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Airport Business News - Europe.

May 17, 2009

A group of low cost airlines have come together to demand that the European Union (EU) gets the ball rolling on harmonising European air traffic management and implementing the long-awaited Single European Sky initiatives. The European Low Fares Airline Association called on the EU to start converging national aviation authorities into one efficient body [ETH] and deliver passengers and the environment considerable gains. A central recommendation urged the creation by 2010 of a single European aviation authority to handle both traffic management and safety issues, using the existing national authority headquarters as regional bases. May 13, 2009

What is the future of Air Taxis in Europe? The global economy is in a severe downturn, businesses are slashing premium air travel and corporate flying is being widely sneered at. It is certainly not the environment in which any entrepreneur would wish to launch a high-end aviation product, but it is the reality confronting Blink and JetBird as they try to build air taxi services in Europe. When the idea for air taxis--essentially short-range charters using very light jets (VLJ)--was born it was feared they could overwhelm air traffic systems, particularly in the already dense European skies. Now the question is whether any company can make the business model succeed. Executives at both JetBird and Blink are optimistic they can withstand the headwind, but they are also realistic that prudence is of the utmost importance. Blink has been first out the door, operating four Cessna Citation Mustangs. JetBird is gearing up to commence operations in September with its Phenom 100. Following the Embraer VLJ's European Aviation Safety Agency certification on Apr. 24, JetBird formally applied for an air operator certificate in its home country of Ireland. Blink started flying last June from its Farnborough, England, base and the business is progressing well so far, says Peter Leiman, Blink's managing director. "We have, in 2008, exceeded revenue and utilization targets," he says. The company started with one aircraft, and received three more Mustangs in January. And while January and February business was slow, the air taxi operator says the results delivered were ahead of plan. March and April also were promising, Leiman adds. Lower-than-anticipated fuel prices likely have helped the company beat its cost targets. Blink and JetBird are not applying identical models, but their business plans are highly similar --so much so, in fact, that it seems either both will make it or both will fail, barring any outside market disruptions reported AWST. May 12, 2009

Corporate jet operations may be safe, but other business aviation operators appear to be taking an unjustified ride on the corporate sector's good reputation. That is the conclusion of a highly detailed report into global business aviation safety carried out by the UKECivil Aviation Authority in association with the International Business Aviation Council and the Business Aviation Safety Partnership. This team found that the fatal accident rate for all business jet civil operations is more than eight times that for large Western jets in airline operation, and four times that for large Western-built turboprops flying commercial operations. The study made a number of recommendations for correcting the situation, but improved pilot training headed the list of priorities. May 11, 2009

Aer Lingus

Aer Lingus has suffered a collapse in passenger numbers and revenue as it searches for a new chief executive, but low-cost rival Ryanair continues to grow its traffic. Aer Lingus' first-quarter revenues were 16 percent down on those for the same period in 2008. Total passenger numbers fell 6.5 percent and long-haul traffic suffered an even sharper drop, of 12.5 percent. Against this backdrop, the airline is to "review its long-term requirement for the long-haul capacity on order with Airbus". May 14, 2009

Alitalia

Alitalia said passengers are returning to fly despite lingering union issues and a barrage of complaints over flight delays, the Italian airline's CEO said Wednesday. Italy's national airline went bankrupt last year and was sold to a group of private investors, who relaunched it in January as a smaller airline with fewer staff. Air France-KLM bought a 25 percent stake in the relaunched carrier, which hopes to re-conquer the fourth-largest aviation market in Europe amid a severe industry downturn and stiff competition from a new high-speed rail service. But the airline has had a difficult rebirth, with low occupancy rates initially, sporadic threats by unions to go on strike and delayed flights that drew the ire of passengers. CEO Rocco Sabelli acknowledged the airline had struggled with punctuality in April but said the situation had improved. Flight occupancy rates have also been rising, with the load factor for flights to or from Rome rising to 68 percent in April from a low of 48 percent in January, he said. May 14, 2009

Alitalia

Alitalia plans to sign a deal soon with Rome's airport operator Aeroporti di Roma worth EUR100 million euros a year as part of the airline's greater presence here, he said. Air France-KLM CEO Jean-Cyril Spinetta also gave Alitalia a vote of confidence last week, saying the relaunch had been going as planned and that its finances are stronger than expected. Sabelli said the airline has been looking at ways to attract customers on the lucrative Rome-Milan route and plans to introduce new features such as a ticket subscription service and live television and email on board in the coming months. Alitalia filed for bankruptcy in August after years of losses due to strikes and inefficiencies. The assets that were not bought by the group of investors are being liquidated. May 14, 2009

