Flight Safety Information October 1, 2013 - No. 202 In This Issue FAA Furloughs: 3,000 Airline Safety Inspectors Off The Job Due To Government Shutdown SoCal CEO, Son ID'd in "Unsurvivable" Santa Monica Airport Crash Aviation Safety Expert: Citation Cessnas Have Good Safety Record Santa Monica crash renews debate on airport's safety Airplane diplomacy: Iran 'to study' possibility of direct flights to US Almost 30,000 passenger and freighter aircraft will be needed by 2032 ISASI NERC Meeting (19OCT2013) Think ARGUS PROS American Airlines plans to hire 1,500 pilots over the next five years Japan Air-ANA Haneda Slot Fight Draws in American, United Report: Frontier Airlines to be sold to Indigo Partners LLC PIA opens financial bid for 10 aircraft today Watch for: AVIATION MAINTENANCE & ENGINEERING EXCHANGE FAA Furloughs: 3,000 Airline Safety Inspectors Off The Job Due To Government Shutdown, Union Says By JOAN LOWY WASHINGTON (AP) -- Nearly 3,000 aviation safety inspectors are being furloughed by the Federal Aviation Administration as part of the government shutdown, the union representing the inspectors said Monday. The inspectors check to make sure airlines are maintaining their planes safely, conduct inspections at airports of planes and pilots, and visit domestic and foreign repair stations where airlines send planes for major overhauls, among other safety jobs, said Kori Blalock Keller, a spokeswoman for the union, Professional Aviation Safety Specialists. Union officials initially thought the FAA had made a mistake when they received word of the furloughs, Blalock Keller said. But FAA Administrator Michael Huerta confirmed the inspector furloughs in a phone call with union officials Monday, she said. Mike Perrone, the union's national president, said he is "outraged that the FAA would consider aviation safety inspectors as playing anything but a pivotal role in protecting the safety of the American public. Furloughing this critical workforce is neither in the best interest of the economy nor the oversight of this country's aviation system." Employees critical to public safety are generally exempt from the furloughs. FAA spokeswoman Kristie Greco declined to confirm the union's tally of the number of inspectors furloughed and the type of inspections they conduct. She said nearly 2,500 safety office personnel - including some inspectors - will be furloughed, but they may be called back to work incrementally over the next two weeks. "Many employees will be on call and ready to return to work if necessary," she said. http://www.huffingtonpost.com/2013/10/01/faa-furloughs_n_4021230.html Back to Top SoCal CEO, Son ID'd in "Unsurvivable" Santa Monica Airport Crash Crews plan to lift a collapsed hangar from a plane that crashed and burned Sunday at Santa Monica Airport Mark Benjamin and his son Lucas were victims in a small plane crash at Santa Monica Airport on Sunday night. Friends remain in shock of their sudden passing while photos Lucas posted on social network sites remind them of their love of private jet journeys. Gordon Tokumatsu reports from Santa Monica for NBC4 News at 5 p.m. on Sept. 30, 2013. A Southern California construction company's CEO and his son were aboard a plane that burned Sunday in what authorities described as an "unsurvivable" crash at Santa Monica Airport, according to a statement from the firm. The statement from Morely Builders identified two people aboard the small plane as CEO Mark Benjamin and his son, Luke Benjamin, a senior project engineer with the Santa Monica-based company. "We are aware of a plane crash at Santa Monica Airport last night," according to the statement. "While we do not have specific facts, we believe that our President and CEO, Mark Benjamin, and his son, Luke Benjamin, a Senior Project Engineer with us, were on board." The Morley Construction statement did not indicated whether there were other occupants in the twin-engine Cessna Citation. The coroner's office has not identified the victims and authorities have not determined how many people were aboard the plane. An NTSB official said Monday afternoon the agency has not been in contact with the company. "We have not identified or recovered any victims," said Van McKenny, of the NTSB. NTSB officials said there is "an indication" the plane had a cockpit voice recorder. The pilot did not indicate there was a problem with the plane and authorities cannot confirm that the landing gear's tire was damaged during the landing, NTSB officials said. "There was no communication with the pilot indicating there was a problem at any time during the flight," McKenny said. The plane veered off the runway and crashed at the airport, located in a densely populated neighborhood about two miles from the Pacific Ocean, at about 6:20 p.m. Sunday. The plane, which departed from Hailey, Idaho, slammed into a metal storage