Bill To Repeal Wright Amendment Restrictions

Southwest just loves two congressmen from Texas who have introduced a bill that would, if passed, remove the Wright Amendment restrictions that limit Southwest Airlines' operations at its Dallas Love Field base. Last week, U.S. Reps. Jeb Hersarling, R-Dallas, and Sam Johnson, R-Plano, introduced the bill, which would allow airlines to operate anywhere in the United States from Love Field. Under a law introduced by House Majority Leader Jim Wright of Dallas in the late 1970s, airlines currently are restricted to flying within Texas and to neighboring states. It was a law designed to protect the young Dallas-Ft. Worth International Airport after deregulation. "This is a significant step toward the ultimate goal of opening the skies for greater access to low fares through unfettered airline competition," said Southwest Airlines in a statement. "In addition, these two Texas congressman recognize the importance of cracking the 26-year deadbolt that has artificially suppressed access to the Dallas-Ft. Worth market because of high air fares. Not everybody is happy about the idea of removing the restrictions, however. In a statement, American Airlines said. "This push by Southwest reflects the understandably selfish intentions of a company that today is roaming the halls of Congress seeking special favors. If Southwest were sincere about growing and competing, they would be flying from DFW Airport – and they wouldn’t need an act of Congress. We’re confident the community will not let Southwest risk the quality of life for North Texans just to preserve and expand their monopoly at Love Field." Southwest Airlines currently has a large majority of the gates at Dallas Love Field while American Airlines has three, which are unused, and other gates are available to other airlines. ------------- Its high time too!

Air Zimbabwe's Route Planning

Reuters reports - Zimbabwe's government has criticized the cash-strapped national airline for flying unviable routes, including one trip which saw an Air Zimbabwe jet fly 6,000 km (3,728 miles) from Dubai with a solitary passenger aboard. The official Herald newspaper on Monday quoted Transport and Communications Secretary Karikoga Kaseke as saying Air Zimbabwe, struggling with chronic fuel shortages caused by the country's acute economic crisis, was a victim of "inept management". Local media reported earlier this month that Air Zimbabwe's maiden flight to Dubai, a Boeing 737, left with 49 passengers on board and made the return flight with just one. "Our investigations have revealed that no proper market research was done before they (Air Zimbabwe) engaged on the Dubai trip," the Herald quoted Kaseke as saying. "It reflects the level of mediocrity of the management at Air Zimbabwe and it also reflects a management that has little knowledge of aviation, a management that acts on hearsay," he added. Kaseke and Air Zimbabwe officials could not immediately be reached for comment on Monday. Industry officials say Air Zimbabwe has also been forced to delay several flights in recent weeks because of fuel shortages dating back to 1999 which have worsened over the past month. The fuel crunch, together with shortages of foreign currency and basic commodities like sugar, cooking oil and milk, are part of an economic slide many blame on President Robert Mugabe's policies, including the seizure of white-owned farms for landless blacks. Kaseke denied the government, isolated from Western countries mainly over the land seizures, had forced Air Zimbabwe to fly routes to Asia and Arab countries under a "Look East" policy of boosting economic ties with those regions. Mugabe denies mismanaging the country since taking power at independence from Britain in 1980, and says the former colonial ruler has led an international assault on Zimbabwe's economy through sanctions applied in retaliation for the land redistribution program. ----- Oh boy.

U.S. Is Set to Test Missile Defenses Aboard Airlines

NYT reports - The tests are being financed by the Department of Homeland Security, which has been directed by Congress to move rapidly to take technology designed for military aircraft and adapt it so it can protect the nation's 6,800 commercial jets. It has so far invested $120 million in the testing effort, which is expected to last through next year. Yet even before the tests begin, some members of Congress, and several prominent aviation and terrorism experts, are questioning whether the rush to deploy this expensive new antiterrorism system makes sense. The concern is not just for the lives that would be lost in the shoot-down of a single plane, proponents say. It is for the enormous economic consequences that would result if the public were to lose confidence in flying. --------- It is really quite shocking that there would be opponents to this technology being deployed. As we all know, an attempt was made to shoot down an Israeli commercial jet in Kenya. Terrorists nearly destroy a DHL freighter over Baghdad. Numerous helicopters have been shot down over Iraq. Moreover, the Taliban was quite adept at shooting down Russian aircraft many years ago. So it’s not like these people don't know how to do the job. They have the training, the weapons and, most important, the will do it. Tragically, it will take another disaster for consensus to kick in. With TSA as inept as they are, they have managed to keep the commercial aviation system safe. There can be no doubt that terrorists have tried to breakthrough TSA - though we are unlikely to hear about it. It would be much easier to use a missile. The media would be all over such a disaster - allowing terrorists to further their nefarious goals. America's porous borders make it easy to come over, do the deed and run. Once an event like this happens, beside the obvious damage, it is likely the commercial aviation sector will undergo a collapse because nobody will trust the system's safety. Can you blame them? We think that running these tests is a great idea. Anything that protects the commercial aviation industry from further exogenous damage is good and if it also protects that industry’s customers, so much the better.

Wright Amendment repeal

ATW Online reports - The battle over opening up Dallas Love Field heated up yesterday as Texas Republican Congressmen Sam Johnson and Jeb Hensarling introduced legislation called the Right to Fly Act, which immediately would repeal the Wright Amendment.The Wright Amendment, which became law in 1979, restricts nonstop flights from Love Field to cities in Texas and seven other states in close proximity. It was designed to protect Dallas/Ft. Worth International Airport from competition from Love Field. If passed, Johnson and Hensarling said their legislation would result in lower fares because of increased competition between carriers. Southwest Airlines, which is headquartered at Love Field, obviously is very supportive of the Right to Fly Act. "This is a significant step toward the ultimate goal of opening the skies for greater access to low fares through unfettered airline competition. In addition, these two congressmen recognize the importance of cracking the 26-year deadbolt that has artificially suppressed access to the Dallas/Ft. Worth market because of high fares," the carrier said in a statement. American Airlines, which operates a large hub at DFW, disagreed and said it believes the proposal would result in a "disastrous setback" to North Texas growth and progress. "This is double whammy for North Texas," AA Executive VP Dan Garton said. "If Southwest gets their way again, both the economy and the environment will surely suffer. First, repealing the Wright Amendment will be a setback to the region's growth. Second, the inevitable and dramatic rise in air traffic at Love Field will harm the environment in the neighborhoods around the airport." Other Congressmen in Texas share American's point of view. Shortly after the Right to Fly Act was introduced, Republican Reps. Joe Barton and Kay Granger led several members of the North Texas congressional delegation in calling for Southwest to offer service from DFW. In addition, the airport reiterated its longstanding bid to Southwest to start some level of service there. Its offer includes free rent for a year and more than $22 million in incentives. DFW is hoping to have Southwest take over some of the gates idled by Delta Air Lines, which earlier this year dehubbed its operation at the airport. "Representative Sam Johnson this morning said at a news conference that this was an issue of airlines being able to have the freedom to fly wherever they wanted," Granger said in a statement. "He's dead wrong. This isn't a freedom issue. It's a local economy issue. There's an answer to this and it isn't repealing the Wright Amendment. The answer is Southwest Airlines moving to DFW where they will have room to expand and no restrictions." by Loren Farrar -------- Considering that nearly all the Texas-based Congressmen and women fly AA to DC, you need to read between the lines here. Thes representatives have Gold or better frequent flier status on AA. This means, you would think, that they are likely to be pre-disposed to AA's view. Whatever AA wants is what DFW wants - between them that is a LOT of power in the DFW Metroplex. To think that moving Southwest to DFW solves the problem is trite. Southwest has built a good business out of Love. Why should they be forced to move airports? Should then also have to leave from Midway and go to O'Hare? Southwest's model is to serve communities cheaply and often this means going with creative airport use. It is a model that has been copied very well in Europe by Ryan. So if its a local economy issue - then leave Southwest alone because they seem to be more successful than other US airline - and consistently so. AA says the removal of the Wright Amendment will be a "disastrous setback" to the North Texas economy - really? How? It might be disastrous to AA and DFW, but who else? It seems to us that the Wright Amendment hampers the region's growth now by limiting airline competition. The US commercial aviation industry has a phenomenon called the "Southwest Effect". This means that when Southwest starts service in a communnity air fares decline and traffic shoots up. How is it that of all the places Southwest flies, it cannot bring this effect to its own home city?

