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Industry News
In partnership with Flight 
Central Washington University Selects Frasca for Flight Training Devices
Source: Frasca
Central Washington University, Ellensburg, WA has placed an order for two Frasca Flight Training Devices (FTDs), a G58 Beechcraft Baron TruFlite FTD with G1000 and a CRJ-200 Level 5 regional jet FTD. Both FTDs will include Frasca's TruVision visual system. The CRJ will also include Frasca's off-line debrief station. Both FTDs will be shipped in Summer of 2009. Central Washington University is a longtime customer with several Frasca devices already in use in their aviation program.
About Frasca International Inc.
Celebrating 50 years of Flight Simulation, Frasca International of Urbana, Ill., manufactures flight training equipment for airlines, flight schools, universities, and military organizations worldwide. The product range includes Flight Training Devices (FTDs), Synthetic Training Devices (STDs), Cockpit Procedure Trainers (CPTs), Full Flight Simulators (FFSs), and more for all aircraft types, fixed wing and rotary. Over 2,200 devices have been installed worldwide
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China's ARJ21 Completes First Flight
Leithen Francis, Singapore
Source: Air Transport Intelligence news
China's regional jet aircraft, the ARJ21-700, successfully completed its first flight on November 28th. The aircraft's manufacturer Commercial Aircraft Corporation of China (Comac) says in a brief statement to its western suppliers that earlier today the ARJ21-700 had its first flight.
"The first flight took 61mins at an altitude of 2.500m (8,200ft) during which each system installed on the aircraft performed very well," it says."This is a significant milestone in the development of the ARJ21 programme," it adds.
The ARJ21-700, which is a new 90-seat commercial jet aircraft, took off from Shanghai's Dachang Airport in Shanghai where the manufacturer has its aircraft assembly plant. Comac is now working to ensure the aircraft receives Chinese certification and aims to deliver the first aircraft to launch customer Shandong Airlines by the end of next year.
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China Southern Gets Government Bailout, China Eastern Next
Leithen Francis, Singapore
Source: Air Transport Intelligence news
China Southern Airlines is set to get a government bail-out and China Eastern Airlines today suspended its shares from trading on speculation that it too is poised to receive a multi-million dollar bail-out from the Chinese government. China Eastern says in a statement to the Hong Kong stock exchange that it has suspended its shares as of 09:30 today "pending the release of an announcement by the company which is price sensitive in nature". It fails to elaborate but reports in China say the loss-making carrier is about to receive a government bail-out.
China Southern Airlines suspended its shares earlier this week and announced late last night that it will be receiving a multi-million dollar bail-out. The Guangzhou-based carrier says in a statement to the Hong Kong stock exchange that China's ministry of finance has decided to give the airline's parent, China Southern Air Holding Company (CSAHC) , three billion yuan ($440 million). The airline says its shares remain suspended because it is planning to issue some new shares. These shares will go to state-owned entities but it has yet to work through the details and get regulatory approval, it adds.
China's other large state-owned carrier Air China has seen its share price increase dramatically today on speculation that it too will receive a government bail-out. China's state-controlled carriers have been losing money and have been lobbying the Chinese government for a bail-out to help them cope with the economic downturn.
In a separate statement today China Eastern says the company, as of 31 October, expects to make a 1.83 billion yuan fair value loss from its 2008 fuel hedging contracts. When fuel prices were high, earlier this year, China Eastern locked in prices for 36% of its 2008 fuel consumption. Now that fuel prices have plummeted China Eastern faces the prospect of paying above market rate for some of its fuel.
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Hawker Pacific to Sell Piston Engine Overhaul Business
By Emma Kelly
Source: Flight International
Australian aircraft sales and flight services company Hawker Pacific has its piston engine overhaul business up for sale, with the proceeds earmarked for growth opportunities in fixed-base operations and aircraft management.
The Sydney Bankstown airport-based business has been operating for 30 years, specialising in the overhaul of Textron Lycoming and Teledyne Continental Motors piston engines. The business, which employs 20 technicians, has approvals from Australia's Civil Aviation Safety Authority, as well as airworthiness approvals from authorities in China, Malaysia, Indonesia and Thailand.