hangar, which then collapsed around the burning wreckage. Crews planned to use a crane Monday to lift the roof of the hangar, allowing investigators to access the plane. The crane was not expected to arrive until about 3 p.m. A National Transportation Safety Board member official said crews are still in "recovery mode." The airport runway remained closed Monday morning. http://www.nbclosangeles.com/news/local/Santa-Monica-Airport-Plane-Crash-Victims-225838451.html Back to Top Aviation Safety Expert: Citation Cessnas Have Good Safety Record Bruce Landsberg, President of the Air Safety Institute says anything from a blown tire or a brake locking up to an incapacitated pilot could have caused the crash. Crews work to lift the collapsed, burned out hanger off the wreckage of a plane at the Santa Monica Airport Monday afternoon. The tail of the crashed Cessna is visible in front of the yellow crane truck. While the National Transportation Safety Board continues to work to pull the crashed plane from under a hangar at Santa Monica Airport, an aviation safety expert told Patch that mechanical problems with Cessna Citations are rare. Bruce Landsberg, president of the AOPA Foundation and the Air Safety Institute spoke with Patch by telephone from Maryland. He said, "While I don't know the age of [the plane that crashed in Santa Monica], the first [Cessna Citations] are fairly new, were built in 1999 and we don't typically see a lot of problems with this type of plane." Landsberg said he believed that the NTSB and the FAA will thoroughly investigate the accident "and the chances are good they'll be able to identify a mechanical fault." However, he added, at this stage it is all speculation and there are a myriad of possibilities from a blown tire to a brake locking up or even an incapacitated pilot that could have caused the plane to crash. "Just by observation it looks like the plane exited the right side of the runway fairly far down and collided with the hangar," he said. He added where the plane exited on the runway is significant. "This type of plane is approved for single pilot operation and it will typically be able to land according to factory specifications in about 2,600 feet of runway." The Santa Monica Airport runway, he said, is 4,973 feet long - almost double the space the pilot would have needed in order to land safely. He said he believed whatever happened, happened either just at the point of landing or during the landing roll. In rare instances, he said, if there were strong crosswinds on Sunday night that might have been a factor in the crash. Speaking to the NTSB's announcement that the pilot gave no indication either during the flight or coming in to land that there were problems, Landsberg said had there been a problem with the landing gear there would have been an indication in the cockpit that the wheels weren't down. "There are three green lights that come on in these plans and there's a backup gear extension procedure to get the wheels down. A pilot would have time to radio that there was a problem." However, he added there is a maxim that pilots are taught to follow: Aviate, Navigate, Communicate. "If there was no prior indication that there was a problem, the pilot would have been following [those first two maxims] when he first sensed trouble and if that occurred on or just before landing, communicating that there was a problem would have been his last priority," Landsberg said. As to the fact that nobody survived the crash, Landsberg noted it will be some time before it's known how fast the plan was traveling before it landed and what the force of the impact on the hangars were. http://santamonica.patch.com/groups/police-and-fire/p/aviation-safety-expert-citation-cessnas-have-good- aviation-record Back to Top Santa Monica crash renews debate on airport's safety Even before Sunday's fatal accident, residents near the airport had been pushing for limits on flight operations over concerns about noise, pollution and safety. Santa Monica Airport is steeped in glamour and history. Douglas Aircraft Co. built its famous DC-3s there, and in 1924 it was the jumping-off point for U.S. Army pilots who were the first to circumnavigate the globe by air. The first woman to fly the U.S. Mail began her milestone flight in Santa Monica in 1938. More recently, actors Arnold Schwarzenegger, Tom Cruise, Harrison Ford and casino mogul Steve Wynn have been among the celebrities and business tycoons who have kept planes there. But the oldest operating airport in Los Angeles County has become the most embattled general aviation facility in the nation as housing tracts, started during the Douglas years, moved right up to its boundaries. Concerned about noise, pollution and safety, those well-heeled Westside communities have been pushing city officials for years to either close the airport or slash flight operations - demands that intensified after Sunday's crash of a private jet that slammed into a hangar, killing at least two people. The fiery crash, which occurred as the plane landed after a flight from Idaho, is believed to be the first fatal accident involving a jet in the airport's history. The impact and fire collapsed the hangar's steel roof onto part of the aircraft as well as planes stored inside. Morley Builders of Santa Monica announced Monday that its chief executive, Mark Benjamin, 63, and his son Luke, 28, are believed to have been killed. It remains unclear whether others were in the plane. Residents near the airport and community activists say the crash of the twin-engine Cessna Citation 525A reflects some of their worst fears because the plane came to rest about 150 feet from homes near the northwest section of the airfield. "It's a warning of what could really happen," said John Fairweather, founder of Community Against Santa Monica Airport Traffic. "Obviously we are saddened by those who lost their lives in that plane. Our concern is what would have happened if it hit houses and the fire spread beyond the hangar." There have been at least 11 crashes involving planes coming and going from Santa Monica since 1989, according to federal records. Six were confined to airport grounds, two struck homes, two came down in the ocean and one crashed on a golf course. The airport had about 7,300 takeoffs and landings in August, the most recent month for which data was available. Some community activists are pushing to turn the 227-acre airport into a park. They say that the federal requirements and leases to operate a large portion of the property as an airport, including a section of runway, end in 2015. "We hope it's a wake-up call," David Goddard, chairman of the Santa Monica Airport Commission, said of Sunday's crash. "Now we hope the City Council will take the next step" and reduce flights. But the Federal Aviation Administration asserts that Santa Monica must operate the airport in perpetuity under a 1948 transfer agreement reached when the facility was returned to the city after World War II. Agency officials have vowed to protect the interests of pilots and aviation-related businesses. The fate of the airport has been debated for decades. When jets began operating at Santa Monica in the 1960s, the city imposed restrictions and, at one point, a total jet ban, which aviation advocates successfully challenged in court in the 1970s. With the advent of more powerful private jets, the city voted in 2007 to ban high-performance aircraft with fast landing speeds, such as larger Gulfstreams, Bombardier Challengers and some Cessna Citations. (The aircraft involved in Sunday's crash was not one of the barred models.) The Federal Aviation Administration later struck down the ban because it discriminated against aircraft types, a decision that was upheld by a federal appeals court. The closure of Santa Monica has long been opposed by pilots, airport-related businesses and national aviation organizations, such as the Aircraft Owners and Pilots Assn. They caution that the cause of the crash has not been determined and it was unlikely the jet could have entered a nearby neighborhood because of a protective berm, landscaping and a wall. "Let's find out what happened first before we speculate," said Bill Dunn, the association's vice president of airport advocacy. "The reality is that accidents occur, and the reality is that more people have been killed on bike paths and in fatal car accidents in Santa Monica than in airplanes." Robert Chandler, a veteran Santa Monica pilot whose vintage 1953 Cessna may have been damaged by the crash, said the airport has a good safety record and is a vital part of the region's transportation system. "To close it would be the equivalent of closing 10 miles of the Santa Monica Freeway," Chandler said. "It's disingenuous to move next to an airport and then complain about it." http://www.latimes.com/local/westside/la-me-santa-monica-airport-20131001,0,7003252.story Back to Top Airplane diplomacy: Iran 'to study' possibility of direct flights to US Iran Air passenger planes sit on the tarmac of the domestic Mehrabad airport in the Iranian capital Tehran (AFP Photo/Behrouz Mehri)Iran Air passenger planes sit on the tarmac of the domestic Mehrabad airport in the Iranian capital Tehran Iranian President Hossan Rouhani is considering resuming flights between Tehran and the US for the first time in more than three decades, in another gesture of rapprochement between the two countries. "The president issued an order to study how it would be possible to establish direct flights between Iran and the United States to resolve the transportation problems of Iranians residing in the US," Akbar Torkan, a senior presidential advisor who heads the country's expatriates' affairs committee, was quoted as