THE CORSIA EFFECT

Carbon offset decisions to be made

REGULATORY REFORM
US and Europe pursue different paths

CEO INTERVIEW
IAG’s Willie Walsh

APRIL 2019 | atwonline.com

THE CHANGING AIR FRANCE-KLM PARTNERSHIP

FOR BETTER
OR WORSE

00 ATW APRIL_19__COVER fin.indd 1 3/13/19 12:50 PM

 Where are
your next pilots
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ATW_PM_04.indd 2 3/15/2019 8:02:28 AM

 Volume 56 / Number 3 April 2019
CONTENTS
This issue online atwonline.com/magazine-issues/atwonline

ON THE COVER
14 FOR BETTER OR WORSE 14
Air France-KLM Group adapts under a new
CEO and with a new government stakeholder
By Karen Walker

KLM
FEATURES
20 ACADEMY GROWTH
Pilot training facilities are
ramping up worldwide.
By Robert Moorman

ROB FINLAYSON
23 CRITICAL CHOICES
Questions loom over aviation’s
global carbon emissions scheme.
By Henry Canaday
20
30 TRADING UP
New narrowbodies and a growing
middle-income market fuel Cebu’s expansion.
By Chen Chaunren

32 WHEN LESS IS MORE

US steps back on airline rulemaking;
Europe stands firm.
By Ben Goldstein and Kerry Reals

CAE
34 CABIN INNOVATIONS
Traditional and new industry players
explore the aircraft interiors space.
By Alan Dron

36 CONNECTIVITY CONVERSATION
The debate on how to improve onboard Wi-Fi
CHEN CHAUNREN

and make money continues.

30
By Victoria Moores

38 AH, DE HAVILLAND!
The Q400 turboprop’s new owner
resurrects a famous brand.
By Graham Warwick

40 DOORS TO OPEN
Can a new push for African aviation
liberalization fare better than the first?
By Alan Dron

36
VIASAT

Cover photo: Air France

atwonline.com | April 2019 | ATW 1

p1-3_TOC.indd 1 3/15/19 2:48 PM

ATW_PM_04.indd 2 3/15/2019 8:02:51 AM
 CONTENTS
7 44
12
5 EDITORIAL
China called it first
By Karen Walker
7 NEWS BRIEFS
US lawmakers seek FAA
oversight review in wake
of MAX groundings
What US airlines and
associations said about
the Boeing MAX grounding
9, 10 Airline News
12 ANALYSIS
Supersonic Reimagined
Can a supersonic airliner be
environmentally acceptable?
By Graham Warwick
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April 2019 | Volume 56/ Number 3
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 EDITORIAL

China called
it first
EDITORIAL STAFF Karen Walker | Editor-in-Chief
Editor-in-Chief karen.walker@informa.com
Karen Walker
+1 703-656-6300
karen.walker@informa.com
Managing Editor
Jack Wittman
jack.c.wittman@informa.com
News & Online Editor

