Preflight

Tigerair had been trying to gain approvals to resume its flights to Bali from Adelaide, Melbourne and Perth since January 10, when the Indonesian government suspended the airline’s flights due to what it said was a breach of its charter permit.

The low-cost carrier had planned to resume services to the popular tourist destination on February 3, after announcing on January 19 it had secured “a key approval” to return to the route.

However, Tigerair chief executive Rob Sharp said the airline had been informed it required an “alternative regulatory solution” that, ultimately, left it with no other option than to withdraw.

“We have been advised by Indonesian authorities that in order to continue operating our flights to Bali, we would have to transfer to a new operating model that would take at least six months to implement and would compromise our ability to offer low-cost airfares to Australians,” Sharp said in a statement.

“Providing a reliable, low-cost service is critical for Tigerair Australia and our customers, and therefore our only option is to withdraw from flying to Bali altogether.”

Tigerair said Indonesian authorities told the airline it needed a particular air operator’s certificate (AOC) that was separate to the one it currently held to resume flights to Bali.

The airline described the process to achieve the new AOC as costly, one that would take six months to implement and put Tigerair’s takeoff and landing slots at Bali at risk.

Further, it was not a requirement for any other international market that Tigerair would consider operating to.

Tigerair said passengers booked to travel from Australia to Bali would be offered full refunds, while passengers due to return to Australia from Bali would be re-accommodated on other flights.

“We sincerely apologise to our customers who have been caught up in this and we will continue to work around the clock to support them as best we can,” Sharp said.

“We will continue to work with Virgin Australia to support any passengers still in Bali and needing to travel home to Australia.”

The end of Tigerair’s international operations comes less than a year after the Virgin Australia-owned LCC began services to Bali in March 2016, taking over flights previously operated by its parent.

It also means the LCC has 14 Airbus A320s and four Boeing 737-800s that, for now, will be deployed exclusively on domestic routes, raising the prospect of potential overcapacity in an already sluggish local market, or alternatively a drop in fleet utilisation that may lead to an higher unit costs.

Virgin’s second quarter trading update said it had flown five per cent fewer domestic flight sectors in the three months to December 31 2016, noting “subdued industry trading conditions in the domestic market continued to adversely impact revenue”.

Sharp said Tigerair was still committed to expanding its network with other international destinations.

“Tigerair Australia’s ambition to have a short-haul international network remains and we will now work towards alternative opportunities,” Sharp said.

The Civil Aviation Safety Authority (CASA) website showed the Tigerair AOC was most recently updated in November 2016 for three years.

A Tigerair spokesperson told Australian Aviation the updated AOC gave the airline approval to operate international flights under its own AOC using its fleet of 14 Airbus A320s.

And it appeared Tigerair has also received approvals to add the 737 as a fleet type onto its AOC as part of its transition from A320s to 737-800s over the next three years.

The first Tigerair domestic flight with the 737 took place on February 1, with VH-VUB taking off from Melbourne at 0831 and touching down at Cairns about three hours later at 1040 local time.

Indeed, flight tracking website FlightAware shows three Tigerair 737-800s – VH-VUB, VH-VOR and VH-VOY – have been operating domestic RPT services.

A fourth Tigerair 737, VH-VUD, appeared to be conducting training flights.

Virgin Australia reports profit decline

Virgin Australia has reported a drop in profit for the three months to December 31 2016 as weak market conditions hit revenues and margins, prompting the airline group to operate fewer domestic flights.

The company said statutory profit after tax for the second quarter of the 2016/17 financial year came in at $13.1 million, compared with $60.8 million in the prior corresponding period.

Virgin said on February 3 the statutory result included the impact of restructuring charges related to its ‘Better Business program’ announced in 2016. However, Virgin did not put a dollar figure on the extent of the one-off charge.

Underlying profit before tax, which removes one-off charges and was regarded as the best indicator of financial performance, fell 37 per cent in the second quarter to $45.9 million, from $73 million a year earlier.

“Subdued industry trading conditions in the domestic market continued to adversely impact revenue during the second quarter,” Virgin said in a statement to the Australian Securities Exchange (ASX).

“The group continues to actively manage capacity in response to subdued trading conditions.”

An analysis of Virgin’s 2016/17 first and second quarter results showed the airline group achieved a statutory profit after tax of $20.7 million for the first half of the current financial year. The result was down 70 per cent from $69.3 million in the 2015/16 first half.

Meanwhile, Virgin’s 2016/17 first half underlying profit before tax was $42.3 million, a decline of 48 per cent from $81.5 million achieved in the 2015/16 first half.

The company said the total sectors flown on Virgin Australia’s domestic network was down five per cent in the second quarter.

While capacity, measured by available seat kilometres (ASK) rose 1.6 per cent in the quarter, Virgin said this was “primarily driven” by an increase in widebody Airbus A330-200 flights compared with the second quarter of 2015/16, when a number of aircraft were temporarily taken out of service to have a new business class cabin installed.

Further, the progressive withdrawal of Virgin’s Embraer E190 fleet has meant some routes previously served by the 98-seat aircraft have been upgauged to “larger aircraft”, mostly the 176-seat Boeing 737-800.

The company also downgraded its earnings forecasts for Virgin’s domestic network.

“The group expects the Virgin Australia domestic business to generate an underlying earnings before interest and tax margin of between three and six per cent for the 2017 financial year,” Virgin said.

This was down from a forecast underlying EBIT margin of between six and nine per cent for 2016/17 from August 2016.

Virgin Australia’s international network reported an 8.1 per cent reduction in ASKs. The airline handed over flights to Bali from Adelaide, Melbourne and Perth to its low-cost unit Tigerair Australia in March 2016, which explains the reduction in capacity and a 7.1 per cent fall in passenger numbers.

Meanwhile, Tigerair continued to post double-digit growth.

The low-cost carrier, which has 14 Airbus A320s and four 737-800s in its fleet, grew domestic and international ASKs 24.7 per cent in the second quarter.

As previously mentioned, Tigerair started international flights to Bali (which have been terminated due to regulatory issues with Indonesia) in March 2016.

