Eastern Airways CEO Richard Lake came to the annual European Regions Airline Assn. fall meeting here with a sense of optimism that this year the organization might bestow its Regional Airline of the Year award upon the Aberdeen-based carrier. Instead, for the second time, Eastern came up just a bit short with a second-place finish. But Lake was philosophical about the outcome, saying, "We must try that little bit, little bit harder."
Russian investigators are homing in on RDX, the main ingredient in C-4 and Semtex, as the explosive that triggered the near-simultaneous destruction of a Tu-154 and a Tu-134 over Russia on the night of Aug. 24. The materials are believed to have been carried into the cabin inside the clothing or carryon bags of two suicide bombers who detonated the RDX at altitude, killing all 89 passengers and crew on the two aircraft.
Three years of airline industry turmoil and restructuring have left their mark on the maintenance, repair and overhaul aftermarket, where suppliers are scrambling to stay abreast of the changing needs of their airline customers while coping with tough competition and excess hangar capacity, itself a result of some of those changes.
Thai Airways International's advertisements always have promised passengers a "smooth as silk" ride and the airline often has delivered. But for the carrier itself, the flightpath has been more like dodging the severe thunderstorms for which Bangkok is famous. A major cause of the turbulence has been government meddling combined with a lack of understanding by the bureaucrats of the critical role Thai plays in the development of the tourism industry.
In early October, the price of oil topped $52 a barrel, representing a 60% increase over the year-ago period. According to the Air Transport Assn., every $1 increase in the price of a barrel adds $425 million in annual operating expenses for US airlines. That means they are spending an extra $9.93 billion on Jet A this year compared to 2003.
You've got to spend money to make money. Easier said than done when it comes to the airline industry, where cash is a scarce commodity at any time and particularly when oil prices are through the roof and fares are under attack by a bevy of lower-cost operators with a simple message: "We're cheaper."
With losses of close to $58 million over the past two years-including an estimated $32 million in the fiscal year ended last July 31-Air Malta cannot continue to operate with a business-as-usual attitude. That is the message coming out of the executive office, where CEO Ernst Funk, a Swiss transplant who took over in fall 2002, and Air Malta Group Chairman Lawrence Zammit are shaking things up at this formerly sleepy Mediterranean carrier.
The birth of Astar Air Cargo, which celebrated its first anniversary in July, was not particularly painful, but sticky questions of legitimacy were raised from the outset by UPS and FedEx, rivals of DHL Worldwide Express, from whence the new carrier traces its parentage. A four-year campaign by the two package/express giants to have the airline declared illegitimate finally was put to rest in May when the US Dept. of Transportation determined that Astar complies with federal law forbidding foreign nationals from holding more than a 25% voting stake in a US carrier.
If the saying "think globally, act locally" is a valid proposition in the airline business, then Gol Linhas Aereas Inteligentes S.A.--translated as Gol: The Intelligent Airline--is doing its part to make it happen.
As the variety of profitable budget airlines demonstrates, success comes in many shapes and sizes. WestJet, Ryanair, JetBlue and AirTran all have taken different paths to arrive at the same destination. This is also true when it comes to how low-cost carriers approach pilot training. JetBlue is building its own facility while Jetstar has outsourced virtually its entire training requirement to a third party. Yet experts agree that most LCCs share a common trait: A determination to think outside the box.
As turnaround stories go, Air New Zealand's is about as good as it gets. In just over 2-1/2 years under MD and CEO Ralph Norris, the company has come from the nightmare of writing off NZ$1.45 billion-the largest writeoff in New Zealand corporate history-to posting combined annual profits of NZ$331 million over its last two fiscal years.
Editor's Note: This is the first in an occasional series of articles on relationships between IT suppliers and airlines Finnair's seven-year relationship with information technology provider Lufthansa Systems Aeronautics, a member of Lufthansa Group, has yielded millions of dollars in savings and revenue for the Nordic carrier through scheduling, planning, pricing, profit, route planning and management software.
Low-profile but profitable, Turkish Airlines is on a roll with an order for 51 new aircraft and plans to build a new $350 million technical base (see box, p. 42), soaring on the winds of a robust economy and rising demand for leisure and business travel. Earnings are at record highs and passenger traffic was up 26% in the first half of the current year.
