Sunday, October 4, 2015

Boeing's Troubled KC-46 Pegasus Hits a Key Milestone


The KC-46 Pegasus finally got off the ground on Sept. 25.

In July, Boeing investors got some unwelcome news, as the company said it would book an $835 million pre-tax charge related to the development of the KC-46 Pegasus aerial refueling tanker. Problems with the fuel system necessitated a redesign and retrofit program. Since Boeing agreed to a capped-price contract with the Air Force, it is responsible for cost overruns.

This was the second special charge Boeing has taken with respect to this contract. That's caused concern from some analysts that the KC-46 Pegasus could turn into a big money pit for Boeing, because of its aggressive bid.

Fortunately, the project appears to be getting back on track. Late last month, Boeing finally completed an initial four hour test flight for the first KC-46 tanker. There is plenty of testing left to do -- not to mention putting the plane into full production -- but Boeing still has a chance to salvage the KC-46 program and turn a decent profit.

A small step forward

The initial flight conducted last month checked the plane's basic systems. According to the company, "Boeing test pilots performed operational checks on engines, flight controls and environmental systems and took the tanker to a maximum altitude of 35,000 feet prior to landing."

The plane performed as expected. The actual refueling equipment -- the most complicated part of the plane -- was not part of the test, making it a relatively small victory. That said, Boeing had originally planned to test the KC-46 Pegasus in August, but mechanics accidentally damaged the fuel system by using a mislabeled chemical for a preliminary test. So just getting off the ground was an accomplishment.

Boeing still expects to be able to test the refueling system and then do aerial refueling trial runs before the end of the year. If those tests are successful, then Boeing will be in good shape to avoid taking any more big special charges for cost overruns.

Risks are real, but manageable

The KC-46 program does carry some real risks for Boeing. The company has committed to delivering an initial batch of 18 tankers to the Air Force by August 2017. However, delays in the development process pushed back the Air Force's final decision on whether to go ahead with the order until April 2016. To gain this approval, Boeing needs to demonstrate that the KC-46 Pegasus meets all of its requirements.

However, Boeing can't wait until next April to start production, or else it wouldn't have the initial batch of planes ready in time. Thus, it is producing planes without a guarantee that the Air Force will be satisfied.

The likelihood that the Air Force will leave Boeing in the lurch seems relatively low, though. Obviously, if Boeing is hit with a big setback with no obvious fix, the Air Force could reconsider, but it really needs this plane. The KC-135 Stratotankers being replaced are already 50 to 60 years old, and the procurement process for new aircraft takes years.

It's harder to measure the likelihood of further major development snags. However, the Air Force general in charge of the program has said he is "cautiously confident" and that the biggest issues at this point are schedule-related and not performance-related.

Meaningful upside

Today, many investors appear to view the KC-46 program as a potential liability for Boeing.
However, there is also a lot of upside if Boeing can just avoid big mishaps. The company is already in line to get more than $40 billion for the 179 tankers the Air Force wants. The total market opportunity could be double that amount, though, as Boeing will be able to market the KC-46 to foreign militaries.

That's a lot of potential future revenue relative to the extent of Boeing's cost overruns thus far. It's way too early for Boeing investors to write off the KC-46 as a lost cause.

(Adam Levine-Weinberg - The Motley Fool)

Alaska Airlines CEO says his airline lost his bag

Alaska Airlines Boeing 737-890 (39043/2711) N512AS "Spirit of Seattle" taxies at John Wayne Orange County Airport (SNA/KSNA) on January 20, 2014 sporting the carriers "Dreamliner" livery.
(Photo by Michael Carter)

Alaska Airlines is so confident in its baggage delivery system that it became the nation's first major carrier to offer a guarantee to deliver your bag within 20 minutes of reaching the gate.

If the airline fails, you get a $25 credit toward a future flight or 2,500 miles in the airline's reward program.

So, Alaska Airlines Chief Executive Bradley Tilden was visibly embarrassed when he attended an airline summit last week in Washington, D.C. and admitted on stage that Alaska Airlines misplaced his bag during his flight to the summit.

The bag was delivered to him the next day.

And it wasn't the first time. He said the airline misplaced his bag on a flight 25 years earlier.

“The media is here and I'm hoping that you don't write this down and print it,” Tilden said with a smile.

Tilden did not say whether he got the $25 credit or the 2,500 miles.

(Hugo Martin - Los Angeles Times)

Boeing 777 Has Enabled The Growth Of Emirates, Which Flies 150 Of Them

Emirates Boeing 777-31H(ER (38982/830) A6-ECX departs Los Angeles International Airport (LAX/KLAX) on March 21, 2012.
(Photo by Michael Carter)

In the U.S., it is typically the low fare, low cost carriers, starting with Southwest,  that are most closely associated with specific types of aircraft.

Not so in Dubai.

As it has grown rapidly into the world’s biggest international airline in terms of revenue passenger miles (or revenue passenger kilometers), Dubai-based Emirates Airlines has relied primarily on the Boeing 777, and secondarily on the Airbus A380. It is the world’s biggest operator of both aircraft.

A month ago, Emirates took delivery of three 777s on a single day, bringing its total to 150 including 13 freighters. (The cargo fleet also includes two Boeing 747s).

Of the 777s, 107 are 777-300 extended range seating 354 to 427 passengers. As of Sept. 3, Emirates’ 777s had flown 859,053 flights.

