March 2004 issue

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Asian airlines back in black

Many Asian airlines posted profits in the third quarter of 2003, indicating that their passenger loads and operations had returned to normal following the Sars scare, which severely affected many airlines in the region earlier last year.

Singapore Airlines posted a net profit of SG$305.8 million (US$179 million) for the quarter, which was a rise in profits of 3.6 per cent on the same quarter in the previous year. 'Passenger demand is expected to remain buoyant in the next two quarters, especially during the traditional year-end travel peak,' said the airline in a statement.

China Southern Airlines, the largest carrier in China, returned to profit in the same period as passenger traffic rose by 11.6 per cent. However, the company said it still expected its annual profit to be half of that recorded in 2002.

Taiwan's largest carrier, China Airlines, posted a 43 per cent rise in quarterly profit. 'As Sars faded, passengers have resumed their travel plans,' said a spokesperson at the airline, adding, 'Business picked up strongly in the traditional peak season of July and August.'

Other airlines reporting an upturn in fortunes include Malaysian Airline System, All Nippon Airways in Japan, Korean Air and Thai Airways, which posted its best ever annual profit. It also revealed it will launch its own low-cost airline in direct competition with Air Asia Aviation Co., which has been set up in Thailand by Malaysia's AirAsia, in collaboration with a company founded by Thaksin Shinawatra, Thailand's Prime Minister.

'We intend to fly our low-cost airline in April,' said an official at Thai Airways. 'Despite a late start, we are confident that we will compete with others.' Malaysia's AirAsia has also confirmed that it is in talks with other regional governments, including Singapore, about possible joint ventures to set up more low-cost airlines.

More budget airlines for 2004

The rise of budget air travel looks set to continue in 2004 as no-frills services are announced in Malta, the USA and the UK.

Thomsonfly.com is the latest no-frills airline to join the UK marketplace. It will be launched at the end of March from Coventry airport, offering services to Palma, Valencia, Rome, Naples, Nice, Malaga, Venice, Pisa, Ibiza, Marseilles and Jersey.

Air Malta is launching a no-frills service from London Stansted to Malta that will commence a three-times-a-week service from April. The service, called Fare 4U, will cost UK£38 (US$69) one-way and complements another new service between London Gatwick and Sicily from May this year.

US carrier, United Airlines, has announced that its no-frills subsidiary is to be called Ted, based at Denver. The carrier plans to operate up to 46 new aircraft by the end of the year.

Debate over sky marshals continues

The controversy over the use of armed sky marshals as a deterrent against hijackers continued at the beginning of this year when many countries in the European Union (EU) expressed their opposition to the proposals.

The US request that sky marshals be present on certain flights to the USA was discussed by European aviation and US security officials in Brussels in January. EU officials said that Finland, Denmark, Sweden and Portugal were firmly against the proposals, while France and the UK were ready to accept. Most other EU states were undecided.

Gilles Gantelet, European Commission Transport Spokesman, said, 'Most countries are not in favour. Some of them are actually firmly opposed to this, whereas others might be able to look at certain situations on a case-by-case basis. But they feel it is not the only solution and certainly not a miracle solution.'

Travel Update

Air Canada, the largest airline in Canada, has secured an agreement with Trinity Time investments (TTI) that will see CAN$650 million (US$505.8 million) being invested into the insolvent airline. In return, TTI is to receive a 31 per cent controlling stake. The airline obtained bankruptcy protection in April last year in a bid to restructure CAN$13 billion (US$10 billion) of debt. Calin Rovinescu, Chief Restructuring Officer, said that Air Canada expects to 'proceed expeditiously' towards leaving bankruptcy protection.

The Irish no-frills carrier, Ryanair, has announced nine new routes across Europe. Four of the routes will operate from London's Stansted airport to Linz in Austria, Bari in Italy, Erfurt in Germany and Jerez in Spain while two will link Stockholm with Milan and Rome. Another two will operate from Frankfurt to Reus in Spain and Tampere in Finland, while the final new service will fly from Brussels to Valladolid in Spain.

China Southern Airlines has introduced a third weekly Boeing 777 flight from Australia to Guangzhou in China complementing the airline's existing service from Sydney and Melbourne to Guangzhou. Annie Ye from the airline said, 'The addition of a third weekly flight reflects a return to growth in the passenger and freight markets after recent global crises.'

An alliance between British Airways, Iberia Airlines and GB Airways has been sanctioned by the European Commission following a consultation period. The EU has exempted the airlines from competition legislation for six years, which will allow joint network planning, sales operations and cargo operations. Rod Eddington, Chief Executive at British Airways, said, 'The alliance will... bring significant cost benefits that will be passed on to customers in lower fares.'

German carrier, Lufthansa, is to launch new flights to the USA and China this year as it continues to develop business from its expanding second hub in Munich. A daily service between Munich and Charlotte in the USA started in February while the existing Munich to Guangzhou in China service is to be extended to five days a week from March.

Virgin Atlantic will begin daily flights between London and Australia with a stop off in Hong Kong under a deal agreed by the UK Transport Secretary. The deal will enable Virgin to connect with its internal carrier operating in Australia, Virgin Blue. The Hong Kong government agreed to give Virgin access only on condition that its national carrier, Cathay Pacific, is able to offer a new route from London to New York.

US airline, United Airlines, is set to come out of Chapter 11 bankruptcy protection after securing US$2 million in exit financing from JP Morgan and Citibank. Glenn Tilton, United Airline's Chief Executive, said, 'We are very pleased to be working with both banks and look forward to moving ahead with them in the exit process and beyond.'

The General Administration of Civil Aviation in China has announced it is reviewing proposals by two private companies and a travel agency to start budget airlines. One of its aims is to increase passenger traffic by 20 per cent in 2004.

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