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Aviation History
1990
1990 - 0145.PDF
OPERATIONS: AIR TRANSPORT defied the Government by complaining to the European Community and filing a case with the European Court of Jus tice in Luxembourg. Under the agreement, Air France and UTA will, for the time being, maintain their respective indentities. UTA has many routes from France to Africa, south-east Asia and the south Pacific, and last year it started flying to Newark, New Jersey, from five provincial French cities, including Mar seilles, Bordeaux and Nantes. The airline also flies from Paris to Singapore, Sydney, San Fran cisco and Tahiti. Under pressure from Air France in 1988, the French Gov ernment denied UTA permission to fly from Paris to Newark, to protect Air France which serves New York's John F Kennedy Air port. The European Commission has been conducting an anti trust investigation over the French Government's denial of routes to UTA. The Commission plans to look at the Air France-UTA link in terms of its effect on air transport competition. In taking over UTA, Air France will own a carrier which flies 19 widebodies, mainly 747- 300s and 747-400s as well as DC- 10-30s. UTA also has a large number of aircraft on order, including 12 Airbus A340s and 12 Boeing 767s, aiming for a fleet of 43 aircraft by 1994. Air Inter owns 53 aircraft, mainly Airbus A300B4s and A320s, but has A330s on order. It expects to carry 20 million pasengers this year and 25 million by 1993. Air France has 113 aircraft, with 60 on order and 52 options, including 12 Boeing 747-400s and Airbus A340s. • Cathay takes stake in Dragonair Cathay Pacific Airways is rescuing its struggling Hong Kong rival, Dragonair, with an injection of cash and expertise which analysts say will guarantee the smaller airline a future after ". . . an experiment that simply did not work". Cathay says that it will spend HK$294 million ($37.6 million) on a 30% stake in Hong Kong Dragon Airlines. Cathay's parent, Swire Pacific, will contribute $6.2 million for 5%. In the same package, China International Trust & Invest ment (OTIC), a mainland-based venture capital group, will in crease its stake in Dragonair to 38% from 26%. The Chao family, which founded Dragonair and has close China ties, will hold 22% of the airline, but loses some control. Cathay appointed a new chief executive officer. Jerry Penwarden, who took over on 22 January, and will second a senior financial officer. Cathay will also provide a range of backup services such as engineering, training and admin istration. "The aim is to make Dragonair complementary and a strong regional carrier," says Cathay. Dragonair's biggest backer, Hong Kong entrepreneur Yue- Kong Pao, pulled out last year after several years of losses (Flight, 6-12 December, 1989). The carrier was frustrated in at tempts to win lucrative regional routes because Cathay operates most of them and lodged objec tions to any extension of the Dragonair network. The normal Hong Kong Gov ernment policy is for only one carrier to serve a route, and that left Dragonair with a clutch of secondary destinations in China and some mainly tourist routes into south-east Asia. • UK charter airlines face travel-business drop British airlines in the inclu sive-tour holiday market face the prospect of substantially re duced business this year as tour operators predict a huge fall in the number of overseas holidays likely to be sold. Leading airlines in the sector include Britannia, Air Europe, Dan-Air and British Island Airways (BIA). The Association of British Travel Agents expects a fall of some 20-25% in overseas pack age-tour holidays being offered this year. Such holidays more than doubled in number through TWA sells aircraft to raise cash TWA has sold eight Lockheed TriStars and three Boeing 747s for $310 million to Potomac Leasing and American Express respectively, in an effort to reduce its debt of $2.7 billion. TWA says that it also wants to sell off its Chicago-London route to American Airlines for $195 million, subject to Federal approval. The airline says that it will use half of the proceeds from the aircraft sale to boost its cash reserves to nearly $1 billion. The rest will go towards paying off debt. TWA has the lowest owner ship of the US airlines, owning only 74 of its 213-aircraft fleet. • the 1980s before a downturn last year reduced them from about 13 million to 11.5 million. Tour operators have cut packages on offer this year by another two million and increased prices to restore profit margins eroded in a late-1980s' price war. High in terest rates are blamed for the current slump. Britannia Airways (owned by Thomson Holidays, the primary UK tour operator, which also owns third-placed Horizon Holi days) estimates a fall of as much as 40% in holidays offered over last year, with demand some 25% below that available. Virtually all .of Britannia's business is charter, with 70% coming from Thomson Holidays. The airline is looking for ad hoc work for this season, although it has preliminary contracts to firm up. The carrier has eight Boeing 767-200ERs in service, with a further eight to come over the next five years, all ordered before the downturn. The nexttwo 767s are scheduled for delivery by late April, when Britannia hopes that it will have contracts to absorb the extra capacity. Air Europe commercial direp- tor John Dewey expects this summer's business to be down 20-25% on 1989. The airline (tied to ILG Travel, which rivals Thomson), operates Boeing 737s and 757s and has increased its scheduled business in recent years, but relies heavily on char ter work to the Mediterranean and Atlantic islands. Dewey re ports a search for alternative business this year, with a need for greater flexibility in maintaining its scheduled and long-haul charter activities. Long-haul operations—now ex tended to the USA, Caribbean, Central America and the Far East—began in 1988. Dan-Air says that it is too early to judge the implications of fore casts for a further downturn but acknowledges that prospects do not look good; it expects a big downturn in 1990 holiday travel, but claims to have detected in dications of an upturn in the UK economy which could bode well for next year. The airline's busi ness comprises about 25% sched uled services, but only about 1% of its 12% growth last year came from charters. Dan-Air filed a loss for its most recent half-year. BIA marketing director Roy Heath says that the airline takes a pessimistic view and has reduced capacity. The airline negotiated new financial arrangements, giving it breathing space in which to continue operations while finding a partner. Heath says that BIA will be offering about 500 seats a day fewer than last year when its four 167-seat McDonnell Douglas MD-83s, four 119-passenger BAe One- Eleven 500s and two 89-seat One-Eleven 400s provided 3,966 seats a day. • FLIGHT INTERNATIONAL 24-30 January 1990
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