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Branson cedes control in bold alliance between Virgin Atlantic, Delta and Air France-KLM

DELTA Air Lines, Air France-KLM, and Virgin Atlantic are moving to deepen their alliance with a set of cross-ownership transactions that will move the industry another step towards international consolidation.

The airlines are hoping competition regulators will allow them to better co-ordinate frequent flyer programs, airport facilities, scheduling and fares in a move that will also see billionaire Richard Branson’s stake in the airline he founded cut to 20 percent.

The plan sees Delta buy a 10 per cent stake in Air France-KLM worth €375m euros ($US438m) as the European giant takes a 31 per cent stake in Virgin Atlantic for £220 million ($US287m). Delta already owns 49 per cent of Virgin Atlantic, a stake it bought in 2013.

The trans-Atlantic deal comes as China Eastern is also moving to buy a 10 per cent stake in Air France-KLM to strengthen the commercial ties between the two carriers. China Eastern and Delta are each subscribing equal amounts to two reserved capital increases totalling €751 million to obtain their shareholdings.

The partners are seeking a 15-year partnership and Delta said the expanded joint venture, which would include troubled Italian airline Alitalia, would offer customers “the most comprehensive“  trans-Atlantic network with almost 300 daily non-stop flights.

“A dynamic global landscape means it’s more important than ever for Delta to deepen ties with our global partners to provide opportunities for mutual growth,” Delta chief executive Ed Bastian said in a statement. “Bringing together the strengths of Delta, Air France-KLM and Virgin Atlantic into a combined joint venture will create the trans-Atlantic partnership of choice for customers.”.

Branson founded Virgin Atlantic in 1984 and said the deal would help the airline better compete with British Airways and its US alliance, partner American Airlines.

He told staff in an open letter that the alliance with Delta had already helped Virgin Atlantic with a traffic feed from America and the relationship with Air-France KLM would help overcome a lack of slots in London to provide network and connections in Europe.

He predicted the alliance would “extremely beneficial’’ to Virgin Atlantic.

 “We’ve also agreed with our partners how important it is the Virgin Atlantic brand lives on as part of our arrangement, and I will remain the largest individual shareholder,’’ he said.

“As I get a little older, I want to be certain that all the necessary building blocks are in place for Virgin Atlantic to continue to prosper and grow for the next 50 years.

“The airline industry has consolidated over Virgin Atlantic’s lifetime and it’s now our turn to put ourselves at the heart of an important alliance, to create a stronger customer champion and build an airline which provides great opportunities for our team around the world.’’

Delta has made a number of investments and alliances in past decade, mostly with fellow members of the SkyTeam global alliance, aimed at extending its global reach  

The Atlanta-based airline’s existing joint venture with Air France-KLM dates to 2009, with the addition of Alitalia in 2010.

It launched a joint-venture with Virgin Australia in 2012 and entered into an enhanced marketing arrangement with China eastern in 2015 that included buying a 3.5 per cent stake.

In 2017,  Delta launched its joint cooperation agreement with Aeromexico, increasing its equity stake in the carrier to 49 percent, and announced a joint venture with Korean Air Lines.  The US carrier also holds a 9.5 percent equity interest in Brazil-based airline GOL.

 Air France-KLM said the China Eastern deal would secure its presence in the Chinese market and give it a leadership position in China Eastern’s Shanghai hub.

It is also looking for increased cooperation in terms of network, pricing and operations and said the move would take place  “in accordance” with the partnership strategy of Delta, which holds a 3.2 per cent stake in China Eastern.

 “This partnership which is unprecedented in scale gives Air France-KLM a leadership position in the worldwide airline industry,’’ Air France-KLM chief executive Jean-Marc Janaillac said in the announcement.

“With Delta and Virgin Atlantic we are reinforcing our trans-Atlantic alliance, making us the number one alliance between Europe and the United States in terms of traffic. With China Eastern, we are consolidating our position on a high-growth market. ‘’

Qatar confirms Sydney, Canberra flights.

Qatar

Qatar Airways has confirmed it will start double-daily Sydney services from February 13 with a  “tag”  flight connecting Australian capital Canberra.

The airline will use a 358-seat Boeing 777-300 aircraft to fly Doha-Sydney-Canberra and then Canberra-Sydney-Doha.

The big jet will be flying the short Sydney-Canberra hop alongside ATR and Q 400 turboprops but it will not be able to fly domestic passengers between the two Australian cities.