However, the growth in available seats was more than matched by market demand, with Tigerair increasing revenue passenger kilometres (RPK) 28.9 per cent in the quarter. As a result, load factors rose 2.8 percentage points to 89.3 per cent across its domestic and international network.

Virgin said it had strengthened its balance sheet in the second quarter through a reduction in net debt and an increase in its total cash balance.

Virgin said its closing total cash balance of $1.6 billion at December 31 was the highest ever reported for the airline group.

The airline group raised about $1.1 billion from shareholders in 2016 thanks to a share placement new investor HNA, as well as a capital raising through the issuing of new shares.

“The group delivered positive outcomes in its liquidity and leverage as a result of the program of work that was initiated under the group’s capital structure review in the 2016 financial year,” Virgin said.

Virgin Australia and Alliance Airlines call on ACCC to reverse course and approve charter partnership

Virgin Australia/Virgin Australia Regional Airlines (VARA) and Alliance Airlines say they are willing to have the competition regulator monitor their charter operations in an effort to secure approval for a proposed partnership.

In December, the ACCC knocked back the pair’s application for a charter alliance, which if approved would allow Virgin and Alliance to work together on joint tendering for corporate fly-in/fly-out (FIFO) contracts.

Virgin and Alliance argued the tie-up would also benefit charter customers through operational efficiencies, the increased flexibility and optimisation of aircraft utilisation through combining their fleets, and the bringing together of VARA’s (Virgin Australia’s) national regular public transport network with Alliance Airlines’ national charter network.

However, the ACCC said it was not persuaded that these benefits would ultimately be a gain for customers and expressed concerns about the lessening of competition in the FIFO market in Western Australia.

Virgin and Alliance said in response to the draft determination the “fundamental rationale for the charter alliance is to provide a superior, more competitive product to corporate charter customers and not to increase prices or reduce service levels”.

To that end, the pair said there was “scope to monitor the impact of the charter alliance” during the period of authorisation.

“Monitoring can include a review of performance metrics, such as average trip rates net of fuel, to see whether there is any material adverse movement in such rates over time,” said the Virgin/Alliance submission, dated January 27 and published on the ACCC website.

“This is a highly unlikely outcome, but in any event could be transparently monitored by the ACCC. Other metrics that could be reviewed include the cost of value-adds charged to customers and the gross margins on charter contracts generated by the applicants.

“Denying authorisation would therefore be denying FIFO customers the benefits of the charter alliance for a largely theoretical detriment.”

Further, it was “not correct” to characterise the Western Australia market as being served by four operators, as the ACCC had in December’s draft ruling.

“In fact there are currently eight established and capable operators in Western Australia, and there is historical evidence of both entry and expansion by smaller operators in this market,” the Virgin/Alliance submission said.

“The state of competition is intense and will remain so with the charter alliance for the foreseeable future (and certainly within the period of authorisation) – as all operators have excess capacity due to the decline in demand for FIFO services.”

There were two submissions to the ACCC following the draft determination.

Mineral Resources Ltd (MRL), an Alliance customer, wrote in support of the proposed tie-up, arguing it “does no harm to real competition”.

“We urge the ACCC to grant authorisation to the charter alliance in these circumstances where we see it as a net benefit to us and therefore to our FIFO workers,” MRL general manager for external affairs Gary Gray said in the letter, which was published on the ACCC website.

By contrast, Newmont Asia Pacific, also an Alliance customer, backed the ACCC draft decision.

“We strongly support the draft ACCC determination to refuse authorisation for the proposed charter alliance agreement on the basis that it would reduce competition for the provision of FIFO air services and lead to increased prices or reduced service levels, to the detriment of businesses like ours,” Newmont regional senior vice president Alex Bates wrote.

Virgin and Alliance’s response to the draft determination noted informal feedback from customers suggested they held “overall a neutral position”.

They said economic analysis from Competition Economists Group (CEG) concluded that operational efficiencies, which result in reductions in both fixed and marginal/variable costs, would “substantially be passed through to customers”.

American and Qantas wind back cooperation ahead of second effort to win US approval on expanded alliance

Qantas and American Airlines plan to make another effort to convince US regulators the pair should be allowed to form a joint-venture partnership on trans-Pacific routes.

The two oneworld alliance members announced on January 27 they would submit a new application to the US Department of Transport (DOT) for anti-trust immunity (ATI) on a metal-neutral, revenue-sharing joint business agreement.

While their first application was rejected in November 2016, there was hope that a new administration at the DOT following the change of US president would come to a different conclusion.

American Airlines executives confirmed during the company’s quarterly earnings call on January 27 (US time) they intended to have a second attempt at convincing the DOT of the proposed tie-up’s consumer benefits.

“We are hopeful that the Trump administration will give the Qantas JV application a second and more favourable look,” American chief executive Doug Parker said during the earnings call, according to a transcript published by SeekingAlpha.

American senior vice president for network planning Andrew Nocella added: “We are excited to get this resolved with the DOT. We think there is a lot of consumer benefits and we are anxious to make our case and get a fair review going forward. I think we intend to refile.”

Steve Johnson, American executive vice president for corporate affairs, said a new application was “probably a few weeks down the road”.

“We are looking forward to doing that and having another opportunity to make our case,” Johnson said.

American’s decision to start flights from Los Angeles to Sydney in December 2015 – and Los Angeles to Auckland in June 2016 – prompted the two carriers to seek ATI as part of an expanded joint business agreement to reflect the US carrier’s entry into the market with its own aircraft.

Their first application, lodged close to two years ago, was rejected in November 2016, with the Department arguing the pair’s combined 60 per cent market share of all seats between the US and Australia would harm competition and reduce consumer choice.

Moreover, Qantas and American would, together, be the largest operator on about 200 city-pair markets, a number sufficient for the alliance to “exert market power”.

“There is a high risk of competitive harm from approving and granting anti-trust immunity,” the DOT Show Cause Order said.

The DOT also questioned some of the claimed consumer benefits in Qantas and American’s application that would result from having their anti-trust immunity approved.

