Archive for the ‘Regulations’ Category
I shambled through Boston a little while ago and initially got subjected to the usual routine. All travelers know it by now but this time it was slightly different. The security operative was kind, thoughtful, and funny making the run through the gauntlet a pleasant experience. Just as I was about to clear his area he let it slip that he was a commuter airlines captain who had lost his job…. Well I hope you found another my friend.
The TSA has a hell of a job but on both sides of the Atlantic the species are a little similar. We KNEW what would happen on September the 12th 2001. It stands to reason, all a bureaucrat monolith needs to swell its power and influence is a great activator – and it got it.
We all understand the need for security, we live at the pointy end and are responsible for delivering it. What rankles is the tawdry way that we are treated and subjected to what can best be described as security for security’s sake. We are low hanging fruit, easy to hit and point to as a shining example of “The security apparatus in action’. Bullocks!
See what Robert Mark has to say about a recent issue over in the US concerning the TSA – it makes interesting reading.
……………………………… Open Skies was entered into with a certain amount of good faith being committed on either side. As with any deal, it is only worth anything to both parties if the agreed terms are abided by. There is a clause within this contract that states that an exit point, 2010 I believe, may be utilized if either party considers that the terms have not been met. Open Skies collapses and the previous status-quo returns. At the time of signing, the cynics among us Europeans were convinced that the US would take whatever measures were necessary to get the ball rolling then renege when it came to opening the US internal market to European carriers. We all thought at the time the hands were shook that for perfectly understandable political reasons, the US would be highly unlikely to open their skies – a ‘no brainer’ really. They signed the instrument anyway to the consternation of carriers on both side of the pond (that one has always confused me). Well, the US administration bet heavily that the Europeans, being fractured across national grounds and consumed by hubris, would paper over that gaping chasm and cave in when ‘push came to shove’ in 2010. That crossroads, when it arrives could be illuminating and may well shape the climate across the Atlantic for a considerable time after its passing .
….”But John Byerly, deputy assistant secretary of State for transport affairs, says the visit to Brussels is in part to make one thing clear: Those in Europe still clinging to the hope that the ownership issue can be revisited are mistaken. The issue is dead, adds a second U.S. government representative, noting that the realization “hasn’t sunk in over here.”
…………………………… In the world of international negotiation this is all to be expected really, particularly when dealing with an entity as disorganized and vacuous as the EU. So ‘well done the US of A’ I say; we deserve all we get and more for being so stupid… if we ‘stack’ in front of a good hand, well engineered.
Antitrust authorities on both sides of the Atlantic levied heavy fines against British Airways and Korean Air for their participation in conspiracies to manipulate fares and surcharges on both passenger and freighter flights throughout this decade.
The carriers, which pleaded guilty and have agreed to the penalties, are among several that have been under investigation by the US Dept. of Justice and UK Office of Fair Trading since last year.
European and US authorities launched their probe into an alleged cargo price-fixing cartel 18 months ago and soon thereafter were joined by counterparts in Asia. In June 2006, BA and Virgin Atlantic Airways were targeted for colluding on passenger fuel surcharges. A portion of those investigations came to end yesterday with the guilty pleas and the announcement that DOJ will fine BA and KE $300 million each while OFT exacted its own £121.5 million ($246.8 million) punishment on the UK flag carrier.
“The Dept. of Justice is committed to vigorous antitrust enforcement and will continue to bring to justice those who fix prices and thereby deprive the American public of the benefits afforded by a truly competitive market,” Attorney General Alberto Gonzales said.
More from ATW
That bold statement stands really well against US reaction to Open Skies and subsidies to US carriers since 9/11. Appalling hypocrisy would be nearer the mark after moves like that. I wonder what sanctimonious rubbish will spew forth when BAE are swung into the US gunsight?
I wonder how open to scrutiny other prime US contractors are at the moment not to mention the major aerospace players and other US contractors in the Middle East. Is it time for a trade war where we squeeze each others nuts to pulp? Greasing palms is a way of life in the East, no grease, no contract. It is just the way it is for ALL of us lining up for business and jobs out there. What is worse, is that the US Government is well aware that this is the case and being highly selective about where it casts its net. IMHO.
This story has a long way to run.
British Airways yesterday appeared unaffected by Air France KLM’s confirmation that it might be interested in acquiring Iberia.
