Preflight

Revenue rose five per cent to $8. 46 billion, Qantas’s first half results presentation showed.

While the reduced fuel bill – Qantas paid $448 million less in the 2015/16 first half compared with the prior year – had also played a part, chief executive Alan Joyce noted not all airlines were benefiting to the same magnitude as Qantas.

Rather, Joyce said the overall result was driven by the airline’s cost reduction program, which yielded $261 million in savings in the half, bringing to $1. 36 billion the total savings achieved as part of the airline’s $2 billion transformation program.

This was best illustrated when Qantas’s results were compared with half-year figures of local rival Virgin, Joyce said.

“If you look at it against our major domestic competitor here, Qantas, three times the size, made 11 times the profitability and 140 times the operating cash flow. There is something more going on than just fuel,” Joyce told reporters at the airline’s Mascot headquarters on February 23.

Underlying profit before tax, which excludes one-off items and was regarded as the best indication of financial performance, came in at $921 million, up from $367 million in the prior corresponding period.

It was the highest first half underlying result in Qantas’s history and at the top end of company guidance issued in December of a result between $875 million and $925 million.

On February 29, Moody’s upgraded its senior unsecured ratings of Qantas to “Baa3” from “Ba1”, restoring an investment-grade rating that was lost after the ratings agency downgraded the company in January 2014, the year Qantas posted a $2. 8 billion statutory net loss after writing down the carrying value of the fleet.

The decision from Moody’s follows Standard and Poor’s move to upgrade Qantas back to investment grade in November 2015. One benefit from an improved credit rating is the ability to borrow at lower interest rates.

Moody’s vice president and senior analyst Ian Chitterer said the return to investment grade reflected Qantas’s reduced debt, the low fuel price environment and the company’s efforts to cut costs.

Further, the focus on return on invested capital indicated Qantas was taking the necessary steps to address volatility, periods of sustained weak demand and high fuel prices.

“The upgrade of the senior unsecured rating to Baa3 is based on the significant reduction in leverage since FY2015, on the back of lower fuel prices and continued success of its transformation programme as well as a reduction in debt by AUD1 billion from the level in FY2014,” Chitterer said in a statement.

The ratings agency also noted the impact of Qantas’s ongoing focus on costs on its financial performance.

“We view continued implementation of this program as critical to improving the competitiveness of Qantas’s operations over the long term, while maintaining its premium service levels,” Moody’s said.

“As such, we expect Qantas to continue focusing on its transformation agenda post 2017, through operational and fleet-enabled efficiencies. ” Qantas International was a star performer in the half, with underlying earnings before interest and tax (EBIT) surging to $270 million, compared with $59 million in the prior corresponding period.

Joyce said it was the best result for Qantas International since the global financial crisis, “probably close if not the best that it’s had in its history”, with operating margins increasing seven percentage points to 9. 1 per cent in the half.

To help meet the expected inbound demand, Qantas planned to maintain its Boeing 747-400/400ER fleet at 11 aircraft in the period ahead, reversing a previous decision to retire two of the aircraft by the end of 2015/16. It also announced it expected to hire 170 new pilots over the next three years, its first significant recruitment of pilots since 2009. During this time, the airline is bringing the first of eight Boeing 787-9 Dreamliners into the fleet.

“The outlook for our members will always be brighter if they are flying for a profitable airline which is expanding its network and bringing on new aircraft types,” Australian and International Pilots’ Association (AIPA) president and Qantas pilot Nathan Safe said in a statement.

“We believe this will be the tip of the iceberg as far as pilot recruitment is concerned now that Qantas has made substantial improvements to its bottom line. ” Qantas’s domestic network lifted underlying EBIT by 70 per cent to $387 million, compared with $227 million previously, and achieved double-digit operating margins at 12. 9 per cent.

While the resources sector remained weak – Joyce said Qantas expected a $50 million drop in revenue due to the weakness in the mining-related markets – the financial services and government sectors were healthy.

Qantas said it would continue to shift capacity out of WA and Queensland, including the use of smaller aircraft in those states and was moving two Boeing 737-800s currently flying in WA onto international routes, with three Fokker 100s to join the fleet operating intra-WA services.

We expect Qantas to continue focusing on its transformation agenda post 2017, through operational and fleet-enabled efficiencies.

