Tuesday, 28 August 2012

Heathrow 3rd runway.-(Parts of) the UK Government dig themselves further into the "No" hole.

There has been some hopeful signs that Britain's Conservative Party, self-impaled on their pre 2010 election pledge of "No 3rd Heathrow runway" which was unnecessarily aimed at the voters of West London, had been re-thinking its opposition, for which read total negativity, to this nationally essential project. It was even beginning to look exciting and as if something might actually get done to meet London's blindingly obvious need to keep its major international business, never mind aviation, hub status.

This morning, any such hopes came crashing down with Transport Minister Justine Greening's catageorical denial that the Government is about to even allow the Heathrow possibility to be part of the forthcoming review of London and Britain's future airport capacity needs. To rule out the most obvious, quickest, cheapest, least economically damaging (not only to London but the whole M4 corridor to the west as far out as Swindon) solution is absurd.  Such are the nonsenses of politics, particularly immature ones. Ms Greening stood in her constituency on a "No 3rd runway " ticket and she is deeply wedded to that agenda, which became part of the Conservative manifesto. It limited her flexibility of thought and action from the start but it was considered in 2010 that since "No runway" was eagerly embraced by the Conservatives' coalition partner the Lib Dems, it didn't bar her from being Transport Secretary .In other parts of the portfolio where she is not encumbered by this hangup she has performed well. Her recent announcement of extensive additional railway electrification is excellent and goes beyond what even the most optimistic expected.

Recently Ed Miliband's Labour Party has also moved away from its very pro and proactive stance on the runway when in power and joined the "No camp". That leaves his Party  also high and dry and with nowhere to go on the London hub issue in the short or medium terms. This is a serious problem . The need is now not even 2020, never mind 2030, 2040 or 2050 all of which could be the length of time it would take to get a new site and its connecting infrastructure, housing, support industries and the rest up and running on a Thames Estuary . The cost of that has been quoted by its protagonsists, including the charismatic but not always realistic Boris Johnson, Mayor or London as £20 or 30 billion. In reality it likely to be closer to £100 billion. This is is Britain with British costs, productivity levels, planning processes,environmetal wranglings and  local and national politics not non- Japanese Asia. 2030 is probably a non starter.2040 is a "maybe with a fair wind behind it" . It is taking a mimimum of 9 years to get a 5 mile link from the nearby Great Western mainline into Heathrow despite an empty station being there already ready and waiting,- and that's Ms Greening's published estimate.

Interestingly over the past few days there have been stirrings from the wiser heads in the Labour Party. Lord Adonis would certainly back the 3rd runway. Had he remained in office after the election he would have continued to persue it and by now the diggers and earth movers would have been on site.  Alistair Darling speaking yesterday on BBC Radio 4 was measured and persuasive about the need to get the runway built as soon as possible. He was also absolutely clear about the issue of the West London and M4 corridor economies. He talked very good sense in straight English rather than Westminster Politico-ease.

The way that British politics look right now there is a real chance of a Labour Government in 2015, and quite likely one with an overall majority so no need for a coalition of any kind. That may be high risk in many areas of economic and social policy, but for aviation, Heathrow and the real western London, it looks a better option than the one they face now.

FOOTNOTE: If , regardless of the realities, Heathrow really is to be condemned to death, east of London is not where its successor should be. Stansted is already there and it struggles despite reasonable road and rail links.


-1947/48 Heathrow masterplan showed 9 projected runways. 6 south of the A4  in a star of David . 3 in a triangle to the north between the A4 and where the M4 now runs.

-1953 The plan for the runways north of the A4 plan abandoned and the other 6 modified /reduced to cater for the central area terminal development.Gradually over time the number of runways has shrunk to 3 and then in the 1980s to the 2 pallel east-west ones currently in use.

-1971 The Roskill Commission set up to recommend a location for "the third London Airport" recommended Cublington/Wing in Buckinghamshire. 6 of the 7 Comissioners in favour. 1 produced a report opposing it on environmental grounds. Also great opposition by local, mainly Conservative groups. Government rejects the verdict of the 7 and selects the remote Foulness artillery firing range on the Essex coast instead. Also heavily opposed by environmentalists and the wild bird lobby.

- 1970s Foulness also dropped.

Since then, apart from the opening of Stansted as a modern airport with one runway and the promise not to build a second at Gatwick before 2018 nothing has happened.

