OnAir with CEO George Cooper

We interviewed OnAir's CEO George Cooper today. Created out of previous in-flight communications parts, like Tenzing, OnAir has evolved into a group owned in part by SITA. The firm has worked with over 60 airlines in previous guises and delivered services on about 1,200 planes. The interview and IAG's take are provided in the IAGPortal.

Northwest to chart new course with Compass

ATW -- Northwest Airlines expects to have its new Regional carrier, now named Compass Airlines, up and running by June, based on a filing with the US Dept. of Transportation asking DOT to transfer Independence Air's operating certificate to Compass. NWA acquired defunct Independence Air's certificate earlier this month.Northwest asked its pilots union last fall for permission to create a wholly owned regional subsidiary under the working name of NewCo that would operate 70-seat regional jets (ATWOnline, Oct. 14, 2005). "To operate at a profit, we must invest in these aircraft and we must do so quickly," President and CEO Doug Steenland told employees in January. "We have a need for these aircraft."

A company spokesperson would not comment on the aircraft selection process, but according to DOT filings and press reports, Northwest is eyeing CRJ900s or Embraer 175s as the choice for the Compass fleet. NWA pilots are in the process of ratifying an agreement that will permit Compass to operate 76-seat RJs using pilots furloughed from the mainline. The Associated Press reported that the new carrier could have as many as 36 jets flying within five years.
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Lets hope there is no bad karma attached to the certificate.  This is going to be a very interesting experiment to watch.

Interesting link on the barnading of this name exists here: Click

Hitwise UK Report

Interesting data from Hitwise UK.

Top 10 Upstream Categories 1. Computers and Internet 50.9% 2. Computers and Internet - Search Engines 44.4% 3. Travel 28.4% 4. Travel - Destinations and Accommodation 17.3% 5. Travel - Agencies 7.0% 6. Travel - Transport 3.0% 7. Shopping and Classifieds 3.0% 8. Business and Finance 2.9% 9. Entertainment 2.1% 10. Computers and Internet - Email Services 2.1%

Top 10 Downstream Categories 1. Travel 47.2% 2. Travel - Destinations and Accommodation 27.2% 3. Computers and Internet 13.9% 4. Travel - Agencies 11.5% 5. Computers and Internet - Search Engines 7.3% 6. Business and Finance 7.1% 7. Shopping and Classifieds 4.9% 8. Travel - Maps 4.6% 9. Entertainment 3.8% 10. Travel - Transport 3.1%

Age old adage holds true?

Interesting piece in the LA Times - click about Singapore Airlines and their high service levels. Some key points: - Airlines focus on "front-of-the-plane" passengers because they can generate 70 percent of a flight's profit even though they fill only about 30 percent of the airplane's space. - Singapore Airline's busiest routes -- between the United States. and Singapore are 86% full. - Singapore Air's lofty image has enabled it to largely avoid competing on price and to draw long-distance travelers from other airlines as it flies to 34 countries. Emirates and Cathay are both following this path. The big question has always been; how big is this market to make it worth the hunt? Based on Singapore's experience it seems rather bigger than we guessed. With a very high load factor, and given the fact that Singapore is not likely the destination for much of this traffic, there is broad demand from the US to Asia. Bear in mind this airline is building its ultra long non-stop service where on-board attention becomes much more important. So it seems the age old adage has merit with the following qualifier: Air travel is a service industry that rewards high service levels provided you are talking of long haul flights, ideally connecting through a hub. Another tidbit - it helps if the servicer provider is non-Western (ideally Asian) because Western cultures are simply not as service oriented. Analysis of passenger service ratings on the US Department of Commerce's In-Flight Survey a number of years ago (www.http://tinet.ita.doc.gov/) showed that passengers (both American and non-American residents) rated service higher on Japanese than on American carriers. In the Japanese culture providing a service is an honorable and respectable activity while in America servicer providers are often treated less respectfully. We're trying hard to be careful here. Flight attendants can tell their story better than we can. But we think from the servicer provider point of view (flight attendant) they too might say that they are treated differently by passengers from different cultures. Now we await the comments.

787 success - An opportunity for Long Beach?

The 787s amazing success is a story worthy of a book. ATW is selling this book in case you're looking for one. Unfortunately the book is being outdated with new news – but that’s why you have this blog!

So, inquiring minds are pondering, how does Boeing handle this 787 demand? They have a skilled pool of people in Long Beach building the C-17 and that program looks like being in the skids, might it be time to think of adding a 787 line in California? No doubt Boeing would get all kinds of help from their Congressional delegation – which is the largest. It would also be of great help, so to speak, if the US Air Force starts evaluating the 787 for its own needs in terms of replacements. We’re thinking tankers and EW here. See our story about the sad 767-400 below.

Yes the 777 is bigger and may offer good capacity (777LR for example). But the 787 is more state of the art and could give the Air Force better options. Given the buying cycles the USAF has; its 135s are very, very, very old (even by Northwest Airlines standards). The 787-10 just might be better as a military airframe than the 777LR.

It sure looks like the stars are lined up for Boeing. What a great set of challenges to have to face.

787 getting another boost?

Reuters -- Qantas Airways is very likely to exercise its option to buy another 50 Boeing 787 Dreamliner jets on top of an existing order of 65 planes, the company's chief financial officer said. --------- Production slots now open when? 2020? This is remarkable. Boeing has created a fantastic plastic monster plane.

Delta's bleeding

Delta Plans to Cut 1,000 Manager Jobs Washington Post -- Delta Air Lines Inc., the nation's third-largest carrier, plans to cut some 1,000 management jobs in an effort to reduce costs as part of its Chapter 11 bankruptcy reorganization. The move, disclosed in a memo to employees last week, comes as Delta is trying to shed some $3 billion in annual costs. The cuts are part of a $200 million plan to reduce the airline's management overhead. The airline announced last year that it would slash its total workforce by 7,000 to 9,000 jobs by 2007. Delta is expected to identify affected workers in the next week or so, said Delta spokesman Anthony Black. The cuts will be spread across all positions, from secretaries to mid-level managers, and will take place in the United States and overseas. Black said no additional mid-level management cuts were planned. ------------- Cuts up to middle management level only? Seems odd to us. In terms of getting Delta lean and mean, the cuts should start from the top and go down rather than start at the bottom. Its the senior management that got the airline into this mess not the rank and file. Remember how United's management rewarded itself coming out of Chaper 11? Remember how American's management gave itself a bonus recently? (For an exellent view on this matter we refer you to this month's ATW editorial). As legacy airlines shed people to save money one needs to see how this might play out. Let's say 2006 has no more oil shocks and fares go up an average of $15 with traffic growth staying its current course - a Cindarella type scenario. Legacy carriers, at best, might break even. Their costs are still too high (start cutting at the top not the bottom) but LCCs will see fantastic revenue growth. Passengers flying legacy carriers will notice not only vastly reduced customer service in-flight but also a dearth of service on the ground. LCCs account for about one-third of US dometic traffic. Two-thirds of the market is therefore going to get another shock from flying. Interestingly, we note that Continental continues to provide in-flight meals. People continue to rave about this airline - industry surveys show this airline having the highest satisfaction ratings. So not all legacy carriers are equal. With an LCC a customer's expectations are met. No satisfaction problems, since the expectation is a cheap fare, no service and on-time arrival. In addition you get to fly a newish plane, the exposure to its staff is a joy (these people smile and are happy with their jobs) - so the customer experience is actually exceeded a bit. At a legacy carrier this does not happen because expectations are higher and kept higher by advertising which creates and builds the expectation. Delta's bleeding therefore indicates problems for its customer service going forward. Legacy carriers remain in big trouble. The only legacy carriers that seem to be operating quietly and well are American and Continental. Bt the way, how is it that Texas is home to the three most powerful US carriers? Is there something special in the water? Its like a whole other country, as they say.

John Leahy thinks the 330 is more efficient than the 787 - no, really

At the Orlando conference where the 350 was roasted by ILFC's president, Airbus' John Leahy made some interesting statements. Mr. Leahy argued the A330 is more efficient than the 787. His analysis says the A330 has a trip cost advantage of $192,000 over the "projected rent" of the 787 and when adding cargo capacity, the A330 advantage is greater. Since the 330 does not have the 787's range, Airbus is developing the A350. Also the A330 is available now while the 787 won’t be available for years. Hmm. More efficient? If that's so, why even bother with the 350? Wait, isn't that what Mr. Udvar-Hazy said? Maybe this means that Mr. Leahy and Udvar-Hazy agree.

Leeham & Co

We came across a new source (for us) today that we'd like to share with readers. http://www.leeham.net Take a peek - it looks like a great source.

Boeing begets an orphan

Recently we noticed Boeing had one 767-400 on order. An odd number that got us digging. It's for the U.S. Air Force. The E-10 program is cancelled, so it's the one and only E-10. More detail can be found here $126m later, Secretary of Defense Rumsfeld states that this move will in no way impair the Air Force's ability to deliver the mission of the E-10 which will be accomplished by an upgrading of the current E-8. Maybe they could have laid their hands on something even older and saved more? For a nation at war, we sure are fighting this one differently from previous wars.

Airplane kingpins tell Airbus: Overhaul A350

ILFC's Udvar-Hazy; Airbus' Leahy; GE's Hubschman Seattle Times-- ORLANDO, Fla. — Two of the world's most powerful airplane buyers yesterday said Airbus should completely rethink the plane it has proposed to compete against Boeing's strong-selling new 787. Steven Udvar-Hazy, probably the most respected figure in the global business of buying and selling airplanes, predicted the current version of Airbus' A350 would sell poorly and leave Boeing to dominate the lucrative market for midsized wide-bodies. He stunned a packed audience of some 700 aviation professionals here by calling on Airbus to scrap its existing A350 design and spend many additional billions on a brand-new airplane with a new fuselage and a new wing. "That's probably an $8 billion to $10 billion decision. Airbus is at a crossroads," said Udvar-Hazy, founder, chairman and chief executive of the second-largest airplane-leasing company, Los Angeles-based International Lease Finance Corp. Airbus had better make that decision before the Farnborough Air Show in England in July, he said. His remarks were endorsed by Henry Hubschman, president of the world's No. 1 lessor of airplanes. In an interview, he said he "completely" agreed with Udvar-Hazy's message. If Airbus sticks with its current design, Udvar-Hazy said, it will wind up with as little as 25 percent market share against the 787. Sitting in the audience was top Airbus sales executive John Leahy, who earlier had given a confident and rosy presentation of Airbus' competitive position. In an interview afterward, Udvar-Hazy indicated some Airbus executives are contemplating the extreme step he advocates. That would be an admission that Airbus' strategy is seriously flawed and needs a radical about-face. "Airbus will have to deal with this issue or accept a silver medal instead of a gold," Udvar-Hazy said. The leasing executive spoke at the annual conference of the International Society of Transport Aircraft Trading (ISTAT) at a resort outside Orlando. He described the current version of the A350 as "a good solid, airplane" with "elements that are leftovers from the early members of the Airbus wide-body family." The current A350 offering is based on the A330 jet but uses new engines and a lighter airframe, thanks to a composite-plastic wing and a fuselage made from aluminum/lithium alloy. However, it has the same fuselage cross-section Airbus had 30 years ago, and the wing shape is unchanged. Udvar-Hazy said Airbus should go for an all-new design to replace not only the current A330 twin-engine jets but also the larger four-engine A340s — "a new family of aircraft that will be the backbone of their wide-body midsize product line for the next 20 to 25 years." Udvar-Hazy and Hubschman, president of GECAS, the aircraft-finance division of General Electric, lead organizations that are quite simply the rival plane makers' most powerful customers. In the corridor after the conference session he shared with Udvar-Hazy, Hubschman said he thought that some action at Airbus should come within the next three months. Udvar-Hazy said in the interview that as a leasing company attuned to an airplane as a long-term financial investment, "we want to have long-term residual value in the A350. ... We're not interested in a Band-aid reaction to the 787." He said Airbus should develop a new family "that incorporates even more of the new technologies the 787 is doing." It should have a larger diameter fuselage to at least match the dimensions of the 787 interior, and a faster, more swept-back wing to give it the 787's speed. That would be "a nightmare for Boeing," he said. But for Airbus, it would be a big gamble. "It's going to cost a lot of money and it's going to cost delay," Udvar-Hazy said. Analysts at the conference said such a move would delay the Airbus program by at least a year. The A350 is already 2-½ or three years behind the 787. But Udvar-Hazy believes Airbus has little choice. If it doesn't, he said, Boeing will dominate the entire midsize wide-body segment of the market, with its 787 outselling the A350 and the 777 outgunning the A340. He said sales of the superjumbo A380 — at best "300 or 400 airplanes," he estimated — cannot compensate for missing out in the much larger midsize wide-body market. Last year, Boeing opened up a big gap in wide-body sales with big wins selling 787s and 777s to airlines including Air Canada, Korean Air, Qantas, Air India and Emirates. "It's the marketplace that is going to dictate whether they do this or not do this," said Udvar-Hazy. "They have some big sales campaigns against Boeing. If they continue to lose, if Airbus loses two or three more critical campaigns, what choice do they have? They can't be out of this segment of the business. "Otherwise, what happens to the A340? Do they make one a month or one every two months? Where is that headed, the whole A340 product line, after say 2008?" Udvar-Hazy said time is not on Airbus' side because Airbus is already spending on the A350 program, and because airlines may get edgy with uncertainty and decide to go for the 787. "That's a huge financial decision. It can't be delayed very long," said Udvar-Hazy. "If they are going to make a course correction, it's got to happen I think in the next four or five months." "Time is an enemy," he said. "They've got to tell the market clearly." By speaking publicly and in front of John Leahy, Udvar-Hazy is also trying to influence Airbus' decision. "There are forces within Airbus that like the current approach; it's the lowest investment and lowest risk," he said. "And then there are others that are perhaps more visionary. They're saying let's think this through very carefully. There are alternatives." Outside, Leahy downplayed the impact of Udvar-Hazy's remarks and pointed out International Lease Finance Corp. has ordered the current version of the A350. "Actions speak louder than words," said Leahy. Asked if a change of plan was in the works, he responded: "I don't see anything imminent at this juncture." Udvar-Hazy said his company placed the A350 order because those planes will sell well enough in the short term if priced much less than the 787. It's the jet's long-term future he is concerned about. Analysts at the conference were doubtful that Airbus can afford to could pull off a complete new aircraft program, even while it struggles to complete the A380 and the military cargo A400M airplane. "They cannot drop everything and start from scratch," said Adam Pilarski, an analyst with Avitas. Richard Aboulafia of the Teal Group said Udvar-Hazy was asking for "a massive turnaround, a total redirection of Airbus resources." "No airplane company is good at admitting that everything is wrong and that their whole strategy is so flawed it needs a fundamental rethink," said Aboulafia. "That's tough." Dominic Gates ----------- This story is full of excellent information. It confirms what pundits have been saying - the 350 is limited by its cabin width and its wing. (This is NOT an Airbus roast) However, we can clearly see the frustration being played out among these firms. No doubt this also indicates what airlines must be thinking. To Mr. Leahy's credit - ILFC has ordered more 350s than 787s. Udvar-Hazy also recently stated that he expects the market to generate large Airbus 380 orders. Yet in the story he seems to indicate a limited market. Airbus has a lot of programs under deelopment. The 380, 350, 400M and 330F are chewing up resources. Boeing does not have that many new programs. The 350 has evolved into a formidable airplane and frankly Airbus has taken the lowest risk route given its situation. Remember about 2 years ago it was a competition between philosophies - Airbus with a hub to hub 380 versus Boeing's hub-buster 7e7. Since then fuel prices have rocketed. The market has begun to comprehend the hub-buster thinking and Airbus hastily, but correctly, responded with the 350. Given Airbus' program situation and Boeing's WTO lawsuit, we don't see a completely new 350. The continual fiddling with the 340 shows some desperation within Airbus. Yes the 787 is a game changer. And Boeing is keeping the pressure up by limiting Airbus' ability to get Euro-nation funding to completely re-do the 330/340/350. In chess we would call this "check". But its not "check-mate". Yet. Boeing does not have unlimited resources and options. There is a global shortage of aerospace engineers. Airbus could still expand its 320 line using China as the production source de jour, so to speak. This would create capacity in Toulouse. That capacity could be utilized to create a new mid-size family. Or, perhaps the tinkering with new materials and technologies could in fact lead to a revised and refreshed 330, 340 and 350 that are compelling. Airbus could easily take a look at how Boeing managed to do this with their 737. If Boeing can manage to keep tweaking this ancient design so successfully, then Airbus can do the same for its current models.

Everything you wanted to know about GDS & GNEs

Today we interviewed industry guru Richard Eastman on the state of travel distribution. Typically our calls are about ten minutes long - but this one went over 25 minutes. The man is a fountain of knowledge. Explaining the history of how we got to where we are today, Richard explained a novel piece of thinking - how the various age groups (Baby Boomers, Gen-X) fit in with technology change. This is really insightful. Richard explained how the GNEs were bound to disappoint and the airlines are posturing with respect to GDS'. The idea of making the distribution model fit into a channel won't work because the Internet does not have channels. We cannot explain in this space how much IP this man has. The podcast is in the portal and we are throwing in a 16 page PDF presentation to go with it. This is a audio you need to listen to, to appreciate the complexity facing GDS, GNEs and travel providers like airlines. A "must have" for industry professionals. You will keep this information around - we expect many of you will print out the PDF and post pieces at your workstation. Its that good.

LiveTV to offer in-flight Internet?

INFLIGHT television system provider LiveTV is studying the possibility of offering email and Internet access, according to British magazine Airline Business. LiveTV sales and marketing manager Scott Easterling says the company is developing system upgrade options, including passenger Internet and email to seatback screens or personal laptops. The Florida-based company already has some experience of data delivery through its WiFi-based Airline.link, used post-landing by JetBlue and Frontier Airlines to pass operational data and IFE updates between aircraft and LiveTV operations centres at main operating bases. An Internet capability would be welcomed by Frontier, which is studying inflight WiFi connectivity for passenger laptops. The airline currently charges passengers $5 per flight for LiveTV’s inflight television service and reports that it has proved most successful on stage lengths of over two hours. The carrier’s maximum stage length is around five hours. Another LiveTV customer, Australian budget airline Virgin Blue, has announced that it plans to roll out the service across its whole fleet and on all routes from the third quarter of the year and says it will charge for usage. Potential customers include India’s Jet Airways. “We are looking closely at offering live television on domestic and international services,” says VP customer services and inflight Rajesh Verma. “On domestic services in India, which are typically from 40min to 2.5hr in duration, the ability to offer live television is very attractive. In less than a year we will have live TV fitted on our new aircraft deliveries and then we will retrofit it into the current fleet. The idea is to give more and more service on board – we’re not looking to earn revenue out of it.” Jet Airways is talking to potential suppliers about a system capable of handling live TV, Internet access and the use of mobile phones. --------- Bring it on! Anything to make the suffering go away. This might make sitting in the airborne equivalent of an interrogation chair worthwhile.

Fingerprint data collected at airports to be used in criminal investigations

Mainichi -- Fingerprints collected from Japanese and special long-term foreign residents at automatic immigration gates that the government plans to introduce at airports in Japan will also be used in criminal investigations, it has been learned. The government says the automatic gates, intended to make the process of entering and leaving Japan smoother, will "increase convenience for Japanese and foreign residents," but the system is likely to stir debate over privacy protection issues. Justice Ministry officials said fingerprints collected from those who decide to use the gates will be stored in immigration bureau databases, and retained "as long as the person intends to use the gates." When law enforcers present investigation inquiry forms and ask for fingerprints as evidence in investigations, the data collected at the gates will be handed over. Justice Ministry officials have defended the proposed move. "The database of fingerprints will not be handed over to police as a whole. We will make decisions individually when information is requested," a ministry official said. Countries collecting fingerprints and other biological data from its people when they leave and re-enter the country include Singapore, Malaysia and the United Arab Emirates. Thailand, Britain, Germany and the Netherlands are considering introducing similar systems. Under a revised Immigration Control and Refugee Recognition Law that is being considered by the Diet, fingerprint data will be collected from foreigners aged 16 or over who enter Japan. It has already been learned that this information will be used not only for immigration purposes but also in criminal investigations. However, the new information suggests there is a possibility that fingerprints collected from Japanese and special long-term residents who provide them voluntarily will be used in the same way. Hisashi Sonoda, a law professor at Konan University said fingerprint data needs to be treated carefully. "Fingerprints form one of the most sensitive types of personal information. (Authorities) should carefully consider whether there is a chance that privacy is being taken lightly because too much emphasis is being placed on investigations and public security. "We must avoid a situation in which the majority of people have no option but to provide fingerprints because of a wide gap in convenience between those who use the gates and those who don't." ------------ Wow! So this system will help catch those criminals that travel in and out of Japan and the other countries that use this technology. Nowhere have we see what proportion of criminals travel internationally. This is a rather disturbing development. Imagine, for instance, that TSA collects your fingerprints. Do you feel they will keep the information secure? Can you trust them? The concern we have is of government gathering data with no obvious protection of the data. Governments are not that trustworthy - anywhere.

IAG Blog Tops Google Again

Twice in one day... we don't know how we do it...

Boeing grows the 787 - 787-10 official

BBC.com -- The first Boeing 787 is expected to be delivered in 2008 Boeing has decided to produce an expanded version of its 787 Dreamliner aircraft in response to airline demand. The "stretch" version of the 250-seat plane will seat 300 passengers and will begin flying in 2012. Boeing said Emirates and about a dozen other airlines had been asking about such a plane. It has staked much of its future on the success of the 787, and has been competing fiercely for orders with European rival Airbus' A350 aircraft. -------- This will force Airbus to stretch the 350 as well. Once doing that, the 350 will encroach into the 340 market and doom it. Similarly, the 787-10 will doom the 777-200ER. This is big news as we explain below. The 777-200LR now has a murky future. What will Boeing do about this plane with a only a few orders? Airbus will see its 340 orders fall away sharply the moment they announce a growth version 350. Similarly, Boeing is going to see a reaction to 777-200 orders. Though Boeing has developed this plane into a freighter which provides some market support. Legacy Euro-airlines are looking hard at this. BA has a slots for 777-200s - it is likely these will be converted to 787-10s. Similarly, Air France, KLM, Lufthansa and others will be watching very carefully. With Boeing's 787 production slots sold out, Airbus is looking better all the time. The current 350 is a vastly superior airplane to the original. Indeed it is very close to the 787 in performance. The US legacy carriers have to start looking at fleet renewals, too. With profits in 2006 a possibility and in 2007 even more likely, orders are probably going to be made. Natural 787 customers, these airlines will have lousy delivery slots unless there have been backdoor deals. Their 767s are already tired. This is getting interesting. The hyper-success of the 787 will surely help 350 sales. ATW reports that Emirates is in "final" negotiations for 50 of these new 787s. That means no 350-9s for Emirates. It also means Airbus is going to get very aggressive. We think there might be great deals in the offing from Toulouse. Given the situation at United, for example, don't be surprised to see a 350 in their livery.

IAG Blog Global News Agenda No. 1

We can announce that IAG Blog is currently No. 1 on the Google News feed.

One order of clipped wings, to go...

