Gartner has been very effective trend analyzer and business Analysis Company since many years especially in the field of cloud computing and information technology. Gartner Inc announced this week end on Saturday August 28, 2012 that the major part of the technology hype cycle is controlled by cloud computing, web hosting, big data, and 3D printing systems on the domain of technology businesses on the market place.
It was further explained that the major technologies that are cruising now a days on the domain of information technology and related technologies are mostly influenced by cloud computing and web hosting technologies. Among such cruising technologies, most important ones are big data, 3D printing, internet TV, near field communication or NFC payments, web hosting, and cloud computing. Further it was maintained by the Gartner analysts that these technologies has already moved very notably along the technology hype cycle even in previous years like Year 2011; the same trend is also predominantly moving along the cycle. This is moving so fast and impact is getting materialized phenomenally fast.
Now, the plateau of productivity of consumerization is anticipated to be achieved in next two to five years or so. In further analysis, Mr. Jackie Fenn, vice president and Gartner fellow said, “Gartner’s Hype Cycle for Emerging Technologies targets strategic planning, innovation and emerging technology professionals by highlighting a set of technologies that will have broad-ranging impact across the business. It is the broadest aggregate Gartner Hype Cycle, featuring technologies that are the focus of attention because of particularly high levels of hype, or those that Gartner believes have the potential for significant impact.” This technology hype cycle technique is a very effective and useful methodology to analyze the technological trends and business prospects of future market place.
States starting to tax the cloud ITworld.com August 20, 2012, 10:23 AM — Cloud computing, particularly public software as a service (SaaS), may have an unlooked-for advantage over "shrink-wrapped" software--freedom from the tax man. But that advantage may not last forever. Many states in the US ... See all stories on this topic »
Nimbus Data feeds flash storage frenzy GigaOM GigaOM · Home · Apple · Cleantech · Cloud · Data · Europe · Mobile · Video. Aug 20, 2012 - 12:01AM PT. Nimbus Data feeds flash storage frenzy. By Barb Darrow · No Comments · Tweet · Email This. The Gemini flash array is the first of what will probably... See all stories on this topic »
Startup SimpliVity pitches super-appliance GigaOM And, for the many companies wanting to use public cloud infrastructure, they can put their OmniStack VM images up on Amazon's EC2 as well. ... the cloud. Comparing the cost of on-demand computing to buying your own infrastructure is one way to look at. See all stories on this topic »
National Aviation Day: Former Astronaut To Speak By John Stegeman Don Thomas, an astronaut who flew four space shuttle missions, the first of which was on Columbia in July 1994, was to speak at the Wright Brothers National.
United Airlines joins Sustainable Aviation Fuel Users Group ... By Isabel Lane In Illinois, United Airlines has joined the Sustainable Aviation Fuel Users Group (SAFUG), an industry working group whose objective is to accelerate the development and commercialization of aviationbiofuels. The airline signed a pledge to ...
Advanced UAV Research Planned for GE's New $65 Million #Ohio ... By GE Careers GE Aviation is investing $65 million to pursue advanced aerospace research and open new jobs in Dayton, Ohio. Over the last five years, GE Aviation added 400 jobs in Dayton, and a new R&D center will bring 200 more. Read more at GE ...
Brazil's aviation expands TTR Weekly SAO PAULO, 20 August 2012: A major air show in Sao Paulo over the weekend turned the spotlight on the robust health of Brazil's general aviation market, which is thriving despite the global economic slowdown. General aviation, which makes up the ... See all stories on this topic »
The latest results from the General Aviation Manufacturers Association show that the business aviation industry may be regaining altitude after what looked like an imminent dead stick landing. Deliveries of new business jets and turbine-powered aircraft are up from last year while piston-powered airplanes haven’t declined by much.
According to GAMA: “Business jet deliveries increased 13.1 percent to 294 airplanes in the first half of 2012 compared to the same period last year. Turboprop airplane deliveries also improved by 10.4 percent to 243 units from the 2011 shipment level of 220 units. The piston engine airplane segment was basically flat at 381 deliveries or a 1.6 percent decline compared to the first six months of 2011.”
We’ve seen the cycles before, and life at the bottom of the trough just isn’t as good as it is at the top. But I have been noticing for many years that the sine wave is flattening out – while the troughs are still bad the upsides just don’t seem to reach the height or last as long as prior recoveries. After all, an annual report at the top of the sine wave in the late 1970s listed nearly 18,000 aircraft deliveries.
