cutting measure, which is not a new computer or a new winglet or even a new uniform.

No, it's their new cups. The airline is boasting that it is on course to save more than $1 million a year by switching a PET (Polyethylene) cup to a PP (Polypropylene) cup. It buys about 98.5 million cups a year, and these cups, although slightly milky in colour rather than clear like the old cups, should save weight as well as money. And we are pleased to note that Southwest got the word out via e-mail, rather than sending out a mailing.

Low-cost carriers will finally be welcomed with open arms at Dubai when the ambitious Jebel Ali airport complex - branded Dubai World Central - opens in early 2008. At present, a lack of capacity at over-crowded Dubai International Airport means that low-cost services are not possible.

"We have turned away low-cost carriers because we don't have the facilities," said Anita Mehra Homayoun (above), director of marketing and communications for Dubai Civil Aviation, speaking at this week's World Route Development Forum in Dubai. The main low-fare player operating in the emirate is Air Arabia, which is based at nearby Sharjah International Airport.

The emphasis on low-fare services will change at Jebel Ali, she said, where DCA is building a low-cost terminal able to handle at least five million passengers a year in the first phase of the airport's construction. "The first phase of Dubai World Central will be for logistics services and low-cost carriers," said Mehra Homayoun. Although prices at the current Dubai International Airport are competitive, rates at the new airport will be lower and "definitely not be the same prices we are asking to pay there", she said.

Dubai urgently needs the extra capacity because its current terminal complex, designed to handle 22 million passengers annually, is now over the 25 million level, with some 29 million passengers expected this year, she said.

The new terminal being added at Dubai will take the airport's capacity to 60 million passengers by 2008. This airport could eventually be dedicated to home carrier Emirates. "I'm thinking that all other airlines will probably go to Dubai World Central," said Mehra, although no firm decisions have been reached yet.

One of the most impressive stands at Routes was a huge model of the vast Dubai World Central site (see below). With its six runways, monster airport, dedicated cargo and logistics centre, two 18-hole golf courses, industrial zone, residential city and commercial centre, it is a staggering undertaking, and one that only Dubai could seemingly envision.

The world of airline networking planning is gathering this week in Dubai as the World Route Development Forum touches down for its annual get together. Over 2,000 airlines, airports, suppliers and interested parties are here. These include Airline Business with a daily newspaper - Routes Daily News.

Naturally the region's airport groups are making a big splash, with Dubai taking centre stage with its incredible Dubai World Central project. The 140 sq km complex is not merely an airport but a logistics, business and leisure destination.

The ambitious plans for Qatar's New Doha International Airport and the expansion at Abu Dhabi International Airport are also prominently featured here.

The event officially opened yesterday (Sunday 17 September), and the Gulf's leading aviation lights were there to kickstart proceedings. This picture from the opening shows Sheikh Ahmed bin Saeed Al-Maktoum (right), and Akbar Al-Baker, sharing a friendly word at the New Doha International Airport stand. Al-Baker, the chief executive of the Qatar Airways group, greeted his counterpart from Dubai, who is the chairman of Emirates Group and president of Dubai Civil Aviation, as Sheikh Ahmed conducted a tour of the exhibition hall.

Al-Baker, who is here to help showcase Qatar's plans for the New Doha International Airport, told Routes Daily News that he hopes to begin services with his carrier's newly delivered Airbus A340-600s to New York's Newark Airport in the first quarter of 2007. By then the carrier will have taken delivery of four A340-600s.

Al-Baker said he prefers Newark with its convenient rail link to downtown New York over "congested" JFK.

For years the prospect of the Caribbean's multitude of island nations, and other interested neighbours, clubbing together and creating a pan-Caribbean carrier has been the topic of debate. Seldom has the debate got past the "in principle that sounds like a good idea" stage. As Peter Davies, the chief executive of BWIA West Indies Airways, observes: "This part of the world could do with one airline."

