The Paris air show 2015 saw EVA Airways order 5 new Boeing 777F, a $1.5 billion list price investment towards building its future cargo fleet. The move highlighted the Taiwanese carrier effort towards modernizing its cargo fleet yet consolidating most economically its entire long haul passenger and freight mission on 2 variants of a single 777 type.
Following retirement of its last MD-11 Freighter this past March, the airlines management had indicated its desire to retire its 8 Boeing 747-400F within three years.
In fact March 23rd 2015 saw the last scheduled flight of a MD-11F in the Taiwanese carrier’s color when registration aircraft B-16113 departed Taipei to Anchorage. The same aircraft, the last MD-11F still operating would soonafter arrive at San Bernadino, California for long term storage. Throughout the 21 years that the airline had operated the type, 12 MD-11 have served split duties between freighters (9 aircraft) and passengers (3 aircraft).
Alongside the MD-11F, the remaining portion of the cargo fleet had rested 8 Boeing 747-400F. These included 3 Boeing-built 747-400F dedicated freighters augmented by 5 Bedeck Special Freighter converted from passenger or combi airframes. While the dedicated freighter are generally brand new airframes equipped with Boeing’s factory-built nose cargo door loading system, the conversion variants always re-assign older passenger or combi airframes pulled out of service for a new life as a freighter. The heavily modified jets see their fuselage structurally reinforced, and are fitted with large left-side cargo door on the rear section of the aircraft main deck. The nose door loading system has proven extremely convenient for loading and unloading heavier / outsize cargo.
For EVA Airways Cargo the absence of nose cargo doors on its 6 MD-11F (MD-11 are not designed with a nose loading system) and 5 of 8 Boeing 747-400F aircraft suggested a logistics operations not built to accommodate the outsized loads niche market.
The absence of such a requirement augured well for the prospects of acquiring the highly economical 777F, a Boeing-built freighter variant of the ultra long range 777-200LR; a twin-engines 102 metric tonnes-capable alternative to the tri-jet 92 tonnes-capable MD-11F. Applying the same comparison to the 112 tonnes-capable but four-engined 747-400F tends to shine the 777F in an even more flattering operating economics light. With Eva Airways having already realized the benefits of acquiring 21 Boeing 777-300ER as the ultimate economical replacement for the MD-11 and 747-400 in passenger service, the freighter variant can only make more sense in light of the large experience and support structure already accumulated from the 777-300ER operation.
ANAC, Gabon’s main aviation authority in the capital Libreville announced the crash of a Bell 212 helicopter on Tuesday March 14th 2012 killing the two crews piloting the aircraft; a French and Austrian national. The helicopter went down at approximately at 1:30pm local time (8:30am New York time) while taking part in oil exploration/ seismic operations on behalf of the Perenco Oil company with CCG Veritas Services SA of France acting as the main contracting party. The crash site near the Iguela marsh land area, is located in Gabon’s southwest oil-producing hub, not far from the tiny oil-producing nation economic capital of Port-Gentil.
The Bell 212 helicopter registered D-HALS is owned by HELOG Lufttransport KG, a German company with advertised experience in providing helicopter transport solutions for seismic, off shore, MEDEVAC, government, outsize sling cargo load and training operations in Africa.
According to its web site, Helog has owned or operated until recently a mix of at least 2 SA 330 Puma helicopters, 4 Textron Bell 212/412 helicopters, 1 Eurocopter EC 145 helicopter and 1 Cessna Caravan from bases as diverse as Salzburg/Austria in Europe and Khartoum/Sudan, Heglig/Sudan, Abidjan/Ivory Coast, Conakry/Guinea and Freetown/Sierra Leone in Africa.
The Salzburg main base is also accredited to handle line and base maintenance operations in cooperation with Aerotechnik GmBH. It is in Sudan (Heglig) where Helog also conducts line maintenance that the Bell 212 were initially deployed in March 2008. The two aircraft initially leased from Agrarflug- Helilift of Ahlen, Germany arrived to support two SA 330 Puma helicopters providing oil fields logistical support.
