airline industry

On the Road: Barrage of Fees Is Starting To Follow Fliers to the Hotel

August 12, 2013 by NewsMaker

This year, hotels in the United States will collect an estimated $2.1 billion in fees and surcharges, up from $2 billion in 2012, according to a new analysis by the Preston Robert Tisch Center for Hospitality, Tourism and Sports Management at New York University.

Of course, that’s small potatoes compared with the airline industry’s revenue from fees, which totaled $6 billion last year just in charges for checked bags and for changing an itinerary. Still, “the airline industry has created great cover that has emboldened the hotel industry,” said Bjorn Hanson, the divisional dean at the center.

Fee revenue has more than doubled in the last 10 years, as many hotels, especially convention, resort and luxury ones, add charges to the bill for services like the use of a business center or an Internet connection, and in some cases apply so-called resort fees that essentially are surcharges for using the hotel’s facilities.

Fees are also being added at some hotels for early checkout, receiving faxes and overnight packages, automatic gratuities and even things like minibar restocking, availability of in-room safes and mandatory valet parking.

Hey, don’t get me started. While attending a conference at a resort hotel in Phoenix two years ago, I was amazed to find a $12 charge for porterage — bellhop service, even though, like many of you, I always wheel my own bags. And charges for housekeeping service — that is, making your bed and cleaning your room — also turn up here and there.

Some readers even tell me that they have encountered charges for a donation to a local charity tacked onto a hotel bill.

And as I noted last week when I checked into the Hilton Bayfront Hotel in San Diego, the clerk asked me if I wanted to pay an extra $20 for a room with a better view. Not paying it got me a 19th-floor room by the elevators with a view of the maritime docks where trucks were unloading a banana boat. (This, actually, turned out to be interesting to watch, and I avoided the $20 surcharge.)

The hotel also charged $13.95 for basic Internet service and $19.95 for faster-speed service, which is not uncommon for higher-price hotels. In the business center, the charge for using a computer was $6.95 for each 15 minutes, an impressive $27.80 an hour.

On my bill at checkout, in addition to the basic nightly room rate of $260 and $27.50 in taxes, there was a daily charge of $5.20 listed as SD TMD Assessment. The city treasurer’s office describes that as a fee “to promote events and tourism in San Diego” that is levied specifically on hotels, which have the option of passing it on.

Incidentally, when I checked out a day earlier than originally planned, I was told the “early departure fee” was $75. I protested, and the front-desk clerk checked with a manager and dropped that charge “as a one-time courtesy.”

It’s important to note, by the way, that many hotel brands favored by business travelers are not in the fee-adding game. Across the industry, midlevel hotels with strong bases in business travel provide a range of services without any extra charge — from free Internet and business-center access to free breakfasts and in some cases even a free evening cocktail hour with snacks. I will enthusiastically stay when it’s feasible at one of these brands, whether a Hampton Inn or Garden Inn, a Country Inns and Suites, a Marriott Residence — to name just a few in that market niche.

The convention and meetings industry will account for a hefty $117 billion of the estimated overall $273.3 billion being spent this year on business travel in the United States, according to the Global Business Travel Association. Meetings are planned years in advance, and corporate event planners are negotiating future deals with hotels that have gained a lot more bargaining power as the hotel industry revives.

That means corporate planners need better data to negotiate on things like group rates, Wi-Fi and bandwidth capacity in rooms and meeting spaces, and other charges. “Hotels now are in the driver’s seat because there is more demand than supply” for some group events, said Kevin Iwamoto, the vice president for industry strategy business solutions at Active Network, a company that provides data management and cost-control technology for companies in the meetings industry.

The meetings and convention business is also growing internationally, as part of the estimated $1.12 trillion that will be spent globally on business travel this year, an increase of 5.4 percent over 2012, according to the trade group.

While some international travelers already encounter energy surcharges and other fees in some smaller hotels, the powerhouse hotel chains based in North America and rapidly expanding abroad are exporting the fee mentality, said Mr. Hanson of the Tisch center. “Some resort fees are becoming common worldwide, often because the North American brands take those practices globally,” he said.

Adding fees is “still more of a U.S. phenomenon than it is globally, but it’s catching on in the major gateway cities where North American brands have been transmitting these practices,” he added.

E-mail: jsharkey@nytimes.com

Article source: http://www.nytimes.com/2013/08/13/business/barrage-of-fees-starts-to-follow-fliers-to-the-hotel.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: airline industry, overnight packages, small potatoes

Ryanair May Have to Divest Aer Lingus Shares

May 30, 2013 by NewsMaker Leave a Comment

The finding is the latest setback for Ryanair, Europe’s largest airline by number of passengers, in its thorny relationship with Aer Lingus, which it has sought, unsuccessfully, to acquire since first building up a nearly 30 percent stake in 2006.

