Wednesday, 1 August 2012

Interview: Alex Cruz, Vueling CEO

Cruz says AENA fee hike will not derail Barcelona growth

Vueling will achieve net growth at its Barcelona El Prat hub throughout 2012, chief executive Alex Cruz tells Flightglobal, with the availability of spare capacity following Spanair's demise comfortably outweighing the impact of higher fees at the airport.

The low-cost carrier is lobbying AENA over the doubling of charges at El Prat and Madrid Barajas airports in "continuous" top-level private meetings, he says.

But Cruz does not anticipate any revisions to the higher fee structure - implemented on 1 July 2012 - and Vueling is instead pursuing "concessions" from the airports operator over the 5%-above-RPI increases planned for the beginning of 2013 and 2014. Though a goal for the airline, Cruz admits that such provisions will be "insufficient".

Hedging your bets

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When Delta Air Lines announced its intention to acquire an oil refinery earlier this year, the unusual move drew a mixed response from analysts. Some praised its innovation, arguing that its daily consumption of 210,000 barrels of jet fuel justified cutting out the middle man. Others questioned whether airlines should be in the business of refining crude oil.

But one thing no one disputed was the urgent need to offset fuel price volatility. According to IATA's latest forecast, Brent crude, the main European benchmark, is likely to average $110 a barrel this year - but in just six months spot prices have ricocheted wildly between $128 and $88.

For airlines that rely on stable ticket pricing to deliver profitability, such swings have brought fuel hedging firmly back into vogue during the post-2008 recovery. In its simplest form, hedging allows fuel prices to be fixed or capped for future expenditure, smoothing out unforeseen spikes in the oil price and bringing some certainty to margins...

Cracking up

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On 4 November 2010, in the skies above the Indonesian island of Batam, one of the four engines powering an Airbus A380 operated by Australian flag carrier Qantas blew up mid-flight. The force of the explosion was so great that shrapnel from the Rolls-Royce Trent 900 engine punctured the wing, sent fuel gushing from two tanks, and disabled an array of vital flight control systems.

Despite malfunctioning hydraulics, limited reverse thrust and no anti-skid brakes, Captain Richard de Crespigny successfully landed Qantas Flight 32 at Singapore Changi Airport. None of the 440 passengers and 29 crew aboard was injured.

In the months that followed, air safety investigators branched out from focusing solely on the faulty engine to addressing a new issue of concern – the discovery of hairline cracks in the Qantas A380’s wings. Though not a contributing factor to the mid-air explosion, it quickly became apparent that these newly identified fissures – located on nine-inch aluminium brackets connecting the wing’s outer skin to its inner rib structures – warranted further scrutiny...