In Sierra Leone Helog has operated via its “HELOG Aviation Sierra Leone Ltd” affiliate since being registered in 2005 using a SA 330J Puma helicopter. Recently, the company claimed it invested over half a million US Dollars to refurbish a Hovercraft to link Lungi International Airport to Freetown’s Aberdeen main land section.
In Guinea, two Bell 412 and one Bell 212 helicopters have also been stationed in Conakry as part of new offshore oil exploitation operation.
The seismic operation underway in Gabon follows up on the Anglo-French company Perenco recently awarded permit of exploitation. There the company has relied since 1992 on a combination of 29 off- and on-shore oil fields to produce 65,000 barrels daily.
This effort is taking place as the carrier is undergoing the most significant fleet modernization effort of its history. On December 13th 2011, Southwest Airlines finalized the largest order of airplane by value and airplane count in Boeing history. The $19 Billion dollar deal (at list price) for 58 Boeing 737NG (-800 variant) and 150 Boeing 737MAX affirmed Southwest as the launch customer for the highly fuel efficient MAX variant. With the 737-800 due to be delivered starting this year, the 2013 completion target date for the Evolve Cabin will give the carrier enough momentum before the introduction the 737MAX begins sometimes in 2017.
The new Evolve concept brings eco-friendly principles aboard the aircraft via introduction of more durable materials that are also easier to sustain, recycle or dispose of. But as well it appears that the new materials offer advantages in efficiency, cost and additional business opportunities.
The new Evolve cabin most visible achievement is to allow the Southwest 737-700 to accommodate 143 passengers instead of 137 previously. Significant gains in weight savings were made possible by using new fibers on the aircraft leather seats. The new fiber showcases the more durable and very light weight E-Leather fabrics that will cover the new seats. The weight economy is even more appreciable since the current aluminum seat frames have been retained in order to contain cost escalation. Southwest reveals that keeping the current seats frame made possible saving an additional $50 million on the upgrade work. With improved Ergonomics, the new Evolve design is also making additional under-seat space available for passenger comfort and/or carry-on luggage. The carrier credits the resulting reduction in seat recline from three inches to two inches for not protruding excessively anymore into the following row’s passengers private space.
However, the entire scope of measures permitting such far-reaching improvements encompasses employing smaller and lighter life-vest pouch, re-design of seats back pocket, lower-profile seats with re-designed headrest and lumbar support.
In addition to visual amenities such as lighter cabin colors, recyclable and more resistant carpet, new wind screens, and pervading use of aluminum, Southwest claims it has achieved nearly 6 pounds in seat weight savings and 635 pounds overall per aircraft quantifiable to nearly $10 million saved per annum. In all the Evolve Cabin represents favorable business initiative for the 737-700 fleet which will become even more economical to exploit. Awaiting the 737MAX family and the promise of double digit reduction in fuel burn and CO2 emission on the prowess of the CFM LEAPX engine platform alone, Southwest will still extract remarkable operating economics and customer appeal from its 737-700 fleet.
The Air France/KLM group just released its traffic figures for the month of December 2011. An overall improvement for passenger traffic of 7.5% from last year’s December (2010) was most dramatic in Europe with a 14.8% rise, the Americas came in second with a 9.0% increase, followed by Africa/Middle East with 5.1% jump. The carrier’s Asian network only saw a 4% rise in traffic while the Carribean/Indian Ocean network traffic only appreciated by 3.6%. The 6.11 million passengers transported this past December proved a double digit improvement to last year’s December’s 5.47 million (11.7% more). The net increase in number of passengers transported this year is a stern reminder of last year’s 5,100 flight cancellations that followed two rounds of extreme winter weather in December alone. The cargo segment in keeping with slowing demand, only recorded modest improvement of 0.3% in Revenue Tonne Kilometer and 0.1% in Available Tonne Kilometer.
Le Figaro newspapers citing financial forecast from Secafi Consultancy signals that Air France may have bled 183 millions Euros between April and September 2011 hence the premature exit of CEO Pierre Henri Gourgeon in this past October. The newspaper anticipates among other top priorities for new CEO Alexandre De Juniac a salaries and hiring freeze, a more limited engagement in Alitalia’s capital from the current 25% as well as more stringent cost controls measures at Air France (as KLM may have recorded profits during the same period).