In a statement, Britain’s Competition Commission said it had concluded that Ryanair’s shareholding had been a significant obstacle to Aer Lingus’s ability to merge or partner with other airlines, limiting Aer Lingus’s strategic options as it seeks to remain competitive amid a recent wave of consolidation across the European airline industry.

The regulator found that the stake also gave Ryanair sufficient influence to block efforts by Aer Lingus to raise new capital or to dispose of valuable takeoff and landing slots at London’s Heathrow Airport.

While the stake was not found to give Ryanair day-to-day control over its rival, it ‘’can influence the major strategic decisions that could be crucial to Aer Lingus’s future as a competitive airline,’’ especially on high-traffic routes between Dublin and London, Simon Polito, the commission’s deputy chairman who led the inquiry, said in a statement.

‘’We were particularly concerned about Ryanair’s influence over Aer Lingus’s ability to be acquired by, merge with, or acquire another airline,’’ Mr. Polito said. ‘’We thought it likely that such a combination would be necessary to increase Aer Lingus’s scale and achieve synergies to allow it to remain competitive in future.’’

The British regulator said it would solicit responses from interested parties to its preliminary ruling and proposed remedies, which include the sale of all or part of Ryanair’s stake, before making a final decision in the matter by July 11.

Ryanair’s chief executive, Michael O’Leary, called the ruling ‘’bizarre and manifestly wrong’’ and vowed to appeal in British court any final decision that imposed what he called ‘’unlawful remedies.’’

Ryanair has made three unsolicited offers in the past six years for Aer Lingus, which is also 25 percent owned by the Irish government. The Irish government has repeatedly expressed its interest in divesting its shares, but has held off in the fear that they could be snapped up by Ryanair or another proxy investor. Ryanair and Aer Lingus already control 70 percent of Irish air traffic, and the Irish government says a combination would leave Ireland, an island nation, too dependent on one operator for vital air links abroad.

The European Commission blocked Ryanair’s latest bid for Aer Lingus, worth nearly 700 million euros, or $900 million, in February after a six-month review. European regulators found that concessions and remedies proposed by Ryanair, which included offers to sell dozens of routes between Ireland, Britain and continental Europe, did not go far enough to allay antitrust concerns.

Ryanair has appealed the commission’s decision to the European Court of Justice, a process that could drag on for years. The airline argued Thursday that any remedies that were ultimately ordered by British regulators could not be implemented before a ruling by the European court in the merger case.

Ryanair has sought, unsuccessfully, to challenge the British commission’s jurisdiction to investigate its Aer Lingus stake since the case was referred to it last year by Britain’s Office of Fair Trading, arguing that the European review of its takeover bid should preclude any separate competition inquiry by an individual member state. A British appeals court rejected that claim in December, saying that as a member of the European Union, Britain had a ‘’duty of sincere cooperation’’ with Brussels to continue its investigation, regardless of the fact that the two airlines are based in Ireland.

Following Europe’s rejection of the takeover, Britain’s Supreme Court in April refused Ryanair permission to further appeal Britain’s right to investigate.

The scope of the British investigation is limited to a review of the impact of Ryanair’s existing stake in Aer Lingus, not a prospective merger.

Aer Lingus said Thursday that it welcomed the British commission’s initial findings and that it would continue to assist in the investigation.

Ryanair contends that the competitive landscape in European air travel has changed significantly, particularly since the global financial crisis and subsequent European economic slowdown has driven traditional network carriers to offer more low-cost options to passengers. The budget carrier points to the approval of a series of big airline mergers in recent years, including that of British Airways and Iberia of Spain to form International Airlines Group in 2010, and that group’s subsequent acquisition of British Midland International in late 2011.

Mr. Polito of the British competition commission acknowledged Thursday that competition between Ryanair and Aer Lingus had intensified on routes between Britain and Ireland in recent years, but he argued that it might have been more vigorous without Ryanair’s shareholding, adding that future competition could also be restricted by Ryanair’s conflict of interests.

‘’Aer Lingus needs to be free to take any actions that will strengthen its position in the future,’’ Mr. Polito said.

Article source: http://www.nytimes.com/2013/05/31/business/global/ryanair-may-have-to-divest-aer-lingus-shares.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: airline industry, competition commission, percent stake

Delta Sees New Terminal as Symbol of an Air Travel Makeover

May 10, 2013 by NewsMaker Leave a Comment

Rather than compete on the lowest fares — a race to the bottom over the last decade that just weakened them — the airlines are now seeking to lure passengers with better amenities and service. That new strategy points to the improving financial health of the industry, a turnaround that can be traced to both the string of megamergers among the big carriers and the industry’s single-minded emphasis on cutting excess capacity since the depths of the recession.

Delta, the first of the major carriers to go into a merger — with Northwest in 2008 — is also in the strongest position to reshape its goals. And the $1.2 billion investment in a new terminal in New York, which will replace two grim 50-year-old and woefully inadequate terminals at the end of the month, is the latest and most visible sign of its new approach.

