October 2005 Archives

Well it didn't take long for the people now running Delta Air Lines to conclude that including a "low-cost" airline in their plans wasn't a great way to get themselves back out of Chapter 11. Whatever else about that much maligned process, it does confront managers with the reality of what they've been doing wrong. And, of course, it makes it a whole lot easier to do something drastic about it. So Song is gone.

When they've tried, US airlines have comprehensively failed to make these kinds of carriers-within-carriers work. I think it can be done in fact - but not with the labour-contract baggage that the American majors haul around like a ball and chain. Doing it simply to respond to a competitor like JetBlue is also not the best way to start - rushed competitive responses may sometimes achieve their short-term aim, but they rarely make for robust long-term businesses.

As it happens, two "legacy" airlines in different circumstances, but both in the UK, showed how it could be done. Everyone's forgotten now, but back in 1998 British Airways created a terrific little airline at London Stansted called Go. It was run by an American - Barbara Cassani, everyone said it would never work - but the passengers loved it, it made money, and in the end BA sold it to EasyJet for a decent price. Cassani reputedly left in tears, declining EasyJet's job offer. (And very nice it was to hear of a CEO with that sort of passion in her veins.)

BA made it work by creating a subsidiary truly at arm's length, run by a pretty much autonomous CEO, and with a cost and labour structure that had nothing to do with the mainline operation.

A while later, in more tortuous circumstances, BA's arch-competitor BMI created something called Bmibaby . Coming six months after 911, this move was more about survival than anything else and had all the hallmarks of a desperate move sure to end in tears (which I confess is what I thought would happen.)

It didn't however, and today it's a major part of BMI's business. (I think it was also the first UK low-cost carrier run by a Brit - Go was headed by an American; EasyJet was owned by a Greek entrepreneur with a Kiwi CEO; and Ryanair, I'm told, has an Irish guy in charge.)

BMI was able to create an operation that worked because, even if not in so many words, it offered jobs on new terms and conditions to people faced with redundancy otherwise. It also had the great advantage of being able to launch at locations well outside London. And, no doubt about it, it was a very well executed plan - which always helps.

In the US I suspect the conventional wisdom is actually correct. The legacy US majors are in deep, deep trouble. They can't face up to cold turkey and they'll be mainlining Chapter 11 on and off for years - unless they finally land in the gutter.

Every so often major airlines find themselves in an immensely powerful position: they have a purchase choice between the aircraft of two manufacturers, either of which would do the job, but both of which have serious politics riding on them. Right now that's Aeroflot.

Next week the Russian flag-carrier is due to commit the best part of $3 billion to an order for as many as 22 of either the Boeing 787 or Airbus A350. It's safe to assume that the management is thoroughly apprised of President Putin's views on the matter.

What those views might be are not so obvious. Boeing and Airbus have both been stepping up their activity in Russia in the past few years - creating jobs, investing, and promising more in future.

Some of what they've done is similar: for example both have created Moscow-based design centres engaged in broadly the same sort of activity, and both are buying substantial quantities of Russian titanium (not that they had much choice in that peculiar market).

But some of it is different. Boeing was earlier in building up its design centre and is today responsible for more Russian employment, but Airbus is catching up fast and is promising to place A350 manufactuirng work in Russia. Boeing has, with exquisite care, managed simultaneously to be seen to be involved in the Russian Regional Jet (RRJ) without actually committing very much to the project. Airbus, in the guise of France Inc with President Chirac at the helm, is benefitting from EADS' imminent equity investment in Sukhoi parent Irkut and Snecma's serious engineering involvement in the RRJ's engine (which in turn benefits Snecma).

And yet all the talk is of a 787 order. One way or another Boeing seems to have manoeuvred itself into the stronger position in this race, and perhaps its powerful role in the freighter world will be significant at a time when Aeroflot is also looking to get rid of its ageing DC-10 freighters.

Aeroflot has been favouring the Airbus narrowbodies over the 737 family, but the widebody deal dwarfs that business and the decision will not be made lightly.

There are other factors, a 787 win arguably leaves less room for consolation prizes. In a two-horse race to provide the engines, the only European offer is from Rolls-Royce competing with General Electric. Nothing wrong with that - but if the British company has been making progress in persuading Aeroflot to finally take its engines then it's been happening awfully quietly. Still, RR has pulled off some true surprises in the recent past and can't be discounted. An A350 order could still hand a huge deal to GE however.

I guess the decision is already made - but I wouldn't like to guess this time what it is.

