Another Russian airline

Mr. Putin is reported to once have said this; "Anyone who does not miss the Soviet Union has no soul and anyone who wants it back has no brain". With that backdrop, we report this news. The Kremlin is planning to revive the fortunes of Russia’s flagging aviation industry by launching another national carrier to run alongside Aeroflot.

Rather than bailing out the country’s struggling privately run airlines, the Kremlin plans to fold failing private assets into a state airline, Rosavia, which is expected to be controlled by a government bureaucrat close to Prime Minister Vladimir Putin.

Rosavia, in formation, and sans website, and its name is just a working title. It was even identified in the press as “Russian Airlines” until Aeroflot objected. Interestingly, Rosavia.com belongs to one Valeriy Vagner (domenforsale@rambler.ru) of Tachovske namesti 90-2, Prague. His phone number is +420.776370030 and the domain was created on 15-Oct-2008. He might be getting a call. And he will sell. But not for the price he thinks.

Russia’s private airlines are on the verge of collapse due to the combination of the high price of jet fuel last summer and the lack of credit recently. One of the losers is Alexander Lebedev, the Russian oligarch and the largest private shareholder in Aeroflot. In an interview with the Financial Times, he said: “The airline industry is one of the riskiest, most unprofitable industries in the world. I don’t know why anybody does this.” Mr Lebedev is fighting to save his stake in the airline, thought to be as high as 30%. “I have had to search all my pockets and found some money,” Mr Lebedev told the FT. He fears that if his shareholding falls below the 25% blocking stake, the state will dilute his ownership further by issuing new stock.

According to Russian media, Rosavia will be 51% owned by Russian Technologies, a state holding company. The other 49% could be controlled by the Moscow city government headed by mayor Yuri Luzhkov.

Meanwhile, Aeroflot posted a bullish trading statement, saying it aims to boost profits next year to a record 9.3bn rubles, despite predictions of a decline in demand for air travel of 10-20%. The airline said it hopes to achieve this by replacing its fleet with fuel efficient planes and cutting administrative staff. It also stated its net profit for 2008 would be around $85m compared to $313m in 2007.

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Chaos at Alitalia

Can it be? Oh yes it can! The new owners of Alitalia and unions are back at the table following the cancellation of nearly 140 flights at Rome’s Fiumicino airport. The parties are trying to thrash out a deal over the exact number of jobs that will be exist when the smaller, more efficient Alitalia is relaunched next month. Thousands of passengers were left stranded following the walk out by baggage handlers and maintenance staff over their futures under the new regime.

Filt-Cgil national secretary Mauro Rossi said: "there are a series of things which have no explanation save for gross incompetence or bad faith in the application of the understandings undersigned in Palazzo Chigi".

The cancellations have caused fury among the many stranded. “Alitalia stinks, I'm sorry,” Vince Mariotto, an American passenger flying to Chicago, told Reuters Television. “I never (will take another Alitalia) flight ... not even if they give me a free ticket.” Another, Mirea Mitrofan, said the airline did little to comfort stranded passengers. "No water, no food. They put some of us last night in hotels, some people slept on the floor in the airport," Mitrofan said. The airline's new owners must be on painkillers already.

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• Qantas A380 Fiji mishap
• Cheaper oil and the A340
• DAE does 777 deal with ANZ

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Boeing to take another hit

Take a look here. This is not good news for a company that has been rich in bad news lately. And, given the nature of the consolidated defense business in the US, the other parties that are getting what was Boeing's money are Northrop Grumman and General Dynamics. By the way, this is on top of other news from the Pentagon - these same firms are getting $14bn for more submarines.

This decision will hurt Boeing's cashflow projections at a time when its cash will be hit with compensation payments to cover 787 delays. When it rains, it pours.

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• What is up with the 737?
• Southwest's balance sheet

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Rolls Royce Trent 700

Take a look here. You would have thought that Rolls Royce would win the order anyway, since this would keep the fleet standardized. But no, RR had to work for it. A 1.3% improvement in fuel burn is huge. Its interesting that prior to this announcement, we have not heard anything about this. You would think RR would holler this from the rooftop. But a search for such an announcement on RR's website does not reveal one. This is a bit odd.

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• Some 787 good news
• Daily Mail discovers ancillary revenue
• US DoT queries BA/AA/IB
• jetBlue handles first NY winter storm with flying colors

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FAA hammers Israel

On Friday the FAA announced it was downgrading Israel's aviation safety standard to Category 2 under the agency's International Aviation Safety Assessment program. This puts Israel in the following company: Bangladesh, Belize, Ivory Coast, Croatia, DR Congo, Gambia, Ghana, Guyana, Haiti, Honduras, Indonesia, Kiribati, Montenegro, Nauru, Nicaragua, Paraguay, Philippines, Serbia, Swaziland, Ukraine, Uruguay and Zimbabwe. Yikes. The FAA noted that the rating downgrade is not related to security issues. What they did say was Israel needed "addressing the items identified, including working with the FAA on an aggressive action plan to correct all areas of concern so that their safety oversight system fully complies with standards and practices set by [ICAO]." And a Category 2 rating "may involve a country lacking laws or regulations necessary to oversee air carriers in accordance with international standards, or that its civil aviation authority does not meet international standards in one or more areas such as technical expertise, trained personnel, record keeping, or inspection procedures."

