Friday, October 31, 2008

Aviation outlook Asia conference

The Hon Anthony Albanese MP speech

The Hon Anthony Albanese MP speech - Aviation outlook Asia conference
The Hon Anthony Albanese MP, Minister for Infrastructure, Transport, Regional Development and Local Government's speech at the Aviation outlook Asia conference: It is an honour to build on this relationship, and deliver the keynote address at the Aviation Outlook Asia Conference.

On current forecasts, in 20 years time, there will be more than a  doubling of current aircraft fleets with new generation Boeing 787 and  Airbus A380 and A350 jets becoming the norm, not the exception.  Some time in the next decade this region will take over from Europe and the USA as the largest aviation market in the world. During his address in August, the Prime Minister talked about the pace of economic and demographic change occurring in the Asia Pacific region, and posed his audience a challenge which I’d like to share.  He said that governments have a responsibility to think about the future, and to plan for it.  Either we shape the future, or the future shapes us.

In short, we must keep ahead of the game.  The Australian Government understands the importance of this, which is why we have acted swiftly and decisively in the face of the global economic storm sweeping world markets.

The current economic climate

Earlier this month, our Prime Minister Kevin Rudd announced a AUD10 billion Economic Security Strategy to strengthen the Australian economy. We are also working with our international colleagues to do everything we can to minimise the fall-out from the global credit crisis.

These global economic conditions underline the importance of  
governments planning ahead and preparing itself for all eventualities.  It includes putting in place strategies to build  
sectors of the economy which are crucial to ongoing economic growth.

As an island continent, Australia depends upon the aviation industry to connect us with each other and with the world. Whether moving tourists, families, freight or business people, the aviation industry is critical to Australia’s economic development. That is why the Australian Government is developing a comprehensive national aviation strategy, which I’ll focus on.

Growth of the industry

Before I do, I’d like to provide you with a snapshot of how our industry is travelling at this point in time.

The reforms which were put in place in the 1980’s helped strengthen the Australian aviation industry. These reforms ended the old two-airline policy, introduced new competition to the international airline sector, and privatised our national carrier Qantas.

These reforms provided the platform for significant growth over the 1980’s and 1990’s.

Australia’s aviation industry carries three times the passengers it did two decades ago.  Fares are lower, services are more flexible, and we have a safety record which is second to none.  Australia’s airlines have remained relatively profitable, despite high oil prices and a volatile international economy.

Australia’s first ever aviation white paper

When I became the Minister responsible for aviation late last year, I was determined to ensure that Australia developed a consolidated aviation industry plan.

Early this year, the Government started the development of a National Aviation Policy Statement. It is a three step process that started with the release in April of an Issues Paper.

Australia depends upon aviation to keep our economy strong and to keep us connected to each other and to the rest of the world

The development of a National Aviation Policy has energised the  
industry and many community stakeholders.   We have received nearly 300 submissions, including a number from international airlines.  The views expressed have been diverse and passionate.

I will release a Draft Policy Statement – or Green Paper - in the near future, launching a further period of consultation prior to the development and release of Australia’s first ever National Aviation Policy Statement next year. The Statement will provide the aviation industry with direction on a number of key challenges it faces.


At the heart of the Government’s policy will be strategies to improve safety in the aviation industry.  Safety is the Government’s number one priority when it comes to aviation.  Australia’s safety agencies – the Civil Aviation Safety Authority, the Australian Transport Safety Bureau and Airservices Australia – have world class reputations.  It’s a record we are proud of.

As a country that looks after 11 percent of the world’s airspace, we have to take advantage of new technologies to improve efficiency and safety. We need to pursue further liberalisation of our aviation markets while still pursuing opportunities for Australian carriers.

We want airports to invest in improved services for passengers and airlines, and to plan their development in consultation with local communities and other key stakeholders. And we must continue working with industry to help it manage emissions and minimise the impact on global climate change.  These are all major challenges. 

Open skies

Australia currently has some of the most liberal bilateral agreements in the world.

The Government recently negotiated an ‘open skies’ agreement with the United States and has also concluded expanded arrangements with Malaysia, Thailand and South Africa.  There are also no restrictions on capacity in our agreements with New Zealand, Singapore or the United Kingdom.

