What's happening in the
Airline Business Americas editor David Field discusses the situation with popular US radio station National Public Radio's Business News anchor Renee Montagne.
As Field commented: "People are lining up with cash money in their hands willing to give the airlines pretty much what the airlines want for a ticket. It's the first time in years that price hikes have gone through."
Barcelona-based Vueling, which was only launched in February 2004 but is making a name for itself in Spain, is another quirky low-cost player on the publicity front.
Its latest efforts have seen it running a contest to name its new Airbus A320s. A remarkable 20,000 people sent in their suggestions, says Vueling. The full list is on the carrier's website, but our favourites are: "The Vueling Stones" and "Ain't no Vueling high enough".
Another of the carrier's A320s is now named Connie Baraja. What makes her so important? She's the carrier's two millionth passenger.
Airline Business editor Mark Pilling presented Kingfisher chairman Dr Vijay Mallya with a framed copy of the July issue of the magazine at last week's Farnborough Airshow. The July issue featured the flamboyant Indian entreprenuer on the cover and contained an in-depth interview inside the pages of the magazine.
Mallya received the framed cover in the
Kingfisher now has four ATRs in service and all are achieving load factors of over 90%, he said. "They are already making money so we are quite delighted," he added.
AirAsia co-founder Conor McCarthy interrupted his holiday last week to make a quick stop at the Farnborough airshow and sign a $2.6 billion order for 40 additional Airbus A320s. He is seen below celebrating the signing the deal with Airbus sales chief John Leahy.
McCarthy, who showed up for a brief press conference at the Airbus chalet with his wife and kids in tow, sees AirAsia quickly reaching the current size of Ryanair, where he once served as chief operating officer. AirAsia now operates six A320s and 35 737-300s but the new deal with Airbus guarantees it will have an all-A320 fleet of at least 100 aircraft by the end of 2011.
Ryanair currently operates just over 100 737-800s with another 132 on order, according to ACAS. McCarthy predicts Kuala Lumpur-based AirAsia will also reach the 200-aircraft mark and potentially shatter it if it expands beyond
"All three markets are doing very well," he told Airline Business deputy editor Brendan Sobie following the 21 July press conference. "We see potentially all three markets are more than capable of taking 60 to 70 aircraft each."
AirAsia's Malaysian operation - which was re-launched as a low-fare carrier in late 2001 after McCarthy, AirAsia chief executive Tony Fernandes and other private investors acquired the carrier - now operates all six of the company's A320s and 19 of the 737-300s, according to ACAS. AirAsia
"That has had somewhat of an influence [on the decision to order 40 more A320s], but that wasn't the primary driver," McCarthy says. "The primary driver was organic growth."
Thai AirAsia was launched in 2004 with local partners holding a 51% stake and now operates 10 737-300s. Indonesia AirAsia was launched last year with defunct Indonesian carrier AWAIR as a 51% stakeholder and now operates six 737-300s.
AirAsia plans to earmark some of its new A320s for the Thai franchise after the Malaysian operation transitions to an all A320-fleet. Indonesia AirAsia is slated to be the third franchise to switch to A320s. McCarthy says all 35 of 737-300s will be phased out gradually over the next several years.
McCarthy confirms the carrier is now in talks to establish new franchises in other Asian countries including
AirAsia originally placed an order in late 2004 for 40 A320s plus 40 options. In March 2005, it ordered another 20 A320s. The new order involves converting the original 40 options into firm orders. As part of the new order, AirAsia also has gained a new batch of 30 options.
The deal signed last week comes as no surprise because AirAsia always had a goal of breaking the 100-aircraft barrier. Upon taking delivery of its first A320 last December, it rolled out a major marketing campaign billing the aircraft as the first of 100 A320s. McCarthy says the 100 firm aircraft plus 30 new options "ensures our continued dominance in the low-cost sector".
He adds AirAsia for now does not foresee any slowdown in the rapid expansion of low-fares travel in
A
The "anti-terror cutlery" is a world-first says Arthur Price, a century old cutlery making firm, and follows guideline on in-flight utensils from the
The "Dinky Dinner" service has knife blades no longer than 6cm with a round rather than pointed end. The forks have prongs no longer than 3cm.
