Sunday, 1 May 2011

Dogfights over Iraq

Full article in JPG format

In May 2003, shortly after coalition troops invaded Baghdad, the US Federal Reserve Bank of New York set up the Development Fund for Iraq (DFI). Its remit was to shield the country's vast oil revenue from compensation claims against the former regime, ring-fencing proceeds for reconstruction and development projects.

Under Chapter Seven of the UN Charter, five per cent of those petrodollars had to be siphoned off as war reparations, gradually reimbursing Kuwait for losses incurred during Saddam Hussein's brutal 1990-91 occupation. More than $30 billion in compensation has already been distributed to foreign claimants, but on 30 June 2011, the DFI mechanism will expire.

This looming transition spells uncertainty not only for the governments of Iraq and Kuwait - who must set aside their historic differences to strike a deal over the $20 billion outstanding - but it also ushers in a dangerous new phase in the decades-old dispute between their flag carriers...

Friday, 1 April 2011

Adopting the brace position

Full article in PDF format

The International Air Transport Association (IATA), the airline industry’s main trade body, has never been shy about talking up the perils of an oil shock. Even in May 2005, when a barrel of Brent Crude set you back just $50, IATA was calling jet fuel "The Fifth Horseman of the Apocalypse".

But with Middle East unrest now pushing oil prices to double that level, the group's latest warning has touched a nerve with airline bosses. The last time crude passed the $100-mark the world was tumbling into its deepest recession for decades, and few industries hit the ground harder than civil aviation.

In 2009, as global financial markets began pulling themselves back from the abyss, air traffic was still falling at its fastest rate since records began. Cash-strapped holidaymakers were opting for staycations; business travellers were downgrading to Economy; and stunted economic activity was choking off demand for cargo. All told, the industry lost $9.4 billion...

Tuesday, 1 March 2011

Blockades on the new silk road

Full article in PDF format

When the UAE’s ambassador to Canada says that negotiating new air links has been a “protracted and frustrating” process, he isn’t kidding. Half a decade of quarrelling reached boiling point last autumn in the form of a full-scale diplomatic crisis, with Canada’s military being booted off Emirati soil, and its citizens being hit by visa entry fees of up to C$1,000.

On the surface, the dispute hinges on UAE demands that two of its carriers – Emirates and Etihad – be allowed to increase flight frequencies to Toronto, as well as add new links to Calgary and Vancouver. But at stake is far more than the competitive threat such expansion poses to flag carrier Air Canada. The web of protectionism blocking a deal actually stretches beyond North America, spanning the Atlantic and ensconcing aviation’s former masters, the European legacy carriers....

Monday, 1 November 2010

Airport security is a necessary inconvenience

Full article on

Julian Glover is right to urge restraint in the west's response to the cargo bomb plot. Anyone who calls for military intervention in Yemen has failed to learn the lessons of the Iraq war, which gave al-Qaida a recruitment boost that it draws strength from even to this day. But the need to protect our interests in the skies has never been greater. It is time for aviation officials to stop whining about the economic fallout of security checks, and wake up to the game-changing nature of the threat these new devices pose.

Michael O'Leary's appearance on the BBC this morning epitomised just how reluctant the industry is when it comes to acknowledging the risks, even in the face of irrefutable evidence. "These [bombs] haven't been on passenger airplanes," the Ryanair chief insisted when asked about the dangers to the flying public. Of course we know this is simply not true – one of the devices was bundled on to two scheduled flights before eventually being found in Dubai, and indeed globally around half of all cargo packages are now transported on passenger jets. "There hasn't been a breach of any European airport security," O'Leary shrugged, refusing to diagnose the flying of military-grade explosives into East Midlands Airport for what it clearly is – a flagrant and deeply troubling breach of European airport security...

Monday, 14 June 2010

Ryanair's hypocritical attack on fair comment

Full article on

Rebuttal by Ryanair's Head of Communications, Stephen McNamara, also on

When Evening Herald journalist Aoife Anderson was asked to review Ryanair's new softsided carry-on bag, produced by Samsonite and specially designed to comply with the airline's strict weight and size limits, she probably thought nothing of it.

Anderson's subsequent review in the Irish newspaper was all but a paragon of fairness, praising the bag as "the perfect accessory" for minimalist travellers and saying its €79 (£66) price-tag "could be worth every cent". Her write-up was a million miles off being an attack on the product, although she did question its size, adding: "You'll need to be a ruthless packer ... it won't fit more than a toothbrush, one change of clothes and a towel."