The owner of Hooters Air is uncertain about the airline's future but he stopped short of saying it would soon shut down. "I just hate to quit. I'm still fighting, but don't expect anything long term," said Robert Brooks, who also is chairman of the restaurant chain Hooters of America. "I dearly wished it could have turned out better." Brooks, a Loris native, said the airline business was "crazy" and he is "open for suggestions" over what to do about the ailing airline. Brooks could sell the airline or find investors to pump money into it. "I've not been enamored with the industry in general," Brooks told The (Myrtle Beach) Sun News. "What I understand about it, I don't like what I see." Hooters Air has trimmed service to some airports and ran up fuel service bills. Airline industry analyst Tim Sieber said problems for the Myrtle Beach-based airline range from a highly competitve low-fare airline industry to rising fuel prices. ---------- Hasn't Myrtle Beach been one of the fastest growing tourism markets in the US over the past 10 years? Why, then, did this company move away from Myrtle and decide to try to make every secondary Florida market their new focus? If they had stayed home, this would have worked. Maybe. More importantly, this just goes to show... a) no matter how it looks, the airline industry is NOT glamorous. b) that just because someone has done well in one industry, they cannot do well with the airlines. c) the easiest way to make $1M in this industry is to start with $10M d) allegedly good passenger service means absolutely nothing when you don't have a viable business plan. e) just serving every po-dunk, backwater, middle-of-nowhere airport willing to give you a subsidy is not a business plan. f) no subsidy will make up for bad route choices. g) this industry is tougher than it looks - just because the media makes it sound like the only thing wrong with the airlines is the dumb people running them, does not mean that just anyone can run a carrier successfully. h) just having good food -and Hooters Girls- onboard means nothing - especially when no one is flying with you to enjoy it, and especially to tell their friends about it. i) flying where no one wants to go doesn't make sense. TransMeridian, Pan Am v.4, Southeast, LeisureAir, and others have proved this. Why hasn't anyone listened? j) anyone can blame their demise on fuel. It's not the fuel. It is flying empty planes and paying high prices for fuel that is the cause of this debacle. They never did go for the obvious choices. Where was the MYR-DFW or MYR-IAH? Where were the markets that don't have MYR service that should? This was never going to be a hubbing carrier, but would have done well with just a few dense markets and service to MYR. Eventually they could have branched out to other golf, gambling or resort-esque destinations (AGS? SAV? GPT?). What kind of idiocy made them think they would make a difference in RFD-LAS? Who were the yes-men feeding Brooks data that didn't get that what they were doing wasn't working? And why are they just figuring this out now? His whole staff should be black-listed in this industry. PT

Welcome to Ultra AS

After our post last week we thought it only fair to invite Ultra AS to comment on it. We welcome them to the site today and hope that they will be responding soon to this post.

Another Virgin screwup

Actual fuel dump from the flight over Iceland (thanks passenger GW) Yesterday's LHR-LAX flight was diverted to Iceland because (drum roll please) a flight attendant felt "ill". Passengers noticed she was walking around OK but was very emotional. The flight was delayed 2 hours. At least this one didn't scream like the last one that had a meltdown on a flight to the US, as reported a few weeks ago. (Apologies for the headline - we couldn't resist)

bmi squeezed

The Guardian -- According to the publication, leaked figures obtained by the Guardian show that the privately owned airline’s flights from Heathrow carried 13 percent fewer people in February than they did a year ago. The report added that airline’s most intensive routes between London and Scotland suffered the most dramatic slump in popularity. Passenger numbers on its Glasgow flights dived by 24 percent to 37,352 and the number of travellers on its Edinburgh flights fell by 17 percent to 44,760. “The airline insists that it is unconcerned by its shrinking customer base, which it says is a result of a change in policy to concentrate on price rather than volume. But the figures are likely to raise questions about BMI’s strategy, launched last May, which involved axing free food and business-class cabins on many of its flights. The change was on the basis that it was “over-delivering” on customers’ expectations. The airline introduced a complex pricing structure with three types of ticket depending on the level of service required by travellers,” added the report. The data will also heighten speculation about BMI’s future as an independent entity, as per the report. The report also referred to fall in BMI’s capacity at London’s biggest airport and airlines losing out on specific routes such as London to Paris and others to faster rail services by Eurostar and Virgin Trains. BMI’s chief executive, Nigel Turner, reportedly said, “We’ve taken a different strategy since I became chief executive. We’ve specifically focused on getting smaller aircraft in. We’ve been concentrating on yield [price] and concentrating on business passengers. We’ve cut out a bunch of uneconomic fares. We were getting to be slightly busy fools.” He reportedly added that the drop was also partly explained by a renegotiation in fees for transfer passengers from BMI’s Star Alliance partners such as Lufthansa, SAS and United Airlines: “We talked to our interline partners and renegotiated for increased yields. Ipso facto, one or two of the lower ones drop out.” ----------- Ipso facto, bmi is also going to drop out. No wonder they are trying to force Lufthansa to increase their stake. LCCs are relentless competitors and in this case, throw in trains.

Dummies of the week - #7

Here, dear reader, you see an endangered species hellbent on its own destruction. The pilots are having a bad time it true - but so have all airline employees. Going on strike - or even threatening a strike - will stop bookings short. Then nobody will have a job and Delta will die. And if you think Delta can't die, then you're living in paradise. The biggest losers would probably be American Express and GE. Then of course real estate prices in Atlanta would dive and air fares shoot up.

African reaction - round 1

Sunday Tribune -- South Africa will not follow the European Union's decision this week to ban from its airspace African airlines it labelled "flying coffins". The EU banned 92 airlines, most from Africa, because research showed the planes were six times likelier to crash than those from elsewhere. Debbie Martin, the General Manager for Swazi Express Airways, based at Durban International Airport, said news of the blanket ban on all airlines operating out of Swaziland came as a shock to her. "We only heard about the ban when a journalist phoned me late this week for comment. The amazing thing is that nobody from the EU contacted us or carried out an inspection of our aircraft. It is so unfair. We are now planning to appeal to the European Aviation Authority as soon as possible, because we feel we have been defamed," said Martin. "The strangest part of this ban is that none of these airlines flies to Europe," she said. ------- Give a bureaucrat a little power and all hell breaks loose. Of course consulting firms and lawyers are going to make money out of this, so it’s not all bad. SH&E offers a service helping airlines get through the ban. Think we might get a referral fee?

VERY LIGHT JETS AND AVIATION SAFETY

By Bill Strait, Editor and Publisher (www.verylightjetmagazine.com) Very Light Jets are coming! They will be arriving soon at an airport near you. Can they be safely integrated into our US National Airspace System (NAS)? The NAS is in charge of all aircraft that are in motion at any given moment, both U.S. civilian and military craft flying over domestic airspace. Can the altitudes and airspace previously reserved for the exclusive use of our corporate jets and commercial airliners safely make space for these new planes? Can the system safely consolidate the VLJ pilots with their varying levels of experience? These questions are on our minds as aviators as we awaken to the dawn of this new day in air transport technology. NBAA defines Very Light Jets (also known as Microjets, or VLJs), as "Jet aircraft weighing 10,000 pounds or less maximum certificated takeoff weight and certificated for single pilot operations. These aircraft will possess at least some of the following features: (1) advanced cockpit automation, such as moving map GPS and multi-function displays; (2) automated engine and systems management; and (3) integrated autoflight, autopilot and flight-guidance systems." The definition is from the National Business Aircraft Association Training Guidelines for Single Pilot Operations of Very Light Jets and Technically Advanced Aircraft. VLJs were spawned by the NASA lead Small Aircraft Transportation System or SATS program. This innovative initiative aimed to provide safe air travel in all weather, in new single-pilot aircraft, with advanced navigation systems. SATS proposed the utilization of 5400 smaller airports in the US so we could enjoy point-to-point travel in modern aircraft at affordable prices. SATS observed that 75% of people and cargo passes through 29 hubs which were over- crowded. By using the public airports accessible to most everyone in the US instead of the hubs, the program promised many advantages: • Separation and sequencing of multiple aircraft operating at airports without ground based radar and communications systems resulting in higher system traffic volume. • Safer aircraft takeoff and landing operations in poor weather at minimal equipped airports and lower minimums for operations because of advanced avionics. • Make more single-pilot operations possible with improved technology. • Incorporate large numbers of small aircraft into the National Airspace System for better airspace utilization. The long-term vision of SATS was “to enable a safe travel alternative that will free people and products from the constraints of today’s ground and air transportation systems.” Government funding of the five year $150 Million dollar program ended in June of 2005. The SATS funding combined with private investment and the promise of a new and profitable era of air transportation has made VLJ travel an eminent reality! Is the system ready? The G/A community, corporate aviation, airline industry, and members of the flying public have expressed safety concerns about the rapidly approaching fleet of VLJs. The specter of their arrival placing unacceptable burdens on our air traffic control system is a growing concern. The FAAs own recent estimate of aircraft entering the NAS is 4,500 additional aircraft over the next 10 years. FAA also predicts a 300% increase in system demand by 2025! Some of the air traffic control equipment still in use is from the 1950s. In June of 2005, House Report 109-153 recommended over $1.5 Billion for new air traffic control facilities and equipment. Full report: http://thomas.loc.gov/cgi-bin/cpquery/R?cp109:FLD010:@1(hr153) This funding may be the key to gate of safety in future air travel. The burden of additional aircraft on the system is real. The arrival of the VLJs is not the cause. They only represent a small portion of the forecast exponential growth in air traffic. Many of the VLJs will be arriving as replacements for obsolete aircraft which results in no net gain of air traffic. They are also not arriving all at once. Many of the larger orders to charter operators of the VLJs actually have staggered delivery dates. These controlled-growth factors should provide sufficient opportunity for the air traffic system to respond safely. The safety of the NAS with the infusion of pilots with large variations in flight experience levels is another area of concern. The pilots of these innovative machines will be transitioning G/A pilots and pilot owners, or the pilots for the corporations, fractionals, and air taxi operations. This mix of pilot experience has demanded a new standard in flight training to balance the air safety equation. The National Business Aircraft Association, in cooperation with NBAA Safety Committee issued their recommendations in their “NBAA Training Guidelines for Single Pilot Operations of Very Light Jets and Technically Advanced Aircraft.” Their report was compiled in association with: • NBAA Safety Committee • FAA/Industry Training Standards • Adam Aircraft • Cessna Aircraft Company • Eclipse Aviation • Insurance underwriters • Training providers This NBAA guideline offers minimum pilot qualifications to include a Private pilot license, multi-engine rating, and instrument rating. Skills and prior knowledge of basic autoflight procedures, basic FMS (Flight Management Systems), and weather radar were also recommended. Full NBAA report is available at http://web.nbaa.org/public/ops/safety/vlj/1.php#1.2+ Training plans disclosed by the manufacturers will be type-rating based. Cessna has signed with long-time partner FlightSafety International for their Mustang training. Eclipse is using United Services, a division of United Airlines, for their Eclipse 500. The NBAA also recommends that upon completing the training program, the pilot, training provider, and the insurance underwriter determine the need for a mentor pilot. The report further states that “mentors should be selected from experienced pilots that have ATPs and are type rated in jet aircraft that have technically advanced systems similar to the VLJ in which they will mentor. The prospective mentor needs to be recognized by both the aircraft manufacturer and the insurance underwriter as meeting these criteria. In addition, it is recommended that a training program on the specific aircraft in which they will mentor be completed.” Many of the Part 135 Very Light Jet operators have expressed an interest in hiring pilots form the cadre of mandatory retired former US airline pilots. Their expectation is that the high levels of maturity, airline based training and flight experience will add an element of safety. These progressive operators plan to use this group as a possible advantage as they build experience with insurance underwriters. It appears that the NBAA and VLJ manufacturers, FAA, training organizations, and the insurance industry have converged to formulate a plan to insure the safety of this next wave in aviation. They have taken definitive steps to assure that the mix of pilots flying the new entrant VLJs will be trained to the highest standards available. They have collectively forged solid training programs based on NBAA guidelines to assure the collective safety and successes of the fledglings called Very Light Jets. The Very Light Jets are almost outside our pressurized and polarized windows. Standby --

Amazing 380 feat today

Der Spiegel -- Celebration mood within airbus: The first emergency test for the megaliner A380 was successful. All 873 passengers were evacuated within 80 seconds - a new world record. However an older participant broke a thigh. --------- Think about this - 873 people managed to get out of the plane in 80 seconds! Nearly 10 people per second. An amazing test Airbus - well done!

IAGportal - have you visited yet?

It's the weekend, which means another day in the office for your intrepid IAGportal editors and correspondents. Keeping our readers satisfied is a 24x7x365 operation, and an international one. The key thing to remember though is that our subscribers are not mere readers, they are participants. IAGportal is a magazine, a source of original insight and analysis, written by industry insiders, for industry insiders. Which industry? Global executive travel, which includes planes, trains and automobiles, and taxis and rickshaws and cycles and, and donkeys, and private helicopters and two feet. Think about your last international journey: can you remember how many modes of transport you used? It was probably around ten. And how did technology enable that journey? IAGportal has the answer. You can use it to network: subscribers can post a profile with their contact details, and you can make contact with other subscribers. Many of our subscribers are CEOs, entrepreneurs, CTOs, consultants and 'big thinkers'. They all have one thing in common: a passion for travel and technology. Visit our gallery, expanding every day, and download for free or buy high resolution images suitable for print. That feature isn't quite ready yet, but it will soon enable PR companies and advertisers, and marketing people, to obtain the best photography in the business, at special rates. Also listen to Addison Schonland interview some of the top names in global aviation. We have recently added interviews with Lufthansa, Ernie Arvai and some of the best IFE visionaries. And if you want a feature we don't support yet, just holler. We'll add it. So there is no excuse, please join us at IAGportal today.

Bombardier confusion continues

Fi -- Bombardier intends to beat Airbus and Boeing to the new single-aisle replacement market with whatever falls out of its rejigged CSeries studies, despite shelving the project in its original form this January. “We are retrenching and studying a bit further, and we are not launching at this point, but the CSeries is still very much alive,” says Crowley, who acknowledges that “it was critical we stopped where we did. At the end of the day we at Bombardier and Pratt & Whitney [Canada] decided it probably wasn’t the right airplane.” “we can’t rush it into service because there will be three viable alternatives from Airbus, Boeing and Embraer”. He added that “if we get it wrong it will spell absolute disaster for us, which is another reason why we’ve slowed it down”. Confirming earlier reports of exploring links with the Sukhoi-led 70-100 seat Russian Regional Jet programme, as well as possible industrial links with China, Crowley says: “We are looking for key partnerships in Asia, China and Russia that provide us with resources as well as market opportunities. I’d be surprised if we ventured out and launched this programme alone,” he adds. -------- This reads like a company that is not sure which way to go. The floor beneath them has collapsed as the RJ market has frayed. Above them the roof bears down from Embraer, Airbus and Boeing. Comments about retrenching, studying further, new partnerships, we can't rush - these are not signs of strength or clear vision. We see confusion and dismay. Bombardier is getting squeezed and they have no great ideas - certainly nothing like the first RJ. Canadian and British government funding helped the company grow its aviation arm. Visit the company website and notice its history page ends in 2004. Perhaps 2005 is a year best forgotten? 2006 seems no easier. A company with interests in transport engineering (rail and aerospace), Bombardier seems to have missed the boat, so to speak. Fortunately its business jet business is doing well.

African airlines & the Euro-blacklist

This blacklist is causing trouble for lots of African countries. Recently Rwanda impounded a Belgian 330 because of paperwork. It was a sham of course. Rwanda wants a plane of theirs impounded in Belgium. The trouble is the plane simply is a not flyable. The following pictures are found on Luchtazk Aviation's website and tell their own story. Although we have reservations about this blacklist - this case seems straightforward. This plane is the infamouse Silverback DC8. Seriously worn tires. Fluid leaks

The Wright Tax

In a very interesting story from the NY Times an astounding statistic is found.(http://www.nytimes.com/2006/03/22/business/22leonhardt.html?_r=1&oref=slogin) "And the (Wright Amendment) law has served its narrow purpose quite well, protecting American Airlines from competition at its home, Dallas-Fort Worth International Airport. Tickets from Dallas-Fort Worth cost about a third more than those from a typical airport. So, on a round trip into Dallas that costs $400, nearly $100 of the fare might simply be the "Wright tax," a little gift from you to American Airlines, made possible by Congress." So in case you wondered what the Wright Amendment costs the good people of North Texas...but wait there's more... "THE cruelest part of the amendment is that the very members of Congress who should most want to get rid of it — those from Texas — have kept it alive. Senator Kay Bailey Hutchison, a Republican elected in 1993, has been the law's most important defender, and House Republicans like Joe L. Barton and Kay Granger have played a role, too. It is not an exaggeration to say that their main airline policy has been to ensure higher fares for their constituents." Well it now seems Senator Hutchison has had a slight change of heart - its an election year remember? The winds of change have reached even this corner of Texas. After Chris Bond of Missouri sneaked through his own amendment exempting his state from Wright's rules, support started to collapse. "I think fares have been too high in Dallas. I do think that," Senator Hutchison said. "I would welcome more discount carriers." Yes of course you do Senator. And keeping your job has nothing to do with this new thinking, right? Lets see if Southwest can fly from Love Field to DCA. That would be a great show wouldn't it? Arizona got their non-stop to Phoenix (Thanks Senator McCain) and Alaska got their Seattle non-stop (Thanks Senator Stevens).

Airport security in South Africa

SAPA -- A group of armed men stole foreign currency from an SA Airways plane at Johannesburg International Airport police said. "Two men armed with AK-47 rifles went to an SAA aircraft, held up guards and police and took bags containing foreign currency around 10.30am," Senior Superintendent Vishnu Naidoo said. At the same time a group of up to six men were holding up guards at one of the gates. All of the men fled, no shots were fired and nobody was injured. Naidoo said it was not yet known how the men managed to gain access to the airport. The amount of money stolen from the United Kingdom and destined for neighbouring countries had not been established. -------- Can you imagine this? Running around the airport with AK47s and nobody sees this or stops it? What does this tell you about airport security? Note the South African Airports Company is planning to run an Indian airport in future.

Blair's tried to influence Qantas decision

The Age 03/24/2006 Author: Katharine Murphy

British Prime Minister Tony Blair gave John Howard a hint last year that Qantas could be allowed to fly more services into the UK if it bought $13 billion worth of new aircraft part-manufactured in Britain.

Mr Blair wrote to Australia's Prime Minister in December expressing his "personal support" for European aircraft manufacturer Airbus' attempts to supply Qantas with a new fleet of 65 aircraft, The Age has learned. Mr Blair told Mr Howard he was backing Airbus because the wings of the new planes under consideration by Qantas would be made in the UK.

Mr Blair stressed the closeness of the aviation relationship between Australia and the UK and then hinted restrictions on Qantas flights into London could be reviewed after the deal.

"We look forward to developing our relationship still further in the future and would welcome the opportunity to review our bilateral relationship with our Australian colleagues," Mr Blair told Mr Howard.

The high-stakes tussle between Airbus and its US rival Boeing for the multibillion Qantas fleet deal was one of the hardest fought corporate battles of last year, attracting international coverage. Australia has been pushing for years without success to win further access rights to London's Heathrow airport. Qantas is restricted to 28 flights per week.

Mr Blair arrives in Australia tomorrow and will attend the closing ceremony of the Commonwealth Games on Sunday before going to Canberra next week. Mr Blair's letter raised eyebrows in Canberra, with ministers interpreting it as an attempt to apply political pressure to Qantas to buy from Airbus.

But if that was the strategy, it failed. About a week after Mr Blair's letter arrived the Qantas board decided to buy 65 new planes from Boeing, and secured further rights to buy another $11 billion worth of Boeing 787 aircraft.

Qantas yesterday refused to discuss any aspect of the tender process or answer questions. Chief executive Geoff Dixon said Qantas received "no pressure from the Australian Government regarding either bid". But Mr Blair and Mr Howard could discuss the issue of improving Australia's aviation rights over the coming days.

A spokesman for Transport Minister Warren Truss told The Age last night that Australia would continue to "seek increased access for its airlines into the UK".

Qantas has bought aircraft from Airbus before last year's tender. In 2000, Qantas agreed to buy a fleet of new generation Airbus A380 aircraft, then valued at $18 billion.

Aircraft transactions commonly involve high-level political lobbying. US senators argued in favour of the Boeing bid for Qantas' business in 2005.

Special Mission aircraft - Embraer coming on again

The picture is of Boeing's MMA based on the 737. The P-8A Multi-mission Maritime Aircraft (MMA) is a long-range anti-submarine warfare, anti-surface warfare, intelligence, surveillance, and reconnaissance aircraft. It possesses an advanced mission system for maximum interoperability in battle space. This aircraft will replace the P3 Orion. Embraer was a member of the team that won the US Army contract for a special missions airplane. However, in typical government style, the scope kept creeping until the winning bid could no longer match the requirement. Embraer met every requirement it was given and, quite rightly, was upset to have lost. Embraer has developed a neat series of special mission airplanes based on their 145. Click here to see their range. The experience with the US Army contract has taught Embraer a lesson - go with a bigger plane because you cannot trust the government gnomes to fix their goals. Gulfstream's bigger plane has been converted for special missions and this has worked well because the basic plane is big enough to grow with requirements that change. Israel's version above and Sweden's version below. Similarly with Bombardier's plane as used by the UK. Now we hear Embraer wants to take the 175/190 airframe and develop a new range of AEW/MMA planes. This should be interesting. Its becoming a crowded market. On the other hand, Asian defence budgets are rising. This is especially the case with need for maritime patrols of the South China Sea, particularly the area around the Spratley Islands.

A300 NTSB urgent inspection

24 MAR 2006 NTSB urges inspections of certain Airbus A-300 rudders

The NTSB urged the FAA to order inspections of the inner skin of the composite rudder surfaces of certain Airbus A-300 series airplanes. The safety recommendations (one of which is classified as urgent) address a safety issue identified during the investigation of damage found during an inspection of a rudder from a Federal Express A300-600 airplane. The Board noted that this incident might have applicability to a more serious rudder separation that occurred last year when an Air Transat A310 suffered an almost complete rudder separation. (NTSB)

http://www.ntsb.gov/recs/letters/2006/A06_27_28.pdf

BA - Another Summer of Discontent?

British Airways have announced their intention to increase the retirement age for all pilots and cabin staff, according to BBC Radio 4's Today program. This is expected to lead to a summer of industrial action a la Gate Gourmet, which we blogged earlier this year. Beware, be very aware, if travelling out of Heathrow this summer, no matter which airline you use.

Russia declines Airbus A350 risk share

The Air Letter Edition: 15,956 Date: Friday, 24 March, 2006 Section: INDUSTRY Moscow: Russian manufacturers will limit their involvement in Airbus A350 production purely to subcontract work. The manufacturer is in negotiations with Russian companies about participation on the new twinjet, "but they have decided not to bid at the tier-one risk-sharing level", A350 chief engineer Dougie Hunter said. "They want to be at tier two, with someone else taking design responsibility." But the partnership with Chinese companies will be on a risk-sharing basis, said Hunter. "We intend to allocate 5% of production to Chinese companies as first-tier risk-sharing suppliers, but have not concluded talks. We've given them the opportunity to bid on a number of packages to a much higher value than the 5% to allow them and us to find the best fit." France and the UK look set to have a slightly lower share of A350 production than on previous Airbus programmes, due to an increase in the Spanish division's involvement. Airbus Espana, which other than on the A380, where it has a 10% share, traditionally builds around 4.2% of each Airbus, will produce around 8% of the A350. As well keeping its responsibility for the horizontal tailplane, Airbus Espana will also take over the Section 19/19.1 rear fuselage from Airbus Deutschland. Meanwhile, Airbus Germany will produce the composite upper wing skins in Nordenham near Hamburg. Airbus France will make some of the fuselage panels traditionally made in Germany.

