Roundup of a windy week..

HURRICANE NEWS: Business along the north eastern seaboard of the USA has been severly interrupted by Huricane Percy and the resultant airport closures. JFK, La Guardia and Newark all had two day outages but were back up and running on Thursday morning, no mean feat when other surface transport links are making getting to and from work  a nightmare for many staff. Fortunately this is an amzingly resilient industry and often at its best when things are going wrong. Ground and air operational and customer service staff come into their own on these occasions and while those cosily esconced in  marketing and other more fashionable and usually better paid backroom functions are reduced to impotence . They become totally dependent on these people bringing in the revenue and kick starting inbound cashflow. Every hour saved in getting the network back on track is money in the bank and stems the relentless outflow of funds which mostly, other than direct operating costs like fuel, goes on regardless of whether or not  aircraft are in the air and passengers and cargo are being carried. CEOs and Boards could do well to pause a moment and think before awarding themselves larger bonuses for service recovery rather than diverting the money to those who rallied on the day, maybe slept in airport offices, worked disrupted rosters or battled their way to work through debris and traffic clogged streets and actually made it all happen. These people certainly weren't "working from home".



AIRCRAFT MANUFACTURING NEWS:  BAe, rescued from its senior management's and  uncomprehending UK politicians' call for a merger with (aka sellout to) EADS by Mrs Merkel over egging Germany's political demands, is showing signs of refocusing on the nasty side of business. That is to say ,making things rather than selling itself. Chairmen, CEOs and Boards are often mesmerised by mirages of greater corporate, not to mention personal, wealth via mergers, aquisitions, alliances and focus on them rather than plotting the company's long term survival by organically growing and making and developing the right and the right quality products. This isn't surprising. In many cases the "merger" or whatever other financial or organisational change is mooted is very exciting, drives adrenaline production, excuses inattention to the real business and at the end carries prospects of big personal financial gains. Not that they would be interested in the latter of course. Management buyouts are a classic. The people who have let the company underperform or even approach insolvency can offer to buy it at a knockdown price, suddenly find new unbounded energy to at least part rescue it and then flog it off at a much higher price to a venture capitalist or other who may well milk it almost dry and sell it on again to someone else who sees their own way of massaging a gain out of it,.. and so the gory tale can go on.

BAe has created its own problems. Back in history when the BAe One-Eleven , the first modern twinjet, started life in the early 1960s the company was still a big player in the airliner business. It was then heavily taken aback by the Heath government's political refusal to back the widebody twin BAe 2-11 which would have competed with substantially French Airbus A300. Heath was prepared to pay any price to get France to remove its objection to British membership of the then youthful  EU so the BAw 2-11 took the hit. BAe then lost interest in further developing or even producing the One-Eleven and killed it off to make way for another politically driven aircraft, the BAe 146 which eventually became a steady seller and outsold the One-Eleven. The company though still found the military market with its captive customer the UK Ministry of Defence, high margins and handful of further export markets much more attractive than the capital/development intensive civil side of its activities. It killed off the 146 development, the Avro RJX,with a single swift and merciless blow just after the excuse of 9/11. That was the end of making complete aircraft. It then concentrated on making Airbus wings . Its 20% shareholding in Airbus secured a monopoly position on that. Then in 2006 it sold its share in Airbus leaving its ongoing sole wing producer status open to challenge as well as price competition. Clever?............or not?

The news that BAe is now going to refocus on its opportunties as a standalone company is therefore welcome and long overdue. Whatever the safeguards, being a minority member of a larger entity would have meant that it been taken over, and it was not a true partner. How could it be? As an entity it would have ceased to exist. Ask the former BA about the reality of IAG.

Well done Mrs Merkel. You have saved BAe,- from itself.



