Aviation Business - August 2010

THE MAGAZINE FOR AVIATION EXECUTIVES IN THE MIDDLE EAST | AUGUST 2010

BUSINESS Licensed by Dubai Media City

Its time for a revolution with the opening of Dubai World Central

Hani El-Assaad, regional director, Middle East and Turkey, SITA

A whole new world

Farnborough Airshow 2010 Celebrating the billion dollar order book from Middle Eastern airlines

TECHNOLOGY TRENDS

SITA outlines the latest trends that are shaping the future for international carriers

MOVERS & SHAKERS HAKERS | NEWS UPDATE | READER’S READ D ER’S LLET TERS | FACTS & FIGURES DER’S

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01

CONTENTS

AUGUST 2010 VOLUME 09 ISSUE 08

09

16

3 EDITOR’S LETTER

Having to deal with disasters in the Middle East aviation industry.

9 NEWS UPDATE

Leading players will compete for trade honours at the Aviation Business Awards 2010. Also this month; Air France-KLM chief warns Emirates over expansion.

Gulf Air continues fleet renewal with Airbus A320. RAK Airways to re-launch after 14-month hiatus. Etihad CEO James Hogan slams ‘free kicks’ culture.

Value of Middle East’s MRO sector to double by 2019. Middle East carriers hit

by Air India warehouse delays.

16 COVER STORY SITA

With record participation in SITA’s airline technology survey this year, Hani El Assaad predicts a bigger and better spend on IT solutions in the Middle East.

20

36 REPORT MARKET OUTLOOK Last year was one of the worst ever in the aviation world, but Middle Eastern players are confident about the future.

40 ASK THE EXPERT

20 REPORT DWC OPENING

Following years of preparation, Dubai finally opened the doors to Al Maktoum International Airport last month, which is expected to cement the Middle East’s position as a global aviation hub.

26 FOCUS ENGINE LEASING

With increasing pressure on airlines to limit the deadweight on their books, the concept of aero engine leasing has emerged as a popular solution.

30 REVIEW FARNBOROUGH

The Middle East steals the spotlight once again at Farnborough Airshow 2010, with major order announcements from Emirates, Etihad and Qatar Airways. www.arabiansupplychain.com

How can aircraft manufacturers help to create a better flying experience for passengers, asks Boeing’s Blake Emery.

42 AIRLINE REPORT CARD

30

A monthly summary of the latest airline accidents and other aircraft-related incidents in the Middle East region.

44 INDUSTRY STATISTICS

Updated statistics from trusted sources, including Airports Council International (ACI), Emirates SkyCargo and FlightStats.

48 DEPARTURE LOUNGE

Following industrial action from it cabin crew, British Airways is sending out a message that its ‘business as usual’.

August 2010

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3 BUSINESS Registered at Dubai Media City PO Box 500024, Dubai, UAE Tel: + 971 4 210 8000, Fax: + 971 4 210 8080 Web: www.itp.com Offices in Dubai & London ITP Business Publishing CEO Walid Akawi Managing Director Neil Davies Managing Director Karam Awad Deputy Managing Director Matthew Southwell Editorial Director David Ingham Publishing Director Diarmuid OMalley Editorial Senior Group Editor Robeel Haq Tel: +971 4 210 597 email:robeel.haq@itp.com Contributors Nadia Khan, Ed Attwood, Anil Bhoyrul Advertising Sales Manager Nick Lowe Tel: +971 4 210 8306 email: nick.lowe@itp.com Publishing Director Diarmuid OMalley Tel: +971 4 210 8568 email: diarmuid.omalley@itp.com Europe Sales Rep Stephane De Remusat Tel: +33 680 844 378 email: sremusat@aol.com Studio Group Art Editor Dan Prescott Designer Angela Ravi Photography Director of Photography Sevag Davidian Chief Photographer Khatuna Khutsishvili Senior Photographers G-nie Arambulo, Efraim Evidor, Thanos Lazopoulos Staff Photographers Isidora Bojovic, Lyubov Galushko, Jovana Obradovic, Ruel Pableo, Rajesh Raghav, George Dipin Production & Distribution Group Production Manager Kyle Smith Deputy Production Manager Matthew Grant Managing Picture Editor Patrick Littlejohn Image Retoucher Emmalyn Robles Distribution Manager Karima Ashwell Distribution Executive Nada Al Alami Circulation Head of Circulation & Database Gaurav Gulati Marketing Head of Marketing Daniel Fewtrell Marketing Manager Annie Chinoy ITP Digital Director Peter Conmy ITP Group Chairman Andrew Neil Managing Director Robert Serafin Finance Director Toby Jay Spencer-Davies Board of Directors K.M. Jamieson, Mike Bayman, Walid Akawi, Neil Davies, Rob Corder, Mary Serafin

EDITOR’S COMMENT Dealing with disasters in Middle East aviation

C

hallenges are thrown at the aviation industry on a regular basis, as experienced by our colleagues in Saudi Arabia last month. Shortly before publishing this issue of Aviation Business, we received the tragic news that a Lufthansa Cargo plane had crashed at King Khaled International Airport in Riyadh. Within minutes of the incident, news channels and online websites were bursting at the seams with real-time updates on what caused the accident. Of course, this is something we will learn as the month progresses, with an investigation already in full swing, although for now we can be thankful that the MD-11’s pilots were rushed to hospital and survived the ordeal.

Unfortunately, the same cannot be said about a stowaway that managed to bypass the security at Rafic Hariri International Airport in Lebanon and hide in the wheel bay of a Nas Air plane on the way to Saudi Arabia. Once again, it was left to airport officials at King Khaled International Airport to deal with the aftermath, with the Lebanese national’s remains being discovered on the aircraft by a maintenance worker. The incident has

raised a number of obvious concerns and led to the eventual resignation of Beirut airport’s security head General Wafik Shoukeir. A ministerial committee has also been drafted in Lebanon to conduct a study on Rafic Hariri International and determine the level of security flaws. The report will be keenly awaited and has been scheduled for completion in the second half of this month.

So what can be done to avoid such instances in the aviation industry?

There’s countless measures being taken around the world to place a limit on potential disasters, some more successful than others, and most within the industry would agree that constant progress is essential. However, given the nature of airline and airport operations, we have to accept that challenges are inevitable, so hats off to the team at King Khaled International Airport for dealing with the severity of last month’s issues with such a professional attitude.

If you have any comments on this month’s issue, please email Robeel Haq, senior group editor of Aviation Business magazine (robeel.haq@itp.com)

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Published by and © 2010 ITP Business Publishing, a division of the ITP Publishing Group Ltd. Registered in the B.V.I. under Company Number 1402846.

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August 2010

4

TRADE TALK

The low cost model is far from simple

Why airlines need to change their approach at different stages of the life cycle

By Adel Ali, chief executive officer of Air Arabia

Passengers on low cost carriers are not necessarily those of a lower income bracket, but those who want to get the most value for their money

The business model for low cost carriers (LCC) has witnessed a significant amount of development and traction in the Middle East ever since Air Arabia launched its operations in 2003. Of course, the economic crisis was a severe challenge to the aviation industry as a whole over the past couple of years, but the low cost sector was a much better performer than expected. In short, it delivered a ray of hope across the airline sector, even though passenger numbers and yields were taking a turn for the worst.

As things stand at the moment, there are around 10 low cost carriers in the Middle East and North Africa (MENA), which reflects the major developments being made in recent years. However, is it time to rest on our laurels and celebrate this success? Of course not! There have been instances of low cost carriers that start their operations with huge promise, but eventually fall by the sideway due to a lack of focus and unfortunate decisions to move away from the basics of the LCC business model. This is the case globally, including the MENA region, although I won’t mention any specific names.

The future performance of individual players is dependent on the strength of their specific business model and their focus going forward. However, given the right kind of segmentation strategy and good execution, there is enough room in the market for multiple service offerings.

Traditionally, low cost carriers have thrived with a reduced operating cost structure, which has been achieved due to the advantages of a single aircraft type, a single passenger class, flights to secondary airports and fast turnaround times. I’ve

August 2010

heard a number of times that this business model sounds a little simplistic. Maybe that’s true at face value, but executing and carrying out such an approach requires great discipline, consistent communication with the employee base and an inspirational leadership model.

For example, some carriers in this region have re-adjusted their positioning to target different customer segments - like business travellers - rather than sticking to a rigid interpretation of the LCC business model.

LCCs therefore need to change their approach at different stages of the life cycle. In the case of carriers like Air AsiaX, they have started to challenge network carriers on long-haul flights to attract customers still beset by higher prices from traditional carriers. Will Air Asia X change the trend of air travel?

Time will only tell.

In Air Arabia’s case, our approach of using strategic hubs around the region to maximise the range of our Airbus A320 fleet has translated into more market

coverage, thereby helping to expand our routes. As the first and largest low cost carrier in the Middle East and North Africa, Air Arabia leveraged its attributes to make the most of the Gulf region’s emergence as a significant hub for international air travel. From our perspective, passengers on LCCs are not necessarily those of a lower income bracket, but those who want to get the most value for their money.

With the MENA region still developing as a market, there is significant potential across the region given the obvious growth prospects. The eventual success stories across this sector will be driven by those carriers who have a compelling value proposition that includes not just pricing, but other variables like convenient schedules, on-time performance, including travel packages for destinations that they serve. Constant innovation is also a prerequisite in order to survive and thrive in this challenging market, which is now attracting the attention of legacy carriers across the region.

www.arabiansupplychain.com

TRADE TALK

A fresh approach to airport technology Airlines, airports and information technology providers need more collaboration

The travel experience at airports is characterised by time-consuming and cumbersome processes

As a guest speaker at last month’s SITA Air Transport Summit in Brussels, I was invited to participate in a discussion on ‘new decade, new efficiencies’, alongside senior officials from the likes of Delta Air Lines, Turkish Airlines and Malaysia Airports. Now in its 10th year, the annual event is a platform for aviation executives to consider the strategic direction of the industry, discuss the latest issues and the role of IT and communications in addressing challenges and opportunities.

During my presentation, I called on airlines, airports, retailers and information technology providers around the world to break down the silo walls and collaborate on technology solutions that improve the passenger experience.

At present, the travel experience at airports is characterised by timeconsuming and cumbersome processes.

The lack of coordination has created queues for passengers and ultimately, this poor coordination has resulted from a fundamental lack of trust within the industry. It’s therefore about time that we united to change the mindset and the industry model.

With forecasts that passenger journeys will double to 6 billion by 2027 – which will be led by Asia and the Middle East due to their geographical advantage and scope to develop airport capacity – we need a different approach to allow the successful handling of this growth. For example, passenger numbers in Dubai will grow from over 40 million today to 150 million by 2030. To accommodate that staggering increase, we are building

www.arabiansupplychain.com

what will eventually become the biggest airport in the world - Al Maktoum International at Dubai World Central featuring five runways and capacity for 160 million passengers and 12 million tonnes of freight. The first phase of operations has already commenced with the successful launch of cargo flights last month. However, I believe that today’s processes and technology solutions are desperately lacking. They simply won’t work at that scale of operation.

In fact, over the entire passenger experience, its airports that are most vulnerable to service flaws, as they rely on strong collaboration between an array of stakeholders, including airlines, ground handlers, customs, immigration, security and retailers to name a few.

To combat this situation, we need vision, collaboration, customer-focused processes and the smart application technology that can evolve service levels and put the global industry on more sound financial footing.

Of course, many airlines and airports around the world will cringe at the investment that is required to make this steep change. However I would argue

that the cost of not changing is far more significant. Almost 50% of dwell time is absorbed by non-commercial processes at an opportunity cost as high as US$35 billion per annum. This is a staggering amount and that money could help address the current imbalance seen across the aviation value chain, which has led to around US$50 billion in losses for airlines over the past decade.

Imagine a future where the customer’s online booking, purchase, seat selection, advance passenger information and biometric data are recorded well in advance. A future where the baggage is checked in advance away from the airport. Biometric data is used to confirm passenger identification, assess security risk and is linked to passenger name records for baggage sequencing, checkin and boarding pass confirmation. And finally, where security scanning occurs simultaneously and unobtrusively in minutes, freeing up time for the customer to relax, dine or shop.

A fresh approach can turn this vision into a reality, as long as the solution is customer-centric, aligns the value chain and results in a seamless process.

August 2010

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06

READER’S LETTERS

READER’S LETTERS Got an opinion? Have your say at...

The Emirates debate on social costs versus cash payments

Glass ceiling in the UAE-France dispute... who will take the hit?

The interview with Maurice Flanagan from Emirates in the last issue of Aviation Business was very interesting.

Whilst the Emirates story is very impressive, it’s a bit unfair of Mr Flanagan to be pointing to the “social costs” of employing staff. It’s Emirates choice to manage staff remuneration in this way; they could just as easily pay cash allowances to their employees as part of their monthly salary. Emirates obviously considers it more costeffective to do it this way. Housing and education are not “free”, they are part of the overall remuneration package.

Given that staff remuneration makes up a huge part of any airline’s overall cost, the total ‘cash plus allowances’ package that Emirates pays must be the same or less than other international airlines, otherwise they wouldn’t be able to compete so effectively.

