General News. September 2010.

A glance at Aviation News. Sept, 2010.

1st Sep 2010

Airbus plans to boost A320 output on strong demand

Airbus is to increase the monthly production rate of its A320-family single-aisle jetliners by four units to 38 aircraft in August 2011 and to 40 in first quarter 2012.
The manufacturer now turns out 34 of the narrowbodies per month, with a planned increase to 36 from December 2010. “For the time being, the [widebody] A330/A340 family production remains at rate 8.5,” Airbus says.

The manufacturer’s move is being driven by continuing strong demand for its single-aisle aircraft. Airbus says this was “recently underlined by the Farnborough Airshow, with 206 new single aisle commitments”, adding that it has a record backlog for the type, exceeding 2,200 aircraft.

“The recent Farnborough International Airshow, where Airbus garnered orders worth US$28 billion in total and the leasing companies made a strong return to the market, was clear evidence of a strong and positive trend towards recovery,” said Tom Williams, Airbus’s executive vice-president for programmes.

Airbus delivered a total of 498 aircraft in 2009, including 402 A320-family models – both new company records. The company has already delivered 250 aircraft by the end of June and says it is “well on track to setting another delivery record in 2010”.

The A320 family, which includes the A318, A319, A320 and A321, is recognised as the benchmark single-aisle aircraft family. Airbus says more than 6,500 units have been sold and over 4,300 delivered to more than 310 customers and operators, making it the world’s best selling commercial jetliner ever.


Henan Airlines suspends operations after crash

Henan Airlines, based in northern China, suspended flight operations on 25 August, a day after the crash of an Embraer 190 that killed 42 people out of 96 on board. The accident was the first hull-loss involving an aircraft of that type.

All the airline’s flights were still cancelled as Asian Aviation went to press, with discussions ongoing between management and the authorities to decide on how to proceed. Chinese official media reported that the crash caused Chinese airlines to review safety procedures and that Henan’s General Manager Li Qiang had been fired.

Henan flight VD 8387 was on a flight from Harbin Taiping International Airport and overshot the runway on landing at Yichun Lindu Airport, breaking into pieces and catching fire. The airport was foggy at the time of the accident, although there was no rain.

Rescue workers recovered the jet’s flight data recorder the day after the crash. It remains unclear whether the cockpit voice recorder has been found.
Embraer says it has sent a group of specialists to the crash site to help local authorities with the investigation.

Henan, formerly called Kunpeng Airlines, is a wholly owned subsidiary of Shenzhen Airlines and operates a fleet of five E-190s. Yichun airport began operations a year ago and has a 2,300m runway.


IATA sees slower ‘second phase’ of recovery

The International Air Transport Association (IATA) says the rebound in travel demand has entered a slower second phase, since traffic improvements will now be measured against year-earlier figures that already reflected the start of a recovery.

IATA announced that international scheduled passenger traffic rose 9.2 percent in July compared with the same month of 2009, while freight demand surged 22.7 percent. Both increases were smaller than the figures of 11.6 percent and 26.6 percent, respectively, recorded in June.

“The apparent slowdown was entirely due to the fact that by July 2009 traffic was already starting to recover,” IATA says. “After adjusting for seasonality, the improvement in demand was faster month-on-month than it was in June.”

During the second half of 2009, IATA says, demand was returning at an annualized 12 percent for passenger traffic and 28 percent for cargo. In the year to July 2010, the annualized rates have fallen to 8 percent and 17 percent, respectively.

“However, this is still considerably above the industry’s traditional 6 percent growth trend,” IATA says.

The organisation says Asia-Pacific airlines outperformed the industry average, recording 10.9 percent growth in July – consistent with their year-to-date figure of 10.6 percent. Load factors were helped by the fact that capacity growth in July was less than half the traffic growth rate, at 5.1 percent.

“Leading the industry’s recovery, the region’s carriers are expected to report a profit of US$2.2 billion,” IATA says. “This will be the largest gain in dollar terms in 2010 compared to 2009.”

