China Airlines recommencing operations to Auckland

On 3 December 2010 China Airlines (CI) announced that it would be recommencing operations to Auckland (AKL) by extending its Taipei-Brisbane (BNE) service three times per week using A330-300 aircraft. The operation is due to restart on 1 January 2011.

Auckland International Airport had commented on the return of China Airlines in a media statement dated 30 November 2010.

A significant change that should boost the chances of success of the new air service is the decision of the New Zealand Government to grant people from the island of Taiwan visa-free access to New Zealand. A similar decsion by the United Kingdom Government has lead to a major boost in travel from Taiwan to the UK (see previous post).

SkyTeam member China Southern Airlines to operate to Auckland

On 12 December 2010 Auckland International Airport issued a media statement welcoming the announcement that China Southern Airlines (CZ) is to commence operating from Guangzhou to Auckland from March 2011, initially via Melbourne three times per week with A330-300 aircraft.

This announcement together with the announcements that China Airlines (CI) and Aerolineas Aerolineas (AR) will be joining the SkyTeam global airline alliance means that this third allinace will be establishing a more substantial presence in the New Zealand market. Currently the only SkyTeam member airline operating to New Zealand is Korean Air (KE).

Canberra and Wellington approve Air New Zealand-Virgin Blue group Alliance

Following a pre-decision conference on 18 October 2010 (see previous post), on 16 December 2010 the Australian Competition & Consumer Commission (ACCC) announced that it had reversed its draft determination (see previous post) and given a conditional authorisation of the application from the Virgin Blue group and Air New Zealand for an Alliance covering their trans-Tasman services. The approval is valid for three years. The ACCC also issued its redacted 120-page final determination.

The Virgin Blue group issued a media statement welcoming the decision. A media statement was also issued by Wellington International Airport.

On 21 December 2010 the New Zealand Minister of Transport, Hon Steven Joyce, announced that he had also given a conditional approval of the application (see previous post). This authorisation is also valid for three years.

The Ministry of Transport made available on its web site a redacted version of its 58-page final report giving advice to the Minister, together with the Alliance Capacity Implementation Agreement and some questions and answers.

Air New Zealand issued a short media statement welcoming the decision.

Air transport and inflation in New Zealand

Small components of the New Zealand consumers price index (CPI) are made up of changes in the price of international (1.68%) and domestic (0.64%) air transport. In October 2009 Statistics New Zealand published details of how it measures price changes in these two components. With thousands of different tariffs available for air travel from and within New Zealand it is interesting to read an explanation of the methodology that the department uses.

Data for quarterly price movements in these components can be found using Infoshare. Go to "Economic indicators" then "Consumers Price Index" then "CPI Level 3 Classes for New Zealand". The numbers are currently indexed so that the base quarter ended June 2006 equals 1000. For the quarter ended September 2010 international air transport stood at 1018 (+1.80%) while domestic air transport dropped to 906 (-9.40%). Over the same four years and three months period the overall CPI had risen to 1111 (+11.10%). Note, however, the regular seasonal peaks in the international air transport price index.

In real terms the cost of air travel has been declining for decades, driven in part by technology change as airliners become more efficient, but also by increased productivity in the airline industry and greater competition following economic deregulation. This has been highlighted by the drive to become "low-cost" airlines. A trend to "no-frills" product, particularly for short-haul routes, has also been reducing the headline price of airfares as passengers now pay separately for extra services. Statistics New Zealand notes that it has made some adjustments for these quality of service changes.

In recent years, as well as jet fuel price increases (see previous post), pushing ticket prices in an upwards direction are the various taxes, levies and surcharges that are being imposed to meet increasing costs for activities such as airport services and security. These items are included in the above calculations.

More on the Philippines "open skies" debate

The President of the Philippines, Benigno Aquino, was reported by the Cebu Daily News on 11 November 2010 as talking about the potential benefits of his country adopting an "open skies" policy (see previous post). Quite what "pocket-sized open skies" would mean though is not clear.

Back on 11 September 2010 GMANews.TV reported on an interesting twist. It quotes a Department of Transportation and Communications (DoTC) official as saying that the Philippines Constitution requires that any such trade deal be reciprocal.

China starting to make available the texts of its air services agreements

In the English language part of its web site, the General Administration of Civil Aviation of China (CAAC) has started to make available the texts of China's air services agreements.

Unfortunately it seems some subsequent amendments, for example with New Zealand where the route schedule has been liberalised (see previous post), have yet to be made available. A work in progress?

More open air services arrangements between Yemen and Bahrain

On 17 October 2010 the Yemen new agency, Saba, reported that Yemen had signed a Memorandum of Understanding on air services with Bahrain. There are now no capacity limits and fifth freedom rights have been exchanged.

Timor Leste completes air services arrangements with Indonesia

On 1 November 2010 Antara News reported that a Memorandum of Understanding on air services had been signed between Timor Leste and Indonesia. Capacity is limited to 14 flights per week and fifth freedom rights are included.

On 2 November 2010 The Jakarta Post carried a short report on what use two Indonesian airlines plan to make of the new air services arrangements.

Australian Senate inquiry into pilot training and standards

On the initiative of independent Senator Xenophon, the Australian Senate has launched an inquiry into pilot training and airline standards. Ben Sandilands, on his Plane Talking blog, is actively following the inquiry.

I must stress that this is a personal view partly based in part on my own experience of flight training and holding a PPL but I remain sceptical that airline pilots can be safe without a much higher number of flying hours in the air as pilot in command than seems to be being advocated by some airlines.

AirAsia X to operate to Christchurch

On 29 October 2010 Christchurch Airport (CHC) announced that it has signed a deal that will see Malaysian airline AirAsia X (D7) commence operations from Kuala Lumpur (KUL) to New Zealand (subject to regulatory approvals). Whether this new direct route will be non stop or via Australia has yet to be announced. The Wings Down Under blog has a post on the story dated 29 October 2010.

New Zealand has a 1998 bilateral 'open skies' air services agreement with Malaysia (see media statement).

There has been speculation that the Malaysia government would not permit AirAsia X to compete directly with the Malaysia Airlines (MH) operations to Auckland (AKL). Singapore Airlines (SQ) already operates from South East Asia to Christchurch and is about to face competition to its Singapore-Auckland non-stop operations from Jetstar Asia (3K)(again subject to regulatory approvals)(see previous post).

