Mark Pilling: February 2006 Archives

Expect fireworks in Brussels on 6 April when the European Commission (EC) holds a public meeting to discuss airport pricing. Transport Commissioner Jacques Barrot has called the meeting following a discussion with Giovanni Bisignani in mid-February at which the IATA boss laid out airline concerns over what it sees as excessive charging.

Airlines and airports have never seen eye-to-eye on charging over the years but IATA's campaign on this issue has caused a major rift between the two lobby groups. The relationship has got so bad that Airports Council International (ACI) went so far as to refuse to engage with IATA on charging matters last November. This has not stopped IATA one bit. In fact, it is characterising Bisignani's recent meeting with Barrot as a "major victory". "This is a major step forward," says IATA, because Barrot has publically said that they could be a problem with the way airports are priced.
Some suggestions as to the way forward could be offered at the April meeting. At present, airport charges are regulated on a national basis. IATA is "calling for a European authority to take care of economic regulation for airports handling over 5 million passengers per year," says Bisignani.
The European arm of ACI rejects this call. It believes the national regulatory system works reasonably well. "Having a European regulator could add a new layer of European legislation and wouldn't, in our view, help the situation," it says.
Alternatives to a pan-European regulator could be a performance review body similar to that which monitors and benchmarks Europe's air traffic control providers, or the EC could put forward new guidance to European states and national regulators to ensure airport charging is being applied consistently and to ICAO rules.
Whichever strategy plays out, one of the first tasks is for airlines and airports to iron out their differences and work together as proper business partners (as they do in plenty of other fields). We are not holding our breath though.

It has taken a while coming, but the Australian Government's decision not to allow Singapore Airlines (SIA) the chance to operate services between Australia and the USA is certainly not a major step forward in freeing up air markets in this still restrictive industry.

The decision is a relief for Qantas and a blow to SIA. In a statement SIA said: "Today's decision from the Australian Cabinet to not lift protection of Qantas on the Australia - US route is a disappointment in the long journey to opening the aviation market to more competition. It is a sign that free trade principles, open market competition and consumer choice have again been sacrificed to protect sectional interests."

In what is being seen in Australia as a big victory for the country's flag carrier, Transport Minister Warren Truss held out little hope of a change in heart from his government as he rejected SIA's pleas. "If access is negotiated in the future, it will be limited and phased and we would not envisage Singapore Airlines operating on the route for some years," he stated.

Truss then became one of the latest to advocate a potential link-up between the two rivals: "The Australian Government believes that future mergers between major players in the international aviation industry are inevitable and considers that the Boards of Qantas and Singapore Airlines should consider the strategic advantage gained from such an alliance in our region."

Surely this is a business decision for the two carriers and not something a government should be meddling in.

The outside world looks on with a mixture of admiration and astonishment at Japanese corporate management practice. The admiration comes from the vision and determination of conglomerates like Honda or Toyota to innovate and expand.

In the airline business, All Nippon Airways, is, under the guidance of surefooted chairman Yoji Ohashi, pursuing a sound strategy. It was recently even confident enough to raise its operating profit forecast to ･78.5 billion ($671 million) for the year ending 31 March 2006.

Now for the astonishment: what is happening at Japan Airlines (JAL)? With less than a year under his belt at the helm of JAL, chief executive Toshiyuki Shinmachi has faced a call to resign by four our of the carrier's top 15 directors and 50 senior managers. The incredible development, which came in the form of a petition, also called for fellow senior directors Katsuo Haneda and Hidekazu Nishizuka to step aside too.

It is reported that the unnamed directors asked for the resignations "in a bid to renew management" amid JAL's poor financial performance and stuttering market reputation. The call has been flatly rejected by Shinmachi and his fellow directors. In a statement Shinmachi said: "Their behaviour undermines public trust at a time when JAL Group must join hands and hearts to meet the two urgent management challenges. At the same time, I apologise sincerely to all the stakeholders."

