17 November 2011

ECJ Advocate General releases opinion on extension of EU ETS to cover international aviation

On 6 October 2011 the Court of Justice of the European Union (ECJ) issued a press release and non-binding legal opinion on the case (C-366/10) brought by the Air Transport Association of America and Others (see previous post).

Reaction from interested parties the same day included statements from:
Media coverage of the opinion and related reaction included:
While airline opposition might be expected, of much greater significance is the reaction of foreign governments.

As might be expected, the opinion has been of considerable interest to international law academics. Aviation Law Prof Blog from DePaul University in Chicago has been providing commentary and links to other work:

Canada signs expanded air agreement with Japan

On 1 October 2011 the Canadian Ministers of International Trade and Transport announced that Canada had negotiated new air services arrangements with Japan (see previous post).

04 October 2011

Australia concludes open air services agreement with Japan

On 30 September 2011 the Australian Minister of Infrastructure and Transport, Hon Anthony Albanese, announced that Australia had negotiated a new open air services agreement with Japan. For Australian airlines the arrangements include time-restricted access to Haneda airport in Tokyo and open access to Narita airport from 2013. While described as "open skies", some slot-related restrictions on access to these Tokyo airports remain for the time being. Also included are fifth freedom rights for Australian airlines beyond Japan to third countries.

On 16 August 2011 the Qantas group had announced that it will be entering into a new joint venture with Japan Airlines and Mitsubishi Corporation to establish Jetstar Japan. Although announced as a domestic operation, this new joint venture could qualify to use Japanese international air rights.

18 September 2011

UK has air services negotiations scheduled with Japan

The United Kingdom Forward Programme of Possible Bilateral Air Services Talks published by the Department for Transport has negotiations scheduled for September 2011 with Cuba, Egypt and Turkmenistan.

More interestingly it states that the UK has negotiations scheduled with Japan for 17-19 January 2012. With the recent talks with Canada (see previous post), Japan is clearly starting to work through a priority list of countries outside of East Asia (see previous post) as it implements its "open skies" policy.

UK Government responds to Committee on Climate Change Aviation Report

On 25 August 2011 the UK Department for Transport published a government response to the Aviation Report issued by the Committee for Climate Change (CCC) in December 2009 (see previous post).

The response focusses on an estimated marginal abatement cost curve to reduce CO2 emissions from UK aviation.

APEC Transportation Ministers meet in San Francisco

APEC Transportation Ministers met in San Francisco on 14 September 2011. The Ministerial Joint Statement released at the meeting makes specific mention of the Multilateral Agreement on the Liberalization of International Air Transportation (MALIAT).

APEC has long taken an interest in the economic regulation of international air transport. In the late 1990s it developed and prioritised eight options for reform and these were endorsed when APEC Leaders met and issued the Auckland Challenge on 13 September 1999 (see page 4).

Guiding APEC's work in trade have been the Bogor goals set by Leaders in 1994.

NZ Commerce Commission has a win in air cargo pricing court case

On 26 August 2011 the New Zealand Commerce Commission announced that it had won a procedural judgement in the High Court in its case against nine airlines (see previous post).

Australian Productivity Commission releases draft report on airport regulation

On 22 August 2011 the Australian Productivity Commission released a draft report on the Economic Regulation of Airport Services. The final date for submissions is 23 September 2011.

Our Standard Poodles enjoy their 15 minutes of fame

Morgan and Bree, our two Standard Poodles, along with my wife Wendy and I feature in a Rugby World Cup-related article and photograph on the second page of Wellington's main newspaper the Dominion Post on Saturday, 17 September 2011. The dogs had All Blacks and England team logos applied to their fur when they were groomed on Friday.

Morgan does actually watch the television, although he tends to prefer watching quadrupeds rather than bipeds, and Bree is obsessed by balls.

India's Comptroller and Auditor General Examines Air India

The Comptroller and Auditor General of India has recently released a Performance Audit of Civil Aviation in India. The audit commenced in September 2009 and the report was tabled in Parliament on 8 September 2011.

For me the most interesting part of the report was Chapter 5 which looks at India's bilateral air services arrangements during a period of fundamental change in India's international air transport policy. Of particular concern to the auditors was the extent of sixth freedom carriage by many of the foreign airlines serving India, notably from small city states. Sixth freedom carriage in this context involves a foreign international airline is carrying traffic between India and a third country via its home country. Seeking to limit such carriage is a traditional approach to air rights exchanges dating back to the 1946 Bermuda 1 arrangements between the UK and the USA (see previous post).

What I had not expected to see was the extent to which European carriers serving India have as high a proportion of sixth freedom carriage as airlines from the Gulf. An 18 September 2011 article in the Business Standard reports on the data.

The auditors also focus in particular on the failure of the Indian Ministry of Civil Aviation to secure Dubai's agreement to a "change of gauge" provision. If this was considered important surely the Indian negotiators would have made it the price for agreeing to capacity increases for Emirates?

A 10 September 2011 report in the Indian Express covers the reaction to the report from the Ministry of Civil Aviation.

It would seem that India has no intention of seeking to wind back existing air services arrangements but one has to wonder what impact this report will have on future negotiations, particularly as there was a change of Civil Aviation Minister in India from Praful Patel to Vyalar Ravi in January 2011.