It will be competing for passengers with Singapore Airline’s direct flight between Singapore and Canberra.

Singapore recently retimed that flight to improve connections with other flights in its network and make the service more efficient.

Qatar had used up its rights under the current bilateral air services agreement to service Australia’s major gateway airports of Sydney, Melbourne, Perth and Brisbane.

However, it is allowed an additional seven frequencies a week to one of the major airports provided it operates the “via or beyond to a point in Australia other than Sydney, Melbourne, Brisbane and Perth’’.

“The services intended to be operated by Qatar Airways to Canberra via Sydney are accommodated under this entitlement,’’ a spokeswoman for Transport Minister Darren Chester said.

Qatar Airways group chief executive Akbar Al Baker described Canberra as an important addition to the global route map that further boosted ties between the countries.

“We are confident our highly-acclaimed product will appeal greatly to government, business and leisure travellers alike and we look forward to welcoming our passengers on board very soon,”  he said in a statement.

Airbus A350 program on track as engine problems haunt the A320neo

Singaporean big data award investigators
Mordern aircraft are capable of capturing vast amounts of data. Photo: Steve Creedy

Airbus is on track to meet its A350 production target of 10 aircraft a month by the end of 2018 after delivering 30 planes in the first half of this year, compared to 12 in the first half of 2016.

But continuing engine problems continue to cast a shadow over the A320neo and an announcement in the European aerospace company’s first-half results of another cut to A380 production has raised fresh doubts about the future of the superjumbo.

The European manufacturer delivered its 100th A350 to China Airlines earlier this week about 30 months after the start of production and has 847 firm orders from 45 customers.

Airbus has so far delivered the -900 version of the aircraft to 14 airlines worldwide and says it flying with an “outstanding” 99 per cent operational reliability.

A bigger version, the A350-1000, is currently in flight test and is expected to get type certification and be delivered to the first customer in the fourth quarter of this year.

“The A350 program is on track to meet the monthly production rate target of 10 aircraft by the end of 2018, the manufacturer said its results. “The level of outstanding work has improved in the industrial system and supply chain bottlenecks are improving.’’

Not going quite as smoothly is the A320neo program.

Airbus delivered 59 A320neos t in the 2017 first half, compared to eight in the same period of 2016, but the production ramp up remained “challenging” with customers still experiencing in-service issues with Pratt & Whitney’s geared turbofan engines.

“Engine supplier Pratt & Whitney has introduced some fixes but these improvements have not come through yet on a reliable basis under normal service conditions,’’ the plane-maker said. “Close to 200 A320neo deliveries are still targeted for 2017.’’

A lack of Airbus A380 orders led the manufacturer to cut deliveries in 2019 to eight aircraft.

It had previously announced it would cut production to 12 aircraft a year in 2018 and the further reduction will reignite speculation about the future of the four-engine superjumbo.

The results saw Airbus maintain its guidance for the full year as it reported group revenue flat at €28.7bn and net profit down 15 per cent to  €1.5bn.

Revenues in the commercial aircraft business were up 3 per cent €21.8bn while earnings before interest and tax rose 157 per cent to €1.1bn.

The company received 203 net commercial aircraft orders in the latest half, up from 183 in the first half of 2016,  to put the order backlog at 6771 aircraft at the end of June.

“The commercial aircraft environment remains healthy while the robust order backlog continues to support our production ramp-up plans,’’ Airbus chief executive Tom Enders said.

“However, we are facing challenges due to ongoing engine issues but we have a clear roadmap in place and have maintained our full-year guidance. Achieving the aircraft delivery target depends on the engine suppliers meeting their commitments.’’

US domestic airfare measure hits 22-year low.

airline

US travellers started 2017 with a first-quarter average domestic airfare at its lowest point for 22 years when inflation was stripped out.

Newly released Department of Transportation figures show the inflation-adjusted average airfare of $US352 was the lowest first-quarter result since the DOT’s Bureau of Transportation Statistics started collecting airfares in 1995.

It was also 5 per cent lower than the same period in 2016, 28 per cent down from the highest adjusted figure reached in 1991 and 26.5 per cent below the 1995 figure. But it was 1.5 per cent higher than the fourth quarter of 2016 – the second successive quarterly increase after six consecutive quarters of falls.

