December 29, 2010
Weekly Issue 051210
Contents
Commentary by Bob Booth
Flight Control Waves
Waves from Europe
Commentary by David Bentley
Waves from the Pacific
Waves from the Americas
Commentary by Ian Bertrand
Cargo Waves
Tourism Waves
Fuel Waves by Larry Weaver
Commentary
by Bob
Booth
So goodbye 2010 and a great 2011
coming up
It’s not
been an active week with the holidays and everything, but still have a bunch of news items which are listed below under the
headlines. The really great news is that IATA has increased its member airline
profit forecast for 2010 to $15 billion, up from the original forecast several
weeks ago of $8.9 billion. It just ratifies my feeling of optimism about the
future of the airline business world-wide. Also from Flight Control Waves is a
piece on the LATAM Airline Group situation
which is going to be the largest airline group in Latin America and in the top ten or eleven
world-wide. No doubt that 2010 has been a great year for airline consolidation,
Open Skies, code sharing and other alliances which are changing the nature –
for the better – of the airline business. A special thank you to Ian Bertrand
for his follow up commentary on Caribbean Airlines…Good work Ian!
Read the
following news items as listed here for the last week of 2010.
SAS shares jump after Lufthansa
report that it wants to acquire it
SAS shares jump after Lufthansa
report that it wants to acquire it
Delta Air Lines launches new
routes from Japan to Honolulu and Palau
Air France to launch new service to Washington from Paris
TAP Portugal launches nonstop service between Lisbon and Miami
Jetstar Asia and other LCCs expanding Chinese
networks
Xiamen and Mandarin Airlines to begin code share on two cross-Strait flights
Qatar Airways to expand China business with Air China
American Airlines to launch
nonstop flights to Tokyo’s Haneda Airport
All Nippon Airways and Hawaiian Airlines to
launch cargo code share service
Miami-Dade Aviation Department
reports November year-to-date cargo up 19.6%
Iguazu Falls will complete a
record year of visitors
Sunwing launches new route to Havana
Stay tuned by reading AirWaves – and have a great, prosperous
and happy New Year…Bob Booth!
Flight Control Waves
LAN and TAM ready to become Latam’s largest airline
The
December 27th issue of MercoPress South
Atlantic News Agency reports on Chief Operating Officer Ignacio Cueto’s comments
on a radio interview in Chile, which leads with the following: “Chile’s flag carrier LAN expects its merger
with Brazil’s TAM to clear regulatory hurdles and take flight in mid-2011 – We
hope by the middle of next year to be on solid ground to begin working
together”. The article goes on to say that the Cueto family – the main shareholder of LAN with a 40% stake – transferred their LAN shares into a new holding company via a public offering last
week, in what they said was a move to simplify their shareholders structure
ahead of the merger to launch LATAM Airline Group. It was the largest operation ever in the Santiago exchange involving $2.135 billion.
LATAM will be the largest airline in
Latin
America
with annual revenues of $8.5 billion, and an equity value of $14.5 billion and
6% of the world’s air transport. Last year the two airlines carried 46 million
passengers to 115 destinations in 23 countries. The Cueto’s have also included their stakes in regional airlines which they
control as part of the total shareholding in the planned airline, which will
simplify the transactions as they move forward.
The merged airline will be controlled by LAN with Enrique Cueto assuming the position of CEO of LATAM. TAM will have an important stake
although it will be the minority, with TAM’s CEO assuming
the position of Chairman of the Board. Other sources have estimated the
required Brazilian and Chilean government approval could come in the first
quarter of 2011 moving the launch date up to March 30,
2011. Viva
LATAM Airline Group. Stay tuned.
IATA increases its forecasted net
profit for airlines in 2010 to $15 billion
Majdi Sabri, IATA’s vice president for the Middle East and North Africa announced that the organization
has increased its forecast for the member airlines net profit in 2010 to $15
billion from the original estimate of $8.9 billion. He stated in an interview “This increase in our original estimate is
based on the fact that the global economic crisis on airlines is disappearing.”
