Before we answer that question, let’s first survey the grim reality. For the past five months, about 4,500 employees of the airline haven’t been paid their salary. Many of them say they can’t quit because they won’t get a single dime out of their dues from their employer. Airports, which allowed the red and white aircraft to land and take off, haven’t been paid either. Faced with the spectre of bounced cheques, they’ve now moved courts to recover their dues. No one has any clue how long it will take, though. A clutch of banks have lent Rs 7,000 crore in all to Kingfisher Airlines. And they don’t have enough collateral to cover even a fraction of their debt. At least some of the lessors were perhaps smarter. They simply repossessed their aircraft.

As my colleague Cuckoo Paul’s cover story shows, the mess is now so deep that the airline’s future is practically sealed. It is a matter of a couple of quarters or even a few months before the airline runs out of cash. In recent times, other than the Satyam saga, nothing comes close to the sordid tale of hubris and irresponsibility that defines the mess inside Kingfisher Airlines.

Vijay Mallya: His vision of building a global airline in less than a decade was simply far-fetched. But now that the bet has gone horribly wrong, his arrogance simply prevents him from looking beyond the FDI option. The trouble is that no sensible foreign airline will invest in Kingfisher.

The Public Sector Banks: They forgot to do proper due diligence and, perhaps, came under enormous political pressure. Now, faced with a huge NPA (non-performing asset) situation, they’re still hoping against hope that the promoter provides a quick fix.

Employees: Many of them were attracted by the aura and the glitz that Mallya manufactured. Little did they realise that the game was unsustainable. Perhaps some of them will now stop believing in the cult of the heroic leader.

The Regulator: All this mess happened under the watch of the DGCA (Directorate General of Civil Aviation). And they didn’t blink until it was too late. It’ll take nothing less than a miracle to revive the airline. All one hopes is that someday we learn the right lessons from the Kingfisher Airlines misadventure.

Source:http://ibnlive.in.com

Boeing is raising its 20-year prediction for worldwide airplane sales to 34,000 jets, enough to double the size of the world’s fleet, as more people travel in China, India and other emerging markets.

The airplane-maker and defense contractor predicted on Tuesday that $4.5 trillion worth of planes will be sold. It will have to compete with Airbus and other competitors including Bombardier, Embraer and China’s state-owned COMAC for those sales.

The projection is 500 planes higher and a half-trillion dollars more expensive than the previous year’s estimate. Boeing expects airlines to shift toward slightly larger planes with higher price tags, accounting for most of the additional spending.

The world’s airlines fly almost 20,000 planes today. That number is expected to rise to almost 40,000 by 2031, Boeing said.

Boeing and Airbus are both speeding up production to meet a growing order backlog. Airbus, based in France, announced on Monday that it will begin assembling A320s in Alabama, with deliveries to begin in 2016. Boeing is speeding up production of its competing 737.

Boeing said the Asia-Pacific region will be the biggest market for new planes, with a potential for 12,030 aircraft there through 2031. The next biggest market is Europe with 7,760, and North America with 7,290.

Tinseth said low-cost airlines are stimulating demand for air travel. Those airlines have been especially important in Asia, because they’re making air travel affordable for people who previously didn’t fly. Boeing predicted that global airline traffic will grow 5 percent a year for the next two decades.

China’s expanding light-rail service will steal some passengers from the airlines, Tinseth said. But the investment in rail as well as new airports should stimulate the economy there and air traffic — and demand for airplanes — will still grow, he said. The company expects half of all airline traffic to begin or end in the Asia-Pacific region by 2031, up from 35 percent today.

“As we look to the future, clearly the center of the marketplace will be the Asia-Pacific region,” Tinseth said.

Boeing predicted that more than 23,000 of the 34,000 planes that will be sold will be single-aisle planes such as its 737 and the competing Airbus A320. It also predicted sales of 7,950 larger planes such as its new 787. Sales of each would total around $2 trillion, because the bigger planes cost more.

Tinseth said Boeing is aiming to build about as many of the single-aisle jets as Airbus. For the larger widebody jets, he thinks Boeing can have a larger market share than Airbus does.

