Flagging carriers out east

Full article on economist.com

The grounding of Malev, Hungary’s national carrier, shows once again how Eastern European countries are struggling to fly their flags around the world. According to a report from CAPA, Hungary is now expected to follow Slovakia in switching to a predominantly low-cost carrier (LCC) market. The report notes that, prior to Malev's bankruptcy, LCCs accounted for just 24% of capacity in Hungary, compared with more than 70% for its neighbour to the north. That figure shot up to 40% overnight, and with Ryanair circling covetously above will only rise further.

But there are few positive signs for Eastern Europe's older airlines. Slovakia has a high LCC penetration because it abandoned its flag carrier in 2007. Lithuania did the same thing two years later, while Latvia clung onto its national airline, but only by marketing it as a pseudo-LCC with pan-Baltic aspirations...

Headwinds over Europe: ETS

Full article in JPG format

Last month, Malaysian low-cost carrier AirAsia X called time on its flagship services to Europe, under the pretext that the continent’s Emissions Trading Scheme (ETS) – essentially an environmental tax – had made flying to London and Paris unprofitable.

Behind the whitewashed press release, its hand was in truth forced by the short-sightedness of a business plan conceived in 2009, when oil prices stood at just $40 per barrel. With Brent crude surging to three times that level in recent months, the viability of a low-cost, long-haul product – absent of any high-yielding corporate passengers – was well and truly blown out of the water.

But while blaming the ETS was undoubtedly a face-saving exercise, AirAsia X will have many sympathisers both within the industry and beyond. Europe’s carbon trading scheme has been an unremitting source of contention for foreign governments, who say the tax violates their sovereignty and who are increasingly talking up the prospects of a trade war...

The future of biofuels

Full article in JPG format: page 44/45 & page 46/47 & bio

Talk to an airline executive anywhere in the world today, and you're virtually guaranteed to hear the same fundamental complaint. With Brent Crude prices hovering around $110 per barrel – up 350% in the space of two years – it's now all but impossible to make money from the business of flying people around.

Of course airlines have several tricks up their sleeves. Hedging fuel contracts is one strategy, albeit a risky one if you misjudge the market. Cutting operational costs and hiking airfares are two others. Perhaps the most pragmatic approach is to fork out a few billion dollars for some next-generation, fuel-efficient jets. In the current financial climate, though, few have that option.

The inconvenient reality is that aviation is well and truly addicted to oil. In order to get a 650-tonne Airbus A380 off the ground, the high energy density required makes anything short of the black stuff a feeble substitute. And that means, in contrast to electric cars, battery-powered planes will never make their commercial debut in our lifetimes...

It's Not Racist to Say Some Black People Are Racist

Full article on huffingtonpost.com

A curious thing happened to me last Thursday while I was reading Bim Adewunmi's article on The Guardian website. Adewunmi was describing, in a very rational and factual manner, the circumstances surrounding her Twitter chat with Diane Abbott - which made headlines after the Shadow Health Minister seemingly accused all white people of being colonialists who "love playing divide and rule". I appreciated Adewunmi's dispassionate article, and I aired my opinion to that effect. Here's my comment in its entirety:

"Thanks for this explanation, and congratulations for (unwittingly or otherwise) exposing Diane Abbott's true views about white people. Last time I checked, I'm not a colonialist. So I now consider her a racist."

Harmless enough, I thought. And my fellow readers appeared to agree. As the tenth comment in a thread which now runs into the hundreds, my highly visible two cents quickly became the second-most 'recommended' post beneath the line. But The Guardian's moderators took umbrage to my contribution, deleting it under the pretext that it had failed to "abide by our community standards". I hastily re-posted the comment, appending a request that they explain which specific standard - racism, offensive behaviour, or another - had been breached. But that post also disappeared within minutes...

Interview: Peter Hill, Oman Air CEO

Full article in JPG format

After 50 years in the industry, Oman Air chief executive Peter Hill recently hung up his flight jacket for the last time. Though his successor has yet to be announced, Hill leaves the flag carrier with a well-defined “luxury boutique” business plan that will nurture the Sultanate’s tourism sector and help articulate its identity within the Gulf region.