James Farrell

Regarding your coverage of France’s decision to reject the UAE’s landing request at Paris, there is no winner in this game. The French and the rest of Europe will balk at letting foreign air carriers take over their rightful air routes as well as destroying their nationally funded carriers. This will result at potential cancellations on the Airbus log book, because where in the world will all those Middle East carriers fly their 550 passenger planes?

The Middle East carriers will face these problems in every market they plan to fly as each government protects their own national carriers. Seriously, how many A380s can you plug in to a city before the local governments start to feel they are getting the raw end of the deal? Will the Chinese open their cities to EK with out getting something in return? India? Australia is already under the gun. So will it be the manufacturing segment or the airline segment? Someone is taking a hit in the Europe.

Mark Cassidy

Operators slam ‘meet and greet’ ban at Dubai airport Please, we really do not need another monopoly in the Dubai aviation industry. I used the Merhaba service a few times and twice my visitors where not met and service fees had to be reimbursed. But that wasn’t good enough. The service is just not reliable enough, especially during busy peaks seasons or timings, when there are flight delays, or even when a flight arrives earlier. Tour operators should not be at the mercy of Dnata’s Merhaba service. Monopolies do not raise the quality or standard of services. Quite the opposite and in the current economy no one can afford not to be competitive. This will just create another overpriced, average service.

Give us a break.

Eva Carola Muths

August 2010

France decision is not personal I think each country have right to protect their own industry; if UAE carriers are buying Airbus aircrafts, its their own wish as they find Airbus products good and competent as compare to others. It’s a win-win situation for both. UAE carriers are showing an aggressive attitude, especially Emirates by ordering so many new aircraft and it could be a problem for them in future. I am hoping for the best, but if the French government rejected a request to give so many new slots to them, I don’t think its big deal and no one should take it very seriously and personally.

Shoaib Ghauri

New approach is needed for Air India to re-capture its position There has been a lot of coverage on the technical problems with Air India in your magazine, especially after recent incidents in the Middle East. As seen in the articles, these technical problems have occurred on two of Air India’s Airbus A320s, which are at least 18 years old and were previously Indian Airlines aircraft. Of course, the purchase of new A320s to replace old ones would be a good improvement for this national carrier. At the end of the day, I think Air India needs to make further efforts to reach its position at the top, as they were 30 years back.

Russell Steven Mendonca

No excuses for stowaway on Sheikh Mohammed’s B747 I was interested to read your latest article about a stowaway being discovered on Sheikh Mohammed’s Boeing 747. Now that sounds very strange - how could this happen at Vienna, where you have all those highly sophisticated security measures in place? Especially to a high profile aircraft like the 747, belonging to such a high-ranking person. And don’t let the Vienna police officials get away with that standard statement you always hear in any case of a breach of security: “There is no 100% security guarantee”. Well, for a government official, it MUST be - no matter where she/he comes from or the location. Not really well done, dear Austrians!

Thomas Stuenkel

www.arabiansupplychain.com

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It’s in our power.™

NEWS UPDATE

Aviation Business Awards to honour Middle East excellence TRADE EVENT

Leading players from across the Middle East aerospace industry will compete for trade honours at the fourth annual Aviation Business Awards (ABA) in Abu Dhabi.

The prestigious ceremony, which is organised by ITP Business, publisher of Aviation magazine and Business ArabianSupplyChain.com , will be hosted at the worldfamous Emirates Palace Hotel on Tuesday 30th November 2010.

“The Middle East is leading the way with billion dollar investments to improve airport facilities in various different countries.

In addition, the region is currently producing some of the most impressive airlines on the planet, with success stories including Emirates, Etihad and Qatar Airways,” commented Walid Akawi, chief executive officer of ITP Publishing Group.

“The Aviation Business Awards will make a welcome return in 2010 to recognise those regional and international companies that stand out from this exalted crowd. The nominees will once again include a combination of regional and international players that have gone above and beyond in terms of their recent industry contribution,” he continued.

The Aviation Business Awards 2010 is sponsored

by Abu Dhabi-based Waha Capital and will include 15 categories in total, covering the airline, airport and cargo sectors, along with a variety of supporting niches. Previous winners have included the likes of Dubai Airports, Air Arabia, Emirates and Dnata.

Nominations are now being invited online and will be www.arabiansupplychain.com

This year’s Aviation Business Awards will feature 15 categories, including airline of the year and the hall of fame award

assessed by a prestigious panel of experts, selected from within the Middle East aviation industry.

“Since its inception in 2007, the Aviation Business Awards have emerged as a leading event for the Middle East aviation industry. Given the market challenges that our industry is facing on a global level at the moment, this is a perfect opportunity to remember those companies and individuals that continue to achieve excellence on a daily basis,” commented Fathi H. Buhazza, president and chief executive officer of Maximus Air Cargo and founder of Care

by Air, who makes his debut on the judging panel in 2010.

Other participants in the judging process this year include Salem Rashid Al Noaimi (chief executive officer of Waha Capital) and Ali Al Naqbi (founding chairman of the Middle East Business Aviation Association

- MEBAA). A select number of additional figureheads will be announced shortly.

“Award ceremonies are important in defining the benchmark for excellence and separating the outstanding achiever from the rest of the group,” added Buhazza. “They also provide recognition to

the best performers in the field, while inspiring others to emulate their success. This is exactly what we’re hoping to achieve with the Aviation Business Awards.”

For further information on the event, please visit www. a rabia nsupplycha i n.com / avbawards

AVIATION BUSINESS AWARDS 2010 Airline of the Year Low Cost Airline of the Year Business Aviation Operator of the Year Cargo Operator of the Year (Commercial Airline) Cargo Operator of the Year (Cargo / Charter Airline) Airport of the Year Aircraft Manufacturer of the Year MRO Service Provider of the Year Ground Handling Provider of the Year Technology Implementation of the Year Training and Education Provider of the Year Corporate Social Responsibility Award Unsung Hero of the Year Personal Achievement of the Year Hall of Fame Award

August 2010

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10

NEWS UPDATE

Air France-KLM chief warns Emirates AIRLINE OPERATIONS

Air-France-KLM’s Peter Hartman believes Emirates will face “more reluctance”

Emirates Airline’s global expansion plans will be increasingly challenged by the reluctance of governments to agree more traffic rights, a senior executive at Air France KLM has warned. The Dubaibased airline is likely to face “more and more reluctance” to grant traffic rights,” Peter Hartman, chief executive of the KLM unit of Air-FranceKLM, and a member of the airline’s governing board, stated in the media.

At the Farnborough International Airshow last month, Emirates announced it had signed a US$9.1 billion order for 30 additional Boeing 777-300ER aircraft. This was

in addition to the 79 Airbus A380s, 70 Airbus A350s and seven Boeing freighters on order, valued at more than $67 billion in total.

However, while the carrier’s ambitious growth strategy is encountering obstacles from governmental policies to safeguard their national carriers, the chances of European countries blocking route applications are slim due to the the potential impact on Airbus, according to Richard Aboulafia, vice of consultancy firm Teal Group. “The Middle East is grabbing market share from legacy airlines and European governments seem willing to make that sacrifice,” he said.

Gulf Air reduces average fleet age RAK Airways to re-launch with delivery of Airbus A320-200 after hiatus of 14 months AIRCRAFT FLEET

Gulf Air’s fleet renewal strategy has been reinforced with the delivery of a new Airbus A320200 last month.

The national carrier has introduced 10 aircraft into its fleet over the past year, including eight of the A320200s and two Embraer E170ARs. “We are delighted to be on-track with our aircraft re-fleeting programme,” said chief executive officer, Samer Majali. “A core proposition of our new strategy is to increase our regional strength and position. In order to achieve this, we need to ensure that our aircraft are optimised for the routes served.”

The latest additions have replaced five narrow-body aircraft, which were phased out due to increasing maintenance costs and low fuel efficiency. As a result, the average age of Gulf Air’s fleet has been slashed from 12 to eight years. “It is important that we invest in August 2010

the most efficient and reliable aircraft, with the highest levels of comfort for our customers,” added Majali. “Narrow-body aircraft form the backbone of our regional network as we continue to identify niche markets and serve them.”

Recent reports have suggested the success of Gulf Air’s restructuring programme will support plans to privatise the national carrier, which is expected to return to profit within a year.

Gulf Air chief executive Samer Majali

AIRLINE OPERATIONS

Officials have confirmed plans to resurrect the RAK Airways brand, with a re-launch of services being scheduled for later this year. The airline, which is marketed as the UAE’s fourth national carrier, has been out of operation for more than 14 months.

“We are now ready to make a strategic re-entry into the market,” commented Sheikh Omar Bin Saqr Al Qassimi, chairman of RAK Airways.

“We have a lot of exciting new plans, which will be unveiled soon. Omar Jahameh, our recently-appointed chief executive officer and his team are finalising the details of our flights to destinations in the Gulf, Africa and the Indian subcontinent.”

A victim of the global economic crisis, the scheduled services of RAK Airways were suspended in May 2009, although the “exceptionally

RAK’s Sheikh Omar Bin Saqr Al Qassimi

tough market conditions” have now sufficiently abated, according to Al Qassimi.

“The decision to relaunch the airline is part of the ambitious vision of His Highness Sheikh Saud Bin Saqr Al Qassimi, crown prince and deputy ruler of Ras Al Khaimah, aimed at boosting tourism in the emirate. RAK Airways is viewed as a key part of that plan,” he said. www.arabiansupplychain.com

NEWS UPDATE

Etihad CEO slams ‘free kicks’ culture AIRLINE OPERATIONS

The chief executive officer of Etihad Airways has taken a swipe at older competitors in the market, especially those that have accepted subsidies or government handouts over a lengthy period of time. “We have been very different,” stated James Hogan during a recent speech to the Australian Business Group in Abu Dhabi. “Unlike many of the original flag-carriers, which ran for decades – yes, decades – on government handouts, subsidies and support, our shareholder has been very clear about the return on investment that is expected.”

Hogan confirmed that Etihad would not receive “free kicks” due to the airline’s commercial principles. “[There are] no fuel subsidies, no cut-price landing charges –

There are no fuel subsidies or cut-price landing charges for Etihad, states Hogan

everything is expected to run on a commercial basis,” he stated, while also pointing out that the relative youth of Etihad meant it would not suffer from the legacy equipment problems that afflict a number of longer-standing competitors around the world.

“We’ve also not been burdened with some of the other legacy problems of those competitors. You only have to look at the challenges being faced by Willie Walsh and his colleagues at British Airways currently to see the cost – both short-term financial and long-

term reputational – of such issues,” he said.

Later in the speech, the chief executive reiterated his belief that the airline would break even in 2011 and announced that Etihad’s contribution to the Abu Dhabi government was approximately US$4 billion in 2009, on top of the airline’s direct contribution in terms of its own revenues. This figure is likely to increase in the near future, with plans to have destinations in every continent within the next five years. At present, Etihad’s fleet of 53 aircraft serves 63 destinations around the world. “The global issues of the last 18 months did slow our pace of growth, but the airline’s performance in the first and second quarter of this year shows the global recovery is well established,” he concluded.

Lufthansa cargo plane crashes in Saudi Arabia AIRFREIGHT

An investigation has been launched after a Lufthansa Cargo plane crashed at King Khaled International Airport in Riyadh.

The MD-11 freighter was performing a flight from Frankfurt to Hong Kong, with stopovers in Riyadh and Sharjah, when the incident occurred at the end of last month. “The plane was piloted by a two-man crew, who were able to leave the aircraft down the emergency slide,” confirmed a Lufthansa Cargo spokesperson. “The MD-11 freighter was severely damaged, but a fire on board was extinguished.”

The aircraft, which was delivered in 1993 and taken over by Lufthansa Cargo in 2004, completed its last www.arabiansupplychain.com

Lufthansa experts to review KSA crash

maintenance check in June 2009. It had 80 tonnes of cargo onboard at the time of the incident.“The experienced cockpit crew consisted of a 39 year-old captain and a 29 yearold first officer,” continued the spokesperson. “The cause of the accident is still under investigation. Lufthansa Cargo is cooperating closely with the authorities in Riyadh and will do its utmost to help clarify the reasons for the accident.”

August 2010

11

12

NEWS UPDATE

MRO sector set to double in Mideast AIRCRAFT MAINTENANCE

The value of the maintenance, repair and overhaul (MRO) industry is expected to more than double in the Middle East by 2019, according to the recent Global Aerospace & Defence Industry Outlook by AlixPartners.

Growth will be fuelled by a shift eastwards in global airline capacities, especially with the success of Emirates, Etihad and Qatar Airways, which will increase the Middle East MRO industry’s value from US$2.1 billion at present to $4.4 billion in 2019. “The MRO space is very significant here as an opportunity - it’s not just for the operators and fleets, but also for the fleets that pass

The success of Middle Eastern airlines is shifting global capacities eastwards

over this area,” said Dave Fitzpatrick, managing director

in AlixPartners’ Aerospace and Defence Practice.

“It’s a natural spot to come here for maintenance, along with the other things that bring aircraft here. It’s also a costeffective location potentially, because it eliminates the ferry cost [the cost of transporting an aircraft to a repair hangar] amongst other cost elements.”