The Jetstar group of airlines – comprising Jetstar Australia and New Zealand, Singapore-based Jetstar Asia, Jetstar Pacific in Vietnam and Jetstar Japan – reported underlying EBIT of $262 million, up $181 million from the prior corresponding period.

It was a record result for the low-cost airline group and the third biggest contribution to underlying earnings, behind Qantas Domestic and International.

And Jetstar’s Asian ventures were “collectively profitable in the first half, compared to a loss in the prior comparative period”, Qantas said, with Jetstar Japan posting its first half year profit amid improved fleet utilisation and expansion onto international routes.

Tourism boom supporting Air NZ growth

Air New Zealand chief executive Christopher Luxon says the airline’s recent capacity growth is being absorbed by a booming tourism market as the airline reports net profit more than doubled during the 2015/16 first half.

The company said on February 25 net profit for the six months to December 31 2015 came in at $NZ338 million, up 154 per cent from $NZ133 in the prior corresponding period.

Air NZ grew capacity, measured by available seat kilometres (ASK) 16 per cent across its domestic and international network in the first half, including launching two long-haul routes to Houston and Buenos Aires, respectively.

That additional capacity had been well digested by the market, with demand, measured by revenue passenger kilometres (RPK) up 17 per cent and passenger revenue rising 16 per cent. New Zealand overseas arrivals were up 10 per cent in the 12 months to December.

Further, load factors on Tasman and Pacific island services were up 0. 6 percentage points to 83. 8 per cent in the half, while they rose 0. 7 percentage points to 86. 1 per cent on its international network.

And there is more capacity growth coming, with seasonal services to Ho Chi Minh City starting in June and a return to Osaka from November. ASKs were tipped to grow seven per cent for the six months to June 30 2016.

However, Luxon and CFO Rob McDonald were questioned about the airline’s yield performance during the first half results analyst briefing. Yields, the industry measure of average airfares per passenger, across the network were down 1. 1 per cent in the half.

Luxon said that Air NZ, with its simplified fleet of fuel-efficient aircraft, “ruthless” focus on maximising revenue and reducing costs, was well placed to meet the challenge from other carriers.

“We are handling competition well. Air NZ has a great strategy that serves it well,” Luxon said.

“Air NZ is a fantastic street fighter. ” In terms of the Tasman, which Air NZ serves as part of an alliance with Virgin Australia, Luxon said tourist arrivals from Australia to NZ were growing by six-seven per cent and Air NZ had the capacity to meet that demand.

“Australia remains a very big tourism market for New Zealand,” Luxon said.

“It’s important that we’ve got that capacity there that links in with that tourism growth.

“I’m very comfortable with where we sit with yields in general across the business and certainly across the Tasman as well. ” Although Luxon acknowledged it was still only early days, he said Air NZ was in “good shape” in the regional market after the start of Jetstar’s Q300 turboprop operations to regional centres in December 2015.

“It hasn’t impacted us as much as we had anticipated to be honest. Maybe it is just a bit too early to see,” Luxon said.

“The bottom line is our competitors got off to a pretty poor start. I just look at last week, I think on-time performance and reliability was 20 points lower than what Air NZ was doing in regional New Zealand.

“We just have to keep the regional piece in a bit of perspective. From a domestic point of view it is four aircraft versus Air NZ’s 50 turboprops in regional NZ and we obviously have a superior lower-cost aircraft as well. ” Luxon said Houston and Buenos Aires had made a positive contribution to the Air NZ network “from day one”, while inbound tourism to NZ had grown 10 per cent in the year to December. The Air NZ chief executive added the airline brought in four in every 10 visitors to the country.

United upbeat on Australian routes

United’s improved on-board offering and the use of Boeing 787-9s on all Australian and New Zealand services will ensure the airline remains competitive amid new carriers and new services in the market, a senior executive from the airline says.

The Australia-US market is currently in a period of expansion, with American Airlines commencing its own flights from Sydney to Los Angeles in December, while its alliance partner Qantas has returned to the Sydney-San Francisco route.

There is also capacity growth coming across the Tasman, with American to start Auckland-Los Angeles from June and United to begin Auckland-San Francisco flights the following month as part of a revenue sharing joint-venture with partner Air New Zealand, which itself launched flights to Houston in December.

United managing director for Japan and Pacific sales Alison Espley, who led the Star Alliance member’s operations in Australia for many years before moving to her current role based in Tokyo, describes current conditions as a challenging revenue environment.