The reasons for JAL's woes are analysed in depth in the March issue of Airline Business by our Asia-Pacific editor Nicholas Ionides. And the carrier is adamant that the measures it is taking, and more to come in its eagerly awaited new business plan, will enable it to turn the corner.

However, this latest move illustrates how deep the internal misgivings run about JAL's strategy. No doubt the upstarts wanted action, and fast. Their petition might result in another management change at JAL, although Shinmachi appears determined to fight on.

Whichever faction wins out, it is a telling sign of underlying trouble that a carrier of the stature of JAL is in a major fix. And with greater competition on the horizon as airport capacity opens up in Japan the repair crews need to redouble their efforts to shore up JAL's stressed balance sheet and its dented market image.

The fly-on-the-wall television programmes that have followed the ups and downs of daily airport life for carriers like easyJet and Southwest Airlines have become popular viewing. The scenes are sometimes uncomfortable as passengers are refused boarding when they arrive too late for check-in or there are delays, but nothing as uncomfortable as some of the footage from last night's "Dispatches" hour-long programme on a UK station about Irish low-cost carrier Ryanair.

The editors sent two reporters undercover at the carrier to train as stewards and get under the skin of what really happens behind the scenes. They wanted to investigate Ryanair's training methods, how it treats crew and passengers, and in particular if it violated security or safety practices and procedures.

There was a lot of wobbly hidden filming, muffled conversations as well as the oligatory stock shots of aircraft landing in a pretty sunset. Now, I have got to confess that I have never flown with Ryanair so I cannot comment on its service. All I've got to go on is the TV programme, and readers will have to watch that to judge for themselves (check the link above to the Channel 4 website but unfortunately it doesn't include any footage).
Ryanair's reaction is perhaps as interesting. The fightback has been furious. It has printed detailed statements on its website to the allegations in the programme. Take a look, it makes for some fascinating reading.
This is certainly a story that has, as journalists say, legs.

David Field, the Airline Business Americas editor, writes about one of the late Sir Freddie's later air ventures - an operation he ran between South Florida and the Caribbean islands on behalf of a gambling casino in the mid-1990s.

He used DC-10 trijets for the relatively short hops. At a Washington lunch to garner (translate: purchase, by means of offering free booze) press attention, he turned to the reporter and said by way of explanation: "Always use three engines. You never know when one will go broke and you won't be able to get a spare."

The youngish reporter turned to Laker and asked if this was a reference to the way in which the majors had (allegedly) kept him from getting access to spare parts, rotables and other essentials. Sir Freddie nodded his white-fringed head, winked and said: "Oh no, you know I'm not allowed to talk about that", apparently in reference to the gag-order provisions of the settlement of his lawsuit.

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Another Airline Business veteran, Robert Hancock, who labours in the advertising and commercial side, has fond recollections of the time a decade ago when he met Sir Freddie - an icon when Robert was growing up in the UK- after an avation club luncheon address in New York.

"He was his usual witty and down-to-earth himself while making a few comments that made obvious his English roots. I went nervously up to him and said hello to him, proudly presented him my Airline Business business card, which seemed to give me instant credibility. He then promptly introduced me to Mrs. Laker and took me to one side (out of US native earshot) and asked me how I thought the speech went. 'Do you think they understood it okay?' he asked me. I was just really taken back over how normal and friendly he was. After all, he was a Sir."

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Meanwhile, Flight International's Commercial Aviation Editor Max Kingsley-Jones recalls earlier memories:

"I have a vivid childhood memory of Sir Freddie's hands-on approach to running his airline. As a nine year old a the end of a family holiday in Tunisia during Christmas 1975, we arrived at Tunis airport for our flight home, only to find that the departure was delayed after the Laker Airways Boeing 707 we were supposed to fly back on had suffered an engine problem at Gatwick.

After a lengthy delay, our 707 finally turned up at Tunis. As we taxied for take-off, the skipper came on the radio to apologise for the delay, informing us that Freddie himself had been down on the apron directing proceedings as mechanics swapped out the Pratt & Whitney JT3D engines.

