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Airline profits fly with passenger numbers

IATA cuts staff
IATA boss Alexandre de Juniac.

The aviation industry is on track to make a record profit of $US39.4 billion this year as passengers continue to fly in increasing numbers despite a lack-lustre global economy.

And in good news for a sector historically plagued by low investor returns, the industry as a whole is tipped to make a return on invested capital that exceeds its cost for the only the second year in its history.

The prediction was announced at a recent financial conference in Singapore by new International Air Transport Association director general Alexandre de Juniac. 

IATA estimates the profit will see industry make a 9.8 percent return on invested capital compared to a 6.8 per cent cost of capital. It comes as an IATA financial analysis argued that July's 5.9 percent growth in global traffic, the fastest in five months, showed the stimulatory impact of lower fares was outweighing headwinds such as the subdued global economy.

The former Air France-KLM chief executive acknowledged the result had been helped by low oil prices but argued it came from hard work, internal restructuring and process re-engineering. He hailed it as a sign that the airline industry was becoming “a normal business and earning normal returns for investors’’.

“Passenger demand is resilient beyond expectation in the face of global economic uncertainty (although the same cannot be said for cargo demand),’’ he told the IATA World Financial Symposium. “And while we and our customers have borne some horrific terror attacks, these last few years have not seen the kind of major global crises that marked the early part of this century.’’

However, the new IATA boss warned that the industry should not get too comfortable and that the profitability was not evenly spread, with almost 60 per cent of the windfall being generated by US carriers. Other parts of the world were experiencing varying degrees of success and some, such as Brazil, were in crisis, he said.

He also pointed to the cyclical nature of the business and potential threats such as quickly rising fuel prices, intensifying terrorist activity, a hard landing by a major economy and a potential impact of the current “protectionist rhetoric’’.

While he was not making any predications, the industry needed to be vigilant.

“I am a big believer in speed and innovation,’’ he said “We cannot predict the future. But we need to be prepared to react quickly when the environment changes. That’s not easy for any business—and it is a real struggle for process-driven and safety-focused industries like air transport.’’

De Juniac emphasised the need for airlines to be high performance organisations so that effective decisions could be made quickly and for finance departments to move away from primarily processing transactions to being "value managers". There was also an opportunity to use the information collected on customers — big data — to get to know them better.

“If you are going to be value managers, it is vital to know where the value is coming from,’’ he said. “We are in a service business. Value is what our customers perceive. At Thales and Air France, the most important person to me was the one who knew our customers and understood what motivated them to buy our products—and what it would take to get them to buy our products more often.’’

Other areas which would help airlines included smarter regulations, optimising the value chain, innovation and greater efficiency. Examples included the carbon offset regulation due to be considered by the 39th International Civil Aviation Organisation assembly, starting this week, as well as initiatives to improve passenger experiences at airports and security checkpoints, new settlement regimes and improved distribution systems.

The IATA boss said aviation was about freedom and had made global mobility ubiquitous.

“For 63 million people, aviation provides the freedom to earn their living,’’ he said. “For 3.8 billion travellers aviation means the freedom to explore the world, build understanding, develop business, make friendships, visit relatives and make their lives better.”
 

Smoother rides for Delta passengers

Some Delta Air Lines passengers are enjoying smoother rides these days thanks to a new app for pilots.

Developed in conjunction with US defense contractor Basic Commerce and Industries, the app should help take a bite out of turbulence encounters shown by long-term data from the US National Transportation Safety Board to be the leading cause of serious passenger injuries.

To underscore the often out-of-the–blue viciousness of some turbulence, the NTSB says the phenomenon accounted for just 3 percent of all weather-related accidents between 2000 and 2011 but still seriously hurt more passengers than any other type of accident.

One case-in-point is the August 12, 2016, encounter with rough air by JetBlue Flight 429. The A320 was headed from Boston to Sacramento when turbulence hit hard. The aircraft diverted to land at Rapid City, South Dakota, where 24 passengers were hospitalized. One compared the experience to a “bad dream” while another told CNN people were “flying out of their seat belts and hitting their heads on the ceiling; it was very scary”.

Not only does turbulence exact a human toll, but it costs the airlines plenty: $100 million for US airlines every year, much of it in maintenance bills.

The Delta/BCI application isn’t for passenger consumption, tt’s purely for pilots. A blog post on the Delta News Hub says it “allows pilots to plug in their flight plan and view where turbulence is and how it’s being encountered.” The display is depicted on a 3-D, color-coded map.

Enabling the application are algorithms developed by the National Center for Atmospheric Research derived from data from sensors on more than 300 aircraft.