Viva the airline business. Stay tuned.
Waves from Europe
Commentary
by David
Bentley
Annual review – forecasts, security, Middle East growth and snow
As the year comes to a close we have, in theory at least, more to look
forward to than in the last two years. In mid December IATA again raised its
profit forecast for the global airline industry in FY2010 to USD15.1 billion,
up from its September 2010 forecast of USD8.9 billion in net profit, in
response to a strong cyclical upswing in revenues and much better utilisation of airline capacity. IATA maintains though that
2011 will present “tougher conditions” for the industry despite upwardly
revising its profit forecast for FY2011 from USD5.3 billion to USD9.1 billion.
I say “in theory” for a reason. I dug back
into the archives and confirmed what I thought was the case – in December 2009
IATA forecast an anticipated USD5.6 billion loss
for 2010, significantly more than its previous projection of a USD3.8 billion
loss. So let’s look again at those figures. A projected USD5.6 billion loss
miraculously turned into an USD15.1 billion gain (an USD20.7 billion
difference) in the course of twelve months. For the mathematically inclined
that last figure is 42% of all the money IATA airlines lost (USD49.1 billion)
in the period 2000 – 2009. I know forecasting can be difficult – I do it myself
occasionally – but I’m afraid I can’t afford IATA any credibility at all, based
on that track record. I certainly wouldn’t take its tip on a good bet for the
Kentucky Derby or the Grand National.
The reasons given 12 months ago were that
would be renewed downward pressure on yields (that hasn’t really happened, the
recovery has been led by business travellers, going
back into business cabins) and upward revision up oil prices (again that didn’t
happen, until recently, with prices now over USD90 a barrel as I write).
So what will happen next year? Your guess is
as good as mine. And IATA’s.
Think of a number, double it, then divide it by your birth date, you’ve as much
chance of getting it right.
(ICAO was a little nearer the mark, predicting
a moderate recovery at the end of December last year, having got it completely
wrong the year before). IATA has provided one very useful service this year
and, ironically, just as Director General Giovanni Bisignani
prepares to step down, in favour of Tony Tyler, CEO
of Cathay Pacific. I don’t know Mr Tyler personally,
but I do know that he complained longest and loudest of any airline CEO during
the depths of the recession (which seems to be a job skill required of the IATA
CEO), almost ad nauseam at times, so airports shouldn’t expect that they are
going to be let off the hook because of a change at the top.
Mr Bisignani’s
comments last month concerned airport security, a subject that has taxed this
column frequently. His big idea is to introduce a new passenger security check
system at airports aimed at finding “bad people, not bad objects”, to replace the
current system. Under this new system, passengers would be directed down one of
three security tunnels depending on their ‘profiles.’ These profiles would be
based on biometric and flight booking data and not on racial or ethnic
profiling. The aim is to eliminate nearly all screening requirements, as well
as routine scanning and onboard luggage searches. IATA expects an introduction
of an early version of the systems in two to three years, if governments
cooperate.
This is certainly a step in the right
direction but I’m not convinced that biometric and flight booking data alone
will do the trick. Biometric data amounts to nothing if a terrorist is a ‘cleanskin’ (not already on the radar) and surely all
terrorists now know not to book one way tickets at the very last minute and pay
for them in cash? Some profiling will still be needed, such as ‘evidence-based
negative profiling’ which
involves identifying the high-risk category of travellers
and assigning more people to the ‘selectee’ category
for which secondary screening is mandatory. Only these high-risk travellers, so defined, would be required to face body
scans or intrusive pat-downs. This is broadly similar to the ‘safe/unsafe’
passenger system used in Israel, which has an excellent record of
preventing terrorism in the aviation sector.
As Bob Poole of the Reason Foundation points
out, the original
anti-skyjacking system developed by an FAA task force in 1969-70 used a
characteristics-based profile that was ruled constitutional by a New York
Federal court. It included 23 elements, of which only half of one percent of
air travellers met as many as six, according to one
of the task force’s members and all 19 of the ‘9/11’ hijackers would have been
flagged by that system had it still been in use in 2001.
