Wither Boeing?

See this survey as well http://iag-inc.com/int/interview.cfm?id=36 Where is Boeing going? ----- Bloomberg 02/24/05 author: David Pauly Feb. 24 (Bloomberg) -- Say ``Boeing,'' and folks reminisce about flying in 707s, 727s and 747s. Still, Boeing Co., long the dominant manufacturer of commercial jet airplanes, may be in permanent decline. The company now trails Europe's Airbus SAS in the two- company race for big-jet sales and has abandoned the market for smaller planes, writing off $340 million pretax for the ill-fated 717. Boeing's defense business, the larger part of the company since acquisitions in the 1990s, has been tainted by a scandal that led to a write-off of about $275 million before taxes and may threaten future business. Anyone reminded of fallen giants such as AT&T Corp.; Sears, Roebuck & Co.; and Xerox Corp.? Investors are concentrating on the short term, betting on an end of the slump in airline traffic that began after the Sept. 11, 2001, terrorist attacks in the U.S. They bid up Boeing shares by 21 percent in the last 12 months to $52.72. That was still far below Boeing's record share price of $70.94 set more than four years ago, and Airbus seems to have much better prospects. Airbus, based in Toulouse, France, and 80 percent owned by European Aeronautic Defense & Space Co., delivered 320 planes to airlines in 2004, while Chicago-based Boeing delivered 285. What's more, Airbus got orders for 366 planes last year compared with 272 for Boeing. Singles Hitter Much of the industry's demand has come from cheap-fare airlines that have been leaning toward Airbus, buying its A320 single-aisle planes rather than Boeing's 737s. For the long term, Airbus and Boeing are making distinctly different bets. Airbus's A380, to be delivered starting in 2006, will be a double-decker carrying about 555 passengers. Boeing insists the market for this size plane is too small. Its future hope is the 787, intended as a fuel-efficient, midsize plane for taking 200 passengers or more on longer, nonstop flights. The first delivery of the 787 is scheduled for 2008. Boeing built up its defense business to offset cycles in commercial aircraft, buying McDonnell Douglas Corp. and parts of Rockwell International Corp. In 2004, defense -- which sells to the U.S. Department of Homeland Security as well as the military -- accounted for 58 percent of total sales and produced operating earnings of $2.93 billion versus $753 million for commercial aviation. Conflicts But the outlook for defense clouded when two Boeing executives pleaded guilty to charges of conflict of interest. Chief Financial Officer Michael Sears had negotiated to hire a Defense Department official, Darleen Druyun, while the two were negotiating a $23 billion contract to lease and sell tanker versions of Boeing's 767 to the U.S. Air Force. Boeing fired Sears and Druyun in late 2003, and Chief Executive Philip Condit resigned -- though there was no evidence he had been involved in the Sears-Druyun dealings. Former Vice Chairman Harry Stonecipher came out of retirement to take over. In January, Boeing said it would write off expenses of the tanker contract, which has been reopened for bids. The Defense Department was investigating other transactions negotiated by Sears and Druyun. So where does all of this leave Boeing? Eastman Kodak Co. dominated photography only to slip. Boeing's loss of market share to a foreign company is reminiscent of General Motors Corp.'s stumbling in the face of Japanese automakers. Upsets in the executive ranks -- Stonecipher, at 68, is a caretaker -- might remind you of Coca-Cola Co.'s recent history. Boeing is still strong, but it has a lot riding on the 787 and its ability to restore its credibility with the government

U.S. wants passenger names one hour before takeoff

By Shaun Waterman UPI Homeland and National Security Editor Published 2/24/2005 11:25 PM WASHINGTON, Feb. 24 (UPI) -- The Department of Homeland Security is drafting a rule that will require airlines to pass on passenger manifest information as much as an hour before the departure of international flights bound for the United States, officials confirmed to United Press International Thursday. ----------- This news is good to hear but probably faulty thinking. Surveys undertaken by IAG indicate passengers agree with this philosophy. http://www.iag-inc.com/data/preflight.htm - use this link to see the preliminary results. The key issues from our surveys were: Fully two-thirds of respondents would like to see travelers have background checks. When asked how far in advance these checks should be undertaken, nearly half the respondents thought one hour before would be best, while another 30% thought one day prior to departure would be best. However, one hour is probably insufficient for these checks. Data switching can be done at the time of the PNR being created. In tests I am aware of it took ~6 seconds to run the PNR data against a watch list. While this might support the view that one hour is sufficient, it really should be done earlier to reduce the burden on TSA. Imagine the false positives every day at ATL or ORD - TSA staff will be running from gate to gate. There is a concern airlines will regard this as another burden they cannot afford. Actually it is not a big burden, but it does require airlines to open their data structures and this is the really interesting part. When the legacy airlines open their data structures (not databases, these things are so old) all manner of worms and bugs will emerge. These information systems will be hammered as never before and they will break. If these systems break, an airline's DCS (departure control system) will fail - and no plane can be pushed back until the DCS clears a flight. Lufthansa a few years ago had to curtail Expedia's access to their reservations system because it alone was able to delay their DCS. And you thought all those delays were air traffic control, right?

Airbus A330 "Entertainment" System

I just traveled to and from Germany on an Airbus A330. (route was DTW-FRA) The airplane itself was roomy enough, except if you find yourself in a window seat towards the rear – the curve of the fuselage wall annoyingly invades your personal space if you are over 5 feet tall. In any case, I wanted to weigh in on the A330 personal “entertainment” system. Aside from the coolness factor of having a personal screen and being able to watch the animated airplane crawl across the blue and green map, it was not very entertaining at all. Sure, there are on-demand movies you can pause. But the movie selection was horrendous – ‘King Arthur’ was the best choice, and after that I suffered through an Alec Baldwin comedy. For 16 hours of flight time, one passable move takes away the all of the advantages of an on-demand system. I was glad I brought a book. The music was the same story – cool to be able to choose which song you wanted to hear, but listening to the same three songs that you like gets old rather quickly. There were some games to play, like solitaire and bejeweled. I didn’t play them much, just checked them out for exploration’s sake. The best feature of the whole system was a multi-person trivia game in which you answered timed trivia questions against other passengers. This blog heralds the advances of Air-Wi-Fi and proclaims the beauty of airborne broadband. It is clear to me that the advantages of an endless internet rather than a rag-tag collection of cutting room scraps clearly outweigh the costs of implementation. It will improve the efficiency of an airborne businessman as well as entertain the jittery children.

More on Ryan Air's Order

Take a look at the link above....and wonder to yourself, how long before Ryan starts flying across the pond? Or will JetBlue start first?

Homeland Security creates committee to advise it on privacy issues.