The airline has already been flexing its muscles. In the last two years, it has focused on improving its balance sheet as well as its operations, expanded its global partnerships, invested in airlines like Virgin Atlantic and even bought an oil refinery. On Wednesday, it said it would reward shareholders with $1 billion in quarterly dividends and share repurchases over the next three years.

“The airline industry has been broken for decades,” Edward H. Bastian, Delta’s president, said in a recent interview. “It was fragmented. People worried if the airlines were going to make it or if they were going to be bankrupt. Today, everybody has scale, customers have choices and people have seen that service matters.”

In this new world of fewer airlines and less capacity, airline executives hope to achieve a level of stability that has eluded them since the federal government deregulated air travel in 1978. While Delta’s merger is complete, more work remains on United Airlines’ merger with Continental Airlines and Southwest Airlines’ tie-up with AirTran. American Airlines and US Airways, which announced in February that they would merge, are just starting the process. But most have begun putting Wi-Fi and individual televisions aboard their planes, installing more comfortable seats for business passengers and investing in mobile technology that gives passengers more control over their travel plans.

Not all the changes have been welcomed by travelers. Airlines charge more fees than ever, requiring passengers to pay for services that were once free, including checking bags or booking seats with more legroom. These fees are also rising and account for a bigger share of the airlines’ revenues. In the latest of these, United increased its ticket-change fee to $200 from $150, a move that was matched by most airlines this month.

Airline executives argue that the industry needs to be profitable for service to improve. Fares have risen in recent years, but they remain lower than they were in the 1990s when adjusted for inflation.

Delta, which left its 19-month bankruptcy in 2007, has also been financially conservative, reducing capital expenses and using cash to cut debt. The carrier posted a net profit of $1.6 billion last year, up 30 percent from the previous year, giving it four years of rising profits despite high fuel costs.

The company said on Wednesday that it would start to pay a quarterly dividend of 6 cents a share and buy back $500 million of its shares in the next three years.

The airline also said it would continue to reduce its debt in the next three years, to $7 billion from $17 billion in 2009. In the next five years, it also plans to spend $2 billion to $2.5 billion a year on its fleet, airports and technology.

Paying a dividend is rare in an industry with losses of $60 billion in the last decade, although there have been exceptions. Southwest Airlines now pays a quarterly dividend of one penny a share, while Alaska Airlines and Allegiant Air buy back their own shares.

Delta’s shares have gained more than 60 percent in the last 12 months, outpacing United but trailing Southwest. On Thursday, they closed at $17.70.

Hunter Keay, an airline analyst with Wolfe Trahan, said investors were looking at the airline industry with more interest since airlines merged and cut their combined capacity substantially.

“Delta is clearly establishing itself in a leadership role in terms of cash generation, returning cash to shareholders and profit margins,” Mr. Keay said.

Article source: http://www.nytimes.com/2013/05/10/business/delta-views-new-terminal-as-symbol-of-modern-age-of-air-travel.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: airline industry, airtran, virgin atlantic

DealBook: Delta Air Lines Ponders Stake in Virgin Atlantic Airways

December 3, 2012 by NewsMaker Leave a Comment

Luke Macgregor/ReutersA transaction would be the latest in a round of mergers that has reshaped the airline industry, as companies in the United States and Europe have looked to consolidation to restore profitability.

Delta Air Lines is in talks to buy Singapore Airlines’ 49 percent stake in Virgin Atlantic Airways, in an effort to bolster its international operations, particularly flights between New York and London, a person briefed on the matter said on Sunday.

Talks are continuing but a deal will not be announced soon, this person said. Singapore Airlines confirmed that it was in discussions about a potential sale of its Virgin stake, but provided no further details.

A transaction would be the latest in a round of mergers that has reshaped the airline industry, as companies in the United States and Europe have looked to consolidation to restore profitability.

With oil prices remaining stubbornly high and the economic outlook uncertain, many airlines have continued to struggle. That may precipitate even more takeovers, analysts say.

A deal would also be Delta’s most significant strategic move since its 2010 merger with Northwest Airlines, which made it the biggest American carrier until the union of United Airlines and Continental Airlines last year.

It would provide more access to London’s Heathrow Airport, one of the world’s busiest, and expand Delta’s North Atlantic business.

It would also bolster its partnership with Air France KLM, Europe’s biggest airline. Both companies are part of the Sky Team global alliance, and also run a joint business in the North Atlantic market, sharing flights, revenues and costs.

“Delta has shown time and time again that it is extremely opportunistic,” said Brett Snyder, an airline expert. “If it sees a good opportunity, nothing is off the table.”