Already, the carrier announced last week that it would suspend its Paris-Newark flights from April 20102 to October 2012 following a reduction from 7 to 5 weekly flights in the same route this winter. Retreating altogether from Newark would allow Air France to consolidate its flight operations to New York JFK airport while still retaining up to 13 daily flights to Newark Liberty in New Jersey from Heathrow, Amsterdam and Paris thanks to its Air France/KLM Joint Venture with Delta Airlines. A new strategic plan articulating entirely the various cost savings initiatives should be available as early as Thursday when Air France’s Board convenes.
Atlas Air, the world leader in cargo Aircraft Crew Maintenance Insurance announced Wednesday 21st 2011 it was “exercising right to terminate” 3 brand new Boeing 747-8F out of the 12 ordered since 2006. The 3 aircraft were due to be delivered in October and November 2011. The announcement indicates that because the 3 aircraft were among the first to be issued from the 747-8 assembly line, these ‘early-build’ aircraft did not incorporate the various design improvements installed by Boeing on latter (newer) build aircraft. The implication that performance shortcomings might be more apparent on these three aircraft it seems influenced Atlas air decision. Through Bloomberg.com, Jim Proulx, a Boeing spokesman explained that these 747-8 being “the first airplanes off the line are slightly short of expectations, these early-build models nonetheless will be great airplanes with unparalleled efficiency and low costs,” Elaborating on the aircraft ending being overweight following major re-design work of the wings that have cost the program the two-years delay also adversely impacting Atlas Air. William J. Flynn, President and Chief Executive Officer of Atlas Air Worldwide, hinted the decision from a risk management and operational performance point of view: “As prudent asset managers, terminating the first three aircraft was the right decision for our fleet, our customers and our stockholders. We expect the remaining 747-8Fs in our order to be better-performing aircraft than those we have terminated.”
Atlas Air will only receive 9 Boeing 747-8F instead of 12 ordered
This drastic decision will leave Atlas Air with only 9 of the 12 Boeing 747-8 it intended on operating. Having replaced the 3 aircraft canceled in the assembly, Boeing still intends on delivering 3 brand new 747-8 freighters to Atlas Air in October and November, 4 during 2012 and the final 2 in 2013. For Atlas Air, the priority is to honor its ACMI contract with British Airways with the 3 aircraft that will be delivered by the end of 2011. Another outstanding ACMI will see Switzerland-based global logistics provider Panalpina utilize the first 2 aircraft delivered in the first half of 2012.
Cargolux will operate 11 Boeing 747-8F instead of the 13 ordered.
The cancellation by Atlas Air follows Cargolux decision to “reject” 2 Boeing 747-8 Freighters. The Luxemburg-based cargo airline, launch customer of the type announced September 17th 2011 that its Board of Directors was suspending the 2 aircraft financing process through JP Morgan pending resolution of contractual issues with Boeing. Underlying the dispute seems to be Boeing’s two years delay in delivering the brand new freighters. Industry insiders have speculated that after Qatar Airways recently acquired a 35% stake in Cargolux, frustrations with Boeing’s continuous delays for delivering Qatar Airways 787s would find indirect repercussions. Nevertheless Atlas Air position regarding under performing early-build aircraft, and Jim Proulx candid admissions may be the hard facts in the 747-8F undercarriage.
Cargolux which incrementally received 16 Boeing 747F between 1993 and 2008 now stands to operate 11 Boeing 747-8F instead of the 13 initially planned. Atlas Air still intends during the year 2012 to withdraw from use 4 aging Boeing 747-200F built between 1979 and 1985 along with a Boeing 747-300F built in 1985. For any trip, the performance shortcomings affecting the 3 early build aircraft can easily negate part of the 16% added cargo capacity claimed against a 747-400. Furthermore the substantial and scarce capital investment required for acquiring a new 747-8 versus a second-hand 747-400BCF practically makes the former option much less optimal. Both carriers will thus resort to used 747-400. As for Boeing, the Cargolux decision completely upset plans for the various celebrations programmed between September 19th and 21st, dates at which the 2 aircraft were to be handed over to Luxembourg-based carrier. With official delivery of the first 787 to launch customer All Nippon Airways planned for Monday September 24th 2011, Boeing is looking forward for a celebration after all.