UK AIRPORTS NEWS : The UK has seen a flurry of competing proposals for the provision of additional runway capacity in London and the South East, a matter which is subject of an urgent government review to be completed by.........2015 with some preliminary proposals promised within the breathtakingly short timescale of just one year. Presumably that will float a few possibilities and conclude "Please don't get excited.These are just a few ideas. Our full report is only 2 more years away. We will talk to you again then".
Meanwhile Boris and Olsen islands have been joined on the nonstarting grid by more runways at Luton, 3 more at Stansted and a new nod from Transport Minister Hammond towards the creation of a two airport hub "Heathwick",-that calling the 2 airports a single hub and linking the terminals by high speed (airside, immigration and customs bonded?) train. That should stack up well against CDG, Schipol, Dubai and others who can offer: "Your departure gate is 35 yards over there.." Heathwick staff could proudly declare: "Your departure gate is 35 miles over there..." Such are the dreams of politicians.



Another Heathrow story is that the state owned China Investment Corportaion has brought a 10% share in what was the BAA from the Spanish company Ferrovial. This gives the Chinese Government a seat on the 14 man board. The UK Government of course has a 0% shareholding and no board involvement. Notions that this move may open the way to more Chinese destinations being served, -a British government wish,- are fanciful. There are plenty of  BA slots in particular which could be used for these but the airline chooses not to. Instead it is adding more services to Manchester (also Virgin Atlantic's choice rather than more to China) and exciting new destinations like Rotterdam. The fact is that services between London and many provincial Chinese cities are more likely to make losses than profits .They don't have enough high yield business traffic or the very high volume of very low yield leisure customers to make them work for any aircraft currently in the BA fleet. BA's relatively small economy class cabins don't help but even then the volume isn't there for their 747s and 777s. The arrival of the 787 may help, especially if they came up with a small business class coupled with high density economy cabin. The leisure side of the business is almost entirely low cost Chinese groups but much of this market avoids the UK because of the separate visa fee of around £70 plus Britain's exorbitant Air Passenger Duty which makes flying long haul out of the country far more expensive than out of Amsterdam (no duty) and Paris (low duty). The UK Governments tourist-hostile fiscal and immigration policies are the impediment to more services to China.The lack of runways and slots at Heathrow is currently not one.


AFRICA NEWS: The continent's new Low Cost airline Fastjet, brought to you by the creators of Easyjet, Go and others ,seems to be morphing into Not So Fastjet as tripwires, problems, swamps even , some made by others making and some self inflicted appear out of the continents' dawn,- and that's often the best part of the day. The quick start route of being grafted onto Fly540 seems to have been an even quicker way into complications. Who did the due diligence before getting involved with a business who several newspapers report have serious issues with staff and fuel companies? No doubt it was seen as a quick way to aquire a Kenyan and other Air Operators Certificate so looked good on paper but was it really?  Just like anywhere else , one neds to go around with eyes wide open in Africa. The first two A 320 series aircraft are due to finally (?) arrive and start gobbling up leasing and other costs by the end of November. Presumably FastJet has a heap of initial working capital courtesy of generous backers so that's no problem?  Having opted for a first base in Tanzania rather than Kenya the first routes were/are to be the less than continent- moving ones from Dar es Salaam to Mwanza and Kilimanjaro. Other than that, fares as low as $20 from Dar to Nairobi have been mentioned. As Travel News Kenya notes, that's way lower than the taxes alone. Not a great way to start keeping up with those leasing payments, not to mention the very high levels of remuneration allegedly being paid to at least one or two of its key players. The launch of this venture doesn't look as easy as its proponents may have at first thought. Like the first foreign explorers they may be finding,- as those did ,- that the land has actually already been found by and is well known to those already living there. Furthermore these ungrateful people may not be lining up to gratefully accept a handful of shiny new low cost beads in exchange for their birthright. More to come on this one.

FLEET NEWS: Turkish Airlines have continued their "We can outflank the Gulf" strategy with additional orders for 15 A330-300s and and  B 777-300ERs. Like Thai,Singapore and Cathay Pacific , all canny bottom line as well as product focused, it has chosen to fly both fleets rather than go for commonality via a mix of 777-200s and -300s. These have always been interesting choices and others have faced a similar one when deciding between the A330-300 and the 777-200 ER and now LR. The 330s capabilities have gradually edged upwards via higher gross weights being offered and the decision has often come down to a one liner. If the A330 can do everything you want it to do then go for it. Once it becomes marginal,- ie doable but at a stretch ,- go for the go anywhere , do anything 777. Simple.