John Kern is surprisingly calm for a man on a mission to save an economy. Kern, director of FAA's Joint Planning and Development Office, is at the helm of the US's latest and presumably greatest attempt to jolt the curb-to-curb air transportation experience, a do-or-die manifest if the $10 trillion US economy is to remain constraint-free on the global stage.
In March 2002, British Airways took a decisive step in combining four of its Regional operators under a single entity, BA CitiExpress, as part of a grand scheme of improving efficiency, reducing costs and bolstering the operating margin (ATW, 6/02, p. 29). "I think the story of the last two years has been one of consolidation," CitiExpress MD David Evans tells ATW. "There were significant challenges to bring four airlines into one."
Evolving business models and driving down costs will be key topics at the European Regions Airline Assn. General Assembly beginning Sept. 29 in Vienna. The annual meeting of Europe's Regional airline industry attracts a diverse crowd of independent and fully aligned carriers as well as a smattering of others sharing common interests and has become a much-anticipated forum at which to discuss issues impacting the sector. ERA members include some 70 airlines along with some 230 representatives from Europe's airports, manufacturers and suppliers.
The nine largest US passenger airlines in aggregate reported a net loss of $2.26 billion for the spring quarter ended June 30 compared to a net profit of $171.9 million in the year-ago period (the 10th, ATA Airlines, did not release results in time to be included in this report). Extraordinary writeoffs at Delta Air Lines totaling $1.65 billion and soaring fuel prices masked significant improvement at most carriers, however.
Charles Darwin wrote, "It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change." British Airways CEO Rod Eddington warns that achieving that responsiveness is extremely difficult-"Changing airline culture is like trying to perform an engine change inflight," he maintains. While not all legacy airline CEOs have to face as daunting a task as that, the magnitude of reform required to meet the actual or threatened competition from low-cost carriers is enormous, and for many airlines seemingly impossible to achieve.
Last winter was not good for Vienna International Airport. It's not that the airport suffered a major slump in traffic--quite the contrary. Passenger throughput increased by 15% in the cold weather months Jan. 1-March 31 on the year-ago period, while aircraft movements rose by 11% year-on-year.
Fifteen months after American Airlines' unionized employees agreed to some $1.7 billion in pay and benefit reductions and productivity improvements in order to keep the airline aloft, management and workers are striving to create a new corporate culture reminiscent of the remarkable transformation achieved at Continental Airlines a decade ago. The drive to change the way the carrier does business reflects AMR Corp.
When the first A320 was delivered to launch customer Air France in October 1987, it represented a revolution in commercial aircraft flight control technology and also featured the most extensive use of automation and computerization on any civil transport flightdeck. Today, with Boeing having embraced fly-by-wire in its two most recent new aircraft programs, and when even regional jets such as the Embraer 170 offer it, it may be difficult to recall the controversy generated by the aircraft.
France is Europe's largest tourist destination, with 75.5 million visitors annually including some 15.5 million Germans, 12.7 million Britons and 12 million Dutch flocking to the country. Per capita GDP is above the European average, and with 61 million inhabitants it has the largest population in Western Europe after Germany. Yet air travelers in France have fewer opportunities to take advantage of low-cost airlines than those in almost any other country in Europe.
People may not be out in the streets demonstrating for change, but they are at their home PCs and Internet cafes making bookings for seats on a revolution sweeping across Asia. The era of the low-cost carrier has arrived and perhaps sooner than most would have expected in a region still making the transition from tightly drawn bilateral agreements to freewheeling open skies arrangements.
As ATW's first issue was being prepared for its debut in 1964, another baby was born to the commercial aviation industry: The Semi-Automatic Business Research Environment went live on March 4, 1964. It was an unwieldy name, inevitably shortened to Sabre, and it indeed would prove to be a sharp-edged weapon. It also would revolutionize the travel industry.
Airlines in 1964 were very excited about technology. The industry that had been pushing the limits of piston engines and propellers since the 1930s recently had been presented with the greatest gift imaginable-a deus ex machina if there ever was one-the jet airplane.