Sunday, 26 August 2012

Qantas mulls ditching BA- and Singapore hub.

It's not only the UK's Conservative-Liberal Democratic coalition that's in trouble. In the airline world the nth generation Qantas/BA pool/alliance/joint services agreement lokks in trouble from Qantas' admission that it has  been talking to Emirates about a linkup which would see them ditching the one with BA and the use of Singapore as its Australia/Europe hub in favour of one with the Gulf giant and a new Dubai hub.

Geographically this would make sense,- at least for struggling Qantas. Politically it would make sense for Emirates by short circuiting a feeling in Australia that maybe the extensive traffic rights given to the new Gulf carriers has knocked their national icon out of the long haul business to Europe.

The geography of the "Kangaroo Route" is such that Qantas is strong in taking business out of the major Australian cities direct to an onward hubbing point ,- historically Singapore about 6 hours distant,- but is weak in then gathering in more and taking it all onward to multiple further destinations. Up against Singapore Airlines with their intra Asian frequencies and vastly superior service, Qantas draws little feed traffic into Singapore and the flow through from Australia simply can not provide enough business for profitable onward 12 hour sectors  from an Asian hubbing point to more than a handful of European destinations. The future use and economics of 787s might provide a bit of an answer but not enough of one. In addition to this problem, Singapore-Europe flights overfly very considerable markets between the Gulf area and Western Europe.

The geographical logic therefore says that Qantas, who have to be one stop only from its European destinations, should shift its hub to somewhere beyond Asia and from which passengers can seamlessly connect to pretty much anywhere east and north and even south of the Gulf. Bingo. Dubai. Abu Dhabi is already in cahoots with Virgin Australia and Doha somehow just isn't as attractive and is not an incremental tourist destination in its own right.

Apart from giving it some political insurance against any Australian protectionism , what does the deal offer Emirates? With 72 weekly flights into 4  Australian cities and Adelaide to be added soon, the company has a big stake in the country and will want to protect itself against that being constrained or reduced. It's something Australia in reality can't now afford to do but logic doesn't always prevail when things get tough for erstwhile national carriers. That's why alliance and brand-busting averse Emirates might buy the idea, but might equally well not. Up to now the airline has been determined to be master of its own destiny and it may well decide to reject the Antipodean suitor and carry on very successfully ploughing its own furrow with its own brand and style intact. While BA and Qantas styles are broadly similar and both very much "legacy" that would not be the case in a Qantas/Emirates tieup.

News of the discussions will not have gone down so well in IAG or BA's (separate) headquarters at Heathrow. Expressions like "betrayal" and "stab in the back" may be amongst the more polite coming out of these buildings. In committing to the Joint Services Agreement with Qantas in 1995 BA surrendered its independence in Australia, Singapore and Bangkok and has been marginalised in these places ever since.Until recently its services to Singapore and Bangkok were simply transit calls en route to Australia . Even now the 4 daily joint BA/Qantas flights from Singapore to London all leave late at night so as to maximise connectivity from Qantas's  flights from multiple Australian points . They all depart within an hour so no real attempt is made to compete for the local market with Singapore Airlines choice of 4 flights well spaced through the day.

For Qantas the Joint Services Agreement and its end may both give a feeling of strategic satisfaction. Right back to the 1930s the relationships between the two companies have seen a mix of love and hate and often mutual suspicion. For many post World War 2 years BOAC, then BA and the British Goverment were seen as arrogant and trying unsuccesfully to push Qantas into buying British aircraft which didn't meet their needs at the right time. Pressure to buy Britannias and Comet 4s were ignored in favour of Super Constellations , Electras and Boeing 707s, and possibly Electras apart, rightly too. Despite a number of pool partnership relationships most of the management and staff of both companies saw the other as their main rival to and from all points served between London, Europe, Asia and Australasia. The "Kangaroo Route" became ever more expensive to operate particularly  for airlines based at either end. High staff costs resulting from expensive traditional type union agreements were way above those achieved by the Asian airlines who, led by Malaysia-Singapore Airlines in June 1971, broke the long standing cartel on the route. They also achieved service and catering standards never consistently matched by the legacy carriers. Nor, thanks to enforced long layovers at one end of the route or the other could Europe or Australia based operators get the aircraft utlilisation achieved by the Asian and now the Gulf airlines. Whatever they did with the schedule they were always left with around 12 hours of dead time when they couldn't do anything else with the airrcaft. The answer for BA, short of total withdrawal which could now happen ,was to shrink their Kangaroo route operation until it is now left with just one daily service of its own to just one city, Sydney. Qantas could claim that by closely embracing its main competitor it has first anaesthetised and then strangled it.  The agreement has left BA with a weakened brand and no organisation of its own in Australasia and South East Asia. That makes a possible end to the Joint Service Agreement looks like several-nil to the Australians. No wonder the air might be a bit blue around Heathrow.  One thing is for sure. If Qantas were switch their relationship to Emirates they would find themselves talking to a very streetwise and clever partner who knows who needs who most. Emirates would be fair and do what they say they will do and be very focused and businesslike. The Dubai people will though know and understand all the history and there would be no chance of a similar pushover this time. If the switch does not go ahead BA may have received the jolt they need to thoroughly review the Qantas relationship and weight the benefits of every aspect of it. They now know that their partner isn't in it for love.

