The Internal Revenue Service wants airlines to refund passengers for taxes paid on tickets purchased before the FAA shut down, and the Air Transport Association is pushing back. Travelers who bought tickets before the government stopped collecting taxes but are traveling after the FAA partially shut down, are entitled to a refund on excise taxes, according to a July 26 letter sent by IRS Commissioner Douglas Shulman to Nick Calio, president and CEO of the Air Transport Association.
Lufthansa is significantly curtailing planned capacity growth for this winter after reporting second-quarter results below market expectations and wider losses at many of its airline subsidiaries. CFO Stephan Gemkow said that capacity will grow only 6% compared with the planned 12%. The airline will push network expansion further out, reduce aircraft size in weaker markets and temporarily cut some destinations. The move mirrors similar steps taken by its rival Air France-KLM.
Virgin Australia has confirmed that its new ATR 72 turboprops will be assigned to the Sydney-Canberra route, and also disclosed that the ATRs will be used for smaller regional routes. “From October 2011, the airline will [use the ATRs to] commence new services from Brisbane to Gladstone, Brisbane to Port Macquarie, and add extra services between Canberra and Sydney,” says Virgin Australia, which is wet-leasing the aircraft from Western Australia carrier Skywest Airlines.
GPS interference caused by a planned broadband wireless network could cost at least $70 billion and an additional 30 million tons of CO2 over the next 10 years through the loss of efficiency and safety benefits, estimates the FAA. But LightSquared, which plans to deploy the nationwide network of terrestrial transmitters, says the FAA’s assessment is based on plans that are no longer on the table and does not reflect the latest proposal to use a frequency spectrum that is farthest from GPS.
Rolls-Royce has not exited the narrowbody market and would remain interested when new programs emerge, new CEO John Rishton says. Rolls-Royce is finding itself on the outside, with Airbus offering the A320NEO (new engine option) with CFM International and Pratt & Whitney powerplants, and Boeing having decided to re-engine the 737 with CFM International’s Leap-X. He says that the decision not to buy the A320NEO “was a sensible decision” and that on the Boeing front, the exclusive supplier arrangement with CFM kicked in.
Premium Aerotec of Germany named Kai Horten as its new CEO. Horten, 46, will take over the new position in October. The new CEO replaces Joachim Naegele, who has been serving as managing director for the past several months. Naegele stepped in as an interim replacement for former CEO Hans Lonsinger, who has been ill. Horten joins Premium Aerotec from Atlas Elektronik, where he was managing director. Naegele keeps his previous post as head of programs and sales.
High fuel costs and a barrage of one-time expenses may have dented LAN Airlines’ second-quarter profitability, but they had no effect on management’s optimism for the operator’s future growth. Operating expenses for the June quarter rose 38.5%, or $354.7 million, year-on-year to almost $1.3 billion, with a $153.5 million or 55.4% growth in fuel to $430.9 million the largest single contributor to this expansion.
United Continental Holdings should address poor staffing practices before blaming pilots for cancellations at its Newark Liberty International Airport hub, says the head of Continental’s Air Line Pilots Association chapter in a response to a cease-and-desist order. According to documents obtained by Aviation Week, the carrier is attributing 24 cancellations on July 27 and about six on July 28 to an organized sick-out by Boeing 737 pilots, and is threatening an injunction against Continental’s ALPA unit.
Australian carrier Alliance Air plans to set up a second major maintenance, repair and overhaul (MRO) base for Fokker jet aircraft. Alliance has been doing heavy maintenance checks on Fokker 70/100s at its MRO base in Brisbane and on Fokker 50s in Adelaide, but it has decided to add heavy checks in Adelaide, says Alliance Air.
The Obama administration constantly touts the need for new infrastructure jobs, but work in airport construction is disappearing fast as the FAA shutdown continues. Montana’s Glacier International Airport, for example, has delayed a $6 million taxiway rehabilitation project until next year. The area around Glacier has a 13% unemployment rate and could have used the 50-70 jobs. The same applies to a now-deterred runway, taxiway and apron project at Fresno, Calif.'s Yosemite Airport, where 220 jobs are at stake and unemployment stands at 16.8%.
