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Aviation History
2003
2003 - 1994.PDF
BUSINESS PRODUCTION BRENDAN SOBIE / SINGAPORE D'Long seeks funds to restart 728 Ex-Fairchild Dornier programme's new owner looks for airframe suppliers and government finance for75-seat twinjet New Fairchild Dornier 728 owner ered twinjet, scheduled to begin D'Long has launched competitions this year under Fairchild Dornier's to select new airframe suppliers as original plan, will now start in the company seeks to restart pro- 2006 if the relaunch succeeds, duction with a mix of private and Project manager Werner von public funds. Deliveries of the 75- Anhalt says Chinese companies seat, General Electric CF34-pow- could manufacture up to 40% of AvCraft ships its first 328JET AvCraft Aviation, new owner of the ex-Fairchild Dornier 328JET programme, has delivered its first aircraft, with Chinese regional carrier Hainan Airlines taking the first of eight on order. Before its collapse in 2002, Fairchild Dornier delivered 19 328JETs to Hainan, and held orders for a further 21 aircraft. This order has now been reduced to eight, with the remaining aircraft due to be delivered "over the coming weeks", says Avcraft. With another long-standing order from UK startup Air Omega for four air craft having been cancelled, AvCraft's only other firm customer is German business charter operator Aero-Dienst, which holds three orders for the cor porate Envoy 3 version. This leaves AvCraft with seven unplaced whitetails, casting doubt on plans to restart the Oberpfaffenhofen, Germany, production line by year-end. LOW-COST CARRIERS ALEXANDER CAMPBELL/ LONDON No-frills threaten charter business SHARE OFFER Virgin Blue deal paves way for IPO by 2004 Virgin Blue Airlines owners Virgin Group and Patrick Air Services have agreed a restructured shareholder deal that will pave the way for an initial public offering (IPO) of the Australian low-cost carrier. Logistics group Patrick is no longer required to sell 5% of its 50% stake in Virgin Blue - a requirement of the original agreement - but will pay Virgin Group AS240 million ($155 mil lion) instead. The partners have agreed to issue new equity valued at A$400 million to allow the IPO to proceed. "This may be in calendar year 2003 or 2004," says Virgin Blue chief execu tive Brett Godfrey, adding that it will help fund a response to any "aggressive action" by competitors. 32 16-22 SEPTEMBER 2003 FLI Airline economists are warning that Europe's charter airlines will continue to lose out as no-frills air lines increase their presence on short-haul routes. An industry report published last week reveals that European charter traffic is declining on some key routes as the low-fare market mushrooms. "Younger passengers tend to book on no-frills carriers, while older passengers book seat-only flights on charters," says Dr George Williams, who co-wrote the report with colleagues at Cranfield University. "Over time the latter market will dwindle," he adds. Scheduled no-frills carriers also offer more choice in departure time and are better marketed, he says. As a result, charter airlines on key leisure routes such as the UK to Malaga in Spain, have seen their traffic fall off as low-cost operators enter the market. Mark Slater, head of seat-only product for charter operator Airtours Holidays - sister company to UK charter airline MyTravel the aircraft, including the tail, fuse lage, wing and some subassemblies. D'Long is also considering other suppliers in Asia, Europe and North America. "We'll have at least some production from a low-cost coun try," says von Anhalt, adding the 728 must be competitive with Brazil's Embraer 170. D'Long says it must reduce labour costs, but final assembly will remain in Oberpfaffenhofen, Germany. D'Long purchased the 728 pro gramme from insolvent Fairchild Dornier in June, including a pro duction prototype that never flew and a structural prototype now undergoing resumed fatigue testing (Flight International 5-11 August). D'Long has created a new German subsidiary, D'Long Aerospace, to study the relaunch. D'Long's head office in Shanghai is supporting its discussions with Chinese government-owned man ufacturers. But the project is being managed by about 20 former Fair- child Dornier workers employed by D'Long's European arm, with dif ferent investment sources from D'Long in China. "It's not going to be a Chinese project," von Anhalt says. "It's going to be a German-developed aircraft for the worldwide market." D'Long is also seeking to line up a second private investor and gov ernment funds for the estimated $300-400 million in relaunch costs. Von Anhalt is confident Germany will provide funding once D'Long completes its industrial plan. With the first 728 to be delivered in 2006, D'Long aims to manufac ture 100 aircraft annually from 2008 and predicts roughly 10% of sales will be to Chinese airlines. SEE FEATURE P46-48 GHT INTERNATIONAL www.flightinternational.com NDE eate SCHEDULED AND CHARTER TRAFFIC EVOLUTION •" AND MALAGA, SPAIN 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000 500,000 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 • Scheduled traffic • Charter traffic Scheduled traffic trendline Charter traffic trendline extrapolated from 1990-8 data extrapolated from 1990-8 data Source: Market Analysis of Europe's Low Cost Airlines, Cranfield University FLIGHT PHIL HOLMES 2003 ^""^ •—^~~ •j^^_ .^^-•iwm*-*—._» #^ —!•— 1 Start of low-cost j services - 1 * 7 \ / ! / i —i—,—,—,—, Airways - says the low-cost airlines have made competition "much more intense. In response we are improving flexibility on departure times and on stay lengths." Seat- only sales have always been a part of the charter operation, he says, but charter operators are respond ing to the no-frills challenge by expanding their seat-only business on short-haul routes. Charter carriers have also reponded by starting to focus on longer routes, where Williams believes they will feel less competi tion. Several charter carriers have also set up low-cost scheduled sub sidiaries - for example Birmingham, UK-based MyTravelLite. But this is a risky approach, the report warns. www.flightinternational.co
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