VK

Delta acquiring 777LRs?

ATW -- The carrier has an order for three 777-200s, which could be delivered as dash 200LRs in 2008.

--------

Speculation is these planes would be used for ATL-JNB nonstops.  Although ATL-SYD has also been mentioned.  However the airline continues to bleed at a scary rate and these old orders with Boeing may not be delivered.  Delta's focus on international service may yet prove to be unsuccessful.

 

 

 

Mishandled baggage costs airlines $2.5bn pa

e-TID.com -- According to IT solutions provider SITA, which tracks baggage information for airlines, 30m bags are mishandled each year, 204,000 of which are never recovered. This equates to 0.46 lost or stolen bags per 1,000 passengers. A further 1.8 bags per 1,000 passengers are damaged and 11.4 delayed, with an average delay of 31.2 hours from the bag being reported as missing to when it is returned to its owner. The most common reason (61%) for a delayed bag is a problem with a transfer between two flights. Francesco Violante, SITA managing director, commented: ‘In 2005 the industry lost in the region of $2.5bn on mishandled baggage when you take into account the costs involved in reuniting the delayed baggage with its owner which, happily, is the case over 99% of the time. This year we will reach the 2bn passenger landmark which, on current trends, will translate into 30m pieces of mishandled baggage. ‘Growth is welcome but it has to be better managed if airlines and airports want to improve the passenger experience by eliminating delays from the system. The industry needs more sophisticated baggage reconciliation systems and greater use of self-service such as check-in through kiosks and on the web. This will all help to simplify travel, reduce delays and baggage misconnections.’ ---------- And people wonder if we need RFID. Missing Bags and GDS fees are currently running neck and neck in terms of total cost for the industry One is easier to solve than the other. But both are a pretty significant in the amount of effort to reduce the overall costs. The airlines need to address both … but are they?

TU334 news

>From today's Komersant Daily (Moscow) - Translation

Yesterday vice-premier of the government of Tataristan (within the Russian Federation) Boris Pavlov, announced that the management of "Kazan aviation - industrial association Gorbunov " and "Tupolev" have signed an agreement with the Italian aeroconsortium AIR-NET on joint activity for certification of the Tupolev-334 in conformity to the requirements of European Safety Agency (JAR OPS).

AIR-NET has expressed readiness to find the funds for preparing international certification of Tu334.

Italian partners suggest introduction of this airliner in foreign markets under new name - NET (New Europa Tupolev). The CEO of corporation AIR-NET, Bruno Della Mott declared, that Tu334 "is necessary in order to organize the air bridge between Italy and the European countries". VK

UltraTrak BRS In Trouble?

We posted something about Ultra Electronics, a small player in the Baggage Reconciliation (BRS) sector, back in February. They are roughly 3rd or 4th in the world behind the likes of SITA and ARINC, but until recently their UltraTrak system was highly regarded. Their Airport Systems division develops, supports and sells their BRS system from the UK, and via sales offices worldwide. In many ways Ultra AS is a phoenix rising from the ashes of the Ferranti organisation, which went to the wall in the 90s. Unfortunately, it now seems that the UltraTrak product is in deep trouble. IAG Blog has learned that of the two offices owned by Ultra Airport Systems, the southern one is to shut down its BRS activities, with the loss of a large minority of technical roles. The product is to be managed from their Manchester office from July 2006, with the time between now and then spent transferring knowledge from the outgoing staff to the existing staff in Manchester. The job cuts are not limited to pure technical roles, and some senior and middle management positions have also been made redundant. Our source claims that the company does not fully understand the amount of knowledge there is about the system, or its complexities, and that the knowledge transfer could result in months (up to 12 of them) of uncertainty, confusion and unreliable support for existing customers, coupled with an inability to sell to new customers given the upheaval and uncertainty surrounding the product and the wider corporation. This is a bitter pill for the larger Ultra Electronics Holdings company, which has seen a key rival QinetiQ floated on the London Stock Exchange just a few weeks ago. It seems as though this is a strategic decision to focus on military and electronics at the expense of Airport Systems. It is therefore likely that the AS division will be closed or sold within a year or two, provided they can stay in business after this current round of redundancies. UEAS customers include Air France, Shanghai Airport, London Heathrow Terminal 5 and BAA. www.ultra-as.com

EU Blacklists 92 Death Trap Airlines

Europe no more for these (mainly African) tearaways who have played fast and loose with innocent passengers for years. Thanks to the Jackson News-Tribune.

Emirates Urges Airbus To Define A340 Plans

Reuters -- Emirates Urges Airbus To Define A340 Plans March 21, 2006

Dubai-based airline Emirates wants Airbus to clarify upgrade plans for the slow-selling A340 model before it takes delivery of the latest version on offer, it said on Tuesday.

"Our order for 20 A340-600s still stands. (But) We are waiting for (information on) the enhanced version," Emirates President Tim Clark said.

Emirates is the launch customer for the A340-600 High Gross Weight (HGW), the latest version of the plane set to begin deliveries this year.

If it defers those deliveries, Airbus would be forced to find other carriers to take delivery slots for the A340-600 HGW, such as rival Qatar Airways, which has also ordered the plane.

Airbus is facing questions about the fate of the A340 model after it was hammered in sales by the rival Boeing 777 model in 2005.

Airbus sold 15 A340s while Boeing sold more than 150 777s as carriers opted for the lower operating costs of a twin-engined model versus one with four engines.

Airlines say Airbus is now fighting back by offering to build an upgraded, more fuel-efficient version with new engines dubbed the A340-600 Enhanced, though the planemaker has remained tight-lipped about the project.

John Leahy, Airbus' chief commercial officer, said last month that airlines were asking about changes to the A340 but declined to comment about the mooted A340-600 Enhanced.

An Airbus spokesman on Tuesday also declined to comment.

Airline officials say the A340-600 Enhanced would use a variant of the engine being developed by Rolls-Royce for the new, smaller Airbus A350 model due in 2010.

A Rolls-Royce official declined to comment, but noted that consultations with planemakers about new models were a normal part of their business.

When Emirates originally ordered the A340-600s, the A350 project and its engines had not been launched.

New, more fuel-efficient engines have paved the way for upgrades and new planes, including the A350 and two models from Boeing -- the mid-sized 787 due in 2008 and a stretched version of the 747 jumbo jet dubbed the 747-8 Intercontinental. -------------- Airbus' 340 program is struggling to stay afloat. If Emirates backs off so will Qatar - these are not irrational people. The 340-600 HGW model is not going to sell unless it comes with massive discounts and guarantees on future replacements. Drop the 340 and focus on the 350 Airbus!

Aeroflot news

Speednews reports Aeroflot has secured 6 MD11s through Boeing. If we recall correctly this requirement ties in with the 787 order. Does this information portend an Aeroflot 787 order?

EasyJet Slams Air France

From EasyJet today... How Air France can suggest that we should also apply for subsidies to fly the 12th most popular route in France is beyond me. Do they really think there is nothing better you can do with public money than handing it over to an airline to fly a route which many airlines would be happy to fly without subsidies? While there are some routes where a PSO status is appropriate, especially to oversee territories, the list of PSO routes should be revised. Today airlines are able to operate a route such as Paris-Ajaccio under market conditions while offering cheaper fares for consumers. Air France tries to scare people into believing that no one would operate this route without a PSO and people on Corsica would be cut off, but that is just absurd. We would therefore like to pose three questions to Air France:- 1) How much money does Air France receive from the French state for the operation of Paris-Ajaccio? 2) Why is Air France not able to operate one of the most popular routes in France under market conditions? 3) How can it be in the interest of the consumer if competition is banned on some of the most popular domestic routes? ===== Any comments?

JetBlue is no PEOPLExpress? Oh really?

JetBlue Seeking International Alliances: Click JetBlue CEO says new routes will boost profitability: Click No Longer an Upstart, JetBlue is Facing Turbulence: Click A few comparisons are in order. PEOPLExpress rebuilt Terminal C at EWR. jetBlue is rebuilding the TWA terminal at JFK. PEOPLExpress expanded quickly and bought Britt and PBA in order to add more destinations. Let's not forget EWR-LGW and EWR-BRU and OAK-BRU. jetBlue is trying an alliance linkup with...Maxjet? PEOPLExpress over-expanded by snatching up tons of cheap, used a/c on the open market and Frontier airlines (another source of cheap a/c that they never got to truly utilize). jetBlue bought 100 examples of an untested new a/c, as well as that TV enterprise. PEOPLExpress was bought by CO after 5 years of existence (1982 - 1987) jetBlue just hit 6 years old... PEOPLExpress eventually tried to raise extra revenue by putting a front cabin product in their aircraft. jetBlue has admitted that they have to increase RASM. Biggest difference? PEOPLExpress flew to the major markets (ok, EWR was still a secondary airport in the 1980s, but still...) jetBlue is avoiding fortress hubs, and where they have gone in, they haven't done too well. Also, jetBlue’s ranks are filled with experienced airline minds. Will they stand the test of time that the former PEOPLExpress ranks have; namely, still being in the industry 20 years later? Airline experience means nothing. Successful airline experience is important. The only reason Neeleman doesn't like PEOPLExpress comparisons is because of how it ends. And let's be honest, this is Neeleman's background. Build an airline up, sell it off and rake in the cash. Morris Air, anyone? I admit, jetBlue would make a nice fit with UA/Ted or the new USAirways, giving the former a needed JFK presence and the latter a transcon presence, as well as a return to NY-Florida. I'm throwing down the gauntlet here. jetBlue is gone by late 2008/early 2009. What am I basing this on? 1) Inability to make price increases stick. With fuel going up (will we hit $75bb this summer?), it appears the jetBlue mystique and customer preference is not enough for jetBlue to push through fare hikes and retain customers. Also, when your reputation is low fare, good luck when your fare creeps above someone else's (though Southwest gets away with that one). And in the markets they are in, is there upward range on fares? NY-Florida? You've gotta be kidding. If jetBlue ever raised prices significantly, another carrier would show up to enter the market. 2) Inability to make this play outside of NYC in general - and JFK in particular. This is particularly troubling on the following counts... a) Most real NYC markets are LGA-focused. In order to tap into ORD or DTW or DFW or ATL, they have to be at LGA or persuade people that the price (bad idea when you are trying to raise fares) or service is significantly different to the point people will take a less preferred airport to get a more preferred carrier. b) Schedule inflexibility. They are slot restricted at JFK. Unless they can offer frequency to the major markets, they will never penetrate them. If they don't penetrate the major markets, then there are simply no homes for 156-seat aircraft, and especially the number of them they still intend to have in their fleet (202). c) LGB is slot restricted, so there is a city they have cultivated a passenger base and identity in, and they are hemmed in. d) Last I checked, EWR is in the NY metro area. If a carrier that has done its best marketing and customer outreach in NY cannot translate its message a few miles away, what does that say? I am sure that somewhere in their plan of operations they thought EWR would be their 'other' airport, possibly their way of getting into some of those major markets I mentioned earlier (EWR-ORD is easier to sell than JFK-ORD). By not showing success on EWR-TPA (I thought NY-Florida was their core!) that tells me that there is less to their success than we though. If they are stuck at JFK trying to fly the major metro markets, they will have to accept sub-par fares, and we know where this leads. Before I take too many hits on this one, yes, I agree one can be a successful niche carrier. However, one cannot be a successful niche carrier with the better part of 200 aircraft arriving over the next 4 years and nowhere to put them. 3) I am bullish on the new Delat transcon product. IF DL can spike the frequency levels and make it a real competitor, using real airports, and leveraging their service offering out of NYC (LGA-ORD is a start – and notice it is LGA!) jetBlue might feel the pressure. Assuming, of course, DL keeps pricing the product like jetBlue does. 4) jetBlue is throwing sales out there that, while not as radical as those offered by Spirit and Independence Air, are still troubling. Should they really be giving the product away? What does that say? 5) Price competition only goes so far. With the various restructurings, the legacy carriers have bought time. Unless jetBlue can start earning real revenue, and the profits their cost advantages should grant them, they will soon be weak and vulnerable. Or at least they will be equal to their larger competitors, albeit with a smaller route system. 6) Having the core of their operations in the most congested airspace in North America comes with problems. There will be delays and cancellations and re-routes, etcetera. Yes, there are customer service impacts that will have consequences, but I am less worried about those. After all, if you live in NY and you fly to and through NY, you are used to airline operational problems and you accept them. (Anyone, passenger or analyst alike, who expected different from jetBlue deluded themselves.) I am more concerned about the limits this will eventually place on their aircraft utilization. Once those A320s (the ones with limited uses outside of JFK) start seeing their average achieved utilization drop from 11 hours a day to 9, jetBlue will feel the pressure. Of course, the good news is that they certainly will have plenty of operational spares due to a lack of good markets left to expand into. 7) jetBlue is a niche carrier that filled a need. I'm going to get in trouble with this, but here goes. Where is jetBlue consistently expanding, and, possibly making money? NY-Transcon, NY-Upstate NY and JFK-Florida. a) The transcon market from JFK suffered from high fares for a long time. This is a case where 3 great things happened when jetBlue entered the market. First, they did stimulate travel. When JFK-LGB is as cheap as JFK-PHX or JFK-SJU or JFK-FLL, there will be incremental travelers brought into the market. Second, they pulled passengers off the connecting legs of other carriers - If you can fly nonstop JFK-LGB for $149 o/w, why take TZ over MDW for $129 o/w? Third, they did stimulate smaller-airport traffic. BUR and ONT and SMF and OAK have always had good service in the California corridor, but to nowhere else. Apparently there was some latent demand for real nonstop service. Finally, JFK works for the west coast market because jetBlue is at least on par with everyone else in terms of airport preference. All nonstops to the coast (excluding those perimeter exemptions) are from JFK or EWR, and, in this particular case, JFK is perfectly acceptable. b) Upstate NY has always been over-priced on a segment yield basis. Of course, we owe this to USAirways. We can be certain that this market had latent, untapped demand, and that demand was satisfied by jetBlue. In addition, most of the trips in the upstate markets to NYC were on props (USAirways again, of course) or, later RJs. A bigger plane obviously appeals to some people. c) Florida. The founder behind a paper airline that never flew, ironically, said there is always demand for seats NYC-Florida at the right fare. Apparently that is true. At the time jetBlue entered FLL; the market had a token TWA presence, and mostly DL, US, AA, CO, and NK operating some permutation of NYC-MIA/FLL. Only one of those carriers was a true discouter. Apparently, there was room for plenty more operators, especially after TWA went away, and US started to not like NYC-Florida markets. And the jetBlue product appealed to the right passenger. What am I getting at here? jetBlue came into the right markets at the right time with the right product. These markets needed the service. Apparently, there are not a lot more markets out there like that. Does BOS-RIC scream for additional service? JFK-ORD? 8) The jetBlue market/experience/mystique/value proposition is limited. Sure, TVs are great on the 5 hour leg to BUR, or the 3 hours to FLL, but with JFK-BOS they will have limited value. Is it really enough to make you choose JFK over LGA? jetBlue over DL? 9) jetBlue is essentially a point-to-point carrier, except for people north of NYC. Point-to-point is great according to all the analysts, but there is one problem. How many point-to-point legs currently will support 156-seat A320s? More importantly, how many will support that additional capacity NOW? How many minimally contested markets are there out there? 10) How much longer before they have to bump into real discounter competition? They haven't yet beaten Southwest in any market they have faced them. They have lost to AirTran (with a little help from DL) in the ATL-LAX market. I am going to assume that the lack of desire to expand into DEN from JFK is not just because it is a UA fortress hub (see note above about their entering fortress hubs) but also due to the Frontier presence. And DEN is only going to get worse as WN competition heats up. 11) Eventually shiny and new wears off. All it takes is talk of rough times ahead to start making those jovial, fun, cute, extra-helpful frontline staff start acting like the grizzled veterans at every other carrier. Will you still fly with jetBlue if the customer-contact experience is similar to that of every other carrier? Is unsustainable youthful enthusiasm a major part of their appeal? Only Southwest seems able to maintain that kind of glee over the course of decades. And Southwest doesn’t have New Yorkers flying their flights in large numbers. 12) My favorite part of the rant: Chances of future success? Limited - jetBlue is in NYC, trying to pay their leadership Southwest-Dallas style wages. Now, really, who is going to move to NY to work for jetBlue (aside from college interns) knowing they will be lowered to poverty level (and let's not get into the stock ownership - right now that isn't looking like too good of a proposition) based on their wage offerings. Good leadership costs money, and in NYC, it costs a LOT of money. Now, if a Legacy carrier disappears in a meaningful way (DL gives up on JFK?) or if jetBlue finds ways to expand successfully or defers aircraft deliveries, then their chances for survival increase. But as of now, there are just far too many unfavorable outcomes ahead. Eventually, you hit some pot-holes while avoiding others. I am surprised to hear reference to weak yields on long-haul flying. Weak? Of course it is weak because jetBlue is flying every possible JFK transcon except the important ones, and they are pouring tons of frequency into the market. And why on earth do you keep upping the frequency? Think about it - how do you decrease RASM? Add more seats! Hello, McFly, hello!! Of course, this does explain why they have not been boosting frequencies in some markets that should have more service. Only 2 in JFK-PHX? Great schedule offering on JFK-SEA too. Why isn't jetBlue pulling passengers off other airlines connecting legs in those markets? Could they be running into tapped-out markets already? I love the enthusiasm with which the jetBlue spokeswoman speaks of new routes. We all know that each new route will probably perform worse than any current route, unless something major has changed. I don't think the collapse of Independence adds that much to the jetBlue equation. Still, 2 destinations will save the airline, right? And what could they possibly be adding from JFK that makes sense with A320s? They are all out of Florida (well, except JAX, which could actually be a good move). What else is there? Gotta say, it has to rank somewhere below JFK-RIC, and JFK-PWM, and BUR-MCO. If it ranks below those, it's gotta be pretty average and I wouldn't be banking my airline on those markets. My point? While we haven't been looking, they have been doing a bit of flailing. The announcement of the alliance push is yet another example. All of a sudden they want alliances. That is a way of increasing average revenue, and also of improving utility to the NY passenger. I read a quote somewhere that stated that they had not seen positive results in 17 out of the last 20 new markets. That is a nasty track record. Sure, some markets take more time to spool up than others. But the easy assumption is that if they don’t add service in those markets once more A320s come in and once there are more facilities available at JFK, then we can pretty much assume those markets aren’t gems. All this anti-jetBlue press cannot be coming about by accident. Gotta be some fire behind all this smoke. Check stock performance for jetBlue versus each of the legacy carriers over the past year, just in terms of percentage change (available via Yahoo). Yes, analysts can destroy an airline. But if there weren't blood on the water, and some shred of credibility to tie this crying wolf to, then the opinions would be useless. SO, what can we look for as the signs of the jetBlue apocalypse? 1) A shift to LAX on the west coast. If they start operating JFK-LAX, we know they are really reaching. Of course, it is one of the 2 west coast airports they don't serve. There is only so much transcon traffic to be had out there. 2) Entry to 2 major hubs. We know they don't do well in other people's areas, but they have to, and with the A320s coming in, they really have to. Thus the flailing will begin. Assuming no other Legacy carrier goes bust, I could schedule homes for 50 more A320s, some uses a little questionable, some very logical, give that there are some markets that are begging for additional service. Not many, but a few. This scheme takes their fleet to 132. 70 more are due on top of that, give or take some renegotiations. Gonna be hard to use that many planes unless something fundamentally changes. 3) Front cabin product introduced. Oh, the joy of replacing 28 seats with 20, but charging twice as much per seat. Tempting, but it hardly ever works out. First, jetBlue is in the wrong markets to really do that. Sure, long-haul JFK-LGB is a logical place for a front cabin, but the people flying in front cabins on those routes are already on the legacy carriers and locked in. jetBlue would have to do something really special with their front cabin to make it worth getting out of some of those corporate contracts. How much better of a front cabin could they make? And I hope Fred Reid is watching this situation closely. So far, every bit of information leaking out about Virgin America (and there has been very limited information) seems to be saying that this operation will be a West Coast jetBlue. Well, Fred might want to make sure he is hitching his wagon to a successful horse. Copying failure is a great way to repeat it. P. Tyler

AA tells agents to consider new channels

ATW -- News from Travel Technology Update: American Airlines warned travel agencies that if they use more expensive booking channels, they may be asked to share the expense. In a letter signed by David Cush, vice president and general sales manager, the airline noted that its full-content agreements with the GDSs expire this year, and it reiterated that it may not participate in all four systems. Cush urged agencies to "consider adding other sources of fare content or leaving yourself the flexibility to add other sources of fare content." American's move came in the wake of the agreement between Sabre and Amadeus that gives the GDS companies the option of backing each other up in the event an airline drops out of one of the systems. Kay Urban, chief executive officer of Amadeus North America, said the deal was struck to give travel agency subscribers confidence that they will continue to have access to airline content. Most major U.S. carriers are currently negotiating new GDS agreements for the first time since the GDS industry was deregulated, allowing them to drop out of one or more systems if they choose. That, coupled with the emergence of alternative providers such as ITA Software and G2 SwitchWorks, has led to a certain amount of public posturing by the airlines. The potential for fragmentation has generated some unease among agencies, which the Sabre-Amadeus agreement seeks to dispel. The agreement does not apply to any airline that does not currently participate in both systems. Chris Kroeger, senior vice president of Sabre Travel Network, North America, said Sabre "fully expects to have full content," but "we feel it is prudent to have a backup plan." American also issued a statement that called the legality of the agreement into question. "American believes that its contracts with GDS providers prohibit redistributing and remarketing American's content among those systems," it said. Kroeger thinks otherwise. "I assure you that we looked thoroughly at our agreements with our airline customers, and these types of arrangements are allowable and valid." American's suggestion to agencies that it might seek reimbursement if they book through expensive channels is reminiscent of Northwest Airlines' attempt in August 2004 to impose a "cost sharing" fee on agencies that booked the carrier through GDSs, rather than its dedicated agency Web site. But at the time, Northwest was bound by its full-content agreements with the GDSs, whose lawyers argued that adding a fee to GDS bookings violated those contracts. Northwest responded to the Sabre-Amadeus agreement with a terse statement: "We have one agreement covering Sabre subscribers and one agreement covering Amadeus subscribers and we expect the parties to respect those agreements." Northwest recently signed a new, five-year full-content agreement with Sabre that includes the settlement of litigation over its "cost-sharing" fee. ---------- So AA wants to break the GDS model? Agents cannot afford to pay for their own technology. So what comes next? Probably higher service fees for customers. Which means more business for online channels like Orbitz, Expedia, Travelocity. Also an ever smaller pool of travel agencies.