Boeing Wins Another Contract

Lion Airlines Will Boost Fleet, Buying 60 New Boeing Planes

[Subscription Required] By TIMOTHY MAPES Staff Reporter of THE WALL STREET JOURNAL May 26, 2005; Page A5

JAKARTA – Indonesian low-cost carrier Lion Mentari Airlines intends to spend $3.9 billion to buy 60 new Boeing Co. 737 aircraft as part of an ambitious plan to transform itself into a major player in Southeast Asia's increasingly crowded market for regional budget air travel, a spokesman for the Indonesian airline said.

The deal -- signed in Washington today during a state visit by Indonesian President Susilo Bambang Yudhoyono -- marks an important turning point for Indonesia's airline industry, which is finally starting to rebound after years of financial problems caused by currency volatility and declining tourist arrivals.

The deal's value of $3.9 billion breaks down to about $65 million per plane, or right in the middle of Boeing's list prices for its 737 models. Lion spokesman Hasyim Arsal Alhabsi said Lion officials also reviewed a competing offer from Airbus -- owned by European Aeronautic Defence & Space Co. and BAE Systems PLC -- but decided to go with Boeing because Lion already flies several Boeing models, and a unified fleet makes sense for maintenance and other purposes.

AIRBUS REDESIGNS A350

23 May 2005 / Aviation Week & Space Technology By Robert Wall, Michael Mecham and Andy Nativi TOULOUSE -- Airbus has again revised its plans for the A350, turning it from an A330-derivative to a new widebody in the face of rival Boeing's success with its 787. After first saying the existing A330/A340 family would suffice to compete with the 787, and last year amending that to projecting a mere derivative of the A330, the aircraft will now undergo a more dramatic transformation--a new development at a higher price. About "90% of the part numbers are going to be changed" over the current aircraft type, says Olivier Andries, A350 program manager. [snip] The development tab is expected to reach $5.5 billion, up from $4 billion only a few months ago. To ease the financial burden, Airbus' desire for European government funding is likely to grow. This would sharpen trade tensions with Washington, which has vowed to bring a World Trade Organization subsidy case if European governments grant so-called launch aid for the A350. Airbus says breakeven would occur at 400-500 production aircraft. Time pressure for A350 decisions has been building, not least for Airbus to avoid losing further competitions. Leahy contends that several airline decisions in which the 787 prevailed may have turned out differently if Airbus had a better candidate on offer. But the 787 isn't the only target. Andries says: "We are positioning our program to be a 777-200ER killer." Arriving at the current stage hasn't been easy. "The fact is, it has taken us an awful long time to get the airplane right," Leahy says. In the last 90 days, the aircraft has changed significantly, he notes, with improvements added to width, seat count and range performance. "We've changed the airplane three to four times" during that period, he says. The configuration was frozen about a month ago. The A350 should be developed and ready for operational use in 2010. Airbus argues the several-year lag over the 787 isn't a major concern. Its "availability matches the next replacement wave," says Laurent Rouaud, Airbus vice president for market forecast and research. A wave of MD-11, A340 and 777 replacements should emerge around 2011. A second wave will occur around 2017. [snip] Composites will comprise 39% of the A350: aluminum-lithium parts, 23%; steel, 14%; aluminum, 11%; titanium, 9% and other materials the balance. This has led to 17,600 lb. of weight reduction, Andries says. Composite use on the A380 is 20%. Leahy says the A350-800 will offer 258 seats in a two-class configuration--more than the A330--largely by moving the rear bulkhead aft, along with the avionics bay and crew rest area. With full passenger load, the range is expected to reach 8,200 naut. mi., and, Leahy claims, keep operating costs below the 787-800's. [snip] Cruise speed for the A350 is slated to be Mach 0.82, the 787's Mach 0.85. Airbus plays this down, saying it doesn't make a material difference. Airbus also says the A350 will be able to fly at Mach 0.83 with minimum drag impact. -------- Comments from Russel in Sydney, Australia o Olivier Andries said, "We are positioning our program to be a B777- 200ER killer". Yet, Airbus says that the A350 won't render the A330/340 Family obsolete. Are we supposed to believe that it is somehow possible for both those items to be true? o The article mentions two notable performance changes: A350-800 will do 8,200nm (rather than 8,600nm as advertised); and cruise speed will be M0.82 rather than a cruise speed hike that Airbus has promised. As for the cruise speed not making a difference vs M0.85 of the B787, what a load of rubbish. The longer the flight, the more damaging a lack of speed will be. o What is the 7,500nm A350-900 range all about? The A330-200 has about 1,000nm more range that the A330-300 (at the same MTOW). Yet, despite a stretch vs A330-300, the A350-900 will close the gap on the -800 to 700nm. That is counter-intuitive. The only thing that would seem to make sense, here, is that the -800 and -900 do not share the same MTOW. However, the article implies that they do (and for what its worth, so does Airbus). o The cost will continue to blow-out. Already US$5.5bn with a break-even of 400-500 airplanes, yet even in this article Leahy was speaking about even more internal changes. Furthermore, break-even at 400 frames for a high-composite widebody means that Airbus may need to have historically high production rates (like Boeing with the B787). If that occurs, then Airbus will indeed be putting a large puncture in their A380 forecast market. o "[Weight] is a significant driver of cash-operating costs." Well, then, there must be a few people at Airbus worried about the A380? That's the kind of argument that Boeing will put into their 747Adv brochures! ;-) o "Leahy claims maintenance costs would be higher on a non-bleed system because it requires the addition of electrical power-generation equipment." In that case, Airbus' next TRUE all-new airplane won't be more electrical. Let's wait and see. The article had me thinking about oeing's various still-borns, 7J7, 747Xs, Sonic Cruiser. For the first time I think Airbus is facing that kind of credibility issue with possibly strong reverberations around the industry: o It turns out that twin-jets are great for routes >5,000nm, afterall. o It turns out that the B787 is in a larger market than Airbus was expecting, damaging their A380 forecast. But then, anyone who could count never really believed their A380 forecast. o It turns out that >30% composites in an airframe is doable. o If M0.82 speed didn't have a "material impact", then why does the A380 need to go at M0.85? It would be cheaper to run at M0.82, particular when Airbus hasn't done a M0.85 airplane before. o It turns out that the A350 is getting so expensive that they do need to go to governments to get aid. Forgeard said that they didn't. I didn't want to annoy anyone, but I think it could turn into a fundamental problem for Airbus if they can't be more credible with this program.

SAS - First airline with Internet access on all Long-Hauls

SAS is the first airline to offer high-speed WiFi Internet access on all of its intercontinental flights, enabling passengers to access e-mail and the Internet - using Connexion. SAS Net Access service is installed in the airline's Airbus A340-300 and A330-300 aircraft operated to the U.S. and Asia. It can be accessed from all 261 seats on the aircraft. Every seat in business class and Economy Flex also has a power outlet. In order to access the service, a passenger must have a laptop or notebook computer with wireless LAN compatible with the 802.11a/b/g IEEE standard - which is the global standard. The service is priced the same as other Connexion services; $29.95 for unlimited use throughout the flight and may be paid for by credit card or with 5,000 EuroBonus (frequent flyer program) points. -------- So you can be 100% sure on SAS you are WiFi enabled and 50% sure on Lufthansa.