It was only a matter of time of course, but a business unit of Airbus' majority shareholder EADS has finally got itself a deal to build a significant chunk of Boeing's 787.

So complex is the web of aerospace suppliers today that it wasn't really possible to predict how and when this would happen. As it turns out it is EADS military business at Augsburg in Germany that has got the work, and it's a pretty crucial component - the unit will be making the composite aft pressure bulkhead using resin transfer moulding techniques.

It wasn't Boeing itself that placed the work - it has devolved so much of the supply chain on the 787 that that sort of decision barely troubles its managers anymore. The work package was awarded by aerostructures specialist Vought, a huge player in Boeing's industrial machine.

The reverse arrangement is unlikely since Boeing is not in the third party game, but further examples of EADS units finding their way onto Boeing products are inevitable.

Oddly enough, in the recent past Alenia of Italy decided to keep itself out of the Airbus consortium for fear of losing Boeing contracts. And it is now winning so much work on the 787 and other models that you suspect it may have done the right thing. 

The value and number of jobs involved in the new EADS contract is minor of course, but year by year the revenue streams out of Airbus and Boeing are becoming so diverse and are reaching such unlikely places that it is becoming harder and harder for them to position themselves as national aerospace champions. That's hardly novel in most manufacturing industries, but structural change in aerospace is not always so rapid.

You can bet that Airbus execs are damn pleased to see the second A380 in the air at last. Obviously the event is important in its own right, but Airbus must be desperate to shift its focus to the A350 right now.

The company is in something of a perfect storm. For the first time ever it is on the back foot as it is forced to play catch-up with Boeing and the 787. That was always going to happen one day - timelines in the aerospace business are immense by industrial standards and have an inveitability all of their own. For more or less all its existence Airbus has been able to eat chunks out of Boeing's market share by positioning itself as replacing older Boeings. But now the boot is on the other foot.

The timing is dire for Airbus. It was put in the position of having to come up with a competitor to the 787 - which Boeing has cleverly positioned as a technological leader - while at the same time seeing the A380 suck in engineering and cash resources as never before. It's hard not to suspect that Boeing's puzzling choice of timing in reigniting the state funding row is at least partly explained by its desire to pile on the agony while Airbus managers already have a huge load on their plates. Incredibly the Europeans even managed to turn the CEO-succession into a fiasco - something that not even Boeing can have expected.

The A350 programme has not gone well. Technically it's in good shape, but the sales and marketing plan went badly awry while chief salesman John Leahy was hospitalised. Belatedly Airbus is throwing money at A350 marketing and stressing the type's newness instead of its A330 roots. Bit by bit it's scrambling back on the sales-train, but the 787 has so far been scarcely dented.

So every time the A380 passes another big milestone you can sense the relief in the EADS boardroom from all over Europe.

[Flight International Editor Murdo Morrison writes:]

Journalists, even those with a good knowledge of their subject matter, like to feel that with the right questions the truth will out. That under scrutiny the senior executives and others we interview will wilt under the perceptive questioning, the velvet interrogation, with a smile. But the reality is that any organisation can keep their secrets and without some sort of precognition the journalist, and public, will simply never know.

At the Paris Air Show the A380 never raised its landing gear and the official story was that the lengthy time it takes to raise and lower the wheels was problematic for such a short demonstration flight. But at the UK Royal Aeronautical Society A380 Avionics conference held from 4-5 October Airbus vice president for flight test, Harry Nelson, revealed the truth about the gear issue and an unknown fact about the first flight that was broadcast around the world.

The A380, and Nelson is adamant Airbus has now resolved this problem, had a faulty latching system with its right undercarriage door. On the first flight as the giant two-deck beast rose into the air the test pilots got a red light on the right carriage door. Checking with the chase plane, it confirmed that the gear was up and the door closed. But the reality was that the door had not latched and could drop, a potentially dangerous situation. So the 30,000ft altitude planned for first flight was abandoned and the historic aircraft was brought back to Earth early. 

This problem had not been resolved by Le Bourget and that was the real reason the gear wasn't raised then.

One wonders how many more technical issues have arisen with the A380 and have never been mentioned. One wonders how many technical issues on the Boeing 787 will be kept secret. This is the reality of the world inwhich we live, organisations, whether they are airframe makers or information technology service providers can hide the truth easily. With a plausible story they can obscure the reality.