Hawker Pacific chief executive Alan Smith says the business is for sale, preferably as a going concern, and has attracted interest from a number of parties. "The business is one of the largest aircraft piston engine overhaul shops in Australia with a substantial customer base and strong orderbook," says Smith. The company's Blue Seal engine overhaul programme has an excellent reputation, with industry-leading warranty and fixed pricing, excluding crankshaft and crankcase replacement, Smith adds.
Smith says Hawker Pacific has decided to offer the business for sale as part of "an ongoing review of the various elements of its business and growth strategy. Proceeds from the sale will be used to assist in funding growth opportunities in the flight services business - FBO and aircraft management - throughout Australia and the Asian region."
Hawker Pacific has FBOs in Brisbane, Cairns and Sydney in Australia, as well as Singapore and Kuala Lumpur's Skypark Subang. It is also establishing an FBO at Shanghai's Hongquiao airport in conjunction with the airport authority.
Meanwhile, Hawker Pacific is expanding in the Middle East with a new avionics facility for rotary and fixed-wing operators at the company's existing facility at the Jebel Ali Free Zone. Operations will start in early 2009. Hawker Pacific is already active in the Middle East, where it is the representative for Bell Helicopters, as well as maintaining a hydraulic workshop and rotor blade repair facility RBI Hawker.
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Eurocopter Eyes Asian Growth Markets
Source: Flight International
By Siva Govindasamy
Asia may be one of Eurocopter's smallest markets, but the region's fast-growing helicopter market gives the EADS subsidiary a great opportunity to perfect its global business model.
"This region is not just about where it is today. It is all about the projections of where it can be in the future," says Lutz Bertling, Eurocopter's president and chief executive, speaking to Flightglobal at the recent Airshow China.
"Almost half the world lives here [in Asia], but there are only 200 civil helicopters. Industries such as offshore oil and gas exploration, homeland security and search and rescue have a lot of potential for growth. Rising military budgets also mean we must increase our presence in Asia."
Eurocopter has been in Asia for almost 40 years, setting up subsidiaries in China, Japan, Malaysia, the Philippines, Australia, Singapore and, imminently, Indonesia, along with several maintenance and service centres. It also licence-produces helicopters in China, India, Japan and South Korea.
With persistence and an aggressive marketing strategy that even its competitors privately admit has worked, Eurocopter estimates its market share to be 54% of Asia's 1,300 civil and military helicopters.
"Without being close to our customers, we would not have been able to grow as fast as we have. This region is a perfect example of how our business model works, and it is a model for other parts of the world," says Bertling, who adds that Eurocopter aims to have a presence in every major Asian country by 2020.
LESSONS LEARNT
Much of the lessons it has learnt have come from China, where the company's business has undergone an evolution since it sold its first helicopter in the 1960s.
Eurocopter began the licence-production of the AS365 Dauphin in 1980, which did not involve technology transfer but allowed the company's Chinese partners to learn about its manufacturing methods.
Soon after that Eurocopter established a local office to explore further opportunities for co-operation. That led to the joint development of the EC120/HC120 with Harbin Aircraft, a partnership that continues with the upcoming EC175/Z15. Eurocopter has also sold more than 120 helicopters in China and has over $100 million in sales annually.
"If you take China's growing economic power, and the size of the country and its coastline, the market could rival the USA's. That means that in the second half of the next decade we could see up to 200 helicopter deliveries a year in China," says Bertling.
© Eurocopter
Bertling: Rival companies admire his aggressive marketing strategy
However, the country faces two major problems: restrictions on the use of low-altitude airspace, and a shortage of pilots, engineers and maintenance workers. "This problem exists everywhere, but steps are being taken to improve the situation. We expect changes in regulations and improvements to the infrastructure to take place by 2011, but the shortage of crew could take a little longer resolve," he says.
