Cathay Pacific builds flexibility while embracing opportunities

In posting an 83.3% drop in its 2012 full-year net profit to HK$916 million (US$118 million) from 2011′s HK$5.5 billion (US$708.5 million), Hong Kong-based Cathay Pacific Airways has ridden through a turbulent year that saw Asia’s largest international carrier posting a HK$935 million 2012 first-half loss, its first since the 2003 SARS crisis, amid a cargo conundrum, softening passenger yields in premium classes and stubbornly high fuel prices.
The result which beat analysts’ estimate of a HK$538.7 million full-year net profit, according to a Bloomberg survey, showed the airline’s cost-cutting measures, including withdrawing the fuel-guzzling Boeing 747-400 aircraft from its fleet at an accelerated pace, trimming long-haul flying, were bearing fruit that was underlined by a HK$1.85 billion second-half profit.
As Cathay Pacific heads further into 2013, a pick-up in business travel to North America as a result of an improving US economy, a more normal profit and loss statement without non-recurring items which weighed heavily on its profitability in 2012, as well as the continued fleet renewal programme, will hopefully produce a material improvement in the carrier’s 2013 net profits.

Image Courtesy of Bloomberg

A more normal P&L statement in 2013
As Cathay Pacific accelerates the pace at which it conducts its fleet renewal programme, the profit and loss statement in 2012 has been plagued by one-off special items, especially in aircraft depreciation and impairment.
Cathay Pacific recorded around HK$719 million non-recurring special items on the airline’s operating profit before tax during the year, including a HK$247 million impairment on 1 Boeing 747-400 BCF (Boeing Converted Freighter). Another HK$140 million of impairment was booked against 2 747-400 BCFs sold to its Shanghai-based Air China Cargo (ACC) joint venture (JV) and HK$52 million against the 4 747-400 BCFs that will later be sold to Boeing under a trade-in deal struck in March this year. The remaining over HK$200 million charge and HK$80 million were respectively booked against higher depreciation expense as Cathay Pacific withdrew 3 747-400s passenger aircraft last year, including 2 in September and 1 in December, and carbon emission reduction units it bought for the European Union (EU) emissions trading scheme (ETS) where the price for carbon dioxide allowance has notoriously slumped by 40% within a short timespan in January and its current price is €4.77 a tonne compared to the €20 a tonne the EU originally envisaged.
Similarly, Cathay Pacific witnessed a 70% drop in fuel hedging gain from HK$1.81 billion the prior year to HK$544 million in 2012. Had there not been this plummet in fuel hedging gain and the around HK$719 million charge, the airline operation of Cathay Pacific and Dragonair would have recorded a HK$2.17 billion profit before tax (PBT) and a HK$1.9 billion profit after tax, versus the HK$158 million PBT and a HK$110 million after-tax loss. The 2012 full-year net profit would also be boosted to HK$2.9 billion, a less pronounced 46.6% drop than the 83.3% headline decline.
Yet these special items could hardly mask the underlying challenging environment Cathay Pacific faced in 2012, arguably more than any other airline owing to the reliance on its cargo operation which could take as high as 30% of its total revenue in good times and 24.7% in 2012.
Total revenue rose by 1% to HK$99.4 billion in 2012 from HK$98.4 billion in 2011, whereas operating expenses soared considerably faster at 5% to HK$97.6 billion in 2012 from HK$92.9 billion the year prior, thus leading to a 67.5% decline in operating profit to just HK$1.79 billion from HK$5.5 billion a year earlier. Profit before tax (PBT) for the group declined by 76.1% to HK$1.55 billion from HK$6.47 billion the prior year, while profit after tax slumped 80.1% to HK$1.1 billion in 2012 from HK$5.67 billion in 2011.
Needless to say, weakness in the air cargo market and sustained high fuel price impacted Cathay Pacific significantly, since it is the world’s largest cargo carrier.
Cargo revenue for 2012 plummeted by 5.5% from HK$26 billion a year earlier to HK$24.6 billion in 2012 with a 5.2% drop in the number of tonnes of cargo carried to 1.563 million tonnes in 2012 from 1.649 million tonnes the prior year. Freight traffic, measured in freight tonnage kilometre (FTK), slumped by 7.3% year-over-year to 8.942 billion, which outpaced a 3.1% decline in cargo capacity, measured in available tonnage kilometre (ATK) to 13.926 billion, thereby leading to a 3% decrease in cargo load factor to 64.2%. While cargo yield remained stagnant at HK$2.42, factoring in a 1.7% increase in average into-plane fuel price, the underlying cargo yield actually declined by 1.7%.
The airline trimmed its base freighter service to Europe from 22 flights per week to 11 flights per week in February 2013 in light of the weak European economy, suspended service to Zaragoza, Spain in November last year as a contract with a major shipper ended and will not serve Brussels and Stockholm as freighter destinations anymore.
Though the airline also pursued growth in airfreight by launching dedicated freighter flights to Zhengzhou, Henan province in China in March 2012, which proved to be so successful such that it increased its frequency from 2 per week to 6 per week. The airline also launched a weekly cargo flight to Colombo in Sri Lanka in December last year, in addition to the Hyderabad, India flight launched in May. Services to Bangalore temporarily increased to 3 flights per week before reverting back to 2 per week this January.
While its cargo business suffered from a severe air cargo market downturn, its passenger business seemed to be on a brighter note and was brisker, with passenger revenue soaring by 3.5% from HK$67.8 billion in 2011 to HK$70.1 billion in 2012, backed up by a 5% increase in the number of passengers carried to 29 million passengers in 2012 from 27.6 million the prior year, indicative of a fall in passenger yield. Similar to its cargo business, while passenger yield, measured in revenue per revenue passenger kilometre (RPK), rose by 1.2% from HK66.5 cents in 2011 to HK67.3 cents in 2012, a 1.7% increase in average into-plane fuel price meant the underlying passenger yield declined by around 0.5%, with restrictions in corporate travel hampering efforts to boost yield in premium cabins and offsetting a slight increase in yield in the economy class, Cathay Pacific finance director Martin Murray said in an analysts’ briefing.
Passenger traffic, measured in revenue passenger kilometre (RPK), rose by 2.3% to 103.8 billion whereas passenger capacity, measured in available seat kilometre (ASK), rose by 2.6% to 129.6 billion from 126.3 billion a year earlier, thereby leading to a 0.3% decline in passenger load factor to 80.1% in 2012 from 80.4% the prior year.
Cathay Pacific continued to invest heavily in improving its passenger products, rolling out its New Business Class, Premium Economy Class and New Long-haul Economy Class unabatedly, with 48 long-haul aircraft being fitted with the premium economy class at the end of 2012, before being featured on 86 aircraft by the end of 2013. The New Long-haul Economy Class, which features significantly thickened cushioning, a small storage space beneath the personal television screen, improved reclining and a touchscreen for its award-winning StudioCX audio/video on demand (AVOD) in-flight entertainment system (IFE), will be available on all long-haul 777-300ERs and A330-300s by the end of 2013.
It also launched the New Regional Business Class in January this year, which will be featured on all regional 777-200s, 777-300s and A330-300s by the end of 2014, as well as reopening the refurbished first class lounge in February 2013, The Wing business class lounge in January 2012 and a brand new first and business class lounge in Paris in August 2012.
Meanwhile, fuel remained the single biggest cost, increasing 4.1% to HK$40.47 billion from HK$38.88 billion a year earlier net of fuel hedging gain and accounting for 41.1% of the Cathay Pacific Group’s total cost last year. As a result, the airline took advantage of a short-lived plunge in Brent fuel price in May and June last year to engage in more fuel-hedging activities, and is now approximately 30% hedged for 2013 at a Brent oil price of US$105 per barrel, 20% hedged for 2014 at US$95 per barrel and 11% hedged for 2015 at roughly the same level.
While fuel cost indeed soared in 2012, Cathay Pacific made a remarkable achievement by being able to produce a 0.7% decrease in total fuel consumption despite the 2.6% growth in passenger capacity in available seat kilometre (ASK), which symbolised its swapping of 747-400 to 777-300ER, which is 22% more fuel efficient per payload tonne than the ageing jumbo jet, on European routes and its fleet renewal programme that saw 19 new aircraft being taken deliveries of in 2012, including 4 Airbus A320s, 6 Airbus A330-300s, 5 Boeing 777-300ERs and 4 747-8F freighters, are working and producing significant benefits.
Maintenance cost, on the other hand, decreased by HK$307 million owing to fewer expensive Rolls-Royce RB211-524H2-T engine shop visits and D-checks as the retirements of 747-400s were carefully timed to avoid these outlays. Though Cathay Pacific said there is little further room for maintenance cost to decline dramatically, as the rest of the fleet still needs to be maintained, notwithstanding the withdrawal of 6 747-400s this year.
“And on the maintenance side, a lot of the shop visits for even the 747s that are coming out this year were planned. The visits would have been done in 2012 so we’re not expecting from the 2012 numbers a significant drop in our maintenance costs, any further drop. The new aircraft still all need to be maintained and things so there’s not going to be a significant reduction in maintenance going forward. The timing of it very much depends on HAECO [Hong Kong Aircraft Engineering Company] etc, so it can vary,” Cathay Pacific finance director Martin Murray cautioned.
Nevertheless its unit cost, measured in cost per available tonnage kilometre (CATK) soared by 5.5% from HK$3.45 in 2011 to HK$3.64 in 2012, primarily owing to the 2.6% growth in passenger capacity which led to a HK$757 million increase in in-flight service cost, an average of 5% salaries increase in 2012. Additionally, this was compounded adversely by withdrawing 4 747-400 BCFs (Boeing Converted Freighters) last year alone, which pushed up the share of passenger costs onto the cargo operation.
“But now that you’re cutting, taking freighters out, the cost per freighter compared to passenger is about half so in terms of all the extras that you have on the passenger in terms of crew and meals, etc. So with the cost per ATK we’re going to have to think how we’ll work that out because the freighters, the denominator in that equation is down over double digit, so it’s down 11%. So it’s much more – it’s a huge impact on the operating cost,” Cathay Pacific director of corporate development James Barrington said.
That said, with the impairment for scrapping and selling numerous 747-400 BCF (Boeing Converted Freighter) aircraft already taken on in 2012, Cathay Pacific has largely bitten the bullet for laying the groundwork of improving its profitability, albeit its depreciation expense is still going to be at a heightened level as the 6 747-400s are withdrawn.
“No, we’re not expecting any further impairment in 2013,” Cathay Pacific finance director Martin Murray commented.