The Australian Competition and Consumer Commission (ACCC) and New Zealand Ministry of Transport took a different view, giving the partnership the green light during 2016.

The ACCC decision meant that while Qantas and American were able to align pricing on tickets sold in Australia, the pair was not able to do so on outbound US fares without DOT anti-trust immunity.

The US end of the market has seen some extremely low fares in recent times as additional capacity from the likes of Qantas, American and United, as well as some currency changes that have affected demand and pushed down ticket prices.

More specifically, American fares for its own service to Sydney were regularly much lower than Qantas-operated flights, which put pressure on the financial performance of the Australian airline’s US operations.

Qantas said in a statement on January 28 (Australian time) the decision to refile an application came after a review of the US DOT’s November Show Cause Order.

“It’s both airlines’ view that the DOT’s decision didn’t take into account precedent, intense competition on trans-Pacific routes, or the benefits that a closer relationship between Qantas and American has already delivered, including two new routes,” Qantas said.

Qantas removed its QF airline code on American’s daily Boeing 777-300ER Sydney-Los Angeles service on February 1. Some tweaks to Qantas’s frequent flyer arrangements with the US carrier would come into effect from May 1.

The Flying Kangaroo said the move was part of efforts to “scale back areas of cooperation that aren’t viable without immunity”, arguing the airline “does not have any free sale codeshare arrangements on overlapping sectors with any other partners, outside of similar joint business arrangements”.

“It will mean people will not get the same status credits as they got on American Airlines aircraft, because we don’t do that with any other carrier on routes without a joint venture,” was how Qantas chief executive Alan Joyce explained some of the frequent flyer changes during a media event in Los Angeles on January 27, according to Fairfax Media.

“So consumers lose out. We just need to go and make that very clear to the DOT, and that’s the main case we’ll be making: customer benefits that are associated with the alliance.

“This time around, we’ll have a very strong case.”

The Australian carrier said it would continue to place its QF airline code on American’s Boeing 787 Auckland-Los Angeles service and on US domestic services.

While Qantas and American, at least publicly, expressed surprise at the DOT’s November decision, aviation analysts believed getting the proposed partnership approved was always going to be a tough ask.

“Qantas already has the bulk of the capacity, so I don’t see how adding American would be better for passengers or help reduce fares,” Singapore-based Shukor Yusof, head of aviation research firm Endau Analytics told Australian Aviation via email in December.

Former Qantas chief economist and the managing director of Airline Intelligence and Research Tony Webber said his analysis suggested ticket prices tended to increase when a competitor was taken out of a market.

“Typically when you go from a four- to a three-player market it will add about 12 per cent to fares,” Webber told Australian Aviation in an interview in December.

“That’s not based on analysis on that particular route, it is just my general analysis on most routes. Qantas and American are effectively taking out a player by joining forces in that way.”

The other two major alliance groups on the trans-Pacific market are the Delta Air Lines-Virgin Australia tie-up and a JV between United and Air New Zealand.

Despite the move to drop the codeshare on American’s Sydney flight, Qantas underlined its commitment to the US market with the opening of its new maintenance hangar at Los Angeles Airport in late January. The facility also serves as the airline’s head office in the US.

Qantas confident of Beijing success

Qantas chief executive Alan Joyce says a lower cost base, the growth in the China market and partnerships with local carriers are the necessary ingredients to ensure the Flying Kangaroo’s return to Beijing will prove more successful than previous attempts to serve the Chinese capital.

The oneworld alliance member resumed nonstop service to Beijing on January 25. The daily flight is Qantas’s latest attempt to crack the Beijing market, having been on and off the route several times over the past two decades.

Joyce said the rapid growth in the outbound Chinese market, coupled with the anticipated boost to commerce between the two nations due to the recently negotiated free trade agreement, meant the market dynamics had changed significantly since Qantas ended flights to Beijing in 2009.

Moreover, Qantas was a very different airline compared with its operations eight years ago, particularly following the airline’s cost reduction transformation program.

“Our product is a lot better, our cost base is a lot better than it was in 2009,” Joyce told reporters at Sydney Airport before boarding the flight alongside Qantas international chief executive Gareth Evans.

“So we think the economics, from the demand side, from a business market and from our cost base, are very different now than they were back then.”

Joyce noted Beijing was the 11th biggest route out of Sydney. Qantas already served the top 10 markets.

Qantas’s return to Beijing comes ahead of Virgin Australia’s daily flights to Beijing and Hong Kong that were planned to start on June 1 2017 from a yet-to-be-disclosed Australian city in partnership with Chinese conglomerate HNA.

The Beijing service adds to Qantas’s existing daily flight between Sydney and Shanghai with Airbus A330 equipment, as well as nonstop flights to Hong Kong from Brisbane, Melbourne and Sydney. The Australian carrier also has an alliance with China Eastern and codesharing arrangements with China Southern for beyond points in China. It recently added extra flights to Hong Kong.

Qantas also has dedicated freighter services into a number of Chinese cities.

Evans noted Qantas was able to do a slot swap with China Eastern to secure more convenient landing and takeoff times for its Beijing flights.

Further, he said the response from the travelling public has been encouraging since the return to Beijing was launched in October.

“The loads on the first flight and the initial period are extremely strong, in the high eighties and above,” Evans said.

“Beyond that, the service is tracking to to the same sorts of seat factors as our Shanghai service, which has been established for a number of years.”

Flight QF107 is scheduled as an afternoon departure from Sydney, landing just at 2240 local time. The reciprocal QF108 is an overnight service from Beijing, touching down in Sydney in the mid-afternoon.

The flight times appear to limit the number of connections beyond Beijing, given the late arrival.

However, the mid-afternoon arrival in Sydney will ensure Chinese tourists visiting Australia will be able to connect to other Australian destinations such as Tasmania, which Joyce said was proving increasingly popular for the Chinese, as well as New Zealand.

“Getting those domestic and trans-Tasman connections is really key,” Joyce said.

“We think Beijing on its own with 21 million people is a big enough destination for it to justify the service in its own right. Through Shanghai and Hong Kong we serve another 23 destinations in China.”

