November 24, 2009
The US government on Tuesday imposed its first-ever punishment against airlines for stranding passengers aboard aircraft, fining three carriers a total of USD$175,000 for a six-hour ordeal in Minnesota.
Continental Airlines and its ExpressJet Airlines affiliate were fined USD$100,000, while Mesaba Airlines, a unit of Delta Air Lines, was fined USD$75,000, the Transportation Department said.
Continental, ExpressJet and Mesaba all reached settlements with the government’s Aviation Enforcement Office.
The action served as a sharp reminder to carriers about service just as the busy Thanksgiving Day travel period gets under way.
Regulators found all three airlines violated a law prohibiting unfair and deceptive practices for their roles in the August 8 incident in Rochester, Minnesota.
Forty-seven passengers were stranded overnight aboard a Continental Express plane en route from Houston to Minneapolis that diverted to Rochester due to bad weather.
ExpressJet operated Flight 2816 for Continental while Mesaba was the only airline staffing the Rochester airport at the time. Mesaba refused to let passengers exit the plane and enter the terminal because there were no federal security personnel on duty at the time.
Government officials concluded that passengers could have entered the terminal so long as they remained in the secure area.
(Reuters)
November 23, 2009
The number of airline passengers over the US Thanksgiving holiday will be down this year, which means fewer delays and airport hassles, but full planes and new fees may keep passengers grumbling.
“With seat cutbacks in the 6-7 percent range — and on some airlines even higher –, the bottom line is planes are going to be as full as ever,” said Rick Seaney, chief executive of Farecompare, on Monday.
“While there may be less people physically at the airport, the planes are going to be packed,” Seaney said.
The US airline industry, battered for more than a year by economic turmoil, has slashed capacity since 2007 to offset weaker demand and support fares. As a result, airports are less busy but planes are extremely full.
The Air Transport Association (ATA), an industry trade group, said this month that it expects a 4 percent year-on-year decline in the number of passengers on US carriers during the traditionally hectic Thanksgiving holiday.
“It is increasingly apparent that the economic headwinds facing the airlines and their customers are anything but behind us. The recent announcement that US unemployment surpassed 10 percent highlights one of the key factors impacting consumer buying decisions,” said ATA president James May in a statement on November 9.
PEAK TRAVEL DAYS
Nevertheless, the skies over the United States tend to be more crowded on the days around Thanksgiving than at any other time of the year. The four busiest travel days surrounding Thanksgiving Day this year are expected to be November 20, 25, 29 and 30, the ATA said.
Holiday travellers cringe at the thought of weather delays or air traffic control glitches like the one last week that led to widespread delays and cancellations, particularly in the heavily travelled New York area.
The US military, however, will allow commercial airlines to use some of its air space along the East Coast and parts of the West Coast near Los Angeles to help reduce congestion over the holiday period, the Federal Aviation Administration said.
FEES AND SURCHARGES
While less traffic is some comfort to air travellers, miscellaneous airline fees and surcharges are an annoyance. In recent years, airlines have introduced new fees to generate revenue amid falling demand and volatile fuels costs.
Fees for bag checks or priority seating — although technically optional — could irk inexperienced travellers who are surprised by the costs, said airline consultant Michael Boyd.
“I don’t think consumers will be paying more. They’ll be paying it in a different way,” said Boyd. “There will be fares. There will be surcharges. And there will be fees. And that does make things more complex.
“Anything that makes it more difficult to do business causes anxiety,” Boyd said.
Carriers are adding surcharges of up to USD$30 each way, around numerous popular flight dates in 2010 such as Thanksgiving, FareCompare’s Seaney said. He said most major airlines have added the fees.
(Reuters)
November 23, 2009
Bahrain’s state-owned carrier Gulf Air plans to shift its order book from wide-body to narrow-body planes and regional jets as it realigns its network to focus on shorter routes, its chief executive said.