I guess things just can’t get as high as they did in the 1970s. Foreign sales, this year like in past cycles, make the bottom only slightly more palatable. But I have also been noticing a positive trend – perhaps because of my work for Piper Aircraft, which is recommitted to its growing market for pilot training aircraft. Pilot shortages around the world, especially in the commercial sector, are driving significant increases in recent fleet sales of piston-powered training airplanes.
That phenomenon is a plus for business aircraft because more pilots will create a demand for more aircraft. The market is also seeing the sale of a surprising number of single-engine turbine-powered airplanes. That is especially true in Europe as businesses resize aircraft fleets to focus on fuel efficiency because of the high cost of jet fuel due to the uncertain Euro-based economies. The Europeans continue to value business aircraft; some are just looking for ways to economize.
While we certainly won’t ever see the level of business aircraft deliveries we saw in the 1970s, the value of these airplanes to business is just as strong, maybe stronger, as riding the airlines without trauma and disruption is much more difficult today. The airline travel passenger lines are longer, the seats smaller, and the refreshments meager. Any maybe it is just my generation, but some airline pilots, like the airline food, require a little more seasoning.
Those of us who have experienced both the corporate jet lifestyle and the airlines
Many parents dont bother to see where their kids are going to work. Parents and Professionals
are not bothering about Employer. As long as they are paying well they are ready to work and
compromise for small sum of money.
Some parents just wants their kids must earn well no matter what ?
With Kingfisher Airlines not clearing salary arrears by August 17 as promised, Pilots and engineers stayed away from work on Monday, resulting in the cancellation of close to 20 flights.
“We were promised that salaries would be cleared between August 17 and 23 but the management says the current delay is due to bank holidays,” said a Mumbai-based Kingfisher pilot on condition of anonymity. He added: “We are in talks with the management but it is very difficult for us to work without pay. The only way they come back to the discussion table is if we go on strikes.”
The near-bankrupt carrier, which never made a profit since it started operations, has not paid salaries since February. In the three months to June, the airline forked out more by way of interest costs at Rs 384 crore than it earned as revenues, which came in at Rs 301 crore, a drop of 84 per cent year-on-year. The airline now operates just about 120 daily flights, a third of its 360 daily flights last year. During the course of the year, Kingfisher has returned 27 aircraft to lessors to prune its fleet size to 39 from a peak of 66. FE
Kingfisher Airlines Promises :
"Soar to new heights"
Working with Kingfisher Airlines promises to be an exciting phase in your life. After all, not everyone can claim to be part of a team that created 'India's No 1 airline in customer satisfaction' as rated by Business World magazine. Taking off from there, Kingfisher Airlines is now set to conquer the global skies.
Our commitment of delivering a true Kingfisher experience rests entirely on the able shoulders of our team. We are constantly looking for the right mix of experience and attitude whether it is in-flight, on ground, or behind the scenes. If you are a potential candidate, we invite you to explore our careers section, find out more about us and search for available positions across the Kingfisher Airlines universe.
Kingfisher Airlines Reality :
Crisis-ridden Kingfisher Airline's promise to pay February salary to all its employees by last Monday (July 16) is sounding hollow to a substantial number of staffers, including pilots, who have still not got the same. They are constantly writing to the airline to ask when — and if at all — does the airline intend to pay their February salary. But, so far they claim to have got no reply.
The airline spokesperson did not offer a comment on this issue. On July 14 (Friday), Kingfisher EVP Hitesh Patel had written to employees that their February salaries would be paid by coming Monday (July 16). "I also understand that in spite of our best and most sincere endeavours, we may have failed on the timelines committed... We have committed to you that your salary will be paid no later than Monday and I am standing by it," Patel's letter to employees had said.
But even this deadline has not been met for all. "We are constantly asking the airline when will they pay the February salary and now we don't even get a reply from them. There may be a march by unpaid employees to the airline office as we don't know what to do," said an unpaid employee.
Same with MDLR :
A former employee of the MDLR Airlines on Saturday committed suicide after reportedly being harassed by her former boss and Haryana Minister Gopal Kanda to join back. In her suicide note, Geetika Sharma, who first worked as an air-hostess with the airline and was later made the director of its subsidiary, Supersonic, blamed the Haryana MoS for Home.