As the region continues to buck the worldwide aviation trend by adding investment and posting growth, more and more aircraft are likely to connect through the GCC, the report added.

“We think it [the MRO sector] can very easily double, but I think that depends on bold investment and the capture of demand from elsewhere,” stated Fitzpatrick.

Middle East carriers hit by Air India Abu Dhabi relocates US warehouse delays at Chennai airport flights to new terminal AIRFREIGHT

Delays at Air India’s export warehouse in Chennai have impacted the operations of several Middle Eastern airlines in the past month, including Air Arabia, Gulf Air, Oman Air, Saudi Arabian Airlines and Kuwait Airways.

Sources have attributed the delays to a number of different factors, such as the introduction of high-security measures, shortages in warehousing personnel and technical faults with scanning equipment.

Over 70 trucks, containing export shipments such as

electronics and perishables, were turned away from the storage facility in July due to a backlog, before the cargo could be offloaded. In addition, a consignment booked on Oman Air was at the warehouse for over seven days.

“We are finalising a contract in association with our consultant RITES to expand the warehouse for booking and scanning cargo.

The space inside the motor transport section, adjacent to the warehouse, has been opened for parking of trucks,” stated an Air India official.

A cargo backlog in Chennai has impacted the likes of Air Arabia and Oman Air

August 2010

Etihad passengers on US flights can now check-in at Abu Dhabi’s new Terminal 3

AIRPORT OPERATIONS

Etihad Airways has been handed security approvals to operate flights to destinations in the United States from Terminal 3 at Abu Dhabi International Airport.

Passengers flying to the cities of Chicago and New York will be able to check-in and board from the new terminal, with premium customers also receiving access to Etihad’s first and business class lounges. In addition to the US destinations, flights to Cochin,

Islamabad, Karachi, Lahore and Peshawar now operate from Terminal 3, switching from Terminal 1, while flights to Colombo and Moscow will move to Terminal 1.

“We are pleased to confirm that Etihad can now offer our US-bound customers the convenience and luxury of Terminal 3, including the premium check-in and lounges, as well as world-class duty free shopping,” said the airline’s chief commercial officer Peter Baumgartner. www.arabiansupplychain.com

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ARABIAN SUPPLY CHAIN.COM

Still hungry for more news?

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Emirates Etihad Air India Nas Air

Human remains discovered on Saudi flight An investigation has been launched after a maintenance worker at King Khaled International Airport in Saudi Arabia made a shock discovery of human remains on the tyres of a plane that arrived from Beirut on 10th July 2010. According to media reports, some passengers on the flight – operated by Saudi Arabia’s Nas Air – noticed a man with a cap and backpack running towards the aircraft shortly before it departed from Beirut. Despite informing the pilot, the flight continued as normal and the body parts were discovered after the plane landed.

Investigators later indentified the body as Lebanese national Firas Haidar, who apparently lived in the Burj al-Barajneh district near Beirut airport. “The man’s family was able to identify him through a photograph provided by Saudi Arabian authorities,” stated Lebanon’s justice minister Ibrahim Najjar. “There are also reports that he was mentally unstable, but we have yet to confirm them.” Rafic Hariri International Airport’s security chief handed his resignation a couple of days after the incident. “General Wafik Shoukeir has met with Interior Minister Ziad Baroud to ask that he be relieved of his duties as airport security chief,” a government source said on condition of anonymity.

Qatar Airways MOST POPULAR HEADLINES

1 Etihad causes temporary runway closure at JFK

2 Saudi pilot detained for ‘following traffic rules’

3 Sheikh Mohammed tours

Al Maktoum International

4 Air India plane crushes

technician at IGI airport

5 Dubai aircraft cleaner

accused of stealing money

EDITOR’S CHOICES INDUSTRY REPORT

PHOTO SPECIAL

Top Long-Haul Airlines: Which? Magazine Survey A recent passenger survey on airline satisfaction has rated Emirates, Qantas, Thai Airways and Singapore Airlines amongst the world’s leading carriers.

Dubai Sheikhs attend Farnborough Airshow A photo gallery of His Highness Sheikh Mohammed bin Rashid Al-Maktoum and Sheikh Ahmed Bin Saeed Al-Maktoum at the recent aviation trade exhibition.

AVIATION BUSINESS SPOT POLL

What are your long-term predictions for Al Maktoum International Airport in Dubai?

62.5% August 2010

The airport will probably be a success over time

16.7%

The project is likely to exceed expectations

20.8

The airport will struggle to achieve % its long-term targets www.arabiansupplychain.com

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AVIATION TECHNOLOGY

IT

TRENDS

With record participation in SITA’s airline technology survey this year, Hani El Assaad predicts a bigger and better spend on IT solutions in the Middle East.

August 2010

viation technology specialist SITA had reason to celebrate last month, with the announcement that its annual Airline IT Trends Survey attracted a record number of participants in su a favourable response, 2010. With such a it would appear the independent questionnaire has been largely accepted g by a target group of senior technology professionals working in the top 200 p international passenger carriers. encou Also encouraging were the survey results, which suggest there is growing t worst is over for a global optimism that the industry that has sustained record losses

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AVIATION TECHNOLOGY

over the last couple of years. “Although the last two years have been incredibly difficult, there is still an emphasis on accelerating technology projects that promise an early return on investment,” explains Hani El Assaad, regional vice president of SITA in the Middle East and North Africa. “The majority of airlines are also looking to extend their IT partnerships with strategic suppliers, such as ourselves, and outsourcing is a major element in this.”

In total, the survey attracted responses from 129 airlines around the world, including 14% that classified themselves as low cost carriers, 81% full service carriers, and 5% charter carriers. From this figure, an encouraging 56% of respondents were expecting an increase in IT spend over the next year, with only 10% noting that a decrease was possible. While the estimated declines were more prominent in developed markets, such as Europe and North America, it was actually the Asia, Middle East and North America regions that carried the most optimism.

“Asia led the charge for increased spending, with 75% of respondents expecting an increased budget for IT solutions next year. However, the Middle East and Africa (MEA) was very encouraging too,” explains El Assaad. “In total, around 22% of our responses came from the MEA region, covering large and significant carriers in more than 40 countries. Although the sample size is not large enough to make exact statistical statements on a regional basis, we do aim to provide regional observations where possible, as trends can vary from one part of the world to another.”

As part of these regional observations, El Assaad explains that IT budgets in the Middle East and Africa have been less affected by the recession, compared to airlines in other geographical locations.

The survey also shows that airlines in the MEA region have generally been able to keep their IT spend, as a percentage of revenue, at a higher level than airlines in other parts of the world, which is expected to continue in 2011. “The expectations for increases and decreases for the Middle East and Africa IT budget in 2011 are similar to global levels,” he continues. “In other words, only 10% of airlines expect a decrease next year.”

Despite the bright forecast, some of the trends observed by the survey are

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IT PRIORITIES: AREAS FOR INVESTMENT

a little more concerning. For example, moving passengers to self service is a strong global trend, especially when it comes to check-ins. But according to the questionnaire results, many airlines in the Middle East and Africa have failed to catch onto this trend as much as their regional counterparts. Fortunately, there is a sincere ambition to add check-in on kiosks and web within the MEA region, in addition to mobile phone solutions for passengers by 2013.

Such nuggets of information are essential reading for anyone with an interest in the aviation sector and will ultimately help SITA to better serve its airline customers in the Middle East, and the wider industry as a whole.

“The aviation industry in the Middle East is still growing above global average and airlines continue to expand their fleets and networks. To support the growth there is significant new airport construction

SPEND 2011 COMPARED TO 2010: POSITIVE OUTLOOK

Increasing business confidence translates into expectation for higher IT spending in 2011 Regional Differences

Expectations for increases and decreases in the Middle East and Africa IT budget are similar to global levels, with only 10% of airlines expecting a decrease next year

August 2010

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AVIATION TECHNOLOGY

and the modernisation of older airports is on the rise. There is also an increased demand for airport-wide integrated IT and communications systems and an emphasis on border security,” states El Assaad. “Throughout the region, interest in self service systems is rising, along with a growing level of environmental awareness. For example, the Arab Air Carriers Organisation (AACO) was the first organisation to recommend adoption of the new SITA Aircraft Emissions Manager solution to its members.”

The primary challenges to overcome before the region can reach its full potential include crowded airspace, privatisation, de-regulation and political stability, according to the executive. “Aviation infrastructure in the Middle East region has not been in sync with the fast-paced growth of airlines in the past, leading to crowding of the airspace. Efficient capacity management is critical as the market continues to expand,” he says.

“Several carriers in the Middle East are seeking privatisation. However, regional regulations do not promote adequate financial and operational transparency, which is a hindrance for attracting private investment. Also, deregulation initiatives

NUMBERS OF RESPONSES IN 2010

are taking place, however these are at a country level and the lack of co-ordination can be challenging for the sector.”

Rather than view such challenges with a negative approach, El Assaad is full of optimism, stating that the Middle East has captured the world’s attention even with these hurdles and once the issues are addressed, the region will continue is rapid ascent. For SITA, this will mean stronger demand for its airport, airline, air traffic management and border management solutions. “We’re in a great market at a great time, so the future is very exciting indeed,” he concludes.

Aviation infrastructure in the Middle East region has not always been in sync with the fast-paced growth of airlines

RESPONDENTS BREAKDOWN

US$ <499 million US$ 500-999 million US$ 1,000-4,999 million US$ 5,000+ million

IT PRIORITIES: AREAS FOR INVESTMENT

Europe Asia Pacific Africa/Middle East Americas

August 2010

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DUBAI WORLD CENTRAL

A WHOLE

NEW WORLD

Following years of preparation, Dubai finally opened the doors to its ground-breaking Al Maktoum International Airport last month, which is set to cement the Middle Eastâ&#x20AC;&#x2122;s position as a global aviation hub.

August 2010

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DUBAI WORLD CENTRAL

ubai marked its transition region, particularly at a time when the into a two-airport city transportation and logistics sector is last month, with the playing an increasingly important role in much-awaited launch the city’s rapidly diversifying economy.” of cargo operations The initial phase of the airport will at Al Maktoum feature an A380 capable runway, 64 International.

A remote stands, a cargo terminal with diverse range of cargo annual capacity for 250,000 tonnes of carriers have registered freight, and a passenger terminal building to operate in the airport designed to accommodate five million – which is part of the multi- passengers per year. “Although it’s a longbillion dollar Dubai World Central term project, the need for a second airport development – including Aban Air, ACI, in the near to mid-term is clear,” states Aerospace Consortium, Aviation Service Paul Griffiths, CEO of Dubai Airports.

Management, Coyne Airways, EuroAsian “Dubai International currently has Services, Rus Aviation, Sonic Jet, capacity for 2.5 million tonnes SunGlobal, Skyline and United of cargo, while volumes are Aviation Services. expected increase to 3 million To celebrate the launch, tonnes by 2015. On the Sheikh Mohammed bin passenger side we expect Al Maktoum International’s Rashid al-Maktoum, prime to see numbers skyrocket total passenger capacity minister of the United Arab from the 41 million that once it’s fully operational Emirates and the ruler of passed through Dubai Dubai, and his son Sheikh International in 2009 to 98 Hamdan Maktoum, deputy ruler million by 2020 and 150 million of Dubai, were provided a royal by 2030.” tour, alongside HH Sheikh Ahmed Bin Griffiths adds that the new airport’s Saeed Al Maktoum, president of Dubai facilities and connectivity to the Jebel Civil Aviation Authority and chairman Ali Port and Jebel Ali Free Zone by a of Dubai Airports. “Phase one is the first bonded road is being acknowledged by step in a long infrastructure development adopting airlines. “We are delighted with project that over time will see our new the response from cargo operators who airport transformed into the world’s are seizing the opportunity. DWC opened largest global gateway and a multi-modal with 15 cargo airlines signed up and we logistics hub, while playing an increasingly expect that number to increase steadily integral role in the ongoing economic and over the next few months.” social development of Dubai,” comments The airport’s opening was preceded Sheikh Ahmed. by the presentation of DWC’s official “The inauguration of Al Maktoum aerodrome certification to Sheikh Ahmed International serves as a timely from Saif Mohammed Al Suwaidi, reminder to regional and international director general of General Civil Aviation stakeholders of the strength of the vision Authority (GCAA), which followed a of His Highness Sheikh Mohammed Bin detailed aviation safety and security Rashid Al Maktoum, vice president and certification programme. “This is the prime minister of the UAE and ruler of 8th International Aerodrome within Dubai, who continues to demonstrate the United Arab Emirates to receive a an unwavering commitment to meeting certification from the GCAA,” states Al the long-term infrastructure growth and Suwaidi. “In addition to the aerodrome capital requirements of our city.” being certified, DWC was the first to Sheikh Ahmed also reinforces the fact obtain organisation certificates for that Dubai World Central will support the air traffic services, communication, emirate’s aviation, tourism, commercial navigation and surveillance, aeronautical and logistics requirements through information services and aviation 2050 and beyond. “The Government meteorology services.” of Dubai remains fully committed to Once completed, Al Maktoum the timely realisation of the airport and International will be the largest airport Dubai World Central as whole. There is in the world, with five runways, four no doubt that this multi-modal logistics terminal buildings and annual facilitation hub will provide significant benefits to for a total of 160 million passengers and the economy of Dubai and the wider 12 million tonnes of cargo.