Boeing reduced its projection for the number of freighter airplanes that will be sold. It says the cargo market remains sluggish. It predicted 940 new freighters would be needed, and an additional 1,820 passenger planes would be converted to haul freight.

Europe will be another wild card. A deep recession would hurt air travel, and the financial crisis could make it harder for airlines to borrow to buy planes.

Tinseth said Boeing expects the European economy to be challenging for this year and next, with “a more normal condition” in 2014.

“We do at times suffer through difficult times, but the market responds and rebounds very quickly, and we think the situation we see in Europe will be no exception to that,” he said.

Boeing does a detailed annual study of airline travel and sales trends. Airlines order planes years in advance, so Boeing has to make production decisions years in advance, too.

Shares of Chicago-based Boeing rose $1.09 to close at $74.27 Tuesday. They are trading near the high end of their 52-week range of $56.01 to $77.83.

Ninety-three per cent of airlines have mobile services for passengers as a top investment priority over the next three years, with 58 per cent investing in major programmes, a report said.

Airlines are focusing IT investment in the key areas of improving passenger service, reducing the cost of business operations and revenue generation, said the 14th annual SITA/Airline Business IT Trends Survey, which represents the views of more than half of the world’s top 100 carriers.

Passenger service is the top priority and mobile services for passengers tops the list with 58 per cent of airlines planning major programs in the next three years. An additional 35 per cent are investing in research and development. In the area of sales and distribution, mobile has taken hold with more than half of airlines already selling tickets via mobile devices and by 2015, 89 per cent of the airlines plan to do so.

But the real transformation is not just in the area of sales, this year’s survey shows that airlines are using mobile apps right across the business.

By 2015, almost nine out of ten airlines plan to have the following core services available via mobile: flight search, check-in, boarding passes, ticket purchase, flight status notification, ancillary services, with customer complaint handling and missing baggage management following closely.

Half of the airlines have already implemented mobile services for flight search and check-in with close to half also providing boarding passes, ticket purchase and flight status notifications.

Francesco Violante CEO SITA, said: “This year’s survey shows how airlines are committed to mobile across the whole business. Mobile apps are being used to improve the passenger experience, reduce operating costs and generate revenue.”

“This is the second year that mobile services for passengers tops the list of investment programs and it is the adoption of mobile apps across sales, customer services and passenger processing that truly shows that airlines are committed to transformation.”

Nine out of ten airlines are investing in social media over the next three years. Some 57 per cent of airlines believe social media can play a significant role in promoting sales with 39 per cent stressing its value in customer service.

Four out of ten promote flights via social media already, and almost 90 per cent plan to do so by 2015. Both social media and mobile open the door for a more personalized service, and 78 per cent of airlines in this year’s survey already have, or plan to, personalize sales offerings via their direct channels.

Over the last number of years, the SITA/Airline Business annual survey has shown the migration to mobile but the results this year show an absolute commitment from the airlines to a mobile future.

The goal? To woo business travelers, who often book the more expensive, last-minute fares, as well as others willing to pay more to fly. The premium-paying customer has always been valuable, but they’re more important than ever as airlines grapple with up-and-down fuel prices and try to compete in an industry increasingly dominated by a handful of mega-size competitors.

“Premium customers are fewer in number, but they spend a greater amount,” says Chris Kelly Singley, a spokeswoman for Delta. “You have to continue to really invest in the product that’s bringing those customers to you in the first place.”

Lie-flat seats, which allow road warriors to get some quality shut-eye before heading to meetings, have become a particularly popular offering. United offers flat-bed seats in the premium cabins of nearly 150 jets and is adding them to more than 30 more planes by early next year.

United, the world’s largest airline since merging with Continental, says it has more of the bed-like seats than any of its U.S. peers. But other airlines are in hot pursuit. Delta plans similar seats on more than half of its international wide-bodied fleet by the end of this year. And US Airways has its lie-flat “Envoy Suite” on its entire fleet of A330 jets that fly across the Atlantic.

