June 2011 Archives

Aer Lingus has just celebrated its 75th anniversary, and after the difficult last couple of years, is in relatively good spirits as chief executive Christoph Mueller has helped guide the airline off the critical list and into profit.

Plenty of challenges though remain - keeping labour on side during the existing restructuring efforts; dealing with the high fuel cost and Ireland's continued weak economy which mean further cost savings may yet be necessary; how to grow the airline outside of its relatively small home market and how to position the airline for relevence in the fiercely competiive market. And all this is set against a complex ownership background which sees low-cost rival Ryanair - which has two hostile takeover attempts under its belt - as its largest shareholder with a 29% stakeholder and its second largest shareholder, the Irish Government, as possibly ready to divest its 25% stake given its added stimulas of needing to raise case.

All of which made it a fascinating time to interview Mueller for the cover interview of our July issue of Airline Business. His approach has been a mix of stemming its losses and repositioning the carrier - after its move into the low-cost carrier terriotory - back up towards a hybrid model to provide an Irish alternative to Ryanair, helping to keep revenues stable despite cutting capacity.

"We are looking for ways where we can tackle our scale problem without giving up the independence of Aer Lingus," Mueller told me in Dublin, just days before the carrier marked its 75th anniversary celebrations in Dublin last month. "Independence for us is not just independence to wave our own flag. I believe it is very important to our survival. But we need parterns to fulfil our mission to connect Ireland with the world. We are too small to do it on ourselves."

The move back towards network carrier ground also sees the airline looking again at alliance membership - Aer Lingus was a one-time member of oneworld before quitting the alliance in 2007 as part of its low-fares, point-to-point repositioning. All three alliances - given its existing partnership with various oneworld, SkyTeam and Star Alliance members - are possibles, as is remaining independent - a decision seems likely by the year end.

"We are too small to become religious on alliances," he says. "We really have to extract money from an alliance. We are currently evaluating whether the benefit of joining one of the alliances is larger than the costs associated with joining one of the alliances."

You can read much more about Mueller's strategy for Aer Lingus by reading the full article here.

Mueller is also one of the confirmed speaker's at this year's Airline Business-organised World Air Forum conference in Amsterdam this October.

All pictures Billypix

Like more than 60 of my Flightglobal colleagues, I've just managed to survive another Paris air show. This one was my thirteenth successive Paris as a professional (I started young!), but it still has the ability to excite, entertain and depress me in equal measure.

This one ended slightly early for me as I headed to Brussels (which involved a particularly torrid and delayed 3h TGV train journey) to cover the SITA/Airline Business IT Summit. But I still covered the thick end of the Paris show week, managed to break a few stories and grab at least 4h sleep each night!

Here are a few of the high- and low-lights from the show, IMHO:

My Paris highlights

• Getting up close and personal to the 747-8I and meeting chief test pilot Capt Mark Feuerstein
• Fernandes' entertaining AirAsia A320neo order press conf (wasn't there but the tweets indicate that fun was had by all)
• Seeing KAL's A380 substitute for the Airbus demonstrator in the flying display (I don't need to explain why it had to stand in!)
• The superb food provided by Dawn and the girls in the Budgie News cafe

 

My Paris lowlights

• Getting up at 5am every day
• The show's usual confusing and inconsistent policy of traffic and people control which created unnecessary traffic jams and queues
• The torrential rain we had to endure at times (again, a familiar theme at Paris!)
• The lack of clarity on Boeing's A320neo competitive response
• The cool reception that the enhanced A350-1000 was given

 

So, it's time to regroup and get ready for "Funbro" 2012 in July next year. But before that we've got Dubai and Singapore to look forward to!

For all our news, video, digital and interactive content from an amazing Paris air show, visit: flightglobal.com/paris

Fresh from its appearance at the Paris air show, the Boeing 787 has arrived in Warsaw, the home base of Polish flag-carrier LOT - one of the first European operators to sign up for the twinjet.

Plenty of images of its arrival on the Gazeta Wyborcza website, although possibly the most interesting - featuring a different livery for the airline - appears to have been curiously cropped since it appeared. So we've taken the liberty of borrowing it:

Okay, before I get started I'll come clean and admit this is probably a blatant miss-use of the Airline Business blog. But I'm sure regular visitors will have noticed a petrol-head theme creeping into an unhealthy number of my posts, so another one won't do any harm!

