Tuesday, December 16, 2014

Ontario airport is less crowded than LAX, but there's a price to pay

Using L.A./Ontario International Airport for flights is much more convenient for me than LAX. I can't understand why the cost of flights is so much higher at Ontario compared with LAX. I cannot stand the long drive to LAX and the crazy traffic in the airport. Ontario airport is a great place with convenient parking and nice terminals. What gives?


Economics. Forever. And always. And maybe some other stuff, depending on whom you believe.
If you look at the weekly airfare chart on Page L6 of the print section, , you can see some of the differences in domestic fares.
Fly out of behemoth LAX — on pace to serve more than 71 million passengers this year — and your cost will start at $124 on American, Delta, Southwest, United, US Airways or Virgin America. Fly out of Ontario, which will be lucky to serve 4 million this year, and your tab starts at $242 on United or US Airways.

If you have a sense of irony, you'll note that your drive to the Strip from Ontario can take almost an hour off the trip (it's about 50 miles closer) than if you were to motor from LAX.

You'll find a price variance — sometimes enormous — on every route listed in the chart. While you're wincing at the premium you'll pay for service out of Ontario, notice how many more carriers fly out of LAX.

Part of the answer to higher prices? The number of competitors.

The LAX-Atlanta route, for instance, shows seven carriers serving Atlanta; from Ontario, three.

What's worrisome for consumers, no matter where they fly from, is what's happened/is happening with the airline industry, as suggested by airlines listed on the LAX-Atlanta run: American, Delta, Frontier, United, US Airways, Southwest and AirTran.

On Dec. 28, AirTran flies its last flight, completing its merger with Southwest. American and US Airways are still becoming one but should have one website by the end of next year. Delta merged with Northwest in 2008. United merged with Continental in 2010.

That leaves Denver-based Frontier, which announced last month that it was transitioning to an "ultra-low-cost carrier" and would be cutting flights on less-profitable routes.

"Competition is not only the basis of protection to the consumer, but is the incentive to progress." That gem is from President Herbert Hoover, who is generally blamed for the Great Depression by those seeking a scapegoat. His thought pretty much sums up why there's increasing pain in your wallet and dismay in your heart about progress (in the form of lower prices) versus airline profits.

You may feel some flicker of hope about prices, thanks to lower fuel costs, but let me extinguish that for you, at least, for now.

George Hoffer, professor of economics at University of Richmond in Virginia, noted that airlines buy fuel hedges — that is, fuel bought at a certain price per gallon so that carriers consistently pay the same amount per gallon. If fuel prices go up, they are paying less than market price. If prices drop, they pay more. It may be some time before airlines can take advantage of lower prices, Hoffer said.

What might provide some hope, Hoffer said: Lower prices mean a friendlier environment for airline start-ups. We've seen that with Norwegian Air Shuttle, which is providing some moderating influence on European airfares.

For now, though, the lack of competition isn't helping Ontario.
Add to this the economics of San Bernardino and Riverside counties, two of the main areas it serves, both of which got walloped by a souring economy. In 2009, San Bernardino's unemployment hit 12.9% and Riverside's 13.4%. (Los Angeles County's was 11.6%.) Those figures are much improved — in October, San Bernardino was 7.7%, Riverside 8.4% — but it's an arduous climb out of a deep hole.

Noting that the Inland Empire was hit disproportionately hard by that crisis, a Los Angeles World Airports report called "Q&A: L.A./Ontario International Airport: Common Questions and Answers About the Airport" notes that "the economic rebound in the IE will play a strong role in the recovery of ONT's air travel."

It's hard to dispute that, but everything becomes suspect when a lawsuit is involved, and there is one: The city of Ontario would like control of the airport and blames Los Angeles World Airports for the decline in passenger numbers and says neglect of its airport caused the drop. The airport says otherwise.

It's unclear for now, but what you can expect, in all probability, is that you'll pay a premium for convenience. Like that $4.99 half-gallon of milk you buy at the Quikkie Stop rather than paying $2.99 at your local grocer, airfares at Ontario will continue to put a bigger hole in your travel wallet in exchange for LAX avoidance. Alas, you're stuck with this dilemma: conserving your wealth or saving your mental health.

(Catharine Hamm - Los Angeles Times)

Southwest ramp, ops, and provo agents picketing over flight delays

Saying Southwest Airlines is neglecting workers and its customers, baggage handlers are bringing attention to the company's slide in on-time performance as they seek a new contract.

Workers picketed and handed out leaflets to passengers at Denver and 15 other airports across the country Tuesday. On Wednesday, they plan to press their point in an ad in USA Today.

For years, Dallas-based Southwest was the most punctual of big U.S. airlines, but it stumbled after trying to squeeze in more flights into its schedule. Southwest has also prided itself on keeping its employees happy, believing that would guarantee good service for its customers.

"That recipe is kind of gone and it's profits over people and that's not acceptable," said Charles Cerf, president of the Southwest baggage workers' union, Transport Workers Union Local 555, who was picketing in Orlando, Florida.

About 50 percent of the time, Cerf said there is only one worker pulling bags out of the bigger version of the Boeing 737 Southwest now flies even though plane holds 38 more passengers than the previous version, requiring an extra flight attendant. He said that is contributing to the airline's delays and hurting customers.