Regional focus & the rising dragon
As Cathay Pacific works to deploy the right aircraft on the right route in its long-haul network, by shifting Boeing 777-300ERs to European routes and reducing Los Angeles, New York and Toronto routes in September last year which will be restored to 10 and 20 flights per week to Toronto and Los Angeles, respectively, there is a growing regional focus as burgeoning Asia/Pacific economies such as Vietnam, Indonesia, Myanmar and the rising dragon – China, and their rising disposable incomes enable strong intra-region air traffic growth.
For instance, Cathay Pacific increased frequencies to Singapore, Ho Chi Minh City, Bangkok, Penang, Kuala Lumpur, Singapore and Chennai, India from 4 per week to daily while Dragonair, its wholly-owned subsidiary, resumed services to Guilin, Xi’an and Taichung in Taiwan during the year in addition to launching flights to Haikou. Dragonair also launched flights to Clark near Manila and Jeju, South Korea in May, as well as Chiang Mai, Thailand in July, although the initial performance to Clark was unsatisfactory and only started to improve, the airline noted.
Cathay Pacific will also add 3 flights a week to Bangkok while switching 3 Hong Kong-Mumbai flights to non-stop ones, whose morning arrival enables onward connection and caters to the need of business travellers.
In the first 3 months of 2013, Dragonair has already launched flights to Zhengzhou and Wenzhou in China, Yangon in Myanmar and Da Nang in Vietnam, highlighting the importance of growing in Asia and China. Dragonair will also increase flights to Qingdao from 10 to 14 weekly, Airline Route reported; while its flights to Wuhan will increase to 10 per week from daily and its Kota Kinabalu flights will increase to daily, whereas its flights to Jeju and Chiang Mai will rise to 4 and 5 per week, respectively. The proportion of revenue made in North Asia, Southeast Asia, India and the Middle East of the total passenger revenue at Cathay Pacific Group rose by slightly more than 1% from 69.6% in 2011 to 70.7%, which Aspire Aviation believes will only grow further as Asia/Pacific economies outgrow their European and American counterparts.
This growing regional focus is also evidenced by the Cathay Pacific Group’s investment. Dragonair has rolled out a new business class based on its parent’s New Regional Business Class that features a 47-inch seat pitch and a 21-inch seat width, up from the existing product’s 45-inch and 21-inch, respectively. The largest recline angle has also been increased to 60 degrees from 38-55 degrees and features a 12.1-inch private television screen with a new audio/video on demand (AVOD) in-flight entertainment system (IFE) named StudioKA, in addition to providing power port and iPad/iPod/iPhone USB port at each individual seat. The airline will also adopt Cathay Pacific’s New Long-haul Economy Class seats as its new economy product.
Furthermore, Dragonair has just rolled out a new customer-facing staff uniform, including flight attendants’, which updates its previous design that has been in use for 13 years.
“As one of the world’s leading regional airlines, we constantly look for ways to enhance our products and services, and to expand our network and increase the choice we offer to our customers. We also invest a great deal of effort in strengthening our brand and boosting our corporate image,” Dragonair chief executive Patrick Yeung said.
Most importantly, besides its Air China Cargo (ACC) joint venture (JV), Aspire Aviation thinks the fullest potential of its strategic tie-up with Air China has yet to be fully realised and further benefits could realistically be reaped through a multi-pronged partnership.
For instance, the brand recognition of Cathay Pacific, while being very prominent in overseas market, remains substantially below that of Dragonair in China. A joint marketing campaign with Air China both overseas and in China could remedy Cathay Pacific’s relative marketing weakness in China and Air China’s one in overseas market.
Moreover, the rise of Middle Eastern carriers on the traditional Kangaroo route, which along with the commencement of the Qantas/Emirates partnership, has seen 25% of Australia-Europe traffic shifting to a Middle Eastern hub and Cathay Pacific said that competition has become stiffer on the Australia-London market, a revolutionary, let alone game-changing partnership with Air China could yield significant revenue synergies on Australia-Europe and Australia-China market.

Image Courtesy of Tian Xiaofei

This revolutionary partnership with Air China that Aspire Aviation is proposing specifically targets lucrative, price-inelastic but time sensitive business travellers and less towards price-elastic leisure travellers and covers two areas in one fell swoop.
As China is currently Australia’s top export partner owing to the mining boom of which the rising dragon is the world’s largest consumer of minerals, with which Australia trades 19.9% of its goods and services worthing A$121.1 billion in 2011, the latest government figure available showed. This spurred the trade link between the countries to grow significantly.
Cathay Pacific, located at the doorstep of China, has been feeding origin and destination (O&D) traffic from China, Asia, North Asia countries such as Japan, South Korea, North America and Europe to its Southwest Pacific – Australia and New Zealand flights very successfully and profitably. The airline operates 4-daily flights to Sydney and has multiple flights to major Australian ports such as Adelaide, Perth, Brisbane, Melbourne and Cairns using 3-class Airbus A330-300 featuring a disproportionately large New Business Class with 39 seats on each aircraft.
The Australia-China air travel market is booming, not least because of China Southern Airlines’ pursuit of its “Canton Route” strategy that aims to build its Guangzhou Baiyun Airport into a hub between Australia and Europe. China Southern Airlines registered a robust 24.6% growth in the number of passengers carried to 642,210 in 2012 from 515,370 in 2011, according to Aspire Aviation‘s compilation using Bureau of Infrastructure, Transportation and Regional Economics (BITRE) figures. China Eastern Airlines (CEA) also recorded a 26.6% growth in the number of passengers carried to 346,690 in 2012 from 273,905 in 2011.
With Cathay Pacific focusing on improving its yields with already very full Australia flights rather than on boosting the volume, the Hong Kong-based carrier has recorded roughly no growth at all over the past year in the number of passengers being carried at the 1.44 million level.
As many Australian companies conduct trades and business in China, such as ANZ Bank, Rio Tinto, BHP Billiton, law firm Clayton Utz, coal company HRL Limited, Atlas Iron Limited, many firms do have corporate offices in both Beijing, Shanghai and Hong Kong and hence many business travellers make trips between these destinations.
Therefore Aspire Aviation proposes a metal-neutral partnership which entails the first business trip sector flying from Sydney or Melbourne to Hong Kong on Cathay Pacific before flying a second sector between Hong Kong and Shanghai or Beijing on either Cathay Pacific, Dragonair or Air China where no particular airline is favoured over each other; the final sector involves travelling Shanghai-Sydney or Shanghai-Melbourne or Beijing-Sydney non-stop flights on Air China, or in the reverse direction. Any incremental profits generated from the partnership would be equally split between Cathay Pacific and Air China.
Currently Air China operates 4-weekly Shanghai Pudong-Sydney, 5-weekly Shanghai Pudong-Melbourne and daily Beijing-Sydney flights whereas Shanghai-based China Eastern Airlines (CEA) operates the former two routes on an once daily basis.
Similarly, the Cathay Pacific/Air China partnership has the potential to counter Qantas/Emirates or Virgin Australia/Eithad Airways partnerships, especially for business travellers, by delving into a wide-ranging European partnership. This would entail business travellers who need to visit Europe and Beijing, Shanghai or Hong Kong in one business trip travelling on Cathay Pacific from Sydney, Melbourne, Cairns, Brisbane, Adelaide to Hong Kong and onward Cathay Pacific flights to London Heathrow, Rome, Milan, Paris and Frankfurt. Next, business travellers could fly on Air China flights from Rome, Milan, London Heathrow, Paris and Frankfurt to Beijing or Paris, Milan and Frankfurt to Shanghai, before flying on the Shanghai Pudong-Sydney, Shanghai Pudong-Melbourne and Beijing-Sydney routes.
This partnership in the carriers’ combined European network would also be metal-neutral where no particular carrier’s metal is favoured over the other’s and split incremental profits between the two.
While sceptics may question whether such wide-ranging partnership is realistically and operationally feasible given the complexity involved such as the alignment of products between the two carriers, as well as whether this will decimate Cathay Pacific’s European and Australian flights, these concerns are arguably misplaced.
Air China’s 5.65% increase in its number of passengers carried to 297,954 in 2012 from 282,025 in 2011 was below its peers and this partnership, both the Australia-Europe and Australia-China ones, will help bolster growth of the Chinese flag carrier on its Australian operation.
For Cathay Pacific, any business travellers needing to visit multiple ports in a single business trip stopping over in Hong Kong and Beijing/Shanghai from Australia would not have travelled on the oneworld member on the Europe-China and China-Australia sectors anyway and this partnership offers unrivalled convenience for passengers for which Cathay Pacific, along with Air China, can charge a revenue premium where no other airline partnership could offer.
Further, Cathay Pacific’s significantly more superior service and in-flight products and unparalleled offer of flight frequencies, coupled with a venerable Marco Polo Club frequent flyer programme (FFP), mean Cathay Pacific will still be the preferred airline for many business travellers. In addition, given the astounding 20%+ growth rate the Australia-China air travel market is witnessing, this partnership offers a clear path for Cathay Pacific to have a profitable and pivotal share of this growth.
As a result, Cathay Pacific may not have to increase its capacity on Australian, Chinese and European routes at all. Rather, this game-changing partnership specifically targeting business travellers, could be utilised as a means to further improve yields by achieving a better traffic mix where only premium travellers, or high-yield economy passengers on business travel, demand such premium travel products while it is much less likely to see leisure or price-elastic travellers engaging in this type of air travel behaviour.

