NZ Herald late and lazy on Air NZ's squeeze

The NZ Herald has finally woken up to what has been mentioned by me on January 26 and by others for weeks now - that Air NZ's new economy class cabin will be a tighter squeeze for everyone NOT in a Skycouch.

What appalls me particularly is that the reporter, Grant Bradley, has done NO research whatsoever to check the claims by Air NZ's spokesman, Ed Sims, that "10-seat rows were becoming the industry norm in the new 777s. "Emirates has been operating 10 abreast for many years, as have Air France and KLM."

How hard was it for Grant Bradley to go to website seatguru.com and check that claim?

He could have looked at all of the airlines serving NZ with 777s and found out that Emirates is the only one with a 10 abreast configuration. The others (the links show the seat maps), Korean, Malaysian, Singapore Airlines and Thai Airways all have a 9 abreast configuration. How hard was that to check?

How about other operators of the 777? Well we know Emirates and Air France/KLM (which is one airline with two brands) both have 10 abreast seating. Any others?

Aeromexico - 9 abreast
Air Canada - 9 abreast
Air China - 9 abreast
Air India - 9 abreast
Alitalia - 9 abreast
ANA - 9 abreast
American Airlines - 9 abreast
Asiana - 9 abreast
Austrian - 10 abreast
British Airways - 9 abreast
Cathay Pacific - 9 abreast
Continental Airlines - 9 abreast
Delta - 9 abreast
El Al - 9 abreast
Etihad - 9 abreast although reportedly moving to 10
Eva Airways - 9 abreast
Gulf Air - 9 abreast
JAL - 9 abreast
Jet Airways - 9 abreast
Kenya Airways - 9 abreast
Qatar Airways - 9 abreast
Turkish - 9 abreast
United - 9 abreast
V Australia -9 abreast

So Emirates, Air France/KLM and Austrian Airlines, and perhaps Etihad - that's it. How is something becoming the industry norm when out of 30 airlines, 3 are doing it (and a 4th reportedly is)?

Don't ask Grant Bradley at the NZ Herald - he just reports what Air NZ tells him.

The mainstream media wonder why some people think bloggers do a better job than they do?

It isn't hard at times.

Air New Zealand focuses on the premium

It is rare that a New Zealand company captures the global attention of the industry it is in, particularly one primarily state owned. Given that Air New Zealand retains minority private ownership, as is publicly listed, that has ensured that political pressure on how the airline runs its business has been very limited. However, it has also meant it has lacked capital to expand, so has focused on its core business.

The new long haul products announced today are reviewed on my airline service blog here. For economy class it is quite revolutionary for those taking the Skycouch, but is no overall advance for others in economy. in premium economy it becomes best of its class with maybe only one rival (although the legroom has been cut), whereas business premier is more of a tweak rather than a serious change.

From a business perspective what is particularly interesting is how dominant the premium cabins are becoming for the airline.

At present services from Auckland to London via LA, and some other services to Vancouver, San Francisco and LA are operated by Boeing 747s with the following configuration:
46 Business Premier
39 Premium Economy
294 Economy
= 379 passengers.

These are to be replaced with Boeing 777-300ERs, which are smaller than 747s but larger than the current fleet of Boeing 777-200ERs. However, look at the seat configuration:
44 Business Premier
50 Premium Economy
246 Economy (including 66 that will convert into couches for 44)
= 340 passengers

In essence, Air NZ is giving up mass market cheap economy class for targeting more discerning tourists, while focusing more on upmarket tourism and business travellers. Bear in mind that few know one of Air NZ’s most profitable routes is LA to London, because the fares that can be charged on that route are almost as high as Auckland to London – although it is a fraction of the cost to service. However, tourism from the UK to NZ has dropped dramatically due to the recession.

It is betting that given its cost structure is mid range among its competitors (Qantas is higher, Emirates and Malaysian are lower), it needs to pitch itself with something to attract discerning travellers. Not the bargain basement lot who are price focused and who really don’t care about legroom or food.

Still it faces a struggle for growth, given that it is undercapitalised and has missed out on realistic opportunities to plunder the Australian market (but that’s another story of corporate blunders combined with government interference).

Now is not the time to sell, but as the majority shareholder, it would be wise to consider at least some sell down of the airline ownership to get some new capital. Ultimately it will need a strategic shareholding by another carrier to have any serious hope of expansion, which means the word that too many in New Zealand politics are far too scared of – privatisation.

I've reviewed all of the product enhancements on my airline service blog:

The business case
Economy Class
Premium Economy
Business Premier
Catering and entertainment
How competitive is it?
Images of the new products

However if you want my quick summary of it all:

Economy - Skycouches are great for couples, but everyone else loses a little width and legroom. Most economy passengers are slightly worse off.

Premium Economy - A significant improvement with far more width, space and better seats, but the same recline. This isn't as good as business class used to be in terms of recline, and at 36" seat pitch it is frankly the worst for legroom in its class.

Business Premier - Business as usual, little change here, except the catering will leap ahead with freshly cooked food, not reheated.

It will first be seen on the new Boeing 777-300ER, the longer larger version of the current 777-200ER. The 777-300ER (dubbed 77W in the industry) will replace 747s for Air NZ, which means sadly losing the upper deck and nose cabins, both far more exclusive than main decks (with only one seat either side in Business Premier).

The first routes will be Auckland-LA and Auckland-LA-London. The existing 777 fleet will also be progressively retrofitted.

Some industry media coverage:
Business traveller
Flightglobal
Wall Street Journal

NZ Herald has great images of the economy seats
NBR has different coverage
Air NZ website has three press releases and a new website to reveal more in a week.

UPDATE:

Apparently Air NZ got a design company to profile passenger types - and they match Simpsons characters. I'm not thrilled to be a blend between Lisa Simpson and Mr Burns.

Full set of photos on flickr here.