The process entailed combining vertical accelerometer readings with things like pitch, roll and wind speed. Taken together, they paint a picture that’s sometimes a must to avoid. That picture is fed back into forecast models

Delta says the app “customizes” the data by aircraft type. Different aircraft respond in different ways to turbulence. The ride you get in a 737 may be decidedly different than one in a larger A330—the flagship of Delta’s intercontinental fleet.

And how are the people at the front of the plane adapting to app?   First Officer (co-pilot) Jason Rice labels it “the most incredible enhancement to en-route situational awareness since the glass cockpit (electronic, digital displays in lieu of older analog ‘round-gauge’ dials).

“The forecasts are accurate, the reports objective and indicative of actual conditions,’ he says.

Delta has already installed the turbulence-reporting algorithm on its Boeing 737s and wide body 767s, and has plans to cover international flights soon when it adds the app to its Boeing 777s and Airbus A330s.

Singapore sees continued role for A380s

A380

SINGAPORE Airlines says it will be a case of “watch this space’’ as it brings in the first of five new  Airbus A380s  next year sporting premium product that will improve on its already impressive new-generation business seats.

The Singaporean carrier created waves for manufacturer Airbus when it decided not to renew the 10-year lease on its first Airbus A380. The announcement came as Malaysia Airlines revealed it was in discussions with airlines in the region about offloading its fleet of six A380s.

SIA may also not renew four more leases due to end, although a decision on that has yet to be made.

But Singapore Airlines (SIA)  executive vice president commercial Mak Swee Wah  says the days of the double-decker superjumbo are not over yet.

“The A380 probably has its niche,’’ Mak told AIrlineRatings during the recent inaugural flight of the Capital Express linking Singapore, Canberra and Wellington. “It is still the relevant plane for those key city pairs were traffic is dense and so I think it’s question of when you want to expand there’s this constant debate over capacity versus frequency.

“So I think … it will be relevant of our fleet but a lot more of the services will be run by twin-engine planes.’’

Mak said the decision against renewing the first lease was a result of the airline’s assessment of the need for the plane.

“At this point in time, with the new ones coming in, we think that we really don’t need to expand the fleet so that’s why we are letting the lease expire,’’ he said. “When the decision time for the next few comes along then we will make the same new evaluation and if we don’t need to expand then we will do the same.’’

The SIA executive would not be drawn on what was planned for the new aircraft, other than to say it would be better than its latest generation business class product.
“I will say watch this space when the time comes,’’ he said.

Read our review of Singapore Airlines' new business seat.

Singapore prides itself on the low average age of its fleet and it has already taken the first 67 A350s set to form the backbone of its fleet. These include seven ultra-long-range versions of the A350-900 deigned to fly up to 19 hours on non-stop flights between Singapore and New York.

The A350-900ULR includes a modified fuel system and aerodynamic improvements that allow it to carry more fuel with an increased maximum take-off weight (MTOW) on services to the US.

Also on order are 30 Boeing 787-10s, which will be the mainstay of the airline’s medium-haul fleet and are due to start arriving in 2018.

 “So there are a lot of new aircraft coming in and as they come in then the older 777s.  which used to be the core of our fleet, will then be retired,’’ Mak said.

Although Boeing has approached the Singaporean carrier about its next generation of Boeing 777s,  Mak said no decision had been made.

The influx of new planes into the region has been one of the factors responsible for increased competition that has pushed down air fares and airline yields.

Mak does not believe there will be any rationalisation of capacity in the near term and said expert commentary suggested  the world economy would  continue to languish for some time.

“It’s hard to predict,’’ he said. “I think t for the moment there is still a lot of airplanes which have been ordered which will be coming into service.
“That’s why we on SIA’s side – not just SIA but the rest of the group – we have to continue with our growth and expansion plan to make sure that we get our fair share of the action.’’

Like everyone else in the Asia-Pacific, Mak sees China as the biggest growth area and says all four members of the SIA Group — Singapore Airlines, SilkAir, Scoot and Tigerair — have expanded their presence there.

He also sees a role for the new Singapore-Canberra-Wellington service as alternate gateway for Chinese tourists. There were about 90 visitors from China on the inaugural Boeing 777-200 flight and Mak said Singapore would do its share to promote traffic from the huge market to Australasia.

And despite some scepticism about the route from competitors, Mak said putting the cities together made sense, with residents in both cities excited about the service and the response so far "encouraging''. The airline hopes to turn the four-times weekly route into a daily service as part of an expansion in the South-West Pacific that has seen the number of weekly flights to the region grow in recent years from 100 to 156.

