Outcome of IATA Istanbul Summit

On 26 October 2008 the International Air Transport Association (IATA) issued a Press Release on the outcome of its Agenda for Freedom Summit in Istanbul (see previous post). The opening Remarks of IATA Director General Giovanni Bisignani and the Summary of the Chairman, Jeff Shane, are also available.

Three key outcomes are stated to have emerged:

• The participants asked IATA to continue to facilitate this discussion with a second meeting in early 2009 to turn the discussion into action.
• They also asked IATA to facilitate the development of a multi-lateral statement of policy that would be a powerful tool expressing the common thinking and approach of the group of states.
• Finally, the group agreed to spread best practices in liberalisation by making more openly available to all states the most liberal agreements that are being negotiated.

On 30 October 2008 The Economist carried a story on the outcomes.

US Department of Justice clears Delta takeover of Northwest

On 29 October 2008 the Antitrust Division of the United States Department of Justice issued a statement in effect clearing the way for the merger of Delta Air Lines and Northwest Airlines. The US$2.6 billion all-stock takeover has created the largest airline in the world. Reuters reported on the news.

EU Council finalises Directive to include aviation in ETS

On 24 October 2008 the Council of the European Union approved a directive bringing into law the inclusion of aviation in the European Union's Emissions Trading Scheme. A press release announced the decision (see previous post).

The United States Ambassador to the European Union, Kristen Silverberg, has written a letter to the European Commission dated 30 October 2008 reiterating US concerns.

Press releases reacting to the Council decision came from IATA, the Association of European Airlines (AEA) and the ELFAA.

EurActiv.com has a "links dossier" providing access to background on the aviation and emissions trading issue.

Political Party Transport Policies for the New Zealand Election

On 31 October 2008 the NZ Herald carried a story by Mathew Dearnaley headed "Transport a bandwagon everyone's happy to ride" and a table on the transport policies of the parties contesting the New Zealand General Election on 8 November 2008.

Policy.net.nz has a page on party transport policies.

Treemaps

Panopticon has a fascinating demonstration gallery of its data visualisation software. As well as the financial data that one might expect and a few treemaps that you might not expect, for those interested in aviation there is a treemap of airliner crashes covering the period 1968-2008. This can be varied by airline and by aircraft manufacturer. The data source used is AirDisaster.Com.

Aerolineas Argentinas to be expropriated?

Reuters is carrying a report dated 23 October 2008 that the Argentine Government is considering expropriating Aerolineas Argentinas. The government had been in talks to buy the airline (see previous post).

The airline is unusual in that it is foreign owned and controlled by Spanish interests, the Marsans group, probably giving many of Argentina's bilateral air services agreement partners the right to refuse to grant it operating authorisation. To my knowledge none have done so.

Air New Zealand reviewing services beyond RAR, TBU and APW to LAX

Television New Zealand and the Samoa Observer are carrying reports dated 26 October 2008 that Air New Zealand is seeking government subsidises if it is to continue its weekly services beyond Nuku'alofa, Apia and Rarotonga to Los Angeles.

The non-stop service between Rarotonga and Los Angeles is already subsidised by the Cook Islands government.

EC's Calleja addresses IAC

Against the background of the resumed air transport negotiations between the European Commission and the United States, on 23 September 2008 Daniel Calleja, the Director of Air Transport at the European Commission delivered a speech to the International Aviation Club in Washington DC.

Jetstar's New Zealand aspirations

On 24 October 2008 The Australian carried a report by Steve Creedy quoting the new Chief Executive of Qantas-subsidiary Jetstar, Bruce Buchanan, about the airline's aspirations for New Zealand operations.

It is becoming increasingly clear that the Boeing B787, with its size/range combinations, is likely to play a major part in New Zealand's aviation future.

Global Financial Crisis Impacting on New Zealand Visitor Arrivals

For some months now I have been getting rather gloomy about New Zealand's international visitor numbers. Having been hit by a supply shock in the form of rising jet fuel prices, airlines are now being hit by a demand shock and those that plan to survive will need to make some tough decisions. Those people that wish to see aviation emissions reduced and aircraft grounded may be in luck the way things are going, in the short term at least.

The September 2008 New Zealand International Visitor Arrivals:

• Australia 82,317 down 2.6%
• UK 10,580 down 5.3%
• USA 9,131 down 11.6%
• Canada 2,139 up 12.0%
• China 5,497 down 33.2%
• Korea 4,577 down 30.7%
• Japan 6,486 down 22.1%

The total number was down by 6.6%.

Will the recent dramatic fall in the value of the NZ$ start to have a positive impact in some of these markets?

The NZ Ministry of Tourism does a good monthly analysis of this data in a Commentary and its Tourism Leading Indicators Monitor. I look at the provisional numbers that come through every Friday and at my work we also have the raw data direct from Statistics NZ. The NZ Ministry of Transport is the only one that gets the airline-by-airline statistics as, unlike in Australia for example, here they are regarded as commercially sensitive.

Fuel hedging by Air New Zealand

As well as hedging their foreign exchange exposure, volatility in the price of jet fuel leads to airlines hedging to achieve a degree of certainty about their costs going forward. Air New Zealand publishes its position here on its web site every quarter.

The latest announcement has just been covered in a story dated 24 October 2008 by Denise McNabb from The Independent. Given the dramatic fall in the price of oil, it is quite interesting. There have recently been some painful losses for the latest quarter announced by airlines in the United States as a result of having to mark to market their fuel hedging.