Southwest was in last place in on-time arrivals among the largest five carriers in 2013 and much of 2014 but topped American and United in October, according to figures released last week. Over the summer it began scaling back its schedule changes and allowing more time between flights.

Southwest spokesman Bob Hughes said the airline has always supported the rights of its employees to express their opinions. He said the number of bags handled by each worker has declined with increased staffing.

"We value our employees and it shows in their compensation," said Hughes, who said the airlines' ramp, operations, provisioning and cargo agents are among the highest paid in the industry.

The workers and airlines have been trying to reach a new contract for over three years and are now in mediation. The union is opposing Southwest's proposal to add part-time workers, which Cerf said would change Southwest's culture.

Workers also staged informational picketing at airports in Dallas; Los Angeles/Ontario; Buffalo, New York; Cleveland; Detroit; Fort Myers, Florida; Indianapolis; Milwaukee; Minneapolis; Pittsburgh; Reno, Nevada; San Diego; San Jose, California; and Seattle.

(Associated Press)

DOT lets Southwest Airlines keep Kansas City-Washington, D.C. route

The U.S. Department of Transportation has ruled that Southwest Airlines may keep flying the route between Kansas City and Washington Reagan National Airport that it received on a temporary basis since Feb. 1.

The pair of slots for one takeoff and one landing at the restricted Washington airport became available when Republic Airways informed the DOT on Jan. 24 that its Frontier Airlines unit would drop the KC-DC route. (Republic was selling Frontier.)

On an emergency basis, DOT gave the slots to Southwest to keep flying the route, and launched a proceeding to decide how best to use the slots at Washington Reagan.

Southwest applied to keep flying the Kansas City route. JetBlue Airways offered a Jacksonville, Fla., flight. American Airlines proposed an Islip, N.Y. (Long Island) route. New carrier People Express wanted to fly from Myrtle Beach, S.C., for half the year and West Palm Beach, Fla., the other half.

The DOT said People Express wasn’t eligible because it wasn’t approved yet for commercial service.

For American, the DOT said: “While at the time of its application, American provided service between DCA [Washington] and ISP [Islip], it recently terminated this service in July, 2014. The other communities in question, Kansas City and Jacksonville, both have existing service to DCA from American.”

It concluded that Southwest and JetBlue would both offer low-fare service, while American would not. In addition, American planned to use 50-seat regional jets while Southwest and JetBlue planned to use larger airplanes. It noted that Southwest proposed using airplanes with 43 more seats than JetBlue’s 100-seat Embraer.

Here’s the meat of the DOT deliberations (JAX is Jacksonville, DCA is Washington, MCI is Kansas City):

Given the constrained nature of operations at DCA, we find that Southwest would use the limited resources that are these slot exemptions more efficiently.
Moreover, Kansas City is a much larger market than Jacksonville, providing for a larger pool of potential passengers. According to the U.S. Census Bureau, the Kansas City Metropolitan Statistical Area (MSA) is home to 2,054,473 people, while Jacksonville is home to 1,394,624 people.
When examining current schedules, we also found that there is less nonstop air service between DCA and Kansas City than between DCA and Jacksonville, even though Kansas City is the larger market. The DCA-MCI market has 1,432 weekly nonstop seats while the DCA-JAX market has 2,201 weekly nonstop seats.
MCI also offers more online connecting opportunities for passengers than does JAX. According to September, 2014 published schedules, the only connecting service offered by JetBlue at JAX is to San Juan, Puerto Rico, which JetBlue already serves directly from DCA. On the other hand, Southwest offers connecting service from MCI to at least ten beyond destinations, including Denver, Phoenix, Los Angeles, Seattle, and others.
While JetBlue’s application has merit, we find that Southwest’s application will likely produce greater consumer benefits for a larger pool of passengers in a market with less DCA service than would JetBlue’s Jacksonville service. The proposals from both Southwest and JetBlue would bring competition to their respective proposed markets, but we conclude that the maximum competitive benefits will be realized by the award of these two slot exemptions to Southwest for service to MCI.

Southwest spokesman Brad Hawkins thanked the Kansas City community and congressional delegation for their strong support for the application.

“This decision is validation of the value both in terms of community service and economic development, and the value of Southwest serving this air market,” Hawkins said.

Hawkins said the route has had “very high load factors,” with both strong traffic between Kansas City and the Washington area, as well as passengers using Kansas City to catch other flights to and from the West.

Southwest entered the Kansas City market in Feb. 18, 1982. It was the 20th airport served by Southwest, its first Midwest destination, Southwest’s ninth non-Texas city and the fourth that could not be served out of Dallas Love Field (because of the Wright amendment).

Southwest currently offers 69 daily departures to 24 cities out of Kansas City.

(Terry Maxon - The Dallas Morning News)

Thursday, December 11, 2014

Airbus Pledges New Engines and Stretch ‘One Day’ for Ailing A380

Airbus Group sought to dispel concern that it may ditch the flagship A380, saying it expects to go ahead with plans to give the superjumbo more efficient engines or even build an ultra-high-capacity stretch version.

Fabrice Bregier, who leads the company’s airliner unit, told investors that upgrades of the A380 are just a matter of time, a day after the parent group’s finance chief raised the prospect of discontinuing the plane as soon as 2018.