Terrorism exposes absurdities of the security bureaucrats

The attempt to blow up a flight from Amsterdam to Detroit has exposed the ongoing risk there has been, for some years, of Islamist thugs seeking to murder civilians en masse for political/religious purposes. It has exposed enormous flaws in the screening process for airline passengers, that someone on a "watch" list gets no particular attention, not too surprising in Nigeria, but appalling in Amsterdam. More disconcertingly it has given the aviation security goons an excuse to persecute all airline passengers flying to the US with such absurdities as:

- Prohibiting people from moving in the cabin in the last hour of flight, when the 9/11 terrorists made their move in the beginning of the flight (next the security goons will be demanding passengers be strapped in seats with "bed pans" to urinate in);
- Banning the use of laptops and portable audio equipment on flights, effectively making business flights largely unproductive and boosting book sales at airports;
- Requiring some airline in flight entertainment systems to be shut down early, contrasting to Air NZ's successful and popular "gate to gate" continuous running of the systems.

Christopher Hitchens in Slate says:

The fault here is not just with our endlessly incompetent security services, who give the benefit of the doubt to people who should have been arrested long ago or at least had their visas and travel rights revoked. It is also with a public opinion that sheepishly bleats to be made to "feel safe." The demand to satisfy that sad illusion can be met with relative ease if you pay enough people to stand around and stare significantly at the citizens' toothpaste.

We have already had to put up with the absurdity of being unable to take bottled drinks through airline security, but we can buy the same ones "airside" which means being price gouged at many airports (thankfully not Heathrow which has enough competing shops to make this no problem). Replacement of stainless steel cutlery with plastic was one of the most stupid, as anyone who got a glass of champagne could well figure out how a weapon could be created.

New Zealand of course coped for decades without any domestic security screening, until 9/11, and security goons were "shocked" at the knives and various objects people used to take on flights from Auckland to Christchurch. The unspoken truth is that the people who did this had no intention of using them against their fellow citizens anymore than they do on trains, buses, in shopping centres or walking the streets. It's a blessing that the Government ignored some calls for security screening for domestic flights using aircraft of less than 90 seats.

The case of Umar Farouk Abdulmutallab wont see anyone fired from their jobs in Nigeria, Schiphol Airport or elsewhere in the security sector. There isn't accountability for failures, just as there isn't for the stupidity of the measures imposed on everyone else.

It should have been obvious to connect the likes of Abdulmutallab to needing additional screening, he was, after all, already on a list. However, that incompetence is now shrouded by adding hours of delays to travellers, hours of inconvenience and discomfort because some control freak has decided to make people "feel safe".

What the security goons and the politicians wont point out is that the risks of attacks remains constant, and ever present. In London, there is little difference today compared with 2004 in terms of the ease of being able to launch an attack on the underground or on a bus. The sheer numbers of people are so great, and the same applies to all metro rail systems. Fast intercity trains are also sitting targets, but then so are crowded downtown areas. The IRA didn't waste energy on transport networks, but waged much fear and death by using bombs on cars and vans, or in public areas.

So the message is, you can't be wholly safe anywhere. Islamist thugs will seek to attack as they see fit, when and wherever they wish. Some on the left wish to minimise this, and it should not be exagerrated, but it is real, it will exist for many years to come. Even lasting success in Iraq, Afghanistan and Israel will only reduce, not eliminate the risk.

It is reasonable to take steps with aviation to stop people taking on board weapons, to screen for explosives and to use intelligence to stop those who there is good reason for suspicion, but someone needs to be responsible for the abject failings in this case and there should NOT be ridiculous kneejerk reactions just to be seen to be "doing something".

It's about time politicians and the public said no to being literally bent over and buggered by the incompetent and the inane. Aviation security is a serious business, it should be driven by real rational assessment of risk and the detailed use of intelligence to screen out passengers. Sadly what we seem to have is the sledgehammer trying to crack a seed, we deserve better from these ever burgeoning monopolies.

Tory disgrace over Heathrow

BA CEO Willie Walsh has come out a blazing against the Conservative Party's opposition to a third runway at Heathrow Airport.

"I want to know, if the Conservatives don't want to build a third runway, how are they going to position the UK economy to compete on a global scale in the future?..."We will look back years from now and say, what a disgrace. We expect governments to have policies that are coherent. I don't see this as coherent."

Dead right Willie. The policy is a mindless kowtowing to the anti-growth luddites of the environmental movement, as well as residents of West London who want their property values enhanced by the removal of Heathrow.

Curiously, Steve Ridgway, Virgin Atlantic's CEO agrees of course. Since it hinders both BA and Virgin Atlantic from growing. Although we shouldn't forget how eager Sir Richard Branson is at pushing environmentalism. This is what happens when you realise those you try to appease are uninterested in you.

Conservative spokesperson Theresa Villiers has said "We are absolutely convinced that the environmental costs of runway three, in terms of air pollution, noise and carbon emissions, significantly outweigh the alleged economic benefits"

Because you're idiots. Who gives a damn whether or not you think there are economic benefits. You are politicians, interfering with the private sector, trying to make money by providing services and therefore providing employment.

You don't create money, you seek to spend other peoples.

Get the hell out of the way of a foreign owned private company investing in new infrastructure in the UK that the taxpayer need do nothing about.

Throw off this pandering to both NIMBYism to win electorates in west London, and neo-Marxist environmentalism. Otherwise some of us will find enough reason to throw our votes away on an alternative.

Third Heathrow Runway "ok" on CO2

Why should that matter you might ask of me? After all, it is a privately owned airport, not seeking a pound of taxpayers' funds to expand, the business case is overwhelming and it is purchasing land for the purpose of the runway. So let it be. Especially since competing airports in Paris, Amsterdam and Frankfurt are all expanding or have recently significantly expanded runway capacity (but don't let that get in the way of reason).

However, the Brown government has a quasi-religious view on climate change, believing, brothers and sisters that the UK must lead the world in crippling economic growth and self sacrifice cutting emissions, even though the UK doing so wont make a jot of difference. So it decided to investigate whether a third runway at Heathrow, and the extra flights it could accommodate (besides reducing the very wasteful queuing at present) would have a negative environmental impact.

