Wind map

I captured this image today from Wind map. As a bit of a weather nerd, meteorology was my favourite theory subject when I was doing my flying training. This image in particular demonstrates the effect a major cyclone storm system has on continental wind patterns. You can clearly still the area of still air in the trough local between Hurricane Isaac and the low pressure system in the northern US, and how the high pressure systems on either side feed into the storm cell. Fascinating.

Game on as Virgin Australia’s profit soars.

Year two of its three-year game change programme, and a transformed Virgin Australia has shown it is the antithesis of Qantas. The airline today posted an after tax profit of $22.8 million, and a full year underlying profit before tax of $82.5 million, an improvement of $149.1 million from the last financial year.

Virgin’s results are admirable given a continued tough operating environment, a loss from fuel hedging and the need to absorb costs associated with the transformation.

The airline has experienced strong revenue growth over the year up 19.8% to a total of $3.9 billion.

Two years into its game change programme and a year ahead of schedule Virgin Australia has achieved a 20 per cent share of the Australian corporate and government market. High yield revenue is up 113 per cent and John Borghetti believes the airline has achieved the “tipping point in realising a new competitive norm in Australia”.

CEO John Borghetti attributes the result to the “tireless dedication of our people, their drive to make a real difference for customers, and their unwavering determination to deliver on strategy”.

The Game Change transformation may be complete, but the game is only just starting for Virgin.

Starting October, Virgin will roll out its WiFi streaming IFE product. The system developed by Lufthansa Systems’ will stream content directly to Samsung Android tablets. From early 2013, the airline will implement a new Sabre reservations system allowing the airline to use a single VA airline designator for all services.

Virgin is reaping the benefits of being the world’s largest virtual network carrier. International operations are now extremely profitable, “the best part is we did this without buying one aircraft” says Borghetti. Codeshare and interline revenue from its international partners is up 158 per cent. New international destinations and virtual network partners are also on the horizon as Virgin targets an additional $150 million in revenue from its virtual networks by 2015.

The Airbus A330-200 fleet will also see international services sooner rather than later. Given the benefits of its virtual network, Virgin’s own international network will continue grow in an extensive but complementary fashion.

One aircraft will be delivered in 2013 and by June 2016 the airline will have eight of the type. Its widebody transcontinental services require five aircraft, and the remaining three will likely be used to complement Etihad’s eventual Perth to Abu Dhabi services, and launch services from the east coast to new destinations in Asia.

Virgin Australia is currently evaluating both the Airbus A350 or Boeing 787 and will place an order for unspecified number by June 2013 for delivery from 2017. Borghetti noting “its a holistic view of our long-haul and medium-haul operations” as the 777s will need to be replaced around that time. It also provides Virgin the opportunity to mature its own international network and presence to better leverage the capability of its next generation narrowbody Boeing 737 MAX 8 and widebody aircraft for expansion post 2017.

Closing his press conference, John Borghetti took a jab at the competition, “I’ve been around a long time, probably a lot longer than some would like”. With everything at Virgin looking up, he’s going to be around a lot longer yet.

Virgin Australia’s full results presentation to the ASX can be found here and breakdown here.

Too little, too late for Perth Airport’s lacklustre redevelopment?

This article is a supplement to last month’s Perth Airport, best in airport design? Unlikely.

Perth Airport’s $750 million redevelopment is resonating well with a public that laments current facilities, but will the terminal redevelopment actually provide ample space to handle growth?

Westralia Airports Corporation (WAC) Perth Airport’s is known for underestimating traffic forecasts. Master planning is based on a prediction of 3.5 per cent compound annual growth, with total passenger traffic of 18.9 million per annum by 2028-29. Unsurprisingly redevelopment plans provide no terminal passenger capacity forecast, stating only that the consolidated development will ensure the already under-capacity terminal is capable of handling passenger growth to 2020.

Australian Government BITRE statistics show between FY1991 and FY2011 Perth Airport recorded:

  • 20-year compound growth rate of 7.6 per cent p.a.; and
  • an increase in aircraft movements of 260 per cent.
  • Passenger growth between FY2006 and FY2011 was 9.2 per cent p.a.

In FY2012 passenger traffic will pass the 12 million mark for the first time. If growth continues at current rates passenger traffic will reach 24.8 million to 40.7 million passengers p.a. by 2028/29.

My math tells me it’s unlikely.

Perth Airport’s current international terminal. Royal Brunei no longer serves Perth. Image: Stuart Sevastos

Is airline resistance to blame?

