Dragonair, a unit of Hong Kong's dominant carrier Cathay Pacific Airways, said on Wednesday that it plans to expand its fleet 20 percent this year by adding six aircraft and will hire more staff to meet growing demand in Asia. Strong demand from China, Dragonair's largest market, helped boost the regional carrier's passenger numbers by 7 percent to a record high last year despite deepening global economic uncertainty. Cathay Pacific reported in January that Dragonair alongside it carried a total of 27.58 million passengers in 2011, up 2.9 percent. It did not provide a breakdown for Dragonair.
The global aviation industry is expected to see a tough year ahead with industry body the International Air Transport Association (IATA) forecasting the industry could lose USD$8.3 billion if the European sovereign debt crisis evolves into a full-blown banking crisis and recession.
Cathay Pacific Airways said on Monday its January freight traffic fell 19.5 percent as weak demand was exaggerated by the Chinese New Year holiday while passenger traffic was strong. Year-on-year comparisons were distorted by the fact that the Chinese New Year holiday fell in January this year compared to early February in 2011, it added. "Apart from a modest pre-Chinese New Year rush, the cargo markets were generally soft throughout January," said James Woodrow, Cathay's general manager for Pacific cargo sales. “Our key markets remain soft and we have been cutting capacity aggressively to match demand on trunk routes to North America and Europe," he said. Passenger traffic was strong on the Mainland China, Korea and Southeast Asia routes last month; while long-haul routes also performed well due to the timing of the Chinese New Year break, said Cathay's general manager of revenue James Tong. He warned that declining yield in the economy cabin remained an area of concern.
Hong Kong Airlines Ltd. will order Airbus A380s as it challenges larger neighbor Cathay Pacific Airways Ltd. and adds flights in China, the world’s fastest- growing air-travel market. The carrier, controlled by the investment arm of China’s Hainan province government, will announce the deal at next week’s Paris Air Show, it said in a text-message reply to questions today. It didn’t elaborate on the number of superjumbos it will buy at the show, which starts June 20th. The world’s largest airliner may help Hong Kong Air compete with Cathay on long-haul routes and offset a looming capacity crunch at the city’s airport caused by delays in building a new runway. The carrier will be the third new A380 customer this year, following Skymark Airlines Inc. and Asiana Airlines Inc., as Airbus boosts sales among smaller Asian carriers. “It’s a good move for brand-building,” said Kelvin Lau, a Hong Kong-based analyst at Daiwa Capital Markets. “It’s quite difficult for newcomers to break into lucrative long-haul routes.”
Hong Kong Air also agreed to order 32 Boeing Co. 787s and six 777 freighters earlier this year to help expand. It had 30 Airbus A320s, 12 A330s and 15 A350s on order as of the end of May, according to the Toulouse, France-based planemaker’s website. The carrier and affiliate Hong Kong Express now operate 18 planes, according to their website. The airline expects to double passenger numbers to 4 million this year as it adds planes and taps China’s rising travel, President Yang Jianhong said in March. The carrier has a less than 10 percent share of Hong Kong’s outbound travel market, Royal Bank of Scotland Group Plc said at the time. The airline will be the second in Greater China to order the A380 following China Southern Airlines Co. Airbus is due to deliver the first superjumbo to China Southern later this year. The planemaker has sold a total of 234 A380s, of which 49 have been delivered, as of the end of May, according to its website.
Orders for the A380 have been dominated by Middle East and Asia-Pacific carriers. Emirates Airline has placed orders for 90, making it the largest customer. Singapore Airlines Ltd. was the first carrier to fly the superjumbo on commercial services. Asiana, South Korea’s second-biggest carrier, signed up for six A380s in January. Skymark, a Japanese budget airline, confirmed an order for four the following month. Cathay Pacific has so far ruled out ordering A380s and is instead building its long-haul fleet with smaller planes. It ordered 15 Airbus A330-300s and 10 Boeing 777-300ERs in March, following an agreement for 30 A350s in August. “We’ll probably have another good look at big aircraft in the next one or two years,” Chief Executive Officer John Slosar said last week in Singapore at the International Air Transport Association’s annual general meeting.
Hong Kong Air is seeking to raise funds by selling a stake to private-equity investors ahead of an initial public offering that may raise as much as $1 billion, Yang said in March. The carrier had a net income of about HK$110 million ($14 million) in 2010, its first annual profit, and it may double that this year, he said. Hong Kong Airport will likely reach full capacity by about 2020 because of growing demand for flights into China, operator Airport Authority Hong Kong said earlier this month as public consultation on plans to build a third runway began. Passenger numbers at the airport may grow as much as 3.6 percent a year, reaching 105 million by 2030, according to estimates on its website. China’s international passenger numbers my rise 11 percent a year through 2014, about double the pace of the global market, according to the International Air Transport Association.