Gulf Air has up to 20 Boeing 787s on order, as well as 15 Airbus A320s and 20 A330s, a wide-body aircraft.
CEO Samer Majali, who joined three months ago to restructure the loss-making firm, said on Monday the airline will cancel 15 routes and open 20 new ones as part of a new strategy to increase traffic in the Middle East.
He declined to say how many of the Boeing planes on order Gulf Air could use under its new strategy.
“We are talking with the manufacturers of the airplanes to see how we can satisfy the plan with the requirements of the contracts we have,” he told a media conference in Manama.
“This is exactly what we’re going to be discussing with Airbus in particular, in view of the fact that we’re also going to expand our narrow-body order beyond the 15 that we already contracted for.”
He also said the carrier plans to lease a number of regional jets for next year, while deciding over the next couple of months from which manufacturer to purchase jets.
Manufacturers of regional jets, typically with a capacity of 100 or less, include Brazil’s Embraer, Canada’s Bombardier and Japan’s Mitsubishi Regional Jet.
Gulf Air also plans to sell five of its A340s as it plans to close its routes to Shanghai, Hyderabad and Bangalore.
The carrier was established as a regional airline but has struggled to find its niche after previous shareholders Oman, Abu Dhabi and Qatar gave up their stakes. It expects to make an operating loss of USD$510 million this year.
It is now squeezed in between regional low-cost airlines such as Air Arabia and Bahrain Air, and state-owned airlines of rich oil producers with large fleet expansion programmes, while Bahrain cannot afford to plough funds into its state-owned companies.
The Gulf Arab state’s sovereign wealth fund Mumtalakat plans to sell a stake of at least 25 percent in Gulf Air once the carrier becomes profit-making, its chief executive said.
Bahraini investors had already expressed interest, said Talal Al Zain.
Gulf Air plans to break even by 2012.
(Reuters)
November 23, 2009
KLM Royal Dutch Airlines on Monday said it operated its first ever passenger flight powered by sustainable biokerosene.
During the 1.5 hour flight above the Netherlands, one engine of the Boeing 747 ran on a mixture of 50 percent sustainable biofuel and 50 percent traditional kerosene. The other three engines ran on 100 percent normal kerosene.
KLM chief executive Peter Hartman said the biofuel used on the flight reduces CO2 emissions by up to 80 percent compared to conventional kerosene. “We hope to receive certification at the end of 2010. Then the question is: how fast can we produce it?”
Aircraft account for an estimated 2-4 percent of global carbon dioxide (CO2) emissions, which scientists say could cause global temperatures to rise, triggering widespread disease, famine, flooding and drought.
Experts say global aviation emissions could reach 2.4 billion tonnes in 2050, which would be 15-20 percent of all CO2 permitted under a global agreement and a nearly four-fold increase on current levels.
KLM, North Sea Petroleum and Spring Associates on Monday founded the SkyEnergy consortium, targeting sufficient supply of biofuels for planes.
“We have demonstrated that it is possible. Government, industry and society at large must now join forces to ensure that we quickly gain access to a continuous supply of biofuel,” Hartman said.
(Reuters)
November 21, 2009
With the clock ticking toward a December 31 deadline, Boeing executives on Friday said the company is on schedule for the first test flight of its long-delayed and highly anticipated 787 Dreamliner.
Speaking on the sidelines of a groundbreaking in North Charleston, South Carolina, for Boeing’s second 787 final assembly site, two local Boeing executives said first flight is in sight.
“Our plan is to fly by the end of the year and to deliver by the end of next year,” said Marco Cavazzoni, general manager of final assembly and delivery at Boeing Charleston.
Tim Coyle, vice president of the Charleston site, agreed, saying that once static tests on the plane were complete, the 787 would be poised for its first test flight within weeks.
The 787 is two years behind its original schedule, due to a series of production setbacks and a strike last year. The company has said it would fly the plane in the fourth quarter of 2009 but has not set a date. Some speculation now centres on December 22.