Lufthansa very happy with In-Flight WiFi

The service, offered through Connexion by Boeing, is available to and from almost all of Lufthansa's 19 Asia-Pacific destinations with more than 42 out of 80 aircraft in the long-haul fleet already equipped with the state-of-the- art technology. Customer satisfaction is very high. According to a study recently presented by Connexion, about 93 percent of around 625 users questioned are satisfied or very satisfied with the online service. The FlyNet Service consists of both the free Lufthansa FlyNet portal with comprehensive news, travel information and shopping facilities, as well as Internet access provided by the partner and service provider Connexion by Boeing. From what we have been able to gather, Connexion is currently on 65 aircraft worldwide. This fleet should be over 100 by year's end and possibly double that by early 2007. While still rather a small "footprint", it is growing. KLM also has in-flight Internet, using SITA's technology. Of the two, we understand that Connexion is faster - a crucial issue for users. More bandwidth is always better. Connexion has announced that it will be offering 4 TV channels soon - so it will be squeezing more bandwidth. If you select Lufthansa for your next long haul flight, you would be right there with 85% of the survey respondents who said this service would impact their airline choice in future. Lufthansa deserves kudos for being so smart in an industry known for being conservative. This technology is an easy way to sharply improve customer satisfaction without impacting cabin crew labor agreements. For the passenger this technology turns what is traditionally "dead time" into productive time - catching up on emails and any last minute information needed to ensure a successful trip. Is that worth $30? You bet. This is truly a winner.

Here they come!

We have been harping on this for some and here is the first entrant. The others (you know who they are) will be watching...cheap fares to Euroland - very cool. Fares in both the NY and FL markets will obviously have to be competitive. ------ Sterling Plans to Go Trans-Atlantic Agence France Presse reports that Danish low-fare leisure carrier Sterling says it plans to launch trans-Atlantic flights and is currently looking for aircraft with which to operate the routes. According to the report, the airline wants to launch flights from Scandinavia to the United States in the fall or spring of 2006. The carrier has mentioned destinations in Florida and New York City.

Short Cuts

Get ready for a new term – centrality. The connections among 3,883 communities with airports around the world were analyzed by a team of researchers led by Luis Amaral of Northwestern University. The results are being published in Tuesday's issue of Proceedings of the National Academy of Science. This new word describes a rating of the shortest paths connecting any two cities that involve a transfer at a particular city. A traveler can get from any of the cities to any other with an average of 4.4 flights, and more than half the communities are connected with four flights or fewer, the researchers found. The researchers found that the busiest locations are not always the most important for the network. The top cities in the world for nonstop flights to other places: Paris 250 other cities, followed by London 242; Frankfurt 237; Amsterdam 192 and Moscow 186.

Laboring under people costs

At a conference held this week, Mark Keifer, an associate principal at CRA International shared some interesting data. According to CRA, labor costs represent about 32% of the nation's major airline's operating costs, with defined-benefit retirement plans and lifetime insurance benefits often making up the lion's share. The obligations at legacy carriers amount to a $33 billion liability. Southwest and JetBlue offer employee-managed 401(k) plans to their personnel which means no lingering liabilities. Now it’s not surprising that Northwest has proposed firing nearly half its mechanics, in a bid to save $176 million a year. The remaining half has been asked to take a 26% pay cut. Mechanics are targets for job cuts because airlines can save money by outsourcing maintenance. So outsourcing hits the airline industry just as it does everyone else. Northwest is especially susceptible because of its ~30 year old DC9 fleet is “mechanic-dependent” – replacing these airplanes cuts maintenance costs. With high fuel costs, replacing these aircraft is very important. Modern engines burn much less fuel and provide more thrust with less noise. Airlines are a service industry. That inherently means a more labor intensive business with consequent cost implications. The legacy carriers have been stuck in a rut for a long time – aggressive unionized labor forces are not known for flexibility. The same thing is happening at Ford and GM. Automation solves some problems. Moving to a two-crew cockpit saved money on a relatively small base. The Internet saved money by reducing the need for call centers to handle reservations. Check-in kiosks reduce the need for check-in clerks. Outsourcing maintenance to places like Costa Rica can save a bundle. But how does an airline save on cabin crew costs? This is the point where the unionized work force meets the person that pays for the whole company. Increasingly this point has also become an area of discomfort. Seats are, frankly, awfully cramped and while not the cabin crew’s fault it does make the passenger less pleasantly disposed. There is no service to speak of – handing out a soda hardly seems to warrant the term service. A vending machine does the same without the hassle. So other than be around in case of an emergency, what exactly does the cabin crew do? If you could dream up a way to automate this, patent it and get the FAA’s approval, you would become very rich. Of course that would eliminate all the labor costs – you could still do a lot of savings at head office. Eliminating the people who decide on those seats and their pitch for example would save the airline more money and improve passenger disposition considerably.

U.S. House panel moves to shield Boeing from EADS

WASHINGTON (Reuters) - The U.S. House of Representatives' Armed Services Committee said on Friday it had voted in effect to shield Boeing Co. from competition from Europe's largest defense contractor for a projected $50 billion U.S. aerial-refueling aircraft market. The panel neither singled out nor named EADS, which wants to offer a tanker version of its Airbus A330 to the U.S. Air Force. Instead, it voted to bar the acquisition of a major weapons system from any foreign company that gets what the United States has protested as a government subsidy barred by the World Trade Organization, spokesman Josh Holly said. ------ Well that seems to make it pretty clear. Duncan Hunter (R CA) got his wish to "Buy America". EADS has been looking at sites in the US to complete assembly of their 330T. Airbus has been talking about launch aid for its 350 which has brought threats by the US to go to the WTO. Airbus and EADS have threatened to also file a complaint with the WTO. All this talk and the US Air Force still has no new tankers in sight.

The Merger Game starts

So USAirways and America West have decided to merge.... lets see what happens next. There is definitely going to be a next. Here is our prediction: • Mergers occur by alliances • Delta, Continental and Northwest hook up tighter – possibly merge to get the economies of scale and become a powerhouse • United, left out in the cold but with a great route network, is swallowed by American which promptly has huge indigestion (remember TWA?) but gets through it as Asian recoveries drive traffic higher • Star loses United to Oneworld • US fares start going up seriously, really seriously. We think 20% is likely as Southwest and JetBlue cannot fend of this consolidation power and see their own smart moves checkmated at every turn – pity the poor people of Chicago who see the sharpest and quickest fare increases • The industry experiences massive layoffs – especially among white collar managers, ground personnel (ramp especially) and maintenance • Travelers have less choice and pay more Then after a year or so, GE magically funds skilled & clever ex-airline managers who create startups. And the glorious chaos that is air travel in America starts its next evolution.

Blogger aboard the Diverted Alitalia Flight

Blogger Nick Genes was aboad the Alitalia flight that was diverted from Boston's Logan Airport to Bangor, Maine. He writes about the interesting sequence of events and some interesting insights on the whole story as well as some questions for the authorities. Two conclusions come to mind from this story - 1) The "watch-list" needs to be revamped or discarded for a better system. 2) The news is being increasingly reported by normal folk in their pajamas (a.k.a. bloggers).

Airbus confident in totally revised A350

ATW reports - Airbus Chief Commercial Officer John Leahy is confident he will be able to announce "triple digit" orders for the A350 at the Paris Air Show next month."We are in final talks with several companies. We'll have more than 100 firm orders in the order book for the A350. I don't want to say 200, because I don't want to be like somebody else and not be able to commit to it," he said in a reference to claims made by Boeing ahead of the 2004 Farnborough Air Show that it would have 200 787 commitments by year end, a target it missed by a few months. Speaking at the Airbus Technical Press Briefing in Toulouse yesterday, Leahy, who is recovering from a five-week absence owing to health problems, stressed that the A350 no longer is a derivative of the A330. "This is an all-new aircraft," he said. "Since December we improved width, range, seat costs, economics. . .We changed the aircraft three or four times in the past 90 days. We achieved an eight-tonne weight reduction through the use of new technologies. Sixty percent of the A350 structure is in advanced materials." ------- These past 90 days musy have been very busy - nights, too. This is a very impressive achievement. It wasn't so ong ago we thought the 350 was on the ropes - turns out we right in terms of the early 350 specs. This sounds like a new airplane. The "new materials" is likely to be metal as Airbus has not been too keen on plastics. As one Airbus contact mentioned - "Wait and see what happens to the first 787 that gets hit by a food vendor truck at the gate."

