World Trade Organization has agreed to investigate the government-subsidy dispute between Brazil and Canada concerning regional-jet manufacturers Embraer and Bombardier. The WTO will create two panels, one to look into Canada's financial aid for development of the Canadair Regional Jet and the other to investigate the use of the ProEx interest-rate equalization program to boost exports of the Embraer RJ-145. The WTO fielded earlier protests, first of Canada and then from Brazil, by telling the parties to resolve it themselves; those efforts failed this month.
FAG, manager of Frankfurt Airport, will purchase 30% of Hannover Langenhagen Airport, jointly with German bank NordLB. The remaining 70% will stay with German Land of Lower Saxony and the city of Hannover.
Air Transport Association President Carol Hallett yesterday said DOT's proposed competition policy is "bad law, bad economics and bad policy," a position backed by economists cited by DOT when it proposed the policy. The department quoted a 1981 article by Robert Willig and Janusz Ordover in support, but a new study they produced, commissioned by ATA, finds the policy dangerous to competition, unworkable in practice and unrelated to the empirical evidence available in the industry.
Senate Judiciary antitrust subcommittee member Mike DeWine (R-Ohio) will meet with Justice Department antitrust chief Joel Klein to ask why DOJ has not filed more predation cases. Staff Chief Counsel Louis Dupart, speaking for DeWine at an International Aviation Club luncheon yesterday in Washington, said "it was hard to believe" no predatory actions have taken place but defended DeWine's view that DOT's competition rules are a "poor second choice" to enforcing existing law.
American Eagle is $100 million stronger than it was in 1995 when the four AMR regional-airline subsidiaries lost money as a group. The merged carriers will post record results for 1998, the company said. Three of the carriers Flagship, Simmons and Wings West - already have been merged under a single certificate. Only Executive remains independent, pending certain negotiations with a number of governments in the Caribbean. Meanwhile, Eagle is boasting 60% to 80% load factors on its eight new 50-seat ERJ-145s, all replacing turboprops in existing markets.
Air Afrique said this week in Paris it will resume services with aircraft chartered from Air France and Air Mauritius. In June, Air Afrique had to give up four A310-300s for failure to meet payments. It owes $50 million to credit insurers Hermes and Coface, which vouched for the purchase of the aircraft.
ASA Senior VP Ronald Sapp, whose carrier this week reported record net income of $19.5 million for the second quarter, said, "We are pleased with the record results for the quarter, and the load factors on the [Canadair Regional Jet] continue to exceed our expectations" (DAILY, July 23). As of June 30, ASA had taken delivery of 11 CRJ aircraft and will take delivery of another 19 over the next year and a half. ASA did not break down its load factor by type of aircraft, but overall load factor jumped 5.5 percentage points to 57.9% in the quarter.
Atlas Air posted net income of $10.1 million for the June quarter, up 189% from $3.5 million in the same 1997 period. Operating income rose to a record $31.5 million from $16.4 million, producing a record 36% operating margin. The results were achieved with two fewer aircraft than Atlas had last year.
Sixteen domestic regional carriers produced an average load factor of 61.2% during June, the highest ever reported on these pages. United Express Air Wisconsin posted a 73% load factor, another first for regional airlines. Of the 16 carriers, nine topped the 60% level and none came in under 50%. Only two, Gulfstream International and Skyway, fell below 55%. Three carriers - Mesa Air Group, United Express Great Lakes and Gulfstream - posted load factor declines, year over year.
Delegations of aerospace manufacturers have been scurrying in all directions in the past few weeks in search of joint-venture partners, several of them focusing on Brazil. Fairchild Dornier, seeking partners for the new 70-seater 728 program, was reportedly in Brazil last week for talks with Embraer, and press accounts indicated that a trade mission of British aerospace companies, including Rolls-Royce International, was in Brazil this week. Spain, meanwhile, says it wants to privatize CASA and is in discussions with Aerospatiale, British Aerospace and Daimler-Benz.
Atlantic Coast Airlines, which this week posted second quarter net income of $10.5 million, said a 4.2-percentage-point improvement in operating margin to 22.9% from 18.7% was "principally due to unit costs...decreasing at a faster rate than unit revenues" (DAILY, July 23). The United Express affiliate said that on a year-over-year basis, cost per available seat mile decreased 15.5% to 17.5 cents while passenger revenue per ASM fell 11.1% to 22.4 cents.