Apart from when scheduling issues arise, the A330-200s that will be deployed to Beijing will be the two unrefurbished A330s in the Qantas fleet, VH-EBG or VH-EBL.

The two Airbus widebodies are yet to be fitted with new Thompson Aero Seating business class seats, an updated economy cabin and new Panasonic inflight entertainment systems throughout the cabin that are already on Qantas’s 10 A330-300s and 16 of 18 A330-200s.

Instead, VH-EBG and VH-EBL have angled lie-flat SkyBeds in business class in a 2-2-2 configuration and previous generation Rockwell Collins seat-back inflight entertainment (IFE). The two aircraft are also fitted with crew rest areas.

Joyce said he expected all of Qantas’s Asian services to feature the new Thompson Aero Seating business class seat at some future point.
“We are working through the reconfigs of those aircraft as we speak,” Joyce said.

“Eventually all of our aircraft flying into the Asian region will have our new product. It is just that at this time they are the two aircraft that have the range to get there.

Asked if having the SkyBeds rather than Thompson Aero seats in business class would put Qantas at a disadvantage compared with other carriers on the route, Joyce said: “We don’t think it gives us a disadvantage, we still think that product is an amazing product.”

China was expected to overtake New Zealand as Australia’s largest inbound tourism market by 2018. About 1.2S million Chinese visited Australia in 2016.

Air China and China Eastern also fly nonstop between Sydney and Beijing.

Philippine Airlines keen on Brisbane-Manila non stops from 2018

Philippine Airlines (PAL) is planning further expansion in Australia from 2018 when the airline takes delivery of the A321neo.

The long-range narrowbody is likely to lead to Philippine Airlines offering nonstop flights between Manila and Brisbane, president and chief operating officer Jaime Bautista says.

Currently, PAL serves the Queensland capital via a Manila-Darwin-Brisbane routing using A320 equipment.

However, decoupling the service to offer a nonstop Brisbane service is on the cards thanks to the A321neo.

“That will happen in 2018 when we take delivery of the A321neoLR, the one with additional centre tanks,” Bautista said.

The Airbus website lists PAL as having orders for 21 A321neo aircraft, without breaking down the order into A321neo and A321neoLR variants.

The A321neoLR has a typical range of 4,000nm, while Brisbane-Manila measures 3,125nm, according to the Great Circle Mapper.

The airline has recently unveiled new business and premium economy products progressively being fitted onto its A330 fleet.

Filipino low-cost carrier Cebu Pacific is also on the Sydney-Manila route, as is Qantas.

Bautista said the airline was also keen to boost its existing daily service to Sydney, potentially to double daily, in 2018 as it took delivery of new aircraft and in recognition of the 10 per cent annual growth in the Australia-Phillipines market in recent years.

However, the veteran aviation executive cautioned that despite the double-digit growth, there remained plenty of capacity in the market, meaning yields remained under pressure.

“There should be more reasons for Filipino’s to travel to Australia and more reasons for Australians to travel to the Philippines,” Bautista said.

PAL has recently taken delivery of its eighth and final Boeing 777-300ER, while the airline has orders for six A350-900s.

Bautista said the Auckland service, launched in December 2015, was doing well, with the fifth freedom Cairns-Auckland sector helping sustain the route given the market was too small for nonstop flights from Manila to Auckland.

OEM News

Boeing 737 MAX heads Down Under as part of flight test program

Boeing’s next generation narrowbody the 737 MAX made a briefly visit to Australia as part its flight test program.

One of the MAX 8 development fleet, N8704Q, arrived in Darwin on Australia Day and spent nine days in the country before returning to Seattle on February 3.

In addition to flights around Darwin of between three and five hours duration, the aircraft also visited Alice Springs during its time in the Top End.

Asked what testing the aircraft was undertaking in Australia, a Boeing spokesperson told Australian Aviation in a brief statement via email: “The MAX is there to do some standard environmental testing.”

Boeing has three 737 MAX customers in Oceania – Virgin Australia is due to receive the first of 40 MAX aircraft on order in 2018, Air Niugini has put pen to paper for four MAX aircraft arriving from 2020 and Fiji Airways has five 737 MAX 8s slated for delivery from 2018.

The MAX, Boeing’s fourth iteration of its 737 program, began its flight test program at the end of January 2016, when the first 737 MAX development aircraft, N8701Q Spirit of Renton, took off from Boeing’s Renton, Washington State site (where all 737s are built).

Boeing chief executive Dennis Muilenburg said during the company’s quarterly earnings call on January 25 (US time) the MAX flight test program showed the aircraft was performing well.

“We are going to begin delivering aircraft in the first half of this year and we are on track to deliver our first MAX in the second quarter of 2017,” Muilenburg said during the earnings call, according to a transcript published by SeekingAlpha.

“The MAX will end up being about 10 per cent to 15 per cent of the total 737 deliveries this year, so a meaningful portion but a fraction as we begin ramping up.

“Our team is doing a great job in the factory to make sure that we continue to deliver NGs while we ramp up the MAX. The production line preparation is on track.”

Muilenburg reaffirmed previous guidance that the 737 production rate would rise from 42 aircraft per month currently to 47 per month in the third quarter of calendar 2017. It would then increase further to 52 per month and 57 per month in 2018 and 2019, respectively.

“And importantly, even at the 57 per month rate, we continue to be oversold. Simply put, this is a big attractive market and the 737 family’s position within it is solid,” Muilenburg said.

The MAX has garnered 3,606 orders at the end of December 2016, according to the Boeing website. The aircraft competes with the Airbus A320neo Family, which has been flying with a number of airlines since January 2016. The Airbus website showed the company had received 5,069 orders for the neo.

Qantas is expected to run a competition between the 737 MAX and A320neo at some future point for the replacement of its existing 737-800 fleet.

Mitsubishi delays first delivery of MRJ by two years to mid-2020

Mitsubishi Aircraft Corporation has pushed back first delivery of its troubled Mitsubishi Regional Jet (MRJ) program by two years from mid-2018 to mid-2020 due to some design changes to the aircraft systems and electronics.

