Why Shanghai Airlines should buy Taiwan's FAT

If Shanghai Airlines were to buy grounded Taiwanese carrier Far Eastern Air Transport (FAT) it could be a good business opportunity assuming it could be bought at the right price and Shanghai Airlines gained effective control over the company.
FAT shuttered its operations on 13 May because it ran out of cash and is heavily in debt.
The owners have been trying unsuccessfully to bring in a new investor that is willing to inject cash into the business and help it overcome its debt problems.
Low-cost carriers such as AirAsia and Jetstar Asia have looked at the business but appear to have decided against getting involved.
AirAsia's director and co-founder Conor McCarthy told me a few weeks ago that AirAsia buying into FAT was unlikely because there are too few synergies between the FAT and AirAsia businesses. FAT is a full-service carrier that operates Boeing MD-80s and Boeing 757s and AirAsia is a low-cost carrier that operates Airbus A320s.
While there may be few synergies between FAT and AirAsia, there are some compelling synergies between FAT and Shanghai Airlines.
Both operate 757s and both have traffic rights to operate between China and Taiwan.
If Shanghai Airlines were to team up with FAT then Shanghai Airlines would immediately become the largest player operating over the Taiwan Strait.
Shanghai Airlines would also gain FAT's pilots which is significant because there is a shortage of commercial pilots in China. The Taiwanese pilots would adapt well to working for Shanghai Airlines because, after all, they speak Chinese.
Also FAT's maintenance arm does heavy maintenance checks on 757 and MD-80 series aircraft so this maintenance base could maintain Shanghai Airlines 757s and do maintenance work for third party customers.
All this adds up to a compelling case for why it might be worthwhile for Shanghai Airlines to take a close look at FAT.

South Korea may be too crowded a market

AirAsia's CEO, Tony Fernandes, was quoted a couple of years ago - while on a trip to South Korea - that the country would be an ideal market for a new low-cost carrier.
He said this because at that time there were only two domestic airlines - both full service carriers - and South Korea has some good short-haul domestic and international routes, ideal for the Boeing 737s and Airbus A320s that low-cost carriers tend to operate.
Today it seems South Korea is no longer an ideal market for a new airline starting out simply because its now too crowded.
The incumbent full-service carriers Korean Air and Asiana Airlines are establishing low-cost carriers of their own.
There are two small regional operators - Han Sung Airlines and Jeju Air - looking to expand.
Plus there are three new airlines starting - Kostar Airlines, Incheon Tiger Yeongnam Air.
I can't see how all these carriers can survice and that can only mean one thing - future consolidation.

SIA master of spin

SIA yesterday had its inaugural Airbus A380 flight from Singapore to Japan but the flight didn't end up in Tokyo Narita as planned but instead was diverted to Nagoya due to bad weather.
The Singapore carrier has been sending out press releases announcing every first A380 flight in an effort to drum up free publicity.
But what to do in the case of the Tokyo service? After all, does a PR hack really want to send out a press release highlighting that passengers have been inconvenienced and sent to the industrial city of Nagoya rather than to Tokyo where they were suppose to be headed?
Solution. Completely ignore the troubled Singapore-Tokyo Narita flight and instead highlight the return leg Tokyo Narita to Singapore.
SIA today sent out a press release headlined: "Singapore Airlines flies inaugural A380 flight from Tokyo."
It makes no mention of the Singapore-Tokyo leg that was diverted yesterday to Nagoya due to bad weather.
And technically Tokyo-Singapore is not SIA's inaugural Japan service but that doesn't seem to matter SIA's PR department.
Don't let the truth get in the way of good puff piece as they say.

MAS' flawed campaign

Malaysia Airlines' (MAS) latest print campaign to promote its new low fares has to be one of the most stupid marketing campaigns I have ever seen.

And that does mean something because prior to joining Flight International magazine six years ago, I was a journalist at Asia's leading advertising and marketing industry magazine MEDIA so I have seen a lot of ad campaigns in my time.

But MAS' latest campaign takes the cake.

The ads look like AirAsia ads and now MAS' CEO, Idris Jala, has even taken to dressing like AirAsia's group CEO, Tony Fernandes.

Fernandes must be having a good chuckle right now over MAS' attempt at marketing.

AirAsia is very much a marketing driven company and Fernandes is a CEO who prides himself on being an astute marketer.

The fact that MAS has made the mistake of mimicking AirAsia's ads means MAS is failing to clearly differentiate its brand and will be seen in the market as a 'me too' product.

There is also a very real danger that MAS' ads will inadvertently help to increase AirAsia's sales.

