January 2007 Archives

As the bidders lined up for Alitalia on Monday - there were 11 in total - an intrepid journalist at Reuters digging into their backgrounds found to his surprise that a humble Italian school teacher had sneaked his way onto the shortlist.
The teacher, Fabio Scaccia, described his fake plan to buy Alitalia as a "citizen's protest". "I've followed the Alitalia crisis for the past 20 years," the 46-year-old told Reuters. "I wanted to show that a company like Alitalia should not be allowed to remain in a state of crisis for so long," he said.
Scaccia joined the list with bidders like Texas Pacific and leading Italian bank UniCredit.

I think it is safe to predict that this will not be the last left field story to emerge from the Alitalia sale process. Some would say the entire Alitalia saga has more than a touch of a Feydeau farce about it.

Going? Gone? The US Airways hostile pursuit of Delta Air Lines seems to be losing altitude.

Chief executive Doug Parker said on a conference call that US Airways would drop its $10 billion bid for Atlanta-based Delta on 1 February if the Delta creditors committee does not move to force the bankrupt carrier's executives into merger talks. "They know exactly what they have to do and they know that if they don't do it, our proposal is gone", he said. But if the Delta creditors are not ready to play ball, "we're not willing to pursue this transaction anymore."

Parker was telling securities analysts about the airline's better-than-expected fourth-quarter profits of $86 million after specials, one-time charges and gains. This is the sort of conversation in which observers will want to weigh every syllable and nuance, and you can too, by listening to Parker's comments.

Parker says more than once that US Airways' deadline is firm, buts seems truly surprised that anyone would not take the cash-and-stock offer and "make the right decision." He spoke just hours after Delta revealed that it had $2.5 billion in financing lined up to support its emergence from reorganisation as a stand-alone airline - an airline that hasn't merged with anyone.

Is this what T.S. Eliot meant with the line in the poem about ending "not with a bang but a whimper"?

UK-based Jet2's claim that its roll out of Mezzo Movies' hand-held in-flight entertainment system is "a first for the low-cost industry" will be met with some surprise by fellow carriers that have been providing a similar service for some time.
Airlines currently offering rival Digecor's portable video device include Australia's low-cost Virgin Blue, and European no-frills giants easyJet and Ryanair both trialled the Digecor system for a period in 2005, but decided not to roll the service out due to a disappointing level of passenger take-up.
Jet2 thinks its offering will be better received by travellers because it will offer TV shows, music videos and CDs, which are better suited to ultra-short flight times of an hour or two - rather than the full-length movies previously trialled that had not finished by the time the equipment had to be turned off for landing.
At the other end of the market, rival transatlantic premium startups MaxJet (Digecor) and Silverjet (Mezzo) are both offering hand-held IFE systems. Most recent sign-ups to the Digecor system are Aeroflot and Kenya Airways, joining carriers from as far afield as Alaska Airlines and Singaporean low-cost JetStar Asia.
Clearly the cost of investment of such systems is considerably less than the installation of seat-back screens and so appeals to low-cost carriers looking to add a frill or two. But live television in flight is gaining ground with a number of carriers - from low-cost JetBlue to fast-growing Etihad. You pays your money and you takes your choice.

Japan Airlines has joined the slowly swelling ranks of carriers offering a premium economy class. From the autumn, the new seats will be available on its international services.

The seats will be in a 2-4-2 configuration with a 38in pitch, which is 20% more than its regular economy seats. They will feature on JAL's Boeing 777s operating from Japan to Europe and the US.

JAL is several years behind its main rival All Nippon Airways in bringing in a premium economy section. ANA launched its take on this class back in early 2002. It must be doing something right for JAL to finally follow suit.

Unlike in Europe, where the UK market is particularly active in offering an enhanced economy product, Asian carriers have not seen a great customer demand for this class. Taiwan's EVA Air was one of the first to bring in this super economy class, while Vietnam Airlines, Garuda Indonesia and China Airlines, also of Taiwan, offer it too.

Virgin Atlantic Airways is another focusing on premium economy. It has introduced its second generation product.

In every interview they conduct at the moment, airline chiefs are being asked with monotonous regularity who they would like to buy, team up with, or be acquired by. But the ever thoughtful Wolfgang Mayrhuber, head of Germany's Lufthansa, has sounded a cautious word: "The damage a wrong decision can cause is greater than the damage of a missed opportunity," he told the Financial Times.
Such thinking is not uncommon among senior industry figures. And such wise words will be being heeded by those peering into the murky books of Italy's flag carrier Alitalia.
The country's government is searching for a white-knight for its beleagured airline. Now that is a tough job. Saddled with debt, terrible labour relations and antiquated working practices, as well as a fiercely competitive domestic market, Alitalia has all the makings of Europe's next network carrier failure. It expects to make a huge loss of €380 million ($490 million) in 2006.
Rome is determined not to let Alitalia collapse, and has backed it up with state cash in the past. It is asked for bidders interested in a taking a 30% stake in Alitalia. They have until today (Monday 29th January) to make an offer
But recent calls by potential suitors to have a free hand in restructuring the airline will fall on deaf ears. Government will to allow any management team over the past decade to take the drastic action needed to reshape Alitalia for the 21st Century has been sorely lacking. What is different now I wonder?

US Airways chairman Doug Parker may well be glad that the Senate doesn't get to decide airline mergers, given the buzz-saw of hostility that Parker ran into in defending his $10-billion unsolicited bid for Delta Air Lines. It's easy to stack a congressional panel for or against whatever pleases or displeases a committee chair, given the prerogatives of power, but the Senate Commerce Committee's Delta defence and 'love-in' should also carries a serious warning: rural and small town America, hurt more by airline service cutbacks than it can bear, is against this or any merger. All of which would be the stuff of jokes, along the lines of "Ma and Pa Kettle can't get to the big city no more", but for a serious fact: farm states and rural states have senators and members of Congress, and they tend to have the same senators and representatives for years and years, giving the much-derided 'flyover country' of Mid-America unusual seniority and clout.

So Parker was listening closely when Senator Byron Dorgan, the North Dakota Democrat, denounced the proposed merger as the first domino to fall in a chain reaction that would starve farm states like his. "Inevitably, what's going to happen is the other network carriers are going to decide, 'we've got to merge'." Dorgan is the chairman of the powerful appropriations subcommittee that sets the Transportation Department's budget, and even though DoT does not have the final say in mergers, its findings carry great weight with the decider, the antitrust and competition regulators at Justice.

