Tag Archives: Sydney

Xiamen Air launches two new routes to Sydney, is also coming to Melbourne, Vancouver and New York in 2016

Xiamen Air Boeing 787-8 Dreamliner B-2760 (msn 41540) PAE (Steve Bailey). Image: 926637.

Xiamen Air (Xiamen Airlines) (Xiamen, Fujian Province, China) launched the first ever intercontinental route between Fuzhou and a destination outside of Asia with the opening of a regularly scheduled nonstop flight between Fuzhou and Sydney on November 29, 2015. The airline will also initiate nonstop service between Xiamen and Sydney starting on December 5.

Xiamen Air logo-1

Xiamen Air launched nonstop service between Xiamen and Amsterdam in July 2015, marking the opening of the airline’s first intercontinental route. The new services to Sydney, operated by Boeing 787-8 aircraft, will help Xiamen Airlines expand its network. The new Xiamen route reduces travel time between the city and Australia to nine hours.

Xiamen Air plans to continue expanding its overseas network while its fleet of Boeing 787-8 aircraft will service international routes. The airline plans to add the more advanced Boeing 787-9 aircraft to the fleet in a move to further expand its global network.

The Chinese airline plans to launch nonstop service to Melbourne, Vancouver and New York in 2016.

Top Copyright Photo: Steve Bailey/AirlinersGallery.com. Xiamen Air Boeing 787-8 Dreamliner B-2760 (msn 41540) arrives at Paine Field.

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Bottom Photo: Xiamen Air.

Xiamen Air fleet (Xiamen Air)(LRW)

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Air Austral moves up the last Boeing 777-200LR revenue flight to October 30

Air Austral (St. Denis, Reunion Island) has now scheduled the last Boeing 777-200 LR (Longer Range) revenue flight for October 30 as flight UU202 from Dzaoudzi (Mayotte Island) and Reunion per Airline Route. This was brought forward from May 30, 2016.

Air Austral 2014 logo

Copyright Photo: John Adlard/AirlinersGallery.com. Boeing 777-29M LR F-OLRA (msn 40955) is pictured in action at Sydney.

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Scoot retires its last Boeing 777-200, becomes the first all-787 operator

Scoot (flyscoot.com) (Singapore) as planned, retired its last Boeing 777-200 with the delivery and entrance into revenue service of its latest Boeing 787 Dreamliner (787-8 9V-OFB, msn 37118, named “Lickity-Split”).

The airline becomes the first all-Boeing 787 Dreamliner operator in the world. The airline transitioned to its all-787 fleet in just seven months.

The airline issued this short statement on social media on September 2:

NokScoot logo (large)

With the addition of ‪#‎787LickitySplit‬ to the Scoot family, we are now the first airline to operate an all new Boeing 787 Dreamliner fleet across our network of destinations!

Copyright Photo: Micheil Keegan/AirlinersGallery.com. Boeing 777-212 ER 9V-OTC (msn 28509) taxies at Sydney.

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Virgin Australia to shift its Bali flights to Tigerair Australia

Virgin Australia Holdings Limited (Virgin Australia Group) (Virgin Australia Airlines and Tigerair Australia) (Brisbane) is making moves after it continues to reduce its losses overall.

Virgin Australia is dropping its leisure routes to Bali and Thailand and will replace the service with its lower-cost subsidiary Tigerair (Australia). The company is making this move in order to reduce its international losses that widened in the fiscal year to $69 million (AU).

Virgin Australia will cease flying from Adelaide, Melbourne and Perth to Denpasar, (Bali, Indonesia) in March 2016 and will instead use its no-frills Tigerair subsidiary on those routes.

Virgin Australia on February 1, 2016 is also canceling service to Thailand, where it currently operates the Perth – Phuket route five days a week

Virgin Australia outlined the route changes with this press release:

Virgin Australia logo-2The Virgin Australia Group has announced plans to optimize its international network to deliver improved fleet utilization and meet customer demand on key trans-Tasman and short-haul international routes.

Tigerair Australia:

The Tigerair Australia brand will launch in the short-haul international market with Denpasar (Bali) as its first international destination to enable the Group to better cater to the changing dynamics in the region.

From March 23, 2016, Tigerair Australia will use three all economy configured Boeing 737-800 aircraft to offer the following services to Denpasar (Bali), subject to relevant regulatory and operational approvals being secured:

Adelaide-Denpasar: five return services per week
Melbourne-Denpasar: daily return services
Perth-Denpasar: daily return services
Members of Virgin Australia’s loyalty program Velocity Frequent Flyer will be able to redeem Velocity Points for seats on Tigerair Australia services to Denpasar.

