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CANADIAN AVIATION INDUSTRY REVIEW
In this issue
Features Columns: Regular Reports: WestJet Seat Capacity 2008
(p.1) Economic Outlook (p.2) Caribbean Report (p. 10) Asia Report
(p.11) European Report (p.12) Ottawa Report (p.13) Washington
Report (p.14) EU/U.S. Open Skies (p. 15)
Airline Data - Canada (p.3) Airline Data U.S. (p.4) Selected
Canadian Airport Data (p.5) News (p.6) InterVISTAS News (p.20)
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WESTJET SEAT CAPACITY 2008 April 2008
WestJet began operations in 1996 with three aircraft serving
five Canadian cities. In 2008, the airline operates 73 aircraft
with flight operations to 47 cities in Canada, the U.S. and the
Caribbean. This column reviews WestJets 2008 seat capacity.
Overall Change Capacity Increases Between January 2007 and
January 2008, WestJet increased its overall weekly non-stop
capacity by 10%. The largest increases were noted in Toronto (5,800
seats), Calgary (4,400), Vancouver (3,800), Edmonton (2,200), Las
Vegas (2,200) and Halifax (1,360) year-over-year. Following its
2006 introduction of international service, WestJet continues to
increase its international destinations served with six new
locations (San Jose Cabo, Montego Bay, Punta Cana, Mazatlan, Puerto
Plana and Saint Lucia) with 1,900 seats offered weekly amongst
them.
Aaron Beeson Project Analyst
Transborder Services now 9% of WestJet seats Between January
2007 and January 2008, WestJet increased its overall weekly
transborder non-stop capacity by 8%. The majority of growth was
realized at Vancouver and Toronto. Kelowna was the only new
Canadian origin city added to WestJets transborder network, with
the introduction of twice weekly flights to Las Vegas.
19% 14% 8%
January 2008 Transborder Seat Capacity
Toronto Vancouver Calgary
Transborder Other Passenger Traffic
Source: OAG January 2007 and 2008 discs
Today, the transborder sector makes up almost 9% of WestJets
non-stop capacity (27,000 weekly seats). Compared to 2005, when all
transborder flights were operated through its three main focus
cities Calgary, Toronto and Vancouver, WestJet now offers
transborder services at six additional cities (Edmonton, Hamilton,
Kelowna, Montreal, Ottawa and Winnipeg). The above graph shows the
share of transborder capacity at each of the three focus cities as
a percentage of total WestJet operations at each airport.
The airline currently flies to 12 different U.S. destinations,
with Las Vegas, Orlando, Fort Lauderdale, Palm Springs, Phoenix and
Los Angeles assuming 75% of the services. The graph to the left
shows the share of weekly seats WestJet flies to each U.S. market.
Of the original 2004 U.S. markets, only San Francisco and New York
are not currently served by WestJet. However, starting 2 June 2008,
WestJet will commence a seasonal Calgary-New York route. This
deviates from its initial operation to New York which was only
served from Toronto. This is a further indication that WestJet is
increasing services to business markets as opposed to its typical
concentration on tourist and sun destinations.
InterVISTAS Canadian Aviation Intelligence Report Page 1
Source: OAG January 2007 and 2008 discs Note: Seat capacity
figures represent weekly non-stop seats flown in both
directions
Las Vegas, 24%
Orlando, 15%
Fort Lauderdale,
12%
Palm Springs, 9%
Phoenix, 8%
Los Angeles, 7%
Honolulu, 6%
Tampa, 6%
Kahului, 6%
Fort Myers, 4%
West Palm Beach, 2%
Kona, 1%
Distribution of Transborder Capacity
April 2008 Copyright 2008 InterVISTAS Consulting Inc., all
rights reserved.
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InterVISTAS Canadian Aviation Intelligence Report April 2008
Copyright 2008 InterVISTAS Consulting Inc., all rights reserved.
Page 2
ECONOMIC OUTLOOK April 2008
Measures of consumer confidence can be a useful indicator of
consumer expenditures in the near future. While not necessarily
accurate in predictions of economic performance as a whole, the
relationship between consumer sentiment and spending means that
changes in sentiment can have an effect on the economy overall. In
general, high levels of consumer confidence signal strong consumer
spending, while low expectations of future performance may cause
consumers to scale back discretionary spending, particularly on
large purchases. A look at indicators for the U.S and Canada shows
consumer confidence in the two countries has exhibited some
differences in recent trends.
Alex Welch Senior Analyst
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U.S. Consumer Sentiment
Source: University of Michigan Consumer Sentiment Survey
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U.S. Consumer Sentiment
Source: University of Michigan Consumer Sentiment Survey
The U.S. Several measures of consumer confidence in the U.S. are
collected regularly, including the University of Michigan Consumer
Sentiment Index. This index measures monthly consumer sentiment
based on a survey of households, including views of current
conditions and expectations.
After reaching a two-year high of 96.9 in January 2007, U.S.
consumer confidence has shown a sharp decline throughout the latter
half of 2007 and the first few months of 2008. Specifically, the
index decreased from 90.4 in July 2007 to 69.5 in March 2008, its
lowest level since February 1992. This dramatic decrease can
largely be explained by the recent turmoil in the housing and
financial markets. To make matters worse, consumers are seeing
record high oil prices combined with predictions by many economists
that the U.S. economy is headed for recession.
Canada. In Canada, consumer sentiment is measured using the
Decima-Investors Group Index of Consumer Confidence. This index
uses a methodology closely based on the University of Michigan
Index and is considered to provide a comparable measure. The index
is measured every four months, in February, June and October.
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Canadian Consumer Sentiment
Source: Decima-Investors Group Index of Consumer Confidence
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Canadian Consumer Sentiment
Source: Decima-Investors Group Index of Consumer Confidence
Compared to the U.S., the Canadian index has been relatively
stable over the past few years. That being said, it appears that
consumer confidence over the past few months has started to trend
downwards, although not to the
same extent as that in the U.S. Specifically, the index
decreased from a 4-year high of 0.88 in June 2007 to 0.81 in
February 2008. It should be noted that the most recent measure of
the index is February 2008, thus it remains to be seen whether the
sharp decline in U.S. confidence over the past six months will be
reflected to any extent in Canada.
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AIRLINE DATA CANADATraffic and Load Factors on Canadas Major Air
Carriers March 2008
Passenger Traffic Revenue Passenger
Kilometres Capacity
Available Seat Kilometres Load Factor Air Carrier % Change over
2007
% Change from 2006
% Change over 2007
% Change from 2006
Change over 2007
Change from 2006
Air Canada1 +3.6% +9.0% +3.9% +6.2% -0.2pts (to 83.5%)
+2.1pts
(from 81.4%) Domestic (Mainline) +1.5% +7.0% +3.2% +3.2% -1.4pts
+2.9pts
Jazz +4.8% +22.4% +4.1% +16.5% +0.5pts +3.6pts International
& Charter +4.4% +9.7% +4.1% +7.3% +0.2pts +1.6pts
WestJet +21.7% +49.0% +19.6% +41.0% +1.4pts (to 86.6%)
+4.7pts
(from 81.9%) Analysis: Air Canada Mainlines domestic load
factor
dropped 1.4 percentage points from March 2007 to 82.9% in March
2008, due to the 3.2% increase in seats outpacing the 1.5% growth
in passenger traffic over the same period. This year, Air Canada
Mainlines domestic sector experienced the first decline in its
March load factor since 2003.