Consumers - unlike marketers - don't spend hours analysing ads.

People often only spend a split second looking at an ad and what they notice is the general look and feel of an ad rather than the fine print.

If someone is quickly flicking through a newspaper and sees these ads, there is a real danger they will confuse it with an AirAsia ad.

And even if they see the ad and notice it is for MAS they will still be thinking of AirAsia because the ads draw on AirAsia's branding ie. the white and red colors and the type face used in the MAS ads are indicative of AirAsia.

Finally, MAS' ads don't work to promote MAS but are instead working to promote the idea of low cost travel.

In other words it is promoting the category rather than the brand and because AirAsia is the leader of the low-cost market category it could benefit the most from these ads.

It reminds me of a scenario that happened in Australia about 12 years ago when Red Rooster - Australia's equivalent to KFC Chicken - launched a multi-million dollar ad campaign that failed to promote the Red Rooster brand and instead only worked to promote the idea that people should eat take-away chicken.

Sales of Red Rooster's major competitor - Chicken Treat - went through the roof.

The ad agency that came with the dud campaign eventually lost the Red Rooster account. I suspect the same will happen to whoever came up with the ill-conceived MAS campaign.

Tiger takes on bear market

Tiger Airways issued a press release today announcing that it is seeking $225 million to help fund aircraft and engine purchases.

This news itself was not that interesting. After all, airlines are always seeking to borrow money or do sale leaseback deals following aircraft acquisitions.

But what is interesting is that Tiger is actively working to publicise the fact and is going out of its way to woo financiers.

Gone are the days when airlines had financial institutions beating a path to their doors trying to get in on aircraft deals.

With the the US sub-prime crisis still taking its toll, financial institutions are continuing to announce write-downs and are out in the market trying to attract funding to prop up their own cash reserves.

If the financial institutions are out pounding the pavement with cap in hand to meet their own needs, its less likely that these same financial institutions will be in the mood to lend millions to others.

The fact that several airlines in the USA have gone into bankruptcy in recent weeks also doesn't whet their appetite for lending.

Lets hope Tiger can beat the bear market.

Yao yapping on

The take-over of Philippine carrier Seair has taken a new twist with Filipino Chinese tycoon Alfredo Yao claiming in the news media that he has bought the airline when in fact he hasn't.
A report in The Manila Bulletin quoted Yao as saying that he has bought the airline and will be merging it with his other airline Asian Spirit and rebranding the business.
He told the newspaper he paid "less than two billion Philippine pesos" ($48 million) for the two airlines.
Yao last month bought Asian Spirit but he has yet to buy Seair.
I know this because I asked Seair director, Nick Gitsis, yesterday whether the airline has been sold and Gitsis said “not yet”.
He says Seair is in negotiations to sell to Yao and some things have been agreed to verbally but Seair has yet to receive a written offer from Yao and “there are still a lot of things that are not clear”.
Gitsis says the carrier anticipates it will receive a written offer on Monday 28 April.
Yao is buying into the small airlines at a time when these two carriers face new competition in the domestic market from larger airlines Cebu Pacific Air and Philippine Airlines which have just started to add turboprops.
Yao is a Philippine businessman who made a fortune from his Zesto fruit juice business plus he has the rights to the RC Cola brand in the Philippines.
Lets just hope Yao's bid for Seair doesn't fizzle out by Monday.

Could PAL's props topple its smaller competitors?

Lucio Tan's new turboprop operation in the Philippines PAL Express is wasting no time in its all out assault on Seair and Asian Spirit's market share in the Philippine domestic market.

Air Philippines, another of Tan's airlines, is in the process of transferring its turboprop aircraft to PAL Express which is due to start on 5 May with three Bombardier Dash 8 Q300s. Tan is one of the Philippines' wealthiest businessmen.

I know this because earlier today I did an interview with Air Philippines CEO Edilberto Medina.

Philippine Airlines - another one of Tan's airlines - has also just bought six second-hand Bombardier Dash 8 Q400s for PAL Express. These Q400s were previously with Scandinavian Airlines group.

Rather than slowly phase in the Q400s - say maybe one every three months - PAL Express is going to be adding one every couple of weeks.

Medina told me today that the first Q400 will arrive in the Philippines on 5 May and will enter into commercial service on 19 May.

He says the dates for entry into service for the other five Q400s are: 26 May, 23 June, 21 July, 26 July and 22 August.

These aircraft will be used on short-haul domestic routes - a market that had previously been left to independent carriers Asian Spirit and Seair.

Asian Spirit - realising the imminent tsunami of competition it was about to face - sold out a few weeks ago to Alfredo Yao, a Philippine Chinese businessman who made his fortune from soft drinks.