“I don’t know whether they’re interested or not, but it’s irrelevant to our assessment of the issue,” BA CEO Willie Walsh said following the carrier’s annual shareholders meeting in London. “We believe €3.60 ($4.96) [per share] is a fair price to offer,” he said, noting that the group is “prepared to be patient” on a possible acquisition and is “not getting frustrated by anything.”
BA, which holds 10% of IB, is part of the TPG-led consortium that approached the Spanish carrier in May with a preliminary offer. BA Chairman Martin Broughton told investors he believes a “joint approach with TPG is in both Iberia and BA’s interests,” Thomson Financial reported. “In the long term we see the relationship strengthening, but Iberia is not a sufficient strategic priority for us to tie up more capital.”
He reiterated that BA has ruled out “further capital investment as part of any consortium offer and will not make an independent bid for the airline.”
Air France KLM on Monday disclosed that it is looking at Iberia, “among others,” as a possible merger target as it aims to make its mark in European airline consolidation. It did not confirm it was in discussions with IB. According to several reports, AF KLM would team up with Apax Partners to launch a bid for €4 per share.
BA also said it will resume paying a dividend for the first time since 2001. “Acknowledging that we are approaching our 10% margin target and have addressed the pensions deficit, the board have decided on a dividend policy for the current year,” Broughton said. “We intend to start dividend payments at a level that will allow them to grow over time and be consistent with other cyclical companies and our major airline competitors.”
by Cathy Buyck ATW
I am slightly puzzled. With the 30% shares that BA hold in Iberia and the options on another tranch, where does AF/KLM think they are going with this? Do they believe that BA will sit back, do a deal then take the money and run? Nothing I have heard has indicated that there is the slightest chance of this.
Perhaps this explains Willie’s laconic and dismissive attitude to the the proposal.
I wonder if the companies recent purchase of 25 million shares has anything to do with this…. “share exchange is no robbery?” Naaa!
Air France KLM confirmed yesterday that it is looking at Iberia as a possible merger target as it revealed its aspiration to participate in Europe’s continuing airline consolidation.
“Air France KLM, the world’s leading airline group in terms of turnover, once again confirms its intention to take an active part in the consolidation process in the air transport industry,” it said in a statement. “In Europe, Spain is a one of the major markets and Iberia an important player in air transport. Taken in the perspective of much-needed consolidation for the efficiency and profitability of the air transport sector, it is therefore quite normal for it to be examined among others.”
AF KLM’s announcement followed a report in the Spanish business paper El Economista saying the Franco-Dutch group will take part as an industrial partner in a consortium led by Apax Partners to launch a bid for IB. The consortium would be willing to offer €4 ($5.51) per share, valuing the Spanish carrier at about €3.81 billion.
US investment firm TPG has approached IB with a preliminary offer of €3.60 per share. Several other investment funds and British Airways, which holds 10% of IB, joined the TPG-led consortium in May, when AF KLM denied it was in talks with the Spanish carrier. The IB board only last week agreed to “make the delivery of all the information requested” by that consortium available as long as a “formal and binding offer” resulted.
by Cathy Buyck ATW
Is this a signal that AF has ambitions to create a European supercarrier? It looks from a distance (and I home it remains a distance) like the aspirations of the French government are spreading to the air after abject failure at a ‘Federal level’ in Brussels.
Would the European Commission pass this one? If they did they would rather be giving the game away as it would create a major imbalance in the markets with a monolithic airline.
Bmi Group is buying five A330s and five A321s to support its “strategy of developing new mid-haul and long-haul routes from London Heathrow,” the carrier announced yesterday.
The five A330s are worth approximately $500 million, bmi said, and will join three already in service with the carrier. First delivery is scheduled for next spring. The A321s, valued at $250 million, will feature on a short-/medium-haul network boosted by the February acquisition of British Mediterranean. No engine choice was announced.
Group Chairman Michael Bishop told ATWOnline this spring that the company preferred to continue using and developing its LHR slots despite increased interest from potential buyers or renters in advance of open skies. Yesterday, CEO Nigel Turner said he was “delighted that we are able to proceed with the development and expansion of our medium- and long-haul services” and that the 10 new aircraft “will allow the introduction of new routes and upgrade capacity on existing services in these two important sectors of our business.”