-2%-1%0%1%2%3%4%5%6%7%8%
Jan-07
Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-08
Feb Mar
Dom RPK Dom ASK
Air Canada Domestic Mainline Air Canada Domestic Mainline
Jazz data is not included in this graph
-2%-1%0%1%2%3%4%5%6%7%8%
Jan-07
Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-08
Feb Mar
Dom RPK Dom ASK
Air Canada Domestic Mainline Air Canada Domestic Mainline
Jazz data is not included in this graph
Air Canada Mainlines international passenger traffic increased
by 4.4% in March 2008 over March 2007. The Latin America and Other
region experienced the strongest traffic growth at 18%. Since the
growth in passenger traffic slightly exceeds that of seat capacity,
this results in the modest increase in international load factor of
0.2 percentage points.
-2%-1%0%1%2%3%4%5%6%7%
Jan-07
Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-08
Feb Mar
Int'l RPK Int'l ASK
Air Canada InternationalAir Canada International
-2%-1%0%1%2%3%4%5%6%7%
Jan-07
Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-08
Feb Mar
Int'l RPK Int'l ASK
Air Canada InternationalAir Canada International
WestJet announced a record load factor of 86.6% for systemwide
operations in March 2008, up 1.4 percentage points from March 2007.
This is due to strong passenger traffic growth of 21.7%, with a
19.6% increase in seat capacity in March 2008 over the same month
in 2007.
0%
5%
10%
15%
20%
25%
Jan-07
Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-08
Feb Mar
RPK ASK
WestJetWestJet
0%
5%
10%
15%
20%
25%
Jan-07
Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan-08
Feb Mar
RPK ASK
WestJetWestJet
1 Air Canada Mainline consists of all Air Canada operations with
the exception of Jazz.
InterVISTAS Canadian Aviation Intelligence Report Page 3 April
2008 Copyright 2008 InterVISTAS Consulting Inc., all rights
reserved.
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InterVISTAS Canadian Aviation Intelligence RepoApril 2008
Copyright 2008 InterVISTAS Consulting Inc., all rights reserved.
Page 4
AIRLINE DATA U.S. IRLINE DATA U.S. U.S. Airlines Release March
2008 Traffic Figures U.S. Airlines Release March 2008 Traffic
Figures
Airline Airline Traffic Traffic (RPMs millions) (RPMs millions)
Capacity Capacity
(ASMs millions) (ASMs millions) Load Factor Load Factor
2,455 8.4%
3,001 13.4%
81.8% 3.7 pts
685 9.5%
933 8.6%
73.4% 0.7 pts
6,679 9.8%
8,736 5.3%
76.5% 3.2 pts
18,291 4.3%
10,074 4.6%
82.3% 0.3 pts
210,041 2.7%
12,137 0.0%
82.7% 2.3 pts
11,595 2.8%
13,816 4.6%
83.9% 1.5 pts
10,656 2.3%
12,743 1.5%
83.6% 0.6 pts
7,160 2.0%
8,235 0.6%
87.0% 1.3 pts
25,393 0.2%
6,384 2.7%
84.5% 2.1 pts
N/A N/A
N/A N/A
N/A N/A
1,709 15.8%
2,146 12.9%
79.6% 1.0 pts
942
14.7% 1,117 4.5%
84.4% 7.6 pts
Notes: 1. Mainline operations only. 2. Load factor includes
scheduled service only. Sources: Carrier traffic reports.
rt
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InterVISTAS Canadian Aviation Intelligence RepoCopyright 2008
InterVISTAS Consulting Inc., all rights reserved.
rt
Source: Transport Canada and individual airports traffic
reports. N/A: not available at press time. Note: Subject to
revision.
Toronto Vancouver Montral-Trudeau Calgary Edmonton Ottawa
Winnipeg Halifax Victoria Kelowna Saskatoon Regina St.
Johns January +3.0% +5.5% +10.2% +11.7% +18.3% +5.9% +3.2% +2.3%
+4.7% +15.2% +6.7% +18.8% +4.6% February +2.0% +2.7% +7.1% +11.7%
+18.3% +8.3% +6.8% +2.0% +4.0% +12.9% +11.0% +24.2% +10.9%
March +1.5% +3.6% +8.9% +9.5% +17.1% +4.9% +5.4% -1.2% +7.9%
+15.6% +5.7% +8.2% +9.1% 1st Quarter +2.2% +3.9% +8.7% +10.9%
+17.9% +6.3% +5.1% +0.9% +5.6% +14.6% +7.8% +17.0% +8.1%
April +0.7% +4.2% +8.9% +11.9% +18.8% +8.0% +12.2% +0.5% +9.6%
+20.8% +12.1% +7.4% +2.1% May +0.3 +2.4% +6.3% +8.6% +17.5% +7.3%
+8.7% -2.5% +6.2% +17.8% +12.7% +9.9% -4.2% June +1.3% +1.8% +8.6%
+7.6% +22.2% +7.6% +7.5% +3.4% +1.9% +14.7% +11.6% +8.0% -1.0%
2nd Quarter +0.8% +2.7% +7.9% +9.1% +19.5% +7.6% +9.3% +0.4%
+5.8% +17.7% +12.1% +8.4% -1.2% July -0.4% +0.2% +10.9% +5.4%
+17.8% +9.0% +3.9% +4.4% +6.7% +7.4% +4.6% +13.6% -6.5%
August +0.7% +2.6% +10.4% +7.1% +17.1% +6.6% +5.0% +4.4% +5.4%
+9.2% +9.0% 5.7% -5.8% September +1.5% +3.6% +8.9% +7.9% +12.4%
+3.7% +1.9% +4.2% +6.1% +9.6% +7.9% +10.5% -0.6% 3rd Quarter +0.5%
+2.1% +10.1% +6.8% +15.9% +6.4% +3.7% +4.3% +6.1% +8.7% +7.2% +9.9%
-4.6%
October +3.7% +3.2% +8.4% +8.3% +13.9% +8.4% +3.5% +4.6% +8.0%
+7.5% +7.2% +5.5% +5.2% November +5.0% +7.7% +6.1% +8.0% +15.9%
+11.0% +5.7% +5.7% +10.8% +4.2% +8.4% +9.1% +0.8% December +2.8%
+4.4% +8.1% +3.7% +8.2% +9.2% +3.8% +4.2% +8.1% +3.7% +7.5% +3.7%
-5.5% 4th Quarter +3.8% +5.2% +7.3% +7.1% +12.4% +9.5% +4.0% +4.8%
+8.9% +5.0% +7.7% +6.0% +0.5%
2007
Full Year +1.7% +3.3% +8.7% +8.5% +16.3% +7.4% +5.5% +2.7% +6.6%
+11.3% +8.6% +10.2% -0.2% January +4.8% +9.2% +3.8% +4.9% +7.6%
+6.4% n/a +2.2% +6.1% +7.8% +11.2% -0.3% -2.4% 2008 February +7.7%
+12.8% +9.9% +7.4% +10.2% +8.3% n/a +8.6% n/a +10.3% +9.1% +8.3%
+3.6%
Summary of Total Year-Over-Year Passenger Traffic Performance at
Selected Canadian Airports
April 2008
Page 5
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InterVISTAS Canadian Aviation Intelligence Report Page 6
NEWS AIR CANADA UPDATE NEW YORK WEEKENDER PASS
Air Canada is offering Western
Canadians easier access to New York City with its multi-trip New
York Weekender Pass promotion. The pass is available for travel for
direct or connecting flights between Vancouver, Calgary and
Edmonton and New York JFK and Laguardia airports. The Weekender
Pass is available starting at $899 for four flights (or two return
trips).
UNLIMITED HONG KONG PASS Air Canada has announced the launch of
the Hong Kong Getaway Pass. The Pass provides travellers with the
ability to realize unlimited travel between Hong Kong and Vancouver
for $1,088. Travel is restricted to Mondays, Tuesdays and
Wednesdays between 14 April 2008 and 18 June 2008. The Pass is only
available until 29 April 2008.
