Preflight

The positive result for the first quarter of 2017/18 announced in a trading update to the Australian Securities Exchange (ASX) on November 8 followed a profitable fourth quarter of 2016/17, again at the underlying PBT level.

And in terms of the outlook, the company has guided the market to expecting an improved performance in the second and third quarters of 2017/18, compared with the prior corresponding quarters in 2016/17.

“This would represent four consecutive quarters of underlying performance improvement for the group,” Virgin Australia chief executive John Borghetti told shareholders at the company’s annual general meeting in Brisbane.

In August, Virgin Australia reported a statutory after tax loss of $220.3 million for the 12 months to June 30 2017. The airline Group said at the time the result was impacted by a subdued domestic market and one-off charges as it withdrew 18 Embraer E190 regional jets and eight ATR turboprops from the fleet.

Virgin Australia is in the middle of its three-year transformation program (dubbed “Better Business”) that is targeting $350 million in annual savings by the end of 2018/19 through fleet simplification, operational efficiencies and other measures.

The company has also sought to bolster its balance sheet through paying down debt and boosting free cash flow.

“The Better Business program continues to track ahead of schedule,” Borghetti said.

Virgin Australia’s trading update revenue improved 5.7 per cent in the first quarter, compared with the prior corresponding period.

Meanwhile, Virgin Australia’s domestic network grew revenue per available seat kilometre (RASK) 8.8 per cent, while load factors rose 3.8 percentage points to 81.4 per cent as capacity, measured by available seat kilometres (ASKs), fell 3.3 per cent.

“We are managing capacity prudently,” Borghetti told reporters during a conference call following the conclusion of the AGM.

On the international front, Virgin Australia’s overseas flying experienced a 17.7 per cent jump in flights between Melbourne and Hong Kong in the quarter and five times weekly Melbourne-Los Angeles services with Boeing 777-300ERs outweighed the end of three times weekly Sydney-Abu Dhabi services.

The capacity increase was not quite matched with demand, with revenue passenger kilometres (RPK) rising 14.2 per cent. As a result, load factors eased 2.5 percentage points to 82.3 per cent.

Borghetti said Virgin Australia’s Hong Kong service – which increased from five times weekly to daily in late November – was performing well, particularly with passengers from China travelling to Australia via Hong Kong as part of the partnership with Hong Kong Airlines.

“Our loads are good, I’m very happy with the way our Hong Kong services are going,” Borghetti said.

Asked when Virgin Australia would announce more flights to Hong Kong or begin previously mooted nonstop services from Australia to mainland China, Borghetti said: “The best answer I can give you is next year.”

“We are working hard in getting additional slots in a couple of cities,” Borghetti said.

“I would like to think that by this time next year we will have slots. Now I won’t say which city that will be but we will have slots.”

Borghetti said any additional flying to Hong Kong or mainland China would be undertaken by Virgin Australia’s fleet of six A330‑200s, which are currently being used on Melbourne- Hong Kong as well as on transcontinental services between Perth and Australia’s east coast capitals.

Meanwhile, Virgin Australia chairman Elizabeth Bryan told shareholders at the AGM the board had discussed the matter of whether the company should be privatised. However, no conclusions had been Reached.

“We have a responsibility to ensure that we act in the best interests of all shareholders and in the long-term interest of the company. As part of fulfilling this responsibility, the board has held discussions about privatisation, however there is no outcome to report to the market at this stage,” Bryan said.

Virgin Australia’s five major shareholders – Etihad Airways, HNA Group, Nanshan, Singapore Airlines (SIA) and UK-based Virgin Group – hold more than 90 per cent of issued stock in the company.

SIA chief executive Goh Choon Phong was asked about the prospects of Virgin Australia being privatised at his airline’s recent half year results briefing.

In response to the question, Goh said there was “not much we can comment on what the chairman has just said”.

“We are very clear on the governance process. We play our role as shareholders quite strictly and ensure that, you know, we get the same information as any other shareholders,” Goh said.

“So when they finally come to us with some proposal, we’ll look at it and we’ll decide from there.”

Qantas profit growth on upward trajectory

Qantas expects to return to profit growth in the first half of the current financial year amid what chief executive Alan Joyce describes as a “mixed market”.