 “We certainly hope to make it a success, especially with the support of the authorities, of the airport, of the tourism bodies,’’ Mak said
“Both (cities) are equally strong and we’ll see over time as the market grows, how we can expand this further.’’

He agreed one advantage of the markets was their relative affluence and pointed to the the wide range of groups in both cities with reasons to travel.

“There’s government, there’s academia, there’s business people and the more affluent leisure traveller,’’ he added. “And also I think we do want to let the rest of the world know that there are some hidden gems around. It doesn’t come top of mind when we do overseas tourists but I think we need to do some work to let people know there’s more to Australia and New Zealand than just traditional gateways.’’

SIA is working on the route with alliance partners Virgin Australia, which is providing lounge facilities in Canberra, and Air New Zealand, which provides them in Wellington.

Air New Zealand chief strategy, networks and alliance officer Stephen Jones described the new route as a great addition to the alliance.’’

Air NZ has authorisation through its alliance to co-operate with SIA to Singapore but Mr Jones said this did not extend to passengers flying across the Tasman.
 “But passengers flying from New Zealand via Wellington over Canberra to Singapore and beyond will be included in our alliance and in our revenue share,’’ he said.

Singapore and AirNZ now co-operate on twice daily services out of Auckland, daily out of Christchurch and the four times weekly Wellington service.

Steve Creedy travelled to Singapore, Canberra and Wellington courtesy of Singapore Airlines.
 

Investigators pour cold water on MH370 fire theory

Air safety investigators have scotched a theory that discoloured debris found in Madagascar was subject to intense fire and say they so far have not been able to link it to missing Malaysia Airlines flight MH370.

Two items of fibreglass-honeycomb composite wreckage recovered in February near Sainte Luce, on the south-east coast of Madagascar, were brought to Australia this month by debris hunter Blaine Gibson amid speculation they had been burnt by fire on board the aircraft.

But an analysis by the Australian Transport Safety Bureau found that the areas of dark discolouration which prompted the speculation were related to resin that had been applied to the items and was not the result of exposure to heat or fire.

Investigators were also unable to find any identifiers such as parts or serial numbers on ether item that would allow them to be identified and are still attempting to determine their origin.

 A burnt smell from the larger piece debris was traced to three small marks identified as damage resulting from localised heating..

“The origin and age of these marks was not apparent,’’ the report said.  “However, it was considered that burning odours would generally dissipate after an extended period of environmental exposure, including salt water immersion, as expected for items originating from 9M-MRO (the tail number of the MH370 aircraft).’’

Australian Transport Minister Darren Chester the debris had been examined with the agreement of the Malaysian government.

 “At this stage it is not possible to determine whether the debris is from MH370 or indeed even a Boeing 777,’’ Mr Chester said.“What is known is that contrary to speculation there is no evidence the item was exposed to heat or fire.'

“Further work will be undertaken in an attempt to determine the origin of the items, specifically whether they originated from a Boeing 777 aircraft.’’

The search for MH370 is due to wind down at the end of this year if no compelling evidence is found to warrant it being continued.

ATSB investigators have also been studying a flap from MH370 and have commissioned drift and marine ecology studies in their continuing attempts to solve the mystery.
 
Read MH370 and now for the facts.

Qantas targets non-stops from Europe to Sydney

QANTAS’ will continue to concentrate on Asia and North America while it waits for new ultra long-range “hub-buster” aircraft to give it the ability to offer unique non-stop services between Australia and markets in Europe.

That is the message from the airline’s group chief executive Alan Joyce who is looking to new technology aircraft such as the Boeing 787s it has on order plus either Boeing new 777X or the Airbus A350 to deliver the airline unprecedented non-stop capability.

Those non-stops will likely be London to Perth with the 787 followed later by routes such as Paris to Sydney and Rome to Melbourne. 

The airline looked some years ago at using Jetstar to service destinations in Southern Europe Mr Joyce says the low-cost offshoot won’t be joining Scoot and AirAsia X on the “kangaroo route” to Europe any time soon.

“I think Jetstar’s got so many growth opportunities in Asia,’’ Joyce says, pointing to recent announcements that the brand’s Japanese joint venture will grow from 20 to 28 aircraft and Veitnam’s Jetstar Pacific would be adding 10.  “I think we have enough growth in this region and … we have a solution to Europe, which is the Emirates partnership.’’

The Emirates partnership gives Qantas 40 destinations in Europe without the need to invest the capital to operate its own services and, says Joyce, gives the Australian carrier a reach it could never have achieved on its own.