The police has recovered the suicide note and a case has been registered against Kanda for abetment to suicide under Section 306 of the Indian Penal Code.
The victim's family alleged physical and mental harassment of their daughter at the hands of the minister.
The victim's brother said that the minister constantly pressured her to join back, even going to extent of making visits to their family.
According to DCP Northwest P Karunakaran, Geetika was working with the company for the past one and half months. However, she suddenly stopped going to office. "The management also called her up but she never went there," the DCP added. According to the family, Geetika quit the company to join another job, which too she left to pursue a degree in MBA.
The victim's brother further said, "When the airline's operation was suspended, Kanda offered her another job. She refused that offer and joined Emirates in Dubai. He then wrote a letter to Emirates making allegations against her character which lead to her termination."
"Kanda had told her that she has to work in his company only and that she could not work anywhere else. He used to spy on her and follow her. He used to call her and say that she cannot work anywhere else other than his company," he added.
Kanda could not be contacted for his comments.
Meanwhile, Haryana Chief Minister Bhupinder Singh Hooda, who was in Kolkata for a meeting, said he would look into the matter. "Ask me on investment, but anything else I will not answer here. I have come to Kolkata, I don't know what has happened, let me go back and find out."
Geetika reportedly hanged herself from the ceiling fan on Saturday night. A PCR call was made at 9:20 am on Sunday.
Same with AirIndia :
As the agitation by protesting pilots entered the fourth day on Friday, 12 Air India international flights were cancelled even as the Civil Aviation Minister hoped that the airline “does not enter the ICU”.
“All our long haul flights to U.S., Europe, Riyadh and Jeddah have been cancelled,” an Air India official said.
This has been done due to non-availability of pilots who are on mass sick leave since Tuesday, he said.
Long overhaul flights to New York, New Jersey, Chicago, Toronto, Frankfurt, London, Paris from Delhi and Mumbai were cancelled. The national carrier has stopped bookings till May 15 on its flights to U.S., Europe and Riyadh.
With pilots remaining defiant, the Air India management had yesterday sacked 9 more pilots.
Civil Aviation Minister Ajit Singh expressed hope that pilots will “get well soon as they are sick. Air India is sick and I hope it doesn’t reach ICU”.
Noting that the aviation industry and Air India are passing through a tough phase due to high price of ATF, high service tax along with Airport charges and others, Mr. Singh said he will take up the issue with Prime Minister Manmohan Singh.
On the problems facing Kingfisher, he said, “Kingfisher is a private company and they will have to sort out their problem themselves.”
Mr Praful Patel, aide sunk Air India :
In his May 28, 2005, letter, Arora listed the decisions on which the board was overruled: purchasing more jets than required, disallowing IA to fly on viable routes to make way for other operators and, even "changing the seating configuration" to favour a particular aircraft manufacturer.
Two Lok Sabha MPs, Prabodh Panda (CPI) and Nishikant Dubey (BJP) have now approached the CVC for a probe into Arora's allegations, saying the government has failed to act.
"I would like to place before you a series of events and certain directions given to me by my immediate superior officer and the minister of civil aviation which have a vital bearing on certain critical decisions being taken in Indian Airlines and Air India... I have been constrained to write in detail to be able to explain the nuances of the verbal directions, the infirmities in the subsequent decisions taken and my consequent sense of unease in the matter," Arora wrote.
He also expressed apprehension over the consequence of his action. "Sir, kindly pardon my impertinence but I implore you to share the contents of this communication only with the Prime Minister... I would not have taken the liberty of making such a suggestion but for the fact that like every mortal, I fear for my personal and family safety."
Complaining of pressure, Arora said, "During the last one year, almost all board meetings of Air India, and even some board meetings of Airports Authority of India have become a farce. Instructions on key agenda items are communicated before hand on telephone or personally by minister, civil aviation, or by his OSD K N Choubey. No suggestions to the effect, that the issue in question requires a more detailed examination or that there are some implications are countenanced. The key word is 'immediate and unquestioned compliance'." Some of the most glaring instances are cited:
"AI discussed their dry leasing plans in 99th board meeting held in Mumbai on 17.7.04. Prior to this meeting, minister spoke to me... said since he and secretary, civil aviation, were satisfied about the correctness of the plans, it is expected that we should immediately endorse it during the board meeting. When I tried to tell him on telephone that the agenda item raises some issues, I was curtly asked to endorse the proposal and a counter question was posed on the telephone that when the minister and the secretary himself are satisfied, what more is there for us to see?"