NEW OTTAWA TO FRANKFURT ROUTE Effective 1 June 2008, Air Canada
will introduce a direct Ottawa to Frankfurt route. Upon its
commencement, it will be the only scheduled daily non-stop service
between the two cities.
AIR CANADA PREPARES FOR SECOND ANNUAL FILM FESTIVAL Air Canada
has announced the 2008 enRoute Student Film Festival will run from
July through December 2008. For the second straight year, Air
Canada will offer passengers the opportunity to watch short listed
entries onboard Air Canada flights and online at
www.enroutefilm.com. Prizes will be awarded in five categories:
Best Student Film, Achievement in Animation, Achievement in
Direction, Destination Inspiration and The People's Choice Award.
Charles McKee, Vice-President, Marketing, said: "Air Canada is
extremely excited to offer hundreds of emerging Canadian filmmakers
the unique opportunity to premier their work in front of millions
of people around the world.
WESTJET UPDATE AIR MILES PARTNERSHIP RENEWED
WestJet Airlines recently signed a
multi-year renewal agreement with the AIR MILES Reward Program
to continue offering its passengers the ability to collect reward
points. Since the original agreement in 2000, over 1.2 million AIR
MILES collectors have redeemed their reward points on WestJet
flights.
GUARDIAN FARE INTRODUCED WestJet has introduced a Guardian Fare
to replace its Unaccompanied Minor Program. The Guardian Fare
enables a parent or guardian, 18 years or older, to accompany a
child, 11 years or younger, on their flight at a 50% reduced rate.
The only condition is that the parent or guardian must return to
their origin city within 24 hours. The new Guardian Fare also
provides the option for a different parent or guardian to accompany
the child on the return portion of the flight.
April 2008 Copyright 2008 InterVISTAS Consulting Inc., all
rights reserved.
-
Page 7 InterVISTAS Canadian Aviation Intelligence Report
NEWS CONTOTHER CANADIAN AIRLINES PORTER AIRLINES LAUNCHES FIRST
TRANSBORDER FLIGHT
Toronto-based Porter Airlines has announced the launch of seven
daily
roundtrip flights between Newark Liberty International Airport
and Toronto City Centre Airport. This marks the entrance of Porter
Airlines into the U.S. market. "The introduction of Porter's
Toronto-New York route makes air travel between two of North
America's most important business and cultural centres easier than
ever," said Don Carty, chairman of Porter Airlines.
PORTER ADDS NEW ROUTES TO SUMMER SCHEDULE A daily Toronto -
Quebec City flight and a daily Quebec City Halifax flight have been
added to the Porter Airlines Summer Schedule which will run from 27
June 2008 until 2 September 2008. The Quebec City Halifax route is
the only scheduled non-stop flight between these two cities.
"Porter's fresh approach to airline service is a perfect fit with
the customer-oriented approach we take at the airport," said Pascal
Blanger, president and chief operating officer, Aroport de
Qubec.
U.S. AIRLINES ON-TIME RESULTS IMPROVE
The U.S. Department of Transportation
(DOT) Travel Consumer Report revealed the nations 20 largest
airlines reported an improved on-time performance in February 2008
(68.6%) compared to February 2007 (67.3%). The results were worse
than January 2008 (72.4%). Examples of cause of delays were weather
(46.9%), aviation system delays (9.4%), late-arriving aircraft
(9.7%), airline controllable issues (7.1%) and security reasons
(0.05%).
ALOHA AIRLINES CLOSES Aloha Airlines announced that it would
cease all operations effective 1 April 2008. The shutdown of Aloha
passenger operations affects about 1,900 employees. However, its
air cargo and aviation services units will still operate as the
U.S. Bankruptcy Court seeks potential buyers. This is an incredibly
dark day for Hawaii, said David A. Banmiller, Alohas president and
chief executive officer. Unfortunately, unfair competition has
succeeded in driving us out of business, bringing to an end a
61-year-old company with a proud legacy of serving millions of
travelers in the true spirit of Aloha.
SKYBUS AIRLINE CLOSES As a result of rising jet fuel costs and a
slowing U.S. economy, Skybus ceased all operations effective 5
April 2008. Based in Columbus, Ohio, Skybus operated its first
flight in May 2007 as an ultra-low cost carrier.
UNITED AIRLINES AND AER LINGUS AGREE TO CODESHARE AGREEMENT
As of 1 November 2008, passengers will be able to realise
seamless travel on flights offered by United Airlines and Aer
Lingus. The codeshare agreement will cover all seven of Aer Lingus
U.S. gateways and benefit Aer Lingus customers by providing access
to over 200 additional U.S. destinations on the United Airlines
network. U.S. customers will also benefit from greater access to
destinations in Ireland and, through Aer Lingus extensive
short-haul network, to destinations in the UK and Continental
Europe. The United Airlines flight code will be placed on all Aer
Lingus Transatlantic flights to and from Shannon and Dublin. The
codeshare agreement will also result in transferable frequent flyer
points, simplified reservations, ticketing, through check-in and
coordinated baggage handling for passengers.
April 2008 Copyright 2008 InterVISTAS Consulting Inc., all
rights reserved.
-
NEWS CONTCARGO IATA WARNING FOR AIR CARGO IATA has called on the
air cargo supply chain to coordinate its efforts to drive an
industry agenda for change that will improve customer service and
competitiveness. World trade grew 7.5% last year and [air cargo]
growth for this year is 4%, said IATA Director General Giovanni
Bisgnani. Bisignani went on to say that IATA is in a unique
position to lead change in the cargo industry due to the fact that
the IATA Cargo Accounts Settlement System now handles US$21 billion
annually.
RECORD AIR CARGO GROWTH FOR HUNTSVILLE
Page 8 InterVISTAS Canadian Aviation Intelligence Report
Alabamas Huntsville International
Airport is now the third fastest growing air cargo market in the
world and the fastest outside of Asia. In 2006, the airport posted
a 29.2% growth in handled freight tonnes over 2005. Huntsville
developed a unique model in that it built the rail side before they
opened the air cargo side. As a result, an intermodal system was
ready when the first international air cargo flight occurred.
Another major reason for growth has been the increase in outbound
cargo. It has always been relatively full on the inbound flights,
but now there is a lot more outbound freight to Europe and Latin
America, said Rick Tucker, Huntsville Executive Director. Over 90%
of the 68,760 tonnes of freight Huntsville International handled in
2006 was international in either origin or destination.
AEROSPACE BOMBARDIER PROFITS SOAR
As a result of increased deliveries of business and regional
jets and
an income tax benefit, profit at Canada's Bombardier nearly
doubled in the fourth quarter. Bombardier, the world's biggest
passenger train maker and No. 3 civil aircraft
manufacturer, stated that it earned USD$218 million in the
quarter ending 31 January 2008. That was up from a profit of
USD$112 million a year earlier. The profit margin in Bombardier's
aerospace group rose to 6.7% from 4.8% a year earlier.
BOMBARDIER EYES KANSAS CITY FOR ASSEMBLY PLANT According to city
and state officials, Bombardier Aerospace is considering Kansas
City as a site for a new $375 million passenger jet assembly plant.
While the project is only in its initial stages, discussions have
gone far enough that state officials recently outlined legislation
to provide state tax credits to help secure the plant. The Montral
-based Bombardier Aerospace is looking for a site to assemble the C
Series of 110- and 130-seat passenger jets. However, Bombardier
made a preliminary deal two years ago to build the plant in Canada
and is under political pressure to honour that deal. Mirabel,
Quebec is the competing Canadian location.