In India, where Eurocopter has had a long partnership with state-owned Hindustan Aeronautics and the helicopter market has grown rapidly, the problem is a shortage of proper infrastructure. The first dedicated heliport is set to come online only next year, and Bertling says: "India must invest more in the infrastructure. Nonetheless, we expect the Indian market to double or triple in the next five years."
The military business is also lucrative, with Asian countries spending more money to modernise their ageing helicopter fleets. Eurocopter has replicated the civil model in South Korea, where it is working with Korea Aerospace Industries to develop an army utility helicopter that could also serve as a platform for a combat variant.
Mostly, however, the company is involved in several straightforward tenders. In Japan, it is keen to compete in upcoming transport and light utility helicopter competitions. South Korea is also looking for attack helicopters, while Malaysia has an ongoing tender for utility helicopters.
INDIAN POTENTIAL
But India has the biggest potential. Eurocopter is involved in a tender for 197 light utility helicopters for the country's army and air force, and the Tiger is in contention for an attack helicopter requirement. It also hopes to work with HAL to develop another 187 utility helicopters for the country's various services.
There have also been setbacks. Eurocopter won the Malaysian light utility helicopter tender in October, but the government cancelled the contract a month later. In India last year, the company was close to signing a contract for 197 utility helicopters until the government cancelled the tender and called for fresh bids. In both instances the governments acted after accusations from opposition politicians and the competitors that Eurocopter was unfairly favoured in the selection process.
Bertling admits disappointment with these losses, but points out that Eurocopter was exonerated by a Malaysian parliamentary investigation and by the Indian defence minister, so he remains confident about Eurocopter's chances in the new tenders.
"We get this attention because we are the market leader," he says. "This is not about Eurocopter, it is because everyone focuses more on us than on the competition. It does not change the way we do business, and actually makes us even more determined to be ahead in every market."
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China OK to Temporarily Stop Passenger Operations
Leithen Francis, Singapore
Source: Air Transport Intelligence news
Tianjin-based Okay Airways has undergone a top management change and its majority shareholder Juneyao Group has written to the Civil Aviation Administration of China (CAAC) to have the airline's passenger operations temporarily grounded.
A Juneyao Group spokesman in Shanghai says the passenger operations will be grounded for one month starting 15 December but Okay's dedicated freighter operation will continue.
He says the management change caused problems internally so Juneyao Group wrote to the CAAC asking that the passenger operations be shut down temporarily for safety reasons.
Juneyao owns 63% of Okay and the Juneyao spokesman says they are preparing to install a new president at the airline. The airline's founder and president, Liu Jieyin, has "left the president's position and will go to another position in the company", says the spokesman, who declines to elaborate. Juneyao Group also owns Juneyao Airlines in Shanghai and has a stake in Chengdu-based United Eagle Airlines. The Juneyao spokesman says the group has no plans to merge Okay with Juneyao because the two carriers are positioned differently and cater to different market segments.
Juneyao is a full-service carrier whereas Okay is a low-cost carrier.
Okay has four leased Boeing 737-800s, one leased 737-600 and at least one leased Xian Aircraft MA60 with more to come. The carrier's freighter fleet comprises two Shaanxi Y8 and two 737-300 freighters. The 737-300Fs operate in China on behalf of FedEx.
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Shanghai's Spring Increasing Fleet Size
Leithen Francis, Singapore
Source: Air Transport Intelligence news
Shanghai-based Spring Airlines aims to increase its fleet to 16 aircraft next year from 10 and its next aircraft is coming in January.
An official in Shanghai at the airline says Spring currently has a fleet of 10 Airbus A320s. He says the next A320 on lease is due to arrive next month and by the end of next year the airline hopes to have a total of 16 A320s. Spring also has A320s on order with deliveries starting next year, says the official.
The airline currently only operates to cities within China and has yet to launch services to Hong Kong and Macau because it still has to get approval from the Civil Aviation Administration of China, adds the official.