American Airline, British Airways

A proposed alliance between American Airlines and British Airways would create a "monster monopoly," British entrepreneur Richard Branson said Thursday. Branson, whose Virgin Group controls BA rival Virgin Atlantic, said in a statement that an alliance between BA and American would strangle airline competition on routes between London's Heathrow Airport and the United States. Virgin Atlantic has asked the US Department of Transportation to reject the proposed alliance, which would allow BA and American Airlines to cooperate on schedules, fares and cost-cutting. Before it can approve the alliance, which includes other airlines in the OneWorld alliance, the Obama administration will accept public comment on the joint business arrangement. The application seeks an exemption from certain antitrust provisions. A final decision is expected within six months. AMR argues that there is no risk of a monopoly because more than 40 airlines fly between Europe and the United States. The company also said travelers will have greater access to cheap fares and smoother connections. The application, the second attempt by American and British Airways to expand their long-standing marketing ties, was submitted last August. The previous attempt failed in 2002 on questions over access to Heathrow. BA is the dominant carrier at Heathrow, where American also has a key presence. May 15, 2009

Berlin Brandenburg

The European Commission cleared EUR654.5 million euros (USD$892.1 million) of capital increases on Wednesday to finance the construction of Berlin Brandenburg International (BBI) airport to replace three former airports. The Commission, which regulates competition in the 27-nation European Union, also approved a 10 percent guarantee for up to EUR2.4 billion from the public shareholder of the airport operator Flughafen Berlin Schoenefeld and EUR74 million in an infrastructure grant. The EU executive said in a statement it would not raise objections to the aid. The proposed project would develop a single airport with two parallel runways and an operating capacity of 45 million passengers a year. The total investment cost for the airport is EUR3.6 billion and will be only partially financed -- up to 27 percent of the total cost -- through capital increases of the public shareholder. The rest of the financing will be made up from the airport's own resources, the statement said. After German reunification, Berlin had three airports -- Berlin Schoenefeld, Tegel which will close when the new airport opens and Tempelhof, which was in the city itself but was closed in late 2008. The new airport will be built on the site of Berlin Schoenefeld airport and will have a new terminal with a starting capacity of 22-25 million passengers. The Commission said the concentration of aviation activity at one single airport outside the city would cut noise and emissions, and there would be no need to fly over densely populated areas. The increased energy efficiency of the buildings at the new airport will lead to a reduction of carbon dioxide emissions, the EU executive said. May 13, 2009

Brandenburg International Airport

The European Commission has approved EUR654.5m capital increases for the building of the Berlin EBrandenburg International Airport. Reuters reported that the EC also approved a 10 percent guarantee for up to EUR2.4bn from the public shareholder of the airport operator Flughafen Berlin Schoenefeld and EUR74m in an infrastructure grant. The total cost of the airport which will replace the German's capital three smaller airports at Tegel, Schoenefeld and Templehof (now closed), is EUR3.6bn, mainly private investment. www.berlin-airport.de May 14, 2009

Cyprus Turkish Airlines

The legal action brought by Cyprus Turkish Airlines (CTA) to challenge the ban on direct flights to northern Cyprus will be heard this Monday, May 18 in the Administrative Division of the High Court. CTA and its UK tour operator, CTA Holidays Limited, is suing the Civil Aviation Authority (CAA) to compel it to lift the ban on direct flights between UK airports and northern Cyprus, which has lasted 35 years. Currently, CTA, together with all other airlines, must land in Turkey en route both to and from northern Cyprus. This increases flight times, airfares and fuel emissions, but has absolutely no operational justification. CTA claims the ban on direct flights to and from northern Cyprus is both unlawful and unjust. Recent legal advice seems to bear out CTA's claim. Two eminent QCs have already stated that there is no legal reason why the UK should not allow direct flights. May 16, 2009

Dublin Airport Authority

The Dublin Airport Authority (DAA) will seek 400 redundancies from its workforce of 3,600, a spokeswoman for Ireland's state-owned airport manager said. The DAA, which also operates airports at Shannon in the west and Cork in the south of Ireland, predicted last month that 2009 passenger numbers at all three airports would fall 11 percent, and forecast an "earnings shortfall" of EUR60 million - EUR70 million euros (USD$82 million - USD$95 million). Swiss aircraft maintenance group SR Technics laid off around 700 Dublin-based staff last month as the company winds down its Irish business, and Irish budget airline Ryanair cut 200 jobs in February including substantial reductions at its Dublin airport base. May 12, 2009

