Private air travel: a luxury or a necessity?

While global economy growth in the first half of 2013 was relatively slow, according to IHS Global Insight it still experienced a real GDP growth rate of 2.4%. This year, it is expected to grow at an annual rate of 2.9%, mostly due to the rapid growth of such emerging regions, as Asia, Middle East, as well as the CIS. As corporate profitability continues to improve globally, the demand for business-related private air travel rises accordingly.

Analysts often point to the rapid expansion of business aviation in the CIS as an example of how quickly an untapped market can be penetrated. The region’s private jet fleet has nearly quadrupled in size over the last 10 years, accounting for almost 7% of overall industry deliveries during 2013. In addition, despite the uncertainty around the near term prospects for the CIS economy the IHS Global Insight forecasts the region to return to 3% GDP growth by 2016, meaning the demand for private travel will only grow, especially among corporate clients.

“In the CIS, great distances over inhospitable terrain make ground transport challenging, while the commercial aviation network provides inadequate service outside of major centres. As a result, business leaders start to rely heavily on business aviation, especially with the growth of the on-demand air travel market, which endeavours to provide solutions for business jet travellers who do not wish or are unable to acquire and operate an aircraft of their own,” shares Vitalij Kapitonov, the CEO of KlasJet.

Despite the fact, that most people continue to view private travel as a luxury, business jets actually provide a wide range of conveniences that are of especially high demand for business needs. For instance, NEXA Advisors’ most recent study on business aviation and the world’s top performing companies concluded that companies using business jets were likely to outperform non-users on revenue growth, innovation, employee satisfaction and market share. In addition, the less quantifiable but equally important benefits of business jet use include on-demand flight schedules, the ability to conduct business privately during flights, as well as more direct access to companies’ sites (which may not be well-served by scheduled airlines). As a result, it should raise no eyebrows that according to a recent article in Bloomberg, spending on private jet travel rose 61% in 2013 among CEOs of the top 10 S&P 500 firms.

“For those unfamiliar with air charter costs, prices can initially be a bit intimidating. Still, it may surprise many to know that while generally a private charter flight will cost more than a first-class commercial flight, private charter can actually be remarkably economic - particularly in cases of flying in a small group or to a remote location,” comments Vitalij Kapitonov, the CEO of KlasJet. “Another potential cost saving benefit is the ability to reach multiple business-related locations in a single day, thus avoiding overnight stays and hotel fees.”

Additionally, you do not have to arrive hours before your flight time to go through security lines and can delay the aircraft's departure time if you're running later than expected. Moreover, there are more than 5 000 airports that can accommodate private aircraft (as opposed to 500 airports for larger commercial aircraft), so you can actually land closer to your destination, thereby reducing ground transport time.

“Of course, private jets are far from having monopolized the market yet. To meet the demands of premium travellers, many commercial airlines like Etihad and Air France are starting to bring the private jet feel to their commercial jets,” comments the CEO of KlasJet. “However, usually if a company or a person can afford a private jet ticket for their upcoming trips, they will do so. Therefore, the trend towards private jet or enhanced first class travel will only continue to grow.”

Source and image: KlasJet

EU may close the sky for Russian airlines

European Union may close the air space for Russianairlines in case Moscow decides to apply similar restrictions to European carriers, Lenta.ru reports.

Air corridors are established in accordance with international agreements, which are compulsory for Russia as well. Therefor, Moscow has no right to apply any kinds of restrictions, Richard Kuhnel, an official representative of European Commission in Germany says.

If Russia chooses to close the air space for European carriers, EU may apply the same measures to Russia.

Earlier Mass Media reported that the Russian government is considering application of restrictions to transit flights from Europe to Asia through Russia as an answer to sanctions applied to it’s low-cost company Dobrolet.