“The change is due to revisions of certain systems and electrical configurations on the aircraft to meet the latest requirements for certification,” Mitsubishi said in a statement on January 23.

It is the fifth delay to the MRJ since the program was announced in March 2008. Launch customer All Nippon Airways (ANA) was originally expected to take delivery of the first aircraft in 2013.

Mitsubishi said type certification for the aircraft was scheduled for 2019. Greater use of foreign experts would help fast-track the development of the MRJ, while a recently established business promotion committee would “oversee the continued development and long-term business performance of the MRJ”.

“MHI is focused on supplying a comfortable, reliable, high-performance passenger aircraft with the world-class safety and operational support services,” the company said.

“MHI is committed to the development and delivery of the MRJ with world-class performance and compatibility with the latest industry certifications.”

The company said the design changes would not affect aircraft performance, fuel consumption, or functionality of systems.

“We will continue with ongoing flight test program with current test aircraft configuration and obtain certification flight test data of performance, flight characteristics for type certificate,” Mitsubishi said.

“The design change will not affect aircraft structure and we have already completed static structure test with ultimate load (150 per cent load) successfully.”

Two weeks after announcing the delay Mitsubishi Aircraft Corporation named Hisakazu Mizutani as its new president and Yuichi Shinohara as its new chief executive.

Currently, Mitsubishi has three flight test aircraft based at the company’s Moses Lake Flight Test Centre in Washington State. A fourth test aircraft is flying at its Nagoya facility. Mitsubishi planned to eventually have five aircraft in the flight test program.

To date, the MRJ has received 233 firm orders, 170 options and 24 purchase rights for the aircraft from the likes of launch customer ANA, Japan Airlines, Eastern Air Lines Group, US-based Skywest, Trans States Holdings and Myanmar-based Air Mandalay.

The MRJ, with its distinctive pointed nose, competes with Bombardier’s CSeries and Embraer’s E-jet family in the less-than-100-seats market. It is powered by Pratt & Whitney PW1200 geared turbofan engines and available in either the 90-seat MRJ90 or 70-seat MRJ70 models.

The MRJ is Japan’s first locally-produced commercial passenger aircraft since the country stopped making the YS-11 in 1974.

Industry news

Hawker Pacific expands FBO operations in Queensland

Hawker Pacific says it is well positioned for growth in the Queensland charter market following the purchase of two Fixed Base Operations (FBO) sites in the state.

The aircraft sales and support company said on January 30 it had acquired a Cairns and Brisbane FBO from aircraft charter group Adagold Aviation. The two FBO’s have been rebranded as Hawker Pacific sites.

The transaction gave Hawker Pacific a larger presence at Brisbane Airport, with its existing FBO to be complemented by the Adagold FBO located in the general aviation precinct and close to the currently-being-built new runway due to open in 2020.

Hawker Pacific vice president for FBO in Australia Graham Owen said there was growing demand in the Queensland market for charter services in both the tourism and mining sectors.

“It’s an exciting time for Queensland tourism right now and this expansion will significantly strengthen Hawker Pacific’s capacity to capture these growth opportunities,” Owen said in a statement.

“With the recent announcements of improvement in the mining industry in Queensland there is an expected a lift in the fly-in/fly-out sector.

“Hawker Pacific is focused on ensuring we continue to meet growing demand in this segment of the market and further cement our position as the leading Fixed Base Operator in the region.”

ADS-B mandate takes effect

Aircraft operating under instrument flight rules (IFR) in Australia must now be fitted with ADS-B (Automatic Dependent Surveillance Broadcast) technology following the passing of the final fitment mandate.

The mandate required all flights operating under IFR to have ADS-B, which is a satellite-based technology enabling aircraft to be accurately tracked by air traffic controllers and other pilots without the need for conventional radar, by February 2.

Civil Aviation Safety Authority (CASA) acting director of aviation safety Shane Carmody said the implementation of ADS-B had improved surveillance coverage in Australia.

“Before ADS-B, Australia’s electronic airspace surveillance coverage was patchy by international standards, with only around 18 per cent of the continent covered by radar,” Carmody said in a statement on February 2.

“In Australia, we have been progressively introducing the technology since 2004 as we had an immediate need for air traffic surveillance that could not be easily achieved with traditional radars.

“Today marks an important and historic day in aviation safety and heralds a new era in technology.”

CASA said its latest figures showed 93 per cent of all flights in Australian airspace flying under IFR were conducted in aircraft fitted with ADS-B technology.

In November, CASA issued exemptions for some private aircraft to be fitted with the technology.

The regulator extended the deadline for private aircraft registered before February 6 2014 flying under IFR to be fitted with ADS-B transponders by almost three years to January 1 2020.

However, aircraft conducting private operations under IFR without ADS-B would be subject to a number of conditions.

Non ADS-B IFR flights would be required to operate below 10,000ft in uncontrolled class G airspace, while they would be subject to air traffic control clearance in class D airspace.

Further, they would only be able to operate in class C and E airspace “to facilitate arrival or departure from a class D aerodrome, with prior clearance from air traffic control and only if fitted with a secondary surveillance radar transponder”.

There were also CASA provisions for a “very small number” of foreign-registered aircraft to continue operating without ADS-B until the European deadline of June 6 2020, subject to air traffic control clearances and flying under 29,000 feet in continental airspace.

Airservices cited the Aircraft Electronics Association as saying the cost of a “simple” ADS-B installation “can be as low as AUD$6,500”.

ATSB says birdstrike incidents up over past two years

There has been a significant increase in the number of birdstrike incidents over the past two years involving high capacity aircraft operations, new figures show.

The findings were part of an Australian Transport Safety Bureau (ATSB) report into birdstrike events recorded over the past 10 years.

The report said there were 16,069 birdstrikes reported to the ATSB between 2006 and 2015.

The two years with the greatest number of incidents took place in 2014 and 2015, when there were 1,946 and 1,977 incidents, respectively.

The ATSB report noted the bulk of birdstrike incidents involved high capacity air transport services, defined as “regular public transport (RPT) and charter operations on aircraft certified as having a maximum capacity exceeding 38 seats or a maximum payload exceeding 4,200kg”.