Arora further wrote that the minister forced him to seek flight slots for IA to the UK and the US during the winter schedule instead of the profitable summer schedule even as private airlines were allowed to fly to these destinations in the summer.
Cash-strapped Kingfisher Airlines Ltd is seeing an exodus of people with at least 3,500 employees having resigned in the last one year, also reflected in falling employee costs in the April-June quarter.
The headcount is down to 4,200 from 7,700 a year ago, according to two executives of the Vijay Mallya-promoted airline. Both spoke on condition of anonymity.
“Out of the 4,200, 40% are not working as the airline closed at least 20 airport stations as part of downsizing its operations,” said one of the officials.
A Kingfisher Airlines spokesperson declined to comment.
The management has not paid salaries since February, prompting employees to resort to multiple strikes in August.
At least 15 flights were cancelled on Saturday.
The airline management has not paid salaries since February, prompting employees to resort to multiple strikes this month. Photo: Hindustan Times The situation is likely to aggravate from Tuesday night as more pilots are expected to join the stir if they are not paid by the end of the banking hours. That the airline is losing employees is reflected in the company’s April-June quarter results where the employee costs for Kingfisher Airlines fell 66% to Rs.58.88 crore, against the Rs.173.66 crore in the corresponding quarter of the previous fiscal.
Typically, employee costs represent 10-12% of the total operating cost of an airline.
One such employee, 30-year-old Anish Dcosta, an aircraft engineer who decided to quit in May as he was not getting his salary, said: “I have decided to go for further studies.” He, however, did not divulge details of his dues or future plans.
A human resources consultant, requesting anonymity, said the exodus would impact both Kingfisher Airlines as well as the industry at large.
“Those with soft skills may find a job in other sectors, including the hospitality sector. But those employees with airline-specific talent (such as pilots) will create a surplus in the domestic job market at a time when the global airline industry is facing turbulence,” he added.
Craig Jenks, president of Airline/Aircraft Projects Inc., a New York-based air transport consulting and advisory services firm, said it is a negative situation, adding, “It is much harder to become profitable by shrinking than by growing.”
Meanwhile, the second Kingfisher Airlines executive cited above was optimistic that employees would return.
“Though we failed to retain talent, I do not see a problem. The brand—Kingfisher Airlines—is still strong. Employees would return to the airline once it is ready to fly the full schedule or it gets an investor—be it a domestic institution or an international airline,” he said.
“Kingfisher continues to believe it will get recapitalized and get on a path of sustained profitability. The airline is in discussions with several strategic and financial investors to bring fresh capital,” the airline said in a statement while announcing the April-June quarter results, without disclosing the names of the potential investors.
High jet fuel costs and grounded planes led to cash-strapped Kingfisher Airlines’ net loss widening two-and-a-half times to Rs.650.78 crore for the three months ended 30 June against a Rs.263.53 crore net loss in the corresponding quarter a year ago.
Incidentally, the scenario is different for other airlines.
Rival carrier Jet Airways (India) Ltd has reduced over 600 employees from the April-June quarter of the last fiscal to the comparable quarter of this fiscal, but its employee costs have risen.
Jet Aiways incurred Rs.401 crore as employee costs in the April-June quarter, up 11.38% from the corresponding quarter of the previous fiscal.
In an analyst call early this month, K.G. Vishwanath, vice-president, commercial strategy and investor relations, said Jet Airways has 220 high-cost expatriate pilots and intends to reduce the number to 50 by the end of this year.
Another listed airline, SpiceJet Ltd’s employee cost for the April-June quarter stood at Rs.131.35 crore—an increase of 71% (Rs.76.93 crore) from the year-ago period.
Kingfisher Airlines lost 1.71% to Rs.9.78 on Friday on BSE while the benchmark Sensex index rose 0.19% to 17,691.08 points.
Groupon, Facebook, and Zynga are currently having difficulties since their initial public offerings. Their losses can go as much as 70%. Currently, public cloud computing companies are not affected. This is primarily because companies like NetSuite and Salesforce.com have already proven themselves since they’ve been around since late 1990s. These companies have already proven that their customers are capable of buying their products and services. These customers also know that these companies offer cloud computing applications which are packed with benefits.