Whether such a declaration was a standard part of the brief from Laker's pilots after a technical delay I will never know, but it was certainly a very effective damage limitation exercise that left all his passengers with an amusing tale to tell.

I came across Sir Freddie again as an adult while working at an aviation consultancy company in the 1990s. He was setting up his Laker Airways Bahamas operation and we had been tasked by a bank to value one of the 727s he planned to operate. But when our appraisal came up short of the number he needed to make the deal work, he called our office and treated us to some of his legendary charm and determination.

Using first name terms, he spoke to us like an "old dad" trying to cajole us into finding a few more dollars in the aircraft's value. Despite failing to push up our valuation, his new airline still took the air, and we'd had a brief, first hand glimpse of how one of aviation's great characters had been so successful."
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Go to the Flight website for Sir Freddie's obituary, lovely pictures of his doomed Skytrain transatlantic service and a link to Flight's story from 1977 reporting on the carrier's first flight.

Sama may not be the first low-cost carrier start-up in the Middle East - that distinction goes to Sharjah-based Air Arabia - but it certainly appears to have the loftiest ambitions. As the proposed Saudi Arabian entrant said on its brand launch on 5 February: "Our objective is simple: To be the preferred and most successful low fares airline in the Middle East."

The carrier, which has the approval of the Saudi government, has backing from 30 Saudi private and institutional investors. It is being headed up by a management team consisting of former executives from UK low-cost carriers easyJet and go.

Sama aims to begin services by the middle of this year using leased Boeing 737-300s to bring the low-cost revolution to Saudi for the first time. Initially it will serve domestic destinations, expanding to other states in the region over time.

The word Sama in Arabic is a verb, says the carrier, with a number of meanings: to rise (high), tower up, go up, to be or become elevated, high, exalted or sublime. The brand image is a modern white and blue geometric design, with echoes of that of US low-fares carrier Spirit Airlines.

To keep abreast of Sama's development, and to find out where it will be flying, visit its website.

The 10m long steel scaffold pole swings precariously close to the transfer bus door as the ex-patriate Indian worker, clad in full-face scarf to ward off the swirling dust, heaves it up to a colleague on the next level. Work is in full swing in and around the daily operations during a busy peak at Doha's international airport.

Workers crawl all over the modestly sized terminal and apron to expand the Qatari capital's airport capacity in advance of a bright, shiny new model (see artist's impressions above and below) scheduled to open in 2009. It is urgently needed. The small Gulf state's flag carrier Qatar Airways is out-growing its home base. In fact it has virtually out-grown it already, and is already capacity constrained at peak times.

So, even though the new airport complex is within sight, some $300 million is being spent at the current one to cope with the ambitions of Qatar Airways. This interim measure will expand the apron and terminal and include the fast-track construction of a dedicated first and business class terminal to open in the third quarter. It is badly needed: the airport's lounges were bursting at the seams during a recent visit.

The new airport will be impressive, and a testament to the aspirations of this gas-rich state to develop a flourishing economy and tourist trade. In fact, so fast is the growth of Qatar Airways that the airport's planned second phase has already been approved. This will boost its capacity from 12 million passengers annually to double that number.

In common with near-neighbours Dubai and Abu Dhabi, Qatar is pouring concrete like mad to meet anticipated demand. It is an amazing story that needs to be seen at first hand to appreciate the scale and speed of progress.

And although for many the only sight of Qatar is in a brief glimpse as they transfer to an airport bound for Bangkok, Berlin or another such destination, more are making a stopover. That is why in January and early February alone Qatar hosted a professional cycle tour event, a round of the European golf tour and a charity concert given by rock star Bryan Adams.

More is in the calendar before the big one: The 2006 Asian Games, which arrives in Doha in December. For most Qatar may still be an alien destination, but within five years I predict many of us will have witnessed its progress at first hand.