Homeland Security creates committee to advise it on privacy issues. The Department of Homeland Security has created a committee to advise it on data privacy, InformationWeek reports. Members of the committee hail from corporations, academia and nonprofit groups. Feb. 24, 2005 For More: AirGuideOnline Airline & Travel News http://www.airguideonline.com/airgtravel_news.htm News Center: http://www.airguideonline.com/airgtravel_newsarchives.htm Magazines: http://www.airguideonline.com/magazines.htm Business Newsletters: http://www.airguideonline.com/magazines_biz.htm#business

Three European leaders urge purchase of Airbus jets.

Three European leaders urge purchase of Airbus jets. The leaders of Britain, France and Germany have sent letters to the Polish prime minister urging LOT, Poland's national airline, to purchase jets made by European jetmaker Airbus instead of planes made by U.S.-based Boeing. Feb. 24, 2005 For More: AirGuideOnline Airline & Travel News http://www.airguideonline.com/airgtravel_news.htm News Center: http://www.airguideonline.com/airgtravel_newsarchives.htm Magazines: http://www.airguideonline.com/magazines.htm Business Newsletters: http://www.airguideonline.com/magazines_biz.htm#business

EADS named "preferred bidder" on U.K. tanker contract.

EADS named "preferred bidder" on U.K. tanker contract, report says. Europe's aerospace consortium EADS has secured "preferred bidder" status on a contract to build refueling tankers for the Royal Air Force, the Financial Times reports. Once it is officially named preferred bidder, EADS may start securing financing for the contract. For More: AirGuideOnline Airline & Travel News http://www.airguideonline.com/airgtravel_news.htm News Center: http://www.airguideonline.com/airgtravel_newsarchives.htm Magazines: http://www.airguideonline.com/magazines.htm Business Newsletters: http://www.airguideonline.com/magazines_biz.htm#business

Boeing's sale of commercial plants indicates change in strategy.

Boeing's sale of commercial plants indicates change in strategy. The sale of Boeing's commercial jetliner plants in Oklahoma and Kansas are part of the company's plan to change its business model, the Chicago Tribune reports. Boeing is moving away from building planes itself; instead, it will coordinate the assembly of jetliners and market them to airlines. Boeing hopes the plan will lower costs, improve innovation and help it better compete against European rival Airbus. For More: AirGuideOnline Airline & Travel News http://www.airguideonline.com/airgtravel_news.htm News Center: http://www.airguideonline.com/airgtravel_newsarchives.htm Magazines: http://www.airguideonline.com/magazines.htm Business Newsletters: http://www.airguideonline.com/magazines_biz.htm#business

FAA to propose rules aimed at improving cockpit recorders.

FAA to propose rules aimed at improving cockpit recorders. The Federal Aviation Administration will propose new rules to improve the quality of cockpit recorders, the Wall Street Journal reports. The FAA wants to lengthen the duration of time the device is required to retain information without automatically erasing it from 30 minutes to two hours. It also wants recorders to be able to operate even if a plane loses electric power. Feb. 24, 2005 For More: AirGuideOnline Airline & Travel News http://www.airguideonline.com/airgtravel_news.htm News Center: http://www.airguideonline.com/airgtravel_newsarchives.htm Magazines: http://www.airguideonline.com/magazines.htm Business Newsletters: http://www.airguideonline.com/magazines_biz.htm#business

Airport screeners face high rate of injuries related to work.

Airport screeners face high rate of injuries related to work. Airport screeners have one of the highest rates of job-related injuries in the nation, USA TODAY reports. TSA employees missed work due to on-the-job injuries five times more often than other government employees. Lawmakers worry this could create a staffing shortage and weaken national security. Feb. 24, 2005 For More: AirGuideOnline Airline & Travel News http://www.airguideonline.com/airgtravel_news.htm News Center: http://www.airguideonline.com/airgtravel_newsarchives.htm Magazines: http://www.airguideonline.com/magazines.htm Business Newsletters: http://www.airguideonline.com/magazines_biz.htm#business

Pratt to enter IFE market with wireless broadband

Dateline: Thursday February 24, 2005 Pratt & Whitney is developing an all-digital wireless broadband inflight entertainment solution that will offer video-on-demand, live television and broadband Internet connectivity to airline passengers. The product also will enable what P&W Manager-Information Service Programs Colin Karsten called a "next-generation" health management system offering "total" aircraft and systems health monitoring and fault finding as well as improved troubleshooting. Aircraft and engine system sensors will be enabled to "talk" to the wireless onboard servers running Cloudlink and data will be communicated to the ground via broadband. He said it should be up and running in 18 months. ---------- Is this cool or what? WiFi in-flight is the most exciting spot in commercial aviation. You heard it before on this site, WiFi is about to make IFE as we know it obsolete. Airlines can get rid of those dumb screens and poor content. They can also remove miles of wire and pathetic 386 processors that power most of the systems. All the IFE systems created aggravation for maintenance crews and created heat in-flight...its also good to see that Tenzing and Connexion are getting competition.

Ryanair Confirms 70 Additional Boeing 737-800 Airplanes

Boeing confirmed it has reached agreement with Ryanair for the airline's purchase of 70 additional Boeing 737-800 airplanes, with options for up to 70 more airplanes,in one of the largest orders for the Next-Generation 737. The value of the agreement for the 70 firm airplanes is 4.6 billion USD at list prices. The total value of the deal if all options are exercised is $9.2 billion. The agreement is subject to the approval of Ryanair shareholders this Spring. Feb. 24, 2005 For More: AirGuideOnline Airline & Travel News http://www.airguideonline.com/airgtravel_news.htm News Center: http://www.airguideonline.com/airgtravel_newsarchives.htm Magazines: http://www.airguideonline.com/magazines.htm Business Newsletters: http://www.airguideonline.com/magazines_biz.htm#business

Avian Influenza A/(H5N1)

According to WHO out of 55 human cases of this flu, 45 people have died. WHO reports only laboratory-confirmed cases. The cases are located in Cambodia, Thailand and Vietnam. WHO further states - "Influenza pandemics are recurring and unpredictable calamities. WHO and influenza experts worldwide are concerned that the recent appearance and widespread distribution of an avian influenza virus, Influenza A/H5N1, has the potential to ignite the next pandemic. Give the current threat, WHO has urged all countries to develop or update their influenza pandemic preparedness plans (see information on web pages below) for responding to the widespread socioeconomic disruptions that would result from having large numbers of people unwell or dying. Central to preparedness planning is an estimate of how deadly the next pandemic is likely to be. Experts' answers to this fundamental question have ranged from 2 million to over 50 million. Even in the best case scenarios of the next pandemic, 2 to 7 million people would die and tens of millions would require medical attention. If the next pandemic virus is a very virulent strain, deaths could be dramatically higher. The global spread of a pandemic cannot be stopped but preparedness will reduce its impact. WHO believes the appearance of H5N1, which is now widely entrenched in Asia, signals that the world has moved closer to the next pandemic." ---------- This information is shocking. Up to 50 million people dying from the flu? The world was stunned by the Tsunami.... but this? Clearly the way this flu will get around is heavily influenced by travel. Are you prepared for this?