If it proceeded, a transaction would directly challenge the Oneworld global alliance, whose biggest members are American Airlines and British Airways. The two airlines have an international joint venture. Virgin does not belong to any of the three major airline alliances — Star, Oneworld and Sky Team — depriving it of the ability to coordinate flights and cut costs, which has helped many of its competitors. Star’s major carriers are United, US Airways and Lufthansa. The deal would also give Virgin a strong partner as it struggles to compete against rivals with deeper pockets. Founded by Richard Branson in 1984, the company has long embraced an image of fun travel and cheaper fares.

But that has not helped the airline’s financial condition of late. Virgin lost £80 million, or $128 million, in the year that ended in February, compared with a profit of £18.5 million in the previous year.

The company has been under pressure from the likes of British Airways, whose corporate parent, IAG, bought BMI British Midlands earlier this year. Virgin fought against that deal, arguing that it would give British Airways too much of a presence at Heathrow. But the takeover was completed, after IAG complied with a European Commission order to give back 14 slots at the airport.

The deal may also pave the way for an eventual change of control of Virgin. The company’s chief executive, Steve Ridgway, told The Financial Times in an interview in January that Mr. Branson was prepared to sell some of his 51 percent controlling stake in the airline.

“For Virgin, it’s an exit strategy in an environment where they are being marginalized by alliances on the Atlantic,” said Robert W. Mann, an airline analyst based in Port Washington, N.Y.

A Delta spokeswoman declined to comment. A representative for Virgin was not immediately available for comment.

Article source: http://dealbook.nytimes.com/2012/12/02/delta-ponders-stake-in-virgin-atlantic/?partner=rss&emc=rss

Filed Under: Business News Tagged With: airline industry, brett snyder, northwest airlines

DealBook: JAL Aims to Raise $8.5 Billion in I.P.O.

September 10, 2012 by NewsMaker Leave a Comment

Tomohiro Ohsumi/Bloomberg NewsAn aircraft owned by Japan Airlines, also known as JAL, at Narita Airport.

TOKYO — Japan Airlines on Monday set the price of its initial public offering at a level that could value the bailed-out carrier at 663 billion yen ($8.5 billion), setting the stage for the world’s second-largest I.P.O this year after that of Facebook.

After robust investor demand, particularly from retail investors, JAL will seek a price of 3,790 yen a share, the airline said in a news release.

The figure is at the top of a range the carrier set last week. JAL’s shares will start trading on the first section of the Tokyo Stock Exchange, reserved for large companies, on Sept. 19, the airline added.

The offering would nearly double the 350 billion yen investment that a state-backed fund made in the carrier after it went bankrupt in 2010. The fund, the Enterprise Turnaround Initiative Corporation of Japan, plans to sell its 96.5 percent stake in JAL in the I.P.O., netting a $4 billion profit.

JAL has emerged from its 2010 bankruptcy as a smaller, leaner airline.

It eliminated a third of its workforce, pared back pensions, dropped unprofitable routes and downsized its fleet from jumbo jets to midsize planes.

JAL’s finances have since become the envy of the global airline industry. For the fiscal year that ended in March, JAL booked a net profit of 187 billion yen, more than six times that of its domestic rival All Nippon Airlines.

Despite enthusiasm for JAL’s return to the stock market, prospects for the former flagship carrier are not necessarily bright in the cut-throat global aviation industry.

The changes made by JAL have made the carrier more efficient, though they have also left it hardly able to compete with larger rivals like Emirates or Singapore Airlines.

JAL, based in Tokyo, has also mostly missed out on the surge in low-cost carrier traffic in Asia. The airline made its foray into that fast-growing market just two months ago with JetStar Japan, a joint venture with Qantas Airways.

Meanwhile, the airline’s turnaround benefited from a write-down of its fleet, government-arranged debt waivers and a $4.5 billion tax credit allowing JAL to offset corporate tax for nine more years.

Those measures sparked intense criticism from its rival, ANA, which has lobbied the government to level the playing field by prioritizing ANA over JAL in future landing slot allocations. If ANA is successful, JAL could lose out further in air traffic.

In a reflection of the uncertainties ahead, JAL, now led by a former pilot, Yoshiharu Ueki, forecasts an almost 30 percent drop in profit for the current year to March. The shaky outlook could eventually put pressure on its share price, especially if investors look to book short-term profits.

According to JAL’s statement on Monday, the airline is issuing 175 million shares, of which 131.25 million have been allocated to Japanese investors and the remaining 43.74 million to investors overseas.

Article source: http://dealbook.nytimes.com/2012/09/10/jal-to-raise-8-5-billion-in-i-p-o/?partner=rss&emc=rss

Filed Under: Business News Tagged With: airline industry, cut throat, initial public offering

Green Column: Airlines Weigh the Advantages of Using More Biofuel

October 9, 2011 by NewsMaker Leave a Comment

Strong growth, particularly in Asia, will see to it that those numbers keep rising.

Add to that the fact that the price of fuel is likely to keep rising and that the pressure to reduce fuel emissions has never been higher, and what you get is a huge increase in recent years in the airline industry’s efforts to develop biofuels capable of powering aircraft.

