all nippon airways

ANA and AirAsia End Partnership on Low-Cost Carrier

June 25, 2013 by NewsMaker Leave a Comment

TOKYO — Malaysia’s AirAsia and All Nippon Airways of Japan announced the dissolution of their joint ownership of the struggling Japanese budget carrier Tuesday, attributing the split to fundamental differences over cost control and customer service.

In separate statements, the airlines said that All Nippon, also known as ANA, had agreed to buy out AirAsia’s 33 percent stake in the venture and operate it as a wholly owned subsidiary. Neither airline disclosed how much All Nippon would pay AirAsia for relinquishing its stake.

Signs of discord had been apparent for some time at AirAsia Japan, a low-cost carrier formed two years ago as a number of airlines raced to crack open Japan’s lucrative aviation market. The new carrier based its operations at Narita Airport, about 70 kilometers, or 40 miles, east of Tokyo, and offered budget flights to Sapporo, Fukuoka and Okinawa in Japan as well as two cities in South Korea.

But the budget airline has been slow to generate sales, prompting each partner to accuse the other of undermining the business.

AirAsia Japan’s passenger load factor, a measure of average occupancy on an airline’s routes, was 53 percent in May, a critically low level for a budget carrier that makes up for low fares by flying lots of passengers.

The venture ate into All Nippon’s operating profit to the tune of about 3.5 billion yen, or about $36 million, in the latest fiscal year through March, according to the company.

On Tuesday, All Nippon said ineffective marketing, a poorly designed Web site and poor customer service had doomed the venture.

Shinzo Shimizu, senior vice president at All Nippon, said that the airline had learned a lot from its Malaysian partner on how to cut costs by adopting simpler reservation systems, turning planes around faster on the ground and getting employees to multitask.

But cutting costs was not enough to win over Japanese travelers, Mr. Shimizu said.

“AirAsia may be almighty in Southeast Asia, but it wasn’t fit to provide the meticulous service called for in Japan,” Mr. Shimizu said. “Even a low-cost carrier requires attentive service, and the airline was not up to task.”

Speaking privately, an All Nippon official pointed to numerous shortfalls in the level of service AirAsia brought to Japan.

For example, the official said, AirAsia required passengers booked on domestic flights to check in 45 minutes before departure — unthinkably early for passengers in Japan, who are used to being whisked onto flights when they arrive even 15 minutes before takeoff — and having those flights still depart on time, to boot.

The online reservation service was also problematic, the All Nippon official added, because it featured unclear Japanese and limited payment options.

Meanwhile, Tony Fernandes, AirAsia’s chief executive, appeared to call out All Nippon for not being committed to a genuinely low-cost carrier. AirAsia had previously criticized its partner’s generally lax approach to cost management.

“I have great respect for ANA as the leading legacy airline in Japan, but it is time for us to part ways and focus our attention on what we do best,” which is running a true low-cost carrier, Mr. Fernandes said. “Despite the cost issues, the AirAsia brand has resonated with Japanese customers.”

The Center for Aviation in Sydney called such differences in approach irreconcilable. “The AirAsia-ANA partnership has not been a happy place,” the industry research group said in a report this month, as tensions between the two airlines surfaced. “Although there was an excellent rapport between the heads of the two organizations, lower down the body the chemistry simply did not match. When a low-cost airline is forced to adopt high-cost practices, the flaw is unavoidably fatal.”

All Nippon’s Mr. Shimizu said that it would pick a new name for the AirAsia venture and decide by July how it would be run. He said the airline was considering a possible merger of AirAsia with Peach, another low-cost venture backed by Hong Kong investors that All Nippon runs out of Kansai International Airport in Osaka.

AirAsia’s troubles underscore the difficulties low-cost carriers have had in entering the highly insulated Japanese market, where domestic fares have stayed above global norms for decades.

Japan’s other flagship carrier, Japan Airlines, started a joint venture with Qantas Airways two years ago. The venture, JetStar Japan, operates flights from both Narita and Kansai.

Those three low-cost carriers together hold a mere 5 percent to 6 percent of the domestic Japanese market, according to the Center for Aviation. Skymark Airlines, which is also relatively low-cost, holds an additional 7 percent share.

AirAsia’s retreat from Japan comes at a time when the airline is focusing on a new challenge closer to home — a venture by its Indonesian rival, Lion Air.

Still, Mr. Fernandes hinted that his airline might take another crack at the Japanese market.

“I remain positive on the Japanese market and believe there is tremendous opportunity” for a low-cost carrier to succeed, he said. “We have not given up on the dream of changing air travel in Japan.”