CHINA: DOT issues Order to Show Cause in China Route/Designation case for 2005/2006 all-cargo/passenger

<img src="http://images.google.com/images?q=tbn:EZgjUe0yZfsJ:www.macrochina.com.cn/english/index/china/imagse/china_flag.jpg"><p>

 Today, the DOT issued an Order to Show Cause in Docket OST-2004-19077 for new China carrier designation/frequencies rights

 

Highlights

• Continental selected for 2005 combination carrier designation and 7 frequencies for Newark-Beijing Capital (American Airlines backup)
• American selected for 2006 combination carrier designation and 7 frequencies for Chicago O’Hare – Shanghai Pudong (Delta Air Lines backup)
• Northwest, FedEx, UPS and Polar evenly split 12 new all-cargo frequencies (3 each), which become available in 2006.

 

Summary >From Order

By this Order, we tentatively decide to award Continental Airlines, Inc. (Continental) and American Airlines, Inc. (American) certificate authority to provide combination services in the U.S.-China market and to allocate Continental and American seven weekly combination frequencies, respectively, for their proposed services. The rights would become available to Continental on March 25, 2005, and to American on March 25, 2006. We also tentatively decide to select American as a backup to Continental’s primary award for 2005 and Delta Air Lines, Inc. (Delta) as a backup to American’s primary award for 2006. Further, we tentatively decide to allocate the 12 weekly all-cargo frequencies available on March 25, 2006, as follows: three weekly frequencies each to Federal Express Corporation (FedEx), Northwest Airlines, Inc. (Northwest), Polar Air Cargo, Inc. (Polar), and United Parcel Service, Co. (UPS).

 

Link to Order to Show Cause - http://dms.dot.gov/search/document.cfm?documentid=316402&docketid=19077

 

DOT PRESS RELEASE

http://www.dot.gov/affairs/dot3205.htm

 

DOT 32-05
Tuesday, February 22, 2005
Contact: Bill Mosley
Tel.: (202) 366-4570

DOT Proposes Two Airlines to Enter U.S.-China Market; Tentatively Awards Flights to Six Carriers


The U.S. Department of Transportation (DOT) today proposed to select Continental Airlines and American Airlines as new entrants in the U.S.-China air market, as well as to award new weekly cargo flights to four carriers currently serving the market.

DOT proposed to award Continental seven weekly passenger flights for rights that will become available on March 25 of this year. Continental will serve the Newark/New York-Beijing market. The Department also proposed to award seven weekly passenger flights to American for services in the Chicago-Shanghai market, effective March 25, 2006. Finally, the Department proposed an award of three all-cargo flights each to current U.S.-China carriers Federal Express (FedEx), Northwest Airlines, Polar Air Cargo and United Parcel Service (UPS), also for rights that become available on March 25, 2006.

The new rights were made available by the U.S.-China aviation agreement signed July 24, 2004 in Beijing by U.S. Transportation Secretary Norman Y. Mineta and Chinese Minister of Civil Aviation Yang Yuanyuan. Once these rights awarded in this proceeding are operational, the number of U.S. airlines in the market and the number of flights they can operate will have nearly doubled.

“We are meeting an historic growth in demand for air travel between our two countries that is the fruit of expanding ties between the U.S. and China,” said DOT Assistant Secretary for Aviation and International Affairs Karan Bhatia. “These new routes will provide more choices for travelers, more opportunity for U.S. carriers, more options for businesses and ultimately, more jobs for Americans.”

If today’s proposed decision is made final, Continental will operate a new daily flight from Newark, NJ to Beijing starting this year, becoming the first U.S. carrier to operate nonstop service to China from the New York area. The Department’s tentative decision noted that “the most serious service deficiency is the lack of U.S.-carrier nonstop service to China from New York, which represents by far the largest U.S.-China . . .market in this proceeding. Our tentative decision to select Continental to serve the U.S.-China market in 2005 responds to the need for that service.”

DOT also tentatively selected American’s Chicago-Shanghai service for the 2006 award. The Department’s tentative decision states that “. . .the U.S.-China combination market lacks strong U.S.-carrier competition. . . .[W]e tentatively believe that it is in the public interest to select, for our 2006 award, the applicant which is most likely to provide the strongest competitive challenge to Northwest and United. . . .”

The new agreement provides for an increase in weekly U.S.-China flights for each country’s carriers from 54 to 249 over six years. Last year, the Department named Polar Air Cargo as the first new-entrant carrier under the agreement, and awarded additional flights to incumbent carriers United, Northwest, FedEx and UPS.

Other carriers applying to become new entrants in the U.S. China market in either 2005 or 2006 were Delta Air Lines, Hawaiian Airlines and North American Airlines for passenger services; and Evergreen International Airlines, Gemini Air Cargo and World Airways for all-cargo flights.

Comment on the Department’s proposed decision is due by March 4, with replies to comments due March 9. After reviewing all comments, the Department will issue a final decision.

The Department’s show-cause order, carrier applications and other documents in this case may be obtained via the Internet at http://dms.dot.gov docket number OST-2004-19077.

Boeing said development of the 747 Large Cargo Freighter is proceeding according to plan.

Boeing said development of the 747 Large Cargo Freighter is proceeding according to plan and the modified freighters will be ready to support final assembly of the first Boeing 787 Dreamliners in 2007. Boeing announced last week the critical "swing zone" of the freighter, the part of the Large Cargo Freighter's aft fuselage that opens to allow loading and unloading of the 787's large composite structures, is being designed in partnership with Gamesa Aeronautica of Spain. Gamesa is the first Spanish supplier supporting the Dreamliner program. The expanded girth of the Large Cargo Freighter will hold three times the cargo by volume of the 747-400 freighters flying today. The airplanes will be modified by Evergreen Aviation Technologies Corporation (EGAT), a joint venture between EVA Air and General Electric, and part of Taiwan 's Evergreen Group.Two Large Cargo Freighters will be needed to support initial 787 production. Two 747-400s that will be converted to the new configuration were purchased by Boeing last year. Boeing continues looking for a third airplane that will enter service later. Certification of the first Large Cargo Freighter will occur in 2006, with the airplane returning to service in 2007 to support final assembly of the first Dreamliners. For More: AirGuideOnline Airline & Travel News http://www.airguideonline.com/airgtravel_news.htm News Center: http://www.airguideonline.com/airgtravel_newsarchives.htm Magazines: http://www.airguideonline.com/magazines.htm Business Newsletters: http://www.airguideonline.com/magazines_biz.htm#business

Boeing claims 787 will have lower maintenance costs than Airbus rival.