The speed of the progress in recent years has been remarkable, leaving many of the airline and aviation executives who gathered in Hong Kong for a conference on aviation and the environment in late September shaking their heads in near disbelief.

“I have been amazed at how quickly we moved forward,”
said Tony Tyler, the former chief executive of Cathay Pacific, who took the helm of the International Air Transport Association in July.

Just a few years ago, Mr. Tyler said, the concept of using biofuels to help power aircraft seemed “very pie-in-the-sky and futuristic.” Now, he said, biofuels are no longer just theory — they are a reality.

Less than half a decade has passed since a handful of carriers staged the first test flights using fuel derived from plants. At least six airlines, including KLM, Lufthansa and Finnair, have now used biofuel on flights carrying passengers. Many of the executives who attended the recent conference broadly agreed that significant amounts of biofuels could find their way into aircraft tanks during the course of the next decade.

This would help the airline industry achieve its goal of “carbon neutral” growth — in other words, of increasing the business but without increasing emissions — by 2020. Even more ambitious, the industry aims to halve emissions by 2050.

As airlines currently account for about 2 percent of all man-made carbon emissions, this is an important factor in the drive to reduce global emissions.

Much progress has already been made on fuel efficiency. Improved designs and materials mean that aircraft and engines today are 70 percent more fuel efficient than those built 40 years ago, said Mr. Tyler of International Air Transport.

But aviation efficiency can go only so far, so biofuels are a key building block in the drive to lower emissions.

“I believe that the most significant leap forward in the industry’s environmental performance in the coming years will be the commercial use of sustainable biofuels,” Mr. Tyler said.

Now, however, comes the other hard part: getting enough of the stuff to airlines, at a competitive price and without running into trouble on issues like land and water supply.

At present, aviation biofuels exist only in minuscule amounts and cost three to five times as much as conventional jet fuel, according to Paul Steele, executive director of the Air Transport Action Group, a nonprofit association that includes a wide range of aviation industry players. (The International Air Transport Association estimates that the airline industry’s total fuel bill will top $200 billion next year.)

The oil companies that supply carriers with traditional jet fuel have yet to embrace biofuels in a major way.

A host of small outfits, like Cosmo Biofuels in Malaysia, are working to develop jet fuel from various plant sources. But the process takes time and does not enjoy government support of the kind seen for biodiesel, which is used in cars.

“The technical issues are largely solved,” said Stephen Emmert, regional director of biofuel strategy at Boeing Commercial Airplanes. “What we need now as an industry is a sufficient, sustainable supply at commercially viable prices.”

Aviation biofuels, in other words, reached technical maturity surprisingly quickly, but commercially, the industry remains in its infancy.

Meanwhile, despite the logic in exploring less carbon-intensive sources of fuel, biofuels are not entirely uncontroversial.

An initial rush to produce fuels from edible crops like corn, sugar cane and palm oil was blamed for contributing to a spike in food prices. The demand for land on which to grow crops has intensified pressure both on agricultural land (to the potential detriment of farmers in poor nations) and on previously undeveloped areas (which could jeopardize existing natural habitats).

And there are concerns among some scientists that the potential for bioenergy to reduce greenhouse gas emissions has been overestimated
.

The aviation sector insists that it is eager — and able — to minimize the effect its appetite for biofuel feedstocks will have.

Crucially, the industry is looking at developing aviation fuel not from palm oil and other so-called first-generation crops, but from plants like jatropha, an inedible weed that can grow in arid conditions, or from algae, which likewise do not encroach on arable land.

Some are also studying ways to develop fuel from municipal waste. The megacities of Asia could potentially supply millions of tons of organic waste material to convert into aviation fuel, said Mr. Steele of Air Transport Action Group.

In Abu Dhabi, where fresh water is a scarce and precious resource, the Masdar Institute, with support from Etihad Airways and Boeing, among others, is testing a seawater aquaculture system that could yield renewable biomass for use in aviation fuel.

Given the many complex political and resource pressures at play, the use of biofuels in aviation and other industries is unlikely ever to be free of controversy.

“We have to understand that the demand for biofuels will have an impact on resources such as fresh water — that the shift to biofuels may be stretching the planet’s capacity elsewhere,” said Eric Bohm, chief executive of the WWF, the conservation organization, in Hong Kong.

But the industry cannot afford not to look at alternatives to conventional fuels.

“Moving to biofuels is a step in the right direction,” Mr. Bohm said. “But the process has to be managed very carefully.”

Article source: http://www.nytimes.com/2011/10/10/business/global/10iht-green10.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: airline industry, cathay pacific, finnair

Senate Leaves F.A.A. in Limbo

August 3, 2011 by NewsMaker Leave a Comment

The partial agency shutdown, which began on July 23 and is likely to continue at least through Labor Day, has also idled tens of thousands of construction workers on airport projects around the country. Dozens of airport inspectors have been asked by the F.A.A. to work without pay and to charge their government travel expenses to their personal credit cards to keep airports operating safely.

