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Virgin Australia sees red

Virgin Australia has swung back into the red in the first quarter of 2017 as it faced the same subdued conditions in the Australian domestic market that have affected Qantas.

Australia’s second biggest carrier reported net loss for the quarter of $A34.6m, including the impact of restructuring charges under the group’s Better Business program. It’s underlying pre-tax loss was $A3.6m.

Virgin is disproportionately affected by a lack-lustre domestic market because that is where most of its flying takes place.

The airline said the cost-cutting program was already generating savings, expected to increase to $300 million per year by the end of the 2019 financial year, and it was actively managing capacity in response to the trading environment.

“During the quarter, total available seat kilometres declined 0.5 per cent and total sectors flown declined 2.3 per cent on the prior corresponding period,’’ it said.  ”The Group will continue to exercise disciplined capacity management in line with trading conditions.’’

The update showed group passenger numbers increased by 4.8 per cent and the airline’s revenue load factor increased by 2 percentage points, while costs fell.

The group has about 90 per cent of its fuel consumption hedged in the current financial year and said it had boosted its hedging program for fiscal 2018 to take advantage of lower fuel prices and protect against future increases.

“The Group continues to drive structural change in its cost base through ongoing cost-saving activities and new efficiency initiatives under the Better Business program,’’ it said. “This includes the fleet simplification programme and organisational rightsizing.’’

Traffic statistics revealed domestic passenger numbers were up 3.9 per cent with capacity growth flat at 0.6 per cent and the load factor up 2.9 pts.

Changes to services to Bali and a refurbishment program for the airline’s Boeing 777s saw passenger numbers tumble 8.6 per cent with passenger loads unchanged.

Tigerair Australia  passenger numbers rose  18.6 per cent on the previous year and load factors rose 2.8 points.

MH370: How air safety sleuths determined the flap was retracted.

A damaged component on the part of the right outboard wing flap closest to the fuselage of a missing Malaysia Airlines Boeing 777 was a key to the finding by air safety sleuths that the flap was likely stowed in the flight position. 

Flaps are moveable panels on the trailing edge of the wing that can be extended to increase the surface area of the wing and increase the lift as the plane slows down to land.

The panels have defined stages of deployment, with “flaps 30’’  often used for landings,  but they are retracted during flight to optimise the wing’s aerodynamics.

A  pilot in a controlled ditching aimed at reducing the amount of debris would have extended the flaps and the finding they were retracted is fatal blow to proponents of that theory who have been criticicising the ATSB's methodology for determining a probable search area.

A key component in the puzzle is a  fibreglass and aluminium housing, known as a “seal pan’’. This is located at the inboard end of the flap and would normally house an auxiliary support track and carriage assembly used to guide the flap as it extends from the wing.

The support track is fully inserted in the flap when the panel is stowed for flight but progressively withdraws as the flap extends.

Although the support track was lost, presumably in the impact, two aluminium components in the seal pan cavity known as stiffeners showed impact damage and their position was such that the stowed support track was the probable culprit.

“The damage was significant because it was indicative of impact damage and the only component in the vicinity of the stiffeners, capable of independent movement within the seal pan, was the support track,’’ iAustralian Transport Safety Bureau investigators said in their report. “Measurements of the support track position at the various stages of flap deployment, indicated that the track would have to be fully inserted into the flap in the retracted position to be adjacent to the damaged stiffeners.’’

Investigators also found an outwards fracture of the fibreglass seal pan which had started at location adjacent to the damaged stiffeners.

“The damage was most likely also caused by impact from the support track,’’ the report said. “ That damage provided further evidence of the support track position within the flap seal pan cavity, indicating that the flaps were retracted at the point of fracture and separation from the wing.’’

And like the steak knives in that advertisement, there was more.

The flap seal pan was also fractured adjacent to the rear spar with comparable damage on the spar and a flaperon, an adjacent moveable panel held by French experts. The investigators saw that the two damaged areas aligned if the flaps were retracted but there was a significant offset if they were extended.

The investigators concluded that the damage to the internal seal pan components was “consistent with contact between the support track and flap, with flap in the retracted position".

“The possibility of the damage originating from a more complex failure sequence, commencing with the flaps extended, was considered much less likely,’’ they said.