The carrier mostly leases its aircraft from GE Commercial Aviation Services but Macquarie AirFinance says in a statement that last month it delivered a second A320 to Spring as part of a three-aircraft deal. Macquarie says the third aircraft will be delivered in February. According to Flight's ACAS database the first A320 from Macquarie has a manufacturer's serial number (MSN) of 1769 and was previously with Spanish carrier Vueling Airlines. Macquarie says the second and third aircraft are MSN 1852 and MSN 1920. Records show these aircraft were previously with Italian leisure carrier Eurofly.
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Indonesia's Kartika Agrees to Acquire Up to 30 Superjets
David Kaminski-Morrow
Indonesian carrier Kartika Airlines has tentatively agreed to become the Asian launch customer for the Sukhoi Superjet 100, with a potential order for up to 30 of the type.
Sukhoi's civil aircraft division says the Jakarta-based carrier has signed a heads of agreement for 15 firm Superjets plus 15 options.
Deliveries of the PowerJet SaM146-powered regional aircraft will begin in 2011.
Kartika currently operates a small fleet of Boeing 737-200 aircraft on domestic and regional routes. Sukhoi says the agreement with the carrier is worth $448 million at list prices.
"With Kartika Airlines being our launch customer in southeast Asia we are opening a new market for the Superjet 100," says Sukhoi Civil Aircraft president Viktor Subbotin.
Kartika's agreement is for the Superjet 100-95B, says the airframer, which will typically accommodate 98 passengers in single-class configuration, or 86 in dual-class.
Candidates for Kartika's fleet-replacement have included the Bombardier CRJ900, Boeing 737 and Airbus A319.
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CAAC Tells Chinese Airlines to Delay or Cancel Orders
Leithen Francis, Singapore
Source: Air Transport Intelligence news
China's aviation regulator is encouraging airlines to delay or cancel aircraft due for delivery next year, which is a major blow to aircraft-makers around the world. The Civil Aviation Administration of China (CAAC) says in a statement that it wants airlines in China to delay or cancel aircraft due for delivery next year.
It also says it wants airlines to ground some aircraft, refrain from renewing some aircraft leases and accelerate the withdrawal of older aircraft. In addition, the CAAC says it plans to refrain from granting air operator's certificates to start-ups planning to launch in 2009.
These measures are necessary because the global economic crisis has adversely affected the aviation sector and carriers need to be careful about adding capacity during these difficult times, says the CAAC.
The CAAC's public announcement comes after some airlines in China, such as China Eastern Airlines, incurred large losses and sought a financial bailout from the Government. Prior to the announcement some carriers had already sought to ground older aircraft and delay the delivery of aircraft scheduled for delivery this year. Hainan Airlines' Grand China Express Air, for example, has delayed the delivery of some Embraer ERJ-145s and China Southern Airlines is seeking to sell its Airbus A300s, Boeing MD-82s, Boeing MD-90s and some of its Boeing 777s.
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Bombardier Reiterates Forecast in Face of China Statement
Mary Kirby, Philadelphia
Source: Air Transport Intelligence news
Bombardier is staying mum about whether it expects China's plan to slow capacity growth to impact the Canadian firm, but reiterates that its forecast sees the region accounting for 15% of the global aircraft market in the next 20 years. The Canadian airframer has been in order talks with Chinese carriers, notably for its 110/130-seat CSeries aircraft.
"We intend to continue working with airlines and their governing bodies to secure firm aircraft orders in China," a Bombardier spokesman tells ATI. He adds: "Our forecast maintains that China will account for 15% of the global aircraft market in the next 20 years. We are engaged in active discussions with potential Chinese prospects for all our aircraft types."
The Civil Aviation Administration of China (CAAC) yesterday confirmed that the nation's airlines are being encouraged to postpone, or even cancel, deliveries of aircraft planned for next year. The CAAC also says it wants airlines to ground some aircraft, refrain from renewing some aircraft leases and accelerate the withdrawal of older aircraft. The confirmation follows earlier reports that an order freeze on new aircraft had been issued in China until current overcapacity issues are resolved. Addressing those earlier reports on 4 December Bombardier president and chief executive Pierre Beaudoin noted that CSeries conversations with Chinese airlines will not be affected by "short-term situations".
