December 2006 Archives

What is it about seaplane services that are so attractive at the moment? The latest one to get going is Destination Air Shuttle, billed as Thailand's only seaplane shuttle service.

News of its appearance comes just weeks after some bright sparks conducted tests in London with a Twin Otter fitted with floats. The aircraft landed successfully on one of London's docks. The idea under study by a Greek seaplane operator is to link London to other UK cities using lakes, rivers and harbours.
Elsewhere, further to the north in Scotland, Loch Lomond Seaplanes has been given approval to link Glasgow to the Highlands & Islands to the north. Such journeys take hours by road.
Thailand's seaplane service launches in February from Phuket International Airport. It will offer 12 flights per day with its Cessna Caravans serving the island resorts of Phi Phi Island, Krabi and Koh Lanta. It says a half day overland journey will be reduced to no more than 30 minutes.
Captain Nithit Kesangam, chief executive of Destination Air Shuttle says: "This is an outstanding service to hotels and tour operators in the Phuket area. This is a fantastic shot in the arm for hotels and tourists going to Phi Phi, Krabi, and Koh Lanta."
SriLankan Airlines is another with a seaplane service. Its Cessna Caravans take leisure travellers around the island on a taxi service taking them quickly from Colombo airport to their hotels.
Check out Sydney Seaplanes in Australia as well - the seaplane tour feature whets the appetite for an intimate picnic getaway on a secluded beach. Commercially challenging as such ventures sound, I must admit to being tempted to try one as a consumer. Who says the romance of flying is dead?

AirAsia took delivery today of its 50th aircraft, an impressive accomplishment given the Malaysia-based low-cost carrier is only five years old.

The carrier, which pioneered low fares in Southeast Asia, says with the 50th aircraft it will embark on the second chapter of its amazing story. In the second chapter, AirAsia promises to "strengthen and enhance its route network by connecting all the existing cities in the region and expanding further into Indo China, Indonesia, Southern China and India".

The carrier launched with a hub in Kuala Lumpur and has since added hubs in Bangkok and Jakarta with affiliates Thai AirAsia and Indonesia AirAsia. It also has added three hubs in Malaysia - Johor Bahru, Kota Kinabalu and Kuching. The latter two opened this year after a landmark deal with the Malaysian government which saw its main competitor, Malaysian Airlines, withdrawing from most domestic routes. The two continue to compete on major trunk routes.

AirAsia says its second chapter will also include new training and maintenance facilities plus new ecommerce initiatives. The carrier will soon introduce web and PDA check-in services.

"The past five years has been a blast," says AirAsia's flamboyant chief executive, Tony Fernandes (pictured below). "Our growth from 2 to 50 planes is a testament that we have a winning product - low fares and quality flying experience."

AirAsia now has a fleet of 15 A320s - the 15th A320 arrived today in Kuala Lumpur - and 35 Boeing 737-300s. It has another 85 A320s on order which will be used to replace the 737-300s and provide another 50 growth aircraft that will allow AirAsia to hit the 100 aircraft mark in 2011. AirAsia should reach the current size of Easyjet and Ryanair in 2012.

AirAsia already operates 300 flights per day on 70 routes across 10 countries. It has already carried more than 26 million passengers since launching in December 2001 and expects to carry another 18 million passengers in 2007.

Weeks after an unsolicited suitor showed up at its door uninvited, bearing a wedding proposal and about $9 billion in hand, Delta has recovered from its shock and begun fighting back. US Airways, the suitor with the hot eye and heavy hand of cash, had gained some strong press with a well designed and very useful merger section on its website (http://www.usairways.com/awa/content/aboutus ). The former America West Airlines offered one stop shopping with documentation, analytical slide shows and even a personal view of some if its executives. Reporters, cultivated by PR agents from the high-powered Joele Frank firm, liked it and analysts used it, through some wondered when or if Delta might expand on its simple 'nyet' to the US Airways cash-and-stock offer.