Eurocontrol

The Brussels-based Eurocontrol released the business aviation statistics in Geneva on the eve of the annual European Business Aviation Conference and Exhibition (EBACE), at which aircraft makers, flight operators and their suppliers parade their wares. But while industry officials in Geneva for the 2-day EBACE agreed the atmosphere was downbeat after years in which business aviation saw annual growth of some 10 percent, they argued that the medium-term outlook was good for the industry. Among companies exhibiting at EBACE are Canada's Bombardier, Brazil's Embraer, Boeing Business Jets division, and Airbus, as well as airport groupings, navigation equipment providers and the aviation industry's main publications and journals. Officials say the presence at EBACE 2009 of a wide range of companies across the industry shows continuing confidence, although they agree that its image even in Europe could have been affected by scandals in the United States over the use of high-luxury planes by executives of failing companies. Business aviation flights have shown a sharp drop of nearly 20 percent across Europe over the first quarter of this year as companies cut back on costs to fight recession. Eurocontrol, the European Organization for the Safety of Air Navigation which tracks aircraft movements from and across the continent, said traffic recovery in the long booming category was unlikely until the spring of 2010. The drop echoed similar falls in the commercial airline and cargo-carrying sector which worldwide has been suffering from a decline in world trade shrinking cargo traffic while the demand for mass passenger travel has also been drying up. Business aviation -- which includes flight operators, taxi firms and companies operating their own aircraft as well as plane makers, airports and maintenance firms -- accounts for some 8 percent of air traffic movements in Europe. The European Business Aviation Association says overall the sector -- whose planes in Europe are almost entirely owned by firms and governments and only 3 percent by individuals -- contributes some EUR20 billion euros, or 0.2 percent of GDP, to the European economy, and provides jobs for some 164,000 people. May 12, 2009

Frankfurt International

Frankfurt airport operator Fraport said it expects it 2009 operating profit to fall 15 percent year-on-year , in line with expectations. Full-year pre-tax earnings could slump to between EUR500m (USD 680m) and EUR530m this year as demand for air travel continues to decline. Fraport has already said it expects sales to decline as the global economic downturn continues to affect business travel. Passenger numbers at Frankfurt is expected to shrink by 6-9 percent this year, Fraport said. www.fraport.com May 14, 2009

Fraport

Fraport expects 2009 operating profit to fall by 15 percent from a year earlier, the company said on Tuesday after reporting first-quarter results that were in line with expectations. Full-year earnings before interest, tax, depreciation and amortisation (EBITDA) would slump to between EUR500 million euros (USD$680 million) and EUR530 million this year as demand for air travel dropped amid the global economic crisis. In the first quarter, the German airport operator's EBITDA fell 15.6 percent to EUR99.8 million. Fraport has already said it expects full-year 2009 earnings and sales to decline as the global economic crisis continues to stunt business travel and consumer spending. At its main airport in Frankfurt, passenger volume would shrink by 6-9 percent this year, Fraport said. The recent outbreak of H1N1 swine flu could further weigh on demand, it said. May 13, 2009

Iberia

Spain's prime minister on Wednesday proposed EUR240 million euros (USD$327.6 million) a year in support to airlines, the latest in a flood of initiatives to combat the country's worst recession in 60 years. Iberia and other airlines serving the country, such as British Airways and Lufthansa, would have their airport charges waived in return for boosting passenger numbers under the proposal. Airlines would have 100 percent of their monthly airport fees waived if they manage to equal or increase 2008 passenger numbers. Socialist leader Jose Luis Rodriguez Zapatero has proposed a string of economic stimulus measures during Spain's two-day State of the Nation debate, including support for the car industry, tourism, tax breaks for small businesses and an end to tax rebates on mortgages. Spanish passenger traffic in March dropped 18.9 percent year on year, figures from airports operator AENA showed, as recession-hit travelers cut back on travel. Spain is expected to be the last European Union member to return to growth, probably in 2011, according to the European Commission. Spain's tourism industry, the second largest in the world, is feeling the pinch as the global recession keeps foreign visitors, such as British and German tourists, at home while Spaniards rein in restaurant and hotel spending. The sector is worth about 11 percent of gross domestic product, making it Spain's second most important sector after construction. The country's once-thriving construction sector has been hit hard by the credit crisis, and unemployment is now the EU's highest at over four million, or 17.4 percent. May 14, 2009

Iberia

Iberia should return to profitability next year, but management is so preoccupied with the worst downturn in memory that merger talks with British Airways are on the back burner, its bosses said. Iberia Chairman Fernando Conte said he was still hopeful of a tie-up to create Europe's third-largest carrier, even if it was taking longer than expected, partly because of market volatility and its effect on BA's pension deficit. Earlier on Tuesday, Iberia reiterated expectations of a net loss in 2009 after the company posted a worse-than-expected EUR147 million euro (USD$200 million) first quarter operating loss. In response to a 9.5 percent fall in demand in the first quarter, the airline outlined a plan to save between EUR110 million to EUR125 million by cutting 10 percent of the 21,500-strong work force, cutting 4.3 percent of capacity and other savings affecting its offices, suppliers and IT. In addition it will cut planned investments by EUR80 million to EUR90 million. Iberia's first quarter capacity reduction from January to February was greater than those by Air France, Lufthansa and British Airways, reflecting the particularly dire position of the Spanish economy and the effect on traffic. Analysts said a return to profit next year was expected since Iberia would enjoy the full benefit of lower fuel prices, however it was Conte's subtly upbeat comments on traffic trends that helped it lead a rise in European airline shares. He said traffic on short and medium haul routes would continue to enjoy the tentative stabilization recorded in March and April. Summer bookings were still unclear, he said, due to a trend towards last-minute reservations. May 12, 2009