The airline group said in a trading update on October 26 underlying profit before tax (PBT), which excludes one-off items and which it regarded as the best indication of financial performance, is forecast to be in the range of $900-950 million for the six months to December 31 2017.

If the result is in line with guidance, it would represent an improvement of up to 11 per cent from underlying PBT of $852 million in the first half of 2016/17. Qantas posted an 8.4 per cent decline in full-year underlying PBT in 2016/17.

Qantas’s market update said revenue across the airline group for the three months to September 30 was $4.19 billion, up 5.1 per cent from the prior corresponding period.

Meanwhile, revenue per available seat kilometre (RASK), which is a measure of demand, was up 3.1 per cent.

“We’re pleased to see continued strong performance across our portfolio of flying and loyalty businesses in what is a mixed market,” Joyce said.

“We’re making good progress towards our annual target of $400 million in cost and revenue improvements, with the Dreamliner and domestic Wi-Fi two examples of projects that will make us more efficient and deliver a revenue premium.

“Overall, despite an uptick in fuel costs and the challenges from competitor capacity growth on the international side, the Group remains on track for another strong underlying first half and a successful full year.”

The company’s latest traffic figures showed the airline cut capacity, measured by available seat kilometres (ASK), in the domestic market across its Qantas and Jetstar units by 2.7 per cent in the first quarter of 2017/18.

It has guided the market to a 2-3 per cent reduction in group domestic capacity for the first half, an increase from the forecast one per cent reduction at the company’s full year results presentation in August.

Joyce said the domestic market was healthy but remained very Competitive.

“The high rate of revenue growth we’ve seen so far this year is likely to slow when compared with what was a strong second half last year,” Joyce said.

Qantas’s international network reported a 10.8 per cent improvement in total passengers carried, with capacity up 5.4 per cent thanks to recently launched new services such as the return to Beijing in January and the upgauging of some Sydney- Auckland flights to widebodied Airbus A330s that began in July. Average load factors improved 2.2 percentage points to 84.2 per cent.

The airline is also adding more trans-Tasman flights from Brisbane and Melbourne to Auckland from March 2018 as Emirates withdraws from those two routes.

Overall, Qantas said its international ASKs would increase about five per cent in the first half, in line with previous guidance, and three per cent in the second half of 2017/18.

This compares with international competitor capacity growth of about three per cent in the first half and 6-7 per cent in the second half, Qantas said. “There’s been a welcome easing of capacity growth in the international market but the indications are that it is likely to pick up pace again in the second half,” Joyce said.

Qantas said the total fuel cost for the airline group was forecast to be $1.55 billion for the first half, up from $1.49 billion in the prior corresponding period.

Cathay Pacific not waiting for Hong Kong’s third runway to grow

Cathay Pacific chief executive Rupert Hogg says there are still opportunities for growth at the busy Hong Kong Airport while the new runway is being built.

Although slot restrictions at Chep Lap Kok are well documented, Hogg says Cathay is aiming to grow annual capacity each year until the third runway was completed and ready for operations in late 2024.

This would be achieved through new long-haul destinations, as well as upgauging of existing services with larger aircraft.

“From our point of view as the hub-based carrier it is important that the hub continues to grow,” Hogg said during a panel discussion at the Association of Asia Pacific Airlines (AAPA) Assembly of Presidents in Taipei on October 25.

“We have a plan to grow through that period. Our plan has us growing at about four to five per cent a year off a very big base up until the point that the third runway is open.

“We are doing that essentially by introducing more new long-haul destinations, by upgauging or using bigger aircraft types.”

In a continuing trend of airlines operating larger aircraft, earlier in 2017 Cathay ordered 32 single aisle A321neos to replace Cathay Dragon’s current in-service fleet of 15 A320s and eight A321s, which will allow the airline group’s regional-focused operation to grow capacity on existing services.

And the trend of upgauging was particularly evident of Cathay’s Australian routes, where the oneworld alliance member has replaced 251-seat A330-300s with a combination of 280-seat A350-900s and 340-seat Boeing 777-300ERs to the likes of Brisbane, Melbourne, Perth and Sydney.

Hogg, who began as chief executive on May 1, noted 65 per cent of all aircraft movements at Hong Kong Airport currently were on widebody aircraft. Increasing the number to 70 per cent would be the equivalent of adding an extra 1.5 million passengers a year.