PEOPLE IN THE NEWS BERNARD LEBLANC NAMED CEO OF SAINT JOHN
AIRPORT AUTHORITY
Saint John Airport Authority has announced the appointment of
Bernard
LeBlanc, a local business leader, to the position of President
& CEO effective early April 2008. Mr. LeBlanc brings twenty
years of senior management experience in generating profitable
growth and customer satisfaction in a variety of technical
industries, both in the U.S. and in Canada most recently as General
Manager of Saint John based Petroservice. Reporting to the Board of
Directors, Mr. LeBlancs mandate is to accelerate growth while
maintaining the highest levels of operational standards.
April 2008 Copyright 2008 InterVISTAS Consulting Inc., all
rights reserved.
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Page 9 InterVISTAS Canadian Aviation Intelligence Report
NEWS CONTPEOPLE IN THE NEWS CONT ACI APPOINTS PAUL VAN DEN
EYNDEN TO NEW MONTRAL POSITION
Airports Council International (ACI) has appointed Paul Van den
Eynden to a newly created position in its Montral ICAO liaison
office, Senior Manager Airport Safety and
Operations.
OTHER ACI 2007 A BANNER YEAR FOR INTERNATIONAL TRAFFIC ACI
recently released its preliminary air traffic results for 2007:
Total Passengers: 4.5 billion, +6.4% Total International
Passengers: 1.8 billion,
+8.2%
Total Cargo (includes mail): 80.3 million metric tonnes,
+2.5%
Total International Freight: 48.3 million metric tonnes,
+3.6%
Total Aircraft Movements: 68.6 million, +2.4% NEW DOMESTIC
AIRLINE FOR BRAZIL
JetBlue Airways founder, David Neeleman, plans to start a
domestic airline in his native Brazil. The airline entrepreneur has
already
raised $150 million in financing from investors in the U.S. and
Brazil and agreed to purchase 36 Embraer E-195 jets with a total
list price of $1.4 billion. The Brazilian market should be three to
four times bigger than it is, Neeleman said. Our target market is
the 150 million passengers who travel annually by long distance bus
as well as those who, for lack of a convenient alternative, dont
travel at all.
EMBRAER TO DEVELOP TWO NEW BUSINESS JETS
Brazil's Embraer announced its board had approved plans to
invest USD$750 million to develop two new business jets, its
latest foray into one of the fastest growing niches of the aviation
market. The jets, which will fall into the midlight and midsize
categories, will seat between seven and 12 passengers plus two crew
members. It expects the midlight and midsize categories to account
for 21% of all business jet deliveries in the next 10 years, which
works out to about 13,150 aircraft, according to Embraer
forecasting.
AIR BERLIN ORDERS BOMBARDIER TURBOPROPS
Bombardier and Air Berlin have announced an order of 10 Q400
turboprop aircraft from the Canadian plane maker with a total value
of USD$267 million at list price. Delivery of the first four
aircraft is expected this calendar year with the remaining six in
2009. The new aircraft will replace the Fokker 100 jets Air Berlin
currently operates. The order, which includes an option for 10 more
aircraft, was initially announced by Bombardier back in October
2007 without naming the customer.
April 2008 Copyright 2008 InterVISTAS Consulting Inc., all
rights reserved.
-
CARIBBEAN REPORT April 2008
Caribbean Airlines increasing North American services this
summer Caribbean Airlines has announced an increase in service
between its Trinidad hub and John F. Kennedy International Airport
from two to three daily services, commencing on 1 July 2008. The
carrier will also be offering nine weekly flights, up from five, to
Toronto beginning 15 April 2008.
Divestment process underway The Jamaican Government has signed
an advisory services agreement with the International Finance
Centre (IFC), a member of the World Bank group. This is a first
step towards divesting the national carrier, Air Jamaica, by March
2009. The carrier incurred the largest loss in its 40-year history
in 2007, reporting US$171 million in operating losses. Under the
agreement signed last month, the IFC will assume the role of
financial adviser and act as coordinator of all specialist
consultants to ensure that stipulated objectives are met and that
the divestment process is carried out as efficiently as possible. A
government-appointed committee will oversee the privatisation
process and will be responsible for advising the minister to ensure
that the project proceeds in accordance with the stipulated
timeline and guidelines and that the government's objectives and
interests are met.
Page 10 InterVISTAS Canadian Aviation Intelligence Report
Two more major carriers to enter the Guyanese market Skyservice
Airlines is set to operate a weekly charter service from Toronto to
Georgetown, Guyana starting in July 2008 and Zoom Airlines has
entered into negotiations with the government of Guyana to begin
service from the United Kingdom in November 2008. The flight from
Gatwick Airport would be the first direct service between London
and the Cheddi Jagan International Airport.
Financing secured for airport airside work Last month the
Antiguan government secured a US$45 million loan from ABI Bank for
the completion of airside work at the V.C. Bird International
Airport. Major expansion and renovation work airside is expected to
begin immediately. This includes an extension of the runway,
including the runway end safety area and a link to runway 10,
complete resurfacing of the active runway and resurfacing of the
airport apron. Work is expected to be completed within 10
months.
Passenger Facility Charge (PFC) for St. Kitts and Nevis
Effective 1 April, 2008, a Passenger Facility Charge (PFC) of US$10
per passenger was implemented in St. Kitts and Nevis. The Passenger
Facility Charge will be collected by the ticketing air carrier or
their agents. Funds from the PFC will be used to assist with
financing long term strategic programs and enhancing airport
facilities including equipment upgrades, expanding the Terminal
Building and upgrading air navigational and ground handling
equipment.
American Airlines adds Miami-Antigua service American Airlines
will begin daily non-stop service from Miami to Antigua this fall.
This is the only non-stop service currently scheduled between Miami
and the eastern Caribbean island. The service is scheduled to
commence on 20 November 2008 and will be operated by Boeing 737-800
aircraft configured with 16 First Class and 132 Economy Class
seats.
Jacqueline Clarke Manager,
Strategic Development
April 2008 Copyright 2008 InterVISTAS Consulting Inc., all
rights reserved.
-
ASIA REPORT April 2008
Oasis Airlines bankrupt On 9 April 2008, Oasis Airlines, the
international budget carrier based in Hong Kong, entered into
voluntary liquidation after it was revealed that the carrier was
being crippled by fuel, airport and aircraft costs. Oasis Airlines
began its operations in October 2006, operating nonstop flights
between Hong Kong and London, UK (daily) and between Hong Kong and
Vancouver (6 times weekly). Code sharing agreement between an Jet
Airways and ANA Mumbai-based Jet Airways, Indias largest private
carrier and Tokyo-based All Nippon Airways (ANA) plan to start a
code-sharing partnership and link their frequent flier programs,
effective 21 May 2008. This represents the first code-sharing
agreement between a Japanese and Indian air carrier. With this
agreement, Jet Airways will place its flight code '9W' on ANA's
daily business jet flights between Mumbai and Tokyo Narita Airport.
Both airlines will link their Frequent Flier Programs, allowing
members to accrue and redeem miles on either carriers flights.
Doris Mak Manager,
Special Projects Private jets taking off in Korea After network
airlines, charter flights and low-cost carriers, the Asia Pacific
region is poised to see a new air phenomenon - the private jet.
Once only focusing on a narrow passenger market, the private jet
market is now extending to a broader audience, with the costs
declining to more affordable levels. In Korea, the number of people
using private jets is growing fast. In 2005, 179 private jets took
off or landed at Gimpo International Airport. The number rose to
429 in 2006 and 571 last year, according to the Korea Airports
Corporation. The trend is likely to continue, with various forms of
private jet use and private jet ownership being introduced.
Fractional aircraft ownership, for example, would allow up to 16
people to share the cost, making the private jet a more affordable
choice.