When WAC reduced its commitment from a ‘world-class’ facility, its main reason for not investing more was “any attempt to design to a higher standard would be met with resistance by airlines, reflected in a refusal to support resulting investment plans”. Perth’s smallest international operator Qatar Airways is ‘the world’s best airline’, and the majority of Perth’s largest international operators are based at airports designed to IATA Level of Service (LOS) A standard, and others such as China Southern, Virgin Australia and Garuda are moving upmarket. Wouldn’t these carriers want facilities at a standard higher than simply average?

Further proselytizing its decision, WAC ‘recognised’ “that lower airport operating costs relative to other airports enhances the viability of air services to Perth and therefore increases the prospect of attracting new services”. True for all airports, particularly those in high competition areas, but Perth Airport’s nearest major competitors are Adelaide, South Australia; Darwin, Northern Territory; and Denpasar, Bali, all over 2,000km away.

What about new operators and LCC traffic?

  • Air China will likely be the next Chinese airline serving Beijing and/or Shanghai, China Eastern focused on growing North American services;
  • Vietnam Airlines to Ho Chi Minh City is a possibility given Perth’s growing Vietnamese population and outbound Australian tourism;
  • Etihad and Virgin Australia to Abu Dhabi;
  • Kenya Airways has confirmed Boeing 787 services to Nairobi from 2016; and
  • Long-term potentials: Korean Air (KE) to Seoul, and Hawaiian Airlines (HA) to Honolulu. HA has made significant strides in developing HNL into a Pacific hub. KE is aggressively targeting in-transit traffic and serves many small-low traffic cities with less than weekly frequency using convenient connections to high-frequency heavy traffic destinations to attract custom.

Air Asia’s largest Australian operation is to Perth with 31 return services a week from KUL and DPS.

In 2007, Low-Cost Carriers (LCCs) accounted for just four per cent of Perth’s international seats. By 2010 they accounted for 27 per cent. While LCCs have increased the ratio of outbound trips per person, frustratingly WAC believes this is over as “there is a limit to the number of outbound trips from residents that can occur”. Pardon? Correct me if I’m wrong, but LCCs:

  • do actually carry inbound passenger traffic;
  • have a substantial stimulation effect on markets; and
  • operators serving Perth will increase. Batavia Air and Lion Air may serve Perth from Indonesia. Jetstar may introduce new Asian destinations, including perhaps resuming QF Group services to Tokyo. Not to mention IndiGo in India, and more services by Air Asia.

WAC highlighted the differentiated basic service needs of LCCs noting only “some LCCs are unlikely to support the redevelopment…because it will increase airport charges”. If it was only ‘some’ LCCs that opposed a ‘world-class’ terminal, why didn’t WAC plan a fully independent LCC terminal allowing the airport to offer diversified services through distinct airline products? Dedicated terminals only enhance an airports value proposition for both LCCs and full service carriers.

Is this development too little, too late? Perth Airport doesn’t think so, but it’s not going to take the public long to realise they weren’t given the best in airport design.

Perth Airport, best in airport design? Unlikely.

Part 1

Who remembers the glamour era of air travel when travel was fabulous and happened on a 747 or Concorde? People living, visiting and doing business in Perth are reminded everyday as they travel through Perth Airport’s International Terminal, circa 1984.

Undertaking its first substantial redevelopment since 1984, the Airport has now made available artists’ impressions, of the expected interior of the completed international terminal and Virgin Australia’s new domestic pier at the airport. Some analysts have even labelled the redevelopment as providing Western Australia with the ‘best in airport design’.

Original plans promised a “world-class” 3 pier, 40-gate redevelopment that would be “one of the best in Asia” akin to Hong Kong or Seoul’s Incheon. These were subsequently reduced to:

  • a new domestic pier;
  • the construction of Terminal WA for intrastate services;
  • one upgraded and one new international gate;
  • expanded international customs and security facilities;

All built to unexceptional IATA service C standard as extensions to the substandard circa 1984 terminal. Best in Airport design indeed.

Overview of T1 redevelopment. International terminal left, domestic pier centre, terminal WA right. Image: Perth Airport

Continue reading “Perth Airport, best in airport design? Unlikely.” »

Qantas, the little airline that couldn’t.

When I was young I wanted to be a Qantas pilot. Growing up I was granted the privileged opportunity of being invited into the cockpit for landing in various Qantas aircraft at various airports around Australia. The dedication and enthusiasm with which staff undertook their jobs was an inspiration to me.