However, Espley believes United’s revamped service on Australian routes – recent changes have included bringing back the two checked baggage allowance, as well as complimentary beer and wine in economy – have ensured the airline is able to continue to meet the needs of the travelling public.

Schedules have also been tweaked to allow for an earlier arrival into the United States, ensuring shorter connecting times for passengers travelling to points such as New York, Chicago, Miami or Las Vegas.

“We are responding to what customers have told us they wanted,” the Tokyo-based Espley told Australian Aviation in an interview during a recent visit to Australia to celebrate the airline’s 30th anniversary in this country.

The switch from the Boeing 777-200ER to the 787-9 on its Sydney-San Francisco and Sydney- Los Angeles services was scheduled for March 27 and 28.

Although the aircraft change means United will no longer offer first class to Australia, it does represent an improvement in the business cabin with a 2-2-2 configuration in the 787-9 compared with a 2-4-2 layout on the 777-200ER featuring a mixture of forward-facing and rear-facing seats.

United already flies the 787 on its Melbourne-Los Angeles nonstop flights that kicked off October 2014.

“The Dreamliner flights to Melbourne have been very encouraging and we are confident the customer satisfaction will be similar when they start flying to Sydney,” Espley said.

In terms of the impact on its Sydney-San Francisco flights following the return of Qantas on the route at Christmas, Espley said United was holding its own in the face of the renewed competition.

The United executive said the strength of the airline’s San Francisco hub with more than 100 connections, coupled with the millions of United’s MileagePlus frequent flyer members and its profile in Australia built up in the 30 years since it first commenced flights to Australia, leaves the airline in a good position to compete.

“We are very pleased with the performance of the San Francisco route,” Espley said. “It is still meeting expectations, as are all our Australian routes. ” On March 11, Air NZ and United announced plans to enter into a revenue sharing arrangement on New Zealand-US routes, further deepening a partnership that was first established in 2001.

United vice chairman and chief revenue officer Jim Compton said: “This joint venture will allow us to work more closely with Air New Zealand to optimise our trans-Pacific schedules and offer more convenient flight choices to our customers in both the US and New Zealand. ” “We look forward to continuing to work with Air New Zealand, an industry innovator and leader, to further grow our business in ways that will benefit our mutual customers. ” Asked whether the revenue sharing arrangement would require any government approvals from either the US or NZ, an Air NZ spokesperson told Australian Aviation: “Air New Zealand and United Airlines have an existing regulatory approval to cooperate on routes between New Zealand and the USA. ” Air NZ has revenue sharing arrangements with Virgin Australia, Cathay Pacific, Singapore Airlines and Air China.

Aviation’s Mr Controversial graces Sydney

Akbar Al Baker is a very controversial figure in aviation. Don’t take Australian Aviation’s word for it, that’s the opinion of none other than the man himself.

Introduced as “His Excellency”, Al Baker fronted journalists and other invited guests at a swanky Sydney hotel on March 3 to talk up the start of Qatar’s new daily service to Sydney, which touched down for the first time the previous afternoon following a spectacular flyover of the Harbour and Opera House.

Al Baker had those in attendance prepared for fireworks when he declared at the start of the media conference, which began more than half an hour late and required two introductions from the MC: “I know that my airline is always creating a lot of hype wherever we go and I am sure you also know that I am a very controversial figure in the aviation industry. ” What followed was an hour where Al Baker had yet another dig at Delta Air Lines over the airline’s efforts to wind back the open skies agreement between the US and Qatar, chided a questioner for suggesting the oneworld alliance member had “relatively low brand awareness” in Sydney and blasted Pratt & Whitney over the engine issues that forced Qatar to refuse acceptance of the Airbus A320neo.

The Qatar chief executive also called on the International Air Transport Association (IATA), where he is a member of the Board of Governors, to do more to help locate missing Malaysia Airlines flight MH370 and defended the handling of a runway overrun incident at Miami Airport in 2015 when a Qatar aircraft struck approach lights on takeoff, despite the pilots on the flight now no longer being with the airline.

“This runway overrun happens very often in airports,” was how His Excellency described the incident.