Virgin Australia route withdrawals:

From March 23, 2016, Virgin Australia will withdraw from the following routes:

Adelaide-Denpasar: five return services per week
Melbourne-Denpasar: daily return services
Perth-Denpasar: eight return services per week

The last flights on these routes will operate on March 22, 2016.

From February 1, 2016, Virgin Australia will withdraw from the Perth-Phuket route, with the last flight operating on January 31, 2016.

Virgin Australia will continue to operate to Denpasar from Sydney, Brisbane and Port Hedland.

Virgin Australia route increases:

From October 25, 2015 onwards, Virgin Australia will increase capacity into New Zealand, in conjunction with our alliance partner Air New Zealand. Virgin Australia will also increase capacity to Fiji and the Solomon Islands to meet customer demand.

These increases represent more than 52,000 additional seats on trans-Tasman and Pacific routes during the 2016 financial year.

Additional capacity to be operated by Virgin Australia:

  • Sydney-Christchurch: addition of two return services per week from October 25, 2015
  • Melbourne-Christchurch: addition of one return service per week from November 6, 2015
    Additional seasonal capacity to be operated by Virgin Australia:
  • Brisbane-Auckland: addition of one return service per week between October 26, 2015 and  December 13, 2015, two return services per week between December 14, 2015 and January 24, 2016, and one return service per week between February 29, 2016 and March 27, 2016
  • Brisbane-Dunedin: addition of one service per week from December 18, 2015 to January 22, 2016
  • Brisbane-Wellington: addition of one service per week from December 14, 2015 to January 24, 2016
  • Brisbane-Apia: addition of one service per week from December16,  2015 to January 13, 2016
  • Brisbane-Honiara: addition of one service per week from  June 22, 2015 to January 25, 2016
  • Brisbane-Nadi: addition of one service per week between December 12, 2015 and  January 23, 2016
  • Sydney-Nadi: upgrade of Saturday Boeing 737-800 services to Airbus A330 services from  June 20, 2015 to October 24, 2015 and from December 12, 2015 to January 23, 2016.
  • An additional Boeing 737-800 service will also operate on Saturday December 26, 2015 and Saturday January 3, 2016

These decisions came as the company reported its fiscal year results:

Virgin Australia logo-2

Virgin Australia Holdings Limited (Virgin Australia today reported an Underlying Loss Before Tax of $49.0 million (all dollar amounts are in Australian dollars) for the 2015 financial year, including the impact of 100 per cent consolidated Tiger Airways Australia Pty Limited (Tigerair Australia) performance from October 17, 2014.

Virgin Australia Group Chief Executive Officer John Borghetti said: “The Virgin Australia Group has delivered a significant improvement in performance for the 2015 financial year, which reflects the positive trajectory of the overall business”.

“Over the past financial year, the Group’s Return on Invested Capital has increased from 1.4 to 6.1 per cent. Improving our Return on Invested Capital will continue to remain a strong focus for the Group. I’m pleased to confirm that based on current market conditions, all fundamental business metrics are on track for the Group to return to profitability and report a Return on Invested Capital in line with its cost of capital for the 2016 financial year. The Virgin Australia Group’s current cost of capital is approximately 10 per cent.

“Unit revenue is increasing, unit costs are decreasing and operational performance and customer satisfaction continue to improve.

“Unit cost declines are a result of the Group’s disciplined execution of our $1 billion cost reduction program. The Group has continued to decrease Underlying CASK while investing in the customer experience. Additionally, the full acquisition of Tigerair Australia has given us further capability to lower the Group’s unit costs.

“The Group is ahead of our target of $1 billion of cumulative cost savings by the end of financial year 2017. We are now on track to achieve in excess of $1.2 billion in cumulative cost savings by this date, excluding fuel pricing and hedging benefits.

“The Group’s balance sheet is also in a much stronger position, with the highest ever full year unrestricted cash balance, a $225.8 million improvement in Operating Cash Flow and a 20 per cent improvement in financial leverage on the 2014 financial year.

“I’m pleased to report that we are seeing strong results from the transformation of Virgin Australia Domestic. The business reported an Underlying EBIT of $111.1 million for the 2015 financial year, an improvement of $210.1 million on the prior corresponding period.