“With the flap in the retracted position, alignment of the flap and flaperon rear spar lines, along with the close proximity of the two parts, indicated a probable relationship between two areas of damage around the rear spars of the parts.
“This was consistent with contact between the two parts during the aircraft breakup sequence, indicating that the flaperon was probably aligned with the flap, at or close to the neutral (faired) position.’’

Numerous other areas of flap damage were analysed, with some consistent with the flaps retracted and others not providing any useful information about the panel’s position.

The combined findings  produced the conclusion that the flap was most likely in the retracted position at the time it separated from the wing and the flaperon was probably at, or close to, the neutral position when it separated .

 

Future aircraft to be a virtual tech feast for passengers

Passengers waiting in a Qantas lounge of the future to board the airline’s aircraft of the future would be able talk to an intelligent personal assistant running advanced artificial intelligence algorithms to act as a personal companion and guide.

They would have already checked in sophisticated luggage that pairs with a Q bag tag to track belongings anywhere across the world. The smart travel companion would be able to follow its owner, weigh itself and could be remotely locked or unlocked.

As the passenger boards, sensors in the overhead lockers detect whether or not a locker is full and a LED strip indicates if there is space for carry-on luggage.

The traveller would settle into a business pod that would synchronise their personal devices with high definition screens complete with data feeds, video conferencing and a “surround’’ entertainment system that syncs with electronic pyjamas to allow passengers to feel their favourite movie.

 Mixed reality glasses with see-through holographic lenses will also provide digital experiences such as travel alerts and interactive entertainment.

These would be complemented by lightweight, wireless stereo earphones capable of blocking ambient noise and able to play up to 1,000 songs.

Helping passengers remain comfortable would be high-tech cushioning connected by Bluetooth to the personal inflight entertainment system. Sensors would monitor a passenger’s heart-rate, respiration, posture and sitting habits to provide personal health and comfort recommendations.

The system would alert them to poor posture or recommend when it was time to do a lap of the cabin.

A smart cup would also monitor water intake and alert customers to the need to hydrate recommend optimum consumption levels for particular beverages.

And for those wanting to go a step further, an adjustable headset could monitor brainwaves and adjust the environment, mealtimes and entertainment to their emotional state.

Meanwhile, smart LED strips would project the outside view or scenes such as an ocean dawn or desert night sky on the cabin roof. 

The aircraft would be powered by biofuel produced from sustainable sources to reduce its impact on the environment and datalinks to ground staff would boost safety.

Qantas admits some ideas for its aircraft of the future concept may be of the "blue sky'' variety but it argues aviation has been, and will always be, a source of great innovation.

“It’s why airlines and aircraft manufacturers are constantly trying to evolve the customer experience,’’ a spokesman says. “Qantas has a proud record of pushing the boundaries being the first airline to operate jet services across the Pacific and in 1971 we were the first airline to introduce Business Class.

“It remains to be seen how many of these concepts get off the ground but rapid improvements in technology are allowing us to already use big data to analyse the best flight paths across the Pacific and give customers the ability to stream entertainment to their own devices.’’

In fact, many airlines are taking a hard look at what the technology in new “connected’’ planes can offer as technology continues to change the way people travel. On-board Wi-fi, once shunned by travellers, is now being widely adopted to provide the inflight connectivity craved by a new generation of passengers .

Technology company SITA estimates the proportion of airlines offering on-board internet to passenger’s devices will jump from roughly a third today to 74 per cent by 2019, with 70 per cent offering multimedia file streaming.

Departure halls have already been transformed by the introduction of self-service kiosks and the International Air Transport Association expects this to continue with the migration to smartphone  apps that allow people to check in outside the airport. This may one day render on-airport check-in facilities obselete, according to some predictions.

SITA expects mobile phone boarding passes, already widespread, to be “almost universal’’ by 2019 and believes almost half of airlines will offer smartwatch boarding by this date.

More than half of airlines are expected to trial wearable technologies over the next decade and there will be a similar move towards a single biometric travel token for identity management.

A smaller but sill significant 44 per cent say they will look at artificial intelligence in the next 10 years and 37 per cent expect to look at virtual reality.

A number of airlines have already joined Qantas in using streaming technology to allow people to access inflight entertainment on their own devices and there is a big move towards phone apps that provide functionality beyond a boarding pass.  Air New Zealand customers, for example, can order a barista-made coffee before they arrive at the airport lounge.