20 years later, and I don’t know how I feel about Qantas. Today’s Qantas just goes through the motions. The timid annual result announcement is a reflection of the diminishing presence Qantas is playing in the lives of Australians. It is also a reinforcement of the distinct strategy which Qantas has chosen to follow.

The annual results also show a distinct change in Qantas rhetoric. Gone are the battle cries of a “65% line in the sand”, replaced by “The Group aims to maintain a profit-maximising 65 per cent domestic market share”. Brave faced Qantas executives are worried. Continue reading “Qantas, the little airline that couldn’t.” »

Has connectivity changed the way you travel?

 

Infographics are great, and even better when they mix planes and travel together.

As a lead in to the main event below, this graph from Amadeus’ provides an insight into the use of social media for travel related purposes by country. Unsurprisingly, China is on top with a 92% involvement. An increasing number of mainland Chinese are travelling abroad, and the majority of internet users, more than half a billion, use a blog or Weibo.

Social media use for travel related purposes by country. Source: 2010 JD Power’s ‘Global Airline Traveller Survey’ commissioned by Amadeus

Today’s China interacts via social media using the general population to deliver suggestions and advice people wouldn’t trust large companies or the government to provide. Chinese travel companies that harness this, such as DaoDao (到到), whose tagline “get the truth, then go” leverages this divide, are reaping the benefits as people gain trust in their services.

Amadeus missed Australia. Perhaps we don’t travel enough or we aren’t connected? Given Tourism Australia research into the influence of social media on our travel, and the emphasis Australia’s airlines place on mobile self services and connectivity through social media, one would assume we’re likely located somewhere between the UK and Canada.

Comparatively in the United States only 59% of respondents used social media for travel related purposes. This is what makes the infographic by MDG Advertising below intriguing. Why does travel connectivity in the home of social media rank in comparison to, or below developing countries?

While slightly America-centric, the infographic provides a thoughtful insight into how connectivity is influencing our travel behaviour. Specific airline data remains commercial in confidence, but several key figures demonstrate the increasing inter-reliance of personal connectivity for airline travel:

  • 26% of people checked airfare prices, and 18% of people booked flights using mobile devices;
  • 50% of travellers now use a mobile device to check flight status, up from 30% in 2011;
  • 30% of travellers use a mobile device to check-in for their flight, up from 17% in 2011.

How connected are you when you travel?

Vacationing The Social Media Way [infographic by MDG Advertising]

Qantas’ Boeing 767s are in it for the long haul.

 

Like Dontella Versace checking in for more age defying plumping, Qantas’ ageing Boeing 767-300ERs are to be given another facelift.

Commencing in October, Qantas will retire another seven of its ageing 23 Boeing 767-300ERs, and the remaining 16 aircraft will undergo a major interior refurbishment. The programme is also step in the right direction for Qantas to return to its roots as an hip, innovative product leader.

Marc Newson has been brought into design contemporary interiors. Business class will feature charcoal leather seats with retro chic 70’s wood panelling, and aubergine is Newson’s colour du jour in Economy. The aircraft will also be given new carpets, lighting, curtains and dividers.

Each refurbished 767 will feature Qantas’ “groundbreaking WiFi entertainment” Q Streaming. And iPads will be provided to all passengers, in Business and Economy. The system provides passengers with 200 hours of on-demand IFE, and passengers will be able to connect with their own portable devices.

Q Streaming is delivered by five WiFi terminals fitted in ceiling on the right hand side of the cabin. Passengers connect to the terminal closest to your seat row, and streaming content is provided from the aircraft’s own content server located in the avionics bay beneath the cockpit. The server is essentially a mini computer with a pair of 500GB solid state drives, each of HD contains all the in-flight programming so the system has redundancy and will continue to work if one drive fails.

Qantas Domestic will also receive 3 new aircraft, 2 Boeing 737-800s and 1 A330-200, before year end.

Refurbishment will not make the B767s any cheaper to operate, nor will they become more fuel-efficient. Original plans envisaged Qantas B767s retired by 2010, replaced by Boeing 787 Dreamliners from 2008. However, Boeing and Qantas’ combined delays, mean the 787 will be 6 years late by the time it enters Qantas service in 2014.

