ANA to Resume 787 Scheduled Service on June 1, CEO Ito Says

ANA Holdings Inc. (9202), the biggest operator of Boeing Co. (BA) 787s, aims to resume scheduled flights of the jet on June 1, Chief Executive Officer Shinichiro Ito said yesterday in Tokyo.
Ito, who flew on the airline’s initial test flight yesterday with Boeing Commercial Airplanes President Ray Conner after completion of a fix to the battery system, said Tokyo- based ANA won’t change plans for introducing the Dreamliner to its fleet. The airline expects to receive 10 more planes in the year to March and will assign the next delivery to expanding domestic routes, he told reporters after the flight.
ANA faces a challenge in luring back customers to an aircraft grounded for more than three months after lithium-ion batteries on two planes overheated and melted. A 787 test flight two days ago by Ethiopian Airlines Enterprise was the first since the Jan. 16 grounding, the longest for a large commercial plane by U.S. and Japanese regulators since jet airliners began flying in the 1950s.
“It’s going to be difficult to get passengers to fly,” said Ryota Himeno, an analyst at Barclays Securities Japan Ltd. “A month isn’t long enough to convince passengers. ANA needs to invest a lot of time in flying the planes before customers come back.”
U.S. air safety authorities haven’t determined what caused the battery faults that sparked a Jan. 7 fire on a JAL 787 in Boston and forced an emergency landing by an ANA jet in Japan nine days later.
Japan’s government last week approved resumption of 787 flights by ANA, which operates 17 Dreamliners, and Japan Airlines Co. (9201), the world’s second-largest operator, with seven. Boeing (BA) has about 300 personnel on 10 teams to make the FAA- approved fixes to the battery system, which take about five days each, it has said.
Safe to Fly
The 787 is safe to fly, even as the cause of the battery meltdowns remains uncertain, Mike Sinnett, vice president and chief project engineer of the 787 program, said April 27. Stress testing of Chicago-based Boeing’s redesigned system showed its steel casing and heat vent reduced battery overheating, he said in Tokyo.
“Even if we never know the root cause, the enclosure keeps airplanes safe, and eliminates the possibility of fire,” Sinnet said in Tokyo. “I can’t comment on the root cause because the investigation is ongoing.”
Ito said yesterday ANA has yet to calculate how much the grounding of its 787s cost the airline, and will begin considering the question of compensation after the situation is resolved.
‘Long’ Time
Boeing’s Conner, who said the grounding was a “long” time, said the company will discuss compensation with individual airlines. It’s too early to decide whether the manufacturer will use lithium-ion batteries in the future, he said after yesterday’s flight.
ANA started repairs April 22 at four airports around Japan, according to Ryosei Nomura, a spokesman. JAL also started fixing the batteries last week, Hisanori Iizuka, a spokesman for the carrier, said April 26.
The cost for replacing the battery will be about $465,000 a plane in the U.S., according to the FAA, and the fix adds about 150 pounds of weight to a 787.
ANA will conduct about 230 test flights for pilots with the upgraded 787s, Hiroyuki Ito, a senior executive vice president, told reporters last week. The carrier will also inspect the battery systems after flights.
Monitoring System
ANA and JAL also have put in place a system to monitor the batteries during flights and transmit data to the ground, the carriers have said.
ANA fell 0.5 percent to 209 yen at the close in Tokyo on April 26, while Japan Airlines gained 3.6 percent to 4,750 yen. Boeing rose 1.3 percent to $92.85 in New York trading.
The Dreamliner is the only large commercial jet equipped with lithium-ion batteries as part of its power system. GS Yuasa Corp. (6674) makes the batteries, which are part of an electrical power conversion system built by France’s Thales SA (HO). United Technologies Corp. (UTX)’s aerospace unit supplies the system, which uses enough electricity to power 400 homes.
http://www.businessweek.com/news/2013-04-27/ana-s-dreamliner-test-flight-seen-as-step-in-regaining-customers

 

