Archive for March, 2010
March 23, 2010
A dispute over US and EU support for large airliners will drag on for a few more years after the WTO condemned European subsidies but dismissed most US claims, Airbus said on Tuesday.
Ultimately the dispute, over EU support for Airbus and US aid for Boeing, will only be resolved by negotiations between the two sides, Airbus said after a World Trade Organisation panel issued a confidential ruling to the two sides.
Airbus confirmed that the WTO panel examining the US case against the European Union had concluded that previous EU support for its planes had contained some subsidies.
A confidential interim ruling in September found European government payments to Airbus had injured US aircraft makers and backed some US claims that they fell into the more severe category of illegal export aid but did not support all US complaints, sources familiar with the findings said.
Airbus said the panel had rejected 70 percent of US claims on subsidies of its planes.
“The Panel has now confirmed what we have always said: reimbursable loans are a legal instrument and they have not caused one single job loss to the US aerospace industry,” Airbus spokeswoman Maggie Bergsma said.
“Airbus has brought competition, ensuring healthy choice for our customer airlines,” she said in a statement.
USD$3 TRILLION MARKET
The report will not be published for several weeks or months as it awaits translation into French and Spanish, but a confidential copy of the 1,000-page document was handed to the US and EU trade missions in Geneva.
While both parties are bound to secrecy until publication, details are likely to trickle out as the two sides seek to influence the debate over government subsidies for aircraft.
Subsidy rules lie at the heart of the battle for dominance of the market for civilian aircraft which aerospace firms estimate will be worth USD$3 trillion over the next 20 years.
The United States argues that Airbus got a total of USD$205 billion in unfairly priced loans and other benefits from France, Germany, Spain and Britain over two decades — making the case by far the biggest international trade dispute.
Even if the ruling in that case condemns support by European governments for Airbus, the European Union says it must be seen in the context of a ruling expected by the end of June in a countersuit brought by Brussels over aid for Boeing.
“A fuller picture will only emerge with the release of the interim report in the EU case against subsidies to Boeing which we expect to be issued in the coming months,” EU Trade Spokesman John Clancy said.
There was no immediate comment from US officials or Boeing, but they have previously argued that the two cases are separate, and the ruling in the Airbus dispute should put an end to EU plans to support the new A350 airliner.
However Airbus said possible future funding for the A350 was not affected in any way by Tuesday’s ruling.
Final resolution of the two cases will define the rules of the civil aviation market, where Airbus and Boeing have together nearly USD$1 trillion of aircraft on their order books, for years to come.
In theory a WTO ruling could require the EU to desist from further aid within weeks. In practice both sides are certain to appeal both cases, stringing litigation out for months or years.
(Reuters)
March 23, 2010
A WTO panel on Tuesday called on the European Union to end illegal subsidies to Airbus, ratcheting up the stakes in the multi-trillion dollar large aircraft market.
The call came in a confidential 1,000-page ruling by the World Trade Organisation panel in one of two cases in the trade dispute involving rivals Airbus and Boeing.
The European Union said Tuesday’s ruling was only part of the puzzle and it was premature for one side to claim victory.
“A fuller picture will only emerge with the release of the interim report in the EU case against subsidies to Boeing which we expect to be issued in the coming months,” EU trade spokesman John Clancy said in a statement.
The ruling, covering EU support for Airbus challenged by the United States, said some of the financial aid at issue amounted to prohibited export subsidies and should be stopped within 90 days, several sources familiar with the ruling said.
This included part of the European funding for Airbus’s flagship 525-seat A380, the world’s largest airliner.
Other support that caused injury to US planemakers should also cease, the panel ruled, but set no deadline.
Airbus acknowledged the WTO had found some subsidies and said it might appeal against this ruling, but asserted the panel had rejected 70 percent of US claims.
The ruling does not mean the end of the dispute, which dates back decades. The WTO is due to rule by late June in the countersuit brought by the EU against US support for Boeing.
Both sides could drag out the litigation into next year and beyond with appeals and new disputes over compliance.