Air India recently had its application to join the Star alliance suspended (see 31 July 2011 media release) and there is now some doubt about its large order for new Boeing aircraft, including the B787.

In the 1960s Air India was one of the great airlines of the world with its wonderful Maharaja character. However, past failures to agree to replace older airliners has left the airline with a relatively old fleet.

"Breaking the Surly Bonds of Economic Regulation" by Chris Lyle

Consultant and former senior official at ICAO, Chris Lyle of Air Transport Economics in Canada published an article in August 2011 suggesting a way forward towards liberalising international air transport economic regulation involving a club approach.

Although I would not uncritically accept what he has to say, it is well worth reading.

Japan negotiating "open skies" agreement with Canada

CAPA reported that Japan's Ministry of Land, Infrastructure, Transport and Tourism (MILT) announced on 9 September 2011 that it would be negotiating an open skies agreement with Canada commencing on 13-14 September 2011 in Vancouver.

MILT noted that this would be only the second such agreement outside of East Asia, the first having been with the United States (see previous post).

New Zealand Productivity Commission International Freight Transport Services Inquiry

The new New Zealand Productivity Commission (modelled on its Australian counterpart) is conducting an Inquiry into International Freight Transport Services. The Commission is looking at both aviation and maritime services, including air and sea ports (New Zealand has no land borders).

The Terms of Reference for the Inquiry were released in March 2011 and on 13 July 2011 the Commission released a 78-page Issues Paper with 79 specific questions.

Submissions are now being made available on the Commission's web site. To date those from the aviation industry have included submissions from the Aviation Industry Association, Board of Airline Representatives NZ, New Zealand Air Cargo Council, NZ Airports Association, and Auckland, Wellington and Christchurch airports.

04 September 2011

New Zealand Government releases transport policy direction statement

On 31 August 2011 the New Zealand Minister of Transport, Hon. Steven Joyce, released a new 44-page transport policy direction statement, Connecting New Zealand.

In contrast to the previous coalition government's 2008 New Zealand Transport Strategy (see previous post), Connecting New Zealand includes three pages specifically focussed on civil aviation.

Road safety continues to be a major priority. Also featured are the Roads of National Significance, a programme of investment in the road network around New Zealand's three main centres, and major investment in rail.

Australian draft report on the Regulation of Airport Services

On 22 August 2011 the Australian Productivity Commission released a draft report on the Economic Regulation of Airport Services.

An Issues paper was issued back in January 2011.

The Commission's final report to the government is scheduled to be made in December 2011.

New Zealand domestic air transport trends to June 2011

Since I last looked at the trends in domestic air passenger numbers twelve months ago by charting the numbers through the three main airports (see previous post) there have been some major external shocks.

Christchurch has been hit by three major earthquakes (7.1 magnitude on 4 September 2010, 6.3 on 22 February 2011 with 181 fatalities and 6.3 on 13 June 2011) and thousands of aftershocks. This was followed by disruption caused by the 4 June 2011 eruption of Puyehue volcano in Chile.

In addition, Pacific Blue withdrew from the New Zealand domestic market on 18 October 2010 leaving Jetstar to compete with Air New Zealand. It is not surprising therefore that domestic air transport have seen some large monthly declines in the year to June 2011.

On a more positive note, the progressive replacement of Air New Zealand's domestic B737-300 aircraft (133 seats) with A320 aircraft (171 seats) can be expected to boost domestic passenger numbers. Already this has been causing congestion at the main domestic screening point at Auckland airport. On 9 August 2011 the airport company announced that this was being addressed.

I am now monitoring monthly domestic passenger numbers at Queenstown Airport and may include these in a future update.

13 August 2011

Getting Paid by Gov't. for NOT Flying Passengers

A weblog post on Carpe Diem from a US economist, Mark Perry, about the Essential Air Service Program in the United States where they have a fiscal crisis, CARPE DIEM: Getting Paid by Gov't. for NOT Flying Passengers, caught my attention. For a mad moment I have been contemplating how I would answer his question: "... what is the best kind of airplane not to fly passengers on ..."

Canada liberalises air services arrangements with Mexico

On 12 August 2011 the Canadian government announced that it has expanded its air transport agreement with Mexico.

The key feature of the new arrangements is the removal of capacity limits on direct (3rd/4th freedom) flights between the two countries.

Tariffs regulation provisions have also been liberalised, and the safety and security articles updates.

11 August 2011

Brazil signs new air transport agreement with Canada

The Canadian Prime Minister's Office has announced from Brasilia that on 8 August 2011 Canada signed a new Air Transport Agreement with Brazil.

The new arrangements include provision for third-country code-sharing.

They have been welcomed by Air Canada and WestJet.

24 July 2011

US Congress to ban US airlines participating in EU ETS?

On 20 July 2011 the US House of Representatives Transportation and Infrastructure Committee announced that it is intended to ban US airlines participating in the "illegal" coverage of international aviation by the European Union's Emissions Trading Scheme by means of a short, 5-section Bill.

GreenAir Online covers the development in a 21 July 2011 article, and includes reaction from MEPs.

Many such bills will not make it into law but the fact that this one has bipartisan support suggests that it should not be taken lightly. With key interests in both the United States and China (see previous post) both firmly opposed to the unilateral action being taken by the European Union, as Flightglobal journalist Will Horton has noted, this could get ugly.