Friday, 17 August 2012

African Update June/July 2012

To begin, not a look back but a vision of the future.  In just a few days Ethiopian Airlines will take delivery of its first B787 Dreamliner.  The original delivery date has long since been passed and the wait must have seemed eternal.  But Ethiopian and the continent as a whole is poised to join the technological elite.  Ethiopian’s order is for 10 B787s.  This first aircraft , after initial ad hoc showcasing  substitutions on services to Entebbe, Kilimanjaro,Dubai  will operate the Addis Ababa - Johannesburg and Dubai routes.  Meanwhile Kenya Airways B787 frustrations have been compounded. Boeing is now talking of yet further delay to early 2014 for delivery of the first of 9 on order.   

The fleet problems faced by the two carriers during the much delayed 787 deliveries have been taxing.  767s have had to be kept in the fleet long beyond their planned retirement dates and additional 777s have been ordered to mop up volume growth on key routes.  None of which has been cheap and both carriers have successfully pushed hard for compensation from Boeing.

South African Airways is clearly under increasing stress.  Back in May it asked Government (its sole shareholder) for USD745million to enable fleet renewal and business restructuring.  Although it argued that this was not a bail out it was unconvincing.  Now it has announced the imminent withdrawal of its Cape Town – London services.  A near 25% fall in total UK-South Africa demand over the past 3 years will have been a significant factor but not the full story.  SAA’s base, Johannesburg is geographically poorly placed in a cul-de-sac at the bottom end of the continent.  It is a terminus at the end of the line and despite some pull in eastern and central Africa for traffic destined to South America and Australia and historically worldwide from Mozambique , Zimbabwe and  Malawi it is not a comprhensive hub.  Nor can it be developed to tap into major long-haul flows of traffic as practised so well by the Gulf states. In July the Public Enterprise Minister increased the pressure saying the airline needs ‘a whole new re-think’ adding that it cannot continue to ask Government for financial assistance.  SAA faces a deeply challenging 2-3 years as it contracts the long-haul network to concentrate on building African regional routes.

Safety hit the headlines in June.  The total loss of 2 Nigerian registered aircraft in 24 hours prompted the immediate withdrawal of operating licences and an NCAA audit of all operators.  Government has now gone further and is proposing mandatory IATA IOSA certification for all licenced Nigerian carriers.  Meeting in Abuja in July,IATA and ICAO urged government ministers of Africa to endorse and adopt a proposed  ‘Africa Strategic Improvement Action Plan’ to enhance safety progressively to 2015.Not least among the recommendations is the establishment of independent CAAs in all African countries but many simply don’t have adequate numbers of qualified and experienced inspectors . Higher salaries and improved conditions elsewhere steadily draws them away from home.

Whilst SAA grapples with historic problems, FastJet is moving to tackle the imminent difficulties of creating a pan sub-Saharan low cost carrier (LCC).  Nairobi, Accra and Dar es Salaam are to be hubs. Obstacles in the way will include protection of existing interests, obtaining traffic rights, and establishing maintainence bases . It will try to avoid unions like the plague. If successful ,passenger volumes are forecast to reach 5 million in year 3 as is profitability with an all-jet A320 series fleet.  Kenya Airways is also moving towards the launch of its planned LCC subsidiary, Jambo Jet but at what pace and whether their heart is really in this potential distraction from their mainline brand is not clear. The search for profitability will be tough but Kenya Airways perhaps has slightly better odds by choosing to concentrate on familiar East African routes whereas Dar es Salaam –Windhoek will be totally unknown territory for FastJet.