Although the new runway was still seven years away, Hogg said the Hong Kong government, airport authority and civil aviation regulator were all working hard to get more out of the current setup through new air traffic control processes, increased terminal space and aircraft parking facilities.

“The challenge now is to make sure that Hong Kong, which is the largest international hub in Asia with 70 million plus passengers a year, can continue to grow,” Hogg Said.

“You can see that there are collectively a whole lot of things that can be done to keep the hub functioning effectively when you know what the current state is and where you need to get to in terms of the next generation of Infrastructure.”

The difficulty of securing slots at Hong Kong Airport is not lost on Australian carriers, with Virgin Australia forced to operate a split schedule when it commenced Melbourne-Hong Kong flights for a number of months before it managed to pick up some more slots to offer a daily service and more consistent departure times.

Qantas too has been seeking to grow services to Hong Kong with limited success.

In other Cathay news, it emerged in early November Qatar Airways has bought a 9.61 per cent stake in the Hong Kong-based carrier, saying the airline had “massive potential” for the future.

The Doha-headquartered airline acquired the 378,188,000 shares in Cathay Pacific from Kingboard Chemical Holdings Ltd, which is listed on the Hong Kong stock exchange, for HK$5,162,266,000 (A$865.3 million).

The transaction is Qatar Airways’ fourth investment in a foreign airline group. It holds 20 per cent in International Airlines Group (the parent company of Aer Lingus, British Airways, Iberia and Vueling), 10 per cent of LATAM Airlines Group and 49 per cent in Italian carrier Meridiana.

Earlier in 2017, Qatar had planned to buy into American Airlines, but the idea was dropped after the US carrier expressed little enthusiasm for the deal.

Qatar would be the third-largest shareholder in Cathay Pacific once the transaction is completed. The bulk of Cathay Pacific stock is held by two major shareholders – Swire Pacific Ltd owns about 45 per cent, while Chinese flag carrier Air China owns about 30 per cent.

China Airlines prepares to join Kangaroo Route

China Airlines says its upcoming move to offer double daily services between Sydney and its Taipei hub is part of efforts to support new services to London Gatwick.

The Skyteam alliance member will join the plethora of carriers on the so-called Kangaroo Route linking Australia and the United Kingdom when its new four times weekly Taipei-London Gatwick flights kick off on December 1 with Airbus A350-900s featuring the airline’s latest cabin products.

On the same day, China Airlines is increasing its Taipei-Sydney schedule from four times a week with Airbus A330s currently to twice daily. The route will also be operated by the A350-900, offering passengers a consistent product all the way from Sydney to London Gatwick.

China Airlines’ A350-900s are configured with 306 seats comprising 32 in business with direct aisle access for every passenger, 31 in premium economy in a 2-3-2 layout and 243 in economy at nine-abreast.

By contrast, the A330-300s currently used to Sydney have either 307 or 313 seats in a twoclass format, with business class an angled-lie flat seat in a 2-2-2 layout that does not offer direct aisle access for every passenger.

China Airlines general manager, strategic planning department, corporate development office James Chung said the Taiwanese flag carrier had been heavily promoting its wider Asian and Australian market in the UK ahead of the London Gatwick service kicking Off.

“From December we will also have the new London route, so yes, China Airlines from this December we are joining the Kangaroo competition,” Chung told reporters at the Association of Asia Pacific Airlines (AAPA) Assembly of Presidents in Taipei on October 25.

“We know there is much competition. But at China Airlines we believe we can try to target some niche markets.”

The schedule change for Sydney will be the latest in a series of recent tweaks to its Oceania route network, with China Airlines recently ending its Sydney- Auckland and Sydney-Christchurch tag flights.

On a more positive note, Chung confirmed China Airlines would boost its Taipei-Brisbane-Auckland service from five times a week currently to daily by the start of December with the A350-900, replacing A330-300 equipment on the route.

And as more A350-900s get delivered, the A330-300s used on Melbourne-Taipei were also expected to be replaced with the next generation Airbus widebody.

“In the next year we have another four A350s that will be coming, so gradually we will be changing A330 services for this route to the A350,” Chung said.