The latest attempt to find common ground between carriers around the region saw the resurgent Latin American Airlines Association - ALTA - gather leaders from several airlines in the Cayman Islands in July. Air Jamaica, BWIA, Caribbean Star, Cayman Airways, Panama's COPA, Antigua's Liat and El Salvador's TACA were all there.

At this stage the discussion centred on issues like sharing resources and using the collective mass of the players concerned to purchase suppliers and services. The Caribbean players would do well to share the experiences of the Arab carriers which have been working effectively through the Arab Air Carriers Organisation to jointly buy services like ground handling.

Taking a greater step requires a more radical policy shift from carriers and governments around the region, whether in the Arab world or in the Caribbean.

There has been talk of mergers before. In 2003, a combination of BWIA and Liat was mooted (BWIA has a 9% stake in Liat). Back in 1994 there was a plan for an operationally merged Caribbean carrier.

Can airlines generate more revenue and improve passenger loyalty by thinking out of the box?

At the World Low-Cost Airlines Congress in London earlier this week, ancillary revenue opportunities were a hot topic. Airlines and consultants talked about how several carriers already generate revenues by offering frequent flyer-credit cards, selling advertising on seatbacks and selling hotel rooms, car rentals and holiday packages on their websites.

Airlines were urged to take it a step further and be more innovative. Recent examples highlighted include Ryanair's plan to offer in-flight gambling and Nok Air  profiting from flight attendant recruitment by having companies pay to sponsor searches. One attendee suggested airlines sell on their website "surprise tickets" in which passengers do not know where they are going until they get to the airport.

In this era of record high oil prices, airlines clearly need to take advantage of whatever new extra revenue streams are available. But there are not necessarily any easy solutions because every local market is different in terms of what passengers will accept.

Take Nok Air, for example. Nok has games on-board and hawks merchandise, including from its advertising sponsors. "You have a captive audience in the cabin for one hour. You can do a lot of sales pitches," says Nok vice-president of marketing Pinyor Pibusonggram.

For Thais this may be seen as fun but in other countries this can be seen as loud and annoying.

In typical Thai fashion, Nok also uses scantily clad "girls" who are paid only ｣2 ($3.75) per day to help passengers check in using personal digital assistants or PDAs (see picture). Other airlines may also want to consider using PDAs held by staff in the airport lobby or even at the curb outside airport entrances to reduce the queues at check-in counters. But obviously not all airlines can get away with paying staff ｣2 per day and in many countries they will not get away with skimpy uniforms.

There are fewer greater joys in a Bavarian's life than drinking beer: Lots of it. And perhaps most remarkably, for many observers, at lunchtime after a mornings work and before a full afternoon's toil.

So it is with pleasure that we comment on the southern German tradition of beer drinking after a prompt from Munich Airport. It is gearing up for tomorrow's launch of the 2006 Oktoberfest, the world's largest beer festival.

The airport runs Airbraeu (see above), what it claims to be the world's only airport microbrewery and authentic Bavarian biergarten in the world. Airbraeu has brewed up 36,000 litres of fresh beer to thirsty Oktoberfest visitors so they can begin quaffing as soon as they step off the plane. This includes a batch of its own creation - Jet A1. If anybody gets a taste of this brew please tell us what it is like.

The airport has also outlined its top 10 - unofficial - survival tips for the festival. My favourite suggests dressing in traditional Bavarian garb to make the experience all the more memorable. So don't forget the lederhosen (for men) or dirndl (for women) if travelling to Munich.

Frontier Airlines is taking a counterintuitive tack in its route back to profitability following the entry of Southwest and the buildup of United into Frontier's hometown of Denver. The low-fares, low-cost Frontier is adding a host of short routes at a time when short-haul air travel is down and the 13-year-old airline is buying a fleet of up to 20 Bombardier Q4O0s turboprops to serve the routes at a time when most carriers are relying on regional jets.