US airlines case against EU ETS coverage heard by European Court of Justice

On 5 July 2011 the European Court of Justice (ECJ) heard a case (C-366/10) brought by the US Air Transport Association (ATA), American Airlines and United Continental Holdings against their inclusion the European Union Emissions Trading Scheme (EU ETS)(see previous post).

The ATA has published it oral argument and written observations here.

The Aviation Environment Federation issued a statement noting some of the arguments put in favour of the legality of extending coverage.

The hearing was covered 6 July 2011 articles in Air Transport World and Aviation Week.

An opinion on the case will be delivered by the Advocate General on 6 October 2011 with a final judgement to follow later.

New Zealand Government mandates air services negotiations in East Asia and South America

On 14 July 2011 the New Zealand Associate Minister of Transport, Nathan Guy, announced that New Zealand's air services negotiators had been issued with mandates for negotiations with up to 10 countries in East Asia and South America. China and Brazil were specifically named. These regions are seen as emerging markets with considerable growth potential. In addition, the prospect of Auckland (AKL) gaining a share of East Asia-South America traffic is referred to. The statement refers to the LAN-Cathay Pacific code share via Auckland (see previous post).

Auckland and Christchurch airports both made media statements welcoming the announcement.

On 15 July 2011 Flight Global (Will Horton) and Aviation Week (Adrian Schofield) covered the news. The latter noted that capacity restrictions applied under New Zealand's current air services agreements with China and Brazil.

A 21 July 2011 Air Transport Intelligence article by Will Horton notes the technology and alliance challenges Air New Zealand faces if it is to serve Brazil.

The Minister's media statement also announced the New Zealand had reached agreement with the Netherlands to remove restrictions on code sharing. This allows SkyTeam member, KLM, to code share to AKL via Guangzhou on the new China Southern operation (see previous post). KLM has been code sharing to New Zealand on Malaysia Airlines which is joining the oneworld alliance.

10 July 2011

"Aerotropolis - The Way We'll Live Next" by John Kasarda and Greg Lindsay

I had expected that this book would be more of an academic work than what it is - largely one of business journalism - but it is well worth a read nonetheless.

Aerotropolis gives a good picture of the role that civil aviation is now playing in globalisation, and how airports have become central to modern economies and urban development.

Featured in the book are developments around:

  • Incheon (ICN) - where a new city, Songdo, is being built
  • Los Angeles (LAX) - where the airport had not been supported
  • Dulles (IAD) - near Washington DC in a wealthy and growing part of Virginia
  • Chicago (ORD) - where there were plans for an additional airport
  • Memphis (MEM) and Louisville (SDF) - hubs for FedEx and UPS respectively
  • Dallas Fort Worth (DFW) - hub for American Airlines
  • Detroit (DTW) - second hub for Delta with links to Asia and looking to build a Detroit Region Aerotropolis
  • Denver (DEN) - where a completely new airport was opened
  • Amsterdam (AMS) - with its associated flower market
  • Dubai (DXB), Abu Dhabi (AUH) and Doha (DOH) - with their competing global ambitions
  • Bangkok (BKK) - where a new airport has been built on a swamp
  • Hong Kong (HKG), Guangzhou (CAN) and Shenzhen (SZX) - vital to the success of manufacturing in the Pearl River Delta

For me, the book's coverage of developments in China was the most interesting, perhaps because it was the least familiar.

Memorable concepts from the book include:

  • "Kasarda's Law of Connectivity: every technology meant to circumvent distances electronically ... will only stoke our desire to transverse [distance] ourselves."
  • "Individual companies don't compete. Supply chains compete. Networks and systems compete."
  • Marchetti's Constant

One piece of advice that is actually included late in the book. Use Google Earth while reading "Aerotropolis" to get an idea of the lie of the land around the airports being referred to.

Reviews of the book have appeared in:

It is clear that civil aviation in general and the future that Kasarda outlines have their sceptics and this book is somewhat provocative.

An earlier 1 July 2006 article, Rise of the Aerotropolis, on the concept by Greg Lindsay appeared in Fast Company.

03 July 2011

Seat capacity limit between Australia and Indonesia increased

On 1 July 2011 the Australian Minister for Infrastructure and Transport, Hon Anthony Albanese, announced UPDATED that Australia and Indonesia had reached an understanding to increase the seat capacity that may be operated by the airlines of the two countries by 86% to 27,500 seats per week.

The Minister's statement highlighted the 32% average annual growth in passenger demand between the two countries over the last three years.

26 June 2011

Qantas and American Airlines seek approval for Joint Business Agreement

Just two days after interim US DOT approval of the alliance between Delta and Virgin Blue was announced (see previous post), oneworld alliance members Qantas and American Airlines on 12 May 2011 filed with the Australian Competition & Consumer Commission (ACCC) for approval of a Joint Business Agreement (JBA). (The reference for the parallel filing made with the US Department of Transportation is DOT-OST-2011-0111.)

On 16 May 2011 Qantas announced that it had commenced direct flights from Sydney (SYD) to American's major hub Dallas-Fort Worth (DFW) returning to SYD via Brisbane (BNE). Qantas uses its B747-400ER aircraft for this ultra-long-range operation. On 14 May 2011 Qantas ceased operating to San Francisco (SFO).

Interim approval was granted by the ACCC on 9 June 2011.