Other  ground-based technology that aims to make trips simpler  includes  biometric bag drops and a plethora of apps that do everything from booking a flight to helping you pack or checking to see if a better seat is available.

Some of those apps, such as Kayak and Worldmate, consolidate the flow of information to give fingertip access to hotel and flight bookings while building an itinerary and allowing you track flights.

Hopper analyses billions of airfares each day to predict future flight prices and tell travellers the best time to book. Its makers claim it predicts future price prices with 95 per cent accuracy and it has already collectively saved users tens of millions of dollars.

Seat Alerts monitors available seats and lets you know if a window or aisle seat becomes available so you can jump on the phone to the airline.

Apps also help travellers navigate unfamiliar airports, where negotiating passport control is getting  easier with the increasing use of technology that uses biometric information stored electronically on passports to process travellers through automated gates.

Technology is also beginning to ease the pain of negotiating security checkpoints as airports look at new security scanners that cut queues and allow people to leave items such as laptops in bags.

Amsterdam’s Schiphol Airport and London’s Luton Airport have introduced computed tomography (CT) scanners which generate 360-degree three-dimensional images able to more quickly process bags and cut wait times by as much as half. The scanners also include automated belts that pull bags into the machine and return empty trays to the start of the checkpoint.

The technology, which has also been trialled at Singapore’s Changi Airport and is due to be part of pilot program in Phoenix involving American Airlines, is able to run bags continuously through the system without the need to remove liquids, gels or laptops.

Grab for bags could cause airfares to triple

Airfares would have to triple if aviation regulators were to re-certify aircraft to the reality of recent chaotic passenger evacuations.

The evacuation of the burning American Airlines Boeing 767 at Chicago airport on Friday is a carbon copy of the accidents over the past few years with most passengers carrying their baggage with them.

World's scariest landing

MH370: New evidence confirms spiral dive

Passengers are risking their lives, and those of fellow passengers, with the obsession of taking cabin baggage with them in an emergency.

Aircraft are certified on the basis of all passengers off in 90 seconds with half the exits out of use. 

The stark reality is it takes three times longer – and sometimes more – with passengers slowing the process by grabbing bags.

In the evacuation certification tests, the “passengers” are aircraft manufacturer employees who know the drill and they have no baggage.

If regulators were to re-certify the long-range Boeing 777 to the reality of what actually happens, the 550 exit limit aircraft would have to be recertified to just 183 passengers – half its typical load. 

But for smaller aircraft such as the widely used A320 – and Boeing 737 – which has an exit limit of 195 and a typical configuration of 180 mostly economy passengers the impact would be devastating with a new limit of just 65.

That would mean a tripling of airfares to make the aircraft economically viable.

The impact on the industry and the world economy would be devastating but something needs to be done before hundreds die in an aircraft evacuation. 

And authorities are already stirring. Last year after a British Airways incident at Las Vegas the highly respected British Civil Aviation Authority issued a blunt warning to its airlines: Stop passengers taking their hand luggage off with them in an emergency evacuation!

This is how passengers evacuated in the Airbus A380 certification test.

The airline industry needs to take decisive action, perhaps by locking overhead lockers for takeoff and landing, to prevent passengers taking their baggage with them after a plane crash.

Or an extreme measure would be to ban carry-on baggage other than a small bag such as a back pack.

It is sobering to consider that it quite often takes 40 minutes to board a plane because of passenger/ baggage congestion.

Not only does taking your baggage dramatically slow the process, there’s a distinct possibility that the bags with protruding metal parts will snag and then deflate the escape slides — rendering them useless.

And in the scramble to get overstuffed bags out of lockers, passengers may be knocked out and the aisle blocked for precious seconds.

There is also the very real prospect of passengers jumping on to the escape slide with their bag and knocking themselves or another passenger out, or even killing them.

Duty-free alcohol is even more lethal because if the bottle breaks there is flammable liquid everywhere, not to mention broken glass.

In a related development, passengers in these disasters are turning them into social media events by taking video and pictures and then trying to be the first to upload the images to Facebook or Twitter.

Complicating matters airlines are not enforcing carry-on baggage limits for competitive reasons, says Steven Reed, National Industrial Officer with the Flight Attendants Association of Australia.

“There is a very real potential for a catastrophe,” Mr Reed told AirlineRatings.com.