Asian Spirit COO, Joaquin Po, tells me Yao has promised to get newer aircraft for the airline to help drive the business forward.

Seair is also looking to sell out - possibly to Yao as well - but is only willing to sell if it is the right price.

One problem Seair and Asian Spirit face is that each operates older aircraft. Asian Spirit has mostly de Havilland Canada Dash 7s and BAe 146s; while Seair operates Let 410s and Dornier 328s.

Plight of Marshall Islands Air has grim consequences

The Marshall Islands is a small nation in the North Pacific that has been in the unenviable position of having no domestic air services for six months.
There have been local reports that the lack of domestic air services has meant some sick people on the islands were unable to be air lifted to hospital and later died.
This is a tragic situation that should have never been allowed to occur.
The country's only airline - national carrier Air Marshall Islands - has three aircraft, namely a Bombardier Dash 8 and two Dornier 228s.
But all three have been grounded due to corrosion damage.
Air Marshall Islands was originally planning to get he Dash 8 back in the air last November.
The carrier's route manager Tony Phillips told me today there was a delay in getting the aircraft fixed and the delay was caused by a lack of funding.
Fortunately the airline's Dash 8 will be back in commercial service on 23 April onwards thanks to a $1.6 million grant from Taiwan.
Some of the money was used to replace the Dash 8's landing gear and the airline now plans to send one Dornier 228 to Germany for repair, he says.
The other Dornier 228 cannot be fixed, says Phillips, adding that the airline is in the market to buy another 228.
It is fortunate that Taiwan's efforts to win friends in the Pacific has inadvertently helped to save lives in the Marshall Islands but it is sad that this small island nation appears to lack the resources to maintain its airline.

Fokker 100 operators to head Down Under

Airlines in Asia Pacific that operate Fokker 100 aircraft will soon have to make the long trek down to Melbourne, Australia if they are to put their pilots through simulator training.
Alteon Training in Singapore has the only Fokker 100 simulator in Asia-Pacific and has just sold it to the Ansett Flight Simulator Centre in Melbourne.
The last day it will be avaliable in Singapore is 5 May, says Alteon Training Singapore director of sales and marketing Chris Bunning.
He says the reason the Fokker 100 simulator is being sold is to make room because later this year Alteon Training Singapore will be adding a Boeing 787 simulator.
But whether there is demand this year for 787 simulator training is highly unlikely considering the first 787 is only due to be delivered late next year.
Its also surprising that Alteon Training has no room in its Singapore centre to house both the 787 and Fokker 100 simulator considering the centre was only built a couple of years ago and it always knew it would be adding 787 simulators later on.
Having the Fokker 100 simulator relocated to Melbourne, supposedly hasn't gone down too well with some of the Fokker 100 operators in the region.
Mandarin Airlines in Taiwan, for example, is understood to be one of the carriers that is not too pleased about having to travel so far for simulator training.
This week I spoke to Kostar Airlines - a new airline in South Korea that plans to launch in August using Fokker 100s - and they told me they were looking to send their pilots to the US or Europe for simulator training rather than travelling Down Under.
The other Fokker 100 operators in Asia Pacific are: Air Niugini (Papua New Guinea), Air Bagan (Myanmar), Aero Mongolia, Alliance Air (Australia), Cosmic Air (Nepal), Mandarin Airlines (Taiwan), Merpati Nusantara (Indonesia), Skywest Airlines (Australia) and Transwisata Prima Aviation (Indonesia).
Another new airline in South Korea called Yeongnam Air and a carrier in Western Australia called Network Aviation Australia also plan to operate Fokker 100s.

South Korea to become crowded airline market

South Korea suddenly looks set to become a very crowded market due to a plethora of new start-ups.

Korean Air and Asiana have traditionally controlled the market and then there are two much smaller carriers - Han Sung Airlines and Jeju Air - which each operate turboprops.

But Singapore's Tiger Airways plans to launch a low-cost carrier called Tiger Incheon in joint venture partnership with the Incheon Municipal Government.

It will start with five Airbus A320s and be based at Seoul Incheon International Airport.

Not to be out done, Korean Air announced last November it plans to launch a low-cost carrier in May called Air Korea.

And earlier this year there was an announcement that Asiana Airlines will have a 46% stake in and will manage Busan International Air, a new airline that plans to launch later this year and is to be based in South Korea's port city of Busan.

And there are also two other start-ups - Yeongnam Air and Kostar Airlines - which both plan to launch this year and use Fokker 100s.

