Delta continues to draw criticism for its $1 surcharge on each fare component of domestic tickets not booked on its own web site. Last week, the American Society of Travel Agents (ASTA) blasted Delta for the surcharge and this week both the Business Travel Coalition (BTC) and American Automobile Association (AAA) came out against it. AAA called the surcharge unfair to consumers. "The airline industry made billions last year and just completed the second best fourth quarter ever," said AAA Association and Club Services Executive VP Mark Brown.
Lower earnings and yields in the fourth quarter did not stop American parent AMR Corp. from posting record 1998 profits of $1.3 billion. The results, announced yesterday, were $329 million or 33.4% better than 1997. Annual revenue increased 5.6% to $19.2 billion. But the fourth quarter did not fare as well - operating earnings dropped 12.1% to $334 million and net profits 12.5% to $182 million. The chief culprit was lower yields due to stagnant or declining ticket prices.
Another private carrier, Hokkaido International Airlines (HIA), has joined the fray in Japan's domestic network, competing with Japan Airlines, Japan Air System, All Nippon Airways and Skymark Airlines, which started operations last July. Hardly two weeks since its launch, HIA already is worrying its competitors, offering a 36% discount off regular fares on the busy route between Tokyo Haneda and Sapporo, Hokkaido, one of the areas worst hit by Japan's recession.
Raytheon Travel Air, fractional ownership subsidiary of Raytheon Aircraft Co., said it is looking at opportunities to extend the program to international markets. Gary Hart, president, said the company's domestic program has "exceeded expectations," and "we want to offer our current and future U.S. owners additional flexibility abroad as well as offer new owners within the international market the unique advantages of fractional aircraft ownership." Raytheon's current fleet comprises 10 Hawker 80XPs, 16 Beechjet 400As and seven King Air B200s.
David Bond, editor-in-chief of Aviation DAILY and editorial director of Aviation Week Newsletters, said yesterday he plans to retire from The McGraw-Hill Companies during the spring.
Qantas will use a Hollywood-style unveiling today to debut its most extensive international refurbishment to date, including new seats and inflight updates on its long-haul 747-400 fleet and a new ad campaign that will air on 17 networks. The new interiors feature a flatbed that is 6.5 feet long, new "Dreamtime Seats" in business class featuring the industry's first five-way electronic controls and new economy seats with lumbar support and adjustable headrests.
Air New Zealand and United have broadened their code share to cover 146 daily flights versus the previous 34. The expansion covers U.S. cities beyond Los Angeles that ANZ does not currently serve: San Francisco, Las Vegas, Seattle, New York, Washington, Denver, Chicago and Boston.
The European Union's prospective limit on use of hushkitted and certain re-engined aircraft "targets non-European operators...and spares European operators," denying U.S. carriers the "unqualified right" to select the best-suited Chapter 3-compliant aircraft for its operations, Northwest said in its complaint to DOT against the EU (DAILY, Jan. 19). If the limitation were in the form of a regulation, it would be binding on each of the 15 EU member states and would violate the bilateral aviation agreements between the U.S. and the individual EU nations, Northwest said.
The management of national carrier Air-India will throw open the facilities at its newly commissioned 216 million rupees (US$5.4 million) aircraft engine servicing and maintenance shop at Mumbai to other carriers, including foreign airlines, to increase its revenues, Air-India sources said. The largest of its kind in Asia, the workshop specializes in overhauling Pratt&Whitney 4056 engines and can handle at least a dozen large turbofan engines at one time.
Cargo traffic fell 4% in November, the Air Transport Association reported. Domestic cargo was down by 4.1% and international cargo 3.9%. ATA President Carol Hallett said year-to-date growth remains steady.
Spanair is offering getaway packages to Spain, including roundtrip airfare and two hotel nights, for $349. The Spain Plus promotion is valid for eight cities.
Senate Commerce Committee Chairman John McCain yesterday introduced a two-year FAA reauthorization bill nearly identical to last year's McCain bill, which died in conference after passing the Senate 92-1. The new bill retains controversial provisions that never were resolved, leading instead to a compromise short-term FAA reauthorization that expires March 31.
Boeing yesterday announced the sale of its MD 500, MD 600N and MD Explorer series of light commercial helicopter lines to MD Helicopter Holding Inc., an indirect subsidiary of Europe-based industrial group RDM Holding Inc. The sale, subject to U.S. Federal Trade Commission approval, is expected to be completed by mid-February at an undisclosed price. MD Helicopters said it will operate initially from existing Boeing facilities at Falcon Field Airport, Mesa, Ariz., and will build new local facilities at a later date.