Even though Parker tried repeatedly to assuage senators, other senior Democrats including Jay Rockefeller of West Virginia said that this or indeed almost any merger would reduce service to small and rural communities. Rockefeller's worries matter: he now chairs the committee's aviation subcommittee. You can listen to the entire Senate Commerce Committee hearing here, click on hearings.

Parker got cold comfort from Republicans, who are supposed to be pro-business. The gentle-lady from Maine, Olympia Snowe, was downright outraged that some of the major towns in her rural state would be "down to one carrier" after a merger. And Mississippi's Trent Lott, now the Senate's number two Republican, said, "This merger causes me concerns and I just want to get that on the record". Noting that Delta is based in Atlanta, Lott told Parker, "you're an aggressive suitor, but the lady from the South doesn't want to be forced into this shotgun wedding". Delta chief executive Jerry Grinstein played up this fear, telling the committee that small communities would be "the major losers in this proposed takeover". Grinstein was in his element in the hearing room, having served as the chief of staff and lawyer for the committee's legendary deal-making, power-wielding chairman, Sen. Warren Magnusson of Washington, back in the 1960s.

The only DoT representative at the hearing, assistant secretary for aviation and transportation affairs Andrew Steinberg, offered some hope for the folks down home , saying the new generation of very light jets such as the Eclipse and the planned 'air-taxi' services they have spurred would fill in the lacunae. He said he could "envisage at some time in the future a much more vibrant market of on-demand service that can be operated profitably". But Steinberg conceded that airline deregulation and mergers since 1978 had hit rural routes the hardest and that subsidised service had not made up the difference.

Here in the northern hemisphere inclement winter weather is with us again, putting the topic of aircraft delays back on the media's agenda.

But while it's all doom and gloom to some, German carrier Lufthansa is putting a positive spin on weather concerns (see picture). The first snow of winter in Frankfurt has prompted the airline to release a feel-good press release about aircraft de-icing. While snow and ice can cause havoc with an aircraft's aerodynamics, it says, de-icing fluid can alleviate this. On an average winter day Lufthansa requires around 135,000 litres of the fluid throughout Germany. That's a lot of de-icing fluid, but apparently its almost completely biodegradable and represents no danger to the environment.

Elsewhere, the spin doctors at bmi and easyJet are also making the best of a bad situation. While strikes threaten to ground British Airways flights next Tuesday and Wednesday stranding 140,000 passengers, bmi and easyJet say they are offering a reliable alternative to BA.

Bmi is placing larger aircraft on existing routes to create more than 3,000 extra seats on flights between Aberdeen, Edinburgh, Glasgow and Manchester, and London Heathrow. bmi also intends to increase the frequency of flights as soon as take-off and landing slots are released by BA through flight cancellations.

EasyJet is also making the most of the opportunities created by the threatened BA cancellations. "EasyJet flies to the same main city airports as BA from London and still has over 8,000 seats available on a choice of 37 routes from its Gatwick base on Tuesday and Wednesday," it says.

Zoom, the Canadian-flag carrier offering low fares across the North Atlantic to the UK and to Paris, may be going south: it has told US regulators that it wants to bring its brand of discount service to the UK-US market, which it intends to do through a UK-based subsidiary it set up in 2006. Zoom last summer sold an $11-million minority stake to the Bank of Scotland, and used that funding to set up ZoomUK at London Gatwick.

The carrier, controlled by Direct Holidays founder Hugh Boyle, wants to starts daily Boeing 767-300ER flights between Gatwick and New York John F. Kennedy, adding that city pair to its routes linking eight Canada points with Gatwick, four other UK cities (Manchester, Glasgow, Cardiff, and Belfast) and Paris. Its Transportation Department application does not offer sample fares, but its website lists fares between western Canada and Paris starting at about $260 (US) or £130 Sterling each way. This level of fares would aid Zoom in its new competitive situation: Delta flies daily between JFK and London Gatwick, while Continental, using the Newark Liberty International Airport on the other side of New York City, serves Gatwick twice daily along with Belfast, Glasgow, and Manchester. But Zoom's marketing material clearly targets the truly price-sensitive traveller, and if the DoT clears the way, Zoom could help write the next chapter in long-haul, low-fares service.

With little fanfare, and only after a small delay, the European Commission has released its long-awaited proposal on airport regulations.

It was partly prompted by IATA's rantings on airport charges, which grew in volume in recent years.

Airline Business will analyse the proposal in its March issue, but you will see the February issue first, with Cathay Pacific chief Philip Chen on the cover.

So, in the meantime, here are the first reactions to the proposal from ACI Europe, the Association of European Airlines and IATA.

You can never be too early. That's the belief at Delta, which has applied for an international route right that won't come up for competition until late in the year. It's a route to China, and Delta, still steamed that it couldn't join in the competition for a China route that just ended with a successful bid by United, has already put its papers in at the Department of Transportation. Delta was shut out because the last competition, under terms of the last US/China open skies deal, was limited to only incumbents, the US-flag airlines already flying between to China. This is Delta's third try for a China route and access to the growing mainland. It lost earlier competitions to other airlines or to all-cargo carriers. This time it's determined to win, even if that means getting letters of support from every mayor, city council member, delegate, travel agent and peanut-farmer in the south.

Delta's argument that it deserves a route follows the lines of one made by American in the last case: a region of the country without a China gateway deserves the route. The argument that whole regions of the nation without service deserve service would seem to be a compelling one, and indeed it was in the China route case just decided. In that case, American Airlines was the front runner for a long time with its argument that its Dallas/Fort Worth hub had no non-stop China service and indeed the entire south-western region was without a link. Most people agreed. Right up until American ran into a problem with its pilot union and couldn't persuade them to change their work rules and fly the route non-stop; after that American said it would have to stop in Chicago on the way from Dallas to Beijing. And was promptly rejected by the DoT, which said it was looking for non-stop plans. United won with a plan to link Washington Dulles and Beijing, in a capital-to-capital route.