The Times reports a UK government committee has said that 60% MORE people can fly by 2050 and still meet the government's CO2 emission targets. In other words, rather than the luddite like "stop flying" nonsense trotted out by the environmental movement, someone has actually looked at the figures and determined how much expansion is "ok". Now it's not all good, it is based on taxpayers' being forced to pay for a high speed railway network to take some people from air to rail on domestic trips, and draconian taxes on flying, as well as assumptions of ongoing improvements in fuel efficiency. Because, you see, without any such kleptomania, apparently demand would double by 2050.

So even if you don't take a fully pro-capitalist view on this, it can still be argued that aviation expansion is not incompatible with ongoing reductions in emissions, in part because technology and commercial pressures will encourage this.

Of course the usual religious zealots have come out bemoaning this. Friends of the Earth enemies of humans wants an end to airport expansion (in the UK). Expect more of the typical rabid "planes bad, trains good" nonsense from environmentalists. Then of course you'll understand why more and more people are more and more sceptical about the true motives behind such activists. It's a form of ascetic nationalist environmental extremism, which happily will let the UK economy be stagnate, whilst letting China, India and even France, Germany and the Netherlands expand.

Air NZ abandons Boeing for domestic routes

Just to show Air NZ's predominantly state ownership does not stop it from applying good commercial acumen, the NZ Herald reports that it has wisely chosen now to order replacements for its Boeing 737-300 fleet, which is almost exclusively used on main trunk domestic flights. Wise, because the global recession has meant deals are easier to get from the two main suppliers of replacements, Boeing and Airbus.

What it will mean is an end to the long history of Boeing 737s on domestic routes, which started in 1967 when the then NAC ordered them to replace the turboprop Vickers Viscount. That first generation set of 737s was at a time when 737s were not popular internationally, and there was a hard sell from a British delegation to order the now virtually forgotten BAC 1-11. Boeing proved its 737 was more promising, despite much British lobbying, and it was right. The Boeing 737, and its second and third generation derivatives has been the most successful airliner made ever, with over 6,000 produced and another 2,000 on order.

The BAC 1-11 sold 244, including bizarrely 22 built in Ceaucescu's Romania. A legacy of a deal signed in the late 1970s. NAC made the right choice.

Since then, the original fleet of 3 has expanded to 15 today, and has been renewed twice. Although Air NZ has tended to order the last of the line of versions about to go out of production. In 1985 the original Boeing 737-200 fleet bought under NAC were replaced with the updated Boeing 737-200 Advanced series (around the last ever made). In 1999 these in turn were replaced with the last Boeing 737-300 series ever made, which saw an end to the noisy 1960s generation turbofan engines well remembered by those living in Wellington's Eastern Suburbs because conversations would need to stop whilst they would take off.

The Boeing 737-300s remain in service today.

Boeing undoubtedly offered its "next generation" 737 series 700, 800 and 900, Airbus had an advantage in Air NZ already having A320s largely used to fly services across the Tasman and to Pacific Islands.

The choice of the A320 was made on price, and it enables economies to be made in having one type of aircraft. The A320 has two other advantages, it has a slightly wider cabin so enables slightly wider seats and aisle, but also carries standard cargo containers in its belly. The "next generation" 737 cannot do that, as its fuselage is still essentially based on the long out of production Boeing 707.

So good for Air NZ, new aircraft, with a lot more seats, more cargo capacity, at a good price, and economies of scale of having one small jet type.

Bad luck for Boeing having lost a sale for a loyal customer of over 40 years for its most successful type.

For passengers it should mean more seats that are slightly wider, perhaps a common fleet that may all have personal TV installed at seats and business class once more domestically perhaps (unless there will be domestic and international configuration A320s). Overall it means that in a few years time, Air NZ's entire jet fleet will be comparatively very young as the 747s and 767s are phased out over the next 5 years as well.

Prince of Wales hypocrisy continues

It's not really news that Prince Charles is a Royal hypocrite on environmental matters.

So his latest antics say it all - according to the Mail on Sunday he decided to embark on a five day tour of Europe to promote environmental issues. He, with an entourage of 11 are flying to Rome, Venice and Berlin. For a man who is "so concerned" about climate change, you might think he'd avoid flying all over the place.

To top it off, he has a chartered a plane for the trip instead of booking commercial flights. Apparently 52.95 tons of carbon will be emitted by his trip, "nearly five times the average person's 11-ton footprint for an entire year".

Really, it does demonstrate how clearly having this man as a head of state is ridiculous. Of course he does a wonderful service is discrediting almost everything he says by his own actions.

More air security for what?

Airlines and airports think it's unnecessary, but it doesn't matter. Government security goons are keen on it, because it will mean they get more money and more power, growing in influence.

According to the NZ Herald up to 14 extra airports could get security screening, but it isn't for terrorists. No. It is to cover drunk people (who surely can be dealt with without everyone being screened), the mentally ill (who airlines should be able to discriminate against, if it weren't for the Human Rights Act) and the disaffected.

I called for a serious cost/benefit analysis of the measure, if only because I believe the delays, and inconvenience to travellers (simple things like stopping people taking water on flights) will outweigh the risk, particularly if other options are selected.

Take this comment from Ray Dumble, chief executive of Tauranga Airport Authority, who said the government is "using a boulder to crush an ant".

"To me the action is potentially disproportionate to the actual problem. But, like anything, it's a business cost which will be passed on ... in the end it will be the poor old passenger who pays."

It's simple. In the UK thousands of trains travel every day without ANY security screening, some go up to 125 mph carrying over 250 passengers at a time - and passengers are screened for nothing. If this can be sustained every day in a country with far more serious terrorism (and domestic anti-social behaviour) problems than NZ, then we can let people fly from Napier, New Plymouth, Tauranga and Nelson without being harassed because 1 in 10,000 people who fly are mad or drunk.