 

Anyway, for those out there that like "planes and automobiles" (you're in good company - Tony Fernandes, Vijay Mallya and Sir Richard are already signed up members of that club!), at the Paris air show this year there was a somewhat unlikely aero/auto combo on display. Boeing hooked up with the Prancing Horse boys from Maranello to demonstrate (well that was the intention anyway) the loading capability of the 747-8F.

What this meant that was there was a brand-new Ferrari FF (the new and usual four-wheel drive "hatchback" that's as rare as hen's teeth) parked in front of Boeing's 747-8I,  and a marginally more common Ferrari California parked in front of the 747-8F.

The demo was cancelled as the loading device (not part of the 747-8F!) went tech before it could be used in anger. But who cares, we still got to see two modern icons in their respective industries lined up next to each other. Having said that, I'd have preferred to have seen a couple of Aston Martins alongside the Le Bourget Jumbos!

This year's Paris air show has seen an invasion by the big jets on an unprecedented scale, with almost 2,000 tonnes of Airbus and Boeing "jumbo" heavy metal on display.

 

The Le Bourget museum's long-serving Boeing 747-100 exhibit has been joined by two of its younger, but larger siblings, a 747-8F and 747-8I passenger variant. Also at the show is Korean Air's next Airbus A380, which has had to substitute in the flying display after the Airbus test hack was damaged in a ground incident.

 

Another impressive piece of hardware on display is the US Air Force's Lockheed C-5M Galaxy airlifter, which has been open at both ends to allow visitors to walk through its huge cargo bay.

 

The A380 weighs in at 560 tonnes, while the 747-8s have maximum take-off weights of 442 tonnes. The 747-100 is a relative lightweight at 333 tonnes.

After announcing the launch of the route in November, Air France's inaugural A380 flight to Washington, DC arrived at Dulles International Airport on 6 June. The A380 aircraft flying to Washington feature 516 seats - 9 first, 80 business, 38 premium economy, and 389 economy. Air France's original A380s were not equipped with the airline's premium economy product, Premium Voyageur, but the product is now being introduced to the fleet.

The shiny new Boeing 747-8 made its air show debut today at Paris, and parked up just opposite an elder sibling - a 1972 vintage Air France 747-100 (F-BPVJ) which is an exhibit at the Le Bourget museum.

No doubt Airbus wags won't be able to resist the temptation to point out that the 747 is such an old design that the original queen of the skies is already a museum piece. But the reality is that Airbus would surely love its A380 orders to match even the number of 747s that have already passed into retirement!

 

The US manufacturer, which is exhibiting both the 747-8I passenger model and 747-8F freighter at the show during the week, has delivered 1,418 747s of all variants, and aims to start shipping the new model this year.

 

 

Just for fun (!), here's a comparison of old and new 747s at Le Bourget - focused on the areas of difference (beyond the obvious fuselage stretch). These include the cockpit, wingtips, trailing edge, main landing gear doors and wing/body fairing. Enjoy...

 

Boeing's new 747-8 Intercontinental jet touched down here at the Paris air show this morning marking the airliner's show debut.

Walking around the lovely orange beast on the Paris flightline I noticed these initials on the front landing gear doors - JFS.

They are of course the initials of the father of the 747, Jospeh F Sutter.

Boeing initialed the doors in tribute to Joe, who will, so they tell me, be here at the show.

A nice touch.

For more on the 747-8's arrival and interior views via video see Flightblogger.

Here are my pictures of the aircraft taken today.

 

We've all been there. One misheard quote and suddenly your journalistic creativity runs riot while your common-sense filter is out on a tea-break. Even on a publication as venerable as The Times of India.

Can't say I was at the press conference, but a quick check of other Indian papers suggests minister Ashwani Kumar actually said those second- and third-tier cities would be served by a "70- to 100-seat" aircraft...

Here's a plug for the June cover story of Airline Business -- I had the chance to sit down with Gary Kelly as Southwest was on the verge of closing its high profile acquisition of AirTran.

Kelly is not blind to the formidable tasks that lie ahead during the next couple of years as AirTran is carefully folded into the Southwest brand. Based on his comments, Southwest is taking a measured approach to the integration, and with the exception of eliminating two-class service and assigned seating at AirTran, Southwest management seems to be keeping an open mind about other aspects of AirTran's operations.