No matter how this is spun, it is a slap on Israel's commercial aviation and its government. Everything in Israel has a defense spin to it and the absence of any reaction from the Israelis is odd. Take a look here for an Israeli view. Of concern will be the fact that this move nullifies code sharing. Heads should be rolling within Israel's government and it will be interesting to see if this happens. The FAA warned about this months ago.

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In-flight comms

Here's an outstanding endorsement for in-flight communications. Emirates introduced AeroMobile's GSM voice and data service last March and has 23 aircraft fitted to date, with new installations taking place every week or two. Last week it recorded the 50,000th access to the AeroMobile service being implemented across its fleet.

Patrick Brannelly, the airline’s VP for passenger communications and visual services, said “Many of these people have simply switched on their phones so that they can be available if anyone calls. But I do know that the number of calls made from the air is many times more than we see with the existing seat back phones - which just goes to show that this is all about convenience.”

During peak times more than 70 passengers per flight are switching on their phones, according to the airline. Texting is more popular than voice calls by a ratio of about 2:1. Amazing numbers yet why are we not surprised?

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• Bankruptcy thoughts

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Oil may have bottomed

Here's a story you want to read. It looks like a Canadian-centric view but does provide an insight that is worth looking at.

Since so much of what we are interested in, like commercial aviation or aviation as a whole, remains oil driven and dependent, we need to view any news that is oil related as important. The past year has shown us how crucially vulnerable western economies are to oil shocks. But to see how this really impacts take a look here.

The first chart shows you total consumption. Now click the tab on the top to see the same data on a per capita basis. Big change, right? Based on 2005 numbers, the US uses less oil per capita than Canada. Interesting way to look at things. Next, take a look at these charts which can be found here.

Despite America's love of the V8 engine, energy consumption has been growing more slowly than real GDP. The graph above shows US energy consumption per 1996 dollar of GDP. The chart shows data through 2003.

The source sites says: "US energy consumption by end use is shown below for the post-war period. Growth in all uses was rapid until the first oil price shock in 1973. After that, residential, commercial and transportation energy use has grown more slowly and industrial energy use has remained essentially constant." The crucial thing here is the oil shock impact. We have just been through another one, in some ways more severe than the previous one. It is likely that when these charts are updated to reflect this impact, we will see a decline in GDP growth, but a much bigger decline in oil consumption. Indeed the chart below underscores the crucial fact that we learn from oil shocks.

Again these data are dated. But the lesson is clear. Oil prices may have bottomed. There is almost no doubt that going forward the US (and other western oil consuming nations) will get their economies going again. This time they will do so, as they did in the past, with much greater energy consumption efficiency.

In other news --

• Delta is flying to Sydney - only they have not announced it yet
• BAA forced to sell three airports
• US oil consumption to be static
• US holiday travel off sharply

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India's airlines get fuel reprieve

After reading about how difficult it is to buy fairly priced jet fuel in India, this story highlights some good news for the embattled airlines in India. However, India's airlines face the same problem as any other, how much to cut fares to get people flying again. This subtle trade off is now the new test for the industry.

Airlines typically cut fares to get people flying again; the idea being the load factors (volume) will make up for the revenue cuts. But with capacity cuts, Indian airlines have less to worry about. For example, Kingfisher no longer is worried about A345s and Jet has sub leased out three 777s. Even with these cuts, the juggle will be tough. As matters look now, travel demand looks to be weaker than anyone expects. IATA has painted a very bleak picture for the industry globally.

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• JAL announces biofuel test
• BA staff strike threat - what a joke

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bmi announces OnAir trial

Here's the company PR. Interestingly the test flight is on one plane flying one route; LHR-Moscow. We know how the British hate lagging behind the French, but it's great to see bmi move first among UK carriers, following Air France in the in-flight communications game. Note also the lack of voice service.

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• Boeing loses, Boeing protests - heard this before?
• Airbus & Boeing to lend customers billions
• USAF fails third nuke test

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C-130 - unsurpassed longevity

A USAF C-130E recently passed the 30,000 hours (in the air) mark, the first time this has happened. Amazingly, this aircraft is expected to fly for another two years, and spend another 1,500 hours in the air. This C-130 has undergone seven refurbishments since it entered service in the 1960s! It is possible that three generations of pilots could have flown the same plane.