Image Courtesy of Dragonair

Yet before such a wide-ranging and revolutionary partnership takes place, Cathay Pacific should strengthen its Australian operation by forging a codeshare partnership with Virgin Australia. In doing so, this would increase the access of the Cathay Pacific network to 18 secondary Australian destinations such as Townsville from Cairns, Mount Isa, Emerald, Gladstone, Rockhampton, Bundaberg, Moranbah, Hamilton Island from Brisbane, Sunshine Coast, Gold Coast, Ballina, Coffs Harbour, Port Macquarie, Canberra, Albury, Hobart, Launceston and Ayers Rock from Sydney while increasing the feed on its Hong Kong-Australia flights.
This would make much more commercial sense in the interim, which is also much less complex to achieve and easier to obtain the regulatory approval from the Australian Competition and Consumer Commission (ACCC) since the codeshare partnership is highly unlikely to lessen its competition with Virgin Atlantic on the Hong Kong-Sydney route (“Qantas, Virgin Australia face new industry normal“, 6th Mar, 13). For Virgin Australia, while a partnership with Cathay Pacific means more competition for its sister airline Virgin Atlantic, it would provide instant access and shorter travel time to North Asia and China where Singapore Airlines (SIA) and SilkAir do not serve many destinations such as Haikou, Sanya, Guilin, Hangzhou, Xi’an, Nanjing, Ningbo, Fuzhou and Qingdao in China, Busan, Taichung, Kaohsiung while having considerably longer flight times to Seoul, Tokyo Narita and Haneda and Beijing via Singapore, etc.
Though Cathay Pacific and Air China should fix its loss-making Air China Cargo (ACC) venture first, which made a HK$600 million operating loss in 2012, albeit its aggressive expansion that saw it launch Shanghai-Chennai-Chongqing-Shanghai, Shanghai-Chengdu-Amsterdam, Shanghai-Chongqing-Amsterdam and Zengzhou-Shanghai-Chicago cargo routes in 2012 and Shanghai-Zhengzhou-Amsterdam and Shanghai-Chongqing-Frankfurt cargo routes in 2013.
In the meantime, the trade-in deal with Boeing that will eventually see Air China Cargo (ACC) selling 7 Boeing 747-400 BCFs (Boeing Converted Freighters) and replacing them with 8 fuel-efficient 777F freighters and Air China ordering 2 additional 747-8I Intercontinentals, 1 777-300ER and 20 737-800s, is going to enable the Shanghai-based carrier to temporarily reduce capacity from 11 aircraft to 7 examples as Boeing will take back the -400 BCFs faster than it delivers the 777F. By the end of 2013, Air China Cargo’s fleet will consist of 3 production 747-400Fs, 3 747-400 BCFs and 1 777F while Boeing will take back 4 -400 BCFs in March, May, July and October this year.
“They are in a much better position as of March 1 with this deal. They have 11 old aircraft of which they are selling 7 and getting 8 new efficient ones, the timing of which means they’ll be able to significantly reduce their capacity from 11 to 7 this year and then slowly build it up again, so again with a fuel-efficient fleet. So we’re now very excited about the re-fleeting that this deal has managed to bring to our joint venture,” Cathay Pacific finance director Martin Murray commented.
With reduced capacity and an ultimate dramatically more fuel efficient fleet, Cathay Pacific is looking beyond present challenges for Air China Cargo and remains confident in its long-term growth and profit potential.
“So the rationalisation of cargo capacity plus the introduction of more efficient cargo capacity, I think bearing in mind all the BCFs, 4 of the BCFs will be gone and that we’ll be left with 3 production freighters, 3 BCFs and 1 777, will certainly massively increase, A.) the matching of supply and demand, and B.) the beginning of the efficiency. The introduction of the 777s really only comes into play next year so the first 777 comes in December this year. But, as I say, don’t forget the rest of Air China Cargo has a revenue stream which is dependent on the bellies of the – the belly sales of Air China itself,” Cathay Pacific director of corporate development James Barrington asserted.

Image Courtesy of Cathay Pacific

Flexibility means ability to respond to changes swiftly
The March 1st trade-in deal with Boeing, under which Cathay Pacific cancelled its orders for 8 777F freighters, ordered 3 additional 747-8F freighter due to be delivered later this year and took the options on 5 Boeing 777F freighters, while selling 4 parked 747-400 BCFs (Boeing Converted Freighters) back to the Chicago-based airframer, has added flexibility to its cargo operation, where cargo capacity, measured in available tonnage kilometre (ATK) is anticipated to grow by 2.6% in 2013.

As Cathay Pacific heads into the second-quarter, airfreight demand is still weak, with the number of tonnes being carried soaring 14.7% year-over-year in January to 132.8 million tonnes before plunging by 12% to 103.8 million tonnes in February due to factory closures for the Chinese New Year, although there is a silver lining on the corner.

Business confidence index, such as the JP Morgan Markit index, has been rising consistently since the beginning of the year, which is a major factor underpinning Geneva-based industry body International Air Transport Association’s (IATA) upgrade of the industry’s 2013 net profits to US$10.6 billion from the previous projection of US$8.4 billion, which also boosted its freight traffic growth forecast to 2.7% from 1.4%. IATA also said yesterday airfreight volume grew by 2% year-over-year in February after stripping out seasonal factors, as global freight traffic and Asia freight traffic were down 6.2% and 14.7% year-over-year, respectively, owing to factory closures during the Chinese New Year.

Yet should a much hoped-for strong recovery in the cargo market materialise after countless false dawns in the past 2 years or so, Cathay Pacific stands to gain the most from a significant rebound.

“I think firstly we think that the airfreight market is a good market to be in. We think if you’re setting up an air freight business you’d want to be either in Hong Kong first, secondly in Shanghai. We’re 100% of Hong Kong. We’re 49% of Shanghai. We think that’s a good strategy. What I think we think we’ve done is we’ve slightly right-sized our business, inasmuch as we probably had over-invested and got our freighter business a little bit too big. But we don’t – that doesn’t suddenly mean we’re thinking of getting out of the freighter business. I think what we’ve learned is that we want to build more flex into it so that we have options to grow in line with the market,” Cathay Pacific director of corporate development James Barrington said.

And the HK$5.9 billion Cathay Pacific cargo terminal, which started operations in February 2013 with high-valued goods such as diamond and mail in stage one, where in second stage it will take transshipment and import before being fully operational in September and able to handle other airlines’ cargoes starting from 2014, will be a state-of-the-art facility handling 2.6 million tonnes of cargo annually and employing more than 1,800 employees.

While the concurrent handling of Cathay Pacific’s cargo at its in-house terminal and HACTL will incur a one-off cost of HK$0.5 billion, the efficiency and extra revenues it will bring, such as slashing cargo handling time from 8 hours to 3 hours, more than outweighed its costs.

Importantly, as the airline receives more Boeing 777-300ERs this year, it increasingly has the flexibility to choose from a range of options to respond to cargo market volatility swiftly, either by utilising belly cargo space on air cargo markets that see dwindling airfreight demand and the ability to add dedicated freighter services should European cargo demand pick up. The 777-300ER has a revenue cargo volume of 5,200ft³ from a total cargo volume of 7,120ft³, a significant increase compared to the venerable 747-400 it is replacing while burning 22% less fuel per payload tonne.

“You’re absolutely right that the amount of belly space to Europe where, A.) there’s a huge amount of belly space which is available and saleable versus North America, where there’s less belly space and, B.) the payload restrictions means that with the number of – when you’ve got full passenger flights, there’s a lot less belly space available,” Cathay Pacific director of corporate development James Barrington conceded.

“Means that the freighter demand, the demand for freighters transpacific where we’re by far and away the biggest freighter operator now and the acquisition of 3 more 748s [747-8Fs] on top of the 10 we’ve already got will give us 13 of the biggest freighters available in the market, which we will plan to deploy to the USA because it’s a good market, is different from the thinking to Europe where we certainly do need to watch out for the incremental, the by-product belly space versus the dedicated freighter space,” Barrington explained.

Which brings us back to the flexibility of the passenger operation. With a backlog of 26 Airbus A350-1000s and an eventual strong fleet of 50 Boeing 777-300ERs, Cathay Pacific does not have to order any very large airplane (VLA) such as the Boeing 747-8I Intercontinental or Airbus A380, of which the former has a revenue cargo volume of 3,895ft³ from a total cargo volume of 6,345ft³, whereas the latter has a revenue cargo volume of only 2,995ft³ from a total cargo volume of 5,875ft³. While the VLAs may have the power to carry such a payload on transpacific routes, their lacks of revenue cargo volume render this capability useless and it can afford to wait for the 407-seat 777-9X which provides growth opportunities and balances frequency and capacity nicely but will not enter into service until mid-2019 (“Boeing 777X to spark mini-jumbo war“, 28th Mar, 13).

The airline will take delivery of 19 new aircraft this year, including 5 Boeing 747-8F freighters, 9 777-300ERs and 5 Airbus A330-300s, of which 4 A330-300s will go to the mainline Cathay unit and directly replace the 4 outgoing examples being returned to lessors. 5 more A330-300s and 7 more 777-300ERs will be delivered to the carrier in 2014. Cathay Pacific also agreed to lease 2 more new Airbus A321s for Dragonair which will be delivered in February and October 2014.

Meanwhile, 6 Boeing 747-400s passenger aircraft are going to be withdrawn and the 4 parked 747-400 BCFs (Boeing Converted Freighters) will leave the fleet, leaving 1 remaining operating example, which Aspire Aviation strongly urges Cathay Pacific to retire the lone example in light of its fuel inefficiency.

Simply put, with a backlog of 85 aircraft and a HK$21 billion of capital expenditure, of which HK$18 billion is earmarked for aircraft, HK$1.5 billion for the cargo terminal and the rest for information technology (IT), the airline could wait for the 323-seat 787-10X that will be ideal for replacing the A330-300s while burning 25% less fuel and better payload/range performance with a 7,000-7,100nm (nautical miles) range while strengthening its balance sheet, which has seen the net debt-to-equity ratio increasing 0.19 times from 43% to 62% and a 49% higher net borrowing at HK$35.4 billion from HK$23.7 billion to fund growth.

A noteworthy point is, Aspire Aviation believes the profit potential of the premium economy class, whose fullest potential is yet to be seen as it is still being rolled out across its fleet. A premium economy class is designed to be a long-haul product that extracts consumer surplus (total use value – total exchange value, or TUV-TEV, the amount of a good one is willing to forego in order to obtain all of the amount of another good) from those who are willing and able to pay twice the economy class fare, in exchange for better seats, services and in-flight catering, yet are unprepared to pay for a full business class fare whose fare is triple or quadruple the economy class fare.

