BACK TO HAUNT QANTAS - Orient Aviation

regionalround-upNo let up on fleet orders, deliveriesNovember was a very goodmonth for Airbus in theregion as several customersordered or took delivery of themanufacturer’s A330s, A320s,A321s, its new engine option(neo) version, and an A319assembled in China.Up and coming Taiwanesecarrier, TransAsia Airways,received its first A330-300, theinitial step in its fleet renewal planthat includes a second A330-300,12 A321neos, 6 A321-200s and12 ATR-600s (including threeoptions).TransAsia chairman, VincentLin, said once both A330-300swere operating, the airline’sinternational passenger marketwould increase by 40%. Since2010, TransAsia has doubledits international network to 16destinations. It intends to fly to NewZealand, Guam, Sydney and theMiddle East using the new A330s.Across the Taiwan Strait,Shanghai-based China EasternAirlines has confirmed an orderfor 60 A320s, with deliveriesscheduled from 2014 for twoyears.Airbus parent company,EADS, has said the Toulouseheadquartered airplane makerwas securing A320 customersfollowing an increase inproduction to 42 A320s a monthlast October. The first of themore fuel efficient A320neoswill begin arriving at customerairlines in 2015.In November, orders anddeliveries for Airbus aircraftincluded: Etihad Airways’ twoA330-200s and the conversion ofa commitment for seven A320s toseven A321s; EVA Air acceptedthe first of its 12 new A321s,leased through the AviationCapital Group in the U.S.; CebuPacific announced its fleet hadgrown to 41 aircraft followingthe delivery of its 23rd A320;Maldivian Airlines became a newA320 operator and Tibet Airlinestook delivery of its first A319assembled at the Airbus TianjinFinal Assembly Line.Boeing also scored a bigwin when it secured the largestorder in the history of SilkAir, asubsidiary of Singapore Airlines.SilkAir CEO, Leslie Thng,announced his airline wouldconvert a Letter of Intentfor 23 B737-800s and 31B737 MAX 8s to a finalorder valued at list prices atUS 4.9 billion. In China andCentral Asia respectively,Tianjin’s OK Airlinesagreed to buy three MA60sfrom AVIC subsidiary, XianAircraft Corp, and AzerbaijinAirlines ordered four newEmbraer 190 jets and boughttwo pre-owned Embraer 170jets through the manufacturer’sleasing arm, ECC Leasing. TransAsia chairman, Vincent Lin:his carrier’s two new A330-300swill increase its internationalpassenger marketby 40%KAL aims for aerospace top spotKorean Air (KAL) launched itsambitious “Aerospace Vision2020” plan last month with thegoal of becoming Asia’s topaerospace company.Central to the target is theexpansion of its aerospacebusiness division (TechCentre) in Busan, South Korea.KAL signed a Memorandumof Understanding (MoU) withthe city last month to builda second Tech Centre nearGimhae International Airport.KAL hopes to transformaerospace into Busan’sKorean Air:Big ambitions for itsaerospace division / ORIENT AVIATION / december 2012-january 2013core industry, developingtechnology intensive smallbusinesses in the city. Busanitself is planning to attractabout 50 enterprises towhat it calls its “cooperationcommunity area”.As part of the AerospaceVision 2020, KAL will focuson cutting-edge technologies.It aims to participate inthe international jointdevelopment of civil aircraft,to become the number onemaintenance, repair andoverhaul (MRO) supplier inAsia and to position itself asthe region’s biggest exporterof unmanned aerial vehicles(UAVs).A statement from thecompany said KAL’s operatingrevenue would increase from600 billion won (US 553million) in 2012 to more thanthree trillion come 2020, byexpanding the Tech Centreand increasing its support ofpartner companies.The centre will beexpanded from 710,000 sq.metres to 940,000 sq. metres.It will include state-of-the-artfacilities, including an aircraftassembly plant, a compositesmanufacturing plant, an MROcentre, which will provideservices for aircraft such asthe A380 and B787, a centrefor the international jointdevelopment of aircraft and anautomatic logistics centre.The composites plantwill produce wings for B737sand structures for B787s andA320s as well as UAVs.