But that doesn’t mean the flying kangaroo, famed for its ability to convince aircraft manufacturers to help it conquer long distances, doesn’t see opportunities further down the track.

Joyce says technology is the airline’s friend and he’s keen to see what opportunities Qantas International’s new fleet of Boeing 787-9s can open up.  The airline is preparing for the arrival of the first of eight B787s at the end of the next year and plans to start selling Dreamliner flights on its existing network before Christmas.

The planes will replace five older Boeing 747s and will be fitted with luxury business class seats, roomier economy seats and what the carrier describes as “a revolutionary premium economy that is streets ahead of anything out there’’.

Possible new routes include a non-stop service between Perth and London made possible by the 787-9’s 7,635 nm (14,140 km) nominal range.

London remains a destination for Qantas because of the size of the market and the traditionally strong links between Australia and the UK.  But with 32 competitors on routes to Europe, Joyce argues the airline currently cannot make other ports on the continent pay, particularly with the one-stop flights that would be required from Australia’s East Coast.

 “The dilemma you always have with the Qantas Group is that it is out of an Australian cost base, it is a long distance from your home and the costs are a lot higher as a consequence of that,’’ says Joyce

“So I think our future is the direct flights.’’

The long-term potential is for non-stop premium services to European ports other airlines would struggle to match, including Sydney-London, using planes such as ultra-long range Boeing 777-8X due to enter service at the end of the decade. The 777-8X, which builds on the technological advances made by the 787 program with enhancements such as carbon fibre high-span wings, will be able to carry 350 to 375 passengers up to 8,700 nm (16,110 km) in a wider cabin.

 “We’re never going to fly to the 40 destinations Emirates has but you could be flying to a few of those top destinations,’’ Joyce says, noting that the combination of direct and indirect services “gives you a very feasible and economic operation in Europe that works very well”.

For now, however, China and the US are the main game.

“We talk about Europe a lot but people forget how big the US is for Qantas,’’ Joyce says, adding that the airline’s Airbus A380 services to partner American Airlines’ hub in Dallas, Texas, are “booming’’. “We’d love to be able to fly more destinations into the states.’’

The 787-9s open up Melbourne-Dallas and Brisbane-Dallas as potential destinations with daily services to cities such as Vancouver also a possibility.

And then eventually with the aircraft in the next decade, you’ll have New York direct and that means Chicago direct,’’ Joyce says. “That means a lot of destinations in the US that have the viability to have direct services start coming on to the radar screen.’’

The alliance with American Airlines remains the biggest for Qantas, despite the higher profile of its marriage with Emirates, but that may be set to change.

Australia’s competition regulator recently gave an alliance with China Eastern a green light and Joyce believes that rapid tourism growth out of China will ultimately make this the flying kangaroo’s biggest partnership. The airline is also set to benefit from Chinese tourism growth through partnerships with China Southern and Hong Kong’s Cathay Pacific.

“The stats just blow you away,” Joyce says. “I think we have 1.2 million visitors from China and we get 1 per cent of the worldwide visitor rate of over 100 million that go overseas.

“Some estimates have that growing to over 500 million in the next decades. Even if we stay at just 1 per cent, the total of the Chinese visitors (coming) here nearly gets to the 7 million total visitors that we have now.

“And when they come to Australia, they typically take an average two domestic sectors when they’re travelling, so the benefits to the domestic network, not only the international one, are quite huge.’’

 “So the potential to tap into a hugely different market that benefits the whole tourism economy is massive in the Chinese market and that’s quite exciting.’’

While Joyce can see growth in all parts of the business from China, including a Qantas service to Shanghai that now operates from China Eastern’s terminal, he is particularly excited about the price-sensitive end of the market.

He sees a big potential in charter services such as the one recently operated by Jetstar between Australia’s Gold Coast and the Chinese city of Wuhan with the Dalian Wanda Group. The year-long Gold Coast deal to sell combined flight and holiday packages ends on October 1 and the parties are working on new services to Australia to begin in time for the Chinese New Year.

Working in conjunction with travel groups such as Wanda means Qantas or its Jetstar affiliates do not have to incur the expense of setting up a distribution network in China.

“They sell the seats and they actually package it,’’ he says. “So Jetstar Vietnam, Jetstar Singapore and Jetstar Japan all will be participating in that growth as well and they’re all doing various forms of charter activity.’’

Another plus out of China for Qantas is, surprisingly, freight. The group has unique freight traffic rights which allow it to fly a triangular Australia-China-US-Australia route using wet leased freighters (aircraft leased with crew) from Atlas Air.  The route has given Qantas Freight about 5 per cent of the China-Us freight market and Joyce says it has been participating well in growth over time.