A data series and graphs on the Singapore jet fuel spot price are available from the US Energy Information Administration (see previous post). I have installed a widget giving the price of crude oil in US$ on the left hand side of this weblog.

Deadline for Canada-EU air services negotiations

On 17 October 2008 during the visit of the French and European Commission Presidents to Quebec City the Prime Minister of Canada Stephen Harper announced that he "... welcomed the decisive progress toward the negotiation of a comprehensive air transport agreement between Canada and the EU. He, along with EU leaders, directed negotiators to conclude the agreement by November 30, 2008. This agreement will improve connections between markets and create new opportunities for the air sector."

Back on 29 May 2008 the Canadian Minister of Transport noted that there had by then been three rounds of negotiations. The first round was held in Brussels on 27-28 November 2007 (Canadian statement)(see previous post).

US domestic air transport deregulation 30 years later

This week saw the thirtieth anniversary of the economic deregulation of the US domestic airline industry under the Carter Administration.

To mark the occasion on 23 October 2008 the Antitrust Division of the US Department of Justice held a Workshop on Airline Competition at which some of the leading academics in the airline field presented papers (HT to Aviation Law Prof Blog).

Also marking the occasion were three articles complete with commentaries in the Summer 2008 issue of the Houston Law Review and a short article, Why You Hate to Fly, by Evan Sparks in The American magazine.

Bill Swelbar from MIT has four postings on his weblog:

• Economic Impact of Commercial Aviation
• Triangulating Southwest to the Point of Indifference
  
• Management and Labor
• Stakeholder Winners and Losers NEW
  

The second posting finishes with an intriguing comment: "In the future, look to the horizon for the new competitive battleground. It will be more about Auckland than Amarillo. It really will."

To cap it off Kieran Daly noted that, one of the biggest beneficiaries of deregulation, Southwest had just announced its first quarterly loss in 17 years as a result of having to mark to market its fuel hedging.

I remember in the 1980s reading that the airline industry was proving to be less contestable than the advocates of economic deregulation had thought it would be. The industry certainly has had a bumpy ride from a financial perspective but consumers have enjoyed huge benefits. I continue to have an open mind as to whether the economic policy advisers and regulators, of which I am one here in New Zealand, have it right. The above links point to plenty of food for thought.

IATA Agenda for Freedom Summit in Istanbul

IATA is meeting back in Istanbul on 25-26 October 2008, this time with officials from 15 governments (Australia, Brazil, Canada, Chile, the European Commission, India, Mauritius, Morocco, Panama, Singapore, Switzerland, Turkey, the United Arab Emirates, the United States of America and Vietnam) in an Agenda for Freedom Summit to discuss ways of freeing up the government-imposed economic restrictions that international airlines operate under.

The Baltic Dry Index sinks

On 24 October 2008 Bloomberg reported that the Baltic Dry Index (BDI) has fallen 90% since May 2008 (see chart). On 16 October 2008 the Financial Times carried a story on this drop.

The BDI measures the cost of chartering large bulk ships and is regarded as a leading indicator of global economic activity. Back on 24 October 2003 an article by Daniel Gross in Slate described it as the best economic indicator you've never heard of.

With such developments as this and the fall in the price of oil maybe the world is getting smaller again (see previous post).

Gongoozling

An article published by The Economist on 18 September 2008 increased my vocabulary. I had never come across the word Gongoozler before. It seems that it is the canal equivalent of a train or plane spotter.

These days what is left of the UK canal network is maintained by British Waterways. I have been to the National Waterways Museum in Gloucester.

The US concludes "open skies" agreements with Armenia, Laos and Vietnam

On 7 October 2008 the US Department of Transportation announced that the United States had concluded a new "open skies" agreement with Armenia, and "open skies" with Vietnam with respect to cargo-only air services. An "open skies" agreement with Laos was announced by DoT on 3 October 2008.

This brings to 94 the number of "open skies" relationships that the United States has reached. Note that ICAO has 190 Contracting States so the US is now just under half way through all the possible "open skies" relationships that it could have.

A sea of red - following the US stock markets

Some time ago I linked from my Economics home page to the SmartMoney.com Map of the Market. It is what is called a treemap and shows a map of US equities with the area for an individual company varying by market capitalisation and the colour by whether the stock has risen or dropped in price.

I recently came across a much more comprehensive data visualisation source, FINVIZ.com (HT to information aesthetics). Currently it presents a gloomy picture but perhaps points to some buying opportunities for those that are contrarian. To quote Warren Buffett in an opinion piece in The Times on 19 October 2008: "Be greedy when other are fearful and be fearful when others are greedy."

The market capitalisations of the major US airlines are now so small that they are actually quite hard to find on this visualisation tool - do not expect to find them in the S&P 500 view - look in the Full view in the Services block on the right near the bottom under "Maj".

Interactive graphic of the current bear market

The New York Times has an excellent interactive graphic dated 11 October 2008 comparing the current bear market with past ones in terms of severity and length as measured by the S&P 500 and Robert J. Shiller from Yale.

Plane Truths report from new economics foundation

On 27 September 2008 the new economics foundation and World Development Movement published their 60 page report Plane Truths: Do the economic arguments for aviation growth really fly? A summary statement talks about three "fossil-fuelled fantasies".

Fiji to join the PIASA

On 7 October 2008 the Fiji Interim Government announced that Fiji intends to join the Pacific Islands Air Services Agreement (PIASA)(see previous post).

Given Fiji's central geographic location in the South Pacific and its past concerns about air services liberalisation, this is a significant announcement.