160M

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August 2010

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DUBAI WORLD CENTRAL

MAXIMUS AIR CARGO’S 4100 LANDS AT ANTONOV 124100 D CENTRAL DUBAI WORLD

DNATA CARGO STARTS DWC GROUND HANDLING SERVICES

Abu Dhabi-based d Maximus Air Cargo ov 124-100 at Al Maktoum landed its Antonov International last month, making it the craft to touchdown at the largest civilian aircraft ar airport facility. “This is multi-billion dollar ion. As the UAE’s largest a symbolic occasion. erator, we are delighted all air cargo operator, that our Antonovv 124 has landed at the st time,” comments Fathi airport for the first dent and chief executive H. Buhazza, president officer of Maximuss Air Cargo and founder This is the start of of Care by Air. “This hip and we are a long relationship proud of the greatt vision of the rates in United Arab Emirates obal, developing a global, ade commercial, trade ub and logistics hub ate that will facilitate th. the region’s growth. dly We wholeheartedly n.” support this vision.”

ENOC AVIATION REFUELS INAUGURAL FLIGHT AT DUBAI WORLD CENTRAL The team at ENOC Aviation were celebrating their role in the launch of operations at Al Maktoum International, after the company was selected as the first supplier to provide jet fuel for aircraft at the Dubai World Central facility. Its first customer was Emirates SkyCargo, with ENOC Aviation fuelling a cargo flight from Hong Kong to Düsseldorf.

Saeed Khoory, group chief executive mber of of ENOC, was joined by a number pany to senior officials from the company n to His mark the occasion, in addition Highness Sheikh Ahmed bin Saeed Al Maktoum, chairman of Dubai Aviation City Corporation.

“Aviation is one of the key pillars of ng of the Dubai’s growth, and the opening rt further Al Maktoum International Airport adds to the market confidencee on the hallenges emirate’s ability to overcome challenges d Khoory and deliver results,” explains Saeed with a sense of pride. ed to “ENOC Aviation is honoured have been the first supplier at the uel new airport, to provide jet fuel o to the Emirates Airline cargo

August 2010

flight from Hong Kong to Düsseldorf.

This is a powerful reiteration of Dubai’s competencies across the spectrum – from managing one of the world’s fastest growing airlines to focused investments in large-scale aviation infrastructure, as well as support technologies,” he adds.

After twelve months of preparations and thousands of man hours by its dedicated personnel, Dnata is ready to serve its customer airlines, some of which have already started flying into and out of the new Dubai World Central - Al Maktoum International Airport (DWC).

The company, which is already the ground handler for over 120 airlines at Dubai International Airport, will provide the ground handling services to all airlines at DWC. It has made significant investment in equipment in recent months and is now fully equipped to handle any type of freighter aircraft at the new location.

“In this first phase, the cargo facility, which will be known as Dnata FreightGate 8, will have a throughput of 250,000 tonnes per annum,” explains Jean Pierre de Pauw, divisional senior vice president of Dnata’s cargo division, whose team manages the FreightGate. “Our team has the facilities and capability to handle any type of cargo - even perishable goods as there is a 1000 cubic metre capacity of chiller and freezer storage. Some 33 truck docks will accommodate trailers up to 40 feet long. Rollerbed and air suspension equipped trucks, capable of accommodating up to full three metre height 10ft ULDs, will ensure a swift connection with airports across the United Arab Emirates and the wider Middle East region.”

Dnata will also provide full aircraft servicing, including the placement of ground and operational equipment. In addition, there is a seamless interface with various control and government authorities, including customs and the airport police, as well as security provision 24 hours a day, which the company states will provide an extra peace of mind to customers.

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DUBAI WORLD CENTRAL

RUS AVIATION PLANS RELOCATION TO DUBAI WORLD CENTRAL

RUS Aviation, a company founded and registered in the United Arab Emirates, launched its cargo operations in the 1990s with a lone Russian build freighter to customers in the Middle East and Central Asia. Today, it boasts a fleet in excess of 22 aircraft, including Airbus A300 and the modern Tupolev TU 204C, apart from it’s rugged backbone, the Ilyushin IL 76.

RUS Aviation is marketing itself as a total aviation services provider on a global scale, switching more and more from charter operator to scheduled services and purchasing state-of-the-art western equipment.

According to Saleh Al Aroud, managing director of Rus Aviation, the company recognised the far-sighted vision and importance of Dubai World Central during the project’s initial stages. “This is the future of the cargo industry, not only in the United Arab Emirates, but in the entire Middle East,” he says. “The decision was made early to be an integral part of the venture and to leave no stone unturned to make it a success.”

RUS Aviation is planning to move its entire Dubai operation to the new airport and is presently conducting an economical evaluation to shift more services to the new location.

INTERVIEW: NITIN MIRCHANDANI, CEO OF AEROSPACE CONSORTIUM What is the history of Aerospace Consortium in Middle East aviation?

Our company was established in 2003 to bring professional aviation solutions to the UAE’s scattered unscheduled charter air space at that point of time. We have experienced steady growth, which has been surprising for us also. With the markets around the world concentrating more on major hubs like Dubai, we as a company have grown as part of the emirate’s overall growth.

What led to your decision to operate at Dubai World Central?

This project is a really unique alternative to the existing airport in Dubai, with the number of

www.arabiansupplychain.com

aircrafts and also volumes increasing everyday. This trend will continue on the upward curve and we wanted to play a role in that growth.

What services are being provided by Aerospace Consortium at this base?

We are offering a range of cargo air charters, basically along the same lines as those being provided at the moment from Dubai International Airport.

Why do you think Dubai World Central as a whole is important to the Middle East aviation industry?

With its strategic location, Dubai World Central provides a launch base to Afghanistan, Iraq and Africa. At the same time, it provides a perfect hub for any movement east to west. The facilities envisaged at Al Maktoum airport and the extent of the project promises to give a lot more capacity, which is not readily available throughout the Middle East.

INTERVIEW: VITO GOMES, FOUNDER AND MANAGING DIRECTOR OF ASM What is the history of ASM? We were first established in 1998 in the United Kingdom and ventured into the UAE and India, operating and delivering premium aviation services network for the Middle East, Asia, Africa, CIS, EU and USA. Our mission was to provide a full range of specialised aviation services designed for both value and convenience to business and commercial companies at the best price quality ratio.

How has the company developed since this time?

To be honest, it has caught me by surprise that within a year of inception, we climbed the ladder at a quick but steady pace to reach the level at which we are today and gain the confidence and respect from our clients and suppliers in the regional and global market.

Why do you think Dubai World Central is important to the Middle East aviation industry?

This will primarily help reduce the congestion in the current operational airports, as well as cut down the operational costs tremendously, as we are aware of the fact that most aircraft are kept holding on ground or in air due to the current congestion in air traffic. ese ce does What type of p presence y have at ASM currently entral?

Dubai World Central?

At present we have representation at DWC. d handling, Apart from ground el, catering we arrange fuel, and all related services erator required by an operator ght. to operate a flight. ere As and when there nt, is a requirement, p we have a tie up in place with all concerned agencies to provide the necessaryservices o on ground to the operators.

August 2010

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DUBAI WORLD CENTRAL

PHOTO SPECIAL : DWC LAUNCH

er of A numb ns have io t celebra ce to mark la taken ptar t of DWC the s s, including n operatioater canon s aw mirate ny for E ceremo royal tour for and a Mohammed Sheikh

August 2010

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AERO ENGINE LEASING

here is no doubt that spare engines are essential to the smooth running of airlines. However, in an economic world blighted by recession, these expensive commodities are often considered ‘deadweight’ on the balance sheets of carriers, on standby for most of their lifetime and yielding little or no direct return. But what if there was an alternative, whereby airlines could have spare engines at their immediate disposal without the heavy costs weighing down their budgets? The answer, according to Phil Seymour, president of International

Bureau of Aviation (IBA), lies in aero engine leasing.

Since its inception in 1988, the independent aviation consultancy has provided a wide range of support services to major players in commercial aviation.

Indeed, the valuation of aircraft, engines and aircraft spare parts have become popular services for IBA, growing into more general advice on due diligence and company valuations during aviationrelated mergers and acquisitions. With all this experience behind him, Seymour is a strong advocate of aero engine leasing as a practical and cost-effective solution to the ‘spare engine’ dilemma. “The engines we are talking about vary in value from around US$6 million up to $20 million for

Leasing lowdown

the larger versions,” he states. “Keeping such a high amount of cash locked into spare engines just does not make sense.”

Whereas aero engine leasing used to be a service largely catering to smaller airlines, the giants in the aviation world have quickly cottoned onto its benefits as a way of increasing liquidity. “An airline with, say, 50 B737NG aircraft of between 5 and 10 years old may require approximately 10 to 15 spare engines to cover the scheduled overhaul programme,” states Seymour.

“That could equate to $100 million of spare engines, so why keep such amounts on the balance sheet as assets?”

If a healthy bottom-line is not enough to convince the most traditional of airlines, the numerous other benefits may well swing the balance. Due to the diversity of today’s market for aero engine leasing, lending agreements tend to be flexible and reasonable. Not only do the lessors cater to a wide range of engines and aircraft models, but also provide a flexible range of leasing options – short-term, medium-term, long-term. Unlike the aircraft market, as Seymour points out, the engine market is still a much closed specialist arena, with independent lessors and OEMs (Original Equipment Manufacturers) controlling around 80% of the leasing market. “Most engine lessors have a relatively high amount of technical expertise, either within their

With increasing pressure on airlines to limit the amount of deadweight on their books, the concept of aero engine leasing has emerged as a popular solution.

August 2010

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AERO ENGINE LEASING

10% of the worldwide fleet of spare engines were leased, whereas today the number is most likely over 20% and growing. “Much of that growth comes from the OEMs through the various maintenance packages they offer, many of which include spare example,” explains Jon Sharp, president engine support.” and CEO at ELFC. The engine leasing division of GE As Sharp points out, the off-loading Capital Aviation Services (GECAS) is of any residual value risk to the lessor is specifically focused on providing spare extremely important for the airline. “Our engine solutions to airlines and MRO business model assumes that we will invest facilities in the region. “We are very active in an engine and hold it for a notional 15- in supplying short-term engine leases for year period, during which time it will be all the engine types we have, entering leased to several airlines,” he says. “This into long-term operating leases and means that we can bridge downturns in financing spare engines for airlines,” says the economy and choose to liquidate the Roger Welaratne, senior vice president of engines when economic conditions are marketing, asset management group at favourable, a luxury of time that an airline GECAS. “This can be for any new spare exiting a fleet of a given type does not engines that airlines are buying to support have.” their fleet of aircraft and for existing spare Sharp founded the company in engines to help airlines manage their 1989, when a new engine cost in the cash flow and their strategy for range of $3 million to $5 million holding spare engines over the and the growing complexity long-term.” and size of engines was For airlines in the region, driving the cost even higher. the decision on whether to buy “That consideration is even or lease is an individual one.

The approximate cost of more imperative today, with “The airline will only take the large-scale aero engines the very largest engines costing engine for the duration of the over $30 million dollars each need that we have to assume is and so the cash saving to the airline planned. If the plan changes, there through leasing is considerable,” he says. is flexibility to extend or in some cases Twenty years ago, he estimates, less than shorten the term,” says Welaratne. “Since

Keeping high amounts of cash locked into spare engines just does not make sense organisations or available to support them as and when their own engines require refurbishment,” he says.

As one of the world’s largest aero engine lessors, Engine Lease Finance Corporation (ELFC) provides financial solutions for the acquisition of spare commercial aircraft engines to international airlines and MRO agencies, with an impressive portfolio of over 240 managed engines. The company’s core business is the provision of long-term operating leases typically of 5 to 10 years duration and the supply of engines for short-term leases on a monthly basis. At times, the company bundles together a package of engines and leases and, together with co-investment from one or more of its partner companies, places them into a jointly owned special purpose company, managing the resulting investment vehicle for the benefit of the co-investors. “Engines are a popular asset for such investment vehicles because of their relatively strong value retention (assuming they are tightly managed) and the fact that they are a ‘medium-ticket’ value asset, assisting in the spread of investor risk across a larger community than higher-value aircraft, for

US$30M

NEW JOINT ENGINE LEASING VENTURE

Three global giants form a joint venture company to invest in commercial aircraft engines subject to leases with airlines worldwide Earlier this year, DVB Bank, Mitsubishi Corporation (UK) and Engine Lease Finance Corporation (ELF) formed an engine leasing joint venture, Deucalion MC Engine Leasing Limited. “The company completed its first portfolio acquisition in December 2009, with the purchase of seven commercial aero engines on lease in Europe, the Middle East, Asia and the Americas,” shares Paul Da Vall, senior vice president, Aviation Investment Management at DVB Bank. ”There are now 24 aircraft engines in the two vehicles, on lease to 18 airlines around the world.”