“As in all other trade conflicts, resolution will finally only be found in trans-Atlantic negotiations,” Airbus said in a statement.
MIXED VERDICT
Boeing insists the two cases are separate and hopes the ruling will stop the EU from subsiding Airbus’s new A350 plane.
But Airbus said the ruling would not affect funding for the A350 — strictly correct as the panel decided the new airliner was out of its terms of reference, which only covered aid up to 2006. Washington will likely argue a precedent was set, however.
In such complex cases the conclusions rarely go one way, and the panel did find that some support for Airbus, such as loans from the European Investment Bank or debt forgiveness by Germany, did not amount to subsidies, the source said.
But it did say that many other forms of support — in some cases at least — did amount to illegal subsidies. These included infrastructure spending, equity ownership, equity infusions, and some research and development spending, sources familiar with the case said.
“The panel has now confirmed what we have always said: reimbursable loans are a legal instrument and they have not caused one single job loss to the US aerospace industry,” Airbus spokeswoman Maggie Bergsma said.
“Airbus has brought competition, ensuring healthy choice for our customer airlines,” she said in a statement.
There was no immediate comment from US officials or Boeing.
The report will not be published for several weeks or months as it awaits translation into French and Spanish, but a confidential copy of the document was handed to the US and EU trade missions in Geneva.
While both parties are bound to secrecy until publication, more details are likely to trickle out as the two sides seek to influence the debate over government subsidies for aircraft.
Subsidy rules lie at the heart of the battle for dominance of the market for civilian aircraft which aerospace firms estimate will be worth USD$3 trillion over the next 20 years.
The United States argues that Airbus got a total of USD$205 billion in unfairly priced loans and other benefits from France, Germany, Spain and Britain over two decades — making the case by far the biggest international trade dispute.
Final resolution of the two cases will define the rules of the civil aviation market, where Airbus and Boeing have together nearly USD$1 trillion of aircraft on their order books, for years to come.
(Reuters)
March 20, 2010
Boeing said on Friday it will accelerate planned increases in production of two of its popular wide-body planes to accommodate heightened demand from airlines that had curbed orders in the last two years because of the economic crisis.
The improved outlook by the world’s No. 2 planemaker may represent the beginnings of a strong rebound in demand for Boeing and Airbus planes as the global airline industry claws its way back to stability.
“I think it’s fantastic,” said Alex Hamilton, senior aerospace analyst at C.K. Cooper & Co.
“We’re awash in news that the commercial aerospace outlook is improving,” Hamilton said. “The demand is coming back. We’re seeing traffic improve.”
“Market improvement and our conservatively managed approach to production have put us in a position where we see it necessary to raise aircraft output,” said Boeing Commercial Airplanes chief executive Jim Albaugh, said in a statement.
Boeing said it sees 2010 as a year of economic recovery and that airlines are likely to return to profitability in 2011.
Boeing, which is boosting rates on its 777 aircraft to seven per month from five per month, will make that change in mid-2011 rather than early 2012 as originally planned.
The company also plans to increase the rate of its 747 production to two planes per month from the current 1.5 planes. That increase will take effect in mid-2012 rather than mid-2013.
The global airline industry has been battered by an economic downturn that drained travel demand and caused some carriers to postpone or cancel orders. But evidence is mounting that the industry has weathered the worst of the storm.
The International Air Transport Association last week cut its estimate of the 2009 industry loss to USD$9.4 billion from December’s USD$11 billion and said airlines are recovering strongly from the crisis, as passengers, freight and pricing power return.
Hamilton said the improved industry outlook also reduces the chance that Boeing will need to cut production rates on its single-aisle 737 plane.
But another expert, Richard Aboulafia at the Teal Group, said it is too soon to say that demand for new planes has recovered.
“There’s still a lot of overcapacity, so any talk of rate increases is kind of aggressive at this point,” Aboulafia said.
He added that he still believes Boeing will end up cutting 737 production rates.
Boeing, which receives payment when it delivers aircraft, said the production rate for the two wide-bodied planes would not affect 2010 financial results.