Authorities in Qatar restrict low cost carrier discounts

eyefortravel.com -- According to a report from Doha, the Civil Aviation Authority will maintain a cap of 15 percent on the differential in airfares that can be offered by LCCs over conventional airlines, in the local carrier market, a top CAA official asserted. Such a ceiling on the discount LCCs can offer passengers, he added, was essential to ensure that all airlines operating to Doha yields that justify operational expenses. The CAA has structured airfares sold in Doha under three categories- Direct, Indirect and LCCs. Indirect carriers can offer fares that are eight percent lower than those offered by airlines flying direct between Doha and any particular destination. LCCs will be allowed to sell tickets up to 15 percent cheaper over fares offered by direct carriers, the report added. According to The Peninsula, Saleh Haroon, director, Air Transport and Airport Affairs (CAA) explained, Qatar could accommodate both, LCCs to serve the economically weaker segments of the society and Full Service Carriers (FSCs), that are preferred by the high-end leisure and business traveller. “If LCCs are allowed to offer fares that are much low than FSCs, conventional carriers might be forced out of operating on a particular route from Doha, affecting passengers who wish to pay more but avail of better services. Hence, we have to regulate the fare difference that LCCs will be allowed to offer in the local travel market,” he told the publication. He emphasised, the CAA had not dictated terms to any carrier to compromise on its in-flight or any other service to cut operational costs. “Hence, LCCs cannot dictate what should be our definition of a budget carrier. Though such carriers cut costs on in-flight meals, operate newer, fuel efficient aircraft and offer lower free baggage allowance, they still have other expenses on crew and navigation. If they do not wish to offer a service does not automatically imply that we will allow them to drop prices.” --------- So its not a free market. This is protection given to legacy carriers and a very bad thing for LCCs. The location of this interference is interesting too - smack in the world of Emirates, Gulf & Qatar.

TSA: A 100% Failure Record

Mike Boyd has a fabulous piece on the TSA - here's our favorite part: "... The GAO report, while still classified, supports TSA's conclusion that we must focus on finding and stopping those who would bring bomb parts onto an aircraft... I am proud of the work that our TSOs do every day. Americans can be confident that TSA is working closely with the entire security community to stop terrorists and protect the traveling public..." Baghdad Bob, apparently, has landed a job ghost-writing for the TSA. ---------- Recommended reading. Click the link.

Emirates very unhappy with their 340s?

Rumor has it the airline's 340 fleet has had dispatch reliability below 98% over the past three months compared with over 99.5% for their 330s, 777s and 747s. This is a primary reason their new 340 deliveries are on hold. Even with Airbus engineers on site, dispatch reliability has not improved.

EASA Funding Proposals Riles Industry

Teething troubles begin to bite as air safety agency EASA struggles to balance its books. A funding crunch within Europe's fledgling aviation safety agency is raising the specter of delays in the certification process. The Airbus A380 widebody is one of the aircraft the agency is dealing with. The European Aviation Safety Agency is struggling to close a gap in its funding, a problem raising concerns that certification activity could be delayed. To replenish its coffers EASA is proposing--at least a temporary--a 40% increase in its hourly rate for certification work, along with substantial fixed-fee rises for design organization clearance. EASA is believed to be 18 million euros short of its intended 70-million-euro ($84.2-million) budget. A European industry source suggests some within Airbus were understandably willing to accept the price hike to avoid any potential threat to the A380 certification schedule. One European source claims Airbus is concerned about the difficulties being experienced by EASA, and the potential follow-on effect. Airbus says it is "absolutely not true" that there is a threat to the certification timescale. The A380, it maintains, will be certified in time to permit first deliveries by the end of the year. But Noel Forgeard, co-CEO of Airbus parent company EADS, has acknowledged that meeting the deadline "will be a real challenge" (AW&ST Mar. 13, p. 48). Neither would the company discuss its view of EASA's proposed price increase. "We never discuss certification costs. They have a price that is to cover all aspects of certification and these are included in the global development budget. We don't discuss individual items." Most of the rest of Europe's aerospace industry, however, is bridling at the price hike proposals from EASA. Lobby group Aerospace and Defense Industries Assn. (ASD) is warning that the proposed fees regime could threaten the viability of some smaller companies. The ASD is acting as the lightning rod for those opposed to the charges. Francois Gayet, the ASD secretary general, last week wrote to European Union Transport Commissioner Jacques Barrot concerning the issue. "Industry is clear that the increases in fees and charges proposed cannot be the way forward. It is equally clear that the continued effective operation of EASA is critical both in terms of credibility and the continued operation of European industry. It is absolutely essential that EASA responsibilities and services are maintained without degradation," Gayet writes. Gayet specifically raises the threat of the certification process being hit by EASA's financial predicament, in his letter to Barrot. "It is of the utmost importance that all currently required certification activities are being continued without any delay to avoid the exceptionally damaging impact on both the credibility of EASA and the competitive position of European industry," he stresses. The ASD is supportive of EASA's aims. Its gripe is with what it sees as an unfair loading of financial responsibility for the organization onto companies. Some European aerospace executives, and officials from national aviation authorities, have previously suggested that EASA has been hurried into operation, and that a further 12 months of planning would have been beneficial. Engine manufacturer Rolls-Royce has in the past characterized the EASA charging regime as "highly bureaucratic." THE organization came into being in late 2003, and is the successor to the Joint Airworthiness Authority, in its role as aircraft and equipment certification authority. In his letter to Barrot, Gayet argues: "The budgetary problems being experienced by the agency derive, in the large part, from the constraints and complexities of the regulatory framework within which it is required to operate." Rather than have industry drum up the additional cash to cover EASA's temporary financial embarrassment, Gayet maintains, "The [European] Commission must accept that the regulator has a primary responsibility in addressing the solution of the problem created by regulation." An industry team will meet with Patrick Goudou, the EASA executive director, on Mar. 24, to further discuss the funding problem. British industry is also lobbying U.K. Transport Minister Alistair Darling regarding EASA's financial dilemma, and the proposed price hike. The U.K. industry, as does most of the ASD, would like to see the European Union Commission "meet its responsibilities," in tiding the agency over this period. --------- VK

747-8 ad - shades of Infiniti?

US readers will recall the original TV ads for Infiniti. It was all trees, water and other stuff - hardly any car, which is what they should have been selling. Lexus came out with car ads. Lexus sold cars - lots more than Infiniti. With that in mind, watch this ad. We think its really odd with shades of the original Infiniti ads. Click Boeing is not perfect - there you are, for readers who think we only bash Airbus.

Boeing vs Airbus - our thoughts on status quo

Today we hear that Airbus is looking into a stretch 350 to compete with the 787-10. Airbus is already stretching its engineers to keep pace with current programs - of which they have many. Now a stretch of the 350? Who, pray, is going to work on this project? Moreover, the word is that GE will offer a variant of the GP7200 from the 380 as a solution for the extra thrust needed. The 350 program is already delayed three months because of the changes to the flightdeck. Recall the 350 was a rushed response to what was clearly a home run by Seattle. Airbus has done amazing work refining the initial 330 derivative into a vastly better airplane - so much so, we think it will actually take over not only the 330 market but is also now impacting the 340. Indeed, the 350 as it stands is highly likely to shut down both these programs. However, in case you wondered (and yes we expect to get flamed again), this reaction from Airbus clearly shows that Boeing is in a powerful leadership position. Airbus keeps reacting as opposed to leading. In the words of the 350 program manager: "Customers are shown Boeing’s proposed 787-10 stretch and we then get asked what we can do with the A350,” says the programme’s chief engineer, Dougie Hunter." Ouch. Boeing is doing this because it has fewer programs and is able to focus resources more effectively. The 777 & 787 are a formidable combination. It would be much better for Airbus to focus on the 350 and quit tinkering with the 340 as the 350 can take on both Boeings. Their future lies in the 350 - even with its current hull size. Meanwhile Boeing plans to double 787 prodcution. The stakes rise.

Wither the 340?

FI -- Emirates Airline looks set to defer deliveries of its Airbus A340-600s which are due to start by the middle of next year, as it waits for the manufacturer to clarify its plans for an enhanced version of the aircraft. Emirates is due to be one of the early operators of the Rolls-Royce Trent 500-powered A340-600 high gross weight (HGW) variant, which is currently in flight testing in Toulouse (pictured above). However the airline is concerned that if the manufacturer’s proposals to introduce a major upgrade to the aircraft – dubbed A340-600 Enhanced – come to fruition it would effectively render the current model obsolete. Flight International published exclusive artist's impressions of the A340 Enhanced last November. “Our order is still intact, but we’ve said to Airbus ‘let’s agree to defer until you know what you are going to do with the enhanced model’,” says Emirates president Tim Clark. “We’ve told Airbus that we don’t want to take the [-600HGW] and then be leapfrogged by something that is a bit better,” he adds. Although the airframer shows the Emirates A340 deal in its backlog as an order for 20 aircraft, Clark says that contract actually comprises 12 firm orders and eight options. He adds that the first aircraft is due to arrive in “around 16 months” but at this point the two parties have just a verbal agreement to discuss a deferral of the order. ----------- Mr. Clark's airline is Airbus' most important customer at present. So when he speaks, Airbus listens. The facts seem to be that Airbus is coming to the realization the 340 is being eclipsed. Besides the now infamous Leahy memo, the idea of a HGW and then announcing an "E" indicates designers are struggling with keeping this plane credible. The 350 technology being added to the 340-600E will not make the plane any more attractive than the 350 is already. Indeed the 350 seems to underscore the fact that twins are more attractive the 4-engine solution. A 340 customer (like Mr. Clark) must be frustrated by the apparent confusion - and his reaction is rational. Why consider the -600HGW knowing it is an iterim solution? Just like Boeing hanging on to the 767, with orders coming in drips and drabs, Airbus is hanging on to the 340.

Bird flu in Israel & Egypt

Haaretz -- The (Israeli) Agriculture Ministry confirmed Monday afternoon that avian flu has been detected in two more locations in Israel, bringing the number of sites at which the disease has been found to six. Suspicions that the virus had reached Kibbutz Nir Oz and Moshav Amei Oz, both in southern Israel, were raised when dead turkeys were found at both locations, and the presence of the virus was confirmed Monday. "We are talking about infections in six flocks in four locations when there are thousands of flocks in Israel in a vast number of locations," Shimon Pokomonsky, a senior veterinarian at the Agriculture Ministry, told reporters. AP -- Egypt reported its second human case of avian flu Sunday, and Israel continued its slaughter of hundreds of thousands of birds while waiting to learn if the disease had spread to poultry there. A 30-year-old Egyptian who worked on a chicken farm in the province of Qalyoubiya was the second person infected by the virus in Egypt, the Health Ministry said Sunday. Um Mohammed, a 35-year-old widow and mother of two, complained that although she had told authorities that her birds were dying, "They did nothing to help me." "Day after day, I watched my chickens die. I felt as though I was handcuffed," she said. The country's first known human case, a woman who died Friday, was from the same province, north of Cairo. The two victims had not had any contact and were from different villages, el-Sayyed told The Associated Press.

Aeroflot long-haul fleet decision delayed (again)

This is an order we have blogged on before. Something does not seem to be going well within the airline. The initial (airline) decision was in favor of the 787 last year. Airbus then tried again sucessfully to revisit their offer. The Kremlin the seemed to get involved at the time of the gas pipline fracas. Today FI reports: Aeroflot is reported to have delayed its much awaited long-haul fleet-renewal decision until next month. Deputy CEO Lev Koshlyakov is reported in the Moscow Times daily newspaper as saying the selection between the Airbus A350 and Boeing 787 will definitely not now be made this month, but he hopes it will not be “any later than April”. He is quoted as saying: “From a commercial point of view...the two offers are on a par. There is no obvious leader.” And, as predicted here earlier, he adds that the views of President Putin’s administration will be crucial to the final outcome. Terms of entry for Russia’s accession to the World Trade Organisation, which in turn impinge on new aircraft import tariffs, are said to be among the items under discussion. It is also likely that the industrial activities of Boeing and Airbus in Russia will be crucial. ---------- Something doesn't jive here.

Hooters Air a goner?

Apparently all routes except Newark-Myrtle Beach will be axed - is this the end of such a sight? Say it ain't so!

BAA Rejects Bid from Ferrovial

Troubled British Airports operator BAA, which owns and manages Heathrow near London, has rejected a bid from Spains's Ferrovial for over €12 billion (euro), according to inadaily.com.

jetBlue - feeling too blue?

"JetBlue Airways Corp. is talking with international airlines about forming partnerships to provide seamless overseas air service, including for Richmond-based travelers, an airline official said yesterday. "We are actually in the very early stages of figuring out a way for customers to [fly] with any international airline that wants to partner with us," spokeswoman Jenny Dervin said. ----------- We are speaking here of the airline that refused to join IATA, refused to be seen in the same light as other airlines (no codeshares).... what is going on here? Is jetBlue running out of places to serve inside the US? They've thumbed their nose at the rest of the airline establishment but now want to be a part of it? We wonder who is running their marketing planning group. This story requires a great spin artist. Something does not fit. Either they have something really clever up their sleeves or something is no longer working. We don't think they're that clever.

Australia loves Emirates even if Qantas does not

Tourism Australia and Emirates Airlines have formed a three-year partnership to increase arrival numbers from Germany and the Gulf Countries. Tourism Australia managing director Scott Morrison said the agreement was flexible, giving both parties the possibility to collaborate on a wide variety of projects. Emirates' strength in Germany and the carrier's extensive route network from Britain and Australia's other European markets, such as France, Italy and Switzerland, make the airline a natural partner for Tourism Australia, he said. "Germany is a priority market for Australia and this agreement underpins our commitment to the market," Mr Morrison said. --------- Here we go! Don't you wonder why Singapore did not do the same thing? The pressure on Qantas rises, and with Emirates coming on, this pressure also applies to Singapore.

Volare flies

Two pictures taken on Volare's first flight. Good luck!

Lufthansa becomes Boeing Connexion posterboy

In an interview with Bernhardt Seiter, Lufthansa's Director of Product Management today, we learned just how pleased the airline is with in-flight broadband from Boeing. Launch customer Lufthansa has leapt ahead of competitors Air France and British Airways. By the end of this month all the airline's long range widebodies will have Connexion. The airline accounts for approximately half of all the Connexion-empowered planes. Recently Lufthansa smashed the in-flight Internet access record previously held by SAS. The previous record of 50 simultaneous users has now risen to 106 on a LA-bound Lufthansa flight. The airline is seeing 10% growth per month in system use. Indeed, internal surveys indicate that about one in five passengers is switching from competing airlines solely because of the in-flight Internet access. IAG believes this technology is so powerful that people whose time is valuable (high yield business travelers) see in-flight Internet as the most exciting thing since the start of the jet-age. It's not about the system revenue, it’s about changing behavior - specifically buying behavior. Lufthansa demonstrates the first mover advantage. Listen to the whole interview on the portal.

Pay Per View Interviews on IAGportal

This entry links to the new pay per view audio page on the portal. You can now access one interview for an unlimited number of times, by paying a special low price. This is significantly cheaper than the annual subscription, but you do not get access to the portal premium content going forward. We recommend this option for people who have a specific interest in one or two of the interviews, and if you like them enough that you convert to a full paid annual subscription, we will deduct the price of the interviews from that subscription. If you have any questions, just get in touch.

BA axes 400 jobs as web sales rocket

BA said that its call centres have received nine million fewer calls since 2001, and that it will close its Belfast call centre as a result. ---------- This is the way its going across the board. Airlines are determined to squeeze costs they can control.

Can eBay become the ultimate travel distribution channel?

eyefortravel -- Hotels and hotel chains have started selling their accommodation packages through eBay. The category “Travel” on eBay Germany has 23,000 listings and according to Cultuzz, eBay Germany has more than 10,000 items listed in the short-term lodging category at any time. A short break is sold every two minutes. - (3/16/2006) Still compared to overall travel sales figures eBay is only distributing relatively small numbers. But, with a brand and visitor traffic rivalling the Googles and Yahoos of this world and following technological investment from technology partners (there are now systems that link PMS and CRS systems directly into eBay), will hoteliers be soon using eBay as a major distribution channel? It also seems that it is not just excess inventory that eBay could help sell. At the moment 70-80% of travel products sold on eBay are short break auctions but technology from Cultuzz was on show at ITB which demonstrated that soon "Buy it now" and "Dynamic Packaged products" will be available through this channel. So if eBay chooses to invest in Travel, the world’s biggest market, and really targets travel suppliers all sorts of question arise: . Bearing in mind the Intercontinental type web site price pledge, how many hotels could eBay actually represent using its auction model? . Where does this leave hotels trying to protect their online brand? . Will this effect online agents such as Expedia and Travelocity, and travel search sites like Google, Yahoo! Travel or Cheapflights? . How do the eBay distribution costs compare with other channels . How big could the eBay sales channel get? ------------- And with Skype built in (like we do on this site) a seller and buyer can speak and interact immediately. Very clever.

EU agrees on list of unsafe airlines

EU aviation experts agreed on a joint list of airlines to be banned from its skies because of safety risks, following a series of deadly crashes last year. However, the European Commission said that it would not reveal the names of the airlines until it makes the unanimously agreed decision official within a week. --------- There has already been push back. Belgian airline SN Brussels had a aircraft impounded in Rwanda (Africa) because the Belgians grounded a Rwandan plane in Belgium. We expect European airlines to cut back service to African nations on the banned list because these countries will retaliate with whatever they can. Impound an aircraft once and that plane won't come back. The existence of this list is going to create a lot of trouble.

Good Bye Helios - hello Ajet?

Cypriot tour operator Libra Holidays has confirmed it is establishing a new charter carrier, Ajet Airways, to take over flight operations from its beleagured carrier arm Helios Airways. -------- Remember how we lost Valujet after a crash? Airtran never looked back. Airline brand values are decimated by crashes. Often you see the tails of crashed planes are covered to hide company names or logo. The picture below demonstrates how large the impact can be of the identifiable remains from an airplane crash.

Ontario, California getting ready for the 380

Interesting how LA is getting ready for the 380. Qantas is likely to be first with the 380 into Southern California. Ontario is likely to see UPS' 380s in 2009.

Ryanair withdraws some Sweden flights

"Low-cost airline Ryanair says it will scrap some of its routes from Sweden if the government’s proposed flight tax is introduced in the summer. The airline says that the proposed 100 kronor flight tax means that certain routes from Malmö and Stockholm will no longer be profitable. “This will cost passengers too much, and give us too small a profit,” airline spokesman Sean Coyle told Sydsvenskan." -------------- Now comes the tough part of the Chirac-tax. Suppliers start to add the cost and consumers have to eat it. Or do they? Its a game of chicken and tax-weary Europeans must be groaning. Small thought - which is the next nation inside Euroland with an election? Lets see if this tax gets any mention.

Thomas Cook AG in major shake-up after return to profit

Thomas Cook AG has unveiled plans to realign the business away from being an integrated travel group while announcing a return to profit for the first time in four years. The German-owned company recorded an after-tax profit of euros 105 million, exceeding the previous year’s level by euros 281.8 million. The profit margin was up to a record 24%. Details of the UK performance – which will show improved profits – are due to be revealed later in the week. Finance chief Ludger Heuberg said: “All key segments have improved their income position and are reporting profits. Thomas Cook UK & Ireland achieved the best level of profitability while Condor recorded the biggest improvement in earnings.” The group - owned jointly by Lufthansa and KarstadtQuelle - carried 1.1% more passengers in 2004-05 at 13.2 million over the previous 12 months. “An enhanced product mix and pricing measures – particularly in the UK market – contributed to group sales (euros 7.7 billion) rising faster at 2.4% than customer numbers,” the company said. Cutbacks in overheads made a “key contribution” to the improved financial performance, including personnel costs down by 2% and operating expenses reduced by 8.4%. Earnings before interest, taxes and amortisation of goodwill (EBITA) increased by euros 171.1 million to euros 193.2 million. Heuberg said: "Our restructuring activities have clearly had an extremely positive impact on our balance sheet structure and financial health." Alongside the annual results, new chairman and CEO Thomas Holtrop revealed a “reorientation” of the business guided by changes in the leisure travel market which has seen customers becoming more price-sensitive and booking later. Meanwhile new entrants with innovative business models and rivals are also embracing change. “All this has increased the pressure on the classic package tour and on the leading operators,” he said. “They have no choice but to respond drastically to the new market specifics in order to convince the customers of the continuing benefits of the products and services they offer. “Our core business involves offering customers a broad selection of package holidays, components and services that are tailored to meet their individual needs. The products are to be distributed via a variety of channels, both operated by ourselves and in co-operation with others. In order to achieve this we need a highly flexible business model that ties up as little capital as possible. “As such we are gradually departing from the ideal of an integrated leisure travel group. Not because the model itself was bad but because it has outlived its usefulness. “It no longer conforms to the needs of a time characterised by excess capacities and falling prices at airlines and hotels. The risk of not using fixed capacities sufficiently now outweighs the opportunity of the enhanced return on investment associated with them. “Our aim is, however, to reduce risk levels, improve our flexibility and speed, thereby tapping new growth areas – which is one of the key aspects of our strategy.” He said the company would be focusing its resources on three key areas - access to services, access to customers via all relevant distribution forms and low-cost production. A new e-commerce division is to be set up, with Holtrop saying: "We aim to develop our e-commerce actrivities still further. We are ideally placed in the market to achieve this and, what is more, this approach has already shown great promise in both Germany and the UK with the offers of Mix&Travel and flexibletrips.com." Despite the planned changes, package holidays would continue to be the "key cornerstone" of the business while classic travel agencies will continue to be the cornerstone of the distribution network, Holtrop added. "Here, size is an advantage," he said. "Only large tour operators are able to offer the necessary scope and variety of choice while, at the same time, keeping the promise of quality customers associate with a package tour - affordable prices, assured quality, a high degree of availability, perfectly co-ordinated services, all-round care in the destination countries and, last but not least, tour operator liability." Holtrop added that the aim was to "sharpen our brand portfolio still further". "We are convinced that we can then achieve attractive margins whilst building on the position we have already established for ourselves in the lesiure travel market," he said. The group forecast further market growth in Europe of at least 2% in the 2005-06 financial year. Report by Phil Davies