AIRBUS APPLIES FOR UK LAUNCH FUNDS FOR A350

19 May 2005 / Reuters LONDON -- Airbus says it has asked Britain for funding to develop its new A350 plane, despite U.S. warnings that such a move could trigger a transatlantic trade war with Europe. "An application has been made to the British government for repayable launch investment to secure this programme," Airbus said in a statement given out at the UK's Royal Aeronautical Society's annual dinner on Wednesday. A Boeing Co. spokesman said a swift response from Washington was likely. "The U.S. government has made it clear that application for launch aid for the A350 will lead immediately to litigation at the WTO," a Boeing spokesman said. The United States pulled out of a 1992 bilateral aviation trade agreement last year under which Airbus tapped European governments for a third of development funding for new aircraft. Washington also filed a complaint with the World Trade Organisation as a warning against Airbus again receiving such loans, which it sees as unfair subsidies. On Wednesday the EU's top trade negotiator reiterated that a fight at the WTO was not desirable. "Taking cases to the WTO is, in my view, not the appropriate way to deal with a dispute between two hugely successful companies for whom there is adequate room for both to prosper in the global market," European Union Trade Commissioner Peter Mandelson said. Washington took its aircraft subsidies case to the WTO worried that soft loans from EU states for the Airbus A350 could challenge Boeing's new 787 Dreamliner, due in 2008. It has already said it would reopen its case against the 25-nation EU bloc if member states approved fresh support for Airbus, opening what could be the largest commercial dispute ever. ------- Here we go then. If the UK has been asked for launch funds youmay reasonably assume the French and Germas have already agreed to the same. Boeing will therefore go to the WTO with Washington's backing. Of course Euroland does not want this to go to the WTO because they stand a good chance of losing. Even if they did lose countries like France would do the loans anyway. This would damage WTO credibility. This looks like a big dust up.

WestJet Launches Complimentary Live Television

WestJet, Bell ExpressVu and LiveTV today announced that all 39 of WestJet's Boeing 737-700 aircraft are now equipped with live satellite television. WestJet is the first airline in Canada to offer domestic in-flight TV service that can be individually controlled by each guest from their own seat. WestJet's satellite TV service offers a selection of 24 television channels from Bell ExpressVu in every seatback on all of WestJet's 737-700 aircraft, including news, sports, music, children's and leisure programming. In July 2004, WestJet obtained Supplemental Type Certificate (STC) approval from the Federal Aviation Administration in the United States as well as STC approval from Transport Canada allowing it to fly its first live satellite television-equipped Boeing Next-Generation 737-700 aircraft. Since then, most of the installations of the live satellite television system were done in Abbotsford, British Columbia. Air Canada has committed to install seat-back television aboard all of its mainline fleet and also is installing it in the airline's new Bombardier CRJ-705s, which will be heavily used by Air Canada Jazz on U.S. routes. -------- Another nail in the coffin of lousy airline provided content. Good for WestJet. Let the people watch what they want. Satisfaction goes up and loyalty grows. Just ask JetBlue.

Its Bandwidth Baby!

Boeing unit Connexion said it will provide about four live television channels to airline passengers using laptop computers on selected flights in a bid to expand its in-flight wireless Internet service. It hopes to popularize this service, which currently works on certain flights for about 11 airlines, by adding live TV news from programmers such as BBC World, CNBC, MSNBC, EuroNews and Eurosportnews at no extra charge. ------------ We have been pondering where this is all going. As you are aware, from reading this blog, we are big fans of WiFi, particularly the in-flight version. The question that we have been pondering is this: Who wins in this space? Current terrestrial vendors like Verizon will want to keep their customers - but they don't have the footprint in the sky. Boeing owns the in-flight customers because while you connect on Airline X, if that airline uses Connexion, it is Boeing that runs your credit card. Should Boeing be setting up roaming agreements with companies like Verizon? The sweet spot here is the business traveler. They want the connectivity and need the productivity. Everyone wants this customer. Of the two vendors descibed, which is more important? You would think the terrestrial... but maybe not... the most inelastic demand for WiFi will be in-flight where a person is "stuck" for hours. On the ground you have alternatives. So, our thinking is that perhaps for a frequent traveler, it might be better to sign up as a Boeing customer taking care of in-flight WiFi and have Boeing run the terrestrial hot spot roaming.

US FDA Warns Airline Food Supplier Gate Gourmet

An airline catering company must take major steps to clean its Honolulu location or risk the unit's closure after US health inspectors found live cockroaches, dirty utensils and an oozing, pink slime earlier this year, according to a letter released on Tuesday. Gate Gourmet, which provides food and beverages to a number of airlines at Honolulu Airport, also kept "dirty uncovered" trash cans near food, let workers handle ice cubes with bare hands, and did not keep food at proper temperatures, the Food and Drug Administration warned. In March, Chicago city inspectors closed a Gate Gourmet subsidiary's storage facility found to have unsanitary conditions and an expired business license. In 2003, the FDA found live insects, "slimy residue" and other problems at a Denver catering facility. The company said it quickly corrected those problems. ----- Yikes - as if airline food isn't bad enough already!Honolulu is a long way from anywhere and you will need to eat something on flights to & from. Even though this company has fixed the problems, seems it might be better to simply bring your own. We have always wondered about airline meals and now we know too much.

A new Fokker?

CH-Aviation reports Air France (AF/Paris CDG) and KLM (KL/Amsterdam) are reportedly considering an order for up to 80 new generation Fokker 70s. ----- This comes after these carriers were apparently in serious talks with Embraer. Obviously Euroland ties run deep - perhaps deep enough to re-start the Fokker line. The firm behind the airplane turned the Fokker name backwards to Rekkof. More info can be found using http://www.rekkof.nl/bannerframes/frame_home.htm If this actually happens it will truly be something returning from the dead. But then again this seems to be a common practice in the aviation world - how many PanAms were there?

Airbus cheaper, but Boeing more profitable says Air India

India Times reports -- MUMBAI: Even as the dust kicked up by the fierce verbal volley between aircraft manufacturer Airbus and Air-India — following the national carrier’s decision to opt for 50 Boeing planes — is still to settle, there is another piquant twist to the tale. A report by A-I’s techno-economic committee has revealed that the cost of buying 50 planes from Airbus was marginally cheaper compared with the Boeing offer, after taking into account the discounts offered by both. Why then did A-I decide to go ahead with Boeing? The answer lies in this very report which drew up a profitability projection for the airline over a 17-year period. As per the report, the Boeing deal is projected to yield A-I a net profit of about Rs 15,300 crore over a 17-year period as against a projected net profit of Rs 6,500 crore — about 50% less — if the airline had chosen to purchase an Airbus fleet. Boeing offered A-I a discount of Rs 21,716 crore for the 50 planes, resulting in a total project cost of Rs 30,700 crore against the catalogue price of Rs 52,416 crore. The discount offered by Airbus was about Rs 24,500 crore on a higher catalogue price of Rs 54,244 crore, translating into a marginally lower project cost of about Rs 29,700 crore for a fleet of 50 aircraft. A-I CMD V Thulasidas confirmed that the committee report had highlighted much higher profitability levels with a Boeing fleet as against an Airbus fleet. “We are still to start negotiations for the final pricing with Boeing. The discounts are what they had to offer, but we have to negotiate depending on what is acceptable to us,” he said. The airline has projected a net profit of Rs 3,995 crore from the eight Boeing ultra long-range (ULR) planes, a profit of about Rs 13,800 crore from 27 medium capacity long range (MCLR) B-class planes, and a net loss of Rs 3,577 crore from 15 MCLR A-class Boeing aircraft over the 17-year period. Another Rs 600-800 crore is expected in profits accruing on account of other aspects. With the Airbus fleet, the report had suggested a net loss of Rs 5.54 crore with the ULRs, a loss of about Rs 6,200 crore with MCLR (A Class) and a net profit of Rs 12,500 crore with the MCLR (B Class) aircraft. The first in-house report, based on the catalogue price, shows that A-I would have made a net loss of Rs 18,462 crore and Rs 28,350 crore with Boeing and Airbus planes respectively over the 17-year period. ----- The main source of difference in profitability between these aircraft must relate to operating efficiencies. If Boeing is showing such a material difference (and they will be held to their projections by all their airline customers), Boeing must be very confident in not only lower fuel burn but also massively lower maintenenace costs. Bear in mind the period is 17 years - a lot of tail end risk is at stake here. Boeing has repeated said the 787 is a game changer and the 777 (with GE engines) has proven to be a winner in terms of lowering fuel burn. While the 777 is a known quantity, the 787 has yet to prove itself. The Air India situation seems to be telling us that Boeing is highly confident they are capable of pulling off something rather amazing for their airline clients. The inputs on these calculations would be a fascinating read.