Qantas codeshares on China Airlines’ Australia-Taiwan services. Australia and Taiwan have an open skies air services agreement.

Asked about the prospects of bringing in more feed for the London flight by offering a nonstop flight to Auckland, compared with the one-stop options via Australia being offered now, Chung said New Zealand was challenging from an aircraft utilisation perspective.

“It’s not easy to handle even a daily fight to Auckland,” Chung said.

Boeing forecasts 930 new aircraft for Oceania

Boeing has downgraded its forecasts for new orders in Oceania over the next two decades, with the bulk of the reduction coming in the singleaisle segment featuring aircraft such as its own 737 and Airbus’s A320.

The manufacturer’s outlook is for airlines in the region – Australia, New Zealand and the nations of the South Pacific – to order 930 new aircraft worth $US140 billion over the next 20 Years.

The estimate is a decrease of 90 aircraft from the 1,020 expected for Oceania in the 2016-2035 Current Market Outlook (CMO).

The Oceania figures from Boeing’s CMO for 2017‑2036 were shown during a presentation to media attending Qantas’s delivery events for its first 787-9 at Boeing’s Everett facility on October 16.

The single-aisle category was cut from 800 in the prior year’s CMO to 680 aircraft, a reduction of 15 per cent.

By contrast, there was an increase in the small widebody segment (between 200-300 seats) from 130 aircraft to 150 Aircraft.

There was also an increase in the regional jets segment, which Boeing does not compete in but offers a forecast for, from zero aircraft in the prior year’s CMO to 10 in the current outlook.

The medium/large widebody segment was unchanged from the previous year.

Boeing Commercial Airplanes managing director for product marketing and analysis Jim Freitas said the emergence of next generation aircraft such as the 787 enabled airlines to launch more point-to-point routes with smaller gauge, lower cost equipment.

Airlines were also able to grow through adding new frequencies on existing routes and opening new markets rather than flying larger aircraft. Freitas was also upbeat about the budget end of the market in Oceania.

“We do see strong growth in LCCs and the low-cost long-haul carriers,” Freitas said.

Boeing expected the Oceania fleet to increase from about 580 aircraft today to 970 over the next 20 years, with some 540 aircraft replaced and 390 new aircraft joining the fleet for growth. Just 40 aircraft flying today will still be in the skies in two decades’ time, according to Boeing estimates.

“That indicates you have a fairly mature market in Oceania today,” Freitas said.

The bulk of the growth in passenger traffic for Oceania was likely to be for travel within the region, as well as to and from the key markets of the Middle East, China and South-East Asia.

“We see the Oceania market has huge potential growth,” Qantas chief executive Alan Joyce said.

The forecast reduction in single-aisle orders comes as the Australian domestic market has experienced almost no growth over the past two years as Qantas and Virgin Australia have cut capacity in an effort to improve the bottom line, and better match the number of seats in the market with demand, amid the slowdown in the mining and resources sectors.

Samoa Airways to ensure country able to determine its own destiny – PM

Prime Minister Tuilaepa Sailele Malielegaoi says Samoa’s newly established airline ensures the country will be able to determine its own Destiny.

Samoa Airways’ maiden flight took off on November 14, when leased Boeing 737-800 I-NEO departed Apia as OL731 bound for Auckland. The airline is offering six weekly flights on the Apia- Auckland route and two flights a week between Apia and Sydney.

Speaking at the airline’s formal launch at Apia’s Faleolo International Airport the day before the inaugural service, Prime Minister Tuilaepa said Samoa Airways was something the country should have set up a long time ago.

“Samoa can no longer rely on others to determine our destiny in terms of air travel, we can no longer sit back and let others dictate to us what’s best for our people and this country,” the Prime Minster said in a speech posted on the Samoa government’s Facebook Page.

“Having our own airline ensures that we will be able to determine our destiny.

“Having our own airline will create jobs and will contribute to the economic growth of our country through increased exports and also contribute to increasing tourists to our country. Something that was not done under past Arrangements.”

Prime Minister Tuilaepa said the government “has not given the airline any funds to start the airline”, telling Samoa Airways employees they had to “run it as a Business”.

“To our airline management and staff, this is the time to work as professionals, to act as professionals, to put your best foot forward, to showcase Samoa and its airline to the world,” he said.