Kuoni and the future of air travel

More from Hannover: 1. KUONI STUDY ON FUTURE OF LEISURE TRAVEL The following is the full text of an executive summary of an independent study on ‘The Future of Leisure Travel’ created by the Gottlieb Duttweiler Institute on behalf of the European tour operator, Kuoni Travel Holding Ltd. It was released on March 9, 2006, at the ITB Berlin. As the text appears to have been translated from the German, some of the syntax and language may sound a bit odd but has been left unedited in the interests of maintaining the accuracy of the original. -0- The market for holidays and travel is becoming more dynamic and complex. Customer behaviour is increasingly incalculable. Although short-run movements in the market are well documented, there is no overall picture of long-term perspectives. The question is: In what direction is the holiday and travel sector headed? This study analyses the wishes and values of travellers. It describes the driving forces of change and answers questions of relevance to the market: Who will travel in the future? What are their motivations? What new travel markets are to be seen on the horizon? What will be the most popular destinations in 2020? THE MOST IMPORTANT DRIVING FORCES FOR CHANGE IN TOURISM 1. SOCIAL DRIVERS <> Ageing society: In 2020, the elderly will be in the majority in Western Europe. Children and young people will be in short supply. <> Individualisation. Growing demand for individual holidays. Falling demand for package tours. <> New family structures. More and more singles. Ever fewer families with children. <> Health consciousness grows. Destinations with potential health hazards will come under pressure. Areas with contaminated water and beaches, polluted air, ugly buildings, a risk of infection, etc., will be avoided. <> Value orientation increases resulting in a new competition of values. Ecological, ethic and social values become ever more important. <> Decline of the middle class in Western Europe. <> Leisure time declines. Western Europe must work longer again. Raising the pension age retards the growth of senior travel. 2. TECHNOLOGICAL DRIVERS <> Availability of information. The spread and performance of information and communication technology continue to increase. Access to tourist and booking Information will become even simpler, faster and cheaper; <> Transport: more, faster and cheaper long-distance connections. <> New search and mapping services. Geo-tagging, Google Earth and GPS revolutionise maps. <> Tracking services make it possible to mark travellers like parcels and to locate them at any time. <> Extreme engineering: Opening up new destinations that were previously closed to tourists, e.g., underwater hotels and space trips. <> Environmental-control technology will become more important. Destinations threatened by natural catastrophes will depend more and more on early-warning, water-treatment and weather-control technology. 3. ECONOMIC DRIVERS <> Greater competitive pressure. Tourists expect more for less money. <> Booming Asia. Wealth and power shift towards the East. <> Polarisation of demand for cheap and luxury offers. Growing pressure on the middle. <> Daily rock-bottom prices are normal and expected. The downward once spiral will revolve faster and faster and the margins will shrink. <> End of industrial working in Western Europe. <> Growing vulnerability of financial markets. 4. ECOLOGICAL DRIVERS <> Unspoilt nature will become scarcer and, therefore, more valuable. <> Climatic change. Regional climatic advantages shift. <> End of the oil reserves. <> Traffic jams will become chronic, the consequential effects increase and make travelling an even greater torture. <> Ozone hole: the sun is dangerous. Sun? Just say no! 5. POLITICAL DRIVERS <> Political uncertainties increase and prevent or restrict travel. <> Growth of terrorism. Security measures, visa regulations and entry controls will become even stricter and make travel more complicated. <> Opening up of China. China and its numerous and its numerous previously unknown sights, could develop into the world’s popular tourist destinations over the next 15 years. <> Declining trust in politics. <> Disintegration of shared values. Clash of cultures. Intercultural conflicts spread and intensity. Thus, travelling will become more dangerous again. MEGATRENDS AND COUNTER TRENDS -THE CONSEQUENCES FOR THE TRAVEL INDUSTRY In principle, holiday travel remains a mass business. However, it will be a more individual form of mass consumption. Holidays will be less frequently booked as package arrangements and more often compiled a la carte. Conventional categories will be dispensed with and the required service and comfort modules booked as required. On the other hand, many people are looking for a greater sense of community. In many cases, the need for personal contact and to be together with friends and family is the reason for the journey - and this will become increasingly important. In the future, tourists will expect more meeting and dating services. The growing number of singles calls for services that help them organise their social and love lives. As life becomes more complex and chaotic, as we are forced to be more mobile and travel with increasing frequency, we look for holidays as a counterbalance offering a touch of normalcy and stability - either stay at home or travelling to the same place year in, year out. The variety of arrangements threatens to overtax more and more travellers. How are thousands of elderly people of 80+ expected to get around big airports? In the future, straightforward but smart packages will be in demand, too. For simplicity is a privilege and also means VIP treatment: in the “fast lane”, travellers get where they want to go quickly and easily without queuing. On the other hand, simplicity also means more travel arrangements for “dummies”. Travellers will be given electronic, GPS guardian angels and thus monitored, guided and looked after by “remote control”. There will be no more clearly defined holiday-leisure segments in 2020. For holidays are becoming increasingly bound up with other activities. The number of hybrid arrangements offered will grow, e.g., hotels that merge with clinics, academies or museums, vacation clubs that also operate handicraft workshops, tower blocks with wellness resorts, cruise liners with temporary jobs. By 2020, there will be virtually no unknown destinations any more. The world has been explored. Bombarded with stimuli, the majority of Western Europe’s older customers have experienced virtually everything. Instead of an ecstatic high, people want meditative tranquillity and spiritual experiences. People are exhausted by life in the experience society. The more we can afford, the more we come up against the limits of our physical resources. Opportunities for relaxation will become more important than entertainment. THE EVOLUTION OF TOURISM The travel motives differ increasingly over time: travel for survival and occupational reasons are followed by travel for religious reasons to places of pilgrimage or on crusades. As society grows more complex, people start to show an interest in other cultures. Discovery, knowledge and education are important - as is, of course, the ensuing prestige. Consequently, more emphasis is given to developing ones own personality in a dialogue with foreign customs, different kinds of art and new ideas, as soon as the individual assumes centre stage. However, increased travel is not only the result of a growing self-awareness but also of the infrastructure available. The dangers of travelling decrease. Knowledge and travel experience increase while guides make travel easier. With the advent of new means of transport, travelling becomes faster and cheaper. Growing incomes mean that the great mass of people can travel solely for the sake of the experience, recuperation and pleasure: the way is free for tourism as a mass phenomenon. WHY WE GO ON HOLIDAY Basic motives and fundamental desires behind holiday travel, which will become even more important in the future. <> Whatever: No expectations. I travel because I can. Cheap offers generate demand. <> Recreational: The search for concentrated recuperation, relaxation and regeneration. Holidays as an emotional medicine against exhaustion, stress and depression. <> Experiential: The search for new experiences and sensations. To discover one’s self. The aim is not to see new places but to see with new eyes. <> Diversionary: The search for pleasure, sport, games, variety and the chance to get away from it all. The chance to loose one’s self. <> Experimental: The search for adventure and a dialogue with foreign ideas. Freedom from the limits imposed by things familiar and owned. <> Tribal: The search for love and togetherness with partner, family and friends. <> Existential: The search for purpose, happiness, relief and transformation. Travel with the aim of becoming part of something bigger and to find one’s way. THESES ON TOURISM IN 2020 HYPER HOLIDAY HUBS: “MORE INCLUSIVE” MADE TO MEASURE Tomorrow’s mass tourism will take place in hyper, holiday hubs. Gigantic holiday resorts will be built on the Mediterranean, in the United Arab Emirates, Qatar, China and Brazil, etc. These hyper-modern recuperation centres will offer the entire spectrum of what the heart desires: warmth in all variations from direct sunshine to carefully measured thermo treatments, love from a casual affair to a romantic adventure, physical recuperation from cheap face lifting to individual organic anti-aging treatments. With everything -- including the airport -- conveniently located in the same place. Holiday hubs offer appropriate ready-made holidays, industrially prepared to the extent that they only have to be unpacked and served. Once the success factors for “good holidays” ¬have been discovered, it will be possible to reproduce them wherever required. Given sufficient reserves of land and good transport links, it will be possible to setup holiday hubs anywhere in the world. CARE AND COMFORT People who frequently change their places of work and residence - who travel a lot and spend more time with strangers than with their family - no longer dream of exotic countries. Mobile people with no fixed roots, at home in several different places, yearn for a genuine home. This yearning becomes all the stronger the more difficult it is to achieve what they want. The yearning for home will be more important than the yearning for far¬-away places. Given that more and more women work outside the home without more men assuming more responsibility for the housework, it will be increasingly necessary to satisfy the need for security, cuddles and a feeling of being cared for away from home. Tomorrow’s travellers will be drawn less to the attractions of the foreign than to those of Hotel Mama where they will be shepherd and spoiled. SOCIAL HUBS FOR MEETING AND MATING Travel markets are relationship markets. We travel to meet families and friends, to encounter new personalities, to have casual *^*, or because we are secretly hoping for the encounter love of our lives. The search for a new partner is proving increasingly difficult for a growing number of singles. Under the new circumstances in which we live, conventional ways of finding a partner are Inadequate. One of the main reasons why online dating services are doing so well is that there are no “on-land” alternatives for older people. There is nowhere that people in the mature age groups can go to meet a new partner or lover in an easy and uncomplicated way. For tour operators, an exciting market for real meeting places will open up as an addition to online-marriage markets, chat rooms and networking platforms. In future, marriage agencies will provide the software while tour operators supply the stage for romance, as well as the players for potential love stories. HOLIDAYS AS EMOTIONAL MEDICINE The global trend towards wellness and health is leading to greater health awareness. Good health is the prerequisite for being happy. Health is a growth market because the hunger for health and the battle against aging are never ending. Improved diagnostics and the early recognition of health risks cause people to concentrate more on their susceptibilities. Many of them develop an almost hypochondriac fear of becoming ill and are thus open to many offers that promise health benefits. On the medical side, the growing specialisation on technical operations also leads to nursing specialisation and emotional care for patients In particular, the frail, singles and people disappointed by high-tech medicine will increasingly seek emotional support during their holidays. For tomorrow’s health holidays, the emphasis will be less on the hardware, bathing facilities, saunas, fitness rooms, etc., and much more on the software, in other words, emotional and spiritual care. “GET TO” INSTEAD OF ESCAPE Older people have different values and wishes to younger people. The older we become, the more of our happiness depends on immaterial values, on personal experience instead of ownership and on interesting relationships instead of boring ego trips. “Arriving rather than escaping” is likely to see traditional notions of luxury superseded by new kinds of travel luxury: quality of life through more calm, more, more space and more time for oneself and one’s family. And this means that travellers will be seeking destinations which are convenient to get to and are places where they can enjoy the quality of life to the full and find calmness and security. THE MOST POPULAR DESTINATIONS IN 2020 The process of segmentation into a big mass market and into differentiated premium markets will continue. In the tourist sector, the differences between rich and poor will be more obvious than ever anywhere else. Decisive for an intensive experience is personal service down to the smallest detail coupled with great style. “I experience something that I will always want to tell. No one can relate a similar experience.” SUPER LUXURY Travel continues to be important for the super rich. After all, there is no better material way of demonstrating success than by travelling. The world’s richest people want solely to associate with and measure themselves against their peers. In this connection, exclusiveness and the private sphere are key notions that define the elite. However, there are differences between the various generations. Via ultra-luxurious holidays, younger people show how far they are ahead of their contemporaries. The baby boomers see themselves as pioneers. Instead of investing in their businesses, they now invest in experiences, in their own lives and in the family. LUXURY New luxury means privacy and adventure, e.g., spending a weekend with all members of the family in the shade of genuine old trees or Inviting family and friends for a holiday with full service on one’s private island or simply having time alone with no disturbances. Given, however, that the general standard of living is likely to fall significantly over the years until 2020, it will become an ever greater luxury to be able to satisfy one’s own highly individual wishes or yearnings for a short space of time (or even to simply decide on the time, place and service level of the trip), regardless of whether at sea, in the mountains or in space. CHEAP Cheap is and remains everything that is packaged and easy for the tour operator to handle, e.g., all-inclusive holidays to Majorca for the family, a trip to Thailand for a couple. Everything that is aimed at the masses will also stay cheap: pensioner colonies in low-wage countries with standardised care services (jointly financed by the medical insurance fund), flights to San Francisco for 100 Euro or a cruise at a bargain rate with Easy Cruise. By 2070, it might even be possible to implant a travel experience in our brains, as in the film “Total Recall”. Naturally, the souvenirs for the home display cabinet would also be provided. ABOUT THIS STUDY TIME HORIZON: This study investigates substantial changes to structures and processes, as well as to values and modes of behaviour, that are likely to influence the travel market over the next fifteen years. The emphasis is on long-term perspectives because, in distinction to seasonal trends, the annual hits and flops, the fundamental needs and motives of holidaymakers change only slowly. Moreover, at least ten years is generally needed for the development of new tourist destinations, e.g., a new airport or the modernisation of obsolete infrastructures. METHOD: The study is based, on the one hand, on the systematic analysis of specialist literature, trend studies and websites on the future of holidays and travel and, on the other hand, on interviews with experts and online polls. We conducted personal interviews with trend and leisure experts, authors, travel-literature experts and tourism experts from Europe, India and the United Arab Emirates with the aim of discovering the most important new development trends and patterns of change. Additionally, new and unusual customer needs and wishes were found in an online poll conducted among Kuoni travel agents. Finally, tourism experts and Kuoni management representatives evaluated and categorised the driving forces of change and motives according to their importance. KUONI AND THE GOTTLIEB DUTTWEILER INSTITUTE: Kuoni is one of Europe’s leading tourism companies. It has subsidiaries in 27 countries in Europe, Asia, Africa and North America. Kuoni was named the World’s Leading Tour operator in 2005 for the seventh time in the annual World Travel Awards. In 2006, Kuoni celebrates its 100th anniversary. For over 40 years, the Gottlieb Duttweiler Institute (GDI) has been identified with independent research. It is known to be one of the leading international think tanks. The GDI is located in Ruschlikon/ Zurich, Switzerland.

OrbitzTLC Alert

The OrbitzTLC Alert system now informs a traveler’s preset list of as many as six friends, family members or business contacts of an arrival delay, which can occur during the course of a flight. When booking a flight through Orbitz.com, alerts are available for more than two dozen participating airlines, including all major U.S. carriers. -------- What a cool idea. How come Orbitz keeps coming up with these clever ideas and not airlines themselves? Orbitz continues to show there is room for an intermediary in travel distribution.

NWA pensions

Is there no good news from Northwest? This certainly does not pass the smell test. Say it ain't so..... ------ "The Labor Department is investigating whether Northwest Airlines systematically shortchanged its employee pension fund over three years, then avoided having to make a $65 million payment to the fund by filing for bankruptcy protection just one day before the payment was due."

Major Mexico Oil Find

How about that! Some excellent news for a change. Oil close to the US - not in unstable places like Venezuela or the Gulf. Mexican bonds will rocket on this news.

Africa splitting - literally

What a remarkable story. Scary really. -------- Der Spiegel -- Normally new rivers, seas and mountains are born in slow motion. The Afar Triangle near the Horn of Africa is another story. A new ocean is forming there with staggering speed -- at least by geological standards. Africa will eventually lose its horn.

Russian Communist leader sees U.S. behind bird flu outbreak

You would think this sort of thing is now passe. But here we have a late entry in dummy of the week. Click the link. We wonder where this world is headed...

Airbus 350 - an appeal

The piece titled "On Airbus 350 marketing docukment" has been read over 1400 times since Sunday. It has also started to generate negative tasting comments. The intent of this blog has never been irritate or offend. Therefore the commentators are asked to email me at info@iag-inc.com. I will arrange for exchanges on the 350 & 787 and composites to take place inside the portal where the rules are simple - it is to be a debate (both sides have good points) which adds to knowledge and at no time are invectives tolerated. The sum of the information should become something both sides are proud of because it eliminates noise to get at the truth.

Delta "tapped out"

AP -- Delta Air Lines Inc. is "tapped out" and can't borrow any more money to cover its mounting losses, making deep pay and benefit cuts it is seeking from its pilots essential to its survival, the company's chief financial officer told an arbitration panel Tuesday. CFO Edward Bastian testified before the three-member panel as part of Delta's effort to void its contract with its 6,000 pilots so it can impose up to $325 million in long-term cuts. The pilots union has said repeatedly it will strike if its contract is rejected. A walkout would put the nation's third-largest carrier out of business, Delta has said. "We are clearly in the worst shape and are the most fragile of anyone in the industry," Bastian told the panel. --------- We bet the pilots are going to cave on this. They can stay employed earning something or they can stay home (until foreclosure) earning nothing. US legacy acrriers are broken and cannot get well without massive cost cutting. Unfortunately we only hear about these cuts from the uniform wearing crowd. Back office staff are also under the gun and getting layoff notices. Take what is happening at British Airways as an example - their layoffs are putting centuries' worth of accumulated industry experience out of work. We feel this painful reform be forced on legacy airlines by LCCs might actually create opportunities. The challenge is to identify these first and then figure out how to use IT to solve problems as they arise. We think IT is the likely solution because automation might enable legacy airlines to maintain momentum and is the only solution that offers leverage. Meaning, if an IT solution exists that slves a problem, then for a nearly fixed (certainly controlable) cost, IT offers upward scalability that labor cannot. For example, if airlines can reduce their baggage related costs by eliminating many human positions through the broad use of RFID, then the IT solution becomes more effective as it will cost less (over the long run), take no holiday, need no benefits and never strike. So RFID is one area where legacy airlines should be hammering away. Good examples exist of this in use at Walmart and FedEx. Consulting firms such as Sabre should be all over this because they probably have the deepest airline related IT solutions anywhere.

340 a "niche" aircraft

FI -- Former Airbus chief executive Forgeard shrugs off those (BAE) worries, stating that the slow-selling A340-500/600 is a “niche aircraft” and “sells as such”, and admitting that to widen the quadjet’s appeal Airbus would have to make “a number of not minor modifications” to “cope with the fuel burn”. ---------- This is right up there with the Leahy memo. We are not bashing Airbus here. They're doing a much better job and are obviously more qualified. This simply an astounding statement. Click on the link to see the original in context.

Philippines losing skilled aviation staff

"FILIPINO airline pilots and mechanics are flying out of the local airlines so fast that there is an industry-wide fear that soon there won’t be enough manpower to keep Philippine planes in the air." --------- While most appear to be leaving for Gulf carriers, there is another giant sucking sound in China and India. These are skilled people and the markets are rewarding them - arbitrage works. Perhaps some Americans want to try these markets as well. By the way, we suggest you forget the union thing on the way over.

UK to Quit Jet Fighter?

Who knows, but we don't think so. Pinch some salt.

MD-80 Death Pile

Nostalgic sigh...

NASA Delays Shuttle to July '06

Ugh here we go...

