News Briefs

    CASA launches drone safety app

    Civil Aviation Safety Authority (CASA) unveiled (23-Feb-2017) a new drone safety app called ‘can I fly there?’ on 23-Feb-2017 to encourage education and safety awareness. Acting director aviation safety and CEO Shane Carmody said drones are here to stay as an important and growing sector of the aviation community. The app will show drone no-fly zones such as aerodromes, helicopter landing areas and restricted airspace. It will assist users to keep drones away from areas where aircraft are flying at low altitudes and could be at risk of a mid-air collision.

     

    Australia and Israel passenger flows reach just under 35,000 in 2016

    Australia‘s Minister for Infrastructure and Transport Darren Chester reported (23-Feb-2017) the new Australia-Israelbilateral air services agreement will, “Strengthen people-to-people links between our two countries and facilitate growth and opportunities”. According to the Minister, during 2016, 12,600 Israeli residents visited Australia, while 22,000 Australians visited Israel, and these numbers are expected to grow under the new arrangements.

     

    Cobham Aviation Services Australia adds second Bombardier Challenger for the AMSA

    Australian Maritime Safety Authority (AMSA) introduced (23-Feb-2017) a new Bombardier Challenger CL-604 for search and rescue services. Cobham Aviation Services Australia was awarded the contract to provide the aircraft and crew, as well as maintenance and equipment. This is the second jet to be accepted into service with the first coming online in Cairns in Dec-2016. One additional aircraft is due to come online in Melbourne “in the coming months”, and an additional spare operational aircraft will follow.

     

    Air New Zealand signs lease deal with ALC for single Boeing 787-9

    Air New Zealand signed (23-Feb-2017) a long term lease agreement with Air Lease Corporation (ALC) for a single new Boeing 787-9. The aircraft is from ALC’s order book with Boeing and is scheduled for delivery in 3Q2018. ALC leases A320s and Boeing 777-300ERs to Air New Zealand, with the five new A321neo and A320neo aircraft due to start delivery later in 2017, on long term leases.

     

    CASA starts search for new CEO and director of aviation safety

    Australia‘s Civil Aviation Safety Authority (CASA) formally started the recruitment process for a new CEO and director of aviation safety. The recruitment follows the resignation of former CEO and director Mark Skidmore in Aug-2016 and the appointment of Shane Carmody in an acting capacity from Oct-2016.

     

    CASA starts review of aircraft maintenance engineer licences and ratings

    Australia‘s Civil Aviation Safety Authority (CASA) reported (Feb-2017) it embarked on a comprehensive review of issues relating to aircraft maintenance engineer licences and ratings. The review includes Part 66 aircraft maintenance engineer licensing, including regulations, the manual of standards and associated advisory material. A priority is to address issues identified under the proposed new small aircraft maintenance licensing structure. Comment is required by 26-May-2017.

     

    CASA welcomes passing of final fitment mandate for ADS-B in Australian airspace

    Australia‘s Civil Aviation Safety Authority (CASA) acting director of aviation safety and CEO Shane Carmody reported (Feb-2017) the final fitment mandate for Automatic Dependent Surveillance Broadcast (ADS-B) technology came into effect for all instrument flight rules aircraft operating in Australia on 02-Feb-2017. The mandate “truly heralds a new era in air traffic surveillance that keeps Australian aviation at the forefront of safety” said Mr Carmody. Benefits include:

    • Increased surveillance coverage – prior to ADS-B only around 18% of the Australian airspace was covered by radar;
    • Better airspace management – ADS-B permits reduced separation standards, increased airspace efficiencies, more accurate and timely provision of directed traffic information and quicker and more accurate search and rescue alerting;
    • Improved safety – including increases in pilot-to-pilot situational awareness through ADS-B IN cockpit displays receiving broadcasts from other ADS-B equipped aircraft in the vicinity.

     

    Jetstar Group profitable in Asia in 1H2017, including first Jetstar Japan profit

    Qantas Group reported (23-Feb-2017) Jetstar Group in Asia was profitable in 1H2017, including a first profit for Jetstar Japan since its start-up in 2012. Overall, the Jetstar Group increased margins by 9.1 ppts in 1H2017, achieving an operating margin of 13.7%. Unit revenue in the domestic Australian market rose 10%, while controllable unit costs across Jetstar’s domestic and international network were reduced by 2%. Jetstar reported its all Boeing 787 long-haul fleet “resulted in significant efficiency gains across international routes”.

     

    Qantas Group to extend life of two 747-400s and add more F100s to free up 737-800s

    Qantas Group confirmed (23-Feb-2017) the following changes to its fleet plan:

    • Two Boeing 747-400 aircraft that were previously scheduled for retirement by the end of FY2016 will be retained, helping meet demand requirements in the strong international market as Qantas International transitions to the Boeing 787-9;
    • Three Fokker F100 aircraft will be acquired for Qantas Domestic’s intra-Western Australia market, freeing up Boeing 737-800s to be used on international routes, including Perth-Singapore and Brisbane-Christchurch.