Austria follows Germany to introduce flight departure tax

On 28 October 2010 GreenAir Online reported that Austria intends to introduce a tax on air travel.

On 1 November 2010 there is a major increase in the United Kingdom's Air Passenger Duty.

Alliances approved, Japan-USA 'open skies' signed and Haneda open for international flights ...

... in that order.

On 6 October 2010 the US Department for Transportation announced that it proposed to approve alliances between American Airlines and Japan Airlines, and separately between United Airlines, Continental Airlines and All Nippon Airways (DOT-OST-2010-0059 refers).

On 25 October 2010 the US Department of State announced that 'open skies' air services arrangements had just been signed between Japan and the United States (see previous post).

On 31 October 2010 Mainichi Daily News reported that Haneda Airport (HND), close to central Tokyo, opened for international air services. Flightglobal reported that the first international flights by JAL and ANA actually departed on 30 October, just before midnight, and reported that the airport's new, fourth runway and international terminal opened on 21 October. International landing and takeoff slots at Haneda are very limited and have been sought by many countries.

The Airline Route web site currently has a section devoted to the new Haneda international services and links to a Ministry of Land, Infrastructure, Transport and Tourism document on the subject dated 23 October 2010 (in Japanese).

ASEAN-China air transport agreement close?

On 29 October 2010 Channel News Asia reported from Hanoi comments by Singapore's Prime Minister Lee that he expected an ASEAN-China Air Transport Agreement to be concluded next month.

Lee also suggested that ASEAN should be pushing for 'open skies' within the ASEAN region. On 27 April 2010 the Business Mirror reported comments from a Philippines official that only one unnamed country had yet to agree to a Multilateral Agreement for the Full Liberalisation of Passenger Air Services (MAFLPAS).

ASEAN already has a 2009 Multilateral Agreement on Air Services, which allows unlimited flights between capital cities by the airlines of member states, and a 2009 Multilateral Agreement on the Full Liberalisation of Air Freight Services.

New Zealand's recent air services negotiations

The New Zealand Ministry of Transport's Annual Report for the year ended 30 June 2010 has just been tabled in Parliament and published. It includes a brief section on air services arrangements:

Air services: The Ministry continued working through the issues outstanding in air services negotiations with the European Union. However, given the differences between our respective positions on significant issues, it was difficult to reach a mutually acceptable position. Further negotiations were put on hold pending further developments on either side. 

Negotiations were also held with Papua New Guinea in March 2010 where an understanding was reached on liberalising some elements of the air services arrangements.

New Zealand–Japan air services agreement: An agreement was reached with Japan on amendments to the New Zealand–Japan air services agreement to permit the operation of Boeing B777-300 aircraft on the route.

South Africa signs new MoU with Qatar boosting capacity for their airlines

On 28 October 2010 the Qatar News Agency announced that, following negotiations in Pretoria, South Africa and Qatar have signed a new Memorandum of Understanding quadrupling the flights available to the airlines of the two countries to 28 flights per week for each side.

Canada initials an air services agreement with Qatar

On 28 October 2010 the Qatar News Agency announced that, after three days of negotiations in Doha, Canada and Qatar have initialled an air services agreement that will allow Qatar Airways to operate three passenger flights and three cargo flights per week to Canada.

ACCC hold pre-decision conference on Virgin Blue/Air New Zealand alliance application

On 18 October 2010 the Australian Competition and Consumer Commission (ACCC) held a pre-decision hearing in Sydney on the alliance application from Air New Zealand and the Virgin Blue group (see previous post). The hearing was closed to the media so there has been no reporting.

However, submissions (scroll down for submissions made after draft determination) from the applicants and most of the New Zealand interests that have in the past expressed doubts about the merits of the case indicate that differences are narrowing with the applicants offering to give conditional undertakings to maintain capacity on routes that are of concern (see the end of the submission from the applicants). These routes (sectors) are: AKL-BNE; WLG-BNE/SYD/MEL; DUD-BNE; and ZQN-SYD.

"Open skies" policy debated in the Philippines

The possibility of the Philippines adopting an "open skies" policy continues to be discussed with the Manila Standard reporting on 21 October 2010 that an Executive Order has been drafted.

On 23 October 2010 The Manila Bulletin carried a report with comments from the Speaker, Feliciano Belmonte Jr., who emphasised the need to improve air transport infrastructure.

On 24 October 2010 BusinessWorld reported that there was support for adopting an "open skies" policy from key Cabinet members.

Breakthrough for the Gotthard Base Tunnel Project

In a major civil engineering achievement, after 14 years on 15 October 2010 the boring of the 57km Gotthard Base Tunnel through the Swiss Alps was completed. swissinfo.ch carried a report on the breakthrough.

The new rail tunnel, the longest in the world, will not open until 2017 but will become a major transport between Germany and Italy when it does. The cost is expected to be US$10.6bn. The travel time by passenger train between Zurich and Milan will be reduced by one hour.

Australian Department intervenes to support Delta-V Australia alliance proposal

The newly renamed Australian Federal Department of Infrastructure and Transport has intervened in the case before the US Department for Transportation (DoT) seeking anti-trust immunity for an alliance between Delta Air Lines and the Virgin Blue group (see previous post), including V Australia, writing a letter dated 13 October 2010 to DoT supporting the application.

This case leaves one thinking that the Japanese approach of not implementing its new bilateral air transportation arrangements with the United States until various anti-trust immunities were first granted was totally understandable.

Details on German aviation tax

The German Federal Ministry of Finance has published a short article on its web site detailing how in practice the proposed aviation tax is to work (see previous post).

Thailand signs new air services agreements with Denmark, Norway and Sweden

On 16 October 2010 ScandAsia.com reported on the signing the previous day of new air services agreements between Thailand and Denmark, Norway and Sweden. The new agreements replace those signed in 1949. Thai and SAS have long historic links.

Jamaica signs open skies agreement with Canada

On 20 October 2010 the Jamaican Prime Minister's office announced that Jamaica had signed a new "open skies" agreement with Canada.

