Podcasts

A couple of years ago when I first got an iPhone I downloaded from iTunes and listened to an aviation podcast. I was not impressed as the speakers were amateur enthusiasts who were clearly not that well informed.

I then started listening to EconTalk, a series of excellent podcasts by economist Russ Roberts from GMU in Virginia (he also blogs at Cafe Hayek). Each week he interviews at length a distinguished economist in a manner that is not overly technical.

For lighter relief I have been listening to the Friday Night Comedy from BBC Radio 4. These generally take the form of a quiz or short monologues focussed on the latest political news from the UK.

More recently, I have been listening to a couple of much more professionally done aviation podcasts.

• Airplane Geeks (@AirplaneGeeks) - from the USA
• Plane Crazy Down Under (@pcdu) - from Victoria, Australia

They have turned out to be excellent with coverage of civil and miltary aviation, including aviation history and technology. I have been listening to older episodes and have even sent off a couple of possible "Grill the Geeks" questions to the USA.

These have all been great listening while walking our two dogs.

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.

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.

"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.

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.

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.

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 ..."

"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:

• Kirkus Reviews 15 December 2010
• Bloomberg Businessweek 24 February 2011
• FT Magazine 25 February 2011
• Wall Street Journal 2 March 2011
• New York Times 4 March 2011
• The Independent 4 March 2011
• The Telegraph 13 March 2011
• The Guardian 19 March 2011
• Barnes and Noble Review 22 March 2011
• The Scotsman 27 March 2011
• The Enlightened Economist 28 April 2011
• London Review of Books 28 April 2011 
• History Books Review 27 May 2011
• Los Angeles Review of Books 30 May 2011

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.

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).

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.

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:

• IATA
• ERA
• BATA 
• AirportWatch 

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.

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.

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.

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.

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).

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.