While Airbus needs to convince potential customers that the upside to the double-decker outweighs its challenges and must make a sound business case for any enhancements, development of a re-engined version as well as a stretch variant will happen “one day,” Bregier said during the briefing in London, asking “where is the problem with the A380?”

Airbus has been struggling to generate enthusiasm for the world’s biggest passenger plane, which has been in service for less than a decade and has so far failed to win a new airline customer this year.
Bregier said that the A380 program is under control and will progress, though there is “no urgency.”
While Airbus will break even on the superjumbo in 2015, 2016 and 2017, that outlook doesn’t hold for 2018, forcing the company to either commit to upgrades or discontinue the program, Chief Financial Officer Harald Wilhelm said yesterday.

Clark Meeting

The A380 is meant to carry around 550 passengers though many airlines have configured it for 500 or fewer, leaving Airbus pushing them to consider denser, more profitable layout. The existing plane could carry about 850 passengers in a single class, while a stretch achieved by adding a new section to the fuselage could carry a maximum of about 1,000 people.

Airbus sales head and chief operating officer John Leahy told investors at the gathering that he met with Tim Clark, president of No. 1 A380 buyer Emirates, at the weekend in Dubai, and that they discussed a Neo variant for the A380.

Clark reiterated that he would add to the carrier’s 140 orders for the plane in the event of an engine upgrade, Leahy said, while arguing that the jet is already very efficient.
Leahy said that travel trends will develop in the A380s favor in coming years, with the development of 71 so-called mega-cities that without recourse to bigger planes would require a doubling in the number of total flights.

“This is a market that has to grow, by definition it has to grow,” Leahy said. “The A380 will dominate the market in years to come.”

(Andrea Rothman and Christopher Jasper - Bloomberg News)

Emirates raps Airbus for A380 comment, dangles huge order

The head of Dubai-based airline Emirates has reacted angrily to a suggestion by Airbus that it might stop making its A380 superjumbo airliner, telling Reuters it could double its investment if the plane-maker agreed to upgrade the A380 instead.

Tim Clark, president of Emirates, said he had protested to Airbus after its finance director aired the possibility of ending production of the flagship jet due to poor sales.

"I am not particularly happy as you can imagine," Clark said in a telephone interview.

"We are on the hook for this plane. I get pretty miffed when we have put so much at stake."

Harald Wilhelm told analysts on Wednesday Airbus would break even on the A380 through 2018, "if we would do something on the product, or even if we would discontinue the product".

The unusually frank remark reflected an internal debate over the future of the world's largest airliner but is the first time Airbus has publicly contemplated winding down the project - one of several scenarios in a review first reported by Reuters.

Others include slowing production or investing together with Rolls-Royce in an improved engine, which Clark said would improve fuel consumption by 12 to 15 percent from 2020.

Clark said that if the two companies went ahead with the upgrade Emirates would eventually replace all the 140 superjumbos it has ordered with the newly upgraded version.
But he suggested Emirates would hold Airbus to delivering the A380s it has sold if it decides to halt the programme.

Airbus would in that case probably ask Emirates to forego some of its future deliveries, he said, adding, "That is not a conversation I would like to have".

Clark said he was worried about the effect Airbus's sombre message would have on future A380 purchases by other airlines, as well as the supply chain and the European aerospace industry which has been a darling of politicians by creating jobs.

He also said the stance would not help the future second-hand value of A380 aircraft.

Clark called on Airbus to step up its A380 marketing efforts, saying it was flying "full to the gunwales" and making good profits if configured correctly. The aircraft was designed to help airlines cope with airport congestion.

"This is where Airbus needs to be going, to persuade airlines in the long haul business that this definitely has a place," he said.

Airbus immediately sought to defuse the row.

"The entire Airbus top management continues to believe strongly in the market prospects of the A380, but any investment by Airbus requires a sound business case, which we will continue to study," head of corporate communications Rainer Ohler said.

However, Clark raised broader questions about Airbus's strategy for wide-body jets, citing poor sales of the smallest type of A350 and its replacement by an upgraded version of the older A330. Airbus says this has extended a successful product.

"What is happening over there? I would like a first-hand understanding on where they are going," Clark said, suggesting that Airbus risked being over-dependent on its smaller A320.

The sweeping criticism from one of the airline industry's most influential figures will ring further alarm bells in Toulouse, after Emirates recently cancelled an order for A350s.

However Clark ruled out a broader decline in the relationship and said Emirates would soon consider making an order for 50-70 mid-sized Airbus or Boeing wide-body jets.

He said Emirates wanted to look at in-service performance data on the A350 before deciding whether to place a new order.

(Tim Hepher - Reuters)

With no new orders for huge A380, Airbus raises prospect of ditching jet

Airbus Group raised the prospect of discontinuing its A380 superjumbo as soon as 2018, the first admission that it may have misjudged the market for the double-decker after failing to find a single airline buyer this year.

While Airbus will break even on the plane in 2015, 2016 and 2017, that outlook doesn’t hold for 2018, forcing the company to either offer new engines to make the A380 more attractive or discontinue the program, Chief Financial Officer Harald Wilhelm told investors at a meeting in London on Wednesday.

His comments come as 2014 shapes up to be the first since the double-decker entered service without a new airliner customer. Its only buyer was a leasing company that has yet to line up a single carrier to take any of the 20 planes it ordered. The backlog remains as thin as it is fragile, highlighted by the cancellation of six jets ordered by Japan’s Skymark Airlines, with two close to handover.