Virgin Blue alliance with Delta approved by US DOT

On 10 May 2011 the US Department of Transportation (DOT) announced that, after substantial changes had been made to the application (docket DOT-OST-2009-0155), it proposed to approve anti-trust immunity for an alliance between Delta Air Lines and Virgin Blue Airlines (see previous post).

This came after a 2 May 2011 announcement that the two airlines were expanding their code-share arrangements.

Note that on 4 May 2011 Virgin Blue announced that it was changing its name to Virgin Australia.

On 10 June 2011 the two airlines announced that they welcomed final US DOT approval of the alliance.

Royal Brunei ceasing operations to Auckland

On 21 June 2011 Royal Brunei Airlines (BI) announced that it is to cease operation to Auckland (AKL), Brisbane (BNE), Perth (PER) and Ho Chi Minh City (SGN) at the end of October 2011.

On 29 March 2011 Royal Brunei commenced operations to Melbourne which in future will be the only airport in Australasia that it serves.

Royal Brunei has been operating to New Zealand since 2003 under the "open skies" MALIAT.

No doubt the commencement of operations to AKL in early 2011 by four new airline operators from East Asia (see previous post) will have influenced Royal Brunei's decision to withdraw.

06 June 2011

The 1935 UK-USA bilateral air navigation arrangement

The arrangements on air services reached between the United Kingdom and the United States of America at Bermuda in 1946 created a model for many of the bilateral air services arrangements (see previous post).

What is less widely know are the details of the earlier 1935 arrangement that took the form of an Exchange of Notes (EoN) on 28 March and 5 April.

In this EoN can be seen many of the features that would appear in post Second World War bilaterals.

What is notably missing from the EoN is the right for UK airlines to operate to Hawaii.

As Dutch aviation historian Marc Dierikx notes in his article "Shaping world aviation. Anglo-American civil aviation relations, 1944-1946" (Journal of Air Law and Commerce 57(1992) nr. 4, p. 795-840), the EoN did not come into practical effect until the airlines of both sides (Pan American and Imperial Airways) were ready to commence regular flying boat operations across the Atlantic. This did not happen until 1939.

Australia signs new air services understandings with Saudi Arabia and Oman

On 21 April 2011 the Australian Minister of Infrastructure and Transport announced that Australia had signed new understandings with Saudi Arabia and Oman. Both provide for restricted access to Australia's main airports. The statement notes that work is continuing on finalising the associate air services agreements.

More new air services arrangements signed by the UAE

The United Arab Emirates has added to its already impressive list of air services agreements (see previous post) by announcing the conclusion of new air services arrangements with (dates are when a statement was posted):

Bangladesh - 14 April 2011
Montenegro - 14 April 2011
Uruguay - 9 May 2011
Colombia - 16 May 2011
Mali - 22 May 2011

The GCCA's statement with respect to Bangladesh rather surprisingly seems to give details of what is supposed to be a Confidential Memorandum of Understanding!

Alleged air cargo rate fixing case reaches court in New Zealand

The NZ Herald reported on court action taken by the Commerce Commission into alleged price fixing by nine international airlines serving the New Zealand market (see previous post) on:

9 May 2011 - "Airlines' price fix case starts in court"
11 May 2011 - "Air cargo cartel case opens in High Court"
12 May 2011 - "Qantas fined $6.5m for price fixing"
12 May 2011 - "Air NZ in court as price-fixing case gets under way"
13 May 2011 - "Qantas hit with record $6.5 million fine"
14 May 2011 - "Cartel case out of line, say airlines"

The Commerce Commission has made a number of media releases on the case:

20 March 2009 - "Commerce Commission procedure in accordance with standard best practice"
11 March 2011 - "Court of Appeal rules on use of confidentiality orders"
18 March 2011 - "Settlements in cartel case as Commerce Commission prepares for Court"
5 April 2011 - "$7.6 million imposed against two airlines in air cargo cartel case" - British Airways and Cargolux
20 April 2011 - "Commerce Commission narrows focus of air cargo cartel case before trial"
27 April 2011 - "Airlines' information request case resolved" - Singapore Airlines Cargo and Cathay Pacific
12 May 2011 - "Court awards highest penalty to date in price fixing" - this statement notes similar action taken in Australia, the United States, the European Union, Canada and South Korea

Air New Zealand has also issued related media statements:

18 March 2011 - in response to a Qantas media statement issued on the same day
20 April 2011

On 17 May 2010 the Australian Competition & Consumer Commission (ACCC) announced that it was taking action against Air New Zealand. On 18 May 2010 Air Transport World reported Air New Zealand's reaction.

On 11 November 2010 the NZ Herald reported that Air New Zealand had been dropped from similar action taken by the European Commission (see previous post).

31 May 2011

OECD meeting of transport experts

On 15-16 November 2010 the OECD hosted a meeting of transport experts, including representatives from ICAO, the World Bank, the WTO and IATA, as well as academics, to discuss the development of a services trade restrictiveness index.

A Highlights of Discussions document has been released by the OECD along with presentations and background documents.

A particularly thought provoking paper is that by Kenneth Button from George Mason University on Air Transportation Services: Both a Traded Commodity and a Transactions Cost in Trade.

24 April 2011

My Grandfather Edgar Thomson Shand RFC

For ANZAC Day 2011 here is a previously unpublished photograph of my grandfather, Edgar Thomson Shand, wearing his Royal Flying Corps (RFC) uniform.