Boeing says maintenance for its 787 will come in 32% lower than maintenance for the Airbus A330 after 12 years of service. Boeing said the 787's electrical systems and composite structure will help lower maintenance costs, Air Transport World reports. For More: AirGuideOnline Airline & Travel News http://www.airguideonline.com/airgtravel_news.htm News Center: http://www.airguideonline.com/airgtravel_newsarchives.htm Magazines: http://www.airguideonline.com/magazines.htm Business Newsletters: http://www.airguideonline.com/magazines_biz.htm#business

Former Boeing financial chief gets four months in prison.

Former Boeing financial chief Michael Sears received four months in prison and was fined $250,000 for his role in the Air Force tanker scandal. The Wall Street Journal reports that Boeing could still face charges related to the scandal. For More: AirGuideOnline Airline & Travel News http://www.airguideonline.com/airgtravel_news.htm News Center: http://www.airguideonline.com/airgtravel_newsarchives.htm Magazines: http://www.airguideonline.com/magazines.htm Business Newsletters: http://www.airguideonline.com/magazines_biz.htm#business

Discount air travel takes off in India.

India's strong economy is fueling the growth of discount airlines, the Washington Post reports. Traffic is expected to grow 30% this year, and five new low-cost airlines have announced plans to start operations. For More: AirGuideOnline Airline & Travel News http://www.airguideonline.com/airgtravel_news.htm News Center: http://www.airguideonline.com/airgtravel_newsarchives.htm Magazines: http://www.airguideonline.com/magazines.htm Business Newsletters: http://www.airguideonline.com/magazines_biz.htm#business

Northwest's DC-9s

Aging DC-9s help Northwest weather higher costs. Northwest Airlines continues to fly aging DC-9s because they are economical and help it endure high fuel prices. The airline owns many of its jets, so its fixed costs are lower than many of its competitors. The average age of Northwest's DC-9s is 34 years, and they account for more than one-third of the company's fleet. For More: AirGuideOnline Airline & Travel News http://www.airguideonline.com/airgtravel_news.htm News Center: http://www.airguideonline.com/airgtravel_newsarchives.htm Magazines: http://www.airguideonline.com/magazines.htm Business Newsletters: http://www.airguideonline.com/magazines_biz.htm#business

Northrop, EADS consider teaming up for bid on tanker contract.

Airbus 330 Tanker Northrop, EADS consider teaming up for bid on tanker contract. Northrop Grumman and EADS, the parent of jetmaker Airbus, are considering teaming up to bid on an Air Force tanker contract. Northrop CEO Ron Sugar said no firm agreement had been reached. EADS is searching for a U.S. partner with which to bid on the contract. The contract was originally awarded to Boeing, but was revoked after it was discovered that the company was unfairly favored during the award process. Boeing has said it will bid again on the contract. Boeing able to change tanker design: Boeing chief executive Harry Stonecipher said the company could change its proposal for the Air Force tanker contract if needed. However, production for the 767, the plane that would be used in the contract, will end soon if the company does not receive new orders. Ex-Boeing financial chief, disgraced by tanker scandal, faces sentencing on Feb. 18, 2005. The former chief financial officer of Boeing will be sentenced today. Michael M. Sears pleaded guilty to a felony related to hiring a former Air Force official who had unfairly influenced contract awards on Boeing's behalf in exchange for a job with the company. Boeing is trying to win back credibility, and the sentencing of Sears could help put some of its ethics troubles behind it. For More: Airguide Airline & Travel News http://www.airguideonline.com/airgtravel_news.htm

EL AL & Connexion

SEATTLE, Feb. 17, 2005 - El Al Israel Airlines, a leading global airline focused on passenger services, and Connexion by Boeing, a business unit of The Boeing Company (NYSE:BA) today announced the signing of a definitive agreement for the installation of the Connexion by BoeingSM real-time, high-speed Internet service on the air carrier's long-haul fleet. The agreement calls for installation of the Connexion by Boeing service to begin in the second half of 2005 on El Al's long-haul fleet, which includes Boeing 747-400s and Boeing 777 aircraft. Installations are expected to be complete by 2007. ----- Slowly but surely airlines are going to add this service. It generates extra money for them and pays back quicker than most realize. Not only does this service enable airlines to recover more $ from passengers, it also means airlines can look forward to NOT buying movies, getting rid of IFE equipment and improve their understanding of their customers. So airlines win and the passengers win. Take a look at this link to see how powerful this idea was back in 1997 - how much more so today? This is a huge and powerful tool for airlines - but it requires some "out of the box" thinking. Unfortunately, the airline industry is not known for growing such thinking from within.

Smaller airports start offering free wireless Internet access.

Smaller airports start offering free wireless Internet access. The Fort Lauderdale-Hollywood International Airport will start promoting its free wireless Internet access, the Miami Herald reports. Large airports have been slow to establish wireless networks because of their size, but smaller airports have used the technology to attract business travelers. Fort Lauderdale airport officials say they will consider charging for the service after they monitor usage. For More: Airguide Airline & Travel News http://www.airguideonline.com/airgtravel_news.htm

Europe's Dassault launches new business jet to compete with North American companies.

Europe's Dassault launches new business jet to compete with North American companies. European corporate jet maker Dassault Aviation will offer a long-range business jet in an effort to compete with rivals Gulfstream and Bombardier, the Financial Times reports. Dassault's entry into this market illustrates the continued challenge European companies pose to North American aerospace companies. For More: Airguide Airline & Travel News http://www.airguideonline.com/airgtravel_news.htm