One more ‘biggie’ in me – FernandesAirAsia founder and serialentrepreneur, Tony Fernandes,has said he has the “energy foranother biggie” to add to hissuccessful stable of airlines “andmaybe a few small ones”.Fernandes was speakingas AirAsia announced its thirdconsecutive quarterly profitlast month. However, said theBloomberg news agency, heintended in the next three yearsto concentrate on his threemajor markets in Malaysia,Thailand and Indonesia. AirAsiaalso has interests in Japan andthe Philippines.The goal is to increasethe annual profit of the threemain hubs to one billion ringgit(US 316.25 million) each, saidthe group chief executive.Fernandes said India, Taiwan,South Korea and Vietnam wereSHORTTAKESAIRPORTS: Hong Kong’s Airport Authorityreported a 13.1% (US 355.99 million)increase in interim profit, to September30, over the same six months in 2011. Theauthority predicted moderate passengerand air traffic growth and said it wasencouraged at recent improvements in aircargo movements.AIR TRAFFIC MANAGEMENT: The CivilAviation Authority of Singapore (CAAS)and the Single European Sky ATMResearch Joint Undertaking (SESAR JU)signed a Memorandum of Cooperationto identify areas of common interestfor overall improvements in air trafficmanagement.ALLIANCES: Malaysia Airlines has delayedits entry into full membership of theoneworld alliance until February next year“to avoid the end-of-year holiday seasonand for other administrative reasons”. Thenewest member of the SkyTeam allianceis Xiamen Airlines, China’s sixth largestcarrier and one of the region’s mostprofitable airlines.CARGO: Qatar Airways, which hadplanned to increase its holding inLuxembourg-based Cargolux Airlines,is selling its 35% equity in the carrierfollowing staff protests about possible joblosses if Qatar increased its shareholding atthe struggling cargo carrier.CODE-SHARES: Air Seychelles andEtihad Airways will start a three-times-aweek code-share from Hong Kong to theSeychelles via Abu Dhabi next February.Etihad owns 40% of Air Seychelles. JapanAirlines (JAL) and Bangkok Airways havecommenced a code-share on selected JALother potential markets for anew hub. Laos, Cambodia andMyanmar were among thesmaller options, he said.The AirAsia boss expectsto complete negotiations for100 more A320s by the end ofthis month. The carrier has 112A320s in service. It intends totake delivery of another 266A320s by 2026.The net income of the Kuala-to Bangkok routes from Narita, Hanedaand Osaka. JAL passengers will be able toconnect with flights on Bangkok Airwaysto Mumbai, Koh Samui, Phuket andChiang Mai.ENGINES: CFM International continuedfilling its healthy order book in Novemberwhen it announced the CommercialAircraft Corp of China (COMAC), themanufacturer of the new C919 mid-sizedjet, had ordered 50 LEAP-1C enginesto power the airliner. The 150-seat plusC919 is scheduled to enter service in2016. CFMI orders and commitments forits LEAP engines reached US 52 billionfollowing confirmation of the COMACpurchase agreement. Hainan Airlines, thefourth largest Mainland Chinese airlinegroup, has chosen GEnx-18 engines topower the two latest B787s it has ordered,bringing the airline’s fleet to 10 B787swhen all the aircraft are delivered. Airlinecustomers worldwide have ordered1,300 GEnx engines, which has beendesigned to produce 15% less CO²than its big selling precursor, the CF6.Mitsui & Co. Ltd and GE Aviation haveformed a strategic partnership to developtechnologies for GE’s next generationlarge commercial engines.LEASING: BOC Aviation has signedagreements to lease six B737-800s andthree B737-800ERs to Indonesian airline,Lion Air. The Singapore-based lessor alsowill lease two new A321s to Etihad Airwaysand one A320, manufactured in 2005, toBangkok Airways. Chinese lessor, ICBC,has taken delivery of an A320, the first of92 A320s and A320neos it has ordered.Thai AirAsia will operate the aircraft.MRO: Lufthansa Technik and CFMLumpur based carrier increased3.6% to 157.8 million ringgit inthe quarter to September 30.Revenue rose 15% to 1.24 billionringgit.Thai AirAsia posted a profitof 199 million baht (US 6.48million) year-on-year, whileits Indonesian counterpartrecorded net income of 