Article source: http://www.nytimes.com/2013/06/26/business/global/ana-and-airasia-end-partnership-on-low-cost-carrrier.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: all nippon airways, open japan, shimizu

Boeing Plan to Test Fixes on 787 Nears Approval

March 7, 2013 by NewsMaker Leave a Comment

The F.A.A. could still demand changes in Boeing’s proposed new battery design if problems develop in the laboratory and flight tests, which will take several weeks. But the decision to start the tests will be a major step in Boeing’s efforts to get the innovative jets, which have been grounded since mid-January, back in the air.

The federal approvals are expected late this week or early next week, even though some battery specialists remain concerned that investigators have not found the precise cause of two incidents in which the jetliner’s new lithium-ion batteries emitted smoke or fire.

The National Transportation Safety Board has found that a short-circuit in one cell caused a battery in a jet parked at Logan Airport in Boston to overheat and burst into flame on Jan. 7. The board plans to release a preliminary report on that incident on Thursday.

But investigators in Japan have suggested that something else may have caused the battery on an All Nippon Airways 787 to emit smoke on a flight on Jan. 16. They said the battery may have been hit by a surge of electrical current from another part of the plane.

Donald R. Sadoway, a professor of materials chemistry at the Massachusetts Institute of Technology, said the Japanese data suggested that temperatures might have shot much higher in that battery than in the one on the plane in Boston. If that is true, he said, Boeing and the F.A.A. might need to add more steps to the safety plan to guard against such possibilities.

“I think the F.A.A. needs to have assurance that the proposed changes address the causes of the two incidents,” Professor Sadoway said. “That means that we need to have certainty as to what caused those incidents.”

Otherwise, he said, “we can make changes that sound like good changes, but if they fall short of addressing what caused those two incidents, they would be inadequate.”

The F.A.A.’s Seattle office on Wednesday was completing its recommendation to approve Boeing’s plan for the tests, which are needed to certify that its proposed fixes would work, federal officials said. The plan is still subject to approval by Michael P. Huerta, the head of the F.A.A., and Ray LaHood, the transportation secretary, who will be briefed on it over the next several days.

Mr. LaHood said in January that the planes “won’t fly until we’re 1,000 percent sure they are safe to fly.” Department officials said Mr. LaHood and Mr. Huerta had been kept informed of the details of the proposal as it was created, and they are expected to sign off on it.

Boeing officials said they think they have identified the most likely ways in which the batteries could fail. They contend that the changes would minimize the odds of future incidents and protect the plane and its passengers if a problem does arise.

Under the plan, Boeing proposed adding insulation among the eight cells in the battery to minimize the risk of a short-circuit cascading through most or all of them. The company also proposed adding systems to monitor the temperature and activity in each cell. It would enclose the batteries in sturdier steel boxes to contain any fire, and it would create tubes to vent hazardous gases outside the plane.

Aviation analysts said the plan would probably protect against the main problem that the safety board has identified, a short-circuit in one of the cells that can trigger a chemical reaction that leads the battery to overheat.

But the approval of the changes is also a highly political process, and Mr. Huerta and Mr. LaHood are trying to balance safety concerns with the interest at Boeing and in the airline industry to get the planes flying again.

Perceptions of the traveling public also loom large as Boeing tries to restore confidence in the 787s, known as the Dreamliners for their use of new technologies that reduce fuel costs by 20 percent.

Article source: http://www.nytimes.com/2013/03/07/business/boeing-plan-for-fixes-on-787-nears-approval.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: all nippon airways, flame on, preliminary report

Japan Airlines Says Grounding 787 Will Cost $7.5 Million

February 5, 2013 by NewsMaker Leave a Comment

In making the announcement, Japan Airlines joined other Dreamliner operators, like All Nippon Airways and United Airlines, in raising the possibility of demanding compensation. That adds to Boeing’s woes as it struggles to determine why a battery aboard a parked 787 burst into flames and another emitted smoke while a plane was in the air last month.

After those incidents, regulators around the world grounded all 50 Dreamliners in service. United States and Japanese officials investigating the two cases have not determined what caused the lithium-ion batteries, made by GS Yuasa of Japan, to overheat.

Japan Airlines, which operates seven 787s and has placed orders for 38 more, is trying to get back on track after its emergence from bankruptcy last year and the relisting of its shares, which raised 663 billion yen.

In earnings announced Monday, the airline said net profit fell 3.7 percent, to 140.6 billion yen, in the first three quarters, through December, of its fiscal year. Sales rose 3.6 percent, to 942 billion yen, but were offset by a nearly 5 percent increase in operating costs as fuel prices climbed.

Japan Airlines also said that it would postpone the introduction of service between Helsinki, Finland, and Narita International Airport near Tokyo, originally scheduled to start Feb. 25. The airline cited “necessary adjustments to JAL’s international routes utilizing the Boeing 787 aircraft.”

Still, it raised its full-year profit forecast through March by 16 percent, to 163 billion yen ($1.75 billion), citing strong demand in Europe, the United States and Southeast Asia.