It's finally happening, as Delta fights back with a well-organised employee campaign that featured rallies in major and minor cities around the system, a campaign that puts big red 'Keep Delta My Delta' badges on workers throughout airports, and a website (http://www.keepdeltamydelta.org ) that includes an on-line petition. Armed with 50,000 of the big badges, Delta employees rallied in major and minor cities, even in Harrisburg, Pennsylvania, where Delta is a minimal presence but US Airways is a big player.

Chief executive Jerry Grinstein took to the web with two webcasts explaining why the Delta stand-alone plan is better than a merger and why the US Airways plan is full of antitrust pitfalls(http://www.delta.com and go to the bottom of the page.) As well argued and detailed as the US Airways merger analysis, the slideshows are seriously documented. And the Delta executives who speak on the website are numerous, including an apparently new player. In one webcast that featured a Q&A with Wall Street securities analysts, the webcast moderator introduced a new Delta chief executive, one "Mr. Einstein". Grinstein, bursting into laughter, quipped that the new name was the smartest thing that he'd been called.

Of course, this is no laughing matter. If done, the deal creates the largest airline in the nation, but removes from the marketplace a proud name that has long been independent and has for decades stood for warmth and home-style good service across a vast swath of the nation.

Today, Wednesday 20th December, after much leaking, the European Commission (EC) has released its proposals to bring airlines into its Emissions Trading Scheme. It has received a cautious welcome across the airline and airport sector, with IATA, the Association of European Airlines, ACI Europe and easyJet all commenting swiftly on the proposal.

As advocated by Airline Business, the scheme will not apply from the outset to non-European Union carriers. In fact not until 2012. This is a year after the scheme applies to carriers flying inside the EU. After that those flying to and from the continental will have to trade their carbon. This is a pragmatic move, but may still not be enough time for some states, such as the US, to stomach.

The EC's move is an important step in a scheme that surely is the only sustainable way for airlines to play their part in addressing climate change - ie paying for their polluting effect - and still offering the ability to grow.

Qantas boss Geoff Dixon is not one to mince his words, or to avoid getting stuck into a fight, so it is no surprise to see him vigorously defending the takeover of his carrier by a privately backed group. Here is an example of the reporting on the Qantas deal from The Australian newspaper.

As an exercise in putting the record straight, from his point of view, Dixon's lengthy tirade is a worthy read.

The old saying goes, "it's easy to make a small fortune in the airline industry. Just start with a large fortune". But the industry is attracting some big and deep-pocketed who may have a better way to spend their money: deals to take over airlines just as the industry's fortunes are rising.

A leading player here is so-called private equity, which means investment groups that have no public shareholders to answer to quarter after quarter but have merely to satisfy their own long-term needs. One of the biggest of these is the Texas Pacific Group, now a key player in the airline industry, having helped put together the winning bid for Qantas.

For Texas Pacific, the Qantas deal represents a return to its early triumphs. The group's first, big deal was the 1990s deal that took Continental Airlines out of bankruptcy protection. Two of the four original members or partners of Texas Pacific, co-founder David Bonderman and Rick Schifter, worked on the original Continental deal and were deeply involved in the negotiations over Qantas. Schifter stayed on the Continental board until this autumn even though Texas Pacific had a smaller and smaller role in the airline.

At the time of the Continental deal, Bonderman was working for a legendarily wealthy Texas oil billionaire, Robert Bass, who himself was a noted investor. He left the relative security of the oil patch for Continental Airlines, turning his initial $66 million investment into a $700 million take. TPG has since turned its focus to turnarounds, management-led buyouts and recapitalisations that include media and telecommunications, industrials, technology and health care.

Among its other deals are the July 2002 buyout of Burger King, the takeover of several big name retailers such as Neiman-Marcus and Debenhams, since re-floated, and hi-tech deals such as the Lenovo purchase of the IBM 'ThinkPad' PC business. It has also taken over Gate Gourmet, the former Swissair in-flight caterer that has suffered industrial action and other turmoil.