And in the margin, Air Tanzania sinks ever deeper towards oblivion. The operating fleet has been reduced to zero and now Government has fired the CEO plus 4 senior directors.


Air Tanzania sacked acting CEO Paul Chizi, and replaced him with Milton LusajoLazaro. Four other senior directors are also suspended.  (Jun 2012)

Ethiopian Airlines  launched the Addis -Toronto route in  July 2012. They are also evaluating a stronger presence in Asian markets, notably Singapore and Kuala Lumpur, plus ‘more destinations in China’  (Jul 2012)

Ethiopian Airlines will at the end of the year introduce Addis to Sao Paulo via Lome, Togo. They hope for a West/Central African feed of 40% by their owned partner ASky of Togo. (Jun 2012)

Ethiopian Airlines  are again talking of creating a new hub in ‘one of the Congos’ together possibly with another in Zambia or Tanzania.  (Jun 2012)  

Ethiopian Airlines has stressed the strategic importance of its increasing investment in flight crew and maintenance training centres in Addis Ababa  (Jun 2012)

Ethiopian Airlines  launched Addis-Toronto services from  July.  They are also evaluating a stronger presence in Asian markets, eg SIN, KUL, SEL, plus ‘more destinations in China’  .Another B777-200LR has also been ordered (Jul 2012) 

Kenya Airways’  USD250mn rights issue of March raised USD171m (70% uptake) to fund 10 year expansion ‘Project Mawingu’. Destinations are to rise from 56 to 115 by 2021. (Jun 2012)

Kenya Airways  CEO, Titus Naikuni, has called for wide-ranging cost-cutting, due sharp drop in profit levels in FY 2011-12. However the Aviation and Allied Workers Union has now obtained a temporary High Court injunction preventing the airline from declaring redundancies. The airline, despite its good terms and conditions, has always had difficult unions and often problematical relationships with staff at all levels.

The airline’s aggressive fleet and network expansion is to continue although it won’t be helped by further problems for Nairobi airport’s redevelopment. The latest is that the Transport  Minister is reported to have instructed the Kenya Airports Authority to reverse their decision to award a Chinese company a 55 billion shilling contract for the reconstruction of the airport. The Chinese company has protested to the  Public Procurement Oversight Authority .

The Abuja route will start in September but those to Muscat and Rome will cease.
Other new points are to be Lumumbashi via Lusaka. Next up should be Harare in November, possibly added as a call on the thrice weekly Maputo service.
Muscat has never really worked although starting in 2002 Oman Air had a good try with 737s from Mombasa which has the strongest and historic, some of them not too cheery, connections with the Oman. The Rome problem has always been low yield as there are on offer large volumes of rock bottom all inclusive cheap air fare/cheap hotel rate/ eat and drink as much as you like beach destined travellers but very few upper end and premium class passengers. This has been much the pattern since the 1960s and a number of attempts to make Rome work have failed and the service has been withdrawn previously despite howls of protest from the Kenya coast Italian community around Malindi.

Kenya Airways – as above , the  delivery of the first 787s now looks like being in early 2014 .  (Jun 2012)

Kenya Airways has mandated the African Export-Import Bank (Afreximbank) to arrange the  financing for 9x B787, 1x B777-300 and 10x Emb190 . Meanwhile it is awaiting government approval  to launch its proposed low cost subsidiary, Jambo Jet . Government may well be asking whether this is something the airline should really do rather than concentrate its management and resources on its prime task. In Europe BA faced the same problem with “Go” and quite early on lost its nerve and sold its successful offspring to a delighted EasyJet.

On its too frequently problematical industrial relations front , Kenya Airways has signed a new collective agreement with KALPA enshrining ‘mutual goodwill’ . Despite that it faces strong resistance to hiring 60 non-Kenyan contract (ie temporary  and non career)  pilots to meet fleet growth . Goodwill is a very difficult thing to quantify but clearly for the union it does not extend to overcoming the long standing antipathy to employing foreigners, even African ones. This itself doesn’t encourage foreign pilots to show much interest in joining.  The flight deck is a lonely and miserable place to be for anyone who isn’t welcome.   (Jul 2012 )

B733 ops from DAR to Lubumbashi via Lusaka. Flights to Harare and Angola are planned by Nov 2012.   (Jun 2012)