saying by the Iranian media. The two countries severed diplomatic relations in 1980, shortly after Iranians took US Embassy officials hostage following the Islamic Revolution. There have been no direct flights since the fallout, but US census statistics reveal that there are nearly 500,000 Iranian expats living in the country. The prospect of direct flights has been raised several times in the past decade, including as recently as three months ago, when former Foreign Minister Ali Akbar Salehi was quoted as saying that the flights would be reinstated for the sake of "public welfare," and Iranian media reported that US carrier Delta Airlines would be the route's operator. At the time, Delta denied the report, not least because US sanctions imposed on Iran over its nuclear program make it illegal for any US civilian airplane to fly to the country. But this time the prospect appears more realistic, following a series of other landmark conciliatory moves. In the past week, the Iranian president has publicly condemned the killing of Jews by Nazis, in contrast to his predecessor Mahmoud Ahmadinejad, who repeatedly called the Holocaust a "Zionist myth" (though the exact nature of Rouhani's words has been hotly contested). Rouhani has also spoken to US President Barack Obama in a 15-minute phone conversation - the first time the leaders of the two countries have communicated directly since the Islamic Revolution. Most substantively, the country sat down for a new round of negotiations with the permanent members of the UN Security Council and Germany to discuss Iran's nuclear program. The parties were previously at loggerheads, as the US accused Tehran of secretly developing a nuclear weapon, and denying access to its facilities, while Iranian leaders insisted that its atomic program was peaceful. The talks in New York were described as "constructive" by both sides. But not everyone has been swayed by Rouhani's softer public stance. Iran's Revolutionary Guards - the elite wing of the army, who consider themselves the ideological protectors of the Islamic Republic - have said that the president should have refused to speak to Obama. "If we see errors being made by officials, the revolutionary forces will issue the necessary warnings," General Mohammad Ali Jafari, the Guards' leader, declared in New York on Monday. Both Rouhani, and the country's spiritual leader, Ayatollah Ali Khamenei, have recently told the Guards not to meddle in politics. Meanwhile, Israeli Prime Minister Benjamin Netanyahu has urged the world to look beyond Iran's "sweet talk and the blitz of smiles." Netanyahu, who is in the US for talks with Obama, says any concessions from Iran have been earned through sanctions, and that those have to be tightened further if Iran is to be prevented from acquiring a nuclear weapon. http://rt.com/news/iran-direct-flights-usa-547/ Back to Top Almost 30,000 passenger and freighter aircraft will be needed by 2032 According to Airbus' latest Global Market Forecast (GMF) in the next 20 years (2013-2032), air traffic will grow at 4.7 per cent annually requiring over 29,220 new passenger and freighter aircraft valued at nearly US$4.4 trillion. Some 28,350 of these are passenger aircraft valued at US$4.1 trillion. Of these, some 10,400 will replace existing aircraft with more efficient ones. With today's fleet of 17,740 aircraft, it means that by 2032, the worldwide fleet will double to nearly 36,560 aircraft. Increasing urbanisation will lead to a doubling of mega cities from 42 today to 89 by 2032, and 99 per cent of the world's long-haul traffic will be between or through these. Traffic growth has led to average aircraft size 'growing' by 25 per cent with airlines selecting larger aircraft or up-sizing existing backlogs. Larger aircraft like the A380 combined with higher load factors make the most efficient use of limited slots and contribute to rising passenger numbers without additional flights as announced by London's Heathrow Airport. A focus on sustainable growth enabled fuel burn and noise reductions of at least 70 per cent in the last 40 years and this trend continues with innovations like the A320neo, the A320 Sharklet, the A380 and the A350 XWB. "By 2032, Asia-Pacific will lead the world in traffic overtaking Europe and North America. Today on average, a fifth of the population of the emerging markets take a flight annually and by 2032, this will swell to two thirds. The attraction of air travel means that passenger numbers will more than double from today's 2.9 billion, to 6.7 billion by 2032, clearly demonstrating aviation's essential role in economic growth," said John Leahy, Chief Operating Officer - Customers. Domestic flows are also set to rise strongly with domestic India growing at the fastest rate (nearly 10 per cent), followed by China and Brazil (seven per cent). Overall, with an above world