“Rest assured that it will be the last time that Qatar Airways aircraft overrun. ” Asked why the pilots were no longer working at Qatar, Al Baker said: “In Qatar Airways we will not accept any kind of lapses by pilots because they have hundreds of passengers whom they should never risk. ” “He [the pilot flying] was not asked to leave because he did anything by putting passengers at risk, but what he did was he violated the company regulations on takeoff distance required by an aircraft, especially with the weight he was carrying on that aircraft.

“This is not particular to Qatar Airways. He would have been asked to leave post investigation in any other airline he would be working for, including I am sure at Qantas. ” But perhaps his most passionate comments were in response to a question about Qatari culture.

Australian trade unions protested against the airline over its treatment of women outside the hotel where the media conference was being held and were present at the entrance to Qatar’s private function at Darling Harbour later that evening where invited guests, politicians and celebrities enjoyed a performance from Kylie Minogue.

Al Baker said Qatar (or “my country”) was “conservative, but at the same time modern”.

“In my country you [women] can mix with men, you can swim in the same swimming pool, you can wear modern clothes – mini skirts – and also my country is not dry,” Al Baker said in response to a question.

“But at the same time like I have to respect traditions of Australia when I am in Australia, we also expect Westerners to come to my country also to respect the Islamic traditions of my country.

“Women have equal rights as men under the constitution of my country.

“I think that giving negative projections or negative reflections by certain trade unions that are not allowed in my country does not mean Qatar does not give equal rights to women. ” And although the MC, television presenter Sally Obermeder, had started to wind up proceedings towards the end of the event, Al Baker intervened, saying he was happy to take questions until all had been asked.

Clearly, aviation’s Mr Controversy is happy to hold court, and court controversy wherever a microphone is present and there is a camera to look down.

Rex posts first half loss due to impairment charges

Regional Express (Rex) has swung to a rare first half loss due to impairment charges relating to the end of a Defence contract.

The company reported a statutory net loss of $11. 4 million for the six months to December 31 2015, compared with net profit of $3. 9 million in the prior corresponding period, Rex said on February 24. It was the airline group’s first statutory net loss since 2002/03.

The result was impacted by impairment charges totalling $18. 1 million, including $6. 6 million for goodwill and $6. 8 million for assets relating to the end of a Defence contract at Nowra held by its Pel-Air subsidiary.

“That tender has now ceased on October the first of last year,” Rex deputy chairman John Sharp said during Rex’s first half results presentation in Sydney.

“So therefore the goodwill value in that tender has now been accounted for on the books and similarly the impact of asset impairment is caused by the same event, the cessation of the contract. ” There was also a $4. 7 million negative adjustment for the company’s fuel hedging program.

Absent those impairment items, Rex achieved an operating profit after tax of $3. 3 million for the half, down from $3. 9 million in the prior year.

Passenger numbers rose 0. 7 per cent to 550,323, while capacity in ASKs rose 1. 7 per cent in the half.

Load factors were up 0. 2 percentage points to 54. 8 per cent. The average Rex fare was $205. 70, up from $194. 90 in the prior corresponding half.

In terms of the outlook, Sharp said conditions were likely to remain subdued in the period ahead.

“Underlying business passenger demand is expected to continue to soften due to negative impact of plunging oil prices and continued China weakness,” Sharp said.

“The mining industry for example is slowing down dramatically. We are affected by that. A number of the towns and communities that we service have a mining component to them and the passenger numbers have declined there as a consequence of that. ” The company expected the net outcome of the negative impact from the sluggish business conditions and the positive impact from the start of WA regulated routes and the recently signed contract between Rex’s pilot academy and Vietnam Airlines to be “neutral to underlying profits in the second half of the year”.

And with some regional markets struggling, Rex executive chairman Lim Kim Hai said the company was open to expanding through acquisition, such as the recent decision to buy the Douglas Aerospace paintshop in Wagga Wagga.

“Regional airline business in Australia is also facing quite a bit of challenges. A lot of them may be facing difficulty so if it makes sense in the type of operations that we do, we will not it rule out to either merge or acquire other airlines,” Lim said.

Corporate Air expands into RPT

Charter operator Corporate Air is expanding into regular public transport (RPT) operations from April 11, with Brisbane-Coffs Harbour the inaugural route to be flown by 34-seat Saab 340Bs.

Canberra-based Corporate Air has been flying since 1972 and has established Fly Corporate for its RPT services using a fleet of four Saab 340Bs and two 19-seat Metro 23 turboprops.

