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Director Aviation Development and Policy

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641 total articles

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31 total articles

and

United Airlines ends 2013 on a positive note; now the challenge is to sustain the momentum

25-Jan-2014 8:53 AM

United recorded commendable financial results for 4Q2013 and FY2013, as the carrier recorded its highest profitability for 4Q since merging with Continental in 2010. The results were encouraging given the operational and financial obstacles the carrier encountered in FY2012.  

The airline has declared that 2013 was the year it moved past its integration, and built a foundation on which to grow, presumably into a scenario of consistent profitability. While United may believe its integration challenges are still in the rear-view mirror, there are considerable outstanding labour issues, notably a joint contract for the airline’s flight attendants.

In the short term United appears to be keeping its momentum despite some fall-out from the Jan-2014 winter storms that triggered more than 6,000 flight cancellations for the carrier. After some revenue weakness during 2013, United believes a recalibration of its revenue management system should continue to accelerate yield improvement through 1H2014.

China air travel: airline CEOs jump on the express train about to steam through world aviation

13-Dec-2013 7:57 PM

In the first CEO panel at the CAPA World Aviation Summit in Amsterdam in Nov-2013, the heads of four airline companies from Asia, the Middle East, Africa and Europe discussed their strategies towards China. With the centre of gravity in world aviation moving east, and China the largest market in Asia-Pacific, this is an express train that must be boarded before it becomes unstoppable.

While Ethiopian Airlines, IAG, Emirates and Air Astana have very different experiences and approaches, all agree that China represents a huge opportunity for air travel. Chinese airlines remain more focused on domestic markets than on international markets, but this is starting to change as demand for goods from Europe and America grows. This may lead to new developments in partnerships with international carriers.

Constraints on growth in air travel to and from China include cultural differences, traffic rights and visa restrictions. Concerning airport capacity, China is undertaking massive investment in infrastructure to accommodate expected traffic growth. This is a lesson that more than one of CAPA’s panellists would like their own government to heed.

United reduces Tokyo connections in a Pacific network revamp that emphasises more directs

1-Dec-2013 2:01 AM

United Airlines plans a realignment of its Pacific operations centred on increasing direct flights rather than stop-overs in Tokyo as the weakness in Japan’s currency has dragged down the carrier’s results in those markets for most of 2013. United is also building a strategy to directly serve non-traditional gateways to China as competitive capacity increases have also pressured the carrier’s Pacific performance.

The adjustments are freeing up some aircraft for redeployment into new markets from United’s Houston Intercontinental, Washington Dulles and Chicago hubs for new service to Europe, which perhaps seems like a safer option at the moment even as the region is on an at-best slow trajectory to economic recovery.

The success of these planned network shifts necessarily depends on execution, an area where United has faced challenges with respect to the merger with Continental. Now, getting it right will be central to the airline's Asian strategy.

Sichuan Airlines grows with Chongqing-Sydney service, but European and American expansion awaits

5-Nov-2013 11:01 AM

Sichuan Airlines, China's fifth carrier to offer international long-haul services, will increase its presence in Australia with a new twice-weekly Chongqing-Sydney service launching 20-Dec-2013 with A330s. The route complements Sichuan's existing Chengdu-Melbourne service and will more easily allow passengers to visit Australia's two largest cities. Short connecting flights between Chengdu and Chongqing will complete the loop. The service will further expand the massive influx of Chinese capacity Australia has seen in recent years, including China Southern's A380 deployment to Sydney in Oct-2013.

Yet to be realised are Sichuan's bold plans to grow in Europe and North America. While the carrier's largest shareholder is the Sichuan government, all three of China's main airlines – Air China, China Eastern and China Southern – own a stake in Sichuan Airlines, complicating its aspirations. Slower growth may be wise: the Chengdu-Melbourne service in its first five months averaged only a 45% load factor. While China's secondary and western cities have geographical advantages for European services, for Australia it will be some time before they mature. This is not helped by the fact that Sichuan does not have an English language website.

Gulf carriers and Turkish Airlines ready to expand in China, if only air rights were available

3-Nov-2013 11:58 PM

For all their success elsewhere, the Gulf carriers and Turkish Airlines are looking rather thin in China. This is not by their choosing. Emirates, Etihad, Qatar and Turkish have reached the limit of air rights and slots made available to them.

All are ready to expand, and Turkish has even said it has service to five cities ready to launch if approved. That is probably of little comfort to China. While the country wants a flourishing aviation market, it also wants its airlines to have a fair share. But this is not classic protectionism. The argument is Chinese carriers are still young and need time to gain experience before being on equal footing with peers.

Yet Etihad and Qatar are younger than China’s long-haul airlines. With a mindset change that favours liberalisation in China being unlikely in the medium term, the foreign carriers will have to find ways to stress their value and why they should receive more air rights. Partnerships are one such answer.

United adds a new layer to changing competitive dynamics on the US west coast

17-Oct-2013 10:30 PM

United Airlines has entered into the growing competitive fray on the US west coast with a push from its hubs in the region into two of Delta’s hubs. Competition was ignited by Alaska Air Group and Delta with Delta increasing its service footprint from Seattle to drive feed for its burgeoning Pacific operation from the airport.

United’s decision to add service from San Francisco to Atlanta and between Los Angeles and Minneapolis occurs as Delta in early 2014 begins a push into Seattle from the airport’s heavily travelled domestic markets to bolster its growing international footprint from Seattle with a particular focus on Asia.

The decision by United to add service into its west coast hubs is occurring against a backdrop of weaker than expected revenue performance for 3Q2013 driven by lower yields in some trans-Atlantic markets and competitive capacity in China that contributed to lower than expected yields in the carrier’s Pacific entity.

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