Boeing delayed a scheduled test flight earlier this year to reinforce a side-of-body section. The company said last week that it has made the repair on the first plane.
The 787 boasts a revolutionary composite design that weighs less and is more fuel efficient that traditional aircraft. Boeing has 840 orders on its books, according to company data.
Boeing last month selected South Carolina as the site of its second 787 final assembly plant as it plans to increase production of the plane away from its traditional base in the Seattle area.
Boeing intends to finish construction of the assembly site by mid-2011 and complete three planes per month, Coyle said.
Boeing already owns a plant in Charleston that makes parts of the 787 fuselage. Boeing has said the Puget Sound area will remain the headquarters of its commercial planes.
The move to South Carolina, which had been expected for some time, is a blow for the Puget Sound economy, where Boeing is the major employer, labour leaders have said. But it is a major economic boon to South Carolina, where the jobless rate was 12.1 percent in October.
Boeing said the new assembly site would create about 1,000 direct manufacturing and flight line positions at Boeing Charleston. The company said that over time it would add several thousand jobs to the region by creating management, engineering and other support positions.
(Reuters)
November 20, 2009
Southeast Asia’s largest budget carrier AirAsia on Friday flagged a further recovery in air travel demand after reporting a profit in the third quarter, helped by higher sales of non-ticket items.
Airlines globally have struggled in the past year as the economic crisis sapped demand for travel and trade, but budget carriers have largely outperformed as passengers look to cut costs. “Based on the forward booking trend, the underlying passenger demand in the fourth quarter is positive,” Tony Fernandes, group chief executive of AirAsia, said in a statement.
AirAsia booked a net profit of MYR130 million ringgit in July-September, against a loss of MYR465.5 million a year earlier.
AirAsia’s average fare fell 27 percent to MYR142 in the third quarter, but the 86 percent jump in ancillary income, or income from sources other than ticket sales, more than offset the lower fares.
Singapore Airlines and Korean Air, two of Asia’s biggest airlines, last week flagged a recovery in travel demand after their quarterly results showed some signs of improvement.
“While the airline industry is facing arguably the most difficult environment in recent memory, we see vast opportunities to grow our business,” Fernandes said.
The budget airline will launch several new routes over the next 12 months, including to several Indian cities, he added.
AirAsia has secured 20 percent of the airline’s fourth quarter fuel needs at an average fixed swap rate of USD$74.98 per barrel.
Analysts said AirAsia is well-positioned to benefit from more tourist traffic into Singapore when the two integrated casino resorts there open their doors to the public in 2010.
AirAsia’s share price has gained 48 percent since the start of the year, in line with the 45 percent rise in the broader market index.
(Reuters)
November 21, 2009
EADS expects the years 2010 and 2011 to be still affected by the financial crisis and sees job cuts completed by the end of next year, the head of the European aerospace group told le Parisien in an interview.
“We think that 2010 and 2011 will continue to be hit by the crisis,” EADS chief executive Louis Gallois told the French paper in an interview to be published on Saturday.
“We will better see where we stand by the end of winter 2010.”
EADS is the parent company of Airbus which has been hit hard by the collapse in global demand for new passenger jets.
Gallois told the paper he estimated some 30 aircraft orders had been cancelled in 2009 and more orders delayed. But he said delivery targets were met for this year and the group would try to meet them again in 2010.
The group, which has cut hundreds of jobs in the past two years to cut costs, will have completed its restructuring by the end of 2010, Gallois told Le Parisien.
He added that about 95 percent of job cuts in France had been achieved and 80 percent in Germany.
“We will be at 100 in both countries by the end of 2010,” Gallois he said.
(Reuters)
November 17, 2009
A member of the consortium that won the USD$2.52 billion concession for Chicago’s Midway airport but then lost the lease because it could not secure financing said on Monday it would bid again if it was on offer.
“We would certainly bid for it again if it came around,” said Brian Bohme, a director at YVR Airport Services (YVRAS), which teamed up with Citi Infrastructure Investors and John Hancock Life to bid for Midway in 2008.