“Do it right, do it properly and make the airline profitable.”

The Samoa government said on its Facebook page the aircraft, which landed in Apia on Saturday after its ferry flight from Milan via Muscat, Singapore and Cairns, was wet leased from Icelandair, with the arrangement to switch to a dry lease in six months’ time.

Some 20 cabin crew were undergoing training to work on the 737.

Prime Minister Tuilaepa’s comments appear to be a veiled swipe at Virgin Australia, following the Samoa government’s decision in May to terminate its Virgin Samoa joint venture with the Australian carrier that was established in 2005 and set up Samoa Airways. Media reports at the time said the decision to ditch the JV was due to concerns over high fares.

A memorandum of understanding with Fiji Airways was signed in July to help establish Samoa Airways, with the current domestic carrier Polynesian Airlines to be part of the new Venture.

Prime Minister Tuilaepa said the decision to set up Samoa Airways was “based on sound and well researched studies”.

“No one else will look after our country’s needs but us,” he said. “If we do not do it now, it will never be done.”

“If you look around our region, from Vanuatu to the Solomons, Nauru to Kiribati and Tahiti to Fiji, our neighbours have their own national airlines and they have maintained their airlines successfully and profitably.

“If others can do it why can’t we. The answer is we can.”

The Prime Minister said the partnership with Fiji Airways would offer connectivity to Asia and the United States via codeshares.

Samoa Airways and Air New Zealand will be the only two airlines flying nonstop between Apia and Auckland, after the Samoa government knocked back Virgin Australia’s application to stay on the route following the end of the JV.

While flights from Brisbane and Sydney to Apia launched on November 13 as previously planned, Virgin Australia was forced to cancel its proposed five times weekly Apia-Auckland service with 737-800s.

The airline said it had removed the Auckland flights from sale, describing the Samoa government’s decision as “out of our control”.

“We are disappointed by this decision and at this stage are working in conjunction with the Australian Government to explore options to encourage the Samoan Government to reconsider its decision,” Virgin Australia said on October 30.

New rules for recreational drone users

Australia’s Civil Aviation Safety Authority (CASA) has introduced new rules for recreational users of remotely piloted aircraft systems (RPAS).

Under the new rules, recreational users are prohibited from flying these aircraft, commonly known as drones, within 5.5km of any controlled aerodrome, which covers all capital city airports and some at regional centres.

Drones, which have surged in popularity in recent times, are also prohibited to be flown within 5.5km of non-controlled aerodromes or helicopter landing sites when it is clear aircraft are operating there.

Further, drones must be kept below 400ft and not get any closer than 30m from people not involved with the operation of the drone. Also, recreational users can only fly one drone at a time, CASA said on October 20.

“The new rules will better protect people and aircraft from drones. They focus on the operation of recreational drones,” CASA said in a statement.

“The drone safety rules have been tightened in response to community concerns about the safety of drones and the rapid growth in drone numbers.”

CASA said those holding a remote pilot licence (RePL) and operating drones according to a remotely piloted aircraft operator certificate (ReOC) or those with an authorisation from CASA, would be exempt from the new measures.

The new rules also prohibit all drones – both recreational and non-recreational – from being used where fire, police or other emergency operations are underway, unless there was approval from the person in charge of the emergency operation.

The regulator also reaffirmed existing rules that do not allow drones to fly over and above crowds and groups of people, as well as regulations that only allow flights during the day and within visual line of sight.

CASA chief executive and director of aviation safety Shane Carmody said the new rules still offered plenty of opportunities for those who fly drones for fun.

“We certainly don’t want to ban recreational drones but we do have to make sure public safety is properly protected,” Carmody said.

“CASA identified some areas in the drone rules that needed strengthening and clarifying to better manage the risks associated with flying drones.

“The changes make the safety requirements clearer for people flying drones and will make the rules easier to enforce.”

Northrop Grumman awarded RAAF C-27J sustainment contract

Northrop Grumman Australia has been awarded a performance-based contract to maintain the RAAF’s fleet of Leonardo/L-3 C-27J Spartan battlefield airlifters.

The contract is for an initial five-year period, and will renew annually for up to 22 years under a “rolling wave” arrangement, should Northrop Grumman continue to meet performance targets.