Social networking companies, on the other hand, are relatively new and they have not proven themselves. The social industry goes with the highly changing times and that it’s difficult to convert the customers’ support to money. This year, companies like Bazzarvoice, Brightcove, Demandware, and ExactTarget have gone public. These cloud computing companies’ share prices have not dipped below their IPO prices. However, this should not mean that the cloud computing industry can relax a bit because more and more cloud computing providers will surely go public. When these companies do, there are so many stocks available in the market.
Investors must also consider macro-economics. If the US economy doesn’t improve, the first one to be affected is software because customers will surely wait for the economy to improve before they make a purchase. The effect may not be very visible now because these cloud companies offer subscriptions to the public therefore revenues are not recognized instantaneously. However, if there are no new subscriptions in the succeeding months then one can expect revenue problems in the near future although the effects won’t be as devastating as the social stocks.
“One of the finest achievements in Canadian aviation history, the delta wing Avro Canada CF-105 Arrow was never allowed to fulfill its mission. Its role was to replace the Avro Canada CF-100 Canuck as a supersonic all weather interceptor. A source of national pride, the Arrow incorporated advanced technical innovations and became a symbol of Canadian excellence.
The Mark 2 production version of the arrow, powered with two Avro Canada Iroquois turbo jet engines, would have been capable of achieving beyond Mach 2 with full military load. This aircraft was a culmination of research and development unprecedented in Canada's aeronautical history. Thousands of people witnessed the first flight of the prototype flown by Chief Test Pilot, Jan Zurakowski, on March 25, 1958.
For various reasons, mostly due to high costs, the Federal Government cancelled the Avro Arrow program on February 20, 1959. Almost everything connected to the program was destroyed. Fortunately the forward fuselage of the first Mark 2 Arrow was saved and is on display at the
National Aviation Museum in Ottawa. There are also some portions of the wings and control surfaces at the museum in Ottawa.” (Quoted from an Avro Arrow historical site)
Lloyd Walton, former Saultite, film maker and painter, took it upon himself to donate two paintings of the Avro Arrow that are on display at the Bushplane Museum in 2008.
They were unveiled during a reception for 100 pilots and aviation enthusiasts that were flying vintage aircraft across the country. The Soo, and Bushplane Museum was a featured stopover.
While speaking about the Arrow to the group, Lloyd noticed a woman in the front row pointing to the man beside her. After his speech, the man introduced himself as one of the men who built the Arrow. He went on to say that he has never had a job like it since. " Every day thousands of men and women rushed excitedly to work knowing that they were producing something that was destined to be the best in the world. " The man's wife went on to tell Lloyd that he still cries when he thinks of that Black Friday when he was told to go home and leave his tools where he left them.
The brainpower working on later even more sophisticated models of the Arrow were also working on lunar modules. They were the Bill Gates and Steve Jobs of their time. Alas many in that group left Canada to help NASA put a man on the moon. Others went to Britain to develop the Concord.
Lloyd remembers that Black Friday back in 1959. I was 13 years old and I remember my dad, an aviation enthusiast, coming home from work and turning on the radio. He sat with his head in his hands. Lloyd got his wings through Air Cadets and wanted to have a career as a pilot but because his math skills didn't fit the profile, he decided to become an artist and enrolled in the Ontario College of Art. From there he went on to be a successful film director-cinematographer. Through the years he would meet people that worked on the Arrow and hear their stories of pride and sorrow. While doing research for a film on Bushplane history in Ottawa , which incidentally plays in the Ranger Theatre at the museum, Lloyd came across some startling classified material about the Arrow. "It ignited my passion and made me want to dig deeper, and I did. The more I found out, the angrier I got. So I translated that energy into two paintings, called the Rise and Fall of the Arrow, which are now displayed in the Ranger Theatre in the Bushplane Heritage Museum.”
Credit: Lloyd Walton
The Museum is presently trying to find funding to do a French translation of the film Bush Angels which plays in the Ranger Theatre.
I graduated from the Ontario College of Art in 1970. I was in the Advertising Program, majoring in animation in my last year.
Right out of school I became a director-cinematographer. I make mostly documentaries, linking history, culture and nature. My movies have won over 35 national, provincial, and international film awards.
