Sunday, 18 December 2011

Happy Christmas from Airnthere,- and on to 2012.

We have had a very successful year with steadily growing readership stretching across most of the world. We have attracted interest from airline and transport professionals at all levels from CEO down and from the media and from many who are just interested in the industry. The transport business will always have an attraction and fascination thanks to its breadth of impact, economic and social importance and its technical advances, all of which make it a dynamic and exciting thing unmatched by many other businesses. It is a 24/7 business requiring high technical and mechanical skills, and positively thinking people who understand it and at the same time have visions of where it can and must go. It isn't like making biscuits.

Thankyou for your support. Very few readers feel it necessary to sign up as followers ,- and of course it isn't,-but it would help us if they did so as to give us a better understanding of who they are. Do also spread the word of our existence and where to find us on amongst your colleagues and others you think would be interested. On our part we will continue to concentrate on different angles on the subjects we cover. We do not believe in conventional wisdom or going with the flow. The realities are usually far more interesting and throw up far more questions and possibilities. That's what we do.

Happy Christmas! Then let's get on with 2012.

Tuesday, 13 December 2011

UK Airline Passenger Duty (APD) in a political headlock. It's almost impossible to get rid of.

For those hoping that the UK Government might see the error of its ways and reduce or entirely ditch its now crushing levels of APD the bad news is that the realities of a) It now producing over £ 1 billion a year to the Treasury and b) Political Britain's obsession with class, wealth and poverty therefore make it almost impossible to get rid of.

The abolition or reduction of APD would be greeted with near hysterical headlines of " £1.5 billion giveaway to wealthy travellers and foreigners" and worse. There would follow lists of how many nurses, policemen, libraries, schools, hospitals the £ 1.5 billion would pay for. There would not be a moment's thought about the lost jobs of voiceless people in a wide range of roles which depend to a greater or lesser extent on tourism. Add to that more easily identifiable jobs with airlines, airports, handling companies, concessionaries and the rest and the potential totals are into the tens or possibly of thousands. Transport for London would be one big loser of revenue. There would be thousands of others great and small up and down the land. Fred and Flossie in the airport duty free shop have never been so threatened.

In racking up the level of APD so high, both Labour and the coalition have created a monster which can not be dismantled. Initially they probably did not comprehend that in escalating it so high they were destroying the ability to reverse it later.It could probably only be done now amidst a raft of financial measures, some of which obtained an equivalent billion from somewhere else. No wonder Walsh of IAG/BA announced cutbacks in recruitment (400 out of 800) and not bringing back into the fleet one stored 747-400. Two further aircraft are believed to be in doubt and that could just be the beginning of it.

2012 will be a difficult year for the airline and travel business while many especially in Europe keep their wallets in their pockets as an insurance against yet more bad economic news. There will be distortions in the UK due to the Royal Jubilee and the Olympics and while London may do well overall, the fact that 50% of its hotel beds will be occupied (many at UK taxpayers' expense) by "The Olympic Family" during the games means that a lot of other demand will simply go elsewhere. Provincial UK, and Scotland could be particularly badly affected. Soaring APD will be whatever is the opposite to icing on the cake,- and it's almost too big now to go away.

Tuesday, 6 December 2011

Walsh slams APD Increases- on behalf of BA

IAG CEO Willie Walsh appeared on the BBC's 6 o'Clock News this evening to lay into the UK Government's insistence on going ahead with the 8% increase in Air Passenger Duty (APD) from April 2012.

What he said about it's effect on the UK's competetive position in international air travel and tourism was entirely correct and more than justifies his announcement of trimmed plans for the year with recruitment cut from 400 to 200 and one less 747-400 being returned to service from its sojourn in the dry American desert.

The Government response that aviation must take its share of the austerity tax raising burden and that it was lucky anyway in not being subject to VAT or fuel tax was entirely predictable from a beaurocratic entity (the Treasury) which is totally blind to the fact that UK Plc is in competition with Europe and the world for tourism and its share of the air traffic business. Ironically the next item on the News was about sluggish retail sales on Britain's high streets. The link between competitive pricing of air travel to encourage tourists to visit and spend money in the nation's shops, hotels, restaurants, cafes, and adding revenue to public transport and a whole host of other(mainly taxed) activities has no traction in Whitehall or amongst most MP's.

