The article is part of a wide-ranging special report on the Middle East aerospace sector published by Flight International, while you can also read the recent Airline Business stories on how the Middle East airline sector continues to grow and interviews with the new chief executives at Egyptair, Gulf Air and Royal Jordanian.

After BA posted first half losses today, the carrier reiterated its belief there were structural changes taking place in the industry, particularly relevent to its short-haul premium business where yields have been hard hit. Asked during a conference call with analysts today about the long-term future for premium in short-haul, Walsh outlined the robust future role he envisages at Heathrow.

"We believe we can continue to justify two-class service at Heathrow for some considerable time. Ten years from now I would expect we will still be operating a two-class service at Heathrow," he says. "I think the nature of the change we've seen primarily relates to point-to-point short-haul premium. I think that is structural. We see that where the short-haul leg is part of a combined short-haul/long-haul product, there is still demand for that product. So even with the most pessimistic outlook on this, we still believe this is a viable proposition for us, though it will be at a lower level and so the revenue stream will reduce, so we need to say a structural change."

But he acknowledges Gatwick provides a different challenge."I'm not convinced we can continue to provide it at Gatwick, because I think the demand at Gatwick is very different to the demand at Heathrow. We don't get as much transfer from short-haul to long-haul, so I think its probably a question of time, and sooner rather than later that we would address the issue of potentially moving to a single cabin configuration for short-haul at Gatwick."

Talking of Gatwick, Walsh said he had already spoken to the new owners of the south London airport. "I still see Gatwick as an opportunity for us," he says. "We've head early discussions with the new owners. We see the change of ownership as an opportunity," he says, noting this was not a criticism of previous management, but his believe Gatwick would benefit from more focused management.

Direct comparison with 2008 is nigh on impossible, given the complexities of trying to come up a with a like-for-like comparison of this year against a combination of slimmed down versions of Air One and Alitalia, even if figures for Alitalia in 2008 were readily available - which they are not. But the profit follows losses of €210 million and €63 million incurred in the first and second quarters respectively and outstrips its own target of reaching breakeven for the third quarter.

And while it might only be a modest profit, it must be a boost to the carrier given the tough market conditions and bearing in mind the old Alitalia racked of net losses in excess $3 billion between 2003-07 alone.

"The ability which Alitalia is demonstrating to be able to deal with a scenario of a market in great difficulty proves the validity of the industrial operation and of the investment made by the stockholders," says Alitalia chairman Robert Colaninno, who led the group of Italian investors which formally took control of the carrier early this year "The challenges that lie ahead are again many and complex, but today we know that we have the means to face them."

Virgin says the app, which features an introduction by Richard Branson, is designed to help people cope with the anxiety at the prospect of flying and overcome their personal fears.

The app explains questions that people commonly have like "what happens if all the engines fail" or "what are all the onboard noises".

It has a video-based explanation of a flight from start to finish, relaxation exercises and fear therapy and a fear attack button for emergencies with breathing exercises.

It's a nice idea to make this mobile from Virgin, and comes with a small price tag of £2.99 (not sure if there is a US$ or € price?)

Now I want someone to invent an app that can tell you if you are sitting near someone was has this app so you can move seat accordingly.

Ryanair increased first half net profits to €387 million from €225 million at the same stage last year, and while it expects to lose money over the second half of its financial year, is still targeting increased full-year profits net profits at the lower end of its €200 million to €300 million target range. This comes on top of Spanish budget carrier Vueling - recently merged with fellow Barcelona carrier Clickair - which has just announced a trebling of it third quarter operating profits to just under €70 million, while growing Scandinavian budget carrier Norwegian more than doubled its third quarter operating profit to NKr475 million ($85 million).

While Ryanair's yields have been sharply hit by the recession - average fares down 17% in the first half and the carrier is projecting yields falling by up to 20% over the second half - its unit costs were down 27% in the first half driven by the sharp reduction in fuel costs (down from €422 million in the third quarter last year to €246 million this time around).

A further sign of the carrier's growth - the long-term future of which O'Leary has raised a question mark over in relation to his attempts to secure a new aircraft deal with Boeing - is shown by his belief it will shortly become the number one carrier in three of Europe's most important markets. This he says is a result of the carrier's own growth and the short-haul capacity cuts of major European carriers.

"We really are growing very rapidly in some of the big markets," he says, in particularly of its position in the UK, Italy and Spain. "We will shortly be the number one airline in the UK, Italy and Spain," he predicts.

Picture credit: Billypix 

But I am puzzled by one little area, which I assume is top deck front, at the entrance to the stairs. Air France calls this the gallery. I would call it a dead zone. There is no room for proper seats so it has become a kind of hanging about area.

Can anybody think of a better use for this area?

A few suggestions:

* Another loo - there are never enough on an aircraft are there?