In its seventh year in operation, the aircraft that cost $25 billion to develop threatens to become a costly misstep. While popular with travelers, most carriers prefer smaller twin-jet models that are more fuel efficient and can access more airports. Emirates is the only stand-out sponsor, having ordered 140 units, while other airlines have either backed off or are struggling to fill the two decks of the jumbo.

“It’s an excellent plane, but it only works for the right destinations,” said Air France-KLM Group Chief Executive Officer Alexandre de Juniac, who aims to cancel the last two of a dozen A380s on order and swap them for smaller models.

Chris Buckley, Airbus’ executive vice president, Europe, Asia and Pacific, said the company has been “at fault” in the way it marketed the aircraft, letting carriers customize the interiors rather than pushing the high-density credentials of the double-decker.

The four-engine widebody airliner is a rarity, after Airbus killed its A340. Boeing said Tuesday that it will cut back production of its 747 jumbo to 16 a year from 18 in 2015.

Emirates President Tim Clark is pushing Airbus to upgrade the A380’s engines to improve fuel efficiency, a move Airbus is resisting because the cost of doing so doesn’t match demand for the plane. Keeping the plane unchanged may mean running down the backlog and eventually shutting down production, now at just under 30 a year, analysts said.

“Airbus will be obliged to make a decision one way or the other in 2015,” said Yan Derocles, an analyst at Oddo Securities in Paris, who estimates an engine upgrade may cost Airbus 2 billion euros ($2.47 billion) because of work required on the wing.

An engine upgrade would take about four years, according to Derocles. The A380 now comes with a choice of engines either by Rolls-Royce Holdings or a joint venture between General Electric and United Technologies’ Pratt & Whitney.

The A380’s lackluster demand contrasts with a boom in orders for other models. Airbus’ best-seller remains its A320 family of single-aisle jets, which it made even more popular by offering new engines. The same concept added momentum to the A330 widebody jet.

The all-new A350, a twin-engine long-range widebody plane made of advanced lightweight materials, has almost 800 orders before its first handover.

Airbus has won orders for 318 of the jumbos. That’s a fraction of the 1,200 it thought airlines needed in that size category when it started marketing in 2000. Emirates accounts for 40 percent of the order book, while airlines including Virgin Atlantic Airways, Hong Kong Aviation and Air Austral are increasingly unlikely to ever take their planes.

Japan and China, originally seen by Airbus as key markets for the A380, have been disappointments, with only one Chinese airline taking five units. Boeing’s 747-8, the only rival, has fared even worse, winning 51 orders from four airlines.

“It’s a pity,” Clark, the Emirates president, said of the A380. “It’s a very big cash generator for us. I just open the doors and the people come.”

Emirates has been successful with its fleet of A380s because the airline uses its Dubai hub as a central point to connect major routes around the globe with just one stop. The A380 is also popular on capacity-restricted airports such as London Heathrow, while many smaller airfields lack the infrastructure to accommodate the plane.

Richard Aboulafia, vice president at the Teal Group and longtime critic of the plane, said the new large twin-engine planes coming to the market will be the death of the A380.

“I don’t think it lasts more than a few years into the next decade,” he said of the A380. “The quicker they let go, the quicker they can devote themselves to marketing efforts on other products.”

(Andrea Rothman - Bloomberg News)

What Has AirTran Done For Southwest Airlines?

As Southwest comes close to completing the integration of AirTran, we assess what AirTran has done for Southwest. In our view, AirTran’s most notable contribution has been accelerating Southwest’s entry in to international markets.

Geographically, AirTran added 21 cities to Southwest’s network and 7 of these cities lie in the international market. This international presence has positioned Southwest to expand to Central America and northern parts of South America – regions that are seeing fast growth in demand for air travel.

In addition, the integration of AirTran has made Southwest the largest domestic airline, based on the number of passengers flown. Synergies from AirTran’s acquisition have also played a key role in growing Southwest’s profit from $178 million in 2011, to $421 million in 2012, and to $754 million in 2013.

In the current year, these synergies, totaling $400 million for the entire year, have helped Southwest’s profit rise by 75% per year to $946 million in the first three quarters. All in all, AirTran has accelerated Southwest’s expansion in the continental U.S. and also positioned it well for long term growth in the international market.

We currently have a price estimate of $41 for Southwest, marginally below its current market price. We estimate that Southwest will post earnings of $1.95 per share in 2014, in line with its current consensus earnings estimate.

Southwest Has Dispelled Pre-Merger Fears

At the time of AirTran’s acquisition by Southwest in 2011, there were many fears that the deal could go wrong for Southwest. Some of the major concerns were that Southwest operates a predominantly point-to-point network, while AirTran had a significant concentration of flights in Atlanta, and that Southwest flies only one aircraft type, Boeing 737s (to keep its operating costs low), while AirTran’s fleet also consisted on Boeing 717s.

There were additional worries that AirTran’s integration could raise Southwest’s operating costs, putting at stake the core of its business model. But over the past 2-3 years, Southwest has done a commendable job integrating AirTran. Southwest smoothly absorbed AirTran’s Atlanta operations, making them similar to the rest of its focus cities, rather than remaining a hub.

