Air Asia, a major force in 2012
(CNN) -- With 1 billion tourists in 2012, it's little wonder the last
12 months have drummed up some juicy fodder for aviation reporters.
London's Olympic Games were a success -- the expected tourism boon
not so much.
Visitors inspect the C919 prototype at an aviation expo during
“Dark tourism” (travel to sites of death, disaster or the macabre)
became a phrase. And various climatic events conspired to wreak havoc on
travel plans across the world.
But which were the stories that really stood out to those who are
involved in the industry every day?
These are the top stories
SAS on its last legs
“A new comprehensive plan will pave the way for a new, strong and
competitive SAS,” read the statement from SAS last month.
“The plan needs to be fully implemented and new collective agreements
must be signed in a very short space of time in order for SAS to have
access to necessary funding.”
One of Europe's oldest airlines and one that still knows the meaning
of passenger service is in dire straits. SAS faces aggressive
competition from low cost carrier Norwegian Air Shuttle, which has
hundreds of aircraft on order from Airbus and Boeing.
The pioneer of polar flights, fully 40 percent of SAS's workforce is
to be chopped.
If the airline fails, and it's been on the brink before, this will
continue the trend in Europe toward consolidation that included the
acquisition by British Airways of struggling Iberia.
Not that this consolidation under the International Airline Group (IAG)
banner has gone well, either.
Iberia on the brink
IAG's Iberia will lose 4,500 jobs in a cost-cutting effort after
losing €262 million (US$340 million) through September.
IAG characterizes Iberia in a “fight for survival.” Nearly 25 percent
of its aircraft will exit the fleet and pay might be cut by 35 percent.
There's a January 31, 2013, deadline for labor to reach an agreement
with IAG, which is negotiating to buy Spain's Vueling Airlines, which is
based in Barcelona.
Iberia cuts jobs in survival bid
A380 loved by passengers, but continues to be a profit drag on Airbus
The Airbus A380, a technological marvel and by all accounts a
passenger delight, continues to be a thorn in the profit-and-loss
statements of Airbus and parent EADS.
Discovery of wing rib bracket cracks in 2011 after the November 2010
high-profile engine failure on Qantas Flight 32 required costly refits.
Never a safety-of-flight issue and affecting only a handful of the
thousands of brackets on the A380's wings, the retrofits and airline
compensations cost Airbus nearly €300 million (US$394.8 million).
Airline schedules all over the globe were disrupted as fixes took
aircraft out of service. The ad wars that broke out between Boeing and
Airbus in late November 747-8 versus the A380, only add another
dimension to the long-running rivalry.
Boeing roars back with 737 MAX
In 2011, Airbus stunned Boeing by announcing orders and commitments
for about 1,500 re-engined A320neos.
This year, Boeing came roaring back, expecting to finish with firm
orders for around 1,000 re-engined 737 MAX aircraft.
Boeing still trails market share, and the MAX will enter service two
years later than the NEO. But any way you look at it, this was Boeing's
Air Asia continues to become major force
Air Asia and its CEO Tony Fernades are leading the low-cost carrier
revolution in Asia.
Taking a page from Sir Richard Branson's book with the Virgin brand,
Fernandes is leveraging the Air Asia name and logo to bring low-cost
travel to hundreds of millions of people.
Fernandes likes to point out Asia (excluding China) has a larger
popular base than the United States or Europe and that island and
mountainous geography make flying the best (and sometimes the only) way
to get around. Air Asia X, the long-haul, low-cost operator, floated an
initial public stock offering this year. Fernandes has major expansion
plans in mind for this airline.
A word of caution: Citi Research in Hong Kong thinks Air Asia is
expanding too rapidly has too many aircraft on order and faces
over-capacity in Malaysia from Lion Air.
Boeing dithers on 777X
While Boeing moved ahead with the 787-10, it dithered on enhanced
revisions to the highly profitable 777-300ER. When Jim Albaugh was CEO
of Boeing Commercial Airplanes, he wanted Authority to Offer (ATO) by
the end of this year.