Boeing team arriving next week to fix Dreamliner battery fault

team of engineers from US aerospace giant Boeing is arriving here on Tuesday to reset the batteries of six Dreamliner aircraft of Air India which are grounded since January after battery fire incidents, sources in the national carrier said.
The Government-run airline plans to put back at least two of the six grounded planes into operations by May 10.
“A team of around 30 engineers is coming to India to reset the batteries of the grounded planes (Boeing-787s) to enable them to fly again,” the sources told PTI here on Sunday.The team, after its arrival, is expected to work on these planes round-the-clock as the airline plans to make all six Dreamliner aircraft operational by the May-end, they said.
“As of now we plan to put into service the first aircraft on May 5 and the second by May 9 once the batteries are reset,” the sources said.
The Federal Aviation Administration (FAA), the US aviation regulator, has approved Boeing’s revamped battery system for these new generation long-haul aircraft.
Following the battery fire incidents in January this year, the entire global fleet of 50 Boeing-787s, owned by eight airlines, including Air India, was grounded.
According to US media reports, the FAA estimates the cost to airlines of modifying each jet with two of Boeing’s beefed-up lithium ion batteries, containment boxes and venting tubes at USD 464,678.
For Air India’s six 787s, total modification cost will come at USD 2.8 million and just over USD 23 million for all 50 jets in service worldwide, the reports said.
The Indian Government has made it clear that it would seek compensation from Boeing for the disruption caused by the grounding of 787s as Air India has been losing an estimated Rs 20 crore each week.
 As per US media, Boeing CEO Jim McNerney reportedly said last week there were no contractual obligations to compensate airlines for the lost revenue. “But having said that, there are a few places where we’ll work with our customers,” Mr. McNerney added.  http://www.thehindu.com/business/Industry/boeing-team-arriving-next-week-to-fix-dreamliner-battery-fault/article4663282.ece
 

and for passengers, with lower fares

The Jet Airways-Etihad deal is expected to intensify competition in the aviation sector. But will it impact air fares dramatically? Aviation analysts and online travel agents (OTA) see interesting times ahead for air passengers.
 According to Sanjay Bhasin, Managing Director of online travel aggregator Goibibo.com, the Jet-Etihad deal will bring in more competition in international sectors and this will cool fares. Jet Airways will have an advantage of getting cheaper fuel from Abu Dhabi which, in turn, will have an impact on fares on certain international routes, he said.
 According to analysts, the Jet deal will add to the supply seats on to international routes and, thus, bring down fares by 10-15 per cent.
 With the revision of air capacity between India and Abu Dhabi, Jet plans to give 23 cities direct access to an expanded global network of 368 destinations. “There will be rationalisation of fares on the US, Africa and South America sectors,” Bhasin added. The Gulf and South-East Asia together account for over 65 per cent of international bookings for the Online Travel Aggregators like Goibibo. “If fares to places like South Africa drop by 10-15 per cent, the demand will shift from Hong Kong and Indonesia to Africa as there may be no fare advantage,” Bhasin said.
 The Jet-Etihad partnership will not only bring in attractive pricing and but also give tough competition to Dubai’s national carrier Emirates, say aviation experts.
 “The deal will give a boost to air connectivity from tier II and tier III cities through code-shares,” says Sharan Lillaney, aviation analyst, Angel Stock Broking.
 Domestic sector fares
 However, in the domestic sector, air fares are expected to remain at the same levels for the rest of the year. The entry of Tata-Air Asia joint venture (JV) is expected in the second half of 2013-14. “At the onset, the JV is expected to focus on tier I and tier II cities with three-four aircraft and will account for only four per cent of the overall industry capacity. We believe AirAsia will ramp up its capacity gradually from 2014-15 onwards. As a result, its entry will not have a significant bearing on key operating parameters, such as average ticket prices in 2013-14,” says Ajay D’Souza, Director, CRISIL Research.
 CRISIL expects the domestic passenger traffic to grow by 2-4 per cent year-on-year to reach around 60 million in 2013-14.
 “We expect the international passenger traffic to continue its steady growth trajectory of 5 per cent in 2013-14 to reach over 41 million. In the long term, growth will be driven by Jet Airways and IndiGo, which are likely to expand their fleet on international routes aggressively over the next two-four years,” D’Souza added.
http://www.thehindubusinessline.com/todays-paper/tp-logistics/and-for-passengers-with-lower-fares/article4664156.ece