Texas Pacific was a major backer of the $4.5 billion privatization of travel-distribution giant Sabre. That deal that came days after a privately held travel tech firm, Travelport, took over another major distribution firm, Worldspan. Travelport is owned by private equity firm Blackstone, one of the few investment groups large enough to rival Texas Pacific.

After a smaller investment in America West following its Continental deal, Texas Pacific had stayed away from airlines for a long time as the industry writhed into its down cycles. For instance, when Air Canada went on the auction block in 2004, Texas Pacific made a low-ball bid and lost out to Cerberus Capital Management.

At the time, Bonderman (pictured) said that the kind of profits of a Continental deal were a thing of the past, given the competition from low-cost airlines. But in recent months, private equity firms such as Texas Pacific and other private investors have shown increasing interest in airlines despite the industry's famously risky landscape.

And smaller private-equity firms were big investors in the recent reorganizations of ATA Airlines and Aloha Air Group while hedge funds, a first-cousin of private equity, were major players in the reorganisation and merger that created the current US Airways Group.

How can a low-fare carrier operate in a country that prohibits low fares?

That is the question China's new stable of private carriers must grapple with as they try to compete against more established government-owned airlines.

The parent of Spring Airlines, China's first self-proclaimed low-cost carrier, has been fined 150,000 yuan ($19,000) for selling tickets too cheaply. Chinese regulations prohibit airlines and travel agents from offering discounts of more than 45% off full standard fares, which are set by the government.

Jinan Spring Holiday Travel, which launched Spring Airlines in 2005, allegedly sold over 400 Spring Airlines tickets at the end of November between Jinan and Shanghai for only one yuan, well under the government regulated minimum one-way fare on the route of about 500 yuan.

Shanghai-based Spring is China's second private carrier after Tianjin-based Okay Airways and was the first to unveil a budget carrier strategy, which is supposedly modelled after Southwest Airlines. There are now two other private carriers in China - Wuhan-based East Star Airlines, and Chengdu-based United Eagle Airlines. Hainan Airlines also has established a low-cost operation earlier this year known as Lucky Air.

While several of these carriers claim to be low-cost they acknowledge they are not true low-fare carriers because the government does not allow them to sell heavily discounted tickets. Low-cost is also really not an accurate description given China's high operating costs and taxes. Most operating costs, including airport charges, are fixed and set by the government at relatively high rates compared to other countries. So far China simply does not seem to be interested in opening up China to true low-cost players despite all the international hype about the potential of China's low-cost market.

if the Chinese government were interested in creating a low-cost market which would enable more of its citizens to fly (something the government may not want to encourage) it would have to allow airlines to sell tickets at whatever prices they see fit. There is nothing stopping low-cost carriers from North America, Europe or even other parts of Asia from selling promotional fares of less than one euro, dollar or ringgit. Spring claims to be profitable although it only operates four Airbus A320s in a high operating cost environment. If this is really the case how can it be low-fare or low-cost?

The recent pain felt by travellers leaving from London's major airports should make premium start-up carrier Silverjet's proposal sound particularly tempting. It is offering passengers a service whereby they can arrive at the carrier's planned dedicated terminal at London Luton Airport just 30 minutes before departure, leave their baggage with a concierge and relax in the lounge where an official armed with a laptop will check them in for the flight.

The carrier will be flying a Boeing 767 fitted out with 100 lie-flat business-class seats. Other enhancements to the regular flying experience being offered by Silverjet include ladies-only toilets on its aircraft, as well as no overhead lights or trolley service to ensure minimum disturbance to passengers during the flight.
It also promises dedicated security at the airport and offers helicopter transfer from downtown London.
The service is scheduled to start on 25 January between Luton and Newark, with introductory fares from £799 ($1,560).
Silverjet is entering a crowded market, with competition from existing US-based premium carriers Eos and Maxjet, as well as UK mainline carriers such as British Airways and Virgin Atlantic, all keen to attract the lucative business-class traveller.
Silverjet's dedicated terminal is part of a trend towards pampering the premium-class passenger. Lufthansa has a dedicated terminal at Frankfurt for its first-class passengers, while in the Middle East Qatar Airways has a terminal for its premium passengers at Doha and Etihad has one for its passengers at Abu Dhabi.

