May
03

Japan Airlines is bringing the dream to Sydney.

 

Pushing ahead with it’s 787 expansion, Japan Airlines will be the first international airline to introduce Boeing 787 services to Sydney. Operating the daily JL771/772 service from Tokyo Narita, the Boeing 787-8 will replace the Boeing 777 currently operated from December 1.

Three months after the Boeing 787 Dreamliner was grounded in late-January, the aircraft and programme are back in the air. With safety fixes for the aircraft’s battery system approved by the Federal Aviation Administration, airlines are bursting with renewed confidence in the besieged programme and planning the aircraft’s re-entry into service on routes around the globe.

Both Japan’s All Nippon Airlines (ANA) and JAL each suffered separate fire incidents in the 787′s lithium-ion battery, and are now working to restore the Japanese public’s confidence in the aircraft before they resume services on June 1. Over the next few weeks both carriers plan to undertake more than 200 test flights for pilot training and battery system verification demonstrating to the public the safety of the aircraft.

With the arrival of the 787 into the Australian market imminent, airlines will soon have a host of new operational opportunities into the country. Initially for JAL, the substantial product upgrade, but capacity downgrade of the 787 reduces available seat capacity on the Tokyo – Sydney route by 24%; instantly improving Qantas capacity share and competitiveness on a market that has struggled since its 1997 peak.  However, the economics of the 787-8 provides the potential to introduce new routes and improved schedules to destinations across Asia and beyond, encouraging growth and allowing markets to mature with the potential to increase capacity with the 787-9 from sometime after 2016. Up-gauging to an aircraft with a similar operating cost, but significantly increased capacity also delivers airlines greater pricing flexibility, to stimulate even more demand through lower fares or the ability to extract higher margins from operations.

The unprecedented level of regulatory and developmental scrutiny afforded the 787 will ultimately deliver an exceptionally safe next generation aircraft. There may be some initial tepidness from passengers in booking on the 787, but ultimately the romance of a revolutionary aircraft will draw them back. It’s been a long wait, but the 787 is almost here.

Carry-on is booked to travel on the inaugural Sydney service, and will be bringing you all the excitement of the day. Stay tuned.

Boeing’s full page すみません (apology). Image: Yoshiaki Miura, Japan Times.

Jan
17

What’s next for the 787?

The media loves fire on an aircraft. Fire scares people. Scaring sells news. Unfortunately, this comes to the detriment of Boeing and the 787 programme, which have faced intense scrutiny by media over a range of minor to hazardous issues, that question the safety of the aircraft.

The Boeing 787-8 suffered a series of incidents over the period, several of these a cracked windshield, minor fuel leak and brake issue are common operational issues. The FAA’s Emergency Airworthiness Directive (EAD) issued today focuses on the electrical architecture of the aircraft, specifically the safety of the GS Yuasa lithium-ion polymer battery, which has led to several incidents consistently traced back to the same issue:

04DEC2012 – United Airlines UA1146 diverted enroute due to an electrical malfunction. Multiple error messages, with flight crew requesting firefighters be vigilant of fuselage aft of wing area upon touchdown.

13DEC2012 – Qatar Airways grounded one of its 787 fleet due to an electrical fault upon arrival in Doha. CEO Akbar Al Baker wasn’t happy, jumped up and down, and shook his fists at Boeing.

17DEC2012 – United Airlines identifies a second electrical issue in a separate 787 to 04DEC incident.

07JAN2013 – Japan Airlines 787 JA829J suffered an incident on the ground at Tokyo Narita, in which smoke filled the cabin, and aft cargo compartment as a result of the APU battery in the rear electrical bay catching fire.

16JAN2013 – All Nippon Airlines (ANA) 787  JA804A operated NH692 diverted to Takamatsu when the crew received battery problem indications, and detected an acrid, burning smell in the cockpit. The aircraft was evacuated on landing.

Aviation safety regulators in India, Japan, Poland, Qatar and Chile have suspended 787 operations for an indefinite period, with Ethiopia and Europe’s EASA likely to follow suit.

The location of the Lithium Ion batteries in the Boeing 787-8. Image: Boeing ARFF Data.

Following the commencement of the regulatory review earlier this week, the FAA has determined that “the battery failures resulted in release of flammable electrolytes, heat damage, and smoke” there is sufficient enough risk of onboard fire, or other electrical issues, to cease the programme. An investigation already initiated by the National Transportation Safety Bureau (NTSB), will now widened and led by the FAA, supported by Japan Transport Safety Board (JTSB) and Boeing.

Why in the first instance did the FAA allow the aircraft to continue to fly after announcing the safety review?  Why was the FAA Administrator Michael Huerta, so emphatic in saying the 787 was safe after he had announced a review, and before the NTSB had concluded an investigation?