From a distance I get the impression that for most
Americans the pat-down ‘don’t touch my junk’ issue was a tipping point and that
not only the U.S. government, but European ones as
well, need to wise up to the fact that air passengers have had enough. Next
April the liquids and gels ban will be relaxed in Europe, earlier than I expected, but
airport representative organisations are already
rushing to block it on the spurious grounds that the (alternative) technology
isn’t up to it. Passengers, who pay a fortune to purchase essentials airside,
will deliver their own verdict on that. Ask yourself this. What is the point of
worrying about 100ml or so of liquid in a bottle (or a thermos flask, the
latest source of paranoia) when the explosive du jour, PETN, cannot be detected by body scanners per se —only dogs
and swabbing have been shown to do that? What’s more, PETN can be shaped to
match body contours and worn like a vest that is unlikely to be spotted. And
then there is the next logical step for terrorists: body cavities, a method
that has reportedly been used already. Applying the same logic that the
Transportation Security Administration (TSA) has used to justify shoe removal
and liquid bans, if a would-be aviation terrorist is caught with PETN concealed
in a body cavity, TSA’s only logical next step would
be body cavity searches for everyone, which would be, well, interesting.
Moving on, this year’s alternative
Christmas message from the Middle East is hardly one of peace and love. The GDS Amadeus filed a report in November which found that
the Middle East is on the brink of becoming the world’s
dominant travel hub. A lesson in the obvious you may think, especially when it
bleats on about its geographic position at the centre of the major air routes.
But it also identifies the continued economic growth compared with the G8
countries and the major investments planned in the travel industry, including
USD86 billion for airports, as well as something that had not previously
occurred to me - that the number of tourists travelling
to the Middle East is projected to double to 136 million by 2020 compared with
54 million in 2008, driven by ‘religious tourism’. I’d always regarded the
region as a transit stop at best, not somewhere I’d like to hang around in for
long but evidently I’m in the minority.
(Perversely, our old friend Giovanni perceives
the centre of gravity in the airline industry to be shifting from the US and
Europe to the Asia Pacific and Latin America regions, with no mention of the
Middle East, but I’ll leave that debate for another day). But the growing
strength of some Middle East carriers, still thought by some European and North
American ones to come courtesy of ‘funding advantages’ has led to several major
slanging matches recently, including a virtual
severing of diplomatic relations between Canada and the UAE over traffic
rights. Speaking up for the Middle East carriers, Etihad
Airways CEO James Hogan claims Western airlines are trying to divert attention
from their own structural failings by deepening the dispute over the alleged
funding advantages of fast-growing Middle Eastern carriers and adds that they
are falling behind their Middle Eastern counterparts because of agreements with
unions, outdated infrastructure and hubs that were poorly located to benefit
from Asia’s ‘booming economies’.
This debate, together with the re-writing of
the rules on export credit financing that presently favours
developing countries over the US and main European
nations, looks set to dominate 2011. In the meantime I find it hard to disagree
with Mr Hogan when he talks about poor
infrastructure, having just witnessed the fiasco of the closure of the world’s
busiest international airport.
The UK wasn’t alone in
experiencing bad weather in December (and some British airports remained
staunchly open) but it is only Heathrow that seems capable of being rendered
inoperative for four days by a few inches of snow; infinitely less than that
experienced in the eastern USA and Russia. There will be plenty
of debate over the next few weeks and months as to the reasons (both the
British government and the EU are already threatening to fine airports that
fail to stay open in the future) but as far as I am concerned there are two
reasons, neither of which will get much of an airing because they concern
government strategy, and that is taboo. Firstly, the obsession here with Health
and Safety regulations (or ‘Elf ‘n safety’ spoken with a cockney twang as we
call it) which is designed to eliminate risk altogether, and secondly the
equally obsessive concern with global warming which has decreed that snow and
ice storms belong in the past (unless they can arcanely
be connected to ‘climate change’ as some have attempted to do) and which
ensures that no-one is his on her right mind would dare suggest to their boss
that some of the airport’s capital budget should be spent on snow clearing
equipment if they want to stay in their job.