Speaking in Tokyo, Yoshiharu Ueki, president of Japan Airlines, said his company was more focused on doing all it could to help get the 787s safely back in the air. He added that the airline would begin compensation negotiations “once the situation had settled down.”

Article source: http://www.nytimes.com/2013/02/05/business/global/japan-airlines-says-787-grounding-will-cost-it-7-5-million.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: all nippon airways, ueki, yuasa

Boeing Says 787 Is Safe Despite Recent Problems

January 9, 2013 by NewsMaker Leave a Comment

The National Transportation Safety Board is trying to find out why a battery pack caught fire in the auxiliary power unit in a 787 parked at Logan International Airport in Boston on Monday. The fire occurred in a Japan Airlines plane after the passengers and crew had left the plane.

On Tuesday, another of the airline’s 787s, also in Boston, was delayed for nearly four hours after a fuel leak. And on Wednesday, All Nippon canceled a domestic flight after a computer on board erroneously showed problems with the plane’s brakes. These problems followed the forced diversion of a United Airlines 787 in December after one of its six electric generators failed in midflight.

He defended the company’s choice to use lithium-ion batteries, saying Boeing was not looking for alternatives to them. And he said the 787 had a large number of redundant systems, meaning that if one or more failed, the plane could still fly and land safely. Testing demonstrated the 787 could fly for more than five and a half hours with just one electrical generator functioning.

“This is par for the course for any new airplane program,” Mr. Sinnett said in a conference call with reporters. “We have a responsibility and obligation to help assure people about the integrity and the robustness of the design.”

Asked whether the plane was safe, he responded: “Absolutely. I am 100 percent convinced the airplane is safe to fly. I fly on it myself all the time.”

Boeing declined to answer specific questions about Monday’s fire, citing the continuing investigation.

The 787’s operational reliability — a measure of how often it leaves the gate on time without a mechanical problem — is in the high 90 percent range, he said, a rate similar to the 777’s at the same time in its production life.

Potential problems with the electrical systems and batteries could be significant, because the 787 carries a lot more advanced technology than previous generations of airplanes. It makes extensive use of lightweight carbon composites, has more fuel-efficient engines and relies mostly on electrical systems instead of mechanical ones to operate hydraulic pumps, de-ice the wings, pressurize the cabin and handle other tasks. It also has electric brakes instead of hydraulic ones.

Randy Tinseth, Boeing’s head of marketing, said in a statement on Tuesday that the 787 had logged more than 18,000 flight cycles and flown more than 50,000 hours.

Boeing shares, which had dropped more than 5 percent in the last two days, recovered partly on Wednesday, and were up 3.6 percent at $76.76.

Article source: http://www.nytimes.com/2013/01/10/business/boeing-defends-safety-of-787.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: all nippon airways, electrical fires, sinnett

Boeing Defends Safety of 787

January 9, 2013 by NewsMaker Leave a Comment

The 787 has been in operation for 15 months, and Boeing has delivered 50 airplanes so far to eight airlines, including All Nippon Airways, Japan Airlines and United Airlines. Since then, a small number of 787s have had electrical fires, fuel leaks or other problems, prompting a safety advisory from federal regulators and a formal investigation into an electric fire this week. The National Transportation Safety Board is trying to find out why a fire broke out near a battery pack in the auxiliary power unit in a 787 parked at Logan International Airport in Boston on Monday. The fire occurred in a Japan Airlines plane after the passengers and crew had gotten off.

Mike Sinnett, the 787’s chief project engineer, said on Wednesday that the program suffered from no more problems than any other new plane, like Boeing’s 777 when it was introduced in the mid-1990s. He defended the company’s choice to use lithium-ion batteries, saying Boeing was not looking for alternatives to them. And he said the 787 had a large number of redundant systems, meaning that if one or more failed, the plane could still fly and land safely. Testing demonstrated the 787 could fly for more than five and a half hours with just one electrical generator functioning.

Asked whether the plane was safe, he responded: “Absolutely. I am 100 percent convinced the airplane is safe to fly. I fly on it myself all the time.”

Boeing declined to answer specific questions about Monday’s fire, citing the continuing investigation.

Potential problems with the electrical systems and batteries could be significant, because the 787 carries a lot more technology than previous generations of airplanes. It makes extensive use of lightweight carbon composites, has more fuel-efficient engines and relies mostly on electrical systems instead of mechanical ones to operate hydraulic pumps, de-ice the wings, pressurize the cabin and handle other tasks. It also has electric brakes instead of hydraulic ones.

Instead of drawing air from the engines to run these systems, the 787’s novel architecture eliminates most pneumatic systems and replaces them with electric ones. This increases the fuel efficiency of the airplane by 2 to 3 percent at cruising altitude, according to Boeing. Randy Tinseth, Boeing’s head of marketing, said in a statement on Tuesday that the 787 had logged more than 18,000 flight cycles and flown more than 50,000 hours.