The Boeing Company unveiled Saturday August 6th 2011 the first Boeing 787 scheduled to enter service with launch customer airline All Nippon Airways early next month. The event took place at the manufacturer’s Everett facility in Washington State. Japan’s largest carrier with an outstanding order for 40 Boeing 787-8 and 15 787-9, plans to debut the aircraft operation with a ‘special package tour’ international charter flight organized between Tokyo and Hong-Kong once the aircraft final acceptance tests will be completed. Subsequently the carrier will introduce it on regular domestic flights between Haneda and Okeyama, as well as Haneda and Hiroshima. While the aircraft is supposed to set new standards of operating economics for its class, ANA has been keen to highlight the unrivaled comfort of the new aircraft as its main value proposition for passengers.
The New Aircraft Comfort Value Proposition
The aircraft designers argued that a re-engineered cabin air quality and circulation system could add ‘unseen comfort’. A four-point air conditioning venting system now replaces more traditional 2-vents air recirculation systems allowing passengers to enjoy fresher air. The refreshed ambient air is supplemented by higher cabin humidity as typically found flying at lower altitude. Passengers comfort also benefits from the larger cabin windows and an overall more spacious interior ergonomic interior with bigger individual luggage overhead storage bins. The LED lights and electro-chromatic windows use a dual approach to optimize cabin light dimming. For its Domestic network, ANA is introducing 787-8 aircraft powered by Trent 1000 engines. The selected configuration allows a 2-class passengers service to comfortably link the US West Coast. The aircraft is set to dominate its class by being able to fly out to a range of 8,200 nm or 15,200 km at up to 13,000 m (40,000 ft) in altitude at a speed of Mach 0.85.
Designed For Aerodynamic Performance
The lowered overall weight of the aircraft, due to the more widespread use of composite materials and the elevated bypass ratio of the Rolls Royce Trent 1000 engines (from 7 on current design to 10) play both a critical role in making the aircraft 20% more fuel efficient. The resulting benefits for the environment are the diminished amounts of carbon dioxide, hydrocarbon, nitrous oxide and carbon monoxide released in the atmosphere. The ‘see-saw’ shaped engine nozzles noticed at the rear of the nacelles are responsible for reducing the noise footprint of the aircraft by 60%. These achievements must not obscure the aerodynamic elements that have formed the core of the aircraft design from day one: higher aspect ratio wings fitted with raked wing tips and the implementation of highly efficient vortex generators for further drag reduction. On the 787, raked wingtips as in the 777 Longer Range models contribute to minimizing wingtips vortices and induced drag. It seems the slight upward curving at the 787 wing extension is a hybrid design implementing both blended winglets and raked wingtips features. This approach we believe is responsible for the remarkable performance improvement in cruising speed: despite high aspect ratio wings, a Mach 0.85 figure is achieved during cruise. This is better than the powerful 777 speed (Mach 0.84) and unseen since the venerable 747.
Since 1990, a total of 1,242 Boeing 777 were ordered by carriers. With 827 firm orders From 2004, the 787 has garnered enough orders to position itself favorably in the continuity of other successful Boeing long haul aircraft design. This highly advanced aircraft is what carriers had been longing for in order to replace the versatile father of ETOPS Boeing 767 orders in amount of 1,057 units since 1978. Boeing also surely appreciates keeping a little edge on the Airbus upcoming A350 design.