Delta is making its case very publicly: it has its workers and its state and city lined bigwigs up, with a news conference at city hall to announce the bid it has mayors, chamber of commerce types, airline employees, business leaders and the like. It also had another argument: it is the only mega-carrier without a route to China. United is already a major transpacific player, Northwest, once called Northwest Orient, is big into Asia, and American does have China routes from Chicago. Delta's plans to use Boeing 777s to Shanghai rests on the argument that with the recent United award, Beijing has more flights from the USA than Shanghai, seven versus five, even though Shanghai is the mainland's major business centre. Read some supporting rhetoric here.

The losing carriers will go after the routes too, and aggressively, it is expected, repeating the publicity stunts such as the fortune cookies that Continental handed out on Capitol Hill, the parade it organised in New York City's Chinatown or the special websites, letter-writing and congressional sponsorships other carriers used to make their cases. Northwest, stung by charges in the Detroit papers that it lost the route because it didn't gather enough congressional suport, is not going to be a stranger in Congress. We can expect all sorts of publicity stunts this time around, but Delta arguably is playing it smart starting so soon. Any bets on Georgia peaches finding their way onto Capitol Hill?

Hardly a day seems to go by without some member of the Flight Group editorial stable of Airline Business, Flight International, Air Transport Intelligence or Flightglobal.com being asked to provide "expert" comment on an aviation industry issue.
Our journalists do as many as can reasonable can, if hand-on-heart we know enough about the subject to comment sensibly.
I did a show this week made by a UK-based consumer TV programme called Watchdog. It was probing the baggage chaos at London Heathrow over the Christmas period - some 25,000+ bags were lost, and British Airways, once again, was in the firing line.
BA didn't want to put someone up on the programme, so they go for the next best thing, kind of, a journo.
Thing is, yours truly felt in the firing line himself as presenter Nicky Campbell, in the pre-interview chat to get the questions straight in my head booms: "So why has BA made such a mess?"
Well, but, mumble, I stutter. Remember it's a just-in-time system, not designed to hold bags etc etc, I haltingly try and educate Campbell on the realities of baggage handling systems. "C'mon," rants Campbell, who struts around his studio, "I represent the consumer, I don't care about BA."
So, we came to an accommodation I suppose. I wasn't going to diss BA outright. Clearly the bag mountain and dealing with it was a mess. Did BA deal with it as best they could? Probably not, but from what I know repatriating bags is a hellish job, not one airlines generally throw money at and typically an area where communication with customers is poor.
I cannot link the clip because it is not on the BBC site, but what I said was all airports and all airlines lose bags, no surprise there. This volume of bags was remarkable, and BA clearly has found it tough to deal with the backlog.
Message - either take the train, or if you have to fly make sure you put labels inside and outside your bag. Otherwise your bag could end up being auctioned off, contents and all.
Yes contents and all. Please, please check out this auction house which sells off unidentified bags. A typical lot: No. 268. Large black expanding trolley case cont ladies assorted clothing.
Hurry, other people's clothes to buy.

For IATA and its dwindling membership, 2007 is the year of deadlines.

All carriers have until the end of December to conduct the IATA Operational Safety Audit (IOSA) and transition to 100% e-ticketing.

That sounds a bit ambitious because 45% of its members have still not been audited and 27% of its members are still issuing paper tickets. But IATA director general Giovanni Bisignani was in London last week to assure reporters that both deadlines will be met even if that means kicking out members.

IATA already has ejected six members for not meeting the first of three IOSA deadlines - 31 December 2006 - for contracting one of the seven companies licensed to conduct the audit. More members will likely fail to meet the second deadline - 31 December 2007 - for having the audit conducted. Even more will potentially miss the third and final deadline - 31 December 2008 - for passing the audit, including putting in place any remedial actions required by the regulators.

Bisignani acknowledges "probably not all will pass" the audit but he says IATA is helping members improve their safety standards and pass through its $3 million "partnership for safety" programme.

So for only 133 of IATA's 244 members have had the audit done, not very impressive considering the programme was launched in 2003. Of these 133 carriers, 100 have passed and the other 33 are still waiting for the results.

Bisignani brushed aside questions that IATA is behind the curve because 45% of its remaining members still have not had the audit done although the IOSA programme is now in its fourth year. He says the seven licensed firms can realistically conduct 111 audits in a single year. He says work was deliberately slow for the first three years to allow the accredited firms to build up experience, understand the standards and make sure they apply them equally across the industry.

Bisignani also claims IATA at the end of 2006 was 3 percentage points ahead of its 70% e-ticketing target. But the last 27% is the hardest. In the Middle East, carriers are only 15% of the way there and in Russia it is 0%.

"We have some worries," Bisignani acknowledges. "A country we have many problems with is Russia."

E-tickets are still illegal in Russia. The Russian government has promised IATA it will soon legalise them, but that will only give carriers about 10 months to actually implement e-tickets. "It's not just taking away paper. It's the need to change the back office," Bisignani says. "It needs major investment."

He says members that miss the 31 December 2007 100% e-ticketing deadline not be kicked out but will have "major problems because paper tickets will not be accepted anymore".

IATA also is behind in its goal for implementing bar-coded boarding passes. Bisignani says 33 airlines now use them and IATA's 2007 target is 80 airlines. IATA also needs another 20 airports to introduce common-use kiosks to meet its 2007 target of 70 airports. IATA has made a lot of progress since launching its "Simplifying the Business" initiative in 2004, designed to cut costs by $6.5 billion, but it's not quite there yet.

Airline trade union negotiations conducted live, on air and in public are a rare thing. But that is just what British Airways chief executive Willie Walsh and Jack Dromey, deputy general secretary of the T&G trade union did this morning on UK BBC Radio 4's Today programme.

The airline's cabin crew have voted overwhelming to take strike action over pay and working conditions at the end of January. Walsh is adamant that the airline is willing to negotiate but insists the union must come back to the negotiating table.

I urge you to listen to this clip to hear the full interview for yourself (you'll need to download RealPlayer which is a bit of a hassle but there you go). It says a lot for the engaging personality of Walsh that he is not only prepared to take the risk of going live on such issues, but appears to relish the task. And he is good at it, a natural in fact. Fellow airline executives should listen and learn.

The interventions of Walsh were effective and strong, his calm and assured manner gave the impression of a leader who has a clear grasp of what he wants.