Recent media reports have suggested that the airport’s privatisation could be resurrected in the light of improved credit markets and Chicago’s strained public finances. The deal with YVR’s consortium collapsed in April 2009.
“Traffic is well above what we included in our bid last year. Midway is coming back much faster than O’Hare,” said Bohme, speaking at the Global Airport Development 2009 conference in Berlin.
He added that a deal would be much more feasible now given the improved debt market conditions.
“We put in our bid in September 2008 and then watched Lehman Brothers employees pack up their stuff. It was probably the worst time to put a bid in, right at that point we weren’t sure how deep the recession was going to be,” said Bohme.
Vancouver-based YVRAS, which runs 18 airports around the world, would consider opportunities to divest some assets, Bohme said, adding that despite talk of large discounts, airports were still sold close to their book value, albeit not reaching it.
(Reuters)
November 17, 2009
The man charged by British airport operator BAA with getting Heathrow’s third runway approved said on Tuesday its planning application for the GBP8 billion pound (USD$13.43 billion) project could take up to four years to approve.
“Nobody knows what the new process they have introduced really looks like,” BAA director Mike Forster said on the sidelines of the Global Airport Development 2009 conference in Berlin.
BAA, majority-owned by Spain’s Ferrovial, is looking at the new planning application structure that was introduced in October and intends to make its submission after the UK general election, Forster said.
“The delay will benefit some parties,” Forster said earlier on Tuesday in his speech at the conference.
The project has pitted airlines and businesses against environmentalists and the local population. The Conservatives, tipped with winning the next election, oppose the third runway.
Forster cited a study published by the British Chamber of Commerce in July that claimed that each year the building of a third runway is delayed the country loses between GBP900 million and GBP1.1 billion.
The future of Heathrow as a major European transit hub relied on plans for a third runway, Forster said, adding that the project was more than just about boosting the company’s bottom line.
“About one third of our customers are visiting friends and relatives. There is a lot of talk about videoconferencing. I’m not sure you can videoconference your sister’s wedding or those sorts of events,” Foster said.
(Reuters)
November 13, 2009
BAA, the debt-laden operator of Britain’s Heathrow airport, said on Friday it is to raise GBP500 million pounds (USD$831 million) in equity to help shore up its balance sheet as it works to access cheaper bond financing.
The chance for it to raise bonds will be a welcome relief for its majority owner, Spain’s Ferrovial, which used debt to buy BAA at the top of the market in 2006, and is now being forced to sell off several key airports during a recession.
“The capital hike is in preparation for a bond issue, which will take place at the end of the first quarter of 2010,” a Ferrovial spokesman said.
The spokesman later specified that the issue, which Ferrovial chief executive Inigo Meiras said in October would top GBP1 billion, was more likely to be launched before the end of this year or the beginning of next year.
“We believe this additional equity will be used to improve coverage ratios and is therefore driven more by opportunism than a need for more equity,” said Scott Ryall, analyst for Macquarie Equities Research.
BAA said in October that it was planning to re-enter the bond market “soon” after it offloaded Gatwick airport and paid down GBP1 billion of its debt.
The firm currently has in place expensive bank loan financing, a legacy of its takeover in 2006 by a group led by Ferrovial.
At that time it planned to use the bond market to take out a GBP9 billion bridge loan, but the securitisation market shut down before it could complete the arrangements.
Ferrovial suffered a further setback when the UK’s Competition Commission ruled in March that it should sell London Stansted and either Edinburgh or Glasgow airports just as the credit crunch kicked in and financing disappeared or became highly expensive. It is now appealing the decision.
Bond pricing has since recovered, but before BAA can access the bond market it wants to raise equity to pay down more of its expensive bank debt and improve its financial ratios.
One bright spot came when the UK Department of Transport issued a watered down version of proposed solvency rules for airport operators, a move which analysts said would pave the way for new bond issues by BAA.