“Over the 2015 financial year Virgin Australia Domestic has continued to drive positive yield growth, led the major carriers in On Time Performance and achieved record customer satisfaction with the end-to-end customer experience . Based on results reported to date since financial year 2013 , Virgin Australia Domestic has narrowed the Revenue per Available Seat Kilometre differential versus our major competitor and retained our strong cost advantage. The business is well positioned for future growth.

“Whilst there are challenges on the international front, we are confident with our improvement plan.

“The Group’s unit revenue gains combined with our continued leadership on cost will drive earnings growth going forward. We now have a strong balance sheet from which to execute our strategy and a powerful portfolio of growth businesses in Velocity Frequent Flyer, Charter, Cargo and Tigerair Australia, that will support the Group’s ongoing earnings development and diversification.

“Our people have demonstrated enormous skill and dedication in their disciplined execution of the Virgin Vision strategy”, Mr Borghetti said.

Group Financial Performance

The Group reported an Underlying Loss Before Tax of $49.0 million for the 2015 financial year, an improvement of $162.7 million on the 2014 financial year. Taking into account 100 per cent of Tigerair Australia performance on a like-for-like basis, the 2015 financial year underlying performance represents a $213.0 million improvement over the prior corresponding year.
The Statutory Loss After Tax for the 2015 financial year was $93.8 million, an improvement of $260.0 million on the prior corresponding period.

Return on Invested Capital for the 2015 financial year was 6.1 per cent, an improvement of 4.7 percentage points on the prior corresponding period.

Total Group Revenue and Income increased 10.3 per cent to $4,749.2 million compared to the 2014 financial year, inclusive of $284.1 million of Tigerair Australia revenue since 17 October 2014.

Group Underlying Cost per Available Seat Kilometre (CASK) reduced 6.4 per cent excluding fuel and foreign exchange for the 2015 financial year compared with the prior corresponding period. Virgin Australia CASK reduced 4.6 per cent excluding fuel and foreign exchange over the same period.

Several major cost reduction initiatives contributed to this result, including Airbus A330 fleet rationalisation, sales channel optimisation, insourced line maintenance, major fuel consumption initiatives and savings in procurement.

The decline in oil prices led to a benefit of approximately $60 million for the Virgin Australia Group, compared with the same period in the 2014 financial year, however this was partly offset by the approximately $35 million negative impact of a weaker Australian Dollar on operating costs. The Group derived a hedging benefit of approximately $31 million in the prior corresponding period which impacted the year on year gain. Based on the Virgin Australia Group’s current hedging position and market rates, the Group expects a fuel pricing net benefit of approximately $162 million in the 2016 financial year. However this is expected to be offset by the approximately $99 million adverse impact of a weaker Australian Dollar, resulting in a total expected net benefit of approximately $63 million in the 2016 financial year.

The Group incurred $70.2 million of restructuring and transaction costs during the 2015 financial year as a result of fleet initiatives, costs associated with various transactions and other transformation initiatives. The business also incurred $27.4 million in hedging ineffectiveness costs and time value movement on cash flow hedges.

The Virgin Australia Group finished the year with a total cash balance of $1,028.5 million and an unrestricted cash balance of $718.9 million, up $244.7 million and $177.9 million respectively on 30 June 2014. The Group’s financial leverage ratio improved from 7.5x in June 2014 to 5.9x in June 2015 and is on track to achieve a further 25 to 30 per cent reduction by the end of financial year 2017.

The Group continues to invest in the latest generation of aircraft to support fuel efficiency, operational performance and customer satisfaction. During the 2015 financial year, the Group converted four Boeing 737-800 deliveries for 2016 into Boeing 737-MAX aircraft. Consequently the Virgin Australia Group will now receive 40 deliveries of Boeing 737-MAX aircraft from 2018 onwards.

Segment Performance

Virgin Australia Domestic

Virgin Australia Domestic reported Underlying EBIT of $111.1 million for the 2015 financial year, an improvement of $210.1 million on the prior corresponding period. Operating margins improved from -3.1 per cent to +3.4 per cent.

Revenue increased by 4.8 per cent on the 2014 financial year on capacity growth of 1.3 per cent, driven by growth in the Corporate and Government, Charter, Interline and Codeshare segments. The business remains on track to reach its target of 30 per cent of revenue from the Corporate and Government segment by 30 June 2017.

Virgin Australia Domestic Yield increased by 5.2 per cent compared to the 2014 financial year; driven by success in attracting increased share of higher-yielding market segments.

Virgin Australia Domestic led the major carriers in On Time Performance for the 2015 financial year, achieving 87.9 per cent of flights on time.