All of these new airlines will be restricted to operating in South Korea's domestic market because the government last November announced that all new airlines will have to wait two years before being permitted to operate internationally.

This means they will be up against South Korea's high-speed trains.

South Korea's new rules are also a major blow to Tiger which had hoped to launch services from South Korea to China and Japan.

MAS poised to order up to 55 narrowbodies

Malaysia Airlines (MAS) later today plans to announce an order for narrowbody aircraft and it is expected to be for Boeing 737-800s.

The national carrier has earlier said it is evaluating 737 next generation aircraft and Airbus A320s and would make a decision in this year's first half.

A source at MAS tells me that the airline will be making an announcement today on aircraft but it will wait until the Kuala Lumpur stock exchange closes.

The source was responding to reports in the Malaysian newspapers - quoting from unnamed sources - saying the airline plans to buy as many 55 737-800s with first deliveries to start in 2011.

It will announce the deal today, say the reports.

MAS currently operates 37 Boeing 737-400s on domestic and short-haul routes but these aircraft are around 16 years old.

This is too old considering its major competitor is AirAsia which operates new A320s.

AirAsia has said publicly that having new aircraft has proven a boon for its business because new aircraft are more reliable to operate and consume less fuel.

If MAS orders 737-800s, as expected, it will have to wait a few years for the aircraft to arrive from Boeing.

But it could speed up its aircraft fleet renewal by getting some 737-800s on lease sooner.

Picture slide show of Ameco A380 hangar opening

Interview with Andreas Meisel, general manager of Ameco Beijing which is Lufthansa and Air China's MRO joint venture in Beijing

Is Ameco going to enter the 747 freighter conversion business?

How many 747s would you need to convert to freighters each year to make it viable?

Have you spoken to 747 freighter conversion supplemental type certificate (STC) holders Boeing and Bedek?

With your airframe heavy maintenance business, what percentage do you want to come from third party customers in future? Today it is 50%.

Who are your competitors?

What's your staff turnover?

What impact is China's high inflation having on wages?

What's happening with wages at Ameco?

How do you cope with wage rises and remain competitive?

Phone interview with Budhi Suyitno, director general of Indonesia's Directorate General Civil Aviation

Here's an unedited phone interview I did with the head of Indonesia's civil aviation authority discussing the country's efforts to improve air safety. Topics we touch on include: the ICAO audit and recommendations, Indonesia's efforts to have the EU ban lifted on Indonesian carriers and registered aircraft and efforts by the DGCA, airport authorities and National Transport Safety Committee to improve training and best practices. The interview is about 10 and half minutes long.

Viva Macau's big challenge

Imagine running an airline where your competitor has the power to prohibit you from operating to particular destinations even if you have already invested money to establish services to that destination.

This is the problem Viva Macau faces because Air Macau has a monopoly concession to Macau's international air traffic rights which effectively means Air Macau - rather than the Macau Government - decides how the territory's air traffic rights will be distributed.

Air Macau CEO, David Fei, disclosed this crucial nugget of information earlier this month when he was interviewed by the Macau Daily Times newspaper.

He reportedly confirmed to the newspaper: "Viva Macau is not restricted as to where it can fly as long as Air Macau approves it."

Viva Macau then pounced on this disclosure by writing an open letter to the newspaper attacking Air Macau by claiming Air Macau is hoarding traffic rights, failing to generate traffic to Macau and, as a consequence, is failing to act in the in the interests of Macau.

It says Air Macau has rejected the majority of applications made by Viva Macau for new points to fly to.

And it cites, as an example, the fact Viva Macau last year launched services to Phuket in Thailand but then had to suspend the service because Air Macau objected.

I feel sorry for the Viva Macau employees in Phuket who would have lost their jobs as a consequence of this spat between Viva Macau and Air Macau.

Hopefully, common sense will prevail and the two carriers will work to complement each other's network rather than going at each other's throats.