The airports operator will need to sell bonds on a regular basis to help it fund its programme of upgrading its portfolio of airports.
The new equity capital consists of GBP200 million of new equity from shareholders, and GBP300 million from BAA Airports and FGP Topco, the ultimate holding company of BAA, which is jointly owned by BAA’s three controlling shareholders.
Ferrovial, which holds 55.87 percent of BAA, will contribute GBP112 million to the cash injection, a spokesman said, with the remainder coming from BAA’s other shareholders.
Canada’s Caisse de Depot et Placement du Quebec controls 26.48 percent of BAA and the Government of Singapore Investment Corporation 17.65 percent.
(Reuters)
November 13, 2009
Shares of major US airlines moved higher on Friday after FTN Equity Capital Markets said good holiday business and easier comparisons would probably result in an improvement in unit revenue trends for November.
The Arca Airline index was up 3.1 percent in morning trading. American Airlines parent AMR rose 4.5 percent, while United parent UAL gained 3.9 percent and Delta Air Lines rose 2.3 percent.
“We are expecting a significant sequential improvement in unit revenue change in the month of November compared with October as the airlines begin to lap easier (comparisons), capacity remains tight and bookings appear solid for the upcoming holiday periods,” FTN Equity analyst Michael Derchin said in a note to clients on Thursday.
FTN said it expected a decline of 6 percent in revenue per available seat mile for the industry as a whole in November, compared with a drop of 14 percent in October. RASM is a key industry benchmark.
Should that single-digit RASM decline materialise for November, it would represent the best sequential monthly improvement for the industry in more than two years, the firm added.
Among airlines, Derchin wrote that JetBlue Airways could post the best unit revenue change for this month compared with October, as it benefits from leisure travel.
“This year, the entire Thanksgiving holiday travel period falls in November unlike last year when some key return travel days were in early December,” the FTN note added.
JetBlue shares were up about 1.9 percent.
(Reuters)
November 13, 2009
BAA, the debt-laden operator of Britain’s Heathrow airport, said on Friday it is to raise GBP500 million pounds (USD$831 million) in equity to help shore up its balance sheet as it works to access cheaper bond financing.
The chance for it to raise bonds will be a welcome relief for its majority owner, Spain’s Ferrovial, which used debt to buy BAA at the top of the market in 2006, and is now being forced to sell off several key airports during a recession.
“The capital hike is in preparation for a bond issue, which will take place at the end of the first quarter of 2010,” a Ferrovial spokesman said.
The spokesman later specified that the issue, which Ferrovial chief executive Inigo Meiras said in October would top GBP1 billion, was more likely to be launched before the end of this year or the beginning of next year.
“We believe this additional equity will be used to improve coverage ratios and is therefore driven more by opportunism than a need for more equity,” said Scott Ryall, analyst for Macquarie Equities Research.
BAA said in October that it was planning to re-enter the bond market “soon” after it offloaded Gatwick airport and paid down GBP1 billion of its debt.
The firm currently has in place expensive bank loan financing, a legacy of its takeover in 2006 by a group led by Ferrovial.
At that time it planned to use the bond market to take out a GBP9 billion bridge loan, but the securitisation market shut down before it could complete the arrangements.
Ferrovial suffered a further setback when the UK’s Competition Commission ruled in March that it should sell London Stansted and either Edinburgh or Glasgow airports just as the credit crunch kicked in and financing disappeared or became highly expensive. It is now appealing the decision.
Bond pricing has since recovered, but before BAA can access the bond market it wants to raise equity to pay down more of its expensive bank debt and improve its financial ratios.
One bright spot came when the UK Department of Transport issued a watered down version of proposed solvency rules for airport operators, a move which analysts said would pave the way for new bond issues by BAA.
The airports operator will need to sell bonds on a regular basis to help it fund its programme of upgrading its portfolio of airports.