Its something to remember whenever you read a newspaper or listen to radio or television reports. Since becoming a journalist five years ago I now rarely read a newspaper. Why buy something whose contents you can't trust? And that's not always because the journalist has been hoodwinked. Much of the UK press, and print media elsewhere in the world, is biased in favour of their owner's world view. The public relations managers give the limited "truth" they convey one spin and then the "journalists" give it another; war is peace, freedom is slavery, ignorance is strength.

Its said that history is written by the victor. Now its written by the largely ignorant.

Flight International Senior Reporter Justin Wastnage posts from a Connexion by Boeing demonstration...

At 25,000ft your correspondent has had his second experience of Connexion by Boeing live internet. sure the glitches from last October's flight above the puget sound have been ironed out, but live TV took about six downloads to get to work. The other neat gadget Boeing is showing off is on-board cellular telephones and again, given that my callee understood one word in 20 that I bellowed down the line, I can hardly call it an unqualified success. but the proof is there; it works and undoubtedly there will be further enhancements. the only regret is that as we now approach 12,000ft, we are losing the connection and as such this blog is kept to the bare minimum.

[Flight International Editor Murdo Morrison writes:]

Like some create your own city state computer game, Dubai is building at a breathtaking pace: the Gulf sheikdom is constructing the tallest tower block, awesome resort hotels, a theme park bigger than Disneyworld, a new motorway, a "media city" and a second international airport, and all in the time it would take most countries to hold a planning enquiry.

Dubai's rulers run the virtually oil-less statelet - and government-owned Emirates, whose growth is inextricably linked to that of its home city - like furiously ambitious CEOs of some massive corporation, hiring the best managers the world has to offer and delivering on growth, market share and profitability every year.

Emirates' strategy when it launched in the 1980s was to capture a sizeable chunk of the Europe to Asia-Pacific market by offering a top-notch service and the chance to hub through one of the world's best retailing airports. Now the rapid growth of Dubai means origin and destination business is nudging towards half its overall passenger totals - from holidaymakers visiting for sun, sea, shopping and sport to international bankers and traders (not to mention the hundreds of thousands of expats - hotel cleaners, construction workers and airline bosses - who need to be ferried in and out).

Yesterday, I blogged about Qatar up the coast. Dubai's oil rich neighbour Abu Dhabi, the UAE capital, is no longer content to sit and count its oil revenues either. Its ruling elite have looked 150km down the Sheikh Zayed highway and decided they too want a bit of the Dubai magic and, having launched their own flag-carrier Etihad (and dumped their share in Gulf Air), are going all out to attract tourists and investors with their own leisure palaces, commercial centres and shopping malls.

When I spoke to Emirates' airline boss Tim Clark earlier today, he suggested that not only was there room for Qatar, Etihad and Emirates, but that the market was probably underserved with three big hub carriers and dozens of smaller low-cost and regional players (pointedly he didn't include Gulf Air...with Abu Dhabi's departure that airline will be looking now to tiny Bahrain and less-developed Oman to drive its growth. It won't be easy).

For lots more on what the region's airlines are up to - as well as an insight into the burgeoning business aviation market - look out for my Dubai air show scene-setter in the 15 November issue of Flight International.

[Flight International Editor Murdo Morrison writes:]

Which Western airline chief wouldn't fancy being Akbar Al-Baker for a bit? The Qatar Airways boss has no stroppy unions, press or city shareholders to contend with, one of the shiniest new fleets in the world and is adding routes at the rate of almost 10 a year. When the airline began outgrowing its hub in Doha, the Qatar government simply started building a new one. Not just a terminal, but an entire new 2,200 hectare airport next to its existing one - with half the land reclaimed from the Arabian Gulf - designed to cope with 12 million passengers a year. From planning stage to the first passengers using it will take just four years.
Not that Al-Baker has simply a licence to print money. Qatar may be oil rich - its 400,000 citizens are living over a 100 years of proven reserves - and its wealth may be underwriting the expansion of both Qatar Airways and a massive amount of new infrastructure in Doha. But under Al-Baker (who took over a nonentity of an airline some six years ago) Qatar Airways - like its rival Emirates - has established its reputation on capturing connecting traffic from Europe to Asia and Australasia with a top-notch in-flight service. Now, like its Dubai-based counterpart, which it relentlessly benchmarks itself against, it wants to build its origin and destination business by selling Doha as a leisure destination and international commercial centre. Doha may be some way behind its Gulf neighbour in the glitz stakes but - like Abu Dhabi - the Qatar government sees a successful state-owned airline as being key to transforming its economy and its international image.