Without addressing China specifically, Bombardier has warned generally of some order cancellations going forward due to difficulties in the marketplace, however.
Bombardier Aerospace president Guy Hachey says that in terms of the pace of aircraft cancellations and deferrals, "it is not a large percentage of our total backlog", although it is "something we expect to be slightly larger than in the past".
Mexican carrier Alma, which ceased operations last month, this year cancelled two CRJ units.
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Embraer Reports “No Apparent Pressure” From China in ERJ Talks
Mary Kirby, Philadelphia
Source: Air Transport Intelligence news
Embraer is still assessing how China's plan to slow airline growth in 2009 will impact the region on a demand-capacity basis, but says talks with Grand China Express concerning a new ERJ-145 delivery schedule are occurring "with no apparent pressure from the Chinese Government".
The Civil Aviation Administration of China (CAAC) yesterday confirmed that the nation's airlines are being encouraged to postpone, or even cancel, deliveries of aircraft planned for next year. The recommendation comes as Embraer continues negotiations with Grand China Express concerning the pace at which the Hainan Airlines subsidiary will take ERJ-145 regional jets. Grand China has 40 ERJ-145s on order with the manufacturer. Three ERJ-145s slated for the carrier in the third quarter were not delivered due to a reduction in the planned growth of its fleet.
As a consequence, Embraer has slowed down the supply of parts and the procurement of supplies to its Chinese joint venture Harbin Embraer, which produces the ERJ-145, until it sorts out the new production rate. "On the ERJ-145, the negotiations between Harbin Embraer and Hainan on a revised delivery schedule are ongoing with no apparent pressure from the Chinese Government," says Embraer executive vice-president airline market Mauro Kern. "However, this recommendation by the CAAC still needs to be better understood as to which sectors of the air transport industry in China will be most impacted on a demand-capacity basis and which will be the most affected by these measures."
Customers with outstanding orders for Embraer E-Jets include Hainan and Kunpeng Airlines. According to Flight's ACAS database, Hainan has 44 E-190s on order with the airframer in addition to the 40 E-145s. Kunpeng, meanwhile, operates one E-190 but is slated to receive four more of the type, says ACAS. The carrier previously said it hoped to get central government approval to order another 45 E-190s. "We have not received any cancellation or deferral request from our E-Jet customers in China (Hainan and Kunpeng) up to now," says Kern.
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Chinese Travel Demand Continues Recovery in October
Nicholas Ionides, Singapore
Source: Air Transport Intelligence news
Chinese domestic passenger demand continued to recover in October but international demand remained depressed.
The Civil Aviation Administration of China says on its website that 18.3 million passengers were carried by the country's airlines in October, representing growth of 8.6% over the same month last year.
It was the second consecutive month of growth after several months of declines that were linked to the Olympic Games period in August. Growth picked up on the back of domestic demand, with domestic passenger numbers rising 11.3% in October to 17 million. However the number of international passengers carried fell 17.4% to 1.26 million. For the first 10 months of the year, the total number of passengers carried by China's airlines increased 2.4% to 159.7 million.
Freight demand also remained depressed in October and the amount of cargo carried by China's airlines fell 3.1% to 343,452t. For the 10-month period demand increased 3% to 3.38 million tonnes.
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China Eastern and China Southern to Get Cash Injection Through Share Sales
Nicholas Ionides, Singapore
Source: Air Transport Intelligence news
China Eastern Airlines and China Southern Airlines have detailed plans for cash injections from their respective state-owned parent companies that will see each receiving nearly $440 million through the issue of new shares.
The carriers, two of China's three largest, have had their shares suspended from trading in Hong Kong and elsewhere since late last month, when the Chinese Government agreed to give their parent companies cash injections to help them cope with losses. Both airlines now say in nearly identical statements to the Hong Kong stock exchange that they will get cash injections of 3 billion yuan ($437 million) by selling new shares to their unlisted government-owned parent companies.