Provided that a premium economy class be structured properly, it should minimise the trade-down from business class to economy class while maximise the upgrade from economy class by utilising a powerful revenue management system (RMS) with price differentiation. Cathay Pacific seems to be doing just that with the premium economy proving to be very successful, popular and beating expectations.
“Firstly I think we would say that our premium economy as a product has been a winner. Then premium economy if you look at it as a separate business has been a winner in some places, but has taken time to pick up in others. So in markets where we were late into the market, in some ways surprisingly where premium economy had already been established in the market, specifically London, premium economy has been an outright winner. And by an outright winner I mean the amount of extra revenue we gain versus the amount of seats taken out has been heavily in favour of premium economy,” Cathay Pacific director of corporate development James Barrington declared.
“The premium economy is growing fast in North America where there are much less premium economy operators. So it started slowly and picked up fast and as you would imagine on flights to places like New York, where a 16, 17-hour flight in economy versus premium economy would incentivise people to pay a little bit more, that is starting to be a real winner. The place where the jury is still out is to Australia where there is an established market with Qantas. On the other hand it’s only between – depending whether you’re Perth or Sydney or Melbourne, only a 6.5 to 8-hour flight, but it’s much more price sensitive. And premium economy the jury is still out there. It’s a winner for the connecting traffic to Europe and it’s taking time to pick up between Hong Kong and Australia.
“So that’s where we are, but I think we consciously chose not to make it a product that was region by region, to make it system-wide in the knowledge that it would be from a customer proposition point of view very hard to sell if it was on some routes and not others. So I think it’s, I would say it’s exceeded expectations,” Barrington concluded.
In conclusion, with many more opportunities awaiting the carrier on the horizon, including a potential game-changing partnership with Air China in the China-Australia and Europe-Australia markets, a potential codeshare with Virgin Australia that makes every business sense and expands the access of its network in one of its most important markets, Cathay Pacific is building flexibility which few of its rivals have into its system, with passenger capacity, measured in available seat kilometre (ASK) expected to shrink 1.5% this year and cargo capacity, measured in available tonnage kilometre (ATK), expected to grow by 2.6% this year.
With a substantially larger fuel efficient Boeing 777-300ER fleet, the fuel consumption of the Cathay Pacific Group should further decline significantly, while its heavy product investments in premium economy class and new regional business class, Dragonair’s new business and economy classes, shall give passengers “a reason to fly Cathay Pacific”. This flexibility to respond to market changes swiftly, will bode well even as it faces low-cost competition where low-cost carriers (LCCs) have accounted for 5% of capacity at Hong Kong International Airport and Spring Airlines and Jetstar Hong Kong expanding at its home turf.
While low-cost carriers (LCCs) are undeniably likely to produce traffic growth in Hong Kong, Cathay Pacific’s profitability may not be significantly undermined as a plethora of such carriers, Hong Kong Express, Jetstar Hong Kong, Spring Airlines and to a lesser extent Hong Kong Airlines, engages in cut-throat price competition, which could enable Cathay Pacific to prevail in the high-yield sector while competing effectively using heavy discounts such as its “fanfares” without the complexity and risk involved in running an in-house low-cost carrier at a slot-restricted, high-cost premium hub where premium seats account for 11.1% of all seats in Hong Kong being versus a global average of 4.6%. This formed a stark contrast to low-cost carriers’ capacity share in Asia/Pacific which grew from 1.1% in 2001 to 24% in 2012, according to the Centre for Aviation (CAPA).
All told, flexibility is the new name of the game.

 

http://www.aspireaviation.com/2013/04/03/cathay-pacific-builds-flexibility-while-embracing-opportunities/ 

Plunging Cathay profits: What went wrong?

With Cathay Pacific Airways, one of the world’s leading airlines, announcing an 83% plunge in annual profit, one must begin to wonder what went wrong.
Almost five years since the onset of the global economic crisis, the fortunes of the airlines can be best alluded to the unpredictable movements of the yo-yo. It was only at the end of last year that the International Air Transport Association (IATA) could with some confidence finally revise its profit forecasts upwards instead of downwards: from US$4.1 billion to US$6.1 billion for 2012, and from US$7.5 billion to US$8.4 billion for the current year.
Could Cathay be an exception to the rule? For all the hype about product improvement all round including the new Premium Economy class and a new regional business class, the Hong Kong-based airline posted a net profit of HK$916 million (US$118 million), down from HK$5.5 billion a year ago.
Cathay has attributed its poorer performance to a number of factors.
First, higher fuel costs. Cathay reported that throughout much of 2012, fuel prices were at sustained high levels and the Cathay Group’s fuel costs increased by 0.8% compared to 2011. What’s new anyway, when this should similarly affect all airlines across the industry? Yet, in spite of that, some airlines such as Japan Airlines (JAL) are reporting improved performances. The volatility of the fuel price has been an easy target to blame no matter what degree its impact is on performance. It may not apply to Cathay, but in fact the average jet fuel price had been falling from September to December 2012 before rising again.
What is more of a concern is the reason for the decline in the fuel price, as explained by IATA chief executive and director general Tony Tyler: “The reduction in fuel prices is a great thing for the airline industry but they are coming down because of concerns over world economic activity. If the world enters an economic slump, that will be even worse for the industry than the higher fuel price was on its own.”
Second, a drop in demand for corporate travel. This is a more cogent argument as the industry continues to be hard hit by the economic stagnation or slow recovery if at all it is happening, particularly in Europe and the United States. Cathay, which banks on its premium product, is naturally affected more than other airlines that thrive on the low-end traffic.
In a statement issued by the airline, Cathay Pacific chairman Christopher Pratt said: “Premium class yields were affected by travel restrictions imposed by corporations.
Again, this is not a new lesson gleaned only yesterday but widely recognised during the global financial crisis which all but favours cheaper alternatives. Cathay is not alone in this predicament; rivals such as Singapore Airlines (SIA) and Qantas face the same threat.

Image Courtesy of Cathay Pacific

In a counter-move, Cathay introduced the premium economy class to retain downgraders and attract those who are prepared to pay a little more but not that much more to upgrade to enjoy the frills of an in-between class. It is tempting to conclude that this strategy – perhaps to the relief of SIA which has until now snubbed the idea – is not working judging by the results posted by Cathay, but its full impact is yet to be realised. If the global economy continues to weigh down, it may well prove to be Cathay’s lifeline.
That brings us to the third point as to what went wrong then. Cathay attributes it to increased competition. Pratt said: “An increasingly competitive environment added to the difficulties.” That may be true, but when an airline such as Cathay which is among the world’s most successful carriers resigns to that, it comes across as being somewhat less plausible and lame, and smacks of something amiss.
Competition is a given in this industry. So what has Cathay done or is doing to check the competition? To be fair, it has done much more than most airlines. It has rolled out new product improvements and improved its in-flight service. The airline is ranked consistently among the industry’s favourites, particularly its business class, by air travellers. By all account, its strategy should place it in the forefront of the competition, so what is missing that it should ascribe its falling performance to increased competition? If there’s such a thing as a success formula to suit different environments, has it got the equation not quite right?
Fourth, the weak cargo demand in major markets, particularly from Asia to Europe. No doubt this has affected Cathay’s overall profitability. If it is any consolation, close rival SIA is also similarly afflicted. There are no clear signs that the situation will improve substantially in the near term. In light of the weaker outlook, Cathay has cancelled an order for eight Boeing 777-200F freighters but instead placed an order for three Boeing 747-8F freighters which will carry 16% more revenue-producing freight than predecessor Boeing 747-400. Cathay Pacific chief executive John Slosar said the larger airplane would result in fuel savings for the revamped fleet.
Fifth, high operating costs, especially of the long haul routes that according to Pratt were dominated by “older, less fuel-efficient Boeing 747-400 and Airbus A340-300 aircraft”. Last year, the company announced plans to accelerate retirement of the less fuel-efficient 747-400 as it continues with the fleet upgrading programme for both airlines in its fold – Cathay and Dragonair. In January, Cathay ordered 10 Airbus A350-1000 and converted 16 of its existing order for A350-900 to the larger A350-1000. These 350-seaters will ply high-density routes which include non-stop flights to Europe and North America.
The future should look rosier. Slosar said: “This is an important strategic development for Cathay Pacific. The A350-1000 aircraft will bring us world-beating fuel efficiency.”
Last, incommensurate cost-cutting measures that include offering unpaid leave to crew and reducing capacity on some routes which unfortunately, according to Pratt, “were not enough to offset in full the effects of high fuel prices and weak revenues.”
And we have come one full circle. So what makes one airline more likely to succeed than another when almost every one of them alike ascribes its failed performance to the same factors?
Pratt said: “Our core strengths remain the same ever: a superb team, a strong international network, exceptional standards of customer service, a strong relationship with Air China and our position in Hong Kong. These will help to ensure the success of the Cathay Pacific Group in the long term.”
Sounds familiar, you may say, except for specific references applicable only to Cathay.



http://www.aspireaviation.com/2013/03/19/plunging-cathay-profits-what-went-wrong/ 

Is the premium economy trend finally catching on?

Is the premium economy trend finally catching on as Air Canada becomes the latest airline to announce its introduction as “a new class of travel”, starting with the Montreal-Paris non-stop route in July 2013. New, perhaps for the Canadian carrier, but not quite globally.
Eva Air of Taiwan was one of the first carriers to introduce the premium economy class, when it launched its operations in 1991. There was a limited number of seats, that boasted more legroom. Since then, a number of airlines have dabbled with the idea and more of them started to introduce an expanded “middle” class. This became almost a preogative during the global financial ciriss that took a toll on business and first class travel.
Many major airlines have started pushing the trend to catch downgraders and entice upgraders who are not quite ready to splash on frills. They include British Airways, Virgin Atlantic, Air France, United Airlines, American Airlines, Delta Air Lines, Cathay Pacific Airways, Japan Airlines, All Nippon Airways, Qantas and Air New Zealand.
There are noticeable exceptions. Singapore Airlines (SIA) introduced the class dubbed executive economy on non-stop flights between Singapore and Los Angeles but did away with it when it converted the flights to an all-business class configuration. The class was popular, but the prospect of higher yield in business ruled in its disfavour. After all, in good times SIA derived at least 40% of its revenue from its premium market. Since then the airline has insisted that it has no plans to revisit the concept anywhere in its network. Some analysts think it may be a mistake for SIA to not go with the flow as it continues to bank upon complete recovery of the business class traffic.