External research confirmed that Virgin Australia Domestic achieved record levels of satisfaction with the end to end customer experience, Domestic Business Class service and the lounge experience. The business also won a number of prestigious awards during the period, including Best Airline Staff Service Australia/Pacific by the Skytrax World Airline Awards for the fifth consecutive year.

In the 2015 financial year Virgin Australia Domestic completed the transition to a contemporary full service airline, including:

  • The rollout of complimentary food, baggage and entertainment across the mainline domestic network;
  • Completion of wireless in-flight entertainment roll-out across the entire Boeing 737-800 and Embraer 190 fleets;
  • Launch of Darwin and Alice Springs lounges, expansion of Brisbane lounge and launch of Premium Exit at Melbourne Airport;
  • A new international standard Business Class service on the Airbus A330s; and
  • The painting of the last red Virgin Blue aircraft in the new Virgin Australia livery.

Virgin Australia International

Virgin Australia International reported an Underlying EBIT of -$68.9 million for the 2015 financial year, a decline of $22.8 million on the prior corresponding period.

Virgin Australia International revenue decreased by 3.3 per cent compared to the 2014 financial year on a capacity decline of 0.4 per cent.

Increased competitive pressure, particularly in the South East Asian and long-haul markets, constrained yield recovery during the financial year.

In recent months, the Virgin Australia Group has put into place the first phase of initiatives to improve the performance of the international business, including introducing Business Class on the Tasman and Pacific Islands routes to drive further unit revenue growth; integrating the management of the New Zealand operations into the rest of the international business; consolidating its Los Angeles flying from three to two Australian hubs; and announcing the introduction of new Business Class suites on the fleet of long-haul Boeing 777 aircraft to drive further yield growth.

As a result, Virgin Australia International has begun to show improvement, with Underlying EBIT improving by $2.4 million in the second half of the 2015 financial year compared to the prior corresponding period.

Today Virgin Australia has announced the second part of the plan to improve performance. This involves launching the Tigerair Australia brand in the short-haul international market, to enable the Group to better cater to the changing dynamics in the region.

It also enables Virgin Australia International to redeploy some capacity to meet increased customer demand on strong-performing routes and to withdraw Virgin Australia International from routes where market structures have changed.

Charter and Cargo

Virgin Australia Charter continued to deliver revenue growth during the 2015 financial year.

Despite the slowdown in the resources industry, demand from Virgin Australia Charter’s existing blue chip client base continued to grow during the 2015 financial year and the business won several significant new resources contracts from competitors. This growth has been supported by the addition of four Fokker 100 aircraft, expanding the charter fleet from 20 to 24 aircraft.

The charter customer experience was also further aligned with Virgin Australia’s mainline operations, including the installation of check-in kiosks and gate scanners at three of its largest charter airports.

Virgin Australia Cargo is the Group’s newest business division. During the 2015 financial year, the Group’s dedicated cargo team implemented a state-of-the-art IT system, which will enable the division to optimise cargo capacity and provide tracking and customised reporting to customers.

The business officially launched on 1 July 2015, providing services for major freight distributors, corporate shippers and individuals. Virgin Australia Cargo has already signed several major clients.

Velocity Frequent Flyer

Velocity Frequent Flyer reported an 18.5 per cent increase in revenue and an 8.0 per cent increase in Underlying EBIT to $81.2 million for the 2015 financial year.

Revenue and earnings growth were driven by record annual growth in members, strong member engagement and new partnerships. Velocity invested significantly in people and systems in the 2015 financial year which will drive stronger earnings growth going forward, with a minimum of 15 per cent earnings growth per annum expected in the 2016 financial year and the 2017 financial year.

During the 2015 financial year, Velocity added the highest number of members since the program’s launch, with an average daily join rate of more than 2,400 per day, up from around 1,900 during the 2014 financial year. This significant increase was supported by Velocity’s Australian-first partnership with one of the country’s largest fuel retailers, BP, with an average of more than 4,300 people joining the program per day during the last quarter of the 2015 financial year.

Velocity continued to achieve numerous awards during the 2015 financial year, including winning three prestigious accolades at the Freddie Awards, in which Velocity has been recognised as having Best Redemption Ability in the Asia-Pacific region for three consecutive years. The program also ranked as number two globally for Seat Availability in the Ideaworks SwitchFly Survey.

In July 2015, Velocity acquired a leader in the data and analytics field, Torque Data, enabling the business to significantly expand its capabilities in this field and support its ongoing growth.

Tigerair logo

Tigerair Australia

Tigerair Australia recorded an EBIT loss of -$8.6 million from 17 October 2014 to 30 June 2015. On a standalone basis, it recorded an improvement of $42.7 million on the prior corresponding period.