Simon Price, whose family has run Arthur Price for four generations, was not surprised at the interest in the cutlery from airlines: "Since the new guidelines from the DOT have come in, all airlines have been forced to use plastic cutlery, which doesn't fit very well with a premium offering such as first or business class. If you've paid that much for a flight, you don't expect to be eating with plastic knives and forks."
Now we have a picture of this wonderful invention. And as we said before we had the picture: "Imagine children's cutlery."
Freighter orders were to the fore at this year's Farnborough, with two start-ups and one established carrier booking major orders for Boeing aircraft.
Kuwaiti start-up operator LoadAir Cargo signed an order for two Boeing 747-400 Extended Range Freighters at the show yesterday. The order is the first part of the company's ambitions to create a major global cargo and aircraft leasing force. "We are trying to build a synergistic aviation group," said Sheikh Khalifa Ali Al-Sabah, chairman of LoadAir.
As well as beginning regional cargo operations hubbing out of Kuwait, LoadAir is in advanced talks with potential partners both in China and Europe about forming cargo joint ventures to operate the aircraft it is buying, said Sheikh Khalifa.
LoadAir will take delivery of its first 747 from Boeing in 2008. It is also looking to acquire smaller cargo types from the secondhand market, such as the Airbus A300 or A310, to enable it to begin operations this year, said Sheikh Khalifa.
Later in the week, new Indian cargo start-up Flyington Freighters signed a deal for four Boeing 777 freighters. Eventually it wants to operate a 30-strong fleet.
The new privately-owned carrier is owned by investors related to media company Deccan Chronicle. Flyington Freighters will operate international cargo flights from its Hyderabad base and in particular is aiming to tap into the market for cargo between India and China.
At a press conference announcing an order for 10 Boeing 747-8 freighters, Emirates ruled out a return to the Airbus A380F. The new Boeing freighters will "strengthen Emirates fleet and reinforce Emirates cargo position in the top league of cargo carriers", said Sheikh Ahmed bin Saeed Al-Maktoum, chairman of Emirates Airline and Group. It is an "adaptable aircraft", he said, capable of serving Africa, the Middle East and most of Asia from the carrier's Dubai hub.
The first of the GEnx-powered 747-8F order, worth $3.3 billion at list prices, will be delivered in 2010. Emirates currently operates nine freighters and will add a further two leased 747-400Fs next year, said Sheikh Ahmed. It also has eight 777Fs on order.
Emirates has big plans both for the passenger airline and its cargo subsidiary. "I think this is the start for the airline SkyCargo," said Sheikh Ahmed. "We have a big potential in Dubai being a hub and with the expansion in Jebel Ali." The huge new airport being built at Jebel Ali in the United Arab Emirates is scheduled to open in early 2008.
Finnish Commuter Airlines (Finncomm) managing director Juhani Pakari missed a Farnborough air show press conference organized with ATR after his driver embarrassingly took him to the wrong Farnborough.
Amazingly, the English driver ATR arranged to take Pakari to a 9:30am aircraft contract signing event thought the Farnborough air show was in the town of Farnborough in Kent rather than the far more distinguished town of Farnborough in Hampshire. As a result Pakari frustratingly ended up hundreds of kilometers from the air show just as he was supposed to sign a $54 million deal for three ATR 72s.
Journalists had assembled at ATR's chalet at 9:30am on 19 July to get a market briefing by ATR chief Filippo Bagnato and witness a contract signing with an undisclosed customer. At the beginning of the event Bagnato asked journalists to be patient because the customer "was somewhere in the middle of England" but was still expected to show up by the conclusion of his briefing.
Halfway through his briefing, senior vice-president commercial John Moore handed Bagnato a note with the bad news: Pakari had ended up in Farnborough in Kent and was going to have the miss the event. "We have to prepare a gold medal for this driver," Bagnato joked.
He refused to divulge who the customer was and asked journalists to wait until 11:30 am for a contract signing in the static area. But Pakari also missed the 11:30am event and by the time he showed up all the journalists were at other events.
Pakari finally arrived at the correct Farnborough in the early afternoon. After signing the contract, presumably without any journalists in attendance, ATR put out a press release just before 2pm.