£15 London-New York return plus taxes

Yep, that's where airfares have gone. Virgin Atlantic announced today it was selling seats in riff raff class at the lowest marginal price in ages. £15 is barely enough to cover the cost of loading an additional meal.

Now to be fair, another £50.30 comprise taxes and levies from the US side, and £55.30 comprises taxes and levies in the UK, plus £106 Fuel surcharge (which goes to Virgin Atlantic).

So it's really £121 fare plus taxes. Still this is a fare to simply recover costs, and let's be clear airlines don't make money on the Atlantic in economy class. A full economy class section loses money for Virgin Atlantic if it carries nearly no one in premium economy class and upper class.

So it's not just the drop in bankers flying the Atlantic.

and don't forget, landing slots at Heathrow are allocated somewhat on a "use it or lose it" provision, so Virgin has to fly the flights to hold onto the slots - which of course are worth a fortune when there isn't a recession!

Dr Cullen and Air NZ

Well it is worthwhile noting both Air NZ's drop in profit and the pending retirement of Dr Cullen. Especially given it is entirely because of Dr. Cullen that you all have a share in Air NZ's future, a piece of history the left conveniently whitewashes over. You see what happened back when Air NZ was in crisis is something that SHOULD have brought Labour down in the 2002 election, but Bill English was too inept, and the mainstream media lacked sufficient journalistic talent and nouse to research it properly. Fortunately, almost all of the relevant papers are now on the Treasury website.

The pro-Labour history around this is simple:
- Air NZ made a bad investment in Ansett Australia;
- Air NZ needed a capital injection to save Ansett and expand its business;
- Two airlines offered this, Singapore Airlines and Qantas;
- As the government was considering both deals, the airline went into crisis;
- This was exacerbated by 9/11 and the global drop in air travel;
- Had Labour let things go, Air NZ would have gone into receivership, damaging tourism and resulting in the end of long haul flights with a NZ brand on them, hurting tourism further. There wouldn't have been flights to many centres in NZ;
- Dr Cullen bravely saved the airline, but required it dump the Australian liability Ansett;
- Then Dr Cullen wisely sought an international partner for the airline in the form of Qantas, because it "makes sense" to have a single South Pacific dominant carrier against the "world".

In other words, the private sector cocked up, and while the government was considering bids for investing in the airline, it was going to fold, and Dr Cullen saved the day. Much of that is nonsense.

That version of history misses out a few facts, facts that demonstrate that the whole situation came about because first the Australian then the New Zealand government stuffed up:

- Air NZ invested in Ansett Australia because the Australian government reneged on a deal for an "open skies agreement" between Australia and NZ. Air NZ originally wanted to set up its own Australian domestic operation in competition with Ansett and the then Australian Airlines. The Australian government reneged on the deal (the famous fax from Laurie Brereton to Maurice Williamson) because it feared it would reduce the price it would get for selling Qantas (which was subsequently to merge with Australian Airlines);

- The Australian government made it clear that it would far prefer Air NZ invest in an established airline - but it was not allowed to invest in Qantas. So Air NZ bought 50% of Ansett in 1996, but was not permitted managerial control at that level of investment and Ansett was required to provide various "social services" (unprofitable routes);

- Increasing frustration with the management of Ansett saw Air NZ finally decide to buy the whole thing out. However it paid too much, it outbid Singapore Airlines as it had aspirations to grow to the size of Qantas. What it found with Ansett was an airline in desperate need of restructuring and new capital;

- Singapore Airlines, which already owned 25% of Air NZ sought to increase its investment to 49% of the airline group, as a capital injection in June 2001. This was unanimously supported by the Air NZ board, but needed support from the Kiwi shareholder - the Crown. Official advice was that issues from such foreign ownership were manageable and that it appeared this was the best option, but the government needed to act promptly.

- Qantas lobbied the New Zealand and Australian governments to oppose Singapore Airlines increasing its investment in Air NZ. Obvious of course that it was seeking to kneecap its biggest competitor. Official advice in June 2001 was against the proposal on competition grounds. The Air NZ board rejected the proposal and Singapore Airlines refused to sell its shareholding, effectively making the proposal academic. Qantas continued to lobby for it;

- In July Cabinet REJECTED the option preferred by Air NZ and officials, preferring either a part state/part Singapore Airlines shareholding or a Qantas takeover;

- Air NZ wrote to Dr Cullen saying that "it would seem that the Government has embarked on a high risk and speculative course that has the danger of putting the Air New Zealand group at risk". The then Acting Chairman warned of the "grave financial risk faced by Air New Zealand Ltd as a result of the current uncertainties;

- Dr Cullen tried to pursue a half and half option allowing some Singapore Airlines investment along with some Crown investment, which was bypassed as the Crown bought out the airline.

Oh and as a side note, the economic geniuses at the Greens believed Air NZ was NOT in a dire financial straight and opposed any new foreign investment, but promoted taxpayer shareholding.

Dr Cullen helped bankrupt Air NZ, because of his peculiar pursuit of the Qantas deal, and the delays in approving the Singapore Airlines investment proposal. You might ask yourself why Dr Cullen didn't like money from Singapore, but liked it from Australia. Not xenophobia surely?

While it is all a bit more complicated than that, the truth is that the slow progress of Dr Cullen and the interference of Qantas has cost the NZ taxpayer dearly, as well as Air NZ. The Greens didn't help either. Air NZ warned that the government's approach created grave risks, and it was right.

So when Dr Cullen steps down, it is worth remembering part of his legacy - the legacy of the lecturer who couldn't make a critical business decision, and surrendered a major strategic opportunity for Air NZ to be a significant airline.

and of course don't forget the Kiwirail deal of the century!

Bye Qantas, hello Jetstar

The end of Qantas flown domestic services in New Zealand (well technically its subsidiary JetConnect), and their replacement by Qantas's low cost carrier Jetstar, will see a big increase in cheap seats on domestic flights.