Then there is the little issue of the hated
air passenger duty, which will raise GBP3.5 billion this year.
Could not some of that money be allocated to capital equipment for airports, at
least in the form of soft loans? Airports are not always in a position to pay
upfront these days (although Heathrow is) – according to ACI’s
annual Economics Survey, 25% of them made a loss last year.
David Bentley is Joint Managing
Director of Big Pond Aviation, a British-Canadian air transport research and
consulting company and who has been an industry media
commentator and analyst for much of the last decade. During this time he has
researched and written 12 management reports on a variety of subjects including
airport privatization and financing; low cost airports, airport security and
airline financing. www.bigpondaviation.com.
(Please see the banner advertisement). Thanks to Bob Poole for his contribution
to this article.
SAS shares jump after Lufthansa report that it
wants to acquire it
Shares of
the Scandinavian airline increased almost 15% following the report that Lufthansa is seriously interested in
acquiring the airline, which is 50% owned by Denmark, Norway and Sweden. The report by Bloomberg which stated that could
announce plans to acquire SAS during
the first half of 2011. One to watch –
stay tuned.
Air France to launch new service
to Washington from Paris
The new
daily non-stop flight will begin on June 6, 2011 with an Airbus 380. Washington will become the second
destination in the US with the A380, following service
to New
York launched one year ago. Viva
Air France – stay tuned.
KLM and Malaysia Airlines sign MOU to investigate closer links with each other
On
December 22 in Shanghai the airlines signed a Memorandum
of Understanding (MOU) which will strengthen the collaboration they have
experienced for the past 11 years. The aim, according to KLM CEO, Peter Hartman, “This MOU will strengthen the connection
between the two hubs; Amsterdam and Kuala Lampur. This partnership is an ideal opportunity to expand the number of
Australasian destinations we offer our customers.” KLM operate its flights daily to Kuala
Lampur using B777-200 and -300 aircraft. Way to go – stay tuned.
TAP Portugal launches nonstop
service between Lisbon and Miami
The
second US destination for the Portuguese
airline – after Newark-New York) – Miami is being served nonstop with five
weekly flights. Miami will become an important hub for
connecting flights in Central/South America and the Caribbean and TAP expects to grow the tourism market in both directions with its
new service. In 2010 the airline carried close to 175,000 passengers between Portugal and the United States, with Miami traffic growing 35% without any
direct nonstop service. Viva TAP Portugal – stay tuned.
Waves from the
Pacific
Air New Zealand receives its first 777-300ER, part of five extended range aircraft
The New Zealand airline is adding five 777-300ERs
to its existing fleet of eight 777-200ERs already in service. The first three
of the 777-300ERs will be used to operate between Auckland, Los Angeles and London beginning in April 2011. The
airline currently has 35 Boeing aircraft in its fleet and will be the first to
take delivery of the 767-9 Dreamliner, with eight on
order. Way to go – stay tuned.
Delta Air Lines launches new
routes from Japan to Honolulu and Palau
On
December 22 Delta has expanded its
Pacific service with two new routes from Japan to Palau and Honolulu. The nonstop B757 flights from
Tokyo Narita to Palau operates four times weekly and the Nagoya – Honolulu service is three times a week,
expanding its already existing service to Honolulu to daily. The service is
operated with B767-300ER aircraft. Viva
Delta Air Lines – stay tuned.
Garuda Indonesia will resume service to Taipei Taoyuan
on March 27, 2011
The daily
nonstop service will be operated with a B737-800 aircraft on a daily basis.
There are currently two airlines serving the route, Eva Air and China Airlines (which
operates via Hong
Kong). Stay tuned.
Low Cost Jetstar
signs agreements with Cathay Pacific and Dragonair
The
Australian LCC airline has signed agreements with Cathay Pacific and Dragonair in
order to penetrate Chinese routes and market. According to David Koczar, Commercial Director of Jetstar highlighted the new agreements as part
of the airline’s expansion plans in China. No word about code sharing – but sounds like it. Stay tuned.