Source and photo: Lenta.ru / Shutterstock

Repurposing the drone

Not so long ago the word ‘drone’ was mainly spoken in the closed circle of professionals and technologically minded individuals. Relatively recently, however, it has become known to general public who have learnt about these unmanned aerial vehicles from the media reports covering their controversial use for military purposes. Unfortunately, the vast coverage have largely focused on the ethical implications of using the clever machines in war zones, instead of informing the audience about the wider applicability of the new gadgets.

As is often the case with new technologies, the decreasing production costs have made drones available for the use in a variety of industries such as commercial surveillance, exploration of natural resources, scientific research and others. Amazon has already promised drone deliverable parcels by 2015, and moviemakers praise the possibilities allowed by shots taken from an UAV. But probably the most important yet arguably the least publicly promoted role of a drone is to be played in the field of humanitarian activities such as disaster relief, search and rescue, border patrol, etc. In fact, due to their nimble frame and low maintenance costs drones could be used to change the way people deal with massive issues.

Needless to say, whilst the popularity of new technologies tend to find quick way to the profit-oriented private enterprises, adapting them in the public sectors burdened by bureaucracy can be a rather slow and challenging process. Moreover, according to Patrick Meiers, who is an internationally recognized thought leader on the application of new technologies for crisis early warning, there is a general lack of awareness within the humanitarian community about the kinds of UAVs being used in humanitarian settings and the different roles they can play.

For instance, one of the most frequently recurring disasters – wildfires - do not only leave many without homes, but also cost governments billions of dollars each year. Due to winds and other factors, the fire spreads in an unpredictable pattern and presents a great challenge for fire-fighters in need of acting adequately and timely. To this day these dedicated public servants have to use their instincts and experience whilst relying on such primitive tools as photos taken from helicopters or satellites. In many cases the long preparation time means that the information is already outdated by the time it reaches the firefighters. , The use of drones under such circumstances allow a quick and easy access to aerial view of the fire spreading. Furthermore, a drone is capable of flying in lower altitudes and can be equipped with infrared cameras that allow thermal vision even during the day. Finally, the data may be evaluated and used in almost real-time, thus enabling the crew to make more informed and effective decisions.

The only issue that may raise concern in the above-described and other relief missions is the limited range and battery life of a drone. P. Meiers explains the energy issue: “Whether UAVs are “too limited” depends on what their intended use is. Small, fixed-wing UAVs have a flight time of about an hour while small rotary-wing UAVs typically remain airborne for half-an-hour (on a single battery). Naturally, more expensive UAVs will have longer flight-times. For targeted damage assessments, current ranges are easily manageable with several batteries. With one team and a few batteries, IOM covered 45 square kilometres in 6 days of flying. As more groups use UAVs in humanitarian settings, the opportunities to collaborate on flight plans and data sharing will necessarily expand both range and coverage.”

Less frequent, yet often more fatal events such as hurricanes, floods, earthquakes and other disasters have to be acted upon immediately. Whilst governments and NGOs do their best organizing rescue parties and support missions, the real damage is hard to define for days and even weeks afterwards. A usual procedure involves, when available, helicopters, soldiers and volunteers looking for survivors and mapping out the area. Yet again, making plans and gathering forces eats up a large portion of the vital time that can be significantly cut thanks to the capabilities offered by new technologies. Jacob Petersen from Danoffice, a Danish company providing IT and IS solutions, gives an example of an UAV employed after the Typhoon Haiyan that hit the Philippines in 2013: “The visual information about a place or a situation is key for NGOs but also for many United Nations agencies responsible for refugees and migrants.“ The drone’s first mission was to identify from air the best place where to implement the base camp for the rescue teams. For international rescue teams who joined the archipelago, one of the major challenges was access to the affected areas and the organization of priorities. In this case the aerial live stream video identified damage and gave Danoffice IT valuable information  the easiest way to reach these areas. As a result, the relief teams could identify the most affected zones and allocate their resources more efficiently. Eventually, the drone was involved in the search for the missing bodies amongst debris and in the Bay of Tacloban. The Huginn X1 civil drone allowed to not only form a structural assessment of the area, but also provided vital information needed to scout the key locations and identify best possible routes of approach and assistance.