The business achieved significant progress in driving incremental revenue growth and delivering cost synergies, with approximately $7 million in benefits achieved as a result of the completion of the Group’s full acquisition of Tigerair Australia.

During the 2015 financial year Tigerair Australia’s average load factors improved by 1.8 percentage points to 86.1 per cent, on capacity growth of 9.6 per cent.

The business introduced a number of initiatives to improve the customer experience while streamlining costs, including check-in kiosks at major airports and an iPad-based mobile app that makes the check-in and boarding process more efficient while enabling additional revenue opportunities. The most recent external survey results show customers were 75 per cent satisfied overall with their Tigerair Australia experience, up 11 percentage points since October 2014.

Tigerair Australia delivered a significant improvement in On Time Performance, with average departures On Time Performance increasing by more than six percentage points during 2015 financial year, finishing the year with 89.0 per cent of flights on time in June and outperforming its major competitor in five of the first six months of the 2015 calendar year .

Conclusion and Outlook

Virgin Australia Group Chief Executive Officer John Borghetti said: “Our people and their dedication to going above and beyond in their day-to-day roles is central to our success in delivering on our Virgin Vision strategy. I would like to thank all of our team members for their commitment to our customers and their tireless efforts in bringing to life the Virgin Vision.

“As a result of the progress on our strategy to date, we are now on a positive trajectory and on track to significantly improve financial performance again for the 2016 financial year.

“Based on current market conditions, all fundamental business metrics are on track for the Group to return to profitability and report a Return on Invested Capital in line with its cost of capital for the 2016 financial year. The Virgin Australia Group’s current cost of capital is approximately 10 per cent”, Mr Borghetti said.

Copyright Photo: John Adlard/AirlinersGallery.com. Tigerair’s Airbus A320-232 VH-VNQ (msn 5218) taxies at Sydney in the new 2013 livery.

Virgin Australia aircraft slide show: AG Airline Slide Show

Tigerair Australia aircraft slide show: AG Airline Slide Show

Tigerair (Australia) route map. The lower-cost Tigerair subsidiary is likely to grow with its lower cost basis.

Tigerair (Australia) 8.2015 Route Map

Jetstar Airways is planning to retire the last Airbus A330-200 in September

Jetstar Airways (Melbourne) is planning to phase out and retire the last Airbus A330-200 in September. According to Airline Rouge, currently (subject to change) the last scheduled route with the A330 will be on September 24 between Honolulu and Brisbane (arriving on September 25) as flight JQ 006. There are no scheduled A330 flights after this date.

The Airbus A330-200s have been replaced with newer Boeing 787 Dreamliners.

Copyright Photo: Micheil Keegan/AirlinersGallery.com. Airbus A330-202 VH-EBB (msn 522) approaches the runway at Sydney.

Jetstar Airways aircraft slide show: AG Airline Slide Show

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American to fly nonstop Los Angeles – Sydney, QANTAS Airways to return to San Francisco

American Airlines (Dallas/Fort Worth) and QANTAS Airways (Sydney) plan to expand their joint business, providing new opportunities for service between the United States and Australia.

American will return to the Australian market on December 17. QANTAS Airways will return to San Francisco.

American will offer new daily, nonstop flights between Los Angeles International Airport (LAX) and Sydney Airport (SYD) with its flagship Boeing 777-300 ER, pending regulatory approvals. In early 2016, QANTAS will begin operating service six times per week between SYD and San Francisco International Airport (SFO), adding another key destination for business and leisure customers with more options when traveling across the Pacific.

Copyright Photo: Michael B. Ing/AirlinersGallery.com. Boeing 777-323 ER N719AN (msn 41668) prepares to land at Los Angeles International Airport.

American Airlines aircraft slide show (current livery): AG Airline Slide Show

Etihad Airways launches nonstop Boeing 787-9 flights to Brisbane, strikes back and strongly refutes the claims by the “Big Three”

Etihad Airways (Abu Dhabi) today (June 2) launched daily nonstop flights between Brisbane and Abu Dhabi.

Etihad Airways flight EY 484 departed the airline’s home base, Abu Dhabi, at 10 pm (2200) yesterday (June 1) and arrived in Brisbane at 5.50 pm (1750) today where it was met by a traditional water cannon salute. Return flight EY 485 will depart Brisbane for Abu Dhabi at 9.35 pm (2135) today and arrive in Abu Dhabi at 6 am local time.