The carrier also has 65 Airbus A-380s. Additionally, it has orders for 196 Boeing 777s and 73 A380s.

The Emirates strategy has been to establish a global hub in the Mideast and to connect passengers from throughout the world, particularly passengers from Asia and the Middle East to Europe and the U.S. The strategy requires a fleet of long-haul aircraft.

“Everything we do follows an extremely well mapped out vision,” said Hubert Frach, Emirates divisional senior vice president of the west. “The vision was clear from the very beginning: It’s about connecting people, places and economies.”

Frach said the carrier takes advantage of Dubai’s location: two thirds of the world’s population lives within four hours by air, and three quarters of the world’s population is within eight hours by air.
Additionally, he noted, throughout the world people “are becoming more affluent in terms of buying air travel. “

But you need the right aircraft. The 777 “is a very reliable aircraft in terms of size, configuration and performance parameters. It can fly almost 17 hours, and its on-time reliability is 99.5%,” said Frach, who previously headed global marketing for Lufthansa.

In a prepared statement, Tim Clark, Emirates president, said “The Boeing 777 makes up the majority of our fleet, and gives us the range and flexibility to provide non-stop services to almost any city within a 16 hour flying range of our hub in Dubai.”

Emirates serves 147 destinations in 79 countries, including 98 destinations served by the 777. It serves 10 U.S cities including Boston, Chicago, Dallas, Houston, Los Angeles, New York, Orlando, San Francisco, Seattle and Washington. It also operates a Milan-JFK route and a cargo route to Atlanta.

On Sept. 3, Emirates began Dubai-Orlando service with an A380; on Oct. 1 it added a second daily Dubai-Boston 777 flight.

Emirates’ strategy has become controversial not only because of its own rapid expansion but also because of the similar, duplicative strategies employed by Mideast competitors Etihad and Qatar.

Particularly rapid U.S growth has prompted American, Delta and United to respond by calling attention to the government subsidies that have enabled it and have violated Open Skies policies.

(The Gulf carriers deny that they receive subsidies.)

Emirates notes that flying Boeing aircraft creates thousands of U.S. jobs, not just at Boeing but also related jobs. The US Department of Commerce has estimated that 5,359 U.S. jobs are created for every one billion dollars in value of U.S. export goods.

Boeing is the biggest U.S. exporter, and also one of the leading U.S. lobbyists, given its importance not only to commercial aviation but also to defense. For obvious reasons, however, Boeing has taken no position on the ongoing battle over subsidies to Mideast carriers, which pits one group of its customers against another group of its customers. Boeing’s position has been described as “aggressively neutral.”

Still, it’s hard not to like a customer whose business strategy is so closely tied to one of your products.

(Ted Reed - Forbes)

Emirates hints at no Dubai Airshow orders, pushes decision on A350/787 to next year

Emirates airlines indicated on Sunday that it won't be announcing any big orders at next month's Dubai Airshow and said it wouldn't make a decision this year on whether to purchase Airbus A350 or Boeing 787 twin-aisle jets.

Tim Clark, the airline's president, asked at an event whether any orders were likely to be announced at the air show which runs Nov. 8-12, said the carrier was still taking delivery of planes announced at the last show in 2013.

"We're still running the program we signed for (in 2013), we've got aircraft coming in as you know," Clark told reporters.

"The Xs (777s) come in late-2018 and 2019. That's enough for the time being," he said.

Dubai's flagship carrier has said it is looking at an order for 50 to 70 twin-aisle jets - with the main competitors being the Airbus A350-900 and Boeing's new 787-10, a stretched Dreamliner.

"We're looking at both of them ... we've got a good comparison opportunity," Clark, told reporters on the sidelines of an aviation security conference hosted by the airline.

"Now we're going to the manufacturers about the numbers that we need and the prices they're prepared to offer. We haven't got there in detail yet," he said.

Emirates has received the needed performance data on the A350 as well as from Boeing's 787-8 and 787-9, variants on the Dreamliner which are already in service, Clark said.

However, he raised doubts about the 787-10's ability to carry heavy passenger and cargo loads to distances beyond eight hours due to its performance in hot climates - an issue for a Gulf-based airline.

"It (787-10) doesn't have the capability of lifting the payload to distances that we would want beyond about eight hours," Clark said.

The A350 meanwhile, can fly for about 14 hours, Clark said, although he also said 85 percent of Emirates' flights do not exceed eight hours.

Many analysts had expected Emirates to announce a big order at its home air show next month as it has done previously.

At the show in 2013, it placed a record-breaking order for 150 Boeing 777x, valued at $76 billion at list price, and added another 50 A380 jumbo jets to an existing order for 90 of the Airbus aircraft in a deal valued at $21.4 billion at list price.

The carrier, which is based at Dubai International airport, is having to make difficult purchase decisions due to space constraints at the airport.

Emirates, which is pushing Airbus to make a stretched and re-engined version of the A380, is unlikely to shift its base to the new airport for another decade.

(Nadia Saleem - Reuters)

Saturday, October 3, 2015

Air Canada Jetz Airbus A319-114 (c/n 831) C-GBIK

Arriving at 14:38 pst from Denver International Airport (DEN/KDEN) as "ACA7015."

 Taxies on "Delta" towards a Rwy 30 departure.

Rolling for take-off on Rwy 30 at 16:11 pst as "ACA7080" bound for Ontario International Airport (ONT/KONT).