Boeing's Subsidized 787, and its New Japanese Wings

Boeing's Subsidized 787, and its New Japanese Wings The story goes something like this: Airbus, loaded with illegal subsidy Euros from the old world's mighty socialist powers such as France, Germany, and Spain, is flooding the market with mediocre planes that nobody even wants to buy anyway. by Madshansen Unfortunately, it's more like a fairy tale than a news story. It is no coincidence that "Airbus vs. Boeing" has become the marquee event in aviation news. The reason, in short, is that after almost 50 years of undisputed dominance, Boeing has now been relegated to number two. Suddenly, Airbus has plenty of bragging rights: In 2003 they outsold Boeing for the first time, and in 2004 they repeated that feat. In January of this year, Airbus publicly unveiled the A380, the double-decker super jumbo that dethrones Boeing's 747 as the world's largest passenger aircraft, a title the Washington based company held for 35 years. The title for longest range airliner is held by the A340-500. By all measures, Airbus has become a formidable competitor, and should perhaps now be described as the market leader. At the same time as Airbus has been riding a wave of success, Boeing has been facing mounting problems. The 7E7 Dreamliner program, recently officially renamed the 787, will be the first new product from Boeing in well over a decade. Several attempts in the 90's to launch new jets failed to attract interest from airlines. The 747X program, a stretched super jumbo version of the 747, got the thumbs down from airlines-which perhaps explains why Boeing claims the A380 is a plane customers don't want. In the ULR (Ultra Long Range) market, Boeing's response to the A340-500 was going to be the 777X derivatives, but again, customers were not satisfied with Boeing's proposals. In 2001, Boeing wanted to launch the "Sonic Cruiser." A radical delta wing design, near supersonic travel speeds, and-according to Boeing-fuel efficiencies that would be no worse than that of same size competitors, were supposed to be exactly what airlines were looking for. However, due in part to a worldwide post 9/11 travel slump, the project was never officially launched. In light of persistently high fuel prices it is not unlikely that airline interest would have dissipated anyway and the project gone the way of the gas guzzling Concorde. This takes us to late 2003 and the official authorization by Boeing's board to offer the Dreamliner for sale. Like the Sonic Cruiser, the 787 is a midsize long-range wide-body, with passenger capacities estimated between 225 and 300, and a range of up to perhaps 9,000 miles. It will also utilize plenty of new technology, such as an almost all-out composite fuselage, new engines, and greater passenger comfort. But Boeing has traded speed for fuel efficiency, and the 787's design, though more streamlined and sculpted than some, is a much more conventional one. With previously failed attempts to launch new products, Boeing's very future and prestige is riding on the success of the 787. Enter the A350. To add insult to injury, Airbus announced in December 2004 that it would face the 787 head-on, and launch a direct competitor. It didn't help matters that Airbus openly declared that so-called "Launch Aid" would play a role in developing the new plane. Launch Aid is government incentives that can take the form of grants, subsidized loans or other monetary assistance. So, is Airbus where it is today because of an endless supply of free government money? Boeing claims that the European aerospace giant has received $15 Billion in illegal aid. At one point, the issue even took center stage in the 2004 U.S. elections, with George W. Bush promising Washington voters that he would level the playing field for Boeing. It might surprise you to learn that the United States and the EU have an agreement on this issue. In an 1992 agreement, 1/3 of the development cost of a new civilian jetliner can be financed through government aid. Airbus claims that it is well within this agreement. And then, there is the other side of the coin. Tired of constant accusations from across the Atlantic, Airbus has crunched some numbers on its own. According to Airbus, aid to Boeing has totaled $23 Billion! For certain key programs, such as the Boeing 707 and the 747 Jumbo Jet, extensive development work was paid for by military contracts. The Federal government has provided export assistance; states big tax incentives. Exactly how much aid has been given to Airbus and Boeing is the kind of information we probably won't have unless it becomes part of the discovery in a legal dispute. However, it is obvious that both have received assistance on a large scale. The obsession with subsidies and unfair competition throws the debate off from far more important questions. What citizens, taxpayers and politicians really should be considering is if aircraft manufacturers should receive subsidies at all? And, if so, what form should it take? Ever since their first plane flew in 1916, Boeing has had a symbiotic relationship with the state of Washington, directly employing almost 107,000 people there as late as in 1989. But in 2001, the company moved its headquarters to Chicago, Illinois. And with the launch of the 787, Boeing did the unthinkable: the company would conduct a nationwide search for a site to build the new plane. In the end, it was decided that the Dreamliner would indeed be assembled in Everett, but only after the State of Washington coughed up an incentive package worth $3.5 Billion over 20 years. Boeing estimates that between 800 and 1,200 people will be employed assembling the jet. This means that the State will subsidize each employee working on the 787 by at least $145,000 per year! For a job that might typically pay around $60,000. Boeing would certainly argue that the 787 program has substantial economic impact beyond the 1,200 assembly jobs. Sure, the plane will be built in Washington-sort of. Actually, the plane will come more or less preassembled to Everett and be bolted together there in only 3 days. The nose comes from Kansas; the technologically demanding wings from Japan, and the Fuselage and horizontal fin are made by a Texas-Italian partnership. The only significant component actually manufactured in Washington will be the vertical tail fin. Boeing's large parts manufacturing facility in Auburn will receive virtually none of the work for the 787. Boeing justifies the subsidies as a way to "protect 200,000 jobs,"-though it conveniently leaves out that only a quarter of those are currently in Washington. Since signing the incentives-agreement, far more jobs (about 4,500) have been downsized than will be gained by the 787 assembly. To reduce cost and financial risk, Boeing outsourced entire subassemblies on the 787. For example, Mitsubishi, Kawasaki and Fuji Heavy Industries, all of Japan, have underwritten billions of dollars in research-and will in return reap fixed portions of the profits. Despite 90 years of history together, the citizens-and taxpayers-of Washington will have to get used to a new reality: Boeing is a transnational corporation and is not demonstrating much allegiance to its old home-state. It's hard to see how Washington will ever recoup its $3+ billion investment. So, if Boeing takes as much or even more government money as Airbus, what is the reason it has slipped to number two? Quite simply, Airbus has done a better job! This is not an easy pill to swallow after half a century in the lead, and pure patriotism prevents most Americans from admitting this. This is not to say that Boeing can't fight back. The 787 program is adopting many new technologies and manufacturing processes. Some of the things Boeing is doing are revolutionary, such as the one-piece carbon fiber fuselage. Others are essentially adaptations of Airbus' procedures, such as having big portions of the plane assembled "stuffed," (that is, with electronics, insulation, etc., already installed) then shipped to a central assembly facility. But Boeing has made many mistakes. For one, the product line is aging. Until manufacturing of the 757 ended last year they were building 6 completely different variants, with limited commonalities, all but one harkening back to 1960s and 70s designs. Airbus, on the other hand, has a modern product line that is carefully integrated and offers plenty of commonalities that benefit both Airbus itself, and airlines that operate more than one type of its products. Boeing really has nobody to blame but itself. CEOs and boards have focused too much on short sighted shareholder demands, and rested too much on laurels that it earned 30 or more years ago.

How does Boeing's future look in Commercial Aviation?