A typical case of aero engine leasing is when airline orders its engines, both installed and spare, usually done separately from the ordering of the host airframe. “This

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may involve a lead time of two years and during that time the airline will need to make pre-delivery payments and a final payment when the engine is delivered,” explains Jon Sharp, president and CEO at ELFC, one of the world’s largest aero engine lessors. “It will turn to ELFC and enter into a forward sale and lease arrangement, whereby ELFC effectively takes over the engine order and makes those payments.”

Once delivered, the engine becomes the property of ELFC and is delivered to the airline that starts paying lease rental (usually on a monthly basis) as it would for an aircraft. “The lease will also contain arrangements for paying for hours and cycles used on the engine, either on a

pay-as-you-go basis or as compensation at lease end. The fees so collected are contributed to engine overhaul when required,” he continues.

During the term of the lease, the airline has control and custody of the engine, which will be treated the same as others in its fleet.

The new company currently has one engine on lease in the Middle East with Etihad Airways. “It is used as a spare engine in support of Etihad’s Airbus A320 fleet, whereby it is put on wing when another engine needs to come off for maintenance,” says Da Vall. “This way the aircraft is able to continue in operation during such routine engine maintenance.”

August 2010

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AERO ENGINE LEASING

the lessor owns the engine, the airline does not need to put equity down, so it is easier Middle East airlines have traditionally on cash flows and there is no exposure on been owners of spare engines, but future residual value.”

Last year, the engine leasing division of there is a gradual shift to leasing GECAS executed a deal with Dubai-based Emirates for the purchase/leaseback of eight GE90-115B engines for the carrier’s As well as cost-savings, many airlines of clients around the world. “Typically Boeing wide-body fleet. This was the first engine leasing deal consummated between find that leasing arrangements are the bank will provide loans to airline the two companies. “Airlines in the Middle generally much more flexible than outright companies directly and to engine leasing East have traditionally been owners of spare ownership. “Airlines can plan the phase out companies, to enable them to acquire their engines, but we now see a gradual shift to of aircraft and spare engines more exactly spare engines in support of aircraft fleets,” leasing,” Welaratne says. “The region has and can better match their total aircraft explains Da Vall. In total, the bank has a large new account order portfolio along seat capacity by engaging in leasing of provided financing for 67 spare engines to with a spare engine order backlog, so we aircraft and engines,” says Paul Da Vall, 27 airlines. Among its clients, DVB finances believe a significant portion of these new senior vice president, Aviation Investment a spare engine with Jazeera Airways in orders will be financed under purchase and Management at DVB Bank, one of support of its Airbus A320 aircraft fleet. the leading specialists in international leaseback type arrangements.”

With the maturation of the engine Emirates is certainly not the only transport finance solutions. Da Vall is leasing sector, the market has become very anticipating that leasing will competitive. “Airlines do have a better airline to have jumped at the become much more popular understanding of the merits of leasing, chance at engine leasing. “The than ownership, as airlines cost certainty, residual risk exposure and main benefit of leasing is look to use their own capital flexibly, thus optimising the solution they it provides spare engines in running their businesses need,” says Welaratne. Others factors in without tying up the airlines during these difficult the current aviation market also come into capital,” says Abdulkarim The estimated percentage economic times. “Firstly, it play – the increased number of aircraft Yousif AlAwadhi, director of of leased spare engines in enables airlines to reduce the being taken on lease for instance, and the aviation asset management for the worldwide fleet amount of their own capital move towards twin-engined aircraft. But another leading Middle Eastern that is tied up in the ownership at the forefront of the future success of airline, Gulf Air. “This is especially of assets,” he says, echoing the views this aviation niche, lies a common-sense beneficial during difficult times such of both Seymour and Sharp. “The airline approach by the airlines to protect its as the global financial crisis.”

The airline itself currently has eleven industry is an unusually capital intensive bottom-line. “There has been an impact spare engines, nine on long-term leases business given the very high cost of aircraft since the airlines have become more and only two directly owned. For Gulf and spare engine assets. By reducing their focussed on cash preservation and more Air, the flexibility of having spare engines capital employed in the ownership of these efficient ways of financing their aircraft available at short notice is a huge bonus. assets airlines can significantly increase and engines,” says Seymour. “Engine “There is always a guarantee that a spare their overall return on capital.” leasing provides a useful weapon in the DVB Bank is also engaged in financing battle for survival and hopefully growth in engine will be available at any point in time and this is crucial when faced with of spare engines on behalf of a number the future.” unforeseen circumstances,” says AlAwadhi.

“Another advantage to leasing is the option to exchange or return an engine it if its performance isn’t up to the mark.”

Indeed, IBA’s Seymour believes that during the recent economic downturn, many airlines have avoided sending engines for overhaul. “This may be because the airlines want to keep these high-value assets off their balance sheet or to support additional spare engine requirements when they are facing a peak of engine overhauls and need short-term leased engines to keep the aircraft flying,” he explains. “Of course at some point the overhaul will need to be performed but, at a time when ‘cash is king’, it is important that airlines use a balanced approach to such expenditure,” Lending agreements for aero engine leasing are normally available in short, medium and long term adds Seymour.

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SHOW REPORT: FARNBOROUGH AIRSHOW 2010

Farnborough AIRSHOW 2010

The Middle East steals the spotlight once again at the bi-annual aviation show, with order announcements from Emirates, Etihad and Qatar Airways. iddle Eastern airlines made a splash at this year’s Farnborough Airshow, with the likes of Emirates, Etihad, Qatar Airways and Royal Jordanian playing a central role in the US$47 billion worth of orders that were announced at the bi-annual exhibition. And while the 2010 order book is somewhat deflated in comparison to the record highs at 2008’s Farnborough – which reached a staggering $88 billion – it still provided a cause for celebration, especially in

August 2010

the aftermath of a crippling economic recession. “Farnborough International Airshow 2010 has been very successful and the figures demonstrate the mood of strong optimism that has been around the show this year,” states Ian Godden, chairman of Aerospace, Defence and Security (A|D|S), the parent company of organiser Farnborough International Limited (FIL). “To see over $47 billion worth of business done at the show, and the quality of business transactions, its testament to the endurance of our sectors, their position contribution to world trade, as well as the significance of the show itself.”

While the multitude of purchase announcements have now brought Farnborough back to 2006 levels, when $46 billion of orders were revealed, the event over-performed in terms of exhibitors this year, with 1450 companies showcasing their products and services in comparison to 1393 from the 2008 exhibition. Organisers have also reported the success of visitor numbers, with 120,000 attendees on trade days and 160,000 on the public weekend – almost on par with the grand total of 285,000 from 2008, although the slight decline was somewhat expected within trade circles due to the economic climate.

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SHOW REPORT: FARNBOROUGH AIRSHOW 2010

price for an additional 30 Boeing 777300ERs. With a signing ceremony that was attended by Sheikh Mohammed bin Rashid Al-Maktoum, ruler of Dubai, and Sheikh Ahmed Bin Saeed Al-Maktoum, chairman of Emirates – together with Boeing Commercial Airplanes CEO Jim Albaugh - the new order adds to the fleet of 71 777-300ERs previously ordered, of which 53 aircraft are currently in service. Boeing scored again with a Royal Jordanian order for The show also contributed three additional 787s. approximately $30 million to the local Also stealing a considerable share of economy around the British town of the limelight, Qatar Airways CEO Akbar Farnborough, according to Shaun Al Baker hosted two press conferences to Ormrod, chief executive of FIL. “We reveal additional aircraft orders for his thank all our guests at this year’s show for corporate jet division, Qatar Executive, attending and contributing to a successful and announce further details of Boeing airshow. We hope very much to see them 787 deliveries and confirmed orders for again in 2012,” he concludes. additional Boeing 777s. The carrier Fresh from its record purchase rounded off its participation of Airbus A380s at the with a show-stopping Berlin Air Show earlier this presence at the static year, Emirates continued display, attracting large its spending spree at crowds to its passenger The total value or orders Farnborough, with an order announced at Farnborough aircraft, including the worth $9.1 billion at list Boeing 777-300.

Airshow 2010

Farnborough’s 2010 success has demonstrated the mood of optimism at the show this year

$47M

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Meanwhile, Etihad Airways and Airbus participated in a handover ceremony at the exhibition to celebrate the first A330-200 freighter aircraft to be produced, attended by James Hogan and Tom Enders, the respective chief executives of both companies. The Abu Dhabi-based carrier is the launch customer of freighter model, which will enter service for Etihad Crystal Cargo in September this year.

FACT FILE: FARNBOROUGH INTERNATIONAL AIRSHOW 2010 • Farnborough International Airshow is the largest temporary exhibition in the world • The ‘build up’ period takes four months prior to the start of the show • Over 3600 tonnes of temporary structures are transported to the site • Around 90,000m2 of structures are erected on site, providing tailor-made floor space that would accommodate London’s Royal Albert Hall no fewer than 30 times

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SHOW REPORT: FARNBOROUGH AIRSHOW 2010

ETIHAD HANDOVER CEREMONY FOR A330200 FREIGHTER Etihad Airways and Airbus participated in a handover ceremony at Farnborough International Air Show to celebrate the first A330-200 freighter to be produced.

The Abu Dhabi-based airline is the launch customer of the A330-200 freighter aircraft, which will enter service for its cargo business, Etihad Crystal Cargo, in September. “Over the last quarter, there was an 18% increase in cargo tonnage carried by Etihad, reflecting the strengthening recovery in our industry.

We are focused on taking the right steps to achieve strong expansion and growth,” says James Hogan, CEO of Etihad.

“The new aircraft will become a key part of our freighter fleet and make a major contribution to building the strength and network of our cargo business. The additional capacity will help significantly expand our footprint in Asia and Europe, including China, as well as enhancing our worldwide charter services.”

Etihad’s A330-200 freighter aircraft can carry up to 64 metric tonnes of cargo and can fly up to 7,400 kilometres

non-stop , according to Tom Enders, CEO and president of Airbus. “This aircraft will allow Etihad’s cargo business to increase frequencies and build its presence in the high-growth European and Asian freight markets,” he says. “Overall, the recovery of freight traffic is gaining significant momentum and this aircraft gives operators like Etihad Crystal Cargo the best product for maximising returns.”

EMIRATES REVEALS US$9.1 BILLION BOEING 777300ER ORDER Emirates placed an order with Boeing for an additional 30 777-300ER aircraft, worth approximately US$9.1 billion in list prices.

With a signing ceremony at Farnborough airshow that was attended by Sheikh Mohammed bin Rashid Al-Maktoum, ruler of Dubai, and Sheikh Ahmed Bin Saeed Al-Maktoum, chairman of Emirates – together with Boeing Commercial Airplanes CEO Jim Albaugh - the new

August 2010

order adds to the fleet of 71 777-300ERs previously ordered, of which 53 aircraft are currently in service. “Our latest deal signals Emirates’ confidence in the growth of the thriving aviation sector and our commitment to building a modern, environmentally efficient fleet for tomorrow,” says Sheikh Ahmed.

The 777-300ER will be operated in a three-class configuration, with eight first class suites, 42 business class seats and 310 economy class seats. “Emirates is today one of the world’s leading airlines, thanks in part to the 777. Its ambitious expansion plans have established itself as a global force in the aviation sector,” adds Albaugh.

“Emirates has played an important role in the 777’s success with its significant support of the programme and valuable feedback over the years. Today’s order serves to underscore the airline’s confidence in the airplane, which forms the mainstay of its fleet.”

QATAR AIRWAYS ORDERS BOEING 777 AIRCRAFT AT FARNBOROUGH AIRSHOW Qatar Airways CEO Akbar Al Baker hosted two press conferences at Farnborough International Airshow 2010, announcing additional aircraft orders for its corporate jet division, Qatar Executive, and confirming orders for two additional Boeing 777s.

The Doha-based airline also revealed a revised delivery schedule of its Boeing 787 Dreamliners, with the first to arrive from the fourth quarter of 2011 to help meet early aircraft requirements.

Speaking at the exhibition, Al Baker explained that the airline was continuing with its ambitious growth plans, undeterred by the difficult global economic situation. “Air travel demand is continuing to rise in the Middle East and it is becoming clear that international demand is returning as the global economy shows signs of recovery,” he says. “We continue to invest in new aircraft and new routes and will be well positioned for the upturn in air travel with a fleet fully optimised for economic and environmentally friendly operations.”

The national carrier rounded off its participation at this year’s Farnborough Airshow with a show-stopping presence attracting large crowds at its passenger aircraft on static display. “The Boeing 777 has become the cornerstone of our fleet. It is a tool for profitability, but also a platform for delivering the highest customer satisfaction,” says Al Baker.

“The additional two Boeing 777-200 LRs will help us open up new ultra long-haul markets as we expand and identify new opportunities further.”

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SHOW REPORT: FARNBOROUGH AIRSHOW 2010

ROYAL JORDANIAN MAKES B787 ORDER AT FARNBOROUGH Boeing and Royal Jordanian signed an order for three 787-8s at Farnborough International Airshow. The purchase is worth around US$500 million at list prices and was previously attributed to an unidentified customer on Boeing’s orders and deliveries website.

“The superior economics and range capability of the 787 will allow us to competitively serve North America and other destinations in our network from Amman,” says Hussein Dabbas, president and CEO of Royal Jordanian. “The unique passenger appeal of the 787 will enable us to provide a competitive advantage in the markets we serve.”

