DOT Inspector General Kenneth Mead told Congress this week that "agency officials recognize that neither FAA nor Raytheon has the necessary expertise to resolve" problems faced by the Wide Area Augmentation System, which is behind schedule and over budget. Mead did not go along with a plan developed at a invitation-only meeting between FAA and industry last week to bring in an "independent review panel of experts" from Stanford University, the Jet Propulsion Lab, Mitre Corp. and Ohio University to identify solutions to the formidable technical problems in the program.
Jet fuel spot prices in New York ended last week at $0.76 per gallon, down 5.6% from the beginning of the week and up 108% from a year ago, according to Deutsche Banc Alex. Brown.Crude oil futures fell to $27.46 Wednesday, down roughly 20% from a nine-year high of $34.13 on March 7. Airline executives are awaiting the outcome of Monday's meeting of OPEC ministers in Vienna, Austria, when they are expected to decide if member countries will increase oil production.
All Nippon Airways and Air Canada plan to begin nonstop code-share service between Tokyo and Toronto April 3. The new service, Air Canada's first from Tokyo Narita Airport, will be operated with Air Canada's Airbus A340s, starting with five flights per week and increasing to daily service on April 25.
Delta's Delta Express unit will begin four daily nonstop flights between New York Kennedy and Orlando Oct. 1. The Delta Express service replaces two Delta mainline flights and adds two new flights, for a total of four Delta Express flights. Delta Express will begin two daily nonstop flights from JFK to Fort Lauderdale April 2.
Northwest Airlines Cargo will increase its fuel surcharge from 10 cents a kilogram to 15 cents, beginning May 1, on all North American-origin transpacific and transatlantic shipments. Northwest recently implemented a 4-cents-per-pound surcharge for domestic freight shipments. It said the average spot price for jet fuel increased 163% in the past year from 33 to 87 cents per gallon.
Hainan Airlines Managing Director Chen Feng has secured a domestic loan of US$133 million from the Agriculture Bank of China to pay for 10 of the 19 Fairchild Aerospace 328JET aircraft ordered last year, plus 20 options. To obtain a domestic loan for such an amount for a foreign aircraft purchase given the airline industry's poor growth is next to impossible, according to China's banking laws. The loan is for more than 50% of the total cost of US226 million for the 19 aircraft. "This is an indication that Chen has strong links with those in power in Beijing.
Fairchild Aerospace is looking for a new chief executive, just as Clayton, Dubilier&Rice and Allianz Capital Partners finalize paperwork to take over more than 90% of Fairchild. The formal ownership transfer is expected at the end of the month. When this happens, Carl Albert will step down as chairman and CEO and become a member of the supervisory board. Chuck Pieper, a CD&R partner, will then step in as interim CEO. Pieper says a new CEO could be from industry, but he doesn't consider this an absolute necessity.
David Phillips, a 35-year-old engineer from Davis, Calif., last week became the first winner of the LatinPass one million bonus mile promotion. To win the bonus, contestants had to fly on all LatinPass member carriers and at least three of four partner airlines before July 1, stay three nights in partner hotels and rent a car for five days from Avis or Thrifty. Phillips' trips cost only $2,500. He calls himself "the pudding guy" because he bought 12,000 cups of Healthy Choice pudding to earn one million frequent flyer miles.
Thai Airways is waiting for a report from its global consultants Credit Suisse First Boston (CSFB) before deciding whether the airline should opt out of the Star Alliance. CWFB, the consultant appointed for Thai's share sale later this year, is studying the pros and cons of keeping the airline in the group. Four weeks ago, Thai President Thamnoon Wanglee expressed his concern about Singapore Airlines' proposed admission to the group. SIA will officially announce its admission into Star during a media conference April 7 in Singapore.
Titanium Metals Corp. (TIMET) sued Boeing Co. for over $600 million in damages for what it said was the breach of a long-term contract to supply titanium. "We would strongly have preferred not to file this lawsuit," said Landis Martin, president and chief executive of TIMET. "It is a last resort -- we have made every attempt to work with Boeing to resolve our problems." In 1997, Boeing decided to pick one prime titanium supplier through a competitive bid process.
FedEx yesterday reported that revenues for its third quarter rose 10% to $4.5 billion. Operating income jumped 36% to $206 million and net profits swelled 45% to $113 million from $78 million. Chief Financial Officer Alan Graf said higher fuel prices and severe winter storms in the U.S. "impacted our financial performance." Fuel expenses grew by more than $100 million during the quarter ended Feb. 29. The company forecasts show that fuel prices could increase fourth quarter expenses by "more than $75 million" over last year.
In the wake of losses the past several years, major changes of the top brass at state owned Vietnam Airlines would take place before the third quarter of the year. The 1997 regional financial crisis sent the airline deeper into the red. To put VAL back on track, the government last year granted several tax concessions to the airline, including waiving all excise duty on imports for the carrier's utilization.
US Airways Express' carrier Chautauqua Airlines on June 11 will introduce nonstop regional jet service between Boston and Indianapolis with one daily roundtrip. Chautauqua will add two roundtrips June 18.
Sweeping reforms are needed in China, including the ruling party and People's Liberation Army (PLA) giving up control of most of China's skies, to make aviation internationally competitive, according to prominent Beijing-based Chinese economist and analyst Hu Angang. He said the Civil Aviation Administration of China (CAAC) should take a look at its future policy, noting that it had been advocating airline mergers and radical changes but nothing has moved.
United followed Delta in applying to serve Vietnam under newly available third-country code share rights, proposing service with Thai Airways. United wants one of three U.S.-Vietnam designations for U.S. carriers agreed to in the U.S.-Vietnam memorandum of discussions signed this month (DAILY, March 3). It requested 14 of the 21 weekly frequencies available under the MOD. United proposes to offer, via Bangkok, seven weekly roundtrips to Ho Chi Minh City, four to Hanoi and three to Da Nang. It operates daily U.S.-Bangkok flights from Seattle via Tokyo.
Despite the threat of a shutdown Saturday and just weeks before US Airways will report its third quarterly loss in a row, Chairman Stephen Wolf said the airline has bottomed out and is improving its operational performance. In an exclusive interview with The DAILY, Wolf said for the first time that the airline's long-running operational problems "are fully resolved" and its recent operating performance is "absolutely superb." Wolf reported that the airline was the best U.S.
The Civil Aviation Administration of China (CAAC) is evaluating whether to raise fares for passengers traveling out of the old Hongqiao International Airport in Shanghai. The Shanghai Airport Group Company (SAGC) had made the suggestion to CAAC, since many airlines are reluctant to move to the new facility. According to the executive vice chairman of SAGC, Du Chuncai, the action is under consideration to encourage airlines to shift operations to the new Pudong International Airport. The two facilities had a total of 451 flights a day in 1999.
Major European airlines are pessimistic about the delay situation in Europe in the coming summer. Lufthansa Chairman and Chief Executive Juergen Weber told members of the European Parliament on Wednesday that he fears the worst for the industry. Sabena's Chief Operating Officer Christoph Mueller told The DAILY recently that he did not expect the situation to improve from last year.
Turkey became the 45th open-skies partner for the U.S. yesterday, when the two countries agreed to liberalize their aviation services. Open skies will be fully implemented following a three-year transition period.
Northwest yesterday entered reams of passenger data by hand into computers as it recovered from losing communications at its headquarters due to a severed fiber optic cable on Tuesday. Northwest gate and counter workers managed to keep the airline operating in spite of losing telecommunications support. Operations returned to normal yesterday after delays and 130 canceled flights of its daily schedule of 1,700 departures. The trouble started at 2 p.m.