The new equity capital consists of GBP200 million of new equity from shareholders, and GBP300 million from BAA Airports and FGP Topco, the ultimate holding company of BAA, which is jointly owned by BAA’s three controlling shareholders.
Ferrovial, which holds 55.87 percent of BAA, will contribute GBP112 million to the cash injection, a spokesman said, with the remainder coming from BAA’s other shareholders.
Canada’s Caisse de Depot et Placement du Quebec controls 26.48 percent of BAA and the Government of Singapore Investment Corporation 17.65 percent.
(Reuters)
November 13, 2009
Jazz Air said on Friday it continues fighting for access to Toronto’s downtown airport, but Air Canada’s regional feeder airline could not point to any progress in its legal action.
A return to Toronto City Centre Airport, where privately held Porter Airlines has had a monopoly since 2006, is seen as significant for Jazz as it seeks to strengthen its business amid difficult market conditions.
Jazz recently dropped its long battle in Ontario Court with Porter and the Toronto Port Authority, which controls the Island airport on Toronto’s waterfront, but it is still seeking a remedy in Federal Court, though no appearances are scheduled.
“The bottom line for us continues to be that we’re seeking fair and equal access to a federally owned and operated facility,” Jazz chief executive Joseph Randell said.
“We are the service provider for Air Canada, and as I’ve said before under our CPA (capacity purchase agreement) it doesn’t matter where we fly, as long as we fly. And we’d like to have the opportunity to fly wherever Air Canada would like us to fly.”
City Centre Terminal Corporation, controlled by Porter president Robert Deluce, said this week it will offer access to its new CAD$50 million (USD$47.6 million) Island terminal in late summer 2010, when construction is completed.
Randell would not comment on any effort to secure slots, saying it would work through Air Canada on the issue.
PROFIT, SALES SAG
Halifax, Nova Scotia-based Jazz reported a 21 percent drop in third-quarter adjusted earnings late Thursday. Profit fell to CAD$33.2 million, from CAD$42.3 million a year earlier.
Revenue fell 13 percent to CAD$379.7 million.
Jazz said the revenue drop reflected its revised capacity purchase agreement with Air Canada, notably a CAD$60 million reduction in pass-through costs for expenses such as fuel and landing fees.
Revenue was also hit by a 5.5 percent reduction in billable block hours and a reduction in the markup charged by Jazz to 12.5 percent from 16.7 percent.
Analysts estimate Air Canada will save between CAD$40 million and CAD$60 million in 2010 from the deal, amended in July.
Chief Financial Officer Allan Rowe said on Friday that Jazz expects 385,000 to 390,000 billable block hours in 2009 and an operating margin between 10.25 percent and 11.25 percent.
Rowe said the margin forecast is a “tad conservative”, but reflects a typically weak fourth quarter.
“The industry is still challenged and we continue to work on contingency plans. We have a healthy company and we want to keep it that way,” CEO Randell said.
“We’ve recently refocused on opportunities to grow and diversify our business and we are experiencing a slight increase in demand for our charter services.”
The company also said it is confident that negotiations under way with crew schedulers, flight attendants, pilots and dispatchers will result in new contract agreements.
(Reuters)
November 12, 2009
British Airways and Spain’s Iberia announced on Thursday a preliminary agreement for a USD$7 billion merger to create the world’s third-largest airline by revenue.
The deal, which the companies hope to close by the end of 2010, ends the British flag carrier’s long pursuit of Iberia to create an enlarged group, able to cope with the industry’s largest downturn in decades.
BA shareholders will have 55 percent of the new firm, with 419 aircraft flying to 205 destinations, while Iberia will hold 45 percent.
In a joint statement, BA and Iberia said the merger would provide “enhanced scale to compete with other major airlines and participate in future industry consolidation.”
The new company will combine British Airways’ strong position in Europe-to-North America traffic with Iberia’s Latin American business, and will potentially be reinforced by a planned alliance with American Airlines.