British Aerospace will acquire Marconi Electronic Systems for about $12.7 billion from General Electric Co. plc, the two British companies said yesterday. The deal would form a company with $20 billion in annual sales and 130,000 workers around the globe, and would rank No. 3 behind Boeing and Lockheed Martin. It also would put the U.K. aerospace industry in a strong position as the European industry further consolidates.
American, holding a controlling interest in Reno Air, told DOT yesterday that "United's agenda for continued slot dominance at [Chicago] O'Hare" should not "destroy the City of Reno's critically important service link to O'Hare." United wants DOT to reallocate seven slots held by Reno Air to a qualifying new entrant, telling DOT that ownership by American disqualifies Reno Air (DAILY, Jan. 11). "Reno Air was clearly a 'new entrant' at the time of the Reno-O'Hare slot exemptions on 1994 and 1997, and has long provided nonstop service" in the market.
Indonesia will close 54 small airports in remote areas of the country, according to a report in the Indonesian Observer. The country has 158 such airports. The main reason is the country's economic crisis, which has reduced passengers and increased costs in operating the airports.
Delta management has agreed to early contract talks with its Air Line Pilots Association unit. The union last week asked management to begin negotiations in September (DAILY, Jan. 12). Delta suggests they start as soon as negotiations over pilot pay and work rules are settled for the new 777 or on Sept. 8, whichever comes first. Delta's ALPA negotiators plan to begin early openers on the 777 pay and work rules in February. The pilot labor contract becomes amendable in May 2000.
Delta yesterday posted record earnings for the fourth quarter and calendar year 1998, its best year ever in terms of revenue, passenger load factor, passengers carried and cash flow. On top of the records, the company's operating margin finished the year at 12.5%, positioning the carrier well if traffic ebbs this year. The fourth quarter margin was 9.3%. Record fourth quarter net income of $194 million was up 2%, while revenue gained marginally to $3.45 billion. Delta's fuel costs were $58 million lower in the fourth quarter and $280 million lower for 1998.
Colgan Air may continue essential air service at Augusta/Waterville, Bar Harbor and Rockland, Maine, and Rutland, Vt., DOT has tentatively decided. Annual subsidy would be $2,387,225 for the period Jan. 1, 1999-Dec. 31, 2000. EAS for the Maine points requires at least two daily roundtrips to Boston, nonstop service to Augusta/Waterville and one-stop service to Bar Harbor and Rockland. At Rutland, EAS requires at least two roundtrips a day either to Boston or New York with no more than one intermediate stop. (Docket OST 97-2784)
Rep. Louise Slaughter (D-N.Y.) is considering introducing legislation that would restrict Delta's surcharge on tickets not purchased from the airline's web site, a Slaughter spokeswoman said yesterday.Slaughter is not on a subcommittee with aviation jurisdiction but is interested in aviation issues involving mid-size cities like Rochester, which is in her district.
The board of AeroPeru will sell its 52% of the airline to private investors rather than approving a plan to invest an additional $10 million to keep the airline viable, according to Miami-based Aviation Management Services. At a Jan. 14 board meeting, which included members Delta, AeroMexico and CINTRA, the group rejected moves to funnel more money into the airline. Delta signed a code share with AeroPeru in March 1998 (DAILY, March 12, 1998) and spent $50 million to acquire roughly a 35% stake in the carrier and gain a board seat.
SAS December traffic rose 4% to 1.49 billion revenue passenger kilometers, but freight volume was down 5%. For 1998, the airline posted a 35% traffic increase to 21.2 billion RPKs, producing a load factor of 66%. Freight volume was flat at 691 million ton kilometers. SAS carried 21.69 million passengers last year, a gain of 4%.
DOT granted Delta a two-year initial exemption to provide scheduled Atlanta-Istanbul service. The carrier may integrate the exemption with its existing certificate and exemption authority, not to include fifth-freedom intermediate and/or beyond rights. To expand its European service, Delta plans to operate three weekly nonstop roundtrips in the market starting June 1 with MD-11s (DAILY, Jan. 15). (Docket OST-99-4997)
National Transportation Safety Board recommended yesterday that FAA require 727 operators to inspect the main landing gear forward trunnion bearing support fittings. The recommendation follows an emergency landing accident in which a DHL Worldwide Express 727 was damaged substantially.