In-Flight WiFi - Rejoinder

In an early sampling of 1,600* passengers who have used the Connexion by Boeing service, research showed the following:

 

Two-thirds of passengers are very satisfied with the overall service

93 percent are either satisfied or very satisfied

One out of three customers surveyed has used the service two-to-four times already

The top four usage applications are sending and receiving e-mail, accessing the Internet for general information, accessing company intranets and using the Internet for financial service transactions

85 percent indicated the availability of high-speed Internet access would have an impact on their future choice of airlines

 

* Survey conducted in Asia, Europe and the US with a 40 percent response rate

-----------

IAG did not conduct this survey but these results support similar results IAG has received from its own surveys.  We remain convinced that in-flight Internet access is crucial for airlines to install as a means to improve net revenues. BTW a 40% response rate is awesome.  That alone speaks volumes.

US Airways, America West close to announcing merger deal

US Airways, America West close to announcing merger deal, reports say. US Airways and America West Airlines could complete merger talks by the end of this week, according to media reports. The airlines want to raise $500 million in new equity from several companies. Company spokespeople declined to comment. The airlines are also finalizing a loan from jetmaker Airbus, and in return they will order 20 new A350 jetliners.

Airline merger would use two well-established strategies: The potential merger of US Airways and America West Airlines combines the two chief restructuring tools used by the industry: bankruptcy and mergers, the Financial Times reports. Some observers say the deal won't work and compare it to "combining two one-legged men." However, people involved in the merger talks say the companies, if combined, could have more liquidity than any airline of comparable size.

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

Fuel - The biggest threat now

Delta expected to pay $1.22 per gallon for jet fuel in 2005, 30% more than a year ago. This year it has been paying $1.42 per gallon. Each penny increase costs Delta $25 million over the year, Delta is forced to pay $500 million more than budgeted if prices hold steady. "Sixty dollar oil takes everyone down," one industry executive says, referring to the traditional carriers. "It isn't just a question of who can afford gas, it is a question of who can afford the pension expenses and legacy costs that get flushed once in bankruptcy." William J. Rochelle III, a partner with Fulbright & Jaworski LLP in New York. -------- Which makes U.S. airlines pushing through their seventh fare increase since February so critical. American Airlines raised most of its domestic fares by $2 to $6 round trip, depending on the length of the flight. Then Delta raised most of its domestic fares by $10 to $20 round trip, but limited its one-way coach fare cap of $499. American then matched the higher fare boost on some routes. By last Friday evening, the other legacy majors matched American's and Delta's fare increases. So even if Southwest and JetBlue keep their fares lower, it seems these new prices will stick. They have to or there will be another bankruptcy real fast.

Pending USA Airbus 350 Order?

From CBS Marketwatch -- SAN FRANCISCO (MarketWatch) -- US Airways Group Inc. and America West Holdings Corp. hope to reach an agreement this week on a merger deal, according to a published report. The WSJ reported the companies also are near an agreement on a $250 million loan from Airbus in return for an order for about 20 of the new Airbus A350 model. Such an order would give Airbus its first North American customer for the A350 -- a competitor to Boeing Co.'s (BA: news, chart, profile) 787 Dreamliner, according to the report. ------------ Wow! USAirways is in Chapter 11 and gets to buy new airplanes? This pending merger is turning out to be quite a big deal. They want a very long range airplane that only is delivered after 2010. Currently US Airways has a long haul fleet of 762s and 330s. AWA has nothing like this, having burned their fingers badly when they tried this before with Japan service using second hand 747s from KLM. As these airlines merge it is generally accepted the combined company will become an Airbus fleet. Clearly Airbus is buying this 350 order - if it happens. How can anyone see it any other way? Boeing no doubt will have a field day with this news. It is certainly an odd story.

AA's view of the Wright Amendment

American's Chairman and CEO Gerald Arpey pledged to fight to preserve the law. The Wright Amendment "has made DFW the economic engine that powers this region and made this region the envy of many other communities around this country," Arpey said in an interview last week. "Bending that successful public policy to serve Southwest's interests I don't think would be a sensible thing to do." DFW airport itself commissioned a USD$100,000 study that says allowing Southwest to expand at Love Field would cost it 21 million passengers a year. The Wright Amendment only allows intrastate flights from Love Field if the planes have fewer than 57 seats, while larger planes can only fly to adjoining states. The law was modified in 1997 to allow flights to Alabama, Kansas and Mississippi. --------- We remain in the "get rid of it" side of the argument. Some analysts worry about traffic congestion at Love Field as AA tries to move in. Others worry about harming the DFW "economic engine". Our response is that a rule which protects an enterprise at the expense of the community it is located in is not a good thing. The same logic is used repeatedly by cities that want to new sports complex. This is simply not a fair taxation. Non-sports fans are forced to subsidize sports fans. It’s not fair. Similarly, in Dallas, it is not fair that travelers who can fly out of Love Field conveniently using Southwest (or any other carrier that serves it) have to be restricted. DFW plainly does not need protection anymore, so the economic engine argument is weak. It seems to be more an argument to protect American as they certainly will be hurt by Southwest competition. And to be consistent, we stay with our argument – this competition is a good thing and it should be allowed. Why should the good people of Dallas subsidize American?

Airlines' top-secret clubs keep elite customers loyal.

AirguideOnline.com reports - Airlines' top-secret clubs keep elite customers loyal. Some airlines are rewarding their best customers with memberships in new invitation-only clubs. These fliers wait in unmarked lounges, receive liberal upgrades and get personal attention. The clubs are so secretive that no airlines contacted would comment on them.

WiFi Update - Boingo goes Boeing

Boingo Wireless's deal with Connexion by Boeing is finally active. Boingo software clients can now log into the in-flight Wi-Fi service from Connexion. Boingo subscribers get one free in-flight connection for new monthly subscribers. Current subscribers still have to pay the usual fees, such as $30 for unlimited access on long flights. May 12 is the first year anniversary of Connexion service on Lufthansa. Apparently customer surveys show high satisfaction. If you fly Lufthansa flights equipped with Connexion service between May 17 to the 23 access is free. Book a seat now.

WSJ: Sabre Buys its UK Competitor

Sabre to Pay $1.08 Billion For U.K.'s Lastminute.com

[links require subscription] May 13, 2005; Page B3

Sabre Holdings Corp., the owner of online travel site Travelocity, agreed to purchase British rival Lastminute.com PLC for £577 million ($1.08 billion or €859.4 million) in cash.

Sabre, of Southlake, Texas, is offering 165 pence a share for Lastminute.com, a 7.8% premium to company's closing stock price in London Wednesday. Lastminute.com surged 45% Wednesday to 153 pence a share after the company said it received a takeover approach but didn't name the party. The shares rose 8% to close at 166 pence in Thursday trading.

Lastminute.com, one of the few British online companies to survive the burst of the dot-com bubble in 2000, sells flights and vacation packages over the Internet in 13 European countries. Sabre Chairman Sam Gilliland said the deal supports the U.S. company's strategy of expanding its international travel services.