But his management style, which by implication is more aggressive said presenter Jim Naughtie, has come under scrutiny. "I would reject that," said Walsh simply.

However, Dromey was equally firm: "The company needs to listen and stop lecturing."

But did this debate help?

At the end of interview both agreed to try and move forward with negotiation, with Walsh suggesting arbitration. We'll know in a few days if this radio spot made any contribution to averting the strike.

The world's largest airline posted the US industry's biggest financial turnaround yet. American Airlines' corporate parent AMR Corp. said it earned a fourth-quarter profit and an annual net, in sharp and welcome contrast to losses in the 2005 quarter and full year. In fact, the results reflect the airline's first fourth-quarter and full-year profits since the year 2000, back in the much better if not good old days of the pre-disaster era. The annual profit of $231 million represents a $1.1 billion improvement over the net loss of $857 million the airline incurred in 2005, while the fourth-quarter net of $17 million represents a $617 million improvement over the quarter of a year before; this quarter is usually a weak one for airlines as business travel drops off with the colder weather and leisure travel slumps off except for the holidays. But this quarter was American's third profitable quarter in a row.

Talking to analysts and reporters from headquarters near the Dallas/Fort Worth airport, AMR president, chief executive, and president Gerard Arpey repeatedly stressed that employee cooperation and initiatives were key to the strong performance, and pointed out the positive gains of labour/management cooperation in its maintenance services unit. AMR Fourth Quarter Earnings Conference Call  And Arpey repeatedly stressed that AMR stepped as deeply as it did into black ink without the advantages of bankruptcy court protection, unlike some of its competitors. It was these very factors that led the judges in the Airline Business Strategy Awards to nominate and select Arpey and his team as winners in the Strategy Awards for 2006 in Executive Leadership (http://www.strategyawards.com/2006%20pdfs/AB-037-Aug06.pdf ).

All, however, is not coming up roses in the Texan winter: the immediate reaction of American's pilots union, the Allied Pilots Association, was to express "outrage" that the strong results could end up as executive bonuses. Based on closing prices of AMR shares, performance bonuses to be paid in April could easily total about $218 million, said APA president Ralph Hunter. Because a "disproportionate share" of AMR bonuses would go to some 50 senior executives, Hunter said "it is insulting for senior managers to be receiving a windfall that may equal or exceed all of our airline's earnings in 2006". APA Outraged That Executive Bonuses Could Match or Exceed American Airlines' 2006 Net Profit The union has been vocal recently, refusing to agree to a management request to change work rules to allow American to fly its proposed Dallas/Fort Worth to Beijing route non-stop. The Transportation Department rejected American's China proposal after it amended its plan to make a stop at Chicago O'Hare on the Beijing route; American's archrival United instead won the route rights with planned non-stops between Beijing and Washington Dulles. Arpey didn't address any of labour's "unfortunate rhetoric", as he called it, but noted that American was recalling furloughed pilots at an increased rate.

Every year, around this time, British Airways hosts a press gathering at London's Langans restaurant to mark Burns night (the presumed birthday of Scottish icon Robert Burns). "We've provided you with more than our fair share of column inches," said the airline's chief executive Willie Walsh, addressing the press corps. More often than not, these column inches came from high profile stories that BA rarely prompted or had any control over.
Walsh listed what his management team has had to deal with over the past year:
* The foiled UK terrorism plot
* Security rules changes
* The polonium 210 issue
* Unprecedented interest in our uniform regulations
* The worst fog in a generation, and to wrap it all up,
* One aircraft broke a light on a runway in Miami.
Walsh recounted a comment from his press chief Paul Marston: "We're no longer the world's favourite airline, we're the world's favourite headline."
And Walsh's latest challenge is to avert a cabin crew strike after unions voted just the day before to take strike action over changes to working conditions and pensions.
The Irishman was in typically combative mood over this development. "We operate in a brutally competitive industry," he said. That environment means BA must lower costs to keep competitive.
"Nobody looks to BA as a benchmark for costs and efficiency," he said. "I cannot accept anybody in this business who says we cannot talk to you about change." Unions "have to accept the way to address these issues is to sit down and negotiate".

As the argument rages as to the relative merits of the European Commission's proposed Emissions Trading Scheme versus the UK's Airline Passenger Duty charge, due to double next month, transatlantic premium startup Silverjet has come up with another idea.

In an open letter to UK Prime Minister Tony Blair, Silverjet chief executive Lawrence Hunt outlines how his airline plans to become the first carbon-neutral carrier when it begins service from London to New York on 25 January.
Hunt says his airline is working with the Carbon Neutral Company to introduce a mandatory carbon offset contribution, giving passengers the opportunity to reinvest their "carbon points" in a number of climate-friendly projects around the world.
The Edinburgh Centre for Carbon Management has assessed the carbon emissions of the Silverjet fleet and associated ground activity in a Verified Emission Reductions scheme.
This scheme, Hunt says, ensures that 100% of the investment ends up in the chosen offset projects, rather than in the UK government's proposed Certified Emission Reductions scheme, which requires "a significant amount of the offset investment to go into bureaucracy and administration", he says.
If the airline industry were to simply charge its passengers 90 pence ($1.80) for each hour they fly on average, he says, they could neutralise the carbon pollution created by the aviation industry.
How will everyone else respond to that one?

China Southern Airlines has become the first Chinese carrier to operate a scheduled service to Africa.

China Southern last week launched a thrice-weekly service from its Guangzhou hub to Lagos in Nigeria via Dubai. Lagos should be the first of several African destinations served by Chinese carriers given growing trade between China and African countries. China Southern says China-Africa trade has been growing in recent years at a 23.6% annual clip. Three African carriers - Air Zimbabwe, EgyptAir and Ethiopian Airlines - already serve this fledging market with services to China from their respective hubs.

"China's second largest trading partner and exporting country in Africa, Nigeria is of great importance to China," says China Southern chairman Liu Shaoyong.
He adds that 30 Chinese companies now have operations in Nigeria with total accumulated investment of over $100 million.

Liu was on China Southern's inaugural flight to Lagos. During his subsequent visit of Nigeria he met with Nigerian president Olusegun Obasanjo (see picture).