Air Canada Jetz A319-114 was a nice visitor on October 1st as it brought the NHL Vancouver Canucks to Southern California to play the Anaheim Ducks at the Honda Center in Anaheim.
(Photos by Michael Carter) 

Bombardier turns to Caisse for cash

A Bombardier CS300 participates in a flying display during the 51st Paris Air Show at Le Bourget airport near Paris, June 16, 2015.
 (Reuters - Pascal Rossignol)

Bombardier is in discussions with the Caisse de depot et placement du Quebec, which manages Quebec's public pension plans, on a deal that could inject more cash into the troubled plane and train maker, according to two sources familiar with the matter.

It was not immediately clear how a potential deal would be structured. One source familiar with the company's thinking said the Caisse, already one of Bombardier's biggest shareholders, was contemplating taking a larger stake in the Montreal-based company.

"It's not a done deal yet," said a source from Canada’s second-largest pension fund.

If it closes a deal with the Caisse, it will be the second surprise financing in less than a year, a humbling turn for one of Quebec's best-known companies.

In February, Bombardier raised C$1.1 billion in equity and $2.25 billion in debt.

At that time, the Caisse bought C$13.3 million worth of Bombardier stock, the Globe and Mail reported in June.

The root of Bombardier's problems is the CSeries, a new medium-range, narrow-body jet that is set to enter service next year, years late and billions over budget. To support it, sources have told Reuters, Bombardier is willing to consider selling stakes in all its business units, not just rail.

A deal with the Caisse could shore up Bombardier's balance sheet relatively quickly, with minimal political fallout or impact on cash flow. By contrast, selling a major asset to a foreign buyer would likely kick off a lengthy government review, and sap it of badly-needed cash flow. A direct government bailout may prove unpopular ahead of an Oct. 19 federal election.

But there is no guarantee Bombardier will close a deal with the Caisse, and the process has been difficult, coming so soon after February's multi-billion dollar debt and equity financing, said one source at the Caisse.

"They lack negotiating power," the Caisse source said of Bombardier. "It's like you lend money to a friend who says everything's fine – only to come back a month later and ask for more money."

A deal with Caisse would likely require some change in the voting rights structure which currently favours Bombardier's founding family, said a second source familiar with the talks.

Bombardier spokeswoman Isabelle Rondeau declined to comment on "speculation or rumours" and reiterated remarks from February, that it is "exploring other initiatives such as possible participation in industry consolidation."

The Caisse also declined to comment.

The Quebec government has repeatedly offered to bail out Bombardier - an offer that one banker familiar with the company said sounded like "code" for increased investment by the Caisse.

"The Caisse, unlike any of the other pension funds, has a dual mandate, so it is not only to maximize risk adjusted returns for their beneficiaries, but also to promote the interests of the province of Quebec," said the banker, who spoke on condition of anonymity.

Some investors have exited Bombardier over the last year, as it veered towards penny stock territory, with shares touching C$1.03, their lowest point since 1991.

The stock recovered somewhat after Reuters reported last month that the company had turned down a Chinese offer to buy the rail unit.

But a portfolio manager at one top shareholder remains very concerned.

"There's no single voice for the company. Since the message is not clear, it's an indication that they don't have a plan in place. That's what worries me," said the investor.

Rondeau said Bombardier's "investor relations service is in constant contact with the Street," and pointed to the company's upcoming investor day on November 24 in New York.

The Caisse held net assets totalling C$240.8 billion as of June 30, 2015.

(Allison Lampert and Andrea Shalal - Reuters)

Forest Service Doubles Fleet of Large Firefighting Planes

The U.S. Forest Service is putting seven more large airtankers into the skies in an effort to double down in the fight against an "above-normal" fire season, two years after an ABC News investigation found the aging firefighting fleet was struggling to protect American homes and lives.
The investigation in 2013 found the Forest Service had been plagued for a decade by a dwindling fleet of large and very large airtankers, aging aircraft often converted from military use that once were relied on by states to aid in large forest fires but were often grounded over safety issues or crashed and were never replaced.

The addition of the "next generation" aerial firefighting planes -- older passenger jets refurbished to drop 3,000 to 11,000 gallons of fire retardant, depending on the aircraft -- is badly needed in western states, notably California, which is suffering a years-long drought and nearly 60,000 wildfires.

“The Forest Service has made significant progress in modernizing the Large Airtanker fleet, which we believe is critical to protect lives, property, and valuable natural and cultural resources from wildfires that are becoming bigger, more dangerous, and more costly,” Tom Harbour, Director of Fire and Aviation Management for the Forest Service, said in a statement Wednesday.

The ABC News investigation found that Forest Service officials for more than a decade had lost more than half their fleet of large firefighting planes but failed at the time to come up with a viable plan to replace them, even as the drought-stricken West battled more fires threatening homes and businesses increasingly developed in dry forested areas.

Defense and aircraft contracting giant Lockheed Martin had mounted an aggressive lobbying effort to get the agency to buy their planes, which were the only new models being proposed at a price rage of $90-120 million per C-130J.

No airplane has ever been designed specifically to drop retardant and historically all firefighting aircraft were modified to do it. Lockheed was also the only company to hire a former top government official as chief lobbyist, who once oversaw the Forest Service.