Going out of his way for comfort

That’s welcome news to Mark Cooper, a field engineer for Microsoft who travels every week. A lie-flat seat is so important, he says, he bypasses a non-stop flight from his hometown of Portland, Ore., to Tokyo to fly to Seattle or Los Angeles, where he can grab another Delta, and sometimes American, flight with the bed-like seats.

“It’s worth the extra time to be able to actually sleep while en route and enjoy the experience,” he says.

Access to the Internet while in the air and space to stretch his legs also are important, he says. “I would much rather fly on a Wi-Fi-equipped flight or one with extra legroom for an extra hour or so, than get there faster and not have access to these services.”

Providing Wi-Fi in flight has become a game of one-upsmanship. Virgin America, for instance, the first U.S. carrier to offer Wi-Fi throughout its fleet, now plans to offer a connection that is four times faster by early August. The change is in direct response to requests by business travelers, says spokeswoman Abby Lunardini.

Virgin America also has a program aimed at smaller businesses and entrepreneurs. If they spend at least $20,000 traveling on the airline during a given period, they get 3(PERCENT) of that amount back in the form of a credit on future travel.

“This was designed for small to midsized companies that deserve some sort of discount,” says Diana Walke, the airline’s vice president of planning and sales. “We really like our leisure travelers, but we love our business travelers. … We can’t deny the fact those fares tend to be higher.”

Airlines are taking comforts to the rear of planes, too. Many have created sections of coach that offer extra legroom for extra dollars. United has “economy plus.” Delta’s version is called “economy comfort.” JetBlue says its single class of service offers “even more space,” with early boarding and a quicker pass through security as part of the package. American plans to offer its “main cabin extra” on all flights, allowing passengers to purchase 4 to 6 more inches of legroom and the privilege of boarding before others in coach.

Delta, keying in on the differing needs of business travelers, tweaked “economy comfort” when it introduced the section domestically this month.

Domestic passengers won’t be able to recline as much as their counterparts on overseas flights. The reason? “On international long-haul flights, the goal of the flight is to get some shut-eye,’” Delta’s Singley says. “On domestic flights, when you push the seat back that far it inhibits the use of laptops, and laptops are essential.”

Other come-ons being rolled out by the industry range from the Samsung tablets that American Airlines offers premium passengers on some flights, to Southwest retooling its frequent-flier program last year and Delta renovating several of its Sky Clubs.

Passsengers do notice perks

Business fliers say amenities and upgrades do grab their attention.
Read more: http://www.azcentral.com/business/articles/20120620airlines-try-outdo-each-other-pampering-business-fliers.html#ixzz1ySin7YNE

The way airlines are doing business is undergoing a fundamental transformation as mobile apps permeate every step of the journey and core aspects of operations.

The 14th annual SITA/Airline Business IT Trends Survey shows 93% of airlines have mobile services for passengers as a top investment priority over the next three years, with 58% investing in major programs.

The survey, which represents the views of more than half of the world’s top 100 carriers, reports that airlines are focusing IT investment in the key areas of improving passenger service, reducing the cost of business operations and revenue generation.

Passenger service is the top priority and mobile services for passengers tops the list with 58% of airlines planning major programs in the next three years. An additional 35% are investing in research and development. In the area of sales and distribution, mobile has taken hold with more than half of airlines already selling tickets via mobile devices and by 2015, 89% of the airlines plan to do so.

But the real transformation is not just in the area of sales, this year’s survey shows that airlines are using mobile apps right across the business.

By 2015, almost nine out of ten airlines plan to have the following core services available via mobile: flight search, check-in, boarding passes, ticket purchase, flight status notification, ancillary services, with customer complaint handling and missing baggage management following closely.

Half of the airlines have already implemented mobile services for flight search and check-in with close to half also providing boarding passes, ticket purchase and flight status notifications.

Launching the 2012 Airline IT Trends Survey, Francesco Violante CEO SITA, said, “This year’s survey shows how airlines are committed to mobile across the whole business. Mobile apps are being used to improve the passenger experience, reduce operating costs and generate revenue. This is the second year that mobile services for passengers tops the list of investment programs and it is the adoption of mobile apps across sales, customer services and passenger processing that truly shows that airlines are committed to transformation.”