Royal Jordanian, which was the first airline in the Middle East to order the 787 Dreamliner, has committed to 11 of the

aircraft. The national carrier placed its first orders for four 787s in 2007 and also has arranged to lease two airplanes each from CIT Aerospace and International Lease Finance. “This commitment to the 787 by Royal Jordanian will allow for expanded

BAHRAIN CIVIL AVIATION RENEWS FARNBOROUGH ALLIANCE His Highness Sheikh Abdulla bin Hamad Al Khalifa, chairman of Bahrain International Airshow’s Supreme Organising Committee, signed an agreement with Farnborough International Ltd (FIL) to formalise a partnership for the joint organisation of the next Bahrain International Airshow (BIAS), which will take place between 19 – 21 January 2012 in the Kingdom.

“Bahrain is proud to be extending its partnership with Farnborough International Ltd following the success of this year’s inaugural Airshow,” states Sheikh Abdulla. “The 2012 Bahrain International Airshow will continue to deliver a personalised event, focused on the industry itself, free of traditional flying and demonstration limitations due to the airshow’s unique location and bespoke facilities.”

The event, which made its debut in January 2010, is designed to deliver access to high-level delegations and provide opportunities for various demonstration flights from Sakhir Airbase, the airshow’s purpose-built home. “Aside from Bahrain’s historic association with aviation, BIAS has continued to forge even stronger links between Bahrain and a number of

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international aerospace organisations who, like many other global businesses, see Bahrain as a natural gateway to the Gulf’s trillion-dollar market,” continues Sheikh Abdulla. “Bahrain’s own investment in aviation is growing rapidly; from aircraft to training and maintenance to airport infrastructure, the Kingdom continues to embrace the economic advantages of this rapidly growing sector and BIAS has a significant role to play in strengthening this focus.”

Gulf Air has once again been signed as official carrier for the airshow and Bahrain Airport Services (BAS) as ground handling service provider.

routes and a customer experience second to none,” states Jim Albaugh, president and CEO of Boeing Commercial Airplanes. “We will work closely with Royal Jordanian as the airplane prepares to enter service and delight passengers.”

MUBADALA AEROSPACE TO FORM MRO VENTURE IN ABU DHABI WITH GOODRICH Mubadala Aerospace has signed a an agreement with Goodrich Corporation to establish a joint venture company for maintenance, repair and overhaul (MRO) work on landing gears in the UAE. Completion of the agreement is anticipated within the next 12 months, with the target of having the Middle East’s first dedicated landing gear facility fully operational by 2012. “This agreement emphasises the continued development of Mubadala Aerospace’s global MRO network. In Goodrich we have a relationship with one of the world’s top aerospace companies that brings their expertise to a new regional hub in the Middle East,” says Homaid Al Shemmari, executive director of Mubadala Aerospace. “The region already has the world’s largest concentration of wide body aircraft and the new facility will deliver much needed landing gear capability for our customers.”

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SHOW REPORT: FARNBOROUGH AIRSHOW 2010

PHOTO SPECIAL : Farnborough 2010

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MARKET OUTLOOK

Last year was one of the aviation industryâ&#x20AC;&#x2122;s worst ever, but the biggest players in the Middle East are confident that the future if looking bright.

August 2010

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MARKET OUTLOOK

im Clark doesn’t do nervous. As a veteran of the aviation industry and president of Dubai-based Emirates Airline, he’s spent years strutting the global business stage.

He’s used to handling problems. Big problems. “It’s an ash cloud. We’ll deal with it, we’ll get on with it,” Clark told reporters back in April. All around him the aviation industry was grinding to a halt as volcanic ash from Iceland threatened to see airlines lose up to $50 million a day. The news was disastrous; the global economic downturn had already wreaked havoc on the industry, seeing it lose a combined $9.4 billion last year. But Clark had another set of figures on his mind. The news that Emirates was on track to make just under $1 billion profit for the previous year was just about to be made public.

Across Dubai, in the UAE capital Abu Dhabi, Etihad’s CEO James Hogan was also studying his figures, which showed the carrier will be in the black next year - just eight years after launching. In fact, Middle East carriers are expected to post a profit of $100 million this year - their first since 2005 - according to the latest research from the International Air Transport Association (IATA).

The predictions are significantly better than IATA’s March forecast figures, which indicated that regional carriers would lose $400 million this year. Local carriers posted a $600 million loss last year as the industry saw some of the worst declines in passenger traffic since World War Two. In total, IATA expects airlines to make a global profit of $2.5 billion in 2010. It’s a major improvement compared with IATA’s previous forecast released in March of a $2.8 billion loss. “Subject to no further external shocks (volcanic ash, war, epidemics, oil price hikes), and a continued improvement in general global economy, it would appear that we are now moving out of the bottom of the cycle,” says Simon McLean, COO of Waha Leasing, an Abu Dhabi-based investment holding company with interests in aircraft. “There are positive indications of a turnaround in the leasing market with some improvement in demand and, consequently, of asset values and lease rental levels. On a general note, there is a lot of confidence and growing competition in the aviation sector with substantial amounts of new equity entering the market and existing players re-affirming their commitment to the aviation sector.”

Just when the world was ready to write off the entire aviation industry as a long lost cause, it appears to be back with a bang.

Industry revenues are forecast to be $545 billion in 2010, up from the $483 billion the previous year, but still below the $564 billion in 2008. “The global economy is recovering from the depths of the financial crisis much more quickly than what could have been anticipated. Airlines are benefiting from a strong traffic rebound that is pushing the industry into the black,” says Giovanni Bisignani, IATA’s director general and CEO. “We thought that it would take at least three years to recover the $81 billion (14.3%) drop in revenues in 2009. But the $62 billion top line improvement this year puts us about 75% on the way to pre-crisis levels.”

So where will the action be? Top of the list, thanks to the likes of Clark and Hogan, is the Middle East. Fears that premium class travellers would desert the industry have proved unfounded, and the region’s relatively strong growth rate means more travel, and more business, both of which are expected to have a positive impact on the aviation sector. www.arabiansupplychain.com

Airlines are benefiting from a strong traffic rebound that is pushing the industry into the black “The airline industry yet again stands as a microcosm for national economies,” Douglas McNeill, analyst at Charles Stanley Securities told The Guardian. “We are seeing a shift in power from West to East.”

A report by investment bank UBS, published last month, says that Middle East carriers account for eight percent of global traffic while the region is well-placed to attract more long-haul stopover traffic as it is located less than 8340km from 86% of the world’s total population. This year, Middle East carriers will add 83 new aircraft to their fleet and 50 next year, which will represent 8.3% and 4.9% of deliveries worldwide. Emirates is expecting to receive eight of its delayed A380s between January and December, while Abu Dhabi’s Etihad Airways is expecting three new Airbus A330 jetliners this year, as a result of pushing back the delivery of its ten A380s from 2012 to 2013.

Europe has been flagged as a major source for most of this new capacity, as Middle East airlines account for 36% of traffic flow to and from Europe. Traffic between the Middle East region and Europe is believed to have grown 7.1% in the second quarter of this year. In terms of routes, Dubai-London generates the most

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MARKET OUTLOOK

This industry needs to re-structure itself to be sustainably profitable traffic and last year represented 17% of the combined capacity of all the top 20 international routes from the Middle East. The same route accounted for an average of 1141 flights per week last year. “The recovery from this crisis is asymmetrical,” says Bisignani.

“Worsening conditions in Europe are in sharp contrast to improvements in all other regions.”

But it’s not just the Middle East that is seeing growth, and plenty of it. AsiaPacific carriers are continuing to benefit from strong regional growth set against a backdrop of gross domestic product growth. The Asia economy (excluding Japan) is expected to increase 2.9% while China will outpace that with GDP growth of 9.9%. As a result, the region’s carriers are expected to deliver the largest profit at $2.2 billion. This is more than double the previously forecast $900 million in March and a major reversal from the $2.7 billion combined losses last year. “Globally, the picture is more encouraging with Asia-Pacific carriers expecting profits of around $2.2 billion - about two-thirds of the combined result during the 2007 peak when the aviation industry made $14.7 billion profit,” Bisignani continues.

North American carriers - long seen as the weakest link in the industry - are expected to return a profit of $1.9 billion this year. This is a major reversal from the previously forecast $1.8 billion loss, and the $2.7 billion that the region’s carriers lost in 2009. The US economy is growing with a 3.3% GDP expansion.

Carriers are improving efficiencies as a result of demand growth, capacity cuts and domestic mergers.

Meanwhile, Latin American carriers will show a profit of $900 million. Having posted a $500 million profit in 2009, Latin America will be the only

August 2010

region to post two consecutive years of profit. Even African carriers are expected to post around $100million in profit, their first since 2002. But of course, its not all positive, especially when Europe is factored in. According to IATA, Europe will be the only region in the red with a $2.8 billion loss. European GDP growth of 0.9% is not enough to support a recovery and the currency crisis clouds the future with uncertainty. Moreover, 70% of the $1.8 billion loss in revenue as a result of the volcanic ash crisis was borne by European carriers. A series of labour strikes and strike threats have also impacted the region’s performance.

Ironically, as the likes of Emirates Airline and Etihad go from strength to strength, so-called iconic carriers such as British Airways are facing a battle for survival. The British carrier is making close to $1 billion of loss a year, almost exactly the same as Emirates is making in profit. During May’s BA strikes, which are reported to cost the national carrier over $10 million a day, Bisignani

claimed unions were “out of touch with reality” and added that he doesn’t believe airlines should be expected to pay salary increases given the fragility of the sector in Europe.

Despite the overall improvement, he warns that the industry is still fragile.

“Even with all of our hard work, the result is just a 0.5% margin, which does not even cover our cost of capital. The industry is fragile. The challenge to build a healthy industry requires even greater alignment of governments, labour and industry partners,” Bisignani warns. “They must all understand that this industry needs to continue reducing costs, gain efficiencies and be able to re-structure itself to be sustainably profitable. We must all be prepared for a greater change.”

What happens in Europe remains the big fear and the great unknown. The worst case scenario is a collapse of the single currency, which could severely impact all major European carriers. With the 20% decline in the Euro, foreign travellers, particularly those from the Gulf region, are paying less for their flights to the continent. Ultimately, that could result in a two tier industry. But for Clark and his Middle Eastern airline colleagues, there is little doubt which tier they will be sitting on.

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ASK THE EXPERT

MAGIC SOLUTION

Question: How can aircraft manufacturers help carriers to create a better flying experience for their passengers?

Expert: R. Blake Emery, director of differentiation strategy, Boeing

THE FOCUS ON CREATING A MAGICAL EXPERIENCE FOR AIRLINE PASSENGERS How many people around the world are fascinated with the magic of human flight? And instead of experiencing that magic, how many people are stepping off a long-haul flight with a feeling of jetlag and fatigue? By combining its unique understanding of how the human body reacts to flight conditions and how emerging technologies can improve those conditions, Boeing is creating a better flying experience with its all-new 787 Dreamliner. The company, along with universities throughout the globe, has embarked on numerous studies while developing the Dreamliner, to understand the effects of altitude, humidity, air contaminants, lighting, sound and space on passengers. Our findings have resulted in significant improvements to the 787, which is scheduled s for delivery in the last quarter of 2010 2010.

WHAT IS THE OPTIMUM HEIGHT? Today’s planes are pressurised to a typical cabin altitude of 6500 to 7000 feet with a maximum certification altitude of 8000 feet.

The advanced composite materials used on the 787 are stronger than aluminium, allowing for the cabin to be pressurised and therefore lowering altitude levels without causing fatigue to the fuselage structure. Studies at Oklahoma State University explored the effect of altitude on passengers to determine optimum levels. After testing at various altitudes, it became clear that lowering the cabin altitude to 6000 feet provided meaningful improvements. This included a decrease in the occurrence of altitude sickness and its symptoms, such as nausea, fatigue and dizziness. Medical experts found that there was no difference in the likelihood of discomfort at ground level and 6000 feet, although the likelihood of passengers experiencing altitude sickness increased in cabins pressurised above 6000 feet.

THE TERR TERRORS OF FLIGHT TURB TURBULENCE Passengers w will often give a highe higher rating to flights that do not encounter tu turbulence.

The 787 wi will have sensors installed on the plane that cause certain control surfaces to react in turbulence. This Th helps to main maintain a smoot smoother ride thro throughout the flight, res resulting in less nausea for suffers of motion sic sickness.

COMMON ISSUES WITH HUMIDITY AND AIR PURIFICATION DURING FLIGHTS In cooperation with Denmark Technical University, Boeing challenged the assumption that boosting humidity would alleviate complaints about dryness on planes. The study found that humidity is not the only factor driving the symptoms associated with dryness. In fact, the most effective technology in reducing such symptoms is the introduction of a new gaseous filtration technology. Combining the technology with increased humidity offers increased passenger comfort and well-being. While today’s planes offer extremely clean air thanks to highefficiency particulate (HEPA) filters, which clean the air of particulates even down to the size of viruses, they are not equipped to filter gaseous molecules.

August 2010

Recent advances in gaseous filtration have now made it robust enough for use on commercial airplanes. By increasing the humidity and adding new filtration technologies, studies show the number of passengers experiencing the symptoms associated with dryness can be reduced.