However, the downside isn't just the end to competition between Rotorua and Christchurch, but also competition at the quality end of the domestic airline market. You see Jetstar is a true low cost carrier. Don't expect free coffee, tea, cookies or water on Jetstar. Expect to be crammed in with 177 people in an Airbus A320. Moreover, members of Qantas Club or top tier Qantas frequent flyers used to the lounges at Auckland, Wellington and Christchurch domestic terminals might ask what happens to them? You wont have premium checkin either.

So Air NZ's 80% hold on the business sector will grow, given Air NZ's most frequent flyers and Koru Club members can sit in the front half of a 737 and get four to five inches more legroom than the back - or more than what Jetstar offers by far.

However, most of you, like Americans and most tourists in Europe, don't give a damn about service or seating. You'll travel like cattle for an hour or more just to get there cheaply. This also is not really about Air NZ - it is about Pacific Blue - for it is the most likely casualty of this move.

UPDATE: Domestic Qantas Club lounges are apparently to stay for now.

3rd runway at Heathrow and watch the luddites crow

The announcement by UK Transport Secretary (Minister) Geoff Hoon that the government supports a third runway at London’s Heathrow Airport is bizarre on a couple of levels. Firstly, it is quite bizarre that government should have anything to do with it. Heathrow is privately owned, its owner – BAA – is not seeking taxpayer funds to pay for the runway. If property rights are properly defined it should be a matter of negotiation between BAA and relevant property owners. However, that is by the by – and a symptom of a bigger problem, that the UK is strangled by process and consultation over matters that shouldn’t be the business of those who are not directly affected.

It is luddite Britain on a grand scale, a culture that worships stagnation, that rides on the religious fervour of the eco-evangelists, and is an orgiastic frenzy of “do as we say” crowd, eager to impose their planning fetish on everyone else. It’s frightening, and shows how hard it is to make real progress in the UK, when half the country is obsessed with standing still and telling others what to do.

The logic to a third runway at Heathrow is straightforward. It makes commercial sense, because Heathrow has virtually no spare runway capacity, is the only major hub airport in the UK, has the highest number of international passengers of any airport in the world, and is by far the most preferred airport for business traffic. In short, it is a profitable, highly desirable operation with scope for significant growth. If you've spent half an hour in the air circling in a stack waiting to land at Heathrow (great for the environment that), or on the ground in a take off queue, you might appreciate how constrained Heathrow is, especially since Terminal 5 has relieved the overcrowding at Terminals 1 and 4, and is (finally) a world class airport terminal experience.

Many countries and cities would love to have an infrastructure asset so sought after, profitable and capable of growth as Heathrow. However, no. In the UK, such opportunities are to be stamped on by various crowds. One group I can understand, the NIMBYs who are affected because they live nearby or in the flightpath. They are likely to experience more noise due to more flights, although with a landing and a takeoff on average every 2 minutes from 7am to 11pm, you wonder how they would notice (especially as airliner engine noise has dropped significantly in the last 20 years)/

The rest have jumped on an environmental bandwagon. The idea that if Heathrow gets a third runway it will accelerate climate change, rather than mean transit traffic shifts to airports at Paris, Amsterdam, Frankfurt and Dubai (which of course makes no difference to the environment). All those airports have between three and five runways and plenty of capacity, but apparently it’s ok if continental Europeans or Arabs have airports that can grow, the British want to deny it to themselves. It’s madness, and if Heathrow is constrained it constrains jobs for the airport, but also the three airlines that hub there – BA, BMI and Virgin Atlantic.

Moreso, those opposing it make petty fascist comments like “people should catch trains anyway”, ignoring that less than 5% of trips from Heathrow are those travelling within the UK or to locations in Europe quickly accessible by train. With New York by far the most popular international destination from Heathrow, it is a bit far fetched to imagine how those travellers should go by rail. Oh and Dublin is second, but the luddites probably think a train and a ferry ride is justified.

You see the other line they take is that so many flights aren’t “necessary”, because, of course, they know best for others. How dare people be tourists or business people travelling when they see advantage in doing so, when the armchair planners have decided that there should be no more flying.

One suggestion is that flights should be “redistributed” to Birmingham, Leeds and Manchester, presumably because if you can’t change mode, you should change destination. If you live in London and want to fly to New York, why not get a train to Leeds first.

The same people who make these suggestions no doubt come from a range of walks of life. There are the idle rich like Zac Goldsmith, who couldn’t care less if rationing air travel puts up prices so those poorer than he can take holidays less frequently. There are the retired planners and bureaucrats who miss the days of large government bureaucracies planning everything. All in all busybodies who think they know best how to spend other people’s money, use their businesses and how they should move about.

They treat aviation as some sort of bringer of doom and destruction. The same doom merchants who killed success for Concorde by getting the US Federal Government to ban supersonic overflight of the USA, which India followed. If these people were alive a century ago, you can expect them warning that aviation should be banned because planes will occasionally crash on the ground, risking lives.

If the 3rd runway is stopped (and assuming Boris Johnson’s idea of a super airport island built in the Thames Estuary is not commercially viable), then it will increase the reputation of the UK as a community of stagnation worshipping school prefects, that don’t like change, that worship the latest altar of “don’t build anything because it wont be the same when it’s done” and see the jobs, businesses and investment of others as something they have to have some sort of quasi-fascist interest in. Hopefully the Conservative Party opposition is just grandstanding to get elected, as I am sure the public service will see them right, because not growing Heathrow means not growing BA, Virgin Atlantic or BMI, and it increases the costs for freight and passengers not only into London but all of the UK. No other UK airport (besides the small London City), has a smidgeon of the high value premium traffic that Heathrow does – only a coalition of the envirovangelists, luddite left and rich idiots who have no interest in economic growth can halt this.

So next time you see a Tory or Conservative MP, or indeed any self-proclaimed environmentalist at Heathrow catching a flight, you might care to ask them about their hypocrisy, or why they aren’t catching a train to fly out of Amsterdam or Paris instead!