Image Courtesy of Chris Lofting

Noticeable too is the absence of premium economy on Emirates Airline, which may have prided itself as providing an economy class that is as good as any other airline’s premium economy. In the same way, one may ask: Do you fly legacy economy or budget business class?
Indeed, it is not what makes the premium economy better than the normal economy but by how much. The early model was not that much visibly different, and that probably explained why it was slow in catching on. Today, airlines such as Cathay Pacific and Qantas are putting much more into this in-between class to give it an exclusivity of its own. It used to sell mainly on wider seats with more recline and legroom, but the perks have been expanded to include a string of priorities at check-in, boarding and baggage delivery on arrival, more generous checked baggage allowances, an apparently more refined meal service on board, a wider screen for in-flight entertainment (IFE) system, brand-name amenity kits and higher frequent flyer mileage points.
However, as the name suggests, premium economy is more an economy than a business class product and, in spite of the effort of Cathay Pacific and the like, it still lacks a character of its own. This could explain the lukewarm attitude towards the product of airlines such as SIA and Emirates, which  probably prefer to focus their efforts on marketing a superior economy and at the same time be not detracted from the truly premium product of the upper classes. For the premium economy to sell, downgraders from business and upgraders from economy must be adequately tempted with visible advantages to make the trade-off vis-à-vis the cost, whether it is saving on the otherwise higher fare or paying the difference additionally for the added frills.
“We have a well-established policy that our goal is to segment the market. We want to sell the product we have onboard to passengers who are willing to pay for that. [Cathay will not] use a premium economy cabin as some overstore cabin rather than a truly different product,” Cathay Pacific head of product Alex McGowan said (“Cathay Pacific’s premium economy to improve profitability“, 24th Aug, 11).
But it may all be a case of nomenclature. The early days of the business class was but a marginal upgrade of the economy status. Swissair, the predecessor of Swiss International, swore it would not bow to the fad, believing there was no room for a three-class configuration. But it did in the end. Will today’s premium economy succeed in the same way? It depends on the strength of its exclusivity, but it is unlikely to evovle to the same degree as the business class which, for some airlines, has in fact replaced the first class product.
Quite on the contrary, carriers that susbcribe to the premium economy concept may be compelled to do even more for their business class to maintain an enviable difference.



http://www.aspireaviation.com/2013/03/12/is-the-premium-economy-trend-finally-catching-on/

Boeing 777X to spark mini-jumbo war

• GE9X to feature 16 blades, versus 18 on GEnx engines
• Folding wingtip to be operated hydraulically
• Folding wingtip to improve lift-to-drag by 12%
• Folding wingtip 800lbs weight penalty, against 777-200′s 3,200lbs
• 777X to remain ICAO Code E aircraft on aprons
• 787-styled tail fin, elimination of overwing exit confirmed
• Elimination of overwing exit saves 1,000lbs of weight
• 787-styled larger dimmable windows, lower cabin altitude being studied
• 777-8X & -9X range boosted to around 8,100nm
• 777-8X to compete with A350-1000, banks on commonality advantages

Now that the development of the 787-10X has slowed owing to the worldwide grounding resulting from a fire onboard a parked Japan Airlines (JAL) 787′s lithium-ion battery in Boston Logan International Airport on January 7 and another smouldering one on an All Nippon Airways (ANA) flight on 16 January, the proposed highly fuel efficient A330-300 replacement may now be eclipsed by its bigger siblings, a major revamp to Boeing’s hot-selling long-haul twin-engine 777 family. As the upgraded big twin, dubbed the 777X, edges closer to obtaining authority to offer (ATO) from the Chicago-based plane-maker’s board of directors as early as its next meeting in April according to an Aviation Week report, a mini-jumbo war looms over the horizon with its arch-rival Toulouse, France-based Airbus offering its 350-seat A350-1000 aircraft.
“I think they are ready to go on that. I am hoping that within the next two or three weeks, we will engage with Boeing almost on a formal basis,” Emirates president Tim Clark was quoted as saying.
As the beleaguered 787 Dreamliner programme is currently squarely focused on returning the 50 delivered examples to commercial service, of which the game-changing aircraft’s three-layered permanent battery fix has enabled line number (LN) 83, an example destined for LOT Polish Airlines, to return to test flight this Monday which is due to perform a US Federal Aviation Administration (FAA) certification flight later this week, the progress being shown on the 777X programme is in stark contrast to the relatively slow one at the 787-10X development effort.
For instance, Boeing has appointed Bob Feldmann as vice president (VP) and general manager (GM) of the 777X on 9th March, who is succeeded by Keith Leverkuhn on the re-engined 737 MAX narrowbody aircraft programme as vice president (VP) and general manager (GM), while General Electric’s (GE) proposed GE9X engine offering has been selected to be the sole-source engine supplier to the aircraft, extending an exclusivity contract the world’s largest engine manufacturer has had with Boeing since 1999.
“On the 777X, things are accelerating. The configuration is looking good. The big question is affordability and the business case, making it affordable for us to build and the airlines to buy,” Boeing Commercial Airplanes (BCA) vice president (VP) of marketing Randy Tinseth said at the International Society of Transport Aircraft Trading (ISTAT) conference in mid-March.

Image Courtesy of Air New Zealand

777X looks to adopt more 787 features
A selection of the General Electric GE9X as the sole-source engine supplier of the 777X is a long-time coming, after Pratt & Whitney (P&W) pulled out from the competition this January. Pratt & Whitney (P&W) offered a scaled-up 100,000lbs version of its geared turbofan (GTF) engine featuring a groundbreaking fan-drive gear consisting of 7 moving parts with journal bearings that allows the engine fan to rotate at a speed 3 times slower than the low-pressure turbine (LPT), thus maximising propulsive efficiency.
For Rolls-Royce, while being dealt with a blow on the engine decision, the loss is arguably limited as the competitive landscape in the widebody engine market has in fact changed little with its exclusivity on the A350-1000 over its Rolls-Royce Trent XWB-97 engine and its virtual monopolistic position on the smaller -800 and -900 variants with Trent XWB-75 and -79 for the smallest shrunk variant and Trent XWB-84 for the baseline -900 variant.
“This decision simply maintains the existing situation in the widebody market in which we are the market leader with over 50% share. We are confident that the proposal we put forward was extremely competitive,” a Rolls-Royce spokesman asserted to Reuters.
Rolls-Royce offered a 337cm (132.5in) RB3025 engine that will slash the engine specific fuel consumption (SFC) by around 10% against the GE90-115B engine on the existing Boeing 777-300ER and provide 99,500lbs of thrust with a bypass ratio of 12:1 and an overall pressure ratio (OPR) of 60:1; while the GE9X will have a fan diameter of 131.5in and a third-generation twin-annual pre-mixing swirler (TAPS III) which will see the high pressure compressor ratio boosted from 23:1 to 27:1 and the overall pressure ratio to 61:1 from 42:1 and feature a 10.3:1 bypass ratio. The GE9X will have 16 blades compared to GEnx’s 18 blades while featuring improved fibre and resin system, which includes the use of ceramic matrix composite (CMC). These will make the GE9X having a 10% lower engine specific fuel consumption (SFC) than the GE90-115B engine.
The new core of the slightly more than 100,000lbs GE9X powering the 407-seat 777-9X will have its first test run as early as 2014 and a final design freeze known as “Toll Gate 6″ will take place in 2015 and its first engine to test (FETT) in 2016, flight tests aboard the engine-maker’s Boeing 747-400 flying testbed in 2017 and engine certification in May 2018, Aviation Week and flightglobal have reported.
In nailing down its engine choice and being very close to “Toll Gate 3″ authority to offer (ATO), Boeing has reached significant milestones in bringing the 777-9X to the market and upping the ante which is going to spark a new mini-jumbo war.
“This decision to work with GE going forward reflects the best match to the development programme, schedule and airplane performance. We are studying airplane improvements that will extend today’s 777 efficiencies and reliability for the next two decades or longer, and the engines are a significant part of that effort. Our focus is on providing the most competitive offering to our customers in the large twin aisle market,” Boeing 777X development vice president (VP) and general manager (GM) Bob Feldmann commented.
Meanwhile, the Boeing 777X looks to adopt more 787 features in ways more than one, starting from its signature supercritical carbon fibre reinforced polymer (CFRP) wings.
The 71.1m (233.4ft) “4th-generation” carbon fibre reinforced polymer (CFRP) wings are going to feature a folding wingtip on its outermost 11ft (3.35m) with a hydraulics actuator and a piano-type topside hinge. Two hinges will be located at where the front and rear wing spars meet the top wing cover and locking pins are going to be featured where the spars meet the lower wing cover. This design, Aspire Aviation‘s multiple sources at Boeing say, remains very similar to a “major scaled-up” version of the CFRP replacement wings for the Northrop Grumman A-6E Intruder fighter jet in the 1980s with “no moveable parts” and excludes the ailerons, although there appears to be an “alternate design” lately. The hydraulics mechanism of the folding wingtip, the sources insist, is “so simple” and “proven” that there is unlikely to be any implications on maintenance cost, while claiming the folding wingtip is of an “acceptance issue”, not a technological one. The folding wing will be certified in the “folded-up” position, with the deflection of ailerons and spoilers easily compensating the imbalance of lift should a folding wingtip ever fail in flight.
This folding wingtip, along with a 787-styled wing, is going to enable Boeing to achieve a 12% improvement in lift-to-drag (L/D) ratio with a minimal weight penalty at 800lbs (362.8kg), compared to the 3,200lbs (1.45 tonnes) weight penalty associated with the original folding wingtip design studied on the 777-200, while adding 30m² (322.9ft²) wing area added to the 777-300ER’s one of 436.8m² (“Boeing 777X & 787-10X unfazed by 787 battery woes“, 14th Feb, 13).
A noteworthy point is, while there have been suggestions that the 777X does not require a folding wingtip at all recently citing the preparations airports around the world have already made for International Civil Aviation Organisation (ICAO) Code F aircraft such as the Airbus A380 superjumbo and Boeing 747-8I Intercontinental, which includes airplanes with a wingspan between 65m (213.3ft) and 80m (262.5ft) whereas the ICAO Code E category to which today’s 777-300ER belongs includes those planes with wingspans between 52m (170.6ft) and 65m (213.3ft), the folding wingtip design is deemed as “central” to the 777X’s business case in Boeing’s view, Aspire Aviation‘s sources at the world’s largest aircraft manufacturer say.
Serving a large number of airports, including those smaller ones served by the 777-300ERs such as Seattle Tacoma International Airport, Glasgow and Newcastle in the United Kingdom, Dublin airport in Ireland is crucial to maintaining the appeal of the 777X and that while airports have widened taxiways and added A380-compatible gates such as Dubai International’s dedicated A380 terminal at Terminal 3 with 20 gates, the expected large number of 777X at airports such as Los Angeles International Airport’s Tom Bradley International Terminal and Hong Kong International Airport where there are 9 and 5 A380-compatible gates, respectively, will render the accommodation of numerous Code F 777X aircraft, rather than a Code E one, relatively difficult.
As it currently stands, the 777-9X and -8X will have the same wingspan as today’s 777-300ER and -200LR at 64.8m (212.7ft) and be categorised as Code E aircraft on the tarmac and taxiways while becoming a Code F aircraft once it is on the runway.
Besides the 787-styled wing, however, several 787 features being studied may ultimately find their ways onto the 777X subtly.
Among the likely features being sold to airlines’ 2 customer working groups, which feature Dubai-based Emirates Airline, International Airlines Group (IAG) subsidiary British Airways (BA) and Japan Airlines (JAL) and more, one to be held in June and another in October or November, are 787-styled displays in the cockpit featuring large liquid crystal display (LCD) panels and an electro-chromatic dimmable windows identical to those featured on the 787 Dreamliner.
Other features being borrowed from the 787 include larger windows and a lower cabin altitude, although these concepts appear to be at an earlier stage than the 787-styled cockpit displays and internal widening by a thinner cabin wall to accommodate a 10-abreast cabin configuration more comfortably.
“We think there’re ways to provide more space and a bigger cabin for the customer without changing the outside dimensions of the airplane. We’re looking for a more comfortable 10-abreast,” Boeing Commercial Airplanes (BCA) vice president (VP) in marketing Randy Tinseth said on the sidelines of the International Society of Transport Aircraft Trading (ISTAT) conference in March.
On the other hand, while the fuselage material choice remains wide open in selecting either the traditional aluminium or 3rd-generation aluminium-lithium for the 777X, Aspire Aviation believes choosing Alcoa’s 3rd-generation aluminium-lithium that will reduce weight by 12% and 6% reduction in skin friction is pivotal to providing a larger window size and lowering the cabin altitude despite the higher cost involved.
Crucially, 3rd-generation aluminium-lithium technology is a proven and mature one that is readily available today, such as Alcoa’s Al-Li 2060-T8E30 product has an around 16.7% higher specific strength than the Al 2524-T3 used on today’s 777 to around 175 MPa/(gm/cm³) from its predecessor’s 150 MPa/(gm/cm³), with a higher stretch formability. Moreover, choosing the aluminium-lithium for the 777X will require no change in production tooling but only a change in coating, a misconception disproved by Spirit AeroSystems’ 737 rear fuselage panel using the Al-Li 2060 material with existing production tooling.
Besides, an artist’s rendering of the 777-9X recently released by Boeing shows a 787-styled vertical stabiliser in addition to featuring 4 Type A doors, thereby confirming Aspire Aviation‘s previous report that eliminating the overwing exit will save 1,000lbs (453.6kg) while stretching the separation between the exit doors to a maximum of 60ft (“Boeing chooses largest wingspan for 777X“, 26th Jul, 12).