Turner said an expanded short-/medium-haul winter schedule will be announced “shortly,” with BMED scheduled to be fully integrated into bmi’s operation by Oct. 28. Long-haul network plans should be unveiled “later this year,” he said. The addition of the new aircraft will lift the Group’s fleet to 75.
Bmi is expected to launch services to the US from LHR when the EU-US open skies agreement goes into effect at the start of next year’s summer schedule. It currently serves Chicago O’Hare and Las Vegas from Manchester. The company holds about 13% of the slots at LHR and has been lobbying for almost a decade for the right to operate to the US from the airport.
by Cathy Buyck ATW
The Indonesian airline industry was dealt a blow by the European Commission, which reportedly has banned all 51 registered Indonesian carriers from operating into the EU.
While no Indonesian airlines currently fly to EU member states, an EU spokesperson warned that “European citizens should avoid flying with these carriers. They are really unsafe,” in a statement cited by The Times of London.
The move follows the Indonesian government’s decision to revoke the operating certificates of nine airlines that failed to improve safety standards after a series of accidents earlier this year. The Directorate General of Civil Aviation found that none of the country’s 20 major carriers met international safety standards, including eight that were given three months to rectify significant shortfalls or facing grounding.
In April, US FAA lowered Indonesia’s safety rating to Category 2 while the State Dept. criticized the DG’s review.
Indonesia’s ambassador to the EU, Nadjib Riphat Kesoema, reportedly claimed that “Indonesian airlines are safe” and said he hoped the EU would review its decision at an October meeting. A number of carriers, including Garuda Indonesia, Lion Air, Mandala Airlines and Indonesia Air Asia, recently have placed significant orders for 737NGs and A320s to replace aging fleets.
by Geoffrey Thomas ATW
What a blow to the prestige of Indonesia and a ‘timely’ move on behalf of their regulators. By intervening they stand a chance of cleaning up their act and meeting conditions for a return to ‘respectability’. Their credibility will hopefully (for them) be protected/enhanced by being proactive. What a shame it probably took a major kick from the EU/FAA to prompt the action, as was almost certainly the case.
Were I a manager in an airline’s Flight Operations department surveying the world from my Ivory tower I might be stroking my chin as I survey the pilot supply chain landscape. It is changing.
The laws of supply and demand are cruel and unbreakable, my brief is to keep a heel on costs and deliver bums to highly technical and fast moving seats – and talented, competent bums at that. How on earth am I going to do that without losing control of cost by using money, or cranking up the numbers that I need by providing a luxurious work schedule? Whichever way you cut it, I have a problem on my hands and the size of that problem depends where I am in the ‘glamor’ stakes in the pilots desirability league. This league is defines by money, jets, route networks and general working conditions, we each chose the order of priority that we assign, they are merely the major categories. Into that pot must be sprinkled career aspirations, advancement to command time and other opportunities.
A fair days work for a fair days pay has always been a reasonable mans guiding principle in his analysis of what he takes home to the wife and kids. That same man is being assailed by stories from the City where a spotty youth with a quick brain, good contacts and a sharp suit can make what I get paid in a year as a bonus to his salary.
Green eyed monster? Not really, I wouldn’t want his job nor he mine necessarily, but that is a reality and it forces us all to mull over what we think is a reasonable days pay for what we do. I am reasonably happy with my lot but I want to stay happy – and the equation is not just about money, it never has been. It is about about lifestyle, the battle to retain of terms and conditions of service that I enjoy, and the retrieval of those that have been lost over the last few years. That battle is the cloud that spoils the morning for our manager in his Ivory tower.
I am hoping (as if you never guessed) that the pilot shortage is going to bring about a shift in thinking where it comes to the treatment of aviators around the world.
We have talked about demand, now let’s look at supply. Given the magnitude of the shortages and available lead time to make them good – in the East particularly; something clearly needs to done. It takes a quite a time to produce a pilot, around eighteen months to two years. At the end of that process he pops out of the system, now available to be trained by the airline into his specific (normally short haul) aircraft type. That’s another two to three months effort – add holiday and administration delays, and two and a half years isn’t unrealistic. With the rates of expansion of the airline system in these pressed areas, is there that much time available to create a pool of sufficient size?
Enter a new initiative, the Multi crew Pilot License (MPL). Much has been written about the MPL and you will be relieved to know that I am not going top describe it at length here. Stripped to its core it is the first attempt for many years to redefine the structure of approved pilot training. The Australians have created a course on behalf of the Chinese and are trialling it as we speak. It involves the drastic reduction of the number of hours students spend actually aloft and replaces that with a considerable amount of targeted simulator and other training.