The C-130 is very special. Nearly all the 491 C-130Es built are still flying. Last year, the air force retired a 44 year old C-130, that had spent 29,500 hours in the air. But here's the really impressive part. The C-130 has been in service 51 years. So far, 2,262 have been built, and it is still in production!

Several other military aircraft remained in service over half a century (Canberra, B-52, Tu-95, AN-2, DC-3). But no other aircraft has remained in production for so long. This makes the C-130 probably the most impressive plane ever made.

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Crying over consolidation

Its amazing, but here it is. AF/KLM filed a complaint with the European Commission alleging conditions under which Lufthansa emerged as the sole bidder for Austrian Airlines were unfair.

The Austrian government's rules at the end of the bidding process weren't the same as those it initially imposed, AF said yesterday. AF called on the commission to determine whether €500m in canceled debt under the deal was a form of state aid. Lufthansa was the only carrier to bid for the state's 42% stake in Austrian.

Too late, too bad. AF/KLM is surely taking a chance here.

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Ryanair pulls Fuerteventura

The crusty Irish are not to be messed with. Ryanair is axing all its flights to Fuerteventura in the Canary Islands following a spat with the local tourism authority. This impacts 23 weekly services on nine international routes to the airport starting 31 January.

Since Ryanair began flying to Fuerteventura in 2006 annual passenger numbers increased over one hundred fold from just 2,000 to over 250,000. The economic impact has got to be significant. There will almost certainly be some sort of fall out.

Ryanair spokesman, Michael Cawley, said: “This is a very black day for Fuerteventura and one which will have a severe impact on tourism and the livelihoods of its islanders. At a time when Spanish tourism numbers are falling Ryanair’s passenger traffic continues to grow as our fares continue to fall. However, the AIE has now taken a huge gamble with the livelihoods of the local tourism industry by blatantly reneging on its contractual commitments and losing Ryanair’s 23 weekly services to the island.

He added: “Ryanair previously called on the AIE to comply with its contractual agreements and provided them with 30 days notice to remedy their contract breach, this notice period has now lapsed with no action having been taken to maintain Ryanair’s presence in Fuerteventura. Therefore, we are faced with no choice but to end all Ryanair flights to Fuerteventura from 31st January”.

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Meet Paddy Power

Start here. A visit to Paddy Power's web site is a worthy use of your time. You can even bet on the Ryanair takeover of Aer Lingus!

Isn't it funny about this part? "The Advertising Standards Authority received a complaint that the ad "denigrated" the airlines named in the ad because it implied each was at risk of going into administration." Well yes actually the bet is not outrageous at all. Some airlines are likely to go bust. You can bet on it.

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• China wants to delay deliveries
• Alitalia goes to Air France/KLM
• Heathrow next eco-terrorists warn
• IATA warns of huge losses to come

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BA plans Qantas merger before Iberia

Last week we noted how Iberia was flexing its muscles, irritated as it was with BA's sudden interest in Qantas. Well guess what? BA is interested in doing a deal with Qantas first. The deal would involve the creation of a dual-listed corporate structure between itself and Qantas, followed by the merger with Iberia.

This is not to say Iberia is unimportant. But it clearly shows that Qantas is more valuable for BA. However, this news is likely to make the Spaniards nuts. Iberia has been taking its sweet time; Lufthansa has added Austrian and yesterday took on Germanwings as well. The Spanish and Italians clearly think time is on their side. The rush for BA and Qantas says otherwise.

The Spaniards have two options; get a move on and join the incorporation of Oneworld or vacillate some more and see their airline's value continue to descend. The one good thing for Iberia is that its stake in BA is becoming more valuable.

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• Now its Stansted

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Hello AirportButler

IAG and Abbott Analytics this week launched a joint effort called AirportButler. This link will take you there.

We could have waited to design a pretty website - but travel plans are being made and we decided to go with a less pretty site that at least offers users function.

The site is devoted to providing travelers and travel planners with insight on real delay times. It is often not a pretty picture. Clearly, as you will see, the cheapest fare may not be the most cost effective. Unless your time is worth nothing.

We are pleased that the launch has already attracted some attention. Take a look at Chris Elliott's take and Rob Mark's take.

The Abu Dhabi deal

There is more to the recent firming of that Etihad order with Airbus. Industry sources say part of the A350's lightweight composites structure would be built at a new high-tech plant in Abu Dhabi. This move, yet to be confirmed, will help Airbus reduce its Euro cost base, but also (crucially), reduce its exposure to China and create a secure order source in the Gulf.

Consequently the move by Airbus should be seen as very clever in light of its inability to get the Mobile Alabama deal set. Airbus is making a number of strategic moves that cement key markets to its products. Boeing has done this with its parts sourcing for years. But putting factories in place may be a much smarter move. These factories will be run to Airbus' own quality controls and therefore less likely to create the mayhem now evident with the 787.

