General News
Below are links to stories of general interest in relation to aviation and airports.
EU orders Germanwings, Ryanair and TUIfly to repay large sums for subsidies wrongly obtained
In February 2014 the European Commission adopted new guidelines on how Member States can financially support airports and airlines in line with EU state aid rules. The aim is to ensure fair competition. The aim is to avoid overcapacity and the duplication of unprofitable airports, or support for an airport that is too close to another. Aid is allowed if there is seen to be a genuine need for accessibility by air to a region, to help economic growth. Many low cost airlines have derived benefit from subsidies to airports, and now a number are having to make repayments for money they should not have obtained. The EU has confirmed that Germanwings must pay €1.2 million, Ryanair €500,000 and TUIfly €200,000 that they got from Germany’s Zweibruecken airport, in the form of lower fees. Zweibruecken is only 25 miles from Saarbruecken airport. Brussels Airlines separately faces an EU probe into €19 million that airlines at Belgium’s Zaventem airport received from the state to fund operating costs from 2014 to 2016. And there are other cases. Belgium’s Charleroi airport must give back €6 million in aid.
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British Airways adds more Heathrow leisure routes – Olbia, Kos, Corfu – to the existing list
Heathrow airport makes a lot of how important its flights to emerging economies are, and how limited its slots are for this. So it would be logical to imagine that spare slots would be used for just this sort of flight. Heathrow is keen on making statements like: "The UK will fall behind in the global race if it cannot connect to growing economies." And "Global air transport provides access for our key industries to established and emerging new markets, which will help deliver economic growth across the UK." So one might expect that, if spare slots come up, they would immediately be used for these long haul destination, to emerging economies. However, Heathrow will now be getting new British Airways flights to ... guess where? Olbia in Sardinia; Kos and Corfu in Greece and Split in Croatia from summer 2015. And these will use Airbus A319s and A320s. To be fair, it is moving its Las Palmas flights to Gatwick. Other purely holiday destinations Heathrow offers in the Med are Mykonos and Santorini, which started earlier this year. There are also Pisa and Porto. And the Heathrow destination map includes many, many more ... Ibiza, Nice, Tunis, Malta, Malaga ....
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Airlines in the US have been flying slower to cut fuel bills
Higher oil prices have made US airlines work to control costs. Between 2002 and 2012, the price of jet fuel quadrupled and fuel bills rose from 15% to more than 40% of the operating costs of US airlines, and their single largest operating expense. Airlines have made many efficiencies to cut fuel consumption, including now flying more slowly. Most of the fuel economies which have been implemented in the last decade will not be undone, even if oil prices were to fall (partly due to the possible future costs of CO2 emissions). There is an optimal cruising speed for each aircraft based on altitude. Flying faster increases the amount of fuel burnt. Historically, commercial aircraft have flown on average about 8% faster than their optimal cruising speed. Getting the aircraft to its destination quicker to pick up another load of passengers and minimise crew cost was worth the extra fuel expense. There is a trade-off between fuel consumption and time. But between 2004 and 2011, the average ground speed of seven major US airlines fell by 1.1%. More than anything else, however, airlines have focused on reducing excess weight.
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George Osborne’s speech at conference omits climate, and says Tories will “decide where to put a runway”
Chancellor George Osborne has today again underlined his commitment to delivering a shale gas revolution in the UK, in a conference speech that ignored climate change threats. Osborne told the Conservative Party conference that the country needed to fast-track infrastructure decisions if it was to deliver on his vision of becoming the most prosperous and creative nation in the industrialised world. Some verbatim quotes: "We will build the high speed rail, decide where to put a runway and support the next generation with starter homes in a permanent Help to Buy." And " Let’s face it, even today this country has spent forty years failing to take a decision about building a new runway in the South East of England." While making the case for investment in new high and low carbon infrastructure the speech contained no mention of climate change, despite David Cameron last week telling the UN that he regards it as "one of the most serious threats facing our world". New Environment Secretary Liz Truss could only manage, on climate, to say this:" we’re now leading international efforts to tackle climate change."
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Countries with most visitor to UK are still France, Germany, USA, Ireland, Netherlands
Data from the ONS (the government's Office of National Statistics) shows each year how many foreign tourists visit the UK and how many Britons travel abroad, for holidays or business or to visit friends and family. The figures for 2013 show that the "tourism deficit" (the difference between the money spent by inbound visitors to the UK, and the money spent by Brits on their trips abroad) remains around £13.7 billion. So we export much more money by our air trips than we get into the UK economy from foreign visitors coming here. The countries with the largest number of visitors to the UK remain, in descending order, France, Germany, USA, Ireland, Netherlands, Spain, Italy and Poland. The countries which pay the most into the UK economy from their visits are, in descending order, USA, Germany, France, Australia, Spain, Italy, Ireland and Netherlands. The countries whose citizens spend the most per day are the UAE and other Middle East countries, Egypt, Nigeria, Norway, Denmark, Hong Kong and Russia. 51% of all overseas visitors come to London. The countries whose citizens spend most in London are Americans and Middle Eastern countries.