Here's Kelly's current thinking on AirTran's mega hub in Atlanta --

All eyes are watching how point-to-point stalwart Southwest plans to execute an operation at the world's busiest airport. "It will be interesting to see how dependent some of these small cities are on the hub and spoke system," says Kelly. "So they're tied to Atlanta today. We could leave those cities tied to Atlanta if they're performing well, or perhaps we could have additional frequencies going west, and we have a number of cities in the west and Midwest that are candidates for supporting small city service like that".

Given the choice, "there's no question you'd rather have nonstop than connecting traffic", Kelly says, and he believes Southwest might have an ability to generate more local demand in Atlanta than that currently produced by AirTran.

However, Kelly is quick to pronounce that there is no reason to pre-judge a strategy for Atlanta. "If nothing else we'll learn a lot more about a hub operation than what we currently have or know."

As debate continues over the level of concern Delta should have over Southwest entering into its fortress hub, some observers believe Delta could gain some AirTran business customers opting to shun Southwest's open boarding policy and single-class aircraft. Southwest has emphatically said that it has no plans to adopt AirTran's assigned seating or two-class aircraft configuration.

There appears to a bit of general acceptance by Southwest that some of AirTran's corporate share could be lost once the business amenities are eliminated. "I'm prepared for some turnover here," says Kelly. "Very strong brands never get everybody. Coca Cola doesn't get 100% of the soft drink market."

Kelly also believes operating AirTran's smaller Boeing 717s is key to opening up small city opportunities that are intended to partly fuel Southwest's growth in the future.  Here's a bit of insight into his strategy for the aircraft, and for their eventual replacement.

Kelly admits Southwest needs an aircraft the size of the 717 to grow into markets that cannot support the current mainstay of the Southwest fleet, the 137-seat Boeing 737-700. "As we stand today, it's difficult to muster up the effort to make one small city work, because it is so small and it just requires a lot of attention," he explains. "In this particular case AirTran will bring us several dozen cities that are up and running, generating revenue and profits. So it is now worth the management effort to make that fit into the Southwest brand and Southwest culture."

Kelly believes there are several dozen additional small cities a combined Southwest-AirTran could grow into, and while the company now has the equipment to penetrate those cities, he admits Southwest will need to focus its attention at some point on a 717 replacement.

Citing the size of the 717 fleet Southwest gains from acquiring AirTran, Kelly says clearly that is too large a number "for that not to be a question. So we're going to have to figure out what the successor aircraft will be". Ideally, it is a conversation Southwest would like to have with its lone aircraft supplier Boeing, but Kelly says the airframer has not expressed any real interest in pursing the market for that sized aircraft.

Admitting during his 25-year tenure at Southwest the carrier has spent very little time with any other airframer besides Boeing, Kelly believes "that's got to be different in the future. Bombardier is clearly bringing something new to the market and the fact that we are inheriting these 717s just demands that we take a good hard look at all the options we have".

Look for some schedule tweaks after November. AirTran's schedule is published to that time, so until then things at AirTran should largely remain status quo.  

 

 

EasyJet boss Carolyn McCall is being applauded for negotiating a new pay and scheduling deal with her long-disgruntled pilots, which was agreed last week on the recommendation of BALPA.

The agreement, which will see pilots receiving a 4% salary increase and a 5% rise in sector pay "goes some way to resolving some of EasyJet pilots' long-term concerns about rostering and scheduling", says the union.

BALPA says the relationship between EasyJet's pilots and management had "not been a good one over recent years". But it credits McCall, who is only a year into the job, with a "brave" decision to take on the difficulties and discuss a "game-changing" partnership.

Last month, McCall held a meeting with her Gatwick flightcrews and a webcast to the rest of the UK pilots to "explain the vision" and why it was in both sides' interests to work together.
 
Speaking to Airline Business shortly after that Gatwick meeting, McCall said that the vision she had would mean "more efficiency and productivity for us, which means a more efficient therefore lower cost base, and allows us to pass on lower fares to passengers - it's a virtuous circle".

She added that the pay deal was "not really about pay at all. It's all about life-style, and rostering and the future. We want a constructive relationship with our pilots. We want them to be on side."