Jetstar Asia and other LCCs expanding Chinese
networks
Singapore-based
Jetstar Asia has announced it will expand destinations
in the North
Asia
region, especially long and short haul flights connecting China. The airline also announced in a
press release it will add around 50 aircraft during the next five years and
plans to introduce the Boeing 787 Dreamliner in late
2012. Currently Malasia-based AirAsia has started 23 new flights to 10 destinations with 201 flights per
week. Zou Jianjun, a
professor with Civil Aviation Management Institute of China told the Global
Times last week, “Based on the popularity
of of low-cost carriers among budget travelers, it is
possible more budget airlines will spring up in China.” Viva China – Stay tuned.
Xiamen and Mandarin Airlines to begin code share on two cross-Strait flights
Xamien Airlines, (China)
and Mandarin Airlines (Taiwan) to
begin sharing codes on each of two cross-Strait flight routes from Xiamen City to Taipe and Kaphslung, beginning on January 1, 2011. Sun H.H., president of China Airlines Group, Taiwan’s largest airline and the parent of Mandarin Airlines,
stated last week: “The cooperation is between the only airlines
headquartered in the economic zone on the western side of Taiwan Strait and the
China Airline Group.” The two airlines will each carry two codes.
Flights between Xiamen and Taipei’s Taoyuan
International will increase to 14 weekly, and those
between Xiamen and Kaohsiung to three per week as a result of
the charing flight codes. It’s all about code sharing – stay tuned,
Qatar Airways to expand China business with Air China
Woo Yew Seong,
general manager
for Qatar Airways Greater China region,
announced that the China business one of the top ten
operations worldwide in terms of revenue. The Chinese freight market has also
been on the fast increase, and revenue from business accounts for around 5% of
the total Asia Pacific business. In a bid to expand its reaches, the airline is
investing over $1 billion in improvement of facilities at Doha International Airport. And the company will launch more
flights to the second-tier Chinese cities beyond cities served like Shanghai, Beijing, Guangzhou and Hong Kong,
as
part of its overall expansion plan. Viva
Qatar Airways – way to go. Stay tuned.
Waves from the Americas
Commentary
by Ian Bertrand
CARIBBEAN AIRLINES REVISITED… ONCE AGAIN
Caribbean
Airlines (CAL) has had a challenging period since it assumed control of the
operations of the start of its control of the operations of Air Jamaica in May 2010. It’s then Board of Directors that had
negotiated the deal, demitted office shortly after the May
24, 2010
general elections. The Board was only
replaced in November 2010. The CEO was
therefore left to manage the critical first six (6) months of the transition
period without corporate oversight. The new Board has since dismissed the CEO
so that the airline is now on its fourth Chief Executive Officer in four years
across two Boards of Directors.
Performance
of CAL to Date
There is
no doubt that CAL’s operational performance to date
has been far superior to that of its predecessor BWIA especially in the areas
of customer service and on-time performance.
Its
financial performance is an altogether different story. The airline started operations on January
01, 2007. Its audited financial statements show a loss
for 2007 and a profit for 2008. Its
management has stated that the airline was also profitable in 2009 and should
be profitable in 2010. The audited
financial statements for 2007 show a Loss of US$18.67 million despite a fuel
subsidy of US$13.65 million. In 2008
there was a Profit of US$5.46 million buttressed by a fuel subsidy of US$38.80
million. It is anticipated that in 2009 CAL will declare a Profit of c.a.
US$6.0 million supported by a fuel subsidy of c.a. US$6.2 million. The 2009 result shows in effect a break-even
position without the fuel subsidy, lending credence to the conclusion in the
original business plan that CAL needs a fuel price equivalent to
less than US$50/bbl to be in a position to achieve profitability. The self
sustainability of the airline at this time is therefore questionable.