SkyTeam's Air France-KLM will probably be moving to its new London Heathrow home at the airport's Terminal 4 at the end of 2008, around nine months after British Airways occupies Terminal 5.
Air France will move from its current location at Terminal 2 to join merger partner KLM at T4. So what is Air France-KLM expecting to get for its money at T4 and by when? For Air France-KLM the "main question is do they share our priority of giving us a competitive tool at T4?" says Air France general manager UK & Ireland Christine Ourmieres. The they in question is BAA.
What Air France-KLM, and indeed any carrier at Heathrow that is not in the sparkling new T5 wants is not to be stuck with the airport's dingy old terminals for too long. They want to see solid and swift plans for revamping and refurbishing the lower number terminals.
Indeed, this is the commitment the SkyTeam Alliance partners obtained from BAA when they signed a memorandum of understanding to occupy T4 last June, says Ourmieres.
She is however, well aware of the tough task BAA faces in delivering T5 and then getting its Heathrow East rebuilding of Terminals 1 and 2 off the ground. "The challenge is to do all this at the same time," she says. In addition there is the added pressure of delivering an all-new Heathrow in time for London's Olympic Games that take place in the UK capital in 2012.
Air France-KLM is in on-going discussions with BAA over its investment plans for T4. There is "open communication" between the two sides. "They know what we want and I'm confident," she says of the hoped for outcome.
However, her view that "there is no time to relax" is no understatement.

Singapore's Tiger Airways has become the first carrier to operate scheduled international services at Udon Thani Airport in northeast Thailand.

The budget carrier earlier this week launched a thrice-weekly flight between Singapore and Udon Thani, which is also the only low-cost gateway to Laos. The Laotian capital Vientiane, which is only served by three full-service carriers, is only 75km or a one-hour drive from Udon Thani.

"Tiger Airways is delighted to be the first international carrier to operate scheduled flights at the new Udon Thani 'International' Airport," says Tiger chief executive Tony Davis. "It is a great honour to be the first international carrier to serve Udon Thani and the people of northeast Thailand as well as providing greater access to Vientiane and Laos."

Davis is pictured below (blue shirt and khaki pants) after the inaugural flight landed in Udon Thani on 9 January. He is accompanied by local tourism authority directors and the Thai and Laotian ambassadors to Singapore.

Tiger now serves every region of Thailand, with 122 flights a week from Singapore to the capital Bangkok as well as Chiang Mai in the northwest and Hat Yai, Krabi and Phuket in the south.

Tiger has been able to rapidly expand its Thai operation because Singapore enjoys open skies with Thailand. But restrictive bilaterals with most other Asian countries have prevented Tiger from launching many potentially viable routes, including a service to Laos. The small landlocked country is an up-and-coming tourist destination but the only low-cost link is provided via Udon Thani, which is also served from Bangkok by Thai low-cost carriers Nok Air and Thai AirAsia. Vientiane is only served by tiny flag carrier Lao Airlines as well as Thai Airways and Vietnam Airlines.

While other fast-growing carriers are busily recruiting flight crew - in some cases poaching them from rival carriers - Virign Atlantic is advertising for 100 in-flight beauty therapists to join the 250 currently working alongside the cabin crew in the carrier's Upper Class cabin.

Passengers enjoying the Upper Class experience with Virgin can choose between treatments such as Back in the Clouds, Hot Hands and Handsome Hands Manicure.
The treatment takes place behind a curtain at the front of the forward cabin, where there is a dedicated seat.
The only drawback - no pun intended - that I found when I experienced the service onboard an Airbus A340 on Virgin's inaugural service to Dubai in early 2006 was that the blissed-out passenger enjoying a head massage is facing fellow travellers - and is revealed to them each time a member of the cabin crew opens the curtain en route to the galley.
Slots are negotiated with the beauty therapist on boarding, and if there are none left you are given a voucher giving you priority on your return flight. You can also choose whether or not to be woken for your treatment if asleep.
The carrier says this recruitment drive is to keep pace with expansion plans for this year, which include the introduction of services to Chicago in April, Nairobi in June and Mauritius in October, as well as an extra daily service to Washington during the summer season.
The service is available on all flights in and out of London Heathrow.

When you get Michael O'Leary going on a hot topic such as the environment, the Ryanair founder and chief executive just does not shut up. At a press conference this morning in London, O'Leary went on like a broken record, reiterating Ryanair's stance on the environment, including its opposition to a controversial European Commission (EC) proposal to include aviation in its emissions trading scheme (ETS), and the UK's plans to double its air passenger duty (APD) from ｣5 ($9.66) to ｣10.

Ryanair has been in the spotlight in the UK since last week when it was called "the irresponsible face of capitalism" by UK environment minister Ian Pearson. Ryanair immediately fought back, pointing out the Dutch Consumer Organisation had recognised it as "Europe's cleanest and greenest airline". This week Ryanair is trying to keep its spin on the environment in the headlines by launching a buy one flight get a second for free sale that "celebrates being Europe's lowest fare and greenest airline".

The promotion, which will run from 11-18 January, will give away up to one million seats with Ryanair covering all the taxes. But wait a second - how is giving passengers who are already flying once over the next month free seats on a second flight they wouldn't normally take celebrate the environment? As several reporters pointed out, passengers will simply be persuaded to take frivolous journeys.

Of course that is not how O'Leary (pictured below at an earlier press conference) sees it. He responded the promotion will "encourage a lot of people to fly on Europe's greenest airline" instead of "Europe's polluters", his phrase for carriers that operate older-generation aircraft.

Ryanair now operates a fleet consisting entirely of new-generation Boeing 737-800s, a fact Pearson apparently was not aware of. "Clearly he doesn't know what he's talking about," O'Leary says, adding Pearson "probably was interviewed by the Guardian at a pub late at night".

O'Leary believes Pearson's description of Ryanair is part of a "scare story" politicians have fabricated to convince the public the fast-growing aviation sector is increasingly responsible for global warming. He thinks aviation is being singled out unfairly because, as a recent report by UK economist Nicholas Stern concluded, aviation accounts for only 1.6% of global green house emissions. Some politicians claim this figure will quickly double as the size of the aviation industry doubles, but O'Leary says they are ignoring the impact of new aircraft and engine technology. He claims even if the industry doubles in size advances in technology will ensure aviation's contribution to global greenhouse emissions stays below 2%.