Politics apart, another fascinating aspect of Walsh appearing on the box standing in front of a stylish dark blue backdrop complete with BA logo was that it he as CEO of IAG, not Keith Williams as CEO of the BA brand,who was making the statement. We speculated earlier in the year on how the relationship between the owner,IAG, and the brands would develop once everyone had got their feet under the table and how the previously very hands-on Walsh would cope with what he might find the relatively dull hands off stratosphere of his runwayside office a mile or so away from BA's Waterside HQ.

Could it be that we are seeing here the glimmer of an answer which we suspected likely ? Add to that the question of whether Keith Williams' early expression of a new style with his "Peace in our Time" deal with Unite ending the cabin crew dispute without many of the real game changing gains Walsh had originally been going for has meant a clipping of wings. It is difficult to assess at this stage and we will have to wait for more blips to appear on the radar screen to give us a fix. The initial ones are certainly interesting and raise the antennae. Following ones boss into his/her former position while he/she moves up a notch and remains the boss demands a lot of both people. The success rate isn't wonderful.

Sunday, 4 December 2011

African Update -October/November 2011

As always lots of activity during the past two months ……..

Newly appointed DG of IATA, Tony Tyler, speaking at the AFRAA AGM, outlined his view of IATA’s role in Africa …. “Aviation is a challenging industry, so let’s work together … to meet the challenges of growth and make aviation even more successful. My focus is on IATA delivering value and innovation and being responsive to the needs of the membership”, ie, a pragmatic shift away from the practice of stripping carriers of membership for non-compliance of directives, eg, IOSA and e-ticketing.

The non-African airline presence on the continent continues to expand. Emirates announced the addition of Harare and Lusaka to the network; Gulf Air adds Entebbe in the next few weeks to be followed by Juba; Qatar has announced imminent operations to Kigali, Zanzibar and Mombasa, and United’s presence has grown with the addition of Houston-Lagos.

Increased capacity by non-African airlines has forced Air Seychelles to abandon long-haul operations and to restructure as a regional carrier. Similar loss of market share leading to worsening operating losses faces other carriers.

Diplomatic spats have soured the air in some countries: Senegal has closed its airspace to Guinea bound flights but has healed a rift with Mauritania. Nigeria and UK are tussling over Heathrow slots and frequencies for Arik and BA. Nigeria fines BA (USD135mn) and Virgin (USD100m) over alleged price discrimination against Nigerians.

The long arm of the law has touched some senior managers at Arik over alleged tax evasion and a previous CEO of Air Tanzania has been charged with abuse of office during his tenure. Parliament has sacked the Board of Royal Swazi for sitting 96 times in a year whereas the Act specifies just 4.

….. and Air Zimbabawe is reported as now being in discussion with Hainan Airlines on a possible takeover. In parallel management spent the night in their offices having been held hostage by staff demanding settlement of USD5.6mn unpaid salaries.


Air Tanzania GoTz pays SATechnic USD3mn maintenance and other bills to release the Dash8, their sole a/c. Ops to restart mid-Nov 2011. (Oct 2011)

Air Tanzania to acquire lease-purchase CRJ200 in Jan 2012. 5 year plan envisages CRJ700 and CRJ900 by end of 2013, followed by B737-800 and eventually B787 (nov11)

Air Tanzania talking to Export Dev Canada for help in raising USD500m for 8 additional aircraft, presumably Bombardiers. Embraer possibly offering E170/190 alternatives. (Nov11)

Air Tanzania former CEO David Mattaka charged in court with abuse of office over 2007 purchase of 26 vehicles. CFO,Ikomba, and Internal Auditor, Hajji, also charged. (nov 11)

Air Uganda new CEO, Kyle Haywood, announces plans for fleet growth in 2012-3 to expand regional and domestic ops to feed the growing number of EBB foreign long-haul ops. (nov11)
Ethiopian Airlines to launch ops ADD-BAH and KWI with Toronto also planned (Oct 11)
Kenya Airways contracts with GECAS for two B777-300ERs on 12-year leases (Oct11)