Airlines seeking compensation from Boeing for 787 delay Boeing
is facing compensation demands from Qantas and Air New Zealand,
after further delaying its new 787 Dreamliner. Asian carriers are
the biggest customers for 787 orders. Boeing is now widely expected
to delay initial deliveries of the 787 to launch customer, All
Nippon Airways (ANA), until September 2009. ANA ordered 50 787s and
planned to begin flying the first of them last month, in
preparation for a spike in demand for the Beijing Olympics in
August. With the delay in aircraft delivery, the 787's maiden
commercial flight is likely to be one year and three months behind
schedule. ANA said that it is extremely disappointed with Boeing
and may also consider compensation demands.
Asia Pacific fleet to surge in the coming decade Asia Pacific
airlines are expected to take delivery of one new aircraft every
day over the next five years, resulting in a 49% increase in the
total number of aircraft in the regions fleet, net of disposals.
The data, contained in the latest Ascend Global Aircraft detailed
global fleet forecast, shows a 35% increase in the Asia Pacific
(including India and China) widebody aircraft fleet (to 1,585 units
by 2013), a 51% increase in narrowbodies (to 3,195 aircraft) and a
113% increase in regional jets (to 375 aircraft), due mainly to
expected growth in China. A further 1,759 aircraft are scheduled
for delivery to Asia Pacific airlines between 2013 and 2018,
resulting in a regional fleet of 2,158 widebodies, 4,047
narrowbodies and 709 regional jets. The proportion of widebodies in
the region compared to the worldwide fleet is set to rise from 38%
in 2008 to 41% by 2018, while the regions narrowbody fleet is
poised to soar from 21% of the worldwide total this year to 25% in
five years and stay at that proportion to 2018.
Page 11 InterVISTAS Canadian Aviation Intelligence Report April
2008 Copyright 2008 InterVISTAS Consulting Inc., all rights
reserved.
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EUROPEAN REPORT April 2008
EU to harmonize in-flight mobile calls To the pleasure of some
and disappointment of others, in-flight passengers will soon be
able to use their mobile phones to make and receive calls, text
messages and use email. At the start of April, the European
Commission unveiled a harmonized EU approach to licensing in-flight
mobile phone services. The objective of the new legislation is to
provide a licensing one-stop shop for airlines and avoid a
patchwork of approaches emerging across the various Member States.
"One regulatory decision for all European airspace was required for
this new service to come into being," said EU Information Society
and Media Commissioner Viviane Reding. Commissioner Reding will
closely monitor the cost of the service offered by airlines before
any legislative intervention, such as the price cap on mobile calls
made on land she implemented, is considered.
John Weatherill Regional Vice President,
European Commission initials Civil Aviation Agreement with India
On 8 April, 2008 delegations of the European Commission and the
Government of the Republic of India initialled a Horizontal
Aviation Agreement to restore legal certainty to the bilateral air
services agreements between India and 26 EU Member States. The
agreement will bring several provisions in the 26 bilateral air
services agreements between EU Member States and India in line with
EU law. Most importantly, it will remove nationality restrictions
in the bilateral air services agreements between EU Member States
and India and thereby allows any EU airline to operate flights
between India and any EU Member State where it is established and
where a bilateral agreement with India exists and traffic rights
are available.
InterVISTAS-E.U. UK Office
KLM-Air France cease negotiations to purchase Alitalia Maruizio
Prato, Alitalia Chairman has resigned following the decision by Air
FranceKLM to put takeover negotiations on hold. Prato led the
Alitalia efforts to find a much needed buyer, but his efforts were
hindered by complicated union and government demands and conditions
of sale. The negotiations were cancelled due to the inability of
the unions to reach an agreement on the Air France-KLM proposal
which would have resulted in hundreds of job cuts. Air France
Chairman Jean-Cyril Spinetta said, "I regretfully acknowledge the
breakdown in negotiations, which is none of our doing. This is a
project I have profoundly believed in and continue to do so,
because it would have ensured Alitalia a rapid return to profitable
growth. Alitalias Board was scheduled to meet to determine the
future of the airline. Alitalia has said it has 170 million Euros
of funds available as of 31 March 2008 to keep the airline
afloat.
The government's sale of Alitalia to Air France-KLM has been
opposed by Milan's airport operator and recent Prime Minister-elect
Silvio Berlusconi. Since his election victory and the European
Commissions statement that the Italian government is not eligible
to provide further restructuring aid to the airline, Berlusconi has
acted quickly to bring Aeroflot back to the negotiating table.
BAA and BA act cautiously with recent success at Terminal 5
British Airports Authority (BAA) and British Airways (BA) have
announced that they will delay moving the remainder of long-haul BA
flights to Terminal 5 until June 2008. The original plan called for
the majority of BAs long-haul operations, approximately 60
departures and 60 arrivals per day, to transfer from Terminal 4 to
Terminal 5 on 30 April 2008. BAA and British Airways have decided
to postpone the move to ensure that the recent operational success
they have realized at the new Terminal will also be realized with
the increased number of passengers that are part of the long-haul
operations. As of 8 April 2008, Terminal 5 has been operating a
normal schedule of flights following the confusion it experienced
during the opening weeks due to software glitches with the new
high-tech baggage system and improperly trained staff.
Page 12 InterVISTAS Canadian Aviation Intelligence Report April
2008 Copyright 2008 InterVISTAS Consulting Inc., all rights
reserved.
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THE OTTAWA REPORT April 2008
Canadian Government funds airport safety in Red Deer, Alberta
The Government of Canada has agreed to provide more than $2.1
million in funding to improve safety at the Red Deer Regional
Airport in Alberta, as part of the 2008-2009 Airports Capital
Assistance Program. The government funding will be used to
rehabilitate its airfield lighting system. According to Bob Mills,
the Member of Parliament for Red Deer, this improvement project
will help the airport to meet the growing needs of the community it
serves and enhance safety for air passengers. The Airports Capital
Assistance Program provides funding for capital projects pertaining
to safety, asset protection and operating cost reduction.
CTA rejects Air Canadas proposal to discontinue the carriage of
small animals as checked baggage
Martin Copeland Senior Vice President,
Aviation
The Canadian Transportation Agency (CTA) rejected Air Canadas
proposed tariff revisions which would have discontinued passenger
rights to carry animals and their kennels weighing less than 70
pounds as checked luggage on all domestic and international
flights. The Agency announced their decision that the proposed
revisions were unreasonable, as the revisions would only create
advantages for carriers, while imposing significant disadvantages
to pet owners. Air Canada has until 5 May 2008 to amend its
domestic tariff to allow for the carriage of small animals as
checked baggage. With this ruling, the Agency confirms its July
2007 suspension of Air Canadas proposed revision regarding
international tariffs.
Clear Bag System approved for use in Canadian airports 311
Travel Bag, Inc., a developer of carry-on solutions for travellers,
announced that the Clear Bag System has been approved by the
Canadian Air Transport Security Authority (CATSA). The Clear Bag
System is now accepted at all Canadian airport pre-board security
checkpoints in all 89 CATSA-serviced airports in Canada. Equipped
with assorted reusable containers for storage of shampoo, lotion
and other toiletries, the Clear Bag System is designed to reduce
confusion regarding the current restrictions imposed on carrying
liquids, gels and aerosols on flights.