Sadly for Anderson that flirtation with criticism was deemed a step too far by Ryanair, whose response was to humiliate the journalist publicly before effectively blackmailing her into a retraction...

Thursday, 20 May 2010

Why risk flying British Airways? It's a good question

Full article on

BA boss Willie Walsh will no doubt be incensed by today's court of appeal ruling, which overturns an earlier judgment at the high court and paves the way for fresh strikes by cabin crew.

The airline had secured its injunction on the admittedly flimsy grounds that Unite broke strict rules over reporting ballot results. But while lawyers and industrial relations experts will be gleefully dissecting the new judgment, for most air passengers it is of surprisingly little consequence. In their minds, BA has long been synonymous with uncertainty.

Had the injunction stood, Unite was pledging to re-ballot members immediately. Strikes that were planned for May would have been pushed back to July. Now they're back to May again. And the promised third ballot, by the way, is most likely still going ahead...

Monday, 10 May 2010

British Airways strike can be averted

Full article on

Benjamin Franklin had it right when he wrote in his autobiography that the best way to win an argument is to adopt an air of "modest diffidence". This approach works not only because it arouses respect among your detractors – who, though unlikely to be immediately won over, will at least lend you a sympathetic ear – but more crucially because of the effect it has on the workings of your inner mind. Men who question their own logic will find it less often being corrected by others.

The alternative, Franklin noted, is to adopt "a positive, assuming manner, that seldom fails to disgust [and] tends to create opposition".

Such a presumed air of papal infallibility is something the BA chief executive, Willie Walsh, should be forgiven for having allowed to creep up on him. The airline boss has dealt a series of decisive blows to Unite in his dispute with the union over cost cutting, and along the way has succeeded in rousing near-universal support among the public, politicians and the media. Though not the most charismatic of speakers, his uncompromising stance clearly struck a chord with many in these austere times...

Saturday, 24 April 2010

Iraq's symbolic return to the skies

Full article on

Ever since 2003, when Saddam Hussein's statue was smothered in an American flag, torn to the ground, and set upon by shoe-wielding Baghdadis, symbolism in Iraq has been dominated by strife and degradation.

The image of an Iraqi man, hooded, standing with arms outstretched as he awaits electrocution in Abu Ghraib. The mugshot of a dishevelled, heavily bearded former tyrant still adapting to sunlight after being rooted out of his bunker in Tikrit. The crumbled dome of Samarra's al-Askari mosque, one of the holiest sites in Shia Islam, smouldering from explosives laid by Sunni insurgents.

It is a testament to the power of symbolism that each of these events, imprinted in the minds of millions around the world, simultaneously caused no injuries and yet precipitated waves of bloodletting that killed hundreds.

But no less powerful is the symbolism of unity...

Tuesday, 20 April 2010

When it comes to the ash cloud and planes, trust the scientists

Full article on

There's a brilliant scene in the film Fight Club where Edward Norton's character is unnerving a woman on a plane. In this scene, Norton explains the process by which the company he works for, a carmaker, decides whether or not to issue recalls of faulty lines.

"Take the number of vehicles in the field, A. Multiply by the probable rate of failure, B. Multiply by the average out-of-court settlement, C," Norton calmly explains. "A times B times C equals X.

"If X is less than the cost of a recall, we don't do one."

It's macabre to the extreme, but there's an innate rationality to the logic of allowing bad things to happen. After all, car manufacturers, like airlines, are in the business of risk management. It's part and parcel of their existence that they take calculated risks, some of which will affect the sanctity of life for a few, very unlucky individuals...

Thursday, 8 April 2010

BA will fly high with Iberia deal

Full article on

Just like the bookies, the City has a remarkable knack for getting to the nub of an issue. It seems whenever the serious matter of money is concerned, the invisible hand of the market has an almost transcendental capacity for clairvoyance – far more so than the meanderings of journalists or pundits.

So it was last month, when shares in BA spiked dramatically upon the (one would assume) worrying news that strike talks with Unite had collapsed. And so it will be again today, now that Britain's flag carrier has sealed a crucial merger deal with Spanish airline Iberia.

International Airlines Group, as the new company will be called, is unlikely to win any awards for its name. But the commercial reasoning behind this partnership could not be sturdier, and the synergies it looks set to bring about – estimated to raise a staggering £350m for the airlines every year – should be welcomed with open arms by shareholders, customers and employees. And yes, that includes cabin crew...