I have painted in oils and acrylics all of my life. The locations where the Group of Seven painted were often my workplace for filming. I’ve met buddies of Grey Owl, Tom Thompson, and Lawren Harris, and worked with A J Casson of the Group. Their influences in style, content and use of colour are evident in my work. The American painter, Edward Hopper also nourished my vision with his blend of story, lighting and architecture.
I enjoy showing the power of the landscape, using the human form or objects consumed by time and weather.
My next showings of work will be in Muskoka and Newfoundland.
Exhibitions (Group)
John B. Aird Gallery - Queens Park
Art Gallery of Algoma - Sault Ste Marie
Canadian National Auto Show Cross Canada Tour
The Ontario Bushplane Heritage Centre - Sault Ste. Marie
Chapel Gallery - Bracebridge
The Art Space - Huntsville
Art Square Gallery - Toronto
Exhibitions (Solo)
Catto Gallery (Muskoka Lakes Museum) - Port Carling
INVESTORS will be looking for signs that Qantas is managing costs - in particular a soaring fuel bill - when the airline posts its full year results on Thursday.
Qantas shocked the market with a massive earnings downgrade in June, slashing its underlying profit before tax estimates to between $50 million and $100 million for the year to June 30, 2012.
It blamed the downgrade on a $450 million pre-tax loss in its troubled international division plus a $100 million cost from industrial action.
Chief executive Alan Joyce has flagged a looming statutory loss and, in a note issued after the profit downgrade, investment researcher Morningstar estimated Qantas would turn in a statutory loss of $198 million after restructuring costs of between $370 million and $380 million.
The airline is in the middle of a restructuring program that will cut a total of 2,800 jobs and includes closing its heavy maintenance facility at Melbourne's Tullamarine airport and selling two catering centres.
Morningstar has estimated Qantas's full year net profit at $67 million before abnormal items, down from $277 million prior to the downgrade.
Goldman Sachs has estimated full year net profit, before abnormal items, of $54.1 million.
Qantas posted a $250 million profit for 2010/11.
Goldman Sachs analyst Andrew Gibson said in a June note to clients that 2012/13 earnings should benefit from the end of industrial action in FY12, the cutting of loss-making routes and other restructuring initiatives.
However risks remain from increased competition in the domestic market, which has been Qantas's best-performing division.
Qantas also flagged it would incur its highest yet fuel bill in 2011/12, and Fat Prophets analyst Greg Fraser said management of fuel costs through hedging and currency strategies will be a factor to watch.
Thursday's results will be the last filed by Qantas in its current configuration, with the airline having split its domestic and international operations into separate reporting entities from the start of the 2012/13 financial year.
I have a joke with a friend of mine that airline pilots are nothing but glorified bus drivers. As cynical as this may be, for the majority of us with regular jobs who fly economy air travel is increasingly becoming like its land-based cousin: cramped, overcrowded and at times downright unpleasant.
Most people living in our modern industrial society take air travel for granted. We think very little about hopping on a plane and travelling around the world for little more than a couple of weeks wages. As jet fuel prices bounce along with the price of crude however many airlines are increasingly struggling to break even. Fuel prices now account for 35 percent of operating costs compared to 15 percent a decade ago. Air travel has always been a fickle business, earning an average net profit of one to two percent, compared with an average of over five percent for U.S. industry as a whole. Research from the 1980s found that some carriers would have zero profitability if they had lost just one out of ten business passengers.
So how does the future look for the airline industry? If recent trends are anything to go by, not good. Not good at all.
Plane Trends
Airlines have increasingly been moving towards smaller aircraft despite the popularity of the “Superjumbo” Airbus A380 since its release in 2007. Airbus has sold 253 A380s while Boeing has orders for 106 747-8s with the large majority of these being used for cargo operations. Richard Aboulafia from Teal Group, an Aerospace and Defense Market Analysis company believes that smaller, sleeker aircraft are the future of international air travel ““The market for large aircraft in general is disappearing fast. Most of the 747-8 planes are cargo. There’s just a limited market.”
Packed Like Sardines
In an effort to increase profits from each flight a number of airline companies are trying to fit more passengers onto each plane. The sale of an extra one or two seats can mean the difference between breaking even and a loss. While standing room only flights appear to be nothing other than a cheap marketing ploy companies have reduced the seat width in order to fit an extra seat in each row.
Air New Zealand recently replaced it’s older 747s with a significantly narrower 777-300ER. To accommodate the same 3-4-3 seat configuration the new seats are one inch narrower and the aisle has decreased in size as well. Air New Zealand was named the most innovative airline in the world last year Airlinetrends.com and so it is likely that other airline companies will follow suit.