The new nonstop flights are operated by Etihad Airways’ brand new three-class Boeing 787-9 Dreamliner which features the airline’s ground-breaking next generation First Suite, Business Studio and Economy Smart Seat.

The Dreamliner flights offer First Class on the Brisbane – Abu Dhabi route for the first time ever and will replace the daily one-stop services which the airline previously operated via Singapore with a two-class Airbus A330-200 aircraft.

Etihad Airways codeshares on Virgin Australia flights from Brisbane to Bundaberg, Cairns Cloncurry, Emerald, Gladstone, Hamilton Island, Hervey Bay, Mackay, Moranbah, Mount Isa, Proserpine, Rockhampton and Townsville.

Etihad Airways’ new Boeing 787-9 Dreamliner will carry 235 guests – eight in First Class, 28 in Business Class and 199 in Economy Class.

Etihad Airways commenced three weekly flights to Brisbane via Singapore in 2007 and increased frequency to daily on February 1, 2013.

In other news, Etihad Airways also launched its inaugural Abu Dhabi-Sydney Airbus A380 flight – EY454 – departed Abu Dhabi International Airport at 10 pm (2200) on May 31.

The A380 will now operate one of the airline’s two daily services between Sydney and Abu Dhabi. The airline’s additional four weekly Airbus A340-600 flights will be upgraded to a Boeing 777-300 ER aircraft.

Finally, according to Reuters, “Etihad Airways issued it strongest response yet to claims that it received market-distorting subsidies, saying it is required to repay loans and that its U.S. competitors have a “condescending” view of non-U.S. law.”

Read the full report: CLICK HERE

Here is the full statement by Etihad Airways:

Etihad logo-2

Etihad Airways, the national airline of the United Arab Emirates, has urged the US Government to ‘keep the skies open’, in a comprehensive formal response to the joint campaign by Delta Air Lines, United Airlines and American Airlines to block competition and roll back the benefits of Open Skies.

The Etihad Airways response, which has now been submitted to the US Department of State, the US Department of Transportation and the US Department of Commerce, emphasises the many benefits delivered by Open Skies to consumers, to American workers, to US carriers and to US trade and tourism.

It categorically refutes claims made by the Big Three carriers about Etihad Airways’ finances, giving a clear and compelling explanation that the equity funding and shareholder loans provided by the Government of Abu Dhabi, by way of investing in a successful business model, fully comply with the US-UAE Air Services Agreement and all other applicable rules.

The submission also shows that the Big Three carriers have gained more than $70 billion in benefits from US Government authorities, and through legal processes such as Chapter 11 bankruptcy reorganization, over the last 15 years.

In a letter supporting the airline’s formal submission, James Hogan, Etihad Airways President and Chief Executive Officer, said: “Etihad Airways did not seek this fight; we focus on making money by providing world class, innovative, re-imagined and value-for-money product and services to our guests.”

Etihad Airways has submitted that the Big Three carriers’ claims, allegations, and requests for relief are not supported by fact, logic, law, or treaty, and that:

(1) Etihad’s conduct, and that of the UAE Government, is fully consistent with the US–UAE Air Services Agreement, applicable United States law and the governments’ respective treaty obligations;

(2) Government ownership is not an issue under the US-UAE Air Services Agreement;

(3) Shareholder equity and loans are not subsidies;

(4) While Etihad competes vigorously for all passengers, it does not charge artificially low fares;

(5) Etihad causes no actionable harm to the Big Three carriers, and actually provides them with significant commercial benefits in terms of connecting passengers onto their networks (an estimated 300,000 in 2015);

(6 ) Etihad has been successful in markets in which the Big Three carriers affirmatively choose not to compete, and is in fact providing the Big Three carriers with an avenue (through codeshare and interline agreements) to offer their passengers routes that they choose not to fly themselves; and

(7) Etihad treats its worldwide employees, who come from over 140 countries, including the United States, fairly and with respect.

Mr Hogan said: “For these reasons, we respectfully submit that the Big Three carriers’ campaign against Etihad Airways should end immediately and that there is no basis whatsoever for government-to-government consultations under the US–UAE Air Services Agreement.”

Etihad Airways’ submission includes detailed information about the airline, its financial strategy and its business performance.

The airline was established in November 2003, decades after its major international competitors, by the Government of Abu Dhabi, the capital of the UAE.

Today, Etihad Airways is a globally-recognized, full-service international airline, which carries almost 15 million passengers per year and flies to, or is planning to serve, more than 110 destinations. The airline currently operates almost 120 aircraft and more than 260 flights per day from its hub at Abu Dhabi International Airport.

