India and Saudi Arabia sign new air services arrangements

On 24 January 2007 the Government of India announced that it had signed new air services arrangements with Saudi Arabia. The new arrangements include a major capacity increase, new route opportunities and multiple designation, as well as a comprehensive liberalisation of arrangements for freighter services.

The United Arab Emirates concludes new air services arrangements with Mongolia, Myanmar and Turkey

The United Arab Emirates has recently concluded new air services arrangements with Mongolia (announced 13 November 2007), Turkey (announced 27 November 2007) and Myanmar (announced 16 January 2008).

HRH Prince William flies solo

The Times reported on 17 January 2008 that, having transferred to the Royal Air Force (RAF), Flying Officer William Wales has now flown solo in a Grob Tutor at RAF Cranwell. The RAF also has a story on his progress. I hope that this is the beginning of a lifelong interest in aviation for him and wish Prince William every success with the rest of his flight training.

The Tutor is a much more powerful training aeroplane than the two-seat, 115hp Piper Tomahawk ZK-EYG that I flew solo in at Paraparaumu Airport on 18 November 1989. My main recollection was that the aircraft performed significantly better in the takeoff and climb without the then chief flying instructor at the Wellington Aero Club, Sarah McIlroy, who had just been on board.

Safe flying William!

Canada and Mexico create new bilateral air services opportunities

A 14 December 2007 news release from the Government of Canada reports that Canada and Mexico have agreed to create new opportunities for their airlines and to meet again in 2009. The release is short on details.

Back on 27 May 2007 the US Secretary for Transportation announced that she was signing with Canada and Mexico a Ministerial Declaration that including a vision for signing a Trilateral Open Skies agreement within the next 10 years.

Airline delay statistics

A 15 January 2008 article in the Dominion Post reports that Pacific Blue is calling on the New Zealand Government to force airlines to make their on-time performance records public, "despite lengthy delays on its new domestic network." Some governments do collate and publish such data (see previous post).

Much such airline delay performance, including for New Zealand, is already available on the web from FlightStats.

Under "Planning Ahead" click on On-time Performance Ratings. Then in the Flight Rating part use the tabs and type in an airline, flight number or sector that is of interest. Note that all of Air New Zealand's A320 fleet is actually covered separately under the code FOM.

Reactions to EU proposals to include aviation in its emissions trading scheme

A 6 January 2008 report in Aviation Week and Space Technology focuses on the differences between the proposals agreed by the European Parliament and Council ministers, as well as on stakeholder concerns (see previous post).

Reactions to the 20 December 2007 Council decision included those from the Association of European Airlines (AEA) and the European Federation for Transport and Environment (T&E). The announcement and reaction was also covered in articles in the Telegraph on 21 December and 22 December and in Flight International on 7 January 2008.

For some of the background to the design and impact of what is proposed see the July 2005, 245 page report Giving wings to emission trading prepared for the European Commission's DG Environment by the Dutch consultancy CE Delft. The consultancy's web site makes available a number of other reports that are relevant to the debate.

Emirates on aviation and climate change

The Emirates Group 2006-2007 Annual Report has a some strong views on aviation and climate change from the company's Executive Vice Chairman, Maurice Flanagan, that clearly place the airline in the climate-change sceptics camp. I think that they are worthy of quoting in full:

"I was at the World Economic Forum in Davos in January and was aghast at the global warming hysteria sweeping the place, with airlines being demonised for their alleged 1.4 per cent contribution to global emissions. Airlines are at the heart of the travel and tourism nexus, linking engine and airframe manufacturers, hotels, car hire, tour operators, travel agencies, connected businesses, and the communities which they serve. If the Green extremists, and their cohorts in governments and the media have their way, hundreds of thousands of jobs in the travel and tourism industry will be lost in the years ahead, against a very dodgy maybe, unsupported by any conclusive evidence, and with a tide of evidence now sweeping in the opposite direction.

"By the way, about that 1.4 per cent – the methane exuded by cows in Europe alone far exceeds the 1.4 per cent of global aviation emissions. There is now a multi-billion dollar industry invested in the myth that the future of the planet is at serious risk through global warming caused by what people do. The Green extremists are impervious to argument, and tend just to quote Al Gore’s regrettably persuasive but fundamentally misleading An Inconvenient Truth at you. Have a critical look at that film, which concludes with a forecast of a global temperature rise of 2.5°F by the end of the century. Mr Gore’s phony graph, however, has steps on the vertical axis of one hundredths of a degree Fahrenheit, so that the temperature seems to shoot up out of control, instead of creeping along the bottom line as it would if presented honestly. Mr Gore cherry-picks to suit his case, for example, citing less snow on Kilimanjaro, whereas Darjeeling and the mountains of Pakistan are seeing snow for the first time in living memory. Mr Gore cites a few recent years in which the temperature rose, and ignores the years of global cooling after the Second World War, when more carbon emissions were pumped into the atmosphere than at any time before or since. Climate changes unpredictably, minute to minute and millennium to millennium. That’s the essence of climate – it changes. Don’t just believe me about all this. Type ‘Global Cooling’ in your web browser and note, for example, the recent articles in The Times of India, the Canadian National Post, the Daily Telegraph and the Russian climatology scientists predicting global cooling.