Finncomm, which already operates two ATR 42s and has six on outstanding order, will take delivery of the larger ATR 72s in 2008 and 2009. It is a small but growing domestic carrier based in western Finland operating ATR 42s, Saab 340s, and Embraer ERJ-145s in partnership with flag carrier Finnair.
Despite this Farnborough hiccup, ATR has had another fantastic year, securing 50 orders to date. In the last 18 months, ATR has booked 140 orders, outstripping the 83 orders over the same period for the rival Bombardier Dash 8. Bagnato is proud to point out there has also only been 169 regional jet orders in the last year and a half. "For the first time in many years the turboprop orders have been bigger than the orders for regional jets. This is one we can keep in our file as a historical moment," he says.
Despite all the success, it has not been a smooth Farnborough for ATR from a publicity standpoint. The manufacturer's other Farnborough press conference, announcing a maintenance agreement with India's Kingfisher Airlines, was delayed by nearly an hour in the sweltering heat on 18 July to accommodate the late arrival of flamboyant chairman and CEO Vijay Mallya.
Mallya's delay was because a tour of the Airbus A380 took longer than expected. As Mallya commented: "I've just come from the A380, which in comparison to the ATR is rather large." Kingfisher has two A380s on order. "It was a proud moment to see the Kingfisher logo on the aircraft," said Mallya.
Six years ago Rusdi Kirana was eating a burger with his wife sitting on the grass overlooking the Farnborough runway. He was at the show looking to acquire his first aircraft for Indonesian start-up carrier Lion Air.
The contrast with this year could not be more stark: yesterday Kirana was having lunch with Boeing chief Alan Mulally in the manufacturer's prime site chalet having just exercised options to buy another 30 737-900ERs. Valued at over $2.2 billion at list prices, the 30 737s doubles the number Lion Air will acquire, with first deliveries starting in April 2007.
And Kirana, a travel agent who founded the low-cost carrier with an $850,000 investment with his brother, intends to order plenty more. "When I came here to order Boeing aircraft I said to Alan that you are going to make me a billionaire. I am going to have a big profit with your 737s."
Kirana told Mulally that he intends to use that profit to become a 787 customer. The aim is to take its first 787, which would have to be leased, by 2010, he said.
Kirana has just finished a round of discussions with European and US banks about raising the finance for its new orders. With no debt and a profitable operation, although the privately held carrier releases no financial figures, Lion Air is seen as an attractive investment, he said.
Lion Air has grown rapidly to become the country's largest domestic carrier with a market share of 32% and currently operates a fleet of 23 737 Classics and MD-80s, said Kirana.
After the phoney war of the Farnborough airshow build-up, the real thing began today (Monday 17th July).
The best coverage is available via Flight Daily News, for which the Airline Business editor is working during the early part of the show. Today's news centred around Airbus coming clear with its all-new A350 and Boeing resisting the temptation to gloat about its troubles. Airbus also has some cool video on its website from the show.
"Don't give up" was the simple message from Alan Mulally, chief executive officer of Boeing Commercial Airplanes, to Christian Streiff his newly appointed counterpart at rival Airbus.
Mulally, who was speaking at his main press briefing at the show, added: "New airplanes are hard we have a lot of compassion with what they're going through." In the past, Boeing has itself been no stranger to being in the firing line with its own programme issues and executive turmoil. "We've had our troubles," admitted Mulally.
Boeing often says it doesn't save up orders for shows, but it could not resist holding back the announcement by Indonesia's Lion Air today at the show that it is exercising its options for another 30 737-900ERs. Lion Air co-founder Rusdi Kirana also said that when these aircraft have made him a "billionaire" he will come back to Mulally and order some 787s.
Alan's smile was, as you would expect, broader than ever.
The slightly unreal aviation world of the global airshow is upon us once again, with the Farnborough Airshow beginning on Monday 17th July. The UK town plays host to this show every two years.
This year, it is Airbus and all its woes that will be taking centre stage. Boeing, having felt exactly the same in the past, is not gloating too much (yet) over the troubles of its arch rival.
What will be fascinating to see is just how Airbus reacts in the coming week to what is one of the most testing periods of the European manufacturer's life. It will also be interesting to hear more about what it's customers have to say.