A win-win situation for Jet…

Rarely have bilateral air services agreements between India and another country led to the kind of controversy that has been generated post last week’s India-UAE pact.
Last Wednesday, New Delhi signed a bilateral air services agreement (ASA) with the United Arab Emirates, taking the number of seats that airlines from the two countries can fly to destinations in each other’s countries to 36,000 a week over three years. At the moment, the bilateral is pegged at 13,000 seats a week.
 Routinely, India exchanges ASAs with various countries. Generally, an ASA is negotiated when the existing agreement for the number of flights that airlines from the two countries can operate to destinations in each other’s countries has been fully utilised and there is pent-up passenger demand.
 The last time New Delhi signed a bilateral leading to a significant increase in the number of seats was in 2008 when it signed an ASA with Dubai. The bilateral allowed airlines from Dubai and India to operate 54,200 seats a week, an increase of 23,000 seats .
 Monetary factors
 There are two reasons why the latest ASA with Abu Dhabi (UAE) is different.
First, it has to do with the Gulf region being important for India for a variety of reasons, including the fact that around 6.5 million Indians, who are a significant source of foreign remittances, live there.
According to the Ministry of External Affairs, the largest number of Indians in the region is in Saudi Arabia at about 2.45 million, followed by the UAE at about 1.8 million.
 A. R. Ghanashyam, Joint Secretary, Ministry of External Affairs, says that in 2012 the World Bank estimated that $70 billion came into the country as remittances by Indians living abroad. A significant portion of this came from the Gulf region. “Of this $70 billion, maybe $50-60 billion actually came from these people,” he says.
 The Government also wants to project its pro-liberalisation face and favours getting Foreign Direct Investment in the civil aviation sector. The second reason why the latest ASA is different is its timing — it coincided with the Jet Airways-Etihad deal. Last Wednesday, Etihad Airways made a “strategic investment” of $600 million in Jet Airways.
 Etihad is the official carrier of Abu Dhabi and it is looking at this acquisition to further growth. Jet is the fifth airline in which Etihad is acquiring a stake since the UAE carrier started operations in 2008.
It already has a 40 per cent stake in Air Seychelles, apart from 29.21 per cent in Airberlin.
The Abu Dhabi carrier also has a nine per cent stake in Virgin Australia and close to three per cent in Aer Lingus.
 intentions
 Many are looking at the bilateral with Abu Dhabi as a win-win for Jet Airways. Jet has already made clear its intention to operate from 23 cities to Abu Dhabi and then onwards to different parts of the world. Jet has asked for over 40,000 additional seats to Abu Dhabi. The Government is yet to decide on the number that will be given to Jet Airways and other Indian carriers.
The additional seats will also help firm up the new partnership between Etihad and Jet, as the two airlines will get an opportunity to fly from India on one or the other carrier and then continue onward journeys again with either.
 Little wonder that the latest move by the Government has got the industry agitated. Officials from different airlines point out that though the earlier bilateral between India and Abu Dhabi was not fully utilised yet, the two sides have decided to increase the number of seats airlines can operate.
Ministry officials say that Indian carriers were using about 65 per cent, while the UAE side was utilising about 85 per cent of the 13,000 seats available under the earlier bilateral.
They also drop veiled hints that the decision to enhance the bilateral with Abu Dhabi was taken at a much higher, political level. Jet, however, is disputing the contention that the earlier bilateral was not being fully utilised.
 Airport and airline officials also point to the fact that New Delhi’s policy is helping create airport hubs outside the country (Jet is calling Abu Dhabi its gateway, which will be used to carry flyers from India to Abu Dhabi and beyond). They are questioning the wisdom of this move, given that the airports in Delhi and Mumbai were privatised keeping in mind the fact that they would eventually be used as hubs by Indian carriers.
 However, for the moment, the deal is done and sealed. Now, one will have to wait and watch how other carriers, both domestic and international, react. After all, India is one of the few global markets that is seeing an increase in the number of people travelling abroad. And each of these passengers is a potential revenue stream for airlines.
http://www.thehindubusinessline.com/todays-paper/tp-logistics/a-winwin-situation-for-jet/article4664158.ece