BMED chief executive David Richardson was in Washington recently to promote his new services from London to West Africa to the US travel trade.
Bookings on BMED's on new services to Dakar, Senegal, and Freetown, Sierra Leone, from London Heathrow Airport are better than expected, according to chief executive David Richardson. Launched at the end of October, the bookings for December and January are "way over budget", he says.

Richardson was in Washington for a reception at the British Embassy, sponsored by UK Trade & Investment and British Airways, to celebrate the new service; there are an 40,000-60,000 residents in the Washington area with West African roots.

A franchise partner of British Airways since 1997, BMED operates the new services three times a week with narrow-body Airbus aircraft, equipped with Club World and World Traveller seating. The flights are timed for connections to and from BA's 40 daily US-UK transatlantic flights.

BMED currently has three A320s and five A321s in its fleet and has five more A321s on order. "We're looking forward to further expansion in the next few years." With the new service, the carrier flies to 17 destinations in Europe, the Middle East, Central Asia and Africa, including many points other carriers avoid, such as in Kazakhstan, Syria, Iran and Lebanon, where it started flying in 1994 as British Mediterranean Airways. "We're used to serving challenging destinations," Richardson notes.

The airline makes a point of hiring local managers at each airport. They are both a fantastic source of information on local culture and markets, he says, and the airline has been able to help with inward investment, playing a role in the development of the local economies it serves. "We have no expat managers at all," Richardson adds. "It gives us a bit of an edge."

Iain Burns, the British Airways public relations chief who resigned in early October in the wake of the still on-going UK/US probe into price-fixing, has swapped chilly Waterside for sunny Abu Dhabi. Burns, a highly experience PR operator, has been named as the head of corporate communications at Etihad Airways, the fast growing Middle East carrier that is vying to give Emirates a run for its money.

It is a remarkable and swift renaissance for Burns and he will be looking to put the price-fixing issue behind him very quickly. Etihad will be getting a seasoned airline PR operator. Etihad's new chief executive, James Hogan, says that the experience Burns has in the aviation sector "is ideally suited in telling the story of our expansive agenda to the media and our own employees".

Burns, 48, left BA after five years as its head of corporate communications. He had joined from PR consultancy Bell Pottinger where, in a neat twist, he handled European and North American PR for Emriates. Burns had two spells at BA, and managed the PR for American Airlines in the UK. In his first public words since leaving BA, Burns said: "This is an exciting time to join Etihad which has come a long way in a short period of time and has great plans for the future. I am very much looking forward to playing my part in articulating the airline's formidable strategy to a growing audience around the globe."

Burns is expected to begin work at Etihad in 2007.

Expect appointment news from the other BA official who resigned in after the price-fixing probe - commercial director Martin George - shortly as well. Word on the street is that, not surprisingly for this well-regarding executive, offers have been coming his way.

Victoria 'Vicki' Moreland, well known among airline network planners, has left Spirit Airlines, the South Florida-based, leisure-oriented carrier she helped found. At Spirit, Moreland had served as sales and service director and more recently as vice-president of planning.

The airline has not named a replacement, and Vicki says in an e-mail that she is proud of her accomplishments there and is looking for the next exciting opportunity. Moreland, who led an in-flight service upgrade that helped Spirit gain a following among bargain-hunting Michiganders seeking to escape the Midwest's harsh winters, was a strategist of Spirit's 1999 move from the Detroit area to Miramar in South Florida and of its network expansion into a vacation-oriented airline with national reach and scope. Spirit has undergone a change of control as new investors have infused it with new capital, but network strategy has not changed.