The carrier also leased out AirTran’s 717s to Delta, preserving the cost advantage that comes with operating a single aircraft type. Southwest will fly the last of AirTran’s 717s until December 28, and thereafter transition the last batch of 717s to Delta. And most importantly, three years after the acquisition, Southwest’s operating costs are still well below those of other major airlines including JetBlue. So, the pre-merger fears haven’t played out.

On the contrary, AirTran’s acquisition and integration has given Southwest the scale to compete more effectively with larger network carriers such as American, United and Delta in the domestic market.

The graph above shows how after acquiring AirTran, Southwest’s domestic market share, based on capacity, jumped to 17.7% in 2011 from 14.6% in 2010. At the time of the acquisition in May 2011, AirTran added $2.6 billion in annual revenue to Southwest’s top line.

Through AirTran, Southwest gained entry in Atlanta and Washington Reagan – both high value markets that likely helped raise Southwest’s average fare and yield over the past three years. Today, Southwest has a strong presence at Atlanta and 44 daily departures at Washington Reagan.

The expansion at Washington Reagan was also boosted by the acquisition of slots which were vacated by American Airlines-US Airways as part of their merger approval from the Justice Department. In terms of capacity, AirTran expanded Southwest’s network by about 25%, making Southwest the largest domestic carrier based on the number of passengers flown.

We figure this scale in the domestic market will catalyze Southwest’s international growth, as domestic traffic feeds in to the international network. Overall, the AirTran integration has played a crucial part in taking Southwest’s stock to its current lifetime high.

Southwest Will Accelerate Capacity Expansion In 2015
Looking ahead, we figure that as Southwest completes the integration of AirTran by the end of 2014, the airline will return to higher rates of capacity addition in 2015. Over the past few years, Southwest was forced to expand its capacity at relatively low rates of around 1-2% per year as it was occupied with integrating AirTran.

Converting AirTran’s 737s into Southwest livery as well as phasing out AirTran’s 717s required Southwest to keep many airplanes out of active service. So, as these AirTran airplanes return to active service, refurbished with Southwest livery, the carrier plans to expand its capacity by 6% per year in 2015.

We figure this aggressive capacity expansion in 2015 will help retain Southwest’s growth, which over the past 2-3 years years was driven in part by the AirTran acquisition and synergies.

Southwest Is Set To Retain Its Growth Momentum In 2015.


Southwest Airlines headed to Belize City next year

Southwest Airlines expects to begin flights to Belize City next year as it expands international service.

The airline said Thursday that it will fly to Belize from Houston beginning next October.

Southwest said that it also plans to fly to four destinations in Mexico — Mexico City, Cancun, Puerto Vallarta and Los Cabos — and to San Jose, Costa Rica, from a new international concourse being built at Houston's Hobby Airport. Southwest needs federal government approval for the flights.

The plan puts Southwest in head-to-head competition with United Airlines, which flies to all those locations from Houston's larger airport, Bush Intercontinental. Low-fare rival Spirit Airlines has announced that it will begin flying several of the same routes in May.

Southwest has taken over flights to Mexico and the Caribbean that were operated by AirTran Airways, which Southwest bought in 2011 and is now shutting down. AirTran's last flight will be Dec. 28. International flights represent only about 1 percent of Southwest's operation, far less than at United, Delta and American.

Shares of Southwest Airlines Co. were up 67 cents to $42.15 in afternoon trading Thursday. They have doubled this year.

(Associated Press)

Wednesday, December 10, 2014

Boeing to lay off 561 employees in Southern California


Qatar Airways delays delivery of first Airbus A350-900

Qatar Airways on Wednesday postponed the delivery of Airbus' first A350-900 just days before taking possession of the next-generation plane built to erode Boeing's dominance in the lucrative long-haul market.

"Qatar Airways announces that the Airbus A350 aircraft ceremonial transfer of title has been postponed until further notice," the airline said in a statement on its Facebook page.

"With the imminent launch of the new Airbus A350 program, both entities are committed to introducing the A350 very soon," added Qatar Airways.

Airbus chief executive Tom Enders said he was "very confident that our delivery to our customer Qatar will happen very soon."

Shares in the aerospace giant were down more than seven percent on the French stock market, pulling down the broader CAC-40 market, which was down 0.5 percent overall.

Both sides had said last week that the A350 would be delivered Saturday at a ceremony in the southwestern French city of Toulouse.

Qatar Airways has ordered 80 of the aircraft, whose delivery had already been pushed back about a year.

The airline planned to use the new plane for its daily Doha-Frankfurt flight from January 15.

The delivery of a new aircraft is always an extremely delicate task for manufacturers as the client's technical teams scrutinize every detail of the cabin, retaining the right to refuse delivery at any moment.

The Gulf carrier is one of Airbus's biggest clients, albeit a very demanding one.

"We want everything to be absolutely perfect," chief executive Akbar al Baker said in June after postponing the delivery of 13 A380 super jumbo planes, eventually received in September.

"There are issues with the interior and exterior of the airplane," he said at the time.

Route Proving

Airlines are in a major push to modernize their fleets to reap the fuel savings that the latest generation of engines offer, especially as competition in the sector is fierce and fuel is one of biggest costs.

The A350, whose wings and fuselage are made of carbon fiber, will save up to 25 percent in fuel consumption.

The plane was designed to help the European aerospace giant catch up with its American rival Boeing.