Updated plans replaced the 767s 1-to-1 by Jetstar’s 11 A330-200s returned as the carrier receives the Group’s first 15 Boeing 787 Dreamliners from mid-2013. However, returning all the A330s does not provide Jetstar much capacity to grow.

Either way, the 767s are likely to be around for a lot longer yet. While the retro, tech savvy refresh will go a long way, it doesn’t remove the fact that the 767s are so old you can almost hear the floor creak as you step into the cabin. Let’s hope people aren’t falling through the floor before the time they ret…well, if they ever retire.

The full Qantas statement can be found here, and Qantas’ Q Streaming trial FAQ booklet can be found here.

Will Singapore’s next generation of cabin products re-establish an industry benchmark?

Oh the delicious drama of the airline industry. It puts the Bold and the Beautiful to shame with its endless alliances and divorces, avant-garde product design, cheap gauche relatives and a whole lot of money.

Today’s twist? Singapore Airlines has announced it has engaged the BMW Group subsidiary DesignworksUSA, and UK and Singapore-based James Park Associates (JPA), to develop the next generation of in-flight cabin products that will be rolled out from the second half of 2013.

Singapore Airlines has always been known for its superior innovative product, but has come under criticism for failing to maintain its edge in recent years, as other major Asian carriers Cathay Pacific and Korean Air have invested significantly in their on-board products. With this announcement Singapore is stepping up to match or outdo its competitors.

The press release is coy about the products and designs to be implemented or whether older aircraft will be refurbished, only confirming the new cabins will be rolled out on the airline’s to-be-delivered Boeing 777-300ER aircraft.

Will we see Singapore’s sceptical executives introduce premium economy? Will we see upgraded lounges or new ticketing and ancillary revenue initiatives? Will its new products allow it to maintain its industry leading cost per available seat kilometer (ASK) of 4.58 cents? Time will tell.

Competing carriers have been given an easy ride as Singapore has focused its attentions on averting an airline disaster with Tiger Airways, maintaining profitability, and launching Scoot. Now Singapore is rearming. Gird your loins players, in 2013 the game is back on.

The full SQ statement can be found here.

Cathay Pacific engages Qantas-Jetstar in airline weiqi.

 

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Cathay Pacific has used a submission to the Australian Competition and Consumer Commission (ACCC) to publicly reveal its stance to the Qantas/China Eastern establishment of a Jetstar Hong Kong subsidiary.

Cathay has been biding its time in indicating its position toward the establishment of Jetstar Hong Kong. Rather than publically lambaste the opposition, Cathay has veiled its opposition in a response to Qantas’ application for greater pan-Asian cooperation with subsidiary Jetstar.

Cathay Pacific and sister carrier Dragonair, have spent decades developing a formidable operation at their HK hub carried on the back of Hong Kong and China’s booming economies.

Supported by an unquestionably good product, multiple daily services to almost every destination they serve, and significant versatility in the way they use their fleet. Cathay CEO Slosar makes it clear “we compete with multiple low cost brands every day,” and any challenge to this dominance is not taken lightly.

While still undetermined, Cathay’s submission gently reminds the ACCC of the potential restrictions any Jetstar HK operation may/will be subject to, if the carrier is granted permission fly at all:

It is also possible that conditions may be imposed on any approval given in Hong Kong. Accordingly, it may be difficult for the ACCC to authorise the proposed conduct in relation to Hong Kong if it is unclear whether Jetstar will be give approval to operate flights within Hong Kong.

The statement highlights the sway over relationships that Cathay has spent years developing right up to the top levels of the Hong Kong Government, and indeed, throughout Asia. Any Jetstar operation in Hong Kong will require a change of Hong Kong’s constitution, and Cathay also knows full well that a decision on regulatory approval for Jetstar HK is unlikely to be made “made until some way through 2013”.

 

Why did Cathay make its move?

In late June, Qantas’ applied to the ACCC to cooperate more closely with Jetstar in the Japan, Singapore and Vietnam markets. Qantas is requesting to coordinate various business and operational functions between Qantas and all Jetstar Airways carriers; and also between Japan Airlines, Vietnam Airlines and China Eastern and their respective Jetstar subsidiaries. Without approval of the the agreement, Qantas says its pan-Asian expansion will be under threat.

The carriers have never had what one would described as a close relationship, and Australian anti-competition laws forbid them from cooperating on services between Australia and Hong Kong. Slosar, denies that a Jetstar HK subsidiary will strain the carrier’s relationship with parent Qantas. His recent referral to the fact that “alliances always have certain overlaps” was certainly an attempt to smooth the waters, although Cathay’s subsequent strategic play has reinforced the limits of any relationship.