Although the addition of turboprops to an all-Airbus fleet adds an element of complexity that the low-cost carrier business model avoids, the move rests on hard thinking and close analysis, Frontier chief executive Jeff Potter told analysts in a web cast. "When you draw a 650-, 700-mile circle around Denver, what we see is a lot of opportunity, but we didn't necessarily have the right aircraft", said Potter. "It gives us the flexibility to serve some of the Colorado mountain destinations that we couldn't otherwise do". That makes smaller resort and ski towns such as Aspen or Durango, Colo., or Jackson Hole, Wyo., candidates for Q400 service along with underserved business centers such as Grand Junction, Colo., and Billings, Mont. It will fly to as many as 18 destinations in Colorado and the Rocky Mountains. The first of the 10 firm-order 'Q's will be delivered in May, 2007.

The deal, worth up to $257 million, will be done through parent Frontier Airlines Holdings, which will operate them through a new subsidiary, Lynx Aviation, which plays on Frontier's wildlife theme and slogan, "A Whole Different Animal". Subsidiary Lynx will be marketed as FrontierExpress. Frontier will hire new employees for Lynx flights, likely at lower pay scales than unionised Frontier employees.

Frontier does have a regional jet feeder operator, Horizon Air, which also happens to be the only US operator of Q400s, but Potter said Frontier decided against having Horizon operate the new 74-seat turboprops. Potter said it would cost less for Frontier to use its new subsidiary.

Potter did say Frontier also wants to expand the number of planes in its regional jet partnership from nine to as many as 20 RJs for longer feeder routes. It will issue a request for proposals to operate that regional jet fleet, inviting Horizon, an Alaska Air Group subsidiary, and other carriers to compete for that flying. Frontier also has a small feeder relationship with Great Lakes Aviation, which Potter said will not be affected.

This September eleventh is almost as difficult a day for airline execs as the first September 11 - five years ago. In a sense it's a harder day, because five years ago, events controlled what airlines did and said, and this time around it is airline guys and their spokescreatures who have control.

Most are electing the better part of valour and keeping mute. As one airline industry spokesman explained: "It is a no-win situation. If you do something to mark the anniversary you run the risk of looking ghoulish or opportunistic, especially if some one questions your taste. And but if you do nothing, then you're insensitive."

Most carriers are taking this position: this is a day to remember those who died and those who tried to save them.

A few parties though are speaking out, and skipping over such predictables as labour unions or political players offering screed in how much safer we are or how much more at risk we are, it's worth looking at what Southwest Airlines is doing. It is using its corporate blog, Nuts about Southwest, and features two posts on the subject and a series of five video clips of employees (including co-founder and board chairman Herb Kelleher) sharing personal experiences and remembrances from that day. http://www.blogsouthwest.com/ .

The US is about to choose carriers for new US-China routes, stirring aggressive bidding, but this Transportation Department  competition is different than most: it has drawn airlines into innovative marketing campaigns to win public support for their proposals in a level of public activity not seen since the early US/China route selections or the anticipated US/UK breakthroughs of the late 1990s.

American has set up an attractive website, www.flytochinaonaa.com, which touts its proposal and invites viewers to sign an on-line petition that will go to the decision-makers, while Continental held a rally in New York City's Chinatown to enlist support and to stress the importance of the traffic base in the New York City area - which has no non-stop US/Shanghai service. Continental too is inviting electronic petition-signing on its website, although the American page is considerably richer in content.

The only US-flag airlines allowed to apply for the highly desirable routes to the Mainland are those airlines that already fly between the two nations. A 2004 US/Peoples' Republic agreement set that limitation, and no new carriers can be chosen before the middle of 2008 - making this competition all the more intense. As much as $100 million in annual airline incremental revenue is at stake, say analysts, while American has estimated an economic impact of as much as $200 million on the North Texas economy alone.

This competition, rather than based in the competition of hub and feeder-network strengths as in the past, involves considerable symbolism: for the first time non-stop service between the two nation's capital cities is at issue.

United Airlines, which has long served China, wants to add a route between Washington Dulles International Airport and Beijing, arguing that its route should win because of the growing importance of US/China relationships. It has won support from the powerful Speaker of the House, Rep. J. Dennis Hastert, who happens to represent a district in suburban Chicago, the city that is home to United's headquarters. Hastert says, "Capital-to-capital service will support the continuous dialogue that is critically needed between these two governments".

