To fly or not to fly: a business traveller’s dilemma

To fly or not to fly: a business traveller’s dilemma

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Published on Friday, 26 September 2014 14:04

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As the global economy is expected to grow at an annual rate of almost 3%, the already record high demand for air connectivity should remain on the ascending slope for quite some time. Meanwhile, business-related private travel industry hasn't been performing particularly well.

Despite the fact that Bombardier expects the global business jet fleet to grow at a CAGR of 3.7% over the next two decades (from 14 875 to 30 975 aircraft), many major markets still haven’t reached their pre-crisis growth rates. As a result, in order to meet the changing needs of corporate customers, many operators will have to consider tweaking their services accordingly.

Global business travel spending is expected to reach record $1.18 trillion this year, nearly 7% up from 2013. The segment has been strongly driven by the booming markets in the emerging regions, a report by a US trade group states. Moreover, according to the Global Business Travel Association, spending within the segment will keep rising over the next four years, advancing by 8.6% in 2015, 7.1% in 2016, 6.9% in 2017 and 6.4% in 2018. Nevertheless, some other trends indicate that such forecasts must be viewed cautiously.

A modelling by Oxford Economics indicates that business travel expenditure by the US and European passengers will most probably fail to reach the pre-recession levels until 2014 and 2018, respectively. According to WINGX Advance, in 2013 the market was practically stagnant in the US, while in Europe it has even seen a decline of nearly 4%.

“Having been faced with the recent recession-related challenges in Europe and the US, Western companies have become increasingly cost-conscious, contributing to a decline in business-travel related profitability of many operators. For instance, local companies have become more reluctant to pay for short haul business class flights,” shares Vitalij Kapitonov, the CEO of KlasJet. “Therefore, it is evident that despite the healthy projections, not all markets and not all companies will thrive.”

According to the executive, having faced significant economic challenges, many businesses have started introducing more sophisticated tools to control their business expenses and making smarter use of such technological alternatives as videoconferencing. For instance, a recent Norwegian study found that videoconferencing saved time not only on travel and administration, but also made the meetings shorter and more efficient. This expense-cutting trend can be only expected to continue, as the recovering business travel segment may push the airfares and average hotel rates upwards as well. At the same time, however, while commercialairlines have been struggling to fill their business class seats, business charter operators seem to have been little affected by the new trends, with some seeing a yearly threefold growth over the last few years.

“Some may be surprised that while usually a private charter flight will cost more than a first-class commercial flight, the former option can actually be remarkably economic. Considering the average expenses on overnight trips are constantly increasing, the ability to reach multiple locations in a day is becoming a viable cost-saving option. Not to mention the benefits stemming from the possibility to travel in a group to a remote location,” shares Vitalij Kapitonov, the CEO of KlasJet. “All in all, despite the cost-saving efforts of corporations, the demand for business travel continues to rise. Consequently, the challenge now is to decide which markets to target and where to invest in order to benefit from this growth.”

Source and image: KlasJet

Surplus parts as a new force in the aviation aftermarket

Surplus parts as a new force in the aviation aftermarket

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Published on Thursday, 25 September 2014 12:21

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While today’s commercial fleet of approximately 20 900 aircraft (acc. to Boeing data) is expected to almost double in the next 20 years, the retirement of older generation machines is also gaining momentum. During the upcoming decade, the retirement rate is expected to reach 1000 aircraft per year, thus raising the availability of surplus parts in the aftermarket and changing the business environment for all industry players.

While historically the retiring aircraft used to drive approximately 20% of all deliveries, the trend is rapidly changing. Since today more than 80% of surplus parts in the aftermarket come from part-outs (up from 55% a decade ago), ICF International forecasts that over the upcoming 10 years’ time up to 50% of new aircraft will be introduced to fleets as a result of the need to replace the retiring units. Naturally, the availability of spares will increase, pushing the current prices downwards and making the already tense aftermarket even more competitive. It is noteworthy that already today operators spend approximately $3.5 billion on aviation surplus components each year and the sum is expected to grow at a CAGR of 5.5% at least until 2023.