Sabre said Lastminute's operations will be combined with its Travelocity Europe subsidiary. The U.S. company expects the acquisition to add to its earnings on an adjusted basis in 2006. "We expect this combination would provide us greater opportunity to profit from the fast-growing European online segment," Mr. Gilliland said.

SINGAPORE AIRLINES EXPECTS COMPENSATION FROM AIRBUS IF A380 DELAYED

AFX UK Focus reports - PARIS -- Singapore Airlines Ltd (SIA) expects to receive compensation from Airbus SAS should there be a delay to the expected delivery date for the first A380 superjumbo next year, company spokesman Franklin Auber said. "Contractually, when Airbus is committed to a delivery date, there is compensation for each month it is delayed," Auber said during a press conference. He stressed that SIA will still be the first airline to take delivery of the A380 in the event of a delay. "The first four aircraft built are set aside for Singapore Airlines. If our programme is shifted, then those of Emirates and Air France will be too," he said. SIA CEO Chew Choon Seng said yesterday that the company is expecting to bring the A380 into service in the fourth quarter of 2006 against initial expectations for mid-2006. He said SIA "hopes to receive it in the final quarter of 2006, but everything depends on progress in the testing programme and in certification". In total, SIA has ordered 10 A380s and has options on 15 others. Dubai-based airline Emirates has ordered 43 A380s and is the biggest customer for the plane. A spokesman for the group said it had received no information on a delay and that it still expected first delivery in October 2006, for services beginning in November. He said Emirates will insist the delivery date is respected, and will have rights to compensation should that prove impossible. A spokeswoman for Airbus confirmed that SIA's first delivery is expected in the second half, while Emirates will receive theirs "by the end of 2006". She declined to comment on any contractual obligations regarding compensation for late delivery. ------- So SQ has been told of the delay and likely gets compensation. But Emirates expects to get its deliveries on time. This is going to get interesting.

Bill Gates: Apple iPod success unlikely to last

When this man speaks, everyone listens. So they should. Why bring this iPOD issue up on this blog you might well ask? We have discovered that Delta Beta has come up with a means for people to download content in-flight to portable devices - like their iPODs. How cool is that? So you might be flying along at 35,000 feet and browsing the web using the seatback system and then download some songs for your listening pleasure. Now this is important because you can download content using a fast connection - what you download takes a lot less time to store than to enjoy. You can leverage time. Now imagine.... if you get asked to maybe complete a short survey in-flight and upon completion of said survey, you get to download music or watch a movie. As a consumer your time is valuable and you will be paid for just sitting there. Today you are bombarded with silly ads and so-so content.....soon you might drive the content being delivered.

EYE SCANNING BEGINS AT ORLANDO AIRPORT

People at Orlando International Airport will have both irises scanned at special computers to determine their identity. The Airport Access Control Pilot Program or AACPP is a first of its kind, according to the report. "Employees irises will be enrolled for the additional layer of security." -------- Hmmmm... is this a good thing? Better security always is, but it will be interesting to see how this 90 day experiment goes. Each person has to have both irises scanned. That means the system needs to know who your are first - meaning you have to add your irises to the database. The solution seems to be moving towards a trusted traveler program. If, by having your irises "known" beforehand, you avoid the TSA lines by scanning, then this might be a very good thing.

Pensions - too risky for everyone?

United Airlines is having all kinds of mud tossed its way over their decision to hand over their pensions to the government. People in the US are becoming more aware of how fragile their social security is becoming. Maybe the lesson here is rather simple. Pensions are not good for the giver or the receiver. Since pension obligations can be handed off and even social security is weak, Americans might want to consider how important alternatives are. US federal government employees are not subject to the same risk – Member of Congress included. They are protected outside the federal system. This is a good time then to consider that the only way to protect retirement assets is not to have a pension at all – a 401K is much better and is yours. Next, the idea of having part of your social security invested outside the federal government becomes ever more attractive. Privatization may be the only way to protect yourself through maximizing returns – if you took a portion of your social security and put it into a mutual fund it would grow faster than leaving it in the hands of the government. Like somebody said, the worst thing you can do is send your money to Washington.

A Horrible First Quarter

From ATW (edited) - With soft fares and rising oil prices the news was going to be bad. For the quarter ended March 31, the 11 large US airlines posted a total net loss of $3.2 billion, more than double the $1.54 billion shed in the year-ago period. Two airlines, Delta and United, account for 2/3 owing to special charges related to their respective restructurings. Three airlines were profitable on a net basis during the quarter: America West, JetBlue and Southwest, predictably low-cost carriers. Earnings for the three totaled $116.6 million. Among the legacy carriers, American did the best job of repositioning itself and posted an operating profit ($23 million) while Continental, Delta, Northwest and United would have been unprofitable on the operating level even at last year's fuel prices. Yields declined and cramming more people into cabins permitted unit revenue for the group to rise slightly on a 3.6-point gain in load factor to 75.4%. This pushed operating revenues up 5.1% to $22.95 billion. Operating expenses climbed 8.7% to $24.7 billion owing to fuel costs and special charges, and the aggregate operating loss of $1.76 billion was widened from $897.4 million last year. More than half of the operating loss ($957 million) belonged to Delta. ----- Delta sounds very, very ill. The news for American seems much better. One would think the legacy carriers have cut out all the fat, half the muscle and in some cases the bone. How is it that American managed to become so much more efficient while Delta and Continental cannot seem to do the same? United clearly has reached a situation where it must shrink to survive. USAirways - well what can we say that has not been said before numerous times?

United can axe pensions - 0thers to follow?

ATW reports - United Airlines' bid to terminate and replace its pension plans was approved by a US Bankruptcy Court judge late Monday.According to the Associated Press, United will save roughly $645 million a year with the move, which is part of the $2 billion in annual savings it repeatedly has said it needs to emerge from Chapter 11. Late last month, the carrier reached an agreement with the Pension Benefit Guaranty Corp. that would allow it to terminate all of its defined benefit pension plans. Under terms of the agreement, the agency will end and become trustee of the company's four largest pension plans in exchange for securities from the carrier with a face value of $1.5 billion (ATWOnline, April 29). According to PBGC, United's pension plans for its unions are underfunded by $9.8 billion on a termination basis, $6.6 billion of which is guaranteed by the agency. The unions strongly opposed the plan and some warned of strike action if the judge approved it. by Loren Farrar ----- If th employees strike - or even threaten to strike - UAL will see bookings drop. Since airlines live for the upfront cashflow more than just about any business, this is a very dangerous situation. Clearly United must and will shrink. But union action may kill this airline as surely as union action eventually killed Eastern. The flight attendants and mechanics unions have fiercely opposed bringing the PBGC into the picture and threatened such a move could lead to a showdown with management. The PBGC has assumed a huge role in the airline industry since it also took on the pension plans of US Airways. This is a volatile situation fraught with risk. The airline needs its people to keep the machine running and the employees need the machine running just as much. Only the airline might need less people than it has. This is going to be a tough time. Dan Ackerman at Forbes.com points out that companies are less likley to be offering pensions in the future. He states, "UAL's move is expected to spur similar actions by other so-called legacy carriers among the airlines, which are squeezed by high costs, competition from airlines without substantial pension obligations and, lately, by rising fuel costs." The airline industry already has the second-most beneficiaries of any industry covered by the PBGC guaranties he also points out. So with Delta now hovering around Chapter 11, there may be another pesnion fund about to be terminated.

SQ cancels 340-500s?

The link from Singapore Airlines' Press Release as the world's largest 777 operator, shows something very interesting. Options for A340-500 have apparently been cancelled. Firm A340-500 orders also show 0. In 1998 SQ ordered 5 345-500s and optioned 5 more. Could this be an indication on the 777-200LR or SQ is done with expanding ULR routes? We bet its the 772LR. SQ cabin crews wear heart monitors on ultra long hauls. There is some concern among the unions about the impact on crews' health on ultra longhauls.