Greenpeace uses property rights to protest

Luddites they may be, and driven by an irrational desire to strangle British airports (which will simply transfer business to continental European ones), but Greenpeace is at least taking a rational approach to protesting the plans to build a third runway at London's Heathrow airport - buying up some of the land needed.

Emma Thompson, Alistair McGowan and Tory nitwit brat Zac Goldsmith have all put up money to buy a field north of Heathrow, which BAA wants as part of its proposed third runway, according to the Daily Telegraph. The intent, of course, is to stop BAA being able to buy all the relevant land, and frankly - from a libertarian point of view - they should be perfectly entitled to do so.

You see ultimately they can make a rational choice. BAA can offer a price which is as much as it is willing to do so to buy the land, and if Greenpeace can take the money (which could fund countless other campaigns) or sit on the land and let BAA try something different.

Of course BAA can ultimately undertake compulsory purchase because it is legally allowed to, and like most businesses today, will use the law to the extent it can to make money. Greenpeace of course doesn't give a damn about property rights, it happily supports those breaking and entering private property to engage in protests - like a recent bunch of fools at Stansted Airport.

So all in all, it's not something significant - an organisation that has scant regard for private property rights is using it to delay a rational commercial project by a private company. I've always said that if BAA can finance a third runway at Heathrow commercially, and buy the land to build it, it shouldn't be prevented from doing so. There may be issues around noise, but unless flights comprise a nuisance over and above that accepted by property owners on flightpaths, it shouldn't be an issue. Yes, I have lived under the flightpath myself.

Of course, if someone can put forward a private business case for a new airport for London at Thames, like Boris Johnson supports, let them do so. However, I wont be holding my breath, sadly.

29 years to the day after Erebus

and sadly another Air NZ plane crashes. The Airbus A320 was about to be returned to the airline after a lease to XL Germany expired and has been lost on a training flight off the coast of France. With 2 bodies found, the likelihood that the remaining crew (flight engineers) surviving is slim. A tragic day for the families and friends of those on board, and a reminder that training flights are not without their dangers.

Cullen leaves Air NZ vulnerable to bloodbath

According to Stuff Qantas, through Jetstar, is about to wage war on the NZ government state owned airline. The statement "Jetstar also plans to use the two centres as a hub for direct flights to the United States and Asia using the new Boeing 787 Dreamliners." (meaning Auckland and Christchurch) will send shivers down the spines of Air NZ's minority private shareholders.

Who should be surprised - it is exactly the consequence of Michael Cullen's decision to not allow Air NZ to be bought by Singapore Airlines in 2002.

Many will have forgotten how Michael Cullen effectively vetoed by indecision Singapore Airlines increasing its stake in (the 100% privately owned) Air New Zealand/Ansett from 25% to 49% in 2002, despite the Air NZ board voting unanimously for the deal, despite Air NZ desperately needing the capital to re-equip its fleet and Ansett's fleet, despite the deal being recommended by officials (who saw it as critical to enable the airline to grow and have a strong strategic future). Dr Cullen did it because Qantas made a rogue bid to invest in Air NZ, which Air NZ's then shareholders opposed, which would have kneecapped its strongest competitor to enable them to merge. A concept Qantas's cunning management sold to the Labour Government, with the undercurrent that it was better for Kiwis and Aussies to stick together and face the world as one (with an enormous monopoly airline), than for NZ to sell out to... others.

Dr Cullen wanted to consider both the Qantas and Singapore Airlines bids, whilst in the meantime Air NZ bled red ink, lacking capital, desperately needing to restructure Ansett - until finally, following September 11 2001, the airline was to fall over, and Dr Cullen renationalised it, on condition that Ansett was left to fail. The rest is history.

Qantas saw its longest standing competitor on domestic and some international routes fall over, granting it complete dominance over the lucrative domestic business market in Australia, it saw its growing international competitor - Ansett/Air NZ/Singapore Airlines - pull out of Australia. Qantas faced only a new and budget market driven Virgin Blue, and saw competition reduce on the lucrative USA and Japan routes.

Qantas owes Dr Cullen a great deal for letting its competitor fail - because Dr Cullen would rather own the airline himself, than let owners of one of the world's best and most successful airlines own it.

So after all that it tried again, and Dr Cullen supported Qantas buying the rump Air NZ - despite competition authorities saying it would be disastrous for the state owned carrier to be owned partly by its biggest competitor.

Thankfully that brought it all to an end. Air NZ restructured, became a profitable carrier, Singapore Airlines bailed out after Dr Cullen severely diluted its ownership, and as a result felt cheated by the Labour government. Air NZ is a shadow of its former self in terms of size, although it has upgraded its fleet and products to compete. Its long haul international network largely comprises routes it monopolises or dominates, with only traffic to Europe and Hong Kong facing serious competition. It does it very best, its efforts of late to install personal video screens on 767s and Airbus A320s for all Trans Tasman flights is a clever competitive move, as it providing more legroom for frequent flyers on its domestic 737s.

However it lacks capital and lack a strategic investor from a large foreign airline.

Dr Cullen would say it should have been Qantas, ignoring that this would decimate competition on domestic, Trans Tasman routes and from Auckland to LA. If the airline continues to be majority state owned with no new capital, it will face all of its lucrative markets under pressure from Qantas-Jetstar. It is already facing a significant decline in UK, Japan and US origin tourism.

Jetstar has a huge advantage over Qantas, in that it has a lower cost base, because the employment contracts were signed outside the legendary generous Qantas pay structure. Jetstar has the economies of scale of the Qantas group, and will aim at the primarily low yield NZ tourist market (the business market will remain with Air NZ, but this is rather small beyond domestic routes, USA and London routes).

So well done Dr Cullen - your own xenophobic preference for Australian capitalists over Singaporean capitalists, your bizarre refusal to give a damn about competition in the aviation industry, and your desire to own an airline come what may, has left Air NZ - which to its credit has improved its game enormously in recent years - vulnerable to the Qantas group waging a war of attrition against it.