Also on Friday, Airbus parent EADS said it may rejoin the race for a multibillion-dollar tanker contract if the US government allays concerns that the competition’s terms favour Boeing.
EADS has said that the US Air Force’s terms for the tanker contract, valued at up to USD$50 billion, are skewed in favour of Boeing’s smaller 767-based tanker. The company is seeking a 90-day extension for the May 10 tanker bidding deadline.
Boeing declined to comment directly on EADS’ request for an extension of the deadline.
(Reuters)
A Canadian government minister apologised on Friday for getting into an argument with airport security staff after he was told he could not take a bottle of tequila on board the plane.
The incident was the second time in three weeks that a member of the Conservative government has apologised for misbehaving at an airport.
Veterans Affairs Minister Jean-Pierre Blackburn said Ottawa airport officials had confiscated the bottle late last month because it was too big. He then got into a heated argument with staff, demanding it be destroyed.
“Granted, I was definitely upset at what happened, and I apologise to those I could have offended,” Blackburn said in a statement. CTV television quoted sources as saying the argument was so heated that airport staff almost called police.
In late February, junior cabinet minister Helena Guergis apologised for berating airport staff at Charlottetown in Atlantic Canada. Media reports said Guergis, angry at being forced to go through security, had called the town “a hellhole” and told staff she was “working my ass off for you people”.
Opposition politicians say the incidents show the Conservatives are out of touch with ordinary Canadians.
(Reuters)
March 20, 2010
A three-day strike by many of British Airways’ cabin crew will go ahead after union talks with management collapsed, leaving the ruling Labour government with a major headache weeks before a general election.
The strike begins on Saturday and is likely to disrupt travel plans for thousands. It risks embarrassing Prime Minister Gordon Brown because the Unite union organising the action is Labour’s biggest single financial backer.
Brown, who had earlier called the strike “unjustified and deplorable”, demanded that it be called off at once.
Meanwhile railway signal workers added to the government’s problems by voting to strike over job cuts and changes to working practices, raising the threat of a first national rail strike in 16 years. They did not name a date.
Labour, which is trailing in opinion surveys ahead of an election widely expected to be called for May 6, has strong union ties that go back to its foundation in 1900. Unite’s political director is Charlie Whelan, Brown’s former spokesman.
Opposition Conservative leader David Cameron has accused Brown of failing to stand up to Unite and compared the situation to the 1970s, which saw periods of severe industrial unrest under Labour.
His party have launched a billboard campaign entitled “Cash Gordon”, featuring a picture of Brown clutching a fistful of union-supplied bank notes behind his back.
“When the crunch comes, he can only act in the union interest, not in the national interest,” Cameron said this week.
“HAWKS” GROUND PLANES
Tony Woodley, Unite’s joint general secretary, told reporters that BA cabin crew who are in dispute would go on strike at midnight for three days, and then again from March 27 to March 30, just as the Easter holiday season begins.
Woodley said “hawks” within BA who wanted confrontation had won the day, including chief executive Willie Walsh.
“I think it is a classic case of Mr Walsh unfortunately being one of the hawks who is looking for a war with our members as opposed to a negotiated settlement,” he said.
The airline wants to save an annual GBP£62.5 million pounds (USD$95 million) to help cope with a fall in demand, volatile fuel prices and increased competition from low-cost carriers.
In full-page newspaper advertisements on Friday, Walsh said a “significant number” of cabin crew would work during the strike and the majority of BA staff did not support the action.
Brown’s spokesman said the prime minister believed the strike “is in no-one’s interest and will cause unacceptable inconvenience to passengers”.
“He urges the strike be called off immediately. He also urges BA’s management and workforce to get together without delay to resolve what is a dispute about jobs and wages.”
Many crews, including those working on long haul flights from London Gatwick airport and all flights from the smaller London City airport, will be unaffected by the action as they have already agreed to the airline’s proposed changes.
BA hopes to fly at least 60 percent of customers booked for the March 20-22 period, having retrained staff to provide cover.