Nine out of ten airlines are investing in social media over the next three years. Some 57% of airlines believe social media can play a significant role in promoting sales with 39% stressing its value in customer service. Four out of ten promote flights via social media already, and almost 90% plan to do so by 2015. Both social media and mobile open the door for a more personalized service, and 78% of airlines in this year’s survey already have, or plan to, personalize sales offerings via their direct channels.

ASIA BRIEFING: THE FIRST TIME I flew in mainland China was 20 years ago and the sign in Kunming Airport said, “We welcome our foreign fiends”.

The flight was delayed because someone had set up a stall on the runway selling food mixers and the whole cabin was full of people carrying these treasured white goods back home, along with various foodstuffs. There was one more person booked on the plane than there were seats, so two of the stewardesses had to double up.

How times have changed. Last week the International Air Transport Association (Iata) held its 68th annual general meeting and World Air Transport Summit. This year the meeting was in Beijing, capital of the rising star of the aviation firmament.

Air travel is booming in China. The country’s domestic aviation passenger market is the second largest in the world, while its international passenger market and international cargo market rank seventh and fourth respectively in the world. China’s airlines accounted for half of all global profits last year.

There are scores of airports being built around the country, none of which is likely to welcome “foreign fiends” but which will put the aviation infrastructure in many Western countries in the shade.

The boom in aviation offers opportunities for Irish companies too – Aer Rianta International will open its first Chinese outlets this year at the new Kunming Changshui International Airport in the southwest of the country.

Airport construction is part of the “mini-stimulus plan” the government has introduced, discreetly, to counteract slowing growth in China.

The expansion of the aviation industry in the past decade has been remarkable. Some 1.2 billion more people and 16 million more tons of cargo will fly this year than in 2001.

The meeting of the International Air Transport Association takes place at a troubled time for the industry, which is under pressure from high fuel prices and the impact of the global recession. The aviation industry faces a fuel bill this year of €164 billion, which is almost equal to the GDP of the Philippines or the Czech Republic.

“The biggest and most immediate risk, however, is the crisis in the euro zone. If it evolves into a banking crisis we could face a continent-wide recession, dragging the rest of the world and our profits down,” said Tony Tyler, the association’s director general and chief executive.

“The industry’s profitability is balancing on a knife edge. If the bottom line worsens by even the equivalent of just 1 per cent of revenue, our $3 billion [€2.38 billion] profit very quickly becomes a $3 billion loss.”

Asia-Pacific carriers make up 40 per cent of the world’s air cargo business and look set to make the biggest contribution to profits in the industry, at about €1.6 billion, but the outlook has been downgraded because of the slowing economies in China and India. It is also less than half of the profit the region reported last year.

Regional demand is expected to grow at 3.9 per cent, above the anticipated 3.3 per cent growth in capacity, providing some protection to airline profits.

China remains central to aviation industry growth. Wang Changshun, chairman of Air China and vice head of the Civil Aviation Administration of China, told the conference that the industry here would see stable expansion, although it faced an even more challenging economy than during the financial crisis of 2008.

“Chinese airlines will order 150 to 200 planes every year in the coming few years,” Wang told the conference. “I think the domestic routes offer better performance than international ones, and the growth of regional routes is faster than for trunk routes.”

European worries are there, as is sluggish US growth, but domestic Chinese consumption is growing. Air China, which has the biggest number of overseas routes among Chinese airlines, plans to order 52 aircraft in 2012, 56 in 2013 and 55 in 2014. Some analysts are worried about oversupply affecting capacities.

We have mentioned Joe McCarthy’s Swords- based Mach Aviation in this column before, and his belief in the potential of the private jet industry in China is shared by none other than Warren Buffett.

Buffett’s NetJets company is spending up to €7.62 billion to buy 425 jets from Bombardier and Cessna to exploit the booming Chinese market.

It is the largest order to date for business aircraft and is based on optimism about China’s prospects.

