Airlines Manpower Shortages Revisited

Ever since the airline industry started the recovery from the COVID-19 pandemic, the news were full of flight cancellations, primarily due to the shortage of crew especially in the USA. The crew manpower shortage is an old issue. It started around 2011. This issue was discussed on this blog in June 2011 The New Challenges ... Manpower and Training and in September 2014 The Pilot Shortage Myth, Maybe Not. 

In 2014 the pilot shortage was viewed by ALPA at the time as a "Pay Shortage" and not an actual manpower shortage. The thinking, at the time, was that the industry will suffer in 10 to 15 years of a flight crew and technician shortage in the hundred thousands based on airline expansion plans. 

Fast forward to 2020 and the COVID-19 Pandemic with strict global lockdowns and massive disruptions to life as we knew it. Airlines furloughed, laid off staff and parked or returned aircraft to reduce losses.  As the world learned to cope with the pandemic and airline operations started again airlines faced two issues:   

1. Get aircraft operational (out of parking or storage); and
2. Get staff (crews, technicians and ground) back to man the operation. 

During the Dubai Air Show we all felt the energy of the industry coming back together and looking optimistically to the future; to the much coveted expansion and well being. To achieve this, airlines 

will need to expand and will probably start feeling the pain of flight crew and technician shortages across the globe around 2025 onwards. Training initiatives and programs need to be launched to encourage younger generations to engage with aviation.

Basically, we are back to where we were in 2014. 

It is a reset, hopefully we all have learned the lesson and will work diligently to avert it.

Plus ça change, plus c'est la même chose

A French proverb meaning the more it changes the more it stays the same. It was great to fly on a B787-9 from DXB to SPL. The aircraft was spacious and the cabin was probably as advertised.
The IFE was great; the selection was good and the screens were the latest model.

I guess great thanks to Boeing and Technology in this case.

But then you hit what matters; the airline offering to mere mortals in economy class. The same ultra firm cushions that are not the best for an 8 hours flight, specially the bottom cushion. The same food offering that has not changed for years and mostly the professional and cold service offered sometimes with a smile.

A modern aircraft with a great IFE does not constitute a great passenger experience; it certainly helps. It is this human interaction during flight and on ground that matters, a concept that seems to allude most airlines. The lip service and rhetoric of improved on board services still stops at the curtain seperating first and business from economy.

So I suppose, plus ça change, plus c'est la même chose 

US3 vs ME3

The rhetoric has calmed down since the earlier days, from accusations of complicity in 9/11 to massive subsidies and the inability to compete against rich states to the US3 just requiring the US government to seek consultation with the UAE and Qatar regarding subsidies to the ME3.

The rhetoric included issues ranging from subsidies to labor unions and gay rights.
It appears that subsidies are like beauty, strictly in the eye of the beholder. While the ME3 talk about equity the US3 talk about subsidy and then Chapter 11 is thrown in the mix as an undue advantage accorded to US industry. The US3 counter and rightly so that this is the law of the land but then without it the US3 would not be with us today.

As for labor unions; the ME3 employ expatriates who sign up for a package that  pobably is superior to whatever they can get at there home countries, so why would they care about unionizing.  But then labor unions are governed by each country's law, just like Chapter 11 I guess.

Similarly, the anti gay issue has nothing to do with fair competition. The ME3 have gay people in their staff, and as long as they do not break any pertinent country laws, they remain employed. But then do the US3 want the US government to discuss labor unions and LGBT rights laws in the UAE and Qatar, of course not, then why bring it up other than to muddy the waters. After all the track record in the USA when it comes to these two issues is not the most pogrssive, with laws enacted in individual States that roll back the rights to unionize and gay rights.

The position of the US3 is opposed by almost all segments of the industry from Aircraft manufacturers', OEM's, the travel and tourist industry, airports and cities. Then why all the screaming?
The US3 are making record profits and there is very little overlap in the international routes they operate with those of the ME3. Is it an anticompetitive sentiment and a myopic view of what constitutes competition? Partly yes, look at the postion taken against Norwegian 's application to operate to the USA or the stance of Delta against the EXIM bank as an indication. The ME3 counter with; compete on  service; invest in new modern aircraft, state of the art IFE systems and customer service on board and on the ground and passngers will come back.

The issue that really scares the US3 and their EU Lgacy airlines partners is 5th freedom rights from Europe and the ensuing comptition on the North Atlantic market. FedEx and that segment of the market oppose the US3 position because they do not want any changes to these 5th freedom rigths. Emirates Airline's Milan/New York route was opposed by both the US3 and the EU Legacy airlines because it directly affects North Atlantic traffic. Tim Clark, Emirate's president intimated last week that the airline might exercise its 5th freedom rights under the bilateral if it proves profitable. He basically declared if a European city asks Emirates to operate because they feel there isn't enough capacity to the USA then subject to profitability Emirates will operate. Etihad has that option but then they do not really need the bilateral to operate on the North Atlantic, they have their own EU approved equity partners; Alitalia, airberlin to name a few.

Welcome to the global travel market.

Etihad, Lufthansa and EU Nationals Control

The LBA on 16 October 2014 reversed a decision to cancel 34 code share flights of Etihad and Airberlin that was taken a few days earlier. The reason for the earlier cancellation was that these code share flights violated the traffic rights agreement between Germany and the UAE. A meeting later in the month between both governments to discuss the bilateral will clarify things for the future. Lufthansa blames these code shares for the overcapacity on the Abu Dhabi route and called them unjustified.

