Looking to the sky in 2014.

Our 2013 retrospective, and Airbus breaking with tradition on A350 MSN2 , inspired me to take a look at what this dynamic industry might have in-store for 2014:

A350 MSN2 the first test aircraft to be fitted with a full cabin interior in its new carbon fibre scheme. Image: Airbus SAS.

CASA Regulation
Some big regulatory changes will take place in 2014. In particular, CASA will need to guide the Australia’s airlines on the use of Personal Electronic Devices (PEDs) following changes to regulatory legislation by the FAA in the US and EASA in Europe. Currently Australian carriers are self regulating in this respect, but moving independently as a way to gain competitive advantage will only create headaches for crew in enforcing use on-board.

 

Image: Graham Cook

Domestic capacity
The war will continue until the end of the first half, bringing further revenue pressure to the Qantas and Virgin groups. Qantas has invested too much the public rhetoric behind in its strategy, to back away now would look like it was giving in. Not the best market image to present given its current financial position. Expect the Federal Government to make small changes to the level of single foreign ownership to the Qantas Sale Act.

 

 

 

Sydney Airport
The political future of Tony Abbott’s Government depends on their ability to deliver a courageous bipartisan policy decision. With a promise of a decision, a ‘government of no surprises’ will now need to deliver with a real commitment on Badgery’s Creek. This will come as a stage 1 single runway development, with no rail connection, because Abbott’s made it clear he doesn’t like trains. Also expect a change to the slot caps at Sydney Airport, starting with the 05:00-06:00am landing window.

Continue reading “Looking to the sky in 2014.” »

Why Holden is an aerospace opportunity.

Manufacturing cars in Australia is no longer sustainable for Holden. Image: Hugo90

No longer Australia’s car. Holden says production in Australia is no longer sustainable. Image: Hugo90

Politicians are scrounging for reasons to blame or deny the imminent demise of Australia’s automotive manufacturing industry. Automotive’s future script has been clear for over two decades since Dr John Hewson announced a zero tariff regime for automotive products in 1992.

Indeed, the writing has been on the wall for the majority of Australia’s manufacturing industries for sometime, yet one industry is a clear performer. Australia’s $4 billion aerospace manufacturing industry is a minnow when compared to the automotive industry, but it still employs more than 14,000 people. Subject to aviation’s global fiscal uncertainty, it still continues to grow delivering consistent profit and growth as other industries shrink.

Continue reading “Why Holden is an aerospace opportunity.” »

It’s been a long time. I’m back.

I originally set up this blog as an outlet for my fascination with the industry, and as an extension for some of the work I was completing in my Master degree in Air Transport Management. One quickly discovers that there is a wealth of freely available information on the industry. For those willing to put in the time, the list of potential topics can quickly become overwhelming.

Continue reading “It’s been a long time. I’m back.” »

China Southern: The blue dragon has risen.

Today, after years of production and bureaucratic delays, China Southern marked a significant milestone with the arrival of its first Boeing 787-8 in Guangzhou. The airline having taken delivery of the aircraft registered B-2725 on May 31.

The 787 delivery marks the next chapter in the transformation of China Southern. B-2725 will enter revenue service on 6 June, operating the inaugural service from Guangzhou to Beijing. Initially the aircraft will also be deployed on Guangzhou – Shanghai services. The 787s are expected to be deployed internationally by the end of 2013 on the ‘Canton Route’ between Australia and Europe, and to Vancouver. China Southern will receive five of the ten 787′s it has on order by the end of 2013.

President & CEO Tan Wangeng has previously said he “will spare no effort in building the Canton Route into a premium product” to be operated by Airbus A380s and Boeing 787s.

China Southern in 2015

Already big and getting bigger; China Southern is the largest passenger airline in Asia, carrying over 85 million passengers in 2012. The third largest by market capitalization. The sixth largest by fleet size. And, Skytrax’s most improved airline of 2011.

International operations currently account for only 18.4% of the carrier’s Available Seat Kilometres (ASKs), the smallest of China’s ‘big three’ airlines. 80% of its domestic route network, and 81.6% of its ASK capacity competes directly against high speed rail. The result? China Southern is turning to international markets with the aim of increasing its international ASKs to 35% by 2015.

