Company Watch June 2005.


China experiences pilot shortage as demand for air travel grows. A dearth of pilots could threaten the growth of China's booming aviation industry, the International Herald Tribune reported. About 11,000 pilots are employed to fly more than 800 commercial planes, according to the Civil Aviation Administration of China. The number is not sufficient to handle soaring demand for commercial airline service, experts say. Some small Chinese airlines are recruiting foreign pilots. Jun 28, 2005

Sponsor of pension bill says airline aid should not be included. The House should not add specific airline aid to a bill aimed at tightening rules for corporate pensions, the sponsor of the bill said Wednesday. However, Rep. John Boehner, R-Ohio, said he would not rule out adding specific relief later in the legislative process, Reuters reported. Meanwhile, the Pension Benefit Guaranty Corp., said Congress should not extend the amount of time airlines have to catch up on their pension contributions, Scripps Howard News Service reported. Delta Air Lines and Northwest Airlines have said they need more time to fully fund their pension programs. Jun 23, 2005

U.S. airlines employ fewer workers, DOT reports. The number of workers employed by U.S. airlines fell to 451,915 in April 2005, down 2.8% from a year earlier, according to the U.S. Department of Transportation's Bureau of Transportation Statistics. The number of workers at the seven network carriers fell 6.1% from April 2004. Jun 23, 2005

Airlines now required to reveal aircraft's origin. A new law effective Wednesday requires U.S. airlines to tell passengers where aircraft were built, Bloomberg News reports. Airlines will place the information on plastic cards in the backs of seats. Rep. John Mica, R-Fla., added the rule to a bill passed in December 2003. A Federal Aviation Administration spokesman said all the carriers are "probably already in compliance."

Jun 22, 2005

U.S. carriers boost service to India as restrictions ease. U.S. airlines are boosting service to India, USA Today reported. In April, the U.S. and India signed an agreement easing rules that limited service. Continental Airlines will launch the first direct service between the U.S. and India, while Northwest Airlines and Delta Air Lines plan connecting flights. Three Indian airlines also plan to add service. Jun 21, 2005

U.S., EU willing to resume aircraft subsidy talks. U.S. and EU officials say they are willing to return to talks over aircraft subsidies. The sides did not say when they would resume formal negotiations. Talks broke down in May, and the White House said it would take the case to the World Trade Organization. The EU also filed its own WTO case. The U.S. believes European jetmaker Airbus receives unfair government subsides to develop commercial jets. The EU counters that U.S. manufacturer Boeing receives aid in the form of defense contracts. Jun 20, 2005

Some airlines will recover from financial slump. The head of the Air Line Pilots Association predicts some large airlines will recover from their financial slump, the Minneapolis Star Tribune reported. Duane Woerth said the airlines are now concentrating on boosting revenue in addition to lowering costs. Recent fare increases are "cause for optimism," he said. Jun 20, 2005

Senator who led delegation to air show will not reveal costs: The lawmaker who led a congressional delegation to the Paris Air Show will not disclose how much the trip cost or how many members of Congress came along, The Washington Times reports. Sen. Ted Stevens, R-Alaska, does not usually comment on trips because they are confidential, a Stevens spokeswoman said. Members of both parties traveled to Paris with Stevens. Jun 20, 2005

Aviation visionaries imagine air taxis connecting small cities. Microjets with two engines could one day connect 5,400 U.S. airports with no scheduled service, The New York Times reported. Visionaries say "air taxis" could be safe and reliable. Improved technology, including satellites, would handle air traffic and provide navigation support. Jun 20, 2005

States sell themselves at Paris Air Show: Politicians from several states have visited the Paris Air Show with the hope of attracting foreign business back home, The New York Times reported. Alabama, South Carolina and Florida were among the states that set up information booths at the show. Charles Lindbergh's grandson, Erik Lindbergh, helped New Mexico's marketing effort. Jun 17, 2005

Key lawmaker opposes specific help for airline pension plans. A prominent lawmaker said he opposes legislation aimed specifically at relieving the airline industry's pension obligations, the Atlanta Journal-Constitution reported. However, Rep. John Boehner, R-Ohio, said he would cooperate with lawmakers trying to help airline workers and retirees. Some large airlines are asking Congress to allow them to stretch out pension payments to their funds. Jun 17, 2005