Airlines challenge hike in charges at Mumbai airport

NEW DELHI: Federation of Indian Airlines and German carrier Lufthansa have challenged an order of airport economic regulator AERA approving hike in various aeronautical charges at Mumbai airport.
 The Airport Economic Regulatory Authority Appellate Tribunal will hear the petitions of Federation of Indian Airlines (FIA) and Lufthansa on July 18.
The Airports Economic Regulatory Authority (AERA) in a January 15, 2013, order had approved hike in various aeronautical charges such as landing, housing and parking, aerobridge and fuel throughput.
A three-member bench of the tribunal issued notice over condonation of delay to AERA, Airport Authority of India and Ministry of Civil Aviation and Mumbai International Airport Ltd, which operates Chhatrapati Shivaji International airport.
"Issue notice on the application for condonation of delay. Notices are accepted by the counsels appearing for the respective respondents (AERA & others). List the matter on 18th July, 2013," said the tribunal headed by its Chairman Justice V S Sirpurkar in its order.
The Airport Economic Regulatory Authority, Appellate Authority Rules 2010, grants 30 days time to challenge AERA's order. FIA and Lufthansa have come after that stipulated period, hence the tribunal would first decide over the condonation.
AERA, in its order, had also approved a 154 per cent rise in development fee from passengers.
The new tariff had become effective from February this year.
The charges would be in effect for a year. The Chhatrapati Shivaji International airport operator had sought 875 per cent rise in tariff but the regulator has approved a lower tariff hike.
http://economictimes.indiatimes.com/news/news-by-industry/transportation/airlines-/-aviation/airlines-challenge-hike-in-charges-at-mumbai-airport/articleshow/19766161.cms
 

Confidence Issues Linger as the Dreamliner Soars Again

BEIJING — For nearly two hours on Sunday morning a Boeing Dreamliner 787 cruised the skies above Japan, with Boeing chief of commercial aircraft, Ray Conner, and the All Nippon Airways president, Shinichiro Ito, on board.

The presence of the two top airline executives on the test flight appeared aimed at restoring confidence in a plane that was grounded in January after two incidents in which batteries overheated in two separate aircraft, leading to a lengthy and costly grounding of the fleet. Fixes designed by Boeing and approved by the Federal Aviation Administration have been made to the batteries and Japanese airline authorities ordered other safety measures, as my colleague Hiroko Tabuchi reported.
 The ANA flight left Haneda airport in Tokyo at 8:59 a.m. local time and returned without incident at 10:54 a.m., Reuters reported, citing an airline spokesman.
Yuya Shino/Reuters Boeing’s chief of commercial aircraft, Ray Conner, (top,) and All Nippon Airways president Shinichiro Ito, (below,) disembark from an ANA Boeing 787 Dreamliner after a test flight at Tokyo’s Haneda airport Sunday.
 What next for the hitherto-troubled Dreamliner? It’s the only large commercial airliner equipped with the lithium-ion battery as part of its power system (the battery is made by a Japanese company,) Bloomberg News reported.
It’s all about the fixes working, of course – but also about confidence, analysts said.
 The fixes include better insulation between the eight cells in the battery, gentler charging to minimize stress and a new titanium venting system, The New York Times reported.
Enough? Akihiro Ota, the Japanese transportation minister, seemed to think so, saying at a news conference last week he was satisfied with the measures Boeing had taken to eliminate risks of fire. “They have adopted defense in depth,” Mr. Ota said.
 But ANA plans at least 230 test flights in May before putting the aircraft back into commercial use, Reuters reported. It owns 17 of the 50 Dreamliners already delivered, while Japan Airlines owns seven. Ethiopian Airlines Saturday made the first commercial flight with a Dreamliner since January. JAL will begin test flying its Dreamliners in May and aims to resume normal operations in June, the airline said.
 ANA said it intended to set up a dedicated Web site to address passenger concerns about the safety of the 787.
“It’s going to be difficult to get passengers to fly,” Ryota Himeno, an analyst at Barclays Securities in Japan, told Bloomberg. “ANA needs to invest a lot of time in flying the planes before customers come back.”
 Japanese transportation authorities are aware of the challenge. “We will ask Japanese airlines to ensure the safety of passengers and provide them with information,” Mr. Ota, the transport minister, said last week.
 Boeing rival Airbus has decided to abandon the battery in question, Bloomberg reported. It will not use lithium-ion batteries for its A350, the direct rival to the 787, after Boeing encountered problems. Airbus plans the first A350 deliveries next year, Bloomberg said.
 Despite the problems, Boeing profits rose in the first quarter, according to reports.
 “Our first priority in the days ahead is to fully restore our customers’ 787 fleets to service and resume production deliveries,” Boeing chairman Jim McNerney said in a statement last week. McNerney said that the company “worked around the clock to resolve the 787 battery issue,” while increasing deliveries of the 737 and 777 planes.
http://rendezvous.blogs.nytimes.com/2013/04/28/confidence-issues-linger-as-the-dreamliner-soars-again/