ACCC looks to clear Delta-V Australia tie up

On 2 November 2009 the Australian Competition & Consumer Commission (ACCC) announced that it had issued a draft determination in favour of approving a joint venture between V Australia and Delta Air Lines (see previous post).

New PIA route to Dubai blocked?

On 28 November 2009 the Daily Times from Pakistan reported that approval of a proposed new Pakistan International Airlines service from Sialkot in Pakistan to Dubai was being delayed by the Dubai civil aviation authorities.

Turbulent times for civil aviation administration in the Solomon Islands

On 5 November 2009 the Solomon Star carried a rather extraordinary set of revelations about alleged disharmony and possibly worse in civil aviation administration in the Solomon Islands:

• Civil Aviation is on the Spotlight Again
• Row erupted in Aviation and Communication Ministry
• "Gross Mismanagement of Public Funds"
• Board of Enquiry
• Minutes of Section Heads Meeting 26 October 2009

On 6 November 2009 the Solomon Star carried an editorial and reported on further developments and on 7 November 2009 reported that the Prime Minister had ordered an inquiry. On 18 November 2009 the Solomon Star reported that the inquiry was due to start that day and take about two weeks.

By way of background, on 7 August 2009 the Solomon Star reported the appointment of Ben Kere as Acting Director.

Some years ago I had a fascinating discussion of the challenges of civil aviation administration with a previous Director of Civil Aviation from the Solomons. It is not easy.

It can be interesting to read the results of audits done as part of ICAO's Universal Safety Oversight Audit Programme for countries such as the Solomon Islands (2006 audit 276 page .pdf). Such audit results are available on the Flight Safety Information Exchange web site (optimised for MS Internet Explorer).

"The Nature of Technology" by W. Brian Arthur

I recently finished reading economist W. Brian Arthur's very interesting new book, The Nature of Technology - What It Is and How It Evolves. Formerly at Stanford, Brian Arthur is now associated with the Sante Fe Institute and PARC. He is noted for his work on complexity theory and increasing returns to scale.

In the book Arthur uses a wide definition of "technology" and offers an excellent plain language explanation of its relationship with science and the economy ("The economy is an expression of its technologies."), and the process of innovation that has wide application. His writing benefits from the fact that, as well as being an economist, he trained as an electrical engineer. A particular attraction for me was his use of examples of aeronautical technology.

A review of the book appeared in the New York Times on 19 October 2009 and the American Scientist carried an interview by Greg Ross with Arthur about the ideas.

The book deserves a wider readership.

Australian IASC splits capacity in decision on Fiji routes

On 6 November 2009 the Australian International Air Services Commission finalised its decisions allocating capacity for new services by V Australia and Qantas-owned Jetstar to Fiji, allocating 907 seats of capacity to V Australia and 852 seats of capacity to Qantas.

Latest ACI statistics point to few bright spots for international air passenger numbers

The Airports Council International data released on 17 November 2009 for international passenger movements at the world's top airports make relatively grim reading. For the 12 months ended August 2009 only three of the top 30 international airports, Dubai (DXB), Istanbul (IST) and Kuala Lumpur (KUL), reported positive growth.

All three airports are hubs for airlines that have been enjoying a relatively successful year. It remains to be seen what impact Dubai's current financial difficulties will have on traffic at the airport.

Germany takes action against Emirates Airline tariffs

On 20 November 2009 Deutsche Welle reported that the German government was taking action against sixth freedom carrier Emirates Airline to stop it undercutting Lufthansa in the Germany-South Africa and Germany-Singapore markets. On 19 November 2009 Reuters report gives further coverage, suggesting that the action was not just directed at Emirates.

A report of reaction in The National dated 26 November 2009 refers to "1970s protectionism".

I was aware of a European law prohibiting fifth freedom price leading by non-EU airlines but had thought that this was limited to flights within the EU. I do not have access to the tariffs article of the Germany-UAE air services agreement which will probably be relevant. I think the current relevant European law is available here but would welcome comments on this.

Enforcing tariff regulation is very hard to do given the thousands of international air tariffs in existence.

UN treaties database online

As well as ICAO, the United Nations Treaty Collection can be a useful source for information about international air services arrangements that have treaty status. The web site has recently be revamped.

However, as with the ICAO treaty collection (DAGMAR), the UN collection is by no means comprehensive with many bilateral air services agreements yet to be filed. It is relatively common for air services agreements to be in operational effect before all constitutional processes have been completed by the parties.

Fifth round of air transport negotiations between the EU and the USA

A further three-day round of air services negotiations held on 9-11 November 2009 in Brussels, the fifth in the second stage of the EU-USA "open skies" arrangements (see previous post), resulted in a joint statement dated 11 November 2009. The next round is to start in Washington DC in the week of 11 January 2010.