One sure sign of China’s growing aviation muscle has been the way it is playing hardball over Europe’s carbon charges on airlines.

China is leading the opposition to the European Trading System, which requires airlines that fly to and from Europe to buy permits for all the carbon they emit en route. India, Russia and 26 other countries also oppose the rules.

Beijing has barred its airlines from participating in the ETS and has put orders placed by its airlines with Airbus on hold.

China has also been swift to threaten rapid counter-measures that could include impounding European aircraft if the EU decides to punish Chinese airlines for non-compliance with the scheme.

China is the world’s biggest polluter and, as ever, when China complains about Western efforts to make polluters pay, you only have to look out the window to see why the developed countries have a point.

Aviation accounts for about 3 per cent of total carbon emissions, but is the fastest- growing source. China wants to wait until findings emerge from talks on a global system to regulate airline emissions, which have begun in the International Civil Aviation Organisation, a UN body. The EU has said it would be willing to reconsider its system if an agreement is reached.

If it wants to lose its status as a “foreign fiend”, and risk jeopardising Airbus’s position in China, it may have to come to an arrangement with the Chinese.

by CLIFFORD COONAN

With demand for pilots growing at a faster rate than local pilots can be trained, Middle East carriers are likely to find it increasingly difficult to hire enough pilots to meet their needs.

Home to some of the fastest growing commercial airlines in the world, the Middle East is also seeing a rapid rise in orders for business jets and military aircraft. According to estimates by Boeing, the Middle East will need 36,000 new commercial pilots to fly the 2,500 new aircraft bound for the region in the next 20 years.

Experts point out that while the problem is acute in the Middle East, it is also a challenge that faces carriers worldwide. Sherry Carbary, vice president of Boeing Flight Services, says the main issue is not so much a shortage of pilots, but rather a significant increase in demand.

“We are currently at a point in time where demand is above supply and thus you see two situations occurring,” she told AMEInfo.com. “One is airlines hiring away people from other airlines – many times in other regions of the world. This in fact does not solve the supply. It simply moves the problem to another place. Airlines are also slowing their growth and sometimes even grounding airplanes due to lack of people to operate them.”

Compounding the problem is the fact that the aviation sector is facing stiff competition for young talent from other attractive industries such as IT and medicine. “Additionally, one of the traditional sources of pilots and technicians – the various militaries of the world – is also becoming smaller since these same militaries are shrinking in size,” she said.

Another challenge is that the job of piloting for an airline has changed over the past 20 years. “Flying for leisure is relatively cheap compared to 20 or 50 years ago and is accessible to more people around the world. Thus, the incentive of travel and seeing the world through piloting is no longer there,” she noted. “In addition, our industry has become much more efficient, so layovers at remote airports are shorter – again lowering the travel element of the pilot job.”

“The younger generation is also much more family and community oriented than the previous one because they have more options than we all did,” she continued. “This makes any job that requires consistent time away from home less attractive to many.”

Eddy Pieniazek, director and global head of consultancy at Ascend Worldwide, believes key challenges that Middle East carriers face in attracting new pilots are providing a living standard, operating philosophy, and professional development that will appeal to the new generation of pilots, over and above those that can be found elsewhere.

“At the same time, the region has an advantage in that it is growing (and with that growth comes opportunity for personal development) and that its order book consists of many of the leading aircraft model types (including the A380 and Boeing 787) which will be serving an appealing range of destinations worldwide,” he noted.

Carbary said the aviation industry itself is partly to blame for the pilot shortage because it never faced demand like this before and therefore never promoted itself enough to the workforce. “We need to change our own behaviours to make our industry more attractive,” she said.

Aviation schools on the rise

The number of flight schools in the region has grown rapidly in recent years, as airlines look to train the pilots of tomorrow. Founded in 1991, Dubai-based Emirates Aviation College has emerged as the largest aviation training college in the Middle East, having graduated over 12,000 students in programmes such as aviation management and aerospace technology.