Aircraft Type	Engine	In Fleet	Firm Order	Option/Purchase
B747-400	PW4056	27	0	0
B777-200ER	Rolls Royce Trent 892	15	0	0
B777-300	Rolls Royce Trent 892	12	0	0
B777-200	Rolls Royce Trent 884	31	0	0
B777-300ER	GE90-115b	0	19	13
A340-500	Rolls Royce Trent 553	5	0	0
A380-800	Rolls-Royce Trent 900	-	10	15
Total	90	29	28

Raytheon & EADS join forces

WSJ reports - As it pursues a U.S. partner for Air Force aerial-refueling planes, European Aeronautic Defence & Space Co. is expected to announce today that it is teaming up with Raytheon Co. to bid on a separate Pentagon contract for Army transport aircraft. ----- This makes the game much more serious. EADS has been looking seriously at a US location for building or completing the 330T.

Discounters Cross the Atlantic

WSJ reports that LTU and Eurofly are launching flights to NY from Europe this summer..."with prices that start a few hundred dollars cheaper than competitors". Fares have started to go up so these new fares are going to have an impact. Article goes on to state that the industry is watching LCCs who might follow on in this market. We have stated on this blog that we believe JetBlue and Ryan are potential players. Although overseas flying is more complex, the challenges can be overcome. If the fares become so attractive, then the LCCs are likely to try it.

Qantas Fleet Updates

ATW reports - Qantas has widened its fleet restructuring plans to include the 787 and A350. CFO Peter Gregg told ATWOnline that the airline is "evaluating 777-300/-200 and 787-3/-9 and A340-600/A350 combinations" to replace its 747-400s/-300s, 767s and A330s. Qantas is expected to place an order for 60 aircraft in the second half of 2005, but Gregg watered down speculation that an order may come out of a May board meeting. "We will only be updating the board," he told this website. The competition originally focused just on the 777/A340 as a replacement for 747s that are not being replaced by A380s, of which the airline has 10 on order. Gregg recently was given fleet responsibility and immediately widened the evaluation to include replacing the carrier's 767s in order to have a more comprehensive fleet strategy. He also pointed out that Qantas may exercise options for more A380s as part of its fleet plan. He confirmed that the airline is looking at the 777-200LR for London-Sydney nonstop flights but said concerns still exist relating to operating the type nonstop only in one direction. Boeing is due to set world payload/range records with the 777-200LR in July and a number of airlines are waiting for the manufacturer to confirm fuel burn gains. While Gregg was coy on the subject, ATWOnline understands that Qantas has delivery positions protected for both Boeing and Airbus models. by Geoffrey Thomas --------- This is going to be another serious fight for Airbus and Boeing. Airbus' success (330 & 380) at QF must have hurt Boeing, its traditional supplier. Recent orders won by Boeing's 787/777 approach will have taught Airbus how Boeing is likely to approach this order.

More on Air India's recent order

The link is to a reasoned breakdown of the situation at Air India. Good reading and from the Indian perspective.

In-Flight Internet Crosses the Pacific

IDG reports - Japan Airlines (JAL) will start offering Boeing's in-flight Internet service on flights between Tokyo and New York this week, the first time the service will be available for transpacific travel, the airline says. -------- This is great news for US-Japan travelers. Service will be available on alternate days on flights JL005/JL006, with the service becoming available daily by the end of June. prices are the usual $30 for the whole flight and $10 for the first 30 minutes and 25c/min after that.

Air India's Boeing order based on fear of backlash from U.S..

Air India's Boeing order based on fear of backlash from U.S.. Air India ordered Boeing jets instead of those made by Airbus because the Indian government feared backlash from the U.S., the Financial Times reports, quoting an unnamed Indian government official. U.S. officials have asked Indian leaders to create a "level playing field" for American corporations and have complained that most of India's manufacturing imports come from Asia. However, India's civil aviation minister said trade considerations did not influence the airline's order.

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

A350 gets a lift?

Reuters reported last week that Emirates was going to announce an order for 50 of Airbus 350 aircraft. Now there is this denial - "Dubai-based airline Emirates has denied a press report that it had decided to make a 6 bln usd (4.6 bln eur) order for 50 Airbus A350s." ------- Really? Northwest also went into early denial about its 787 order which was eventually announced. Therefore it is probably true that this order will be announced and it explains Mr. Leahy's confidence that he will have 50 orders for the 350 by the Paris Show. On the other hand, might this be the only order? It would be a great order for the 350 which is in dire need of customer support. But it also highlights a rising dependency between Emirates and Airbus.

Blogging & Calling from 36,000 feet over Iceland

In case this is new to you (what planet have you been hiding on?)....in-flight WiFi is here NOW. Yes you can be productive and even entertained while flying - click on the link to read this.

A whole LOT of 787s

Seattle PI reports that despite intense lobbying by France, Germany and Britain, the national airline of Poland will buy Boeing's 787 rather than a competing jet made by Airbus. ------- This follows established Polish loyalty to the US - buying American fighters and joining in the Iraqi war. The Polish government owns 68% of LOT and one can imagine the pressure the French, Germans and British have brought to bear in favor of Airbus. If formally announced, this order is a severe blow to Airbus' 350 program. Although it is only 6 aircraft, Airbus could not have a more compliant situation. If, even with the intense Euroland pressure, LOT still wants the 787, the 350 program is in an awful situation. Airbus contends they will have 50 orders by the Paris air show and 100 by years end. Let’s assume that ILFC is a buyer of the 350. Who would they lease this aircraft to? It appears that airlines which have been given the sales pitch of 787 vs 350 clearly see the 787 as the game-changer Boeing says it is. It is possible that Air France and Lufthansa might have to order the 350. It would seem that this is the time for Airbus to have sleepless nights figuring out a next step. In strategic thinking (if there is such a thing at airlines), the major point appears to be that airlines agree more with Boeing that point to point is where the business is going. This is why people were comparing the 787 with the 380 – the manufacturers have fundamentally different views of where the business is going. Based on the order flow this year, Boeing’s argument seems to be gaining more traction. This does not mean that there is no room for the 380 – there is, especially at constrained airports like Heathrow. Using the British case, airlines could reduce the dependence on Heathrow by flying 787s into other UK airports that simultaneously remove constraints at Heathrow while offering better (local) service to British travelers. Consequently, BA is more likely to look at the 787 to replace its 757 & 767 fleets since the new airplane handles both types of work. BA is the least likely Euroland airline to submit to any political pressure. That is why LOT’s possible order is so important as they are highly subject to Euroland pressure and still seem to want the 787. Checkmate 350?

Wrighting a wrong

You have heard about the Wright Amendment - if you have not, why are you even reading this blog? This amendment was created to protect DFW from competition from Love Field in downtown Dallas and named after Jim Wright, its creator. This law is 26 years old. Well DFW is now the 2nd busiest airport in the world. Does it still need protection? Of course not! Southwest, the pluckiest airline in the world operates out of Love and is limited to where it can fly from Love (limited flights to Texas and adjacent states). The link above is a great place to learn more about this. Bottom line? Repeal the Amendment and watch airfares out of DFW drop like a stone. It may not be what American wants - now that they have pushed Delta out of DFW and have a virtual monopoly. But what do the people of Texas want? We bet they also want to see the Amendment repealed. The idea was to protect DFW not American Airlines. DFW has thrived and no longer needs protection. Now its time to protect Texas air travelers, especially those living in Dallas.

Northwest Airlines Orders Boeing 787

Northwest Airlines just announced it has ordered 18 Boeing 787 twinjet airliners to support the carrier's long-term fleet renewal program. Initial deliveries of the 787 will begin in August 2008. Northwest also holds options and purchase rights for an additional 50 aircraft. ----- Total 787 order book now is 255. The 787 has cleaned the A350's clock.... how much longer can Airbus stay with their current 350 design?

Japanese government, companies team up to develop passenger jets.