Lufthansa has lobbied the EU to reexamine the control issues of foreign equity stakes in EU carriers and has lobbied for the courts to block Emirates Milan/JFK flights earlier in April 2014; those flights are now operated on a temporary authority pending an appeal's court decision.

Lufthansa has been more vociferous than most regarding the 3 Gulf carriers expansion into Europe. The EU now is examining whether Etihad controls Airberlin and Alitalia through its equity stakes and is also looking at the Delta/Virgin Atlantic deal. This has prompted the Swiss authorities to look at Etihad's control of Darwin Airlines now branded Etihad Regional.

The issue of foreign investors having control of EU carriers is  becoming a thorny issue. There is a needed balance required between control and the investment risk of bailing out a European carrier and preserving jobs and airline services to communities. The major EU legacy carriers are coming under pressure from EU LCCs and apparently from the Gulf carriers that they are not willing to invest more but are looking to cut costs and curtail services. Air France/KLM declined to increase its stake in Alitalia and Lufthansa was not interested in a minority stake. Etihad worked very hard to get the unions and the creditors to accept its terms for its USD 750 millions direct investment for a 49% equity stake in Alitalia. The problems of Lufthansa and AF/KL are compounded by the mega orders from the Gulf carriers for Airbus aircraft with the associated economic fallout of order cancellations.

Etihad will modify its agreements with its equity partners to comply with the EU and Swiss regulators control requirements. Etihad did the same in India when the regulators questioned its control of the Jet Airways board. Etihad will not jeopardize its strategy for expansion; one that is based on equity partnerships providing access to new markets, cost savings in aircraft acquisition, maintenance and other services and more traffic through its Abu Dhabi hub.

The airline industry is more global than ever; the EU has to balance its requirements and need of EU nationals control of its airlines and the foreign investment in these airlines. These investments preserve jobs and services in Europe at a time when its economies are under pressure and their own carriers are not willing to invest.

The Surplus Parts Market A Force Of Stability

In a recent article in AINonline "Surplus Parts Costs Forecast To Drop" it was suggested that prices will go down as more and more aircraft are parted out pushing "the current prices downwards making the already tense market even more competitive".

In principle, this is true to a certain extent.

Boeing and Airbus have both announced production rate increases on their current aircraft types.   Taking into consideration that as an aircraft type evolves and technology improvements are introduced; parts interchangeability is no longer maintained between the latest aircraft off the production line and an aircraft produced 2 or 4 years earlier. This is valid especially for avionics components, where software changes are the most common.

OEMs have to meet both the challenge of  supporting the production rate increases and that of supplying parts to support the industry with the latest and earlier component configurations; this will impose production pressures and supply difficulties.

As the number of retired aircraft increases to almost a 1000 aircraft per year in the next decade, so will the number of part-outs and the availability of surplus parts. However, these surplus components and parts will not support the latest and recent configurations of the active fleet, but will support the earlier and older configuration versions.

The availability of surplus parts for mature aircraft configurations of the popular fleets will tend to;

• ease off the pressure for OEMs to support the earlier aircraft configurations; and
• reduce prices in the aftermarket as a whole but remain competitive for avionics components and a variety of other parts.

The surplus market is detrimental in maintaining a stable components and parts supply for the mature aircraft.

DWC On The GO

Al Maktoum International Airport at Dubai World Center (DWC) is set for major expansion to eventually accommodate up to 240 million passengers. DWC currently handles a few low cost airlines but is the home of Emirates SkyCargo in addition to a few more cargo airlines, creating one of the largest cargo hubs in the region.

An investment of 32 Billion USDs has been set for this task, almost double the projected 18 Billion USDs projected earlier at the start of the decade.. The investment is to support the building of another 4 runways and 2 satellite buildings that will accommodate 120 million passengers annually and 100 A380s parked at any one time (click here for a look at the Master Plan). This phase will be completed in 6 to 8 years in time for Emirates to move out from Dubai International in the mid 2020s leaving Dubai International for the use of Flydubai and other operators. The airport design will allow Dubai Airports to add capacity in 20 million passengers increments to support the expansion plans of Emirates.

Dubai International is expected to handle 120 million passengers by 2020 in time for the 2020 Expo Trade Exhibition. The smooth expansion of Emirates depends on capacity at Dubai International. It is projected that Emirates will carry 93 million passengers by 2020.

Dubai sees the aviation sector as a major contributor to its economy and it is expected to generate 323,000 jobs and contribute 28% of GDP in 2020 compared to 250,000 jobs and 22% of GDP in 2011.

The Pilot Shortage Myth, Maybe Not

Captain Lee Moak, President of ALPA, International in an Opinion titled The Pilot Shortage Myth  in the September 8, 2014 issue of Aviation Week & Space Technology argued that it is not a pilot shortage but a pay shortage. I agree with Captain Moak, that entry level pay for pilots at the lowest paying US airlines especially regionals is at the poverty level and this is driving young people from the profession among other factors. Airline management sometimes use the pilot shortage as an argument to roll back safety regulations (Pilot Fatigue and FO qualification and training rules) or cancel flights and curtail services.

I do not share the view that the shortage is a myth. It may be a myth today but it will be a reality in 15 to 20 years. US carriers are rolling over their older fleets and the capacity increases are derived more from larger aircraft than from fleet expansion, but that is now eventually the fleet will have to increase and so will pilot demand. The rapid expansion of airline fleets in Asia Pacific, MENA and Latin America, add to it the eventual recovery of European airlines and the industry will be looking at a global shortage.

As the fleet ages, so do pilots, in reality pilots aged 45 to 50 years now would be retired by then. Investment in human capital especially pilots, engineers and technicians is no longer a luxury it is a necessity for the survival of the industry. This has been a challenge a few years back (The New Challenges... Manpower and Training Oussama's Take 20 June 2011), still is and will be for a long time.  