74.5billion rupiah (US 7.75 million),said AirAsia. International have signed a cooperationagreement to support CFM56 enginesto jointly develop component repairs,overhaul technology and technologysupport for their MRO operations.OEM: The manufacturer of China’sregional ARJ21 jet, which had its maidenflight four years ago, will delay its firstdelivery to customers by up to two yearsbecause of “inexperience in certificationin terms of methods and infrastructure”.Luo Ronghuai, a vice president of theCommercial Aircraft Corp. of China(COMAC), said six of the ARJs haveaccumulated 2,800 flight hours of groundand flight tests, but delivery to launchcustomer, Chengdu Airlines, had beendelayed “due to the inability of some keyparts to pass flight tests”. COMAC has 252orders for the ARJ.ROUTES: All Nippon Airways (ANA) willlaunch its Tokyo Narita-San Jose service onJanuary 13, using the newest addition to itsfleet, the B787 Dreamliner, initially offeringfive flights a week on the route. ANA hasalso launched a new service between Tokyoand Delhi. It commenced flying to Mumbaifrom Tokyo in 2007.TRAINING: The European Aviation SafetyAgency (EASA) has announced that ATR’snew flight training centre at the SeletarAerospace Park in Singapore has fullaccreditation to instruct trainees in a rangeof programmes from flight crew type-ratingto recurrent training. ATR has more than250 of its aircraft flying with Asia-Pacificairlines. Hong Kong Poly University hasreceived an in-principal commitment ofHK 160 million (US 20.65 million) toestablish a research centre for aviationmaintenance at the university. december 2012-january 2013/ ORIENT AVIATION/

businessround-upANA, Garuda beating the oddsRecession or no recession, AllNippon Airways (ANA) must bethe envy of its peers followingthe publishing of its interimfinancial results to September 30.Its operating revenue of753.2 billion yen (US 926.45million) and operating income of75.3 billion yen was the airline’shighest on record. Recurringprofit of 63.4 billion yen wasalso a record. Net income forthe six-month period was 36.9billion yen.However, operating revenueis expected to fall 30 billionyen below pre-financial yearforecasts as a result of the impactof anti-Japanese demonstrationsin China over territorial issues.Resurgent Japan Airlines(JAL) also was in the black forthe six months to September 30.Operating revenue, expensesand income for the six monthsrose 5.7%, compared with thesame period last year, to 634.2billion yen, 522 billion yen and112.1 billion yen respectively.Net income increased 2.4% to99.7 billion yen.Like its rival ANA, JAL isexpecting the anti-Japaneseprotests in China to hit itsrevenue for the full year. This isestimated at five billion yen, butthis drop off will be offset by anexpected increase in net incomeof 10 billion yen.The Singapore Airlines(SIA) Group saw its profitfall 30% to S 168 million(US 136.58 million) for the sixmonths to September 30 whencompared to the same periodlast year.This was mainly attributableto lower non-operating itemsas the airline benefitted from ahigher surplus on the disposalof aircraft and spare engineslast year, said an SIA statement.Group operating profit was upS 8 million, or 6% year-on-year,All Nippon Airways:record revenue andoperating incometo S 142 million.The airline recorded anoperating profit of S 169 millionfor the six months comparedwith a 53 million profit in2011; subsidiary carrier SilkAirposted a profit of S 37 million(S 34 million profit in 2011);SIA Cargo lost S 99 million(S 31 million loss in 2011); andSIA Engineering made a profitof S 66 million (S 69 million in2011).Garuda Indonesia is provingto be one of the Asia-Pacific’smost buoyant airlines in thesedifficult economic times.Its operating revenue in thethird quarter was up 14.4% toUS 2.39 billion, compared withthe 2.08 billion earned in thesame period last year. Operatingincome rose 140.4% to 92.75million, while comprehensiveincome increased 108.2% to 60.8 million year-on-year.Garuda saw passengerand cargo volumes increasesignificantly. Indeed, comparedto a lacklustre global cargoindustry, the carrier recordedan 18.7% rise in cargo duringthe third quarter compared tolast