"Aviation is not the cause of the problem," O'Leary says, adding nobody is attacking the rapid construction of new power stations in China."Why are we rolling around pulling wool out of our navels about cheap flights in Europe?" asks O'Leary. "It's not the case of the problem."

O'Leary does not think the proposed ETS is a potential solution because it "won't do anything to reduce the impact on the environment". Instead he calls ETS "another means of taxing the ordinary passenger".

Meanwhile, O'Leary says he has written to UK treasury chief Gordon Brown to ask him to withdraw the planned 100% increase in the APD and explain where the extra ｣1 billion in revenues the higher ticket tax will generate will go. "Stop taxing cheap flights," O'Leary urges, pointing out business class passengers pay the same amount. "If you want to tax someone, tax the rich."

Ryanair expects its ｣28 average fare will increase to ｣33 at the beginning of February, when the larger APD tax will be implemented. Certainly this will not be the last time we hear from O'Leary whining on this or just about any other topic impacting the aviation industry.

Airbus can't build A320s fast enough for AirAsia. Earlier this week the Malaysia-based low-cost carrier ordered another 50 A320s, lifting its total firm order to 150 aircraft.

That may seem ambitious for an airline that now only operates 50 aircraft, including 15 A320s and 35 Boeing 737-300s which will be phased out before the 150th A320 arrives in 2013. But chief executive and co-founder Tony Fernandes is quick to point out that at 500 million people, South-east Asia has a population bigger than the USA and Southwest Airlines already operates over 400 aircraft. And if you include the rest of Asia, there is a total population of two billion, most of which is within the reach of an AirAsia A320.

"Just in case you thought we were going bananas, we are conservative people," Fernandes insists.

In choosing a venue to sign the new 50-aircraft order, Fernandes decided to return to London, the city he was in when he first decided he would launch a low-cost carrier. Fernandes, then a music industry executive, was in London six years ago during a stopover on his way back to Kuala Lumpur from New York when he saw easyJet founder Stelios Haji-Ioannu on television.

"London is a very special place to me," Ferandes said at the press conference (see picture above) announcing the order. "(In London) I decided my next life would be running a low-cost airline."

He recalls how he took a train to London Luton Airport to check out how low-cost carriers operate. In a later trip to London he went to Stansted, where he met for the first time former Ryanair executive Conor McCarthy "at the lowest-cost coffee shop in town". McCarthy (pictured below at the far left) would become a major investor and co-founder of AirAsia, which launched in late 2001.

The new 50-aircraft order ensures AirAsia "will become the Ryanair and Southwest Airlines of Asia", Fernandes says.

The AirAsia group, which now also includes affiliates in Indonesia and Thailand, carried 15 million passengers in 2006 and expects to carry 21 million passengers in 2007, which Fernandes says will make AirAsia bigger than most large Asian network carriers, including Malaysia Airlines, Thai Airways and Singapore Airlines.

Fernandes is proud to say AirAsia by 2013 will become one of the largest A320 operators in the world and by far the largest in Asia. In 2015, Fernandes estimates AirAsia will carry 60 million passengers to 70 destinations. For that to be achieved, AirAsia will have to exercise its options for another 50 A320s, lifting its total firm order to 200. "All 200 aircraft would be needed for the three franchises" Fernandes says, adding new franchises are not required to support the group's potential 200-aircraft fleet.

He says the A320s are helping AirAsia reduce its available seat kilometre cost from 2.5 cents to only 2 cents. "With our cost base we can reach 500 million people," Fernandes says.

"That's the lowest cost I've seen anywhere," John Leahy, Airbus chief operating officers customers, said at the contract signing.

Leahy signed his first deal with Fernandes in late 2004, for 40 A320s and 40 options. A second 20-aircraft contract was signed in March 2005. In July 2006 they signed a contract for another 40 firm aircraft. The new order, for 50 firm aircraft and 50 options, means AirAsia will take an average of almost two A320s per month.

"We wish John could deliver them faster," Fernandes says, joking he has been trying to convince Leahy to cancel the Airbus A380 programme to make room for more A320s.

Not surprisingly Fernandes isn't exactly paying the $70 million per aircraft list price. "I would like to see in my lifetime Conor McCarthy and Tony Fernandes actually paying catalogue price," Leahy jokes. "We'll settle for what we can get here."

Airbus will have another opportunity to praise AirAsia next week in Toulouse when the carrier takes the 3,000th A320 to roll off the assembly line. AirAsia is just about the best story Airbus has to recount these days, when A350 and A380 delays seem to capture the headlines.

DENVER - It isn't real till you've seen it. The snowstorms that blasted the Rocky Mountains and Denver between Christmas and New Year made headline news after some 4,000 flyers were stranded in Denver's decade-old airport for as long as 45 hours, but not just because it was a slow news period, writes Americas Editor David Field.
The weather out here is a real thing, and people take it seriously as the snaking coils of doubled-up queues at Denver's airport demonstrated this week, as thousands of people flocked to flee an impending storm. The snow and ice of the last two storms was still heavy on the ground, as deep as two or three inches and thick. Wary of a new wintry blast headed in from the Pacific, people lined up to get away. As one seatmate pointed out: "Westerners are supposed to be hardy, but a third storm will be too much."

The cost of the December blizzards was just coming out as Airline Business visited Frontier Airlines here. Frontier's chief executive, Jeff Potter, put his head in his hands as he predicted a "humongous" bill for de-icing glycol, let alone the forgone revenues. Frontier, the number two here, lost as much as $12 million in all.
United, the largest by far at the airport said that the wintry storms here and a blast at its Chicago O'Hare hub would cost it as it as much as $40 million and probably force it into a deficit for the fourth quarter.
Denver International Airport officials said the two storms added some $7 million above budget and cost it about $4.5 million in lost concession fees. 
The storms carry a powerful reminder: weather is still an inestimably crucial factor in aviation, and even an experienced hand needs a reminder now and then of the natural forces that are beyond our control.

They were not drinking. Or smoking that funny stuff, they swear, but a serious number (several dozen) of serious United Airlines workers at Chicago O'Hare swear that they saw an aerial phenomenon they can't explain, or, in other words an Unidentified Flying Object (UFO). It happened late last year but the news is just now coming out that the United people say they saw an object hovering low over O'Hare for several minutes and then taking off through thick clouds leaving "an eerie hole in the overcast skies", one of them tells the Chicago Tribune.