Edgar Shand (28 February 1891-15 January 1938 aged 47) went to Egypt in 1916 as a Second Lieutenant (9/2027) to join D Squadron of the Otago Mounted Rifles where he transferred to the RFC (PI 7225) in 1916 (see Supplement to the London Gazette, 17 October 1916, page 10067) and trained as a Observer.

He joined 17 Squadron of the RFC and served briefly on the Macedonian Front where he was wounded in action:

"On August 19th [1916] an Army Reconnaissance was carried out over the Carniste-Valandovo area [near Salonika], the BE2c machine being escorted by a two-seater Nieuport (110 Clerget) attached from the French Aviation. This reconnaissance machine was attacked by an Aviatik which was immediately engaged by the Nieuport. In the course of the combat the French pilot, Lieutenant Ducas and the English Observer, Lieutenant Shand were both wounded. They, however, succeeded in driving off the enemy machine and returned safely to their Aerodrome."

On 20 July 1917 the Evening Post carried an account NEW of a talk he gave on his RFC experiences (HT to Dr Don MacKay).

On 2 August 1917 the Poverty Bay Herald carried his account NEW of the action near Salonika in an article entitled "Fight at 11,000 feet."

A photograph of him on the SS Galeka evacuating him from Salonika in September 1916 is available here NEW.

He was reported in a list of the sick and wounded to have disembarked from a hospital ship at Malta on 12 September 1916, reported on 4 October 1916 to be embarked for England and then reported to have arrived back in Auckland, New Zealand on 29 April 1917. His transfer to the RFC was approved on 1 August 1916 but not reported in the New Zealand Gazette until 1917.

He went on to serve in the Army (and was keep on in the Royal Air Force (RAF)) in New Zealand, first as Adjutant, Otago University Officers Training Corps and then on the staff of Colonel A. V. Bettington (see page 7 - Footnote 4: J.M.S. Ross: Official History of New Zealand in the Second World War 1939-45; Royal New Zealand Air Force: Wellington: 1955).

In Henry (later Sir Henry) Wigram's diary for 28 Aug 1919 there appears this brief mention of Shand (HT to Errol Martyn):

"Went out with A [HW's wife Agnes] to aerodrome [i.e. Sockburn, now Wigram], the machines [2 Bristol Fighters and 2 DH4s] ex Matatua were arriving and being assembled under direction of Capt [John Hallan] Don and Mr Shand, there were about 120 cases some of them 30 feet long by 9 ft high which only just squeezed through the [Lyttelton] tunnel."

My grandfather relinquished his commission on 2 February 1920 (see the London Gazette, 13 February 1920, page 1832).

Having visited Japan twice, his comments on the political and military situation there were reported in the Evening Post of 17 September 1934. He was obviously still taking an interest in military aviation.

My father, James Macilree, served as a pilot in the RNZAF in the Second World War and I have maintained the family connection with aviation.

19 April 2011

Saudi Arabia initials "open skies" agreement with the United States

On 18 April 2011 the United States Department of State announced that it had initialled an "open skies" agreement with Saudi Arabia.

16 April 2011

Saudi Arabia to consider allowing cabotage flights?

A Reuters story dated 5 April 2011 reports that the Shoura (Shura) Council, the advisory assembly of the government in Saudi Arabia, has recommended consideration be given to grant some airlines from other Gulf states the right to operate domestic flights within Saudi Arabia. The report notes price caps on domestic air fares, and fuel subsidies and privatisation of Saudi Arabian Airlines (Saudia).

Australia negotiates air services agreement with Oman

The Oman Tribune reports that a Memorandum of Understanding with a draft air services agreement between Oman and Australia came into effect on 6 April 2011.

A notable feature is that, in line with new Australian policy (see previous post), there is no capacity restriction on capacity outside of the two main Australian cities. In practice this means Cairns and Darwin (see official list of Australia's international airports).

10 April 2011

Four additional airlines operating to New Zealand

In just the last four months four international airlines commenced operations to New Zealand and one started code sharing here. Well actually the story is a little more complicated than that.

China Airlines (CI) from Taiwan recommenced services after a decade. Its operation to Auckland (AKL) from Taipei (TPE) via Brisbane (BNE) started on 1 January 2011 (see previous post).

Jetstar Asia Airways (3K) from Singapore (SIN) started operating to AKL on 18 March 2011 in direct competition with Singapore Airlines (SQ) (see previous post). This is only the third long-haul route to New Zealand to have such direct competition on the same sector - the others are AKL-LAX (NZ and QF) and AKL-HKG (NZ and CX). Jetstar Asia is actually wet-leasing VH registered aircraft from Qantas subsidiary Jetstar (JQ) in Australia. However, Jetstar had to obtain a Foreign Air Operator Certificate from the New Zealand Civil Aviation Authority because the operation does not qualify to be covered by the mutual recognition of safety certification regime between Australia and New Zealand (see previous post). The new service is being provided under the MALIAT.

AirAsia X (D7) commenced operating to Christchurch (CHC) from Kuala Lumpur (KUL) on 1 April 2011 (see previous post). The airline is to be commended for persisting with the launch date despite the devastating Christchurch earthquakes.