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IAG is to pay its first ever dividend and British Airways is due to return to profit
The parent group that owns British Airways, IAG, have said that they are now making profits and will give their first dividend, probably in November. This is their first dividend since they were created in 2011 through the merger of British Airways and Spain’s Iberia. IAG has also bought bmi and Spanish budget carrier Vueling since its formation. Analysts believe shareholders will receive their first payment at the end of IAG’s 2015 financial year at the latest, as the controversial turnaround at Iberia, which required the loss of some 4,500 jobs and sparked strikes and political outcry in Spain, has stemmed the losses. IAG posted a €96m pre-tax profit for the six months to June 30 this year, up from a €503m loss at the same time in 2013. IAG says it is on track to improve operating profit this year by “at least” €500m, from €770m in 2013. British Airways' CEO, Willie Walsh said in August that BA had now returned to profit for the first time since 2007, the start of the financial crisis. BA has barely paid any UK corporation tax for years - it may pay round £61 million for the 2013 financial year.
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Ed Balls and Mary Creagh, at Labour conference, both say there needs to be a quick decision on runway capacity
At the Labour conference, Shadow Sec of State for Transport, Mary Creagh said, on aviation: "More airport capacity is vital to Britain’s economic success, but David Cameron was too weak to deliver it. So he kicked it into the long grass. That led to Boris Johnson’s fantasy island airport .... The one that would have closed Heathrow, destroyed jobs and put London at risk of flooding. £5 million of public money wasted on his vanity project, but it was never about the country’s future. .... The next Labour Government will make a swift decision on airport expansion in the national interest." In his speech, Ed Balls, the Shadow Chancellor said there should be no more “dither and delay” on airport capacity, amid signals that Labour is no longer ruling out expansion at Heathrow. He said there must be a rapid and final decision on this after the next election. “Whatever the outcome of the Howard Davies review into airport capacity, we must resolve to finally make a decision on airport capacity in London and the South-East — expanding capacity while taking into account the environmental impact ....No more kicking into the long-grass, but taking the right decisions for Britain’s long-term future.”
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Does Heathrow advert implying a small girl needs a 3rd runway, for her future, meet Advertising Standards?
Earlier this week, Heathrow put out full page advertisements for their 3rd runway. This is part of an on-going, and expensive media campaign. However, they may have mis-judged the tone of this one. It features a small girl, aged about 5, with her hand up - and the text makes out that her future well being will depend upon ..... guess what?? .... a new Heathrow runway. The advert says the 3rd runway will deliver "... at least £100 billion of economic benefits [no timescale given] the length and breadth of the country. .... So, even if our little girl never leaves home, she'll still feel the benefit." People may have been inspired to write to the Advertising Standards Authority, to complain about this rather dubious text, with unsubstantiated claims, making use of a small child, to try to make a PR point. One such letter to the ASA has been copied to AirportWatch, in which the writer clearly puts the case that what this child needs is a stable climate for her future, not accelerating carbon emissions. The writer believes the advert to be misleading, and asks the ASA to have it withdrawn.
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Heathrow seeks 20-year landing charge deal with CAA so investors will fund 3rd runway
For many years, Heathrow has been in dispute with the CAA about the level of charges to airlines using the airport. It is now reported to be demanding a 20-year deal on landing charges in return for building a 3rd runway. Heathrow says it needs a fundamental review of the regulatory regime, where prices are reviewed every five years, if it is to bear the risk of the £15 billion capital outlay that a new runway would require. The request, part of its 400-page submission to the Airports Commission, is likely to infuriate airline customers, who have been complaining bitterly about its high passenger charges. Assessment of the financial viability, and possibility, of the runway proposals is part of the task of the Airports Commission. Heathrow said a deal on regulation needs to cover a period “from the point of committing the first significant investment, for at least 15 years” and it wants the government to guarantee that all “efficiently incurred” expenditure is included in the company’s regulated asset base (means a proxy for an airport’s value – which rises in line with investment in new facilities, such as terminals and runways) in future — with safeguards to prevent write-downs.
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Prices of long-haul flights from Scottish airports slashed as Middle East airlines compete – cheaper than going via Heathrow
Air passengers from Scotland, travelling to the Middle East and Australia are benefitting from a price war between the major airlines. Emirates and Qatar Airways are bitter rivals, founded less than 10 years apart in 1985 and 1993 respectively, and then the arrival of Etihad in 2003 put both under pressure. Emirates, Qatar Airways and Etihad now compete for long haul passengers from Scottish airports, to Dubai, Thailand and Australia. The price of a ticked on Etihad from Edinburgh to Sydney for next summer is about £790, cheaper than the cost of an Etihad flight from Heathrow. Emirates has slashed its return fare from Glasgow to a low of £771 for the same dates. The same flight with Qatar Airways comes in at £995 return. Industry experts predict fierce competition between the 3 carriers, undercutting each other. Due to the 3 Middle East airlines competing, fares to Australia are cheaper from Scotland than from Heathrow or Amsterdam. So one less reason to need to expand Heathrow, or worry about losing traffic to Schiphol.