In 2010 an Italian company, Avio Interiors, introduced the world to its “Skyrider” saddle-style seat. Intended for up to four hour long flights the passenger sits at an angle with 23 inches of legroom (compared with 30 inches on a standard configuration) allowing more passengers per flight. Two years later no airlines have yet committed to the Skyrider seating but as fuel prices continue to rise one has to wonder how long it will take before it is seriously considered.
At the other end of the spectrum some airlines have introduced what has colloquially been termed “chub class.” In an effort to accommodate the expanding waistline of Western flyers Airbus is increasing the size of aisle seats to 20 inches wide on its A320 jets while decreasing middle and window seats by one inch. The premium wide seat will be sold at for an extra US$10.
Weight Reduction
Scoot Airlines, based out of Singapore has recently removed television monitors from airplane seats replacing them with Apple iPads. The television monitors and associated electronics are reported to weigh two metric tonnes. According to Bloomberg this has enabled the airline to add 40 percent more seating while decreasing the weight of a fully loaded flight by seven percent.
Extra Charges Everywhere
Traditionally the most successful airlines traded on glamour and providing a service experience. Recent trends however show that airlines are increasingly moving towards a no-frills approach in an effort to cut expenses. To do this airlines are imposing costs on everything possible under the thin veil of “increased consumer choice.” Changes seen over the last few years include the removal of a complimentary item of check-in luggage, the removal of complimentary meals and extra charges for window seats and seats towards the front of the plane. The iPads on Scoot flights mentioned above will cost US$17 to hire for the flight.
Recommendations from a 2005 study suggest that a low-cost strategy should no longer be considered an exception but should rather become the norm for the airline industry. We can see this recommendation playing out today with the stripping of services from flights shifting to an almost purely user pays model.
Case Study: The Air New Zealand Situation
A good example of this new user pays model is Air New Zealand. In 2010 they changed to single class short haul flights with radically rebundled fares. Travellers can now choose from one of four options beginning with a seat, one 7kg carry-on bag, tea, coffee and water and access to some entertainment options but no new release entertainment. At the other end they have the ‘Works Deluxe’ which allows two priority bags, a carry-on bag, meal and drinks, a seat request, a guaranteed empty seat next to the passenger, premium check in, lounge access and better entertainment options.
Being the most innovative airline company does not necessarily make you the most profitable. Air New Zealand announced a 71 percent earning slump in February 2012. As part of it’s recovery plan the company announced it was cutting 441 jobs. The airline blamed a decrease in passenger numbers as well as as fuel costs NZ$173 million more than forecast. This is despite the airline enjoying “a solid performance from the domestic network including benefits from the Rugby World Cup and improved market share on the Tasman” according to Air New Zealand chairman, John Palmer.
The outgoing chief executive Rob Fyfe says the price of jet fuel has doubled over the last three years and due to the weak global economy it has been difficult to pass on the higher costs to passengers.The inflation adjusted average price of jet fuel was US$3.04 per gallon for the six months to December 31st. Going off jet fuel prices alone it is unlikely the airline will see much of a turn around in profitability for 2012. In the first six months of 2012 the average price barely moved, up US$0.04 to $US3.08.
The full year earnings are not released until the end of August but the few media releases coming out of Air New Zealand the last few months are beginning to sound increasingly desperate. On 19th July 2012 Fyfe and Palmer called for an “urgent review” of New Zealand tourism. Palmer told Parliament's finance and expenditure committee that despite operational improvements (newspeak for job cuts), Air New Zealand's financial performance was not healthy and decreased expenditure was yet to be reflected in its currently "disappointing" share price.
Air New Zealand is looking to focus on its domestic, Australian and Pacific service as these have been the most economically sustainable. According to Fyfe, "An aircraft flying to London and back, a 777-300, it costs $1.25 million to get that aircraft to London and back and over 50% of the cost of fuel, a 737 flying to Auckland - Wellington about 23% of the cost is fuel."