The combination of passengers not listening, larger and heavier bags and more aggression and defiance from air travellers is a perfect storm, suggests Mr Reed.

Tragically, it will take a disastrous evacuation with multiple deaths for the industry to act.
 

American Airlines flight bursts into flames

American Airlines Boeing 767-300, registered N345AN, operating flight AA383 from Chicago to Miami with 161 passengers and 9 crew, aborted its take-off and has caught fire.

The flight was well down runway 28R when the pilots rejected the takeoff  because of a suspected uncontained engine failure and fire.

Crew initiated an emergency evacuation and  20 people were taken to hospital with minor injuries.

The 767-300 sustained significant damage.

Many passengers filmed the evacuation.

Once again passengers have risked their safety and that of their fellow passengers by insisting on taking their carry-on baggage with them.

Video of the inside of the 767 taken during the evacuation shows many baggage bins open while passengers can be seen with their carry on baggage.

Read: Grab for bags could cause airfares to triple

Jet engines are designed with a containment ring to prevent the shrapnel generated by disintegrating parts from tearing through the cabin or fuel tanks but in rare cases this does not work.

A source told Reuters the failure in this case was so intense a disk from the CF-6 engine  hit a nearby building roof.

The news agency said  US National Transportation Safety Board officials were looking for clues as to whether the fault lay with the engine, with maintenance or a freak event such as debris on the runway entering the engine.

GE spokesman Rick Kennedy told it on Saturday that the plane engine dated from the 1980s or 1990s and had been serviced by the airline.

Qantas unveils 787 interior

Qantas will defy a global trend to cram more people into aircraft when it launches its new Boeing 787-9 “Dreamliner” aircraft and gives back to economy class passengers an inch of legroom.

The airline announced today that it will increase the seat pitch on its new economy seats from the 31 inches (78.8cms) found on its Airbus A380s to 32 inches on its new flagship Dreamliner.

Read: Boeing 787 banishes jet lag

“The Dreamliner is an aircraft built for comfort,’’ Qantas chief executive Alan Joyce said. “The windows are bigger, it helps reduce jetlag, it’s extremely quiet and there’s a system that smooths out turbulence. Customers are going to love it.

“We’re planning to make the most of the 787’s amazing range, so we’ve designed the cabin to give Qantas passengers a better experience on long haul flights.’’

The airline unveiled the business class and economy product for the new airliner but not its “class-leading and revolutionary” premium economy seats.

The aircraft will seat 236 passengers: 42 in business on seats that are an evolution of its acclaimed Thomson Aero Seating A330 suites, 166 in next generation economy seats and  28 in the premium economy cabin. The overall seat count is less than that of competitors such as  United Airlines, which seats 252 on its equivalent planes,  and Air New Zealand,  which has  292 seats on its 787-9.

Read: London to Australia non-stop

Boeing 787 Farnborough demo

While Qantas promised its premium economy seats will be “streets ahead of anything out there’’, all it revealed today was a roomy 2-3-2 configuration ahead of details to be released early next year. Although Qantas was a late adopter of premium economy its current product is highly regarded so industry interest in the new cabin will be high.

The brainchild of Australian industrial designer David Caon, the next generation Recaro economy seats, will be in a 3-3-3 configuration and offer a 6-inch seat recline. They are fitted with a bigger 12-inch high definition touch screen and a personal electronic device holder that will allow users to set up a tablet.

A standard personal reading light will be complemented by Individual mood lighting will be integrated into the back of each seat to help reduce disruption to other passengers.

The seats feature additional stowage for a water bottle, literature and small personal items as well as individual USB charging and shared PC power.
Qantas has also updated the “footnet” introduced in the A380 and designed to cradle the legs during sleep.

A potential downside is that the economy seats will be only 17.2 inches wide and narrower than rival Virgin Australia’s Boeing 777-300ER economy seats, which are 18.5 inches wide in a nine-across configuration and also sport a 32-inch seat pitch. The 787 seats are also marginally tighter than the 17.5-inch wide economy seats on Qantas A380s and close to the 17-inch wide seats that have caused consumer unhappiness on 10-across Boeing 777s.

However, Boeing studies have shown that most passengers would rather an extra inch of legroom over an extra inch of shoulder room.  The aircraft manufacturer also says that the 787’s much larger windows give passengers a greater sense of space.