The month of June 2011 will remain one of Airbus’ most spectacular with massive aircraft sales being realized by the manufacturer particularly during the Paris Airshow held at Le Bourget Airport between June 20th and 26th. With 667 aircraft sold, the A320neo provided for the greater part of the staggering $72.2 billion worth of sales realized by the manufacturer (Airbus has revealed that commitments comprising Memorandum of Understanding for 312 aircraft are worth US$28.2 billion and firm purchase orders for 418 aircraft are worth around US$44.0 billion). The A320 “New Engine Option” was first offered commercially by Airbus in December 2010 as the latest improvement of the already highly successful A320 single-aisle passenger aircraft family. Since then, the A320neo has amassed 1,029 orders. The ‘neo’ has been marketed as the newer ‘eco-friendly’ highly fuel-efficient version of the A320 family with which a 95% airframe commonality is retained. In fact the introduction of ‘Sharklets’ -referring to the new aggressively-designed blended winglets smoothly integrated to the wing tips- will be one way to differentiate the A320neo from the standard A320 family. However most of the performance improvements will come from the ‘New Engine Option’ with the introduction of the innovative Pratt & Whitney PurePower PW1000G and the alternative CFM International LEAP-X. Together with the ‘Sharklets’, the Pratt & Whitney PurePower 1000G promises what Airbus claims will be “fuel savings of 15% translating in additional flight distance of 500 nm or two tonnes of payload at a given range”. The direct benefits for the environment are “3,600 tonnes less CO2 per aircraft per year” as well as “a double-digit reduction in NOx emissions” and “reduced engine noise”.
The ‘Sharklets’ that will be installed on the A320neo are wingtips aerodynamic vertical extensions very similar to the blended winglets designed by Aviation Partners and now commonly sighted on Boeing 737NG, 757 and 767 aircraft. With their aggressive curved design, sharklets serve the same purpose as blended winglets: improving air flow around the aircraft wingtip and generating smaller trailing vortex thus reducing overall aerodynamic drag. The Blended Winglets concept as applied to Boeing aircraft is known to have resulted in a drag reduction of 6%, accruing range from 80 to 130 nm or an extra payload of 910 to 5,800lb on Boeing 737-800 while Boeing 737-700 gain 110-130 nm more in range or 1,100-4,400 lbs of extra payload on similar routes. On the A320neo, the Sharklets are expected to provide more than 3.5% savings in overall fuel consumption on long routes, while also improving overall performance, inclusive of take-off and range/payload (extra 1,100lbs or added range) in comparison to the standard A320.
The Pratt & Whitney PurePower 1000G
Pratt & Whitney PurePower1000G will initially power A320neo. The PurePower development program is more than 20 years old and benefits from more than $1 billion in research and development funding. The ubiquitous Fan Drive Gear System is now reaching full maturity, guaranteeing reliability and durability. A remarkable 12:1 bypass ratio is achieved by incorporating within the huge engine nacelle a large fan linked to a small engine compressor core via a gearbox. This set-up directs as little as 10% of the air being ingested in the nacelle to the engine core while the remaining 90% is used by the variable speed fan to provide so-called bypass thrust. As a result the PurePower® PW1000G engine provides a 16% fuel burn improvement with a noise footprints also reduced by 75%.
The new Dynamics Regarding Airbus Order Books
Of the 1,029 A320neo ordered since launch, 667 commitments worth some US$60.9 billion were registered during the June 20th-26th Paris Air Show:
-Cebu Pacific order for 30 A321neo plus options for 7 A320 actually took place on June 16th 2011.
-GECAS orders 60 A320neo on June 20th 2011
-SAS orders 30 A320neo family aircraft June 20th 2011
-Air Lease Corporation orders 50 A320neo family, 11 A330 and 1 A321 on June 20th 2011
-TransAsia Airways orders 6 A321neo on June 21st 2011
-CIT orders 50 A320neo on June 21st 2011
-Garuda Indonesia signs MOU for 25 A320 for low cost unit CityLink June 21st 2011
-JetBlue orders 40 A320neo (MOU) June 21st 2011
-AviancaTaca orders 51 A320 (including 33 A320neo) June 22 2011
-Republic Airways Holdings (Frontier Airlines) for 40 A320neo and 40 A319neo on June 22 2011
-IndiGo orders 150 A320neo and 30 A320 June 22 2011
-LAN orders 20 A320neo June 22 2011
-ALAFCO orders 30 A320neo June 22 2011
-GoAir orders 72 A320neo June 23 2011
-Air Asia orders 200 A320neo June 23 2011
Some 34 standard A320 family aircraft worth $2.8 Billion were also ordered during this rush confirming the relevance of the standard aircraft. The updated Airbus June 2011 listing reveals a total of 7,562 A320 family ordered to date with 4,638 aircraft delivered to 233 customers (260 operators). This includes 80 A318, 1470 A319, 5080 A320 and 932 A321.