The ABC News investigation found that Mark Rey, a paper industry lobbyist who served for all eight years of the Bush administration as the U.S. Department of Agriculture undersecretary directly overseeing the Forest Service, has been Lockheed Martin's chief lobbyist in selling C-130 planes -- used as a workhorse transport aircraft by the military -- to the Forest Service.

Since 2009, lobbying records filed in the U.S. Senate show Rey has been paid $430,000 by the defense contractor to lobby the Forest Service for "firefighting aircraft."

E-mails obtained by ABC News through a Freedom of Information Act request in 2013 showed that Rey has enjoyed easy access to Harbour, a former subordinate. An official told ABC News Rey and Harbour met every few months to discuss aerial firefighting, in which Rey is recognized by many in the field as an expert.

Despite the close relationship, Lockheed has failed to convince the Obama administration and Congress for the past six years to buy their costly new C-130J planes, with contracts instead going to other firms modifying re-purposed older civilian aircraft that are much less expensive.

Rey told ABC News Thursday that "the company is still interested," adding that Lockheed Martin will submit future proposals to the Forest Service to buy its planes.

Harbour indicated the company may yet succeed in winning a major contract.

"I am still bullish on the C-130J," Harbour told ABC News.

Rey said the problems with the aging Forest Service large airtanker fleet "have only gotten worse" over the past two years. But he said he sees hope in the Federal Aviation Administration approving a civilian version of the C-130 which will be lighter and likely less expensive than the estimated $90-120 million cost per plane to convert new C-130J's into aerial firefighting platforms.

The seven new planes added to the Forest Service's "exclusive use" contract fleet will include four BAe-146's from Neptune Aviation Services, two Avro RJ85's from Aero-Flight and a DC-10 from 10 Tanker Air Carrier, which has wowed woodland firefighters with its jumbo jets that fly as low as 100 feet over raging fires and dropping as much as 11,000 gallons of orange fire retardant.

With these additions, a total of 12 large and two very large airtankers make up the Forest Service fleet, along with much smaller tankers and seasonal loaners from the military. Two additional very large airtankers are available for severe situations, officials said.

In June 2013, 19 elite woodland firefighters from Prescott, Arizona, known as the Granite Mountain Interagency Hotshot Crew, were killed fighting a blaze on Yarnell Hill, a half hour drive from their home base. Only one hotshot, lookout Brendan "Donut" McDonough, survived the disaster.

A 10 Tanker DC-10 was orbiting in the skies overhead at the time awaiting orders to hit the blaze but could not have swooped in to save the hotshots, who were killed by the flames within only two minutes of the team leader's first radio call that their escape route was cut off.

"My captain was right overhead when those guys got killed," 10 Tanker owner Rick Hatton told ABC News in 2013.

Only 34 airtankers have been flying for the Forest Service this year as fires raged throughout hard-hit California, mostly made up of a hodge-podge of Korean War-era prop planes to the DC-10s jets, a surplus military HC-130H and more C-130s borrowed temporarily from the National Guard, which spray retardant rather than drop it from the belly using gravity, which is more effective, government and private fire experts agree.

(Brian Ross, James Gordon Meek and Cindy Galli - ABC News)

British Airways recieves first 787-9 "Dreamliner"

Boeing marked the delivery of the first 787-9 Dreamliner to British Airways on Sep 30.
The latest delivery is related to the airline’s first order for 22 787-9. Boeing has already delivered eight 787-8s to the airline and has a backlog of 12 B787-10s. The 787-9 aircraft is scheduled to fly the London-Delhi route later this month.
Compared with its predecessor, the 787-9 model has an extended fuselage structure, which enables it to carry 242 to 335 passengers over distances as far as 8,500 nautical miles. Travelers can choose from a four-class configuration – Club World, World Traveller Plus and World Traveller, along with a new first class. The 787-9 Dreamliner has eight seats in the first class, compared to the 14 in 787-8.
The first class features enticing facilities for travelers, which include a new ottoman beside the adjustable footstool which has ample space for personal items, shoes and even handbags; an individual suiter for jackets and coats; and a new locker with a mirror on the door for important documents and gadgets.
British Airways is the first European airline to install the top-class First cabin on a Dreamliner. China Southern was the first airline in the world to enjoy the same.
Other benefits of the 787-9 include fuel efficiency and lower emissions. It burns 20% less fuel, resulting in an exceptional environment-friendly performance. It incorporates the design of the 787-8 model, while boasting features like modern LED lighting, large windows, lower cabin altitude and cleaner air, thus enhancing passenger comfort. To date, there have been a total of 304 Boeing 787 Dreamliner deliveries.
The Dreamliner had in the past faced difficulties related to design problems, cost overruns and delays. But the aircraft has not looked back since its first flight in Dec 2009. Boeing’s 787 Dreamliner is a one-of-a-kind aircraft, combining innovation, efficiency, comfort and environmental awareness to ensure the ultimate flying experience.

Friday, October 2, 2015

Gulfstream G-II celebrates its 49th Birthday

Gulfstream G-IISP (c/n 153) N132FP "Air Faith 1" operated by the Crenshaw Christian Center Church of Los Angeles holds short of Rwy 30 at Long Beach Airport (LGB/KLGB) on May 11, 2011.
(Photo by Michael Carter)

49 years ago today, October 2nd 1966, the G-II (c/n 001) N801GA flew for the first time from Bethpage NY were it was built. 