The Global Situation
Globally the situation does not look much better. Some Middle Eastern airlines and Asian carriers are still recording strong growth but they are the exception. The International Air Transport Association (IATA) revised the Middle Eastern profit forecast in March 2012 from USD300 million to USD500 million assuming jet fuel prices stay stable. A spike in oil prices could however could turn the forecast profit into a USD200 million loss for the region’s airlines. According to the IATA average oil prices could reach as high as US$135 per barrel this year in the unlikely event of Iran closing the Strait of Hormuz. Oil prices this high would create a US$5.3billion loss for the global aviation industry.
U.S. airline profits have historically followed a cyclical profit-loss pattern of three to five years since U.S. deregulation in 1978. Profit margins have always been thin, sitting at 1.6% during the 1980s and only 1.0% for the period between 1990 and 2000. The early 2000s however saw economic downturn accompanied by huge industry-wide losses of $7 billion in 2001, $7.5 billion in 2002, and $5.3 billion in 2003. The impact of 9/11 and the associated changes to the way airlines run as well as the Dot-com crash cannot be denied either. Between 2000 and 2005 the industry plunged into record operating losses of $40 billion in total.
Figure 1: World economic growth and airline profit margins: 1970 to 2011. Source: IATA Financial Monitor for Jan/Feb-2012 released on 01-Mar-2012, sourcing IATA, ICAO & Haver.
Figure 1 clearly illustrates the cyclical nature of the airline industry. Whenever world GDP growth drops below two percent this is reflected by the net post-tax profit margin turning negative.
The director general and CEO of IATA, Tony Tyler, has cautioned that global GDP is not expected to pass two percent in 2012. “The risk of a worsening Eurozone crisis has been replaced by an equally toxic risk – rising oil prices. Already the damage is being felt with a downgrade in industry profits to $3.0 billion… With GDP growth projections now at 2.0%...it will not take much of a shock to push the industry into the red for 2012,” Mr Tyler said.
Rising fuel costs have taken a massive chunk out of the airline industries profit margins. The cost of jet fuel closely maps that of crude oil prices. This means that when prices are high at the local pump the airline companies are also hurting.
The IATA has forecast the airline 2012 fuel bill is expected to be $US213 billion, equivalent to 34 percent of total operating costs. The IATA fuel price average for 2012 is currently $US128.6 per barrel which is estimated to add an extra $US31billion onto the forecast 2012 jet fuel bill.
These IATA forecasts illustrate the fragility of the airline industry. Profitability is an elusive prospect for the industry with the IATA commenting that “the best collective margin of the last decade of 2.9% (2007 and 2010) does not cover the cost of capital”. Cargo traffic around the globe declined 1.9 percent in May 2012 compared to May last year. Cargo traffic generated US$66 billion in 2010 but has declined every month since May 2011. “Business and consumer confidence are falling,” Tyler said. “And we are seeing the first signs of that in slowing demand and softer load factors. This does not bode well for industry profitability.”
Dirty Air
If airlines are struggling this much with the current economic conditions it is almost certain that a globally unified approach to carbon taxing would cripple the industry. A report from 2008 found that airlines were emitting 20 percent more carbon dioxide than previously estimated. This could grow to 1.5 billion tons a year by 2025, far more that the worst cast IPCC predictions. As a comparison the entire European Union currently emits 3.1 billion tons of CO2 annually. This emission prediction does assume that oil prices will stay relatively low and that economic growth gets back on track, two assumptions that are looking increasingly unlikely.
Travel While You Can
Environmental concerns aside if you want to travel anywhere in the next five years now is the time to do it. The global economy is extremely fragile at the moment. Petroleum deliveries are at their lowest point since September 2008, with the weakest July demand since 2005 and yet Brent crude prices are still sitting above $US116 per barrel. This is not to mention the impending US “fiscal cliff” where $600bn in tax increases and spending cuts come into effect on January 1, 2013. Unless the US Congress comes to some kind of agreement on raising the debt ceiling again by the end of this year GDP growth could be reduced by four percent, plunging the US into recession. Europe is cannot escape its current quaqmire without huge upheaval and there is now talk that France will be the next to crumble leaving Germany on its own. China’s growth has slowed to a three year low of 7.6 per cent with little sign of recovery in the next few months.
This is all bad news for airlines that are already combatting high fuel prices. I expect to see a number of big name airlines fold or amalgamate in the next two years as financiers can no longer afford to prop up an industry that is hemorrhaging with no relief in sight. This could mean a reduced number of flights, less options of places to travel and skyrocketing ticket prices. While mother nature might thank us for the reduction in emissions the airline industry is running on empty.