Kamil wasn’t too pleased about me being on his back. Given that Kamil was a camel, I felt me climbing on his back was pretty much par for the course. But Kamil wasn’t having any of it. As I put one leg over, up he rose in the air, leaving your correspondent swinging down sideways, clinging on frantically to the seat, trying to rescue his camera which simultaneously hoisting himself aboard inelegantly.

I’m not entirely convinced that the Bedouin press ganged into acting as guides for the group of British journalists were telling the entire truth when I enquired my dromedary’s name, as Kamil struck me as an odd monicker, especially when there are hundreds of vastly more suitable names such as Clive, Donald or even Sopworth. But the name stuck just as my clambering routine did in the minds of Fleet Street’s finest, assembled in the 45 degree heat of the Arabian Desert.

The Saudi Supreme Council for Tourism has embarked on a charm offensive and leapt on the occasion of inaugural services from London Heathrow by UK carrier BMI to correct some misconceptions in the minds of the British press corps. Alongside Flight International were representatives of several of the UK’s national newspapers as well as influential trade publications.

Saudi Arabia is keen to create jobs for its burgeoning population, which is due for a boom in jobless twentysomethings over the next decade, and tourism is one area it has spotted it is lagging behind in. The government looks in envy as it sees some 130 flights per week from London alone bringing in holidaymakers to frolic in the sun in Dubai and as many again from other European cities. But they have hit a snag: not many people associate the kingdom, with its strict adherence to Islamic law, as the perfect place for a week’s precious R&R. To put it bluntly, Saudi Arabia has an image problem.

The first step to solving a problem is to admit you have one, as alcoholics are told at the anonymous meetings they hold. The clandestine consumption of alcohol, while we’re about it, is one contributing factor to the kingdom’s image problem, with supposed unequal treatment of women another. The Saudis’ answer to its image problem is to be open, honest and warm.

Despite the head-to-toe black abayas, or cloaks, the female journalists were obliged to wear in public along with full headscarves, there were never made to feel inferior, just different. Saudi Arabia is as much as anything else, deeply traditional rather than radical; most men opt to wear white those gowns with the ubiquitous red and white chequered headdress so as not to stand out from the crowd. Speaking to Saudi women and most will tell you they see it not as restrictive, but liberating, allowing them to be taken seriously. Yet those with an eye for detail will catch little lace along the seams of some of the most daring Saudi women and most cloaks are daringly accessorized with thousands of pounds worth of jewellery as they cruise the women-only floor of the shopping mall or drink tea together in segregated coffee shops. 

One can’t help wondering how compatible the Supreme Council’s plans for Red Sea beach resorts will be with the laws that banned the female journalists from swimming, exercising or sunbathing more than their faces with your correspondent will prove to be. It is hard to imagine, for example, many Western takers for a scuba diving holiday to the Farasan islands’ spectacular reefs once the kingdom’s restrictions are taken into account.

But there are plenty of Muslim visitors already flying to the country either for hajj or umrah pilgrimages to Mecca, who could extend their stay to see the country’s sites and then take in a dive or two, the Supreme Council points out. In time, too, the more relaxed attitude that persists in the expatriate compounds that fringe the country’s major cities could extend to the Rea Sea resorts, allowing women to bathe in less cumbersome attire than a baggy wetsuit, insha'Allaah.

The compounds themselves have become heavily fortified following the terrorist attacks of 2003. Security too is part of the kingdom’s image problem. The camel train, for example, was a different take on the caravan we had got used to, a very discreet cavalcade of bullet-proof, blacked-out GM Suburban sports utility vehicles provided by the Ministry of Information, replete with armed escort and a minder-***-censor in every car. Handy for answering those tricky questions when inspecting Deera Square, nicknamed Chop-Chop Square, the scene of public displays of capital punishment on Friday afternoons. Despite having fallen out of judicial fashion of late, the faint blood stains on the square's concrete drains reminded us of the threat of limb amputation that a theft conviction brings with it. It clears all fears of being pickpocketed from one's mind, even if in other cities, our tour guide shepherding may have alerted the quicker brained criminal to our out-of-townness.

Luckily, your correspondent thought as our motorcade sped through downtown Riyadh sweeping everything in its path aside, we were clearly not identified as potential targets. The heavy handedness continued at the diplomatic quarter where the thirsty journalists assembled for dinner at a prohibition-busting embassy only to be delayed by several hours as the caterers negotiated their way through the security cordon a kilometre down the road.

Given the amazing access we journalists were given in a supposed secretive society (with the exception of any mention of defence contracts coming as it did the week allegations in a British newspaper not invited on the familiarisation trip), it would be a surprise if more people were not taken by the charm and hospitality of its people. I just wish my camel toed the line a bit more.