Royal Jordanian, Uncertain Future

Royal Jordanian (RJA) is facing liquidation since its losses have exceeded 75% of its capital. For this reason, the airline has not issued its 2013 financial results or had its share holders general meeting yet. In reality, the government who is the major share holder will not allow its liquidation. It is a matter of national pride and to a certain extent national security. There are talks of restructuring and a government bail out, but this is a hot topic because of the economy and the deficit. It appears like a lot of political jockeying is going on.

The airline was listed in the Amman Stock Exchange in December 2007 and since then it had very mixed results. It sustained losses in 2008 (34.7 M USD), 2011 (81.6 M USD) and 2013 but had moderate profits in 2009 (40.3 M USD), 2010 (13.6 M USD) and 2012 (1.6 M USD).  

In all fairness to Royal Jordanian the geopolitical situation in MENA has not been very favorable and still is not; between fluctuating fuel prices, the Arab Spring, Libya and now ISIL, the airline had to indefinitely suspend lucrative routes like Damascus, Aleppo, Tripoli, Benghazi, Misrata and now Mosul; Cairo, Baghdad and Erbil were suspended on and off for security considerations. RJA also suspended flights over Syria which added almost an hour to an hour forty five minutes to the Beirut flight without an appreciable increase to fares. However, RJA has just announced a code share agreement with Middle East Airlines to start in mid October 2014, allowing RJA to cancel two of its four daily flights. But the most interesting reason cited is the aggressive competition from the Gulf three (Emirates, Etihad and Qatar Airways).

In an attempt to reduce its costs RJA inked code share agreements with Gulf Air, Oman Air and SriLankan to operate Amman to Bahrain, Muscat and Colombo  and has suspended or plan to suspend flights to what it terms as losing routes, like Delhi, Mumbai, Alexandria, Accra, Lagos, Brussels and Milan.

Not withstanding geopolitics, the airline did not react quickly enough. While canceling unprofitable routes is a good thing, overcapacity is not. It leaves part of the fleet idling while still incurring lease and loan payments. Rationalizing staff levels is not be the greatest option in a politically charged country with a very high unemployment rate. 

RJA has already returned 2 A321s and with the B787 deliveries it is planning to rationalize the fleet composition by the end of 2014 to include the following:

B787, 5 operating aircraft;

A340, completely phased out (4 aircraft) ;

A330, 2 operating aircraft down from 3;

A321, 2 operating aircraft down from 4;

A320, 6 operating aircraft down from 7;

A319, 4 operating aircraft, no change;

E195, 4 operating aircraft down from 5;

E175, 3 operating aircraft, and

A310F, 2 operating aircraft, no change.

A net change of 5 passenger aircraft all of them single aisle aircraft, but with a more fuel efficient and modern fleet.

In a nutshell, the airline board and management acted, just like in the old days, like a government entity. This has caused the share price to go down from a high of 4.09 JOD {5.76 US$} on 16 March 2008 to 0.38 JOD {0.53 US$} on 15 September 2014. RJA would have certainly benefited of the equivalent of a Chapter 11.

RJA needs to act in a more agile and proactive manner, after all that was the reason the airline was privatized. The plans for the fleet and route reductions were too late and too little. There is a need to come up with innovative solutions that increase revenue and not only reduce cost. After all, cost reduction is subject to the law of diminishing returns but with revenues, the sky is the limit. 

While RJA may have not lacked leadership, it requires a different kind of leadership. One that not only looks at fleet and routes but one that looks at the management structure and how management approaches risk assessment and especially mitigation. A management that looks at new opportunities for expansion amid the chaos. If this means replacing senior managers, then so be it.

Royal Jordanian has survived for 50 years among the geopolitical chaos; the dilemma today is how to survive and thrive in the same chaos as a publicly listed company. This is a totally different set of rules that RJ may not be yet equipped to handle.

Beyond Emirates' A350 Order Cancellation

This blog first appeared in Bangalore Aviation under the title of Analysis: Emirates Banks on 777X with A350 XWB Order Cancellation jointly authored by Devesh Agarwal and Oussama Salah

On June 11, 2014 Emirates and Airbus announced the cancellation of the A350 order 50 A350-900 and 20 A350-1000 as a result of a fleet requirements review. The order cancellation was downplayed by Airbus as "not good news commercially" but not "bad news financially". It must have been a disappointment to lose 9% of the A350XWB order book by one of the most prominent Airbus customers. Emirates deliveries would have started in 2019 giving Airbus ample time to recover. However, it sends the message that B777X can easily perform the missions of the A350XWB.

I am certain the fleet requirements review went beyond the A350 cancellation, Emirates has emphasized that the passenger growth forecast has not been changed which makes one wonder what the fleet composition will eventually be?

The cancellation has many advantages for Emirates:

• Rationalizing the fleet back to two (2) types; A380s and B777s currently the fleet consists of  (A380/A340/A330 and B777);
• Removing the financial and human resources burden of entry into service of a new fleet (maintenance facilities, simulators, parts, training and hiring etc..);
• An improved cash flow due to reduced pre delivery payments; and
• Less financing requirements in the tune of Sixteen (16) Billion USD.

The only disadvantage at this time, there is no aircraft to cover the 230 to 300 passengers requirement which is now covered by the A330/A340 and some of the B777-200, in other words their thinner routes. One can argue that with the newer standards of first and business seats, cubicles and apartments the passenger loads of the aircraft will automatically be reduced. 