Australia-China has always been its weakest leg but Joyce says a free trade agreement between the two countries is starting to see this improve with a range of new products.

Of course, Qantas isn’t the only airline with Chinese aspirations.

Virgin Australia’s John Borghetti also sees a big growth potential from the world’s most populous nation and now has two major Chinese groups, Nanshan and Hainan, as major shareholders.

Joyce is unfazed by Virgin’s new shareholders and says he’s happy with Qantas’s position and its partnership with two carriers enjoying strong growth and support.

“I think it’s such a huge market that there’s plenty for everybody on it,’’ he says “ And you know I’d say with the China market I’d rather have the big players as well. I think China Southern for example just reached 700 aircraft, which makes it the fourth largest airline in the world.’’

Another point Joyce makes is that Qantas is a different organisation from the one it was a few years ago.

The airline made a net profit of more than $1 billion in the year ended June 30, 2016, with a 60 per cent rise in underlying pre-tax profit, the best result in the airline’s 95-year history.

It declared its first shareholder dividend since 2009 and saw record earnings from all business units – except freight.

The result was partly driven by a $664 million benefit from lower global fuel prices but also by a transformation program that has unlocked $1.66 billion in permanent cost and revenue benefits since 2014 and expects to see that rise to $2.1 billion by next June.

One result of the changes, according to Joyce, is that airline group well-placed to cope with the often quickly changing aviation environment.

“What’s great, I think, about where you see Qantas today compared to where it was when it had its previous record earnings back in 2007 is they are coming from a bigger variety of things,’’ he says.

“We have a lot bigger frequent flyer program than we had back then, which is making over $300 million. Jetstar made over $400 million, a record profit for Jetstar, but what’s great in the results is that Qantas International and Qantas Domestic also had a record profit.

Joyce is particularly pleased with a billion-dollar turnaround in the international business that prompted the airline to invest in the long-awaited B787s.

“Every business has earned the right to grow and we are now in an enviable position of figuring out what’s the growth opportunities for the businesses going forward — where do we invest the capital, how do we grow to take advantage of the really solid position each of the businesses are in?’’ he says

“And that’s very different from where we were in the past, where usually it’s one component of the business that contributes all the profits and some of the others were underperforming.’’

However, he also acknowledges that low fuel prices have been accompanied by international fares at historic lows in some markets and a global economy that is at best mixed.

He observes that the Australian economy is also going through a transition which saw Qantas drop more than $250m in resource sector revenue, although it managed to redeploy aircraft to the East Coast to take advantage of the property boom and leisure routes have been going well..

“So you’ve definitely got a mixed environment and what I think we’ve changed in our culture here is the ability to be agile and to move things around to take advantage of that,’’ he says.

With the 787s and Airbus A320 neos on the way for Jetstar, the group has a sizeable commitment to new planes but Joyce says it will continue to take a cautious view on capital management.

Investments such as new lounges, new seats on existing aircraft and, increasingly, information technology all clamour for a slice of what will be a $4.5 billion capital expenditure pie over the next three years.

“It’s a lot of money but there are lot demands for growth, there are a lot of demands for new businesses, there are a lot of demands for new seats,’’ he says. “And we have a prioritisation within the organisation for that capital demand and that it’s allocated to the right things.

“I think Qantas is a lot better at doing that than it did before so everything gets done. The pace at which it gets done has to fit into our capital program and the ability, like any business would have, of the business to be able to pay for it.’’

The airline has 15 options and 30 purchase orders for the Dreamliner and Joyce says he wants to see how they perform before ordering more.  Even if that happens, further orders are likely to be incremental and Joyce says it could be as little as one at a time under the agreement the airline has with Boeing.

Qantas has yet to determine whether it will order the new Boeing 777-8X as a replacement for its 12 still relatively young A380 superjumbos.  When the time comes, it will run a competition between the new Boeing widebody and Airbus’s A350-1000.

“We always run a competition on every aircraft type and there are no certainties on these things,’’ says Joyce. “But what I think is always the case in the airline industry is that you’re always continuously monitoring what’s your potential replacement. So the minute you get a new aircraft you’re thinking about what’s going to be in the future the aircraft that has to replace it.’’

Qantas will not exercise options to take an eight additional A380s but Joyce says the existing fleet has worked well for Qantas on Los Angeles,  Dallas, London and, on occasion,  Hong Kong.

Asked how the 380s stack up against the new planes, Joyce says they work well on high volume, long distance routes to hub cities.

Qantas has five services that depart Los Angeles within a small window and Joyce says flying smaller aircraft would not be as cost-effective and would mean too many frequencies.