TWA intends to expand its TWQ business flyer product soon to two markets beyond the current four - St. Louis-Philadelphia, -New York LaGuardia, -Washington Reagan and Chicago O'Hare - Chief Executive Gerald Gitner told reporters as the airline reported a second quarter profit (DAILY, July 23). Company officials declined to provide details about the progress of TWQ, and Gitner did not identify the prospective new markets. The airline's New York Kennedy hub led the system in operating performance, and TWA plans to virtually double its service to the Caribbean.
FAA Administrator Jane Garvey met recently with vertical flight industry officials to discuss working together on future issues, including development of the national airspace system with industry participation on two working groups that make up the Satellite Operation Implementation Team.
European Union Transport Commissioner Neil Kinnock has instructed his department "to draft a negative decision" on new traffic distribution rules for the Milan airport system, Kinnock said this week in Brussels. The decision would outlaw Italian plans to divert more traffic from Linate to the newly expanded Malpensa Airport, starting Oct. 26. Recent Italian press reports accused the European Commission of wanting to "sabotage" Malpensa.
Voyageur Airways applied at DOT for a foreign air carrier permit. The Canadian carrier wants to provide scheduled combination service between any points in Canada and any points in the U.S., beginning in September.
LanChile and Qantas agreed yesterday to code share on Southern Hemisphere service between Australia and Chile, beginning this year. The new alliance includes participation in both carriers' frequent flyer programs. Initially, passengers will fly from Santiago to Easter Island and Papeete on LanChile, where they will be able to connect with Qantas service from Papeete to Auckland and Sydney.
Swissair and Malaysia Airlines agreed this week to form closer marketing ties and expand their Kuala Lumpur-Zurich code share. The flights will be operated three times a week with MAS's Boeing 777s. The carriers will cooperate in all three classes of service and add a fourth code-share flight next year in time for the summer 1999 schedules. The cooperation may be extended to cargo, ground-handling and inflight catering. MAS recently won the Best Asian Business Airline award from Business Travel World for the third straight year.
Fine Air Services said yesterday it will acquire Southern Air Transport in a deal expected to be completed within 90 days. Barry Fine, president of Fine Air Services, said acquiring SAT's widebody fleet will enable Fine to offer ACMI [aircraft, crew, maintenance and insurance] services to a broader range of customers, expand scheduled cargo services to the southernmost countries in South America and serve higher-volume routes better.
Sabena applied at DOT for a foreign air carrier permit authorizing it to provide scheduled combination service from points behind Belgium via Belgium and intermediate points to points in the U.S. and beyond. The Belgian carrier operates such service under exemption, which it filed to renew separately. It now wants to exercise rights available to it under the U.S.-Belgium open-skies agreement concluded in 1995 and to "supersede and replace" its exemption and current permits with the requested permit.
Northwest drafted Laura D'Andrea Tyson among others to support its attack on DOT's competition policy. Tyson, now dean of the Haas School of Business at the University of California, was chair of President Clinton's Council of Economic Advisors. Northwest filed its objections at DOT yesterday, including Tyson's 51-page analysis of the policy's defects.
Pilatus Aircraft has agreed to sell wholly owned subsidiary Pilatus Britten-Norman to a private investment company, Litchfield Continental Ltd. The subsidiary manufactures the Islander light utility aircraft series. Operations will continue under the original name.
DOT Secretary Rodney Slater yesterday ended a deadlock by approving British Airways' application for Denver-London Gatwick service, a route stayed by US Airways' objection that it has been unable to secure commercially viable slots for Charlotte-Gatwick. Sources said a Colorado delegation, including its senators, told Slater they were tiring of the delay and threatened action, including nomination holds, if the service was not approved.
FAA yesterday issued an advisory circular on how airlines can comply with the rule that requires them to develop and enforce carry-on baggage programs. The programs, which can vary by airline and aircraft type, should describe what constitutes carry-on baggage, explain each carrier's limits on the size and number of bags per passenger, and cover the use and handling of child restraint devices, according to the circular.