Iberia’s chairman Antonio Vazquez will be chairman of the new company, while BA’s chief executive Willie Walsh will be CEO. Each airline will have seven members on the new 14-member board.
The deal will create a new holding company, which will own the two airlines. The two companies will have dual hubs in London and Madrid, and will keep their own licenses, codes and brands for the first five years of the merger.
This mirrors the structure set up by Air France-KLM from the Franco-Dutch merger in 2004, which created a holding company plus two operational units to preserve national identities and bilateral international landing rights.
Ahead of the announcement of a deal, BA shares closed 7.5 percent higher at 206.8 pence, while Iberia shares ended up 11.8 percent at 2.22 euros.
(Reuters)
November 12, 2009
A Rwandair passenger plane bound for Uganda crashed into the airport VIP lounge in Rwanda’s capital on Thursday and killed one passenger, officials said.
Richard Masozera, director general of Rwanda Civil Aviation Authority, told reporters the pilot of the 50-seat jet reported a problem two minutes into the flight from Kigali and asked to land again.
“He landed safely on the runway and was guided by the marshals into the parking area,” Masozera said.
“For some unexplained reason, the plane, from the parking spot, took off again at full power and… took a right turn, unexplained, into the technical building,” he said.
Information Minister Louise Mushikiwabo said the plane had hit the VIP lounge which is inside the technical building.
Masozera said emergency services responded within two minutes of the crash, but one passenger later died of their injuries.
Jack Elk, acting chief executive of Rwandair, said the airline’s best guess was that the plane “auto-accelerated”.
“The captain could not control it. The plane did not get airborne again, it taxied into the building,” Elk said, adding that the aircraft black boxes would be studied by experts.
“The captain was taken to the hospital with a broken leg. He has not been able to give us any information so far,” Elk said.
(Reuters)
November 12, 2009
Boeing said on Thursday that it has completed work to address a structural problem on its delayed 787 Dreamliner, and still expects the plane’s maiden flight to take place before year’s end.
The company said reinforcements have been installed within the side-of-body section on the first 787. New fittings at 34 stringer locations were installed within the joint where the wing is attached to the fuselage.
The company said completing the modifications was a crucial step toward the first flight of the 787.
In late June Boeing put off the first flight of the Dreamliner, citing the structural problem. It was the latest in a series of delays that have put the test flight two years behind its original schedule.
(Reuters)
November 12, 2009
The Obama administration should resist any calls to re-regulate or otherwise intervene in airline operations to ensure the industry’s viability, major US carriers said on Thursday.
The comments came as Transportation Secretary Ray LaHood chaired a conference sought by unions on the competitiveness of an industry that continues to struggle financially after restructuring earlier this decade.
“Our request is to simply let us run our businesses,” US Airways chief executive Doug Parker said in a letter to LaHood.
Parker’s sentiment was mirrored by other airline officials concerned that workers and other groups stung by job cuts, declining service quality, and poor financial performance want government to exercise more muscle.
Some union and congressional officials have raised the possibility of re-regulation 30 years after the government stepped away from that role.
“For those who think re-regulation is the answer, think again — because our financial situation was no better then,” said Peter McDonald, chief administrative officer at United Airlines.
In a letter inviting participants to the conference attended by airline executives, unions, airport officials, lobbyists and analysts, LaHood expressed no view on specific remedies for the industry’s ill health but said it was time to discuss the matter.
“The continuing problems facing our airlines have led to restructuring and downsizing, which have weakened both the domestic and global aviation marketplace,” LaHood said.
“Without a financially strong aviation industry, we will be unable to compete in domestic and international commerce and also could fall behind in addressing our infrastructure needs,” LaHood said. “We must begin this important conversation.”
(Reuters)
November 11, 2009
A United Airlines pilot has been charged after being arrested at London’s Heathrow Airport on suspicion of being drunk shortly before he was about to fly a transatlantic airliner, police said on Wednesday.