Air Niugini getting 787s

Papua New Guinea's national carrier Air Niugini just keeps on adding aircraft.
A few years ago this state-owned carrier was losing money hand over fist but thanks to strong demand for domestic air services and relatively little competition on international routes it has become profitable.
And it appears to be using its new-found financial strength to invest in newer aircraft.
Today I did an interview with a well-placed source of mine at the airline.
The source says Air Niugini has decided to order the Boeing 787 and is also working to get a Boeing 767-300ER and Embraer 190 on lease.
In addition, it has just bought three more Bombardier Dash 8s and is working to buy two more Fokker 100s, says the source.
He says the 787 deal will definitely go through because the carrier has already paid Boeing a deposit.
He says Air Niugini plans to buy two 787-9s and representatives from Boeing are in Port Moresby today to help the carrier decide on operating specifications.
Other issues that still need to be worked out are delivery slots.
Boeing has put Air Niugini down for first deliveries in 2015 but the airline is pushing Boeing hard for an earlier delivery slot, says the source.
I suggested that the delay in the 787 programme might make it hard for the aircraft-maker to appease the airline.
(Boeing has been aiming to deliver the first aircraft to launch customer All Nippon Airways at the end of this year but Boeing hasn't even powered up the first test aircraft yet so the latest estimate by analysts is that the first aircraft delivered to ANA might be delayed to September 2009).
But the delay in the 787 programme appears not to have fazed my source at Air Niugini. He says once Boeing starts producing 787s it can ramp up production. The hope is this will mean Air Niugini will receive its first 787 before 2015.
Currently, Air Niugini is maintaining international services using an Airbus A310 on short-term wet-lease from Portuguese carrier White Airways.
The A310 was needed because an earlier deal “went sour” on the purchase of an ex-Royal Brunei Airways 767-300ER, says the source.
Air Niugini was planning to buy the 767-300ER from Hong Kong firm Aerospace Finance Asia and receive the aircraft last October.
The source says Air Niugini “in a couple more months” will instead receive a 767-300ER on “damp lease” from Loftleidir Icelandic, by which time it will return the A310.
Air Niugini currently also has a one-year wet-lease on a Boeing 757 from Loftleidir Icelandic and has extended it for another one year, says the source.
While Air Niugini’s long-haul fleet is set to change dramatically, the airline is also making changes to its short-haul fleet.
Next month the airline will start wet-leasing an E-190 from Australia’s SkyAirWorld for a four-times-weekly non-stop service from Port Moresby to Brisbane and Sydney, says the source.
Currently Air Niugini operates on the Port Moresby-Brisbane-Sydney routing using a 767 because Sydney traffic on its own is unable to support a 767, says the source.
The E-190 is due to come in the first week of April but it will take time for SkyAirWorld to secure a foreign air operator’s certificate from the Papuan New Guinean authorities so it is more likely to start in the second or third week of April, adds the source.
Air Niugini has also been operating Fokker 100s to Australia and currently has six in total but is returning one in May on lease from Australia’s Alliance Air.
The source says Air Niugini’s CEO, Wasantha Kunarasiri, is in Dubai today to negotiate the purchase of one or two Fokker 100s.
And the source also says the airline recently purchased three Bombardier Dash 8s from German carrier Cirrus Airlines.
One is a -300, which has since arrived in Papua New Guinea, and the other two are -100s that will soon be delivered to Air Niugini, adds the source.

Video of C-160 cargo aircraft exploding at Indonesian airport

Video footage has emerged of a Transport Allianz Transall C-160 cargo aircraft operated by Indonesian carrier Manunggal Air Service that was gutted by fire 6 March soon after landing at an airport in west Papua.
The two pilots, a flight engineer and three loadmasters escaped safely from the aircraft which caught fire at 08:36 on 6 March at Wamena airport in west Papua moments after completing a flight from the west Papuan city of Jayapura, Manunggal Air Service operations manager Tjonhar Azya says from the airline’s offices in Jakarta.
He says the chartered cargo flight and was carrying diesel and jet fuel.
The aircraft had touched down at Wamena and was taxiing when the control tower informed the pilots that “smoke and fire could be seen coming from the left side landing gear”.
“They asked the pilot to taxi to the apron…and they taxied to an area …and stopped the aircraft and set down everything.”
When the pilots got out of the aircraft they could see “the landing gear was in smoke and fire and they tried to put it out with fire extinguishers but the fire kept increasing and then the fire brigade came to try and put out the fire but the fuselage kept burning”.
To watch TV footage of the blaze, click on this link http://www.metrotvnews.com/ and type in C-160 into the news search box.
The TV footage, from Indonesia's Metro TV News, shows the aircraft engulfed in flames, thick black smoke billowing plus, and at one point, a large fireball shoots out of the aircraft and into the sky.
Pictures taken after the fire was extinguished shows the aircraft’s main fuselage was completely destroyed and all that remains is the aircraft’s nose, rear empennage, wings and engines.
The aircraft that was destroyed, local registration PK-VTQ, was one of four C-160s in Manunggal’s fleet. Tjonhar says of the remaining three, two are in service and one is parked permanently at Jakarta airport.
He says the airline plans to keep its other C-160s and adds it is a good aircraft because “it is very easy to handle” and on the Jayapura-Wamena route can carry 10t of cargo.
The C-160 was built by a consortium of French and German aircraft manufacturers which developed the aircraft in the mid-1960s as a military transport.
Today the aircraft is still in service with the French, German and Turkish air forces.