Can Boeing survive in the airline industry? In 2003, for the first time, Airbus sold more units than Boeing - mainly due to the popularity of the A330. Boeing claims that with the efficient 787 it can reclaim the top spot. With no other models in the pipeline, will the 787 be successful enough to help Boeing survive? Use the link to see the survey. http://iag-inc.com/int/interview.cfm?id=36

Boeing 747 ADV

Boeing 747 Advanced: Too little, too? A common, yet not convincing argument frequently to be heard is that airport congestions necessarily imply larger airplanes, like the A380. To avoid congested airports carriers could also look into flying to smaller, usually less congested airports. Not everybody needs to fly into Seattle, WA; Portland, OR to the south could be an option too, particularly for those whose final destination of travel is closer to there. And this is where the 787 fits in. For More: Airguide Airline & Travel News http://www.airguideonline.com/airgtravel_news.htm The Problem at Boeing is McDonnell Douglas. Boeing needs to return to the core that once made Boeing the leader in Commercial Aviation. Boeing's trouble started when, in 1997, McDonnell Douglas used Boeing's money to take over Boeing. The old Boeing just faded away. Now we have a diversified aerospace company, headquartered in the midwest, playing second fiddle in the commercial market (and looking at freighters as the next big market), trying ever so hard to compete in the military market, and riddled with scandal for doing improper things. Pretty much the company McDonnell Douglas once was. Not surprising when you look at Boeing's current management team. The problem for Boeing to overcome is first and foremost, regaining the prestige they once had in the commercial market. Boeings were once synonymous with Airliners - now Airbus has that role. Airlines tend to follow one another in a pack - and they are all headed to all Airbus fleets. To arrest this alarming trend, Boeing needs to develop a clean consistent lineup of modern commercial airliners. The 787 alone is not enough. The 737 has to be replaced - the basic design is too old. The 747 (like the MD-11) seems to have become a freighter which pretty much dooms it from a prestige standpoint - its now a truck, when before it was a chariot. The 717 and 757 are history. The only remaining modern airliner is the 777. What a mess of a lineup. For More: Airguide Airline & Travel News http://www.airguideonline.com/airgtravel_news.htm -- Aram Gesar Editor & Publisher AirguideOnline.com

777LR - Really Long Legs

The 777LR The 777-200LR will be capable of flying over 10,000 miles non-stop, linking virtually any two cities. This airplane further reflects the diametric strategy difference between Boeing and Airbus in their approach to aircraft size, first highlighted with the 787 vs. A380. As stated elsewhere on this blog - we believe Boeing is correct. Air travel is unravelling from hubs. Security checks at airports already take too long (our research indicates 20 minutes) - imagine how long this will take as traffic recovers in summer? Add to this frequent delays at large hubs and it is possible to save ~4 hours travel time by flying non-stop for the typical US-Overseas trip. Considering roundtrip travel time to be in the order of 24 hours for West Coast to European trips, this is a significant time saving. With East Cast to Europe taking half that time, these delays become even more considerate. In our research, we have found ~90% of respodents prefer to fly non-stop when a flight is over 8 hours. Further, when asked how much more they would pay to fly non-stop; on 8-hour flights respondents stated they would pay 11.7% more and on 14-hour+ flights they stated a willingness to pay 14.3% more. More preliminary data at http://www.iag-inc.com/data/longhaul.pdf Pakistan International Airlines has stated they want to fly 19 hour stages from Karachi to Houston. Therefore airlines using very long range aircraft could charge premiums over competing flights which are nor non-stop. Singapore Airlines is on record that their SIN-JFK and LAX flights are making money using the 340-500 and these flights are up to 18 hours duration. While described by some as a "niche player", the 777LR might be better described as the edge of a Boeing chisel strategy. By this I mean Boeing enables airlines to chisel valuable traffic away from hubs. The first traffic to leave hubs will be the higher yield variety, which traditionally is schedule driven. This means business travelers using their company's or client's credit cards. When Airbus first tested the idea of a very long range airplane (the A340-8000), passenger research indicated a willingness to pay up to $400 more for a ticket - which allowed a passenger to sleep in a bunk below the floor in an LD9 container. The container held 4 bunks and had a stairway to the cabin - very neat. The 340-8000 led directly to the 340-500. At 300 seats, the 777LR offers equivalent capacity to the 340-500. Seat mile costs on the 777LR will be between 15-18% lower than the 340-500/600 according to Boeing. The 777LR uses the GE90 engine, which on the 777-300 produced remarkable performance improvements beyond what was expected. Addison Schonland

In-Flight WiFi

Another European airline is adding Boeing's Connexion service. This is an important issue...many travelers and even airlines are not aware of the impact WiFi will have. For travelers it means freedom of generally pathetic in-flight entertainment - where equipment often fails or the content is poor. Wifi has much less network break points and is therefore much more reliable. For airlines it is a chance to get an extra $30 per traveler on long hauls. Assuming a 300 seats, at 70% LF, and a 20% useage rate - the airline could get the equivalent of an extra long haul fare ($1,260). Sound too little? Over 330 flights (a typical year) an airline could create an additional $416,000 in revenue from one aircraft. Considering the cost of a WiFi install is ~$250,000, this is likely one of the best investments an airline can make. Now think of the downstream impact. The airline can communicate with its customers in-flight - creating more data for their CRM systems. Which enables the airline to build loyalty in a rather unloyal environment. That has to be worth a very large, if more difficult to define, amount. As more people fly with WiFi PDAs and laptops, expect to see less airline provided crappy entertainment content. Wifi provides more revenue for airlines - lots more revenue! If everyone on a flight were to buy their entertainment instead of using the free stuff out there now, an airline could potantially see 300 people spending at least $10 per flight - a very useful extra $3,000 per flight - or the equivalent of 3 more fares with NO DISTRIBUTION COST! Over 330 ops, this adds to just under $1m. Sure beats revenues from duty free sales. Addison Schonland