Hospitality through the eyes of Ernst & Young

[The following report was publicly available to the media and distributed at the Ernst & Young LLP booth, International Hotel Investment Forum 2006, Berlin] CAPITAL MARKET ACTIVITY: Asset Class of Choice, Appetite for Hotels Remains High Favorable lodging industry fundamentals, a low interest rate environment, and attractive pricing among the publicly traded lodging stocks combined to create another exceptional year for the capital markets. While the year 2004 was characterized by increased IPOs, secondary offerings, and a considerable amount of mergers and acquisitions, activity in 2005 brought aggressive share buy-back programs among the large publicly traded companies and several significant mergers and acquisitions, especially among privately held companies. Approximately $23 billion of M&A activity took place in 2005. More than $100 billion was raised by private equity funds during the first three quarters of 2005, a record-breaking year for the industry. The availability of capital and the growing interest among private equity firms in the lodging sector contributed to a considerable number of public-to-private transactions. Blackstone continued its foray into lodging with its $3.2 billion acquisition of Wyndham during the first half of 2015 and its subsequent $3.4 billion acquisition of LaQuinta. Colony Capital purchased the Singapore-based Raffles Holdings Limited for approximately $1.0 billion and made a $1.3 billion investment in Accor Hotels. In all the transaction activity, there has been a shifting of business models within some of the large brand-hotel companies. Starwood Hotels & Resorts and Host Marriott, the largest publicly traded lodging REIT, announced a $4.0 billion transaction for 38 hotels, thereby significantly reducing Starwood’s exposure to the underlying real estate, since the assets will keep their brand affiliations and will continue to be managed by Starwood. Hilton Hotels recently announced an agreement to acquire the lodging assets of the UK-based Hilton Group PLC for approximately $5.7 billion. Given that the outlook for the lodging industry remains positive and profits among this asset class are anticipated to remain strong capital activity should continue for the next several years. While interest rates may increase in the near term and then may be fewer lodging targets available at attractive prices, the outlook for the equity and fixed income markets should provide support for continued M&P lodging sector activity. INTERNATIONAL ACTIVITY: Going Global During 2005, a number of major changes and shifts occurred in the global hospitality market as foreign markets continued to expand. The lodging markets in India, China, and UAE experienced considerable growth with continued plans for steady development in the future. According to the Organization of Asia-Pacific News Agencies, Dubai is anticipated to increase its lodging supply by 18,200 to 20,000 rooms by 2010, an increase of approximately 100%. There are concerns of oversupply: however, given the historical growth in demand and the increased public spending on tourism in the Emirate, the market is expected to absorb the supply additions. China has continued to maintain a strong growth in the hospitality market. Asia Pulse indicated that during the first eight months of 2005 Chinese lodging markets experienced an average RevPAR growth of 14.3%. Furthermore, commercial markets such as Beijing and Hong Kong reported growth in excess of 20% and despite the rapid growth in lodging supply, Shanghai increased by 17%. Such high growth rates are estimated to continue as international visitation continues to the region and with the Summer Olympics in 2008. With the Indian lodging market experiencing a RevPAR increase of 31.3% from 2003 to 2004, and a 26.2% increase from January 2005 to August 2005, India is not only a growing hospitality market but profitable as well. Luxury and Upscale hotels are operating at 90% occupancy levels versus 70% last year along with room rates for many hotels in Mumbai, Delhi, Bangalore, Chennai and Hyderabad reaching all-time highs the winter season of 2005. With significant global growth opportunities, Marriott International is targeting 13% of its 2006 to 2008 additions in Europe, Middle East and Africa and 94/0 in the Asia-Pacific region. Similarly, Four Seasons plans to open 24 additional properties in 10 additional countries. In addition, on a much larger scale, InterContinental Hotel Group plans to open 125 hotels in China by 2008. Hilton International continues its global reach with plans to add another 19 hotels by the end of 2006 and another 23 hotels by the end of 2007. Starwood’s acquisition of the London-based Le Meridien global hotel group increased its portfolio and global reach with more that 130 luxury and upscale hotels in 56 countries worldwide. LODGING FUNDAMENTALS: Good Times Continue to Roll Lodging fundamentals are anticipated to exhibit strong performance for year-end 2005 and into 2006 due to anticipated increases in ADR in every major market versus 2004. Significant increases in ADR, which increased 5.2%, according to Smith Travel Research year-to-date through November 2005 versus the same period in 2004, have been driven primarily by the return of the corporate traveller due to improving economic conditions. Additionally, ADR has increased due to limited supply growth and even the reduction of lodging supply during the past year in some major markets. Lodging Supply increased an estimated 1.3% in 2003 and 1% in 2004 nationwide, and new lodging supply growth is anticipated to be less than 1% in 2005 due to numerous notable hotels exiting the lodging market or undergoing conversion into residential units. However, with the recovery in lodging demand taking hold in 2004, Lodging Econometrics anticipates an estimated 88,711 hotel rooms to open in 2006 and lodging supply is anticipated to increase by approximately 100,000 guestrooms in 2007, representing the most significant number of new openings since 2001. However, as construction costs have increased and are anticipated to further increase an estimated 10% - 20% in the short term due to the impact from recent major hurricanes, many of these projects may not materialize. Additionally, though lodging supply is showing signs of growth at an increasing rate, overall supply growth is below normal levels at this point in the cycle. With RevPAR for the United States exhibiting an increase of 8.2% year-to-date through November versus the same period last year, positive hotel operating performance is anticipated to continue for the foreseeable future. According to a recent report by Torto Wheaton Research, the lodging sector is anticipated to offer investors the greatest return in the real estate sector in 2006, with unleveraged average annual returns for hotels anticipated to be approximately 12.1% over the next 10 years. Real estate investment alternatives are anticipated to exhibit single digit returns ranging from approximately 5% - 8% with office properties the next highest at approximately 7.8%. As a result, both REIT and C-Corp lodging stocks have shown continued signs of strength, with lodging REIT returns demonstrating an increase of approximately 7.7% year-to-date through the beginning of December versus year-end 2004, according to the National Association of Real Estate Investment Trusts. Additionally, a majority of the publicly traded lodging companies outperformed the S&P 500 index, which experienced an approximately 3.0% increase during the year, and large-cap hotel owners experienced an average stock price performance of approximately 16.5% during the year. The financial outlook for the hotel industry is anticipated to remain favorable into 2006 with demand exceeding supply growth. PRIVATE RESIDENCE AND DESTINATION CLUBS: The Cross-Pollination of Lodging Segments to Produce Lodging Hybrids With approximately 1,000 baby-boomers turning 60 everyday, the demand for second and vacation homes is anticipated to remain strong for the next several years. For baby-boomers who enjoy traveling and seek to minimize the hassle of second-home maintenance, hybrid lodging developments (e.g., condominium-hotels, destination clubs, and fractionals) are increasingly meeting this need. Private Residence Clubs (PRCs or fractionals), condominium-hotels and destination clubs (DCs) are being marketed as offering all the amenities and services of traditional luxury resorts and having the appeal of real estate ownership. PRCs and DC’s go beyond traditional fractional ownership as they offer vacation “credits” that can be utilized at various luxury private homes and estates, yachts, and condominiums around the world. PRCs and DCs arc being developed throughout the world in mixed-use resort developments, traditional vacation home communities and unique real estate settings. PRCs and DCs have been used interchangeably by several developers, analysts, and travel writers so that it is difficult to define them separately. Conceptually, PRCs and DCs are no different than other fractional interest programs, including timeshares. However. PRCs and DCs offer a level of quality in facilities and services that are aligned with their six- or seven-figure membership fees. It is possible to separate PRC’s and DCs based upon a club’s equity component. Equity PRCs and DCs, similar to fractionals, transfer a real estate deed for a fraction of the assets with each new club member. Non-equity clubs, similar to country or golf clubs, provide no deed to assets but usage rights to assets included in the club’s portfolio. Both models may offer refunds on initial membership fees in the case of a member terminating their membership. With the competitive landscape anticipated to increase to over 30 PRCs and DCs in 2006, PRCs and DCs are beginning to segment themselves. Current segments include those that are region focused and those that are theme-focused, such as for golf, fishing, boating, or wine enthusiasts. PRCs and DCs that focus on a specific region or theme tend to provide their members with additional amenities and benefits that focus on the theme of the PRC or DC and are not offered by more traditional clubs. As the baby-boomer generation continues to spend its dollars on travel, additional niche markets may develop, thereby fueling the continued growth of PRCs and DCs. Will the popularity PRCs, DCs, and other hybrids continue’? Given the powerful baby-boomer demographics, it is certain that PRCs, as well as DC’s, and other lodging hybrids will continue to receive interest from both consumers and real estate developers. Nevertheless, untested issues, including the resale value of individual PRC credits and DC units and the lack of secondary markets for hybrids (e.g.. condominium-hotels and fractionals) may reduce the attractiveness of hybridized lodging segments. CONDOMINIUM-HOTELS: Complex Nature Equals Risky Business Condominium-hotels continue to be popular in hot real estate markets such as Miami and Hawaii and have begun undergoing rapid development in new markets, such as Las Vegas. This trend continues to address the increasing number of individuals (especially baby-boomers) interested in owning vacation real estate. Due to tight capital availability for standalone hotel developments in the past several years and the low interest rate environment, such developments offer an alternative financing structure and offer the potential to minimize financing risk for the developer (as developers are basically outsourcing their debt load to individual unit owners). However, underlying this construction boom are many risk issues for those involved in condominium-hotel developments. Securities laws, particularly concerning liability if a development is deemed to have been sold as a security (and not properly registered), remain the primary legal concern. Most developers seek to avoid registration due to the time required, restrictions on advertising, broker requirements and the use of deposits. This comes at the price. however, of being unable to mandate participation in a rental program, inability to pool income and expense, and the inability to provide buyers with income estimates, among others. After this initial hurdle comes the risk of buyer lawsuits due to unmet expectations from those who had an inflated view of the units’ rental potential. How individual owners react to the realities of the hotel business (ramp-up to stabilization, seasonality, ADR versus Rack Rates, frequent renovation, etc.) remains to be seen. Additional issues include balancing operating risk, determining which party has control over the property infrastructure and shared facilities, and properly crafting all the complex agreements to work together. The critical nature of all this complexity being properly thought through may not become apparent until years after a development is analyzed and sold to buyers. Of most importance is that the development needs to make market and economic sense as a hotel before ever being considered as a condominium hotel. Subsequently, evaluating the economics of a condominium-hotel development beyond unit pricing, such as the structuring of association fees, rental program fees, and fair revenue and expense allocations, remain key issues for this segment. With so many potential “land mines” surrounding the condominium-hotel segment, seeking sound legal and advisory guidance and having adequate preparation, documentation, and disclosure are absolutely necessary. THE RISE OF THE LIFESTYLE BRAND: A Hotel for Every Lifestyle and Budget Several new brands designed to cater to the lifestyle preferences of various traveler segments emerged in 2005. A trend that began in the late 1990s in the full-service upper-upscale and luxury segments, has found its way down to the upscale and limited-service midscale segments providing style and comfort at a more affordable rate. These new lodging brands have moved away from the approach taken by the traditional lodging “mega-brands” and instead aim to transcend the product-centered customer relationship to develop an emotional and long-term bond with travellers. The new lodging “lifestyle brand” takes a similar approach to that adopted by successful retail brands, focusing not only on guests’ basic product needs and preferences, but also on creating a unique lodging experience that ties into guests’ way of life, self-image and interests, arid delivers self-expressive benefits. These new lifestyle brands resonate with people who expect to live increasingly stylish lives and are less interested in settling for the old-fashioned cookie-cutter lodging product. These consumers are increasingly seeking a lodging product that resembles the look, feel, and contact of their own homes. One of these new mid-priced lifestyle lodging brand is interContinental Hotels Group’s Hotel Indigo, which opened its first hotel in November 2004 and is anticipated to roll out a total of four hotels by the end of 2005. This new lifestyle brand was designed to address the desires of style-conscious guests who art seeking experience and quality over pure functionality when traveling. It targets aspiring consumers who are seeking to “trade up” to a more stylish lodging product, while still seeking value. Another prominent example of a new mid-priced lodging brand is Starwood Hotels & Resorts’ new “aloft” brand. This brand was designed to provide increased style, comfort, functionality, and energy at affordable rates. The first aloft hotels are anticipated to break ground early 2006 and open in early 2007. Starwood is planning to roll out 500 aloft hotels by 2012. This trend is anticipated to continue into 2006, with expansion activity of lifestyle brands gaining momentum. In 2006 the lodging industry is likely to witness the continued growth of multiple lifestyle brands, from Starwood’s and InterContinental’s chain-oriented brands, through smaller boutique brands such as Kimpton, Joie de Vivre. and Morgans to niche Haute Couture lifestyle brands, launched in cooperation with international fashion brands such as Armani, Versace, Bvlgari. and most recently Missoni. TOURISM: Creating a Buzz About Town Among the many factors that affect tourism in the United States, primary research indicates that the most influential are the overall condition of the national economy, gasoline prices, security concerns, consolidation among the meetings and event; industries, and U.S. government-imposed travel restrictions/requirements. According to the Travel Industry Association of America (TIA), travel expenditures for both domestic and international visitors exceeded $600 billion for the first time in 2004. For 2005, travel expenditures were estimated to increase 5.6% to more than $633 billion. Despite record-high gasoline prices and a devastating hurricane season, positive growth was driven by the rebounding economy and its impact on corporate, group, and leisure travel. As the travel and tourism industries significantly contribute to the overall health of local economies, by creating jobs and generating market awareness, tourism authorities continue to take a proactive stance toward increasing their share of the lucrative tourism and meetings markets. As a result, competition among locations remains fierce. In addition to the top-of-mind city destinations competing for tourism dollars (e.g., Orlando, Chicago, Las Vegas, and New York), more and more secondary and tertiary cities across the United States have developed strategies to effectively compete in attracting visitation and capturing market share. Intermediate term plans (0-5 years) tend to focus more on local community (developments including museums and parks, while long term plans (more than 5 years) focus more on improving visitation directly, with an embedded benefit to the local community, including the development of convention centers and headquarter hotels. Still, the development of the necessary infrastructure is only part of the broader tourism picture as meeting and event planners increasingly place importance on the perceived value and overall experience of the local market. In order to successfully compete, local markets have found that they need to offer quality accommodations and amenities, a diverse array of attractions, and easy access to and around the destination. The combination of these is crucial to the development of a unique and well defined brand insane which will allow for increased consumer awareness and create a buzz about town. HURRICANE ACTIVITY: Mother Nature Not So Nurturing The hurricanes that made landfall in the United States during 2005 have been by far the most costly natural catastrophes in the country’s history. The wrath of Hurricanes Katrina, Rita and Wilma left no industry untouched and caused extraordinary industrial and commercial property damage, which will likely result in an unprecedented number of insurance claims and lawsuits -- estimates indicate insured losses exceed $60 billion. Oil rigs and refineries were initially hit hard as Hurricane Katrina reportedly affected production at more than 50 oil and natural-gas platforms in the Gulf of Mexico. This fueled an immediate increase in gasoline and airfare costs, due to higher jet fuel prices. While the sticker shock at the pump has subsided (for the most part) as gas prices have declined, the impact of the active hurricane season on tourism in the Gulf Coast, especially in New Orleans, has been far-reaching, beyond the physical damage to local hotels, amenities, and tourist attractions. Indeed the displaced convention and group market in New Orleans has subsequently sent waves of disruption throughout the country. With the New Orleans Convention Center closed for renovations from September 1, 2005 through March 31, 2006, thirty-three convention meetings and tradeshows have been displaced, representing approximately $1.3 billion in lost business for the area. Despite the risk of future hurricanes and the violent images shown by the media in the wake of the storm, convention and association groups have indicated that they wish to return to New Orleans; however, the city does not want to book convention business until the city is fully ready to receive it. In an effort to redirect the convention groups previously scheduled in New Orleans, the Convention and Visitors Bureau is working with other major convention markets in the country to swap near-term meetings and conventions with dates in the intermediate future. Indeed the Dallas Convention and Visitors Bureau is reportedly working with as many as a dozen groups that have meetings on the books in both cities, effectively moving forward the Dallas business and rebooking New Orleans to a later date. Similar to the willingness to return to New Orleans for meetings. South Florida tourism did not see a drop off in demand in 2005 as some expected as a result of an active hurricane season in 2004. Interestingly, the region experienced one of the strongest years ever. Despite the more active hurricane cycle we are in, key tourism destinations like New Orleans and South Florida continue to be high on the list for vacation, meetings, and quick getaway trips. Additional contingency planning will be required however, during the summer months. SARBANES-OXLEY AND 404: The Next Chapter Chief Financial Officers continue to experience the challenges of a tightening regulatory environment. As 2004 was the first year of Sarbanes-Oxley (SOX) and Section 404 implementation, public, SEC-registrants committed significant resources and dollars to understanding processes and ensuring compliance. As a result, finance functions and the role of internal audit have evolved and continue to evolve, as efforts continue to focus on understanding and evaluating controls for the purpose of improving the reliability of financial reporting and corporate disclosures. The first year implementation of SOX and 404 in particular has served to improve investor confidence. The current debate surrounds the question, “At what cost?” There is general consensus that both internal and external costs of implementation were far greater than anticipated. The challenge for companies in 2005, 2006, and beyond, is to build a 404 assessment and compliance process that is sustainable and cost efficient. Although SOX governs only those companies registered with the Securities and Exchange Commission, many believe the review and enhancements that have surfaced will promote financial reporting best practices for all companies. Many companies continue to struggle with the issue of finding sufficient resources to meet the current and ongoing challenges posed by SOX and 404. HOTEL CAPITALIZATION RATES: The Low-Down on Compression As stocks struggle and the bond market begins to lose appeal in the face of rising interest rates, major equity and debt participants, in addition to newer entrants such as high-net-worth syndicates, private REIT investors, 1031 exchange buyers, and international investors, have begun to increase the supply of capital for real estate. Often viewed as the riskiest real estate class, hotels have begun to close the cap-rate gap between themselves and other classes such as office and industrial. Sonic attribute the recent cap-rate spread reduction to a combination of factors, including the current softening of other real estate classes’ fundamentals, the tempered supply growth and improving demand outlook for hotels, and the increased transparency of hotel industry performance data and analysis. As a result of the cap-rate compression, hotel cap rates have reached historic, single-digit lows as buyers are attracted to the positive forward-looking fundamentals and the inability to find alternative placements for capital with such yields. Rates for top-tier, upscale, and major market properties are currently in the 7% - 8% range (in some instances even lower) while mid-tier hotels are just under 10%. Where are cap rates headed? Many investors believe that the ramp-up of the Fed rate will have a lesser impact on hotel values than other forms of real estate due to the protections lodging assets afford by altering rents daily. With improving lodging fundamentals, coupled with the influx of new lenders (CMBS hotel issuance doubled during the first nine months of 2005 to approximately $13.7 billion) and capital investors chasing the limited amount of deals available, the trend of hotel cap-rate compression is anticipated to continue, albeit at a slower pace.

New fares in 2006

The nickle and diming has begun. As Southwest increases fares by an average of $10, jetBlue will follow and so the rest of the herd. The difference is that this is all those two airlines need to offset fuel charges. Legacy airlines are still to expensive to run and therefore will continue to lose money in 2006. They need more like $25 per ticket in additional fare to stop the hurt. Next please note that Northwest will now charge an extra $15 in coach for exit row seats, bulkhead aisle seats. These seats traditionally go to gold or better customers who will not pay the $15. So the airline, in an effort to squeeze more money out of their customers, will irritate their best customers first. If this works out as planned Northwest could raise an additional $27m per year. A paltry amount insufficient to solve their deficits. But a start in that direction. At a cost of irritating their best customers. Smart? We're not sure. However the lines are now being drawn in ink; United already charges more for certain seats. We can thank the creative gnomes at Ryanair for these ancilliary revenue ideas. By the time we're done in 2006 expect to see the out of pocket total to be around $25 per one-way fare more than what you paid last year.

Aboulafia - Ides of March on VLJs

Dear Fellow Checker Cab Flyers, Permit me to ask you a personal question: Do you tip your air taxi driver? My colleague Mark argues that a well-placed C-note ensures great service, particularly if golf clubs are involved. My colleague Steve says it’s covered in the fare and isn’t necessary at all. Forgive me for writing as if air taxis were commonplace. But many folks seem to have reached exactly that conclusion. The 2006 FAA forecast calls for 5,000 Very Light Jets (VLJs) to enter service by 2017. Then there’s the 2005 Collier Trophy, awarded to air taxi wannabe manufacturer Eclipse Aviation. Most of all, there’s Flight International’s March 1 cover story, “Vision of Eclipse Aviation’s Vern Silences The Skeptics.” Here’s some skeptical non-silence. The Collier Trophy award is a mystery. I won’t deny that the Eclipse is an impressive creation, with some great engineering behind it. But doesn’t the Collier usually go to programs like the V22, C-17, and B-2? Why did it go to a small GA plane? The Eclipse 500 is neat, but is it in the same league? More importantly, the NAA says their coveted Collier goes to a program “the value of which has been thoroughly demonstrated by actual use during the preceding year.” (http://www.naa.aero/html/awards/index.cfm?cmsid=62) Huh? At what point during 2005 were air taxis “demonstrated by actual use?” (Kudos to www.avweb.com for pointing this out.) The FAA’s motives are clearer: they worship growth. The RJ craze kinda petered out, so the FAA needs a new altar to worship this elusive deity. The FAA says VLJs “are believed by many to have the potential to…support a true on-demand air taxi business service,” resulting in a 10.2% annual increase in business jet flight hours. Fellow analyst John Walsh once gave a brilliant presentation explaining the FAA forecast as “something that is used to justify not only the agency’s budget, but its promotions and salaries, too.” How else to explain a VLJ flying hour forecast driven by air taxi utilization figures thoughtfully provided by wannabe air taxi service DayJet? And that phrase “believed by many” speaks to the kind of tough, rigorous analysis that we private sector forecasters can only envy. The FAA’s forecast also helps justify NASA’s ongoing plans to fund a Small Aircraft Transportation System (SATS) (http://as.nasa.gov/factsheet/SATS_Fact_Sheet.htm). We’re from Washington, and we’re here to help. Oh, and to justify our budgets, salaries, and growth plans too. (Sidebar: On behalf of my imaginary rich friends the NASA/FAA VLJ plans are a welcome change. For years I have watched my government squander cash on the neediest, with billions wasted on education and health care. What about the neglected wealthy, the folks who really need a helping hand? Why not give them a chance to pull themselves up by their VLJ bootstraps? Let’s invest public money into something that favors not just the very rich but the neglected moderately upper income types too.) Flight International, though, gets a pass for three reasons: (1) I like Flight. (2) I like the author, Murdo Morrison. (3) Given points One and Two, I’m thinking this article might be a Trojan Horse. Two-thirds of the way through the article you can find this little nugget: “Eclipse will break even at 500 deliveries a year and will be ‘comfortable’ at 750, he says. That boils down to as few as two aircraft a day, although Raburn’s target is four.” Reality check. That’s total output at all the US bizjet manufacturers combined. It’s a statement that should set off warning sirens in the head of anyone affiliated with this program. Take a moment to consider the air taxi customer, that oddest of ducks. He has more travel cash than an airline passenger, but not enough to be in a real business jet. Nor does he have enough to buy into a jet card program or to use existing air charter operators. He doesn’t want or need to fly more than two hours/1,000 miles at a time. And you need enough of him in enough markets to avoid a high percentage of deadhead flights, but not too many of him in these markets to justify decent airline service. These plans won’t work with just any old plane. Never mind that you could prove the concept using thousands of depreciated, low-cost, service-tested jets and props out there. You apparently need a new VLJ to make air taxi magic happen. And of course you need enough enthusiastic investors to turn these unfunded air taxi plans into reality. VLJs might let a few new charter operators to make some cash, but we’re talking a few score aircraft, not thousands. Without significant Air Taxi demand, Eclipse is left with owner-operators. That’s potentially decent business, limited by the number of jet-qualified pilots. It’s probably good for 200-300 sales per year. Much of this will go to Cessna and Embraer. And there are other new players coming on line, basically waiting to be bitch-slapped by market reality. Without air taxis, the best case scenario for Eclipse is much lower production rates than anticipated, with higher prices and serious write-offs all around as a result. The worst case scenario: A dot.com, with wings. This is why Teal Group has no Eclipse report, nor do we have an Eclipse line in our business jet forecast. Given the parameters and drivers of our forecast or those of any other widely accepted market forecast (including the FAA’s), there is no way we could give Eclipse enough planes to avoid bankruptcy. At the other end of the size spectrum, March updates include the Commercial Jet Transport overview, the A318/319/320/321. 737/MMA, E-2, Harrier, Hawker 400, S-76, K-8, all the Gulf-streams, and a very special A300 epitaph update. Enjoy your month. Yours, Nostalgic For An Age Yet To Come, Richard Aboulafia

Cendant on travel in 2020

Please use this link to download the PDF. Delivered at CeBit in Hannover Click

The World According to ASTA Future of Corporate Travel Agents

by Bill Maloney, ASTA Executive VP and Chief Operating Officer

 

Speech delivered on March 9, 2006 at the ITB-Berlin. [Editor’s note: The speech has been edited slightly to remove colloquial references.]

 

I’ve been asked, today, to speak about the role travel agents play in the corporate travel market. It’s an interesting topic, and one that is particularly timely as the U.S. travel market once again is experiencing what might be categorized as growing pains. I’ll be taking a look at a phenomena I call the ‘rush to the middle’ before giving my prognosis for both short- and long-term outlooks for travel management companies. First, I would like provide a general overview of the role of the corporate travel agent within the larger context of the U.S. travel industry.

 

In the eight years since I have joined ASTA, our members have faced:

 

<> The rise of the Internet

 

<> The loss of airline commissions

 

<> A major economic recession

 

<> Not one, but two wars

 

<> Major global terrorist attacks

 

<> Epidemics, and

 

<> Natural disasters.

 

Today, we have zero airline commissions, several of the major airlines have declared bankruptcy, and it seems that every day, new low-cost carriers are rewriting the travel industry business rules. As major U.S. carriers cut and eventually eliminated commissions, some travel agents were forced to close up shop while others responded by initiating service fees.

 

A study just released by ASTA found that in 2005, nearly 97% of all ASTA member agents charged a service fee. On average this fee is a little more than US$27, up US$16 from 1998 when we first started polling our members about service fees. That said, service fees range anywhere from US$5 to $200 or 5 to 165 Euros--depending on the service.

 

Airline-related services continue to top the list of services for which agencies most frequently charge. Not all agents charge the same fee for every airline ticket sold. In fact, nearly 70% have different fees depending on the destination of the trip-be it domestic or international. 60% vary fees depending on the price of the ticket or the number of tickets sold, and close to half vary fees depending on their relationship with the customer. When it comes to setting a fee, U.S. agencies charge the most for trip planning and research. On average, agencies charge more than US$65 for this service.

 

Service fees are not set in stone, however, but we have found that agencies have become much more strict about applying their fees. The majority of agents do at times waive some service fees.

 

The good news is that once travel agents overcame their initial hesitation, they quickly discovered that the implementation of service fees did not equate to a loss in clients. Quite the contrary, in a service fee study we conducted in 2004, members reported that they have a 90% customer retention rate. Throughout everything, the constant piece of good news is that the U.S. travel agency industry is resilient, and today those agencies that remain are larger and stronger than ever.

 

Sales reports from the Airlines Reporting Corporation, or ARC, show U.S. agencies and corporate travel offices closing out 2005 with a new post 9-11 sales record of $70.5 billion, with average weekly sales per location coming in at more than US$60,000 during 2005. ARC, for those of you who don’t know, is the American equivalent of BSP.

 

In 2005, according to ARC, average weekly sales per location were up by more than 16%, and industry wide, annual sales were up by more than 7% from the previous year.

 

In the five years leading up to December 2005, the number of retail agency locations in the United States dropped to less than 20,000. Even so, average weekly sales per location continue to rise. Take this past January as an example. Average travel agency sales jumped 15% during the month of January to more than US$56,000. At the same time, the actual number of retail locations dropped by 4%.

 

Translation? Industry constriction might be decreasing the actual number of retail agency operations but those remaining are thriving. Travel agents are still the dominant force in both leisure and business travel.

 

Today, U.S. travel agents, including the online travel engines, book

 

<> 87% of all cruise reservations,

 

<> 81% of tours and packages,

 

<> 51% of all air travel,

 

<> about 47% of all hotel reservations and

 

<> 45% of all car rentals.

 

Airlines still rely on travel agents to sell slightly more than half of their inventory. But survival doesn’t mean complacency. As the world has changed and as consumers change, the business model for agents is changing. An increasing amount of business is conducted over the Internet rather than over the telephone.

 

ARC sales from 2000 through 2005 show all the growth is coming in the online sector.

 

As proof of the impact online travel booking is having on both the supply and demand sides of the travel equation, a 2004 ASTA member survey found that 65% of agencies have their own Web site. 45% of them allow visitors to make reservations either through email request forms or live online booking tools.

 

ASTA also recently completed a survey of members and non-members. We asked travel agents what percentage of their clients said they had conducted travel research on the Internet before contacting their agent. 74% of the agents said that their clients do travel research online most of the time before calling.

 

Despite the availability of Internet-based alternatives, why are customers still using travel agents? Travel agents suggested that their clients gave at least four important reasons for booking with travel agents.

 

<> Almost 90% said “Clients value my industry knowledge.”

 

<> Just over 80% said “They are comforted that I will help them in the event something goes wrong.”

 

<> Almost 75% said “They appreciate the convenience I provide,” and, “They trust I will find them the best prices.”