Describing the deal as a "not inexpensive settlement", RBS Transport analyst Andrew Lobbenberg quipped in a note today: "The good cop bad cop partnership of McCall and ops Director Warwick Brady looks to have worked well."

He adds: "This episode looks to have earned the CEO some kudos and should have bought the company a good dose of goodwill from the cockpit crew that should help secure the operation through whatever ATC strikes, storms, volcanoes, bean sprout pandemics or other challenges the world throws at the business this summer."

So they just need to tackle the peak-time bag-drop bottlenecks and it should be smiles all round in Orangeland!

Korean Air might want to pick up a couple of tips from Emirates on the art of creating a polished Airbus A380 advertisement.

The Seoul-based airline, which took delivery of its first A380 in May, has its own promotional video showing the aircraft being put together in time-lapse footage.

 

But wait a second...

Korean Air's A380s are powered by Engine Alliance GP7200 engines; in fact, the handover ceremony in Toulouse included a speech by Engine Alliance president Mary Ellen Jones, who said she was "delighted" that the airline would be the first Asian carrier to use the powerplant.

So what's being bolted onto the wing of that A380 about seven seconds into the Korean Air video? The orange engine cover clearly says, er, Trent 900...

Emirates might already have 90 Airbus A380s on order but it built a 91^st - or at least gave a computer-enhanced impression that it had - on a film set in South Africa, to promote the economic benefits of the Dubai-based carrier's fleet programme.

In a 30-second advertisement actor Maxim Deluc, playing a flight attendant, is shown wheeling a drinks trolley down the aisle while the A380 is put together around him.

Shooting the commercial involved constructing a full-scale fuselage barrel of the A380, on which to film the basic nose-to-tail walk, while the engines, detailed internal fittings and background were filled in afterwards with computer-generated jiggery-pokery:

Emirates is using the advertisement to emphasise the "economic significance" of its commitment to the A380 which, it says, supports creation of 200,000 direct and indirect jobs. It adds that 72% of the jobs are in France, Germany, the UK and Spain - hence the European flavour of the advert, which shows the A380 being assembled to an accompanying refrain from Strauss' Blue Danube waltz.

This video shows how the advertisement was put together, which also features a few facts about the aircraft's manufacture you might not have previously appreciated: "Six continents contribute to a single A380," it says. "Everywhere but Antarctica. Sorry, penguins." 

Interesting insight from IATA during their recent annual general meeting on how new technologies could revolutionise the future security checkpoint experience at airports. There was a demo on show in Singapore of the concept, which basically would involving filtering passengers into different security tunnels by using the data already collected by government agencies and used to today, and through a scheme by which passengers could opt to provide more information up front, to enable them to go through a known traveller tunnel. The aim is to focus security resources where they are most needed, while smoothing the travel experience for passengers at the airport

We did a piece on this in the Airline Business daily paper from the AGM - check it out here.

http://www.emagazine.airlinebusiness.com/1H4decf032d65be416.cde/page/6

The impact of security at the airport on the air travel experience is an increasing issue for airlines, and something we looked at in the last issue of Airline Business. To read more about its impact, check out the following article.

http://www.flightglobal.com/articles/2011/05/24/357103/airports-security-blanket.html

 

Warning: This is long. Only read if you want to hear my observations about a truly remarkable 2011 IATA AGM.

If that's not your bag, return to Flightglobal for news etc

 

Wow, that was some IATA annual general meeting. In fact it was like no other AGM I've been too.

The Airline Business Daily headline on Tuesday morning, reporting on a furious series of interventions from the floor of this normally placid affair, said simply: "Arab carriers speak out." We could have had: "Time for change", "Arab ambush" or "Arab spring."

All were suggested, some even went on page, only to be discarded for reasons you'll need to talk to myself or Airline Business editor Max Kingsley-Jones about if you know us well enough.

Read the digital edition of the paper, and those from Days 1 & 2 here.

For Airline Business, naturally, the IATA AGM is an important affair as CEOs who represent 93% of world traffic go there. We like it so much, back at 2007's AGM in Vancouver we decided to publish a daily paper at the show. Airline Business, part of the Flightglobal publishing empire (OK perhaps empire is a bit strong), can do dailies because many of us have experience doing the Flight Daily News series some of you will know from big air shows like Paris or Farnborough.