One of the most visible Airbus images already being prepared at the show ground are large "Xs", several metres high, that appear on the company's many posters. The X stands for Xtra, which is how Airbus will be positioning its widebody offering to confront Boeing's 787 Dreamliner. This is presumably for extra cabin width.
More to follow on Monday after new Airbus chief executive Christian Streiff tells the world what the A350, or perhaps A370, will be.
Follow the news at Farnborough via Flight Daily News and via Flight TV. You know it makes sense.
Led by none other than Reverend Raymond C Lee and Priscilla C Lee, Oasis Hong Kong Airlines is creeping forward to its goal of launching low-cost long-haul services between
The two Lees - chairman and executive director of the start-up respectively - are hoping to begin flying five times a week between
Despite some delays to its launch, Oasis is feeling confident. So confident in fact that it has started winding up
Oasis says its 747s will have 81 business class seats and 278 economy seats. The personalisation comes from allowing travellers to book the basic seat and then pay for extras such as advance seat reservations, lounge passes or better in-flight grub. "Passengers only pay for what they choose," it says.
Airline Business covered Oasis and other planning low-cost long-haul services recently. Many, however, have doubts whether it is a business model that can really work in competitive long-haul markets where the natural benefits low-cost players have in short-haul travel give them the edge.
Oasis and the Lees are determined to give it a go. Further routes will be announced soon, they say. We will watch their progress with interest.
The crystal-ball gazing abilities of British Airways chief economist, Dr Andrew Sentance, have been recognised by none other than Gordon Brown, the
Dr Sentance joined BA in 1998 from the
Separating fact from fiction when airlines and airports bandy claims and counter-claims about airport fees is sometimes as tricky as deciphering just what Italian soccer player Marco Materazzi actually did say to French player Zinedine Zidane.
But the headline in a recent International Air Carrier Association (IACA) press release left us in no doubt about their views on a Mediterranean fees dispute: "Drastic increase in airport charges will impact tourism in Cyprus". The association, which represents 39 carriers in the leisure industry, called for the new owners of Larnaca and Phaphos airports on the island - a private consortium called Hermes Airports - to review its 300% charges hike.
Now this is aggressive stuff from IACA, which has shied away from blasting airports in public. It is complaining about a lack of consultation on the charges increase, which was imposed in mid-June. "These costs are unbearable, we have not even had time to pass them onto passengers and they will have a detrimental effect on traffic to
Geens explains how there are six additional charges at these airports, over and above the basic landing charge. These are: a ground handling fee (3.48 per departing and arriving passenger); a security fee (1.17 per departing passenger); a fuel throughput fee (0.009 per litre); and a fire service recovery fee (on average 0.52 per passenger). The other two are an airbridge fee and a CUTE user fee, but as neither airport has these until new facilities are built these can be discounted for now.
IACA has calculated that by
Hermes Airports chief executive Bob Manning is puzzled. He cannot get to 300% with his calculations. The closest he gets is 45%.
Now that, perhaps, is quite an increase anyhow. But, he points out, this is not quite the whole story. The major new cost - ground handling - has been broken out from the old, all-encompassing charge. "We have separated it out," he said. For now, Hermes has taken on the former government workers providing this service, but they will get out of this business in a couple of years. More competition will follow and prices should fall.
It seems that airports in
"Ironically it is in the best interests of the airlines. We are not going to succeed by strangling the airlines and they are not going to succeed if they don't provide good services," said Manning.
"What airlines were getting for what they were paying wasn't very much," he added. The extra charges mean carriers at Larnaca and Phaphos will pay 20-25 per passenger compared to the 18-19 before, he said. This will put it on a par with other Mediterranean airports like Nice, Marrakech,
So, who is right and who is wrong? Like most airline-airport disputes until both sides agree on the figures it is difficult to tell. In this case there is an increase, although probably not at the headline order of 300%.
More importantly, the whole subject of dialogue seems sadly lacking once again between these important partners. Come on guys get around the table.
Air France and KLM celebrated the opening of their new joint office in London on 6 July at a champagne ceremony that has been repeated around the world since the two carriers merged in 2005.