average traffic growth rate of 5.5 per cent, Asia-Pacific will account for 36 per cent of all new passenger aircraft demand, followed by Europe (20 per cent) and North America (19 per cent). In the Very Large aircraft market, dominated by the A380, there is a requirement for 1,334 passenger aircraft valued at US$519 billion. Of these, 47 per cent will be needed in the Asia-Pacific region, followed by the Middle East (26 per cent) and then Europe (16 per cent). Asia-Pacific's requirement for the A380 is demonstrated by the region's growth in middle classes which is set to quadruple in Asia-Pacific in 20 years. In the Twin Aisle market, covered by amongst others the A350 XWB and the A330, the requirement is for 6,779 aircraft valued at US$1.82 trillion. Of these, 48 per cent of deliveries will be in Asia Pacific, followed by Europe (15 per cent) and the Middle East (13 per cent). The Single Aisle market represents 71 per cent of deliveries by unit numbers with a requirement for 20,242 aircraft valued at US$1.80 trillion. Asia-Pacific will require 34 per cent of deliveries followed by North America and Europe requiring 23 per cent each. The global success of low cost carriers (LCC) especially in Europe, and increasingly in Asia, the Middle East and Africa is helping to open new markets and give access to the benefits of flight to first time flyers from these regions. By 2032, LCCs will have increased their traffic market share from today's 17 per cent to 21 per cent. SOURCE - Airbus http://nextbigfuture.com/2013/09/almost-30000-passenger-and-freighter.html Back to Top Back to Top Back to Top American Airlines plans to hire 1,500 pilots over the next five years American Airlines, which has used up its list of pilots on furlough, is now ready to resume hiring. It said it expects to hire 1,500 pilots over the next five years. It credited the need for pilots to four factors: - An incoming fleet of new airplanes - More international flying - Pilot retirements, and - Tougher federal rules on pilot rest and duty time that go into effect in 2014. "Today marks an important step toward a bright future at the new American," AA vice president of flight John Hale said. "We're providing our current pilots with the strongest career advancement and growth opportunities in more than a decade, while continuing to build a premier airline and world-class employer they can be proud to fly for throughout their careers." Hale said the planned merger with US Airways - currently blocked by a federal lawsuit - "will provide even greater opportunities for all of our people." Allied Pilots Association Dennis Tajer said the real boost for American will be if it can finish the US Airways merger. "While this is welcome news for our pilot families, we continue to believe the core ingredient in creating pilot job security and hiring is in developing a network that can compete with Delta, United and Southwest by merging with US Airways," Tajer said. American said its plan call for hiring hire and training 40 to 50 pilots a month beginning this winter "through at least summer 2014." Among the newcomers will be applicants currently flying for American Eagle Airlines. http://aviationblog.dallasnews.com/2013/09/american-airlines-plans-to-hire-1500-pilots-over-the-next-five- years.html/ Back to Top Japan Air-ANA Haneda Slot Fight Draws in American, United Japan Airlines Co. and ANA Holdings Inc.'s fight over additional slots at Tokyo's Haneda airport, Asia's second- busiest, is widening to include global airline partnerships seeking access to fly businesspeople right into the heart of the city. Haneda is set to gain about 40 new daytime landing slots for flights starting in March, Akihiro Ohta, Japan's transport minister, said Sept. 20 in Tokyo. United Continental Holdings Inc. (UAL), which has teamed up with ANA, is seeking its first slot on its own while Delta Air Lines Inc. (DAL), the only major U.S. carrier without a Japanese partner, wants 25 slot pairs. American Airlines Inc. has a partnership with Japan Air. ANA, Japan's largest airline, is vying for a lion's share of the roughly 20 new international slots to be distributed among local carriers, saying government support of Japan Air's restructuring tipped the balance in favor of its rival. Rights to Haneda are important as business travelers will pay a premium to land near the city center instead of flying into Narita airport, about 40 miles east of Tokyo. "Access to those slots is considered very important by the U.S. carriers," said Peter Harbison, executive chairman at the Sydney-based CAPA Centre for Aviation. "It creates the obvious competitive advantages -- being close to the city and having desirable arrival and departure times." 