The next 6 were all built here before the company relocated the civilian component to Savannah, Ga. to improve production efficiency. Here they also found the needed supply of skilled labor, an established airfield adjacent to the plant site and sufficient acreage for expansion.

Transportation facilities suitable for heavy equipment as well as weather favorable to year-round flight-testing and flight-training further enhanced Savannah’s appeal. All subsequent Gulfstreams have been built in Savannah.

The new building in Chatham County opened in June 1967 and was officially dedicated on Sept. 29, 1967. It housed production and flight testing for the GII. The 100-person workforce that built the GII was 90 percent local and grew to more than 1,700 within a few years.

(Bob Holland & Gulfstream Corporation)

Airline CEOs Defend Industry's Profitability at Aviation Summit

From l-r, Bradley Tilden, Gary Kelly and Robin Hayes speak at the A4A Commercial Aviation Industry Summit.
 (Photo: Bill Carey)

While finally earning profits that are in line with other large companies, U.S. airlines are facing unwarranted criticism for being profitable, airline industry executives said this week. Defending the industry’s performance, they said new, passenger-focused regulations that have been proposed are unnecessary.

Speaking on September 28 at the Airlines for America (A4A) Commercial Aviation Industry Summit in Washington, D.C., A4A president and CEO Nicholas Calio described the industry’s progress since he joined the trade association in January 2011.

In five years a lot has changed,” Calio said. “Through a very painful series of restructurings, budget cuts, employee cuts, bankruptcy and consolidations, (airlines) got on the right foot and also changed the business model…We’re now being attacked for being profitable by many people. Certain policy makers and other people in the public don’t like the idea that airlines can be profitable…Profits are a good thing; they’re usually considered very American.”

During the first half of the year, the 10 publicly traded U.S. airlines the association tracks invested $8.5 billion in products and services, or $23 per enplaned passenger, Calio said. Yet the cost of an airline ticket has not kept pace with inflation.

In August, A4A reported that major U.S. airlines collectively had doubled their net profit in the first six months of the year compared to the prior-year period. The large carriers the association tracks reported $8.7 billion in net profit in the first half, up from $3.9 billion in first half of 2014. A 34-percent decrease in fuel expenses helped drive profitability.

Meanwhile, in September, an advisory committee to the federal Department of Transportation (DOT) recommended that airlines be required to clearly disclose the cost of change and cancellation fees in selling tickets, as well as the size of an aircraft’s seat. Already, the DOT issues a monthly “Air Travel Consumer Report” that provides data on flight delays, mishandled baggage, oversales, consumer complaints and airline reports of the loss, injury or death of animals during transportation.

According to Calio, a baggage handling “performance mandate” has been proposed in legislation to reauthorize the Federal Aviation Administration. Such rules “have nothing to do with safety and nothing to do with things that any other business is subject to,” he complained.

Airline CEOs appearing on a panel at the summit echoed Calio’s remarks. Southwest Airlines CEO Gary Kelly said lower airline fuel costs should not be linked with lower fares. “I think people quickly forget the struggles that the industry has gone through to get to this point,” he said. “What our customers want is stability.

As a low-fare carrier, what we really disliked doing was having to chase fuel prices up and up and up over a long period of years with never ending fare increases…I think that air fares have not kept pace with inflation and it’s because of competition, and lower fuel prices in terms of transportation is nothing but a great thing.”

In the century since the airline industry started, it probably has “negative retained earnings,” remarked Bradley Tilden, Alaska Airlines CEO. “We’re moving from that history to where we’re starting to make a little bit of money and people are saying, ‘Oh my God, they’re making excess profits.’ I don’t think the industry is,” Tilden said. “I think we’re making profits that are necessary to continue to grow and invest in service.”

Commenting on the prospect of a baggage performance mandate, JetBlue CEO Robin Hayes said such requirements, while well intentioned, often have unintended consequences. “No one wants to get to a destination without their bags, so clearly we are incentivized to make that work,” Hayes said. “Let us compete and offer the best quality service. It will be a far better outcome than the unintended consequences of selective mandates.”

Kelly said Southwest’s “Bags Fly Free” policy that allows passengers to check one or two suitcases without being charged—a practice unmatched by other major carriers—gives his airline a competitive advantage. “It’s huge,” he said. “Every company would love to have points of distinctiveness…It’s astounding how many people hate bag fees, hate change fees. They just don’t like being nickeled and dimed.”

(Bill Carey - AINOnline News)

Charter Report 2015

The improving U.S. economy, in contrast to challenging economic circumstances affecting the rest of the world, seems to be reflected in the charter business, and activity has never been better, according to companies AIN interviewed for this special report. Charter/management firms report steady growth in fleets and business, from both management customers and buyers of charter lift.

Statistics from market analyst Argus support these claims. The Argus July TraqPak Business Aircraft Activity report (U.S. and Canada) showed charter operations up 9.6 percent compared with July 2014 and 6.1 percent month-over-month. During the past year, charter activity rose 3.4 percent, and Argus projects an increase of 4 percent during the coming year.

Overall, the charter industry doesn’t change much, but the way charter buyers and operators use technology is having an effect on quoting and selling trips, managing operations and meeting compliance requirements.

On the buyer side, the ubiquitous nature of mobile devices has spawned a race for the first company to become the so-called “Uber of aviation,” and while plenty of apps make this claim, no one has truly replicated Uber’s business model: connecting nonregulated drivers with paying passengers.