China Southern Airlines (CZ) commenced operating from Guangzhou (CAN) to AKL on 9 April 2011 (see previous post). This is a major new non-stop addition to the set of long-haul air routes to New Zealand. The inaugural flight was welcomed by the Prime Minister John Key (he is also Minister of Tourism). The new service is being jointly promoted by the airline and Tourism New Zealand.

The excellent MRC Aviation blog has photographs of the new operations in New Zealand by CI3KD7 and CZ.

Finally, Virgin Atlantic Airways (VS) from the UK commenced code sharing to New Zealand on Air New Zealand (NZ) operations on 27 March 2011 (see Air New Zealand announcement dated 12 January 2011).

The next announced airline to recommence operating to New Zealand should be United Airlines (UA) in 2012 after it takes delivery of the B787 (see previous post). United already code shares to New Zealand.

I maintain a list of international airlines that serve (and those that have served) New Zealand on my homepages.

08 April 2011

Next air services negotiating priorities for the United States

On 31 March 2011 Air Transport World reported US Assistant Secretary for State Jose Fernandez as saying that the next air services negotiation priorities for the United States are China, the Dominican Republic, Mexico and Russia.

07 April 2011

Chinese concern about EU ETS covering international aviation

On 22 March 2011 Air Transport World reported opposition from the major Chinese airlines to the inclusion of international aviation in the European Union's emissions trading scheme (US airlines have similar concerns - see previous post). It will be very interesting to see what position China's Government adopts.

Wikileaks releases diplomatic cables on UK position during EU-US air negotiations

The Telegraph has published a confidential diplomatic cable from the US Embassy in London dated 4 February 2010 concerning the UK position with respect to the second set of air services negotiations between the European Commission and the United States (see previous post). An earlier related unclassified cable dated 11 March 2009 was also released. Both cables were obtained via Wikileaks.

Issues to feature include the restrictive US position on foreign ownership of airlines and anti-trust immunity for oneworld alliance members (this was subsequently granted - see previous post).

The Guardian carried a report dated 14 February 2011 on the two leaked cables.

While there can be little doubt that for the academic community Wikileaks is providing a valuable source of current history and for the news media plenty to write about, much of what is released shows US diplomats very professionally going about their work. Some of the disclosures have already been damaging, and not just to US interests. It also no doubt leaves many people who deal with US diplomats (including me) wondering how free and frank one can be in conversation. This can only be to the detriment of better international understanding. When it comes to foreign relations I for one think that there are communications that should legitimately not be dropped into the public arena.

Brazil relaxes air services restrictions with Canada, Mexico and Russia

On 29 March 2011 Reuters reported that Brazil had agreed to relax restrictions in its air services arrangements with separately Canada (restrictions on capacity removed), Mexico (restrictions on capacity removed except at Sao Paulo and Mexico City) and Russia (to 14 flights per week up from three).

India signs replacement air services agreement with Brazil

On 8 March 2011 the Indian Ministry of Civil Aviation released details of a a new air services agreement that the Minister of Civil Aviation had signed with the visiting Brazilian Minister of Foreign Affairs.

There is a flexible route schedule and third-country code sharing is permitted but passenger capacity is limited to 21 operations per week.

03 April 2011

UAE adds to its fast growing list of air services agreements

In addition to that with France (see previous post), in recent months the United Arab Emirates has announced new or enhanced air services agreements with (dates are when a statement was posted):

Ecuador - 27 March 2011
Albania - 16 February 2011
Djibouti - 15 February 2011
Bosnia and Herzegovina - 19 January 2011
Portugal - 19 January 2011
Mauritania - 16 January 2011
Cambodia - 26 December 2010
Botswana - 24 October 2010
Burkina Faso, Guatemala and Vanuatu - 11 October 2010
Panama - 28 November 2010
Slovak Republic - 18 March 2010.

The UAE has also been negotiating with:

Colombia - 19 December 2010
Venezuela - 28 November 2010

This illustrates an interesting dilemma. How many countries and territories does it make sense for a country to establish air services relationships with? ICAO currently has 188 members known as "contracting states". One wonders how many of these members the UAE is aiming to negotiate air services agreements with and how many of these agreement will eventually be used to provide international air services.

If countries are ranked on the basis of the their true origin/destination (TOD) market size (the traditional basis for exchanging restricted traffic rights), the largest markets that New Zealand currently does not have air services agreements with are Israel and then Saudi Arabia. In terms of TOD traffic, some countries with which New Zealand has air services relationships are smaller than this in terms of market size and we continue to receive approaches from countries where the end-to-end market is tiny (less than 1,000 passengers per year). New Zealand now has around 49 air services relationships.

Even if the home market one might gain access to (and through) in an exchange of air services arrangements is small, how, for example, should one take into account the size of a potential partner's airline industry (see previous post) or traffic through its main international airport measured in terms of passenger numbers when considering whether to exchange air rights? According to Airports Council International in its 2010 ranking released on 15 March 2011 Dubai International Airport (DXB) was 13th in the world in terms of passenger movements and 8th in the world for air cargo.

On 3 January 2010 UAE Interact carried a report that quoted Saif Mohammed Al Suwaidi, Director-General of UAE's General Civil Aviation Authority (GCCA) as telling Khaleej Times, "We have already signed open sky agreements with about 45 countries in the Mena region and with some in Europe, North America and Asia. We are willing to sign open sky agreement with any country which is willing to reciprocate."