The central theory of the course is that flying hours in light aircraft do not really mean very much and are not a measure of a pilots quality and value. Relevance is everything and training wholly focused on the business of operating a jet transport is far more valuable.
- Asia needs it.
- Australia is developing it.
- Europe and the US are interested but the FAA is sceptical.
- All Aviaition Authorities are awaiting the results of the monitored performance of the initial batch of candidates in airline service.
What do I think of the MPL? (well, it is my Blog) Not a bad idea – anything that reduces training down to the essentials will obviously shorten training time and there are many other examples around of accelerated training. What is most important though, is a completely trained and confident pilot who clearly understands his, the aircrafts and the systems limitations. The development of workload capacity and a solid understanding of the system within which the pilot works is absolutely essential. These are the building blocks of situational awareness.
The ‘monkey in the fridge’ might be confidence. Without it we are all lost and I am at present unable to see on what that confidence will be based. That essential tool is gradually constructed across the passage of a pilots training as mountains are climbed and minor defeats turned into victories. Where will this come from in a bare bones training scheme?
The Military train in a broadly similar way and have created pilots who have on completion of their operational training, have had to face offensive operations as ‘first tourists.’ They are prepared, in part, by a form of military indoctrination that delivers an aggressive, confident, and skilled aviator to the front line.
After all, if he has very little experience, what else can you give him?
Are we going to do the same? will we tell these candidates that they have been ‘specially selected’ and are ‘the best in the world – trained to a razors edge?’ Because they aint’; they will have been built to cost and speed! That is what the FAA and others are worried about, and why they are so keen to see the results before they contemplate authorizing something similar in their own juristriction.
In the text below and all texts on this site, he must also be read as her in the interest of reading ease.
What are employers doing?
That there is a shortage right now is a given, it still isn’t acute enough at the top end of the food chain to be really frightening the majors, they feel insulated from it. Insulated perhaps, immune? – definitely not.
A great place to go for a type rating is a major carrier and lots are doing it… then realizing after eighteen months that demography in the list above them is going to suppress their career ambitions.
That’s when the world outside starts to look good and their 777/744 type rating and 1300 or so hours on type has value when you add it to previous experience.
This is happening in Europe and the majors are not happy about it. It is not a widespread practice yet but the pattern is being repeated in the hotspots. The very people carrying gray hair and command experience being attracted from the military and elsewhere may soon focus minds towards a form of bonding not previously seen at this level. Previously we did not see this happening at this level in the industry; why leave having just landed the dream job?
Working us harder.
Over the last five years we have seen a progressive increase in the number of hours that we are flying. I look back to 1999 and see that whilst I was on the 747-400 I average around 550 hours per annum across a seven year period. After three years flying short haul on the 737 I returned to long haul flying during 2003. Across the last four years my annual average has ramped up to around 750 with rolling totals occasionally reaching the regulatory 900 hour limit. Only leave (holiday) or compulsory breaks reduces this figure and drops the average. I (we) see this as a major increase in productivity across quite a short period of time, I guess you might too.
I understand applications are being made across the industry to increase the flying hour limit northwards in the name of competition and cost reductions – the pilot shortage will be another pressure that may sway the regulators both in the UK and elsewhere. Figures of a new limit of 1200 hours a year have been mentioned. ‘Do more with those you have, they are expensive and increasingly rare.’
Changing the way we work.
Work allocation has always been a hot potato, any element of control that an employee has over his working life enables him to introduce inefficiencies. Take away that control and the employer can create efficient work patterns and trips integrations into a pilots working life that reduces these ‘inefficiencies.’
For us the problem is really one of semantics, where the airline means ‘inefficiencies,’ pilots mean ‘breaks to aid recovery from fatigue and retain some semblance of family life.’ For those who have not done it, let me assure you that the process of flying 900 hours in a rolling twelve month period is pretty exhausting. In long haul flying continual time zone transit, extended periods of exposure to dry air environments and physical inactivity can wreak havoc with both health and general wellbeing. The effects of working at that rate for years on end are unknown. And that is about the best I can say about it really, I have heard a lot worse.