Albaugh is gone, retiring unexpectedly. ATO for the 777X is put off
for perhaps a year, say people familiar with Boeing's current thinking.
The 777X is Boeing's answer to the Airbus A350, which promises to be
far more economical than the 777-300ER. But Boeing figures it has more
time because Airbus delays A350. The composite A350 was already some 18
months behind schedule when Airbus announced a new delay this year for
its planned entry-into-service (EIS) from mid-to-late 2014. Many expect
a further slip into 2015. First flight is still planned for mid-2013 in
time for the Paris Air Show in June?
But technical issues at Airbus’ plant in Broughton, Wales, will delay
assembly for the test aircraft needed for certification, thus delaying
Airbus’ challenges with the program prompt questions over whether the
smallest family member, the A350-800, will be canceled and whether the
largest, the A350-1000, is sufficient. Airbus says the -800 won't and
the -1000 is, but market doubts remain.
Boeing launches 787-10
The 787 program's problems have become legendary in the industry and
Boeing won't make money on it for years. The ATO of the third member of
the family, the high capacity, 6,800 nautical mile range 787-10 is a key
Although official ATO didn't come in October as expected, a “soft”
ATO did and Boeing is talking with potential customers. A formal launch
of this program is now said to be expected by mid-2013. This sub-type
should be a real winner for Boeing and a profitable member of the 787
China expands aerospace role
China's ambitions to become a major global aerospace player draws
skepticism from many quarters. The AVIC/COMAC ARJ21 regional jet is
essentially a Chinese copy of the old McDonnell Douglas DC-9-10 built in
1965. And it's yet to enter service and is already five years behind
Many think the COMAC C919 will be similarly disappointing.
But the C919 has 380 orders and commitments (albeit entirely from
Chinese airlines and lessors) even though it's not expected to be up to
Airbus and Boeing standards.
The government wants the C919 to take half the home market, about
2,000 aircraft over 20 years, and this comes out of Airbus’ and Boeing's
market share. But this isn't all.
There are more than 20 Chinese companies that want to play in the
aircraft leasing field, though fewer than a dozen are active so far.
Many are affiliated with Chinese banks, which are becoming bigger
players in financing aircraft.
Anyone who thinks China won't be a major global player for aircraft,
lessors and finance needs to think again. It's just a matter of when,
not if. It might take a generation, or even two, but China will become a
viable, global aerospace presence.
China leads the way to block Europe's Emission Trading Scheme
The European Union announced plans to implement its Emission Trading
Scheme (ETS) that requires airlines to buy and sell carbon credits.
Airlines and several countries, led by China, objected to this
unilateral action, saying it should be a global accord reached through
the International Civic Aviation Organization trade group. China was the
first to tell its airlines not to comply. Others followed.
But China uses aircraft orders from Airbus and Boeing as political
leverage and refused to ratify an order for US$14 billion worth of
This would cost jobs. In November the EU blinked and put off
implementing ETS. We'll see if Airbus lands the stalled orders by year
Nothing demonstrates the powerhouse clout China has on the global
stage more than this.
Merger between EADS and BAE Systems collapses
Barely in office after assuming the slot in mid-2012, EADS CEO Tom
Enders proposed a merger between EADS and Britain's BAE Systems.
Word leaked prematurely in September and under British takeover law,
a decision to move forward or not had to be made the next month.
The combination would have created a global defense behemoth rivaling
The Boeing Co. It would have positioned EADS North America to bid more
credibly on future U.S. defense contracts.
It would have balanced EADS’ over-reliance on subsidiary Airbus for
revenues and profits. It would have diversified BAE's sole reliance on
defense, a shrinking market.
It would have, at long last, diminished the government ownership (and
meddling) of France and Germany in EADS and Airbus affairs.
The highly parochial French surprised everyone by going along. But
Germany's government objected to losing sway over Airbus jobs.
Britain's government feared losing influence over BAE, a stock
company, but which is one of Britain's major employers and a top defense
German opposition killed the deal, and with it Enders’ dreams of EADS
becoming a “real” public company free of government influence.