"With fuel costs now running at about 30 per cent of a typical airline’s total cost, against about 13 per cent a few short years ago, the airlines and manufacturers of airframes and engines could scarcely do more than they are already doing about it. In the years to 2025, airline passenger traffic is forecast to double, but aircraft movements to increase by only 2.8 per cent, as average aircraft size significantly outpaces traffic growth. Fuel burn per passenger will fall correspondingly and the 1.4 per cent of global emissions allegedly generated by the airlines will undoubtedly fall."

Readers will have their own views on the above. Personally, I believe that there is always a place for healthy scepticism on scientific matters but I was rather taken by the view of Nassim Nicholas Taleb whose popular books, "Fooled by Randomness" and "The Black Swan", I have recently finished reading. In a recent contribution to Edge he says:

"Correspondents keep asking me if it the climate worriers are basing their claims on shoddy science, and whether, owing to nonlinearities, their forecasts are marred with such a possible error that we should ignore them. Now, even if I agreed that it were shoddy science; even if I agreed with the statement that the climate folks were most probably wrong, I would still opt for the most ecologically conservative stance — leave planet earth the way we found it. Consider the consequences of the very remote possibility that they may be right, or, worse, the even more remote possibility that they may be extremely right."

Food for thought.

Some airlines boosted by generous tax treatment

A 22 December 2007 article in the Australian reports on lobbying by TTF Australia (Tourism and Transport Forum) of the new Labor Government for quicker tax depreciation rates for aircraft on climate change grounds. It notes that "Australian airlines are forced to write off the value of their fleet over 10 years while Singapore has a three-year write-off period and Hong Kong can depreciate aircraft in five years."

The issue has been around for many years with Qantas, for example, making a submission that focuses on it to an Australian Government business taxation review a decade ago.

Some airlines receive even more generous tax treatment. Emirates, for example, being based in the oil rich United Arab Emirates reportedly pays no tax.

The issue of state aid to airlines and its competition implications has be of particular concern within the European Union. Does not such tax treatment raise similar concerns?

Helping to ensure that older, less efficient technology aircraft are replaced earlier may have a positive impact on reducing aviation emissions. If, however, those aircraft that are sold earlier than might be expected remain in service with other airlines in other countries the global benefit would have to be questioned. In any case the current price of Jet A1 is a powerful incentive to order new technology aircraft and this is being reflected in the record orders Boeing and Airbus have recently been enjoying.

I suspect that the tax residence of quite a few aircraft leasing companies has been driven by such tax depreciation rate considerations. In 2004 Air New Zealand was reported to be having issues with the Hong Kong tax authorities on related matters.

New Zealand secured open air services arrangements with Switzerland

The Annual Report of the New Zealand Ministry of Transport for the year ended 30 June 2007 tabled in Parliament has on page 34 a brief report on New Zealand's progress in air services negotiations during the year.

During the year New Zealand "Secured open air services arrangements with Switzerland, finalised new arrangements with China and continued efforts to secure more open air services arrangements with other parties, including Canada, the European Union, Turkey, South Africa and the Philippines. Agreement was reached with Japan to permit the operation of B777 aircraft on routes to Japan."

This is the first time that news of the revised arrangements with Switzerland has been made public.

Separate public announcements have already been made on recent new air services arrangements with Canada, China and the Philippines.

Australia-US "open skies" negotiations set to proceed

The Australian reported on 3 January 2008 that the new Australian Labor Government has confirmed that it is looking to negotiate an "open skies" air transportation agreement with the United States. The negotiations are scheduled for 12-14 February 2008. These negotiations will be of particular significance for V Australia (see previous post).

UK negotiates new air services agreements with Antigua, Brunei and Mauritius

The United Kingdom has recently signed new air services agreements with Antigua and Brunei.

The agreement with Antigua was announced by the UK on 14 November 2007, the day it was signed.

The agreement with Brunei was announced by the UK on 23 November 2007, again on the day it was signed. A statement by the Brunei Government gives some further details.

The Mauritius Government announced that on 6-7 November 2007 it also has negotiated new air services arrangements with the United Kingdom.

New Zealand Superannuation Fund investments in civil aviation

Apart from Air New Zealand and an interest in the industry through NZ Post, how many airlines (and other civil aviation businesses for that matter) do New Zealand citizens/taxpayers through the New Zealand Government have shares in?