* A shower

* An arcade area - a couple of playstation type games or a slot machine could be a good ancillary revenue source

* Table football / hockey etc

Here are those links:

Air France A380 will get fourth class later on

Air France rolls out first A380

The Air France A380 website with lots of photos, video and press kit

Continental President Jeff Smisek likened the carrier's entry into Star to a first class upgrade while United's CEO Glenn Tilton stressed Star is an alliance that treats "all members as true and equal partners."

Max was on the flight - as is obvious from the video - and wrote this story on Flightglobal.

Here's the full Qatar Airways release on the flight too.

Who knew Milwaukee could breed such intense passion? 

Well it has certainly stirred AirTran CEO Bob Fornaro, who today during the carrier's earnings call spoke very passionately about the carrier's prospects in the market.

Since US regional operator Republic Airways Holdings closed on its purchase of Midwest Fornaro has not shied away from voicing his opinion of Republic's chances of preserving the Midwest brand.

"Republic's not fooling anyone," Fornaro declared today. He argues any business traveller in Milwaukee is savvy enough to know the old Midwest doesn't exist.

"We'll give it a year," says the AirTran chief as he continues to stress Republic has no track record in terms of marketing experience.

Fornaro warns Republic has a real challenge on its hands. They've "done a few paint jobs, cut a few costs and laid off some people....but ultimately they've got to start carrying customers."

Of course Fornaro believes this give AirTran a prime chance to strike. "It gives us an opportunity to make inroads in the market. It really opens the door for us."

It comes after Lasak's long efforts to push through wage cuts.CSA's board had in August offered to resign if unions would a agree to a wage cut deal. While CSA's statement does not mention the reason for the resignation, Lasak is quoted in the Czech press as saying the board agreed to resign after an agreement with unions on wage cuts saving the company around $35 million. These wage cuts, including a 15% cut by pilots, still fall short of those originally sought by the company. You can read plenty more about this here in a detailed article in the Prague Daily Monitor.

Lasak took the helm of CSA nearly four years ago at a particularly dire time for the carrier. He first stabilised the carrier, in part through the sale of a number of assets, before setting out on restoring its profitability. I interviewed Lasak three or four times during his time at CSA, latterly early this year for a cover interview for Airline Business. I asked him just how close they were to the edge when he took the helm. "Close," he said. "I started to read about bankruptcy law." You can read the article here.

But market conditions have turned against the carrier - the airline is expecting losses this year - just as the state has been attempting to privatise the airline. A consortium, including Czech airline Travel Service, is the only bidder still in contention.

In the meantime, new board chairman Miroslav Zámečník says the existing restructuring projecSt are continuing as before.

And in an unusual sign of airport and airline harmony, new man at the helm of CSA is Miroslav Dvorak - who is and will remain head of another Czech privatisation target, Prague Airport. "The appointment of Dvořák, until now the CEO of Prague Airport, does not constitute a conflict of interest.  Both companies are controlled entities according to the applicable legislation, whose common shareholder is the State," says Zámečník.

My two favourite bits are:

1. When O'Leary says he can't do the interview now as he has to go and defend the airline in an interview (live) he is doing for another BBC programme (You and yours).

2. The casual, but slightly puzzled look of the guy with the moustache standing in the background - he doesn't look like he is with Ryanair or the BBC to me, so just who is? And I love the way at one point he actually moves to his right, just to make sure he is still in shot. 

Anyway expect O'Leary, who had his say last week before the programme aired, to give the BBC somre more feedback during a press conference in London this morning.

Here's the link, enjoy:

Uncut: Ryanair's Michael O'Leary

And considering the throng of those interested in a few seconds with Panamian president Ricardo Martinelli today I was lucky. Here is Mr Martinelli showing his Italian heritage with some effective arm gestures during a speech today.

The occasion was the official announcement of the latest expansion of Panama City's Tocumen International Airport. This is a big deal for Panama which is building up a reputation as a transportation node that is not simply notable for having a famous waterway.

Now Martinelli is a gregarious chap as far as I could see and his ease with people helps explain why he swept to victory in Panama's elections in May with a majority of someone told me 60% of the popular vote.

I was at Tocumen by accident really as I am visiting Panama's Copa Airlines and Tocumen airport officials on my way to the ALTA Airline Leaders Forum in Cartagena this week.

It just so happened the announcement of Tocumen's expansion was today - so I went with Copa CEO Pedro Heilbron to witness proceedings at first hand.

The event started with airport general director Rafael Flores (left) telling us about the expansion plan. That will see another pier being built adding 12 gates. This will give the airport 34 gates altogether. It should be finished in 15 months or so and will cost some $60 million.

This will position Tocumen very nicely with plenty of capacity for Copa to grow into and you never know even welcome a few other carriers.

Mr Martinelli, with one eye on tourism, was keen to encourage international carriers to serve Panama.

He particularly nudged Copa to think about serving Rome. Remember Mr Martinelli's Italian heritage.

After the formalities the party made for a specially prepared area where the new North Pier will connect with the existing terminal.