Qantas’ applies and Cathay responds

Qantas’ original application suggested that “When a LCC enters a market, all competitors (FSAs and LCCs) are forced to innovate in order to remain competitive. That is, LCCs force FSAs to re-think long standing business practices and competitive responses”. In the case of Hong Kong, why is Qantas forcing other carriers to innovate while its own “long standing business practices” remain the same?

Cathay has responded by focusing on consumer interests alluding to the anti-competitive nature of the Jetstar Qantas relationship. Questioning the necessity of Qantas and Jetstar to cooperate anymore closely, as other airlines can provide the “stimulatory effect of Low-cost Carriers (LCCs), including the competitive reaction they may elicit from Full Service Airlines (FSAs)”. There is a sense of effrontery in Qantas’ suggestion that it isn’t anti-competitive for it to operate a Jetstar subsidiary in Hong Kong, and other Asian countries, in addition to closer relations with the Jetstar group as a whole.

A320NEO range from Hong Kong. Source: Airbus

Jetstar’s fleet plan

Leveraging the opportunity to force Jetstar to reveal its long-term fleet plans and allocation of aircraft across the Jetstar group, Cathay asks, “could Jetstar Hong Kong or Jetstar Japan buy or lease planes that could reach Australia? Does the Jetstar group have, or have on order, aircraft capable of reaching Australia that could be allocated?”.

Seemingly unaware of the capabilities of the fleet of 15 787-8s (delivery from 2013), and over 70 A320NEOs (delivery from 2016/17) Jetstar has on order. Qantas asserts that “Jetstar Japan and Jetstar Hong Kong cannot offer services to or from Australia because they do not have the aircraft that is necessary to make travel over such distances economically or practically viable”. The 787-8′s 14,000km range puts all of Australia well within range, and the A320NEO is capable of reaching almost one-third of Australia including Jetstar’s Darwin hub, and Perth.

Henry Kissinger enthuses that in war “Chinese ideals have long stressed subtlety, indirection, and the patient accumulation of relative advantage”. In what is likely to become a patient contest of relative gain and long-range encirclement, Cathay has made its first very deliberate and subtle move.

Deciphering the future of China’s aviation industry. China Airborne by James Fallows.

 

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China’s aviation industry is growing and with it so are the aspirations of many millions of Mainland Chinese. Predicted to become the worlds largest market for business and general aviation, China’s middle class unsatisfied with simply owning an Audi or two, increasingly desires to take to the skies in their own aircraft. China’s aviation industry seems unstoppable, but is it really on the verge of take off?

James Fallows’ (journalist, China correspondent and plane enthusiast) latest book China Airborne, puts two of my favourite interests, planes and China, under one communist-revolutionary-zeal-esque cover.

Fallows’ 236 page narrative sets about detailing the development of China’s aviation industry, how it has evolved, the factors influencing its development and the future direction of the industry. Writing with perspective and humour, Fallows turns what could have been a dull read into a fascinating insight into the status of aerospace and aviation in today’s China.

Readers are taken through a history of China’s aviation pioneers, and the unique cultural factors that have influenced the development of China’s aerospace industry. Fallows details the important roles Boeing and the FAA have played China’s aviation safety, and we are introduced to the Chinese and foreign ‘middlemen’ who are facilitating the next stage of the industry’s development.

China is determined to build an aerospace sector equivalent in strength and quality to others around the world. Fallows explores the factors influencing the development of an aerospace industry with ‘Chinese characteristics’ including its achievements and inherent limitations. There is also discussion of companies taking advantage of the explosion to introduce navigation technology, which is delivering improvements in environmental efficiency and safety in Tibetan operations.

We experience first hand the restrictions of China’s general aviation industry as he joins a friend on a cross-country Cirrus flight from Changsha to Zhuhai – GA never took off in China, because of the military’s control of airspace. And meet the provincial officials and aviation visionaries, with no aircraft, but runways at their disposal, who aim to take general aviation mainstream

Disappointingly the final two chapters could have done with far more discussion about aeroplanes. Losing their flight path, the chapters focus more on a general discussion of China’s current political situation and development. Although, those with little knowledge of the extent of China’s internal trials and tribulations will learn a great deal.

Fun and full of Chinese idiosyncrasies, and lacking complex jargon, China Airborne is well worth the time.

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