Kenya Airways takes delivery of its ninth E-Jet from Embraer, an E190. (Oct11)

Kenya Airways targets 107 aircraft fleet by 2020 and the CEO openly talks of hiring expat flight crew to meet the growth, a traditionally toxic topic with local unions. (Oct 11)

Kenya Airways eff 24Oct, USDollar pricing/payment introduced for domestic flights due to Kenya Shilling volatility (Oct11)

Kenya Airways rights issue due ‘in next 6 months’ to finance fleet/network expansion (Nov11)

Precision Air IPO overvalues the shares say analysts. 2010 profit 2% of rev and falling. (Oct11)

Precison Air planning new routes to Lillongwe, Luanda, Lusaka and Lubumbashi. (Oct 11)

Precision Air IPO closing date extended to 15 Dec 2011. Share take-up reportedly slow (nov11)

RwandAir takes delivery of second new B738. The 2 leased 735s are to remain for 2 years. 2x CRJ200 and 1x Dash8 also in fleet. Further 6 aircraft planned (Nov11)
Rwandair to launch service from Kigali to Lagos on 03 December 2011 with B738 (Nov11).
Southern Star (South Sudan) ceases ops 2 months after start-up. Reasons unclear. Single leased Dash8 returned to ALS Nairobi. (Nov11)
Tropical Air (Zanzibar) takes delivery of leased ATR42. Established charter operator. Started scheduled services in 2011 with Grand Caravan; DAR/ZNZ Pemba and Mafia. (Oct11)


Air Malawi suspends all ops due total fleet of 3 a/c grounded for maintenance/unpaid bills plus end of B732 wet-lease. New 737 lease plus return of ATR42 anticipated mid-Dec 2011 (nov11)

Air Seychelles to withdraw from ‘seriously loss-making’ long-haul ops by Mar 2012 and become regional carrier. 3x leased 767s to be returned. New B738 being considered. (Nov11)
Air Zimbabwe continuing efforts to acquire two A340-500s from Airbus despite EU sanctions. Funds from Chinese Sonangol (Angola). Ownership fuzziness delaying a/c registrations (Oct 11).
Air Zimbabwe again suspends international ops over JetA1 shortage due unpaid bills. (Nov11)
Air Zimbabwe staff hold managers hostage overnight over USD5.6m salary arrears (nov11)
Air Zimbabwe reportedly in talks with Hainan Airlines re takeover or investment (Nov11)
Fly 540 Dem Rep Congo is planned to add to Fly540s Kenya, Angola and Ghana.(Oct2011)
LAM ceased MPM-LIS ops pending strategy review. Plans to launch autonomous LAM Internacionale, long-haul co, with own fleet and crew. Will need to overturn EU ban. (Nov 11)
SAA drops DUR-CPT ops to codeshare with LCC subsidiary Mango. Ditto Lanseria - CPT (Oct 11)
SAA eff Jan 2012 to launch 2pw A319 ops to Pointe Noire and 3pw A346 to Beijing (Nov11)
SA Express DRC Congo Express jv failed and now closed. DRC partner revealed by audit to be without capital. Write off USD4.8m. SAX ops JNB-Lubumbashi continue (Nov11)
Santaco Airlines (SA) LCC ‘proof of concept launch’, 16 Sep 2011. Project of SA Taxi Assoc. Target ‘the black community’. End 2011 op launch. Lanseria – Bhisho and CPT. (Oct 11)

Zambezi Airlines AOC revoked due to ‘safety concerns’. Airline challenges decision in courts. Re-instatement apparently agreed. Ops to restart 11 Nov. New Govt has announced pending creation of new national airline. Zambesi USD20mn outstanding debts reported. (Oct11)


Arik Air plans LOS-AUH ops with A340-500 eff Nov 2011. First WAf carrier into AUH (Oct 2011)
Arik Air announces firm order for 2x B747-8I with GEnx engines. (Oct 2011)
Arik Air to launch ops Abuja - London Heathrow on 30 October 2011. (Oct 11)
Arik Air suspended from BSP by IATA. Arik joined BSP in Feb2011 (Oct11).
Arik Air president Arumemei-Ikhide plus CFO and 2 others arrested for alleged tax evasion and related offenses. USD22mn tax owing. USD7mn also owed to Nig Airspace Mgmnt Agcy (Oct 11)
Camair-Co reduces Paris ops from 6 to 4pw. To add 3pw Lyons ops with 737-700. (Nov11)