Singapore Airlines wont buy it while Labour is in power, for obvious reasons, and indeed there will be little interest in the airline unless it has a presence in the Australian domestic market - already crowded with three airlines (Qantas-Jetstar, Virgin Blue and Tiger Airways). The choices are simple:
- Seek a substantial foreign investor (preferably a Lufthansa, Singapore Airlines, um that's about it in this environment);
- Pour taxpayers' money into financing a competitive battle;
- Let the airline withdraw from markets that are decimated by Qantas/Jetstar.

Well done Mr economic genius.

Qantas to fly A380 to NZ for promotion

So why on earth has Stuff included a photo of an Emirates flight attendant inside an Emirates plane in its article, with the caption "Qantas by a nose: Qantas will be the first airline to fly the new Airbus A380 to New Zealand". (photo to the right).

Mainstream media, carefully edited and double checked - not.

The report says, of course, that Qantas plans no scheduled A380 service to New Zealand. The first routes will be from Australia to the USA, then to Hong Kong/Singapore and the UK. Emirates by contrast will fly an A380 service daily to Auckland.

Meanwhile, the easiest way for NZers to fly on the A380 is Singapore Airlines, from Singapore to London after flying from Auckland or Christchurch.

Airline industry faces enormous challenges

The massive hike in jetfuel prices, although moderated in recent weeks, has taken its toll in the airline industry worldwide. The most recent casualty, XL airlines (a UK low cost airline/ charter/tour operator) fell over because it hadn't hedged against price increases adequately, and had sold its tickets many months in advance. Being an operator at the bottom of the market left little room for fat, so it has gone. Others to fold have been Trans-Atlantic low cost carrier Zoom (again the bottom of the market has little profitability in it), US carriers Aloha, Skybus, ATA, Futura of Spain, Hong Kong's low cost carrier Oasis and the three all business class Trans Atlantic airlines, Maxjet, EOS and Silverjet. The last three folded because they couldn't offer the frequencies, network connections or airport access at London that was needed to be competitive.

So what does this hold for airlines down under? Well both Qantas and Air NZ have been hit hard, primarily because of a major collapse in international tourism from Europe, the USA and Japan. Long haul flights burn a lot of fuel, but the fare per passenger km is lower than short haul (and the staff/amenities required are much more elaborate than on short flights), so routes to and from Europe have been badly hit.

Air NZ in particular is vulnerable. Although it remains profitable, it is small, it retains the same risks it had before it bought into Ansett many years ago of not having much access to its nearest large market, and it extends itself far beyond New Zealand to an extent almost unparalleled by airlines of similar sized countries.

Air NZ's share price closing Friday was NZ$1.05, that is less than it was after it was largely renationalised in 2002, at NZ$1.75. More of your money Dr Cullen has spirited away. However, none of this should be a surprise:

- The domestic market remains largely stable, as Air NZ completely dominates the high yield flexible ticket business market and most provincial routes. It is shoring up that business by having converted the front half of its 737s to a new "Space +" configuration for Koru Club members, Gold and Gold Elite Airpoints members and full fare customers. That 3-4 inches more legroom will earn loyalty.

- The Trans Tasman market is growing, as Aussies and Kiwis travel closer to home, but it remains a bloodbath on prices. Pacific Blue is increasing frequencies as is (the apparently immune to oil prices) Emirates which will fly a daily Airbus A380 across the Tasman from February. Air NZ is also putting a "Space +" section at the front of economy class on its 767s and Airbus A320s on this route, also to shore up business traffic (as it will have the most legroom in economy class on the Tasman), as well as installing personal TVs for every seat in every class on 767s and A320s. Again it is hoping that aiming for the top of the market will increase yields, but it faces one huge disadvantage - no access to the Australia domestic market. Business traffic feeding to the Tasman domestically almost entirely goes on Qantas, because it can offer that.

- The Pacific Island market is low yield mostly, comprising ex.pat Pacific Islanders "going home" from NZ, and NZers going on holidays. They are all seekers of low fares. Air NZ has chosen to almost abandon the US/Europe to Pacific Island tourist markets through LA, although these have also plummeted significantly.

- The Asian market is also low yield. Tourism originating from Japan has collapsed significantly in the last few years. Air NZ has dropped routes to Nagoya, Fukuoka in recent years and the Osaka route is down to twice weekly (and about to be operated by 767s, a drop in 79 seats from 777s as well as a major drop in Business Class seating). The routes to China (Shanghai and Peking) are also disappointing, as there is very little business and premium economy demand, and the economy passengers are again at the cheap end of the market. Hong Kong has more balanced demand, though that is in part a feed to Lufthansa and Swiss flights to Europe (as well as the route to London).

- Routes to US and Canada tend to have plenty of business and premium economy traffic, but the economy class end of the market has declined significantly due to the recession in the US.

- Lastly the London routes are currently unprofitable, which is why the route via LA is being downsized to a 777 (also reflecting the increased competition between London and LA since the Trans Atlantic Open Skies agreement came into effect). UK origin tourism has dropped significantly, and Emirates has hurt Air NZ's business on routes to Europe.

So it's tough, it is a major exposure for the government as well, and like Delta/Northwest, BA/AA, Lufthansa and Brussels Airlines, Air NZ must be looking to hook up with a major foreign airline to survive and grow. To do this the government must water down its shareholding. At the very least the incoming government should look to dilute its over 80% shareholding to 50.1% to give the airline an injection of capital and the strategic linkages it needs to grow. Not doing so will see it struggle to sustain long haul routes at times like these, which is, after all, one of the key reasons for the government wanting the airline to remain in any case.

Branson the whinging entrepreneur

I have before said that Sir Richard Branson or "Beardie" as Jeremy Clarkson likes to call him, is far more about style than substance. One need only see his latest bleatings to show how little of a true entrepreneur he really is.

British Airways, American Airlines and Iberia (and to a lesser extent Finnair and Royal Jordanian) are all seeking immunity from competition authorities in the EU and USA to allow them to codeshare and more closely integrate their networks. Hardly surprising with high jetfuel prices, intense competition between and within Europe and North America, and as all three are in the OneWorld alliance.