A350-1000 competition: Will the market move on?
These innovative features adopted from the 787 Dreamliner will, when combined, make the 76.48m long 407-seat 777-9X an unparalleled aircraft with an unbeatable seat-mile costs in the 350-400 seat segment, while burning 21% less fuel per seat and having a 16% lower cash operating cost (COC) than the 365-seat Boeing 777-300ER.

With a maximum take-off weight (MTOW) of 344,000kg, the 777-9X is going to create a new niche in the marketplace. It also symbolises Boeing’s belief that sustained growth in long-haul international traffic will lead to the market moving onto a new niche which is a notch above today’s 350-seat segment while a notch below the very large airplane (VLA) segment such as its 467-seat Boeing 747-8I Intercontinental.

This big bet could make or break the success of the 777-9X, which increasingly looks similar to a one-to-one replacement for the ageing global fuel guzzling 416-seat 747-400 fleet while offering growth opportunities for airlines by up-gauging modestly from the 777-300ER without compromising either flight frequency, a criterion underpinning premium airlines’ business model, nor the capability of carrying a large amount of underbelly revenue cargo.

The stakes are high – long-haul traffic is forecast to grow by 5.2% a year over the next 20 years, representing 7,950 twin-aisle airplanes at US$2.1 trillion that will be contested by both the Airbus A350 XWB (Extra Wide Body) aircraft family, the 787 and the 777X families.

In particular, the market which both of the A350-1000 and 777-300ER are in, is highly lucrative, with the 777-300ER variant accounting for 152 of 202 orders in the best-ever year for the 777 programme in 2011, when Emirates announced an additional order for 50 777-300ERs. In 2012, the 777-300ER accounted for 73 out of 75 sales of the long-haul big-twin and it has won an order for 10 777-300ERs from Air Lease Corporation (ALC) and 1 from American Airlines (AA) this year. Since its launch in February 2000 as yet another “777X” back then, the 777-300ER has racked up 687 orders with 303 unfilled orders at press time.

In response, Airbus redesigned its 350-seat A350-1000 with a larger engine core producing 97,000lbs of thrust instead of the 93,000lbs originally envisaged, a larger wing and a higher maximum take-off weight (MTOW) from 298 tonnes to 308 tonnes which saw its range being increased to 8,400nm (nautical miles) while boasting a 25% fuel saving over the 365-seat 777-300ER with 53% of its airframe being carbon fibre reinforced polymer (CFRP). Entry into service (EIS), however, was postponed to 2017 from 2015 as a result.

The European Aeronautic, Defence & Space Co. (EADS) wholly-owned subsidiary is also mulling a second final assembly line (FAL) to boost the A350-1000 output specifically in order to satisfy anticipated customer demand, declaring that it now expects to garner 70-80 A350-1000 sales per year versus the 40-50 previously assumed. The A350-1000 has won significant customer endorsements recently, first from Hong Kong-based Cathay Pacific Airways ordering 24 A350-1000s, then Qatar Airways switching 20 A350-800 orders for 3 additional A350-900s and 17 additional A350-1000s of which the latter has boosted its order total for the largest A350 XWB variant to 37, and Air Lease Corporation (ALC) ordering 5 A350-1000s this February.

“I would like to believe that sometime this year we’ll be able to make a decision to do that,” Airbus chief operating officer (COO) customers John Leahy said in a Bloomberg interview.

Interestingly, initially the business case of the 353-seat 777-8X is thought to be considerably less robust than that of the -9X, with the lower-end segment below the 7,100nm range being cannibalised and undermined by the proposed 323-seat 787-10X aircraft (“Launch of Boeing 787-10X has implications on 777X“, 22nd Oct, 12). However, Aspire Aviation understands that Boeing is now going to utilise the 777-8X to compete head-to-head with the A350-1000 while its 777-9X will reflect shifting market dynamics and create a new market in its own.

The 69.55m long 353-seat 777-8X is going to be powered by a derated around 90,000lbs General Electric GE9X engine and has a maximum take-off weight (MTOW) of 315,000kg, which will have an around 14-16% lower block fuel burn per seat absent the higher seat count on its bigger sibling that shaved 5% off the block fuel burn per seat measure alone.

Make no mistake, while the 777-8X will have a considerably heavier airframe and hence structural weight and that the Airbus A350-1000 is going to have the lowest block fuel burn per seat on 350-seaters, the 777-8X nonetheless has a higher maximum take-off weight (MTOW) at 315t against the A350-1000′s 308t providing more uplift and carrying more passengers and revenue cargoes despite its shorter range along with the 777-9X at 8,100nm (nautical miles), upped from 8,000nm recently, according to Aspire Aviation‘s multiple sources at the Chicago-based airframer.

Despite a higher block fuel burn per seat, one advantage the 777-8X holds over the A350-1000 is commonality among its family members, as the 777-8X shares the same carbon fibre reinforced polymer (CFRP) wing with the -9X of a wing area of 466.8m² compared to the 777-300ER’s 436.8m², whereas the A350-1000′s wing area is 4% larger than that of -800 and -900 at 460.7m² against the smaller variants’ 443m² through an extension of trailing edges and high-lift devices. In addition, Boeing contends that each A350 variant is now an individually optimised platform, which will lead to a lower commonality across the variants, especially after adopting a larger engine core notwithstanding the 80% commonality in line replaceable unit (LRU) between Rolls-Royce Trent XWB-97 and XWB-84, XWB-79 which will inevitably push up maintenance cost.

	A350-900	A350-1000	777-300ER	777-8X	777-9X
3-class pax no.	314	350	365	353	407
Range (nm)	8,100	8,400	7,825	8,100	8,100
MTOW (kg)	268,000	308,000	351,530	315,000	344,000
MLW (kg)	205,000	233,000	251,290	n/a	n/a
MZFW (kg)	192,000	220,000	237,683	n/a	n/a
MEW/MWE (kg)	115,700	n/a	n/a	n/a	n/a
OEW (kg)	n/a	n/a	167,829	n/a	n/a
Overall length (m)	66.89	73.88	73.9	69.55	76.48
Wingspan (m)	64.75	64.75	64.8	71.1	71.1
Diameter (m)	5.96	5.96	6.19	6.19	6.19
Cabin Width (m)	5.61	5.61	5.86	n/a	n/a
Engines	Rolls-Royce Trent XWB-84	Rolls-Royce Trent XWB-97	General Electric GE90-115B	General Electric GE9X	General Electric GE9X
Thrust (lbs)	84,000	97,000	115,300	~90,000	~100,000