"As the director general of IATA I am a bit like a catholic priest - I can't disclose what I know," says Giovanni Bisignani, responding to a press question at the association's annual press briefing over what he thinks will happen to his former employer Alitalia.
Bisignani, who ran the ailing flag carrier when it wasn't ailing in the 1990s, says he has talked to several of the airline chief executives mentioned in the media as potential suitors for Alitalia in the past few weeks. "I do not see any developing an interest in the deal," he reveals.
Alitalia and Olympic remain the two difficult and outstanding cases in Europe when it comes to profound restructuring. And it should be hands-off as far as their respective governments are concerned when it comes to sorting these carriers out, he says. The Swiss government's attitude of it's now time to sink-or-swim towards the resurrection of the country's flag carrier after its collapse is the stance to take, he says.

A dozen Christmas trees are today hastily being put back up at Seattle-Tacoma Airport after being taken down last week under threat of a federal lawsuit. Rabbi Elazar Bogomilsky had threatened to sue the airport after complaining that the decorations did not include a Jewish menorah. He had written to ask the airport to add a menorah - an eight-branched candelabra used during the festival of Hannukah - to reflect the city's cultural diversity.
But the airport panicked and decided, in the face of the threat of legal action, to take down all the Christmas decorations.
The authorities might have guessed the decision would have been less than popular with the travelling public, but could not have foreseen the public outcry that saw the airport's website flooded with emails of protest and hate mail being sent to the Rabbi concerned.
After clarification the airport operator Port of Seattle president Pat Davis said: "The Rabbi never asked us to remove the trees. It was the Port's decision based on what we knew at the time."
The Rabbi insisted that he was "saddened" the trees had been removed.
"There has been such an outcry from people of all faiths we believe the trees should be reinstalled," said Davis.
A menorah will not be added this year, but the airport says it plans to work with the Rabbi and members of other faiths next year on a display to reflect all sections of the community.

Flying out of London Heathrow Terminal 4 yesterday, my first visit to this outlying home for British Airways and assorted others, brought it home how much the carriers that are left in this terminal and terminals 1,2 and 3 will be at a disadvantage when BA moves to the glittering new Terminal 5.
Terminal 4 is horrible. The interior is dark and grim, the check-in zone is narrow and cramped, the boarding and shopping areas are dense and crowded.
Now I'm unlikely to be telling anyone who uses Terminal 4 anything new here. But Air France-KLM and fellow SkyTeam carriers I pity you greatly if you do indeed take up residence in this terminal.
I resolve to ask a lot more questions in 2007 about how BAA proposes to invest in Terminal 4 to bring it up to something at least approaching Terminal 5 standards. I am sure SkyTeam and Air France-KLM have been asking them for ages - I wonder what answer they are getting?
One quesiton I know they will be unlikely to find a positive answer to is whether or not they will obtain lower terminal fees at Terminal 4 compared to BA's at Terminal 5? Terminal 4 will be so sub-standard compared to Terminal 5 it will be almost immoral not to charge less. Or BA should be charged more for the pleasure of using Terminal 5?
BA, on the other hand, is delighted it will be vacating Terminal 4. In fact, the countdown is well under 500 days to go to the big move to Terminal 5. As BA says in its inflight magazine: "The move will transform the flying experience for the 30 million BA passengers who pass through Heathrow airport each year."
I hope to be among them, as I aim never to set foot in Terminal 4 again (well except that is upon my return there this evening!)