     

    Qantas liquidity at USD2.5bn

    Qantas reported (23-Feb-2017) it holds total short-term liquidity of AUD3.3 billion (USD2.5 billion), which includes AUD2.3 billion in cash and AUD1 billion in undrawn facilities. 50% of the Group’s fleet is now unencumbered, adding to a strong total liquidity position.

     

    Qantas expects capital expenditure towards upper end of three year range out to FY2019

    Qantas reported (23-Feb-2017) its total net capital expenditure for FY2017 through FY2019 is expected to be between USD3.6 billion and AUD4.5 billion (USD2.8 billion and USD3.5 billion). Net capital expenditure in H1FY2017 was AUD1 billion (USD770 million) and forecast capital expenditure over the full year is expected to be approximately AUD1.5 billion (USD1.2 billion). Qantas expects that capital spending will be towards the high end of forecast three year range.

     

    Qantas to recruit 170 pilots in first major cockpit crew expansion since 2009

    Qantas Group reported (23-Feb-2017) it is reviewing its crew recruitment needs, as it continues to work to improve scheduling efficiency, respond to market opportunities and prepare for the arrival of the Boeing 787-9. The EIS of the 787-9 in late 2017 creates the opportunity for promotions of current Qantas pilots as well as new positions to be filled through external recruitment. Qantas expects 170 new pilots join the pilot workforce over the next three years, its first significant pilot recruitment programme since 2009. This follows recruitment for cabin crew to help meet the demand created by additional international flying.

     

    Qantas Domestic managing capacity in a ‘transitioning economy’

    Qantas Domestic reported (23-Feb-2017) it is managing capacity in response to the “transitioning economy”, deploying smaller aircraft such as Fokker F100s in markets such as Western Australia and intra-Queensland. The falling value of the AUD has seen “steady growth in domestic tourism”, which both Qantas and Jetstar are supporting with targeted capacity increases.

     

    Qantas Group responding to lower AUD by adding Asian and North American capacity

    Qantas Group reported (23-Feb-2017) that as the lower AUD drives more inbound tourism, Qantas International is adding flights and seats on Asian and North American routes, including Tokyo, SingaporeHong Kong and San Francisco. Qantas International aircraft utilisation rose by better than 5% in 1H2017, building on a 15% increase between FY2012 and FY2015.

     

    Qantas marketing budget 70% committed to digital channels

    Qantas Group reported more than 70% of its marketing budget is invested via digital channels (adnews.com.au, 23-Feb-2017).

     

     

    Strong performance at Domestics and Loyalty ‘insulates’ Qantas from international capacity expansion

    Qantas Group CEO Alan Joyce commented that the strong performance of the carrier’s Qantas Domestic and Qantas Loyalty businesses “insulates” it from continued capacity additions in international markets, which has lowered average airfares and passed the benefits of lower fuel prices back to travellers (AFP, 23-Feb-2017).

     

    Tigerair Australia pleased with performance of Canberra-Melbourne service

    Tigerair Australia commercial director Adam Rowe reported the carrier is “very pleased” with its Canberra-Melbourne service, which resumed in Dec-2016, and the service is “definitely tracking on target” to the business case (Canberra Times, 19-Feb-2017). Mr Rowe noted that the airline uses a three years business case for a market and it could add more destinations from Canberra in the medium term.

     

    Qantas Group says domestic, loyalty operations are ‘creating stability’

    Qantas Group CEO Alan Joyce stated (23-Feb-2017) the company’s domestic and loyalty operations are “creating stability” for the company. He noted that the company is “not immune to what is happening internationally” in terms of the challenges facing the aviation sector.

     

    Qantas Group has 62% capacity share, 86% profit share of Australia domestic market

    Qantas domestic CEO Andrew David stated (23-Feb-2017) the group has a 62% capacity share and 86% profit share of the domestic market. He noted that the carrier has downsized some East to West Coast capacity, in addition to intra-Western Australia and intra-Queensland services, but is seeing growth out of the key Sydney, Melbourne, Brisbane and Adelaide markets from a corporate perspective.

     

    Jetstar Group says replatforming exercise was ‘very successful’

    Jetstar Group CEO Jayne Hrdlicka stated (23-Feb-2017) the carrier is seeing the benefits of a replatforming of its booking engine and website, describing the process as “very successful”. She noted that the new platform has resulted in improved conversion rates for both ticket and ancillary purchases, adding that she is “pretty excited about the results”. She also noted that the removal of the booking and service fee has been offset through such improvements.

     

    Jetstar Group is ‘pretty optimistic’ about Japan market

    Jetstar Group CEO Jayne Hrdlicka stated (23-Feb-2017) Japan is a “really important market” for the carrier, noting that the LCC has a “great brand in the market” and is “pretty optimistic” about the future in the market, where there are “significant opportunities for growth”. She noted that Japan is another market where the dual brand model is present and successful and that Australians are “spoilt for choice” in that market. She noted the considerable scope for growth in the domestic market, where LCCs currently hold only a 8% market share, with projects that this should be closer to around a 33% share in coming years to be a market with a similar size, scale and dimension as that of the Australian market.