Sources: Airbus, Boeing, Aspire Aviation estimates
With the Asia/Pacific region driving future growth, in which traffic, measured in terms of revenue passenger kilometres (RPKs), for the region is expected to grow by 6.4% annually, outpacing the expected fleet size growth of 5.5% per year, that implies the average number of seats per airplane is going to grow, according to Boeing’s latest 2012-2031 current market outlook (CMO) forecast.
This trend is already becoming more pronounced, with airlines worldwide reporting a 1% increase in the number of flights leading to a 3% increase in seats in March 2013 year-over-year, according to an OAG Facts report. Airbus also predicted in its global market forecast (GMF) 2012 that between 2012 and 2031 passenger traffic will grow by 150% from 5.1 trillion revenue passenger kilometres (RPKs) to 12.8 trillion RPKs whereas passenger aircraft fleet will only grow by 109% during the same period.
This will bode well for the business case of the 777-9X, which will build on the strong customer base the 777-300ER already has, and be particularly attractive for airlines seeking a direct 747-400 replacement and those who seek to tap into the growing markets of the Asia/Pacific and Latin America regions such as China, India, Indonesia and Brazil.
Customers are already clamouring for the 777-9X, with Dubai-based Emirates Airline operating 86 Boeing 777-300ERs as of end-January and has another 66 on backlog at press time. By the time the 777-9X enters into service in mid-2019, Emirates says it will have some 40 examples to be phased out.
“If you look at the total number, it is 175 that have got to go out. Boeing is looking at a long delivery stream of [777] replacements. But by the time it comes to market there will be 40 or 50 Emirates aircraft which will have been [ready for retirement], so they are obviously identifying that as an initial order,” Emirates president Tim Clark said in Reuters interview.
International Airlines Group (IAG) subsidiary British Airways (BA) is also enthusiastic about a potential 777-9X order, given its 12 Airbus A380s will not be sufficient to replace all of its ageing 54 fuel-guzzling Boeing 747-400 fleet, which would entail the having 777-9X replacing around 30 747-400s.
“Based on what I have seen, it is almost inevitable that it is an aircraft that we will have in our fleet at some stage. It looks like a perfect fit for some of what British Airways (BA) would require. We don’t have an immediate issue, but given the delivery timeframes, we are not looking to delay [the decision],” International Airlines Group (IAG) chief executive Willie Walsh told Aviation Week.
“We have been in detailed discussions with both manufacturers and the engine suppliers in recent months, and we have as much visibility at this stage about what options are available to us as we are likely to get,” Walsh commented.
In the meantime, Japan Airlines (JAL) is reported to be studying an order for 20 A350-1000s, despite being an active participant in the 777X customer working group and operating 13 Boeing 777-300ERs, while Philippine Airlines is eyeing an order for 20 777-9Xs.
“It depends on the price. We are looking at the new Boeing 777X. We may buy 10 and, if it performs well, we’ll exercise an option for 10 more. That’s larger, can carry 400 passengers with longer range. The new 777, they call it X because it’s lightweight, has bigger wings, newer engine,” Philippine Airlines president Ramon Ang was quoted by Reuters as saying.
While such a Japan Airlines (JAL) order would be a significant endorsement for the A350-1000 and a severe blow to Boeing, Aspire Aviation thinks it makes more sense for JAL to operate both the 353-seat 777-8X and the 407-seat 777-9X in light of commonality consideration, which reduces maintenance and training costs, as well as securing Japanese suppliers’ work share on the upcoming 777X. Indeed, the need for diversifying its supplier base to include Airbus in its fleet is highlighted by the recent 787 groundings, but the marginal benefit of operating such a small fleet of A350-1000s remains questionable given the significant investment required to train and switch its allegiance to Airbus.
Other potential 777X operators include Hong Kong-based Cathay Pacific Airways, which will eventually has a 50 unit strong 777-300ER fleet and a 26 unit A350-1000 fleet alongside 22 A350-900s as Asia’s largest international carrier pursues growth in the key China market and North American market.
A closer look at today’s 777-300ER order book reveals how bright the market potential of the 777-9X is, with Japan’s All Nippon Airways (ANA) having 19 777-300ERs in its fleet, American Airlines (AA) 20, Etihad Airways 18, Eva Air 18, General Electric Capital Aviation Service (GECAS) 47, International Lease Finance Corporation (ILFC) 28, Singapore Airlines (SIA) 27, just to name a few. It would fit into Air China’s fleet ideally, which has ordered 2 additional 747-8I Intercontinentals this month in addition to the original order for 5 examples.
Separately, Pratt & Whitney (P&W) is reportedly looking to build a 100,000lbs geared turbofan (GTF) engine for the A350-800s and -900s, which will challenge Rolls-Royce on the aircraft and enable the A350 to have the potential to reap the benefits from a technological breakthrough.
“As Pratt & Whitney looks ahead to powering future widebody applications, we will scale the geared turbofan architecture to the required thrust levels. We continue to keep all airframers informed of our progress on the PW1000G family, including studies with Airbus for potential widebody applications,” a Pratt & Whitney (P&W) company spokesman was quoted as saying.
“One should not walk away saying Pratt has focused on being only a single-aisle manufacturer. We are heavily investing in technology for the widebody thrust class and we continue to be very positive on taking a geared turbofan architecture up to 100,000 pounds of thrust,” Pratt & Whitney (P&W) vice president (VP), next generation product family Bob Saia said.
“The decision that we made on the 777X is that it didn’t meet our base criteria for us to be able to go forward and be able to submit a proposal. That’s not to say that if something changed, or if another widebody application were to come up with the right timing, that Pratt would take the same position,” Saia explained.
Though Aspire Aviation thinks it is too little, too late for Pratt & Whitney to break into Rolls-Royce’s stranglehold on every A350-800, -900 orders as well as its exclusivity on the -1000 variant, since it would be considerably easier for airlines to maintain a common engine supplier across different members of an aircraft family to save maintenance cost by maintaining a common spool of spare parts, let alone its financial resources would be strained by the development of a series of narrowbody GTF engines, including the PW1700G and PW1900G designed for Embraer’s re-engined and re-winged second-generation E-Jets.

777-9X undermines VLAs’ business cases
One might wonder whether or not with the growth in the number of seats outpacing the growth in the number of flights, as well as Airbus’ forecast that the number of aviation mega-cities will grow from 42 in 2011 to 92 by 2031 where 95% of long-haul traffic will pass through, that ordering the Airbus A380 superjumbo or 747-8I Intercontinental would make commercial sense.

However, Aspire Aviation firmly believes that the 777-9X will invariably undermine the business cases of both the Airbus A380 and 747-8I Intercontinental and operating such a type will bring several significant benefits to airlines.

First of all, very large airplanes (VLAs) are arguably more susceptible to uncertainties and volatility, more than aircraft of other sizes, thereby carrying significantly higher risks. Singapore Airlines’ (SIA) A380 Suite was reported to have been suffering from poor loads during the 2007-2009 global financial crisis which prompted the carrier to heavily discount its fares, thus diluting yields.

Worse yet, the fact that airlines are making their A380s the flagship of their fleets, by adopting a comfortable configuration such as Korean Air’s 407-seat configuration, the lowest of any A380 seat count and equipped with an all-business class upper deck that is also found on Singapore Airlines’ 409-seat A380s and SIA’s 471-seat A380s and British Airways’ 469-seat ones, may have inadvertently lowered the cost per available seat kilometre (CASK) unit cost advantage that a 525-seat A380s would otherwise hold, since CASK generally decreases as the seat count increases.

Coupled with the discounting involved in order to fill the A380 should seasonal, economic and other factors affect the demand for a particular flight adversely, this will lead to a higher break-even load factor (BELF) as BELF = cost per available seat kilometre (CASK) / yield, of which the yield is defined as revenue per revenue passenger kilometre (RPK).

“We don’t need to make a decision about [our 6 A380 orders] now, it very much depends on the state of the global economy and the oil price. It’s a lovely quiet aircraft but it’s very big and you need to operate it on some very big trunks and you need to have a big enough fleet – we always knew we’d have a small fleet and is that fleet too small? And that is a challenge for Virgin Atlantic but it’s not something we need to worry about right now,” then Virgin Atlantic chief executive Steve Ridgeway said in an Airline Business interview.

Next, the flexibility that the 407-seat 777-9X offers is unmatchable by its VLA peers, especially for carriers based on a frequency business model such as Hong Kong-based Cathay Pacific. Airbus countered that examples shown by Singapore Airlines (SIA) and Air France have demonstrated the A380 can save airlines dollars by, in SIA’s case, substituting 10 278-seat Boeing 777-300ER flights per week on the Singapore-Paris Charles de Gaulle airport route for 7 471-seat A380 flights per week will lead to a 3% lower cash operating cost (COC) per week and a 21% lower COC per seat, thereby saving US$7.9 million a year while offering 27,000 additional seats. Similarly, the example with Air France showed a saving of 18% in COC by substituting 1 777-200ER and 1 A340-300 flights with an A380 flight on the Paris Charles de Gaulle airport-New York John F. Kennedy airport route.

Such a saving, proponents of the superjumbo argue, could be made on Cathay Pacific’s 5 daily flights to London Heathrow, where a pair of 2 flights, CX255 and CX251, depart 1 hour after each other and another pair of 2 flights, CX239 and CX237, depart in 20 minutes of each other.

Yet such an analysis conveniently ignores the revenue foregone in spillover demand, where price-inelastic last-minute walk-up business travellers pay the full face value of the airfares, i.e. at a premium, as economic theories state that closer the actual departure time to the preferred departure time, the more likely it is a carrier is able to command a premium and convert potential demand into actual demand. This takes place on the Hong Kong-Sydney route, where Cathay Pacific offers 4 daily flights while Qantas has trimmed its flights from twice-daily to single-daily, Hong Kong-New York John F. Kennedy where Cathay Pacific flies 3 daily non-stop flights while its closet competitor United Airlines flies single-daily to Newark. Other examples include its Los Angeles, San Francisco, Vancouver routes, just to name a few.

Furthermore, the 777-9X is going to offer unprecedented revenue cargo volume, the sellable remaining cargo space after fully loading passengers’ luggage where profit margin could be as high as 60%-70% as fixed costs are shared with the passengers. Today’s 777-300ER already offers superior revenue cargo volume of 5,200ft³ out of a total cargo volume of 7,120ft³, compared to the 747-8I Intercontinental’s revenue cargo volume of 3,895ft³ out of a total cargo volume of 6,345ft³, whereas the A380 has the smallest revenue cargo volume of 2,995ft³ from a total cargo volume of 5,875ft³. This is crucial as Cathay Pacific carries 70% of its cargo in the underbellies of passenger aircraft.

Therefore, it is not inconceivable that the 777-9X is going to put further pressure on both the A380 and 747-8I to further improve their performance since the 777-9X strikes the “sweet spot” between growth opportunities, revenue cargo-carrying capability, frequency in one fell swoop with a better seat-mile costs than the 747-8I or even the A380 while minimising the risks of having to dilute its yields to fill up its aircraft and the substantial macroeconomic risks.

In conclusion, the 777X has made significant progress lately with its business case strengthening continuously. The 777-8X will take on the A350-1000 fiercely with an advantage in commonality and having a common wing and engine core with its bigger sibling despite the latter will nevertheless be the most fuel efficient 350-seat aircraft. Yet Boeing is betting on a market shift where the 407-seat 777-9X will be the new norm satisfying the growing needs of airlines to carry more passengers and cargoes over a longer distance at 8,100nm using 21% less fuel. With a strong customer base and 787-styled features such as 787-styled large displays cockpit, larger dimmable windows and a lower cabin altitude, the 777-9X is going to lure airlines with growth potential, minimised risks and maximised profits – and magnificence that features a novelty folding wingtip.