year.After six consecutivequarters of losses, MalaysiaAirlines (MAS) posted a profit10 / ORIENT AVIATION / december 2012-january 2013before tax of 39.10 million ringgit(US 12.82 million) for the thirdquarter ended Sept 30. Thiscontrasted with a pre-tax lossof 461.54 million ringgit in thecorresponding quarter in 2011.Revenue declined to 3.47 billionringitt from 3.56 billion ringgit.MAS has reached agreementwith state-owned Turus Pesawatfor financing of up to 5.31 billionringgit (US 1.72 billion) topurchase six A380-800s, oneA330-200 freighter and oneA330-300. MAS took delivery ofits third A380 last month.China’s top three carrierssaw declines in their third quarterprofits as a softening in air traveldemand and foreign exchangelosses hit their bottom lines.Flag carrier, Air China’sprofit declined 16% year-on-yearto 3.17 billion yuan (US 508million) from 3.8 billion yuan ayear earlier. Air China’s first halfnet profit declined 77%.China Southern Airlines’third quarter profit dropped29% to 2.22 billion yuan. ChinaEastern Airlines saw its thirdquarter profit fall 20% to 2.63billion yuan, compared with 3.31billion a year earlier.India’s major carriers are stillswimming in red ink, but for twoof their number the losses werecut in the second quarter.Jet Airways reported a 16%increase in operating incometo 783 million compared withthe same period a year earlier.The improved performance,attributed to reduced capacity inthe market and higher yields, ledto a lower net loss of 19 millionover 146 million year-on-year.Meanwhile, SpiceJet, India’ssecond largest low-cost carrier,reduced its second quarterlosses by 32%. Net losses fellto 30 million compared to 48million year-on-year.The same could not be saidfor Kingfisher Airlines. Currentlygrounded and desperatelylooking for investors, its losseswidened in the second quarter toaround 150 million comparedwith a 93 million loss a yearearlier. Its revenue fell to 40million from 310 million in2011 as many of its aircraft werereturned to leasing companies.* Qantas Airways unveiled aplan last month to repurchaseA 100 million (US 104million) of its shares and repayA 650 million in debt ahead ofschedule. Its chief executive,Alan Joyce, has embarked ona five-year plan to restructurethe airline, focussing on its lossmaking international business.

newsbackgrounderEU backs down on ETSWell, well,well, what aturn up forthe books.During a paneldiscussion at the Associationof Asia Pacific Airlines (AAPA)Assembly of Presidents in KualaLumpur in November, theEuropean Commission’s (EC)director of transport, MatthewBaldwin, hinted a compromiseon the European Union’s stanceon its emissions trading scheme(ETS) may be on the cards.Five days later it wasofficial. The EC’s commissionerfor climate action, ConnieHedegaard, announced shehad “stopped the clock” andsuspended the inclusion ofinternational aviation in theEU ETS after a “positive”International Civil AviationOrganisation (ICAO) councilmeeting. The industry will nowfocus on providing a globalframework for aviation emissionsthrough ICAO by the time ofthe organisation’s next generalassembly in September, 2013.The AAPA’s director general,Andrew Herdman, said the EUhad “bowed to the inevitable”.He added: “The implied threatof an automatic snapback ina year’s time [after the ICAOassembly] means the EU will stillbe seen by some as negotiatingwith a gun on the table.”IATA director general, TonyTyler, described the commission’smove as a “pragmatic decision”while the China Air TransportAssociation’s deputy secretarygeneral, Gen. Chai Haibo,described it as a “sensible choice”.China’s airlines had refusedto take part in the EU ETS, butGen. Chai said: “China willtake an active part in ICAO’snegotiations to address theaviation carbon emission issue.”It has been a tumultuousyear for the EU ETS, which cameinto effect on January 1. Manyof Europe’s own carriers joinedthe rest of the world in speakingagainst it. The word compromisewas first used earlier this year bythe EU transport commissioner,Siim Kallas. And following earlythreats of reprisals to the ETSby China, Hedegaard suggesteda global solution may beacceptable.Eight of China’s airlines,along with two Indian