To help address the need for commercial pilots, the college has also recently launched the EASA Licensed Pilot Training programme. The ground school (theory) will take place in Dubai for a period of seven months, while the practical part (flying) will take place in Lisbon for 10 months, says Dr Ahmad Al Ali, Vice-Chancellor, Emirates Aviation College.

“Industry studies show that an average of 23,000 additional pilots are needed per year over the next 20 years to fulfil the demands of air travellers and the growth of airlines worldwide,” he noted. “Emirates Aviation College plans to help fulfil that need by graduating up to 150 pilots in the next 5 years. For the first class, which began in March, we had 30 applicants; however, only 10 could get through the stringent screening process. The current class consists of ten pilots from eight countries.”

The 17-month study programme is open to any interested candidates between the ages of 17-30 who hold a High School certificate or equivalent, who can obtain a Class I Medical certificate and can pass the pre-selection process.

Source: AMEINFO.com

According to him, except those in the aviation sector merge to form “very strong and formidale airlines” Nigera may witness more air disasters in future.”

Ore described the committee set up by Aviation Minister Stella Oduah, to probe the June 3 Dana plane crash .

Ore said the minister lacks the power to probe into causes of the Dana plane crash, adding that it is only the Accident and Investigation Bureau (AIB) that has such power.

‘’The investigating body set up by the minister and headed by Group Captain John Obakpolor, should not be in competition with the AIB. That panel is illegal. Mind you, there are foreign nationals in that plane and their country won’t take us serious with the ways we are going about probing the cause of the crash.

‘”The Act regulating the industry is very clear. The minister can set up as many committees as she wants, but not one to probe the cause of the crash and look into the maintenance record of Dana Air. The only body that can do that is the NCAA and not the minister,” he said.

Ore also lambasted the National Assembly for asking the Director General of the Nigeria Civil Aviation Authority, Harold Demureen, to step aside pending investigation into the crash, adding that the lawmakers lacked the power to make such pronouncement.

“I disagree with the aviation minister that our airspace is the safest in Africa. Aviation is very important to governance, but I can’t understand why the Federal Government is treating it with levity. The most important airline in the country is the presidential fleet. It is well run by Nigerians at great cost to the nation. So, the president knows that it’s not cheap to run an airline. If he considers the kind of problems faced with the running of the presidential fleet, he will appreciate the possible problems faced by private airlines.”

The only way the airlines can move forward is by consolidation.

When asked to comment on the services of Dana Air before the unfortunate incident, he said as an insider in the industry, he was quite familiar with most operators and could vouch for the services of Dana Air. He said if the suspension placed on the airline was lifted tomorrow, he would not think twice before putting his family on board Dana Air, because of its safety .

Managing Director of Capital Airlines , Captain Amos Akpan said it is premature for some experts to claim to know the cause of the DANA Air crash, when the investigation into the accident is still on going.

“International Standard best practice for investigating air accident are properly documented. Nigeria ’s adoption of these practices are documented in Federal Republic of Nigeria Official Gazette No. 61 Vol. 93 of November 2006 – Government Notice No. 45 – Titled Civil Aviation Act, 2006.

“The Nigerian Accident Investigation Bureau (AIB) is the agency to investigate air accidents. It is the AIB’s prerogative to seek assistance from other technical institutions and persons worldwide for the delivery of exhaustively investigated report.

“The Civil Aviation Act 2006 states that the sole objective of the investigation of accidents and serious incidents shall be the prevention of accidents and incidents and it shall not be for the purpose of apportioning blame or liability.”

He said: “But the law says it can recommend withdrawal or suspension of license or cancellation. We cannot shout crucify anybody until AIB finishes its job. The Nigerian Civil Aviation Regulations 2006 prohibits reprisal punishment against any personnel that comes forward to report incidences, errors, or actions that needs to be investigated in order to place preventive and corrective measures on record. Operators in the industry are forced to document this as their procedures.

“This means we investigate to prevent and correct and will encourage people not to shy away from reporting incidences.