The organisation adds that it expects a slowdown in freight markets in the second half of the year.

“Extraordinary freight growth rates in late 2009 and early 2010 were supported by businesses restocking their inventories. With the restocking cycle completed, air freight demand will be driven by consumer spending and business capital expenditure,” IATA says.

Consumer confidence remains weak in key markets such as Europe and North America, which could dampen the recovery. However, the group notes that stronger corporate profits support higher capital expenditure that could continue to drive robust freight growth.

Thai, Tiger Airways plan new LCC

Thai Airways International has signed an agreement with Singapore-based Tiger Airways Holdings to set up a new, low-cost joint venture.

The venture will be known as Thai Tiger Airways and will be based at Bangkok’s Suvarnabhumi Airport. Operations will begin in the first quarter of 2011, using a fleet of five Airbus A320-200 aircraft to serve domestic and international destinations within five hours of Bangkok.

Five more aircraft will be added to the fleet in 2012, and details of the route network are now being finalised.

Thai Airways will hold a controlling 49.8 percent stake in the venture, with another Bangkok-based company holding 1.2 percent, while the remaining 49 percent will be owned by Tiger Airways. The low-cost carrier will have start-up capital of 200 million baht (US$6.7 million).

Thai Tiger’s board will include three directors from the Thai partners and two from Tiger Airways – namely Tony Davis, Tiger Airways’ president and chief executive officer, and Declan Ryan, one of the founding members of both Tiger and Ireland’s Ryanair.

The Thai Department of Civil Aviation and Ministry of Transport confirm that Thai Tiger has already obtained its air operating certificate.

Thai Airways President Piyasvasti Amranand says the new carrier will boost tourism and create jobs.

“The move provides more revenue opportunities for Thai Airways and paves the way for it to be more competitive in the region, with the anticipated growth in the low-fare segment of the market as a result of the continued Association of Southeast Asian Nations (ASEAN) liberalisation policy,” Piyasvasti says.

The 10-nation ASEAN bloc plans to liberalise its airspace by 2015, hoping to stimulating air travel in the region.

The Thai Tiger partnership has surprised some observers, as Tiger Airways is 34.4 per cent owned by Thai Airways’ rival Singapore Airlines (SIA). Piyasvasti says there is no conflict in the partnership, since Tiger Airways operates independently of SIA.

Davis says Thai Tiger aims to compete with Kuala Lumpur-based AirAsia, the largest budget carrier in the region.

“I acknowledge that the tie-up is a sensitive one but I would like to say that Thai Airways and Tiger Airways have a common objective: to fight AirAsia and gain market share,” Davis says.

A Thai AirAsia official who declined to be named says the airline is ready for competition, declining to comment further.

Since Thai AirAsia started operations in 2005, Thai Airways’ share of the domestic market has dropped from 82 percent in 2005 to 45 percent. Thai AirAsia has 33 percent of the market, while One-Two-Go Airlines and Nok Air share the remaining 22 per cent.

Virgin Blue announces major route restructuring

The Virgin Blue Group has announced the first phase of its network review, including plans to pull out of the domestic New Zealand market.

The group will also boost Trans-Tasman, medium-haul and long-haul services, and increase capacity in the domestic market. The goal is to make the group more competitive and capture “growth opportunities”.

“As we enter a new era for Virgin Blue, it is vital that we have the right aircraft on the right routes if we are to fully exploit our competitive advantages in the context of the group’s three-core business: domestic short-haul, international medium-haul and international long-haul,” says Chief Executive Officer John Borghetti. “We are adding capacity to routes with strong revenue potential and accordingly, removing capacity from services which are underperforming.”

The changes will “maximise yields, increase aircraft utilisation and also provide a more attractive schedule for the business market, including better integration of our international and domestic schedules,” he adds.

New Zealand-based subsidiary Pacific Blue will now expand as an international medium-haul airline with operations across the Tasman, the Pacific Islands and South East Asia, the Virgin Blue chief says.