Meeting Production Goals
As sales of other aircraft have been relatively modest (commitments were received for 11 A330s worth US$2.4 billion, six A350s worth US$1.6 billion, and 12 A380s worth US$4.5 billion), Airbus is allocating manufacturing resources to fulfill strong demand for the A320 .With the A320neo projected availability date set for October 2015 and the introduction of the A319neo and A321neo models at a later date, output rate is being increased to 42 aircraft per month in the fourth quarter of 2012. Already on June 3rd 2011, Airbus had announced that it was immediately dismantling the multi-national A320 passenger-to-freighter joint conversion program that had involved Russia’s United Aircraft Corporation and Irkut since 2006. On June 29th 2011, Airbus announced that production of A320 rudders by Chinese partner Hafei Airbus Composite Manufacturing Centre (HMC) would rise from 3 per month currently to 21 units per month by 2014. However Toulouse where the initial A320 assembly line remains will build most A320, with Hamburg retaining the manufacturing of A318 and probably A319neo and A321neo. Tianjin, home of the Chinese Harbin Hafei Airbus Composite Manufacturing Centre which has assembled to date 50 A320/A321 aircraft is also likely to grow work orders for the ‘neo’.
Airbus new fortunes are putting Boeing in an awkward position as a new replacement design for the Boeing 737’s 1965 design ( whose fuselage was inherited by the older 1950s Boeing 707) was recently postponed until about 2018. It now seems that a new design re-evaluation must be developed now under very stringent time constraints in order to avoid losing significant market shares. Expectations that the ‘neo’ will be made available as an aftermarket retrofit kit involving ‘Sharklets’ and the PurePower Engine also remain widespread. This option would defer new aircraft upgrades as carriers will become confident that their A320 retrofitted to the ‘neo’ standard remain competitive. However this approach may buy additional time for Boeing to orchestrate a viable commercial response to the A320 ‘neo’ threat.
We are publishing excerpts from an interview published in the French daily newspapers Le Monde issue of May 20th 2011 and Air France news portal of Pierre Henri Gourgeon, Air France’s CEO. The interview follows the group announcing it had realized a 122 million euros ($174 million) profit for the 2010-2011 fiscal year ended March 31st 2011, reversing 1.3 billion euros ($1.85 billion) lost a year before.
The 65-years old Aeronautics Engineer became Air France CEO in January 2009 after serving as Deputy CEO from June 2004. He is likely to remain at that post through 2015 pending confirmation at the next board meeting on July 7th, 2011. The 122 million euros profit just announced by the Air France-KLM Group is a big turn around from the 1.3 billion euros lost in 2009-2010. His latest ‘Embark’ strategy will focus on security of flights and attention to customers needs. He hopes to be able to further reduce the Group’s debt ratio which went from 1.15 in March 2010 to 0.85 currently (the target is 0.5 within 3 years). Better process integration across KLM and Air France remain a big objective; finance, accounting, IT, and streamlining wherever redundancies remain from the 2004 merger.
The 2009 turn-around plan is now set to generate up to 1.4 billion euros ($2 billion) in savings (900 millions euro-$1.28 billion were expected); better offerings on European flights and strong products on the long haul have been introduced. The cargo business did turn around positively a year ahead of planned. Labor reductions contributed 600 millions euros ($855 million) in savings. Interestingly enough he reveals that fuel cost makes 20% of medium haul fare and a third of long haul’s.
The so-called provincial bases (Marseille debuts October 2nd 2010 plus 3 others in 2012) could generate cost savings of 15% which coupled to higher aircraft utilization and flexible personnel schedules (more flying hours in fewer days) would create the foundations for a low cost operating infrastructure.
The long haul North Atlantic sector will see stronger joint ventures and a re-invigorated Sky-Team alliance. Thanks to a deeper network in the Chinese market, the CEO claims being immune from the competition from the Gulf carrier.