The SkyTeam members now share offices in more than 50 cities and plan to have 95 joint town offices by the end of March 2007. The new joint offices helped the carriers generate 350 million ($449 million) in savings in fiscal 2005-06, including 27 million in commercial savings. Air France executive vice-president Patrick Alexandre and KLM executive vice-president commercial Paul Gregorowitsch predict these figures will increase to 61 million and 465 million in fiscal 2006-07.
Shortly after Air France and KLM merged in April 2004, they predicted the merger would generate 27 million in commercial savings in the first year. "We kept our promise and we'll deliver," says Alexandre.
"It's quite unique what KLM and Air France are doing together," says Gregorowitsch. KLM has kicked out fellow SkyTeam member Alitalia from the Plesman House at Hatton Cross near Heathrow Airport to make room for Air France. KLM has been in the home-like office since 1990 while Air France previously had its UK and Ireland office in nearby Hammersmith.
Air France and KLM currently have 330 employees across the UK and Ireland, including 180 at the Plesman House. Many of these employees joined a team of executives from both carriers, led by Alexandre and Gregorowitsch, and the UK Ambassadors to France and the Netherlands to cut the ribbon on the new joint office and toast the completion of a refurbishment.
The EVPs reiterated that neither carrier has cut any jobs since the merger and promised there will be no job cuts in the current fiscal year. "We didn't have any issues in the management side," adds Alexandre.
The carriers enjoy an 8.6% market share in the region, with over 800 flights per week from 17 airports. Only one-fifth of the carriers' passengers from the region are heading to France and the Netherlands while the other 80% connect in Amsterdam and Paris to the over 200 destinations the carriers serve worldwide.
I have been pointed to a new website devoted to recollections from former British Overseas Airways Corporation - BOAC - employees about their time at this post-World War Two airline institution, which was merged with British European Airways in 1974 to create British Airways.
The author, former BOAC staffer Peter Jones, has gone to spectacular efforts to compile stories from around the BOAC empire. It was meant to be a book but apparently a publisher has proved elusive. The tales range from Burma to Iran and from Ghana to Panama.
For a touch of nostalgia and for a feeling of the adventure these BOAC activitists felt about being in the airline business back in the '50s, '60s and '70s, take a look.
No your eyes are not deceiving you - this is the interior of an aircraft, not a fancy New York, Dubai (sorry Abu Dhabi restaurant) or Paris restaurant. The mood lighting is not created by candlelight - at least I don't think so.
Middle Eastern carriers are determined to outdo each other in the premium cabin, and Etihad Airways is no exception. It has just launched this interior concept on its Airbus A340-500s that began flying between London Heathrow and Abu Dhabi at the beginning of July.
This, I hardly need to say, is first, or Diamond Class. The seats spin. Not in the way kids like to play with office chairs, but through 180 degrees so "Guests", as Etihad calls them, can have meetings, chat or eat.
But don't worry those of you who can contemplate paying for this service - rotation is not complusory. Each seat also has a privacy shell.
Whoever said first class was dead?
El Salvador's TACA typifies many carriers looking to follow IATA's Simplifying the Business (StB) e-ticketing initiative: it says that getting rid of the paper tickets is only the first part - the tougher part of obtaining interline e-ticketing (IET). That is where carriers which want to interline with each other must do so in a full electronic way as far as the tickets are concerned.
"Today's challenge is becoming fully IET compliant by the end of 2007, mainly due to the high stakes of interline revenues at risk," said Jaime Pocasangre, corporate controller and chief information officer of TACA, speaking at the recent Airline IT Summit, presented by SITA in co-operation with Airline Business. "Half of our interline revenues come from Europe so it is very important for us to meet IATA's target, and also to do it flawlessly." By the end of next year, IATA is committed to eliminated paper tickets altogether.
TACA has already taken some important steps on e-ticketing. It started with this technology in 2001 and now issues 91% of its tickets as e-tickets. "Our e-ticket platform has enabled phenomenal direct channel growth," said Pocasangre, talking about the carrier's sale of tickets on its own website.
But switching to IET is a difficult project, and has been given such a high priority by the carrier that its chief executive Roberto Kriete is directly involved.
But will e-ticketing help TACA reduce costs? "What savings?" asked Pocasangre. At first the carrier has to invest. "Now it is about generating value, not savings," he said. "Today we still have some staff to deal with paper [tickets]. Once we are 100% [e-tickets] we will see some savings."
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