As of this writing, the roll-out of the 777-9X is scheduled to take place in the fourth quarter of 2017, followed by a 9-month flight test programme which ends in late third-quarter 2018 and an entry into service (EIS) in mid-2019. The service entry of the 777-8X is being envisaged in 2021-22, while the 9,480nm 777-8LX is still of a low priority at this point.

“We have had strong and productive engagement with a broad set of customers in the marketplace to understand their future needs. We are pleased with where we are in the process. We are aggressively moving forward on our plan and will continue to refine requirements with customers,” Boeing 777X development vice president (VP) and general manager (GM) Bob Feldmann said.

With an imminent authority to offer (ATO) on the 777X, now the race is officially on – both with the 787-10X on launch timing and the A350-1000. Only time can tell if the market will move on or not.

Image Courtesy of Boeing

http://www.aspireaviation.com/2013/03/28/boeing-777x-to-spark-mini-jumbo-war/ 

26 April Batik Air Ramaikan Langit Indonesia

(5/4/2013) Batik Air, maskapai penerbangan full service milik Lion Air, rencananya akan melakukan penerbangan perdana pada 26 April mendatang. Maskapai baru ini diharapkan bisa bersaing dengan Garuda Indonesia di kelas full service.

Pasar penerbangan full service di Indonesia sangat potensial karena belum ada maskapai lain yang menggarap pasar ini kecuali Garuda Indonesia. Garuda yang menangguk untung besar sebagai pemain tunggal membuat Lion Air ingin ikut menikmati pasar ini melalui Batik Air.

Dalam layanannya, Batik Air akan mengoperasikan pesawat Boeing 737-900ER untuk rute-rute domestik dan internasional jarak dekat, serta Boeing 787 Dreamliner untuk rute penerbangan jarak jauh.

Fasilitas yang disediakan Batik Air akan sangat kompetitif dengan Garuda Indonesia, dengan menyediakan makanan penuh, fasilitas telepon di pesawat, dan media hiburan.

Menurut Heavy Maintenance Manager PT Lion Tech Ronny Roozanno, rute pertama yang dioperasikan Batik Air adalah Jakarta-Pekanbaru, kemudian diikuti dengan rute Jakarta-Batam dan Jakarta-Manado.

Perusahaan menilai rute penerbangan dari dan ke Batam sebagai salah satu rute yang akan dilalui Batik Air karena mobilitas warga Batam sangat tinggi. Selain itu, Batam merupakan tujuan wisata nomor tiga di Indonesia.

Jika benar, rencana ini agak berbeda dengan rencana sebelumnya, dimana Batik Air akan melayani rute Jakarta-Manado, Jakarta-Balikpapan, dan Jakarta-Yogyakarta pada penerbangan perdana. (Baca: Beroperasi April 2013, Ini Rute-Rute Batik Air)

Selain melayani rute-rute domestik, Batik Air diproyeksikan untuk melayani rute-rute internasional. Namun ini merupakan rencana jangka panjang perusahaan.

Lion Datangkan 4 Unit Pesawat Boeing 737-900 ER buat Batik Air

Liputan6.com, Jakarta : PT Lion Mentari Airlines akan mendatangkan 4 unit pesawat Boeing 737-900ER yang diperuntukkan bagi anak usahanya, Batik Air.

"Pada tahun ini sekitar empat pesawat, rencananya akan didatangkan secara bertahap. Pada bulan April 2 unit pesawat, dan Mei 2 unit pesawat lagi," ujar Rusdi usai acara penandatangan perjanjian kerjasama Telkomsel dengan Lion Air di Hotel Sheraton, Jakarta, Rabu (10/4/2013).

Rusdi menjelaskan, selain penambahan untuk pesawat Batik Air, pihaknya juga berencana menambah sekitar 12 pesawat untuk anak usahanya yang lain yang beroperasi di Malaysia, Malindo Air. Khusus Lion Air, juga akan menambah sekitar 8 unit pesawat lagi.

"Tahun ini Lion Air tambah 8 pesawat, tahun kemarin banyak hampir sekitar 24 pesawat baru yang di datangkan," kata Rusdi.

Dia menjelaskan, penambahan pesawat baru yang lebih sedikit pada tahun ini karena melihat perkembangan Lion Air tidak seperti tahun lalu.

Seperti diketahui, Manajemen Lion Air berencana akan memperlihatkan pesawat barunya yaitu Batik Air pada 26 April nanti. Lion Air janji juga akan memberikan sensasi penerbangan yang berbeda, dengan maskapai Batik Air

Bos Lion Siap Luncurkan Batik Air 26 April 2013

Jakarta - Maskapai penerbangan nasional full service, Batik Air dijadwalkan terbang perdana tanggal 26 April 2013. Batik Air merupakan anak usaha dari PT Lion Mentari Airlines yang merupakan milik pengusaha Rusdi dan Kusnan Kirana.

Direktur Umum Lion Air Edward Sirait mengatakan saat terbang perdana, Batik Air akan melayani rute Jakarta-Manado pulang pergi. Untuk terbang perdana ini, akan dilayani oleh armada baru yakni Boeing jenis 737-900 ER.

"16 April diharapkan terbang dari Seattle (Pabrik Boeing di AS). Kalau ada tidak ada perubahan penerbangan perdana 26 April rute Jakarta-Manado," tutur Edward di Gedung DPR Senayan Jakarta, Selasa (9/4/2013).

Dengan menggunakan Boeing 737-900 ER, Batik Air menyediakan 160 kursi di kelas ekonomi dan 12 kursi di kelas bisnis. Hingga akhir 2013, setidaknya ada 6 pesawat baru jenis 737-900 ER yang memperkuat Batik Air. Rencananya, Batik Air akan melayani rute penerbangan hingga pelosok negeri dengan konsep penerbangan full service.

"Kita ingin masuk ke semua kota di Indonesia," tambahnya.

Seperti diketahui, saat pesawat tiba di Indonesia pada 17 April 2013 setelah terbang dari Pabrik Boeing di Seattle Amerika Serikat tanggal 16 April 2013, Batik Air akan memperoleh Air Operator Certificate (AOC) atau sertifikat izin operasi.


detik.com

Airbus Mulai Bangun Pabrik di 'Kandang' Boeing

Alabama - Produsen pesawat terbang asal Prancis yakni Airbus mulai membangun pabrik pesawat barunya di Mobile, Alabama pada Senin kemarin. Pembangunan pabrik ini untuk memberpesar pangsa pasar Airbus di AS.

"Pabrik ini mewakili bentuk transformasi Airbus untuk menjadi perusahaan global," ujar Presiden Direktur Airbus Fabrice Bregier saat peresmian konstruksi pabrik tersebut seperti dikutip dari AFP, Selasa (9/4/2013).

"Kami akan memproduksi pesawat di Asia, Amerika, dan di Eropa," tambah Fabrice.

Airbus merupakan saingan terbesar Boeing yang merupakan produsen pesawat asal AS. Untuk pabriknya di Alabama, Airbus berencana untuk merakit pesawat tipa A319, A320, dan A321, dan pabrik di AS ini akan mulai mengantarkan pesawat ke pelanggannya pada 2016.

Tahun lalu, Airbus menargetkan akan memproduksi 40-50 pesawat per tahun pada 2018. Airbus merupakan anak usaha dari European Aeronautic Defence and Space Company (EADS).

Di 2011, Airbus mendapat kontrak pemesanan pesawat senilai US$ 35 miliar dari Pentagon untuk menyediakan pesawat pengisi bahan bakar di udara.

Sebelumnya diberitakan, pabrik di Alabama tersebut bernilai US$ 700 juta atau sekitar Rp 5,4 triliun.


detik.com

Lion’s Batik Air to launch this month

Lion Air will launch another new carrier by the end of this month.
Batik Air, Lion’s new Jakarta-based full-service subsidiary, will commence commercial flights on 26 April, an airline executive confirmed this week.
It had previously been expected to launch in May. According to a Jakarta Post report, citing Lion Air’s Commercial Director Edward Sirait, Batik Air will initially operate services connecting Jakarta to Manado and Balikpapan, using a Boeing 737-900 aircraft which is scheduled to be delivered on 16 April. The aircraft will come fitted with 12 seats in business class and 160 in economy. Batik will take delivery of a further five aircraft this year and plans to expand across Indonesia and Southeast Asia.
Batik promises to offer a series of in-flight services, such as mobile and Wi-Fi connectivity, meals and on-demand in-flight entertainment.
It will become the second airline launched by Lion in as many months, following the inauguration of Kuala Lumpur-based low-cost carrier Malindo Airlines in late March. Sirait said earlier this month that Lion now plans to set up a series of regional subsidiaries in markets such as Australia, Myanmar and Vietnam.
Following huge recent deals with Boeing and Airbus, the group has outstanding orders for more than 500 aircraft.



http://www.traveldailymedia.com/151385/lions-batik-air-to-launch-this-month 

Batik Air Terbang Perdana Akhir Bulan Ini

TEMPO.CO, Jakarta - Maskapai Batik Air, anak usaha PT Lion Mentari Airlines (Lion Air), akan beroperasi pada 26 April 2013. "Rutenya Jakarta-Manado, dua kali sehari," ujar Direktur Umum Lion Air, Edward Sirait, di sela-sela rapat dengar pendapat Komisi V Dewan Perwakilan Rakyat, Selasa, 9 April 2013.

Seperti induknya, Batik Air akan beroperasi dengan menggunakan pesawat Boeing 737-900ER. Dalam setiap penerbangan, maskapai baru ini menyediakan layanan full service dengan 160 kursi ekonomi dan 12 kursi bisnis.

Edward menjelaskan, perusahaan akan mendatangkan enam Boeing 737-900 ER untuk Batik Air. Hingga saat ini, kata dia, tidak ada target spesifik untuk jumlah penumpang yang diangkut maskapai penerbangan itu. "Target kami bukan jumlah, melainkan jangan rugi," ujarnya.

Edward pun berharap maskapai baru itu nantinya dapat menjangkau seluruh wilayah Indonesia. Namun, ia menolak menyebutkan rute-rute lain yang dibidik Batik Air. Yang terpenting, perseroan berharap tingkat keterisian penumpang atau load factor Batik Air dapat mencapai 100 persen.

Kementerian Perhubungan menyatakan Batik Air telah siap beroperasi. "Izin rute dan air operator certificate (AOC) sedang kami proses," kata Direktur Angkutan Udara Direktorat Jenderal Perhubungan Udara Kementerian Perhubungan, Djoko Murjatmodjo. Sebelum beroperasi, kata dia, Batik Air harus melakukan uji terbang (demo flight).