“Pacific Blue will cease flying New Zealand domestic routes and redeploy its New Zealand-based aircraft on to trans-Tasman and medium haul international routes. Guests holding forward bookings on New Zealand domestic routes from 18 October onward will be provided with re-accommodation and refund options,” Borghetti says.

Restructuring Pacific Blue operations will free up long-haul V Australia aircraft to capture increased travel demand to the USA, he explains. “By year-end, V Australia will be fully devoted to international long haul business more suited to the B777 fleet, with Fiji serviced by Pacific Blue,” he says.

In May, the Virgin Blue Group reduced its profit forecast for the year ended 20 June to between A$20 million (US$17.7 million) and A$40 million, from the previous forecast of A$80-100 million, announced in February.

Responding to Virgin’s decision to stop Pacific Blue’s domestic New Zealand services, Australia’s Jetstar says it plans to increase its own domestic services in the country, basing an additional two aircraft there. The Qantas Airways low-cost subsidiary will also look at new destinations.

The additional aircraft will expand Jetstar’s New Zealand-based fleet to eight aircraft.

Oman Air sees Asia a big market for expansion

[Pic: Oman.jpg. Caption: Oman Air has expanded aggressively in the past three years. (Credit: Airbus)]

Oman Air, flag carrier of the Sultanate of Oman, says it sees tremendous growth potential in the Asian market. The carrier is looking at starting services to Singapore, Hong Kong, Manila and Jakarta over the next two years, as well as adding to its existing services to India.

The airline now operates to 16 destinations in Asia, including ten in India, two in Pakistan (Lahore, and Islamabad), Bangkok, Colombo, Kathmandu and Kuala Lumpur. According to Philippe Georgiou, the company’s chief officer for corporate affairs, Oman Air is hoping to tap demand from both business and leisure travellers.

The Muscat-based airline started operations in 1993, operating mainly domestic flights with a few international services, using five leased 737s while still being an active shareholder of Gulf Air. Bahrain-based Gulf Air was then owned jointly by the Kingdom of Bahrain, Oman, the Emirate of Abu Dhabi and Qatar, with each holding a 25 percent stake.

Georgiou says the four shareholders of Gulf Air decided in the early 2000s to set up their own flag carriers. “The main reason was that the four countries were all developed and have an abundance of oil reserves to supply to their respective carriers,” he explains.

Oman pulled out of unprofitable Gulf Air in 2007, to concentrate on the development of Oman Air. It was then that the Omani government decided to inject fresh capital and expand Oman Air’s fleet and network. The government increased its stake in the airline from 33 to 80 percent.

In 2007, Oman Air ordered six Boeing 787s, seven Airbus A330-200s – six of which have already been delivered – and five Embraer 175s. The remaining A330 will arrive in 2011, while the first 787 is slated for delivery in 2014, with the remaining five to be handed over on a staggered schedule through to 2016.

The 787s will be deployed on European routes – currently covering London, Paris, Frankfurt, Milan and Munich.

The airline also operates a fleet of 15, single-aisle 737-800 jetliners and two ATR72-500 turboprops. Oman Air has set up its own engineering unit to maintain its fleet, with the capability to carry out A, B and C checks for 737-800s and ATR72s, as well as overhaul of components and equipment.

“Oman Air started on a small scale, but within three years has expanded quite aggressively,” Georgiou says.

Oman Air has no current plans to operate to the US, but does not rule out the possibility of launching flights in the future.

TG gets nod for loan

Thai Airways’ board has given the go ahead for the airline to take a 15.5 billion baht (US$515.2 million) loan from a consortium of four Thai banks, led by Bangkok Bank.

The loan will be used to partly pay for the acquisition of seven Airbus A330-300s, ordered in August, and eight Boeing 777-300ERs, as well as improving the airline’s cash flow. Two A330-300s will be delivered in third quarter of 2011, three in 2012 and the remaining two in 2013. The 777-300ERs are slated for delivery in 2012 and 2013.

With its winter traffic starting 31 October, Thai Airways will add capacity on a number of international routes.