Meanwhile, remote villages in third world countries have trucks with aid coming and going all the time, but poor logistics still leave many ill and starving. Drone advocates believe that UAVs have a role in this scenario, too. After all, bad roads or no roads mean little, when aid can be brought in by air. The way it is delivered now – a large amount every few months - causes a lot of drugs to expire without ever being actually used. Employing a drone as opposed to cars or trucks means that packages can be sent out much more often, and the medicine can be prescribed upon situation.

With all the benefits that UAVs are able to provide, why is that they are still not such a common humanitarian tool? In the beginning we have mentioned the much dreaded word ‘bureaucracy’. Well, as stated earlier, not unlike any technology that rises fast, drones still have to receive their share of laws and policies. An FAA spokesperson has said, that the agency has been working for several months to implement the provisions of Section 333 of the FAA Modernization and Reform Act of 2012 and move forward with UAS integration before proposing the small UAS rule. Companies must apply for airworthiness and operational exemptions. Search and rescue missions are usually conducted by federal, state or local government entities. Government entities can operate a UAS under a Certificate of Waiver or Authorization (COA) from the FAA. “We can, and have, issued COAs for natural disasters or search and rescue missions in a matter of hours, “told the spokesperson, recalling the wildfires in the mountainous areas of California.  An NGO or a private company, he added, may be able to perform humanitarian missions under a public entity’s COA that provides for such missions and the private entity contracts to do the work. A private entity could also apply for a section 333 exemption described above and thus be able to operate independently of a government agency if the petition is granted.

Although the commercial use of drones is likely to receive definite laws sooner due to huge lobbying from media, oil and agriculture industries, humanitarian application is elevated by tech savvy, socially conscious drone ambassadors, activists in NGOs and governmental agencies. One such campaign is the Drone Social Innovation Award presented by the Drone Users Group Network. The community raises awareness by asking participants to submit models of UAVs that are cheap and can potentially have a positive impact on communities. In conclusion, sooner rather than later there will be drones buzzing back and forth above wildfires, disaster zones and otherwise unreachable areas, helping civil services and saving human lives.

Source: FAA, Danoffice, Partrick Meiers

Long-haul low-cost – mission (im)possible?

The summer of 2014 might have marked a new page in the development of the global passenger air travel market. Only a few global media sources have missed out on covering the Norwegian’s latest ambition – to launch low-cost transatlantic flights from London.

A similar initiative is being also considered by the Chinese Spring Airlines, while Lufthansa is also being anticipated to announce its long-haul low-cost project in the nearest future. However, yet another attempt to introduce cheap long-haul routes faces a whole set of obstacles, including the HR-related ones.

In July 2014 the Norwegian airlines launched its flights from London Gatwick to three USA-based destinations with some tickets starting at 300 USD, or approx. half the price of those offered by “traditional” carriers. Moreover, the newly-launched routes are not the only long-haul destinations on the Scandinavian carrier’s map. The company is already operating flights from Norway and Sweden to Thailand and the U.S. East Coast.
In the meantime, the Shanghai-based carrier Spring Airlines has also recently announced its plans to launch long-haul routes, connecting Asia and Europe for as little as 100-200 USD per ticket. At the same time, Lufthansa plans to launch a long-haul low-coster already in the beginning of 2015. Allegedly, it will by carrying passengers from Germany to South Asian destinations.

“Less fuel consumption, more aircraft turn-arounds, minimum ground handing and maintenance time, no catering, no multi-class, optimized aircraft ownership and HR-related costs – these are the traditional factors which allow low-cost airlines to keep their ticket prices bottommost. However, lately the industry has been increasingly noticing that the distinction between traditional and low-cost business models is becoming less apparent,” comments Skaiste Knyzaite, the CEO of AviationCV.com.