Flyglobespan offers 2nd season of Canadian flights Flyglobespan
will be offering its second season of air service from three
Canadian gateways (Hamilton, Calgary and Vancouver) between 12 May
2008 and 26 October 2008. The carrier will be introducing two new
routes this year, including Hamilton-Bristol (beginning 25 May) and
Vancouver-Dublin (beginning 1 June). In addition, the carrier will
continue to operate the following routes: from Hamilton to London
Gatwick, Manchester, Glasgow, Edinburgh, Belfast and Dublin;
Calgary to London Gatwick, Manchester and Glasgow; and Vancouver to
London Gatwick, Manchester, and Glasgow. According to Stephen Elmy,
General Manager, North America, Flyglobespan, the first season of
operating flights from Canada in 2007 yielded a 96% load factor.
Flyglobespan is a subsidiary of the Globespan Group, which serves
predominately as a tour operator providing services to Canada.
New Canadian airline to launch Spring 2008 Corporate Jet Air, a
new Calgary-based Canadian carrier that plans to offer all-business
class flights, is expected to launch in spring 2008. Corporate Jet
Air will be offering three per day Calgary-Toronto service using
Bombardier CRJ 200s, which have been reconfigured from their
original 50 seats to 18 seats for added comfort and space.
Corporate Jet Air is selling plane tickets in bulk only (10 one-way
tickets that have a one-year validity) and are priced competitively
against Air Canadas executive service and private jet charters.
Corporate Jet Air is considering future expansion to include
Vancouver-Toronto and Calgary-Houston routes.
Page 13 InterVISTAS Canadian Aviation Intelligence Report April
2008 Copyright 2008 InterVISTAS Consulting Inc., all rights
reserved.
-
THE WASHINGTON REPORT April 2008
DOT proposes expanded transatlantic alliance The U.S. Department
of Transportation (DOT) proposed in its 9 April 2008 Show Cause
Order to allow six Skyteam airlines to combine their existing
transatlantic alliances. Two U.S. carriers, Delta Air Lines and
Northwest Airlines, along with four international partners, Air
France, Alitalia, Czech Airlines and KLM Royal Dutch Airlines, seek
anti-trust immunity on transatlantic routes. This preliminary
decision allows the six carriers to coordinate their services and
to act as a single carrier on U.S.-Europe routes. The carriers are
required to implement the immunized alliance within 18 months and
will remain subject to antitrust laws for all flights not covered
under the agreement.
Delta and Northwest agree to merge
Jon Ash
President InterVISTAS-ga2 Consulting Inc. Washington, D.C.
Delta Air Lines and Northwest Airlines announced that the two
carriers have signed a merger agreement on 14 April 2008 in which
Delta Air Lines essentially would acquire Northwest Airlines and
the new airline would take on the Delta name. The merging of Delta
and Northwest creates a massive airline with $35 billion in annual
revenue, 800 aircraft and 75,000 employees combined. The new
airline and its regional partners would establish a route network
that consists of 390 destinations extending across 67 nations.
Despite the support of the Air Line Pilots Association,
representing Delta pilots, the merger still requires the support of
the Northwest Master Executive Council, representing Delta pilots.
The NWA MEC is most concerned with the current agreements seniority
list integration process, for which they feel will position NWA
pilots on a b-scale for years.
DOT Proposes United Air Lines to fly Los Angeles-San Jose del
Cabo The U.S. DOT proposed to grant United Air Lines the right to
operate flights between Los Angeles and San Jose del Cabo, Mexico.
The proposal was made immediately upon notification by Frontier
Airlines that it would cease operations on that route starting 14
April 2008. If granted, United Air Lines would have the authority
to operate this route for two years and Delta Air Lines will serve
as a backup carrier to United. Under the U.S.-Mexico aviation
agreement, a total of three U.S. airlines are allowed to operate
flights between Los Angeles and San Jose del Cabo. Currently,
American Airlines and Alaska Airlines are already serving the
market.
U.S. DHS agrees to Visa Waiver Program with five EU States The
U.S. Department of Homeland Security (DHS) signed a Memorandum of
Understanding (MOU) with Estonia, Latvia, Slovakia, Hungary and
Lithuania for the potential implementation of the Visa Waiver
Program (VWP). The security enhancements indicated in the
agreements put all five countries on track for visa-free travel to
the U.S and could potentially lead to the designation of the five
countries as VWP members later this year.
U.S. reports record passenger levels and inbound travellers The
U.S. DOT reported a total of 10.7 million domestic and
international flights operated by U.S. carriers in 2007, resulting
in a record 769.4 million passengers, up 3.3% over 2006, the
previous record-setting year. The 2007 total consisted of 679
million domestic passengers (up 3.1% over 2006) and 90 million
international passengers (up 4.7% over 2006). The U.S. Department
of Commerce announced a record 56.7 million international visitors
to the United States in 2007, up 11% over 2006. Visitors from
Western Europe made up the largest group, representing 46% of
international visitors to the United States. The number of Canadian
visitors to the United States came in second, representing roughly
31% of international travellers to the United States. As a result
of inbound travel to the United States, $17.8 billion was generated
from travel expenditures and tourism within the United States.
Page 14 InterVISTAS Canadian Aviation Intelligence Report April
2008 Copyright 2008 InterVISTAS Consulting Inc., all rights
reserved.
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EU-U.S. OPEN SKIES THE EUROPEAN PERSPECTIVE April 2008
On 30 March 2008, the Open Skies agreement between the European
Union and United States came into force. The agreement followed 11
rounds of negotiations started in June 2003 and ending with the
signing of the agreement in Washington, DC on 30 April 2007. Open
Skies creates a single transatlantic Open Aviation Area replacing
the patchwork of individual bilateral agreements between the U.S.
and the 27 EU member states (in fact, a number of member states,
such as Bulgaria, Estonia, Latvia, Lithuania and Slovenia, had no
prior air service agreement with the U.S.).
Major Features From a European perspective, the major feature of
the new agreement is that it allows any EU carrier to fly between
any point in the EU to any point in the U.S., without restrictions
on pricing or capacity. For example, Lufthansa now has the right to
fly from London to New York and British Airways the right to fly
from Paris to Los Angeles, etc, whereas previously these carriers
were restricted to operating transatlantic flights from their home
countries. In addition, the agreement provides the following
opportunities for EU carriers:
Ian Kincaid Director, Economic Analysis,
InterVISTAS-E.U. UK Office
5th freedom rights to fly passengers beyond the U.S. to third
countries (this right was already provided in many of the previous
agreements with member states);
7th freedom rights to operate direct passenger flights between
the U.S. and European countries outside the EU (members of the
European Common Aviation Area such as Norway, Croatia, Iceland,
etc., but not Switzerland);
For all-cargo flights, 7th freedom rights to operate flights
between the U.S. and any third country (without a requirement that
the service starts or ends in the EU); and
Greater freedoms to enter into commercial relationships with
other carriers and the possibility of antitrust immunity for the
development of airline alliances.
Anticipated Outcomes It is anticipated that the agreement will
lead to a greater number of routes operated between the U.S. and
EU, lower fares as a result of increased competition and increased
traffic volumes over the Atlantic. The U.S. FAA is forecasting a
14.5% increase in EU-U.S. passenger traffic in 2008 and a similar
level of increase in 2009.2 IATA reports that scheduled flights
between the EU and U.S. have increased by 11% in April 2008,
relative to the same month last year.
Much of the early response by carriers seems to be focused on
London Heathrow (Heathrow accounts for approximately 40% of all
flights between the EU and U.S.). Under the previous Bermuda 2
agreement between the UK and U.S., access to Heathrow was
restricted to two U.S. carriers (United and American) and two UK
carriers (British Airways and Virgin Atlantic). Under the new
EU-U.S. agreement, Heathrow is now open to all U.S. and EU
carriers. To date, five carriers have announced new services from
Heathrow: Air France-KLM, Delta, Continental, Northwest and US
Airways. However, the challenge for carriers is obtaining slots at
Heathrow, as the airport operates at virtually full capacity.
