ETOPS in action: Perth – Mauritius

I thought a recent flight from Perth to Mauritius provided a great basis to highlight the impact of ETOPS restrictions on airline operations in the Southern Hemisphere.

There is no trans-polar or oceanic route in the Northern Hemisphere that requires more than ETOPS 240 approval (four hours from flying time from a suitable airfield), and more than 90% of routes require no more than ETOPS 180.

ETOPS speed schedules are designed assuming a MTOW at departure with highest gross weight and enroute weather conditions at critical points enroute determining diversion speed and endurance. Speeds vary by operator, and other factors including carriage of additional passenger oxygen allowing operations at an intermediate level above FL140 are also taken into account.

Down south ETOPS restrictions have arguably a much greater operational impact as this Perth – Mauritius sector highlights.

Air Mauritius’ previous A340 operation to Australia tracked along a flight path relatively close to the great circle routing (see map below). Now operated by its A330-200 fleet – approved for ETOPS 180 (for arguments sake roughly 1,000nm) – the aircraft must track significantly to the north of the great circle route. Flying north-west after departing Perth to remain within diversion flying time of Learmonth, the Cocos Islands and then Diego Garcia, before tracking to the south-west for Mauritius.

The result is a longer flight time – the previous 8:30 minute block time westbound, is now an 8:30 minute flight time – approximately 45 minutes to one hour longer airborne.

The associated impact on flight economics is substantial as Virgin Australia learnt the hard way in its brief foray into Boeing 777-300ER operations between Melbourne and Johannesburg. To remain with ETOPS 180 restrictions the 777 operated a more northerly, inefficient routing – maps of westbound and eastbound flights – resulting in a flight time 1:15 longer than Qantas’ 14 hour Sydney – Johannesburg service.

The lightest grey shade on the map indicates ETOPS 180 limits. If Air Mauritius were to gain approval for ETOPS 207 or even 240 it would allow a more efficient southerly routing. But would you really be comfortable knowing you are that far from land on the off chance your Royce stops Rolling?

 

 

 

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.” »

An Xtra-wide formation: A330, A350, A380.

In the excitement of various firsts by Boeing and Bombardier last week, overlooked was Airbus’ first: its widebody family test aircraft, the A330 (rear), A350 (foreground) and A380 flew in formation for the first time before continuing on their own test sorties. Magnifique.

Continue reading “An Xtra-wide formation: A330, A350, A380.” »

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.

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.

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.

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