India's Kingfisher Airlines is looking to lease both wide-body and narrow-body aircraft to meet an unanticipated surge in demand as the domestic economy recovers more quickly than expected, the company's chairman, Vijay Mallya, said on Monday. Mallya also told reporters on the sidelines of the International Air Transport Association's annual meeting in Singapore that the company had revived a plan to sell Global Depository Receipts, taking higher oil prices into calculation. Asked if Kingfisher's current capacity was enough to cater to the projected increase in demand, he said: "Not quite, that is why we are looking for leased capacity.
"Kingfisher at one time had several aircraft that were on order from Airbus for delivery in 2010 and 2011. During the 2008-2009 crisis, I actually postponed the delivery of those aircraft to 2012 and 2013," Mallya said. "So right now we are looking for capacity, but our own new deliveries will start in about 18 months." He said he was looking to lease both narrow-body and wide-body aircraft. "We have been experiencing for the last six months unprecedented load factors, which I have never seen in the last six years," Mallya said. "We are running at mid to high 80 percent on every flight, which is extremely healthy."
According to its website, Kingfisher has 66 aircraft, mostly Airbus jets and ATR turbo-prop variants. It has more than 125 planes on order. Loss-making Kingfisher, India's second-largest airline by market share, has restructured its debt by converting almost INR12 billion rupees (USD$268 million) of loans into equity. Its current debt stands at about INR60 billion rupees. Last month, it reported a net loss of INR10.27 billion rupees in the fiscal year ending March 31, versus a loss of INR16.47 billion rupees the year before. But it had positive EBITDA amounting to INR1.4 billion rupees, the company says. "We reported significantly improved numbers and EBITDA profit for the first time. This is a sign of things to come," Mallya said.
He said the company had also revived a proposal to sell GDRs of USD$250 million - USD$350 million, but gave few details. "We had an excellent roadshow for our GDR in January and early February this year and we presented a compelling business plan." He said the plan assumed crude oil at USD$90 per barrel. "The minute crude oil prices started going up to USD$120 plus per barrel, prospective investors asked us to rework our business plans, which we did."
The flamboyant Mallya, who controls the United Breweries Group, owns a Grand Prix motor racing team and a team in India's cricket league, said Kingfisher's growth should be enhanced as it joins the oneworld airline alliance, which also includes Cathay Pacific, British Airways and Qantas. "The opportunities to leverage this alliance are huge," he said, adding that Kingfisher would become a fully operational member by 2012. "We see this as being a contributor of about 5-6 percent of enhanced revenue to us."
He said Kingfisher was continuing to lobby the government to allow foreign airlines to take stakes in Indian carriers. "Airlines in India must raise capital and the opportunity to raise capital from foreign airlines must not be excluded and that's why we will continue to request the government of India to reconsider its foreign direct investment policy." Kingfisher flies to eight international destinations and to more than 50 towns and cities in India. Its fleet of turboprop aircraft will help it to respond to the pattern of wealth creation in India, Mallya added. "There is a lot of wealth in tier-2 and tier-3 cities that is being created," he said. "It is no longer a situation where wealth in India is restricted to the big metro cities, so it offers a huge amount of opportunity. "Kingfisher is well positioned because it has a large number of ATR aircraft which are ideal to service the emerging demand in tier-2 and tier-3 cities," he said.
Cathay Pacific Airways Ltd., Qantas Airways Ltd. and Emirates Airline are awaiting deliveries of about 400 planes to capitalize on Asia’s rising prosperity. Finding pilots is the next job.
Boeing Co. expects the region’s carriers to be the biggest buyers of twin-aisle planes as travel grows in China and India, home to a combined 1.1 billion middle-class people. Asia-Pacific airlines will buy about 8,000 planes worth $1.2 trillion over the next 20 years, Airbus SAS said. Airlines worldwide need an average of 49,900 pilots a year from 2010 to 2030 as fleets expand, yet current training capacity is only 47,025, according to the International Civil Aviation Organization in Montreal. That is sparking bidding wars as Emirates offers tax-free salaries and four-bedroom villas for captains, and AirAsia Bhd., the region’s biggest budget airline, gives tuition-free training. “It’s a major issue and will be a big challenge to the industry’s growth,” said Binit Somaia, a Sydney-based analyst for the Centre for Asia Pacific Aviation. “Even if you can find the pilots, you have to pay top dollar for them because they are so scarce.”