Illustrating this scarcity, Continental Airlines announced that it
paid US$209 million for four daily slots at Heathrow. This shortage
of slots has
2 Source: Federal Aviation Administration Aerospace Forecast
Fiscal Years 2008-2025, March 10th, 2008.
Page 15 InterVISTAS Canadian Aviation Intelligence Report April
2008 Copyright 2008 InterVISTAS Consulting Inc., all rights
reserved.
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EUROPEAN PERSPECTIVE CONT
also made UK carrier BMI an attractive takeover proposition the
carrier holds 12-13% of the slots at Heathrow, second only to
British Airways which has around 40% of the slots at Heathrow.
Press stories indicate that Virgin and Lufthansa (which already has
a 30% stake in BMI) have both been eyeing the carrier. This influx
of carriers into Heathrow has put considerable pressure on the home
carrier, British Airways, which has responded by moving some of its
flights from Gatwick to Heathrow and announcing a subsidiary
airline, called OpenSkies, operating service between Brussels and
Paris to New York.
While the initial air carrier response to the Open Skies
agreement has largely focused on major hubs or cities (new services
to/from Paris and Madrid have also been announced), it can be
expected that new routes will emerge, connecting secondary cities
in the U.S. and Europe, as occurred when the EU internal aviation
market was liberalised. And as with the liberalisation of the EU
aviation market, Open Skies will likely result in low cost carriers
entering the market. Ryanair CEO, Michael OLeary, has said that he
is considering setting up a new airline offering service to the
U.S. from Europe for fares as low as 7 (US$14) one-way utilising
secondary airports such as Baltimore and Long Island Islip
Macarthur (in New York).
It remains to be seen what sort of low cost model will be
sustainable on transatlantic routes. Nevertheless, there are likely
to be significant opportunities for secondary and regional airports
in Europe to develop direct air service to the U.S., provided they
can demonstrate a sufficient level of demand or traffic stimulation
potential. For regional governments in many parts of Europe, the
liberalisation of the EU aviation market has contributed to
economic development and tourism growth and has allowed a number of
secondary airports to grow and thrive. In a similar manner, the
Open Skies agreement offers additional tourism and economic
development opportunities for many European regions through the
securing of viable transatlantic air service.
Issues There have been a number of complaints about the Open
Skies agreement from European carriers and governments (notably the
British) arguing that the arrangement is not fully reciprocal.
Firstly, the agreement does not allow EU carriers any access to the
U.S. domestic market (i.e., cabotage) but does allow U.S. carriers
the right to carry passengers between EU member states, as a 5th
freedom service (although not within member states, e.g., U.S.
carriers can carry passengers from London to Paris but not from
London to Manchester). Secondly, the ownership and control rules
are imbalanced: U.S. investors can hold up to 49% of voting shares
in EU carriers while EU investors can hold only a maximum 25% share
of voting stock in U.S. carriers (EU investors can hold up to 49%
of non-voting stock).
Recognising this, the EU obtained a suspension clause in the
agreement which commits both sides to further negotiations
regarding these remaining issues (to develop a Stage Two
agreement), starting by the end of May 2008. If no substantial
progress has been made by November 2010, then the EU could suspend
or terminate the current agreement. The European Commission head of
transport, Jacques Barrot, has indicated that the EU will also
press for U.S. carriers to take part in the EU emissions trading
scheme.3 This second stage of negotiations is likely to be
particularly challenging for the EU negotiators, as there appears
to be little support for
Page 16 InterVISTAS Canadian Aviation Intelligence Report
3 In the UK, reaction to Open Skies has been mixed, due to
environmental concerns. One British newspaper announced the start
of the agreement with the headline, A revolution in the skiesa
disaster for the planet.
April 2008 Copyright 2008 InterVISTAS Consulting Inc., all
rights reserved.
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EUROPEAN PERSPECTIVE CONT
cabotage and ownership revisions with U.S. carriers, unions or
Congress (the current agreement did not require congressional
approval, but any changes to ownership restrictions would likely
require such approval). Furthermore, it is perhaps not entirely
convincing that the EU would be willing to throw away the current
agreement, by triggering the suspension cause, in order to force
the hand of the U.S. government, particularly once the changes
brought about by the agreement have become established in the
transatlantic air market.
Regardless of these challenges, the EU-U.S. Open Skies agreement
is a significant development in the evolution of the global air
transport industry. As with previous examples of air service
liberation in North America, Europe and elsewhere, Open Skies is
likely to result in great choice for travellers, lower fares and
better levels of air service for many parts of Europe.
Page 17 InterVISTAS Canadian Aviation Intelligence Report April
2008 Copyright 2008 InterVISTAS Consulting Inc., all rights
reserved.
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EU-U.S. OPEN SKIES THE U.S. PERSPECTIVE April 2008
On 30 March 2008, the Open Skies agreement between the European
Union and United States came into force. The agreement followed 11
rounds of negotiations started in June 2003 and ending with the
signing of the agreement in Washington, DC on 30 April 2007. Open
Skies creates a single transatlantic Open Aviation Area replacing
the patchwork of individual bilateral agreements between the U.S.
and the 27 EU member states (in fact, a number of member states,
such as Bulgaria, Estonia, Latvia, Lithuania and Slovenia, had no
prior air service agreement with the U.S.).
Major Features From the U.S. perspective, the key elements of
the new agreement are: Steve Martin
Senior Vice President, Government Relations &
Policy Analysis InterVISTAS-ga2 Consulting
Inc. Washington, D.C.
Elimination of restrictions on the number of flights, aircraft,
routes and pricing; Ability to enter into cooperative arrangements,
including codesharing, franchising and
leasing;
Eliminate restrictions affecting market access to Heathrow;
Preserve flexible beyond and intermediate routings; and Allow EU
airlines to transport non-Defense U.S. Government passengers and
cargo on
flights between two foreign points and on all EU-U.S.
routes.
Anticipated Outcomes The transatlantic market has already begun
to see changes, although none are drastic or completely unexpected.
U.S. carriers that had previously served London through alternative
airports Northwest, Continental, Delta, and US Airways - have
purchased slots at Heathrow and begun operations there and the four
incumbent carriers also added nonstops. American shifted its
Gatwick flights to Heathrow, and United announced new LHR service
from its Denver hub. In addition, AirFrance/KLM also announced that
it would launch service to Los Angeles from Heathrow and Delta
announced it had joined AF in that effort as part of a joint
venture.
Aer Lingus announced that it would initiate service from Dublin
to new U.S. cities, now that it is not required to make the Shannon
Stop. British Airways announced plans to operate a new carrier
cheekily dubbed Open Skies between New York, Paris, and Brussels.
Lufthansa acquired a 19% percent investment stake in JetBlue in
December 2007, and is considering expanding the relationship.
Through its hub at JFK, JetBlue would provide significant flow
traffic to Lufthansa.
Issues There is some question at this point as to which side won
more. Clearly, from the U.S. perspective, the greater access to
Heathrow has been beneficial, if albeit expensive (Continental is
said to have paid over $50 million each for four pair of slots).
Some would argue that several major EU (non-UK) airlines may be the
early winners. Given their fleet mix, they may be better positioned
to take advantage of the new access to Heathrow and opportunities
to launch service from non-home countries. Business travelers may
benefit from the additional capacity in the front of aircraft. But
with carriers adding surcharges to cover rising fuel prices, few
believe that economy passengers will see great deals across the
Atlantic any time soon.
Page 18 InterVISTAS Canadian Aviation Intelligence Report April
2008 Copyright 2008 InterVISTAS Consulting Inc., all rights
reserved.