The Brisbane-Coffs Harbour route was scheduled to operate a return service on weekdays – a morning departure from Coffs Harbour and late afternoon departure from Brisbane – to allow travellers from Coffs to have a full day in Brisbane and return home the same day.

There will also be one flight on Saturday (Coffs Harbour-Brisbane) and one on Sunday (Brisbane- Coffs Harbour).

Air NZ returns to Osaka

Air New Zealand is expanding its presence in Asia with a return to Osaka (Kansai).

The seasonal three times weekly Auckland- Osaka (Kansai) flights are scheduled to begin in November with Boeing 767-300ERs and run until March 2017.

Currently, Air NZ flies 10 times a week between Auckland and Tokyo with Boeing 787-9s. Demand for travel between Japan and New Zealand had grown significantly since it cut flights to Osaka in 2013, the airline said, allowing for the resumption of nonstop services to Japan’s second largest city.

The three flights a week will run on Wednesdays, Fridays and Sundays, with a morning departure from Auckland and early evening arrival at Osaka (Kansai) about 11 hours later. After a short time on the ground, the 767 returns to Auckland as an overnight service.

RAAF’s AOSG becomes Air Warfare Centre

The RAAF has formally stood up the Air Warfare Centre, a key element of its Plan Jericho transformation plan, during a ceremony at RAAF Base Edinburgh on February 25.

Air Warfare Centre (AWC) replaces the former Aerospace Operational Support Group (or AOSG) and achieved initial operational capability (IOC) on January 11.

“The future of the AWC is as dynamic as it is exciting. Importantly, you will have a key role to play in the transformation of the Air Force in the future,” AWC commander Air Commodore Stephen Meredith said.

The old AOSG comprised the Development and Test Wing and the Information Warfare Wing, and also had responsibility for the Woomera test range. In its place the new AWC is structured into directorates, comprising Integrated Mission Support, Capability and Logistics, Test and Evaluation, Information Warfare, Air Force Ranges, and Tactics and Training. Like AOSG, AWC’s headquarters and most of its units are based at RAAF Base Edinburgh.

The establishment of an air warfare centre was heralded by then Chief of Air Force Air Marshal Geoff Brown in his launch of Plan Jericho in February 2015.

The subsequent Plan Jericho ‘Program of Work’ document notes that: “Air Force lacks the systemic ability to generate rapid, cogent and integrated combat capability solutions in response to current and future capability gaps and bottom-up innovation opportunities. ” In response it promises that: “an Air Warfare Centre … will become the centre of innovation and thinking for integrated operations. ” Air Warfare Centre’s full operational capability (FOC) is scheduled for 2020.

Bombardier upbeat on Oceania

Buoyed by a confidence-boosting order from Air Canada, Bombardier is looking to grow its presence in Australia and New Zealand in both the turboprop and jet sectors.

Currently, QantasLink is a significant Bombardier customer with Dash 8 series of turboprops in its fleet. Meanwhile, across the Tasman, Air New Zealand, although a big ATR operator, also has a number of Q300s for regional services. Virgin Australia operates no Bombardier aircraft, having chosen the Embraer E-jets and ATR turboprops.

However, no airline in this part of the world has committed to the CSeries, a clean-sheet design targeting the 100 to 150-seat market that has faced its share of challenges as it inches towards first delivery to Swiss in the second quarter of 2016.

The program has suffered cost overruns and delays, including a three-month halt to flight tests after an uncontained engine failure, which made some airlines interested in the CSeries sit on the sidelines.

There was some positive news for the beleagured CSeries in February, when after more than a year without any new orders, Air Canada signed a letter of intent to buy 45 CS300s, as well as options for 30 more of the type.

Bombardier Commercial Aircraft vice president for sales Frank Baistrocchi, who is responsible for the South-East Asia and Australasia regions, says the Air Canada commitment was a tremendous vote of confidence in the CSeries program, which features the CS100 designed to seat 110 passengers in a single-class configuration and the larger 135-seat CS300, based on 32in seat pitch.

“We are all ecstatic,” Baistrocchi told Australian Aviation in an interview on the sidelines of February’s Singapore Airshow.

“When we see large marquee-type operators moving forward with the aircraft that certainly gives other interested buyers the confidence that the aircraft is likely to meet their requirements as well.