02 April 2011

UK Department for Transport consulting on developing a sustainable framework for UK aviation

The 39-page scoping document for the consultation was published on 30 March 2011. It includes 49 questions on which feedback is sought.

The current UK government is working under severe fiscal constraints but all the same seems to be continuing in the tradition of a long line of UK administrations that arguably have had distinctly negative approaches towards the development of both civil and military aviation in the United Kingdom. Having said that the industry itself has allot to answer for.

European Commission publishes its vision for Europe's transport future

On 28 March 2011 the European Commission published a white paper Roadmap to a Single European Transport Area - Towards a competitive and resource efficient transport system.

Contrails a significant contributor to climate change?

Recent German scientific research by Ulrike Burkhardt and Bernd Karcher from the DLR Institute for Atmospheric Physics published on 29 March 2011 by the prestigious journal Nature suggests that contrails formed by airliners flying at high altitude may be as significant a contributor to climate change as aviation emissions. The journal has also published a news report written by Olivier Boucher from the UK Met Office Hadley Centre explaining the results.

The potential implications for the airline industry are far reaching, particularly if airliners are forced in future to fly at less fuel-efficient altitudes. To date the focus has been on reducing CO2 and other emissions from aircraft so there has been an alignment of interests between airline companies seeking to reduce their fuel bills and environmental concerns.

For those who want to see under what conditions contrails form there is a neat application available on the web.

Australia and Vanuatu expand air services opportunities

On 14 December 2010 the Australian Minister for Infrastructure and Transport announced that Australia had negotiated new air services arrangements with Vanuatu. As well as a phased increase in passenger seat capacity, the new deal includes open arrangements for freighter services.

27 March 2011

Australia signs first air services arrangements with Belgium

On 10 March 2011 the Australian Minister for Infrastructure and Transport announced that Australia had signed it first Memorandum of Understanding on air services with Belgium.

Australia and China expand route and capacity opportunities for their airlines

On 8 March 2011 the Australian Minister for Infrastructure and Transport announced that Australia had signed a Memorandum of Understanding on air services with China expanding passenger seat capacity and route opportunities for the international airlines of the two countries. Australia continues to seek an "open skies" agreement with China.

UK launches consultation on band structure of Air Passenger Duty

On 23 March 2011 HM Treasury released with the UK's Budget a consultation document on reform of the air passenger duty. The key element of this is presenting options for alternative band structures (see previous post). It was also conceded that a switch to a per plane duty would be contrary to international law.

The Daily Telegraph, the Daily Mail and the Guardian reported some reaction to the news.

Reaction also came from:
Earlier ABTA had launched a Facebook campaign - A Fair Tax on Flying - while environmental groups launched a Facebook page - Fair Tax on Flying

For a New Zealand industry perspective prior to this announcement see a letter dated 30 November 2010 to the UK Economic Secretary to the Treasury from the Tourism Industry Association (TIANZ), Inbound Tour Operators Council (ITOC) and NZ Airports.

Russia's overflight fees and the EU

On 29 October 2010 Air Transport World reported that the European Commission (EC) had announced that it was initiating court action against European Union (EU) member states France, Germany, Austria and Finland over their air services arrangements with Russia that see their airlines paying overflight fees.

Note that these fees are not for air traffic control services. A 28 October 2010 report in the Journal of Commerce provides an estimate of the total fees paid by EU airlines, mostly to Aeroflot.

On 28 January 2011 Bloomberg reported that the EC was looking to take action against seven additional member states.

On 14 March 2011 the European Commission released a press release that gives background and another press release advising that it was taking action against six further member states.

Qatar concludes new air services arrangements with Ecuador, Georgia, Germany, Sri Lanka, Sudan, Syria and Uruguay

From the Civil Aviation Authority of Qatar and various media, announcements of new air services agreements between Qatar and:
  • Ecuador - signed 21 March 2011
  • Georgia - signed 15 February 2011
  • Sudan - reported in February 2011 to have been signed
  • Uruguay - negotiating mandate granted by Qatari Cabinet in February 2011
Qatar has also announced enhanced air services arrangements with:
  • Germany - negotiations were held 6-7 July 2010 
  • Sri Lanka - negotiations were held 8-10 August 2010 
  • Syria - reported in October 2010

ASEAN moves towards a Single Aviation Market

I have been trying to disentangle the progress being made by the 10 member states of the Association of Southeast Asian Nations (ASEAN) towards an ASEAN Single Aviation Market (ASAM) by 2015 and related engagement with dialogue partners. What follows are some key source documents.

On 11 November 2010 in Brunei ASEAN Transport Ministers jointly announced progress towards "open skies".

This included signing the ASEAN Multilateral Agreement on the Full Liberalisation of Passenger Air Services (MAFLPAS). This has a Protocol 1 [link?] and a Protocol 2.

This new agreement extends the 2009 ASEAN Multilateral Agreement on Air Services (MAAS), which does not cover all international airports within ASEAN.

The MAFLPAS also compliments the 2009 ASEAN Multilateral Agreement on the Full Liberalisation of Air Freight Services (MALAFS).

Also signed in Brunei on 12 November 2010 was a Memorandum of Understanding on ASEAN's Air Services Engagement with Dialogue Partners. This is designed to ensure that priority is given to committing to the ASEAN internal air transport market ahead of any air transport agreements with ASEAN's dialogue partners.