Precison Air is to resume ATR42/72 Arusha services  as runway work is nearing completion . Meanwhile B737-300 services are to commence from Dar es Salaam  to Lubumbashi via Lusaka and are planning to operate to Luanda and Harare the end of  2012. The airline's strategy is to expand regional services and they will be keeping a weather eye on Fastjet’s intentions while planning to add  3 ATR72-600s and 2 ATR42-600s to their fleet by mid-2014.(Jun 2012)


1Time on June 1st  withdrew from  at Lanseria to consolidate at  Johannesburg’s OR Tambo. Lanseira looks attractive from the cost point of view but the customers are so used to heading for the long time main airport that not enough are abandoning habits of a lifetime. (Jun2012)

1Time CEO, BlackyKomani, says agreement is close on new joint venture with an unnamed Southern African country.  Please let it be Malawi . See below.(Jun2012)

Air Malawi – Not for the first time the Government has declared  the loss to be unsustainable. The 2011 edition of  USD4.1 million is again so labelled. Government  policy is now avowedly  to seek a strategic investor to revive the company.  This will only work though if government backs off  and the investor has total freedom of action of obstruction from any source. Meanwhile Ernst and Young is to guide on company restructuring. No doubt they will do a thorough job , do a nice presentation and it will cost a lot of money. It could though be done in a day by one or two people  who know its business, its background and realities at a fraction of the price , if not on restaurant napkins then on on A4 sheets,-  and not many of them.  ( Jun 2012)

Air Namibia is to lease 2 new A330s  to replace its elderly, lease expired, 2 A340s. Fuel costs and initial engineering costs will go down but unless the A340 deal was terrible leasing costs will rise significantly .  (Jul 2012)

Air Zimbabwe has taken delivery of a second A320 leased from China Sonangol.  The first arrived in January 2012.  A Ernst and Young  report on restructuring is imminent.  They can then go on to Malawi (see above) (July 2012)

Air Zimbabwe  IATA is allowing 90days for IOSA re-certification or the airline will lose membership .(Jun 2012)

SAA is ceasing will withdraw from Capetown –London on 15th August citing a 24% drop in UK-South Africa volumes caused over the last three years in part, by the UK’s high APD tax and USD80 transit visa.
On  17Aug it will extend current two of its weekly Johannesburg-Accra A330  services to Abijan with local traffic rights. On September it will launch rwice weekly  A319s to Brazzaville  (Jun2012)

SAA Public Enterprise Minister says the airline ‘needs a whole new rethink’ and that ‘it cannot keep approaching government for financial assistance’  (Jul 2012)

SAA and Qantas  have been granted interim extension of permission to codeshare on their flights between Johannesburg, Perth, and Sydney, until the end of March 2013.  (Jul 2012)

SA Airlink on 15th June  launched  ERJ135 flights from  Joburg to Maun. Larger RJ 85s are due to take over in due course . (Jun 2012)

Swift Air (Malawi) despite its early promise has ceased flying.  Cash and debt difficulties are blamed. A familiar problem for startups who simply underestimate the cost of an initial period of flying with low loads . The Malawi CAA also has also questioned alleged licence breaches. (Jun 2012)

Zambezi Airlines resumed business on mid-June with 1 CRJ200 leased from SA Express.  (Jun2012)


Air Nigeria continues to have an unhappy life. There has been a  strike by pilots over unpaid salaries and other cash related grievances.  To compound the headaches the NCAA suspended all operations  pending ‘safety inspections’ following engineers strike and for doubts over the financial security of the company.   Such things don’t impress the customers. As if that were not enough the CEO was arrested for USD3 of unpaid corporate taxes. The Chairman was also sought, allegedely for mis-use of GoN Aviation Intervention Fund monies.
It doesn’t therefore come as a surprise that GECAS re-possessed four leased B737-300 . Air Nigeria executives must wonder what a good day in the office would feel like.  (Jul 2012)

Associated Aviation (Nigeria) a domestic operator  has taken on  4 Emb145s (Jul2012)

CTK CityLink Airlines (Ghana)is  resuming  Accra-Kumasai/Takoradi with 1 F100. Accra –Kumasi fels a bit crowded with 70 weekly frequencies by 4 operators but nevertheless it is on FastJet’s list of initial Ghana A319 operated domesic services.  Meanwhile Antrak Air which has ploughed a steady if unspectacular furrow despite the surprise purchase a few years ago  of 2 ex Ghana Airways DC9s which it then seemed never to actually operate, stopped flying for two months but is now back in the air with a leased ATR and only doing the Accra-Kumasi route. (Jun 2012) 