At the Singapore Air Show in February,  Boeing Commercial Airplanes vice president of marketing Randy Tinseth told Australian Aviation that an independent survey by Mindset of economy class cabins of 10 airlines showed 48.2 per cent of respondents found the 787 cabin to be “very spacious”, compared to 34.5 per cent for the Airbus A380 and 17.3 per cent for the A330.

Mr Tinseth said that on the comfort aspect the survey found that 45.3 per cent gave the 787 cabin a big tick as “very comfortable”, compared to 34.2 per cent for the A380 and 20.5 per cent for the A330.

Regardless of the width debate in economy,  it will be all smiles in the high-yielding premium economy and business class cabin. The aircraft’s 42 business class seats will be in a 1-2-1 configuration that guarantees all passengers direct aisle access and boast a comfortable 80-inch (203cm) flat bed, a new deployable privacy divider as well as 16-inch touch screens.

Like the A330 seats, they can be reclined during take-off and landing and all have ample space to work, good storage as well as in-seat USB and PC charging.

“Many of the cabin design elements reflect what our customers have told us,’’ Mr Joyce said. “Personal storage rates really highly, so we’ve created extra space in Economy for customers to store their personal devices and water bottles.

“We’re proud that our new economy seat includes features other carriers reserve for premium economy.

“We’re also redesigning the in-flight experience for the Dreamliner, from rethinking our menus to making better use of the self-service bars during different phases of flight.’’

Qantas has yet to confirm new routes for the Dreamliners but has said they will gradually take over routes currently operated by its Boeing 747s such as Sydney-Johannesburg.

But its decision to go for a lower seat count should mean it can fly further and mooted new routes include London-Perth, Dallas-Melbourne or Dallas-Brisbane.

The first international 787 flights will go on sale before Christmas and the airline will announce early next year the first ultra-long route.

 

Qantas updates the flying kangaroo

qantaslivery

A reimagined roo, a funky font and a tip of the hat to times past.

Qantas unveiled a new livery and a makeover of the iconic flying kangaroo today to herald the arrival of its newest aircraft, the Boeing 787-9 Dreamliner.

The fifth update of the flying kangaroo since its introduction in 1944 sees a more streamlined marsupial without the hooked front legs and with silver shading to give it a three dimensional feel.  It was designed by long-time Qantas collaborator Marc Newson in collaboration with Australian design agency The Houston Group.

It is accompanied by a new slimmer font for the fuselage branding with a windswept look as well as a giant Qantas sign on the belly that can be seen as aircraft fly overhead.

Underneath the cockpit, in a nod to the airline’s long heritage, is the famous winged Kangaroo that graced aircraft tails for over three decades.

Qantas last update its kangaroo logo in 2007 to coincide with the delivery of the Airbus A380 superjumbo and chief executive Alan Joyce said a review of the airline’s history had shown it had been updated each time it introduced a game-changing aircraft.

“It’s tradition that goes back to the Lockheed Constellation in 1947, the Boeing 727-300 in 1984 and the A380 in 2007,’’ Mr Joyce said. “A fresh band helps symbolise the new era Qantas is entering as we head towards our centenary.’’

Mr Joyce said the new livery would be added as aircraft come up for repainting, typically every seven to 10 years. Twenty-eight aircraft in an earlier scheme would be the first to repainted and the 787s would be delivered in the new scheme from the factory.

“The idea is to do this for very minimal cost and the idea is to get it is all done by 2020, the centenary of Qantas,’’ he said.

The Qantas boss said the requirements for a logo and brand had changed because of the advent of social media and the new branding was more versatile and vibrant.

Low fares hit Qantas profits.

Qantas A380 Sydney London
Qantas is switching its Sydney-London flights back to Singapore

AUSTRALIA’S Qantas is the latest airline to feel the impact of a competitive international airfare market and subdued economic growth as evidence mounts that the  aviation economic cycle has peaked.

 Lower fares on international routes and subdued domestic demand shaved 3 per cent off Qantas revenues in the quarter ending September 30 but it is still expecting a first-half underlying pre-tax profit of between $A800m and $A850m.

This is below the underlying pre-tax profit of $A921m in the first half of last financial year but the airline noted it would still represent the third best first-half result in its history. It said the result would be helped by cost improvements from its transformation program and lower fuel prices offsetting the slowdown in revenue.