 

In this same survey, clients told travel agents that the reason they would book on the Internet instead of using their travel agent was either strictly based on price, or because there was a special incentive offered with Internet hooking, such as double frequent-flyer miles.

 

Luckily, travel agents quickly adapted to the Internet and have used it to their advantage to communicate with clients, market their products and services and conduct client research. Travel agents offer unbiased 3rd-party advice when customers hit “information overload,” and bring value, expertise, convenience and personal service to the table. U.S. consumers still love and need travel agents.

 

So what about business or corporate travel?

 

TQ3-Navigant’s chairman and CEO Ed Adams recently noted that several years ago, the ‘doomsday scenario’ was that 100% of travel clients would go online and there would be no need for corporate travel management firrns. He and other TMCs pointed out, and rightly so, that even if 100% went online, they would need someone to manage the process, aggregate the data, work with suppliers, etc.

 

That’s turned out to be true.

 

Travel management companies have always had a different customer relationship than leisure agencies. Most have contracts and long-term buyer relationships that were in place long before the first commission cap in 1995. Those that did quickly renegotiated their contracts to include a transaction or management fee. What’s more, the majority of these fee arrangements are tailored to the specific needs and culture of the client. The formal nature of that relationship made the transition to zero commissions somewhat easier for the vast majority of travel management companies. The major exception is government business which is slow to change.

 

Travel management companies do not see themselves as airline ticket distribution outlets. They are vital to managing corporate travel expenses. They track and manage costs, ensure that corporate policies are followed, negotiate special arrangements with suppliers and serve as an information center for employees and managers. In spite of suppliers’ direct offers, the travel management companies remain successful and there is some recent evidence that their role is growing. The 2005 National Business Travel Monitor from Yesawich Pepperdine Brown & Russell/Yankelovich Partners reported 32% of business travelers surveyed booked a trip through a travel agent, up from 25% who did so the previous year.

 

Why?

 

The report said the increase could reflect less willingness to spend time searching for the best prices and a “growing suspicion about the integrity of pricing for travel services across the multiple channels of distribution.”

 

TMC’s value should not be underestimated. The fact is that the business travel market is changing. While TMCs are consolidating, online travel agencies are broadening their product offerings. I characterize this change as a rush to the middle.

 

Business Travel News recently published a roundup of The Corporate Travel 100 ranked on total travel budgets. Among the 100 global companies, the trend has been to consolidate their global travel under one travel management company. American Express represents 42 of the 100, for example.

 

A classic example of this is presented in a recent interview with New York mega-agency, Stevens Travel Management. It is one of the few TMCs that in addition to having offices in New York City is also headquartered there. The article points out that where there were once 200 corporate agencies in Manhattan, today that number is down to somewhere between 20 and 30. What’s more, the services Stevens is offering have changed almost as dramatically as the numbers.

 

To remain a survivor, Stevens Travel Management has invested heavily in technology and has developed a new strategy to meet its customers’ needs at all levels.

 

<> First, they offer a low-cost, online service. Because it is essentially unmanaged, and automated, they charge no fees.

 

<> Second, they offer online, managed contracts. For this, Stevens charges a service fee of between US$10 and US$15.

 

<> Finally, there is the top level which provides clients with a highly managed system with personal assistance. This level integrates authorization processes and high-levels of reporting using such products as Trip Managers, Cliqbooks and GetThere. Because the service depends on extremely skilled agents, Stevens charges US$45 to complete a booking.

 

This is a clear illustration demonstrating how a professional, regional TMC has evolved using automated tools as solutions and alternatives to a pure call center. Through this plan, Stevens can customize the travel management solution depending on the needs and wants of the customer. It has something to offer everyone.

 

TMCs are online travel agents. They offer end-to-end solutions such as corporate booking tools, mid-office and back-office systems as well as corporate, and travel and entertainment reporting. In 2005, Sabre’s GetThere.com, for example, processed more than $6.3 billion in corporate travel and lodging. This was up by more than 31% over 2004 figures.

 

Meanwhile, online agencies such Orbitz and Travelocity for Business are becoming TMCs as they expand the automated tools they offer and open more customer service centers. Today, these online giants are operating full-service, traditional call centers, providing customers with service guarantees, management reports and travel advice.

 

<> Expedia Corporate Travel calls itself an “on-demand full-service travel agency” ...whether online or agent-assisted.

 

<> Orbitz operates Orbitz for Business for accounts of less than half a million dollars, and Travelport for large full-service accounts.

 

<> Travelocity Business is a “full-service corporate travel agency” offering “online and offline capabilities.” It guarantees that customers can connect with its “agents by telephone within 60 seconds, any time of the day or night.”

 

What’s going on here? TMCs are going online while online agencies are becoming full-service TMCs. What does all this mean? In essence, it’s a rush to the middle. If you think about it, this is where the market is going.

 

TMCs across the globe are involved in their own set of musical chairs. TQ3-Navigant, until recently was non-existent in its current form. It was created after the owners of both the Business Travel International and the TQ3 Travel Solutions joint ventures announced they were splitting. Dutch-based BCD Holdings and U.K.-based Hogg Robinson determined that neither company could assume single ownership of BTI, at which point BCD bought out the holdings German-based TUI had in TQ3 Travel Solutions. This left Navigant with the TQ3 name, but no partner. Now, TQ3-Navigant is looking to take on an equity partnership with companies outside North America.

 

Multi-national businesses are looking for multi-national solutions. The debate now is really between one supplier with one set of reports, one set of policies, one contract and set of costs and multiple, unique national suppliers leveraging national volume and seeking consolidated reporting so they can see on a global level what they are spending.

 

Looking ahead, the next 18 months will see airlines negotiations with GDSs continue as they leverage content in exchange for lower segment fees. In their favor is their ability to bypass the traditional GDS in favor of the GNE.

 

GDSs, in return, are looking for access to fares and lower segment fees and will use as leverage their access to travel buyers through TMCs. The impact of this will be:

 

<> lower segment fees for airlines with menu pricing for some features, and

 

<> lower marketing fees paid to agents by GDSs, which, in turn, may result in higher fees passed on to corporate accounts.

 

For now,

 

<> Northwest and U.S. Airways have already inked deals with Sabre.

 

<> G-2 Switchworks is positioning itself as the provider of “efficiencies in agency processes” and not as a “GDS alternative.”

 

While this battle is being waged, it is imperative that business travel buyers and their TMC partners keep an `eye on the prize’ because with airfares being driven by high fuel costs, hotel prices being driven by demand, and, car rentals being driven by external charges and taxes, the total cost of travel and entertainment is going through the roof.

 

There is more leverage in negotiating good corporate purchasing than ever could be gained by concentrating on fees alone. For example, let’s say an airline ticket costs US$800, a room costs US$150, and a rental car costs US$50. That’s a US$ 1,000 trip. The transaction fees that a TMC will charge comes in somewhere between US$15 and US$40, bringing the total to US$1,015 at best.

 

Even the corporation that manages to negotiate a 50-percent reduction in fees will only be saving between US$7 and US$20 per trip. The smart move is to negotiate and use better corporate discounts. This way the total cost of the trip can be brought down to below a US$1,000.

 

That is the true value of a TMC-the negotiation, management, authorization, automation, reporting and control of these expenses. They, and only they, have the market knowledge to leverage the buying power of corporations.

 

Travel planning isn’t just between places, it’s between people. Travel counselors are there for their clients, before during and after the trip. And, that is the real value of using a travel agent.

-------------------

And what about Self Service…. It is not a binary decision People OR Machines. People do people things well. Machines do some things better – particularly repetitive and menial functions. Travel is comprised of both. Travel needs both Humans and Machines. However even Humans have to have ROI.

Portal or Blog? Which Do I Want?

Don't panic. We're not going anywhere. Blog is here to stay, on blogger. Phew. However, if you'd like to see premium content, written by professional journalists just for you, scoops written by industry indiders just for you, and interviews with the high and mighty in global travel (just for you!) then mooch on over to IAGportal. All the current content is free (for now) except for the full-length audio interviews. We have to charge for those due to the cost to produce and host them, sorry folks. However the subscription fee on the site there is indicative, in the sense that it is typical. We can tailor an access package just for you, at a price you want to pay. Just contact Addison or Paul using the details over on the portal. And remember: the portal fees are demand-drive, which means they will only rise in the coming months and years. We have a limited number of accounts, and once they are gone, that's it. No amount of cajoling, blackmail or other inducements will change the fact that we have reached our limit. Please do visit - it's fun over there.

Flying in Iraq is scary

Click this link and read about a flight in the new Iraq. Amazing.

More on DVT

This story won't go away. Its an issue that airlines need to address - especially on ultra-longhauls. The above link is to FI - "Medical researchers in the Netherlands have found that lack of oxygen and pressure are also factors in the development of deep vein thrombosis (DVT) during air travel, rather than simple immobility, in a study that could affect airlines' future cabin configuation choices".

Harry Stonecipher's 2005 tax return

Harry Stonecipher, who worked less than three months for Boeing last year before being ousted for having an extramarital affair with a female employee, earned nearly $US11.5 million in salary and stock awards in 2005, according to a filing with the US Securities and Exchange Commission. Mr Stonecipher earned $US496,422 in salary and $US11 million from incentive stock awards. The incentive award stock was issued to Mr Stonecipher at $US43.53 per share. By the end of 2005 Boeing shares were near a five-year high of $US70. --------- Great work if you can get it.

Dummy of the Week #7

We're back at weird passengers this week - this story hails from a small African country called Malawi. Apparently the Minister of Tourism was not given proper customer care by the national airline. This led to a bit of national pouting. Curb your giggles right now and be happy that customer care has reached this part of Africa. To highlight this esteemed member of Malawi's government compassion for other humans, here is quote "It was a case of mistaken identity. The kidnapped engineer is not a Malawian but a Kenyan." Minister of Information and Tourism Patricia Kaliati was on Friday detained for 30 minutes at Jomo Kenyatta International Airport in Kenya when she refused to surrender an umbrella to security officers. An airline official and some passengers who confided in The Nation said Kaliati was heckled because the officers did not want the umbrella to be part of her hand luggage since it is a pointed object. Kaliati confirmed in an interview yesterday that she was detained for 30 minutes but dismissed reports that she refused to be searched. “I did not refuse to be searched…I was searched and my only sin was because I refused to surrender my umbrella to security,” she said. Passengers on the Air Malawi flight to Lilongwe said that Kaliati was flying in from Rwanda where she had gone on government business when the incident happened. “She refused to be searched and caused the delay of the flight…To make matters worse she also caused problems on the flight after she refused to seat in the Business Class,” said one of the passengers. Kaliati said that she got annoyed because she realised how ordinary Malawians are mistreated whenever they travel. “What annoyed me was because I was getting on an Air Malawi flight and I was being treated like an Al Qaeda suspect and no Air Malawi official was in sight,” she said. Kaliati said as a Minister of Tourism she is not supposed to fight Air Malawi “but enough is enough… These people need to know customer care,” she said. Asked why she refused take a seat in the Business Class, Kaliati said she was angry with the Air Malawi crew because they ignored her when the Kenyans were harassing her. “I thought they were wrong because I became important when I got on the flight…When I was being harassed as a Malawian national they never came to my rescue,” she said. Kaliati, well known for her public outbursts, said that as Minister of Tourism, she will make sure that the airline is taught how to respect its passengers. Most airlines refuse any person to board a plane with any sharp objects since the September 11, 2001 terrorist attacks in the America.

SIX TRAVEL TECH TRENDS FOR 2006

[Document distributed to the media at the ITB Berlin 2006 Press Conference] By John Bray, Cathy Schetzina and Susan Steinbrink. PhoCusWright 2006 is already shaping up to be a productive year for travel technology. RSS feeds are popping up, venture capital is flowing in, IT departments are seeing projects large and small come to fruition ... and launching new ones. As anyone who has tried in the past to predict when mobile will really take off knows - it isn’t always easy to anticipate just when a public-facing technology will reach the much-discussed tipping point. Some technology trends develop at a steady - and predictable - pace, while others are hyped to near-extinction before they flourish. PhoCusWright analysts see several technology trends - some visible, some behind-the scenes - being important in 2006. Here are six trends to watch in the coming year. 1. ELECTRONIC SNACKING The consumer has developed an insatiable appetite for news, media and music tracks. To accommodate this, technology will play an even greater role “behind the scenes” in travel e-commerce by encouraging repeat and just-in-time purchases. More products are conforming to consumers’ need for quick “sound bytes” of information, pricing and travel options prior to, during and post travel. For both leisure and corporate travel, its delivery will be driven by technologies that enable consumers to receive travel information and services off the browser. RSS (Really Simple Syndication), which permits users to subscribe to their choice of content sources across the Web, will continue to spread across the industry and gain traction as more consumers become aware of its potential. Aggregation tools (such as personalized start pages) have the capacity to display summaries of these subscriptions, which update automatically when new information is available. RSS reduces the need for users to search multiple Web sites and will make it easier for travellers to pull only the information that interests them. As anticipated, suppliers and online travel agencies have launched a number of RSS feeds over the last several months, most of which provide information on travel deals. More personalized feeds are in the works and will further the customization agenda and add value by providing real-time travel information. Mobile devices, including phones, PDAs and iPods, will become increasingly important because they are ideal in the short term for receiving discrete hits of information. With more than 500 million people having their first experience this year with mobile phones, it may, in some regions of the world, surpass and leapfrog usage of the Internet, This is because, more people have access to mobile phones than computers and these devices are increasingly outfitted with more functions, capabilities and power. Their value in travel will increase exponentially when travellers are able to conduct commerce with them. Travel companies will continue laying the groundwork in 2006. In the meantime, mobile mapping applications, real-time traveller information and a renewed focus on the largely underserved mass of iPod users will rule the day. The snacking trend translates to increasing interest in Software as a Service (SaaS) in travel companies’ IT departments this year, with software-on-demand models providing a potential cost-saving alternative to hosting software in house. Worldspan, for example, in 2005 announced plans to shift its internal customer relationship management, human resources and payroll, and entertainment and travel expense management systems to a Software on-demand model. While the idea is not a new one, the model is becoming increasingly viable and spending on software-on-demand should increase significantly. 2. THE WEB GETS SOCIAL; TRAVEL MINGLES Social technologies are the talk of the technorati, with blogs, bookmarks and tag clouds popping up across the net. As the Web has grown larger, users have discovered that sorting the net is a lot more productive with a little direction. Social networking makes it possible for people to share information about personal experiences, recommended sites and interesting content. For people planning travel, the ability to tap the experiences and advice of a Iarge network of people could be invaluable - and when those recommendations have already been filtered based on shared interests, perhaps shared friends, the results will be impressive. On the tagging front, users are exploring a new way to organize information on the Internet intuitively -- simply by assigning searchable keywords to images, bookmarks and blogs. The practice has gained popularity on sites like the photo-sharing service Flickr, which was recently acquired by Sunnyvale, Calif.-based Yahoo! Inc., where the majority of images have been tagged by users. Tagging systems are also referred to as “folksonomies,” which Wikipedia defines as “a neologism for a practice of collaborative categorization using freely chosen keywords.” In 2006, look for existing travel companies to begin incorporating social technologies into their online strategies. “Travel-related social networking tools will be hot on travel Web sites this year - and companies will take a close look at how tagging might be used as a differentiator in the hotel realm and in building excitement over travel experience planning. Look for a few social related travel startups as well in the coming year. 3. THE THREE D’S - DASHBOARDS, DATA MINING AND DATING: POWER SHIFT TOWARD CONSUMERS This trend is about leveraging past trip patterns, traveller behaviors and trend data to predict future opportunities for savings (corporate through dashboards) and inspire relevant travel purchases (consumer through data mining). It is about anticipating what information travelers, travel managers or procurement decision makers want to have at their fingertips, what a firm could/should do next to better serve them and delivering on these needs. And, all three are required to strengthen a firm’s brand affinity with prospective and current customers and cultivate “customer stickiness.” To date, travel providers have not effectively responded to travelers’ interest in a branded site where information can be shared. This gap has given rise to blogs and online communities that exist throughout the net. Community sharing has become so popular and successful because these venues have helped travelers to visually and compellingly share their experiences with family, friends, colleagues and even strangers. Like on-demand TV, these chat rooms, blogs, social networks, and tagging and bookmarking activities have given travelers control of the experience (shopping, buying and travel) to make 2006 all about wooing the customer and forming a relationship based on shared information, not just purchases (similar to dating). The challenges for travel companies lie in 1) effectively integrating and utilizing data mining technology, 2) embracing social technologies in a timely manner and 3) reconciling the need to relinquish control and discard outdated models with the ultimate goal of building brand. Technologists have the opportunity in 2006 to help their organizations establish a plan for bringing all of the pieces together: dovetailing social and data mining tools to forge a new type of relationship with consumers and enabling novel ways of owning brand within an increasingly consumer operated Web. 4. ALTERNATIVE DISTRIBUTION CHANNELS Cambridge, Mass.-based ITA Software Inc. and Chicago, Ill.-based G2 Switch Works Corp. spent 2005 promoting their alternative distribution systems and refining their agent desktops. The GDSs could be on the losing end. Although the leak will be minor at first, ITA, G2 and others will make progress in building out to suppliers and begin to position themselves to optimize their market-share capture. ITA’s $ 100 million influx of capital - whether it’s largely earmarked for alternative distribution efforts or not - will further infuse confidence in the company and keep the subject of alternative distribution a viable one. 5. RICH MEDIA At The PhoCusWright Conference in November 2005, hoteliers continued to express concern about the commoditization of travel, and Michelle Peluso, CEO of Southlake, Tex.-based Travelocity, acknowledged the challenge of finding effective ways for hoteliers to differentiate their product. Rich media has the potential to be a powerful tool and travel companies will begin to capitalize on it, With broadband penetration on the rise, rich media not only has the potential to differentiate hotel rooms, but enables companies to leverage sound, animation, real-time video and interactive maps to help consumers to visualize the travel experience. The novelty of mediocre rich media, however, has worn off. It’s unlikely that an overwhelming crop of rich-media product announcements will hit the wires in 2006, but tech departments will be busy behind the scenes addressing the integration, content management and simple division-of-labour challenges that will enable rich media to become a truly valuable tool. 6. X MARKS THE SPOT Mapping technology has received a great deal of attention in the travel space of late, as more travel companies incorporate interactive maps into their Web sites and mapping APIs inspire technology enthusiasts to create their own custom maps. Mountain View, Calif.-based Google Inc., Yahoo! and Redmond, Wash.-based Microsoft Corp.’s MSN have released mapping application program interfaces (APIs) and Denver, Colo.-based MapQuest Inc. is expected to follow suit -- giving companies and individuals the mapping tools they need to create a broad range of mapping mashups. Web application mashups combine two or more services, often a mapping application arid a data source, to create unique maps with overlaid location-based information. Maps are popping up that track favorite restaurants and hotels, drink prices, parking spaces and recommended walking tours of various cities. Blogs are appearing that are devoted entirely to tracking the maps that are being created ... a sure sign that this trend is going to be big. Interactive maps provide an obvious way to organize information about a city or neighborhood and will increasingly become a staple of the trip-planning process. Travel companies should exploit opportunities to incorporate data-rich maps into their own Web sites and take steps to integrate the capability with social technologies in the short term and realtime data sources in the long term. As maps become even more data rich and GPS-enabled mobile devices become the standard, mapping technology will be a goldmine of opportunity in the travel space - before, during and after the trip.

Avian Flu and Mad Cows from a US Student

Great post, worth your time.

Weekend Tittle Tattle from FT.com

I'm sorry, but I love the FT. Sorry FT, but your FT.com site lets you down from time to time. This link is nothing more than froth and gossip dressed up as news, and it quotes a technical guru from Jupiter somewhat out of context, as it makes out that his line that Origami "is not an iPod killer" is central to his opinion on the topic. Unusually for me, I'm on fire over this little remark. iPod is not yet sentient, therefore cannot die. Notwithstanding this somewhat pedantic observation, I find myself annoyed that FT.com have misquoted Jupiter. Furthermore they should know better than to quote some fan's web log. If they want to quote from a blog, quote this: "Origami is not in the same space as the iPod, the UI is not as friendly, and the battery life renders it unfit for purpose. If these guys want to be taken seriously, they should not launch prototypes as products. If Apple ever did that, they would have launched an iPod the size of a house brick in 1992 and the device would never have taken hold of the imagination in the way that it has." I'm breathing again, but if you want real research and analysis, from real experts, I can recommend IAGportal. There. Sales pitch done. If you ask me, I may even give you a free trial, such is my confidence that we can do better than that.

Gulf Air Bahrain Grand Prix

Our correspondent reports from the start line of the Bahrain GP. The notorious Gulf Air fly-past of two Airbus jets turned heads and stopped a few hearts. The sight of such big planes in such close proximity to tall buildings is no longer a thing of majesty, but an experience of awe. Nevertheless the Grand Prix itself is a sight to behold, and it is live around the world to an audience of 400 million in just 25 minutes. Wherever you are in the world, do tune in.