For instance, according to KPMG, over the past several years the cost gap between traditional and low-cost airlines has fallen by an average of 30%, reducing from 3.6 to approx. 2.5 US cents per Available Seat Kilometre. Nevertheless, gaining the desired competitive edge on long-haul operations might prove to be a much bigger challenge for the carriers ambitious enough to try the new approach.

In addition, on average, aircraft ownership and maintenance account for 23-24% of all carriers’ expenses. Therefore, operating new aircraft models comes as one of the main factors allowing the development of a profitable low-cost model. New aircraft provide higher residual values (70% of the initial price in five years) and lower aircraft maintenance-related costs as they are usually covered by at least four-year long warranty maintenance with no major repair works required for the following several years. Unfortunately, both Boeing and Airbus are fully booked for years ahead, meaning that not all carriers which explore long-haul low-cost routes will be able to minimize some of their major expenses with newly-built aircraft.

Yet another factor is aircraft operation. In Europe most legacy carriers operate up to 300 block hours per month, whilst low cost airlines keep their aircraft in the air for 350-400 hours or even more during the summer season. The higher density allows maximizing profit generation from a single aircraft. However, when it comes to long-haul low-cost routes (e.g. London-Los Angeles), we are talking about 20-22 hours of a turn-around flight plus 2-3 hours on-ground time. This applies to both budget and legacy carriers.

So what allows low-cost carriers to offer cheaper tickets? Apart from more fuel-efficient aircraft, one should consider the seat number – approx. 240 in 3-class against up to 380 in 1-class Boeing 787-8. In addition, no interline/codeshare agreements allow a cheaper distribution network, while more flexible HR-management provides lower personnel-related expenses.

Sourcing both cockpit and cabin crews from the entire world is one of the main strategies implemented by low-cost carriers when seeking optimal HR-solutions subject to the price and experience of the personnel. But it is the demand for cheaper HR-solutions that has been recently raising more and more concerns within the pilot/steward community, particularly in Europe. 

“European pilots shouldn’t be overly concerned about the risk. While in Europe the average market-wide salary rate maintains at 9-11 thousand USD/month, other regions, particularly Asia, are at the 11-15 thousand USD/month point due to a substantial shortage of skilled personnel. However, the same cannot be said of cabin crew which does present a viable opportunity for the carriers to optimize their HR-related costs, as in certain cases European stewards earn twice as much as their Asian colleagues,” shares the CEO of AviationCV.com. “In other words, it is essential to maintain constant monitoring of the job market and continuous communication with potential employees in separate countries and regions in order to be able to balance one’s HR costs. Therefore, as the long-haul low-cost project is concerned, it is yet too early to speculate about its potential success or failure.”

Source and image: AviationCV.com

China will need $870b worth of new planes by 2033

Boeing, China's leading provider of passenger airplanes, projects a demand in the country for 6,020 new airplanes over the next 20 years, valued at $870 billion. The company released its annual China Current Market Outlook (CMO) today in Beijing which shows Chinese carriers will take delivery of nearly 45 percent of the total demand for airplanes in the Asia Pacific region during the forecast period.

"China's aviation market is going through dynamic changes," said Randy Tinseth, Boeing Commercial Airplanes vice president of Marketing. "New business models like low-cost carriers and airplane leasing companies, a new generation of fuel-efficient airplanes and evolving consumer needs are driving demand for more direct flights to more destinations."
Boeing airplanes such as the 737 MAX, 777X and 787 Dreamliner are well positioned to take passengers directly to their destinations and help airlines generate more revenue.
The new CMO also shows how the emergence of start-up airlines and low-cost carriers stimulates traffic and allow more people to fly. Tourism in China and intra-Asia travel support a strong demand for single-aisle airplanes, with total deliveries reaching 4,340 through 2033. Tinseth said both the Next-Generation 737-800 and new 737 MAX 8 offer the airline customers the most revenue potential in this segment.
Chinese airlines with large global networks continue to look for opportunities to expand as international flying increases from secondary cities apart from Beijing, Shanghai and Guangzhou. This growth in the long-haul segment is expected to result in demand for an additional 1,480 new fuel-efficient widebodies, such as the 777, 787 Dreamliner and 747-8 Intercontinental. This year's forecast reflects a continued shift in demand from very large airplanes to efficient new small and medium widebody airplanes.
"To compete in the tough long-haul international market, our Chinese customers are focused on evolving new business models, adding new destinations, increasing their capacity and resources," said Tinseth. "These trends will shape market demand for an airplane lineup that has high efficiency, low operating costs, environmentally progressive technologies and a great passenger experience. We believe Boeing's comprehensive widebody portfolio is perfectly aligned to meet those needs."

