Jackie Thompson: October 2006 Archives

"The intellectual battle is over - open skies is the way forward." So says Alex Plant, head of economic policy and international aviation at the Civil Aviation Authority (CAA). But he admits the battle is still being fought over restrictons on ownership and control that are the other elements to a totally liberalised industry.
Speaking at a briefing in London this week he outlined the the primary obstacles to achieving this freedom - concerns over safety, non-reciprocity and regulatory convergence. And in a bid to open up the debate he says: "We felt it time to seek an objective view of the various issues."
In a discussion paper Ownership and control liberalisation the CAA points out the lack of commercial freedom in international aviation compared with other comparable global industries such as financial services and even highly sensitive sectors such as utilities and defence, and asks: "Why should airlines be so special when it comes to ownership and control?"
The CAA believes that there are likely to be substantial benefits from liberalisation and sets out a pathway for reform, which, it says, "should lead to safer, more efficient and cheaper international aviation".
It believes that liberalisation of ownership and control would bring benefits for safety and also for all participants in the industry - the airlines, their staff and the people who fly with them.
With regard to safety, greater market opportunities would act as incentives for countries' safety authorities and their arlines to improve safety performance, the CAA believes, while reform would facilitiate cross-border investment, lower financing costs and attract innovative management. Freer flows of capital would "allow a more financially stable industry structure to emerge and structural changes, such as consolidation and the growth of airlines with a significant presence in more than one continent, are made easier".
For consumers, lower prices and greater choice should result, while multinational airlines could offer new routes that are not possible at the moment. Airline staff have not been left out - the CAA believes they should have nothing to fear from reform. "A more flexible and responsive sector enabled by liberalisation should increase demand for the industry's outputs, with positive effects on employment," it insists.
With such a win-win situation envisaged one can only wonder why it is taking so long to achieve, and who is standing in the way?

Increasingly European airlines are singing from the same hymn sheet when it comes to concerns for the future. Fears of a competitive bloodbath - warned of so graphically by Ryanair's Michael O'Leary - have been overshadowed by the Big Two spectres - the environment and airport charges.
And whether they are low-cost newcomers, charter carriers or mainline giants, it seems that Europe's airlines - and the associations that represent them - are coming to the realisation that doing nothing is not an option and that it is essential they can form a cohesive unit that can at least agree on basic concepts.
To this end, and faced with the prospect of a Europe-wide emissions trading scheme (ETS), they are keen to ensure that the impact of such a scheme on their business is not underestimated.
Regulators, including the European Commission, argue that the impact of an ETS on European airlines will be minimal, as the cost of CO2 allowances will be passed on to passengers. IACA, which represents charter carriers, is anxious that this impact is not minimised from a price sensitivity standpoint.
"The EC must talk to us and not to consultants. We must raise the issue above the threshold of a technical argument," IACA insists, adding that the design of any ETS must be "fair, transparent, non-discriminatory and workable for all airlines, including smaller entities".

The worst-kept secret in international aviation was made public today when Abu Dhabi-based Etihad Airways formally announced that James Hogan, late of Gulf Air, has been appointed chief executive.
Hogan spent four years at Gulf Air, with a remit to redefine and restructure the carrier, and had been widely tipped to take the helm of Etihad after stepping down from Gulf Air at the end of September. His appointment at Etihad is effective immediately.
Hogan is likely to have a lot more scope at the helm of Etihad than he did at Gulf Air, which has been left rather exposed since Abu Dhabi's government, which was a shareholder in Gulf Air, last year pulled out of its involvement there to concentrate on developing Etihad.
The carrier has ambitious expansion plans, having launched 35 long-haul routes in as many months. It says it expects to carry four million passengers in 2007.
Hogan has a wealth of business experience in the region and says he believes "we can position Etihad as a leader in the international and local markets".
He is taking one of his most trusted lieutenants with him on the move. James Rigney, former head of corporate strategy at Gulf Air, takes on the role of vice-president finance at Etihad alongside his former colleague.

Delegates at the recent Royal Aeronautical Society's Aviation and Climate Change conference in London were startled out of their reveries on whether or not contrails contribute to the formation of cirrus cloud by the claim made by one speaker that he had the answer to the challenge of peaking oil production.

In his presentation Dennis Bushnell, chief scientist at NASA's Langley Research Centre argued that soaring fuel prices, oil depletion, security and geopolitical issues were a strong incentive to find a credible alternative to fossil fuels.

Of the two alternatives one, hydrogen, is too much of a long-term prospect, the other is biofuel. During his presentation Bushnell revealed himself to be passionately anti-fossil fuels, with any discussion of the merits of coal versus oil brushed aside by his messianic zeal for biomass.

This, he explained, could be cultivated on the world's "wastelands" such as the Sahara desert, western Australia and other barren areas, irrigated with seawater - a technique already adopted with some success by Chinese growers, among others - and treated in bioreactors to produce sustainable fuel supplies.

These bioreactors are infinitely scaleable, he added, removing the need for transportation, so households could untimately have their own personal bioreactor in their back garden, making them self-sufficient in biofuels for their personal needs. This could perfectly feasibly be achieved in five years, he insisted.

With the environment, and in particular aviation's effect on it, on the lips of everyone from Richard Branson to David Cameron in the past few weeks, UK airport operator BAA has waded into the fray. Despite the recent months of hostilities with the airline industry BAA has come down firmly in favour of aviation joining an carbon emissions trading scheme rather than the imposition of an aviation tax.

Speaking at a fringe meeting of the UK's Conservative party conference, BAA chief executive Stephen Nelson said: "A tax to price people out of flying would not deliver the desired environmental result and would also damage people's quality of life. The best solution is an emissions trading scheme, which would be both effective and popular."

The UK government has yet to reveal which measure it favours to tackle aviation's contribution to global pollution, and is awaiting the publication of a review of transport policy being undertaken by former British Airways chief executive Rod Eddington, which is due later this year.

Air transport is currently estimated to contribute 2% to global greenhouse gas emissions, with 1kg (2.2lb) of jet fuel causing 3kg of CO2 to be released into the atmosphere.