Virgin Australia and Air New Zealand announced a new business alliance that would improve both carriers outlook for passengers transportation services between Australia and New Zealand. The new alliance will bring deeper code sharing agreements easing travelers connections on routes operated across the two carriers in the newly expanded network. Such travelers will benefit from unrestricted access to any one carrier’s lounge. Cross-honoring Air New Zealand’s Airpoints loyalty programme and Virgin Australia’s Velocity Rewards programme will further stimulate market share gains for the two participants. In the end both carriers are to share profits.
A profound alteration of flight services schedules will reflect the nature of a deal aimed at providing additional convenience to travelers, market share consolidation, flexible adjustment to seasonal demand and a somewhat limited attempt to streamline flight operation for cost reduction.
Integrating two networks.
The new agreement will permit joint operation between two carriers with already dense networks that currently integrate 26 and 31 destinations, respectively for Air New Zealand and Virgin Australia Blue Flight domestically and across the Tasman Sea.
The schedules re-adjustments that will take place will nonetheless restrain both carrier to capacity levels below limits stipulated by regulating agencies like the Australian Competition and Consumer Commission (ACCC) and New Zealand Ministry of Transport (MOT).
Improving flight convenience for air travelers, the main driver behind the deal as a mean to improve overall market share will be achieved through the following:
Double daily services have been put in place between Christchurch and Sydney, Christchurch and Melbourne and Brisbane and Christchurch where the two airlines will equally share four daily flights. Travelers are offered more flights opportunities at much improved departure times in the morning and afternoon/evening.
The Queenstown-Sydney flights are now set to operate at least five days a week. The Wellington to Sydney route will be solely operated by Air New Zealand twice daily again with conveniently scheduled departures in the morning and afternoon/evening.
Routes that were previously operated by both airlines have been restricted to one airline operation wherever expedient. This measure consolidates a carrier on routes where it already enjoy a higher market share allowing the other carrier to cut operational cost and streamline flight operations while still enjoying sizable profit. To date Air New Zealand maintains a market capacity share of 70% against Virgin Australia Pacific Blue 30%. To that end Virgin Pacific Blue will assume all flight services between Brisbane and Wellington, Sydney and Dunedin as well as between Melbourne and Dunedin. In addition the carrier will operate the two daily services between Brisbane and Wellington in the morning and afternoon/evening.Air New Zealand will be left to conduct all the group’s flight operations on the Wellington-Sydney and Auckland-Cairns routes.
This latest alliance incorporates anti-competition provisions that stipulate capacity thresholds under which the joint venture is mandated to operate. Accordingly, capacity on Air New Zealand’s Auckland to Adelaide services will increase by 16% and
Auckland-Perth flight services will increase in frequency to eight times per week adding another 4% capacity to the route. Overall capacity into and out of Wellington will also grow by 3.5% in average, thanks to a marked increase of 10.5% on the Melbourne direction and another 5% increment to Brisbane services being counter-weighted by a 14% drop on the Christchurch route.
A Joint Business Agreement is being sought from regulators in three nations as Qantas and American Airlines seek to deepen their commercial relationship. Applications have been filed with the Australian Competition and Consumer Commission (ACCC), the New Zealand Minister of Transport and The U.S. Department of Transportation. An approval will allow the JBA participants to maximize their market share on the South Pacific routes between the US, Australia, New Zealand and further.
Both airlines recognize that with American Airlines ability to offer up to 1,010 weekly flights to 37 destinations in North America, along with Qantas new 4 weekly services to its Dallas/Fort Worth hub (where both carriers implements code-sharing agreements to 54 destinations since March 2011) significantly increase connections opportunities for travelers connecting from Australia and New Zealand. The business benefits can be extensive if both carriers can increase flight frequencies and orchestrate their schedules around shorter connection time. The dual advantages of the agreement present the same opportunities on Trans-Pacific services where travelers from North America will find more convenient gateway access to Australia and New Zealand destinations. The marketing initiatives underlying the deal will allow both carriers to jointly introduce more competitive fare structure and products with a simplified booking process for corporate customers and travel agents, offer more consistent discount pricing on American Airlines Vacations packages and cross honor frequent flyers travelers miles.