The union had said cabin crew would call off the strike if the airline reinstated an offer that was withdrawn last week.
Walsh said he had put forward a new offer on Friday, which would remain open until the strikes begin, but admitted it was lower as a result of the costs the airline has incurred due to the planned industrial action.
“I have made it clear to the trade union that that is an expense that must be recovered, so the financial value of the proposal that we have tabled is definitely not as attractive as the previous one,” he told reporters.
“Our business must make changes, and I am disappointed that the union has not been able to see the sense of the proposal that we tabled today.”
(Reuters)
NEW DELHI — In an attempt to tighten anti-hijacking laws in the country, the Union Cabinet on Friday approved death sentence for hijackers in keeping with the recommendations made by the civil aviation ministry.
“The Union Cabinet today approved a proposal of the civil aviation ministry to amend the Anti-Hijacking Act of 1982,” I&B minister Ambika Soni said after the Cabinet meeting.
The UPA had earlier constituted a group of ministers (GoM) to look into the proposals which called for complete no-negotiation policy with hijackers. After the UPA came back to power last year, a new GoM, headed by home minister P Chidambaram, was constituted to further look into the proposals. The GoM also included law minister M Veerappa Moily, HRD minister Kapil Sibal and civil aviation minister Praful Patel.
Sections 3 and 4 of the Act, which deal with the definition of hijack and punishment for hijacking, are proposed to be amended to include death penalty. Currently, the law provides for life imprisonment and a fine as punishment.
The GoM earlier examined the proposals to amend the existing law to include these aspects as well as the conspiracy to hijack an aircraft.
The amended law will allow the Indian Air Force, when ordered by a competent authority, to intercept a hijacked aircraft and force it to land. A hostile plane can also be shot on evidence that it could be used as a missile to hit a vital installation.
The amendment also calls for immobilising a hijacked aircraft on Indian soil if it has not taken off already. A new clause will also be inserted for punishment to those who launch a conspiracy to hijack an aircraft.
Source The Times of India
March 19, 2010
Dutch airline KLM, part of Franco-Dutch Air France-KLM said on Thursday it wanted to make commercial flights which use biofuel from 2011.
Last November, during a 1.5 hour KLM flight over the Netherlands, one engine of a Boeing 747 ran on a mixture of 50 percent sustainable biofuel and 50 percent traditional kerosene. The other three engines ran on 100 percent kerosene.
“We have proven it is possible,” said a KLM spokeswoman.
The exact date for launching commercial flights which use biofuels would depend on developments in the industry, such as suppliers and certification, the spokeswoman said.
She did not know to what degree commercial flights would use biofuels but said that test flights had taken place where all four engines used 100 percent biofuels.
KLM chief executive Peter Hartman said in November the biofuel used on the flight reduced CO2 emissions by up to 80 percent compared to conventional kerosene.
Aircraft account for an estimated 2-4 percent of global carbon dioxide (CO2) emissions, which scientists say could cause global temperatures to rise, triggering widespread disease, famine, flooding and drought.
Experts say global aviation emissions could reach 2.4 billion tonnes in 2050, which would be 15-20 percent of all CO2 permitted under a global agreement and a nearly four-fold increase on current levels.
(Reuters)
March 19, 2010
US aviation regulators on Thursday proposed their second fine in a week against American Airlines for alleged maintenance violations.
The latest civil penalty sought by the Federal Aviation Administration (FAA) totalled USD$300,000.
The agency alleged that American mechanics misdiagnosed a problem with the heater on an MD-82 air speed sensor in 2009 that should have restricted when the plane could fly.
Instead, the work was deferred and the aircraft flew five scheduled flights before the mistake was corrected.
Last week, the FAA proposed a USD$787,500 fine against American for three alleged maintenance violations that occurred in 2008 and 2009.
The case involved six planes, two of which the FAA said were operated on flights even though the airline said it would not do so until outstanding work was completed.
American said it was reviewing both fines and planned to meet FAA officials. Airlines can appeal proposed civil penalties.