Additionally, the improvements in cabin altitude combine with humidity and cleaner air to create a significant improvement in passenger comfort.

THE PASSENGERS’ POINT OF VIEW Boeing surveyed passengers on their reaction to different window options through the use of an innovative mock-up that allowed them to evaluate a variety of window sizes and shapes. The results clearly showed that passengers prefer larger windows. From an engineering point of view, however, larger windows have always been a challenge because the loads carried by the airplane structure are easier to deal with if the fuselage has fewer, or smaller, cut-outs like doors and windows. The fuselage on the 787 Dreamliner, however, is constructed out of advanced composite materials, rather than aluminium, which can handle the loads of larger window cut-outs. As a result, the 787 has larger windows than any of today’s current commercial planes, offering each passenger a commanding view of the horizon.

A BETTER FLYING EXPERIENCE The 787 Dreamliner combines all of these pioneering new passenger features with unparalleled performance and advanced technology, making the airplane as innovative inside as it is outside. The result? A plane that airlines can operate reliably and efficiently and one that their passengers will enjoy flying. The 787 is truly the future of flight. www.arabiansupplychain.com

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AIRLINE INCIDENT REPORT

Airline incident report A monthly summary of the latest airline accidents and other aircraft-related incidents that have occurred in the Middle East and throughout the world Etihad involved in temporary runway closure at JFK airport DATE: 17th June 2010 A runway at JFK International Airport in New York was closed for around 10 minutes last month, after an Etihad Airbus A340-500 (registration A6-EHC) made contact with runway lighting upon landing. The aircraft, which arrived from Abu Dhabi in the United Arab Emirates, struck the left-hand edge lights on runway 04L, prior to the intersection with runway 31L. At the time, it was

unclear whether the lights were hit by the landing gear or another part of the aircraft.

According to reports, pilots were requested to hold the A340500’s position on the adjacent taxiway while officials checked for damage. “An Etihad Airways aircraft made contact with a runway light at New York’s JFK airport upon landing on Thursday 17th June,” confirmed a spokesperson from the airline.

“The incident caused no damage to the aircraft and no passengers or staff were affected.”

FlyDubai diverts Boeing 737 due to technical problems DATE: 27th June 2010 FlyDubai diverted a flight from Damascus to Dubai on 27th June due to technical problems. Crew on the Boeing 737-800 had to shut down the right hand engine (CFM56) and divert the Boeing 737-800 to Arar in Saudi Arabia.

Flight FZ0229 had 57 passengers and six crew members on board at the time. A replacement plane was later dispatched and passengers reached Dubai in the evening with a delay of 17 hours.

Health scare for Emirates pilot on Amman flight DATE: 5th July 2010 Emirates has confirmed that a flight to Amman was returned to Dubai International Airport on 5th July 2010, after the first officer was unwell. The Airbus A330-200, which contained 237 passengers, landed in Dubai at 10:15am and re-departed for Amman an hour later, reaching the Jordanian city with a four-hour delay. “The first officer is in stable condition, and has been transported to the Welcare Hospital in Dubai for further testing,” a spokesperson commented at the time.

EgyptAir makes Saudi flight u-turn due to agitated horses DATE: 30th June 2010 EgyptAir passengers on a recent Saudi Arabia-bound flight were delayed by around 80 minutes, after pilots were forced to turn their plane around on the runway due to the distressed state of horses in the cargo hold. The aircraft, which was transporting approximately 190 passengers at the time, also contained six

August 2010

Arabian horses owned by a Saudi prince, according to a report

by The Associated Press. An anonymous source from Egypt claimed that the animals were deemed a safety risk by pilots after they became increasingly agitated. As a result, airport veterinarians were called to tranquilize the horses, allowing the plane to depart for Jeddah once again, this time with the animals asleep.

Hydraulic failure on Iran Air Tours Tupolev TU-154M DATE: 5th July 2010 Iran Air Tours experienced a hydraulic failure onboard its Tupolev TU-154M aircraft from Abadan to Mashad on 5th July 2010. The incident occurred during the plane’s approach to Mashad, although pilots of the Iran Air subsidiary were able to make a safe landing.

Emirates staff evacuated from burning warehouse DATE: 9th July 2010 Emirates has confirmed that its employees were safely evacuated from a warehouse at London Heathrow Airport on 9th July 2010, after a large-scale fire at the storage facility. Over 100 firefighters and 20 fire engines were assigned to tackle the blaze at a Servisair Cargo warehouse, although flights at the airport were not impacted. “We can confirm that, following the fire at a Servisair Cargo warehouse at Heathrow where we and a number of other carriers are based, all of our employees have been evacuated safely,” stated an Emirates spokesperson. “Our flights to and from Heathrow Airport are expected to depart as scheduled.”

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AIRLINE INCIDENT REPORT

Fire alert on Emirates A330-200 on Dubai-Kochi flight DATE: 9th July 2010

Pilots of the Emirates EK-532 flight from Dubai (United Arab Emirates) to Kochi (India) were able to safely land their aircraft, despite a fire alert being triggered by the plane’s smoke detector.

The Airbus A330-200 (registration A6-EAC) was on final approach to Kochi on 9th July 2010 with 281 people on board when the incident occurred. However, after landing, an investigation by emergency services found no trace of fire, smoke or heat.

Shock discovery of human remains on Nas Air flight DATE: 10th July 2010 An investigation has been launched after a maintenance worker at King Khaled International Airport in Saudi Arabia made a shock discovery of human remains on the tyres of a plane that arrived from Beirut on 10th July 2010.

According to media reports, some passengers on the flight – operated by Saudi Arabia’s Nas Air – noticed a man with a cap and backpack running towards the aircraft shortly before it departed from Beirut. Despite informing the pilot, the flight continued as normal and the body parts were discovered after the plane landed. Investigators

later indentified the body as Lebanese national Firas Haidar, who apparently lived in the Burj al-Barajneh district near Beirut airport. “The man’s family was able to identify him through a photograph provided by Saudi Arabian authorities,” stated Lebanon’s justice minister Ibrahim Najjar. “There are also reports that he was mentally unstable, but we have yet to confirm them.” Rafic Hariri International Airport’s security chief handed his resignation a couple of days after the incident.

“General Wafik Shoukeir has met with Interior Minister Ziad Baroud to ask that he be relieved of his duties as airport security chief,” a government source said on condition of anonymity.

Gulf Air passengers and crew injured by turbulence DATE: 12th July 2010 Around ten passengers and cabin crew were injured on a recent Gulf Air flight from Bahrain to the Philippines, following the impact of heavy turbulence while the aircraft was cruising at 41,000 feet. According to reports, seven passengers and three cabin members suffered contusions when the Airbus A330-200 encountered a short period of severe air pockets and dropped 400ft. “Gulf Air staff at Manila airport met flight GF157 and nine people, including two Gulf Air crew members, were immediately transferred

by waiting ambulances to San Juan De Dios Hospital, where they were treated for what local medical officials described as minor injuries, such as cuts, bruises and lacerations,” the airline confirmed to Aviation Business. “All were discharged a few hours later. Gulf Air’s teams in Manila worked closely with the crew onboard to establish a response plan and dealt with the situation appropriately. The safety of passengers and crew is always the company’s number one priority and Gulf Air, as one of the long-established airlines, has well-established systems and procedures to deal with such situations.”

Hydraulic failure on Saudi Arabian Airlines flight DATE: 13th July 2010 Pilots on a Saudi Arabian Airlines flight from Jeddah to Cairo were able to safely land their aircraft on Tuesday, despite experiencing a hydraulic failure on approach to the airport. The incident occurred on flight SV-2146 to Egypt, which was being operated with an Airbus A300-600 and contained 305 people on board at the time.

Emirates A380 engine problems on Paris flight DATE: 13th July 2010 An Emirates flight from Paris Charles de Gaulle airport to Dubai International Airport experienced technical problems on 13th July 2010, prompting the crew to switch off one of the aircraft’s engines. Flight Ek74, which is operated with an Airbus A380 (registration A6EDG), was flying at FL300 about

30nm northwest of Zurich (Switzerland) when the incident occurred, according to a report in the Aviation Herald. Pilots returned to Paris Charles de Gaulle airport, where the aircraft was safely landed around 40 minutes later. Passengers were eventually dispatched on a replacement A380 (registration A6-EDH) and reached Dubai as flight EK-74D with a total delay of 20 hours.

Boeing 747 operated for Saudia in rejected takeoff DATE: 17th July 2010 A Boeing 747-300 , operated by Phuket Airlines on behalf of Saudi Arabian Airlines, was preparing for a Cairo-Jeddah flight with 22 crew, when one of the engines failed. The rejected takeoff left debris on the runway, which had to be closed for around twoand-a-half hours while the items were cleared.

www.arabiansupplychain.com

Technical problems on Iran Air flight to Kuala Lumpur DATE: 17th July 2010 Iran Air pilots on a Kuala Lumpur to Tehran flight were forced to return their Boeing 747SP to its departure point on 17th July 2010, following an unspecified technical problem. The aircraft landed around 90 minutes after departure and passengers were taken to hotels. The flight was delayed until the following day.

August 2010

43

44

AVIATION DATA

AVIATION FACTS & FIGURES A SUMMARY OF LATEST INDUSTRY STATISTICS FROM AROUND THE WORLD

Every month, Aviation Business provides its readers with the latest information from a variety of trusted sources, including Airports Council International (ACI), Emirates SkyCargo and FlightStats.

F

or April 2010, airports experienced the first global decline in passenger volumes since July 2009, with a total drop of 1.2%. The primary cause of the setback was the closure of some European airspace in reaction to the

CITY/COUNTRY

eruption of Eyjafjallajökull volcano in Iceland. “April results put a sobering brake on the growth trajectory to which the industry had returned,” comments Andreas Schimm, director of economics for Airports Council International (ACI) World.

APRIL 2010/2009 PASSENGERS (tonnes)

CARGO

% CHG

(tonnes)

YEAR-TO-DATE APRIL 2010/2009 MOVEMENTS

% CHG

(tonnes)

PASSENGERS

% CHG

(tonnes)

CARGO

% CHG

(tonnes)

MOVEMENTS % CHG

(tonnes)