This model simply is not possible in aviation, unless the service provider is willing to facilitate illegal charters.

This special report examines the current state of the charter industry and some of the developments that are affecting operators and the brokers that account for the majority of charter bookings.

(Matt Thurber and James Wynbrandt - AINOnline News)

40% of Bizjet Pax Plan To Fly More in Next Year

Survey respondents said that the Gulfstream G650 topped their most-wished-for-aircraft list in the ultra-long-range business jet category. Other top aircraft in other categories included the Pilatus PC-12, King Air, Embraer Phenom 100 and 300, Cessna Citation X and Gulfstream G450.
In the above photo, Gulfstream G650 (c/n 6038) N278L operated by Nantworks LLC is captured arriving at Long Beach Airport (LGB/KLGB) on May 20, 2014. 
(Photo by Michael Carter)

Nearly 52 percent of current business jet users plan to fly the same amount over the next 12 months, while nearly 40 percent say they will fly a bit more (32 percent) or a lot more (7.9 percent), according to the just-released results of the Fifth Annual Readers' Choice Survey from AIN sister publication Business Jet Traveler.

About half said they flew the same amount over the past year as during the year before, while 21.7 percent flew a bit more and 15 percent a bit less. Only 7.7 flew much less and 5.9 percent much more.

Not surprisingly, survey respondents said “saving time” was the number-one reason that they fly on business aircraft, followed by the ability to fly into airports not served by airlines and the ability to work and hold meetings in flight.

Nearly 62 percent of their flights are mostly or almost always for business, while 28.1 percent were an even mix of personal and business flying. Less than 10 percent of flights were categorized as mostly or almost always personal.

According to the survey, the most attractive feature of an aircraft is economical operation, with range, cabin size, aircraft manufacturer and age of aircraft rounding out the top five; baggage space was at the bottom of the list. Respondents’ business aircraft wish list included the Pilatus PC-12 at the lower end and the Gulfstream G650 at the top end.

(Chad Trautvetter - AINOnline News)

SAS sells Blue1 to CityJet

SAS Scandinavian Airlines is to sell its Blue1 subsidiary to CityJet of Ireland in a further move to outsource its services on regional and thinner routes.

SAS recently announced that UK regional carrier Flybe would be taking over a tranche of its regional services.

CityJet will acquire 100% of Blue1’s shares for an undisclosed sum and the Finland-based carrier’s name will disappear. Dublin-based CityJet currently has a small network of destinations in Western Europe.

“SAS’s strategy is to offer frequent travelers a broad network with frequent flights to, from and within Scandinavia,” said SAS in a statement Oct. 1. “To adapt the size of the production to traffic flows SAS utilizes hired capacity ... with smaller regional jet and turboprop aircraft.”

The new arrangement will begin from the start of the summer 2016 program, with CityJet operating “basically on existing routes,” SAS spokesman Henrik Edstrom told ATW.

“This is part of our strategy to have regional operators operating thinner routes to make them profitable.” As well as Flybe, Danish carrier Jet Time also flies for SAS.

The sale of Blue1 would have a “marginal impact” on SAS’s income before tax, cash and net debt, said the Scandinavian carrier. Income after tax during Q4 2014/2015 would be negatively impacted by around SEK90 million ($11 million), primarily due to write down of capitalized loss carry-forwards.

The sale and the new wet lease agreement are expected to increase cost efficiency and flexibility. 

As part of the agreement, CityJet will acquire eight new Bombardier CRJ900 regional jets, with the aircraft being wet-leased to SAS and operating in the Scandinavian carrier’s colors. The wet-lease agreement will run for three years, and contains an option for the acquisition of a further six aircraft.

CityJet has been looking for a replacement for its fleet of 18 Avro RJ85 regional jets for some time.

The new CRJs, in a high-density 90-seat configuration, will be put into service from March 2016 “on routes and at times when there is a need for smaller aircraft.”

SAS already operates 12 CRJ900s through its Danish subsidiary, Cimber.

“We are looking forward to working with CityJet to further expand our regional route network and thereby strengthen SAS’s offering to frequent travelers.

The eight brand new CRJ900s from CityJet will provide us with efficient and flexible production of regional flights that will complement SAS’s production on the larger traffic flows,” said SAS president and CEO Rickard Gustafson.

 “This is a fantastic opportunity for CityJet to work with a leading airline such as SAS,” said CityJet chairman Patrick Byrne.

“We are looking forward to a long-term cooperation, where we will deliver a high level of quality in terms of efficiency and customer service for SAS passengers.

We are also keen to benefit from the experience and knowledge of the Nordic airline industry that the acquisition of Blue1 will give us.”

(Alan Dron - ATWOnline News)

Indonesia AirAsiaX plans to merge into Indonesia AirAsia

Indonesian low-cost carrier Indonesia AirAsia (IAA) looks set to cease operations as a standalone carrier, and be merged with sister AirAsia subsidiary, Indonesia AirAsia X (IAAX).

The move may have been precipitated by the recent Indonesian Transportation Ministry (ITM) threat to revoke air operator certificates (AOCs) for airlines that reported negative equity.

In July, ITM named 13 Indonesian carriers that did not comply with Indonesian fleet and operations funding requirements, one of which was Indonesia AirAsia.

“We will revoke [AOCs] if we find out that they are not capable of flying,” said Indonesian Transportation Minister Ignasius Jonan at the time.