“Both the number and rate of birdstrikes per 10,000 movements in high capacity operations have increased markedly in the past two years 2014 – 2015,” the ATSB report said.

“In contrast, the number of birdstrikes in low capacity operations and general aviation has remained relatively consistent.

“In the two years since 2013, the rates for six of the 10 major airports have increased relative to ten year averages. The largest increase in the rate of birdstrikes was observed at Cairns, Canberra, Darwin, Gold Coast and Sydney.”

The ATSB report said there have been only 10 reported birdstrike incidents in the 10-year period 2006-2015 that have resulted in injury.

Of those, eight occurred in general aviation, while two involved low capacity air transport operations. The ATSB said the injuries were minor in all cases.

The ATSB report said the four most common flying animals involved in birdstrike incidents in 2014-2015 were bats/flying foxes, swallow/martins, kites and lapwings/plovers.

“Swallows and martins had the most significant increase in the number of reported birdstrikes per year in the last two years, with these species being involved in an average of 96 birdstrikes per year for 2014 and 2015 compared with 65 per year on average across the entire 10-year reporting period,” the ATSB report said.

“Galahs were more commonly involved in birdstrikes of multiple birds, with more than 38 per cent of galah strikes involving more than one galah. However, larger birds were more likely to result in aircraft damage.

“For every 1kg increase in animal mass, the likelihood of a birdstrike causing damage increases by 12.5 per cent.”

Meanwhile, the ATSB said the most common time for birdstrike events was 0730-1030.

CASA seeking industry views on pilot medicals

Australia’s aviation safety regulator is seeking industry views on potential changes to pilot medical requirements.

The Civil Aviation Safety Authority (CASA) discussion paper entitled “Medical Certification Standards” has outlined six potential options that could be considered for future consultation.

CASA acting chief executive and director of aviation safety Shane Carmody said in the discussion paper’s introduction aviation medicine was “complex”, given the medical, regulatory and legal issues that needed to be considered.

“The discussion paper is intended to stimulate debate and raise awareness about our current approach to aviation medicine, the propriety of current medical fitness standards, the factors involved in aeromedical decision-making and related considerations and developments internationally and in other jurisdictions,” Carmody said.

“Ultimately, our objective is to identify modifications to our approach that will make the most sense for Australia today and in the future.”

The discussion paper noted the Civil Aviation Safety Regulations currently had four types of medical certification – class one for those holding air transport commercial or multi-pilot licence; class two for private pilots; class three for air traffic controllers; and a recreational aviation medical practitioner’s certificate (RAMPC).

A medical assessment from a specialist designated aviation medical examiner (DAME) is required to receive, and retain, Class one, two and three certification.

“Historically, the aviation medical system in Australia has monitored the health of all pilots – those involved in commercial air transport as well as pilots operating general and sport/recreational aircraft,” the discussion paper said.

“The question now being asked by industry (both in Australia and worldwide) is whether the same general approach taken to monitor the health of pilots involved in air transport as a career is appropriate for all other licence holders as well.”

“A number of other countries have introduced (or are considering) different approaches to medical certification.

“These include assigning a more prominent role in the medical certification process to doctors outside the aviation medicine specialisations, or in some cases, greater degrees of self-certification.

“Any relaxation of existing requirements will rely more heavily on the integrity and insight of the pilot and will necessitate the need for additional education or training.”

While the paper contained no proposals or draft regulations, it outlined six options that could be considered.

These included:

– continuing the existing medical certification requirements and arrangements (status quo);
re-assessing risk tolerances which inform medical certifications standards in the context of industry and community expectations;

– examining and streamlining medical certification practices across the various certification standards, including the approach to assessing incapacitation risk;

– aligning certification standards across the sport and recreational sectors by revising the recreational aviation medical practitioner’s certificate to make it both more accessible to pilots and more widely applicable;

– developing a new medical certificate for the sport and recreational sectors which considers overseas approaches with elements of self-certification; and

– mitigating the risks of any changes by applying operational restrictions.

Minister for Infrastructure and Transport Darren Chester said the discussion paper formed “the basis for any future consultation between CASA and the aviation community on potential changes to medical certification”.

“I welcome this consultation process which is intended to streamline medical requirements for pilots in the future,” Chester said in a statement.

“In particular, I am keen to see what improvements can be made to the private pilot medical requirements to help alleviate regulatory and cost burdens in the general aviation sector.

“It is essential that any changes that are made are assessed against safety and risk considerations.”

The due date for submissions was March 30 2017.

ATSB releases study on aviation fatalities over past 10 years

There were 31 aviation-related fatalities in Australia in 2015, with the bulk of those deaths occurring in the general and recreational aviation sectors, new figures show.

The statistics are outlined in a report from the Australian Transport Safety Bureau (ATSB) covering aviation occurrence statistics between 2006 and 2015.

Recreational aviation recorded 18 fatalities from 76 incidents in 2015, while general aviation had 12 fatalities from 130 incidents, the report said.

Meanwhile, there was one death in commercial air transport from nine incidents.

“In 2015, Australia had 31 fatalities and 32 serious injuries – 28 aircraft were involved in fatal accidents and a further 28 in an accident resulting in serious injuries,” the ATSB report said.

“There was a total of 227 aircraft involved in accidents, and 185 involved in serious incidents (indicating an accident nearly occurred).”

ATSB chief commissioner Greg Hood said commercial air transport had the lowest number of accidents in the 10-year study period in 2015.

However, Hood expressed concern that in 2014, which was most recent year flying hours data was available, the flying training accident rate per million hours flown was more than double that of any year in the previous eight.

“The increase in accident rates involving flying training is an emerging safety concern – we’ll continue to keep a close eye on this sector to get a better understanding of the safety issues involved,” Hood said in a statement.

Looking at the longer term figures, the ATSB report found that 17 of the 19 fatalities in commercial air transport in the 2006-2015 time period involved aircraft conducting charter operations.