“So you’ve got the A380 which is a very, big efficient vehicle – and it depends on oil prices as well.,’’ he says. “Today the 380s look a lot better than they did with oil prices over $US100 .’’

 He adds that oil prices also determine the roll-over or replacement case for aircraft but declines to predict what will happen in that arena, describing picking fuel trends as a “fool’s game’’.

“We always hedge and we are hedging and we’ve communicated our hedging for financial year 17 and we’re hedging into 18,’’ he says. “And the idea is to give you time to cope with whatever the fuel price is and not try to put a bet on where fuel’s going to be.’’

 

Singapore Airlines links capitals downunder

SINGAPORE Airlines is confident the affluent residents of Canberra and Wellington will vote with their feet and allow it to boost its historic new “Capital Express” service to Australia and New Zealand to daily flights.

The airline launched the service on Tuesday with a late-night flight from Singapore waved away by diplomates from both countries during a ceremony at a Changi Airport departure gate.

The four times weekly Boeing 777-200 service, sporting 38 angled lie flat business seats and 228 in economy, is the first new route to be launched to Australia by the Singaporean carrier for almost three decades. 

It also marks the first regularly scheduled international services to the Australian capital, the announcement of which was warmly welcomed by residents.

Airline and airport executives are now hoping the residents of both capitals will convert that enthusiasm to patronage.

“I think Wellington has always been a big contributor to revenue from New Zealand, it’s obviously a premium market, as is Canberra,’’ said Singapore Airlines senior vice president sales and marketing Campbell Wilson. “And they were really markets we couldn’t serve alone, either for physical reasons, in the case of Wellington, or economic reasons in the case of both.

“So with the maturity of the market, with the development in Canberra airport, that really presented a perfect opportunity to serve two obvious ‘next’ destinations and hopefully in an economically viable way.’’

Wilson said it had always been the airline’s vision to move to daily flights but it would wait to see how the economics turned out first.

“It’s step by step,’’ he said. “I think we’d like to go daily but four times a week is a good start.’’

The airline is launching the service at a time when competition on international routes is fierce and fares are at startling lows on European routes with rival Malaysia Airlines this week unveiling $1277 return fare from Sydney.

But fuel prices were also low, Wilson said.

“Clearly, competition and capacity coming into a market has a negative effect on yields but low yields have a positive effect on demand, they are stimulatory,’’ he said. “And in this particular case we are serving markets that are very, very poorly served at the moment so we feel there’s both inbound potential and certainly outbound demand that will appreciate the non-stop or more simple service that this will provide.

“So we’re quite confident. Yes, it’s a risk to be a first mover but there are also advantages to being a first mover.’’

The flight leaves Singapore at 11pm and arrives in Canberra about 8.35am before continuing on to Wellington to land about 3.05pm.  It heads back to Canberra at 8.15pm, arriving at 10.05pm, before leaving for Singapore at 11.30 pm to arrive at 5.50am the next day.

The service marks a personal milestone for Canberra Airport chairman Terry Snow who has been trying to attract regular international services for years and worked with government and tourism agencies to make it happen.

“We’ve been chipping away for 18 and half years,’’ Snow said at the departure gate. “We built a brand new terminal … and the crowning grace is, of course, international flights, particularly through Asia. That’s the big emphasis for Australia, building our relationship with Asia, and Singapore Airlines is the ideal partner to do that.

“They have 101 destinations throughout the world, so it’s great gateway for Canberra, and it’s a stroke of genius by Singapore Airlines to put Wellington with us.’’

Snow is confident Canberra residents will get behind the new service, noting that the “dysfunctional travel’’ they normally endure through Sydney provides a big incentive for people to fly direct from the Aussie capital.

He believed Singapore would get enough passengers to warrant increasing its service and said he was looking forward to low-cost international carriers also flying in and boosting tourism.

“This is something again where we can work in partnership with Wellington,’’ he said. “I think it’s great we’ve got this template to work from.’’

Asked with the airport was talking to other carriers about international services after Singapore has broken the ice, Snow said: “We are speaking to a number of them but this process can take years, as you know.

“They have an expression in Asia that the Chinese love to be second.’’

Singapore will codeshare with alliance partner Virgin Australia on the Canberra-Singapore flights, giving Virgin customers another option to earn frequent flyer points and status credits on journeys to Europe. The airlines’ wide-ranging partnership gives Singapore 53 codeshare destinations in Australia and the South Pacific.

Virgin will provide lounge facilities to Singapore’s Canberra passengers but the fact the lounge is not in the international section of the terminal means it will not be available to passengers transiting between Wellington and Singapore.

