Editor’s note: Outlook is CNN's in-depth look at business climates around the world. To August 12, 2012, we’re focusing on Singapore.
Asia’s latest discount airliner takes to the skies Monday, with its inaugural flight from Singapore to Sydney.
Launched by Singapore Airlines, no-frills Scoot has already sold more than 100,000 tickets, according to The Straits Times. In its first year, it will offer flights on four Boeing 777 aircraft, linking Singapore with nearby countries, including Australia and China. Currently, tickets are available to the Australian cities of Sydney and Goldcoast, as well as Bangkok and Tianjin, China. FULL POST
Delta Airlines' decision to buy an oil refinery has caught the imagination. It seems to make a lot of sense and if the numbers actually come true it will look like a stroke of genius.
Delta says that it could get savings of $300 million a year by cutting out the middle man and refining its own jet fuel, all for the cost of one medium-size new airliner. It sounds like a no-brainer so I put the question to a CEO of an Asia airline: did he think that individually or as a group that Asian airlines would get together to look at a similar arrangement.
It does make some sense. According to Cathay Pacific Airways, fuel costs accounted for 41.5% of total operating costs last year. That's a lot higher than the 30% average for global airlines. The reason why Cathay and other Asian arilines have proportionally higher fuel bills is that they are mainly long-haul operators, and the fuel component of a long-haul flight can be twice as high as a short-haul flight - 60% fuel cost on long-haul versus 30% on short haul.
Fuel costs were the main reason by long-haul budget airline AirAsia X to cut back its services. Its short-haul flights are still performing strongly.
But buying a refinery is not on anyone's agenda among Asian airlines. Not yet at least. But what is on the radar relating to fuel costs is fracking - the process of extracting gas and oil through hydraulic pressure fracturing of rocks. It has revolutionized the gas industry in the U.S. Gas prices are at a 10-year low, prompting oil-energy users such as power companies to look at switching to gas-fired plants, a relatively easy transtition.
As oil users switch to gas, airlines are hoping there could be a knock-on effect to the price of oil as demand starts to fall. It may be a long shot at this stage, but in the airline industry it's one of the very few bright spots on an otherwise bleak outlook for controlling one of the biggest costs in the business.
London (CNN) – I am frequently asked whether I get tired of traveling, all the hassles and difficulties that go with a life on the road. Obviously, sometimes it is physically exhausting, especially when flights are late and the descriptions of hotels are more enthusiastic than accurate. But I never really get tired of the magic and delight of a life on the road.
This has been very much in my mind as we start the new series of CNN Business Traveller.
Ten years after it first took to the air, it is legitimate perhaps to ask, what new there is to report? After all, the show has been to most parts of the world (not all - there are still some notable exceptions) and we have covered everything from the super commuter to traveling women and spent more hours than decent in planes, trains and automobiles.
The fact is there is a huge amount to bring to your screens since the last series ended a couple of years ago. The aftermath of the great recession has led to some significant changes in the past couple of years.
London (CNN) – The letter from the seven airlines complaining about the European Emissions Trading system made me smile. Not that there is anything funny about the prospect of a full-blown trade war between Europe and inter alia, China, the fastest-growing super economy in the world.
Rather because it smacked of too little, too late. Where were these airlines writing their letters when the scheme was being initiated, promulgated and ultimately brought into force?
No doubt they made protests behind the scenes and lobbied like fury - which got them precisely nowhere! The Commission was impervious to the threats of trade wars. They barrelled on regardless of the damage that was being threatened.
I know this because the EU commissioner responsible, Connie Hedegaard, was on Quest Means Business defending the scheme. To her credit, she hasn't wavered. The view in Brussels was, if the ICAO process was going to be delayed and drawn out then the EU would go its own way - and that is exactly what they have done.
Hong Kong (CNN) – A local airline has found itself in hot water with environmentalists over a recent cargo flight of dolphins.
According to the Chinese newspaper China Daily, the airline transported five dolphins from Japan to Vietnam on January 16. An internal memo to the airline staff was leaked boasting of the transaction’s success saying that it earned the company HK$850,000 (US $110,000) in cargo revenue. The memo also included a photograph of the dolphins lying in shallow, narrow containers with their fins protruding, inside the Boeing 733F cargo plane.
Hong Kong, China (CNN) – With a Greek debt deal successfully brokered on Tuesday, the world’s economic skies seem a bit less likely to fall. That new $173 billion bailout for Greece on the brink of bankruptcy is now staunching a bit of the hemorrhage of confidence in the continent.
As for the “stuff” that actually flies through those economic skies? The volume of that over our heads, homes and offices is, in fact, falling.