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 Some people can give presentations and some can't.

By common agreement of all I spoke to at the International Helicopter Safety Seminar (IHSS) in Montreal (26-29 Sept), Brig Gen Joseph Smith, US Army, gave the most riveting presentation of all, despite having to compete with  plenty of quality  stuff at this seminal gathering. He is the Director of Army Safety and the commanding general of the US Army Combat Readiness Centre. Maybe his secret delivery ingredient is the same quality that impels ordinary soldiers to launch themselves over the top when the chances of death are high.

Anyway, aside from the style, Smith delivered some facts followed by compelling psychological deductions. US Class A military helicopter accidents (fatal or damage costing more than $1 million) had been reducing all the way to the 1991 Gulf War. Then the figures levelled out for a decade. But after 9/11 they began to rise fast, and by far the majority of the accidents were "non-hostile", Smith revealed. He delivered this assessment: "We focussed on the enemy and forgot the hazards." So his team were charged with finding out why this had happened. "We found that 18-24 year-old males who had done a lot of combat thought that safety was a four-letter word…it was 'something that stops us getting our job done'." How do you tell war-hyped young men to be sensible about safety without killing the gung-ho spirit that keeps them going?

The answer was "composite safety", which sounds like a cold shower to gung-ho. But message delivery is the key, and Smith is good at that. "Make the message personal", he said; "Don't be risk-averse, but you can manage safety." Before departure on a mission, argues Smith, the issue is "what's going to take us out today?" Okay, so it could be an enemy rocket-propelled grenade, but equally it could be a wire-strike. So why let a power cable take you out? "Combat safety is accomplishment of the mission and returning from it," he explained. The same concept could be applied to a civilian search and rescue or emergency medical support sortie.

Those who do return from missions get a debrief, but in its present form, Smith argues, it is of limited value. He wants - and hopefully will soon get - MFOQA. This is a to be military version of the widely used airline Flight Operations Quality Assurance programme, a system under which a digital flight data recorder (DFDR) records and, when downloaded, highlights operational exceedences and non-ideal performance. MFOQA will allow instant playback on a PC, with an on-screen image of the flight instruments, simulated external view, and voice recordings all time-coordinated. Now THAT'S a debrief, says Smith. It brings to life good or poor crew coordination, target fixation, a hundred other situations that can arise on a mission. Smith compares this to a spoken debrief: "To combat soldiers, words without pictures are just white noise."

Which brings me to another form of US military psychology. On the first day of  the IHSS, at a seminar headed "safety management tools and training sessions", the US Marine Corps fronted-up their presentation on risk management with some of the videos the troops get to psych them for war. They sure woke up any of us in danger of nodding off.

In one of them, backgrounded by deafening gangsta-rap, images of Osama bin Laden and his cronies were flashed across the screen repeatedly, synched with the beat of the song, to which the chorus was "let the bodies hit the floor". As a former UK military man (admittedly of some time ago), I felt a bit uneasy. I remembered the scene from "Apocalypse Now" when the attack helicopter formation swarmed toward the enemy shore with the leader's microphone switch pressed to transmit Wagner's Ride of the Valkeyries to his fellow cavalry. Great cinema, but not good for a cool head in the heat of real battle.

This stuff was compelling alright, but does it over-hype soldiers? Is this a part of what makes safety a four-letter word? Like Gen Smith said, those who are to complete their mission and survive it need an element of cool and control as well as the essential adrenaline (and luck). And does hyping of this kind risk creating the trigger-finger itchiness that can increase friendly fire incidents, and lead to a de-humanising of the enemy that makes mistreatment of prisoners-of-war too easy? Better consult a military psychologist, because I don't know.

In case those at the IHSS thought I was going to forget the civvies; no chance. The civilian helicopter world were there in force, hyped in their own way. It was they, in fact, who had called the IHSS and had recognised that the military would have invaluable experience to bring to the event. When I first learned that it was to happen I thought it must have been an annual event that had formerly passed me by. I was wrong. Although almost all helicopter seminars and conferences have safety as one of their concurrent themes, this was the first global symposium totally dedicated to helicopter safety and nothing else. It was a statement by the industry that the stagnation of helicopter accident rates for about two decades is not good enough at a time when - in all the other aviation sectors - safety is improving. The civvies did not arrive hyped, but they left on a high, having agreed that the helicopter world definitely has the capability to improve its own safety performance from within - by 80% within ten years. What I heard sounded like cool-headed determination, not hot air.