21 August 2010

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.

17 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.

16 August 2010

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).

15 August 2010

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 on the New Zealand Ministry of Economic Development web site. The rail passenger numbers come from here 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).

08 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.

07 August 2010

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.