“The appointment of a Committee to report on the “health of the airlines and the agencies” is the prerogative of the government. It sounds to me like indictment of the Directorate of Economic Regulations of our Civil Aviation Authority and other relevant departments who worked to secure United States Federal Aviation Administration category one, he said. Meanwhile, the Air Transport Senior Staff Association of Nigeria ( ATSSSAN), has cautioned experts in the aviation industry to be wary of comments that could plunge the industry into further crisis, as their comments on the supposed cause of the DANA Air crash has brought about a drastic decline in passenger traffic.

Source: The Nation, Nigeria

“If fuel prices remain at a reasonably low and stable level, of course it’ll be favorable to operations of the company,” Wang Jian, board secretary of China Eastern Airlines, told AFP.

But “despite the recent reduction in oil price, it remains at historically high levels and a significant challenge to the business,” said Cathay Pacific Finance Director Martin Murray.

It “relieves the pressure a bit,” acknowledged Air France-KLM‘s Philippe Calavia, finance director at Air France-KLM.

But he noted the Franco-Dutch group has based its financial plans on oil at an average of $98 a barrel this year.

Oil prices are “still above over budget,” he said.

The price of oil continued to fall this past week, with Brent North Sea crude for June at $106.91 a barrel in late London afternoon trade, way off the $128.40 it hit on March 1 and the record $147.50 it set in July 2008.

Airlines in Asia and Europe have been struggling with the high price of fuel, the first or second largest cost in their budgets, which has pushed many deep into the red.

Singapore Airlines saw its full-year profit plunge 69 percent year-on-year to $268 million due to high oil prices and global economic uncertainty.

Similarly Hong Kong-based Cathay Pacific saw its 2011 net profit slump 61 percent to $708 million and recently announced a raft of cost-cutting measures in response to high fuel prices.

Australia’s biggest airline Qantas, which has raised fares in recent months to partially offset higher fuel costs, said reduced oil prices were not yet helping its bottom line.

“Our fuel bill this year is going be significantly higher than last year, so the outlook is still very challenging as far as we are concerned,” a spokesman told AFP.

Jet fuel is Qantas’ biggest operational cost and in February the carrier said it had hedged 86 percent of its remaining fuel requirement for the financial year at a worst-case price of $121 per barrel.

Airlines, like many other companies, use financial instruments to protect themselves from possible rises in oil prices. But hedging can also trap them if oil prices fall below expectations.

“The main risk today is to rush to take advantage of current prices, which are still very high if falling, and finding yourself exposed to a loss on your hedges if prices continue to fall,” said Air France-KLM’s Calavia.

….

Read More… 

Source:Bangkonk Post

(Airlineberg – May 25, 2012) The global airlines‘  traffic performance for March was announced last week by IATA. 

• In summary, premium and economy class travel demand growth accelerated compared to the same month in 2011 which had a lower base due to unexpected events in Japan and MENA negatively affected air transport market. 

• The number of passengers travelling in business and first class on international markets was up 8.6% in March compared to the same month in 2011. 

• Economy class travel also showed significant growth, increasing 8.9% on a year ago. 

• It is estimated that the net growth in Premium traffic is around 4% and %7 for economy segment after adjusting the negative effects of Arab Spring and Japan Earthquake. 

• Over the last 4 months, premium travel has been increasing at an annualized rate of over 6%, above the annual growth of 5.5% in 2011. Economy travel has also picked up this year,with  annualized growth of about 7.5% between January and March,  well above performance in 2011 when economy travel increased 5.1%. 

 Key Route Regions Growth Year 

Europe Airlines Related Regions Growth

Middle East Airlines Related Regions Growth 

Far East Airlines Related Regions Growth 

North American Airlines Related Regions Growth 

IATA commented that “Overall, continued improvements in the global business environment are supporting air transport, and particularly premium travel markets. Leading indicators of business travel are showing further increase, with the Purchasing Managers’ Index signaling a modest expansion in business confidence for the fifth consecutive month. World trade, which softened in February compared to January, is still up almost 2% on a year ago, providing support to export/import-related business travel.”

Fastest Growing Routes in Premium Traffic

Fastest Growing Routes in Economy  Air Travel

Airlineberg.com