In other news --

• Delta cuts capacity, again
• Superjet gets a win
• Continental reveals new IFE & Frankfurt plans
• Ryanair dangles carrot

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Iberia flexes muscles

In news that must be rather irritating to BA's management, Iberia CEO has said BA must choose between his carrier and Qantas as it would be “too complex” to pursue both deals. Speaking at the UK Aviation Club in London, Fernando Conte also said he had no idea BA was entering merger talks with Qantas till a mere hour before the announcement was made public.

“I don’t have too much information about what has happened between BA and Qantas since August,” he told a meeting of the UK Aviation Club in London. “I knew about it one hour before it was published, when Willie Walsh called me and informed me they were having discussions. “We have on our agenda a pending meeting to clarify what we are talking about.”

Iberia has been in merger talks with BA since July, putting aside merger interest from both Lufthansa and Air France-KLM. An Anglo-Spanish merger is seen by analysts as more beneficial in the short term than the more complex Qantas deal, including a number of immediate cost savings and synergies.

BA and Iberia have a fraught relationship in spite of building commercial ties, and the Spanish carrier has previously shown its frustration at BA’s earlier lack of interest in pursuing a full merger. Iberia has raised its stake in BA to 9.9% in recent weeks to underline its commitment to the talks and to strengthen its negotiating power. BA holds a 13.2% stake in Iberia.

Its lovely to see this relationship struggle already. Clearly the grand vision of a truly global airline, stretching from Sydney to London via Tokyo, Madrid and DFW has not been bought into by the Madrid faction. Lots of work to be done then.

In other news --

• High tension in India continues
• F-22 troubles (again)
• More 787 delays coming
• Third Heathrow runway fudged for 2008

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Those clever Germans are at it again

Targeting Chinese university students looking to travel to Europe, Lufthansa has launched a campaign on social networking site Xiaonei. The carrier set up the Lufthansa Study Abroad in Europe Group on the site as a community forum allowing visitors to lead discussions, upload photos, play games and download podcasts related to European travel, we hear.

“China has long been a strategic market for Lufthansa’s global expansion,” says Lufthansa Great China MD Arved von zur Muehlen. “The fact we chose China as the first country to introduce such a comprehensive social networking group proves Lufthansa’s commitment and initiative to its Chinese customers.”

This is the same airline that had that nifty online game to test your geography last year. They were the first with in-flight Internet. Fiendishly clever these Germans. No wonder they will soon own the EU skies.

In other news --

• Emirates whines about the A380 - again!
• Another one bites the dust
• The sky is falling
• But mainly in the USA

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Here's a giggle

Start with this story. Now, as many know, The Onion is a staple of silly news in the US. Nothing they write is true and typically stories like the linked one are fabulous jokes. The problem with these jokes are that sometimes other news media get caught.

China's Xinhua news service has fallen for Onion stories in the past. But there are other news feeds that grab headlines and then report these as fact. The news feed at Planenews.com has caught this Onion story and reports it as is.

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• FT on F-35
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• Air Canada on S&P watch

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Lufthansa parks seven planes

Lufthansa said Monday it has taken four long-haul aircraft temporarily out of service and that it plans to park a further three planes to counter a drop in demand. Four A300-600s have been grounded and three A340-300s are slated to be put out of service for an unspecified time, a company spokesman said.

The airline earlier reported in an internal publication for employees that some aircraft would have to be grounded. Lufthansa had warned in October that its 2009 capacity, excluding its Swiss subsidiary and new routes from Milan Malpensa Airport, would shrink.

On the other hand, Lufthansa does have other airlines that might use these planes. Italia or bmi for example.

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• A320 crash - more tidbits
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Another scandal in the making?

If USAF staffers pay attention, they had better be careful with this news. The USAF cannot afford a Nimrod event. Look here. Perhaps air forces the world over just don't give these planes the attention they deserve. Fighters and bombers get attention. But its the work done before, during and after destructive missions that really matter. Electronic eyes and ears keep the rest of the attack fleet safe after all.

Reading this story sounds so much like the RAF people going on about how safe the Nimrod was and how they were doing excellent maintenance. And then one blew up in flight and the RAF lost some irreplaceable talent. Its time the USAF started putting its fancy technology into newer planes. Even if they are able to keep 40 plus year old designs flying, there comes a time when these planes are too old. Moreover, with wars going on, these planes are being used more than than ever.

Furthermore, Boeing could use the work. No doubt they would be delighted to secure orders for 767s to undertake missions now performed by the RC135. The USAF could alleviate concerns about its old workhorses by spending its very generous budget on something other than F-22s for example.

In other news --

• China and Russia's regional jets are flying
• Delta to tweak 787 orders?
• Ryanair tries again
• The mess in Asia

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