SAS looking at smaller aircraft for transatlantic

Scandinavian Airlines is evaluating introducing smaller aircraft to operate some of its transatlantic routes where its A330/A340 fleet offers too much capacity, particularly during the winter months. The airline is working with its pilot unions to evaluate the concept, a spokesperson told ATWOnline. One of the possibilities under study is leasing an Icelandair 757 for the Oslo-New York sector. "But also from Stockholm Arlanda to other destinations there could be some possibilities," the spokesperson added. The earliest date for such a change would be the next winter season. -------- Reality strikes! Too much capacity on the North Atlantic? No wonder we see AA & CO using 757s. Expect to see more of this. UA also has ETOPS 757s (currently used to Hawaii). Which of course again leads to the idea of jetBlue and its 320s based in Boston....one has to wonder. Lots of long thin route potential here. Unfortunately for the Europeans, the US has more big cities. This means a US carrier can more easily manage the "feed", or origin traffic, and move it into smaller Euro-cities. Euro-carriers need their hubs more than US carriers do. For example, if AA were to try JFK-Lyon with a 757, how would AF respond? They might try with a 330, add too much capacity and lose more money that AA. Of course, AF might be able get government support more easily than AA. This issue is fascinating as it indicates the North Atlantic market might be doing what Boeing thinks - fraying into more traffic that avoids hubs and therefore plays into a 787 world. Meaning the potential market for the A380 on North Atlantic could shrink. Addison Schonland

jetBlue gets #71

jetBlue turned 5 years old today and took delivery of their 71st A320... are you aware that JB is now the "biggest" airline at JFK?! It only took 5 years. Amazing.
If you work for a legacy airline this has to give you the creeps. Young and frisky, JB is on a roll and good for them - good for passengers too! Their customer feedback is great, and like Southwest, JB delivers what what their customers expect.
Its all about expectations. Its not a good idea to over promise and under deliver. Airlines may be among the worst offenders. Just look at their advertising. No wonder customer loyalty is out of the window - low fares rule - why would anyone be willing to pay more? Are the seats better? Service better? Planes better? I can hear you shout "Hell No"!
As stated elsewhere on this blog, let LCCs get into international flights ASAP. jetBlue would get high load factors between Boston and London and with their low costs, we might see fares of $99 each way. That would build traffic. The incumbents would be sick with having their last piece of protection, international routes, chewed up. Roll on progress. Addison Schonland

Airbus coming to Washington State?

Airbus 330 Tanker
New life for American aircraft engineers may be in the works! If you wanted to sell the US DOD an aerial tanker and were looking for skilled workers....where would you look? I wonder if this happens, do the employees get the same great vacation and benefits as their European colleagues? -------- Airbus is coming to town, and the 767 might be history! Airbus in talks with Washington cities for possible U.S. plant. Airbus parent EADS is considering three Washington cities as possible sites for an aircraft assembly plant. Airbus would build Air Force tankers at the plant. It will discuss the plant with leaders from Everett, Spokane and Moses Lake next week. The three cities all have ties to rival jetmaker Boeing. The Defense Department has not yet decided who will build the tankers. Feb 10, 2005 For more: Airguide Airline & Travel News http://www.airguideonline.com/airgtravel_news.htm

GDS Operators Report Profits As Airlines Seek Cost Reductions

By Richard Eastman, President of The Eastman Group Per my comments earlier this week pertaining to the concept of how the GDS world "has changed" versus my thoughts that it "is changing." That said ... it is really hard to identify WHERE the profits identified below actually came from -- given the overlaying strategies and business roles that are NOT related to distribution. From Business Travel News©, February 09, 2005 ++++++++++ GDS Operators Report Profits As Airlines Seek Cost Reductions FEBRUARY 10, 2005 -- Global distribution system operator Amadeus today reported 2004 net income of €208 million, a 30 percent increase from 2003. The Madrid-based company follows GDS operators Cendant and Sabre Holdings in reporting healthy full-year financial results. At the same time, major U.S. airlines are struggling to rebound from years of crippling losses and are looking to GDS operators for improved contractual terms as a means of lowering distribution costs. "We are willing to have economic discussions," said Greg Webb, senior vice president of marketing for the Sabre Travel Network, speaking this week during a panel discussion hosted by Ultramar Travel Management. "We recognize that we need a new and different offering and we plan to lead the way we led with the Sabre Direct Connect Availability Three-Year agreements." Amadeus already has communicated its vision of future airline-GDS economic arrangements and now is in the second phase of its value pricing initiative, which seeks to base fees charged to airlines on the type of booking (BTNonline, Nov. 30, 2004). Cendant and Sabre each has been developing conceptually similar approaches and each in the meantime has produced solid earnings. Worldspan, too, has been exploring new economic models, following the end of federal GDS regulation last summer, but has not yet reported 2004 financial results. Full-year results for Amadeus included a 5.4 percent increase in total booking revenue on a 7.6 percent increase in transaction volume. Full-year revenue increased 6.6 percent, and for the first time surpassed €2 billion. The company--citing particularly strong growth in eastern Europe, Asia/Pacific, Africa and the Middle East--said 2004 hotel reservations increased 11.2 percent, while total online bookings jumped 53 percent and now represent more than 10 percent of total volume. Amadeus' non-booking revenue rose 10.5 percent. On the e-commerce side, reservations in the E-Travel division grew 73 percent from 2003 levels, including 76 percent global growth for the Aergo online corporate booking tool. The company in 2004 also formed or expanded airline IT service agreements with such major international carriers as British Airways, Finnair, Qantas and South African Airways. Despite such growth, Amadeus fell short of company and analyst earnings targets due in part to the acquisition of European online travel portal Opodo, according to European press reports. The company last month entered "exclusive negotiations" with venture capital firms BC Partners and Cinven, which intend to create a new private parent company. Amadeus airline owners Air France, Iberia and Lufthansa each indicated they want to retain some level of equity (BTN, Jan. 17). Sabre Holdings, meanwhile, last week reported a 75 percent increase in earnings per share for 2004. Sabre executives cited profitability turnaround at Travelocity, ongoing cost reductions, a one-point market share gain, a slower rate of channel shift to Internet outlets and a return of travel demand. Total global bookings processed through the Sabre GDS in 2004 grew nearly 7 percent from 2003 levels, with most growth contributed by online channels. The company also claimed 250 new accounts for Travelocity Business in the fourth quarter alone, including such bigger companies as Aetna and General Dynamics. Revenues also increased for Sabre Airline Solutions. Sabre chairman and CEO Sam Gilliland said the unit's fourth quarter was the best since the Electronic Data Systems transaction in July 2001 (BTN, March 26, 2001). For 2005, Sabre projected 10 percent revenue growth. "We will continue to grow organically and be opportunistic in M&A activity," Gilliland said. Meanwhile, Cendant this week reported full-year earnings per share growth of 27 percent and total revenue growth of 10 percent, despite slightly lower earnings in the travel distribution sector, partially a result of the Orbitz acquisition. Ken Esterow, Cendant Travel Distribution Services executive vice president of supplier services, last week told BTN that the company recognizes the plight of beleaguered airlines and is working to tailor new agreements. "We have addressed and continue to address the question of GDS pricing," he said. "The distribution landscape is one that has its challenges, but we are more optimistic than ever given our asset portfolio. We will embrace change and innovate, technologically and economically."

