Around the Globe in Aviation

Lot’s of encouraging news as most of the major international carriers are reporting record and near record profits last quarter. Despite oil prices continuing to rise, carriers are managing capacity better and expanding towards more profitable international markets at an accelerated pace. Some rumors of possible mergers are in the wind as the industry looks to consolidate. Some highlights across the regions:

The A-380!!

After an 18 month delay, Airbus presented to Singapore Airlines the first operational aircraft last week. It will begin scheduled service on this weekend. The A-380 is the largest passenger aircraft seating 500 passengers and crew. (The Antonov AN-225, 6 engine transport is the largest aircraft) Currently, no U.S. customer has ordered the aircraft. Most airports aren’t designed to handle it.

The B-787 Dreamliner

Boeing announced fight test delays upwards of 6 months. Quantas, the largest customer for the B-787 had a measured response with the announcement. They also have A380’s on order (delayed also). Northwest, Continental, and Air Canada all are awaiting Dreamliners within the next few years. Their initial responses in the media appear to be tepid – for now.

EU Emissions Tax

The airline industry contributes roughly 5% of the world’s CO2 emissions as reported by IATA. The EU is considering replacing the controversial passenger tax with an assessment based on flights instead. British Airways estimates its share will be $815.6 million annually. Funds to be used to combat the “green-house” effect.

Airline Fares

Not surprising, fares are headed upward further still in 2008 in response to continued strong demand, generally tight capacity and higher fuel prices according to the “Global Business Travel Forecast” released by American Express Travel Advisory Services. U.S Domestic 1%-5%; International long-haul business fares5%-10%; Canada domestic short-haul 2%-5

Philippine Airlines

PAL may be emerging from receivership this month, as it moves towards health after 9 years in its “rehabilitating program”. It has demonstrated improved profitability since being acquired in 2000 by the Lucio Tan Group.

China’s air safety record

China’s airlines were perhaps the worlds most dangerous through the 1990s due to pilot errors, poor regulation and spotty maintenance. The country’s aviation industry has made vast strides and is today one of the world’s safest, as it approaches the showcase summer Olympics next year. China continues to improve airspace management also.

Aeromexico is finally sold

The final price of $249 million was accepted by the Mexican government for its 62% controlling interest in Aeromexico. Banamex, a subsidiary of Citigroup, and a consortium of wealthy Mexican families, won out over the Saba family and a last minute bid by Mexicana Airlines. The company is forecasted to continue a strong earnings performance.