Ten C-27Js are on order for the RAAF, with the type being introduced into service with 35 Squadron at RAAF Base Richmond, west of Sydney.

The award announcement comes some six months after the contract was awarded, and builds on Northrop Grumman’s growing transport aircraft maintenance work in Australia which also includes sustainment of the RAAF’s KC‑30A MRTT at RAAF Amberley and Brisbane Airport, and the Canberra-based Boeing 737BBJ and Bombardier 604 SPA fleet.

“This program represents the strategic foundation for Northrop Grumman upon which we can build sovereign Australian capabilities to sustain and modernise the 5th Generation Air Force of the future,” Ian Irving, chief executive, Northrop Grumman Australia said in a statement.

“It allows us to deliver on our commitment to establish and grow a uniquely Australian defence capability while leveraging our world-class defence technologies and global infrastructure.”

Northrop Grumman has teamed with Leonardo, the C-27J’s original manufacturer, in order to “reduce primary risks to data access, design engineering support and supply chain management.”

Work on the C-27J will initially take place at RAAF Base Richmond, before moving to Amberley in the medium-term when 35 Squadron relocates there.

Australia signs up to Next Generation Jammer Development

The RAAF and the US Navy have signed a memorandum of understanding (MOU) to jointly develop the ALQ-249 Next Generation Jammer Midband (NGJ-MB) capability.

Next Generation Jammer is an external jamming pod that will replace the ALQ-99 Tactical Jamming System on EA-18G Growler airborne electronic attack aircraft.

The jammer technology will be cooperatively matured by the RAAF and the Airborne Electronic Attack Systems and EA-6B Program Office (PMA‑234). The MOU provides the framework for communication, coordination and cooperation during engineering and manufacturing development.

“This is a very important milestone for both nations, one that took four years of communication and collaboration to successfully achieve,” Chief of Air Force AIRMSHL Leo Davies said on November 2.

“As this is a rapidly evolving area, we will work in partnership with the US Navy to develop the next-generation jamming capability, which will ensure that our aircraft remain at the technological forefront throughout their service life.”

AVM Cath Roberts, Head Aerospace Systems Division within the Capability Acquisition and Sustainment Group (CASG), attended the signing, which was held on October 18 in Hawaii.

Minister for Defence Senator Marise Payne announced in March that Australia would be partnering with the US to develop a next generation radar and radio jammer for the Growler at a cost of $250 million.

SriLankan arrives in Melbourne

SriLankan Airlines has returned to Australia for the first time since 2001 with the start of nonstop flights between Melbourne and Colombo.

The inaugural service, operated by Airbus A330-300 4R-ALM, touched down at Melbourne Airport at about 1515 on October 31, following its 10-hour journey from Colombo.

The aircraft was on the ground for about two hours before operating the return flight back to Colombo’s Bandaranaike Airport. SriLankan last flew to Australia in 2001, when it ended flights between Colombo and Sydney. AirLanka, which preceded what is now SriLankan, operated Colombo- Sydney-Melbourne-Colombo services with Lockheed L1011 Tristars in the early 1990s.

SriLankan chief executive Captain Suren Ratwatte, chairman Ajith Dias and Sri Lankan State Minister of Public Enterprise Development Lakshman Yapa Abeywardena also travelled to Melbourne on the first flight.

“We’re incredibly excited to be connecting Melbourne and Colombo like never before,” Captain Ratwatte said.

“We look forward to providing our award-winning service, delivered with world-renowned Sri Lankan warmth and hospitality, as Australians travel to Sri Lanka, India, the Maldives and beyond.”

Melbourne is the oneworld alliance member’s second-longest route behind its Colombo-London Heathrow flight, and Captain Ratwatte noted Australia was home to one of the largest Sri Lankan expatriate communities, many of whom lived in Melbourne.

SriLankan is hoping its new flight will attract Australians travelling not just to Sri Lanka but also beyond to countries such as India and the Maldives.

While the inaugural flight was operated by an A330-300, the smaller A330-200 will operate the route on an on-going basis.

IATA boss says airport privatisation a failure

International Air Transport Association (IATA) chief executive and director general Alexandre de Juniac says the privatisation of airports around the world by governments often seeking a short-term boost to the budget has proven to be a failure.