Shanghai-based China Eastern says parent company CEA Holding will acquire 652.1 million new domestic 'A' shares at 3.6 yuan each for a total price of 2.34 billion yuan. CEA Holding's overseas unit, CES Global, will at the same time buy new international 'H' shares at 1 yuan each for a total of 652.1 million yuan. The share purchases will lift to 68.2% from 59.7% the total direct and indirect shareholding CEA Holding will have in China Eastern.
Guangzhou-based China Southern, a member of the SkyTeam alliance, will meanwhile issue 721.1 million new A shares to its parent company for 3.16 yuan per share, raising 2.27 billion yuan. The parent company's overseas arm will at the same time acquire 721.1 million new H shares for 1 yuan each. China Southern Air Holding will own 59.2% after the share purchases, up from 50.3%.
The last of China's 'big three' airlines, Air China, is in the strongest financial condition of the major carriers although it too may receive a cash injection from the Government soon, according to reports. Fourth-largest player Hainan Airlines has also indicated it may seek government aid.
China's airlines have been struggling this year as costs have risen and demand has fallen, in part because of natural disasters as well as strict visa restrictions that were imposed on foreign visitors ahead of the Olympic Games in Beijing in August.
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Pratt, China Eastern to Open CFM56 MRO Facility in '09
Mary Kirby, Philadelphia
Source: Air Transport Intelligence news
A new engine maintenance, repair and overhaul (MRO) business being established in Shanghai under a joint venture between Pratt & Whitney (P&W) and China Eastern Airlines is expected to open in the next six months, despite the region's current economic woes.
The facility, which will handle CFM International CFM56 engines, was originally slated to be operational in 2008, but the process was delayed due to issues associated with the Beijing Olympics and earthquakes in China, says a P&W spokesman. "At one point when groundbreaking took place, they thought it would open by the end of 2008 but it will be the first part of 2009 when it will open," he says, specifying that it will be the "first half" of 2009.
P&W Global Service Partners and China Eastern in December 2005 disclosed they had signed a memorandum of understanding to establish an engine MRO centre in Shanghai that would initially focus on CFM56 engines. One year later, they announced they were proceeding with plans for the facility and revealed that Shanghai-based China Eastern had awarded P&W a 15-year maintenance service agreement to maintain the airline's CFM56 engines.
The carrier's fleet includes CFM56-powered Airbus A320 family aircraft and Boeing 737s. In addition to engine work for China Eastern, the centre will provide MRO for third-party customers across the Asia-Pacific. China Eastern has been struggling financially of late. The carrier is to receive a cash injection from its state-owned parent, CEA Holding, through the issue of new shares to help it cope with growing losses.
At the same time, Chinese carriers are under pressure from the government to curb capacity growth by delaying or cancelling aircraft due for delivery next year, grounding some aircraft and withdrawing older aircraft. Despite current industry turmoil, P&W remains optimistic about growth in the Asia/Pacific region. The P&W spokesman points to the forthcoming Shanghai MRO centre as evidence of this confidence.
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Airbus Calm Over Chinese Slowdown Pressure on Carriers
David Kaminski-Morrow, London
Source: Air Transport Intelligence news
Airbus is remaining calm over the Chinese Government's pressuring airlines to postpone, or even cancel, deliveries of aircraft planned for next year. The airframer states that it has not received any requests from Chinese carriers to cancel or delay receipt of aircraft.
"We're committed for the long-term to our Chinese partners," says a spokesman for the company. He points out that Airbus has over 450 aircraft operating in Chinese service and a backlog of some 430 aircraft on order from Chinese carriers as of 30 November. Airbus also has a new A320 final-assembly line in the Chinese city of Tianjin, which it formally opened only in September.
China's civil aviation administration, CAAC, is trying to curb capacity growth to reduce the economic slowdown's impact on the aviation sector. It is intending to hold back from granting air operator's certificates to start-up airlines planning on beginning operations next year.
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