Emirates wants an A380neo which Airbus is starting to look at, however the A330neo is still their priority. Emirates is an influential customer and very persistent, remember the B777X so eventually Airbus will develop the A380neo. In the meantime Emirates and Boeing are discussing the B747-8i which has slightly lower passenger load than the current A380 configuration but the same range capability and as the latest reports intimate a slightly better fuel consumption on a seat/mile basis. Whether Emirates will accept the B747-8i fuel efficiency argument and actually buy the B747-8i or it is only meant to pressure Airbus towards the A380neo, remains to be seen.

In any case, the Farnborough Air Show is just round the corner.

EX-IM Bank Again...

EX-IM Bank is again in the news; Delta, A4A and ALPA are adamant about defunding it because it stifles competition by providing export facilities to competing airlines especially the Gulf carriers. The fact that Korean, a SkyTeam partner of Delta or GOL obtained an EX-IM guaranteed bond financing to support its engine work at Delta TechOps is of no consequence. Delta's assertion is; EX-IM Bank allows carriers like Emirate, Qatar and Etihad cheaper financing therefore allowing them to offer cheaper fares which creates unfair competition. Hence the defunding campaign, regardless of the requirements of any other economic sector such as Aerospace,Nuclear energy, etc. It would have been better for Delta to lobby for tighter rules on guarantees for aircraft purchases.

EX-IM Bank and Boeing have maintained that defunding is akin to unilateral disarmament. Airlines will just buy from Airbus and utilize whatever the European credit agencies have to offer. Defunding will not change the level of competition, just the type of aircraft used.

Delta has been risk averse when it comes to buying new technology aircraft. Delta's CEO is on record for the "preference of proven technology". They feel that buying at the end of the development and production cycle allows them to purchase aircraft at lower prices. Others, including the Gulf carriers prefer to be launch customers with all the technology risks and possible delays this entails. Being a launch customer allows an airline a greater say in the aircraft design, aircraft mission requirements and most importantly a much lower price ever.

Delta's acquisition and/or lease of older aircraft like the MD80s and B717 provides them with lower asset costs, their use on short and low utilization sectors offsets the fuel price and when maintenance is due the aircraft is parted out or retired. The preference to refurbish older aircraft with the latest interior and cabin IFE and Wi-Fi in Delta's thinking provides an equal level of comfort to newer technology aircraft and most importantly better profitability. This maybe true in the short term but cabin noise levels, ability of the aircraft systems to support modern IFE and  new ATM requirements and overall reliability will eventually catch up.

To put the unfair competition of Gulf carriers in perspective, out of the 180 million international passengers that travel to and from the USA approximately 6 million (3.33%) hail from the Middle East of which 2.4 million (41%) are carried by US carriers and 3.6 million (59%) are carried by International carriers. There are seven carriers that operate non stop services to the USA; Etihad, Emirates, Qatar Airways, Saudia, Egypt Air, Royal Jordanian and Royal Air Maroc. Out of these, four are members of an alliance, but all of them code share with a US carrier for travel within the USA.
- American code shares with Etihad, Qatar Airways and Royal Jordanian (the latter two are members of
  OneWorld);
- Saudia code shares with Delta (a SkyTeam alliance member);
- Egypt Air code shares with United (a Star alliance memeber); and
- Emirates, Etihad and Royal Air Maroc code share with Jet Blue.
They bring revenue to the cities they serve in terms of employment, tourist traffic, use of the airport facilities (dedicated lounges) and most importantly better connections to the rest of the world.

All these MENA carriers come from relatively small countries with little or no domestic travel and have always relied on transit traffic that caters to holiday traffic, visiting friends and relatives and yes to the immigrant communities in the USA. For some reason US carriers do not pay much attention to the rising numbers of immigrants from MENA, India, Pakistan and Asia. these groups constitute the bulk of the traffic carried by these carriers, especially the Gulf Carriers. They compete on service, advanced entertainment systems and passenger amenities, high technology aircraft with high fuel efficiency and ultra long flights (12 to 16 hours/sector) that lower the asset cost per flight hour and most importantly very few or no ancillary fees.

US carriers have gained profitability in the last few years by:
- exercising capacity control (a 2% growth at best) while the Middle East was expanding at double digit
   rates (10% to 15%);
- lowering their labor costs, sometimes at the expense of customer service on ground and in flight;
- utilizing older aircraft (it was not until the last three to five years that US carriers embarked on fleet
  renewals, Delta not as much, and cabin upgrades); and of course
- escalating ancillary fees.

Hardly the stuff of fierce competition.

The Gulf carriers will expand into the USA by virtue of the open skies regimes they have with the USA and their global presence. They will compete with Delta and others; whether they use Airbus or Boeing aircraft is not an issue for them.

Malaysian MH370

Malaysian MH370 disappeard on March 7, 2014 and the search continues and no one is the wiser. This will not be the first aircraft crash whose wreckage may not be found. In the meantime the relatives of the passengers suffer the uncertainty and lack of closure. Our prayers and thoughts are with them.

The Media and CNN in particular has made this into a 24 hours a day drama, with experts upon experts speculating on what may have been; not that other networks were any less guilty.

The aircraft made a turn and headed back and then it was lost from the radar and satellites. The whole incident/accident questions what a lot of us in aviation took for granted:

• if an aircraft does not report to the next ATM center or disappears from the radar someone will raise an alarm; or
• if an unidentified aircraft shows up on a radar screen, someone would try to raise the flight or scramble an aircraft to have a look see. But for someone to assume and do nothing on the premise that if an airliner turns back it must have an ATC clearance is ridiculous.