Does this all sound a bit like a moan? Well, yes I suppose it is, no-one likes to work to the point where the pleasure is eroded from an honest days work and pilots are no exception. Across the world we have seen an expensive asset being driven harder and harder to reduce costs and improve business efficiencies. We have yet to see a point worldwide where realistic limits are being uniformly adhered to by all operators. This is an excellent way to earn a living, we want to keep it that way and reach the point where we can enjoy the fruits of our working life without dropping dead when we retire. Remember, these pressures are set to increase as the shortages really bite – everywhere. Airlines will do all they can to fill aircraft with customers and achieve schedule….
It will be interesting to see what the airlines response will be to these pressures. We have already seen from links that the Indian governments response to pilot movement within the industry has been to regulate, effectively cementing people in place after they have qualified. Government bonding? Yes, they are stating to see this as a real option. China will do something similar though she has always been a rule unto herself.
More about India’s problems.
What is the industry doing? Next.
The argument has been aired many times, yes 2% of the worlds carbon dioxide emissions come from air travel and with expansion that is set to rise to 20% over the next however long…. fifty years – who knows?
Stark statements and an even starker reality. If the environmental lobby have their way we will all be grounded and traveling by sail across the worlds oceans again. From a romantic perspective that is quite an attractive idea isn’t it? – naaa, it’s a non starter, too much is at stake both on the job and World economic scene.
So if we are to believe the pundits something must be done, and soon. I’m all for that – but is the evisceration of aviation really the answer, or are there other solutions that might help us achieve the objective of limiting the damage to ‘acceptable’ levels for the foreseeable future and possibly completely remove them in the longer term?
What’s happening now? This post outlined what the prospects might be of producing a green fuel for aviation use from coal or natural gas. Up-pacing the industrial extraction of massive amounts of coal to keep ever expanding fleets of aircraft airborne is a non starter, and gas… similar problems. The USAFs line of research does point up the strategic importance of securing reliable supplies of aircraft fuel doesn’t it – if we ever needed reminding of the importance of air power to politics…
Ethanol/Biofuel is a big hope in the alternative energy game but it inevitably has its challenges. Is it economically viable to produce aviation fuel mixes, ethanol/fossil? Is the production of the volumes that aviation consumes sustainable? Is it ethically viable to devote huge tracts of land to produce the crops that ethanol is produced from to sustain a largely discretionary air travel option for those who ‘have’? I don’t think so, perhaps a part solution but the whole answer – no.
How about hydrogen? Fuel cell technology is moving ahead but not at a massive pace. As far as aircraft are concerned there are some pretty hefty problems with the carriage of hydrogen. There have been advances though and the prize is very significant. The only by products of hydrogen fuel burn are heat and water.
We could spend ages here debating these questions and producing reams of evidence for each case, but it would probably not advance the argument. I am sure we all applaud Richard Branson’s initiative in the area (whilst at the same time keeping one eye on his astute PR activities).
The sorry truth is that unless there is a technological breakthrough of mammoth proportions over the next few years, we need to limit the expansion of air travel severely. The most likely method to be used to achieve this unfortunately fiscal – by charging more for it. This in itself raises weighty questions – for a start who takes the money, the airlines or government structures?
Gordon Brown, the British chancellor of the UK exchequer is actively lifting cash from the air traveler. He lost no time cashing in by fleecing the UK traveling public with taxes levied at the check in desk. Brown’s motivations, the fairness of his measures and the final destination of the money are hotly debated subjects in Parliament and that debate will warm further as time and his raiding marches on. Vociferous? yes, a little, and an example of how the cost issue may engulf the argument; it’s emotive isn’t it?
Air travel was once an expensive luxury, in relative terms it doesn’t need to be quite so expensive, but again, I do believe the price of a seat should rise, either to fund research and development, carbon offsets, or both. Merely diverting the money into the general taxation pot is unacceptable in my opinion. Trap Gordon’s hand in the till I say.
Does this mean that the modern concept of the low cost carrier is about to whither and die? – I doubt it. If anything, the way they do business will remain little changed and the competitive pressures they exert on the industry will continue to define the way businesses administers themselves. Traveling by air might get more expensive, but the pressure will still be to make it as cheap and efficient as it possible to make it; fierce competition will still rule that element of cost related to the provision of the service. An inefficient carrier will still have the continued life expectancy that the Dodo enjoyed. Dodo – what Dodo?