Aviation News

Singapore Airlines’ sale of its 49-per cent stake in Virgin Atlantic will allow the cash-rich Asian carrier to focus resources on its fast-growing regional market, analysts said Wednesday.

The Singapore carrier’s tie-up with British billionaire Richard Branson’s Virgin Atlantic never really took off since the alliance began 12 years ago when the stake was bought for 600 million pounds ($A918 million).

Singapore Airlines (SIA) on Tuesday said it will sell the stake to Delta Air Lines of the United States for $US360 million ($A341 million) in cash in a deal to be completed next year.

SIA said it “had been evaluating strategic options for the stake for some time, as the investment has not performed to expectations and the synergies the parties originally hoped for have not materialised.”

Analysts said SIA, consistently one of the world’s most profitable airlines, had little say in how Virgin Atlantic was run by the flamboyant Branson, and the sale allows it to exit an underperforming investment in the troubled European market.

“SIA can now focus on investments in the Asia Pacific region,” Brendan Sobie, a Singapore-based analyst with industry consultancy Centre for Aviation, said.

Sobie said it made more sense for Delta to have a strategic stake in Virgin Atlantic as there are more synergies in their trans-Atlantic network.

Jason Hughes, an analyst with IG Markets Singapore, said that despite the higher acquisition price paid by SIA, the $US360 million “will go down as a profit, as losses had already been accounted for in previous years”.

Malaysian bank CIMB said in a note that the sale would give SIA a “short-term boost” but urged investors to focus on the long-term challenges posed by Middle Eastern carriers and budget airlines.

Shukor Yusof, an aviation analyst with Standard & Poor’s Equity Research, said SIA can use the extra cash to “redefine its business strategy on top of beefing up its regional subsidiaries”.

“It’s also good to exit out of Europe because the market conditions there are quite atrocious,” he said.

Shukor said conflicting management styles with Branson was one of the chief reasons why the alliance failed to prosper beyond a code-sharing agreement.

“Branson remained the controlling shareholder and he called the shots,” he said.

Virgin Atlantic also did not have enough slots at London’s high-traffic Heathrow airport for SIA to latch on in its bid to gain a share of the lucrative trans-Atlantic route to New York, Shukor added.

Analysts said SIA’s decision to buy the stake in Virgin Atlantic in March 2000 was a good move at the time because Asia was just emerging from the 1997-1998 financial crisis.

But the centre of global economic power has since shifted to Asia, sparking a travel boom in the region.

Passenger traffic in the Asia Pacific is forecast to account for 33 percent of the global market in 2016, up from 29 percent in 2011, according to trade body International Air Transport Association (IATA).

“This makes the region the largest regional market for air transport, ahead of North America and Europe which each represent 21 percent,” IATA said in a statement on their latest industry forecast.

SIA has been investing both in the premium travel segment, where it faces competition from Middle East carriers, and in the low-cost market where it is challenged by budget airlines.

SIA in June launched a long-haul budget wing called Scoot while maintaining a substantial stake in low-fare carrier Tiger Airways. It also operates a regional wing, SilkAir.

SIA and Scoot in October announced orders for 45 Airbus and Boeing aircraft. The orders came after SilkAir in August said it would buy 54 new Boeing planes with an option to buy a further 14 aircraft.

Read more: http://www.smh.com.au/travel/travel-news/singapore-airlines-puts-focus-on-asia-after-selling-virgin-atlantic-stake-20121213-2bc6m.html#ixzz2ExdAW0H0

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Severe fog has forced the cancellation of dozens of flights scheduled to take-off and land at Britain’s airports on Wednesday with more disruption expected later in the day.

Flights to Warsaw, Nice, Stockholm, Aberdeen and several German cities were among 20 cancelled by London’s Heathrow.

“It’s better to cancel flights when there’s fog because in fog you can’t land as many planes per hour because you have to leave more space between the planes,” said a spokesman for the airport.

The smaller London City Airport also reported disruption.

A message on the airport’s Twitter page said: “Visibility has not improved, flight disruptions are present and expected to continue until further notice. Please call your airline for info.”

Britain is in the middle of a cold snap with temperatures hitting minus 10C (14F) in some parts of the country.

“The fog is currently pretty widespread,” explained Julian Mayes, forecaster for MeteoGroup.

“It’s currently located over central England as a large area of low cloud, which is descending down as fog.

“Visibility is poor and the areas affected include the Midlands, the eastern side of Wales, most of East Anglia, most of the area just to the north of London, Bristol and parts of central southern England,” he added.

Read more: http://www.smh.com.au/travel/travel-news/freezing-fog-sees-dozens-of-uk-flights-cancelled-20121212-2b9i4.html#ixzz2ErNyFKtx

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Cathay Pacific flight crews may stop serving alcohol and smiling at passengers after voting in favour of industrial action during the Christmas holidays over a salary dispute, their union said Tuesday.

The Cathay Pacific Airways Flight Attendants Union, which is demanding a five percent salary increase from Hong Kong’s flagship carrier, said the “work-to-rule” measures could also throw flight schedules into chaos.

“We will be selective in providing our services,” union general secretary Tsang Kwok-fung said, adding that the form and date of the action approved in Monday’s vote is yet to be decided.

“This could include not smiling at passengers, not providing certain types of beverages — such as alcohol — or stop serving meals,” he said.

“In a nutshell it means passengers will still be able to reach their destinations except they are paying a five-star price to get a three-star service,” Tsang said.

Work-to-rule is a form of industrial action in which employees do no more than the minimum required by the rules of their contract, sometimes adhering to safety or other regulations precisely in order to cause a slowdown.

“We will follow the rules strictly, such as offloading oversize luggage, that could cause a slowdown or even delay of flights,” Tsang said.