As a founding member of Dubai’s Emirates Airline, Hill was headhunted by Oman Air four years ago to develop the plan begun by his predecessor, Ziad al Haremi, who had died tragically of a heart attack. In contrast to the mega-hub strategy Hill advanced in Dubai, the flight path for the Muscat-based carrier focused on selective long-haul expansion and a bespoke in-flight service that, in his words, “the bigger boys just can’t offer”...

Iran Air: shackled by sanctions

Full article in JPG format

In October, one of Iran Air’s 40 year-old Boeing 727s was filmed making an emergency landing at Tehran Mehrabad Airport. Banned from European Union (EU) airspace, the plane was on a return flight from Moscow when its front landing gear failed to deploy. After skidding to a halt on the runway, all 113 people on board were safely evacuated and the flag carrier vowed to repair its geriatric jet.

Sadly for Iranians, incidents such as this are hardly rare. More than 700 nationals have died in 13 crashes over the past six years, including 77 in January when another of Iran Air’s 727s crashed while trying to land in the north-western city of Urumiyeh...

Interview: Simon Stewart, Nas Air CEO

Full article in JPG format

Four years after Saudi Arabia liberalised its aviation sector, Simon Stewart, chief executive of the only surviving private carrier, Nas Air, remains optimistic about the “vast potential” for air transport in the kingdom. Ask him about the progress to date, however, and the former army pilot pulls no punches. “Saudi aviation is pretty much structured as it was in the old legacy days,” he admits, and he doesn’t expect things to change overnight.

Low-cost carrier Nas Air was created in 2007 along with another private airline, Sama, to end the domestic monopoly of flag carrier Saudi Arabian Airlines. It was hoped the new license-holders would mimic the success of Jazeera Airways, which grew rapidly after the Kuwaiti aviation sector was liberalised in 2005...

Flying into the unknown

Full article in JPG format: page 42/43 & page 45

“An economist is an expert who will know tomorrow why the things he predicted yesterday didn’t happen,” wrote the late US educator Laurence Peter. His words ring as true today as ever before, with the world’s brightest economic minds showing little aptitude for diagnosing – let alone remedying – the perfect storm of a European debt crisis, a stagnating US economy, and political upheaval across the Arab world.

And yet while meaningful forecasts elude the experts, the simplest of litmus tests is available to anyone by looking up, towards the skies, at the air transport sector – the lifeblood of the global economy...

Wing and a prayer

Full article in JPG format: page 54/55 & page 56

In August, the Air Transport Rating Agency (ATRA) published a list of what it claimed are the ten safest airlines in the world. The Geneva-based company, which was founded earlier this year, said it arrived at the holistic safety rating through a combined analysis of 15 criteria, incorporating factors as disparate as financial results and average fleet age.

Some analysts were quick to cast doubt on its methodology, arguing that previous studies have found no correlation between accident rates and several of the criteria used. Others also noted the conspicuous absence of any Gulf carriers on its list, despite the fact that the region’s three largest airlines – Emirates, Etihad and Qatar Airways – have never recorded a fatal incident in their, admittedly brief, histories...

Interview: David Arendt, Cargolux CFO

Cargolux finances three more 747-8Fs, sells one 747-400F

Cargolux has arranged Ex-Im backed funding for three of the four Boeing 747-8Fs due to be delivered in 2012, and the carrier will consider an operating lease structure for the remaining freighter, CFO David Arendt has told Aviation Exchange. The airline is the launch partner for the 747-8F and will sell one of its older 747-400Fs to Silk Way Airways later this month after receiving two of the three Dash-8s being delivered this year, he added.

The fourth aircraft, which arrives in February 2012, will be financed by PEFCO under an Ex-Im guarantee, Arendt confirmed. The fifth aircraft, delivering in April 2012, will be acquired by a joint venture comprising Cargolux and three equity co-investors – Crédit Agricole, DVB Bank and KfW-IPEX Bank – and will draw from Ex-Im backed debt provided by JP Morgan. The sixth, arriving in July 2012, looks set to be funded by an Ex-Im bond on the capital market, with Goldman Sachs and Crédit Agricole signing preliminary agreements.