Further, the ATSB said: “Growth in recreational (non-VH) flying and improving awareness of reporting requirements, led to more than a tenfold increase in the number of recreational safety incidents reported to the ATSB between 2006-2015.”

The ATSB report noted the number of accidents and incidents involving remotely piloted aircraft (RPAs), commonly known as drones, was on the rise, with 12 accidents, four serious incidents and four incidents involving RPAs recorded in 2015.

“This is a significant increase compared to any other year in the previous 10 years and reflects the increasing prevalence of these aircraft,” the ATSB report said. The figures do not include incidents where pilots of conventional aircraft have reported encountering an unidentified RPA/model aircraft.

The report said most of the incidents involving RPAs involved collision with terrain, often caused by mechanical/electrical failure or radio interference.

Examples of RPA incidents detailed in the report included a 3kg DJI S900 falling out of the sky and landing on a parked car, while an Aeronavics SkyJib 8, which has a maximum takeoff weight of 16kg, at the Melbourne Cricket Ground for the 2015 Cricket World Cup final fell to the ground after the the crew operating the RPA lost control of the aircraft.

The ATSB report said the number of occurrences involving RPAs had increased from 14 occurrences in the eight-year period between 2006 and 2013 to 37 over the two years covering 2014 and 2015.

“Given the significant growth in the use of remotely piloted aircraft, it is likely that the number of incidents and accidents will continue to increase in the short term,” Hood said.

Analysis work on finding MH370 to continue as search at sea ends

While the last ship involved in the search for Malaysia Airlines flight MH370 has returned to shore, work to determine the location of the missing aircraft is ongoing for at least the next couple of months.

The Australian, Chinese and Malaysian governments officially suspended the 120,000 square kilometre underwater search in the Indian Ocean after failing to locate the Boeing 777-200ER, 9M-MRO on January 17.

The three countries had previously expressed a willingness to extending the search for aircraft, which disappeared enroute from Kuala Lumpur to Beijing in March 2014 carrying 239 passengers and crew, if there was credible new evidence which led to the identification of a specific location of the aircraft.

However, a joint statement from Australian Minister for Infrastructure and Transport Darren Chester, China’s Minister of Transport Li Xiaopeng and Malaysian Minister of Transport Liow Tiong Lai said there was not enough new data to continue the search.

Although the ships are back in port, Australian Transport Safety Bureau (ATSB) chief commissioner Greg Hood said the technical analysis regarding the 777-200ER’s whereabouts was ongoing.

“Although the underwater search is suspended, some residual search-related activity is continuing, including debris drift analysis and further detailed analysis of satellite imagery,” Hood told reporters in Melbourne on January 18 according to a transcript released by Minister Chester’s office.

“This activity is anticipated to conclude by the end of February 2017. The ATSB will continue to support any further requests by Malaysia, including the examination of any further debris that may come ashore in months to come.”

Chester said he was “hopeful that we will have a breakthrough in the future”.

However, the Minister reiterated the position of Australia, China and Malaysia that there needed to be credible new evidence which led to the identification of a specific location of the aircraft, which disappeared enroute from Kuala Lumpur to Beijing in March 2014 carrying 239 passengers and crew, if there was going to be a new search effort.

“I don’t rule out a future underwater search by any stretch,” Chester said.

“We need to prepare ourselves for the sad and tragic reality that in this foreseeable future we may not find MH370, but that doesn’t rule out future endeavours or future breakthroughs in terms of data or technology that helps us solve this extraordinary puzzle.

“As the ATSB chief has just pointed out, there is other work going on, on land in relation to more detailed analysis of drift patterns, and further if more debris comes to light in the weeks and months ahead, again, it will be a question of working with Malaysia, working with our experts on any further analysis.

“We need to have credible new evidence leading to a specific location before we would be reasonably considering future search efforts.”

People news

Virgin Australia chief executive John Borghetti receives Australia Day gong

Virgin Australia chief executive John Borghetti has been recognised in the 2017 Australia Day Honours list for his contribution to the aviation industry over the past four decades.

The veteran airline boss has been honoured with admission as an Officer of the Order of Australia (AO).

The official citation said Borghetti was recognised “For distinguished service to the Australian aviation industry, to the development of national and international tourism opportunities, and as a supporter of the arts and sport.”

Prior to joining Virgin, Borghetti was at Qantas for 36 years. Starting in the mail room in 1973, Borghetti rose to executive general manager of Qantas airlines in 2003, a position he held until his departure from the Flying Kangaroo in 2009.

In addition to his aviation roles, Borghetti is currently a non-executive director on Australian Securities Exchange listed Coca-Cola Amatil. He has also been a director of the Australian Chamber Orchestra since 2012.

Etihad’s James Hogan to depart in second half of 2017

Australian-born aviation executive James Hogan will depart Etihad Aviation Group, the parent company of Virgin Australia shareholder and alliance partner Etihad Airways, in 2017 as the Gulf carrier battles difficult market conditions.

Etihad Aviation Group said in a statement on January 24 Hogan would step down as president and chief executive in the second half 2017. Chief financial officer James Rigney would also leave the company at the same time.

Hogan was chief executive of Etihad Airways between 2006-2016, before stepping away from the day-to-day stewardship of the airline in May 2016 to spearhead the wider Etihad Aviation Group following a corporate restructure.

The leadership change comes at a tricky time for not just Etihad but all the Gulf-based carriers, given the slowdown in the region amid difficult trading conditions and overcapacity.

It was reported in December 2016 Etihad, and Emirates, were reducing staff numbers and cutting costs.

Meanwhile, Etihad’s minority shareholdings in overseas carriers such as Europe’s airberlin and Alitalia, as well as Virgin Australia, were yet to offer a return on their investments, with the two European carriers in particular mired in deep losses.

Etihad Aviation Group chairman Mohamed Mubarak Fadhel Al Mazrouei said it was a “challenging market”.

However, he described Etihad, with its airline, cargo, engineering, frequent flyer and ground handling services operations, as a “great business with strong fundamentals”.

“The board and management team will continue an ongoing, company-wide strategic review,” Al Mazrouei said in a statement.