CAL The Regional Airline
The
Governments of Jamaica and Trinidad and Tobago as well as CAL have positioned the airline’s Jamaica operations as the first step in
the development of a sustainable regional airline. The second step is supposed to be an equity
relationship with LIAT. However neither
CAL nor GORTT has ever made public the expected improved financial performance
of CAL due to the Jamaica operations.
In
summary, it appears that CAL is purchasing the right to fly, on a non-exclusive
basis, the routes owned by the Government of Jamaica (GoJ)
in exchange GoJ being given sixteen (16) percent of
the equity of CAL, with the right to appoint a member of the Board and provided
that GORTT first injects c.a. US$50M into the airline. CAL also has the option to use the
Air Jamaica brand but under defined conditions.
For the route rights to be truly effective, GoJ
would have to designate CAL under its international Air
Services Agreements to operate the routes.
It should be noted that an airline domiciled in Jamaica would not have to purchase such
rights.
This
Expansion Agreement was signed off by the last GORTT and reaffirmed by the
present.
There is
a transition period, not exceeding twelve months and expiring in April 2011
leading to the culmination of this Agreement during which Air Jamaica remains
operational. It seems that CAL is free to walk from the deal
with its exposure limited to any losses incurred during this transition
period. GORTT has already increased its
equity in CAL by c.a. US$24 million or roughly
half of the promised additional shareholder capital.
CAL has
also been taking advantage of the expanded route rights available to it as a
result of the recently negotiated T and T/USA “Open Skies” Air Services
Agreement and the airline seems to be focusing its USA operations on New York
as it attempts to position itself as the airline of choice to the Caribbean
from that city and the tri-State area, at least for its very large West Indian
populations. As a result, CAL has recently started direct
service from New York to Antigua, Grenada and Tobago.
Analysis
of the Jamaica Operations
It is the
hope that CAL’s Jamaica operations will generate
sufficient economies of scale as to make the expanded airline sustainable. CAL’s management has been moving
aggressively to secure such economies of scale.
Labour costs have been reduced and CAL is acting as the single purchaser
of fuel for both its own operations and Air Jamaica’s thus extending the GORTT fuel
subsidy to the Jamaica operations.
Since the
start of the transition period, however, Jamaica has aggressively continued to
successfully woo North American Airlines to either start or expand service to
the country. As a result, the
competitive environment within which CAL operates in Jamaica is much more intense than the Trinidad environment and not within CAL’s experience to date.
Operating
a fleet with a single aircraft type is a major contributor to generating
economies of scale. CAL’s management has recognized this is
and is moving to replace Air Jamaica’s A320 fleet with B737-800s, the
current CAL jet aircraft type.
Industry
scuttlebutt indicates however that the Air Jamaica routes, despite the GORTT
fuel subsidy benefit, have been losing an average of US$4.5M per month during
this transition period to date, May – November 2010. At the current rate of losses on the Air
Jamaica routes, all of GORTT’s capital infusion into CAL in support of the Air Jamaica
transaction would have been wiped-out by next May.
LIAT
Integration
There
should be a detailed examination of the benefits of a potential integration
between the expanded CAL and LIAT.
Combined aircraft acquisition with related maintenance rationalization
and schedule integration with the intra-regional and international operations
feeding each other should produce significant cost and revenue benefits.
It should
be noted however that LIAT’s operations are
significantly more complex than CAL’s and that LIAT is conducting this
more intricate operation with significantly older aircraft. Indeed from a regional perspective the
renewal of LIAT’s fleet is a far more urgent
requirement than the renewal of CAL’s turbo-prop fleet.
Summary
If in
fact we want to have a sustainable regional airline with CAL at the core, let’s pause, and
conduct the necessary strategic planning before making major capital, operating
and governance commitments that we may rue in the medium to long term. Who knows, but it may require a strategic
equity investment by say a major profitable industry player, such as a
successful Latin
America
airline, to ensure the regional airline sustainability that we have sought for
so long. A global entity with a
track-record in pioneering transactions in the global transportation sector can
be a valuable participant in such an exercise.