The Australian carrier also expects slower growth in the first half and cut its capacity increase forecast to between 1.5 and 2 per cent, from the previous guidance of 2 to 3 per cent.

Group domestic capacity is tipped to grow by 1 per cent while international growth is forecast to be around 3.5 per cent.

But there are some tail winds from fuel costs, which are forecast to fall from $A1.7 billion in the first half of fiscal 2016 to $A1.5 billion in the latest quarter. Full-year costs are tipped to be no $A3.15 billion and no worse than $A3.2 billion.

Qantas Group chief executive Alan Joyce said the result would be another strong first half for the airline and the group’s reduced cost base, disciplined financial framework would help it to keep performing well in the more challenging international environment.

Mr Joyce said he airline would continue to manage capacity carefully to match demand while investing to build on the group’s competitive advantages,.

“Like most carrier’s globally, we are seeing international fares below where they were 12 months ago, but the impact has been tempered by the competitive advantages we’ve been working hard to fortify, including our strong domestic position and diversified loyalty business,’’ he said.

Overall revenue for the group fell from $A4.11 billion a year ago to $A3.98 billion in the latest quarter despite a 2.5 per cent rise in group passenger numbers to 13.2 million.

First-Quarter unit revenue  from the group’s Jetstar and Qantas domestic operations fell by 2.9 per cent compared to a year ago as the airline was hit by a $28m reduction in resources market earnings, primarily from routes within the resource- rich states of  Western Australia and Queensland.

However, Qantas said domestic conditions beyond the resources sector reverted to a more stable environment seen prior to the run-up to this year’s federal election.

Group international unit revenue was down 6.9 per cent as lower fuel prices, higher capacity growth and increased competition led to lower fares.

“New Qantas international routes continue to meet expectations though have lowered average international unit revenue during their ramp-up phase,’’ it said. “Qantas International increased capacity by 5.8 per cent, with all growth funded by increased utilisation of existing group fleet.’’

Qantas has redeployed aircraft from its domestic operations to international services, primarily to meet growing inbound demand from Asia.

It expects its Jetstar International arm to grow capacity by 4.3 per cent and noted its loyalty program had hit 11.5 million members at September 30 as it signed new partners, including Airbnb.

The flying kangaroo's results came as the  International Air Transport Association said in its October business confidence survey that industry heads expected little change in profits over the next 12 months, consistent with signs that the industry profitability cycle may have peaked.

Most respondents expected growth in cargo and passenger businesses and reported a fall in operating costs for the quarter, it said.

“But given that oil and jet fuel prices have trended slowly higher since bottoming-out in early-2016, most respondents expect input costs to increase over the next 12 months,’’ IATA said. “The outlook for input costs contrasts with expectations for yields and points to a more challenging profitability environment.

“In a reflection of strong competition and the subdued economic backdrop, over 90 per cent of respondents expect passenger yields to remain unchanged or to fall further in the year ahead.’’

 

 

Third runway for Heathrow an economic bonanza

The UK government has approved a third runway at Heathrow following a cabinet committee earlier this week.

However, a public consultation now follows before a final decision is made as part of a national policy on aviation. The final vote will be taken late next year but it is unlikely that it would be operational until well into the next decade.

A report last year recommended that the third runway be given a green a light because the slot- congested airport is at capacity and expansion was seen as the best option for the future of UK aviation.

Heathrow third runway video

 

A third runway would put Heathrow on the same footing as rivals serving Paris, Frankfurt and Amsterdam and allow another 740,000 flights a year to 40 new destinations. The Airports Commission report forecast the 17.6 billion pound project would add 147 billion pounds in economic growth and create 70,000 jobs by 2050.

The north-west runway would involve the construction of a new terminal, Terminal 6, and as significant expansion of Terminal 2 along with big increases to road and rail capacity costing up to 5 billion pounds.

The report recommended restrictions to reduce environmental and noise effects, including an overnight curfew. It also described as feasible a cheaper expansion at rival Gatwick Airport.

The Heathrow proposal has attracted significant opposition, including from a number of high-profile politicians such as conservative MP Boris Johnson, and almost 800 homes will need to be demolished to make room for it.

However, it is believed to have the support of British Prime Minister Theresa May and has been backed by pilots and unions.