Needless to say, this spells good news for aircraft operators, as surplus spare parts allow to significantly cut maintenance-related expenses, especially for those reluctant to consider PMA alternatives. For instance, the ICF states that using surplus parts for MRO needs may bring up to 30% maintenance-related savings. As a result, Aviation Week reports that while PMAs still account for as little as 2% of the market share, surplus spares already represent a firm 12%. Nevertheless, the situation with independent MROs and OEMs is a little more ambiguous.

"Currently several trends are shaping the surplus parts market. Alongside the growing demand for integrated component MRO solutions and the increasing retirement of younger aircraft models, lessors are acquiring an increasing share of the currently operated fleet. However, while the increasing use of surplus parts spells cost savings for operators, it might present news challenges for OEMs,” shares Zilvinas Sadauskas, the CEO of Locatory.com. “Since the trend has a direct effect on the demand for new parts in the aftermarket, manufacturers might be forced to re-think their spare parts-related strategies, especially as concerns the support of mature aircraft.”

According to the executive, currently over 60% of the segment is dominated by engine surplus parts, followed by 30% of surplus components. Moreover, the segment growth is affecting the nature of surplus parts business itself, as a number of relatively small players are looking into the opportunities stemming from the expansion beyond mere trading. As a result of such developments, some industry giants, such as GE, Pratt & Whitney, and AeroTurbine have already decided to join the race and started to practice aircraft dismantling to ensure the availability of inventory on offer.

“The situation is ambivalent for independent MROs as well. On the one hand, offering surplus parts can become a viable strategy in gaining a much-desired competitive edge. On the other hand, it may reduce the demand for maintenance services (and, in turn, the cost of certain maintenance works),” comments Zilvinas Sadauskas, the CEO of Locatory.com. “All in all, whether or not the new market segment will reach the forecasted estimates, it has already become a significant force in aviation MRO, and needs to be reckoned with by all industry representatives.”

Source and image: Locatory.com

Aeroflot welcomes first foreign pilot

Aeroflot welcomes first foreign pilot

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Published on Wednesday, 24 September 2014 12:10

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JSC Aeroflot CEO Vitaly Saveliev today welcomed the first non-Russian pilot to join Russia’s flag carrier. Klaus Rohlfs, a German citizen, will make his maiden flight as an Aeroflot captain from Moscow to Prague tomorrow.

Two more candidate captains – from the Czech Republic and Germany – who are currently completing their registration formalities were also presented at the ceremony today in Moscow.

Earlier this year changes were enacted to Article 56 of the Russian Air Code to allow Russian airlines to hire foreign citizens as flight personnel from 21 July. A Government Order allows the nation’s carriers to recruit up to 200 foreign citizens every year in total.

Aeroflot received more than 800 applications from foreign pilots – or more than 10 per vacancy – with the most applications coming from the Czech Republic, Germany, Italy and Spain. To date more than 40 applicants have passed initial selection and testing procedures.

“The Russian aviation market has great potential, and pilots here are in great demand and highly valued,” said Klaus Rohlfs. “For me this means reliable employment, and moreover I will not be far from Germany and my family. Working conditions at Aeroflot are excellent – better than any other airline in the world.”

Aeroflot’s management sees recruitment of foreign pilots as an essential transitional measure to help reduce Russia’s current deficit of flight personnel, which will require concerted long-term efforts.

“Today is a historic day,” said Aeroflot CEO Vitaly Saveliev. “For the first time in Russian history, a foreign citizen will captain an Aeroflot plane. This is an important step – now that we are able to employ captains from outside the country, we can bring through substantially greater numbers of Russian pilots, who will gain experience for their captain’s exams by flying with their foreign colleagues as co-pilots. Despite some slowdown in 2014, the Russian aviation market is continuing to grow, so demand for pilots remains strong.”

Source and image: Aeroflot

An Emirati woman has caused a Twitter storm after joining the military fight against Islamic State

An Emirati woman has caused a Twitter storm after joining the military fight against Islamic State. Mariam al-Mansouri is UAE's first female air force pilot. Her involvement in airstrikes against IS has sparked a contentious debate about the war against the group. It's also led to a discussion about the role of women in conflict.