Negotiations are underway on a comprehensive air services agreement with the European Union to replace the current bilateral agreements with EU Member States.

This agreement is expected to remove many, if not all, of the restrictions on services provided by Australian and European airlines between the two continents.  China, India, and countries in the Asia-Pacific and South American regions are other priority markets the Australian Government would like greater access to.

The Government’s policy in regard to our air service negotiations is to secure capacity ahead of demand – an example of keeping ahead of the game.  Our focus is to identify and engage in emerging markets in our region, maximise trade and tourism opportunities, and ensure airlines are able to make commercial decisions on the viability of a service.

Climate change and sustainable aviation

I mentioned earlier the strong growth of the Australian aviation industry. Airline passenger numbers are at record levels, and predicted to double over the next 20 years.  This growth rate is obviously welcome, but it does pose some challenges for the industry in terms of its responsibility to explore ways to reduce its global carbon footprint. Civil aviation currently accounts for about two percent of global emissions, and this figure is expected to rise.

I’m pleased to say that Australia’s major airlines are at the top of the list of order books for new generation aircraft.

As well as better aircraft, we are also getting smarter with our air traffic management systems.  A good example of this is flexible flight paths which can help reduce emissions. These flex-tracks, as they are commonly known, take advantage of high-altitude jet stream winds that can significantly improve an aircraft’s speed.

Future improvements in fuel efficiency will not be enough to  
counteract the emissions generated by a growing industry. We need a combination of operational and market-based measures to  
reduce the size of aviation’s carbon footprint.  The Australian  
Government, along with industry, is playing its part.

The election of the Rudd Government in November last year heralded a change in course for our nation’s climate change policy. Starting with ratification of the Kyoto Protocol, we have been working since day one to put in place the frameworks necessary to tackle Australia’s climate change challenges.

To put in place the best scheme possible to reduce emissions, while minimising costs to the national economy, the Australian Government is working closely with the aviation industry as part of our broader approach that involves extensive consultation with affected industries.

Airport planning issues

Perhaps the issue to attract most attention so far during consultation about the national aviation policy has been airport development and planning.  In addition to advances in technology and regulatory reform, the other major change to Australia’s aviation industry in the last 20 years has been the growth of our major airports.

Australia’s major airports are our economic and social gateways to the globe.  As such, our airport sites are valuable, not to mention scarce.

There have been significant investments at Australia’s airports, and more than AUD4 billion is expected to be spent in the near future by airports in Perth, Sydney, Brisbane and Melbourne.  But some communities have expressed concerns about the broader impact these developments are having on their neighbourhoods.


I began by referring to the economic storms sweeping global markets. The global financial crisis has highlighted the  
interconnectivity of world financial systems.  In many ways, the financial linkages that exist from country to country are not unlike the connections in international aviation.  By its very nature aviation is the most international of industries.  The destiny of our airlines is inextricably linked to the health and prosperity of the global economy.

These uncertain times call for long term planning with an eye to the future. The decisions we make will have long term benefits for  
Australia’s aviation industry, and the broader Australian economy.

China to remain key market for Boeing

Despite the global economic downturn, China will remain the world's fastest growing commercial aviation market, accounting for 41 percent of Asia-Pacific airplane demand over the next two decades, Boeing said yesterday.

"Air travel is, and will continue to be, an integral part of the social and economic fabric of our world. The long-term market outlook is still strong," said Randy Tinseth, vice-president of Boeing Commercial Airplanes.

"China will continue to be the most dynamic market in the world and the economic growth of the country will reshape the landscape of our industry," Tinseth said.

China will need about 3,710 new airplanes worth about $390 billion over the next 20 years and one-third of that demand is already in aircraft manufacturers' backlog, according to a Boeing report issued yesterday.

Boeing's forecast is based on an annual GDP growth rate of 7.1 percent in China over the next two decades.

The Chinese government recently unveiled a series of measures to stimulate the economy after the country's GDP growth slowed to 9 percent year-on-year in the third quarter, the slowest pace in the past five years. The measures include raising tax rebates for a quarter of its export portfolio, embarking on various infrastructure projects and efforts to stimulate the sagging real estate sector.

Battered by high and volatile oil prices, the global airline industry will have to spend $130 billion more on fuel this year than it did in 2003, Tinseth said. Due to the sluggish world economy, global air traffic growth is expected to slow to 2-3 percent this year and be "further pressured down next year", he said.