% CHG

MIDDLE EAST ABU DHABI UAE

866,476

10.1

34,151

21.1

9128

11.1

3,445,396

12.8

135,508

22.2

36,128

13.2

BAHRAIN BAHRAIN

732,768

-0.8

27,626

-2.9

8669

3.2

2,922,957

4.6

111,925

-0.5

35,219

5.9

BEIRUT LEBANON

438,389

11.7

6114

4.0

5050

-0.2

1,511,546

18.2

24,506

8.1

19,599

9.4

3,745,016

14.5

178,357

19.6

24,917

8.5

15,215,536

18.9

723,107

25.9

99,458

9.0

KUWAIT KUWAIT

634,679

2.2

22,083

41.4

8060

1.1

2,655,322

8.4

69,745

18.8

31,770

3.9

MUSCAT OMAN

461,486

25.8

8191

67.9

5597

29.3

1,773,374

30.8

30,844

65.0

21,533

32.4

SHARJAH UAE

515,466

9.2

33,013

10.5

5743

12.6

2,031,890

9.3

144,805

28.0

22,289

9.4

23.3

DUBAI UAE

AFRICA ACCRA GHANA

120,400

17.0

3116

-21.8

2138

-3.2

472,270

15.5

14,019

-13.6

8515

1,320,014

5.9

24,715

9.3

12,684

5.4

4,850,174

12.8

107,492

11.3

48,789

9.9

671,799

2.3

n/a

n/a

7786

2.1

2,729,010

3.8

n/a

n/a

31,273

-1.5

CASABLANCA MOROCCO

585,553

13.2

4454

-20.6

6358

17.5

2,125,984

14.2

17,032

-17.6

24,277

13.2

DAR ES SALAAM TANZANIA

106,896

8.6

1238

-26.2

4068

3.1

458,893

9.9

4972

-16.8

18,218

4.7

JOHANNESBURG S. AFRICA

1,492,966

1.0

23,137

25.3

16,916

2.5

5,730,449

2.7

94,171

15.8

66,015

0.4

CAIRO EGYPT CAPETOWN SOUTH AFRICA

MARRAKECH MOROCCO

313,122

2.5

106

n/a

3104

9.0

1,085,687

8.3

359

n/a

10,920

12.4

SHARM EL SHEIKH EGYPT

782,615

7.7

n/a

n/a

5868

10.1

2,932,028

24.6

n/a

n/a

21,449

19.3

9.5

ASIA PACIFIC BANGKOK THAILAND

3,353,688

-1.8

105,063

36.4

22,686

0.9

15,483,821

17.3

414,117

41.3

91,739

BEIJING CHINA

6,042,979

9.4

128,695

5.5

42,479

5.2

22,786,505

10.2

479,087

12.3

165,025

5.5

MANILA PHILIPPINES

2,530,690

9.7

34,956

51.6

21,295

5.6

9,006,902

11.3

135,470

57.3

80,616

6.4 3.8

MUMBAI INDIA

2,213,581

16.3

51,103

14.8

20,903

5.1

8,769,954

14.5

212,215

23.4

81,960

NEW DELHI INDIA

2,273,307

22.2

47,852

24.8

21,241

6.8

9,076,817

16.5

185,190

30.9

83,980

7.8

SINGAPORE SINGAPORE

3,283,071

12.6

148,884

15.9

21,740

8.9

13,224,405

15.5

583,971

17.6

85,528

9.0

SYDNEY AUSTRALIA

2,921,743

6.2

n/a

n/a

25,335

7.6

11,786,740

8.6

n/a

n/a

99,048

5.2

TOKYO JAPAN

4,708,444

5.0

66,038

6.0

27,424

-0.4

20,000,438

1.9

238,389

-1.3

110,052

-0.2

FRANKFURT GERMANY

3,536,881

-16.9

169,463

21.2

32,195

-16.0

14,880,697

-1.9

704,768

28.9

140,904

-4.2

LONDON HEATHROW UK

4,454,905

-20.7

105,701

7.3

31,435

-19.9

19,142,817

-4.7

476,181

18.1

141,626

-7.4

MADRID SPAIN

3,942,057

-6.9

33,155

40.1

35,266

-4.3

14,895,772

2.4

127,289

29.6

138,756

-1.1

MUNICH GERMANY

2,338,597

-14.1

21,705

15.4

27,585

-17.9

9,529,281

-1.6

81,919

17.7

115,815

-8.9

PARIS FRANCE

4,062,475

-20.0

158,020

11.3

35,874

-20.7

16,693,216

-4.8

643,770

12.1

154 ,104

-10.1

ATLANTA

119,612

21.5

n/a

n/a

10,684

48.1

435,112

21.2

n/a

n/a

40,581

39.8

CHICAGO

5,446,943

0.5

115,639

45.7

73,229

7.6

20,143,304

2.0

427,556

36.8

276,671

2.9

DALLAS/FORT WORTH

4,665,859

1.4

54,122

23.1

54,224

4.4

17,613,881

0.7

214,296

18.7

211,336

2.8

LOS ANGELES

4,642,867

0.0

147,145

27.5

47,467

5.1

17,989,157

4.1

552,112

25.8

186,146

4.2

EUROPE

NORTH AMERICA

Passengers = total passengers enplaned and deplaned (transit passengers counted once). Cargo = loaded and unloaded freight & mail. Source = Airports Council International (ACI) *Growth rate > 200% or < -50% due to extraordinary circumstances, i.e. war, social and political unrest, major sports events, new routes.

August 2010

www.arabiansupplychain.com

AVIATION DATA

EMIRATES SKYCARGO FUEL PRICE INDEX

DUBAI INTERNATIONAL AIRPORT: CARGO STATISTICS

450

210,000

14 May

175,000

25 June

406

410

401

4 June

385

140,000

11 June

370

2 July

382

21 May

373

382

105,000

70,000 330

Index

100 = 53.5 US cents per US gallon 35,000

FUEL PRICE INDEX

THE FUEL INDEX IS BASED ON THE AVERAGE PRICE OF AVIATION FUEL IN FIVE KEY SPOT MARKETS (ROTTERDAM, SINGAPORE,

April 10

Mar 10

Feb 10

Jan 10

Dec 09

Nov 09

Oct 09

Sept 09

July 09

May 09

Aug 09

0

NEW YORK, US GULF AND US WEST COAST)

June 09

290

CARGO STATISTICS

09 Jul 10

02 Jul 10

25 Jun 10

18 Jun 10

11 Jun 10

04 Jun 10

28 May 10

21 May 10

14 May 10

07 May 10

250

THIS GRAPH REPRESENTS THE CARGO VOLUMES HANDLED AT DUBAI INTERNATIONAL AIRPORT OVER TWELVE MONTHS. CARGO IS MEASURED AS LOADED AND UNLOADED FREIGHT AND MAIL IN TONNES (SOURCE: AIRPORTS COUNCIL INTERNATIONAL)

AIRLINE ON-TIME DEPATURES PERFORMANCE APRIL 2010/2009

AIRLINE

CODE

SCHEDULED

TRACKED

DEPARTED

CANCELLED

DELAYS 15-30MINS

30-45 MINS

ON TIME

45 MINS +

MIDDLE EAST AIRLINES EMIRATES

EK

357

329

329

0

73

21

27

63%

ETIHAD AIRWAYS

EY

175

19

19

0

2

0

0

89%

GULF AIR

GF

135

132

132

0

15

5

8

79%

QATAR AIRWAYS

QR

251

214

212

2

37

14

12

70%

ROYAL JORDANIAN

RJ

115

101

101

0

11

6

16

67%

SAUDI ARABIAN AIRLINES

SV

443

18

18

0

6

1

7

22%

AFRICAN AIRLINES EGYPTAIR

MS

262

241

228

13

29

11

16

75%

SOUTH AFRICAN AIRWAYS

SA

189

171

171

0

13

6

4

87%

ASIA PACIFIC AIRLINES CATHAY PACIFIC

CX

283

231

230

1

27

14

13

77%

QANTAS AIRWAYS

QF

622

612

609

3

99

24

23

76%

SINGAPORE AIRLINES

SQ

232

106

106

0

55

9

2

38%

THAI AIRWAYS

TG

232

227

227

0

20

8

6

85%

EUROPEAN AIRLINES AIR FRANCE

AF

965

889

838

51

129

79

294

40%

AUSTRIAN

OS

207

179

179

0

20

15

15

72%

BRITISH AIRWAYS

BA

808

751

743

8

118

62

105

62%

LUFTHANSA

LH

1313

1203

1171

32

157

61

125

71%

NORTH AMERICAN AIRLINES CONTINENTAL AIRLINES

CO

983

964

962

2

117

35

73

77%

DELTA AIR LINES

DL

2667

2595

2516

79

358

194

428

61%

UNITED AIRLINES

UA

1182

1180

1165

15

66

32

93

84%

*The information above is compiled by FlightStats and indicates depature flight activity on 14th July 2010. In some cases, the information may differ from numbers reported by the carrier. www.arabiansupplychain.com

August 2010

45

RECRUITMENT

TO ADVERTISE HERE CONTACT: Nick Lowe Tel: +971 4 210 8306 Email: nick.lowe@itp.com

MOVERS & SHAKERS Etihad E promotes Ali Abdulla Al Shamsi t general manager of Abu Dhabi hub to E Etihad Airways has announced the promotion oof Ali Abdulla Al Shamsi to general manager oof the airline’s hub at Abu Dhabi International A Airport. The UAE national has worked in the airline industry fo for more than 23 years – including positions with Emirates Airline and Gulf Air. He joined Etihad as assistant head of the Abu Dhabi hub in February 2010. “Ali’s airline experience and knowledge of the region have proven invaluable since he joined us earlier this year,” said James Hogan, CEO of Etihad Airways.

“He was the natural choice to take on the head of hub position, the most senior Etihad role at our busiest airport, in the recent reorganisation of our global airport operations. Ali’s promotion is part of our strategy to attract and develop top Emirati talent from across the UAE for our key positions in our expanding network.”

F FlyDubai finance executive lands chief executive officer role at SpiceJet e FlyDubai’s chief financial officer Neil Mills F h been confirmed as the new chief executive has o cer of SpiceJet. The executive is expected to offi jo the Indian airline in October and replaces join Aggarwal who resigned from the position last month.

Sanjay Aggarwal, In the meantime, Kishore Gupta will serve as SpiceJet’s interim CEO. “I can confirm that Neil Mills is leaving FlyDubai to take up the position of CEO at SpiceJet in India,” commented Ghaith Al Ghaith, chief executive of FlyDubai.

C Coyne Airways hires Darrin Quern as m managing director of Dubai operations C Coyne Airways has appointed Darrin Quern as m managing director of its hub operation in Dubai.

T The executive began his aviation career with N Northwest Airlines, where he spent 14 years in operations capacity planning and latterly as manager for ground operations, government and charter cargo sales. For the past 12 years prior to joining Coyne Airways, Quern worked for courier firm TNT, first as director of TNT Airways and, since 1999, as director of Global Networks-Asia. “Darrin has the all-round airline and logistics experience that we need for our major hub in Dubai. His government and military experience will be especially beneficial is helping to further expand our operations from all over the world via Dubai into Iraq and Afghanistan,” stated the airline’s chief executive officer Larry Coyne.

D Mohammed Ahmed Al Zarooni selected Dr as chairman of DAE executive committee a D Dubai Aerospace Enterprises (DAE) has aappointed Dr Mohammed Ahmed Al Zarooni as cchairman of the executive committee, working aalongside managing director Khalifa Al Daboos and acting CEO George Mushahwar. The executive committee has been assigned to manage and oversee the entire business and implement strategies and business plans. “Dubai Aerospace Enterprises is a huge economic project that will play a major role in the aerospace industry worldwide in the very near future. The operations of DAE cover leasing aircraft and providing essential services for the aerospace industry,” stated Al Zarooni.

N vice president of Falcon sales for New EMEA announced by Dassault Aviation E D Dassault Aviation has appointed Gilles Gautier aas vice president of Falcon sales for Europe, M Middle East, Africa and India. Over the last 20 yyears, Gautier has held a variety of sales positions with Dassault Avi Aviation, and has sold over 150 Falcon aircraft. In his new position, Gautier will lead the sales team in charge of Europe, Middle East, Africa and India, including sales offices in Moscow, Dubai and New Delhi. “Gilles’ invaluable experience will be a great asset as Dassault looks to strengthen its position in different markets such as the Middle East and India,” said John Rosanvallon, president and CEO of Dassault Falcon.

A Amadeus Gulf appoints sales director ffor Dubai and Northern Emirates A Amadeus Gulf has recruited Shafeekh Azeez as ssales director for Dubai and Northern Emirates.

P Prior to Amadeus, Azeez was commercial m manager with Al Rostamani Travel for almost 10 years, where h he headed the corporate travel, retail travel, business development, marketing and sales divisions. “This latest appointment will further support Amadeus’ operations in the UAE and strengthen our ability to meet the needs of customers,” explained Geert Boven, managing director of Amadeus Gulf.

Please email your ‘movers and shakers’ information to robeel.haq@itp.com P August 2010 0

www.arabiansupplychain.com

48

DEPARTURE LOUNGE

BUSINESS

AS USUAL

Following industrial action from it cabin crew, British Airways is sending out a message that its ‘business as usual’, explains Middle East commercial manager Paolo De Renzis.

British Airways has faced a challenging time with recent cabin crew strikes. Do you think this has impacted the airline’s reputation in the Middle East?

Although we have experienced a challenging time, British Airways was still able to fly around 80% of our longhaul customers during the strike period.

The entire Boeing 777 fleet has been flying and in the Middle East, apart from Bahrain, Doha and Jeddah, most of the stations have not been too affected.

So generally speaking, we had a strong and robust contingency plan to fly more than 70% of our customers long-haul and more than 50% short-haul. Of course, the challenges were greater in some stations.

As I mentioned before, flights to Bahrain, Doha and Jeddah have been cancelled quite a few times, but all the others have not been affected.

What feedback has British Airways received from customers to the situation?

We have been really impressed with the loyalty of our customers. British Airways is back to business as usual and the summer bookings are pretty strong. We haven’t received any official notification of further strikes and last month, the airline launched some of its most competitive summer fares on all services from the Middle East to the UK, Europe and the Americas, both in premium and non-premium travel.

Many travel agents say they won’t sell BA tickets to clients until the strike situation is resolved. How are you working with the trade to boost confidence?

We have also been very impressed with the support we have received and the loyalty to British Airways. The website August 2010

is constantly updated and there is regular communication with all the agents, both corporate and trade partners. As I mentioned, the summer bookings are quite strong in the Middle East, so I am confident we are back to normal and back to business.

Do you think Willie Walsh is doing the right thing by refusing to give in to the trade unions?

The industry has gone through some very challenging times and everybody within British Airways contributes to the future of the company. No one is immune. So we believe that the reaction from the unions in disproportionate. There are no salary cuts, there are no job cuts, so we believe it is the right thing to do. Many of our cabin crew have been supportive anyway so we could still operate most of our long-haul and short-haul flight and we hope not to see more disruptions in the future. But if there is another disruption our plan is to operate 100% of our long-haul flights.

How do you compete with the young fleets of Middle Eastern airlines, such as Emirates, Etihad and Qatar Airways?

British Airways has a pretty young fleet and we have new aircraft coming in.

Earlier this year, we had 777-300s coming in, which we have equipped with our new first class product. We have invested a total of US$155 million in the new first class. I have flown it and think it’s fantastic.

Many airlines have scrapped their first class cabins. Do you think there is still enough demand for premium travel?

We strongly believe there is still demand on specific routes for first class travel and that’s why British Airways has invested $155 million. Otherwise we would not have been so convinced that it was the right thing to do.

How important is the Middle East market to British Airways?

It’s one of the most important markets in the world for British Airways. We are very committed to the region and even though we have been through difficult times last year, there was still 35% capacity growth in the Middle East. It was one of the few markets in the entire global network where we did increase capacity. We re-started flights to Saudi Arabia last year, which confirms and highlights our commitment to the Middle East. In the future we plan to grow even further in this region, although I cannot be more specific with plans at this stage. www.arabiansupplychain.com