Air traffic controllers and airplane inspectors, who are paid with separate accounts, have continued to work, but workers who oversee research on aviation systems, grants for airports and facilities and operations equipment have been furloughed.

If the stalemate continues through Labor Day, the government could lose roughly $1 billion in tax revenues on airline ticket sales.

Ray LaHood, the transporta-tion secretary, said he firmly believed that passenger safety was not at risk.

“No safety issues will be compromised,” Mr. LaHood told reporters on a conference call. “Flying is safe. Air traffic controllers are guiding airplanes. Safety inspectors are on duty and are doing their job. No one needs to worry about safety.”

The House began its August recess on Monday night, and the Senate followed Tuesday, leaving little hope for a resolution until Congress returns in September. President Obama, in remarks after the Senate’s passage of the debt ceiling bill, urged Congress to break the impasse, which he described as “another Washington-inflicted wound on America.”

The impasse centers on disagreements between Republicans and Democrats over a program that subsidizes commercial air service to rural airports. But behind the scenes, a larger fight has been taking place over federal rules on labor elections in the airline industry.

Randy Babbitt, the F.A.A. administrator, said in a conference call with reporters on Tuesday that the agency was depending on the “professionalism” of airport safety inspectors to continue their work without being paid, because their jobs are paid for with money that is awaiting Congressional authorization.

Those inspectors are the primary individuals responsible for ensuring that commercial airports comply with federal regulations. They also support runway safety action teams, oversee construction safety plans, investigate runway incursions and ensure that corrective action is taken on safety discrepancies.

“The reason they are out on the job is because of the risk to operational safety or life and property,” Mr. Babbitt said. “We can neither pay them nor can we compensate them for expenses. We are depending and living on their professionalism at this point.”

It is unclear how long the inspectors can continue to pay the bills for their own travel and hotel expenses. Typically, each of the roughly 40 regional inspectors travels to up to five airports in each two-week period, F.A.A. officials said.

When F.A.A. financing expired last month, the agency also lost the ability to collect taxes on airline tickets. Those taxes amount to about $30 million a day and are paid into a trust fund that pays for much of its operations.

The House passed a bill last month that would extend F.A.A. financing through Sept. 16 and allow it to continue collecting the ticket tax. Congress has passed 20 such temporary spending bills over the last four years, in part because it has been unable to agree on a larger, long-term authorization of the agency’s budget and capital plans.

But the House temporary bill also would end $14 million in subsidies that provided commercial airline service to 16 rural airports. The law was written in a way that appeared to single out for closing airports in the states of prominent Senate Democrats, including the majority leader, Harry Reid of Nevada.

Democrats say Republicans are trying to save a few million dollars at the expense of the ticket tax, which would generate roughly $200 million a week.

Some of the airport closings were included in a long-term spending bill passed by the Senate in February. But Senate Democrats, including Senator John D. Rockefeller IV of West Virginia who is chairman of the committee with jurisdiction over the F.A.A., objected to their inclusion in what they said should have been a “clean” temporary spending measure.

Robert Pear contributed reporting.

Article source: http://feeds.nytimes.com/click.phdo?i=313f7ad6b1746b661600fccb3c5735fe

Filed Under: Business News Tagged With: airline industry, congress returns, republicans and democrats

U.S. and Europe Battle Over Carbon Fees for Airlines

July 28, 2011 by NewsMaker Leave a Comment

Until now, the United States and Europe have taken a to-each-his-own attitude on how to handle the greenhouse gas emissions that contribute to global warming, leaving American consumers largely immune to aggressive European environmental regulation and its costs. But come 2012, Americans flying to Europe are likely to be paying indirectly for the emissions their trips create — chiefly through steeper fares, although uncertainty persists about how much higher they will be.

American carriers and air freight companies will also face a new type of competition, because the “cleanest” airlines will pay less in emissions fees.

The United States airline industry has fought aggressively against inclusion in the European Union Emissions Trading System, most recently in a lawsuit filed before the European Court of Justice, the European Union’s highest court. It argues that the European Union has no legal right to regulate American carriers or flight emissions that are released over other countries or into international airspace as planes make their way across the ocean. A ruling is not expected until late this year at the earliest.

The issue has also created diplomatic tensions. “The European Union is imposing this on U.S. carriers without our agreement,” Wendell Albright, director of the Office of Aviation Negotiations at the State Department, said in an interview on Wednesday. “It is for the U.S. to decide on targets or appropriate action for U.S. airlines with respect to greenhouse gas emissions.”

He said the Obama administration had voiced its displeasure to the European Union and was “exploring various options” to address the standoff.