The global airline industry is expected to post losses of $5.2 billion in 2008, according to the International Air Transport Association. Most of the losses are projected for the US market.

Boeing has received 633 net orders so far this year and has a backlog of over 3,700 aircraft. Its European rival Airbus has received over 700 orders and has a backlog of over 3,800 jets.

The US airplane manufacturer reached a tentative agreement with machinists on a new four-year contract covering 27,000 employees in the United States on Tuesday. If employees vote to approve the offer, it will end the strike at its factories that started on Sept 6.

For eight weeks Boeing's assembly lines have been idle and no planes were delivered to customers. The strike could possibly further delay the first delivery of the B787 Dreamliner, whose first flight was scheduled at the end of this year.

Analysts warn of Asia airline failure as tourism slows

Leading airlines are posting losses or laying off staff * Future is uncertain, says Centre for Asia Pacific Aviation

By Kevin Lim and Lawrence Tan

SINGAPORE, Oct 30 (Reuters) - Aviation analysts warned on Thursday that Asian airlines will fail as tourism in the region slows and a worsening global economic outlook leads carriers such as Singapore Airlines to cut back flights.

The financial crisis is moving into the real economy as layoffs hurt consumer sentiment, leading airlines from China to India to post losses or layoff staff and hoteliers to focus on budget travellers as the luxury market takes a hit.

"There is not one airline in this region, and the rest of the world, that will be confident they will still be here this time next year," Peter Harbison, executive chairman at the Centre for Asia Pacific Aviation, told Reuters on the sidelines of an aviation conference in Singapore.

He said the bottom lines of carriers that rely heavily on business class travel such as Singapore Airlines (SIAL.SI: QuoteProfileResearch,Stock Buzz) and Hong Kong's Cathay Pacific would be hurt by the financial crisis which is causing banks to cut staff.

Singapore Airlines, the world's second largest by market cap, said late on Wednesday it will cut flights to a number of Asian cities including Seoul, Osaka and Bangalore, with further capacity changes to be made quickly where demand falls.

Airlines may benefit from a recent slide in oil prices CLc1, but many have been burned this year by locking in fuel purchases as oil soared to record levels.

"From past lessons, the strong will get stronger and the weakest may not survive, and the not so strong ones may involve consolidation, merger, partnering," said Andrew Herdman, Director General for trade body the Association of Asia Pacific Airlines.

Indian airlines such as top private carrier Jet Airways (JET.BO: Quote,ProfileResearchStock Buzz) are resorting to job cuts and reducing capacity to cope with slow demand, high fuel prices and the credit crunch.

Jet Airways posted a loss for July-September, as did China's flag carrier Air China (0753.HK: QuoteProfileResearchStock Buzz) and China Eastern Air (0670.HK: QuoteProfileResearchStock Buzz) this week.

Harbison said: "China's airline industry is in financial trouble and restructure is inevitable, and hopefully in the process, they will see a recovery. The dark years in aviation will emerge very different with new models, and government involvement to grow."

China, Sri Lanka and Singapore have all reported receiving fewer tourists in September, worrying news for firms across the sector that had bold plans for expansion in a region that was seeing booming growth earlier this year.

French hotel group Accor (ACCP.PA: QuoteProfileResearchStock Buzz) told Reuters on Thursday growth could come from domestic and intra-Asian travel even as international tourism dried up.

Asia Pacific chairman Michael Issenberg said Accor still plans to open 100 hotels in the Asia-Pacific region in the next 30 months as construction had begun, but projects slated to open from 2011 could see financing problems.

"Nobody builds hotels for next year," Issemberg said. "They build for the next 20, 30, 40 years. I don't see a lot of projects being cancelled although there will be delays." (Writing by Neil Chatterjee; Editing by Sharon Lindores)

Crash revives talk of Asia's Bermuda Triangle

  • Taiwanese fighter jet disappeared last week on training mission over Taiwan Strait
  • Scientists have found nothing abnormal in area around Taiwan's Penghu islands
  • 3 planes, one helicopter and five fighter jets have crashed in the area in last 20 years
  • Penghu county chief blames 'mystic' crashes on the high volume of air traffic

TAIPEI, Taiwan (AP) -- The two-seat Taiwanese fighter jet disappeared last week during a routine training mission over the Taiwan Strait. Debris and body parts were found the next day, but authorities are at a loss to explain what happened.