Against that symbolism is the argument that some regions of the US have no service at all to China; American wants to start serving between its Dallas/Fort Worth hub and Beijing, opening the first gateway to China from the US south. The China Daily quotes Marriott's John Northern, chairman of the travel and tourism committee of Shanghai's American Chamber of Commerce, as giving reserved backing to the United bid. "The most important thing is to have a balance of destinations so there is even coverage in both directions and that would lead me to favour Washington and then maybe the Dallas route," he is quoted as saying.

The third contender, Continental, which wants to fly between its Newark Liberty hub and Shanghai, argues that more local passengers fly from the New York area to Shanghai than from San Francisco, Chicago, or Los Angeles, all of which already have China service. The fourth contender, Northwest, would add Boeing 747-400 service between its Detroit hub and Shanghai. That is the largest aircraft size on offer, with the others offering equipment in the B777 size. Northwest argues that even though it already links Detroit with China, the addition of a new city on the mainland from Detroit makes sense because the 'Motor City' is the only US gateway with enough traffic to compete with service levels between China and Chicago O'Hare - four daily flights on United and one on American.

The Transportation Department has set a 31 October deadline for applications and supporting material, and will likely decide before Christmas, allowing the routes to new service to start in March of next year. You can read the arguments and counterarguments here: OST-2006-25275-1.

Carriers are gradually emerging from the bunkers in the Lebanese capital Beirut after the introduction of a ceasefire that halted hostilities between neighbouring Israel and Lebanese resistance fighters Hezbollah and the lifting of a military blockade.
Home carrier Middle East Airlines (MEA) has been gradually reintroducing services from Beirut and the carrier says its entire fleet has now been repatriated to Beirut from the Syrian capital Damascus, where  MEA operations were based during the conflict.
British Airways franchise partner BMed and Qatar Airways have both restarted commercial flights to Beirut's Rafic Hariri International Airport following approval from the Lebanese authorities.
Etihad Airways has resumed its four-times weekly Abu Dhabi-Beirut service, alongside the daily service by low-cost carrier Air Arabia from Sharjah.
German flag-carrier Lufthansa has restarted its five-times weekly services from Frankfurt, and Gulf Air and Emirates have also returned to the Lebanese capital.
Emirates will initially operate three-times weekly from Dubai while Gulf Air's service will be daily.
Air France has resumed service at four-times weekly flights at first, three less than before the start of the hostilities. "Demand will determine whether we go back to those levels. But the first flight was nearly full," says Air France. The French flag carrier is also taking over services previously operated by merger partner KLM.
The airport was severely damaged during fighting, with runways and taxiways sustaining bomb damage that forced airlines to withdraw. The terminal buildings, however, were largely undamaged and it is back to business as usual for the airport's shops. This will doubtless come as a huge relief to the salespeople, who for a while have been outnumbering the customers.

The sale of SR Technics to a group of Middle Eastern investors could accelerate the race among the world's largest maintenance companies to expand into key growth markets.

The change of ownership will strengthen SR Technics' presence in the fast-growing Middle Eastern market and help it expand into India and potentially other parts of Asia. SR Technics chairman Frank Turner says the company will retain an earlier plan to open an overhaul shop in Oman and acknowledges a tie-up with Abu Dhabi-based Gulf Aircraft Maintenance (GAMCO) is also possibility.

One of GAMCO's owners, Abu Dhabi government investment arm Mubadala, is one of the three companies acquiring roughly 30% stakes in SR Technics. The other two companies involved in the acquisition are Dubai Aerospace Enterprise (DAE), which was established early this year and was planning to open an aircraft maintenance shop at the new Dubai airport, and United Arab Emirates investment house Istithmar.

Turner says SR Technics will be the only maintenance provider under DAE and will decide later whether to go forward with the plan for a maintenance facility at Dubai. "With growth that is predicted in the Middle East there is a shortage of facilities there," says Turner (pictured below). "We may be at the new airport in Dubai but we can't say definitively at this stage."