On Monday morning at our hasty news meeting - most had to rush into the Oneworld press conference at 0745 - we highlighted possible lead stories and talking points that would go into the Tuesday morning paper.

Bisignani with his wife Elena shortly after the AGM finishes.

We knew of course that the set-piece state of the nation speech from outgoing IATA director general Giovanni Bisignani's would provide some big headlines and quotes. His "basta" blasts at monopoly suppliers and governments have become legendary and given us plenty of headline fodder over the years.

You can watch the whole thing via IATA's website.

We also had word that there might be something else afoot: Something out of the ordinary: a surprise from the floor perhaps?

We were on high alert. So was the IATA hierarchy, for behind the scenes a revolution was rumbling and they were prepared for trouble.

As you can imagine there are many twists and turns, some dating back years, as to why this "Arab spring" came to a head in Singapore and I'd need another series of interviews and 100s more words to explain it all in detail, but simply put Middle East carriers felt under-represented at IATA, they felt IATA was too "big network carrier" - centric, and perhaps the autocratic style of its leader Bisignani was putting their backs up as well.

So what would they do about it? Prior to the meeting they were ready to agitate, but had decided, for the sake of a united industry front at Bisignani's swansong AGM, to keep quiet. It is not the done thing to air grievances in public - and this is a very public forum.

That ended on Sunday afternoon when decisions taken in the IATA committee (which met on the Sunday) that nominates who sits on the 30-strong IATA board of governors - the most powerful IATA leaders - caused a firestorm among Middle East carrier chiefs.

A series of hasty phone calls later and a big brick was about to be flung into the normally placid waters of the IATA AGM.

Now, as a point of order, I need to try and briefly explain how the AGM works for those who weren't there or don't understand the procedure: this is effectively a public annual general meeting at which recommendations (resolutions) from the company board are tabled, discussed and decided.

Now I don't know the exact procedures - refer to IATA's website for that arcane detail - but in my understanding each IATA airline member can have their say and vote upon resolutions.
The airline delegates sit in United Nations style rows behind desks in specific places each with their own microphone. They can have their say at any point in the proceedings.

Most say nothing. They are usually more interested in the discussions and networking that take place in and around the AGM.

Yes the director general's speech is a must-see and the CEO debate in the afternoon can throw up some good verbal punch-ups, but the AGM bit is a gavel-bashing, orchestrated swift round-up of business.

Under Bisignani the gavel-bashing part has been compressed, and rightly so. It had been a tedious, largely irrelevant, run through IATA procedures.

The only upset I can recall to this smooth running was in Washington DC in 2003 when Jaime Bautista, the cheery head of Philippine Airlines piped up. I can't remember what he was complaining about, but it certainly stirred things up. He's been quiet ever since though.

But the events of Monday 6 June, explained in the Airline Business story in our Tuesday paper at the show, caused more ructions at IATA.

See also this Qatar Airways press release that it issued on Tuesday 7 June - plenty of borrowing from our story. It also uses our photo of Al Baker waving his notes at the time!

I was actually sitting in the press room preparing pages when I heard on the TV feed the voice of Qatar Airways head Akbar Al Baker. His tone said it all - as I am sure all of you at the AGM knew right away.

He had some comments and misgivings about IATA's financial statements and about its auditors. Now this doesn't happen. Let's be honest, how many CEOs even read the papers they get outlining IATA's finances? I'd wager hardly any.

Al Baker was the spearhead for Middle East complaints. He was backed up from the floor by Middle East Airlines chairman Mohamad El-Hout.

From left field the Middle East carriers received support from Air Niugini head Wasantha Kumarasiri. My information is that Kumarasiri's input was not part of any scheme, he simply spoke out at what he heard (Wasantha, if you do happen to read this drop me a line at mark.pilling@flightglobal.com and tell me your part of the story).

Again, read the Airline Business story for the details.

Now this was awkward for the man running the show (traditionally the AGM host carrier does this job) the shiny new CEO of Singapore Airlines Goh Choon Phong. Poor sod. He's been in the hot seat at SIA less than a year and now, because the Egyptian revolution meant moving the AGM from Cairo to Singapore with just three months notice, he has to host the world's biggest airline meeting (as an aside, Mr Goh was praised by IAG chief executive Willie Walsh for his adroit handling of the situation - well said Willie).