The world's airline association IATA has carried out its threat to take the Argentinian government to court over the charging structure proposed for the country's airport operator AA2000. This dispute particularly involves the country's main gateway Buenos Aires airport and is being supported by ALTA, the Latin American Airline Association.
The move is the third time IATA has taken legal action against what it says are flawed airport deals: in June it took the French government to court over its fee hikes at the Paris airports, and in May it filed a case against the Dutch government's charging increases at Amsterdam Schiphol airport.
The issue in Argentina dates back to 1998 when the government privatized the country's airports creating AA2000. The complaints against AA2000 and the government already fill several pages of IATA documents, but include price discrimination between foreign and domestic carriers and against the structure of a renegotiated contract between the two players.It really does make for some gruesome reading. Speaking at a global IATA press briefing today (12 December), the association's director general Giovanni Bisignani said: "There is a cosy relationship between the airport and government. That is going to turn a failed privatization into a disaster."
The Argentinian case is a political hot potato, partly because the government plans to take an equity stake in AA2000. In fact the issue is so sensitive in Argentina that IATA has had to previously unheard of lengths. When Bisignani went to testify at a hearing in Buenos Aires about the airport contract he had to have body guards, and the association has had to have special phone lines installed as it suspected it was being bugged.

For a coherent and closely argued speech on aviation's environmental responsibilities look no further than Martin Broughton's submission to the UK's Aviation Club on Wednesday 6 December.

The erudite British Airways chairman said: "I have no doubt whatever that the right policy response is to go with the grain of what society wants: an aviation sector that is environmentally responsible and focused on making real reductions in global carbon emissions. Carbon-safe flying, you might say."

In his view, this means emissions trading and not so-called green taxes. In fact, moments before he delivered his speech Broughton was told by his press office colleagues that the UK Chancellor Gordon Brown had doubled Air Passenger Duty.

Broughton was scathing in his response to this "extremely blunt instrument".

"It is a revenue raising measure, pure and simple," he said. Aviation is being treated as a "cash cow", he added.

On emissions trading, the European Commission's plan to include all flights in and out of the European Union as well as all those within the EU is "overly ambitious and self-defeating", said Broughton. "It will undoubtedly lead to international disputes, as non-EU states and airlines challenge the right of the EU to apply the scheme to them."

Delta Air Lines has become the first US major in five years to operate a service to the African continent.

The carrier's inaugural flight to Johannesburg landed yesterday (see picture above), completing a 20-hour journey from Atlanta via Dakar in Senegal.

Delta, which has never before operated any routes to sub-Saharan Africa, will also launch a service next week from New York to Accra in Ghana.

Africa has not been served by any US major since 2001, when both Delta and TWA dropped their Cairo services. But the US government, by signing open skies agreements with several African countries, has been trying to promote more direct air links with Africa. Miami airport also has been holding an annual conference with the Foundation for Democracy in Africa to promote more US-Africa links. More flights between the USA and Africa are seen as a must if efforts to boost trade and economic ties between the two are successful.

Miami is now trying to woo South African Airways (SAA), which used to serve Miami, and Kenya Airways, which is looking at adding its first US destination. SAA also flew to Atlanta until earlier this year. The switch prompted Delta, which had been a codeshare partner with SAA, to look at launching its own Johannesburg service. Delta recently inked a codeshare pact with small domestic carrier Nationwide Airlines, which will carry Delta's code on its flights within South Africa.

Not many US majors, however, seem interested in Africa. Even Delta, which is looking to further grow its market-leading transatlantic operation, says no more African destinations are on its radar screen. Delta says forward bookings of its new African routes are encouraging, with most sales to Ghana generated from the USA and the Johannesburg flight receiving equal bookings from South Africa and the Americas.

Below is a picture of (left to right) US Consul General Stephen Coffman, Delta vice president of sales and affairs for Europe, Middle East and Africa Frank Jahangir and chief executive of South African tourism Africa Moeketsi Mosola cutting the ribbon following Delta's arrival yesterday at Johannesburg.

The first in a potential wave of new premium class products debuts today as Singapore Airlines (SIA) places its first Boeing 777-300ER into service.

SIA is outfitting its new Boeing 777-300ER fleet with new first, business class (pictured above) and economy class seats which, as generally is the case with SIA in-flight products, will likely be followed by many of the world's leading airlines.