However, some of the theories brought forward to explain the disappearance of MH370 are literally out of this world. The sad part was, they were seriously discussed on TV and social media, and these include:

• a black hole type disturbance in the atmosphere sucked the aircraft into space or another dimension;
• the flight was hijacked by US and Israeli agents because it carried some ultra secret technology on its way to the Taliban or North Korea; 
• there was mention of a cyber attack on the aircraft systems;
• the plane was destroyed by a Texas company because it had four Chinese engineers holding semi conductor patents worth billions of dollars. The patents will revert to the company in case of their death; and/or
• the pilot has gone suicidal because he had a failed love affair or was an Islamic zealot.

One good thing came out of this accident; countries were ready to cooperate to locate the aircraft, contributing resources from maritime surveillance aircraft, ships, satellites and underwater equipment capable of locating the pulses of the CVR and DFDR locators in a search effort that moved from one area to the other as investigators refined the flight path of the missing aircraft.   

When AF447 was lost in June 1, 2009 over the South Atlantic, it took two years to recover the DFDR and CVR and sadly we are facing the same problem. The calls to extend the battery lives of the DFDR/CVR came to nothing. There were even suggestions of floatable black boxes.

However, the solution must be a better aircraft tracking regime utilizing the available technology in               e-Enabling and connectivity in addition to the extended locators batteries operational life. A solution to switching off the ATC Transponders and ACARS in flight must be found.

As of today April 5, the Chinese news agency reported that one of its ships have detected a pulse at 37.5KHz which is the DFDR/CVR locator frequency and their pilots have photographed a debris field. 

We remain hopeful that this may be the successful end of the search.

RAK Airways, Full Circle.

On January 1, 2014 RAK Airways suspended operations for the second time, citing rising costs, the conditions of the aviation industry and geopolitics. The airline indicated that the board will review the state of the airline and decide whether the airline will resume operations.

As usual things move fast in MENA. On February 2, 2014 Ras Al Khaimah Directorate of Civil Aviation signed an agreement with Air Arabia, designating it the National Carrier of Ras Al Khaimah. This morning February 4, 2014 Adel Ali, Air Arabia Group CEO confirmed to Dubai Eye that Ras Al Khaimah will be the airline's fourth hub and will be basing its aircraft there to operate to destinations in the Middle East and the Indian Sub Continent.

RAK Airways was founded in 2006 as the fifth UAE national carrier based in Ras Al Khaimah. It started operating in 2007. By 2009 the airline suspended operations. It announced the resumption of operations in 2010 but actually restarted in 2011. The second time around the airline was more organized and operated to ten (10) cities  (Abu Dhabi, Riyadh, Jeddah, Doha, Amman, Peshawar, Lahore, Islamabad, Calicut and Katmandhu) using two A320s in two (2) class configuration 8 Business and 160 in Economy.  RAK Airways operated to Abu Dhabi and had a code share with Etihad to London Heathrow, Manchester, Dublin, Geneva and Bangkok.

RAK Airways never had a defined business plan, other than the usual rhetoric of development of tourism and aviation in Ras Al Khaimah, and if it did it was never published. The airline had 7 CEOs in as many years.

Ras Al Khaimah is emerging as a tourist destination with 1.2 million visitors last year and global hotel chains like Hilton, Waldorf Astoria, Crowne Plaza, Rotana and others opening hotels and resorts in the emirate. These tourists preferred to fly to Dubai, since the majority of them came from destinations not served by RAK Airways.

Ras Al Khaimah government realized that going it alone in the Northern Emirates with their 800,000 inhabitants is not going to work out. Developing tourism using limited regional destinations does not work when most of the tourists hail from Europe and North America.

The question that raises itself now is how would Fujairah react to all of this, if at all? The emirate is developing into an important oil terminal with oil related industrial activities after the inauguration of the pipeline from Abu Dhabi to Fujaira. It boasts tourist areas like Khor Kalba, Massafi and the proximity to Khor Fakkan, the Sharjah resort on the Gulf of Oman. It is linked by a modern super highway to the major cities of the UAE, reducing travel times.

Another interesting issue will be the Ajman International Airport (under construction) which is in close proximity to Sharjah International Airport and Dubai International Airport and is raising ATM concerns within the UAE.

We wait and see

The Saga of Abu Dhabi's CBP Pre-Clearance Facility

Finally on Friday, 24 January 2014 the US Customs and Border Protection Pre-Clearance facility opened in Abu Dhabi International Airport. A4A, Pilots' Associations and of course the ever present Delta spearheaded the opposition to open the facility. So the UAE government, more likely the Abu Dhabi Government, paid up 85% of the cost includingy the salaries of US CBP officials. There were a lot of reasons cited opposing the facility; the investment could have been used to alleviate congestion in US international gateways and unfair competition to US carriers, who by the way do not serve Abu Dhabi.

Personally, I would have preferred the facility in Dubai, where there are more flights to the USA including Delta and United.

To put things in perspective approximately 180 million international passengers pass through US International Airports of which 58% are carried by US carriers and 42% by international carriers. Of these passengers 6 million come from the Middle East of which 41% (2.4 million) are carried by US carriers and 59% (3.6 million) by international carriers. At this time Etihad operate to JFK, IAD and ORD. 2014 will see a double daily to JFK and operation into LAX and DFW. All things considered Etihad will probably carry around 750 thousand passengers who will go through the pre-clearance facility, out of a total of more than 90 million passengers, less than 1%. The investment in the facility is minimal and will hardly dent the congestion problem.