Coast guard teams search for bodies and wreckage after a China Airlines crash off the Penghu islands in 2002.

Coast guard teams search for bodies and wreckage after a China Airlines crash off the Penghu islands in 2002.

The October 20 crash revived decades-old speculation: Are Taiwan's Penghu islands the Bermuda Triangle of Asia?

"The Bermuda terror," boomed a headline in the United Evening News, a Taiwanese newspaper. "Three hundred dead or missing in 40 years over here."

Cable news stations aired grisly images of earlier plane crashes in the area, sparking debate in Internet chat rooms.

The reports prompted Penghu officials to issue a statement disputing the Bermuda Triangle comparison, which they fear might scare away investors in a casino resort and other projects.

Most experts dismiss the idea and speculation that an irregular magnetic field disrupts navigation instruments. Scientists have found nothing abnormal in the area, says geologist Chen Wen-shan at National Taiwan University.

The pristine waters around the Penghu islands, a popular beach destination 50 miles (80 kilometers) west of the Taiwanese mainland, have seen their share of crashes.

Government records show at least three commercial planes, one civilian helicopter and five fighter jets have crashed in the area in the past two decades.

Earlier, several spy planes reportedly went down or missing while flying missions to mainland China during the Cold War in the 1960s and 1970s. The military refuses to confirm the reports, saying most of the documents remain classified.

The deadliest accident came in May 2002, when a China Airlines flight to Hong Kong broke into four parts over seas north of Penghu, killing all 225 aboard. Seven months later, a cargo plane crashed in the same area.

The back-to-back crashes bolstered the Bermuda Triangle speculation so much, that tourists all but shunned Penghu in the following months.

So far, the recent fighter jet crash has not rekindled as many jitters among the public, much to the relief of local officials.

Penghu County Chief Wang Chien-fa blames the crashes on the high volume of air traffic, saying most of the mishaps have been shown to be the result of either human or mechanical failure.

"With so many aircraft flying over our air space everyday, the chances of crashes are proportionally higher, and that's all," he said in a telephone interview.

Yuan Hsiao-feng, an aviation expert at National Chengkung University, points to the high risks of military training flights.

Ending a summer season that drew thousands of swimmers to its beaches, the island chain of 90,000 people is now getting ready to welcome windsurfers.

Tourism officials also hope that Penghu will benefit from a recent relaxing of travel restrictions for mainland Chinese who want to visit Taiwan.

The islands, first settled by shipwrecked Chinese sailors 700 years ago, have an undersea ancient wall and other ruins. They are also an attraction because they were once at the forefront of the bitter Taiwan-China military standoff, said tourism official Hong Tung-lin.

The Chinese have long seen the islands as mysterious, because of their inaccessibility and a past history of shipwrecks, he said.

South of Penghu, an area called the "Ditch of Black Waters" is a graveyard for numerous boats, said to have capsized in swirling seas during the height of Chinese immigration to Taiwan two to three centuries ago.

Japanese pilots and sailors are said to have tried to avoid the rough seas off Penghu, known to them as the "devil's sea" during Japan's 50-year rule of Taiwan that ended in 1945.

Today, trawlers and cargo ships sail through the region safely.

"The mystic perception is fine but we hope people will not associate this area with danger," Hong said.

Jetstar's Agenda for 2008 - Aviation Outlook Asia

In an exclusive interview at the Aviation Outlook Asia conference in Singapore, Bruce Buchanan, chief executive officer, Jetstar spoke about the airline's growth progress and future strategies while also touching upon setting Jetstar's agenda for 2008 and capitalising on opportunities amidst the current global economic climate.

Jetstar's current focus is on acquisition and growth as the the airline plans to focus on the Pan Asian market. Having recently launched its New Zealand route, the airline certainly has plans to focus more on Asia. The future is welcoming its new fleet of 787s which would then be deployed on expanding its European and North American operations.

Buchanan is of the opinion that there is immense potential in the Asian market and the low cost business model will be very robust in this season of downturn. Having an optimistic look at the current scenario, the airline feels they are ahead of the game. The other focus areas and strategy being adopted by the airline is to deal in different markets differently.