NTSB photo of the aft Lithium Ion battery following the fire on the JAL 787 in Boston. Image: NTSB.

During its certification period and the aircraft’s first 15 months in service the 787 has suffered ongoing problems related to its electrical system. The first aircraft to support fully electric architecture, this replaces pneumatic bleed air systems used to drive cabin pressure and onboard systems, and operates at a significantly higher capacity 1.5MW than any other aircraft.

To support these systems the 787 requires a battery that can efficiently produce enough energy, and currently only less-stable Lithium Ion polymer batteries offer that capability. Overheating or overcharging the battery creates ignitable metallic lithium.

After years of testing the batteries were approved by the regulator with special conditions, and demonstrated assurances that the system would could isolate and shutdown the batteries in this instance, and inflight fire would be contained. Yet the system safeguards failed to prevent either incident incident in Japan.

Navigating in uncharted territory.

Is the 787 programme a disaster? Certainly not, the 787 like the A380 is technological leap in the way aircraft are designed, built and flown. And, every revolution has its problems, see Airbus A380, Boeing 747, Comet, Viscount.

These aircraft all suffered significant problems following their Entry Into Service (EIS). Who remembers the 747 having significant engine problems? All were eventually rectified. It is part of the natural development of aircraft that changes are made, and redesigns worked in, and changes made again. The number of Airworthiness Directives in worldwide circulation for all aircraft types demonstrates this.

With proven operational experience no customer is yet to cancel their orders over this incident, and none are likely too. Airlines awaiting imminent deliver of aircraft will be temporarily inconvenienced, Akbar Al Baker may jump up and down, and Boeing’s reputation will take another hit, but that doesn’t mean they lack faith in the aircraft’s future. The more resources pushed into engineering the 787 now, the better it will become.

As with the DC-10 and the A380 after QF32, it’s no surprise travellers will book away from the 787 for a period of time, concerned about reliability. But they will come back, they have loved the 787 to date. With this level of regulatory and developmental scrutiny we’re going to end up with an exceptionally safe next generation aircraft. It’s a matter of when, not if that happens.

The full statement from the FAA. Boeing’s full statement on 787 action.

This paper is excellent background reading on the FAA’s only other commercial grounding of the McDonnell Douglas DC-10.

 

 

Jan
17

Airline Statements on suspension of 787 ops

Qatar Airways has now issued the following statement on suspension of 787 services:

In compliance with the recommendation of the Federal Aviation Administration of the United States (FAA) and in coordination with the Chilean Aeronautical Authority (DGAC), LAN announces that it will temporarily suspend the operation of its three Boeing 787 aircraft.

Flights that were scheduled to be operated by the 787 will be temporarily replaced with other aircraft in our fleet to mitigate any potential impacts that this situation could cause to its passengers and cargo clients. The safety of the operation and its passengers is LAN’s top priority and the company regrets any inconvenience that this may cause.

Chile’s LAN Airlines part of the LATAM group, has also issued its own statement:

In compliance with the recommendation of the Federal Aviation Administration of the United States (FAA) and in coordination with the Chilean Aeronautical Authority (DGAC), LAN announces that it will temporarily suspend the operation of its three Boeing 787 aircraft.

Flights that were scheduled to be operated by the 787 will be temporarily replaced with other aircraft in our fleet to mitigate any potential impacts that this situation could cause to its passengers and cargo clients. The safety of the operation and its passengers is LAN’s top priority and the company regrets any inconvenience that this may cause.

Ethiopian Airlines issued in the following statement:

Ethiopian Dreamliners have not encountered the type of problems such as those experienced by the other operators. However, as an extra precautionary safety measure and in line with its commitment of putting safety above all else, Ethiopian has decided to pull out its four Dreamliners from operation and perform the special inspection requirements mandated by FAA.

Qantas previously expressed its continued support for the 787 programme on 16DEC:

“Boeing has kept the Qantas Group fully informed about the performance of the 787 since it entered commercial service in 2011. We are confident that the current issues will be resolved before Jetstar receives its first aircraft as scheduled in the second half of this year.”

Click here for more coverage on the 787 EAD action.

The full statement from the FAA.

Jan
17

FAA issues Airworthiness Directive Ground Boeing 787

The following is the FAA’s initial statement on its order for operators to temporarily cease Boeing 787 operations. We will develop this story as the day goes on:

“As a result of an in-flight, Boeing 787 battery incident earlier today in Japan, the FAA will issue an emergency airworthiness directive (AD) to address a potential battery fire risk in the 787 and require operators to temporarily cease operations.  Before further flight, operators of U.S.-registered, Boeing 787 aircraft must demonstrate to the Federal Aviation Administration (FAA) that the batteries are safe.