Ian Bertrand is the founding
Principal of El Perial Management Services, a management
consulting firm based in Port of Spain, Trinidad and a member of the 3-person
Coordinating Committee of Group El Perial, a group of
independent and complementary consulting firms. He is the air transport
consultant to the CARICOM Strategic Plan for Regional Development.
TAM has begun its first nonstop
flight between Sao Paulo and Bogota
The
Brazilian airline, partner in LATAM with
LAN Chile, has launched its first
daily non-stop service between Sao Paulo and Bogota, Colombia. The new route will be operated
with an A320. The airline currently serves 18 destinations in South America, the United States and Europe. During 2010 it has launched
service between Rio de Janeiro-London and Frankfurt, and between Belo Horizonte and Brasilia to Miami. Viva TAM and LATAM – stay tuned.
GOL closes a marketing agreement
with Brazil’s Passaredo airline
The deal
gives GOL access to the domestic
airline which operates more than 100 flights to 20 destinations in Brazil. With the agreement, GOL has added eight flights between
Porto Alegre-Goyana and between Rio de
Janeiro-Uberlandia (Minas Gerais).
For GOL, according to Claudia Pagnano, the
airline’s vice president of marketing, this is a strategic winner, since it
offers our customers more destinations within our route structure. Viva GOL-Passaredo
– stay tuned.
American Airlines to launch
nonstop flights to Tokyo’s Haneda Airport
The US airline has announced it will
launch nonstop flights from New York to Tokyo’s Haneda Airport on January
20, 2011.
More service to Japan – stay tuned.
Argentina’s November industrial production up 8.8%
According
to the December 24 issue of MercoPress South
Atlantic News Agency, Argentina’s November industrial production
up 8.8.%, says private index. The following is the
opening statement in the article: ‘Argentina’s industrial production in November continued to grow at record
levels, with output jumping 8.8% on the year, according to the monthly index
published by local think tank Fiel”. The gains were led by a sharp
rebound in manufacturing of automobiles, steel, non-metallic minerals and
textiles according to Fiel. For the complete article go to http://en.mercopress.com
Westjet airline plans to grow its preliminary deals into full code shares
Canada’s airline has announced plans to
grow its preliminary deals with American
Airlines, British Airways and Air
France-KLM into
full codeshares by the end of 2011, adding one per
quarter. Westjet also plans to add another Asian
airline in 2011, and hopes to find a Middle East partner in the future. Viva Westjet –
stay tuned.
Cargo Waves
All Nippon Airways and Hawaiian Airlines to
launch cargo code share service
ANA and Hawaiian launched a cargo code share service on December 22 on
flights between Tokyo and Honolulu. Under the agreement, ANA is placing its code on Hawaiian operated daily flights between
Haneda-Honolulu service - the flights are operated with
B767-300ER aircraft. The code share not only covers cargo shipped from Haneda to Honolulu, but taps the market for freight
between the cities throughout Japan and other Asian cities as well US
cities beyond Honolulu. Viva Cargo Code Share – stay tuned,
Miami-Dade Aviation Department
reports November year-to-date cargo up 19.6%
With a
total of 173,024 cargo tons handled in Miami in November it showed an increase
of 9.06% - for the year-to-date, 1,810,293 tons were handled for an increase of
19.6%.
The
following chart shows the top five carriers at MIA in November and
year-to-date:
November 2010 Year-to-date
Ranking Total freight %
change Ranking Total freight % change
1. UPS 14,865 17.45% 1. Centurion 162,755 61.625
2. LAN 14,671 -2.75% 2. UPS 160,358 19.1%
3. Tampa 12,758 7.75% 3. LAN 139,154 -7.17%
4. Centurion 12,526 101.45 4.
Tampa 138,311 16.29%
5. AMR 11,819 4.41% 5. AMR 115,627 11.85%
Cargo is driving the economy, or
vice versa. Stay tuned.