Skyteam alliance airlines Air France/KLM (which has by far the plurality of slots at both Paris Charles de Gaule and Amsterdam Schiphol airports) already have this with partner airlines Northwest and Delta, as do Star Alliance airlines Lufthansa and United. Lufthansa has dominance in airport slots at both Frankfurt and Munich.

Beardie is upset because BA has 42% of slots at Heathrow, and American around 6%. He said "If this monster monopoly is approved it will be third time unlucky for consumers. It will still be bad for passengers, bad for competition, and bad for the UK and US aviation industries."

Let's see what this "monopoly" looks like:

London to New York you can fly on BA, AA, Virgin Atlantic, Delta, Continental, Air India, Kuwait Airways.
London to LA you can fly on BA, AA, Virgin Atlantic, United, Air France, Air NZ.
London to Chicago you can fly on BA, AA, United, Virgin Atlantic, Air India.

Of course you can fly indirectly on these routes through Europe, Canada and other US destinations on umpteen airlines, a lot cheaper than the direct routes typically.

There is also no legal restriction on any US or European airline entering any TransAtlantic routes (although landing slots at Heathrow are at a premium, Delta, Continental and Northwest got some earlier this year without enormous effort). Monopoly? Hardly!

Let's compare that to trains between London and Manchester - how many operators run that? Oh yes, one - Virgin Trains, and it gets hundreds of millions of pounds in subsidies from British taxpayers to do this. Of course there is competition by air and road Beardie would say, of course he would - he isn't involved in monopolies now is he?

So why does BA have so many slots? Well Heathrow is BA's hub, like Frankfurt is Lufthansa's and CDG is Air France, and Schiphol is KLM's. You don't operate an airline that flies within the UK or around Europe at all, so it's no bloody wonder you have less. There are, of course, several European airlines over the years that have gone bust you could have bought and revived, but I don't see you doing that - not going to buy out and rename Alitalia, Virgin Italia?

You might see what Chairman (and majority owner) of BMI - Sir Michael Bishop - another competitor of yours (and BAs), with the 2nd highest number of slots - has said instead "I think things have changed after open skies and they are not setting any precedents. What BA is asking for is what both the other major alliances already have." according to the Daily Telegraph.

So Beardie - compete, make your own arrangements (you already have a codeshare deal with Continental, but I'm sure it's not as lucrative now Continental has agreed to join Star Alliance) and don't pretend that somehow AA gives BA anything more except closer integration to the US domestic market. Why don't you fly from Frankfurt, Schiphol or CDG? Why don't you seek to closely integrate with BMI? Why is Singapore Airlines finding it hard to sell its 49% stake in your floundering airline?

A real entrepreneur responds with a competitive challenge by outsmarting and outdoing the competition - stop running to Nanny State to protect your business and work it out - an airline dedicated to nothing but long haul flights from the UK, with only a smidgeon of partners feeding it, is not a sustainable business. It's not the fault of BA that it's figured out where the future is and you haven't. What are you scared of? Most British business class travellers wouldn't touch American Airlines for obvious reasons and if fares "go up" you benefit if there is less capacity on the route? Or is this maverick "I'm all for competition" all style over substance?

Is that why you're spending money lobbying Barack Obama and John McCain to protect your impotent business?

Like you needed another reason to not fly Ryanair

Snobby elitist post...

According to ABTN "Ryanair has fitted 15 Dublin-based aircraft with technology to allow in-flight calls and text messages, with trials to start at the end of July.

By the end of the next fiscal year it wants to extend this to 50 aircraft, and across its fleet within a year and half."

So besides virtually no service groundside, no service in the air, stripping planes to the bare minimum with fixed seats, no windowshades, now you would have to put up with gobby tourists waffling on about how "I'm on the plane" or with the incessant "beep beep .......... beep beep" text messaging notification sound. Though given Michael O'Leary said “The charge you pay will be the international roaming charges" and Ryanair customers are tighter than Mbeki and Mugabe, it might be not that bad.

I say you, because I wont fly Ryanair. With Gold Elite Air NZ status I can fly in the back on short European flights with Star Alliance airlines, use business class checkin, have lounge access and business class baggage, and be with an airline that does provide some sort of service on the ground. Beyond that BA isn't half bad, sometimes has good deals in Club Europe (business class) and I am halfway to being Gold Qantas so I can do the same with OneWorld as I can with Star Alliance. Now I'm not saying flights around Europe in economy class are great, they are not that comfortable, have almost always bad food (though free drinks are appreciatd) are often late and uninspiring - but they are step beyond Ryanair's truly cattle class (and many of the people you travel with are too!). However, if you are willing to travel as freight then you'll pay - and it's the same with flying third (economy) class UK-NZ, especially without a stopover.

Fortunately tomorrow I'm flying BA back, and not in fourth, third or second class.

Qantas stuffs up A380 cabin release

When Singapore Airlines highlighted the new cabins as the first airline flying the Airbus A380 "whalejet" it got accolades. From the Suites providing proper beds in cabins with sliding doors, being undoubtedly the best first class in the air, its fully lie flat wide business class seats (as wide as the pitch between typical economy class seats), and its slightly wider economy class seats with bigger entertainment screens. Singapore Airlines has something to show off and rightfully so.

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Emirates is the second airlines to fly the A380, but has not released interior photos. Qantas will be the third, but has.

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It's so underwhelming, some commentators think the airline has screwed up. I'd have to agree. Here are the publicly available photos. The first class looks no better than Air NZ's Business Premier but reversed the other way, the business class looks like current Qantas business class but the seat cushioning looks dishevelled and uninspiring. Economy class, yawn. Now it might be better if professional photographers and the PR wonks tart it all up (as they should've, not just let some journo take some pics), but look for yourself. Would you choose Singapore Airlines or Qantas? I don't think there is any contest... Singapore remains supreme.