Brisbane Airport strenghtens partnership with Shanghai Airport

Brisbane Airport (BNE) has become the first Australian airport to sign a Memorandum of Understanding (MOU) with Shanghai Airports Authority (SAA) in a partnership which will strengthen key relationships and boost aviation links between Australia and China.

The MOU, which was signed on Friday in a special ceremony in Shanghai attended by SAA President, Jing Yi Ming and Brisbane Airport Corporation (BAC) CEO and Managing Director, Julieanne Alroe, outlines the commitment of both parties to explore market demands, develop air route network, and provide quality services to customers.

Julieanne Alroe said the agreement was endorsed at the most senior levels and will provide a framework for the development of stronger airport relationships that will enhance services for passengers.

“The establishment of a friendly relationship with SAA is based on information sharing, personnel exchanges and working together on collaborative projects that will ultimately provide benefits to travellers in Shanghai and Brisbane.

“This will be achieved through sharing information in areas of airport planning and construction, safety of airport operation and management, information technology, customer services, air route development, as well as airport business development.

“Collaboration to strengthen the air connections between the two airports, aiming at increasing passenger volume and freight throughput, will also be a key focus.

“Importantly, we aim to establish Brisbane and Shanghai as the major gateways for services between China and Australia via this unique partnership,” Ms Alroe said.

Personnel exchanges will take place as part of the MOU with Senior Executives from SAA and BAC spending several months immersed in the respective airport’s operations to develop a better understanding of air policies, culture and business strategies.

“The staff exchange is one of the most exciting aspects of the agreement as it provides hands on exposure to each airport’s operations that will be incredibly valuable,” Ms Alroe said.Brisbane Lord Mayor, Graham Quirk, welcomed the announcement, commending Brisbane Airport for its pro-active approach to strengthening ties with China.

“This Memorandum of Understanding will expand business opportunities between Brisbane and Shanghai and will promote Brisbane as Australia’s New World City in China,” Cr Quirk said.

“As the Lord Mayor of Brisbane, I am committed to helping Brisbane businesses and the Brisbane economy grow and look forward to seeing this agreement benefit both Chinese and Brisbane businesses.”

Source and image: Brisbane Airport

Helitech International, 14-16 Oct 2013, Amsterdam

Helitech International, 14-16 Oct 2013, Amsterdam

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Published on Monday, 08 September 2014 14:18

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Helitech International is the largest helicopter exhibition in Europe dedicated to helicopter products, parts, accessories and services. The show brings together leading manufacturers, suppliers, operators, buyers and engineers in the industry. Taking place in Amsterdam RAI from 14-16 October, Helitech International 2014 is the must-attend event of the year. 

The education programme at Helitech International 2014 kicks off on Tuesday 14th October with the Business and Strategy Conference.

Delivered by industry experts, this day long conference will explore the future opportunities and challenges for the European rotorcraft sector.

Topics include:

- Key business and strategy issues
- Market insights and opinions
- Regional trends and market prospects
- Crucial finance issues affecting growth
- Challenges and opportunities for the supply chain
- Threats and possibilities offered by UAVs technology

Source and image: Helitech Events

Filipino volcano alert: Deadly lava in spectacular flow ..

=Lava flows from the crater of Mayon volcano seen from Legazpi City, Albay province, southeast of Manila on September 17, 2014. Lava continued to cascade down the Philippines most active volcano on September 17 as authorities rushed to evacuate thousands ahead of a possible deadly eruption. (AFP)

An aerial picture taken on September 14, 2014 shows a plane flying over the Bardarbunga volcano spewing lava and smoke in southeast Iceland. The Bardarbunga volcano system has been rocked by hundreds of tremors daily since mid-August, prompting fears the volcano could explode. Bardarbunga, at 2,000 metres (6,500 feet), is Iceland's second-highest peak and is located under Europe's largest glacier, Vatnajoekull. (AFP)