Speaking to the Association of Asia Pacific Airlines (AAPA) assembly of presidents in Taipei, de Juniac said airports performed better in public hands.

“That is the conclusion of three decades of largely disappointing experiences with airport privatisation,” he said in his speech on October 25.

“The primary focus of airports should be to support local and national prosperity as an economic Catalyst.

“But in private hands, shareholder returns take top priority. And we struggle with costs at privatised airports as far flung as Paris, Sydney and Santiago.”

His comments come as the aviation industry tries to cope with the growing demand for air travel, with the number of passengers in the Asia Pacific alone expected to more than double to about 2.1 billion annually over the next two Decades.

Infrastructure looms as the major bottleneck, with many airports in the region at or above design capacity, air traffic management constrained by a lack of intergovernment cooperation regarding airspace, and slot restrictions acting as a handbrake on growth.

While de Juniac said privatisation was “not by itself negative”, the regulation of those airports – both the regulatory framework and the regulatory body – lacked efficiency.

“What we have seen is that regulating privatised airports is difficult, to be polite, and has been a failure, to be impolite,” de Juniac told reporters on the sidelines of the AAPA conference after his speech.

“We haven’t found any government or any country that has been able to regulate efficiently privatised airports. So we have seen in countries in which airports are privatised an increase in airport charges, in whatever we pay to land and to park our aircraft. At the same time the airfares have decreased.

The gap is significant.”

Further, de Juniac noted those airports that regularly topped the list of the world’s best airports, citing Amsterdam, Dubai, Hong Kong, Seoul Incheon and Singapore Changi as examples, were all in government hands.

He said the move to sell off airports was often not triggered by aviation interests but pressures on government budgets.

“It is because the state needs money,” he said.

“When they are privatised, the public entities, whether it is local governments or states, they wash their hands about this infrastructure which is absolutely monstrous because when you talk about hubs it is national interest infrastructure.” In Australia, the major capital airports are either publicly-listed companies or held by large investment or superannuation funds.

And the industry group representing the nation’s airports, the Australian Airports Association (AAA), has previously talked up the benefits of privatisation, noting the “billions of dollars of private investment that would have otherwise come from the pockets of taxpayers under a government ownership model”.

AAA chief executive Caroline Wilkie, writing in the August edition of Australian Aviation, said the privatisation of the nation’s airports that began with Brisbane, Melbourne and Perth two decades ago had “arguably been one of the most successful and transformative infrastructure privatisation processes this country has ever seen”.

“It’s also worth remembering that our major airports remain over 85 per cent Australian-owned by Australian superannuation funds, so the investment in our critical infrastructure and the benefits it delivers helps drive our economy,” Wilkie said.

“While we observe the challenges currently facing several other infrastructure sectors as they begin the transition to private ownership, perhaps there are some valuable lessons that can be learned from our major airports.”

IATA has conducted an extensive study on airports, the details of which de Juniac said would be released soon.

Revised OneSky tender price under evaluation

Defence has revealed that a new tender price for Australia’s ambitious OneSky program to acquire a joint civil and military air traffic management system is currently under evaluation.

Thales was announced as the successful supplier for the Airservices Australia-led OneSky project at the Avalon Airshow in February 2015. However, negotiations between Airservices and the French-headquartered aerospace and defence company have become increasingly protracted, and an Australian National Audit Office (ANAO) report published in April questioned OneSky’s value for money, suggesting Australia could end up paying too much for the project.

“In June last year they [Thales] submitted an offer based on their original tendered offer that had gone through a further negotiation phase,” Rear Admiral Tony Dalton told the Senate’s Foreign Affairs, Defence and Trade committee on October 25.

“The assessment of that offer in June last year was it didn’t represent value for money.

“There has been a degree of work done on that offer with Thales in the intervening period that culminated with a revised price being offered by Thales last month. That is currently under assessment.”

RADM Dalton is now general manager ships at Defence’s Capability Acquisition and Sustainment Group (CASG), but retains responsibility for Defence’s portion of the OneSky program.

Defence’s share of the OneSky program is known as “Project AIR 5431 Phase 3 Civil Military Air Traffic Management System”, and was added to the government’s Projects of Concern list of Defence acquisition programs requiring special remediation in August, a near unprecedented move for a program yet to be contracted.