Air rights between the UK and Taiwan expanded

On 8 October 2010 the Taipei Times and Taiwan Today reported that negotiators from the United Kingdom and Taiwan had reached agreement to expand the opportunities available to their airlines in terms of both capacity and routes.

This follows the UK deciding to grant visa free access to people from Taiwan from March 2009. New Zealand has recently made a similar move.

Tax dispute may see more foreign airlines pulling long-haul services from the Philippines

A 13 October 2010 weblog posting from The Exciting World of Philippine Aviation reported on a dispute between some foreign airlines and the Philippines government over the imposition of a value added tax. On 5 October 2010 the Manila Standard reported that KLM and Delta were among the airlines considering cutting services to Manila.

Canada updates air transport agreement with Switzerland

On 22 October 2010 the Canadian Prime Minister, Stephen Harper, announced that Canada had negotiated an updated, more open air transport agreement with Switzerland. The Prime Minister's Office announced more details.

Tyndall Centre report on emissions from shipping

The Tyndall Centre for Climate Change Research at the University of Manchester released a media statement and 83 page report on emissions from UK shipping. A key issue covered in the report is the different methods of apportioning emissions to individual countries.

The Guardian published an article on the findings of the report on 23 September 2010.

Further coverage of the UAE v Canada aeropolitical dispute

What is looking like becoming a classic standoff (see previous post) has been receiving further media coverage. The following items are just a sample:

11 October 2010

Winnipeg Free Press

Gulf News from Reuters

12 October 2010

The Montreal Gazette - note the reference to Australia and New Zealand

The Globe and Mail - editorial

13 October 2010

The Globe and Mail

14 October 2010

The Globe and Mail - suggests there were differing views in the Canadian Cabinet

The Vancouver Sun

18 October 2010

The Montreal Gazette

20 October 2010

National Post NEW

21 October 2010

The Vancouver Sun

22 October 2010

National Post NEW - comment from Canadian Transport Minister Chuck Strahl

On 16 October 2010 the Centre for Asia Pacific Aviation published a background article.

The 2001 Canada-United Arab Emirates air transport agreement (ATA) itself is also available online. I found it unusual in that the capacity limits are explicitly included in the Route Schedule at the end of the ATA. The capacity principles are not unusual and are clearly spelled out in Article XI. What I have not seen in any of the coverage are the actual true origin/destination (TOD) passengers numbers between Canada and the United Arab Emirates.

Air New Zealand still waiting for the B787-9

On 10 October 2010 the NZ Herald carried a feature article on the Boeing B787 aircraft that Air New Zealand has ordered (see previous post).

Of particular interest was the comment by senior Air New Zealand manager Ed Sims that the aircraft will offer the potential for non-stop operations from Auckland (AKL) to Chicago (ORD), Mumbai (BOM) and Sao Paulo (GRU). Great Circle Mapper gives the distances from AKL to these airports as 13,171km, 12,303km and 12,045km respectively. Boeing currently lists the range of the B787-9, which has yet to fly, as 14,800km to 15,750km.

CATR research on New Zealand air transport presented

Government-funded (by FRST and the Tourism Strategy Group) research done by Auckland economic consultancy Covec for the Centre for Air Transport Research (CATR) at the University of Otago was presented at a workshop with representatives of the New Zealand tourism industry on 5 October 2010. The 66 slides and an audio file are now available on the CATR web site.

Particularly noteworthy to me are slides 23 and 24 which in diagram form summarise seat capacity into New Zealand in 2004 and 2009, slides 26 and 27 giving a matrix of New Zealand's air connectivity, and slide 32 indicating how B747 and B767 aircraft are being replaced by B777 aircraft on international air services to New Zealand.

Japan considering "solidarity" tax on international air travel

On 28 September 2010 the Asahi Shimbun reported that the Japanese Government is considering introducing a 'solidarity' tax on international air transport.

Chile, France and South Korea already has such a tax in place with the money being used to fund UNITAID NEW.

New Zealand Civil Aviation Authority commences consultations on future capability and funding

On 12 October 2010 the Civil Aviation Authority of New Zealand (CAA) released a major discussion document on Funding Alternatives together with Questions and Answers.

Given the fact that fees and charges have not been adjusted for many years, not surprisingly most of the proposed increases are large. The review is also looking at alternative capability levels for the CAA.

Submissions close on 23 November 2010.

Aeropolitical 'hard ball' directed at Canada by the UAE

Reports in the Globe and Mail (8 October 2010), the Vancouver Sun (9 October 2010) and on Bloomberg (10 October 2010) point to the United Arab Emirates (UAE) venting its frustration at Canada's refusal to grant increased access to Emirates and Etihad (see previous post). This has taken the form of kicking the Canadian military out of the UAE which the Canadians have been using for logistics support for operations in Afghanistan.

I am left wondering whether there is a real risk of Canada giving notice of termination of its air services arrangements with the UAE. Such action would potentially include removing the right for UAE's airlines to overfly Canadian territory on non-stop services between Dubai and San Francisco/Los Angeles, for example, because Canada is no longer a party to the International Air Services Transit Agreement - Canada withdrew in 1988. (New Zealand has only ever terminated an air services relationship once, with Canada in the 1960s.)

Given that the origin of the military operations in Afghanistan was the horrendous 9/11 attacks in the USA using civil aviation, the actions of the UAE are not a good look.

An update on New Zealand domestic air passenger numbers

Since I last graphed the numbers of passengers going through the three main domestic airport hubs in New Zealand (see previous post) there have been some major announcements. First there was the announcement that Pacific Blue is to withdraw from the New Zealand domestic market with effect from 18 October 2010 (see previous post).

Then on 31 August 2010 Air New Zealand announced that it would be increasing capacity on some of its provincial services from February 2011.

Finally on 16 September 2010 it was reported by Business Day that Jetstar would be adding two A320 aircraft to its New Zealand domestic operation, also from February. Before these new changes take effect then I have done more graphs of recent monthly domestic passenger numbers and year-on-year growth rates.

Australian ACCC gives an interim Yes to Etihad-Virgin Blue alliance

On 23 September 2010 the Australian Competition and Consumer Commission (ACCC) announced that it was giving an interim approval to an alliance between Etihad Airways from Abu Dhabi and Virgin Blue from Brisbane. Papers related to the authorisation are available here.

