Mark Pilling: November 2008 Archives

Flightglobal.com's mascot Stefan, see this blog earlier this week, is soaking up the atmosphere here at the ALTA Airline Leaders Forum in Cancun.

That's when he not reading the Airline Business Daily we are producing here at the event of course! The lead story from Day Two's paper was a scoop for Washington-based senior editor Brendan Sobie with TACA and Copa both announcing moves towards the Star Alliance.

Travelling from the UK to Cancun in Mexico for the Latin Airline Leaders Forum has taken me via Atlanta, my first visit to the world's busiest airport (as the TSA guard reminded us) for some time.

Atlanta is almost the perfect transfer airport: anonymous and devoid of personality but it works.

So I was pleasantly surprised to see Atlanta injecting a little bit of atmosphere into the centre of Concourse E with some live music. Michael B - pianist, composer, arranger - as his card says, was treating the Tuesday late afternoon crowd to a few easy tunes.

I am part of the Airline Business team travelling to Cancun to cover the Leaders Forum, which is run by the Association of Latin American Airlines and also features its annual meeting.

We are producing a daily paper at the conference, as we did for the IATA AGM this year in Istanbul and at Routes in Kuala Lumpur. We've done one issue in advance and issues 2 and 3 will be available from Friday and Monday next week respectively.

An interesting feature of the Latin market is that it is the only region of the world where traffic is still growing. Just how long that is the case will be a topic of debate in the next couple of days.

For the eagle-eyed among you, see if you can spot in the photograph Stefan, the "action man" pilot puppet given to me for the trip by my colleagues at Flightglobal.com.

I will leave it to our community editor Stuart Clarke to explain the significance of Stefan. This is a test to see if he is reading this blog.

Over to you Stu!

Fuel hedging. Hard to understand and hard to get right - especially in the past year with prices as volatile as they have been.

This article from John Bowker at Reuters nicely sets out the current state of play on airline hedging.

It follows our very own Kerry Ezard's article in the August issue of Airline Business that set out what airlines were doing when oil was at or around its peak of $140+ a barrel.

Since then many caught a cold, having hedged at over $100 a barrel when it was up in the $140 pirce range, only to see the price drop back well below $100.

Then there are the US carriers like Southwest and United that have had to account for losses in their fuel hedge contracts.

As ever when people are trying to second guess the market the potential for error is large. But who have thought fuel hedging would have become so critical and topical as it has been in the past months.

After hosting some Chelsea soccer stars yesterday at its World Travel Market stand Etihad has turned to the celebrity world of pop to take care of Miss Dannii Minogue, a pop star and judge of X Factor (UK version) and sister of a certain Kylie.

Poor old Clive Wratten, UK country manager, had to break off selling lots of seats to pose for a few snaps with the lovely Miss Minogue and a replica Formula 1 racing car.

In return for doing a stint at WTM Miss Minogue seems to get seats on Etihad to fly back to her home country of Australia, and in particular her home town of Melbourne. Etihad flies to Melbourne daily from Abu Dhabi.

Staying loyal to the path trod by Emirates in associating itself with sporting greatness, neighbour Etihad Airways was seen doing the same at London's World Travel Market today.

The airline's UK country manager Clive Wratten is seen posing with Premiership stars Ashley Cole (far left), Didier Drogba and Florent Malouda of Chelsea.

Now I suspect Clive is not a Chelsea supporter - maybe he can tell us? That's the trick with sponsoring a team - you don't really care except in a business way if they win or lose.

At least Chelsea can be confident of the financial health of their sponsor. Unlike poor West Ham with XL Airways, which went bust forcing the "Hammers" backroom staff to get the needle and cotton out and hastily patch over the Excel logos.

Tell us of any other "stars" you saw at WTM.

I didn't have room for this shot in the recent "Reopening the shop" article I wrote for the November issue of Airline Business.

But I thought it said a lot about what went on behind the scenes when the Caribbean Airlines engineering team, together with Boeing Commercial Airplane Services experts and facilitators from consultancy Catalise worked on restructuring the airline's maintenance operation.

The full story is in the article, when explains the detailed and rigorous process the teams undertook to remodel Caribbean's M&E department.

Following up on my blog yesterday that Ryanair's Michael O'Leary might announce his long-haul low-cost plans today he scotched that one this morning, putting it down to an over zealous writer bigging a story.

On BBC Radio 4's Today programme he repeated that he needs to see a "collapse in aircraft prices" for the venture to take the next step, and that the industry is "many months away from that".

He did say however that he sees the market being "cleaned out" over the coming months as some carriers fail. "Five or six airlines will go bankrupt in Europe before Christmas," said the Ryanair boss, and that "Ryanair would be one of the big four airlines in Europe".

That in itself is interesting as previous conventional wisdom has put Air France-KLM, BA and Lufthansa as the network big boy survivors and Ryanair and easyJet as the big low-cost ones. Now O'Leary sees only 4 - so who's gone?

Here's a link to its second half results. O'Leary is guiding to a full year breakeven for the carrier, but says that profits will rebound strongly next year if oil stays at $70 a barrel.

Our friends at Flight scooped this story ages ago, and since then Ryanair boss Michael O'Leary is continuously asked if and when he is going to launch a long-haul low-cost airline.

A few weeks ago the main hurdle in the way appeared to be cheap aircraft. O'Leary seems to have several investors lined up, including himself of course.

Now hints have emerged that at tomorrow's press conference to announce the carrier's second half results O'Leary will tell us more - perhaps he has finally got the aircraft at the price he needs to make the plan make sense.

In early October he said the plan could be activated "if aircraft fleet values collapse and there's every prospect of that happening now in this kind of recession, particularly with long-haul traffic collapsing".

Thing is, I didn't think prices had really fallen spectacularly - at least not yet? If they have that's big news in itself.

O'Leary rarely disappoints at his press conferences, and tomorrow's looks like being no different.