Europe moves quickly on new air traffic control system. Europe is working quickly to modernize its air traffic control system, The Wall Street Journal reports. Companies and governments are reaching a consensus on creating a safer network for directing planes through Europe. Meanwhile, plans for improvements to the U.S. air traffic control system are fragmented. American officials worry Europe will move to satellite-based navigation before the United States. Jun 15, 2005

Finance ministers ask for study on voluntary airline tax. EU finance ministers have asked the European Commission to study a voluntary tax on airline tickets, Reuters reported. The tax would help pay for aid to Africa. Some countries have criticized the proposed tax. The commission turned down the ministers' first request for a study last week because of opposition from 10 commissions. Jun 9, 2005

International carriers recover from financial crisis ahead of summer. Many international airlines are starting the summer travel season with significant cost savings following several years of restructuring, the Wall Street Journal reported. Some of the carriers are even able to raise fares. U.S. airlines continue to struggle, and two U.S. carriers remain in bankruptcy protection. Jun 6, 2005

Price of average 1,000-mile airfare down 20%. In five years, the price of the average 1,000-mile flight has dropped 20% to $118, according to the Department of Transportation. More people are flying to take advantage of the lower fares, The New York Times reports. Meanwhile, delays have increased. Jun 6, 2005

Jet fuel prices soar 15% in two weeks; airlines lift fares. Jet fuel prices have climbed 15% in the past two weeks, sending costs higher for U.S. airlines, the Atlanta Journal-Constitution reported. Fuel is usually an airline's second-highest cost. Carriers have lifted fares nine times this year to offset the higher costs. Some analysts expect jet fuel prices to continue climbing. Jun 6, 2005

IATA - International Air Transport Organization director general Giovanni Bisignani was in a bullish mood when he addressed the delegates to the industry gathering in Tokyo last week. He spoke of growth but at the same time was very quick to emphasize that high oil prices were destroying the profitability of the airline business. "The crisis continues," he said. "Our fuel bill this year will be US$83bn. Equal to the GNP of New Zealand. This is US$39bn more than 2003. Last year alone, the industry lost US$4.8bn. However he highlighted regional differences. North American carriers lost US$9bn. Efficiency gains cannot make up for structural problems. Labor costs remain high. And low cost competition at major hubs drove yields down. European airlines posted profits of US$1.4bn. Yields were better. And consolidation helped capacity management. Asian carriers posted US$2.6bn profit. Strong growth fueled by China and low labor costs are the competitive advantage. And India may be the next great market for the industry. Middle Eastern operators made US$100m. Strong traffic growth led to profitability. But the economics of matching capacity to demand is the challenge. In Latin America things were near break-even. The situation is changing fast. Some of the region's airlines are making money, but the majority are technically bankrupt. And misguided airport privatization makes matters worse. Finally African airlines lost over US$150m. The region has major safety problems. And governments are not investing in infrastructure". Jun 3, 2005

Budget carriers expand into Eastern Europe. Discount airlines are expanding across Europe, and giving travelers an alternative to bus and train service, the Associated Press reports. Last fiscal year, SkyEurope transported 1.2 million passengers, and EasyJet and Ryanair are adding flights in Eastern Europe. Jun 2, 2005

White House unlikely to bail airlines out of financial mess. Airlines should not count on the White House to help pull them out of their financial downturn, the Wall Street Journal's David Wessel writes. The administration believes airlines are losing money because the industry has too much capacity and excessive costs. One economist said a government rescue plan could prolong the industry's suffering. Jun 2, 2005

Alaska Airlines

Alaska Airlines opposes Southwest's possible move to Boeing Field. Alaska Airlines said it opposes a possible move by Southwest Airlines to Boeing Field, The Seattle Times and Seattle Post-Intelligencer reported. In a letter to the King County Council, Alaska Airlines said its costs would climb by $11 million a year if Southwest is allowed to leave Sea-Tac Airport. However, if Southwest moves, Alaska said it also would shift some flights to Boeing Field to remain competitive. Jun 23, 2005

Alaska Airlines

Alaska Airlines reaches tentative pact with mechanics. Alaska Airlines on Thursday reached a tentative agreement with its mechanics union, the Seattle Post-Intelligencer reported. The four-year contract, which covers...

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