Etihad Airways has had to invest heavily to compete effectively against its more established competitors. Recognizing the enormous cost of entry to the airline industry, the Abu Dhabi Government invested in Etihad Airways by providing capital and shareholder loans.

Since 2003, the Government has invested $14.3 billion in Etihad Airways; of this amount, $9.1 billion was provided in equity funding and a further $5.2 billion was provided in shareholder loans.

These commitments were made on the basis that the airline would operate commercially, deliver a long-term return on investment, repay shareholder loans and achieve sustainable profitability.

Etihad Airways receives no Government subsidies or sovereign guarantees and, contrary to the claims of some competitors, it does not receive free or discounted fuel or airport services in Abu Dhabi, its home and global hub.

Since 2003, Etihad Airways has raised in excess of $11 billion in long-term funding through the global financial markets, including $3.7 billion debt funding raised in 2014. Approximately $5 billion of the airline’s borrowings have been repaid since 2003, including $800 million in 2014.

The airline has established strong relationships with more than 80 global financing partners and aircraft lessors, 26 of which are based or headquartered in the US.

Etihad Airways is highly focused on its commercial mandate. Although it is only 11 years old, the airline has posted consecutive net profits since 2011. Etihad Airways complies with International Financial Reporting Standards (IFRS) and is audited by KPMG.

Commenting on the submission, James Hogan said: “Our story is one of an airline that has chosen to challenge the global status quo, bringing new competition to markets that have for too long been dominated by the major legacy airlines.

“In many markets, airlines react to our new competition by improving their own offer to consumers. It is ironic that in the home of free competition, a market in which we account for only a tiny fraction of one per cent of international departures, we have instead been attacked.”

Etihad Airways’ submission includes the example of routes to the Indian sub-continent to explain the inaccuracies of the Big Three’s arguments. The submission states:

“Their only specific claim is that from 2008 to 2014, they have allegedly collectively lost five percentage points of their market share to the Indian subcontinent. However, what they neglected to mention is that during the same period their passenger numbers actually grew by 18 per cent. So while their collective market share actually went down by a relatively insignificant 4.4 percentage points (not 5 percentage points), their actual passenger volumes grew by over 18 per cent, or over 250,000 passengers, including both economy and premium classes. This passenger growth clearly demonstrates the power and effects of Open Skies and liberalized traffic rights.

“The Big Three carriers affirmatively and voluntarily choose not to directly serve Etihad’s key Middle East and Indian Subcontinent markets in a meaningful way. Instead they are routing US passengers through congested European hubs and on to their European alliance partners to serve certain destinations. Indeed, the Big Three carriers’ campaign is little more than a regulatory attempt to further cement their oligopoly, particularly on transatlantic markets.”

Mr Hogan added that facts, not myths, should define the debate, saying: “These airlines criticize us for being Government-owned – but government stakes in airlines are completely normal around the world. The majority of airlines in the global alliances, which the Big Three dominate, are owned or controlled by governments or government-owned entities. Just this month, the French Government increased its shareholding in Air France.

“The Big Three criticize us for receiving Government investment. We have never made any secret of the fact that we have received equity funding and shareholder loans, which again is not unusual for airlines, or indeed for many businesses. These investments received from our shareholder are not like the more than $70 billion the Big Three have received from US Government sources or court-approved processes since 2000 alone, a fact shown in a study by The Risk Advisory Group.

“The Big Three say our services threaten competition. Yet a report by independent analysts the Edgeworth Group shows that our services actually stimulate traffic flows, which have increased overall passenger numbers on those routes for airlines including the Big Three and their alliance partners.

“The Big Three say we threaten American jobs. Yet their campaign seeks to limit the operations of Etihad Airways, which according to Oxford Economics will support 23,400 American jobs this year, and almost double that number by 2020.

“And finally, the Big Three have spent millions of dollars trying to influence politicians on the supposed threats from the Gulf carriers, yet their report mentions consumer choice only once – even then in a cursory manner.”

In his covering letter to Etihad Airways’ submission, Mr Hogan said that the US carriers had been able to benefit from numerous Chapter 11 reorganization processes, which gave them a major advantage over their international competitors.

“Yes, we understand that bankruptcy is a court process, but unlike these US carriers, Etihad does not have an avenue by which we can periodically clean up our balance sheet by disclaiming debts and other legal obligations. We have to carry these obligations and debts on our books,” he said.

Mr Hogan’s letter also said that the United Arab Emirates had embraced the US concept of Open Skies.