Abu Dhabi-based GAMCO is now the only major maintenance provider in the Middle East and also has been looking to expand into Asian growth markets, in particular India. It lost its anchor customer, Gulf Air, overnight in May when the carrier transferred the servicing of its entire fleet to SR Technics. As part of the deal, SR Technics committed to opening a maintenance facility in Oman.

GAMCO and SR Technics have since discussed potential partnerships and common ownership could drive these talks forward. Turner says there are no specific plans for a tie-up with GAMCO and any negotiations would be done at arms length because SR Technics will remain a completely independent company.

"We will not be part of any Middle Eastern airline but will have increased opportunities to service them," he says.

SR Technics now operates 11 maintenance hangars, all of which are located in Europe. "We'll now be based in one of the most dynamic and fastest growing regions in the world," says Turner, adding the new owners will also help the company expand into India and China because they have developed contacts in these countries.

Other larger maintenance companies such as Lufthansa Technik and Singapore Technologies also have been keen to expand into the Middle Eastern and Indian markets. The SR Technics acquisition could prompt them to speed up these growth plans and lead to consolidation in the maintenance sector, which has seen steady growth in recent years driven by airlines relying more on outsourcing as part of efforts to curb costs. The maintenance sector is now poised for more growth driven by rapid fleet expansions at Asian and Middle Eastern carriers.

In terms of marks out of 10 for succession planning Boeing gets a solid 7, Embraer warrants a glossy 10, while Airbus only merits a paltry 2.

It is quite remarkable that all three of the world's major aerospace manufacturers have undergone radical transformations at the top of their management trees all within a couple of months of each other. There is a stark difference between each however.

At July's Farnborough Airshow Alan Mulally must have known that his annual press briefing was to be his last. Soon the roar of the turbofan would be replaced in his world by the hum of the automobile engine, as Boeing's commercial airplanes supremo mulled a transfer to the troubled Ford Motor Company.

Mulally's move was hardly a surprise after he was overlooked by Boeing's board to lead the entire corporation in favour of 3M and GE executive James McNerney a year ago. Luckily for Boeing a ready-made replacement was waiting in the wings in the shape of Scott Carson, its head of sales. The affable Carson was brought in to revive Boeing's flagging sales efforts in late 2005. The only potential blot on his copy book is that he ran Connexion, which Boeing is now axing, although to his credit he did get it up and running and left well before the in-flight communications service came under scrutiny.

Mulally leaves Boeing with a coherent product strategy, with the 777 coming into its own and the 787 selling like hot cakes. Its production costs also appear to be well under control. Carson takes over a solid looking platform from which he can weave his sales magic.

In succession terms, Carson has most likely been lined up for months. In fact the press release has probably been sitting on a desktop just ready to go.

Boeing's peaceful transition jars with the woes at Airbus in the weeks running up to Farnborough. Flightglobal covered the departure of Noel Forgeard and arrival of Christian Streiff in great detail. Suffice to say, succession planning did not play a great role in the affair. The only reason Airbus gets a score of 2 out of 10 is that it responded quickly to bring Streiff in.

The most impressive succession is at Brazil's Embraer. The smooth handover of Mauricio Botelho to Frederico Curado is virtually by the book.

The appetite for aviation acquisitions among Iceland's hungry investment community has again been highlighted with the purchase by Swedish budget carrier FlyMe of a majority stake in UK charter operator Astraeus.

The Icelandic link in this deal comes from investment company Fons Eignarhaldsfelag, which has a 20% stakeholder in FlyMe. It also owns Iceland Express, another low-cost carrier.

FlyMe says there are plenty of synergies to be gained from moving aircraft efficiently around the three carriers. It has a network of European routes from its Gothenburg base. Astraeus meanwhile flies to leisure destinations in Europe and Africa.

As the award-winning article Northern Raiders, written by Gunter Endres in the February 2006 issue of Airline Business, explains, Icelandic investors have been extremely active in the aviation market in recent years.

And there are short odds that there will be more action from this quarter in the not too distant future.