“Essentially it reinforces the decision for the airlines that have already bought the aircraft and for any prospective customer that is looking at it, it gives them confidence that the product is everything Bombardier says it will be. ” In an Australian context, Baistrocchi sought to highlight the suitability of the CSeries as the replacement aircraft for those Fokker 100s and Boeing 717s currently flying in this part of the world.

While those older generation aircraft do come with lower capital cost, the touted superior economics of the CSeries would be a key factor should, or when, fuel prices eventually climb off these current historic lows.

“It is ideally sized. The technology has been leveraged to make the aircraft perfect for that segment,” Baistrocchi said.

“The intention is to be able to replace several of those old technology aircraft from their various capacities with something like the CSeries which in many cases is at least 20 per cent better in terms of economics than some of these older aircraft.

“Pricing of fuel is volatile. It will go up again. Of all the advantage the CSeries has, it will just magnify the potential. ” The CS100 flight test vehicle four was on display at the Singapore Airshow in Swiss livery. The aircraft was certified at the end of 2015, with entry into service with launch customer Swiss due before the end of June. The CS300 was expected to follow six months later.

The CSeries competes for the lower end of the narrowbody market alongside the Embraer E2 (featured elsewhere this issue) and Mitsubishi Regional Jet, and to a lesser degree designs from Sukhoi and COMAC. Baistrocchi said the current environment was no different from a normal business cycle and reminiscent of a previous era, where there were a number of players building new turboprops.

“We’ve seen that cycle before,” he said.

“When Bombardier was building the Dash 8s, it was a very crowded market at the time. In the small turboprop market there were a lot of players, British Aerospace, Fokker, we had Saab, we had Bombardier itself or de Havilland at the time, we had Embraer in that market. There were a lot of players.

“It looks like we are about to enter another cycle again where in that regional space and small mainline we are going to see some new platforms. I think in some market segments it is going to get crowded and likely some of the programs are not going to be as successful as some of the other programs.

“We are absolutely confident that everything that we said about the economies of the aircraft will be met and potentially even better. ” Air Canada is the first mainline carrier in North America to order the CSeries.

Excluding the Air Canada LOI, Bombardier has orders and commitments for 678 CSeries aircraft, including 243 firm orders.

On the turboprop front, Baistrocchi said existing routes served with the Q200 and Q300 would eventually grow to support the Q400, which can now seat up to 90 passengers in a single class, offer two classes of service or carry cargo as a combi.

“Generally in regional operations for turboprops, year over year there is about a one to 1. 5 seat growth that we see take place so it is very easy for an operator that is operating our short-body Qs to move into the Q400,” Baistrocchi said.

“We have this incredible flexibility inherent in the aircraft and that’s got a very large appeal to customers through several countries in this area.

Baistrocchi said Qantas currently had no orders for new Q400s, the only model still in production, noting the flat capacity growth in the local market.

However, conversations with all the Australian players has the Canadian executive optimistic of a bigger presence in this part of the world.

“We are seeing a very conservative approach taking place in Australia. There hasn’t been a lot of growth. Airlines buy product when they are ready and the timing is correct and certainly we are talking to everyone,” Baistrocchi said.

“Can we covert Virgin? It would be nice. We are certainly having conversations with them. ”

Virgin, Alliance announce “strategic partnership”

Alliance Aviation Services and Virgin Australia have announced a partnership agreement that will see them cooperate in the fly-in/fly-out (FIFO) resource charter market.

“Both airlines will benefit from the ability to leverage each other’s strengths, particularly in terms of network, brand, product and service offering, and technical expertise,” the two companies said in a joint statement to the Australian Securities Exchange on February 15.

“This will allow Alliance and Virgin Australia to develop a compelling customer proposition and to more effectively compete in the Australian FIFO market. ” The “long-term strategic partnership” will see Virgin and Alliance form a “charter partnership” to “jointly grow” their charter businesses. The two companies say existing FIFO contracts will remain with their current operators, “with all new contracts to be operated under the Charter Partnership”.

Further: “Alliance and Virgin Australia Regional Airlines [VARA] will enter into agreements to provide and procure services for each other on a preferential basis. This includes, but is not limited to, aircraft procurement, spare parts pooling, maintenance and ground handling services. ” On face value the partnership appears to make a lot of sense. FIFO flying has declined following the end of the so-called mining boom, leaving the FIFO market – where other major players include QantasLink (which includes the recently rebranded Network Aviation), Cobham Aviation Services and Skippers – considerably more competitive.