carriers,failed to submit carbon emissiondata by a March deadline set bythe EU.Last month, U.S. President,Barack Obama, signed intolaw legislation that enablesthe country’s transportationsecretary to forbid its airlinesfrom participating in the EU’s ETSshould it be re-introduced.Now it is up to ICAO to comeup with the goods: an ETS thatwill satisfy the EU’s Commissionfor Climate Action. The internationaldestination for theaircraft interiorsindustryAircraft Interiors Expo 20139-11 April 2013, Hamburg Messe, GermanyPassenger Experience Conference8 April 2013, CCH. Congress Center, HamburgAircraft Interiors Expo and Conference is theunrivalled international launch pad for tomorrow’sdesigns in cabin interiors, in-flight entertainment,connectivity and passenger services.Register your interest to attend atwww.aircraftinteriorsexpo.com/oaCo-located with:Organised by:In association with:World Travel Catering& Onboard Services9 – 11 April 2013Hamburg Messe , Germanydecember 2012-january 2013 / ORIENT AVIATION/11

coverstoryORIENT AVIATIONPERSON OFTHE YEAR 2012John BorghettiChief ExecutiveVirgin AustraliaBack tohaunt QantasVirgin Australia chief executive,John Borghetti, has achieved whatmany people thought impossible.The former Qantas high flyer has turneda no-frills cum hybrid airline,formerly named Virgin Blue,into a high quality, full-service carrierwith global reach. In recent weeks,Singapore Airlines has agreed to take a10% share in Virgin and Virgin is to takea 60% share in Tiger Airways. There ismuch more to come, says Borghetti.By Tom Ballantyne12 / ORIENT AVIATION / december 2012-january 2013

Back in 2008, John Borghetti missed out onQantas’ Airways top job to his then colleague,Alan Joyce. But in a twist of fate Qantas’ loss hasturned out to be Virgin Australia’s gain. The 56year-old airline operations veteran has becomeone of the biggest bees in his former employer’s bonnet.Borghetti spent 36 years in a wide range of senior rolesat Qantas before leaving in May 2008. A little over two yearslater, in March 2010, he was appointed chief executive ofVirgin Australia.“What we have achieved in the past two-and-a-halfyears will pale into insignificance compared with the nexttwo and a half years,” he said. Fighting words indeed.Virgin chief Borghetti is a man of surprises and he has afew more up his sleeve. But he isn’t telling just yet. No pointin giving his competitors any advance notice, he said.Those who doubt him need only look at his track recordsince he took the reins of the carrier. At the time, the formerno-frills Virgin Blue had changed its spots. It had become ahybrid “New World” airline. It was struggling.But in a remarkably short time, Borghetti morphedVirgin Australia into a high quality, full-service airlinegroup that offers its passengers access to destinations aroundthe world.Urbane and street smart, he changed the brand. Forstarters he dumped “Blue” from the name. Previouslyoperating offshore under a variety of names because anagreement with Singapore Airlines, 49% owners of VirginAtlantic Airways, meant the Virgin brand couldn’t be usedinternationally, he resolved the issue so that the variousdivisions could be consolidated.He created his own virtual global alliance throughbilateral deals with major offshore partners, SingaporeAirlines (SIA), Etihad Airways, Delta Air Lines and AirNew Zealand.He drew up a five-year business plan that persuadedsome of the partners to invest in Virgin without a seat onthe board. In addition to major shareholder Sir RichardBranson’s Virgin Group’s 26%, Air New Zealand has 20%equity and Etihad 10%.Last month, Borghetti surprised the industry again withanother round of unexpected developments.He announced:* 10% of Virgin Australia will be sold to SIA for 105million.* Virgin will pay 35 million for a 60% share in budgetcarrier, Tiger Airways Australia

Airways, Japan50250 Kuala Lumpur, Airlines and Garuda Indonesia, improved performances for Malaysia Airlines and India’s Jet AirwaysFax: (603) 2145 2500 and SpiceJet, but profit falls for Singapore Airlines and China’s Big Three, Air China, China Southern andAndrew Herdman China Eastern Airlines. Big losses for grounded Kingfisher Airlines