On Airbus 350 marketing document vs. Boeing 787

Although it is a while since the review of Airbus marketing document on 350 was published we would like to share few more thoughts on the 350 comparison with Boeing's 787. Airbus is obviously using the similarity with 330 and 340 in order to send the positive message to its shrinking long haul customer base. In terms of range and payload the 350 is an improvement. However there is no comparison to (theoretical range and payload) from the similar Boeing 787 models. Why is Airbus avoiding doing that comparison? In general, you do a comparison with your competitors, right? So there must be numbers (and Boeing might have them) that tell a different story. It shouldn’t be long for these numbers to come from Boeing. Regarding seat capacity; when Boeing declared that they will follow customer requests and sacrifice comfort for profit (sic!) with 9 seats in abreast in economy, this definitely adds a notch to the 787's clear advantage over the 350. Commonality and pilot familiarity is a long-term strategy for Airbus and is correct. However they use the same pitch on the 380 campaign so it is unclear how much value an airline puts in this. It is logical to use the same pool of pilots from your Airbus family but how many of them are really flying across the whole family? Ask pilot unions what they think of this. These organizations are hierarchical (seniority) and switching from one type to another (320 up to 330/340) is a big deal. So not that useful from the crew stand point. As for risk; in engineering terms risk is analyzed for every new aircraft. Introducing 350 to an already established Airbus fleet is easier then introducing a 787. But it is also easy to calculate advantages of a completely new technology over the next 30 years or so. Those who started with Airbus in 70s and 80s and Boeing 737 and Boeing 747 in 60s know the final numbers, right? Discussions about new materials is questionable, especially the Airbus pitch of advantages of Al-Li over the composite fuselage. First, Airbus NEVER made a composite fuselage and have no data for a comparison. They do have some fuselage parts made of composites but still this is only partial. Damage to composites are easier to repair (whoever has a boat knows that) and there is enough knowledge on composite fuselages in the last 20+ years to confirm this. Boeing had enough expertise coming from their Defense unit (IDS) so there is no question if they're well versed in composite repairs. The statement made by Airbus on using composites for the wing based on fatigue criticality is, from my point of view, avoiding saying that a pressurized structure (fuselage) is just as sensitive to fatigue and cracking. Fact is Airbus have never tried to develop a composite fuselage manufacturing technology. This will is a clear advantage to Boeing because sooner or later Airbus will also go for all composite fuselages (32x replacement). I wonder what their sales pitch be then? As for engines, stating that bleed air is more efficient (economically) can backfire. There is a very good reason, mostly economics, that Boeing is using electric generators to power the systems onboard 787 and to leave the engines for thrust only. Expertise that Boeing's partners have in new types of generators is the main reason to go in that direction. Customers DO like the fact they will have a more economical engine, especially with today's fuel cost. I do not see this item used in Airbus's marketing. Engine economy with and without bleed air, taking as a parameter fuel expenses, is a good sales pitch for Boeing 787. Maintenance and overhaul of these engines can be estimated only by their manufacturers so I would leave up to them to for the numbers. On the other hand, it is hard to produce both types of engines (with and without bleed air) and to support both statements used by Airbus and Boeing on maintenance cost reduction. One has to prevail and we will very soon see which one of these two is cheaper to run. Finally, sending a message that Airbus 350 is targeting long thin routes is a sort of "salto mortale" for Airbus. For those of you remembering the initial 380 marketing approach; it is in a head-on collision with "long thin route" statement. Airbus’ 380 was pitched based on a fact there will be no demand for a point-to-point long thin routes and that hub-to-hub transport is the future. Why would Airbus step on their own toes? It is true they were forced to counter Boeing's 787 family, no matter what. Initial statements by Airbus strategists that Airbus 350 with new engines will beat Boeing 787 got revised into new materials, new systems and then declaring the 350 completely new, probably when they saw they could not certify it as a derivative. Good decision and yet too late. In this race being second is being the loser. This also impacts Airbus's overall strategy. Having an advantage in one segment (Airbus 319/320/321 vs. Boeing 737NG) is a strategy that, in artillery terms, needs some lateral adjustment. In my opinion Airbus’ only solution is to try to use resources and start a new all-composite single aisle model to gain competitive advantage. Going to China and trying to set a production line there may be a good move if this is a result of a long term strategy. I am suspicious this seems an equation with too many unknowns and few good solutions. Just check on Douglas' and Embraer's "success" in setting China based manufacturing. In general, Boeing has a clear advantage now because they started a new composite family (787) which will create an even larger knowledge base. This move also makes a smoother transfer to a new, single aisle, composite program. Airbus should do a pre-emptive strike and start working on that first. But bearing in mind that their resources are over-stretched (A400, 380, 350) this will be a tremendous challenge. Boeing can use its lead and, with a small effort, they can make this lead bigger by starting a new composite structure single aisle family. VK

Airbus delivery delays inevitable

Airbus is hit harder by the current global shortage of aerospace engineers. EC work rules limit employees to a 40 hour week including overtime; contractors are only allowed 5 hours/week overtime. By comparison Boeing workers have a 40 hour week with no overtime limit and they can squeeze contractors for whatever they can. Add to this an annual leave in Europe of 6 weeks compared to 2 weeks in the US. Now factor in the fact that Airbus is currently doing the 380, A400, 350 and replacement 320. Boeing is currently doing the 787, 747-8 and 737 replacement. Which team will get their work done faster and cheaper? More from our writer VK in the IAGPortal.

Newsvine Utah Man on Crusade

Thanks to Cali Lewis for putting us onto the exceptional Newsvine. This story is a humdinger, a la Falling Down.

Philoculture Blog

Stumbling around in the middle of the night is good for the soul. Doing it online is even better, and the results tend to do less harm. I recommend Philoculture's blog (linked, hit the title) for its aviation links and its refreshing take on a rugged path.

Portal Update

Blog readers will be pleased to hear that (for a limited time only) all of the IAGportal content is completely free as we start the long haul to go-live. The exception to this is the full-length audio content, which remains exclusive to paid subscribers. Over the coming weeks, other sections will gradually slide into the 'paid-for' abyss. However we can announce some very good discounts for annual subscriptions, and the ability for IAG Blog readers to negotiate special terms also. Don't forget that the Portal is much more of a community than the blog, by its very nature, and you will be able to network and share contacts with other like-minded industry bigwigs, analysts, consultants and CEOs from some of the top organisations. Please do bookmark the portal and keep checking back. We will soon be launching a regular PDF newsletter which will be available in a special Portal section, and can optionally be sent by email to account holders. In future months we will be including video content on the site as well, and we are commissioning professional journalists to write feature articles. Early days, small acorns and all that, but the portal is garnering interest from top airlines, aircraft makers and jetset travellers alike.

China's large aircraft dream to come true by 2015

China is expected to realize its "large aircraft" dream by the year 2015, a senior aviation official said Friday in an exclusive interview with Xinhua. "Large aircraft" refer to large transportation planes with a carrying capacity exceeding 100 tons, trunk liners with more than 150 seats and other derivative special-purpose planes, Liu said. Liu Daxiang, who is a senior official with the state-owned China Aviation Industry Corporation I and also a deputy to China's parliament or the National People's Congress (NPC), said he was happy to learn that the development of large aircraft is listed as one of the country's 16 major development plans in the 11th Five- Year Program for the 2006-2010 period. "If things are going smoothly, large transport planes for military and civil purposes are expected to fly into the sky in 10 years," Liu said. "With 5 more years of further development, the Chinese people are likely to travel by home-made 150-seat planes by 2020." ---------- If I were a decision maker at European or American airspace OEMs I would be very cautious about my next moves vis-à-vis China and technology transfer. Competition forced, first Boeing and then Airbus, to start a lot of subcontracting work outside of their control, and recently to China. As in the case of Japan it is inevitable that this will help local industries to develop enough IP to be capable of building their own commercial aircraft. Read the rest of VK's piece on the IAGPortal.

Row44 plans 2006 tests and 2007 launch

Airline broadband startup Row44 had an analyst call with IAG today. Some interesting tidbits that emerged from the call were: Their relationship with Hughes gives them access to 95% of the world's population, Hughes has taken a small stake in the firm and the firm plans to start testing their solution this year. The really neat thing we learned is this - Row44 only charges $25,000 per installation (per plane). That is a number way lower than alternative options. Indeed, there is no charge if the install is done by the airline itself. Row44 gives their on-board equipment for free. The full call is on the IAGPortal.

RFID at Cebit

The linked BBC News article discusses some of the issues being discussed at Cebit in Hannover associated with civil liberties and RFID. As a technologist, I tend to lean towards the exciting opportunities that such inventions enable. Others go right for the privacy jugular, and some of them come across as mis-guided scare-mongerers. I have to say that this article is fairly innocuous, and discusses how RFID could help you sort your sock drawer. Such examples don't help anyone. It may well be that there are civil liberties implications, but let's get the technology to work first. Make it commercially viable, agree on an international standard, and then worry about the politics later. For a start, the range of RFID scanners will preclude the kind of 'Big Brother' scenario that the doom-sayers predict. Lots of talking and inventing and hard work ahead, don't hold your breath, but it'll be worth the wait.

Legacy airlines=value destroyers says Morningstar

We wouldn't recommend buying and holding a legacy airline stock now nor at any point in the airline industry cycle. There--we said it. Kidding aside, it should be no secret by now that we do not consider any airlines other than the very best low-cost carriers-- Southwest LUV and AirTran AAI--to be wise buy-and-hold investments. --------- This is a biting and well written piece. For the Wall Street analysts that stop by daily - please read this piece.

UA bankruptcy fees - $335m

This is a beaut. "James Sprayregen, the Kirkland & Ellis partner who was United's lead bankruptcy lawyer, performed $3.45 million worth of services, the firm said in a court filing Monday. He charged United for 4,419 hours in the case, billing at a top rate of $850 an hour.....The law firm called the average hourly rate of $356.08 charged by its more than 300 attorneys who billed for over 263,000 hours "more than reasonable" and said it compared favorably to the rates charged by other law firms in the case." Use the link to read the rest. And lawyers wonder why people make jokes.

India now using Israeli-style airport security

Wary of increasing terror attacks , the Central Industrial Security Force (CISF), in-charge of security at the Mumbai airport and 53 other airports in the country, has begun psycho-profiling all passengers to be able to correctly pin down potential hijackers, terrorists, gangsters, smugglers and drug-peddlers . Lessons in psycho-profiling , a method of examining psychological behaviour patterns by way of observation and questioning, were imparted to the CISF early this year by officials of the Israel national airline El Al, one of the most security-conscious airlines in the world which has had this system for years and by officials of Indian intelligence agencies. ---------- In case you have not had the pleasure of such an interview, let us assure you, its a pain. Israeli airport require you to turn up much earlier for flights so they can checkout EVERY passenger. They have a zero tolerance rate and it works for them. But Israel is a small market while India's is growing very quickly. This method is highly labor intensive - how quickly can India expect to roll this out?

Long flights: Cabin air quality linked to blood clots, says study

AFP -- Low cabin air pressure and poor oxygenation enhance the risk of deep-vein thrombosis (DVT), a study says, also identifying a minority of people who are the most prone to developing these dangerous blood clots. DVT occurs when a clot forms in leg veins during periods of sedentary activity. The clot can then migrate to the heart, lung or brain, sometimes days or weeks later, and inflict a heart attack or stroke. ---------- Yet according to the stodgy House of Lords, there is no such thing as DVT and airlines are not responsible for the tight seats that make it impossible to move that almost certainly play a role in DVT. It is reasonable to assume that not one of the members of that body has traveled in economy in a long time. Maybe some other more modern political body could take up this cause? Brussels, Washington...No wait, politicos don't travel in economy. Forget that idea. Where, oh where to turn for relief?

Lufthansa eyes the 747-8

Bloomberg -- Deutsche Lufthansa AG, Europe's second-largest airline, said it's interested in both passenger and freight versions of Boeing Co.'s planned 747-8 airliner. Lufthansa is giving Boeing proposals on how the Cologne, Germany-based airline would want both the 747-8, a proposed longer version of its largest airliner, and the new 787 model configured in the event it buys the planes, Boeing Germany President Horst Teltschik said in an interview in Berlin. Boeing approved production of the 450-seat 747-8 in November in a challenge to Airbus SAS's 550-seat A380 as the Chicago-based company tries to hold onto the jumbo-jet market it created almost four decades ago. The A380 will overtake the current 420-seat 747 model as the world's biggest commercial aircraft when it enters service later this year. Lufthansa will have the world's second-biggest fleet of A380s once all 15 are delivered starting in 2008. That wouldn't damp its interest in Boeing's giant plane, Michael Lamberty, a Lufthansa spokesman, said in an interview today in Berlin. "We think we have an advantage, because Lufthansa hasn't ordered Boeing planes in eight years, so they run the risk of becoming dependent on Airbus," Teltschik said. The German airline plans a "large order, in the billions," for either the 787 or Airbus's competing A350 in 2006, Lamberty said. "This is the big year for plane decisions." --------- Tonight they are not sipping champagne in Toulouse. To even consider the 747-8, in both versions, after being a launch customer of the 380 is a harsh indictment of Airbus by Lufthansa. This is no invective either, a simply worded statement that screams. Lufthansa is an airline that shows its technical expertise in on-board television. They boast how when taking delivery of a new plane, it gets checked before it flies customers. By contrast, PIA's new 777LR flew from Seattle to Manchester where it immediately went into revenue service. The statement above reeks of customer unrest and discomfit. Given the 787s order history, and its apparent performance differential with the 350, we think that plane is a shoo-in at Lufthansa. Any more screw-ups with the 380 will guarantee a 747-8 order. Lufthansa has not ordered a Boeing for eight years. They're overdue.

UAE's Boeing orders threatened?

Dubai is threatening retaliation against American strategic and commercial interests if Washington blocks its $6.8 billion takeover of operations at several U.S. ports. Retaliation from the emirate could come against lucrative deals with aircraft maker Boeing and by curtailing the docking of hundreds of American ships, including U.S. Navy ships, each year at its port in the United Arab Emirates (UAE), the source added. ------------ This was bound to happen. The elephant in the room for Boeing is named Emirates. This is very big news if the UAE decides to teach a lesson. Before everyone goes off half-cocked let's review. If the UAE decides to vent their anger by cancelling 777 orders or only buying Airbus, they lose as much as Boeing does. Airbus is watching this very carefully - remove Boeing from the picture the big Airbus discounts go away. The UAE has every reason to be angry but beware of an over-reaction. The US, though an importer of oil, is a very big exporter of largesse and protection for small nations in the Gulf squeezed between Saudi Arabia, Iraq and Iran. Those port calls are worth a great deal more than the coin dropped by sailors. The US should graciously accept the Dubai Ports World’s offer of a revised deal proposed today. The President is on the right side of this. Congress is flat out wrong - unless they have something concrete, there is no good reason to halt this deal. Its at least xenophobia or downright racism unless they have something solid. Would there be this hullabaloo if it was an Israeli company? One wonders what Chuck Schumer would have to say then. Lets hope this thing comes to a quick resolution without any lasting damage. Right now the Gulf nations must be looking at the White House with new respect and at Congress with disdain.

Origami - An IFE Option?

Microsoft chairman Bill Gates first told the world about plans for an ultra-portable PC in April 2005 at the annual Windows Hardware Engineering Conference. He envisioned a gadget that ran all day on a single battery charge, cost less than $500 (£300), had a touch screen and ran games, music and multimedia. --------- Here is another mobile option that could replace in-seat technology. But heres the bad news - Samsung is the first hardware partner to show off a working ultra-portable device, the Q1. Prototypes are reportedly lasting only 15 minutes before needing re-charging while production devices are expected to run for three hours before needing a fill up (less than a US coast-to-coast flight). The price is also higher - Samsung said when the Q1 goes on sale in Europe in April it will cost about 1,000 euros. Right idea - not such execution. How quickly can they fix this or do we all have to get Apple's iPOD?

BA cost cutting & LCC impact

AP -- British Airways PLC, which is facing tough competition from budget airlines and coping with surging fuel costs, announced another cost-cutting program Thursday. Chief Executive Willie Walsh said later at an analyst and investor meeting that he has no plans to adjust the fuel surcharges on either long-haul or short-haul tickets. BA has progressively increased surcharges as oil prices soared over the past year. In contrast, budget airlines such as Ryanair Holdings PLC have imposed no extra fuel charges on passengers, a decision they claim have helped keep prices low and win customers from the full-service airlines. Walsh said that BA has secured delivery slots with Boeing Co. for ten '777' aircraft starting from the end of 2008 for its long-haul fleet -- where it makes the majority of its profits. --------- So this means retiring some of the older 747-400s and replacement (no doubt) with 777-300ERs. Same capacity with much lower fuel burn. So far so good. But not enough. The LCC effect we have seen in the US is now kicking in big time. So another legacy carrier is getting its business plan refined by lower cost competition. BA's focus on long hauls is a logical step but this too will be refined as Emirates starts to carve up BA's traffic headed east from London to lucrative markets like Hong Kong and Oceania. Its amazing to see legacy airlines have their business plans trashed by hyper efficient LCCs - this is the US market all over again. The impact is painful and pressure relentless. On short hauls in Europe easyJet and Ryanair service is whittling away at BA, the UK airline with the most market share to lose. Customers won't pay for the "extra" service levels. On the long hauls where service becomes an issue, BA is going to lose against Emirates because they also have lower costs and can drive down the prices thereby increasing their value proposition. Interestingly, Emirates has a lot of UK citizens among its employees - they are not working for free. The obvious next thought is that Emirates, Inc. is subsizing their airline. For the paying passenger, no problem. For BA's shareholders and employees - ouch - but what can they do? As we have seen in the US, you can cut into (and through) bone and still see prices driven lower by LCCs. Are we going to see the British government start limiting access to long haul LCCs (Emirates) like the French? What other options are there but to see BA come apart piece by piece? Not a great set of circumstances.

Dummy of the week #6

Indian newspaper Business Standard reports -- “Don’t just have it on your mind. Have it on your plate too!” So runs one of the series of advertisements that the ministry of health and family welfare and the department of animal husbandry are putting out in newspapers. One immediate consequence, perhaps, is that the country’s largest airline, Jet Airways, has announced it will be back to serving chicken and eggs in its non-vegetarian menus. While this is good news for the country’s poultry industry, the manner in which the entire episode of bird flu, or H5N1 to give the flu its scientific name, has been resolved leaves a lot to be desired. For, the ads don’t tell you if the bird flu is over, just that ‘well-cooked chicken and eggs are safe and healthy’. If you read between the lines, presumably that means the flu itself is not over. So, the ministry is not recommending chicken salami. Or is it? ------------- Avian flu is over? Jet Airways has brought back chicken to its menu. Oh boy.

SAA to lose CEO?

Rumors emanating from South Africa are that its current CEO Khaya Ngqula will be out when results are announced. Notice his name is no longer on the SAA web site. Replacement is apparently the current head of SA Express, an SAA subsidiary. During his stint with the IDC, the incumbent managed to create enormous personal wealth. Launching many companies with IDC funds helped a lot, many of which eventually failed.

Carnegie Mellon, Cell phones & Airplanes

Researchers at Carnegie Mellon undertook work which has come to light through a university press release a week ago. Addressing mobile phones and other portable devices such as DVD players and laptops a study is said to show that on average one to four cellphone calls are made during every commercial flight in the north-eastern USA. It goes on to assert that some of the calls are made during the climb or on final approach, potentially placing the aircraft in danger. “We found that the risk posed by these portable devices is higher than previously believed,” said Bill Strauss, a recent doctoral graduate from Carnegie Mellon. “These devices can disrupt normal operation of key cockpit instruments, especially Global Positioning System (GPS) receivers, which are increasingly vital for safe landings.” So what? Nobody is going to stop using their devices for as long as they can or as soon as they can. Cabin crews hate Blackberrys for the simple reason that these devices are fantastic and people use them thm as long as they can. People love them and feel that remain productive while otherwise imprisoned in a tube. This study will not stop the tsunami called mobile technology. While we have not read the study, we don't buy the proposition that portable devices impair avionics.

Airbus 330F

As we saw yesterday Airbus is hinting possible work on A330-200 Freighter which according to our sources has been on the table for some time (since last year, at least). This is a good, but late, decision from Toulouse. Airbus lags Boeing in the cargo market significantly. Taking a combined Boeing and MD/DC fleet that gap is even greater. There are several small problems for Airbus if they go with this new model. Their resources are spread (A400, A380, A350) so they need to outsource the engineering work (stress, design) as well as modification work. Since they are building an office in Mobile, AL in order to accommodate possible tanker conversion work for USAF one would expect to see them to shift all or most of the 330F work in that direction. What better way to show their serious commitment to working in the USA? More on this subject in the IAGportal.

Flu Update on BBC Newsnight 2230 GMT

Tonight's edition of BBC Newsnight in the UK will feature an interview with a representative of the World Health Organisation (WHO) talking about the latest on the Avian Flu epidemic. For those outside the UK, Newsnight is available LIVE on broadband from 2230 GMT and for 24 hours after broadcast. Visit BBC Newsnight for details.

First it was Putin Aerospace...now...

Interfax reports Russian flag carrier Aeroflot Russian Airlines plans to merge five state-owned airlines by placing an additional share issue in favor of the Russian government. So now we are going to see "Putin Airways" too? What are these people drinking? Has nobody in Russia figured out that governments cannot run service industries, especially airlines? This is very odd. Moreover, what else is being re-centralized?

Pentagon to split tanker order?

Reuters -- A study on upgrading the US military's fleet of refueling tankers found the best option would be to modify new commercial jets built by Airbus or Boeing, and urged the Pentagon not to exclude a mixed fleet of planes from both. The two-year Rand Corp. study, requested by the Pentagon, sets the stage for a multibillion-dollar, transatlantic competition to help the Air Force replace its aging fleet of 531 KC-135s. The aircraft, which are an average of 46 years old, are used to refuel fighter jets and cargo aircraft in mid-flight. Pentagon officials shared the results of the 1,900-page study with lawmakers in late January, but the executive summary was publicly released for the first time on Tuesday. The final report was delivered to the Pentagon earlier this month, Rand said. In the summary, Rand concluded that the cheapest alternative for replacing the KC-135s would be to buy a fleet of new medium to large-sized commercial planes modified as tankers. Possible candidates in the range between 300,000 to 1 million pounds included the A330 and A340, built by Europe's Airbus, and Boeing's 767, 787, 777 and 747 jets, Rand said in the study. Estimates of the costs of these planes were close enough that none should be excluded as possible candidates, and there was no reason to discount a mixed buy of Airbus and Boeing planes, Rand said. "A mixed fleet consisting of more than one of these alternative candidates also has comparable cost-effectiveness, so there is no reason to exclude a priori an Airbus-Boeing mixed buy on cost-effectiveness grounds," the study said. Modifying used planes would not be as cost effective as buying new ones, it said. The limited number of used aircraft available would meet only 10 percent to 25 percent of the total requirement at best. The Rand study made no specific recommendation on when the Pentagon should replace its tankers. ----------- Some perspective. - Does the USAF need over 500 tankers? No, not if the new tankers are bigger. Both the 767 and 330 are much bigger planes than current tankers. - Does the 767 still make sense? Sort of, it quick to put into the market and the USAF is not paying any more development costs because 767Ts have been sold and are in service already. - Is the 330T viable? Yes, orders have been placed for it by others and the USAF would not have to fund development costs. - Which plane seems to offer the best options? The 767 is smaller and probably cheaper. The 330 is larger and can carry more cargo - which is something the USAF wants. The other planes (777, 747, 787) are not compelling at all. That said, don't put it past Boeing to offer a 747 tanker.

737RS - some whispers

We hear that a 737RS with a composite fuselage and P&W GTF (geared turbo fan) will be capable of targeting the 90-100 seat niche market. Interesting don't you think? Wouldn't want to be Embraer or Bombardier if this is true.

Wright update

Dallas Business Journal -- Southwest Airlines said Tuesday that it is opposed to resolutions expected to be approved by local city councils for a seven-month moratorium on any Congressional action regarding changes to the Wright Amendment. Instead, the Dallas-based low-cost carrier wants the Dallas City Council to substitute a 30-day moratorium ending April 10, 2006. The city councils of Dallas and Fort Worth are calling for the seven-month moratorium until Oct. 1, 2006, giving them the spring and summer months to negotiate a compromise related to the 1979 federal law that limits service from Dallas Love Field to short-haul flights to a few surrounding states. Southwest, which flies out of Love Field, has been battling to repeal the Wright Amendment. Love Field is owned by the city of Dallas. Because the fall elections are on the Congressional calendar, any action on the Wright Amendment could be put off until the fall of 2007 if the seven-month moratorium in enacted, Southwest said. ----------- Gutless politicians. Voters should toss them out. How come these city councils won't take firm stands on this issue? How much longer must the people of Dallas endure this issue? BTW click on this excellent article by Enplaned about Alliance Airport - something most people (us included) missed.

American Eagle & a 2006 trend

American Eagle Airlines is providing customers with a new snack box option for purchase, based on the results of recent customer feedback. "American Eagle has listened to our customers and conducted a number of product tests to determine what they value," said Jon Snook, Senior Vice President - Customer Service. "These new products directly reflect what we heard from our customers and we believe they will enjoy the options we'll provide." Eagle has updated its snack box items based on customer survey data, and will be going to one box regardless of time of day. The items reflect customer preference for healthier snacks. The snack box will continue to sell for $3. This new box will contain a Quaker Fruit and Oatmeal Apple Crisp Bar, a box of Sun Maid Raisins, Jacob's Crackers, Le Petit Fromage Cheese Spread and a 4-pack of Lorna Doone Shortbread Cookies. Eagle also conducted a test in California in which it sold cans of soda and juice for $1, and has opted to discontinue those sales at this time. Sales of cashews and pillow-and-blanket sets are being evaluated for further distribution -----------