Home' Asian Aviation : AAV April 2016 Contents 8 AsianAviation | APRIL 2016
NEWS IN BRIEF
Cathay profit beats estimates
Cathay Pacific Airways, Asia’s largest international airline by
passengers, said it its net income nearly doubled in 2015 to US$773
million, beating estimates by analysts. Sales declined 3.4 percent
despite a 7.6 percent rise in the number of passengers due to the
elimination of a fuel surcharge that resulted in cheaper tickets. The
airline is trying to cut costs and increase productivity as it prepares to
add 12 Airbus A350 aircraft to its fleet this year. Cathay’s capacity
increased 5.9 percent last year but future growth may be limited
because of capacity constraints at its Hong Kong base where a
third runway is scheduled to open in 2023. The airline also faces
challenges from mainland Chinese carriers who are offering more
direct flights to the U.S. and Europe.
Indian conglomerate Tata
Sons is hoping to silence
critics who claim AirAsia
India is actually owned and
controlled by “foreigners”
by upping their stake in the
low-cost carrier to 51 percent
by buying the 7.94 percent stake held by Arun Bhatia-controlled
Telestra Tradeplace. Another 2 percent of Telestra’s stake will
be acquired by Tata veterans and AirAsia board members S.
Ramadorai and R. Venkataramanan.
The move will give Tata Sons a controlling stake of 51 percent
in AirAsia India, which should calm critics who said the airline
was controlled by AirAsia’s Tony Fernandes. The value of the deal
was not disclosed but it may open the door to a capital infusion.
The controversy over the ownership originated with Bhatia’s
son Amit, an independent non-executive director on the board
of the AirAsia group. Bhatia did not participate in the last round
of funding in 2015 when his stake was diluted and he accused
Fernandes of remote-controlling the airline. Bhatia also blamed
poor management and expensive third-party agreements for losses
at the airline. Indian rules allow foreign airlines to own up to 49
percent in local airlines, but stress that management control must
be with the local partner. — Matt Driskill
AirAsia India seeks to silence critics
The International Air Transport Association (IATA) has filed a
complaint with European regulators in an effort to help member
airlines negotiate better contracts with original equipment makers
(OEMs) for after market parts and services.
The European Commission’s competition office is investigating
whether airlines are being forced into anti-competitive maintainence
deals when, for example, engine and component makers force
airlines to use only their spare parts for repairs.
The issue is a large one as the industry is estimated to be worth
US$60 billion and is estimated to grow to US$80 billion by 2025.
IATA officials said the trade body filed the complaint after
European officials sought to validate claims of abuses by OEMs.
“This is an area of deep concern for our members. There are
relatively few equipment vendors and our members are frustrated that
there is little flexibility in negotiations for aftermarket services. Airlines
do not have the leverage to resolve these concerns individually.
So IATA is fulfilling its role as their global trade association and
representing their interests as a complainant,” Tony Tyler, IATA’s
outgoing director general said in a statement.
Tyler said the IATA is not seeking monetary damages, but instead
said “our focus is on the future.
“Our members want to be able to negotiate contract terms more
effectively and with more options than the OEM community will
entertain today. Our aim is to help re-balance the relationship so that
airlines and OEMs can work together as true business partners in a
normal commercial relationship,” said Tyler.
Tyler said because OEM revenues are airline costs, “there is a
natural tension on this issue...Whatever conclusion the investigation
comes to, at the end of the process there will be greater clarity on
the rules of the game and how they should be applied. That will be a
good development for all involved,” said Tyler.
The original probe started in 2015 and focused on maintainence
support for CFM56 turbines and Rolls-Royce Trent XWB engines as
well as Honeywell APUs. — Matt Driskill
IATA weighs in on European
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