The business and first class seats, at 30in and 35in, instantly become the widest in commercial service. The economy seat is also more spacious and features a wider seatback television screen, an AC power supply socket and a USB port.

SIA last week took delivery of its first two of 19 777-300ERs on order. The first aircraft will be placed into service tonight on SIA's Singapore-Paris route. From tomorrow the aircraft will also be used during the day to operate one of SIA's Singapore-Hong Kong services.
SIA competes mainly against Air France to Paris and Cathay Pacific Airways to Hong Kong, which is introducing an equally innovative new economy, business and first class seat next year.

More SIA routes will receive the product refresh as SIA takes another eight 777-300ERs over the next seven months. From 20 December, SIA will begin using the aircraft on its thrice weekly Singapore-Milan-Barcelona route. From January it will also be used from Singapore to Zurich and from Singapore to San Francisco via Seoul. In May, one of SIA's two daily Singapore-Frankfurt service will be upgraded to the 777-300ER (pictured below).

SIA believes the new product will allow it to boost premium class revenues - it will charge more for business class seats on the 777-300ER than its other aircraft and the new seat may woo business travellers away from other airlines. "The cabin products set a new benchmark for the airline industry. We have transformed what customers can expect in the cabin, and taken account of the clean-sheet designs of the new generation aircraft to include new features," says SIA chief executive Chew Choon Seng.

Maybe it was the weather or maybe it was all the upbeat talk and aviation activity, but Norm Mineta, beset by illness during his five-and-a-half year tenure as Transportation Secretary, looked and sounded in fine fettle at ALTA in Cancun. Now a Hill & Knowlton consultant, Mr. Secretary, as he is universally called, spent two days at the Latin American Airline Leaders Forum, working the crowd, giving a luncheon speech and chatting with reporters and others at the event.
And Mr. Secretary was more candid with reporters than his government post had allowed him to be: in his years at DoT, and in his years on Capitol Hill as chairman of the House Aviation Subcommittee, Mineta was almost always the soul of tact. But chatting with a reporter after lunch, Mineta was candidly and charmingly pessimistic about the possibility of open skies with the EC: the new House Transportation Committee chairman, Minnesota Democrat Jim Oberstar, "is against it and isn't going to be moved." Oberstar will become chairman of the committee in January but has already pronounced the EC/US tentative agreement on investment liberalisation and open skies a 'dead' deal.

"It's going to be tough", Mineta said of reviving transatlantic liberalisation. Recalling one of his last duties before stepping down from DoT in July at age 74: "You know, Jim (Oberstar) nearly bit my head off when I went in to see him. And he is one of oldest and closest personal friends on the Hill". The two served in Congress together for more than a decade and earned the nickname "the dynamic duo" when each hold leadership posts at the committee. Mr. Secretary was slyly humorous: when first asked about open skies, he smiled broadly and said "oh yes, I have high hopes", all the while shaking his head in an even more telling bit of body language in that universal sign of 'no way'.

While in Cancun, Mineta's long interest in aviation was commemorated: after the luncheon spech, Mexicana chief executive Emilio Romano presented him with a silver plaque to mark the efforts Mineta made to get direct Mexico City service for his hometown of San Jose, California, where Mineta was mayor in the 1970s before going to Congress. The airport got the flights and many others; it is now the Norman Y. Mineta International Airport.

And while Mineta was in Cancun, two airlines - JetBlue and a Mexican startup, Viva Airbus - began service to the resort and another Mexican startup - Aladia - announced plans for Cancun flights.

Being popular is great. But popularity brings its own problems - chief amongst them for airports is queues. And Cancun this weekend showed why it is a victim of its own success.

A flood of humanity was departing the soft sands and bright lights of this Mexican playground for visitors from North America, and Cancun Airport struggled to cope. The lines for that most active of Mexican immigrants, Continental Airlines, were the longest and most tragic. Average check-in time was at least an hour.