Australia has funded two major research projects through the ASEAN-Australia Development Cooperation Program (AADCP) focusing on the ASEAN air transport market that also provide useful background on other regional efforts around the world:
Earlier research included:
As reported by The China Post on 9 May 2010 Indonesia does not seem to have bought into the 2015 deadline for ASAM. This is reflected in its lack of ratifications by some member states to the key ASEAN air transport agreements.

In an earlier post I noted that progress was being made towards an ASEAN agreement with China. The Air Transport Agreement (Protocol 1) was announced in Brunei on 12 November 2010. The Agreement is limited to an exchange of third/fourth freedom rights with officials to pursue an exchange of fifth freedom rights. However, given the size of the two air transport markets and their expected rapid growth in coming decades this may turn out to be the beginnings of one of the major global moves towards air transport liberalisation, akin to the economic deregulation of the air transport markets within the United States and the European Union.

India too has been working towards a closer air services relationship with ASEAN announcing on 7 November 2008 an aviation cooperation framework.

I am still looking for a good write up of what has been happening within ASEAN but see some parallels in the staged approach to the deregulation of the air transport market adopted by the European Union and the Pacific Islands.

26 March 2011

Philippines adopts "pocket open skies" policy

The Philippine Daily Inquirer reported on 18 March 2011 that President Aquino of the Philippines had signed two Executive Orders, EO28 and EO29 (both are dated 14 March 2011), changing responsibilities for negotiating new air services agreements and subsequent amendments, and adopting an open skies policy with respect to all international airports except that at Manila (NAIA)(see previous post).

Thailand has "open skies" agreement with Switzerland

On 18 January 2010 the Bangkok Post reported that Thailand had signed an "open skies" agreement with Switzerland replacing an agreement from 1984.

23 March 2011

New Zealand Prime Minister looks to sell down government shareholding in Air New Zealand

In a speech on 26 January 2011 the New Zealand Prime Minister announced that the Government was scoping the option of selling down its shareholding in Air New Zealand while still maintaining a majority of the equity.

On 28 January 2011 the Finance and State-Owned Enterprises Ministers released advice from the Treasury on the issue.

EU concludes comprehensive air transport agreement with Brazil

On 18 March 2011 the European Commission announced that the European Union and Brazil have negotiated a comprehensive air transport services agreement.

France agrees to liberalise access for UAE airlines

On 31 January 2011 UAE Interact announced that France and the United Arab Emirates had agreed to an over 60% increases in the frequency of flights permitted between the two countries and the addition of Bordeaux as a destination point in France for airlines from the UAE.

Airlines from the UAE have very large aircraft orders from Airbus.

Brazil concludes "open skies" agreement with the USA

On 6 December 2010 the United States Department of State announced that on 3 December 2010 the United States had initialled an "open skies" Air Transport Agreement with Brazil.

Colombia becomes 100th "open skies" partner for the USA

On 12 November 2010 the United States Department of Transportation announced that its 100th "open skies" relationship had been established with the negotiation of an agreement with Colombia.

The 11 November 2010 Memorandum of Consultations and Air Transport Agreement are available online from the United States Department of State's web site.

Singapore concludes "open skies" agreement with Japan

On 2 February 2011 Airport News Japan reported on the 20 February 2011 announcement by Japan's Ministry of Land, Infrastructure, Transport and Tourism that an "open skies" agreement had been negotiated between Singapore and Japan.

Japan concludes "open skies" agreement with South Korea

On 17 January 2011 Tokyo Tomo carried a report that at negotiations held on 21-22 December 2010 Japan and South Korea had reached an "open skies" agreement. Excluded, however, is access to Haneda where airport slots remain tightly constrained.

Air New Zealand buys stake in Virgin Blue group

On 20 January 2011 Air New Zealand announced that it had acquired a substantial shareholding in Australian airline, Virgin Blue. The following day it announced that it had taken a 14.9% stake.

Air New Zealand was subsequently required to sell down a small proportion of its new shareholding in Virgin Blue to ensure that the 49% cap on foreign owneership was not exceeded.

It is notable that Air New Zealand says that it is not seeking a seat on the Virgin Blue board. Although the two airlines are entering into a trans-Tasman alliance (see previous post) they will still be competing on services to some South Pacific islands.

Japan announces priorities for "open skies"

A 17 December 2011 story from AFP carried by channelnewsasia.com reported that Japan was giving priority to negotiating "open skies" agreements with South Korea, Singapore and Malaysia. Interesting is Japan's new willingness to cover access to Narita (NRT) in these agreements.

20 March 2011

South Africa leads initiative to oppose European taxes on aviation

On 11 March 2011 at ITB in Berlin the South African Minister of Tourism released a Communique supported by his country, Australia, Kenya, New Zealand, the Seychelles, Singapore and the Caribbean Tourism Organisation criticising the impact that "unilateral, discriminatory" European aviation taxes are having on long-haul destinations. The Communique received little media coverage but points to concern from a wide range of Commonwealth countries.

This follows taxation changes made by the United Kingdom (see previous post), Germany (see previous post) and Austria (see previous post).

There are very few disputes between the United Kingdom and Australasia but this seems to be one of them. The UK's 2011 Budget due to be released on 23 March 2011 may be worth watching for any movement on this issue.