In addition to being adjusted for inflation so fares can be compared in 2017 constant dollars, the overall average includes taxes and charges as well as one-way fares accounting for about 34 per cent of total domestic tickets. It does not include ancillary fees for items such as checked baggage.

The one-way average domestic fare for the quarter was $US256, while the average round-trip fare was $US417.

When inflation was not considered, the $US352 figure was the lowest first-quarter average since 2010 when the figure was $US328. It was also 2.6 per cent down on the same quarter of 2016 and 9.4 per cent lower than 2015’s first quarter.

Travellers also did well compared to other consumers when it came to fares.

“Since 1995, unadjusted fares rose 18.5 percent compared to a 61.3 percent increase in overall consumer prices,’’ the department said.

However, the figures showed airlines have increased their reliance on ancillary fees: the percentage of total revenue from ticket sales fell from 87.6 per cent in 1995 to 73.7 per cent in this year’s first quarter.

The airport from which passengers flew also made a difference, with smaller airports costing more.

“Of airports grouped by the number of originating passengers in the first quarter of 2017, the 13 airports with between 50,000 and 99,999 originating passengers had the highest average fares ($US386),’’ the bureau said.  “Airports with 1.0 to 1.49 million originating passengers had the lowest average fares of any group ($US314).’’

Singapore jet twice breached minimum altitude rules near Canberra.

Singapore Air New Zealand alliance
A Singapore B777 in Wellington.

A  Singapore Airlines plane approaching Canberra in February twice breached minimum altitude requirements and at one point was 700ft below the lowest height at which it was safely allowed to fly.

High terrain around Canberra meant the Boeing 777-200 with 13 flight crew and 235 passengers was supposed to fly no lower than 5300ft on a sector between two waypoints known as SCBSG and SCBSI but the plane descended to 4600ft.

This was after it had previously breached a minimum altitude of 7500ft on another sector, according to a report released Thursday by the Australian Transport Safety Bureau.

The incident on February 22 this year came after air traffic control surprised the crew by instructing them to conduct a different arrival to the one they expected.

The aircraft was operating Singapore’s Capital Express service to the Australian Capital and its New Zealand counterpart, Wellington, in good visual conditions.

The new approach used ground-based VHF transmitters but the crew wanted to continue using GPS waypoints and needed to reprogram the flight management computer to accommodate this.

When they manually entered the SCBSI waypoint, they erased SCBSG and removed a 7500ft minimum sector altitude constraint.  The captain manually re-entered the missing waypoint but did not notice the altitude constraint was missing.

This saw the aircraft descend to about 7000ft as it headed towards SCBSG without the crew noticing. A warning from air traffic control prompted them to disconnect the autopilot and climb back to 7500ft.

Prior to passing SCBSI, the crew elected to conduct a visual approach but did not tell air traffic control, as required by standard operating procedures.

The first officer was manually flying the aircraft as it descended below the 5300ft minimum safe altitude.

The captain noticed the approach profile was low at about same time a  controller warned the plane was below the minimum safe altitude and the first officer levelled off at about 4600ft.

“The flight crew advised the controller that they had the runway and terrain in sight,’’ the report said.

“The controller then cleared the flight to conduct a visual approach. After being cleared for a visual approach, the first officer commenced a climb to about 5,000 ft and re-established the aircraft on the desired approach profile.”

The ATSB noted there had been a number of incidents in Australia involving foreign flight crew diverting from flight paths.

These included incidents involving Thai Airways, AirAsia X and Garuda Indonesia.

It said the Singapore incident highlighted the importance of preparation and communication before starting a phase of flight.

“Requesting a preferred clearance early allows ATC to ensure that a clearance can be provided, or if not available, allows the flight crew time to prepare for a different clearance,’’ it said.

The incident also underlined the importance of adhering to standard operating procedures, something from which the Singapore crew deviated when the manually entered the waypoint, investigators said.

The ATSB  had identified numerous accidents worldwide that were the result of human errors in data calculation or entry with the consequences ranging from rejected take-offs to crashes.

Qantas capitalises on surge in Japanese tourism

qantas vodka

Qantas is moving to take advantage of a resurgence of Japanese tourism to Australia with a new seasonal service that will see it flying three times weekly to Osaka over the summer peak.

While China is seen as the modern Eldorado when it comes to tourism gold, Japan has remained an important source of visitors for Australia and a market to which Qantas has remained committed.

It is also a market that has been booming recently with the latest figures showing arrivals in Australia from Japan rose 13.5 per cent in the year ending May, 2017. to more than 422,000.