Dana Air (Nigeria) The NCAA suspended their licence indefinitely following the totally fatal  MD83 Lagos crash (Jun12)

Fastjet is planning an October launch in Nairobi and Accra using existing Fly540 AOCs.  It will be an all-jet operation flying  leased A319s with 156 seat configuration. The existing Fly540 leased turbo-props and the Fly540 brand will gradually disappear.  Bases in Tanzania and Angola are to follow. It sees huge potential for a pan-African Low Cost carrier but it will be a tough nut to crack. Ed Winter who worked with Barbara Cassani in Go and later with Easyjet is appointed appointed as CEO. They will need some solid Africa expertise in their top team .(Jun 2012)


Afriqiyah has resumed flying Tripoli -London Gatwick with an A320.   (Jul2012)

EgyptAir Group is considering subsidiary EgyptAir Express using E190 or Bombardier CSeries to take over certain B735 African routes from parent EgyptAir. (Jun 2012)

Royal Air Maroc to lease A310 from HiFly (Portugal) for the summer 2012 season  (Jun 2012)


Air France added daily Abuja flights to its Lagos and Port Harcourt Nigerian points on 4th June.  Added to the new Kenya Airways Nairobi service this gives the Nigerian capital more useful spokes to its international network.(June 2012)

Air France has entered a codeshare with Air Burkina and Air Mali . This looks like a defensive move following joint investment by AKFED (Aga Khan Fund for Economic Development) in the new Air Cote d’Ivoire. Its predecessor was historically an Air France groupie.  AKFED  also has holdings in Air Burkina and Air Mali , both in territory in which Air France has historic and threatened interests.  French speaking West African countries tend to have a love/hate relationship with Air France often publicly decrying their dominance on routes to Paris but privately preferring their service (Jun 2012)

British Airways  on the other hand is not involved in a scramble for Africa . Seemingly quite the reverse in fact despite many others piling in to the continent and some long and profitable assosciations going back to the 1930s. June saw the withdrawal of services on the previously BMi operated  Heathrow - Addis Ababa route . Presumably this will help free up slots for the airline’s new 4 daily London-Leeds services. Meanwhile the airline continues to blame lack of slots for its inability to expand its long haul operations , especially to China , Asia and South America. With the withdrawal of Virgin from Nairobi-London a logical move would have been to grasp the nettle and go double daily offering overnight and daylight flights in both directions . These would have given all the competition a headache but there is no sign of any enthusiasm in BA for that .(Jun 2012)

Brussels Airlines  , undeterred by likely low yields on this mainly holiday/inclusive tour route plans to extend its experience of serving destinations throughout Africa with a November launch of Brussells -Mombasa scheduled services. (Jul 2012). 

Emirates on 01 June launched B777-300ERs between Dubai and Durban.  (Jun 2012)

Etihad  joined the Gulf/Lagos traders and sixth freedom markets fray on 1 July with six weekly A330-200s between Abu Dhabi and Lagos. (Jul 2012)

Iberia also expanded its African reach by starting Madrid-Nouakchott-Accra with A319s.

KLM another Africa enthusiast is adding 3 weekly  A330-200s to Harare from October.  Harare is definitely beginning to come in from the cold despite the continuing Mugabe regime. (Jul 12)

Lufthansa While SAA has withdrawn from Capetown –London  Lufthansa  is adding a link to its secondary hub in Germany with the launch of Munich to Cape Town in time for the European winter season. Services start in September.  (Jul 2012)

Qatar Airways added  A320 flights to Kilimanjaro eff 23 July .Its East Africa coverage which now includes Entebbe, Nairobi, Dar es Salaam . Also to come in August are new services to Mombasa  and  Zanzibar . Competition in this region gets tougher by the day.    (Jul 2012)

Ryanair has withdrawn 34 weekly services in Morocco, citing higher charges levied by the country's airports authority, ONDA.  (Jun 2012)