     

    Canberra Airport considers new international lounge

    Canberra Airport is planning to add an independently-run premium lounge for business class passengers and top-tier frequent flyers as international services increase (ausbt.com.au, 23-Feb-2017). The airport has not decided if it will run it itself or under contract to a third-party operator. Singapore Airlines currently operate four times weekly Singapore-Canberra-Wellington service and Qatar Airways plans to launch Doha service in 2018.

     

    West Sydney Airport needs rail from day one: Labor MP

    West Sydney Airport needs to be connected to Sydney’s rail network from day one to be successful according to senior Labor figure Anthony Albanese (sbs.com.au, 23-Feb-2017). Australia’s Federal Government previously said that land has been set aside for a train station in the airport plan, though initial plans do not include a rail link.

     

    Flight Centre Travel Group cuts profit outlook by ~USD15-20m

    Flight Centre Travel Group (FLT) outlined (23-Feb-2017) its outlook for H2FY2017:

    • General outlook:
      • H1FY2017 underlying profit before tax was in line with expectations;
      • Total transaction value “appears to be accelerating”;
      • Trading conditions globally remain uncertain and the factors that significantly impacted H1FY2017 results – foreign exchange movements and airfare deflation – may continue throughout the H2FY2017and slow bottom-line growth;
    • H2FY2017 outlook:
      • Accelerated TTV growth “if airfare pricing remains relatively stable”. Differences in average fares may decrease as FY2017 progresses, which will see FLT achieve more rapid TTV growth if it maintains current ticket sales volumes;
      • More stable trading environment and solid momentum heading into the period after an improved Q2FY2017, particularly in the US and Europe;
      • Comparatively stronger results from the touring businesses after an AUD9.6 million (USD7.4 million) reduction in H1FY2017 earnings stemming from foreign exchange shifts and operational issues (over capacity) during the peak European touring season;
      • Benefits from cost-control initiatives that are now in place;
      • Further productivity gains and cost-effective network expansion.
    • Profit before tax guidance: AUD300 million to AUD330 million (USD231 million to USD254 million), reduced from previous outlook of AUD320 million to AUD355 million (USD247 million to USD274 million).

     

    Flight Centre new initiatives expected to drive offerings and growth

    Flight Centre Travel Group (FLT) outlined  (23-Feb-2017) new initiatives to enhance its omni-channel offerings and drive future growth:

    • Added Shenzhen Sunny Holiday International, a small Shenzhen-based travel agency that is licensed to sell outbound travel to Chinese nationals, to its network. This is a “small but potentially important investment” for the future on mainland China according to FLT;
    • Three small business acquisitions:
      • 49% interest in Ignite, an Australian retail business that specialises in holiday packages, exclusive “flash sale” travel vouchers and rewards programme;
      • A European corporate businesses;
      • The business assets of Bangalore-based Travel Tours Group, which included specialist FX, meetings and events, leisure, corporate and wholesale businesses;
    • Recent acquisitions in Europe, which added businesses in GermanySwedenDenmarkFinland and Norway to its existing footprint in the UKIreland and Netherlands;
    • Continued expansion in six key sectors: mainstream leisure, corporate and student/youth businesses, plus its emerging in-destination, non-travel and business acceleration areas.

     

    Lower airfares, foreign exchange and economic uncertainty lower Flight Centre H1FY2017 profit

    Flight Centre Travel Group (FLT) reported (23-Feb-2017) its H1FY2017 results were “significantly impacted” by:

    • “Unprecedented” airfare discounting since the H2FY2016, stimulating demand but slowing short-term total transaction value (TTV) and revenue growth;
    • Adverse foreign exchange movements, which affected overseas result translation into AUD, which also led to an AUD3.4 million (USD2.6 million) swing in forward exchange contracts and translation of foreign denominated balances into AUD. FLT would have achieved an additional AUD4.7 million (USD3.6 million) in H1FY2017 profit before tax, and TTV would have increased by 5.6%;
    • Economic uncertainly early in H1FY2017, which contributed to soft Jul-2016 trading results. Excluding Jul-2016, TTV increased about 3.4% globally and by 6.2% in Australia;
    • Reduced earnings from the emerging Asia, Middle East and UK-based tour operating businesses, which together recorded a USD12.5 million decrease in 1H profit.

     

    Flight Centre ‘strategic evolution’ starts to gain momentum during H1FY2017

    Flight Centre Travel Group (FLT) reported (23-Feb-2017) H1FY2017 results were affected by cyclical factors, including “a challenging global trading cycle and against a backdrop of widespread airfare discounting, economic uncertainty and exchange rate volatility”. According to FTL, the company’s longer term strategic evolution has started to gain momentum, as evidenced by:

    • Strong ticket sales, particularly in Australia, where volume growth significantly outpaced market growth and H1FY2017 total transaction value (TTV) topped AUD5 billion (USD3.9 billion) for the first time;
    • Improved productivity, as FLT achieved its goal of increasing sales per person;
    • Growth in Europe, with the business delivering record H1FY2017 results in local currency and expanding into new and important geographies in continental Europe;
    • Ongoing business transformation through the investment in new tools and systems, including digital enhancements that have helped drive rapid online sales growth;
    • A strong balance sheet, with more than AUD350 million (USD270 million) in positive net debt.