Senate Commerce Chairman Larry Pressler (R-S.D.) asked the General Accounting Office to report this fall on whether barriers to entry still exist and, if so, whether they prevent the entry of low-cost service into markets in the upper Midwest and the Southeast. GAO found in a recent report that portions of these regions have not benefited as much as other regions from the low-cost-carrier phenomenon.
Startup airlines are noted for flying old airplanes, and ValuJet's are among the oldest. The average age of its 49 aircraft is 26 years, according to FedEx Aviation Services, compared with 23 years for Kiwi's 16 aircraft and Frontier's seven. Reno Air's 24 aircraft are the youngest on average, six years.
Southwest is pressing DOT to throw out Delta's complaint against American's Sabre computer reservations system, charging violations of antidiscriminationprovisions of the department's CRS rules. Delta accused Sabre of imposing a discriminatory CRS transaction fee on most - but not all - carriers, beginning last Friday. The carrier complained that it is among carriers required to pay the fee, while Southwest is one of the few that are exempt (DAILY, Feb. 2).
BE Aerospace reported a fourth quarter net loss of $31.3 million on sales of $64.3 million, compared with a net profit of $465,000 on sales of $59.3 million in the same quarter a year ago. Sales for the full fiscal year ended Feb. 24 were $232.6 million, up from $229.3 million, with a net loss of $83.4 million, compared with a net loss of $12 million the previous year. The company blamed the performance on a change in its accounting methods and expenses associated with acquiring Burns Aerospace.
Mickey Foret, executive VP and chief financial officer of Northwest, has been named president of Atlas Air Inc. Foret will join the company June 1 and become a candidate for its board, which meets June 4. He takes the president title from Michael Chowdry, who remains chairman and chief executive. Foret joins Atlas during a period of rapid growth at the carrier, which is adding 10 747-200s to its fleet of 14 747s. Foret has been at Northwest since late 1992.
The world's airlines made money in 1995 for the third year in a row and are believed to have turned a net profit after non-operating items for the first time since 1989, according to preliminary estimates by the International Civil Aviation Organization (ICAO). ICAO estimated operating revenues of the world's carriers, excluding those of the Commonwealth of Independent States, at $274 billion for the year, while expenses came in at $260 billion. That gave airlines an operating profit of 5.1% of operating revenues, an improvement over 3.4% in 1994 and 1% in 1993.
Martinair Holland said its revenues increased 11% in 1995 to $695 million from $624 million in 1994, but pressures on yield resulted in a pretax profit of $37.5 million, down from $43.2 million, and a net profit of $28.1 million, down from $31.2 million. The company said 1995 was its 37th profitable year. It carried 1.9 million passengers during the year, up 5%, and 122,000 tons of freight, up 27%. Markets in Central and South America contributed almost 30% of cargo activities.
Delta declared a cash dividend of five cents per common share and $875 per share of Series C Convertible Preferred Stock. Both dividends are payable June 1 to stockholders of record May 9.
The 4.3 cents-per-gallon federal fuel tax means a loss of five million passengers to the industry per year, on average about one less person per flight, Air Transport Association President Carol Hallett said Friday at a Senate Finance Committee hearing taking testimony on whether the tax should be repealed. "This statistic alone is enough to drop many flights in the loss column, and will surely result in airlines cutting back," Hallett said. She noted that each 1% increase in ticket prices that airlines charge correlates to a 1% decline in air travel demand.
South African Airways will add a third weekly nonstop between Miami and Cape Town June 14 and a fifth weekly service from New York Kennedy to Johannesburg June 17.
Media coverage of service interruptions at air traffic facilities during the past year has "helped mask" some "very good news," FAA Administrator David Hinson told a Senate subcommittee last week. "Throughout 1995, on any average workday, FAA commissioned five to six new systems throughout the U.S.," he said.
If Congress approves FAA's fiscal 1997 budget but the various aviation user taxes are not collected, the agency's budget "would have to be financed almost entirely from the General Fund," according to a General Accounting Office report to Congress. "The administration has requested $8.1 billion in budget authority to finance FAA in fiscal year 1997, including $6.1 billion from the [airport and airway] Trust Fund and $2 billion from the General Fund."
