The events of Sept. 11 have rekindled a decades-old dispute between the U.S. and the European Commission over subsidies and state aid. This time, ironically, it is the EC crying foul, arguing that payments made under the Air Transportation Stabilization Act (ATSA) to U.S. carriers constitute state aid and have subsidized service across the Atlantic. At the same time that EU carriers receive Sept. 11 compensation from their governments, the EC is straining the definition of "subsidy" in an attempt to paint U.S.
McGraw-Hill's Aviation Week, which owns The DAILY, has signed an agreement with Montevideo, Uruguay-based AviaGlobal.com to produce the first Spanish language information service for the aviation industry. Details of the agreement will be announced April 3 at the Fidae 2002 Air Show in Santiago. AviaGlobal.com is the first and only Spanish language portal for the aviation and aerospace market.
Flight attendants at Mesaba, represented by the Association of Flight Attendants, have ratified their first contract. The deal goes into effect April 1 and was approved by 81%. Negotiations had been going on since May 2000. The deal protects jobs in the event of a merger or transfer of ownership; increases pay rates, holiday pay and per diem and guarantees an eight-our duty period, among other benefits.
US Airways this week inked several deals to sell 97 narrowbody aircraft, many of which have been parked since late last year. The details of where the planes are going and for what price they were sold are not being released, per confidential agreements. The sales will close by March 31. Included in the sale are 55 Boeing 737-200s, 26 DC-9s and 16 MD-80s. Along with the aircraft, US Airways sold the related spare engines and spare parts inventory.
Japan Airlines and its domestic subsidiaries next week will launch a campaign to support the Japanese national soccer team during the World Cup. From April 1 through June 30, JAL will decorate its airport facilities and will unveil a Boeing 747-400 painted with a soccer theme livery. Commemorative seat headrest covers will be installed starting April 10. JAL has been an official sponsor of the Japanese national soccer team since 1999.
U.S. passenger airlines, which received a $4.5 billion post-Sept. 11 bailout from the government, will have to absorb more than that amount in added security costs and insurance premiums, a Salomon Smith Barney analysis shows. Security and insurance costs alone for major airlines, which have jumped tenfold in some cases, will soar to $2.5 billion annually, SSB said.
Air Canada yesterday unveiled the name and logo for its regional airline division. AirBC, Air Nova, Air Ontario and Canadian Regional have been consolidated to form Air Canada Jazz, with aircraft bearing colored maple leaves on the tails. Joseph Randell, president of Air Canada Jazz, said each regional carrier has "strong brand awareness within its regions...and acts as a metaphor for being youthful, vibrant, innovative, flexible and part of the local community."
KLM, after a series of failed merger attempts, said it is focusing on deepening alliances rather than mergers. "We don't see the need for any mergers in the coming years," Chief Financial Officer Rob Ruijter told The DAILY. KLM would like to extend a six-month pact with Continental that expires in April. KLM also is talking with five European carriers on top of British Airways and Italy's Volare.
DOT asked Vanguard, which has applied for a loan guarantee from the Air Transportation Stabilization Board, to explain why it has "failed to properly remit passenger facility charges to several airports." DOT told the airline it understands that Vanguard is overdue on $210,000 in PFCs to Dallas/Fort Worth, $220,000 to Kansas City "and has not paid any PFCs at [New York] LaGuardia since October 2001."
Continental in May plans to terminate its code-share partnership with America West after eight years, as the financial value of the linkage has waned to almost zero this year. Code sharing will cease on May 1 and the airlines' reciprocal frequent flyer and airport club agreements will end on Sept. 24. Because America West is becoming more leisure-oriented and Continental is increasing targeting business traffic, Continental decided to break off the partnership.
Orbitz CEO Jeff Katz yesterday went on the offensive, blasting his competition for spreading misinformation about Orbitz and restarting an expensive "food fight" among the industry's largest players. He told journalists that he is "quite confident" that DOT will conclude at the end of its current informal investigation that Orbitz "has done everything we said we were going to do." He believes that competition has increased since Orbitz launched last year sites like Travelocity and Expedia have grown and prospered at the same time.
AirTran yesterday said it would begin serving Milwaukee, its 38th market, with a daily nonstop to Orlando and two daily nonstops to its Atlanta hub, starting June 19. Delta, which operates four daily Milwaukee-Atlanta nonstops, said it would add a fifth, midday nonstop in the market July 1.
Fairchild Dornier is understood to be close to insolvency, industry and company sources indicated yesterday. The company might be forced to file for insolvency as early as Tuesday, April 2, since its cash reserves are almost gone. If that happens, the company would be run by an administrator, who would be tasked with keeping the company going and finding investors who would want all or part of the company.
FAA wants to fine Boeing $344,450 for production-related problems between August 1996 and April 2000. Boeing is planning to contest the penalty. The fine, the fourth major against the U.S. manufacturer since 1998 for production issues, is actually four separate violations.
European Union transport ministers this week agreed to extend government support for third-party war and terrorism insurance coverage by 60 days. The current support system was due to expire March 31. The EU is aligning with the U.S., which recently extended its coverage, also by two months.
Former United CEO Jim Goodwin received close to $1.5 million in salary and bonus in 2001, the same year the company posted the largest loss in its 75-year history. In an issue that will do little to improve labor relations at the company, parent company UAL Corp. yesterday revealed in its annual proxy filing that Goodwin also received $5.4 million in severance when he resigned from the airline and will continue to receive an office and secretary for the next five years.
The European Union adopted new airport noise rules, whose low profile sparked protest from the Belgian government, at an EU transport ministers meeting this week in Brussels. The new directive, which defuses a conflict with the U.S., replaces existing rules that were aiming at banning hushkitted aircraft at EU airports, starting in April. "We are pleased that the [EU] has reached agreement to repeal the European hushkit regulation," said U.S. State Department spokesman Richard Boucher yesterday in Washington.
EgyptAir will close its Singapore office on July 5 and relocate its regional operations to Kuala Lumpur. The nine local workers would be laid off while three expatriate staff would be transferred to KL. The move is part of the airline's decision to bypass Singapore on the twice-weekly, flights from Cairo-Sydney. Starting July 9, the flights will operate via KL, using Airbus A340-300s. EgyptAir will be the first carrier to bypass Singapore and relocate its operations to KL, an office that will be responsible for Malaysia, Singapore and Brunei.
Travelocity.com reached a deal purchase Site59.com for $43 million in cash as part of its plans to boost revenues this year. Site59 was launched in May 2000 and offers last-minute travel packages that combine air, hotel and rental car inventory. Travelocity.com plans to operate Site59 as a separate unit and it expects to "begin generating revenue from last-minute travel operations immediately." The company this summer expects to start selling hotel rooms using inventory from Site59, and it expects the deal to be accretive to earnings this year.
When Infraero, Brazil's airports agency, was about to dismantle grounded Transbrasil's infrastructure in the country (DAILY, March 2000), a last-minute injunction issued by a federal judge in Brasilia is forcing Infraero to return all repossessed areas and facilities to the carrier and put the process on hold. According to the injunction, a prior administrative, legal, accounting and financial audit is necessary to ascertain the alleged debts to Infraero for a total of $50 million.