Delta and others screamed about unfair competitive advantage, well they do not operate to Abu Dhabi, and it is unlikely that anyone will travel from Europe or Israel to fly Etihad just to avoid congestion. If anything Emirates, Qatar Airways and maybe Royal Jordanian, Saudia and Kuwait Airways should have lobbied against the facility. They are more affected by it than any US carrier.

The CEO of Norwegian lately said US carriers are afraid of competition, I tend to agree, but then this is another story.

2013 In Prespective

2013 has been an interesting year for aviation and the airline industry, in some ways a year of firsts. The following are some of the exciting events that will continue to shape the industry in 2014 and beyond. 

On board connectivity

Finally, the FCC and the FAA have paved the way to the use of mobile devices on board aircraft from departure to arrival, with inflight WI-FI available after 10,000 feet. The use of mobiles have triggered the debate of whether voice calls should be allowed; BA and Delta have decided not to allow mobile calls inflight, but the debate continues and most airlines awaiting passenger feedback. The prospect has raised the issue of cyber security with some airlines planning to have two (2) WI-FI networks on board; one for the cockpit and another for the cabin. 

The largest airline in the world 

The merger of American Airlines and US Airways is finalized creating the world's largest airline. Of course the road ahead is very difficult and how successful the new AA remains to be seen. Personally, I liked the old in bankruptcy AA the level of service improved and fleet renewal is underway.

The rise of the GULF Global carriers

The three Gulf carriers continued their double digit growth in different ways

- They launched the B777X along with Lufthansa and Cathay Pacific;

- Emirates ordered fifty (50) A380s and stabilized Airbus's production plans for the short term;

- Etihad equity stake in Jet Airways was finally approved. Etihad did not lose anytime in announcing its 

  plans for the Indian market;

- Etihad acquired 33% of Darwin Airlines, a Swiss regionals and will rebrand it as Etihad Regional.    

  Furthermore, they are in discussion with Alitalia for an equity stake; and

- Qatar Airways joined One World.

This prompted Star Alliance to invite Air India to join the alliance in an attempt by Lufthansa to preserve its share of the Indian international market. More interesting is US carriers, lead by Delta, request for protection from the government to limit access of the Gulf carriers and other international carriers and access to EXIM Bank financing.

These are by no means the only events facing the industry in 2014 but probably will have a large impact. Barring major geopolitical and natural disasters the industry is expected to continue its growth, hopefully at a better rate than this year.

Wishing you all a Happy and Prosperous 2014

RJ at Fifty, Still Going Strong

This post appeared in RJ's in house employees magazine 

Amidst all the geopolitical turmoil of the last few years, Royal Jordanian has been able to maintain its pioneering spirit. It is not the oldest airline of the region nor the largest or richest. However, Royal Jordanian has always been at the forefront of the industry in the MENA region.

RJ has an innovative and can do spirit that meets challenges head on. I cannot recall a time when the MENA region did not have challenges from wars, invasions, blockades to uprisings. Issues that affect the stability, security, economy, tourism and the ability of people to travel.       

In spite of all this the airline managed to develop into a center of excellence.

The 1970s and 1980s, where times of rapid fleet expansion, with an increase in the B727/B747 fleets and the introduction of the L1011-500 and A310s followed by the A320s in 1990. The move to QAIA allowed the airline to rise to the challenge and was capable to efficiently operate and maintain the advanced new aircraft. The larger facilities allowed the airline to develop its heavy maintenance, engine overhaul, training and catering capabilities. The airline was always at the leading edge of technology, in 1983 it started operation of the L1011-500, the most advanced digital aircraft of its time. It was among the first to operate the A320, the first fly by wire aircraft and to introduce the large regional jets the Embraer ERJ175/195 to the MENA region.

In 2007 the airline was privatized, the first government airline of the region, a long and arduous process. The airline had to sell off almost all of its ancillary services, this drew criticism but in the final analysis it helped to broaden the aviation base in Jordan. New capabilities were introduced that otherwise would not have been. In the same year RJ joined One World The first MENA carrier to join a global alliance. The airline had to meet the alliance service delivery standards.

In the last few years the airline rolled over its fleet. The A310 passenger aircraft were retired and the A320 fleet was replaced by new A321/A320/A319 aircraft. The A340s were refurbished and the A330s were introduced to fill the gap until the delivery of the B787s, in the last quarter of 2014. The e-enabled B787 encompasses challenging leading edge technologies.

Royal Jordanian is a trend setter and has a can do spirit that rises to meet all challenges. This is achieved through a dedicated and well trained workforce. A workforce that is ready to go the extra mile to achieve its goals. The airline developed and thrived in spite of internal and regional challenges and in the process helped other airlines especially those in the Gulf region to develop. As the airline celebrates its 50^th anniversary, the same pioneering, innovative and can do spirit still prevails. Aviation is an industry that is about people; those who travel and those who make their travel possible in a safe, secure and comfortable manner.                          

No Airline exemplifies this as Royal Jordanian does.

Emirates, A Force of Stability or Disruption

Emirates, the largest international carrier and the oldest of the three Gulf Global Airlines, evokes confidence, distrust, and a sense of foreboding  with every decision it makes from buying aircraft to announcing new routes

If you are Airbus or Boeing, you value Emirates as a force of stability in aviation. Six (6) weeks after 9/11, when legacy airlines all over the world were reeling from the events of that day: grounding aircraft and laying off employees specially in the USA and Europe. Emirates, during the Dubai Airshow 2001, did the unthinkable and ordered USD 15.6 Billions worth of aircraft.