Worldwide passenger and cargo traffic contracted by 1% in June from May, according to the International Air Transport Association (IATA). The reduction reflects the effects of slower economic growth, but at least on the passenger side, demand is still growing by 4.4%, compared with last year. Air cargo traffic was down by 3%, however. “For passenger traffic, this is a speed bump in a gradual post recession improvement. But air cargo continues in the doldrums at 6% below the post-recession peak,” said Tony Tyler, IATA’s director general and CEO.
Spirit Airlines reported a $16.9 million profit and 14.8% operating margin for the second quarter, in the South Florida-based low-cost carrier’s first earnings report since completing its initial public offering.
Lufthansa confirmed an order for a total of 30 Airbus A320NEO (new engine option) family aircraft. The deal, originally announced in March, includes 25 A320NEOs and five A321NEOs. The airline also selected Pratt & Whitney PW1100G engines to power the aircraft. The aircraft will be delivered between 2016 and 2019.
Embraer’s maintenance support contract with U.S. regional Compass Airlines has been extended to 2020. The deal includes inventory and technical support for the carrier’s fleet of 36 Embraer 175 twinjets.
Continued growth in its Asian air network contributed to a 13.3% year-on-year rise in UPS’s international sales in the second quarter, although operating profits and margin were affected by currency shifts and fuel hedge losses. The company’s domestic operation, however, was more robust in the quarter and helped the operating margin grow 1.4 percentage points to 12.9% on a 21.1% rise in operating income to $1.7 billion. Company-wide, revenue improved 8.1% to $13.2 billion, while net income rose 25.8% to $1.1 billion.
Asked to stop reaping profits from the partial shutdown of the FAA, the Air Transport Association (ATA) says airlines will continue collecting the fees, citing an “excessive tax burden” on the industry. Sens. Jay Rockefeller (D-W.Va.) and Maria Cantwell (D-Wash.) on Wednesday wrote a letter asking Delta Chairman and CEO Richard Anderson, as the current chairman of the ATA, to persuade airlines to set aside revenues they gain by continuing to collect money from passengers that otherwise would have gone to the Airport and Airway Trust Fund.
La Palma Airport has opened a new terminal in hopes that it will strengthen its role as a hub for Spain’s Canary Islands. The terminal offers ground level check-in for travelers in an arrangement of 24 desks and four baggage carousels. Parking for 448 vehicles covers a basement area of two levels. A nine-gate departure area occupies the third floor, where shopping and dining are available.
Morpho Detection Inc., the security unit of Safran Group, has acquired Syagen Technology, Tustin, Calif., which specializes in mass spectrometry technology. Morpho will operate Syagen as a technical center of excellence.
European aerospace giant EADS has for the second time this year dipped into its cash pool to make a services-oriented acquisition for one of its operating units, with a $504 million deal to acquire Satair to bolster Airbus’s service offering. The move—along with the acquisition of Vector Aerospace for Eurocopter—is part of EADS’ wider strategy to boost service revenue across the company.
India’s second-largest budget carrier SpiceJet Ltd. is exploring partnerships with global low-fare carriers as part of its second phase of international expansion. The airline currently serves only two international destinations—Kathmandu, Nepal, from Delhi and Colombo, Sri Lanka, from Chennai—and plans to start flights to 10 more international destinations, including points in South and West Asian countries.
An apparent sick-out by Continental Airlines pilots is forcing flight cancellations at Newark International Airport. Few details are available and United Continental Holdings is not blaming the 24 dropped flights on any work action, but canceling flights this late in the month because crews are unavailable usually indicates that pilots have orchestrated the problem.
Southwest Airlines is canceling service on 12 routes early next year—an unusually high number for the low-cost carrier, which attributes most of the cuts to demand-lowering fare increases necessitated by higher fuel prices. The fare increases have been “fairly moderate,” says Bill Owen, lead planner for scheduling. But even those “have shrunk the market,” he says, and most of the markets now being cut were small ones for Southwest. “They shrunk to the point where they are no longer profitable for us.”