This will see Qantas severing its relationship with Etihad under which, among other routes, Etihad has been code sharing on Qantas operations between Sydney and Auckland (see 11 March 2009 announcement), and Emirates severing its relationship with Virgin Blue group's V Australia under which V Australia has been code sharing on Emirates' operations from Sydney to Auckland and Christchurch (see 16 September 2009 announcement).

ICAO Assembly to debate US proposal on mechanism to liberalise restrictions on foreign ownership of airlines

The triennial International Civil Aviation Organization (ICAO) Assembly is about to start in Montreal and will run from 28 September to 8 October 2010.

Of particular interest from an aeropolitical perspective will be the debate in the Economic Commission under agenda item 49 "Liberalization of international air transport services" on working paper A37-WP/190 "Facilitating airline access to international capital markets" presented by the United States. This paper also presents a draft multilateral agreement (see previous post). It will be very interesting to see whether the ICAO membership is prepared to take up this initiative and work on it.

Under the same agenda item, there is also a reference in paragraph 2.3 in working paper A37-WP/5 "Developments in international air transport regulation and liberalization" from the Council of ICAO to research carried out by the Secretariat quantifying liberalisation of international air services arrangements. However, I have not seen whether this research has been made public. The World Trade Organization (WTO) has already done comprehensive work in this area (see previous post).

Environmental issues too can be expected to be the subject of attention at this Assembly although I would not expect that member states will be prepared to take a different approach at ICAO on the issue of addressing climate change from that they take in other fora, notably the UNFCCC.

Australian ACCC gives a draft No to Air New Zealand-Virgin Blue alliance

The Australian Competition and Consumer Commission (ACCC) announced on 10 September 2010 that it had tentatively concluded that the alliance application from Air New Zealand and the Virgin Blue group of airlines should not be approved (see previous post). The ACCC issued a 91-page draft determination explaining its reasoning.

US DoT gives a tentative No to Delta-Virgin Blue group alliance

On 8 September 2010 the United States Department of Transportation (DoT) announced a draft decision to deny the application by Delta Air Lines and the Virgin Blue group for anti-trust immunity (DOT-OST-2009-0155) and issued a 13-page Order to Show Cause (see previous post).

The Australian Competition and Consumer Commission (ACCC) had previously approved this alliance (see previous post).

The German Departure Tax

Details of the German air transport departure tax (Luftverkehrsteuer or Luftverkehrsabgabe) are now available in a 1 September 2010 media release from the German Government and a legal text (both in German)(see previous post).

The tax, which will have three distance bands, is similar to the air passenger duty currently imposed in the United Kingdom.

A November 2009 study by SEO from the Netherlands of The Implications of the Irish Air Travel Tax commissioned by Aer Lingus, Ryanair and Cityjet suggests that such taxes can be counterproductive.

Singapore concludes "open skies" agreements with Barbados, Brazil, Jamaica and Rwanda

On 19 July 2010 the Civil Aviation Authority of Singapore (CAAS) announced that Singapore had concluded "open skies" agreement with Barbados, Brazil, Jamaica and Rwanda at ICAN 2010.

Air services arrangements between Fiji and Singapore were also modified to create new opportunities.

Further planned airline arrivals and departures in the New Zealand market

On 26 May 2010 Continental Airlines (CO) announced that it plans to operate its new B787-8 aircraft non-stop between Houston and Auckland from 16 November 2011. Auckland Airport also issued a statement welcoming its returning customer.

Continental and United Airlines (UA) announced on 3 May 2010 that they proposed to merge. On 27 May 2010 the US Government Accountability Office (GAO) issued a report on the issues raised by the proposed merger. Committees of the US Senate and House of Representatives have also held hearings. On 27 July 2010 the merger received a clearance from the European Commission but is still awaiting a decision from the US regulatory authorities, in this case the Department of Justice.

On 21 June 2010 Jetstar announced that Jetstar Airways would be operating non-stop services between Singapore and Auckland using A330 aircraft on behalf of Jetstar Asia (3K) from 18 March 2011.

On 28 July 2010 Aircargo Asia-Pacific reported that Cargolux (CV) is suspending it operations to Australia and New Zealand. The last flight will operate on 28/29 August 2010.

European Commission to propose a direct tax on aviation?

On 9 August 2010 the Telegraph reported that the European Budget Commissioner has floated the idea that the European Commission be granted the power to impose a direct taxes on financial transactions and air travel. The latter would seem to be in addition to the EU ETS. The United Kingdom Government is reported to be opposed to the idea.

Brazil opens access for airlines from the Gulf region

A 13 July 2010 report in Xinhua reports on the bilateral air services arrangements concluded by Brazil with 12 countries at the ICAO Air Services Negotiation Conference in Jamaica.

Notable new arrangements include those with countries in the Middle East. The fast growing airlines from the Gulf region in particular stand to benefit from the sixth freedom opportunities that this will create for carriage between Brazil and East Asia.

Pacific Blue to cease New Zealand domestic services

On 16 August 2010 the Virgin Blue group announced that Pacific Blue would be ceasing New Zealand domestic air services from 18 October 2010. Its B737-800 aircraft will be redeployed and would, among other things, be used to increase flight frequency on the BNE-HLZ, BNE-DUD and MEL-CHC trans-Tasman sectors.

Air New Zealand will be increasing its domestic frequency when it replaces its B737-300 aircraft with A320 aircraft from January 2011 (see previous post). A competitive response from Jetstar is also likely.

Although Pacific Blue boosted domestic air passenger numbers when it initially entered the New Zealand market on 12 November 2007, this boost did not last (see previous post).

Wellington rail patronage growth largely driven by petrol price changes

In a previous post linking to Greg Mankiw's cross-price elasticity of demand examples, I noted that the car park at my local railway station seemed fill up when petrol prices went up. I recently found the two data series and graphed the relationship to see if I could confirm this.

The graph below and the R-squared value of 0.76 indicate that the changes in petrol prices have in fact been quite strongly related to changes in Wellington train patronage. For each cent the average quarterly price of petrol rises Tranz Metro can expect to have seen patronage rise by just under 8,000 passenger journeys per quarter.