“We must ensure that the airline is the right size and the right shape. We must continue to improve cost efficiency, productivity and revenue.

“We must progress and adjust our airline equity partnerships even as we remain committed to the strategy.”

There have been signs in recent times Etihad was looking at new ways to improve it financial position. The airline signed a codeshare agreement with German flag carrier Lufthansa, which although small in scope to begin with, had the potential to grow into something bigger.

And on February 1 Etihad unveiled further cooperation with Lufthansa through separate maintenance and catering deals.

Separately, it also announced plans to establish a new European leisure airline as part of a joint venture with TUI AG.

There were also efforts to turn things around at at airberlin (through leasing aircraft to a Lufthansa subsidiary) and Alitalia (which is undergoing yet another restructure).

Also, a new chief executive could herald a change in approach to Etihad’s foreign airline investments acquired during Hogan’s tenure, which apart from airberlin, Alitalia and Virgin Australia also included India’s Jet Airways, Air Seychelles, Air Serbia and Swiss-based Etihad Regional.

Etihad Aviation Group said in a statement Hogan and Rigney would join an (unnamed) investment company after leaving the airline group. A global search for a new group chief executive and group chief financial officer was underway.

Al Mazrouei said the aviation group had a “deeply experienced aviation and airline management team” and paid tribute to Hogan’s leadership over the past decade, where Etihad Airways has grown its fleet from 22 to 120 aircraft.

The airline has also set a benchmark for premium travel, particularly for the three-room “The Residence” on board its Airbus A380s.
“We are very grateful to James,” Al Mazrouei said.

“It is a business which has set new benchmarks for service and innovation. Under his leadership, the company has provided new opportunities for thousands of Emiratis and has been a critical element in the remarkable progress of Abu Dhabi and the UAE. We look forward to James’ continued association with Abu Dhabi in new ways.”

Hogan, whose departure from Etihad was flagged in a series of media reports at the end of 2016, said he was proud of what had been achieved during his time at the helm.

“Along with the board and my 26,000 colleagues, I am very proud of what we have built together at Etihad and of the company’s substantial contribution to the UAE and to the development of Abu Dhabi,” Hogan said in the statement.

“The last decade has seen incredible results but this only represents a first chapter in the story of Etihad.”

Etihad serves Brisbane, Melbourne, Perth and Sydney from its Abu Dhabi hub.

Routes news

Fiji Airways heading to Adelaide

South Australians will have a new one-stop option to the United States from June 2017 when Fiji Airways begins twice weekly flights between Nadi and Adelaide.

The route will be flown using Boeing 737-800s, with the inaugural service due to take off on June 30 2017, Fiji Airways said in a statement on December 21.

In addition to being the only airline offering nonstop flights between Adelaide and Nadi, Fiji Airways is also hoping the new route will help support its year-round flights to Los Angeles and seasonal schedule to San Francisco.

While Adelaide will be served with 737-800s configured with eight business and 156 economy class seats for a total of 164, Fiji Airways operates to Brisbane, Melbourne and Sydney with a mixture of 737-800 and Airbus A330 equipment.

Currently, South Australians heading to the United States can fly one-stop through Australia’s east coast capitals, Auckland or Asian points such as Hong Kong or Singapore.

Qantas to offer year-round nonstop flights between Sydney and Bali

Buoyed by the performance of its seasonal flights to Bali, Qantas has announced it will serve the popular tourist destination on a year-round basis from March 2017.

Qantas returned to Bali with scheduled services for the first time in seven years in late 2015, operating a total of 33 flights from Sydney with Boeing 737-800s between December 4 2015 and January 29 2016.

The oneworld alliance member has returned to the Sydney-Bali for a second year of seasonal flying, with daily flights that kicked off on December 14 2016 and scheduled to conclude in March 2017.

However, Qantas said on December 21 it would continue flying the route four times a week beyond March 25.

Qantas has been taking capacity out of the domestic market in recent times, particularly due to the downturn in the mining activity in resources-rich states such as Queensland and Western Australia.

Those aircraft have, often, been redeployed on international routes.

United reduces San Francisco-Auckland

United is switching its San Francisco-Auckland flights from a year-round to seasonal service from April 2017.

The schedule change was “in order to better match capacity on the route with seasonal demand”, Air New Zealand said in a note to travel agents on January 6.

Under the new schedule, United will stop flying between San Francisco and Auckland between April 16 2017 and October 28 2017, leaving Air New Zealand as the only operator on the route.

The US carrier will resume daily services to Auckland from San Francisco from November 2017, and increase its schedule to 10 times weekly over the peak summer holiday period between December 2017 and March 2018.

United returned to Auckland in July 2016, ending a 13-year absence in New Zealand.

It is flying the route in partnership with Air New Zealand, as the two Star Alliance members have a revenue-sharing joint-venture on New Zealand-US routes that commenced with United’s return to New Zealand.

Jetstar returning to Ho Chi Minh City

Jetstar is to resume nonstop flights between Australia and Vietnam flights with the launch of nonstop services from Sydney and Melbourne to Ho Chi Minh City.

The Qantas-owned low-cost carrier plans to serve Vietnam’s most populous city from May 10 with Boeing 787-8s, operating three times a week from Melbourne and four times a week from Sydney.

Jetstar last served Vietnam in 2012, when it ended narrowbody flights on the Darwin-Ho Chi Minh City route. Previously, Jetstar also had a short-lived Airbus A330-200 service from Australia’s east coast to Ho Chi Minh City.

Currently, Vietnam Airlines is the only nonstop carrier between Australia and Vietnam, with daily services to both Melbourne and Sydney from its Ho Chi Minh City hub. In December, Australia became an all Boeing 787 destination for the Vietnamese airline after it switched both its Melbourne and Sydney services to the Dreamliner.

Qantas, which owns 100 per cent of Jetstar Australia and New Zealand, places its QF airline code on the Skyteam alliance member’s two Australian services.

Further, Qantas and Vietnam Airlines are joint shareholders in Jetstar Pacific, with the Australian company holding a 30 per cent stake in the Vietnam-based LCC and Vietnam Airlines owning the remaining 70 per cent.