 Singapore regional vice president Tan Tiow Kor said the airline would liaise with Virgin to ensure premium passengers had ample time to clear customs and immigration before boarding their flight.

Virgin had also agreed to extend the opening hours of the of the lounge to accommodate the flight, Tan said.

The new Canberra service adds another route to a network in Australia that includes Singapore Airlines flights to Adelaide, Brisbane, Melbourne, Perth and Sydney and flights by full-service subsidiary SilkAir to Darwin and Cairns.

Steve Creedy flew to Singapore and Wellington courtesy of Singapore Airlines.

Virgin Australia offers new international services

Virgin Australia has announced a new service between Perth and Abu Dhabi which will give Perth travellers excellent connections into Europe.

The new three times weekly service is part of a major route restructure which also includes new flights and connections to the USA.

Read Geoffrey Thomas on Virgin Australia's new in-flight product

Qantas targets non-stop Sydney to Europe flights

The Perth to Abu Dhabi service will launch on June 9, 2017 and will operate on Tuesdays, Fridays and Sundays outbound and Monday, Wednesday and Fridays inbound.

The flight using the airline’s Airbus A330-200s with the new state-of-the-art interiors will depart Perth at 11.05pm and arrived in Abu Dhabi at 6.35am connecting with a host of Etihad Airways flights into the region, Europe and the US.

Virgin’s three time weekly flight will supplement equity parter Etihad Airways daily afternoon service to Abu Dhabi with Boeing 787s giving the two airlines 10 flights a week.

For the US Virgin Australia will reintroduce in April a five times weekly service from Melbourne to Los Angeles.

Of particular interest to Perth travellers is a new timing via Brisbane to Los Angeles of 12.45pm ex Perth with an arrival in LA at 5.30pm the same day.

This once a week connection will operate from April on a Sunday.     

The airline however will drop its Sydney to Abu Dhabi service and those flights will be replaced with an increase in Etihad flights between the two cities.

 

How low-cost airline policies hit your back pocket

Statistics released by a low-profile European online travel site show that countries failing to foster budget airlines and the development of so-called ultra-low-cost carriers (ULCCs) miss out on the air travel affordability revolution.

Berlin-based Kiwi.com says it has analysed data on more than one million air journeys to come up with its annual review of air fares, which ranks the world's top 75 countries for air travel affordability.

The top of the affordability list is dominated by countries that have encouraged the proliferation of low-cost carriers, such as India, Malaysia, Indonesia and the Philippines in Asia,  and the EU, which has fierce competition between low-cost carriers (LCCs) and full-service airlines as well as between low-cost carriers such as Ryanair and easyJet.

The US, which invented the LCC —  the first of which, Texas-based Southwest Airlines, has grown to become the nation's biggest domestic airline — has also now spawned ULCCs, such as Spirit Airlines, Allegiant and Frontier, which are among the country's fastest growing and most profitable.

But that has served only to highlight the glaring disparity between the US and its northern neighbor, Canada, which has a terrible record of discouraging competition and hiking the cost of air travel.

According to Kiwi.com, the US is No.17 in the global air fare affordability ranking, whereas Canada is No.70, with only Japan, Netherlands, Qatar, Finland and United Arab Emirates bigger basket cases in that category. The Kiwi.com data shows fares in the US cost just $US9.81 per 100 kilometres compared with a whopping $US38.71 in Canada.

That's because Canada has high airport costs and security charges that can be as much as $US25 per passenger compared with as little as $US2 in other countries.

It's also pointed out that Canada's insistence on 75 per cent Canadian ownership of airlines has stifled foreign investment, when jurisdictions like the US and EU allow 50 per cent foreign ownership.

Some countries, such as Australia and New Zealand, even allow 100 per cent foreign investment. Without that, Australia would not now have two LCCs, as Virgin Australia subsidiary Tigerair started life as part of Singapore's Tigerair and took advantage of the lack of ownership restrictions to set up a domestic service Downunder.

Even so, according to Kiwi.com's data, Australia, which has a reputation for high business costs, is barely better than Canada, coming in at No.66 on the list at $US35.69 per 100 kilometres — partly explained by the fact that Australia's two LCCs are now part of the Qantas-Virgin duopoly.

Compare that to Malaysia — No.2 on the list with average air fares retailing for just $US3.78 per 100 kilometres.

Canada's high-cost regime for airlines means that, until recently, the country has had only one LCC, WestJet.