The European emissions trading system relies on a cap-and-trade mechanism in which companies that exceed their government-mandated targets for reducing their carbon dioxide emissions must buy carbon permits from businesses that earned them by emitting less than they were allowed. New industries enter the program each year.

American carriers project that they will end up spending $3.1 billion on the carbon permits by 2020. That could ultimately raise the price of a trans-Atlantic ticket as much as $57 for a flight from New York to London, according to some industry estimates.

The European Union is “attempting to regulate the airlines of the world,” said Nancy Young, vice president for environmental affairs at the Air Transport Association, the largest airline industry group in the United States. “The plan violates international law.”

European Union officials are standing firm, saying that adding civil aviation and cargo flights to Europe’s expanding emissions trading system is both legal and nonnegotiable.

“In Europe, we’re trying to do something with climate change and we now have emissions targets for sector after sector,” said Connie Hedegaard, the European Union’s commissioner for climate action. “We now include power producers, we now include manufacturing, so how can we not include aviation?”

Under the current plan, all airlines flying into airports within the European Union will have to reduce their emissions next year by 3 percent from average levels between 2004 and 2006, or buy carbon permits to make up the difference.

Ms. Hedegaard added that was unfair to require European airlines to pay for their pollution on routes that United Airlines or Air China flew for free.

At a hearing before the European Court of Justice last month, lawyers from the European Union and environmental groups said inclusion was legal, comparing the emissions fees to a landing charge or to a prohibition on overly noisy aircraft.

Annie Petsonk, a lawyer who attended for the Environmental Defense Fund and who previously worked for the Justice Department, said: “The E.U. system is not a tax — if you don’t want to pay you can reduce your emissions. ”

At the heart of the dispute are the disparate political positions taken by Europe and the United States on appropriate measures for reining in greenhouse gas emissions and the gravity of climate change. Carbon dioxide emissions from air travel are one of the fastest-growing sources of the gases that scientists say are warming the planet, and they have an outsize effect because they are released high in the atmosphere, scientists say.

Article source: http://www.nytimes.com/2011/07/28/business/energy-environment/us-air-carriers-brace-for-emissions-fees-in-europe.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: airline industry, american carriers, united states airline

At the Paris Air Show, Anticipating a Surge in Sales

June 18, 2011 by NewsMaker Leave a Comment

The organizers of the Paris Air Show, which opens on Monday at Le Bourget airport, north of the capital, said that most major exhibitors had reduced their budgets for the weeklong trade show by 10 to 30 percent from the levels of 2009, the last time the industry gathered here.

Still, the number of exhibitors was expected to reach a record, 2,100 — many of them subcontractors and suppliers to companies like Boeing and Airbus — from 80 countries.

Louis Gallois, the chief executive of European Aeronautic Defense and Space, the parent company of Airbus, said he expected a lively week.

“The market is dynamic and definitely on the right track,” Mr. Gallois said during a recent interview. “Traffic is good and airlines are in a better financial situation.”

The global airline industry made a net profit of $18 billion in 2010, bouncing back from combined losses of nearly $26 billion in 2008 and 2009. The airlines are expected to be profitable again this year, to the tune of about $4 billion, according to the International Air Transport Association.

Despite the recent jump in oil prices and turmoil in Japan, North Africa and the Middle East, air passenger and cargo demand are expected to increase 4.4 and 5.5 percent, respectively, this year, largely in line with long-term trends.

“The downturn in commercial orders was short-lived,” said Philip Toy, a commercial aerospace analyst at AlixPartners in Southfield, Mich. He, too, forecast the signing of a number of new contracts in coming days, particularly for the newest version of Airbus’s popular A320 single-aisle jet, which will be fitted with more fuel-efficient engines and a more aerodynamic wing.

The A320neo — the letters stand for new engine option — will be available for delivery beginning in 2016, and Airbus has been promising fuel savings of as much as 15 percent over current engines. It is expected also to run more quietly, with lower operating costs, and be able to fly farther or carry heavier payloads while emitting less greenhouse gas.

Airbus has booked more than 200 firm orders for the A320neo since it was introduced late last year, with commitments from customers to buy as many as 200 more.

Analysts said the momentum building behind the A320neo was putting pressure on Boeing, the American plane maker, to follow suit with a revamped version of its 737, rather than produce a fully redesigned single-aisle jet. After more than 18 months of deliberation, Boeing has yet to decide which strategy to pursue. Boeing has indicated that an announcement is unlikely at Le Bourget.

“They need to make an announcement very soon, before the end of this calendar year,” or risk losing customers to Airbus, Mr. Toy said. “Airbus is no doubt anxious to increase the noise about Boeing’s indecision.”

Randy Tinseth, vice president for marketing at Boeing, said that the manufacturer continued to lean toward an all-new 737 replacement jet that would enter the market in 2019 or 2020 — an approach he said was preferred by customers. But Boeing was not ruling out a new engine, which he said would be 11 percent more fuel-efficient than those on existing models.