I downloaded the data series for the inflation-adjusted quarterly average price of regular petrol from here UPDATED on the New Zealand Ministry of Economic Development web site. The rail passenger numbers come from here UPDATED on the Metlink web site.

It would be interesting to see what the relationship is with respect to other urban rail passenger systems, particularly in Auckland.

Meanwhile another factor is currently influencing rail passenger demand in Wellington. Service disruptions, while the system goes through a massive upgrade, are driving down demand as some rail commuters resort to more reliable alternatives transport modes (see Dominion Post story dated 13 August 2010).

BA/AA Okay

On 20 July 2010 the United States Department of Transportation announced that it had granted anti-trust immunity to an 'integrated' alliance between American Airlines (AA) and four of its oneworld partners, British Airways (BA), Iberia, Finnair and Royal Jordanian. The docket number is DOT-OST-2008-0252. The airlines only had to surrender four pairs of slots at London Heathrow (LHR) airport.

In a 15 July 2010 post Aviation Law Prof Blog covers the European Commission approval of the alliance given on 14 July. The BBC also carried a report. The Commission required the surrender of 49 weekly slots at LHR.

This brings to an end a lengthy process that started over a decade ago. The first attempt by AA and BA to gain approval dates back to 1997 while a second attempt was also knocked back.

The alliance had long been opposed by Virgin Atlantic. I recall seeing their aircraft painted with the slogan No way BA/AA.

Productivity growth in the New Zealand transport and storage industry

A June 2010 report into Industry Sector Productivity Statistics 1978-2008 released by Statistics NZ confirms that the Transport and Storage sector has a very good story to tell in this regard (see in particular Figure 2.1 on page 6).

What is particularly interesting to note though is Figure 14.2 on page 93. I suspect that it could be concluded that the transport reforms in the 1980s were a major contributing factor to the productivity growth in the decade or so following. The more recent productivity performance of the sector has not been so impressive.

Australia and Papua New Guinea expand airline capacity arrangements

On 3 June 2010 the Australian Minister for Infrastructure announced that air services negotiations between Papua New Guinea and Australia had reached an understanding to increase the passenger and cargo capacity able to be provided by the international airlines of the two countries for services between them.

Airline code-share approvals in Papua New Guinea

For some years Qantas has left operations to Papua New Guinea to its local partner Air Niugini. It is sometimes instructive to see how the regulatory authorities in other countries deal with applications from airlines seeking to cooperate.

Here are the 59-page, 18 December 2009 Determination of PNG's Independent Consumer & Competition Commission renewing approval of the Qantas/Air Niugini code-share arrangements and the 37-page, 11 November 2008 Determination approving the Pacific Blue Airlines (Aust)/Airlines PNG code-share arrangements.

On 1 July 2010 QantasLink commenced operations to Port Moresby from Cairns. This is the first international service for QantasLink.

Alternative view on the location of the World's Economic Centre of Gravity

Danny Quah from the London School of Economics has produced a paper The Global Economy's Shifting Centre of Gravity, dated August 2010, presenting an alternative view as to the location of the World's Economic Centre of Gravity (WECG) to that of Grether and Mathys (see previous post).

This has the WECG located just south of Izmir, Turkey (rather than north of Norway) and moving East. Maybe this provides a partial explanation for the current success of the rapidly growing airlines Emirates and Turkish.

New Zealand Emissions Trading Scheme covers transport fuels from today

It would be remiss of me not to note that from today, 1 July 2010, the New Zealand Emissions Trading Scheme (ETS) covers all domestic modes of transport, including aviation, that use liquid fossil fuels.

Once again New Zealand is leading the world.

Australian Infrastructure Minister addresses IAC in Washington DC

On 30 June 2010 the Australian Minister for Infrastructure, Hon Anthony Albanese, delivered an address on aviation policy to the International Aviation Club (IAC) in Washington DC.

Some of the very good points he makes about the implications of Australia's geographic location in terms of air services arrangements, particularly the critical importance of fifth freedom rights, apply equally to New Zealand.

WTO makes public its Air Services Agreement Projector

On 14 June 2010 the World Trade Organization (WTO) made available its Air Services Agreement Projector (Flash application) based on its QUASAR database (see previous post).

I know that this is the culmination of considerable hard work by a small dedicated team at the WTO Secretariat, as well as the work of the International Civil Aviation Organization (ICAO) Secretariat in Montreal who maintain DAGMAR.

The database is only as good as the information feed into it and this is primarily reliant on ICAO member states fulfilling their obligations to deposit copies of their air services agreements.

Already this data is being used for economic research (see previous post).

The Economist on Aviation in the Gulf

On 3 June 2010 The Economist published a briefing on Aviation in the Gulf "Rulers of the new silk road" and related editorial "Super-duper-connectors from the Gulf", focussing on the rise of network airlines Emirates, Etihad Airways and Qatar Airways, and their hub airports.

These airlines and airports, as well as enjoying the active support of their governments, are just about in the perfect geographic location for serving international air transport needs with ultra-long-haul aircraft. This is illustrated in a range chart centred on Dubai for the Boeing B777 family of aircraft.

On 10 June 2010 Airbus announced that Emirates had ordered a further 32 Airbus A380 aircraft to take its total order to 90 of these giant airliners. Jon Ostrower, in his excellent weblog FlightBlogger, on 10 June 2010 commented: "With RPK - the measurement of actual passenger traffic - set to double in the next 20 years, makes you wonder whether or not Emirates is hoping to carry it all themselves." Jon was joking wasn't he?

WTO report on US complaint against Airbus

On 30 June 2010 the Geneva-based World Trade Organization (WTO) released its massive report on the United States complaint about subsidies given to Toulouse-based aircraft manufacturer Airbus.

Media statements in response have been released by:

• Airbus
• Boeing
• European Commission Trade
• Office of the United States Trade Representative

Regardless of the final outcome it seems highly desirable that there continue to be at least two global-scale manufacturers of large airliners driving innovation through competition.