'Very Important' Haneda resumed regular intercontinental flights three years ago after opening a new international terminal. Atlanta-based Delta said on July 31 it wants 25 slot pairs so it can return most of its flights to the airport after being forced to move them to Narita in 1978. It's competing against United and American, which have flight- sharing ventures with Japanese airlines and benefit from the domestic carriers' slots. Delta won two nighttime slots to Haneda in 2010, while American Airlines got one. Hawaiian Holdings Inc. (HA) also received one slot while United got none. A slot is the right to land and take-off a plane. "Connecting Haneda with United's San Francisco hub would clearly provide the greatest level of consumer benefit of any service between Haneda and the United States," Rahsaan Johnson, a United spokesman, said Sept. 25. "United has more flights out of San Francisco than any other airlines' western hub." 'Piecemeal Offers' The ability of U.S. carriers to win slots at Haneda is hampered by government favoritism toward domestic carriers, Delta Chief Executive Officer Richard Anderson said at a press conference in Tokyo on July 31. "The U.S. should reject these unsatisfactory and piecemeal offers -- and permit no changes until Japan is ready to fully open Haneda and allow Delta to move its hub," Anthony Black, a spokesman for Atlanta-based Delta, said in an e-mail. The allocation of daytime slots may also prove more competitive than the nighttime slots three years ago, since the timings are more attractive to U.S. carriers. "American has consistently raised concerns about the operational restrictions under which we fly between John F. Kennedy and Haneda, and that remains our focus," said Mary Frances Fagan, a spokeswoman for the carrier. The time for its one flight between Haneda and New York, which leaves Tokyo at 6:55 a.m., isn't attractive to business travelers, she said. ANA, JAL ANA says it needs more slots from Haneda after the government's support during Japan Air's restructuring. "We can't catch up with Japan Airlines's finances and profitability by ourselves after the support it had under restructuring," ANA President Shinichiro Ito said in an interview last month. "One of the few ways the government could help correct that imbalance would be to give priority over the new slots to us." Japan Airlines, the only other local airline that flies overseas from Haneda, was relisted on the Tokyo Stock Exchange last year after it wiped out shareholders and debts during bankruptcy as it was supported by 350 billion yen of government-backed financing. The carrier had an operating profit margin of 13.8 percent, almost double ANA's 7 percent in the year ended March, according to data compiled by Bloomberg. "The slots are the property of the nation's citizens," JAL President Yoshiharu Ueki said in an interview last month. "They should be divided equally." Japan has been gradually increasing landing and take-off slots at Haneda since the opening of a new runway in 2010. It will add 30,000 international slots in the year ending March 31, bringing the total to 447,000 annually, according to the transport ministry. http://www.bloomberg.com/news/2013-10-01/delta-aims-to-snatch-more-flights-to-tokyo-s-downtown- airport.html Back to Top Report: Frontier Airlines to be sold to Indigo Partners LLC Indigo Partners LLC agreed in principle late Monday night to buy Denver-based Frontier Airlines from Republic Airways Holdings, the Wall Street Journal is reporting. It is unclear what the future may be for Frontier, which is Denver's only hometown airline with an estimated economic impact of about $470 million each year on the metro area. Frontier employs 4,000 people nationwide, 3,000 of whom are in Denver. The deal is primarily based on debt assumption, The Journal reports. Indigo, formerly the controlling shareholder of ultra-low-cost carrier Spirit Airlines, is based in Phoenix and specializes in aviation, particularly in the ultra-low-cost airline sector. William Franke is co-founder and managing partner of Indigo and the former CEO of America West Airlines. Indigo bought Spirit in 2006, and with Franke at the helm as chairman, helped change the carrier into an ultra-low-cost airline and one of the fastest growing carriers in the U.S. Franke and TPG founder David Bonderman partnered on investments in Ryanair Holdings PLC, a discount carrier in Ireland well-known for its irreverent advertisement tactics. Indigo fueled speculation in July when all shareholders associated with the equity firm sold off their stakes in Spirit at the same time that Franke stepped down as chairman of the airline. Having a large stake in both carriers could be seen as a conflict of interest given Frontier's current transition to an ultra-low-cost carrier. Negotiations appeared to stall last week over pilot agreements, but the parties came to an agreement just hours before the exclusivity agreement would be lifted between Indigo and Indianapolis-based Republic, reports The