Does Brazil's Embraer have a spare $1 billion it can lend to Japan Airlines?

Last month at the Singapore Airshow I was inside the Embraer chalet having lunch and chatting to one of the Embraer market analysts whose job it is to try and work out which airlines have a high propensity to order regional jet aircraft.

"I can't figure out where Mitsubishi is going to sell the Mitsubishi Regional Jet (MRJ)," he said.

His rationale was that Mitsubishi would struggle to sell the MRJ because Embraer had in the past couple of years sold RJs to nearly all the potential customers out there.

Coincidentally as he was saying this there were some executives from Japan Airlines (JAL) inside the chalet standing about 10 feet away from us.

JAL last year ordered 15 Embraer 170s, the first of which is due to arrive in Japan later this year.

"How about the Japanese?", I said to my friend at Embraer who was quick to reply that JAL had already ordered E-Jets so there is no way they would order MRJs as well.

Well, lets not be so sure about that.

A quick scan of the news out of Japan paints a very different story.

JAL is currently trying to get its finances in order as part of its turnaround plan and guess which large Japanese corporation has been coming to JAL's aid.

For example, in December Japan's Nikkei newspaper reported that JAL is looking to raise up to 150 billion yen ($1.3 billion) by selling shares to two Japanese conglomerates, one of which is Mitsubishi.

And in mid-February JAL announced it had raised 42.2 billion yen ($390 million) by selling and then leasing back two maintenance hangars at Tokyo Haneda Airport. It sold the hangars to a real estate investment trust controlled by Mitsubishi.

If Mitsubishi is pumping in the best part of $1 billion to help JAL financially then I don't see why JAL wouldn't want to return the favour by buying a few MRJs.

Pictures of crashed Air Bagan ATR 72 in Myanmar

Pictures have emerged of the Air Bagan ATR 72-210 that failed to take off from an airport at Putao town in northern Myanmar.

The pictures as you can see, show a crack down the mid-fuselage and that the rear cone has come off.

In the picture the aircraft (manufacturer's serial number 458 and local registration XY-AIE) is seen lying on a slope at the end of the runway.

I did an interview late yesterday with Tony Griffin, managing director of Phoenix Aircraft Leasing in Singapore, the firm that leases the ATR 72-210 to Air Bagan.

He says on 19th February the aircraft was on its take-off roll when a failure indicator showed that one of the engines was not working.

The pilot then decided to abort the take-off but at that stage the front nose gear had already become airborne and the aircraft was 3,700ft down the 7,000ft runway, says Griffin.

He adds, the aircraft was unable to stop in time and the aircraft damage occurred when the aircraft went down the slope.

Griffin also confirms that the insurance assessors have decided to write the aircraft off.

Earlier reports said three passengers and the two pilots were injured in the crash but Griffin says there were no injuries.

Delay to ARJ21 comes as no surprise

First flight of China's ARJ21-700 has been delayed, possibly by as much as three months.
The ARJ21-700 had its roll-out in December as scheduled and was due to have its first test flight in March but a spokesman in Shanghai for the aircraft maker, China Aviation Industry Corp. 1 Commercial Aircraft (ACAC), told me yesterday that "it will not happen in March".
He was unable to provide a new date and said they were aiming to have the first flight sometime before July.
If the aircraft ends up being delayed by three months it could have a major impact on the aircraft's customers.
ACAC has been aiming for the aircraft to receive Chinese certification in September 2009 but a three-month delay would make it hard for the aircraft's launch customer Shandong Airlines to receive its first aircraft before the end of 2009 as planned.
It also makes it hard for ACAC to fulfill Shenzhen Airlines' request that its regional airline joint venture in China, Kunpeng Airlines, start receiving ARJ21s in 2009.
At last December's roll-out ceremony Shenzhen Airlines made a commitment for 100 ARJ21-700s - a firm order for 50 ARJ21-700s with options for 50 more.
A senior ACAC official told me at the roll-out event in Shanghai that fulfilling the order would be challenging because Shenzhen Airlines had told ACAC it wants first deliveries for Kunpeng Airlines set for 2009 rather than 2010.
While the delay in the ARJ21 programme will make it hard for ACAC to meet customer expectations, the delay comes as no surprise to me personally.
At the roll-out ceremony I had an opportunity to look at the aircraft close-up and could see that there was still a lot of work that needed to be done on the aircraft.
For example, I could see that there parts of the landing gear that still had to be attached to the aircraft.
And no one at the ceremony was permitted to look inside the aircraft which can only lead one to assume that some of the equipment inside the cockpit had yet to be fitted.

