Week in brief 170610

Reunion-based Air Austral has declared a small profit from its operations for the last FY, "despite costs associated with the arrival of two B777-300 aircrafts (sic) in June 2009 and the opening of the southern route of Sydney-Noumea in April 2009". The airline says it carried 42,000 passengers on that new Sydney-New Caledonia route in the remainder of the year. That includes quite a bit of the GFC disruption period, so perhaps the whole Reunion-Sydney-Noumea is viable after all.

Analyst Frost & Sullivan is warning that the US Government might tighten regulations around oil drilling operations following the great oil spill in the Gulf of Mexico. The suggestion is that this could have a major impact on the oil (and hence fuel) price in coming years: "Should the Obama administration tighten drilling regulations, there may be an oil shortage between 2016 and 2018, driving fuel costs above $100 per barrel". And the US may well be not the only regulator to act against the drilling industry.

Having recognised that its business model has strayed from its straightforward origins, the management of AirAsia is preparing to formally segregate the long-haul arm of the airline, AirAsia X, by means of an IPO, probably in the second half of next year. Airline founder Tony Fernandes said that, "After more than two years of operation, we have begun to notice some dilution of the AirAsia business model and recognise the need for AirAsia and AirAsia X to remain focus (sic) on their respective markets".

The plan is for the long-haul operation to control employment of its own crew and ground staff, as well as the commercial and marketing team; to enable it to "aggressively pursue its own commercial strategy and better develop capabilities in long-haul services".

This is appropriate perception. given the strains that long-haul operations place upon a basic LCC model.

So, as we've all heard by now, Emirates has topped up its order for the big A380 by an additional 32 aircraft, taking the total to 90. Given that many were wondering what the Dubai-based carrier was going to do with the first 58, this is perhaps a tad overwhelming. There's no doubt that Emirates has a strategically placed base and that it is (and has been) well managed with an entrepreneurial flair. But there are already some concerns about over capacity in the global marketplace, so something is likely to give, somewhere, at some stage. Will it be in the already very competitive Middle East?

And Tiger Australia has added even more services ex Avalon, with destinations now including Sydney, Rockhampton, Mackay, Alice Springs, Gold Coast, Adelaide and Perth. Tiger will also establish its third base at Avalon in November this year, with two aircraft slotted for location there. This is especially heartening for the Fox Group which has invested substantially in infrastructure at Avalon (and has plans for more). It wasn't so long ago that we were wondering about the fate of Avalon, as Jetstar transferred more and more services to Melbourne Airport.

Boeing has announced its intention to list the production rate on the ever-popular B737NG to 35 per month from early 2012. This follows a May announcement that the rate would rise from 31.5 to 34. The single-aisle product from both Boeing and Airbus continues to attract orders in such numbers that it's difficult to see it being superseded for a while yet. Both manufacturers are instead refining the packages on offer; and new engines are likely to be the biggest factor.

A giant plume of volcanic ash over the South Pacific prompted warnings to tourists and airlines at the end of May but caused only minor disruption to flights compared with recent chaos in Europe. The cloud billowing from Vanuatu's Mount Yasur volcano on the island of Tanna, rose about 6000 feet and was spread over about 340 square kilometres (130 square miles), affecting flights in neighbouring New Caledonia. By early June the plume had disrupted a handful of domestic flights operated by New Caledonia's AirCal, although disruption remains minimal compared with the havoc seen in Europe recently.

More than two dozen CEOs of the world’s top airlines will meet in Queenstown in December, following Air New Zealand’s successful pitch to secure the Star Alliance Chief Executive Board meeting in New Zealand. The annual Star Alliance conference will take place across three days from 12-14 December, combining both Chief Executive and Alliance Management Board meetings. The two Board meetings will cover Star Alliance key business decisions for the year ahead including voting on membership development, financial expenditure, product development and marketing programs. Approximately 80 attendees representing the 29 airline members and Star Alliance are expected to attend. 

The Victorian Government has issued an invitation to state-based businesses in the defence and aerospace industries looking for export opportunities to participate in upcoming international trade missions:

* Farnborough Airshow July 2010

* China and Mongolia Aviation and Commercial Aerospace, Shanghai and Ulaanbaatar, September 2010

Further details from www.export.vic.gov.au