First Nation Airways (Nigeria) , start-up, out of Bellview, ops wef 2Nov ABJ-LOS-PHC with leased A320 ex Gulf Air. AOC granted 31 Oct 2011. (Nov 11)
Fly 540 Ghana receives its first aircraft, ATR72-500. Ghana AOC awaited but expected to start by end of 2011, says parent Lonhro (Oct11)
Gabon Airlines ceased ops Mar 2011. President announces new airline to fly in 2012 (Oct11)

Ghana International Airlines GIA collapse is ‘an albatross round Govt’s neck’, says President of Ghana as court cases continue. ‘Replacement is not a priority’. (Oct 2011)

Kabo Air (Nigeria) applies to US regulators for foreign air carrier permit with plans to operate B767-300 Lagos to Atlanta, Fort Lauderdale, and Houston (Nov11)

Sika Airlines (Ghana) plans 2012 startup with leased 777. ACC – LHR and JFK (Nov11)

Starbow Airlines (Ghana) Domestic ops started Sep 2011. Regional ops to follow.
Leased 2x BAe 146-300. Six aircraft planned. CEO Bock Frieson ex Air Malta. (Oct 11)

STP Airways (Sao Tome) relaunches ops between Sao Tome and Principe with DO228. Also ops 1pw 737-800 Sao Tome – Lisbon. 35% Govt owned. (Oct11)


Royal Air Maroc to op Casablanca - Bissau via Conakry eff Dec 2011 (Oct 11)

Several carriers have now restarted services into Tripoli.


Emirates to launch 5pw A330 ops Dubai – Lusaka – Harare eff Feb 2012 (Oct 11)

Emirates SkyCargo launched weekly 744F DXB-Lome-ACC-FRA-DXB service (Nov11)

KLM will launch 2pw 777-200 ops to Luanda eff Nov 2011 (Oct 11)

Qatar Airways to launch ops to Kigali, Zanzibar and Mombasa in early 2012 (Nov11)

Royal Jordanian to op A330 AMM-LOS eff Nov 2011. ACC, NBO, ADD, A320 in 2012 (Oct11)

Swiss to drop Cameroon ops eff Mar12. Fellow LH Group SNBrussels to up to 7pw (Nov11)

THY Turkish ups IST-ACC-LOS to 7pw and introduces B737-900ER, eff Dec 2011 (Nov11)

United Airlines launches daily Houston – Lagos. Operated by Continental. (Nov11)

Yes Airways (Poland) launched service from Warsaw to Mombasa on 09 October 2011 with A320. Carrier is operated by IKATA, Poland’s largest tour operator. (Oct11)


Addis Ababa Airport expansion to be completed Dec 2011. Aircraft parking up from 19 to 44 incl 747/777. Runway upgrading plus new taxiways. Chinese contractors. (Oct 11)

Airbus predicts sub-Sahara Africa need for 528 new passenger aircraft by 2030, value USD65bn. 350 single aisle, 157 twin aisle, 21 very large. Assumes annual 5.7% pax vol growth. (Oct 11)

US FAA issues AD to increase fuselage crack checks on B733/734/735 with 40K+ cycles (Nov11)

IATA fresh approach to Africa, said by new DG Tony Tyler at AAFRA AGM ……….
“Aviation is a challenging industry, so let’s work together, where we can, to meet the challenges of growth and make aviation even more successful. My focus on running IATA is on delivering value and innovation and being responsive to the needs of the membership”. (Nov11)

India Govt keen to secure S Atlantic fifths beyond Africa in exchange for fifths beyond India for African carriers (Oct 11)

Nairobi JKIA USD500mn new terminal and ramp expansion, ground breaking scheduled for Jan 2012 for operational completion 2014. (Oct 11)

Nigeria Lagos MMA Airport new terminal under construction. Part of GoN USD120mn national airports upgrade plan. (Nov 11)

Nigeria Fed Airports Authy removes MD Mr Aisuebeogun, & Nigerian Airspace Management Agcy MD Mr Auyo. Replacements, Mr Uriesa and Mr Udoh respectively (Oct11)

Nigeria reduces BA LOS freqs to 3pw eff 31 Dec as Arik claims BASA breach in allocation of their LHR slots. Arik previously leased slots from BMI, now being sold by DLH. (Nov11).