Journal. Details of the sale have yet to be announced and the implications for the carrier's hub remain uncertain. Denver's worst case scenario is if the airline's new owners find the local market is too competitive - having both United and Southwest entrenched and fighting for market share - and decide to pack up its hub and head for a different city. Not only would this cause upheaval for Frontier's workforce, but Denver passengers on all airlines would likely see ticket prices increase, which has Denver International Airport's chief financial officer Patrick Heck on alert. In August, Heck said that the greatest risk to DIA's financial health is the loss of a major carrier. "If Frontier did go away tomorrow, we would see fares go up somewhat, and people who are sensitive to prices are just not going to fly. So you are going to see passenger numbers drop, and we would lose all of Frontier's connecting traffic," Heck told The Post. "It would be bad, but we can withstand it." With nearly 60 percent of the airport's revenues coming from airlines, DIA has a significant dependency on its carriers. Heck and the DIA leadership are trying to flip that percentage with non-airline revenues - such as car rental, parking and concessions - in order to stabilize its finances in the future. But,they know that transition won't happen overnight. "I think we would see a drop in passenger numbers in the short term but that other carriers would eventually pick up most of those numbers," Heck said. Airports generally operate under one of two financial models, compensatory and residual, which essentially dictates what costs it pays for versus what its airlines pay for. Heck says that DIA is a hybrid of the two, but has some inherent risks within it. "We started looking at our risks, and the potential of losing a carrier and we decided we needed more cash in the fund," Heck said. "I think there's room for multiple carriers to exist we just never believed they could exist in their current state." Since Southwest Airlines re-entered the market in 2006, competition at DIA escalated, driving down ticket prices and increasing passenger counts for the airport. More passengers equals more revenue, but airport officials knew it was not likely they could support three major carriers forever. So, DIA began setting aside a rainy day pot of about $600 million to cushion the blow of a major carrier drawdown. According to Heck, it costs approximately $1 million a day to run the airport. "It's just good business practice to have about a year of cash on hand and we increased that to offset that risk of losing a carrier," Heck said. "The good news about all of this is that we have been very upfront about passenger declines due to the dehubbing of one of our major carriers." The DIA team has been feverishly implementing new processes for the last couple of years in an attempt to increase non-airline revenues. DIA's chief commercial officer is currently overseeing a dramatic revamping of the airport's food and retail offerings, recent rate increases on its money-making parking and hopes its new South Terminal Redevelopment project helps rake in cash. Frontier's departure from Denver is the airport's worst-case scenario, but Heck said, "we really want Frontier to make it and we want Denver to be a good market for them." Several airline analysts predict Frontier staying in Denver, but overhauling its image into the ULCC model, while others suggest the steep competition at DIA will drive the carrier elsewhere. Republic, a publicly-traded carrier that flies small aircraft on behalf of large airlines, bought Frontier out of bankruptcy in 2009 for $109 million, plus the assumption of $1 billion in debt and aircraft lease obligations and was its foray into running a brand-name carrier. Frontier was a money-suck for Republic at the beginning of the relationship but saw an improved financial performance following restructuring and cost-trimming efforts. The Denver-based airline had a pre-tax income in 2012 of $23.9 million compared with a loss of $95.3 million the year prior. Revenue grew from $1.3 billion in 2011 to $1.4 billion last year. Republic carried long-term debt of $2.1 billion, a significant portion of it acquired when it purchased Frontier. Frontier has more than 200 daily flights with nearly 120 of them departing out of its hub at Denver International Airport. Meanwhile, Dallas-based Southwest Airlines surpassed Frontier last year in the airport's market share, snatching the No. 2 spot. The shift was is a direct result of Frontier's cost-cutting measures, including decreasing the number of flights while squeezing more passengers on each flight. The Denver carrier operates 57 aircraft, primarily Airbus. Its fleet includes 17 A320, 35 A319, and one A318. Florida-based Spirit Airlines' fleet is strikingly similar to Frontier, consisting of 35 