Daily flights to Tokyo’s Haneda airport will be introduced, while services to Helsinki, Finland, will be increased by two weekly flights to a daily frequency. One weekly flight will also be added to Moscow, making the service four-times weekly, and services to Sydney, Australia, will be increased by four to 18 flights a week.

Frequencies to Nagoya, Japan, will rise from seven to 10 per week, Fukuoka and Kolkata services will increase from five flights weekly to a daily service, and the current daily service to Mumbai will be doubled.

MALAYSIA AIRLINES’s freight unit MASkargo is to expand its fleet with the addition of two Airbus A330-200 freighters by the end of 2011. The cargo carrier ordered the two aircraft in March, taking an additional two options, which, if converted into firm orders, could be delivered by the first half of 2012. The first of the aircraft now on firm order is scheduled to be handed over in September 2011, with the second to follow in November. The airline is also planning to lease a fifth Boeing 747-200F freighter from Southern Air, starting in September.

TIBET AIRLINES, a Lhasa-based start-up carrier, is set to become Airbus’ newest customer in China after selecting the single-aisle A319 jetliner to build up its fleet. The airline, which obtained approval from the Civil Aviation Administration of China (CAAC) in March 2010, has signed a commitment to acquire three A319s, configured for 128 passengers in two classes, including eight first-class seats. The carrier plans to operate the A319s on regional and domestic routes.

Australian group launches GA Rescue Package

A group of Australian aviation associations have launched a General Aviation Rescue Package in an attempt to highlight the problems facing the country’s general aviation industry and to revive the struggling sector.

The group – comprising the Aerial Agricultural Association of Australia (AAAA), the Aircraft Owners and Pilots Association, the Aviation Maintenance Repair and Overhaul Business Association, the Regional Aviation Association of Australia and the Royal Federation of Aero Clubs of Australia – is proposing a 10-point rescue plan.

The plan includes calls for the country’s aviation regulator, the Civil Aviation Safety Authority (CASA), to abandon its current European-based approach to regulatory reform and instead adopt a model based on the United States of “simple regulations for simple operations”. The group also calls for security requirements for general aviation (GA) aircraft and pilots to be in line with US practice, while the regulatory burden on GA should be substantially simplified and reduced.

CASA should establish a high-level joint task force to work with industry on improving efficiency and effectiveness and reducing costs, while the regulator’s culture should be changed to include fostering and promoting aviation, the group says. CASA needs to be set “on a track of supporting GA rather than killing it”, it adds.

The group calls for the government to engage with the GA industry better, by establishing a ministerial forum with leading industry associations, and to give aviation a higher policy and funding priority through tax reform and government programmes. Launch of the GA Rescue Plan follows earlier attempts to address the sector’s problems, including the GA Action Agenda and the subsequent Aviation White Paper.

The associations believe that Australia’s GA sector has great potential but has been ignored by government policy makers. One of the problems is that the government has failed to objectively determine the benefits of GA to the Australian community and economy.

The group says GA’s contribution to the economy was “embarrassingly underestimated” in the government’s Aviation White Paper, released last year, with the paper claiming the sector only employs 3,000 people, whereas the true figure is “many times that number”.

“The fact that even the government does not know the size of the sector or the contribution it makes speaks volumes for the current approach to GA policy,” it adds.

Further government inaction will “continue to kill off GA”, the group warns.
AAAA Chief Executive Officer Phil Hurst says the GA Action Agenda and the White Paper were “missed opportunities that suffered because the authors ignored most of the input from industry”.

Mahindra plans growth for GippsAero

India’s Mahindra Group is aiming to expand the product line of Australian general aviation manufacturer GippsAero – formerly Gippsland Aeronautics – with plans to bring a 10-seat stretch of the popular GA8 Airvan and the relaunched Nomad to market within the next two years.

The Mahindra Group, better known for automotive production, announced plans to purchase a majority of Latrobe Valley, Victoria-based Gippsland at the end of last year. Mahindra plans to invest US$20 million in the manufacturer over the next two years.