Brief mention in UK Budget on replacement of Air Passenger Duty

The UK Budget Report released on 22 June 2010 (see page 36) made only a brief mention of the replacement of the Air Passenger Duty (APD)(see previous post):

"1.123 The Government will explore changes to the aviation tax system, including switching from a per-passenger to a per-plane duty, which could encourage fuller planes. Major changes will be subject to public consultation."

Perhaps more significant is the line in Budget Table C11 (see page 100) from the new Office of Budget Responsibility which has revenue from APD doubling over the next six years. We can assume that they do not have a doubling of passenger numbers in mind!

Air Vanuatu "rescue"

On 21 June 2010 Radio New Zealand International reported on the "rescue" of Air Vanuatu involving an around US$30m loan to the company.

A 19 June 2010 article and a 25 June 2010 article in the Vanuatu Daily Post provide further background.

There is still a web site seeking proposals for the airline's restructuring.

There can be no doubt that operating a small international airline with a limited network of long, thin routes is very challenging to put it mildly. One might contemplate the governance implications of replacing politicians with civil servants as board directors and where the incentives lie. The company now has only four directors whereas at one point it had 28 directors (see paragraph 68 of this 2005 Pacific Islands Forum paper on Public Enterprises).

LAN using MALIAT rights to code share on Cathay Pacific to Hong Kong

On 17 May 2010 the Chilean airline, LAN started code-share services to Hong Kong (HKG) from Santiago (SCL) using the operations of its oneworld global alliance partner airline, Cathay Pacific (CX) for the sector to HKG. The services are via New York (JFK), Los Angeles (LAX) and Auckland (AKL).

LAN's code sharing beyond the United States and New Zealand to Hong Kong uses Chile's air rights under the MALIAT and separately Chile's air services arrangements with Hong Kong.

South America and East Asia are on opposite side of the globe so the great circle distances involved in the three air routings are not that different, although travel via AKL is shorter:

• SCL-JFK-HKG 21,193km
• SCL-LAX-HKG 20,647km
• SCL-AKL-HKG 18,829km

The calculations were made using Great Circle Mapper.

Canada concludes new air transport arrangements with Cuba, El Salvador, Ethiopia, Morocco and Tunisia

In recent months Canada has announced new air services arrangements with:

• El Salvador (29 April 2010) - "open skies-type ..."
• Ethiopia (1 March 2010) - first agreement
• Tunisia (1 March 2010) - first agreement
• Morocco (9 February 2010) - expanded agreement
• Cuba (7 February 2010) - expanded agreement

Botswana negotiates air services agreement with Ethiopia

The Southern Times reported on 14 July 2010 that, at negotiations held in Addis Ababa on 26-27 May 2010, an MoU was signed concluding a bilateral air services agreement.

The Botswana CAA is reported to be planning to hold negotiations this year with Angola, Egypt, Singapore and South Africa as part of a liberalisation programme.

Singapore and the Philippines expand their air services arrangements

On 13 May 2010 the Singapore Government's Ministry of Transport announced that it had agreed with the Philippines to expand their bilateral air services arrangements by allowing for greater capacity, measured by flights per week (see previous post).

Singapore announces new air services arrangements with Greece

On 17 June 2010 the Singapore Government's Ministry of Transport announced that the previous day it had agreed with Greece to expand their bilateral air services arrangements.

These new arrangements are another example of agreeing to take a more liberal approach to dedicated freighter services than to passenger services.

New Zealand's provincial international airports

Aviation pioneer isn't a phrase one hears very often these days with respect to recent aviation industry developments, but I would describe Ewan Wilson as one in the New Zealand context. In the mid-1990s with Kiwi Travel International Airlines (1995-1996) he established the first regular non-stop international services between Hamilton, Palmerston North, Dunedin and Australia. Serving on a point-to-point basis, in what was about to become in 1996 the Australia-New Zealand Single Aviation Market (SAM), Kiwi used leased aircraft from a number of international aircraft operators in what proved to be an ultimately undercapitalised venture when faced with competition from Air New Zealand's new no-frills subsidiary, Freedom Air (1996-2008).

In those days the global security environment was more benign and it was easier to establish border facilities at an airport for international flights, although the cost of processing passengers on a per-passenger basis compared with at New Zealand's three main international airports was very high.

The following graph illustrates the subsequent rise and fall on international passenger movements through Hamilton (HLZ), Palmerston North (PMR) and Dunedin airports (DUD), and the growing success of Queenstown (ZQN), which now has Air New Zealand, Jetstar, Pacific Blue and Qantas competing. The graph disguises the fact that HLZ temporarily lost its international services until Pacific Blue entered the market, while in the winter of 2009 for some weeks DUD only had one Air New Zealand international service per week. Rotorua (ROT) has only recently secure international services operated by Air New Zealand, while Invercargill (IVC) has for many years sought to attract international operations.

Again the data for the graph comes from Statistics NZ's excellent Infoshare.

The challenge for these provincial airports is that while they offer air passengers the convenience of non-stop point-to-point services, the frequency of international air services available is inevitably much greater at the three main airports and all these provincial airports enjoy good connecting domestic air links. In the case of HLZ there is the added challenge of competing with an improving road link between Hamilton and Auckland Airport.

Today Ewan Wilson is back in the travel industry operating escorted tours under the Grand Journey brand.

Dramatic changes in purpose of visits to New Zealand

The following graph indexes overseas visitor growth to New Zealand by purpose back to the year ended March 2004.

What it clearly shows is that the weakening growth in overall visitor numbers to New Zealand contains within it three interesting trends:

• Strong growth in visiting friends and family (VFR), perhaps connected with related long-term migration
• A lack of growth and a cyclical pattern in holiday visitor numbers
• A collapse in business visitor numbers since 2007

The data source for this graph is the entry cards visitors fill in when passing across the New Zealand border. These are processed by Statistics NZ.

Germany planning to introduce new duty on aviation

On 7 June 2010 Bloomberg reported on the German Government announcement that it would be introducing a tax on air travel to raise one billion euros a year as part of its efforts to reduce its budget deficit. For those that speak German, some further information is available here about what is described as a national ecological air traffic charge on all passengers.

Reaction from the airline industry included:

• Association of European Airlines
• International Air Transport Association

On 17 June 2010 the Brussels-based NGO Transport & Environment posted a story that suggests that it is not yet clear what will happen to this tax when international air transport is covered by the EU Emissions Trading Scheme (ETS).