“One country that shared the vision of the United States is our home, the United Arab Emirates, which also embraced the idea of open and less regulated traffic flows despite being a small and, at the time, relatively unknown country working toward financial stability and success. This is why we find it so ironic that in 2015 Etihad Airways finds both itself and its home country under attack. We have helped fully realize the best in international aviation policy: safe travel provided by the highest quality airlines at fair prices that allow millions of passengers to travel conveniently and easily to and from the United States to markets in the Middle East, the ISC and beyond, enjoying the many benefits the aviation industry offers.”

In addition to a detailed rebuttal of the Big Three US carriers’ report, Etihad Airways’ submission to the US Government also includes three reports commissioned from independent and respected global expert consultancies.

EXAMINATION OF BENEFITS ACCRUING TO US CARRIERS

On 15 May, 2015 Etihad Airways released a report authored by UK-based The Risk Advisory Group that documented in detail benefits valued at more than $70 billion which Delta, United and American have received from the US Government and judicial processes and mechanisms available only in the United States.

These benefits included massive debt write-offs in multiple bankruptcy proceedings, government assumption of airline employee pension plans and bespoke tax benefits.
Etihad Airways does not question the US Government’s right to make these benefits available to US carriers, and nor does it criticize the US carriers for taking advantage of these substantial and valuable benefits.

Instead, Etihad Airways commissioned this report to highlight the environment in which it has to compete and the hazards of unilaterally labelling different funding strategies as subsidies, and otherwise mischaracterizing the way a competitor conducts its business.

REVIEW OF US CARRIERS’ ASSERTIONS

On 22 May, 2015, Etihad Airways released a report drafted by Washington, D.C.-based Edgeworth Economics. Etihad Airways’ instructions to Edgeworth were simple: review the economic claims made by Delta, United and American and provide an independent critique of their assertions.

Edgeworth conducted a detailed review and concluded, among other things, that air routes between the United States and the Indian Subcontinent (ISC), on which over 65 per cent of Etihad Airways’ US passengers fly, are highly competitive.

They found that Etihad Airways’ US competitors largely choose not to serve these routes directly. They instead fly passengers to Europe and connect them onto non-US partner airlines, a practice that often requires passengers to make additional stops.

Edgeworth also determined that Etihad’s published fares on these routes were consistent with those of competitors, even though the revenue per kilometer generated on these ISC routes was considerably less than the immunized US and European carriers receive on their protected North Atlantic routes.

Most significantly, Edgeworth found that even though there is more capacity on these ISC routes in 2014 than there was in 2009 (the result of increased competition), there continues to be considerable demand for that capacity.

Between 2009 and 2014, US airlines and their immunized joint venture partners actually carried over 250,000 more passengers between the US and the ISC – that is a gain of over 18 per cent.
In 2014, Etihad Airways delivered 182,000 connecting passengers to US airlines including American, United, Delta and Jet Blue. This is forecast to grow to approximately 300,000 in 2015, an increase of 65 per cent, following the introduction last year of new routes to Los Angeles, San Francisco and Dallas Fort Worth.

Etihad Airways is proud to contribute to the success of Open Skies, while maintaining a load factor at approximately 80 per cent on average.

ECONOMIC CONTRIBUTION STUDY

Issued on 27 May 2015, and drafted by Oxford Economics, this detailed Etihad Airways’ contribution to the US economy.

Oxford valued at $2.9 billion the contribution Etihad Airways will make to the US economy in 2015 through capital expenditure, passenger and cargo services, direct and indirect employment and contribution to tourism.

This research also calculated that Etihad Airways would employ, or contribute to the employment of over 23,000 Americans in 2015.

Additionally, Oxford projected that the value of our contribution would grow to $6.2 billion by 2020, supporting more than 46,000 American jobs.

While Delta, United and American expend considerable money on advertising and other tactics that claim Etihad Airways threatens American jobs, Oxford conclusively demonstrates, on the contrary, we have a very positive impact on the US economy and workforce.

Mr Hogan said the Etihad Airways had clearly demonstrated that it was contributing not only to competition in the skies, but also to the US economy.

“We believe in competition and consumer choice,” he said. “It is now time to get back to the business of providing high quality air services and enhancing consumer choice, just as Open Skies intended. Let’s keep the skies open.”

Copyright Photo: Paul Bannwarth/AirlinersGallery.com. Boeing 787-9 Dreamliner A6-BLA (msn 39646) departs from Zurich.

Etihad Airways aircraft slide show: AG Airline Slide Show

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