Nigeria CAA fines BA USD135m and Virgin USD100m for alleged price fixing. Ban from Nigerian airspace possible for non-compliance. Both carriers objecting. (Nov11)

Senegal and Mauritania resolve 5th freedom spat – ‘misunderstanding’ DKR-NOU ops resumed after 3 month gap (Oct 11)

Senegal / Belgium new BASA signed but Brussels Airlines fifths beyond DKR, suddenly withdrawn on creation of new Senegal Airlines in Jan 2011, not reinstated. (Oct 11)

Senegal bans flights to/from Guinea air space following Guinea grounding an Air Senegal aircraft due unpaid bills. Guinea president says Senegal complicit in failed assassination attack. (Nov11)

South Sudan (Republic of) has become ICAO’s 191st Member State, (Nov11)

Swaziland construction of new Sikhuphe Intl Airport stalled due cost overruns. 2011 opening date postponed. Construction began 2003 east of Manzini. Part funded by Taiwan. (Nov11)

John Williams
1 December 2011

Thursday, 1 December 2011

Airline Downsizing Roundup.


There's a bit of it about.

Here are just a few current examples, big and small:

-American Airlines, frustrated at its lack of progress in negotiating a new deal with its pilots, has finally taken the path of its major US competitors and gone into Chapter 11 bancrupcy protection. This should enable it to renegotiate many of its labour and pension arrangements and downsize its cost base. Some of its international routes could get the chop too although nothing has been said yet. Had the unions been a bit more accomodating and acknowledged the airline's efforts to avoid Chapter 11 they might have protected a lot more than they now stand to lose. Unfortunately that is all to often not the way of unions. Protecting an undefendable past is their normal territory. Designing new futures and being part of these is not.

- Thomas Cook,struggling a bit right now, is to take 4 aircraft out of its UK fleet in Summer 2012. That was before its recent search for additional funds. Maybe more now? A sobering note about the future was struck by a bank today saying that unless they take drastic action they will be in the same cyclical cash flow position again this time next year. In the meantime restoration of customer confidence has to be their top priority or there won't be a next year.

-BA is reducing its long haul fleet by 2 in summer 2012 despite transfering its 3 x daily Moscow flights from short to long haul.Of five apparent new Heathrow new daily slots, 1 goes to Domestic (Glasgow), 3 to short haul and 1 to long haul to increase South American frequencies. No sign of those new Asian long haul destinations it occasionally talks about. The problem there is how to make money on routes with very high volume low yield leisure demand but not enough premium business. That's especially so when your main base (Heathrow) fleet is very largely configured with high large premium cabins and small economy ones.

- Astraeus, a highly competant largely contract operator, has closed due to lack of new business.

- Air Seychelles new CEO, Bram Stellar, hasn't wasted any time in securing Government agreement to do the previously unthinkable,- withdraw from London and Paris and concentrate on being a profitable regional carrier. The monthly fixed costs on the 3 767-300s alone was Euro 1 million, enough to ensure a loss weithout high utllisation and consistently high load factors. A codeshare deal has been put together with Etihad to give Air Seychelles access to their network with of course no attendant capital costs or liabilities. Air Malawi, Air Tanzania and a few others should take note and pick up the phone to the Gulf. There are much more pressing things for their governments to spend money on than a failing state airline.

With the Euro rocking about, fuel price prospects looking only northwards especially if export sanctions are imposed on Iran and potential customers feeling wary about spending money once the Yuletide splurge is over, we can expect to see some more belt tightening by many ,- specially the smaller carriers,- leaving the growing high quality, high frequency network Asian and Gulf airlines and their hubs in ever stronger positions.