No wonder Cancun's privately owned operator ASUR is seeking permission from the country's Government to construct and operate a new airport on Mexico's Mayan Riviera. Judging by Saturday's crush, and admittedly this could have been the busiest part of Cancun's week, it could not come too soon.

There are plenty of carriers queuing up to join the queues at Cancun. One of the latest is JetBlue Airways. It launched daily Airbus A320 flights on 30 November between Cancun and its New York JF Kennedy Airport base. Read JetBlue chief executive David Neeleman's blog about the launch via this link. He is seen here doing the big foam scissors thing after touching down on the first flight last week.

In fact its flights will be popular, not only because it is a cool carrier but because switched on travellers will use the less frequent visitors to Cancun, like JetBlue, Spirit and United, simply because the check-in queues could be shorter. Continental suffers because of the sheer scale of its operation in Cancun.

Cancun and ASUR are between a rock and a hard place. Its aggressive route development programme is designed to pack the airport with aircraft and passengers.

ASUR needs strong revenues to invest in its proposed new airport. But these are suffering because of terminal congestion - the long queues give travellers less time and less inclination to spend. And we all understand how important non-aeronautical revenues are to airports.

Growth in the London market could be further constrained by a local government decision this week to block a proposed increase in traffic at Stansted airport.
Uttlesford District Council has rejected a proposal from British Airports Authority (BAA) to increase a cap at Stansted from 25 to 35 million passengers annually. Low-cost carriers, which generate the majority of traffic at Stansted led by Ryanair and easyJet, will now have to try and find another London area airport to handle their growth.
But channelling growth to another airport will be difficult given similar local opposition to expand Luton, another London satellite airport popular with low-cost carriers. London's two close-in airports, Heathrow and City, are completely off limits to low-cost carriers because of slot constraints while Gatwick, which is used by easyJet and to a much lesser extent Ryanair, is also nearly at capacity.
Luton and Stansted both only have one runway and plans to expand operations on their single runways - yet alone add a second runway - face stiff opposition from community groups. Opposition to BAA's proposal to increase the cap at Stansted was led by the group Stop Stansted Expansion (SSE), which claims: "BAA's plans would have had an appalling impact on this predominately rural area as well as generating the equivalent of an additional five million tonnes a year of carbon dioxide emissions at a time when tackling climate change is the most pressing issue facing the world today."
Indeed increasing environmental challenges are now dominating the agenda of major airline industry trade groups in Europe and have become a huge barrier to airport expansion in the region. Airports Council International Europe (ACI-Europe) is warning of a looming capacity crunch and is concerned continued setbacks and long delays in securing approval for airport expansion or new airport projects will impede growth from next decade. Environmental issues and opposition from local communities, which seem to often fail to recognise the important role airports play to local economies, are by far the largest causes to such delays.
The airlines are not exactly helping the cause by opposing several airport expansion projects, on the grounds they will have to pay for them through higher user fees. EasyJet and Ryanair have led opposition to BAA's plan to build a new terminal at Stansted, although this plan along with a proposed second runway is separate than the more short-term proposal to increase the annual passenger cap to 35 million using the existing infrastructure. IATA also has been an opponent to BAA's long-term Stansted expansion plan and is concerned the project could be partly covered through cross subsidies from other BAA airports.
BAA's new owner Ferrovial will likely be encouraged by the UK government to sell off some of its airports following the conclusion at the end of this year of a review by the UK's Office of Fair Trading. Ferrovial could find it more difficult to fetch a good price for Stansted if Ullesford's decision, which will likely be appealed by BAA, is upheld. And if the airport is sold, its users will almost certainly ask for the new owners to guarantee a reduction in user fees, making it impossible to fund any major expansion should in the unlikely event it receive government approval.
The combination of all this increasingly bitter opposition from a wide section of groups could just lead to a standstill with no airport upgrade projects going forward anywhere in Europe. There are already huge capacity constraints in London, Dublin, Frankfurt and several other European cities. If this problem spreads to more cities it will not be good for anyone involved in this industry.