And Hong Kong is one of the best places to take a measure of it all.
This Asian hub of commerce boasts the busiest air cargo airport in the world. And air cargo volumes are an excellent thermometer to gauge the health of global trade.
According to Hong Kong airport data, 3.9 million tons of cargo passed through this Chinese territory in 2011. But for all that volume, the huge number actually revealed a drop of nearly 5% year on year.
Just as Hong Kong is the world’s number one cargo hub, Cathay Pacific Airways is the world’s number one air cargo carrier. In 2011, Hong’s Kong’s flagship airline transported more than 1.6 million tons of cargo around the world. But that represented a drop as well – of nearly 9% year on year.
The reason for this season of slumps is found not in Asia but halfway around the world: in the United States and Europe.
The U.S. is still clawing back from its Great Recession.
Europe, which buys 30% of all of China’s exports, is still focused on its highly-indebted nations. And for the next several months and years, Spain, Portugal, Ireland, Italy– and yes Greece- will still be the word.
It’s a decline in demand from all these places – for cheaper Asian-assembled electronics and your Wal-Mart apparel – that led to a slump in air cargo traffic last year.
And the 2012 skies don’t look much brighter.
The International Air Transport Association, more famously known as IATA, forecasts absolutely no growth for global air cargo traffic this year.
Cathay Pacific’s CEO John Slosar predicts his company’s air cargo business might not take off again until the second half. That’s not great news since the company relies on cargo for 30% of its annual profit.
And some oil analysts foretell of $150 per barrel ifIrantensions boil over into conflict.
All this may be conspiring for a collision course with catastrophe. But reroutes do exist.
To offset losses, airlines have successfully booked more people into their seats. Cathay reported nearly 12% more passengers this past January, year on year.
That’s on top of rising ticket prices as any flier – frequent or not – can attest.
And just this past December, Cathay announced it would delay the purchase of two new Boeing 747-8F freighters until 2013.
The bottom line for the air cargo industry? Despite short-term fixes, its long-term recovery will depend on the pace of improvement in the U.S. and Europe.
Until then, better profits from global air cargo will hang on a wing and a prayer.
Hong Kong, China (CNN) – A nearly 9-hour flight delay turned into a standoff at Hong Kong airport Wednesday, with passengers refusing to leave the plane for 5-hours until the airline agreed to higher compensation.
The incident underscores just how high tensions can rise in modern air travel with passengers and airlines jockeying it out in a low-frill, high-fee world. There is no global standard for passenger compensation in the case of airline delays and wide gulf can exist between passenger expectations and airline offers.
When Hong Kong Airlines flight 752 from Singapore arrived at 530 a.m. Wednesday morning, the airline says 80 passengers refused to get off. The travelers, mainly members of package tours from mainland China, demanded the airline increase the original compensation offer of $50 per passenger.
(CNN) - The “King of Good Times” is facing some grim times at the moment.
Airline group chief and billionaire business tycoon, Vijay Mallya is struggling to keep India’s Kingfisher Airlines afloat due to surging fuel costs and fuel taxes.
In the past week, the Bangalore-based carrier has cancelled 200 flights in hopes to reduce its debt from Rs. 6,500 crore (about $1.4 billion) to Rs. 3,000 crore ($600 million). Kingfisher has suffered a loss of Rs.1027 crores ($200 million) in the past fiscal year, adding to its mounting debt.
(CNN) – Duty-free shopping onboard may no longer be limited to watches and perfume. Ryanair is considering offering in-flight pornography to its passengers, according to a report on Tuesday in The Sun.
The racy content would be broadcast through a custom Ryanair app for smartphones and tablets. Michael O’Leary, chief executive of the Dublin-based discount airline, told the Sun, “Hotels around the world have it, so why wouldn’t we?” He said that pornography would be available only via the relative privacy of mobile devices and would not be shown on seat-back television screens.
This isn’t the first time O’Leary has displayed a “sex sells” ethos for his airline. In 2008, he made flippant comments to the media about offering “beds and b***jobs” in business class. The airline has also published an annual “Girls of Ryanair” calendar since the same year, featuring its female flight attendants in bikinis.
Singapore (CNN) – Singapore Airlines has launched a new long-haul budget airline called “Scoot” which will offer airfares at 40% less than full-services airlines.
Flights are expected to begin in mid 2012 with destinations in Australia and China. Specific cities will be announced in the months ahead, airline officials said.
The no-frills airline will have an initial fleet of four Being 777 aircraft, purchased from its parent company Singapore Airlines (SIA) which made an initial investment of $223 million.
The new airline is banking on creating a strong brand identity with its unusual name.
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