Chairman Si Xianmin noted in a 2012 interview that “[we’re] looking at route expansion into South America, Africa and other emerging markets to expand our hub network. The broader vision of the Canton Route is to build Guangzhou as a global, comprehensive, long-haul aviation hub”.

Currently operating 35 weekly services to 5 Australian cities, Tan says that “More than 30% of the passengers travelling on this [Canton] route are from Australia and Europe”. Plans see this increasing to 55 weekly return services (110 total segments) to Australia by 2015. In addition, South American services are likely to operate through Nairobi, home of Skyteam partner Kenya Airways, linking three of the world’s largest developing markets.

However, if it is to win greater market share from other ‘Kangaroo route’ carriers, the airline will need to substantially improve the transfer experience at Guangzhou’s Baiyun Airport. One of those ‘only in China’ experiences, transferring at Baiyun remains a messy affair and while the carrier is developing a winning onboard product, the result of substantial focus and investment, its ground services lack the polish of competitors.

Urumqi hub

Ürümqi is China Southern’s strategically located second international hub. Ürümqi acts as a western entry point, one of the focus airports that the CAAC uses to efficiently distribute airline traffic across the China. A cooperation agreement signed in 2011 by China Southern – with its 75% international market share – and the Xinjiang Autonomous Region government, has seen Ürümqi Airport’s passenger traffic grow to become China’s fourth largest international airport. From Ürümqi the carrier offers services to the middle east, Turkey and following the resumption of services to Tashkent in July all of the CIS republics (except Moldova). Supported by expanding minerals exploration in the region, could China Southern leverage Ürümqi’s strategic location to reshape sixth-freedom traffic flows across Asia?

Opportunity much? Nearly 3 billion people live within 4.5 hours flying time of Urumqi. China Southern’s current international network from Urumqi, and connections to its other major China hubs.

Deploying the Airbus A380

Image: Xinhua.

In late 2012, almost a year after after taking delivery of the A380, international operations commenced with daily services from Guangzhou to Los Angeles. To date, this remains the sole international A380 route, with the aircraft otherwise restricted to domestic services.

Sources say upon EIS in 2011, the Civil Aviation Authority China (CAAC) restricted operations over concerns that cockpit flight crew English levels were insufficient to operate in a monolingual English environment, particularly in relation to the aircraft’s Electronic Flight Bag (EFB). An extensive and successful flight crew training programme during 2011-2012, resulted in the CAAC lifting operational restrictions.

China Southern originally planned to use the A380 on new services from Beijing, however the CAAC has long restricted competition between the ‘big three’ on international services, particularly direct competition with Air China in Beijing.

In 2012, China Southern entered into negotiations with Air China and it’s powerful coterie of interests, to operate joint-services from Beijing to Paris, and Frankfurt. Initial negotiations shaped the operation as a revenue sharing joint-venture with Air China code sharing on China Southern operated services. However by early 2013 talks were faltering; Air China changed its position, negotiating only to wet-lease the aircraft, to operate and market the proposed Paris services as Air China only services. In early May, China Southern Chief Financial Officer Xu Jiebo reported “the discussions were suspended as many issues arising during the negotiations couldn’t be resolved”.

Central to this was disagreement on Terminal access at Beijing. With Air China operating from Terminal 2 and China Southern Terminal 1 at Capital Airport the carriers would be unable to offer seamless connections. This would only be compounded further when China Southern relocates its operations to the new Beijing Daxing Airport when it opens in 2017.

The result? China Southern will now operate the A380 daily from Guangzhou to Sydney from October 27, preferring not to compete head-to-head with Air China. Tan says “on our current Sydney route we operate [a] double daily using our A330 aircraft and the load factor has been very satisfying, which means we can operate a triple-daily service. We have studied if the market will be big enough to digest this capacity”.

China Southern’s ambitions for Australia are big, but just how realistic these ambitions are remain to be seen. China Southern is on the verge of being unleashed in the same way Emirates was 10 years ago. A blue dragon is rising, and it’s winging its way to a city near you.

Image: Jay Miller.

China’s CAAC issues 787 type certification

It’s been a long wait. After years of delays, the Civil Aviation Administration of China (CAAC) today issued the Chinese type certification certificate for the Boeing 787-8.

A team from China Southern is currently in Seattle undertaking preparatory work and customer acceptance flights before formally accepting the carrier’s first 787 LN 34, registered B-2725, on or before May 28. Hainan Airlines will follow, taking delivery of its first 787-8 in June.