An initial US$2 million has been invested to expand the company’s business in Australia. This initial investment will be used to fund the new, 18-seat GA18 (the relaunched Nomad), the 10-seat GA10 Airvan and related production operations, says Arvind Mehra, executive director and chief executive officer of Mahindra Aerospace, the group’s aircraft and aerostructures manufacturing division.

“Our plan is to bring the GA10 to market first, closely followed by the GA18, both of which will occur in the coming two years,” he says.

Gippsland has been considering developing a 10-seat stretch of its popular eight-seat GA8 utility turboprop for some time, in response to customer demand. It has also been seeking funding to launch the GA18 programme since it acquired the type certificate for the Nomad from Boeing in June 2008.

The GA18 will feature new engines and propellers, a glass cockpit and weight-saving measures. Mehra declines to comment on how many commitments Gippsland has for the GA18, but last year the company had letters of intent for nine aircraft.

Mahindra is already developing the five-seat NM5 aircraft in conjunction with India’s National Aerospace Laboratories. “The design phase is complete and we have already started to make the tooling from which we will build the prototype aircraft,” says Mehra, adding that a prototype will be produced in Australia at Gippsland.

“Mahindra Aerospace is committed to consolidating and expanding Gippsland’s business in Australia. The Airvan GA8 has already proved its airworthiness and is in great demand amongst buyers in both Australia and overseas,” he says.

The latest version of the GA8, a turbocharged variant, has been selling well despite the global financial crisis, Mehra says. Some 15 of the type are now in service in a variety of roles, including with long-term Airvan customer the Mission Aviation Fellowship, which has added three turbocharged Airvans to its 14-strong GA8 fleet for operation in Papua New Guinea.

PAL faces three-cornered industrial dispute

Financially-troubled Philippine Airlines (PAL) is in a three-corned fight with its pilots, flight attendants and ground crew.

The airline’s latest troubles started in July when it downgraded 20 pilots from the Airbus A320 twinjet fleet to its ATR 72-500 turboprop fleet, with lower salaries. This was closely followed by the departure of 25 of its A320 pilots, who went to better-paying jobs with other airlines in South-East Asia and the Middle East. More are threatening to leave.

According to PAL President Jaime Bautista, the 25 pilots are still contractually bound to the airline for their training expenses.

“We have rejected their resignations and are willing to take them back without taking any action against them,” Bautista says. Meanwhile, an official of the Department of Transportation and Communications tells Asian Aviation that some of the pilots have left the country.

The exodus has resulted in the daily cancellation of domestic and international flights operated by the A320 aircraft. PAL has warned the 25 pilots to report for work or face criminal and administrative charges. Bautista declines to specify what criminal charges may be brought against them.

At the same time, the Flight Attendants and Stewards Association of the Philippines (FASAP) wants salaries reviewed under a new collective bargaining agreement. FASAP has rejected PAL’s offer of a one-off 80 million (US$1.78 million) payment to PAL’s 1600 flight attendants. Each flight attendant would receive 50,000 pesos.

FASAP has warned that the 1,600 flight attendants would strike if the airline’s management continues to ignore the union’s demands. Bautista says the carrier has contingency measures in place, should the flight attendants decide to go on strike.

“There is a legal process involved, which the parties concern respect and adhere to before deciding to strike,” the PAL chief says.

Meanwhile, 3,000 ground-crew members of the Philippine Airlines Employees’ Association, have said they are prepared to do everything to stop PAL from going ahead with a decision to outsource in-flight catering, ground handling and reservations/ticketing as part of a plan to cut operating costs. The outsourcing would lead to the retrenchment of 2,600 workers. An earlier plan would have led to the loss of 3,000-4,000 jobs.

PAL hopes to save US$750 million a year from the closure of the three divisions.

Bautista says the airline’s cost-cutting moves come at a critical time, since the carrier was badly hurt by the global financial crisis in 2008 and 2009. PAL reported a loss of US$301.4 million for the year ended 31 March, a stark contrast to its US$30.6 million profit in 2008.

Asian Aviation at a glance