US airforce's decision spells death for 767 programme

The US Airforce has decided to get specially designed Airbus A330s to use as refuelling tankers rather than use Boeing 767s, effectively putting the final nail in the coffin of the 767 aircraft programme.
Boeing had been hoping that US Airforce's requirement for 179 refuelling tankers would keep the 767 programme alive.
Currently Boeing has an order backlog of 51 767s and has been producing one aircraft per month which means at that rate the final aircraft will be completed a little over four years from now.
There are no new orders for 767 in sight because airlines instead have been ordering the Boeing 787, which promises to be far superior.
But if Boeing had been able to keep the 767 programme going - with the help of the US Airforce's massive order - it could have been a useful product in Boeing's line-up.
Not every airline can afford to buy a brand new 787 or is willing to wait six years for an aircraft to be delivered.
The 767 could have been an appealing choice for those airlines that wanted to buy a brand new widebody at a cheaper price and with the added benefit of next year delivery.
This, I believe, would have appealed greatly to airlines in developing nations such as Central Asia and Africa.
China is currently in the early stages of development on its own widebody which I suspect will end up filling the void left by the 767. China's new widebody won't be as technologically advanced
as the 787 but as long as it can be as reliable as the 767 and is significantly cheaper than the 787 then it will have a ready market and a market that could have been Boeing's.

Two of the world's regional aircraft makers are doomed to fail

I did an interview at last week's Singapore Airshow with Embraer's tech guru Satoshi Yokota where I posed the question 'which regional jet aircraft makers will be around 20 years from now?'
Satoshi stopped short of giving his forecast for the future but he did say he thinks the market can only support three.
Today the dominant players are Bombardier and Embraer (and not necessarily in that order).
There is also China Aviation Industry Corp. (AVIC) I, which is building the 90-seat ARJ21-700 and 105-seat ARJ21-900; Sukhoi with its 95-seat Superjet 100; and Mitsubishi Heavy Industries is developing the 70-80 seat Mitsubishi Regional Jet MRJ70 and the 86-96 seat MRJ90.
Satoshi says the industry consolidation that occurred with large aircraft manufacturers will also occur with manufactures in the regional jet aircraft market.
"Its like with the big jets...Lockheed, McDonnell Douglas and so on are all gone" and now there are only two major players, says Satoshi referring to today's industry heavyweights Airbus and Boeing and the withdrawal of Lockheed in 1984 and McDonnell Douglas' merger with Boeing in 1997.
"Can you have a third player" in the regional jet aircraft market?, Satoshi asks rhetorically.
"Probably", he says.
Who that third player will be is anyone's guess.
Satoshi is Embraer executive VP strategy planning and technology development.

Aussie regional carrier Rex has pilot attrition rate of 89%

Australian regional carrier Regional Express (Rex) is currently losing nearly 90% of its pilots each year and says this is because bigger Australian carriers such as Qantas Airways, Jetstar and Virgin Blue are poaching them.
Rex this week released an analysts' briefing document to the Australian stock exchange showing that - for the year to February 2008 - its pilot attrition rate was 89%.
This compares to an attrition rate of around 16% in the 12 months ending 30 June 2006, while in the 12 months ending 30 June 2007 it was nearly 60%.
The acute pilot shortage has forced Rex to suspend services on some routes such as Melbourne-Griffith, Sydney-Cooma and Maryborough-Brisbane.
Rex's rival QantasLink revealed this week it too has been some suspending services due to a shortage pilots.
Some of the routes QantasLink has suspended are Newcastle-Melbourne, Newcastle-Brisbane and Newcastle-Sydney.

To see Rex's briefing document for analysts go to: htt://www.asx.com.au/asx/statistics/announcementSearch.do

China Eastern's rejection of Air China puts it at odds with China's civil aviation minister

Li Jiaxiang was Air China chairman

but is now boss of the CAAC

China Eastern has formally rejected a proposal by Air China's parent China National Aviation (CNAC) for a tie-up between China Eastern and Air China.
In a rather frank letter to the Hong Kong stock exchange China Eastern accuses CNAC of being insincere, failing to properly think through its proposal and it says there is a lack of trust between the two sides.
Instead China Eastern says it has more to gain by working with an overseas strategic investor, namely Singapore Airlines.
What is puzzling is that China Eastern also says that it is rejecting the CNAC proposal on the grounds that there is uncertainty over whether the proposal would get the necessary regulatory approvals.
But the regulator is the Civil Aviation Administration of China which is now headed by Li Jiaxiang.
Li was effectively appointed to the top job in January and prior to that he was chairman of Air China and the chief architect behind the proposed tie-up between Air China and China Eastern.
Li's predecessor at the CAAC, Yang Yuanyuan, had wanted China's 'big three' carriers to remain separate and to compete against each other but Li is of the view that Air China and China Eastern should come together to create a much larger - and supposedly stronger - carrier that can compete more effectively against the foreign carriers moving into China.
If the head of the CAAC is behind the tie-up between Air China and China Eastern, I don't see how getting regulatory approval could be an issue.