Airbus invested 10-12 billion euros ($12-$14 billion) in its strategy to position the A350 between Boeing's popular 777 and its 787 Dreamliner, hoping to eat away at both planes' markets.

However with 778 orders for the A350 by November, Airbus was still behind Boeing, which reported booking 1,055 orders for its Dreamliner.

Japan Airlines has ordered 31 A350s and the United States' Delta Airlines has ordered 25.

Airbus chief executive Fabius Bregier estimated a potential 2,500 A350s could be sold eventually.

In August, Airbus had announced that the plane had completed its "route proving", around-the-world in 20 days trip aimed at testing the aircraft's readiness for airline operations, during which it flew 180 hours and stopped off at 14 airports.

The plane, with Trent XWB Rolls-Royce engines, can carry 315 passengers over a distance of 14,500 kilometres (9,000 miles), and to date 39 customers worldwide have ordered it.

(Delphine Touitou - AFP News)

Tuesday, December 9, 2014

Boeing announces new production cut for 747-8

Boeing has decided to lower yearly output of the 747-8 by 2.4 aircraft starting in September 2015 due to a slower recovery cycle in the cargo market.

Annual production will drop from 18 747-8s to 15.6 beginning next September, Boeing says.

The monthly production rate falls from 1.5 aircraft to 1.3 747-8s.

“We’re making this minor adjustment because the near-term recovery in the cargo market has not been as robust as expected,” Boeing says. “We continue to believe in the long-term strength of the freighter market and the 747-8 is uniquely positioned to capture this demand.”

The latest production cut comes 14 months after Boeing lowered output from 21 747-8s per year to 18.

At the time, some Boeing suppliers, such as LMI Aerospace, told analysts that it would be contractually difficult for Boeing to reduce the production rate for the 747-8 below 1.5 per month.

Boeing executives, however, have said that further production rate cuts were possible if demand did not improve.

So far in 2014, Boeing has added orders for two 747-8s, but customers canceled orders for two aircraft. Boeing has 39 747-8s remaining in the backlog, or enough for about 28 months of production at planned production rates.

In October, IATA released a five year air cargo forecast predicting annual growth averaging about 4% through 2018. While an improvement compared to the stagnated air cargo market since 2008, that growth rate is still slightly below the 5% yearly growth threshold cited by Boeing as necessary to stimulate demand for buying new freighters.

Meanwhile, demand for the passenger-carrying version of the 747-8 has failed to pick up the slack. In July, Boeing revealed proposed design changes that could allow the 747-8 Intercontinental to fly from Asia to the US east coast or from the Middle East to the US west coast non-stop.

But the 747-8I faces tough competition from Boeing’s product line-up. By 2020, Boeing plans to start delivering the 777-9X with a similar passenger capacity and even better fuel efficiency than the 777-300ER. The latter itself presents a competitive threat to the 747-8I. In September, Boeing’s top salesman in Africa said the 777-300ER has better fuel efficiency on a seat-mile basis than the 747-8I.

(Stephen Trimble - FlightGlobal News)

Thursday, December 4, 2014

Ryanair adds $74 million to its full-year net profit guidance

Ireland’s low-cost carrier Ryanair has added €60 million ($74 million) to its full-year net earnings guidance, giving a new range of €810-€830 million, due to stronger-than-expected winter bookings.

At the start of the financial year, Ryanair’s original guidance called for a €580-€620 million full-year net profit, compared to the €523 million net income it achieved in 2012-2013. This outlook was increased to €620-€650 million in July, to the top end of this range in September, and then to €750-€770 million at the release of its first-half results in November.

The latest guidance, released Thursday, predicts net profits in the range of €810-€830 million for the full year ending March 2015. Ryanair also upgraded its passenger forecast to just over 90 million passengers from 89 million. This compares with a total of 81.7 million passengers for 2012-2013, which was originally expected to swell to 84.6 million in the current financial year.

“Ryanair attributes this stronger-than-expected initial winter performance to the continuing success of its Always Getting Better customer program, our stronger forward-booking strategy and the airline’s substantial fare and unit cost advantage over all other European airlines,” Ryanair said in a stock market disclosure.

For winter 2014-2015, the Irish budget carrier is offering a “substantially expanded” schedule, including a large number of new routes aimed at business travelers. This led to a 13% hike in November capacity, which was met by a 22% increase in passenger numbers to 6.4 million.

This boosted its average load factor by seven points to 88% and Ryanair said it had “materially exceeded” its first month load factor targets on “a significant number” of the business links.

However, once again, Ryanair cautioned its full-year net profit performance is “heavily reliant” on its January to March (fourth-quarter) yields and bookings, over which it has “very little visibility.”

(Victoria Moores - ATWOnline News)

Thomson 787 Dreamliner plane to fly from Cardiff Airport

The "revolutionary" Boeing 787 Dreamliner planes will be flown out of Cardiff Airport for the first time.

Thomson Airways said it will be launching the flights next year.

They will be part of the Caribbean cruise and holiday programme for Thomson Cruises, Thomson Holidays, First Choice holidays and P&O Cruises.

Cardiff Airport said the 787 Dreamliners are Thomson's "newest, largest and most comfortable aircraft".

Karen Switzer, director of aviation planning for Thomson Airways said: "The Dreamliner has certainly lived up to its promise to revolutionise long haul travel.