• Twenty five (25) B777s
• Twenty Two (22) A380s
• Eight (8) A340-600s
• Three (3) A330s

In Dubai Airshow 2013 Emirates did it again it helped launch the B777X with an order of one hundred and fifty (150) plus another fifty (50) options and ordered another fifty (50) A380s helping Airbus to stabilize the A380 production line for the near future.

Undoubtedly, Emirates is (was) rewarded for its good deeds with very attractive pricing, well below what the competition gets. Something that reflects favorably on its yields and financial results.

On the other hand, legacy carriers specially Delta, American, Qantas, Air Canada, Air France and Lufthansa considered Emirates (Etihad and Qatar Airways) as mere toys of oil rich desert princes and heavily subsidized government airlines. They are considered by Delta and the A4A as the most disruptive force in the industry. 

Fast forward to the present and the critics of yesterday are the partners of today

• Qantas has a great agreement with Emirates, resulting int the transfer of its Singapore hub to Dubai. The deal has been profitable for both airlines;
• Air Canada whose position on additional frequencies for Etihad and Emirates escalated into a diplomatic rift between the UAE and Canada, now has a code share with Etihad;
• Qatar Airways is a member of One World;
• American Airlines and Etihad has a code share agreement; and
• Air France KLM has signed a very deep and extensive code share agreement with Etihad.

It is understandable when EU airlines complain about the Gulf airlines, they actually compete with them; directly between their respective hubs and on connecting traffic to Europe, USA and Latin America. These new entrants have shifted the center of aviation, from Europe as a hub between the Americas and the other side of the globe, to their Gulf hubs. US airlines never really competed directly with Emirates or the other two global airlines, so the complaining and whining is somewhat surprising.

Emirates competes on service, passenger amenities and convenience. Their First and Business classes are rarely discounted and if you think their fares are low, think again, they are not. However, the service is exemplary, their seats and cabin are leading edge and ICE (their IFE system) is out of this world. Emirates knows how to fill its flights. They actually make money, not because they are subsidized but because they keep airplanes full at the right yields, and they buy their aircraft at the right time and the right price.

They also sponsor sports clubs and events, spending millions of dollars to make sure that the name of Emirates is seen by millions of people across the globe while watching soccer, tennis or Formula 1 among others. Emirates and the others invest in lounges, media promotions and sports to keep the brand global.

Emirates works hard at increasing the productivity and efficiency of its operations, but it pays attention to its expansion.

 Emirates Vision and Values clearly explains their methodology for success

A strong and stable leadership team, ambitious yet calculated decision-making and ground-breaking ideas all contribute to the creation of great companies. Of course, these have played a major part in our development, but we believe our business ethics are the foundation on which our success has been built. Caring for our employees and stakeholders, as well as the environment and the communities we serve, have played a huge part in our past and will continue to shape our future.

Etihad's Anniversary Splash

Etihad celebrated its tenth anniversary with a splash.

• The Jet Airways 24% equity deal was finally approved by the Indian Cabinet setting the stage for expansion into India. 
• Air Serbia 49% equity deal setting the stage for expansion in Central Europe

All this is old news. Dubai Airshow was the stage of its splurge on aircraft orders:

• Fifty (50) A350s;
• Thirty Six (36) A320NEOs;
• One (1) A330F;
• Twenty Five (25) B777X (launch customer for the -8)
• Thirty (30) B787s (bringing the total Boeing orders to 1000 aircraft and becoming the largest operator of the type);
• One (1) B777F.

All these aircraft are not intended for Etihad's fleet only, some will be used for their equity partners.

On a quieter note Etihad announced the launch of its new route to Zurich in June 2014 and almost in the same breath announced the launch of Etihad Regional, not in the Gulf or MENA but in Europe. Darwin Airline in Switzerland, Etihad acquired a 33.3% equity stake in the regional airline. The idea is for Darwin Airline, which will be rebranded as ETIHAD REGIONAL is to feed traffic to Etihad and its equity partners' hubs in Europe for onward travel. Eihad Regional will add 21 new routes and 18 new destinations by mid 2014 to Etihad gateways in Europe (Geneva, Paris, Amsterdam, Dusseldorf, Belgrade and Zurich). Will this be the only regional airline equity acquisition or just the first in many more to come.

If the aircraft orders upset some US carriers and A4A, the European response to Etihad Regional has been almost non existent. 

Time will tell how this will evolve for now Happy Anniversary Etihad...

Saudi Arabia's Domestic Market, The Final Stretch.

When everyone almost forgot about the two operating licenses that GACA awarded to Qatar Airways and Gulf Air-Abdel Hadi Al-Qahtani and Sons Co in late 2012. 

During the Dubai 2013 Qatar Airways announced it will launch Al Maha Airways in the first half of 2014 using aircraft from Qatar Airways. However, the management of Al Maha Airways will be independent from the airline and staff will be directly hired.

Similarly, Al Qahtani Group announced the launch of Saudi Gulf Airlines based in Dammam. Gulf Air denied that it has applied for or was awarded an operating license by GACA. Gulf Air is a consultant to the new airline assisting it in obtaining GACA approvals. The airline will start operating in Winter 2014. To date Saudi Gulf Airlines have not indicated the type of equipment it will be operating.

Both airlines will start operating to major cities (Riyadh and Jeddah), second tier cities, regional and international route as they develop.

How much coordination, and there will be some, between Al Maha Airways and its owner Qatar Airways is something to look for in the near future. 

As we await developments of the new airlines; Nasair the low cost carrier has followed in the footsteps of flydubai and will introduce business class on some of its routes, primarily for religious tourism and eventually for corporate clients.

Anniversaries

It appears that everything I was involved with in my professional life has an anniversary and a milestone this year.