The protest was sparked by Cathay’s announcement last month that it was giving a two percent pay rise to its employees in 2013, on top of a discretionary one-month bonus for 2012, falling short of the union’s demand.

The 6000-strong union at a special meeting on Monday told the carrier to resume negotiations or face the Christmas action and a possible full strike during the New Year holiday.

Cathay has insisted the union withdraw the threat to strike before re-opening talks, and asked its staff to be “considerate and understand the difficult situation” the airline is facing.

The carrier has been trying to trim costs after it fell into the red in the first half of this year with a $HK935 million ($A114 million) loss, partly due to high fuel prices.

Read more: http://www.smh.com.au/travel/travel-news/no-smiling-no-booze-cathay-flight-attendants-service-threat-20121212-2b8qt.html#ixzz2ErNgha2W

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Airline crews and ground staff are assaulted, passengers storm a runway, and a person yanks open an emergency exit door on a plane.

In China, angry passengers are resorting to extreme measures to protest delays as the country’s restricted air corridors are becoming clogged with millions of new flyers each year – a fact attributed to the fast rise of the middle class and cheap flights.

There have been dozens of incidents involving irate travellers on both domestic and international flights this year, as airlines struggle to stick to their schedules.

“When flights get delayed, passengers make a lot of trouble. Sometimes they even beat our staff,” Wang Zhenghua, founder and chairman of Shanghai-based budget carrier Spring Airlines, said in an interview earlier this year.

“Airlines are actually the weaker party. With the government calling for a ‘harmonious society’, the only thing we can do is to give them compensation to calm them down.” With manufacturers predicting a new plane will take to China’s skies every other day for the next two decades, industry officials say congestion is only going to get worse. And that means more delays.

Some 30 years ago, flying was a travel option only available to top government and company officials who needed to submit a special document from their employer to buy a plane ticket.

While most Chinese people still use trains for long-distance travel because of the lower cost, rising income and cheaper flights as a result of increased competition means more are now using planes.

Over 270 million passengers flew on domestic routes in China last year, up nearly 10 per cent from 2010 and over 70 per cent from 2003, according to government data. The International Air Transport Association projects 379 million will be flying domestically by 2014.

Airlines have been adding planes to keep pace with the increased demand. Boeing predicts China will need to add 5260 new planes worth $670 billion over the next 20 years.

Airlines are increasing the number of flights but with China’s air force controlling much of the airspace, delays are likely to become increasingly common.

The results can be over the top.

Earlier this year around 20 angry passengers dashed towards the runway at Shanghai’s main international airport, coming within 200 metres of an oncoming plane from the United Arab Emirates. Their action was sparked by a 16-hour flight delay.

It was not clear why they charged on to to the tarmac, unless they were seeking to create a scene in order to boost their chances of getting compensation.

In August, two passengers furious after being refused compensation for a delay yanked open an emergency exit door on their plane – resulting in a further delay.

An Australian pilot and crew were surrounded and threatened by an angry mob in October after a Jetstar flight, which originated in Melbourne, was diverted from Beijing to Shanghai because of bad weather.

That incident echoed another involving a United Airlines flight that was delayed for three days in Shanghai. Media reported frustrated passengers started shouting and rushed at the pilots.

Last week, angry passengers came to blows with ground staff after their flight was delayed from Guiyang in south-western China, according to a witness.

“The staff’s attitude was bad, so I can understand their anger but I strongly disagree with police not arresting the passengers,” said the 28-year-old office worker, who only gave her last name as Tong.

There have been other equally bizarre, yet peaceful acts. A group of passengers sang songs over the public announcement system after airline staff deserted the terminal in Shanghai when all flights were grounded due to a thunderstorm this year.

The cause of these protests partly lies with the Chinese carriers themselves. It is not uncommon for passengers to have to wait for hours inside a plane or at the boarding gate without any information about how long the delay might last.

“In the past, only ‘first class’ people had the privilege to travel by plane so the average Chinese has very high expectations for services,” said Li Yuliang, an independent civil aviation commentator who is also the chief trainer for China Eastern Airline’s Shandong office.

“But when they actually fly, they find the services are not as good, especially when there is a delay, and these disappointed passengers make a lot of trouble.” In the case of the runway protest in Shanghai in April, all passengers, including those who ran out to the tarmac, were given 1000 yuan ($160) each in compensation from the carrier, Shenzhen Airlines. None of the protesters was reprimanded.

According to the Civil Aviation Administration of China, about a quarter of the 2.4 million domestic flights were delayed in 2011. The ratio is roughly comparable with delays seen in Britain but this data does not reflect delays that occur after all the passengers have boarded the plane.

China’s skies are hardly crowded, but its restricted routes are. Experts and pilots say airspace allocated for commercial use is only around 20 per cent.

“The airspace is too small. It’s like an eight-lane highway with just two lanes open,” said Jeff Zhang, a pilot at one of the top three Chinese carries.

In addition, the lack of up-to-date equipment at airports, such as those used to navigate pilots in bad weather, relatively stricter safety standards and the scarcity of trained air controllers are also adding to flight delays, they say.

With the military unlikely to make more space available for commercial use, it is up to the airlines and aviation authorities to make the best use of the resources they have, for example, by using bigger planes or upgrading equipment.

“As a pilot, I want to fly as soon as possible too because I don’t get paid when I’m on the ground. The airlines don’t like delays either since they want to use their aircraft as many times as possible,” said Zhang.

“No one likes delays. But this is all because of the narrow air space.”

Read more: http://www.smh.com.au/travel/travel-news/extreme-airline-complaints-chinese-passengers-attack-flight-crews-open-plane-doors-20121211-2b6m4.html#ixzz2ElCEH4es

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