United says it knows nothing, nothing, but the Federal Aviation Administration said its air-traffic control tower at O'Hare received a call from a United supervisor asking if controllers had spotted a mysterious elliptical-shaped craft sitting motionless over Concourse C of the United terminal. What's interesting is that airline employees, who daily serve unidentified fried objects to the passengers and who daily see strange things aloft, do not report more UFO-type sightings. But an air traffic controller in Chicago has made the best of the strange situation, quipping, "Wherever they were from, they should have known better than to try to land at O'Hare in the afternoon rush. After all, they came all those zillions of light years only to find they couldn't get to their gate".

The yawning gap between high-cost air and low-cost sea freight is set to be bridged if the FastShip transportation system is all it claims. Advertising to sell capacity on its proposed service in the January issue of Airline Business, the company is planning a high-speed transatlantic link between the ports of Philadelphia in the USA and Cherbourg in France in just five days port to port. This timescale would enable New York to Paris delivery for full containers in just six days.
This, says FastShip, "will enable door-to-door delivery times comparable to standard airfreight at half the cost, aimed at the fast-growing international time-definite delivery/logistics segment of the market".
Roland Bullard, president and chief executive of FastShip, says: "Classification for the design of the vessels is in place and we are in the process of finalising the capital raise. The forward sale of capacity on the service is part of that. I expect there will be a multinational grouping of strategic and financial investors in place by the end of 2007. After that there will be 12-18 months of detailed design work with first operation some 12 months after that."
The company will operate the service with three high-speed "JetShip" vessels, each with 10,000 tonnes capacity, and anticipates a 98% on-time port arrival rate. It will also use specialised terminals to load and unload the ships and foresees a complete turnaround of the vessel "within six hours of port arrival", compared with up to 24 hours for traditional crane operations.
The vessels - the first of their type - will be built in a German shipyard by Oslo, Norway-based Aker Group.

The JetShip burns substantially less fuel per freight tonne than a Boeing 747 freighter, adds FastShip, " so the JetShip's cost advantages over air freight improve as fuel prices rise".
FastShip says it is planning to augment its initial North Atlantic route with services on other new trade routes such as the transpacific and intra-Asia.
Could this be a realistic alternative to costly intercontinental air freight?

It used to be simple. Low-cost carriers stuck to short-haul point-to-point routes, offered no frills and refused to forge alliances with other carriers. Network carriers offered frills and operated from hubs a mix of short-haul and long-haul routes with multiple partners.

The creation of AirAsia X just throws all that out the window. Tony Fernandes' empire now includes a five-year-old pure low-cost short-haul operation, a five-month-old regional turboprop operation and soon a long-haul supposedly low-cost operation. It seems Fernandes (pictured below), a flamboyant former music industry executive, is trying to become another Richard Branson, not another Herb Kelleher.

Fernandes looked briefly at the long-haul low-cost sector before launching Malaysia-based AirAsia in late 2001 but quickly determined it would not work. Long-haul, low-cost is an oxymoron and simply too complicated. Low-cost carriers are about keeping things simple - one type of aircraft, quick turnarounds, no frills and no interlines or alliances.

Fernandes first muddied the model last March, when he agreed to take on thin regional routes in order to complete a watershed deal with the Malaysian government. Fernandes so desperately wanted Malaysia Airlines' (MAS) subsidised domestic operation off his back he agreed to assume responsibility for MAS' loss-making turboprop operation in rural eastern Malaysia in exchange for MAS relinquishing 99 of its 118 domestic routes. AirAsia first said it would subcontract the turboprop operation to a totally independent third-party, thus keeping true to its pure low-cost model. But in the end the third-party, Fly Asian Xpress (FAX), turned out to be owned by Fernandes and some of his closest business partners.

Now FAX will be used to back the new long-haul operation, AirAsia X, and as part of the deal publicly listed AirAsia will take a 20% stake in FAX. So now we have a low-cost carrier parent company - with a majority stake in Malaysia-based AirAsia as well as 49% stakes in affiliates in Indonesia and Thailand - owning part of a regional carrier. And the same regional carrier from July will operate widebodies - most likely Airbus A330s - in a two-class configuration on routes to the UK and China. What is low-cost about that?

FAX will undoubtedly call its new AirAsia X operation low-cost but nothing about FAX follows the traditional low-cost model. FAX will have at least three types of aircraft, a second class on the long-haul flights with almost flat-bed seats and possibly even an alliance. Fernandes is talking to Virgin Atlantic and easyJet about a potential tie-up with AirAsia X.

Of course the differences between low-cost and network have been fading for some time. Network carriers all over the world have been gradually taking on more low-cost characteristics while some low-cost carriers such as India's Kingfisher now look more like network carriers. Further proving the blending of the once distinct models, AirAsia X will be the world's fourth so-called long-haul low-cost carrier, following Australia's Jetstar International, Oasis Hong Kong Airlines and Viva Macau. These three, all of which launched late in 2006, all have two classes with some frills.

Congratulations Herb, Southwest Airlines was the first and perhaps soon will again be the world's only true low-cost carrier.

Has the drive for ancillary revenues gone too far?

On a two-hour easyJet flight I was on four days ago, I was offered for sale not only snacks and beverages but gaming cards, train tickets, take-away small champagne bottles and a teddy bear the flight attendant promised can be sold for a profit on eBay.

I'm all for low-cost carriers keeping air fares low by selling goods on their website and on board aircraft. But the non-stop peddling of items can become annoying, especially on a flight where you can't drown out all the hawking with in-flight entertainment.

The Airbus A319's public address system was on almost for my entire flight as the lead flight attendant tried repeatedly to persuade passengers to buy certain items. Gaming cards were sold not once but twice on the short flight and we got a full recount of recent winners that had travelled on earlier flights. Small champagne bottles were offered not only for in-flight consumption but it was suggested passengers should buy extra bottles and take them to New Years Eve celebrations.