The new Qantas route using upgraded Airbus A330s will be the only direct flight between the two cities and adds to the airline’s Sydney-Tokyo (Haneda), Brisbane-Tokyo (Narita) and Melbourne-Tokyo (Narita) services.

Sister airline Jetstar also flies Cairns-Osaka, Cairns-Tokyo and Gold Coast Tokyo and the Qantas Group is a key stakeholder in Japanese low-cost carrier Jetstar Japan.

This gives the group extensive domestic networks at both ends of its international routes.

The tourism resurgence coincides with the 70ths anniversary in December of Qantas flights to Japan and Qantas International chief executive Gareth Evans said the airline was well-placed the growth in travel between the two countries.

 “Australia is a highly sought-after destination for Japanese tourists with many staying longer and spending more while they are here,’’ Evans said in a statement. “And with the Free Trade Agreement in place, the new route opens up more opportunities for companies to explore and build business in new regions, further strengthening the trade relationship between the two countries.”

“For Australian travelers, this service will appeal to those looking to explore the historic Kansai region and the surrounding areas.’’

Tourism Research Australia’s International Visitor Survey shows spending by Japanese tourists rose 13 per cent in the year ending March, 2017, to $A1.7 billion.

Tourism Australia managing director John O’Sullivan said Qantas had contributed significantly to the “remarkable resurgence in visitation’’ seen from Japan in recent years with the additional capacity put into the market helping to drive demand.

“Whilst this is a seasonal service, Australian tourism will be a beneficiary of a direct, non-stop service from another key Japanese city,” he said.

Qantas is offering special launch fares for the new service starting at $699 for economy class for travel on select dates and $3499 for business class.

Boeing forecasts improved pilot job prospects.

Boeing cockpit re-evaluate

Boeing may be looking at the long-term possibility of pilotless planes but the job prospects for aviators over the next two decades have been boosted by the US aerospace giant’s latest forecast.

The plane maker’s latest pilot outlook forecasts that the commercial aviation industry will need 637,000 new airline pilots between 2017 and 2036.

That’s up 3.2 per cent on its 2016 outlook as airline boost fleets and flight schedules to meet growing demand.

The biggest demand will be in the Asia-Pacific, where the commercial transport sector will require 253,000 new pilots, followed by North America (117,000 new pilots), Europe (106,000), the Middle East (63,000) and Latin America (52,000).

Africa is forecast to require 24,000 pilots and Russia/CIS  will need 22,000.  

Boeing said the airline industry was addressing the need for pilots. It noted that regional markets that had relied heavily on recruiting pilots from outside their home locations were increasingly looking recruiting, training and developing pilots from local sources.

“New market opportunities are creating an increased demand for qualified, skilled, and experienced pilot,’’ it said.

At the back of the plane, Boeing predicts a global need for 839,000 new flight attendants with the Asia-Pacific Pacific again leading the pack.

But it has pared back its growth forecast for airline technicians by 4.6 per cent fewer because of the reduced maintenance needed for modern planes such as B737 MAX.

That still means there will be 648,000 jobs for commercial airline maintenance technicians around the world.

Boeing announced at the Paris Air Show that it would test pilotless aircraft technology in a simulator this year and intended to fly it on an aircraft next year.

However, it admitted the technology was still a long way from convincing regulators and, more importantly, passengers that pilotless aircraft would be safe.

Read: Boeing to test pilotless planes.

Scoot celebrates Tigerair’s last flight with new destinations

Scoot nixes payment processing fees
Photo: Scoot.

Scoot has marked the last official flight of Tigerair Singapore with the announcement of five new destinations, including a maiden US service to Honolulu.

Although only one Tigerair Airbus A320 has so far rolled out in the new livery, the July 24 flight between Singapore and Tiruchirappalli in India effectively completed the transition of the Singaporean low-cost carrier to the Scoot brand as part of a nine-month integration process.

The move leaves Virgin Australia-owned Tigerair Australia as the surviving brand representative and sees the former Tigerair Singapore and long-haul budget carrier Scoot using the TR flight designator code under one operating licence.

The process began in May, 2016, when Singapore Airlines brought the carriers together under a common holding company, Budget Aviation Holdings,  and work started on integrating operations, flight scheduling and reservations systems.