Source and  image: Boeing

International Aero Engines achieves certification of V2500®-E5 engine

IAE International Aero Engines AG has achieved Federal Aviation Administration certification of the V2500®-E5 engine for Embraer's KC-390 aircraft. The KC-390's launch customer is the Brazilian Air Force.

"Achieving engine certification on schedule is a big win for the program," said Jackson Schneider, president and CEO, Embraer Defense & Security. "We have a high level of confidence that the engine will perform as reliably as its in-service counterpart has done, and we look forward to a successful first flight."
"Reaching certification is further proof of the steadfast reliability of our V2500 engines and our development team's ability to enhance this technology," said Dave Brantner, president, Pratt & Whitney Commercial Engines. "Our entire team looks forward to supporting Embraer's goals for the KC-390 program."
The V2500-E5 engine, rated at 31,330 pounds of thrust, was selected in July 2011 by Embraer Defense & Security and the Brazilian Air Force, which established the KC-390 requirements.

Source and image: Pratt & Whitney

A quest for profit: increasing aircraft availability

While IATA forecasts the airline industry to generate $746 billion revenues in 2014, the airlines are still struggling with profitability. Currently, the average actual earnings of the carriers globally account for less than $6 per departing passenger. Thus, in a struggle to find ways to earn more, the focus of the aviation industry must change with regard to how aircraft maintenance is accomplished.

The civil aviation market is intensely competitive. It has rising fixed costs, low margins of profit and increasing consumer demand. As the Wall Street Journal recently revealed, 99% of revenue received per flight is needed simply to breakeven on the cost of operation and maintenance. However, as costs related to maintenance typically make up to 11% of all operating costs, it is one area in which technology can be used to optimize operations and boost profits.

“The most precious assets of an airline are the airplanes themselves. To give one example, the average list price of a Boeing 737-800 approximately reaches $90 million, so it is important that this asset is utilized to its maximum in order to provide the lowest per trip capital cost,” shares Andrius Norkevicius, the COO of FL Technics Engineering. “Therefore, it is crucial that airlines learn to benefit from solutions that simplify the complex range of MROprocesses, such as scheduling, forecasting, replenishing inventory, repair & overhaul and delivery of serviced aircraft – thereby increasing efficiency, reducing maintenance-related downtime and delivering substantial cost savings.”

According to FL Technics, on the average only 12+ hours of a Boeing 737NG aircraft operations are generating revenues. Meantime, delays and scheduled major maintenance checks account for approximately 2.6 hours. In a 24-hour period, this leaves a little less than 9 hours, during which the aircraft is available, but not used. At the same time, an additional hour of B737NG utilization might generate about $1.3 million per year.

“By optimizing check intervals, reducing technical delays, increasing airplanes parts availability, and spending less time in the hangar through optimum deployment of manpower and outsourcing of work, it is possible to significantly enhance aircraft availability. Combined with a shorter gate turnaround time, this can provide the additional couple of hours needed for one more flight every day, which can result in almost $2.6 million in profit opportunity per year, per airplane. Apply this for a typical airline fleet of 30 airplanes, and it adds up to $80 million per year. Thus, while optimizing MRO is not a panacea, it is certainly a good starting point,” concludes the COO of FL Technics Engineering.

Source and image: FL Technics Engineering