Japanese government, companies team up to develop passenger jets. Japanese companies are teaming up with the country's government to develop commercial jetliners, Japan Times reports. The project is in its early stages, and planes will not be built for years. A team of engineers has been working on the project at Mitsubishi Heavy Industries' facilities since 2003. Asia expected to drive sale of jetliners: Asian airlines are ordering more jetliners as the region's booming economy boosts demand for air travel. In the next decade, Asian companies are expected to purchase more than 800 planes.

Japan plays large role in development, assembly of new Boeing jetliner. Three Japanese manufacturing conglomerates will design and build 35% of the Boeing 787, the Seattle Times reports. This marks the first time Boeing has outsourced the design and assembly of a new jetliner's wings. Japan is expected to spend $1.6 billion on development for the 787.

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

Airbus to postpone deliveries of A380 until second half of 2006.

Airbus to postpone deliveries of A380 until second half of 2006, report says. Airlines say Airbus will delay deliveries of its A380 superjumbo jet until the second half of 2006, the Wall Street Journal reports. The manufacturer previously expected to deliver the planes in the first half of the year. Airbus would not comment on the delays. Engineers say efforts to reduce the weight of the plane and technical issues are stalling the program. They added that the delays do not signal fundamental problems with the plane.

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

The evolving GDS channels

From Richard Eastman: 1. The legacy carriers are going to experiment with the G2 and ITA new entrant GDS channels. 2. The legacy carriers continue to justify the experiments on the basis of offering a low cost alternative; the “new entrant” GDSs continue to claim that they offer a technologically better alternative; the “traditional” GDSs continue to remind users that theirs is a broader, more diversified channel that provides a lower total-cost solution; and the special interest groups are contriving scenarios to generate fear and chaos among intermediaries and users to ensure continuation of the established business processes. 3. As much as the legacy carriers would like to emulate the lower cost base of the new entrant low cost carriers … to use the lower cost technologies and expand their distribution alternatives – it cannot happen with any semblance of “fast” because the legacy carriers remain encumbered by the organizational roadblocks created by the onion-layered information technology processes inherited from their 1960’s origins and entrenched institutional memory. 4. The current experimentation process appears headed toward a model which remains largely unrecognized … a distribution model in which bulk and volume buyers will totally by-pass both “traditional” and “new entrant” GDSs to effect direct purchase from the vendor hosts – packaging travel product transparently and opaquely “on the fly” in response to buyer or user needs. The GDS of the future will be relegated to packaging for or dealing with buyers that cannot generate enough collective purchasing power to deal direct. This new model will evolve for the very reason the new entrant GDSs claim as their current advantage – lower cost ubiquitous technology. As the airlines learn to implement this technology within their own business processes, the value of an intermediary technology service goes away. 5. The real value of intermediaries in travel will remain … in knowledge and/or packaging. The knowledge of people in the “how” and “where” to buy, sell, connect, integrate, and otherwise enable travel packaging for buyers – mostly via real-time online interactive digital dialog using predefined business rules and/or agreements will become the primary business of intermediaries. There will be a sizeable role in dealing with exceptions - those things that fall outside of the established business rule set - but the transactional and operational functions of product distribution and settlement will all be automated through interactive real-time direct digital linkages.

Airlines to ask for more passenger info

You don't have to give it, but it could help you... In coming weeks, the Transportation Security Administration plans to require airlines to solicit the information. Passengers do not have to provide it, though if they don’t there’s a better chance they’ll have to undergo more stringent screening at the airport, Justin Oberman, the TSA official in charge of the program, said Wednesday. Oberman said having passengers’ full names and birth dates will make it less likely that they’ll be confused with people who are known or suspected terrorists. “Far fewer people will be inconvenienced than they are today,” Oberman said. Such confusion has brought the TSA much criticism. Sen. Edward M. Kennedy, D-Mass., is among those whose name matched someone on a watch list. ---------- What took these guys so long? Of course this is necessary... we all want to travel safely. And there are probably good reasons for Ted's name being on the list. I don't want him to drive. (I could not resist)

Air India's Order makes sparks fly!

War of Words between Airbus and Air-India A war of words is taking place between Airbus and Air-India ever since Boeing announced its major long-haul aircraft order win from the state-owned carrier. According to the Hindustan Times on Monday, Air-India responded to criticism from Airbus over the Boeing decision by saying that the European aircraft manufacturer did not make a proper presentation before Air-India's board, but that it was given the opportunity to do so. "The issues raised by Airbus are malicious and baseless," Air-India spokesperson Jatinder Bhargava told the Hindustan Times. "The process of finalizing the contract was absolutely fair and transparent." Air-India was responding to criticism from Airbus that it had not been given fair treatment, a complaint Airbus reportedly has taken to the Indian government, which must approve the Boeing order before it goes through. Airbus wants the decision to be reviewed and says that it was not permitted to make a presentation on the airline's new proposed A350, which it has designed to compete with Boeing's 787. "We are not disappointed, but astonished," Airbus Vice President Nigel Harwood was quoted as saying by the Press Trust of India. "We were not given fair and equal treatment. We were not given a chance to make a presentation on the A350 whereas Boeing made their case on 787s, which will not fly before 2007. That goes contrary to tender conditionalities" Airbus says only it could have delivered all the aircraft Air-India requires on time, as the Boeing 787 is still several years away from entering commercial service.

Accenture Survey

ACCENTURE, the management consultants have come up with some interesting statistics as to the way that people in commerce arrange their travel. In a survey of more than 450 UK business travellers, they found that 53% organise their movements online, compared to 47% who did so in 2003, when Accenture first fielded the survey. In contrast, only 27% reported that their preferred booking method is by telephone with a live agent, down from 41% in 2003. Additionally, 46% of respondents say they have used airport kiosks to check in and almost three-quarters (72%) of those who have used kiosks said they did so largely for their convenience. According to the survey, respondents continue to prefer major network carriers for business travel (cited by 55%), and they use both major network carriers and low-cost airlines for personal travel in equal amounts. At the same time, however, almost two-thirds (63%) of respondents said they expect their use of low-cost air carriers to increase or remain the same over the next six months. In addition, 46% said they would increase their usage of low-cost carriers, if they offered more flights into main airports. -------- Of course you fly a network carrier when your client is paying for your convenience! And when its your dollar, the LCC is the way to go. The results are completely logical. Travelers will make increased use of ANY enabling technology that makes the increasingly depressing travel experience better.

Randy Baseler blog

We only discovered this today - Randy Baseler at Boeing has a blog! While its contents are probably vetted by PR first, it nonetheless gives his perspectives. This is a great idea - we would love to read John Leahy at Airbus' blog, if he has one.

Embraer Throws its Hat in the VLJ Ring

Embraer announced today an new very light jet (VLJ) and a new light jet to spice up its line of jets.

The re-opening of the Imam Khomeini International Airport at Tehran.

The re-opening of the Imam Khomeini International Airport at Tehran, virtually 12 months to the day after the US$400m project was closed by revolutionary guards 24 hours after its official opening. A political hot potato it is 30 miles south of the capital. When flights began on Saturday (30 April) officials said all international services will be switched from the current Mehrabad airport by March 2006. http://www.iranair.com

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

Airports prepare, upgrade for Airbus superjumbo jet.

Airports prepare, upgrade for Airbus superjumbo jet. Airports around the world are working to accommodate the Airbus A380 superjumbo jet, the New York Times reports. Officials say the plane with be something of a burden, unloading hundreds of passengers into airports at once. Airports are also buttressing their runways for the plane, which can weigh 1.2 million pounds when it takes off. The plane will enter service next year.

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

Airlines consider how to adjust if cell phone ban is lifted.

Airlines consider how to adjust if cell phone ban is lifted. Airlines are considering how they will adapt if government regulators decide to lift the in-flight ban on cell phones, the San Francisco Chronicle reports. They are considering phone and no-phone sections and etiquette rules. The Federal Communications Commission is taking comments on the cell-phone issue through May 27.

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