The merger aimed to improve the efficiency of the airlines in the competitive South-East Asian market by utilising aircraft more effectively and streamlining operations. It brings together 14 long-haul Boeing 787 Dreamliners with 23 single-aisle Airbus A320s used on short- to medium-haul services.

“As we come to the end of Tigerair’s journey, we open up a brand new chapter for Scoot,’’ Scoot chief executive Lee Lik Hsin said in the announcement.  “Building on what Tigerair and the old Scoot had achieved since their respective inceptions, we are stronger than we have ever been before, and consequently in an even better position to offer our guests more choice, connectivity and value.’’

Other destinations to be serviced by the “new” Scoot include Harbin in northeast China, Kuching and Kuantan in Malaysia and Palembang in Indonesia.

The new destinations and the addition of the Tigerair network will see Scoot servicing 65 ports across 18 countries.

The airline also unveiled a new uniform for crew members a change in tagline from “Get Outta Here!” to “Escape the Ordinary’’.

“Scoot’s new tagline, Escape the Ordinary, is reflective of our growth as an airline brand,” Lee said. “It is more relevant to the global market now that our network has grown as it is aspirational to our inner wanderlust, and inspires us to travel and explore the world.”

The remainder of the former Tigerair fleet will be progressively repainted and the livery change is expected to be complete by mid-2018.

Read: AirlineRatings world’s best airlines awards for 2017.

United ban prompts comic confusion.

Captain America, Thor and Spiderman found themselves on the wrong end of a mistaken United Airlines ban as US pop culture institution Comic-Con wrapped up in San Diego on Monday.

Attendees considered taking their phasers off stun after United told them comic books were not allowed in checked baggage.

Their confusion increased when the US Transportation Security Administration told them that they were.

The ruckus started after a fan tweeted a picture of a sign telling Comic-Con attendees to remove all books from checked bags.

United responded with a tweet saying: “The restriction on checking comic books applies to all airlines operating out of San Diego this weekend and is set by the TSA”.

The TSA tweeted back saying there were no TSA restrictions on checking comic books or any other type of books’’.

It linked the tweet to a June 28 blog which said it had tested the removal of books at two airport locations but this was no longer underway and it had no intention of bringing in the procedures.

The blog said this was because books had been used in the past to conceal prohibited items.

“Occasionally, our officers may recommend passengers remove items such as heavy, glossy programs during a special event with a lot of travelers such as Super Bowl programs,’’ it said.

US media speculated United had misinterpreted 2016 guidelines issued by the TSA which suggested stacks of brochures and comic books be taken in carry-on bags.

“Packing these items in checked bags often causes alarms leading to bag searches which can cause a significant slowdown in the screening process leading to delays and bags possibly missing their flights,’’ the guidelines said.

A TSA spokeswoman confirmed to Gizmodo that heavy glossy items could set off the checked baggage screening alarm but said there was no prohibition on putting comics in checked baggage.

United later issued a statement saying it had misunderstood TSA instructions and regretted any inconvenience to passengers.

US laptop ban lifted for all airlines

The US Department of Homeland Security has lifted its controversial ban on large personal devices for all airlines.

The DHS said all 180 airlines and more than 280 airports offering direct flights to the US had implemented the first phase of enhanced security measures announced in June by Secretary John Kelly.

This included the 10 airports and nine airlines from the Middle East and North Africa caught up in the original ban announced in March.

“There are currently no airlines under restrictions for large personal electronic devices,’’ the Department said in a statement. “Airlines worldwide have implemented additional security measures that ultimately make the global aviation community more secure.

“The quick and decisive action taken by airlines, nations, and stakeholders is a testament to our shared commitment to raising the bar on global aviation security.”

The US sparked an international backlash when it introduced the so-called laptop ban and then suggested it might expand it to Europe and other parts of the globe.

Strong lobbying by the European Union and opposition by airlines and the travel industry resulted in the announcement in late June of tougher security measures.

These included a boost to overall passenger screening, heightened screening of personal electronic devices as well as increased security protocols around aircraft and in passenger areas.

Airports will also be expected to deploy advanced technology, expand screening by dogs and establish additional pre-clearance locations for travellers heading to the US. These allow international travellers to go through US customs and border security before boarding their flights.

The DHS warned those who failed to adopt the requirements within “certain time frames’’ ran the risk of additional security restrictions being imposed.

The International Air Transport Association welcomed the move to impose the requirements as an alternative to the laptop ban and said it would work with the DHS on a phased implementation of the new measures

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