Have a look at this lengthy 30 June 2007 equity portfolio list from the New Zealand Superannuation Fund. About half the fund's NZ$14bn (and growing) is invested in international equities. On a quick skim read I spotted (all amounts in NZ$m):

Australia
Macquarie Airports $4.93m
Qantas Airways $2.40m
Toll Holdings $0.5m

Austria
Flughafen Wien AG $44.85m

Brazil
Empressa Bras de Aeronautica $1.62m
TAM SA $1.67m

Canada
Ace Aviation Holdings $0.21m
Bombardier $0.72m
CAE $0.28m
Jazz Air $0.009m

Denmark
Kobenhavns Lufthavne $48.79m

France
Air France KLM $10.60m

Germany
Deutsche Lufthansa $7.54m
MTU Aero Engines Holding $1.05m

Hong Kong
Cathay Pacific Air $0.28m

Japan
Airport Facilities $0.04m

Mexico
Grupo Aeroportuario Sur $2.40m

New Zealand
Air New Zealand $15.46m
Auckland International Airport $76.86m
Infratil $35.00m

Singapore
Singapore Airlines $1.03m

South Korea
Korea Airport Service $0.13m

Sweden
SAS AB $1.14m

Switzerland
Unique Zurich Airport $191.74m

United Kingdom
British Airways $1.89m
Easyjet $0.80m
Rolls Royce $2.81m

United States of America
AMR Corporation $0.86m
Atlas Air Worldwide Holdings $0.05m
Boeing $6.05m
Continental Airlines $3.14m
Delta Air Lines $0.73m
General Electric $36.60m
Northwest Airlines Corporation $0.90m
Spirit Aerosystems Holdings $1.39m
United Technologies $4.64m

The notable feature is the size of equity investment in airports.

Oil price over US$100 per barrel

On Wednesday, 2 January 2008 the price of oil briefly hit US$100 before dipping back down. The Financial Times reported that this record price was a result of a small trade.

As well as considering geopolitical factors such as "tension" in the Middle East and other oil producing regions, simple analysis of supply and demand is a good place to start when looking at any market and that for oil is no exception. One of the key factors in recent years is clearly rising demand for oil from China and India as a result of their strong economic growth, a point that the 27 member International Energy Agency has been highlighting.

Another factor to be considered is the impact of the fall in the relative value of the US$ against other major currencies. With respect to the New Zealand dollar (also known as the Kiwi) the National Bank of New Zealand provides a good set of graphs that give a clear picture of recent trends. The New Zealand Ministry of Economic Development's web site has information on both the price of crude oil and refined product in New Zealand dollars.

For a fuller picture when looking at the historic price of oil one must also consider the impact of (and on) inflation and the trend in the proportion of household spending (both direct and indirect) on oil products. In December 2005 the Reserve Bank of New Zealand published an article entitled "Oil prices and the New Zealand economy" by Felix Delbruck.

Regardless of the incentives that will be provided by carbon taxes and emissions trading schemes, the higher price of oil gives consumers, particularly in the transport industry, a strong incentive to look for ways to reduce their consumption.

IATA provides a Jet Fuel Price Monitor NEW that is updated every week.

George MacDonald Fraser obituaries

Obituaries have now appeared in the Telegraph, Times, Independent, Guardian, New York Times, and Globe and Mail (see previous post).

The US presidential primary season kicks off

As a political studies graduate, every four years I take some perverse pleasure in following the peculiar workings of US democracy in action as the US presidential election process works through. It is also fun to watch the polls and see how close they are to the final results.

Today, 3 January 2008, is when the process kicks off in Iowa and this year, with no incumbent running and the polls particularly close in the early races (if not in the country overall), we are in for an interesting time.

There are many web sources for following the US political news but one I have found particularly useful as a starting point is Real Clear Politics from Chicago. It provides links to the latest poll results and articles in the main-stream news media.

Although in New Zealand we are far away from the political action in the US, the final outcome does matter to us, particularly in the attitude a new US Administration and Congress will take on foreign trade issues.

Now on to New Hampshire and beyond.

Otago University research on carbon footprint of visitors to New Zealand

The New Zealand Herald is carrying a 3 January 2008 NZPA report on research by two Otago University physicists, Inga Smith and Craig Rodger, into the carbon footprint of air travel by visitors to New Zealand. The report puts into context the estimated size of the emissions.

I will be interested to see the details of the assumptions used to make their calculations.

Another New Zealand-based academic taking a close interest in these issues is Susanne Becken at Lincoln University.

Over the last year aviation and the environment issues have been taking up an increasing proportion of my work time and this is unlikely to change in the foreseeable future.

Author of the Flashman historical novels dies

The news media is reporting today the sad news that author George MacDonald Fraser has died aged 82. I have all twelve of his well researched and at times very funny novels about the nineteenth century adventures of his fictional hero/coward Sir Harry Flashman. As I write this the 2 January 2008 report from the BBC of the news of his death is its most frequently emailed article. Other new media to report on his life include the Independent and the Times.

I am also sad because no package of papers on Sir Harry's adventures during the US Civil War or the Franco-Prussian War, alluded to in the novels, has been found.