Airbus - 26 A319s, 7 A320s, 2 A321s. The sale has been a long time in the making with Republic missing several target sale dates over the past year. Republic hired bankers at Barclays Capital in April 2012 to court potential buyers. Frontier, in its 20th year of operations, is a recently-turned ultra-low-cost carrier servicing more than 75 destinations in the U.S., Mexico, Costa Rica, Jamaica and the Dominican Republic. http://www.denverpost.com/breakingnews/ci_24211326/report-frontier-airlines-be-sold-indigo-partners-llc Back to Top PIA opens financial bid for 10 aircraft today ISLAMABAD: The Pakistan International Airlines (PIA) will open on Monday (today) first bid for obtaining 10 additional aircraft on lease, to improve its services and overcome losses. Although the PIA management has sought financial bids for acquiring 10 aircraft either on lease or on payment, it prefers the former option, according to sources. "We are opening two separate bids for obtaining 10 additional aircraft on lease or on purchase on Sept 30 and April 4, respectively," PIA spokesman Mashhood Tajwar told Dawn. He said that negotiations were under way with different banks for loans to get the planes on lease because even in case of lease PIA would have to pay some initial amount to the contractors or the aircraft companies. When asked whether acquisition of the ten aircraft could help scuttle the government's plans to privatise the airline, Mr Tajwar said it would help ease the financial crisis being faced by the company. "At least a monthly loss of Rs3 billion would be controlled after the new planes become operational," he remarked. "Out of the Rs3bn loss, Rs1bn goes to repayment of international loans, Rs1bn to payment for fuel and Rs500 million to retirement of local loans." He said the PIA's total liabilities amounted to Rs250bn whereas the worth of its assets ran into trillions of rupees. It has been learnt that the government's announcement regarding privatisation has served to bring about some improvement in the airline's efficiency. "We find some improvement in the efficiency of the PIA," acknowledged an office-bearer of the Pakistan Air Line Pilots Association (Palpa). A senior official of the PIA said three under-repair aircraft were inducted into the airline's fleet of operational aircraft this week, taking the total number of such planes to 24. Meanwhile, PIA employees have decided to move the Supreme Court against the proposed privatisation of their company. They demand of the government to make at least one "sincere attempt" to bring the organisation to its feet before going for privatisation of 26 per cent of its shares, as announced by Nawaz Sharif. One of their major demands is that the government should carry out an audit to ascertain real worth of the company's assets, which is said to be in trillions, and its total liabilities. The decision to move the court against the government's plan was taken by the recently-formed Joint Action Committee (JAC) which comprises associations of PIA officers and employees. The JAC feels that the national carrier can be revived and its losses can be curtailed through better planning, including induction of some new aircraft into its fleet. "We have consulted our legal team and decided to put our complaints before the Supreme Court," a member of the JAC and secretary general of the PIA Corporation Employees Union, Obaid Ullah, said. He said that PIA employees held 12 per cent shares of the airline but the government had not taken them into confidence before announcing the plans for privatisation. "We believe that 21,000 employees of PIA will get justice from the Supreme Court," he said without elaborating. The federal cabinet recently approved the proposed privatisation plan. According to the PIA management, the monthly loss of Rs3bn was not because of overstaffing but due to debt retirement and heavy consumption of fuel by outdated aircraft. If the airline acquired 10 to 15 additional aircraft the organisation could overcome its monthly loss, an office-bearer of Palpa said. At present PIA has a fleet of 32 aircraft, of which 24 are in operation. But those in operation are 15 to 20 years old and, therefore, consume great amounts of fuel. A related problem is that big aircraft are being used for short routes because the organisation does not have small planes for domestic routes. It has also been learnt that one of PIA's hotels - the Roosevelt in New York - got an offer of $5bn a couple of years ago, but the Privatisation Commission did not accept the offer. One of the PIA hotels is located in the expensive Champs-Élysées area of Paris, and its price is said to be over $2bn. Another PIA hotel is in the UAE. http://dawn.com/news/1046469/pia-opens-financial-bid-for-10-aircraft-today Back to Top AVIATION MAINTENANCE & ENGINEERING EXCHANGE Published weekly on Wednesday. Curt Lewis