“We are going to take our time,” Mr. Tinseth said. “When the decision is ready to be made, we will make it.”

Meanwhile, Airbus also plans to give an update on the development of its latest plane, the A350-XWB, which is slated for delivery in late 2013. The assembly of the first test aircraft is expected to begin at the end of this year, with flight tests scheduled for 2012.

Analysts said Boeing probably would seek to focus attention during the show on its newest twin-aisle jets: the 787 Dreamliner, its competitor to the A350; and the 747-8, a stretched version of the 747. Both the Dreamliner and the 747-8 will be on display at Le Bourget this year for the first time.

“Boeing will quietly take their blows on the narrow-body front while playing up” its wide-body offerings, said Richard Aboulafia, an analyst with the Teal Group, an aerospace and defense consulting group in Fairfax, Va.

After nearly three years of production delays, Boeing plans to deliver its first 787 — 52 percent of which is made from lightweight composite materials rather than metal — to All Nippon Airways in late July or early August. Meanwhile, delivery of the first freighter version of the 747-8, to Cargolux of Luxembourg, is also expected this summer. Lufthansa will be the first airline to receive the passenger version of the plane, which can seat as many as 500 people, in early 2012.

At the smaller end of the spectrum, analysts said they would be watching closely to see how many orders the makers of regional jets, which typically seat 100 to 200 passengers, would manage to garner at the show.

Despite relatively weak demand, the sector has become increasingly crowded in recent years, with manufacturers from Brazil, Canada, China, Japan and Russia.

Article source: http://www.nytimes.com/2011/06/18/business/global/18airshow.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: airline industry, oil prices, paris air show

Paris Air Show Braces for a Flurry of New Aircraft Orders

June 17, 2011 by NewsMaker Leave a Comment

PARIS — Their corporate chalets may be a touch less spacious and their delegations less numerous, but the titans of the global aerospace industry are returning to Paris this year for what most aviation executives expect will be an affirmation of a steady recovery that is likely to translate into a flurry of orders for newer and more fuel-efficient jets.

The organizers of the Paris Air Show, which opens Monday at Le Bourget airport, north of the capital, said that most major exhibitors had reduced their budgets for the weeklong trade show by 10 percent to 30 percent from the levels of 2009, the last time the industry gathered here.

Still, the number of exhibitors was expected to reach a record, 2,100 — many of them subcontractors and suppliers to companies like Boeing and Airbus — from 80 different countries.

Louis Gallois, the chief executive of European Aeronautic Defense Space, the parent company of Airbus, said he expected a lively week.

“The market is dynamic and definitely on the right track,” Mr. Gallois said during a recent interview. “Traffic is good and airlines are in a better financial situation.”

Despite the recent jump in oil prices and turmoil in Japan, North Africa and the Middle East, air passenger and cargo demand are expected to increase 4.4 percent and 5.5 percent, respectively, this year, largely in line with long-term trends.

“The downturn in commercial orders was short-lived,” said Philip Toy, a commercial aerospace analyst at AlixPartners in Southfield, Michigan. He, too, forecast the signing of a number of new contracts in coming days, particularly for the newest version of Airbus’s popular A320 single-aisle jet, which will be fitted with more fuel-efficient engines and a more aerodynamic wing.

The A320neo — the letters stand for New Engine Option — will be available for delivery beginning in 2016, and Airbus has been promising fuel savings of as much as 15 percent over current engines. It is expected also to run more quietly, with lower operating costs, and to be able to fly farther or carry heavier payloads while emitting less greenhouse gas.

Airbus has booked more than 200 firm orders for the re-engined plane since it was presented late last year, with commitments from customers to buy as many as 200 more.

Analysts said the momentum building behind the neo was putting increasing pressure on Boeing, the U.S. plane maker, to follow suit with a revamped version of its 737, rather than produce a fully redesigned single-aisle jet. After more than 18 months of consideration, Boeing has yet to decide which strategy to pursue; it has indicated that an announcement is unlikely at Le Bourget.

Randy Tinseth, vice president for marketing at Boeing, said that the manufacturer continued to lean toward an all-new 737 replacement jet that would enter the market in 2019 or 2020 — an approach that he said more customers preferred. But Boeing was not ruling out a new engine, which he said would be 11 percent more fuel-efficient than those on existing models.

“We are going to take our time,” Mr. Tinseth said. “When the decision is ready to be made, we will make it.”

Analysts said Boeing probably would seek to focus attention during the show on its newest twin-aisle jets: the 787 Dreamliner, its competitor to the A350, and the 747-8, a stretched version of the 747. Both the Dreamliner and the 747-8 will be on display at Le Bourget this year for the first time.

Article source: http://feeds.nytimes.com/click.phdo?i=d196e9537fc1bf715bc74559a27da623

Filed Under: Business News Tagged With: aircraft orders, airline industry, new aircraft

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