Iberia

Iberia has announced "severe" cost cutting measures after suffering a EUR92.6m loss in the first quarter. The plan will see EUR200m in savings through cuts in capacity, staff pay, purchases and external costs. The Spanish airline group blamed a steep decline in demand but said business travel had been hit hardest. Capacity cuts will be "selective and temporary", Iberia said, affecting those routes struggling the most from falling demand. Iberia denied cuts would affect any strategic routes and would not signal a withdrawal from any market. www.iberia.com May 12, 2009

Iberia

Iberia has said it plans to cut jobs and target pay to save more than U200 million (USD 272 million) after announcing worse-than-expected Q1 results Tuesday. The troubled airline said it lost U92.6 million (USD 126 million) during the first three months of 2009, adding that it was unlikely to post a profit in 2009 under current economic conditions. Iberia lost U28.3 million (USD 38.8 million) during the same period last year. Analysts had forecast a loss in the region of U117.5 (USD 161 million) for the same quarter this year. The airline said it had been hit by a decline in overall traffic accentuated by a dropoff among business travelers. May 12, 2009

London City Airport

Airlines are "sailing close to the wind" in the way they present their fare prices, Richard Gooding ceo of London City Airport, said. He quoted one example of a fare advertised at GBP 2.49 but which came to GBP 93 when taxes and other charges were added. Mr Gooding said he found it "astonishing" the way airlines presented their fares in the way they do.He compared it unfavourably with how a shop gave the price of an item and its delivery with no extras with how airlines simply gave the basic fare. "Do airlines know they are misleading the consumer who wants to know what the cost is. It is quite hard to find out. "It seems to me that airlines are sailing close to the wind and that Brussels might be taking a look at what they are doing," he said. www.acte.org E www.ms-uk.com May 12, 2009

London Gatwick Airport

A consortium led by Citigroup's infrastructure fund was dropped Wednesday from the battle to buy London's Gatwick airport, leaving just two groups vying to take over Britain's second-busiest airport. The decision is a fresh blow for the Citi Infrastructure Investors fund and its ally, Vancouver Airport Services, which only weeks ago saw their winning bid for Chicago's Midway airport collapse because they could not secure financing. Boston-based John Hancock Life Insurance Company, an initial member of the bidding group that also co-bid for Chicago Midway, left the consortium at the end of January, the spokesman added. Gatwick's Regulated Asset Base (RAB), a way of valuing infrastructure assets, is GBP1.6 billion pounds (USD$2.43 billion), but analysts have said it is unlikely to fetch that much, with debt scarce and airline traffic down sharply. Some press reports have put the Lysander bid at just under GBP1.2 billion. May 14, 2009

Midwest Executive Aviation

The UK's Newquay Cornwall airport and its fixed-based operator Midwest Executive Aviation are reporting a continued increase in business aviation traffic at the airport, despite the economic downturn. Midwest Executive Aviation is reporting a 10 percent increase in handled traffic for the first quarter of 2009, despite business aviation movements in Europe have declined by around a quarter compared with the same period in 2008. May 11, 2009

Ryanair

Ryanair called for the early sale of London Stansted after BAA figures confirmed that passenger traffic at the airport dropped 14 percent year-over-year in the first four months of 2009, including a 13 percent decline in April. May 12, 2009

Vueling

Vueling said it increased passenger traffic by 11.3 percent in April on the back of Easter travel and new ways of selling its tickets. Vueling bucked grim industry trends last month by predicting it would make its first full year profit this year after turning around the airline with a new route network focused towards business travelers, an income boost from non-fare revenue and cost cutting. Easter fell in March last year, inflating the April numbers, but the spokesman said the seasonal effect was only part of the story. Vueling's decision to sell through electronic booking systems such as Amadeus as well as travel agents employed by corporate customers, was a big factor. Among rivals, British Airways flew 0.9 percent more passengers in April, EasyJet 6.3 percent more and Ryanair posted a 12 percent jump. Iberia publishes data on Tuesday. Vueling is in the process of merging with Iberia's low-cost start-up Clickair and said last week that the new airline -- also known as Vueling -- expected synergies of some EUR65 million euros (USD$88.45 million) a year. May 12, 2009

ZZ AirGuideBusiness 090518

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Date:May 18, 2009
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