• Royal Jordanian (RJA) is celebrating its 50th Anniversary
• Air Arabia (ABY) is celebrating its 10th Anniversary
• Etihad (EY) is celebrating its 10th Anniversary
• Al Jaber Aviation (AJA) celebrated its 5th Anniversary

My involvement with each organization varied but I always managed to learn  and contribute.

I joined RJA at a time when the airline was expanding its fleet with new B727s, B747 and L1011s. A new cycle of  B707 heavy maintenance (D) checks was starting and the decision was made to bring the capability inhouse. The planning was done and the new hangar at QAIA was used before the airport was completed. It was an exciting time, then capabilities for B727 and L1011 was developed, it felt like routine. The next milestone was the introduction of the A310s and A320s into the fleet.

Of course there were other challenges some good others not so good. The development of third party contract maintenance that went a long way to cover the Maintenance and Engineering Department costs. Then the first Gulf War that shut down the airlines for four (4) months; but every challenge is an opportunity we performed a B727 D check and B707 D check for a customer. RJ has a pioneering spirit, it was always a tad bureaucratic, but when the chips were down everyone came together and made things happen, a real can do attitude.

At the age of 50 the airline still has this attitude, it has the ability to rebound from challenges; most of them global geopolitical (wars, uprisings, financial crisis, etc.).

RJ brought home the value of "if there is a will there is a way" and doing great things on a budget. I spent eighteen (18) years there and made life long friends.

Start ups are messy affairs. They are hard work and require focus, perseverance and resilience, and all that before first flight. Once operations start it is even messier.

I was at GAMCO now ADAT at the time Air Arabia and Etihad started. I was tasked to ensure an MCC and a scheduling unit are operational at the time the airline begin operations. Both airlines started within a week of each other, ABY on 28 October and EY on 5 November 2003. Small beginnings leading to greater things.

Working for an LCC is a life changing experience. I joined Air Arabia on November 1, 2004, a year after commencing operations. An LCC is a way of life that looks at value for money, efficiency and productivity in a way no legacy airline ever does. I worked for RJA and we were frugal, ABY took that to a higher standard.

Legacy airlines ignored ABY at first as a flash in the pan and an experiment that is bound to fail. Until they felt the heat and then we felt the pressure. Ten profitable years later, ABY is there to stay, true to its business model when others came and failed or changed.

I joned Al Jaber Aviation in October 2008 going from an LCC to a VVIP Corporate Jet Operator. Getting an AOC must be one of the most challenging things a person can do. I heard stories in ABY of working out of a few offices in Sharjah Cargo Building. Well at AJA it was a few offices out of Al Bateen Airport when it was still an air base. Having GCAA inspections while still building offices and  getting manuals approved and licenses accepted before starting operation requires staying power. The first aircraft, an Embraer Legacy 600 was delivered three weeks before the AOC was issued. The proving flights and final GCAA inspections were performed and the AOC was delivered on June 1, 2009 at the time of the second Legacy 600 delivery. The AMO Certificate was issued on 28 May 2009. Operating business jets is totally different than scheduled carriers. There is no schedule and flights are launched at relatively short notice, because even planned flights change at short notice as clients' change plans.

Thirty Five years later, I am starting all over again. Start ups are still messy and require focus, staying power and resilience.

Well 2013 is definitely a year of challenges and milestones. These four (4) airlines regardless of their age still face challenges some are internal but most are external. They all need to look internally and determine what is needed for them to thrive in the next decade. What brought them so far may not and probably is not what will take them forward. After all, successful companies fail because they insist on doing what made them successful in the first place, ignoring the ever changing environment they operate in. Things change and so should organizations.

For now, Happy Anniversary to all four airlines and to my friends and colleagues who are still there, moved on or retired. We all shared experiences, challenges and yes good times. Looking forward to the continued success of Royal Jordanian, Air Arabia, Etihad and AJA.

Spirit Airlines, the ULCC

Spirit Airlines one of the few Ultra Low Cost Carriers (ULCC) in the USA and indeed the world.
Spirit does not have the best of reputations mainly because its customer service due to the unwavering and rigid adherence to its internal rules.

I have flown Spirit in late 2006 when seats still reclined and carry on luggage was free, things have changed since. Spirit charges for everything, it is displayed clearly on their website; from checked baggage, to carry on luggage, to seat assignments and a few other things. I, personally think that all airlines should charge for carry on luggage just to stop people from going around the checked baggage fees and clear some overhead bins for others.

One feature of its aircraft are the first two (2) double seat rows and extra leg rooms, well worth the fee. I had mixed feelings about the non reclining A320 seats, on the one hand they get to be uncomfortable on a long flight but on the other hand you tend not to get the back of the seat in front of you in your face.

So going to NBAA 2013 in Las Vegas I flew with Spirit from Detroit. It was the perfect flight as far as a ULCC goes.

• I received the email advising me of online check in. 
• The staff at the airport were smiling and helpful. 
• The boarding was flawless and we departed on time.

However, the return flight was totally different. I never got the email to advise me about online check in.
It happens but I tried anyway and the system did not let me; the aircraft was delayed for two hours. So now
I know, same thing happened at the airport with self checking kiosks. That by itself was not a problem, a helpful ground agent got me my boarding pass.

Things went downhill when past the 10:10 pm departure time the flight departures monitor still showed the original timings, this was changed to delayed past midnight. No announcements were made, no explanations given and after five hours we departed. I understand that passengers are told to check the departures information monitors, but at least keep them updated!! This total disregard of basic customer service tends to wipe out all the goodwill gained throughout the check in and boarding processes.

Would I fly with them again, only if I have to.