More background sources on the UK Air Passenger Duty

As we wait to see what the UK Budget on 22 June 2010 will say about the replacement of the current UK Air Passenger Duty (APD) with a Per Flight Duty (previous post), here are some more sources of information about the existing UK APD:

• HM Revenue & Customs releases monthly data that includes information about the total revenue raised for each distance band.
• HM Revenue & Customs published a 10-page regulatory Impact Assessment on the last set of reforms to the APD.
• The UK House of Commons Library has produced a briefing paper on Air passenger duty : recent debates & reform (last updated 14 May 2010).

Fiji negotiators heading for ICAO meeting in Jamaica

On 17 June 2010 the Fiji Times reported that Fiji is sending an air services negotiation delegation to the third ICAO Air Services Negotiation Conference at Montego Bay, Jamaica from 28 June to 2 July 2010. One of the objectives of the Fiji delegation is to continue negotiations with the United Arab Emirates (previous post).

Recovery in New Zealand domestic air passenger numbers

Almost a year ago I posted graphs of domestic passenger numbers through AKL, WLG and CHC airports that clearly showed the impact of the start of domestic (cabotage) services by Pacific Blue and the subsequent impact of the economic recession. I have continued to update this data and the graphs now show growth returning to the New Zealand domestic market.

Recent news from: Air New Zealand on 25 May 2010 that it will be boosting domestic capacity by 3.8% for the Northern Winter 2010 schedule season; Jetstar, which is reported by the NZ Herald on 5 June 2010 to be adding a seventh A320 to its New Zealand-based fleet, and Pacific Blue which is reviewing its New Zealand domestic operation, however, suggests that the supply side of the New Zealand domestic air transport market will be in for some changes.

Top 10 airlines almost all have relatively small home markets

When I saw the list of the top 10 airlines in the world announced by Skytrax as part of its annual World Airline Awards on 20 May 2010, I was immediately struck by the fact that I had recently compiled a short list of countries that contains virtually all of these airlines' home countries, the exception being Korea. This was my research last year into the ratio between airline industry RPKs and home market GDP (previous post).

Here is the list of the 2010 top 10 airlines with in brackets the ranking of their home market in terms of that ratio:

1. Asiana Airlines (19)
2. Singapore Airlines (4)
3. Qatar Airways (3)
4. Cathay Pacific (6)
5. Air New Zealand (7)
6. Etihad Airways (1)
7. Qantas Airways (8)
8. Emirates (1)
9. Thai Airways (13)
10. Malaysia Airlines (9)

There is even a rough correlation in some of the rankings.

A further correlation that would be interesting to examine would be whether there is a relationship between perceived product quality and profitability but to get a complete picture we run into the problem that Qatar Airways, for example, does not publish its financial position.

I note that all of these top 10 airlines are long-haul carriers and it has yet to be conclusively proved that a "no frills" approach to such services can succeed so the 10 airlines have to position themselves at the quality end of the market. Short-haul leisure travellers are more likely to be focussed on price rather than product quality.

A simple conclusion would be that to succeed in the international airline business outside of a large open aviation market and attract so much sixth freedom passenger traffic (the exercise of fifth freedom rights is relatively rare) an airline has to offer a high-quality product.

Might the flip side of that be that airlines with larger home market, protected by the lack of domestic competition because of the rareness of cabotage rights exchanges, tend to take customers in their home markets a little too much for granted? Or could it partly be explained by the fact that for other lower quality ranked airlines the ratio of short- to long-haul services is higher? Food for thought and perhaps further analysis.

New UK Government planning to replace APD with a per-flight duty

In its May 2010 coalition agreement, The Coalition: our programme for government, the new United Kingdom Government, in the Energy and Climate Change section, has confirmed that:

"We will replace Air Passenger Duty with a per-flight duty."

This follows election manifesto commitments to:

"- reform Air Passenger Duty to encourage a switch to fuller and cleaner planes." Conservative Party manifesto (page 23)

"Ensuring pollution is properly taxed by replacing the per-passenger Air Passenger Duty with a per-plane duty (PPD), ensuring that air freight is taxed for the first time. We will also introduce an additional, higher rate of PPD on domestic flights if realistic alternative and less polluting travel is available." Liberal Democrat Party manifesto (page 14)

Related media coverage appeared in The Independent and the Daily Mail on 13 May 2010, and The Telegraph on 14 May 2010.

This issue was the subject of a similar proposal in 2007 (previous post). Following consultations the idea was rejected by the previous Labour Government.

The design details of how the per-flight duty would work has yet to be announced.

How closely the amount of revenue collected reflects the environmental costs (previous post) and whether it would be adjusted in light of the extension of coverage of the EU emissions trading system to cover international aviation remains to be seen.

US airlines to challenge legality of EU ETS covering international aviation

On 28 May 2010 GreenAir Online reported that US airlines have secured UK High Court agreement to take their case against the extension of coverage of the European Union's emission trading system (EU ETS) to the European Court of Justice.

A news releases was made by the US Air Transport Association.

In a 17 March 2010 post Aviation Law Prof Blog commented on the issues involved.

More information about the plans to extend the EU ETS to cover aviation is available here on the UK Environment Agency web site.

Air New Zealand/Virgin Blue group alliance New Zealand application

On 28 May 2010 a public version of the application seeking authorisation from the New Zealand Minister of Transport to form an Australasian Alliance was posted on the New Zealand Ministry of Transport's web site (previous post).

European Commission seeking to negotiate air services agreement with Brazil

On 6 May 2010 the European Commission announced that it is seeking a mandate from its member states to negotiate new, comprehensive air services arrangements with Brazil. This follows completion of an economic study by booz&co. quantifying the benefits.

Brazil is one of the major countries that has not negotiated an "open skies" agreement with the United States.

Outside of its immediate neighborhood, the European Commission has negotiated new air services arrangements with Canada and the United States, and has negotiations underway with Australia and New Zealand.

MIT thesis on the trans-Atlantic air transport market

I recently found available for download a June 2009 MIT thesis The Evolution of Network Competition in Transatlantic Aviation and the Effects of Regulatory Liberalization by Alexander Cosmas. The thesis has an interesting analysis of stakeholder interests in the market. I will leave it to others to comment on the econometrics.