The BBC said the decision would be made by a sub-committee chaired by May and some ministers would be allowed to speak out against it a limited period “in a move seen as evidence a third runway at Heathrow would be backed’’.
 

Fare rules crackdown

The world is watching as the Obama White House, in its last months in power, forces through new rules backing air travellers that it says will lead to a more competitive market.

The rule changes in the world's biggest domestic air travel market have been rammed through by Democrat President Barack Obama's hand-picked transportation secretary, Anthony Foxx, using so-called executive orders so that they bypass debate in the hostile Republican-controlled Congress and Senate.

And, instead of being hailed as useful reforms, they have been met with either indifference or hostility by the American aviation industry media, as well as by the airlines.

In the first of the rule changes, the Department of Transportation (DOT) has announced that, by the end of the year, online travel retailers will be prohibited from "undisclosed biasing of flight offerings on behalf of certain airlines".

Foxx says the rule stems from "a concern certain agents may be offering flights based on relationships with certain carriers” rather than providing a neutral rundown of offerings based on fares or schedules.

“We want to make sure we get as much transparency as possible,” Air Transport World quoted Foxx as saying.

But, like most government meddling in competitive markets the DOT is either implementing or contemplating, critics have pointed out that the potential for unforeseen consequences is everywhere.

For a start, mandating what relationships airlines and their suppliers may have with each other effectively abolishes competition in the chosen area.

The second rule change mandated by the DOT is an expansion of the gathering of performance statistics to "stop airlines from data cherry-picking", according to a briefing by the White House – an indication of how seriously the Obama administration is taking the changes. 

From January 2018, US domestic airlines will be required to report competitive data, such as on-time performance, for all airlines that fly under their brand names and not just the mainline carriers. By expanding data-gathering to include all airlines with more than 0.5 per cent of industry revenue (market share) from the current one per cent, that rule is designed to capture regional affiliate airlines and some minor niche players that current aren't required to report.

On the face of it, though it won't affect travellers in a major way, that is a useful reform as the US has been the world leader in publishing competitive information that consumers can use to choose their carrier when booking travel.

The US was the first jurisdiction to publish on-time performance statistics so consumers can see which airlines are punctual and which aren't.
However, critics point out that by targeting smaller airlines, the compliance burden will fall on those least able to pay for the extra staff required. Regional airlines in America are notorious for their wafer-thin margins and bankruptcies are common.

The DOT has also signalled it is proposing two future rules – the first to require airlines to refund baggage fees when luggage is "substantially delayed"; the second requiring airlines to disclose an "all-up" fare that includes optional fees for items such as baggage, seat assignment and booking change or cancellation.

These two areas open a giant can of worms as they involve potentially large financial penalties for airlines.

Incredibly, the DOT doesn't even know what a "substantial delay" is. Rather than proposing that, say, a sliding scale of penalties will apply if baggage is lost for more than 24 hours, the department says it is still soliciting comments on what constitutes a "substantial delay". 

In any case, critics say the DOT appears determined to eliminate competition between airlines on conditions of carriage for baggage and incentives they may use to win business.

But it is the second area of future rule-making that has airline managers alarmed as it suggests regulation of the new centrepiece of airline pricing, optional extras or ancillary revenue.

"DOT will be conducting a rulemaking to explore whether airlines should be required to share fee information for such services or products (like baggage, advance seat assignments and priority boarding) with ticket agents, so that customers can get an all-in-one price when they shop online," the White House briefing says.  

"DOT will also determine which fees will have to be included, potentially including baggage fees, seat assignment fees, and change and cancellation fees.

The DOT is talking of forcing airlines to disclose "all-up pricing" and seems to suggest that optional items should be included.

While such a ruling looks like it would be unworkable, it would also see the government meddling with airline marketing of their products to consumers.
Other jurisidictions such as Australia have much more stringent consumer laws than the US and insist only that airlines must declare compulsory fees, while optional extras are fine.

Needless to say, the airline industry is scathing of Washington's latest actions.

"It would be difficult to find an industry that is more transparent than the airline industry; customers always know exactly what they are paying for before they buy," says Airlines for America (A4A) president and chief executive Nick Calio. "Dictating to the airline industry distribution and commercial practices would only benefit those third parties who distribute tickets, not the flying public.”

 

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