Frontier Airlines plans to start flying June 1 from its Denver hub to St. Louis and San Diego, bringing to 15 the number of points it serves from Denver. It will offer two daily roundtrips to St. Louis and one to San Diego, with one-way fares starting at $79 and $69, respectively. The carrier has launched daily 737-300 Denver-Seattle/Tacoma service and will add a second daily roundtrip this summer. Fares start at $89.
British Airways traffic rose 3% last month, compared with April 1995, while capacity increased 6.5%. The carrier flew 4.99 billion revenue passenger miles on capacity of 7.1 billion available seat miles, resulting in a 2.4 percentage point drop in the passenger load factor to 70.3%. The number of passengers carried by the airline fell 1.2% to 2.64 million. Year-over- year comparisons were impacted negatively by the early Easter holiday, which boosted traffic last April but was spread over March and April this year.
U.S. Major and National Carriers Interest Expenses Fourth Quarter 1995 % Of Total Operating Systemwide Expenses America West $ 13,136,120 3.48 American 122,037,000 2.99 Continental 42,767,000 3.70 Delta 66,500,000 2.32
American's Allied Pilots Association union is upset because it says the company told its pilots that Sabre's performance no longer will count toward their profit-sharing pay once the technology unit is transferred from American to parent company AMR. The issue surfaced last week in contract negotiations, the pilots say.
Southwest passengers who rent a car from Dollar Rent A Car through June 30 will receive a long-distance calling card good for 25 minutes of free calling. The occasion is Southwest's 25th birthday.
U.S. global, major and national carriers accounted for 85% of all jet airline hiring in 1995, says the Future Aviation Professionals of America, and will continue to offer the majority of new jobs for pilots who want to fly large jets in the next decade. Five years from now, United and Delta will retire more pilots than other U.S. carriers - 1,514 at United and 1,098 at Delta.
Urging DOT to begin passenger talks with Japan immediately, Delta charged that United's "desperate battle" to prevent such negotiations is an attempt to "preserve its monopolistic position in Japan." In a filing to DOT last week, Delta said United's reply to Continental Micronesia's bid for U.S.- Japan authority included several erroneous statements about Delta's positions. "United continues a drum beat of distortions in a quest to maintain United's dominant position over U.S.
Grimes Aerospace signed an agreement with DAC International under which DAC will market SunVu 3-inch airline transportation instrument (ATI) liquid crystal display cockpit systems. Grimes's 3ATI, in flight testing on Boeing, Douglas and Saab aircraft, provides a plug-in replacement for electromechanical indicators.
Pratt&Whitney's PW4090 turbofan engine, in development as a 90,000- pounds-thrust powerplant for heavier Boeing 777s, has completed successfully its FAA model test "under the most rigorous conditions ever attempted," the company reported. Model testing included 750 simulated cycles at maximum temperature and more than 60 hours of running under conditions designed to induce high-vibration stress, P&W said. Engine certification is scheduled at the end of June, and 777 flight tests will follow.
Traffic for the Mesa Air Group increased 23.1% in April on an 8.5% jump in capacity as the carrier flew 110.9 million revenue passenger miles on 199.3 million available seat miles. Load factor for the period was up 6.6 percentage points to 55.7%. The carrier flew 532,400 passengers, an increase of 10.1% over April 1995 levels. For the first four months, Mesa's traffic was up 26.8% on a 10% increase in capacity. Load factor gained 7.3 points to 55.3%.
Belgian carrier Sabena told its employees it may have to lay off as many as 1,700 airline workers or cut salaries by 15% to stem losses and generate profits through 2000. Former Swissair executive Paul Reutlinger, who became Sabena's chief executive in February, told a workers council meeting that under the current operating plan, the airline would lose 3 billion Belgian francs (US$95.27 million) in 1998 and as much as BF3.4 billion (US$107.97 million) by 2000.
AirTran Airways will begin operating June 19 from its Orlando base to Piedmont Triad Airport, Greensboro, N.C., offering daily nonstop 737 service with introductory fares of $49 one way. The fares are good for travel June 20 through Sept. 3 and must be purchased by May 31. Last week, Northwest launched three-times-daily flights to Greensboro from its Detroit hub, using 100-seat DC-9s.