For more information contact:
Duane M. Riley, driley@miami-airport.com
Tourism Waves
Iguazu Falls will complete a
record year of visitors
According
to the December 27 issue of MercoPress South
Atlantic News Agency, over one million tourists (1,064,731) had visited
until Christmas Argentina’s Iguazu Falls national park, a number which
could reach 1.2 million when the 2010 calendar year is completed. Current
numbers indicate a 30% increase over 2009. Most visitors come from Argentina (62%) and Mercosur
associates (Brazil, Paraguay and Uruguay (10%), while the rest were from
overseas, mainly Spain, Italy and France. Viva Iguazu tourism – stay tuned.
Sunwing launches new route to Havana
The Canadian
airline has opened a new route to Havana, Cuba with two weekly flights.
According to the airline’s president, Colin
Hunter, “This is a first step and we
will see how the market responds.” Canada is the largest Cuban tourism
market with close to one million visitors in 2009. Hunter pointed out that the airline moves 365,000 tourists annually
to Cuba and serves 30 Canadian airports. Viva Sunwing –
stay tuned.
Fuel Waves
By Larry
Weaver
Interesting report out of Iran this past week. Iran, as do all OPEC countries, subsidizes the price of motor
gasoline for its citizens. The subsidy for Iran has been so much that their fuel cost has been
approximately $0.06 per gallon – Yes, that is SIX
CENTS per gallon. Needless to say, at this price, the Iranians were not
economizing on the use of gasoline. This has been especially true the last few
years when crude oil prices have gone up so that more social programs were
available and the general income level of the Iranian has gone up
substantially. Even to the extent, as I have noted previously, that Iran has to import gasoline to meet the demand as their
domestic refining capacity is not sufficient to meet demand. In addition, with
the economic embargo on Iran, they are having difficulties in importing equipment to
maintain their own refineries. As a result, they have had to cut the gasoline
subsidy to the point that prices have gone up over 1,500%...to more than $1.00.
There are indications that there will be further cuts in the subsidies
resulting in higher prices. Prices in the rest of the un-subsidized world are
at or over $3.00 per gallon but that is not a 1,500% increase! Oh, Iranian
officials speaking to the Oil Ministry's Petroenergy
Information Network, meanwhile, said energy consumption is expected to decline
significantly.
While we
are talking on the Middle
East, there are rumors that if
prices continue to increase above $100 per bbl, OPEC may hold an emergency
meeting to increase exports. The next regularly scheduled meeting is in June
2011.
Trading on the
petroleum markets is very light in this “intra-holiday” period. Despite this, February Brent was up $0.53 per bbl to
$94.38 per bbl on Tuesday and and February WTI
climbed 0.49$/bbl to $91.49 per bbl. This was despite the strengthening of the
US dollar during the afternoon period. Both prices lost about half their gains
early this morning. It appears as though the impetus for the rise came from the
demand on heating oil due to the blizzard in the Northeast
US and the lingering cold in Europe.
In addition the rate increase announced by China over the
weekend may have had some effect on these markets. Although the US DOE report
will not be released until tomorrow, the estimates are that it will show
heating oil consumption being up while gasoline and jet fuel demand was down
due to the cancellation of flights and the blocking of roads due to the
blizzard.
As I noted last week,
“As long as the economy stays ahead of the rising prices, we may have a Merry
Christmas and a Happy – and Prosperous – New Year which we wish for all of
you.”
Larry Weaver is an
Aviation Fuel consultant headquartered in Tampa, Florida with over forty
years experience in aviation fuels. He is the founder and President of Dellem, LLC. Prior to starting Dellem,
he was employed in the Aviation Sales Department of Texaco Inc, and was Manager
of Texaco Aviation's Worldwide Operations. In this capacity he was responsible
for aviation fuel quality control and wrote the Texaco international Quality
Control Manual. He has provided training and consulting in quality control and
product handling to Petroleos de Venezuela, the
National Science Foundation and his expertise to various other private
companies. Dellem has provided worldwide Fuel
Acquisition and Management services to airlines for over twenty-five years and
has managed in excess of 25 million gallons of fuel per month for Dellem's clients. Contact: lweaver@dellem.com or airwaves@avnewsinc.com Att: Larry Weaver