But not on foot for Mr Martinelli for he spied the electric cart that Vice President Juan Carlos Varela was using. Now Varela wasn't being lazy: the poor chap had injured his foot tumbling down some steps after a late night press briefing and was on crutches.

Mr Martinelli jumped into the driving seat and escorted his number 2 to the next stop.

Bemused travellers watched as a procession that included woman dressed in ethnic dress, a band, plus a crowd of press, moved to the unveiling.

After pulling the rope on a visual that showed what the new pier will look like Mr Martinelli grabbed the mike and dived into the press scrum to take questions.

This kind of thing takes a long time so I grabbed a snap of Pedro Heilbron (right) with Copa chairman and prominent Panamian business figure Stanley Motta. The Motta family founded Copa and still holds a significant interest in the publically quoted carrier.

Now that was a fun day out in Panama!

Some links:

Airline Business cover interview with Pedro Heilbron.

Airline Business citation for Pedro Heilbron's 2009 Airline Strategy Award.

As it happened, I had scheduled to visit Panama on my way to Cartagena with meetings planned with Copa executives and officals from the city's Tocumen International Airport.

No better time then to ask Copa CEO Pedro Heilbron what he thinks about Avianca-TACA.

Here's Pedro being interviewed on the same subject during a ceremony today to mark a new phase of expansion at Tocumen Airport (see related story here).

Here's the story that I'm going to post to our sister service Air Transport Intelligence later, but you are getting it first fine Airline Business blog reader because this blog is working but my VPN to send this story is not!

Network strength will enable Copa to resist merged Avianca-TACA

Mark Pilling, Panama City

The strong position Copa Airlines has built up over the past decade at its hub in Panama will prove its best weapon to combat any increased competitive threat from a combined Avianca-TACA, chief executive Pedro Heilbron told Airline Business in an interview at his headquarters in the central American city.

Speaking a week after Colombia's Avianca and El Salvador-based TACA announced their strategic tie-up, Heilbron acknowledges that Copa will carefully watch how the new entity moves forward but will not alter the disciplined business plan.

Over the past several years Copa has grown to become one of Latin America's most profitable airline groups.

"When they get together they clearly become our main competitor, but the truth is our own network is solid enough and unique enough and highly defensible," says Heilbron.

Copa competes with TACA's hubs at San Salvador in El Salvador for Central American traffic while its 100%-owned unit Aero Republica is expanding in the Colombian market.

The Avianca-TACA deal was not unexpected, says Heilbron. "We knew given the financial situation in the world at present and in particular of those two airlines that it was in their best interests to do something.

"The way we see it is that it is still in our hands to remain the leading intra-Latin American carrier," says Heilbron. "It is up to us to keep doing the necessary investments to maintain our leadership position."

Copa and Aero Republica have built up a fleet of 58 Boeing 737s and Embraer 190s and a handful of MD-80s and have more 737s and 190s on order.

In Panama Copa also has an advantage because the state-owned airport operator is investing in expanding the airport and keeps its charges competitive. "Having an airport that plays ball is important. It has new facilities and is being expanded again," says Heilbron.

In contrast, Colombia's Bogota El Dorado airport is congested as is another TACA base at San Jose in Costa Rica, he says.

"We feel our space and opportunities are not dependent on what they do. So what we are going to do is more of the same. We are going to stay the course," says Heilbron.

So, can Avianca-TACA unseat Copa? To be honest I think that's a tall order.

Single-minded Copa has build a strong fortress at Panama and a well-functioning hub system. It has four banks a day at Tocumen with a hour connecting time max. Around half of its traffic connects.

Let battle commence!

Efforts continue at ICAO's high-level meeting on international aviation and climate change to establish a common position for aviation to take into the Copenhagen summit. The three-day meeting in Montreal is expected to end late this evening.

"Let me be very honest and very blunt," said Bisignani at the end of yesterday's session."At the end of a very difficult day, I am concerned for the outcome of your work. This meeting is in danger of two things: being held hostage by the desire for consensus and missing a great opportunity. You have 24 hours, to rise above the obstacles of a few and deliver results.

"If you fail to agree and declare a credible position for ICAO to take to COP 15,  it will not be the responsibility of industry or of ICAO. It will be the failure of those gathered here who lost an historic opportunity."

IATA has submitted a joint paper with airports grouping ACI, navigation services body CANSO and the International Coordinating Council of Aerospace Industries Associations (ICCAIA) putting forward a common position for aviation.

Specifically they are calling for ICAO to adopt a three targets: 

• Improving fuel efficiency by an average of 1.5% annually to 2020
• Stabilising carbon emissions from 2020 with carbon-neutral growth
• Reducing net carbon emissions 50% by 2050 compared to 2005

The outcome of the meeting will no doubt be closely watched in Brussels, as the EC moves ahead with its controversial inclusion of aviation into its emissions trading scheme.

Picture credit: Billypix