"Feedback from both customer and crew has been extremely positive and we are delighted to be operating flights from Cardiff Airport where customers from Wales can now enjoy the Thomson 787 Dreamliner experience."

Faulty Batteries

Boeing, which produces the planes made of carbon fibre and plastic, claims it is the world's most efficient aircraft.

Each aircraft can carry up to 291 passengers and fly as high as 38,000ft (11,500m).

Thomson had planned to use the 787s from May last year, but all 50 were grounded in January 2013 over faulty batteries.

(BBC News Wales)

Wednesday, December 3, 2014

CIT Group firms order for 15 A330-900neos, five A321ceos

Rendering of A330-900neo in CIT livery

Rendering of A330-900neo in CIT livery

US lessor CIT Group has firmed up its order for 15 Airbus A330-900neos and five A321ceos. CIT became one of the launch customers of the A330neo after signing an initial agreement in July at the Farnborough Airshow.

“Given our long-term leadership on the A330 program, we are proud to be one of the first customers to sign a purchase agreement for the all-new A330neo aircraft,” CIT Transportation & International Finance Jeff Knittel said. “These agreements will enable us to provide fuel-efficient solutions to our customers as CIT continues to be a leader in providing early access to the most sought after aircraft for our customers.”

In March, CIT Group urged Airbus to make a decision “in the next six months” on whether to re-engine the A330 for a potential 2017 entry-into-service.

(Linda Blachly - ATWOnline News)

European Union accuses US of breach of joint air transport agreement in NAI case

The European Union believes the continued delay by US authorities in processing Norwegian Air International’s (NAI) application to operate to the US marks the first breach of the EU-US air transport agreement that was signed in 2007.

The European Commission called a meeting of the EU-US Joint Committee in Washington DC last week to “raise one issue of principle on which we consider that the US is not honoring the agreement: Norwegian Air International's application for a permit to fly to the United States,” it said in a statement.

The Ireland-based international subsidiary of Norwegian Air Shuttle currently uses a temporary license to fly to the US and is trying to obtain a foreign carrier permit with the backing of the EU executive.

The Commission said it “considers that there is a breach of the EU-US air transport agreement by the US authorities, regarding the application from NAI to fly to the US.  The US authorities are taking too long to process the application and this delay is not compatible with the EU-US agreement.
According to the agreement, the parties shall grant authorizations to carriers of the other party swiftly, which was the case in previous applications.”
The 2007 Open Skies agreement between the two blocs entitles EU airlines to operate to the US from anywhere within the 28 member states of Europe, with US carriers holding reciprocal rights for European operations.

Norway is not a member of the European Union, so Norwegian is trying to establish a foothold within the EU for operating low-cost long-haul flights. The move is being resisted by US unions and airlines, which allege NAI is using its Ireland base as a flag of convenience that could ultimately erode safety standards and labor practices in the US aviation industry.

Following the meeting in Washington DC, the Commission said it will now “discuss the possible next steps with the EU member states.”

A further meeting of EU-US Joint Committee is scheduled for January 2015.

(Anne Paylor - ATWOnline News)

Airbus to take back A340s as Finnair firms more A350s

Finnair has converted options on eight more Airbus A350s to firm orders, with deliveries of the jets to begin in 2018.

The agreement raises to 19 the number of A350s due to the Oneworld carrier.

Finnair says it is intending to withdraw its Airbus A340s, of which it has seven, by the end of 2017 as the A350s enter the fleet.

As part of the agreement, it says, Airbus has agreed to acquire four of its A340-300s in 2016-17.

Finnair was one of the first operators to order the A350, initially agreeing to take the type in 2006. All A350s are available only with Rolls-Royce Trent XWB engines.

Chief executive Pekka Vauramo says the A350 will be "essential" to its long-haul development strategy, and that firming the options "demonstrates our commitment to growth".

He adds that the A340 swap with Airbus "ensures a smooth transition" between the old and new aircraft, "mitigating potential business continuity risks related to fleet renewals".

Under its long-haul modernisation programme, Finnair will take its first four A350s in the second half of next year. Another seven will be delivered over 2016-17 with the remaining eight arriving over 2018-23.

Finnair also uses eight A330s for long-haul operations. The carrier, which has arranged sales and leaseback for four A330s and two A350s, says it is "evaluating various financing options" for the other A350 deliveries.

It adds that the combination of the A340 switch and the previously-disclosed leasebacks are "not significant" to the airline's operating profit outlook for 2014 and 2015.

(David Kaminski-Morrow - FlightGlobal News)

Airbus delivers 200th aircraft from Tianjin line

Airbus has marked the 200th Airbus A320 family aircraft assembled at the Final Assembly Line China (FALC) in Tianjin, handing over an A319 to China Eastern Airlines.

“The 200th Airbus A320 family aircraft assembled in Tianjin marks an important milestone of the Airbus partnership with China,” says Eric Chen, Airbus China president and chief executive.

“We are happy to deliver this aircraft to China Eastern Airlines, and to celebrate this achievement together with the Tianjin Free Trade Zone and AVIC, our partners. We are committed to providing the world’s best aircraft to our customers and keen to continue our win-win cooperation with China.”

asset image

Inaugurated in 2008, the FALC is a joint venture between Airbus, AVIC and Tianjin Free Trade Zone. It is the third A320 family assembly centre after Hamburg and Toulouse, and is the first outside of Europe. The first aircraft delivered from the FALC was handed over in 2009.