By merging with IAAX, IAA will no longer show negative equity and will be able to continue operating under ITM regulations. As IAAX has been operating for less than a year, it does not show any negative equity—or officially audited loans that overbalance its registered assets.

A merger would also benefit IAAX, which is currently in discussion with the ITM over compliance with Indonesian Law No. 1, 2009 on Flight, which requires any Indonesian airline operating scheduled commercial flights to operate at least 10 aircraft, with a minimum of five wholly owned and the remainder leased.

The wrapping of IAA's 29 Airbus A320s onto IAAX's fleet of two Airbus A330-300s would solve both compliance problems at once.

However, if the merger goes ahead, all IAA operations in Indonesia under a merged brand could require the submission of a new business plan and new flight permits for existing IAA routes, said Indonesian DG air transportation Suprasetyo, in a Jakarta Post report.

(Jeremy Torr - ATWOnline News)

Aeroflot drops plans to acquire Transaero; bankruptcy imminent

Aeroflot’s plans to acquire Transaero Airlines have fallen through and the Russian government will allow Transaero to enter bankruptcy, placing the carrier’s future in serious doubt. 

A source confirmed to ATW that the Russian government has ruled out rescuing Transaero. ATW understands that the government decided Transaero’s debt burden was too high for a bailout to be viable.

On Sept. 1, it was announced Aeroflot would acquire struggling Transaero.

Aeroflot, Russia’s largest airline, was ready to buy 75% plus one share of Transaero for RUB1 (1.53 US cents).

But Aeroflot, which is 51%-owned by the Russian government, backed out of the deal when Transaero’s shareholders, which are led by Alexander and Olga Pleshakova, failed to consolidate 75% plus one share of the airline’s ownership by Sept. 28 in order to facilitate the Aeroflot acquisition.

The Sept. 28 deadline had been agreed to with Aeroflot, which refused to give Transaero’s shareholders more time.

Also, Russian media reported that Transaero’s main creditors could not come up with a solution for the airline’s debt problem. Transaero’s overall debt has reached RUB250 billion, Interfax agency has reported, quoting Sberbank president Herman Gref. Sberbank as one of Transaero’s biggest creditors.

Aeroflot has guaranteed it will fulfill obligations to Transaero passengers who otherwise would be stranded if the airline ceases operating. “The passengers will be carried or will be able to get a refund,” Aeroflot CEO Vitaly Savelyev said in a statement Oct. 1.

(Polina Montag-Girmes - ATWOnline News)

Search begins for aircraft carrying 10 people in Indonesia

An Aviastar DHC-6-300 Twin Otter aircraft at Halim Perdanakusuma Airport in 2012.  (Ekoprihantoro via Wikimedia Commons)

Indonesian authorities launched a search on Friday for a Aviastar airline Twin Otter turboprop aircraft with 10 people on board that went missing on a domestic flight on Sulawesi island.

Indonesia has a patchy aviation safety record and has had three major air crashes over the past year, including an AirAsia flight that went down in the sea on a flight from Bali to Singapore in late December, killing all 162 people aboard.

The Transportation Ministry said a search has begun for the aircraft that lost contact on a flight from the town of Masamba, about 30 minutes before its was scheduled to land in Makassar city.

"It was around 60 nautical miles from Makassar," ministry spokesman J.R. Barata told MetroTV.

"We have now started a search."

"Most importantly, we will work out its position first," Barata said adding that 10 people - seven passengers and three crew - were on board.

Aviastar, which flies domestic routes, said it had lost contact with the aircraft in the mid-afternoon and it had then contacted search authorities.

According to, Aviastar has had four fatal incidents, including the crash of a British Aerospace 146-300 aircraft in the eastern province of Papua in 2009, killing all six crew on board.

In August, a passenger airliner crashed in Papua killing all 54 people aboard.

More than 100 people were killed in June in the crash of a military transport plane in the northern city of Medan, prompting the government to promise a review of the aging air force fleet.

Struggling to cope with the expansion of air travel, Indonesia scored poorly on a 2014 safety audit by the U.N. aviation agency.

(Agustinus Beo Da Costa - Reuters)

Thursday, October 1, 2015

Gulfstream G450 (c/n 4059) N18S

Captured under-tow at the Gulfstream service center on September 28, 2015 at Long Beach Airport (LGB/KLGB). Previously registered as N222NB, N221NB, & N495GA.
(Photos by Michael Carter)

Airbus A320neo Has Setback on Pratt Engine Damage in Test

Airbus said an engine on one of its revamped A320neo jets was found to have suffered damage following flight trials in hot-weather conditions, the latest setback for the Pratt & Whitney-manufactured turbine.

The issue was discovered in one of the test aircraft’s two power-plants, Airbus said Wednesday in an e-mailed statement that didn’t specify the source of the trouble. Deliveries of the single-aisle plane should still begin as scheduled later this year, Airbus said.

The first A320neo, due to be handed over to Qatar Airways Ltd., will be powered by the PW1100G engine from Pratt, a unit of Hartford, Connecticut-based United Technologies Corp. A competing turbine is being offered by the CFM International venture of General Electric Co. and France’s Safran SA.

Airbus’s disclosure of “findings in the engine” added to two previous turbine-related disruptions in the development of the A320neo and Bombardier Inc.’s CSeries. Pratt’s geared turbofan engine is the company’s newest offering, and is designed to help improve fuel efficiency.