UAE negotiates air services agreement with Somalia

On 24 November 2009 Air Transport News carried a release from the United Arab Emirates GCAA that the UAE had negotiated an "open" air services agreement with Somalia. The negotiations were held in Dubai.

Emirates Airline calls on the New Zealand Prime Minister

On 13 November 2009 the NZ Herald reported that Andrew Parker from Emirates Airline had met with the New Zealand Prime Minister, John Key, and senior government officials in Wellington. The Prime Minister also holds the Tourism portfolio.

Note that the 850,000 passenger statistic quoted would seem to have been calculated on a full uplift discharge basis rather than using the true origin destination method. Thus sixth freedom transit passengers travelling between New Zealand and Europe through Dubai would seem to be included in this total.

The Air New Zealand criticism referred to was made by its Chief Executive Rob Fyfe in the speech in Hong Kong in which he did not refer to Emirates by name (see previous post).

Emirates Airline is owned by Dubai holding company Investment Corporation of Dubai.

Airline RPK to Country GDP ratios

Recently I spent a wet weekend looking for a means to identify the countries where their airline industry plays a disproportionate role in the national economy. As a general rule I would expect that these are the countries with airlines that rely to a greater extent on sixth freedom (transit) traffic.

I took the overall size of each economy as measured in US dollars and adjusted for purchasing power parity (PPP) from the World Factbook published by the CIA on 20 March 2008.

I then took the 100 top airlines in the world as measured by revenue passenger kilometres (RPKs) from the August 2008 edition of Airline Business and allocated these airlines to their home countries.

What I came up with were the following RPK:GDP ratios that were greater than 0.1 (number of airlines in brackets if more than one):

0.67 United Arab Emirates (2)
0.57 Bahrain
0.56 Qatar
0.37 Singapore
0.33 Ireland (2)
0.26 Hong Kong
0.24 New Zealand
0.16 Australia (3)
0.13 Malaysia (2)
0.13 United Kingdom (9)
0.12 Sri Lanka
0.11 Finland
0.11 Thailand

That countries in the Gulf region, led by the UAE, came top was no great surprise given recent developments. What I had not expected was that the ratio for New Zealand would be so high.

Australian ANZA airlines to pay New Zealand domestic safety levy

On 3 November 2009 the New Zealand Minister of Transport, Steven Joyce, announced that Australian airlines exercising ANZA privileges (they do not have to hold a separate New Zealand safety certificate and the direct oversight of their airline operations is carried out by the Australian Civil Aviation Safety Authority (CASA)) would have to make a contribution to the costs of running the Civil Aviation Authority of New Zealand (CAA) through a domestic levy of $1.66 per passenger sector when providing cabotage services. The CAA released a statement on 4 November 2009. This will mainly affect Jetstar (see previous post).

In similar circumstances when operating within Australia, New Zealand airlines, such as Airwork and Vincent Aviation, exercising ANZA privileges are already paying a fuel excise.

Earlier the CAA had issued a consultation paper and released a summary of submissions.

This follows the introduction of an Arrangement providing for mutual recognition of safety certification between Australia and New Zealand. This was originally envisaged when the Single Aviation Market was negotiated in 1996.

The ANZA mutual recognition provisions are in Part 1A of the Civil Aviation Act 1990 while the relevant levy-making provisions are in Part 4. The relevant Order in Council (the amended version is not yet available on the web) is the Civil Aviation (Safety) Levies Order 2002.

Media coverage included stories by the Australian correspondent for The Independent and Business Day, Denise McNabb on 23 October 2009 and 2 November 2009, and a story in the NZ Herald on 5 November 2009 which reported that Qantas was "furious".

The Daily Telegraph launches a campaign against the UK APD increases

With the UK Air Passenger Duty (APD) rising on 1 November 2009 the UK newspaper the Daily Telegraph has today launched a campaign against the increases giving 10 reasons why it considers that the Duty "must be abolished" (see previous post).

A BBC 1 November 2009 report quotes a spokesman for HM Treasury saying: "The government maintains that air travel should pay its fair share in tax. APD is an important contributor to the public finances, while helping the government achieve its environmental goals."

The Observer has a 1 November 2009 report that quotes a survey by YouGov, commissioned by Easyjet, that found that 80% of people believe the system should be reformed. As always with such surveys, it is worth looking at exactly what questions were asked.

Invercargill International Airport?

On 31 October 2009 the Otago Daily Times reported that Invercargill Airport (IVC), located in the Southland, New Zealand, is looking at providing international facilities for Pacific Wings according to industry sources. The Australian airline would wet lease aircraft for any trans-Tasman services from Nauruan carrier Our Airline.

With the restart of international air services into Hamilton (HLZ) by Pacific Blue on 1 September 2009, currently New Zealand has six international airports. Air New Zealand plans to start the first trans-Tasman scheduled services into Rotorua (ROT) on 12 December 2009.