China, the world’s fastest-growing major aviation market, likely will account for a third of the region’s orders, Airbus, the world’s biggest aircraft maker, said in February. Its economy will grow 10.5 percent this year, compared with world growth of 4.6 percent, according to International Monetary Fund estimates.
India, with estimated growth of 9.4 percent this year, may overtake China as the world’s fastest-growing major economy as early as 2013, according to Morgan Stanley.
This year, the region’s carriers ordered 133 commercial jets with more than 100 seats, or 23 percent of the global total, according to Ascend Worldwide Ltd., a London-based aviation forecaster and data provider.
“There will be a shortage of pilots, and this is going to last for a while because it takes time to produce a good pilot,” said Elmer Pena, president of the Airline Pilots Association of the Philippines.
Philippine Airlines Inc. canceled flights in July and August and rebooked passengers after losing 27 pilots to higher paying jobs abroad.
The demand in Asia contrasts with the 4,500 U.S. airline pilots on furlough, according to figures compiled by Kit Darby, a retired United Airlines pilot now running an Atlanta-based consulting firm.
That situation shouldn’t last long. The global fleet of cargo and large passenger planes will double to nearly 32,000 by 2028 from 15,750 last year, according to Airbus.
The major U.S. airlines are expected to hire more than 40,000 pilots in the next 12 years, said Louis Smith, president of FltOps.com, which provides career counseling services and sponsors job fairs.
World passenger traffic is expected to increase an average of 4.7 percent a year between 2009 and 2028, according to Airbus.
Emirates is the largest Arab airline with more than 200 planes on order. It aims to recruit 250 pilots this year and double that number in 2011, it said in a statement.
The company, which needs more than $28 billion through 2017 for expansion, sought to recruit in Houston, Madrid and Singapore.
Cathay Pacific, Hong Kong’s biggest carrier, will recruit 1,000 people, including crew, Chief Operating Officer John Slosar said. PT Garuda Indonesia placed a newspaper advertisement last month seeking pilots “fluent in English and of good character.” Jetstar, the budget arm of Qantas, plans to recruit 120 more pilots by next summer.
Singapore Airlines Ltd. and AirAsia, based near Kuala Lumpur, set up their own tuition-free training academies. Singapore Air’s flying college graduates about 150 cadet pilots a year, while AirAsia’s facility trains as many as 500 a year.
Graduates must stay with the budget carrier for five years, AirAsia Chief Executive Officer Tony Fernandes said.
New flight schools also are opening. CAPA is investing at least $125 million to build an aerospace university in India that can train about 300 pilots a year, Somaia said.
The shortage, and hiring by a new crop of budget carriers, also could push wages higher.
“There is a misconception that low-cost airlines pay lower salaries,” said Tony Davis, chief executive officer of budget carrier Tiger Airways Holdings Ltd., part-owned by Singapore Air “We couldn’t do that in a competitive market.”
Basic pay for Singapore Air captains flying twin-aisle Boeing 777s or the Airbus A330s begin at S$9,300 ($6,870) a month, excluding allowances, said P. James, president of the Air Line Pilots Association of Singapore. They also earn a productivity allowance of as much as S$3,800 for flying 70 hours a month.
Emirates offers a starting monthly salary of 34,410 dirhams ($9,370) for captains, according to its website. That excludes benefits such as hourly flying and productivity payments.
Its other perks include a tax-free basic salary, profit sharing, villas for captains and free dry cleaning of uniforms, its website said. Those incentives help attract candidates to an increasingly demanding job, said Barry Jackson, president of the Australian and International Pilots Association, who has been a pilot at Qantas since 1987.
“Young people these days prefer to become doctors or lawyers,” he said. “This sort of career path is becoming less desirable.”
Cathay Pacific Cargo is heading a new direction today.The airline’s first ever trans-Atlantic flight departs Chicago’s O’Hare International Airport at 4:50 p.m. CDT en route to Amsterdam, Netherlands; Dubai, United Arab Emirates and then home to Hong Kong. It will have arrived Chicago from Hong Kong via Anchorage, Alaska, making it the airline’s first around-the-world flight as well.
The airline has spent months developing the new route, which will initially be operated twice weekly, every Friday and Sunday (when departures will be at 10:50 p.m. CDT), using a Boeing 747-400 freighter. Cathay Pacific already offers eight trans-Pacific freighter flights a week to Hong Kong from Chicago, providing traditional cargo services plus specialty services such as pharmaceutical and live animal handling.