According to Buchanan, marketing is around fares and flexibility and not so much just around a brand. This view is particularly true for the long run as one needs to have the right product for the right market.

Thursday, October 30, 2008

Berlin Mourns Tempelhof as Last Flights Leave Nazi-Era Airport

By Jeremy van Loon and Hellmuth Tromm

Oct. 30 (Bloomberg) -- BerlinTempelhof, once the world's largest airport, will close its gates tomorrow on an 81-year history that spanned the Red Army's invasion, the Cold War and Germany's reunification.

A 1940s Douglas DC-3 and aDeutsche Lufthansa AG Junkers Ju- 52 of a similar age will be the last aircraft to take off from the city-center airport shortly before midnight tonight.

With them will depart an era of Berlin's history. Tempelhof, expanded under Adolf Hitler, played a central role in the 1948 Allied airlift that circumvented a Soviet blockade after World War II. After the construction of the Berlin Wall in 1961, the airport was for many the only safe passage to the outside world.

``It's very sad,'' said Doris Oelschlegel, 69, who went on a tourist flight in a DC-3 with her husband last year from the airport. ``Tempelhof is a historic monument and a symbol.''

Berlin city authorities say they are legally obliged to close the unprofitable airport, the smallest and most central of three airfields in the capital, to concentrate air traffic at a planned site 20 kilometers (12 miles) southeast of the city.

An April referendum to halt the closure was defeated after support from Chancellor Angela Merkel and Bild, Germany's biggest-selling newspaper, failed to swing the vote.

Passenger numbers at Tempelhof fell to 350,000 last year compared with 6.3 million at Schoenefeld in the former East and 13.4 million at Tegel, former West Berlin's airport. Tempelhof lost between 10 million euros ($12.5 million) and 15 million euros a year since the mid-1990s, according to its Web site.

Berlin Icon

``Tempelhof for me is one of the icons of Berlin,'' said Elke Schumann, 63, who boarded her first airplane at Tempelhof on a British Airways flight to Hamburg in 1961. ``I don't understand the decision, it's a mistake.''

While Schoenefeld in the former East is being developed into Berlin's main airport, there are no firm plans for Tempelhof once the aircraft leave. The airport is on a subway line four stops from the city center, and is a 10-minute cab ride from downtown.

Proposals for the 1,000-acre site ranged from a park for solar-power generation to a casino complex to a medical clinic with fly-in service for patients. The clinic, spearheaded by U.S. billionaire Ronald Lauder, was rejected because of the flights.

Tempelhof's association with aviation stretches back to the earliest days of flight. In 1909, the flat expanse where there are now runways played host to Orville Wright, the pioneering American aviator.

`Mother of Airports'

Opened as an airport in 1927, Tempelhof expanded over the next decade and was included in plans by Nazi architect Albert Speer to transform Berlin into Germania, the futuristic capital of Hitler's Third Reich. Architect Norman Foster described the influence of the neo-classical limestone edifice molded during the 1930s as ``the mother of all airports.''

The airfield's finest hour, commemorated in concrete at the entrance to the terminal building, came at the end of the war as Berlin was carved up into zones controlled by the victorious Allied powers: Britain, the U.S., France and the Soviet Union.

In 1948, Soviet leader Joseph Stalin, in an attempt to squeeze U.S., British and French forces out of the nearly 500 square-kilometer (193 square-mile) enclave of West Berlin, ordered his soldiers to cut off supplies.

During the 11-month blockade, Tempelhof served as the landing strip for U.S. and British planes ferrying coal, milk and other necessities. Seventy American and British pilots died during the operation.

During the Cold War, Tempelhof was the natural location to film Michael Caine as British secret agent Harry Palmer, arriving disguised as a salesman with a suitcase of women's underwear in the 1966 movie of Len Deighton's novel, ``Funeral in Berlin.''

``Tempelhof is a symbol that is strongly identified with the blockade and the role the airport played in allowing life to go on in the city,'' said Gerhard Braun, a professor of urban studies at Berlin's Free University. ``It's a mistake to close a central airport like Tempelhof.''

To contact the reporters on this story: Jeremy van Loon in Berlin atjvanloon@bloomberg.netHellmuth Tromm in Berlin

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