Further, Alliance and VARA also operate the same fleet types, the Fokker 100 jet and Fokker 50 turboprop (VARA also operates A320s). With its recent acquisition of Austrian Airlines’ entire Fokker 70 and Fokker 100 fleet, Alliance has moved into aircraft and spare parts brokerage and leasing. Virgin, meanwhile, has announced the retirement of all its Fokker 50s by the end of the current financial year – aircraft that perhaps could either join the Alliance fleet, or be brokered for sale by Alliance.

“We look forward to collaborating with Alliance to further build a competitive, efficient and sustainable charter business,” Virgin chief executive John Borghetti said.

Alliance managing director Scott McMillan said: “We look forward to partnering with Virgin Australia to leverage the operational and commercial expertise of our respective businesses. With our combined services and expertise we see a great deal of logic in working together. ” The two airlines said the deal was subject to Australian Competition and Consumer Commission approval.

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BARA’s collaboration call

The Board of Airline Representatives of Australia (BARA) has called for more collaboration between airports, government and airlines amid some “early warning signs” the nation’s aviation infrastructure is struggling to handle the growing number of travellers into and out of the country.

At a BARA function in Sydney on March 9, BARA chairman Leanne Geraghty said although the industry was doing well, indicators such as on-time performance, lost baggage numbers, as well as evidence of longer queues at border processing and incidents of jet fuel rationing, highlighted the stress being placed on Australia’s available aviation capacity.

“Given these challenges, in order to continue success and growth, it will be critical over the next few years that all stakeholders work together to find ways of boosting industry capacity and efficiency to continue to provide safe and high quality services,” said Geraghty, who is Air New Zealand general manager for Australia.

BARA represents 32 international airlines that fly into and out of Australia, covering about 90 per cent of all international passenger services. The body has called for an opening up of Australia’s on-airport jet fuel storage and distribution facilities as major international airports opened up to competition.

Further, BARA believed negotiations with airports over the charges and fees for services provided needed to use a “consistent” set of performance data “with agreed capital and operating resources”.

And thirdly, Geraghty said improved integration between the airlines, Airservices and the airports, with the sharing of real time and accurate information, would generate efficiencies in the aircraft turnaround process.

“The future industry needs to be a better integrated one. The tools necessary to achieve this are already available to us,” Geraghty said.

“The challenge, therefore, is to continue to break down the barriers and obstacles faced by different suppliers and get everyone focused on delivering higher quality and more efficient outcomes. ” Department of Infrastructure and Regional Development Secretary Mike Mrdak, who also spoke at the BARA function, noted infrastructure capacity issues were a significant concern across the region.

“Throughout this Asia Pacific region, the one big constraint that everyone is worried about is not about the capacity of the aviation industry to create new product, to do marketing or to buy the aircraft for the future, it is actually the physical infrastructure,” Mrdak said.

“Both the airports and also the airways infrastructure is the number one critical constraint for the future of our industry. ” Mrdak has had two new ministers responsible for the Department’s work sworn in following the retirement of Warren Truss, whose previous portfolio of Infrastructure and Regional Development has been split in two with Senator Fiona Nash the new Minister for Regional Development and Darren Chester the Minister for Infrastructure and Transport.

“We have new ministers right across the portfolios, they take time to start to learn and absorb the issues that this industry has to deal with,” Mrdak said.

“But the one thing that I think stands us in good stead in the industry is that there is largely bipartisan support for the policy directions that this industry deals with.

“We’ve had successive Australian governments who have been committed to ongoing liberalisation, committed to a sensible approach where we grow our markets, we grow Australian carrier participation in global markets and we look to ways in which we can get the right balance between the growth of our industry and the growth of the tourist traffic and also Australian travellers out. ”

Emirates claims title of world’s longest passenger flight

Emirates has claimed the title of the world’s longest passenger flight from alliance partner Qantas after its nonstop Dubai- Auckland service touched down in New Zealand on March 2.

Flight EK448, operated by Airbus A380 A6-EON, landed just before 1000 local time – after a 14 hour and 40 minute journey – and was met with a water cannon salute on its way to the terminal.

The use of the A380 was a one-off to celebrate the inaugural service, with Emirates to ordinarily deploy the Boeing 777-200LR for the 7,668nm route.