“The FAA will work with the manufacturer and carriers to develop a corrective action plan to allow the U.S. 787 fleet to resume operations as quickly and safely as possible.The in-flight Japanese battery incident followed an earlier 787 battery incident that occurred on the ground in Boston on January 7, 2013. The AD is prompted by this second incident involving a lithium ion battery.

“The battery failures resulted in release of flammable electrolytes, heat damage, and smoke on two Model 787 airplanes. The root cause of these failures is currently under investigation. These conditions, if not corrected, could result in damage to critical systems and structures, and the potential for fire in the electrical compartment.Last Friday, the FAA announced a comprehensive review of the 787’s critical systems with the possibility of further action pending new data and information.

“In addition to the continuing review of the aircraft’s design, manufacture and assembly, the agency also will validate that 787 batteries and the battery system on the aircraft are in compliance with the special condition the agency issued as part of the aircraft’s certification.

“United Airlines is currently the only U.S. airline operating the 787, with six airplanes in service. When the FAA issues an airworthiness directive, it also alerts the international aviation community to the action so other civil aviation authorities can take parallel action to cover the fleets operating in their own countries.”

Click here for more coverage on the 787 EAD action.

Sep
06

“A momentous day in aviation”

This is the label Tim Clark gave to today’s announcement of the partnership between Qantas and Emirates. For Emirates, it is merely an endorsement that its strategy and positioning has worked. For Qantas, the agreement represents a considerable strategic shift, forcing the airline to finally acknowledge many of the operational issues that should have been acknowledged up to a decade ago.

From 1 April 2013, Qantas’ services to London will operate ‘The Falcon Route’ via Dubai. Subject to regulatory approval, the centerpiece of this strategic is an 10 year operational partnership with Emirates Airlines which includes integrated network collaboration with coordinated pricing, sales and scheduling as well as a benefit-sharing model. Akin to having fully metal-neutral Anti-Trust Immunity, the agreement also provides scope for further expansion, Alan Joyce saying “the two airlines can do a lot more together into the future.”

The partnership “representing a step-change for the aviation industry” while true, is ironic. Qantas has essentially endorsed Emirates strategy and positioning, something it has vehemently fought against and accused of everything from receiving subsidies to capacity dumping for years. Even after the Qantas rhetoric, will passengers buy this sudden strategic shift? Perhaps.

Why? Sure, it doesn’t deliver Qantas operated services to passengers outside Melbourne or Sydney. What it does represents a fundamental change in airline thinking, that Qantas recognises the importance of the mature and continuously developing expectations passengers have of airline alliances. It recognises that passengers will fly if the alliance can take you where you want to go, with the benefits you deserve with full reciprocity. Something which has become murky in the wider world of airline alliances.

The alliance is risk averse, it allows Qantas to minimise its exposure to the European market and the trans-Tasman market, where Emirates with its much lower margins and cost structure is more competitive. The association with a brand considered to be one of the world’s best, will also dramatically enhance Qantas’ international exposure.

“It’s not you, it’s me”. On 31 March 2013 Qantas will end the 17-year Joint Services Agreement with British Airways, the breakup an indication that in today’s operational environment the alliance wasn’t delivering from an operational, passenger experience or yield perspective. Qantas will also cease to fly the Kangaroo Route to Europe, just over 65 years after the airline first started flying the route on 1 December 1947. Services to Frankfurt will also be suspended, a route that has long not been profitable because of high jetfuel prices, the Boeing 747-400s full burn and high-aircraft weight.

The following slide from the Qantas presentation gives an idea of the significant markets the Qantas-Emirates partnership will open up:

“Qantas alone can’t take pax everywhere – but together Qantas & Emirates can take Australians just about anywhere. With style.” Alan Joyce, Qantas Airways CEO

The partnership doesn’t extend across Asia, with QF/EK connections only available to Emirates services through Singapore and Bangkok. In addition, Qantas codeshare services with Cathay Pacific and Air France to Rome and Paris respectively will also be cancelled. Changes have also failed to address Qantas’ neglected international markets from Perth, Adelaide and Brisbane.

Perhaps more important than the partnership, is Qantas acknowledgement that its Asian services need to be transformed. For many years Qantas has neglected the region home to our biggest trading partners and inbound tourism markets. Services to the region will be enhanced, with new flights and changes to schedules in recognition of a need to be more business friendly. Will Qantas actually receive a portion of the 15 Boeing 787-8s it subsequently directed to Jetstar in support of this? Time will tell.

Back in 1996, Qantas entered into a partnership with an emerging carrier, Emirates. When it ended, no one noticed. How things change in 15 years. Now the world is watching, and it seems everyone else, especially John Borghetti, was right.

The Qantas-Emirates partnership website can be found here. And, Qantas’ full statement here.

Aug
28

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.

Aug
26

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.

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