The opaque nature of Chinese bureaucracy has muddied the official reason behind the CAAC’s delay in issuing the Chinese type certificate. Industry sources suggest that the 787 type certificate was ready for issue in late 2011, however due to development delays the preparatory work expired before the 787 could enter service under the old certificate. It is also suggested that Air China’s political connections in Beijing played a hand in delaying the paperwork, waving their magic wand to reduce the competitive pressure on the Chinese flag carrier which couldn’t secure early delivery positions for its 787-9 order, and didn’t order the A380.

Each carrier holds orders for ten 787-8s; China Southern will receive five aircraft, and Hainan seven, by the end of 2013.

Image: China Southern Airlines.

Check out Carry-on’s profile of China Southern
*This post has been amended as we mistakenly wrote Air China had not ordered the 787. Air China has 15 787-9s on order. Thanks to one of our readers for pointing this out.

Peeking into British Airways’ chic new A380

British Airways’ new video gives a sneak peek into the onboard refinement of their chic new A380. BA has twelve A380s on order to be delivered by 2016, and will receive with the first three aircraft to be delivered in July, September and November. Configured in a four class 469 seat layout with , BA’s A380 will be deployed between London – Los Angeles from 15 October and daily London – Hong Kong services from 15 November.

British Airways is likely to deploy its A380 to other destinations in Asia including Beijing, Shanghai and Singapore; in line with strategic moves to increase its presence throughout Asia, particularly mainland China. In support of this, BA has signed a codeshare agreement with Cathay Pacific to take affect from 31 March, the final day of the Qantas/BA Joint Service Agreement (JSA). BA will initially place it’s flight code on Cathay Pacific’s services from Hong Kong to Cairns, Sydney, Melbourne and Perth.

“The best refinements are those you hardly notice. Deceptive in their simplicity, you may not notice them at all. Truly great design steps aside, leaving you with a sensation, a feeling. This was our ambition when designing the interiors for our next generation aircraft. Soon, our A380s will fly between London Heathrow, Los Angeles and Hong Kong. We hope, when you step on board, you can’t put your finger on exactly what makes flying in them so pleasurable.

More than 90 years of experience has taught us how to get things right and our intention is to make sure – on every second of every flight – you realise how flying with us makes you feel.” – British Airways

Tally ho!

British Airways: “Down under’s not over”

There’s a great modernity about British Airways’ simple but stylish Australian newspaper advertisement. Taking a subtle, cheeky swipe at Qantas following the ending of the Joint-Service Agreement in favour of Emirates, British Airways is keeping calm and carrying on.

BA will upgrade all its Australian services to new B777-300ER aircraft from March 30, 2012. Timed to match the commencement of the Qantas Emirates partnership, the introduction of the aircraft with upgraded long-haul product, and BA’s shift of Australian services from London Heathrow’s T3 to its T5 hub marks another competitive upgrade in the fierce Australian international market.

The move is part of BA’s renewed focus on the Asia-Pacific region. BA will commence five weekly services to Seoul from next month, and three weekly services to Chengdu from September 2013. In addition, BA is likely to recommence schedules to Kuala Lumpur and Taipei, markets the carrier exited in 2001, as well as new services to additional cities in mainland China.

British Airways served Taipei from London and Hong Kong as British Asia Airways (英亚航空) until 2001. British Asia Airways was incorporated to overcome a now overturned Chinese Central Government policy prohibiting national carriers serving mainland China from serving Taiwan. Image: Daryl Chapman.

There is also nothing delicate about British Airways’ new oneworld push. For many years oneworld has been quiescent, foundering without a meticulous leader as Star Alliance has in Lufthansa. But the signs are this has changed, limited by expansion options at London Heathrow, British Airways and its parent company International Airlines Group (IAG) are making an active effort to engage and mold oneworld into an entity that supports BA’s sustainable growth and underlying business goals.

British Airways has already formed a comprehensive JV partnership with oneworld member and long-time Qantas partner Japan Airlines, and invited Qatar Airways to join oneworld in 2013/14. Could BA’s Asian focus see the airline engage Malaysia Airlines in place of Qantas to expand in South-East Asia?