(Reuters)
March 19, 2010
British Airways and the Unite union have resumed talks to try to avert a weekend strike by cabin crew that would embarrass the ruling Labour government weeks before an election.
“We’re at least talking. That’s the good news, but at the moment there’s only talks and certainly no breakthrough and no acceptable way forward for us but I’m still hopeful and optimistic and that’s why I’m going back (for more talks),” Unite joint general-secretary Tony Woodley told Sky News.
Woodley said cabin crew would call off the planned seven-day strike if management reinstated an offer which was withdrawn last week.
The dispute centres around cost-saving and specifically a reduction in the number of cabin crew staff on long-haul flights.
BA shares traded 1.25 percent higher on Thursday afternoon after the resumption of talks was confirmed.
Led by former pilot Willie Walsh, BA has taken a hard line with unions, arguing that cost cuts are essential when it faces a squeeze on business travel and competition from low-cost airlines. The timing of the stoppage is awkward for the ruling Labour government because Unite is its largest financial backer.
The opposition Conservatives, who lead in opinion polls in what is poised to be a close election, have seized on the dispute to say that Labour remains too close to its union paymasters.
Business Secretary Peter Mandelson said on Thursday that the proposed strike was unjustified and would harm the company’s prospects. Prime Minister Gordon Brown has also called for a resumption of talks.
BA has said it hopes to fly at least 60 percent of customers booked for the March 20-22 period after training staff from other areas of the company to fill in for cabin crew. The union has planned an initial three-day stoppage from Saturday, followed by a four-day strike from March 27.
(Reuters)
Summit communiqué charges unfair, discriminatory treatment of region
Guyana has joined the rest of the Caribbean Community (CARICOM) in expressing concern over the implications of Britain’s increased Air Passenger Duty (APD) for the region’s tourism and travel industries.
Heathrow airport, London
Guyana is one of scores of Carib-bean, African, Pacific and Latin American countries listed as destinations to which passengers travelling from the United Kingdom are required to pay an APD, reportedly a green measure aimed at taxing aviation’s carbon emissions as of November 1 last year.
Until October 31, 2009 there were four rates of duty – twenty pounds for specified European destinations, and ten pounds and forty pounds, respectively, as reduced rates for European and other destinations. With effect from November 1, 2009 the British government introduced a four-destination band structure based on geographical distance from London, each having two rates of duty depending on the class of travel. Bands are based on the distance between London and the capital of the destination country. Guyana, along with other CARICOM countries, has been placed in Band C which attracts an APD of one hundred pounds and a reduced duty of fifty pounds.
Britain is likely to rake in an estimated three billion pounds in taxes as a result of the new APD rates and Rifal is quoted as saying that the people who will suffer from the new British tax will be developing countries.
The new APD came into force last November despite a vigorous CARICOM lobby which peaked late last year at the annual World Travel Market trade show in London where several CARICOM governments were represented. Several British parliamentarians also lobbied the House of Commons during 2008 and 2009 in an attempt to stop the imposition of the APD.
CARICOM tourism and travel officials have argued that the APD discriminates against the region in favour of the United States by determining that all of the US and Hawaii is closer to London than all of the Caribbean.
At last week’s CARICOM summit in Dominica Heads of government expressed concern that the new measures would prove particularly damaging to the region at a time of falling visitor arrivals resulting from the global recession, particularly since the United Kingdom is the Caribbean’s leading tourist market. The customary communiqué issued at the conclusion of the Roseau summit quoted the conference as reiterating “its concern about the deleterious effect of the Air Passenger Duty on tourism, the Community’s most important economic sector, and its related industries, and pointed out that the ‘band’ in which CARICOM member states had been placed was unfair, discriminatory and placed them at a competitive disadvantage.” CARICOM tourism ministers have previously noted the irony of such measures being imposed on the most tourism-dependent region in the world and on countries with no or low carbon emission.
Britain has also come in for criticism from the Secretary General of the World Tourism Organization who said last week in Berlin that the British government had turned a deaf ear to worldwide appeals for a reform of the APD.