RADM Dalton explained that the delay in signing contracts was one reason OneSky was added to the Projects of Concern list, and that further delays might force Defence to seek an alternative supplier to replace its existing Australian Defence Air Traffic System (ADATS).

“Well certainly the timeframe has slipped. That’s been part of the issue and that’s why it’s been elevated to a Project of Concern,” RADM Dalton said.

“But inside our budget, we have some allowances to cater for the obsolescence emerging in the current defence system. That clearly is a concern for us and there is a finite amount of time that the process can go on before we have to look at alternatives.”

Further, RADM Dalton confirmed the cost of Defence’s share of the program could be higher than first expected. “Our contribution to the overall OneSky program may need to increase. We have made some allowances in the revised Integrated Investment Program to accommodate for that increase. Our negotiations with Airservices have said that there’s a finite amount of money that we’re prepared to increase,” he said.

“Part of the discussions that we’ve had with Thales, through the Projects of Concern process, has made that abundantly clear to Thales.”

Remembering Ben Sandilands

Tributes have flowed for veteran aviation journalist Ben Sandilands, who died in late October after battling cancer.

Fellow journalists and “adversaries” from the world of PR said Sandilands’ deep knowledge of and passion for aviation shone brightly in a career that spanned close to 60 Years.

While his peers read his work with much admiration, the public relations staff at the airlines and companies Sandilands had in the crosshairs faced a persistent, determined journalist unrelenting in his pursuit to get to the bottom of every story.

And he was never shy in expressing his opinions, regardless of whether it was in casual conversation or when questioning an airline chief executive at a media conference.

As Justin Dubon from the Airbus media team explained in a message of tribute on the Australian Aviation website: “Ben’s passion for aviation was infectious and his 24hrs a day coverage was legendary. Never one to shy away from an opinion, he kept us PRs dancing on our toes. He was always available at all hours and grew to become a dear friend and sparring partner. Dear Ben – one of the great aviation journalists – we remember you fondly and will miss you. Your friends at Airbus.”

Heather Jeffery, who led the PR team at Virgin Blue for many years, recalled in her tribute on Australian Aviation meeting Sandilands for the first time.

“Ben was terrifying – an encyclopaedic font of aviation knowledge waiting to be aired. But quickly and over the years I understood him to be irrepressibly passionate about the industry, extremely fond of his family, colleagues and competitors, a gentleman (even when he was almost yelling at me – probably deserved) and above all a truly kind human being.”

And former Australian and International Pilots Association president Captain Barry Jackson, noted Sandilands “did not mind ruffling a few feathers” and always went “beyond the Spin”.

Sandilands covered aviation at Fairfax Media’s The Australian Financial Review and The Sydney Morning Herald mastheads through a period where Australian Airlines and Qantas became one, Ansett folded, Virgin Blue emerged and then morphed into Virgin Australia, as well as the arrival on the local scene of low-cost carriers in the form of Jetstar and Tigerair Australia.

For the past decade, Sandilands wrote on aviation for the Crikey online blog Plane Talking, where his combination of analysis, opinion and news often provoked much comment from readers.

Even Qantas chief executive Alan Joyce was prompted to respond to one of Sandilands’ Plane Talking posts in June 2011.

Most recently, Sandilands had written extensively on the search for missing Malaysia Airlines flight MH370. He had also written for The Bulletin, Guardian Australia and the ABC.

This body of work was recognised with a lifetime achievement award in 2015 from the National Aviation Press Club. Aviation journalists and industry figures also took to Twitter to pay tribute to their Colleague.

Long-time aviation editor at The Australian and now editor/ Asia Pacific bureau chief for Airline Ratings Steve Creedy said Sandilands was a largerthan- life colleague whose sharp observations would be sorely Missed.

Reuters Asia aviation and defence correspondent Jamie Freed, who previously covered aviation for Fairfax Media in Australia, said Sandilands was an “industry legend”.

Qantas pilot Captain Richard de Crespigny expressed similar sentiments in farewelling a “legendary aviation journalist and friend”.

Australian Aviation contributor John Walton perhaps put it best, saying “how fortunate we truly are to have known Ben and to have read his work”. Australian Aviation extends its deepest condolences to the Sandilands family.