Turkish Airlines CEO TemelKotil says that 2012 will see African cities served rise from 20 to 30 with 40 anticipated for end-2013. Most cities will be served by  B738 and B739Ers specifically configured for these long (for narrowbody)routes. Elsewhere this airline’s relentless persuit of more and more spokes from its Istanbul hub is seeking Nigerian approval for scheduled services to Abuja and Kano . This carrier hardly stops for breath in its dash for network expansion and reach. and one has to assume that the Turkish Government sees this project to establish the carrier as a real alternative to the Gulf airlines as a national one which they will underpin financially. (Jul 2012)


Ghana is to seek USD741m investment for development of 5 national airports. (Feb 2012)

IATA and ICAO are urging government ministers of Africa to endorse and adopt Africa Strategic Improvement Action Plan to enhance safety progressively to 2015  (Jul 2012)

Libya, Tripoli International Airport was temporarily closed on 4 June after militia seized the tarmac and grounded all flights. Libyan army has since regained control (Jun 2012)

Nigeria the federal government directs the NCAA to audit all operators in Nigeria following the Dana Air MD80 Lagos crash. ICAO invited to conduct the audit. (Jun12)

Nigeria  Government is specifying IOSA certification as mandatory for all Nigerian licenced operators  (Jul  2012) 

South Sudan  The EU has granted  €12.5m for Juba Airport security upgrade.  That looks like a lot of money for the task  .Air Uganda, Kenya Airways and Ethiopian Airways operate  (Jun1 2012) 

Tanzania Arusha airport has reopened with its runway extended and new a terminal building. The dilemma here for Arusha’s original airport and close to the town,  ever since underutilised Kilimanjaro on the plains between Arusha and Moshi opened in the 1960s ,has been how to update and improve it while not drawing much needed business away from Kilimanjaro.  (Jul 2012)

Tanzania Government is facing union type pressure against licencing of non-Tanzanian pilots.(Jul 2012)

John Williams
 August 2012

Friday, 3 August 2012

IAG's Shareholders,- the pain continues.

Last year the newly formed IAG posted a first half profit to June 30th of 88 million Euros. This year it has come in with a loss of 253 million Euros thanks to a BA profit of 13 million being eclipsed by an Iberia loss of 263 million.

While many "analysts" fail to have consistently failed to clock the realites this will come as no surprise to seasoned BA and now IAG watchers and it's not all down to the current Spanish and Euro woes.

The creators of IAG understood that while BA has over the past decade and more shed large numbers of staff and made good progress on many aspects of working practices and productivity, Iberia was barely at the starting line. It was the potential of getting Iberia to the same place as BA and then taking both brands beyond that in efficiency terms that made the case for putting the two together under a newly created umbrella company look most attractive. Increased revenue and synergies from "savings" are claimed in all mergers but are difficult to really pinpoint and leave feelings that they have been over optimistic and overstated post facto.

Former BA shareholders are again seeing chances of early dividends recede .BA employees will wonder why "their " airline has been saddled with the potentially enormous costs of keeping an erstwhile competitor afloat as that task will consume money better spent on building the business, renewing the fleets and expansion. Paying interest on accumulated losses is never fun . It's just drag and doesn't move the business forward.

IAG's CEO, Wille Walsh mentions "stark differences" between the two companies. That's not news to anyone and never has been for a good few decades. He frowningly promises a restructuring plan for Iberia. That too has been neessary from long before the "merger", so why only now?  Better late than never, it will include staff cuts, productivity increases, and some route rationalisation to try to establish a new lower cost higher quality platform . Once achieved, both owned brands can at some time resume growth and fight their competitors. For Iberia, Spanish labour law and attitudes to slimming down are not encouraging and the whole thing could become a long , drawn out  debilitating , morale sapping ( and that's just for the management) battle with serious costs long before any promised land is reached. For BA there are still entrenched productivity and service quality issues so even there it's work in progress. That's before we talk about the short term costs of running BMi or its Heathrow slots until a new overall BA brand strategy on route development emerges, matched with the purchase and delivery of aircraft to meet the new needs of more long haul, destinations and frequencies, developmental routes, and the rebuilding the Asian network in particular. The long haul  side of the BA business has been investment starved for a dozen or more years and the funding of Iberia's losses isn't going to make things any easier now.

Walsh himself says "Iberia's problems are deep and structural". That's why BA's staff and former shareholders clutching their replacement IAG scrip can reasonably ask:" What's happening? Why do we have to pay for all this?  When will things get better ? Why did the former BA Board lead us here?"

There are no answers in today's statement and the ritual blaming of the economic rain in Spain for the current pain simply doesn't cut it.