EasyJet has been at the forefront of industry efforts to drum up new ancillary revenues. In the 12 months ending 30 September 2006, the carrier generated EURO131 million ($255 million) in ancillary revenues, an increase of 34% compared with the previous year. That equates to 86 pence per passenger and clearly, if sales pitches on their flights are any indication, there is room for more revenue expansion.

As part of its drive to further increase ancillary revenues in its current fiscal year, easyJet recently began charging for early boarding. But on the flight I took easyJet's "Speedy Boarding" product only guarantees you a choice seat on the bus that takes you to the aircraft. In the end it didn't matter if you checked in early or bought the "speedy boarding" privilege - there was a mad dash to the front and rear staircases when the bus arrived at the aircraft. In fact, the people who checked in last ended up boarding the bus last, giving them the best position when the doors of the bus again opened when it arrived at the aircraft.

Onboard gambling represents another potential new source of ancillary revenues. Ryanair, which generated EURO259 million ($339 million) in ancillary revenues for the year ending 30 September 2006, will introduce onboard gambling later this year. EasyJet has so far elected not to follow its rival and introduce onboard gambling. But at least onboard gambling is a quiet activity, with passengers gambling using their mobile phones and other GPRS-enabled devices such as Blackberries.

In a new twist to in-flight entertainment offerings, Israir Airlines has installed a Torah - a scroll of Jewish laws - on a Boeing 767-300ER.

The Israeli carrier says in a statement that it has become "the first airline to maintain an authentic Torah Scroll on board its aircraft".

The "Sky-Torah" was completed last week by a specially trained scribe in Florida and installed on Israir's lone 767. Israir had a special ceremony at New York's JFK airport to welcome the torah "with singing, dancing, live music and important Rabbis and dignitaries in attendance".

Israir uses its 767 to compete with its much larger rival, El Al Airlines, on the popular New York-Tel Aviv route. It also operates a Boeing 757 on European routes and three ATR 42s on domestic services.

The introduction of a Torah on Israir flights, which it says will enhance the prayers of its religious passengers, comes less than one month after a major dispute erupted between El Al and Israel's ultra-Orthodox Jewish community. Since its launch in 1948, El Al has traditionally not operated flights on the Jewish Sabbath, which starts at sunset on Friday and ends at sunset on Saturday. But at the beginning of December El Al operated several flights on Sabbath to transport passengers that were stranded due to flight cancellations caused by an airport workers' strike.

The ultra-Orthodox Jewish community, which accounts for about one quarter of El Al's passengers, threatened to boycott El Al after the rare Sabbath flights were completed. The boycott was called off last week after Israel's ultra-Orthodox Jewish community completed an agreement with El Al requiring the airline to maintain its revenue-losing policy of not flying on Sabbath. In the event of an extraordinary circumstance, El Al reportedly has agreed to consult with an ultra-Orthodox rabbi before operating any future flights on Sabbath.

Israir, founded in 1996, does operate some flights on Sabbath. But its Sky-Torah could entice religious passengers to fly Israir. While flying, Jewish religious passengers congregate in small single-sex groups during prayer times, often at the back of the aircraft or in the galley. Depending on the timing of the flight, prayers sometimes are required several times on a flight between New York and Tel Aviv as the aircraft crosses several time zones.

While prayers do not require a Torah, the presence of a Torah enhances a prayer experience and turns the aircraft into a virtual synagogue. The Torah scroll is no small book - it is a bulky handwritten and complete body of Jewish laws (see picture above). The Torah is typically only brought out and unscrolled on Sabbath and select holidays. Each Sabbath a unique section of the scroll is read during the prayer session. But the presence of a Torah on an aircraft during non-Sabbath days provides an environment conducive to praying and gives Israir an important religious symbol all Jewish passengers can identify with.

It is becoming something of a tradition for Lufthansa to announce major recruitment drives at the turn of the year. This year is no exception and proves once again the resilience of the German flag carrier and its determination to expand even as the industry's growth globally begins to brake.
It is taking on 3,000 new staff this year. This is on top of the 2,500 new employees it recruited in 2006, and will take its global workforce to some 94,000 people, with a staggering 34,000 of them outside Germany.
The jobs suit a wide range of professions - and are advised and promoted via its impressive careers website - from 2,000 airport jobs at its Frankfurt and Munich hubs and including 1,200 flight attendants. Another 240 trainee pilots are to book into its Flight Training Centre in Bremen.
Lufthansa is proud of its attractiveness as an employer. It says that in a recent study conducted for the US business magazine Forbes by the New York Reputation Institute, more than 30,000 respondents from 25 countries voted Lufthansa among the top three most popular employers from 600 globally active companies.
Lufthansa takes recruiting very seriously and boasts of its flexibility with a variety of working-time models. For example, a seasonal job for flight attendants between March and October. Staff in passenger service jobs at the airports can also opt to work part-time for three or four days a week.
To find out if Lufthansa is the place for you, or simply to pinch some good ideas of how to attract new staff check out that careers portal.

Over the past few years the phrase "network carrier" has become almost a byword for inefficient, old-fashioned flag carriers, the type low-fare upstarts have loved to bait and hate.

So, hold on, Richard Branson, Tony Fernandes and Stelios, of Virgin Atlantic, AirAsia and easyJet fame respectively are plotting a "global" budget carrier - come off it. But yes, according to a report in Malaysia, since apparently confirmed by Virgin, the three entreprenuers are chatting about some form of international tie-up. What, a network carrier?

The idea of linking low-cost carrier networks has tempted many, but there are few connections today. The problem has been the distribution systems of low-cost carriers tend not to be compatible, while the lack of interlining and baggage transfer, and the cost of providing this "network" service has been prohibitive. Network carriers do this in their sleep of course, but it is not cheap, and there are ramifications for the type of fast turnaround, go-when-we-are-ready, networks that low-cost carriers operate.

It is no doubt a natural evolution of the low-cost carrier model that as the most prosperous and ambitious mature that they look at opportunities beyond their pure point-to-point operation. Look at what Jetstar and Qantas are doing in Australia, and at the advances their rival Virgin Blue is making.

The limitations of taking costs out of the long-haul model are well documented. These limitations mean pure origin and destination low-cost long-haul carriers will have a tough time gaining a significant edge over their network competitors. But there surely must be a way of connecting the slick domestic or intra-regional low-cost networks with long-haul operators. The ones that crack that one will be the winners. 

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