Emirates said prior to the start of the Dubai-Auckland route it has worked with air traffic controllers, including Airservices and Airways New Zealand, on flexible route options, meaning the actual flightpath can change depending on conditions, in an effort to minimise flight times and reduce fuel consumption.

The majority of the Dubai- Auckland flight will be in Australian-controlled airspace, Emirates said, adding it had worked with Airservices on flexible route options on its Australian-bound flights for the past decade.

“The organised track system – AUSOTS – is well-proven and extending that program so that it is specific to the Auckland-Dubai route will have significant benefits, without impacting the operations of other aircraft going to Australia,” Emirates vice president for flight operations support services and air traffic management Geoff Hounsell said on February 23.

Dubai-Auckland eclipses Qantas’s A380 route between Sydney and Dallas/ Fort Worth, which clocks in at 7,454nm according to the Great Circle Mapper website.

Boeing forecasts 950 new aircraft for Oceania

Boeing has forecast a US$140 billion market for 950 new aircraft for Oceania – Australia, New Zealand and the South Pacific – over the next 20 years as airlines in the region replace order models with newer, more fuel-efficient jets.

The estimate, contained in Boeing’s Current Market Outlook (CMO) for 2015-2034, is a reduction of 50 aircraft from the 1,000 expected for Oceania in the 2014- 2033 CMO.

Three of the five aircraft categories – large widebody (more than 400 seats), small widebody (between 200-300 seats) and single aisle – were lower than the prior year, while the forecast for medium widebody jets increased. Regional jets, which Boeing does not compete in but offers a forecast for, was unchanged.

Boeing Commercial Airplanes vice president of marketing Randy Tinseth says the Oceania market has been growing at a “relatively modest rate” at about 1. 5 per cent a year, although long-haul flights were stronger at about five per cent.

The bulk of that growth had come through airlines adding new frequencies on existing routes and opening new markets rather than flying larger aircraft.

Boeing expected the Oceania fleet to increase from 540 to 990 over the next 20 years, with some 500 aircraft replaced and 450 new frames joining the fleet. Just 40 aircraft flying today will still be in the skies in two decades’ time.

“Over the past several years we’ve seen airlines build their fleet and now we are in a cycle where we will actually see more airplanes delivered to replace older airplanes,” Tinseth told media during a media briefing in Sydney on February 19.

Tinseth said the 787 represented 10 per cent of total capacity on flights to, from or within Oceania, with Air NZ and Jetstar operators in the region and Qantas set to take delivery of its own 787-9s next year.

Asked what the prospects were for more widebody orders in Australia and New Zealand, Tinseth said: “We continue to see the long-range market grow faster than the regional and domestic market, so I think we have opportunities for widebodies moving forward, especially in light of both the growth and replacement demand. ” In terms of the impact on the aviation sector from fuel prices, Tinseth said airlines had responded by increasing aircraft utilisation and adding more marginal flying.

However, airlines still regarded newer, more efficient aircraft as “good hedges” for fuel prices eventually going up from these recent historic lows.

“We haven’t seen anything in our order book that indicates that airlines want to defer or cancel airplanes,” Tinseth said.

“I don’t think that that is going to change.

“When I look at our backlog it is well balanced by region and business model. ” The CMO forecast 10 new orders in the less-than-100-seat category over the coming two decades.

Tinseth said some routes currently served by regional jets would eventually be able to support single aisle aircraft such as the 737 and Airbus A320.

Boeing has regarded the very large aircraft segment as a small market, believing just a handful of airlines around the world had the route structure and capability to successfully utilise an aircraft with more than 400 seats. Sales of both the A380 and 747-8 have been slow.

The A380 ended a three-year order drought earlier in 2016 when ANA said it would purchase three of the type and Iran Air indicated it would purchase 12.

Meanwhile, Boeing has reduced the production rate of the latest version of the 747 to 0. 5 aircraft a month from September, from 1. 3 a month currently and one aircraft a month from March, which reflected both the lack of demand for very large passenger aircraft and the weakness in the global cargo market.

“Five years ago we thought that there was frankly a larger market for big airplanes, but that market has been rapidly evaporating,” Tinseth said.

“What we have seen is the airline marketplaces where big airplanes make sense, now most of them have more than likely been addressed.

“We are seeing that there is a clear preference for something a little bit smaller, a little bit more flexible, a little bit more capable. ”