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U.S. PERSPECTIVE CONT
The axe over the neck of the projected benefits? The agreement
included a pledge to begin phase II talks with a goal of further
liberalizing the agreement. The parties that signed the "phase one"
agreement can terminate it if there is no agreement between U.S.
and EU negotiators on "phase II," which is supposed to be in place
by 2010. That is, individual EU states have the power to withdraw
flying rights to U.S. carriers if they are dissatisfied with
progress.
EU airlines complained that the initial agreement unfairly
favors U.S. carriers. Several carriers notably British Airways and
Virgin (which, coincidentally stand to be the biggest losers of
having Heathrow opened up) have said that they will exercise that
right unless Washington does allows EU airlines to increase
ownership and control of U.S. carriers and permits them to run
domestic U.S. services. For international alliances with
antitrust-immune codesharing agreements, the implications of
reversing those commercial arrangements would be financially
devastating.
That stance sets up a head-on collision with the position of the
powerful Chairman of the House Transportation Committee.
Congressional leaders objected to provisions in the phase I
agreement relating to liberalizing ownership and control of U.S.
carriers and included language in its FAA reauthorization bill that
would specifically block any such changes. That legislation has
stalled though because the U.S. Senate has been unable to settle a
disagreement concerning FAAs future source of financing.
With U.S. carriers struggling financially, some on Capitol Hill
have indicated opposition to allowing foreign carriers to swoop in
and take controlling interests in these carriers at
bargain-basement prices. And with labor-friendly Democrats
controlling Congress and hopeful about winning the White House in
November 2008, they have turned an attentive ear to the positions
of unions that foreign ownership would threaten jobs.
Resolving the coming clash of positions promises to be extremely
challenging for negotiators, unnerving for airline executives and
fascinating for interested observers.
Page 19 InterVISTAS Canadian Aviation Intelligence Report April
2008 Copyright 2008 InterVISTAS Consulting Inc., all rights
reserved.
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Page 20 InterVISTAS Canadian Aviation Intelligence Report
INTERVISTAS NEWS Debbie Homonai Appointed Manager,
Administrative Services InterVISTAS is pleased to announce that
Debbie Homonai has been appointed Manager, Administrative Services
for InterVISTAS-ga2. Debbie joined InterVISTAS in June 2005 as
Office Administrator and was promoted to Office Manager in 2006 and
her commitment and dedication over the past 3 years has contributed
greatly to the success of the Washington operation. As Manager,
Administrative Services, Debbie will be responsible for
administrative oversight of ga2 including accounting, HR, office
services and IT, in addition to continuing to provide support for
Service Delivery and Business Development.
InterVISTAS Upcoming Speaking Engagements Dr. Joe Kelly,
Director, Environmental Services 2008 Tourism Educators Conference:
Whistler, BC 8-10 May 2008
Dr. Kelly will be presenting a presentation titled, Tourism and
Climate Change: Issues, Trends and Solutions.
Canadian Ski Council Symposium: Sun Peaks, Canada 16 July 2008
Dr. Kelly will be delivering a presentation titled, Climate Change
and the Ski Industry: Issues, Trends and Solutions.
Dr. Mike Tretheway, Executive Vice President, Marketing &
Chief Economist
InterVISTAS Canadian Aviation Intelligence Report is a
collection of information gathered from public sources, such as
press releases, media articles, etc., information from confidential
sources, and items heard on the street. Thus, some of the
information is speculative and may not materialise.
To inquire about advertising opportunities or to provide
comments/feedback on the InterVISTAS Canadian Aviation Intelligence
Report, please contact Rob Beynon at [email protected] or
1-604-717-1864.
To subscribe, please send an email to
[email protected]
To unsubscribe, please send an email to
[email protected]
InterVISTAS Canadian Aviation Intelligence Report is a
collection of information gathered from public sources, such as
press releases, media articles, etc., information from confidential
sources, and items heard on the street. Thus, some of the
information is speculative and may not materialise.
To inquire about advertising opportunities or to provide
comments/feedback on the InterVISTAS Canadian Aviation Intelligence
Report, please contact Rob Beynon at [email protected] or
1-604-717-1864.
To subscribe, please send an email to
[email protected]
To unsubscribe, please send an email to
[email protected]
Canadian Transportation Research Forum Annual Meeting:
Fredericton, New
Brunswick 2 June 2008 Dr. Tretheway will be delivering a
presentation titled Essential Priorities for Canadas Air Transport
System.
Canadian Airline Investment Conference: Toronto, Canada 10 June
2008 Dr. Tretheway will be delivering a presentation titled, The
Carbon Footprint: Emerging Environmental Challenges and Solutions
for Sustainable Aviation.
ACI-NA Marketing and Communications Conference and JumpStart Air
Service Development Program: Pittsburgh, Pennsylvania 23 June 2008
Dr. Tretheway will be delivering a presentation titled, State of
the Aviation Industry.
April 2008 Copyright 2008 InterVISTAS Consulting Inc., all
rights reserved.
WestJet Seat Capacity 2008Overall Change Capacity
IncreasesTransborder Services now 9% of WestJet seats Traffic and
Load Factors on Canadas Major Air CarriersMarch 2008Analysis:
Airline Data U.S.U.S. Airlines Release March 2008 Traffic
Figures
News News Cont News Cont News Cont Caribbean ReportCaribbean
Airlines increasing North American services this summerDivestment
process underwayTwo more major carriers to enter the Guyanese
market Financing secured for airport airside work Passenger
Facility Charge (PFC) for St. Kitts and NevisAmerican Airlines adds
Miami-Antigua service
Asia ReportOasis Airlines bankruptCode sharing agreement between
an Jet Airways and ANA Private jets taking off in KoreaAirlines
seeking compensation from Boeing for 787 delayAsia Pacific fleet to
surge in the coming decade
European ReportEU to harmonize in-flight mobile callsEuropean
Commission initials Civil Aviation Agreement with IndiaKLM-Air
France cease negotiations to purchase AlitaliaBAA and BA act
cautiously with recent success at Terminal 5
The Ottawa ReportCanadian Government funds airport safety in Red
Deer, AlbertaCTA rejects Air Canadas proposal to discontinue the
carriage of small animals as checked baggageClear Bag System
approved for use in Canadian airportsFlyglobespan offers 2nd season
of Canadian flightsNew Canadian airline to launch Spring 2008
The Washington ReportDOT proposes expanded transatlantic
allianceDelta and Northwest agree to mergeDOT Proposes United Air
Lines to fly Los Angeles-San Jose del CaboU.S. DHS agrees to Visa
Waiver Program with five EU StatesU.S. reports record passenger
levels and inbound travellers
The U.S. DOT reported a total of 10.7 million domestic and
international flights operated by U.S. carriers in 2007, resulting
in a record 769.4 million passengers, up 3.3% over 2006, the
previous record-setting year. The 2007 total consisted of 679
million domestic passengers (up 3.1% over 2006) and 90 million
international passengers (up 4.7% over 2006). The U.S. Department
of Commerce announced a record 56.7 million international visitors
to the United States in 2007, up 11% over 2006. Visitors from
Western Europe made up the largest group, representing 46% of
international visitors to the United States. The number of Canadian
visitors to the United States came in second, representing roughly
31% of international travellers to the United States. As a result
of inbound travel to the United States, $17.8 billion was generated
from travel expenditures and tourism within the United States.
EU-U.S. Open Skies The European PerspectiveMajor
FeaturesAnticipated Outcomes
European Perspective ContIssues
European Perspective Cont EU-U.S. Open Skies The U.S.
PerspectiveMajor FeaturesAnticipated OutcomesIssues
U.S. Perspective Cont InterVISTAS NewsDebbie Homonai Appointed
Manager, Administrative ServicesInterVISTAS Upcoming Speaking
Engagements