767 Production Halt?

The 767 Tanker In today's WSJ - "Boeing Co. could be forced to decide whether to halt production of its 767 aircraft before the Air Force drafts a plan to potentially buy the model for use as aerial refueling planes." With orders for 25 more 767s, Boeing continues to market the plane. Each new 767 order gives Boeing about a month of breathing room. Here's a great line - "Regardless of the decision on 767 production, Mr. Stonecipher said, Boeing will compete for tankers and will have a plane that fits the Air Force's requirements, though it is an open question as to which model it will be. "We will be competitive, we will be there, no matter what the requirements are," he said. Opting to convert a different Boeing airliner would add development costs and time." Which aircraft might that be? The 787 perhaps?

Airbus Is World-Class, So Start Acting Like It!

The amazing 380 in UPS schema Great story in the Wall Street Journal about Airbus' success but its apparent inability to wean itself off European "launch aid".

Elton John on Air Tran

Elton John  Singer Elton John's face will begin appearing on 20 AirTran jets. The move is designed to promote AirTran's launch of satellite radio at each passenger seat. The airline says the XM Satellite Radio systems will offer more than 100 channels. -------------- Its about time - Frontier has ads on their planes, Ryan has ads in the cabin. Its great to see "out of the box" thinking in revenue generation. Moreover, 100 channels? That beats the crap we have to endure on planes now. I predict airlines get out of the on board entertainment business and pipe in everything within a few years. That means no more dumb movies you see over and over again. By your fourth flight you can lip sync the whole thing. Roll on Boeing Connexion to bring high speed internet to your seat. You could even respond to this blog from 30,000 feet! My idea of airlines moving away from providing entertainment is based on many years thinking about this subject. See http://www.iag-inc.com/media/ipec97.pdf - I started thinking about this in 1997. This is when the idea of an airplane having high speed access was "out there". I recall a gentleman from Pakistan Airways at the IPEC Conference saying to me that he could not understand why an airline would provide seat back entertainment (IFE) - he was frustrated because they had to offer food! Hey, either you get it or you don't.

Airlines protest hike in security fee in proposed budget

There is a proposal to increase the so-called September 11 security fee on airline tickets by three dollars, to 5.50 dollars per flight segment. One wonders how the travelling public in the US will react. After all, the agency getting this money has been lambasted in the media for its shoddy practices. You can view a survey on this matter at http://www.iag-inc.com - look for the TSA Survey link. This survey has been running continuously since 2004. Results may be viewed at www.iag-inc.com/tsa.cfm. The data seems to show broad dissatisfaction with airportv security in general. Inconsistent policies at airports - some require your shoes off while others don't - are passed off as ways to keep security threats "off balance". Travelers know better than that. The results are not a great endorsement of the TSA's performance. Even though they have improved their performance over the year according to respondents, a major proportion of travelers seem to be dissatisfied. Consequently, even though travelers will have to pay the fee - what else can they do? - their irritation with apparent incompetence will grow. There are very limited ways for travelers to deal with this though. Any overt action could lead to a traveler being added to the "do not fly list" or being harrassed by the TSA's staff even more. It certainly does not make for a more pleasant travel experience and adds nothing to confidence in government at work.

JetBlue inks deal to move to larger area at Boston Logan

By Addison Schonland The carrier presently occupies two gates in Terminal E, but beginning in May it expects to occupy five gates in Terminal C as well as 14 ticket counter positions. Starting in 2006, it will add one gate every six months over the next three years. It said it will invest $9 million to improve the facilities and concessions at the terminal. JetBlue currently offers 19 daily nonstop flights from Boston to Oakland, Long Beach, Denver, Ft. Lauderdale, Tampa, Ft. Myers and Orlando. The airline recently announced plans to add new daily nonstop service to Las Vegas and San Jose (Calif.) on May 3. --------- Just a thought - what restrictions are there for the 320 to fly across the North Atlantic? If the 757 does it from BOS, surely so can the 320. Ergo, how many months before we see JetBlue flying from BOS to Europe? This should scare the pants off AA and every Euro airline. As Jet Blue gets each new 190, it frees up a 320 for other things. The 190 will not be exclusively for new service. Many of these 190s will serve current markets better than a 320. That being the case, I think JetBlue will cast its sharp eyes on cities within the open skies regime. I pick AMS first. FRA next. Of course BOS means you have to look at the UK. AA's 757 goes into MAN....so that would be on the list too.

Low Cost LCCs doing Long Hauls

BUDGET AIRLINE OASIS AIMS TO BE LONG-HAUL SUCCESS 3 February 2005 / The Standard By Nicholas Zamiska and Danny Chung A fledgling Hong Kong budget airline is determined to succeed where few no-frills operators have yet dared to venture -- in the international long-haul market. By late this year, Oasis Hong Kong Airlines hopes to offer flights to about six leading cities not now served by Cathay Pacific Airways. Berlin and Cologne, Germany, are possibilities, as is Milan, Italy. "These budget long-haul airlines are going to start, probably in America and Europe, and Hong Kong has to have a place," chief executive Stephen Miller said Wednesday. Miller, a founder of Dragonair, said the controlling stake would be held by real estate investor Raymond Lee, chairman of Oasis Development Enterprises, and his wife. Allan Wong, chief executive of telephone manufacturer VTech, is also a major investor, he said. [snip] Miller said Oasis wants to lease either Boeing 747-400s or Airbus A340-300s, wide-body workhorses that handle much of the world's intercontinentaltraffic now. To keep its flights full, Oasis would auction off its tickets. Miller believes Oasis Hong Kong can create a whole new market of budget travelers who have put off visiting friends or family abroad before now because of the high cost. Cathay Pacific flies non-stop to five European destinations: London, Amsterdam, Frankfurt, Paris and Rome. A discounted round-trip to any one of them costs from HK$5,500 to HK$6,850. [snip] "People who are looking for a budget price at the moment have to go through destinations like Dubai and Singapore," Miller said. "Hong Kong then becomes somebody's else's spoke around the hub. This is the market we want to reclaim." AIRASIA TO LAUNCH LCC IN CHINA BY YEAR-END2 February 2005 / AFX Asia KUALA LUMPUR -- Malaysia's AirAsia, Asia's biggest and pioneering budget carrier said it plans to launch a low-cost venture in China by the end of 2005. "We have already begun talks with a few potential partners. It is progressing well. We definitely hope to begin operation by the end of 2005," a top company official told AFP on condition of anonymity.The official said the Chinese business venture would be similar to the Thai AirAsia model. Thai AirAsia is a joint venture between AirAsia, with 49 pct, and Thai telecommunications giant Shin Corp, owned by the family of Thai Prime Minister Thaksin Shinawatra, which holds 51 pct. The official said the planned China carrier would be based in southern China where most Malaysian business interests are located. "We will mount flights to China from Thailand and Malaysia," he added.