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.