Garuda and Lion Air's aircraft orders raises more questions

Garuda Indonesia and Lion Air recently placed orders for Boeing aircraft which raises questions over how these aircraft will be financed and, in the case of Lion, whether it really needs to order so many aircraft.

Prior to the 19 February announcements, Lion already had 122 Boeing 737-900ERs on order which means last week's order for 56 additional 737-900ERs raises its total commitment to 178.

Lion president Rusdi Kirana says the airline plans to only operate 60 737-900ERs in Indonesia and the rest will be for airlines it plans to start in other countries such as Australia, Malaysia and Thailand.

But these markets already have entrenched players who will undoubtedly try and make it hard for Lion to gain a foothold let alone build up a large local fleet.

Rusdi says he has been financing his aircraft by doing sale and leasebacks with GE Commercial Aviation Services.

He also says he been doing deals with financial institutions such as HSH Nordbank and Germany's DVB.

Garuda, meanwhile, is hundreds of millions of dollars in debt and has yet to state publicly what has been the outcome of its negotiations with European creditors.

A significant proportion of Garuda's total debts relates to monies borrowed earlier from European creditors when it bought Airbus A330s in the late 1990s.

Even though these debt matters appear to still be unresolved, the carrier on 19 February placed a firm order for 10 Boeing 777-300ERs.

But who is going to finance this acquisition?

All that one can assume is that the Indonesian Government will step in and pick up the tab although that would be contradictory to earlier efforts by the government to try and make the state-owned carriers less dependent on state aid.

Tycoon to capture Indonesia's airline market

Sometimes downturns can inadvertently create opportunities for new entrants. And it seems one of Indonesia's wealthiest businessmen, Hary Tanoesoedibjo, sees the downturn in Garuda Indonesia's fortunes as an opportunity to enter the Indonesian airline market and grab Garuda's hold over the higher margin business traffic.
Tanoesoedibjo's investment company Bhakti Investama already owns 50% of Indonesia's Adam Air and controls Indonesia Air Transport, a small but profitable charter operator that plans to branch into scheduled passenger operations by operating on small regional routes.
What is more interesting is Tanoesoedibjo's move to establish mainline carrier Star Eagle.
Star Eagle will be positioned as a full service carrier and plans to launch later this year using Bombardier CRJ900s and Boeing 737-800s.
This new carrier will target less price conscious consumers and operate on larger routes within Indonesia as well as from Indonesia to destinations in Asia.
It will be positioned differently to Adam Air, which markets itself as a 'boutique airline' but is perceived as a low-cost carrier.
Having three distinct airline brands targeted at different market segments means in future Bhakti Investama has the potential to be the lead player in Indonesia's airline market.
And Bhakti Investama, unlike other would-be entrants, has the money to achieve its goals.
Tanoesoedibjo is the 15th wealthiest business person in Indonesia according to Forbes magazines' 2007 survey which puts his wealth at $815 million.
Bhakti Investama, the company he founded, owns local TV and radio networks, a national newspaper, road tolls, real estate and other assets.
Garuda, meanwhile, is hundreds of millions of dollars in debt.

Singapore airshow has dearth of commercial aircraft

The Singapore Airshow 2008 is both a civil and a military airshow but you wouldn't know it going by the aircraft on display in the static display area.
The Airbus A380 (MSN 001) was certainly impressive and dominated the static display because if its size.
But the only other commercial aircraft on display was a Britten-Norman Islander, a tiny aircraft that only seats 10 passengers. Talk about going from one extreme to the other.

What was predominately on display was business jets and military aircraft.
Don't get me wrong. The selection of business jets on display was impressive because there were aircraft from the likes of Bombardier, Embraer, Hawker Pacific and others.
And the US and Singapore military was out in force with an impressive line up of fighter jets as well as a Boeing B-1 bomber and some military transports such as the Lockheed C-130.

But - because I am a journalist that focuses on commercial aviation - I was really hoping to see more commercial aircraft.