Erwin Washington, 51, from Lakewood, Colorado, was charged with “being aviation staff, performing an aviation function whilst exceeding the proscribed alcohol limit”, a London police spokesman said.
Washington was arrested on Monday shortly before he was due to fly a Boeing 767 with 124 passengers and 11 crew to Chicago.
United said he had been suspended pending a full investigation.
“United’s alcohol policy is among the strictest in the industry, and we have no tolerance for violation of this well-established policy,” a spokeswoman said.
Washington is due to appear before magistrates in north London on November 20.
(Reuters)
November 11, 2009
Unions representing Spanish airline Iberia’s cabin crew have extended strike action, which has forced the airline to ground some 800 flights, by eight more days, union officials said.
The strike, which went in to its fourth day since the end of October on Wednesday, aims to put pressure on Iberia during collective wage talks.
“We have called for eight more days because there is no will to reach an agreement. Our wages have been frozen since 2005 and, according to the company’s viability plan, this will continue until 2011,” a spokesman from the Sitcpla union said.
The new dates for the industrial action are November 30, December 1, 2 and December 14-18.
(Reuters)
November 11, 2009
US Senator John McCain, whose investigation helped derail an earlier USD$23.5 billion Air Force plan to lease and buy 100 Boeing tankers, has raised serious concerns about the Pentagon’s latest attempt to replace its fleet of KC-135 aircraft.
In a letter to Defence Secretary Robert Gates dated October 29, McCain asked a series of detailed questions about how bids for the programme would be evaluated, how decisions were made about requirements for the new planes, and whether the new rules would favour mostly smaller planes.
Northrop Grumman and its European partner, Airbus parent EADS, won the last competition with their larger A330-based tanker, beating the smaller 767-based tanker offered by Boeing.
Northrop has complained that the draft rules for the next competition, released by the Air Force in late September, are give Boeing and its smaller plane an unfair advantage.
Boeing and its supporters, meanwhile, question why the Air Force has decided to disregard a preliminary World Trade Organisation ruling that found that Airbus benefitted from billions of dollars of illegal subsidies.
Boeing supporters argue the subsidies give Northrop and EADS an unfair cost advantage in the US competition.
In his letter, which echoed concerns McCain raised in October, the senator questioned why the Air Force decided to focus on fuel-rate usage and military construction costs when assessing total ownership costs, instead of including the broader costs generally considered.
He asked how the planned process would assess the relative developmental and integration risk among the offerings, noting that Congress recently passed an acquisition reform law aimed at minimising discovery of problems late in the process.
McCain also asked how the Air Force decided which of the previous 800 requirements to make mandatory or non-mandatory, and whether the Pentagon’s Joint Requirements Oversight Council had been involved in those decisions since it had validated the same requirements that underpinned the last competition.
Northrop has argued that the Air Force’s decision to pare the requirements to 373 mandatory and 93 non-mandatory ones puts significant issues such as the fuel offload rate for the planes on the same level with less serious issues such as water flow rate in on-board toilets.
Finally, McCain asked Gates to explain how he intended to ensure “robust, independent oversight” of the competition, given the history of the programme.
Defence analyst Loren Thompson of the Virginia-based Lexington Institute first reported McCain’s letter in a column published on Monday, saying he had weighed in “on Northrop’s side,” but the letter’s content was not disclosed until now.
Thompson also raised a potential conflict of interest in a November 6 blog posting. He said employees of the Government Accountability Office, which rules on federal contract protests, were recently organised by the International Federation of Professional and Technical Engineers union, which is part of the AFL-CIO and represents 85,000 white collar workers, including some at Boeing.
“So if Northrop loses the next round of competition and lodges a protest, couldn’t it allege that GAO is conflicted and thus not a suitable arbiter of the protest?” he wrote.
The union issued an 11-page pamphlet supporting Boeing’s bid and its protest of the last tanker contract, which was initially awarded to Northrop/EADS before being overturned.
(Reuters)
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