Earilier this year, Airbus, AVIC and TJFTZ agreed to extend FALC’s operations for another decade, from 2016 to 2025.

The extension will include the final assembly of the re-engined A320neo family from 2017 onwards for delivery to Asian customers.

(Aaron Chong - FlightGlobal News)

Boeing fixes KC-46 wiring issues, sets first flight for spring 2015

The first prototype of Boeing’s KC-46 aerial refueling tanker has been rewired to meet US Air Force standards and is being prepared for its first flight sometime in late spring 2015, the companies chief operating officer says.

“We’re doing final prep for first flight on tanker,” Dennis Muilenburg, Boeing’s president and COO, says on 3 December at the Credit Suisse Global Industrials Conference in Chicago. “We are feeling very good about where that program is at now that we’ve got some of those technical issues behind us. Now we’ll focus on executing the flight test program under development and then getting the programme into production.”

Boeing earlier this year alerted the air force to “anomalies” in the aircraft’s wiring, which is required to be triple redundant to meet military and US Federal Aviation Administration specifications.

The company launched a wiring audit that found about 5% of the aircraft’s 98,000 wiring bundles were installed too close to redundant counterparts. The first four engineering and manufacturing development aircraft had to be rewired before they could roll off the production line.

“Those have now been resolved and closed out,” he says. “That airplane is done. We completed factory functional test. That airplane has now rolled out of the factory.”

The aircraft is derived from Boeing’s 767 commercial jet and is powered by two Pratt & Whitney PW4062 turbofans.

In addition to serving as an aerial refueling tanker, KC-46As can be configured to accommodate cargo or up to 114 passengers, or to serve as an aero-medical evacuation aircraft.

The first test aircraft has been fueled in preparation for flight testing and is on the flight line, Muilenburg says. The first tanker flights are scheduled for the second quarter of 2015, he says.

The air force is expected to make a Milestone C decision to enter low-rate initial production within the following three months. Boeing is then on the hook to deliver the first 18 operational tankers by 2017. “We’re very confident that we will hit the mark on all three,” he says.

A provisional test 767-2C, a freighter variant of the aircraft, and the first EMD KC-46 are scheduled to fly in the second quarter of calendar year 2015. That is a change from September, when Maj Gen John Thompson, the air force’s KC-46 programme manager, said first flight would take place before the end of March.

The US air force needs at least 179 KC-46 tankers, which gives Boeing a “long, strong production profile”, he says. Potential international demand may increase orders from Boeing to between 400 and 500 aircraft, Muilenburg says.

(Dan Parsons - FlightGlobal News)

Helvetic Airways to take seven FlyNiki Embraer E-190s

Switzerland-based Helvetic Airways will buy seven 112-seat Embraer E-190s from Austria-based airberlin subsidiary FlyNiki, which is expanding its fleet capacity with five 150-seat Airbus A319s and two 180-seat A320s, a source close to airberlin’s management confirmed to ATW.

                                                                       The changeover will be gradually implemented by June 2015.

According to the source, the carrier will operate four of these aircraft in a wet-lease contract for Swiss International Air Lines (SWISS) until SWISS can take delivery of its first Bombardier CSeries aircraft.

Oneworld member airberlin announced its fleet harmonization plan in September as part of its restructuring program.

“Harmonizing our fleet will enable us to achieve increased productivity, lower costs per seat kilometer and more efficient flight operations,” CEO Wolfgang Prock-Schauer said in a statement.

“The decision to switch to the larger Airbus planes will also create new growth opportunities for FlyNiki. In 2015, the carrier will therefore see capacity increases,” Prock-Schauer added.

FlyNiki CEO Christian Lesjak described FlyNiki’s fleet standardization as a “bonus” for the Austria-based subsidiary. For example, he said, “Vienna Airport has established itself as a hub for airberlin passengers for flights to Greece and Cyprus.”

Airberlin plans to retire all its 45 Boeing 737s by 2016 and become an Airbus-only operator.
Airberlin has further 10 Airbus A321 aircraft on order. Plus it plans to order 10 more A320s, which not yet been officially announced.

ATW understands airberlin will also acquire 14 additional A320 aircraft from Alitalia.

(Kurt Hofmann - ATWOnline News)

New narrowbody fleet in the future for LOT Polish Airlines

LOT Polish Airlines plans to announce an order for a new narrowbody fleet in the first quarter of 2015.
“We are heading toward that timing, “CEO Sebastian Mikosz told ATW in Warsaw. “Boeing [with the 737 MAX] definitely has a privileged position because of the Boeing 787 Dreamliner in our fleet. But we are also actively looking to the Airbus A320neo family aircraft,” Mikosz said.

He added that LOT is also considering the Bombardier CSeries. “We are part of the Embraer family so we are also looking at the E-Jet E2,” he said, adding the Star Alliance member airline expects the new narrowbody order be for around 40 to 60 aircraft.

LOT, in the aftermath of a restructuring, has been banned by European Union regulators from growing capacity or adding routes until early 2016. 

LOT will lease out one of its six Boeing 787-8s to Air Europa under an ACMI contract. “And then we can start cooperating with Air Europa because I like very much there business model,” Mikosz said.

(Kurt Hofmann - ATWOnline News)