Wednesday, August 22, 2007
China To Tighten Control Over Airline Growth
According to a recent Aviation Week and Space Technology article, China's airline and aircraft industry should benefit from recent government moves to curtail the growth of the civil aviation market. The new initiatives announced by the CAAC include a ban on new airlines until 2010 at the earliest and an immediate reduction of 48 aircraft movements a day at Beijing's airport. However, new airlines will be allowed if they meet one of the following criteria: (1) they carry freight; (2) use mainly foreign pilots; (3) fly mostly at night; (4) primarily serve the west and northeast of the country; and (5) use Chinese made aircraft. According to AW&ST, these new regulations will allow existing carriers to firm up pricing power in the marketplace and help alleviate the "shortage of technical workers, airspace and airport capacity."
A related article containing an interview with China's chief aviation minister Yang Yuanyuan about the "radical reforms" he has orchestrated in China's aviation market can be found on the Airline Business website.
Problems At London-Heathrow
The Economist recently ran two articles looking at problems with London's Heathrow airport. The first article articulates reasons why Heathrow's underinvestment in facilities could be cured by breaking up BAA's monopoly control over London's three main airports (Heathrow, Gatwick and Stansted). The second more sympathetic article speculates that the recent negative focus on Heathrow's customer service problems "may be may be the result of 'an orchestrated campaign to influence the [UK Competition] Commission's outcome' by those who want to see [BAA] broken up."
EU Q2 2007 Quarterly Report on the EU Air Transport Market
This newly released report includes a detailed look at how PSO (public service obligation) routes are administered. As discussed in previous blog postings, DG-TREN has increased its oversight of this controversial area during the past year.
Friday, August 10, 2007
BA and Korean Air Settle Price Fixing Charges with U.S. DOJ
On August 1, the U.S. Department of Justice announced that British Airways pleaded guilty to charges of price fixing relating to fuel surcharges on long-haul passenger and cargo flights. In announcing that the carrier would pay a $300 million fine, the DOJ noted that during the time of the passenger conspiracy (2004-2006) the fuel surcharge for a round trip passenger ticket increased from $10 to $110. During the time of the cargo conspiracy (2002-2006) the fuel surcharge on shipments increased by 20-fold. On the same day, the UK Office of Fair Trading announced that it would fine BA $246 million as a result of a similar investigation into passenger fuel surcharges. The DOJ fined Korean Air $300 million as well for participating in a conspiracy from 2000-2006 to fix cargo rates and passenger fares. The other participants in the conspiracy, Virgin Atlantic and Lufthansa, will escape a fine from the DOJ due to the fact that they disclosed their participation.
New York State Governor Signs Airline Passenger Bill of Rights
Last week, New York became the first state in the nation to pass an airline passenger bill of rights (Download NY_Passenger_Bill_of_Rights.pdf for the full text of the law). As we wrote about previously on the blog, one of the most high profile incidents that lead to the push for federal passenger bill of rights legislation was the JetBlue operational meltdown at JFK last February. Therefore, it was not surprising to see that the New York state legislature also wanted to be seen as doing something proactive for their constituents.
According an ATW online article: "[t]he law requires carriers to provide food, water, clean restrooms and fresh air to passengers stranded on aircraft for more than 3 hours. It also requires airlines to provide passengers with a phone number to register service complaints and establishes an "office of airline consumer advocate" within the New York state government." The article suggests that the Air Transport Association may mount a court challenge and argue that the law is preempted by federal statutes.
Mexico Minister Rules Out Open Skies With U.S. During Current Presidential Term
A recent Dow Jones Newswires article (Download mexico_rules_out_open_skies_dj_newswire.doc) mentions that Mexico's transportation minister, in a recent speech to a Mexican pilots' union, remarked that there would be no open skies agreement with the U.S. during President Felipe Calderon's current term in office. A U.S.-Mexico open skies agreement is an important building block for achieving the goal of a NAFTA (U.S.-Canada-Mexico) open skies agreement within the next ten years, as declared by transportation ministers (including Mexican transportation minister Luis Tellez) at the North American Transportation Trilateral Ministerial in April 2007 (see U.S. DOT press release discussing the declaration that was signed at the Ministerial).