What was of particular interest to me was the concise presentation of the eight freedoms of the air in one diagram (see Figure 1 on page 24) which was sourced from Michael Francesconi at UPS. Usually multiple diagrams are used. The diagram does not distinguish between the eight and ninth freedoms and in an international context (rather than in the US context) I would question the comments that the sixth freedom is "Generally prohibited" and that cabotage is "Always prohibited".

Also I had not come across this quote before from musician Frank Zappa: "You can't be a real country unless you have a beer and an airline."

Review of airline competition law developments in 2009

Australian law firm Minter Ellison has published Airlines - 2009 world wide competition law review. In what promises to be a valuable resource if it becomes a regular publication, the Review outlines the various ways that competition law around the world cover the international airline industry.

It also points to issues with Chile's method of allocating limited international air rights between Chilean airlines.

Japan and Indonesia expand bilateral air services arrangements

A 26 April 2010 weblog post on Airline Route reported on the expansion of capacity, route and code sharing opportunities for Japanese and Indonesian airlines.

An official press release in Japanese details the outcome of the air services negotiations that were held in Jakarta on 20-22 April 2010.

Air New Zealand and Virgin Blue seek to form trans-Tasman alliance

On 3 May 2010 Air New Zealand and the Virgin Blue group announced that they are seeking regulatory approval from the New Zealand Ministry of Transport and the Australian Competition & Consumer Authority (ACCC) to establish an alliance covering their trans-Tasman routes. The application to the ACCC is available here.

Papers from the last major application of this type, the proposed international alliance between Air New Zealand and Qantas in 2006 are still available here on the Ministry of Transport's web site.

Russia questions status of Austrian Airlines

On 24 March 2010 Austrian Times carried a report that the Russian Government was questioning the nationality of Austrian Airlines following involvement by Lufthansa and that this issue has been the subject of ongoing talks.

Comprehensive article on air services liberalisation published in Airline Business

On 22 April 2010 FlightGlobal published a comprehensive article from Airline Business by David Knibb entitled Liberalisation: Breaking the bilateral web on progress on air services liberalisation.

The article would have benefited by also examining the research work done by the World Trade Organization in this area.

Unfortunately the Knibb article is spoilt by some factual inaccuracies concerning developments in the South West Pacific.

"MALIAT remains open for others to join, but none have."

Actually, although they are not major, four other countries have joined: the Cook Islands, Samoa and Tonga and Mongolia (cargo only)(see http://www.maliat.govt.nz/country/index.shtml).

"A Pacific Islands Air Services Agreement and Single Caribbean Sky are still only proposals."

Actually the Pacific Islands Air Services Agreement (PIASA) has been in force since 13 October 2007 and this month Australia and New Zealand became eligible to join (see http://www.forumsec.org/pages.cfm/economic-governance/economic-growth-work-programme/aviation-1/aviation.html UPDATED).

I do not claim detailed knowledge of the current situation in the Caribbean but I am also left wondering what the relationship of the article reference to "Single Caribbean Sky" is to the agreement that came into force in 1998 (see previous post).

"Open skies" policy debated in Sri Lanka

On 18 April 2010 the Sunday Times from Columbo reported comments by the Sri Lankan President on the impact the previous government's "open skies" policy was having on Sri Lankan airlines, SriLankan and Mihan Air. The article suggests that there is a need to balance the interests of the airline industry with those of the tourism industry.

On 31 March 2010 the Daily Mirror reported on problems in the Sri Lanka-Qatar air services relationship while on 25 October 2009 the Sunday Times reported on problems in the Sri Lanka-Oman relationship.

Israel reaches "open skies" agreement with the United States

On 23 April 2010 the US Secretary for Transportation, Ray LaHood, announced the negotiation of an "open skies" agreement between the United States and Israel. Israel becomes the USA's 97th "open skies" partner.

A slightly out of date list of those countries that now have "open skies" relationships with the USA, arranged by geographic region, is available here on the Department of Transportation web site. The US Department of State list, which is in chronological order, is more up to date.

It has got to the point where a more interesting list would be of the countries that do not have "open skies" agreements with the United States. Notable absentees include Brazil, China, Colombia, Egypt, Mexico, Russia, Saudi Arabia, South Africa, Turkey and Vietnam. A 13 April 2010 article in BTNonline.com quotes John Byerly, State's Deputy Assistant Secretary for Transportation Affairs, commenting on the next negotiating priorities for the United States.

The impact on aviation of the volcanic eruption in Iceland

I have been trying to monitor the impact on aviation of the 2010 eruptions of Eyjafjallajökull in Iceland and the virtually unprecedented shutdown of European airspace. This post links to some of the resources that I have been using. Some of the web sites are enjoying unprecedented popularity and their performance is suffering accordingly. I have also found Twitter (I use the free program TweetDeck) useful - search for #ashtag.

The eruption itself can be seen on three webcams set up in Iceland. Of course, this is daylight and weather dependent.

Maps with live air traffic over Europe (the advice is use any web browser except MS Internet Explorer) can be seen at:

• RadarVirtuel.com
• flightradar24.com

The official news about airspace availability can be seen on the web sites of:

• Eurocontrol
• NATS - covering the UK

Specific information on the ash cloud is released by the UK Met Office Volcanic Ash Advisory Centre.

On 19 April 2010 IATA commented on the situation and released an assessment that the likely daily revenue loss to airlines of being grounded would be in excess of US$200m per day. ACI Europe and CANSO have made similar estimates for the daily financial impact on airports and air traffic control providers respectively.

Because of the uncertainty about the event, scenario analysis provides useful way of thinking about the impacts. A series of articles from Reuters by Peter Apps are the best I have seen so far:

• Scenarios - Potential scenarios for volcano gas cloud crisis - 18 April 2010
• Scenarios - How could Europe volcano crisis play out? - 19 April 2010
• Scenarios: What if volcano disruption last weeks, months? - 20 April 2010

This truly is a "Black Swan" event (see previous post) and may prove to be a real test of concern about safety versus concern about the economic survival of the European airline industry.