A British Airways led quadruple entente would secure a network between Australia and Asia to Europe covering all major traffic paths via Northern and South-East Asia and through the Middle East. Image: GCMapper and Carry-ON.

Malaysia Airlines has much to offer BA, with a South-East Asian network, services to every major Australian city, and code sharing agreements with Japan Airlines, as well as oneworld members-to-be Qatar Airways and SriLankan Airlines already in place. To leverage this through an alliance or a comprehensive JV between the three carriers opens up incredible network and traffic flow options as the map shows. The grouping would be well placed to gain a formidable position in the growing high yield markets driven by Asia’s growing middle class, and provide substantial traffic feed into BA’s long haul network in Asia, and connections to BA short haul services across Europe.

oneworld is on the brink of change, and British Airways is now firmly at the helm. Tally ho.

Australia’s obsession with engaging Asia: Can aviation play a role?

爱国 àiguó: to loves ones country/patriotism. Image: AP

It’s been awhile since I’ve written a post, and to kick things off again I thought I’d take a look at Australia’s renewed obsession with Asia, triggered by the Australian Government’s recently released Asian White Paper.

I went to a fascinating forum last week on Australia’s Engagement in Asia through Future Foreign Policy. Hosted by AsiaLink at Melbourne University, and to be broadcast on newsline this Thursday November 22, the Q&A style event saw Liberal MP Kelly O’Dwyer and Labor MP Richard Marles answer audience questions on Asia and what we as a country are trying to do with/about it. I say fascinating because it became clear during the course of the forum from the disconnected and vague responses that past the fact it’s there, good for foreign investment, and we should be doing something about it, neither Kelly or Richard have much clue about Asia.

The audience for this event were a culturally diverse bunch. Over 150 people who from the various questions, were already very ‘engaged’ with clear personal interest or involvement with Asia. Most of the people seemed to emigrated from, or lived, studied, worked overseas and at the very least the majority spoke an Asian language or had a son/daughter learning one. So why was Richard’s best answer to a question on how should young Australian’s engage with Asia, to “go out and make friends, just go overseas study, make friends”. Clearly sir, we’ve already done that.

The introductions were centred on reeling off growth statistics from what I like to call the ‘Asian Wheel of Fortune’, as the reason we need to engage. We were told how Australia is an activist middle power, great at managing countries smaller than us, or acting as a go between. We don’t need to choose between America and China, yet we aren’t willing to accommodate China unless it sticks to the rules based international system. Forgetting that America isn’t the best country to follow on that one.

Another audience member wanted to know if Asia wanted to engage with Australia. Do they really? An emphatic “Yes!”, apparently they do, because as we have seen, they want to buy our mineral resources. But I really don’t think we can consider buying iron ore engaging across multiple sectors.

An important cultural question popped up, Korea and Japan are great at using their soft cultural power overseas to promote design, art, music. “Why doesn’t Australia move out of sport and do that to?” Luckily, both Kelly and Richard agreed this would be great! The Japanese went wild for the Australian Ballet, but when they wanted to go to China last year to tour, there was no funding so they went to New York instead. Apparently it’s cheaper to fly twice the distance.

The Australian Government has been there and done this before in the 1980s and early 1990s never to follow through. From the crowd of people gathered at Melbourne University there is clearly a growing population in Australia that wants us to be involved with something greater than Bali and Phuket. The intention of both parties is right, but everyone seems to blindly fumbling when it comes to what to do.

As opaque as China’s leadership is, behind Thursday’s unveiling of a new China management team we saw a government fully aware that’s economy is slowing and needs to do something else. An economy in which Australia has placed the good majority of its eggs. If the Chinese government can see it needs to diversify, why can’t Australia’s?

How does aviation fit in?

Aviation featured vaguely in the Asian Century White Paper, with a small case study into Indian Investment into Gippsland Aero, and the failings of Sydney Airport. That was it. Australia’s aviation industry is growing, we can boast of one of the world’s safest aviation regimes, with a mass of incredibly talented people across airlines, air traffic control, training, safety, regulation. Combining this with perhaps the world’s most globalised industry, the aviation industry seems to be the perfect vestibule through which to engage with our northern neighbours. If the government and the general population are truly serious that is. Are you onboard?

The Australian Government’s Australia in the Asian Century White Paper

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]

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

 

china_airborne_cover.png

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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