That has changed with the arrival of three fledgling ULCCs, Jetlines, NewLeaf and Enerjet, which are using or planning to use secondary airports, where costs are lower. Part of their strategy is to target the five million Canadians who cross the border into the US each year to access cheap fares unavailable at home.

It's not before time. "Griping about the cost of air travel in this country is as endemic as bitching about the weather," business columnist John Ivison wrote recently in Canada's National Post newspaper.

Full Kiwi.com travel affordability comparison table here: 

Growth prompts Qantas to boost Japan flights

Qantas is ramping up flights to Japan in response to a growth in Japanese visitors to Australia and as part of a strategy has seen the full-service airline increase capacity on Asian routes by 17 per cent.

A new daily service between Melbourne and Tokyo’s Narita International Airport from December 16 will be operated with upgraded two class Airbus A330-300s.  Budget offshoot Jetstar will pull off the same route in February next year.

 The 297-seat Qantas planes have the airline’s latest product, including its cutting-edge business suite, and squarely aimed at the premium market.

The move will take pressure off the airline’s existing Sydney-Tokyo (Haneda) and Brisbane -Tokyo (Narita) services and comes as the completion of the A330 upgrade program frees up extra capacity.

It also capitalises on A 17 per cent growth in Japanese visitors to Australia in 2015-16, as the destination gained from the troubles in Europe, and a boost in the number of Australians flying to Japan of  24 per cent.  Japanese spending in Australia rose 14 per cent to $A1.5 billion over the same period.

Qantas and Jetstar will both operate flights from Melbourne to Narita during the December -February holiday peak, with Jetstar ceasing direct flights from February 25.

Qantas International chief executive Gareth Evans said the new service built on Qantas’ long history of flying to Japan and a “boom time for tourism and business travel” on the market.  It was part of a "larger pivot to Asia'' that saw Qantas lift capacity on Asian routes by 17 per cent last financial year.

 “The Qantas Group is perfectly placed to support the resurgent growth we’re seeing, with the biggest Australia-Japan network, the biggest domestic network in Australia, and the biggest low-cost carrier network in Japan through Jetstar,’’ Mr Evans said in a statement.  “Our dual-brand strategy and the size of our fleet means we have the ability to move quickly to meet demand where it’s strongest, putting the right aircraft on the right route.’’

The new route is already on sale and Jetstar customers booked on the LCC’s Melbourne-Tokyo (Narita) flights from February 26 will be reaccommodated on the Qantas service.

 Jetstar continues to operate direct international services from the Gold Coast and Cairns to Tokyo (Narita) and Cairns to Osaka.

 

Japanese growth prompts new Qantas route

Qantas is ramping up flights to Tokyo in response to a growth in Japanese visitors to Australia and as part of a strategy that has seen the full-service airline increase capacity on Asian routes by 17 per cent.

A new daily service between Melbourne and Tokyo’s Narita International Airport from December 16 will be operated with upgraded two class Airbus A330-300s.  Budget offshoot Jetstar will pull off the same route in February next year.

 The 297-seat Qantas planes have the airline’s latest product, including its cutting-edge business suite, and squarely aimed at the premium market.

The move will take pressure off the airline’s existing Sydney-Tokyo (Haneda) and Brisbane -Tokyo (Narita) services and comes as the completion of the A330 upgrade program frees up extra capacity.

It also capitalises on a 17 per cent growth in Japanese visitors to Australia in 2015-16, as the destination gained from the troubles in Europe, and a boost in the number of Australians flying to Japan of  24 per cent.  Japanese spending in Australia rose 14 per cent to $A1.5 billion over the same period.

Qantas and Jetstar will both operate flights from Melbourne to Narita during the December -February holiday peak, with Jetstar ceasing direct flights from February 25.

Qantas International chief executive Gareth Evans said the new service built on Qantas’ long history of flying to Japan and a “boom time for tourism and business travel” on the market. It was also part of a "larger piviot to Asia'' that saw Qantas boost capacity on Asian routes by 17 per cent last financial year.

“The Qantas Group is perfectly placed to support the resurgent growth we’re seeing, with the biggest Australia-Japan network, the biggest domestic network in Australia, and the biggest low-cost carrier network in Japan through Jetstar,’’ Mr Evans said in a statement.

 “Our dual-brand strategy and the size of our fleet means we have the ability to move quickly to meet demand where it’s strongest, putting the right aircraft on the right route.’’

The new route is already on sale and Jetstar customers booked on the LCC’s Melbourne-Tokyo (Narita) flights from February 26 will be reaccommodated on the Qantas service.

 Jetstar continues to operate direct international services from the Gold Coast and Cairns to Tokyo (Narita) and Cairns to Osaka.

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