Pratt spokeswoman Sara Banda referred questions to Toulouse, France-based Airbus, which said it was “currently analyzing the situation in close cooperation with our partner.” The A320neo program -- an update of Airbus’s top-selling A320 narrow-body model -- has a fleet of five test planes.

Airbus’s flight trials with the Pratt turbine on the Neo were suspended from early May through August as the engine-maker dealt with difficulties involving a seal in the area of the high-pressure compressor.

In 2014, Bombardier halted flight testing for several months of the CSeries after an engine failure during ground trials. Bombardier spokeswoman Marianella de la Barrera said Wednesday that the A320neo situation has had no impact on the CSeries, which uses a different version of the engine.

(Andrea Rothman - BloombergBusiness)

US DOT says Kuwait airline discriminates against Israelis on flights from US

In a challenge to boycotts of Israel, the U.S. government has found that Kuwait Airways unlawfully discriminated against a passenger traveling on an Israeli passport by refusing to sell him a ticket for a New York to London flight.
Eldad Gatt, an Israeli citizen, complained to the Department of Transportation that in 2013 he was unable to buy a ticket from John F. Kennedy Airport to London Heathrow Airport through Kuwait Airways because the airline's online booking system prevented him from selecting Israel as his passport-issuing country.
The department investigated and initially rejected Gatt's discrimination complaint, according to a statement and letter provided by transportation officials. But when Gatt appealed the department's decision, the case was reopened and the department ultimately concluded that the airline had violated a different federal law than the one initially cited by Gatt.
"We considered Mr. Gatt's claim upon an alternative ground ... which holds that an 'air carrier or foreign air carrier may not subject a person, place, port, or type of traffic in foreign air transportation to unreasonable discrimination,'" Blane Workie, DOT's assistant general counsel for enforcement said in a letter to the airline.
By refusing to transport Israeli citizens to and from the U.S. and a third country that accepts Israeli citizens, in this case the United Kingdom, the airline is in violation of the law, the letter said. "We expect (Kuwait Airways) to sell tickets to and transport Israeli citizens between the U.S. and any third country where they are allowed to disembark based on the laws of that country," Workie said.
Transportation Secretary Anthony Foxx said the case is a warning that "any airline that wishes to operate in the U.S. should know that we will not tolerate discrimination of any kind in our skies."
The airline explained that it's against the law in Kuwait to do business with any Israeli citizen or company, and that punishment for a violation could result in imprisonment and hard labor, according to the department.
"We do not find the interest of Kuwait in the enforcement of its laws in this case to be greater than the interest of the United States in the enforcement of its laws," the letter said. "It is our view that the U.S. interest in providing nondiscriminatory access to air transportation to an individual traveling from the U.S. to a third country that allows that individual's entry is greater than Kuwait's interest in applying its economic boycott of Israel."
The department said it is aware of another, similar complaint.
The department has given the airline 15 days to respond. A range of enforcement actions are possible, beginning with civil penalties. Kuwait Airways officials didn't immediately respond to a request for comment from The Associated Press.
(The Associated Press)

Air France nears decision on cuts

Air France and its trade unions will reach a deadline Sept. 30 on whether cuts to its long-haul services can be averted.

The loss-making airline said Sept. 8 that it could drop 10% of its long-haul services and proceed with redundancies if it does not reach an agreement with all its unions over implementing its Perform 2020 turnaround plan.

The airline’s Central Works Council held a meeting Sept. 24 to discuss the proposals—which would see both pilots and cabin crew on mid- and long-haul routes work longer hours for no extra pay to improve productivity—but it is believed no agreement was reached.

“We are not commenting on the outcome of last week’s council meeting,” airline spokeswoman Ulli Gendrot said, adding that discussions between management, pilots and cabin crew are continuing.

She confirmed that an Air France-KLM board meeting is scheduled for Oct. 1 and that Air France’s board will meet the following day.

The next Central Works Council meeting is scheduled for Oct. 5 and it is thought that a management decision on how it will proceed will be communicated to the unions on that date.

Among measures being considered by the airline to improve its financial position are compulsory redundancies—a move that would not be well-received by the heavily unionized workforce. Air France endured an expensive pilot strike in fall 2014 over moves to improve its financial position.

The carrier has also said it could postpone planned deliveries of its order for Boeing 787-9s, which is due to start arriving late 2016.

Gendrot referred ATW to a weekend report in the French newspaper Le Journal Du Dimanche, in which Air France CEO Frédéric Gagey said that successfully fulfilling Perform 2020 would bring the carrier’s competitiveness closer to that of partner KLM, whose unions had accepted the Perform 2020 plan.

Asked if failure to reach agreement by Sept. 30 would result in cutting routes and frequencies, Gagey noted Air France either has to improve its productivity or scale back its ambitions; the latter choice, he said, would be “extremely regrettable.”

He noted that other carriers—such as Iberia, British Airways and Delta Air Lines—had “drastically” cut some activities to improve their positions. Air France was extremely reluctant to do this, preferring to reach an agreement on reducing costs with its workforce.

If the company’s financial performance is satisfactory by the end of 2017, he added, Air France would put €100 million ($112 million) on the table for staff. It also aimed to recruit more pilots in 2017-18 “if our efforts bear fruit.”

(Alan Dron - ATWOnline News)