The discomfort on the podium was clear as Tom Windmuller, the AGM secretary, and Mr Goh handled the growing unrest.

Sharply made points from Al Baker, accompanied now with points made by the ever-eloquent boss of Emirates Tim Clark, rained in.

A vote was going to be taken, initially suggested as a show of hands by Windmuller. No thanks, said Clark, and it became a secret ballot. That would happen in the afternoon.

Throughout these proceedings, most sat there bemused, what was going on? Clearly the Middle East carriers are unhappy at IATA, but why?

It took at least an hour for all this excitement to unfold. Please correct me if I am wrong, but to my mind the only voice I recall offering a pause for thought on the Middle East intervention was Air New Zealand head Rob Fyfe, himself on the IATA board of governors.

In the afternoon the ballot result was announced, and it was close, only being narrowly defeated. The tight result in itself is a major story, showing clearly the unease that many CEOs have in IATA's governance.

As Toronto Star scribe Bert Archer tweeted: #IATAAGM Ballot results: 43 in favour of proposal, 48 against, 5 absentions, 22 blanks, 1 ineligible. Very divided #IATA, it seems.

Overnight the IATA team pondered next moves: would any objections be raised about the appointment of director general designate Tony Tyler. The former head of Cathay Pacific was IATA's nomination and a man seen by all as a brilliant choice.

But there was to be no further AGM disruptions. International Airlines Group chief executive Willie Walsh told the AGM that "Tony's track record in the industry is second to none" and that IATA was "fortunate" to have a man of his standing lined up to take it forward.

However, he did allude to Monday's events. "It has been a difficult AGM, but in my mind one of the most positive AGMs in recent times," he said. Tyler won the AGM's support, and took to the podium as Bisignani's successor. Many stood and applauded.

Here Tony Tyler swaps cards with a gaggle of journos after the Tuesday press conference.

Tyler made reference to Monday's events as well: "Yesterday was an interesting day wasn't it." But, like Walsh, he was encouraged. "It shows how relevant and important IATA is to you...that's a good thing.

"My priority now is to ask questions and then to listen and to learn," he said.

 

 

So what have we learnt from this most remarkable of IATA AGMs?

Firstly, Tony Tyler has been handed a bit of a hot potato to deal with. He officially begins work on 1 July and one of his first tasks will be to mollify the Middle East carriers and get them back on board.

The Middle East carriers respect and admire Tyler so he has a good chance of achieving that.

Secondly, there will be some soul-searching at IATA about whether it is properly transparent and has balanced its representation of big and small alike. "I heard your message about greater member involvement and transparency," said Tyler on Tuesday. He must wonder just what he's sailed into.

Thirdly, there is no doubt this was not the leaving ceremony Giovanni Bisignani envisaged. For me, and I expressed my views about Bisignani's leadership of IATA in the June issue of Airline Business, these events did overshadow his departure.

But the Middle East rumblings and arrival of Tyler should not detract from Bisignani's undoubted achievements with IATA over the past decade.

For me as a journalist Bisignani has been brilliant. And on a personal level I have really enjoyed dealing with him and I've got immense respect for him. Of course he's not perfect and clearly he's made enemies as well as friends.

But I do regret that his goodbye this week did not include a standing ovation, which I think is rather churlish of the IATA members.

Overall quite simply it has been an amazing few days that have been a privilege to cover.

Our video team has been out and about here at the annual general meeting in Singapore and we have video interviews with a number of Asian airline and airport leaders:

• Thai Airways president Piyasvasti Amranand on the carrier's to establish a new regional airline
• Malaysia Airlines chief  Azmil Zahruddin on the airline's decision to join Oneworld
• Japan Airlines boss Masaru Onishi on the airline's recovery efforts
• Philippine Airlines president Jaime Bautista on the airline's US ambitions
• Changi Airport's EVP hub development Yam Kum Weng on its aim to hit 50 million

Watch them all here

 

Our Airline Business team have been out in Singapore for the IATA annual general meeting and we were looking for a cool picture for a front cover image to mark director general Giovanni Bisignani tenth and last annual generat meeting - and here's what we came up with.

Its a great picture (courtesy of our snapper Billypix) though the shirt looks a bit large to me!!!

Check out our interview with Bisignani from the first Airline Business IATA daily paper here and look out for much more from Giovanni as he addresses the AGM tomorrow.