W hatever is ultimately Unfortunately, as happened with

Linda Blachly
linda.blachly@informa.com
concluded about the the 2013 groundings of the Boeing
Europe Bureau Chief
Victoria Moores Lion Air and Ethiopian 787 after a series of fires related to
Tel: +44 (0) 7966 389 339 Airlines Boeing 737 MAX crashes, its lithium ion batteries, FAA, DOT,
victoria.moores@informa.com
the response to the second acci- Boeing—and, indeed, Boeing’s US
Europe/Middle East Editor
Alan Dron dent was an aviation regulatory airline customers—looked uncom-
South East Asia & China Editor gamechanger. fortably too much in lockstep as they
Chen Chuanren Typically, the US—and FAA unilaterally agreed, after each non-
US Congressional Editor in particular—is the global leader US grounding, that they were right
Ben Goldstein
when it comes to major safety deci- to keep the MAX in the air.
Senior Editors
Sean Broderick
sions, such as issuing an emergency Since 2005, when FAA changed
Bill Carey grounding order. That is especially its certification procedures to allow
Jens Flottau
Mark Nensel
true where a US-made and certified qualified manufacturers to select
Adrian Schofield aircraft is involved. their own employees to certify their
Director, Editorial Production In this case, of course, the oppo- own aircraft, FAA has been more reli-
Michael Lavitt site was true. By the time the US ant on those manufacturer decisions.
Production Editors issued its grounding order, it was the And when a major event happens—
Bridget Horan
Michael Johnson last to do so. China, where slightly such as two airliners of the same type
Contributing Editors more MAXs are installed than in crashing within five months—US
Helen Massey-Beresford the US, was quickest to take the regulators seem unable to stand clearly
Henry Canaday
Kurt Hofmann “safe not sorry” approach. Other at arm’s length from the US manu-
Polina Montag-Girmes countries with well-regarded avia- facturer. But as AFA president Sara
Robert W. Moorman
tion authorities, including Australia Nelson said, “America in international
Contributing Photographers
Rob Finlayson and Singapore, followed suit, as did aviation means the larger world more
Joe Pries EASA and then Canada. Agree or generally—that we set the standard
Art Direction & Design disagree with their approach when so for safety, competence, and honesty in
Unconformity, LLC.
little was known about the second, governance of aviation.”
Ethiopian, crash, the fact remains That is still true, but FAA, DOT
that none of those countries or regu- and Boeing should take careful note
© Air Transport World 2019. All Rights Reserved.
Permission is granted to users registered with the latory authorities felt it necessary to of how the sands shifted with the
Copyright Clearance Center, Inc. (CCC) to be guided by where FAA stood in tragic Ethiopian crash. Convenient
photocopy any article, with the exception of those
for which separate copyright ownership is indicated making the call to ground. For the as it may be, it is not enough to say
on the first page of the article, for a base fee of $1.25 most part, the public—and affected that China and the rest of the world
per copy of the article and 60 cents per page, paid
directly to the CCC, 222 Rosewood Dr., Danvers, non-US airlines—agreed with them. bowed to emotional pressure while
Mass. 01923, U.S.A. (Code No. 0002-2543/04 This is a new world order that FAA the US waited for facts. The world
$1.25 + .60). Microfilm of Issues and reproduc-
tions of issues or articles can be ordered from The will find difficult to fold back, espe- also wants clear evidence that major
Proquest Company, 300 North Zeeb Rd, PO Box cially if any major design fix is found safety decisions are made without any
78, Ann Arbor, Mich. 48106, USA.; Tel: +1 800-
521-0600. to be necessary for the MAX. political or economic pressure.

atwonline.com | April 2019 | ATW 5

p5_Editorial_April2019.indd 5 3/15/19 3:08 PM

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 Airline News
For daily news stories,8-9
go to atwonline.com/dailynews
For daily news stories, go to atwonline.com/dailynews
US lawmakers seek FAA oversight review in wake of MAX groundings
The crash of an Ethiopian Airlines’ Boeing 737 MAX 8 became a
watershed moment for US aviation regulatory oversight after sharp
divisions emerged about when an aircraft type should be grounded
and who makes that decision.
The crash of Ethiopian flight 302 minutes after taking off from
Addis Ababa March 10 triggered an unprecedented chain of
groundings because of similarities with another MAX crash in
Indonesia less than five months earlier. Like flight 302, Lion Air
MAX 8 flight 610 had just taken off in good weather conditions,
appeared to encounter severe control problems almost imme-
diately that prompted the pilot to request emergency clearance
for a return to the airport, and then the aircraft went into a rapid
and steep descent. All 189
people onboard flight 610
and all 157 people on flight
302 were killed.
Both crash investigations
are ongoing, but one focus
area of the Indonesia event
is the MAX’s maneuvering
characteristics augmenta-
tion system (MCAS), soft-
ware developed specifically
for the MAX because of
its heavier weight. MCAS
is designed to automati-
cally kick in if the aircraft’s
angle of attack becomes
too high, risking a stall.
There is an MCAS override
switch.
The erratic flight path
of flight 610, with the pilot appearing to be fighting sharp nose-
down turns with nose pulls, prompted a closer examination of
MCAS.
While no cause has yet been established for the flight 610
crash, airlines and countries that operate the MAX almost imme-
diately began grounding the aircraft after the Ethiopian crash,
citing concern about two catastrophic accidents of the same new
aircraft type in months and the need for an abundance of caution.
China was the first country to issue a grounding, doing so
the day after the Ethiopian crash. There are more than 70
MAXs in the fleets of Chinese airlines. In the next 48 hours, the
groundings rapidly expanded, issued by countries that included
Australia, Indonesia, Singapore and several European coun-
tries. On March 12, Europe’s aviation authority, EASA, issued a
European Union-wide grounding order. On the morning of March
13, Canada’s transport ministry announced a similar ban, citing
new evidence that, while not conclusive, showed “similarities
that exceed a certain threshold in our minds.”
This left the US as the lone exception still permitting the
MAX to fly. Throughout the three days after the crash, the US
Department of Transportation (DOT), FAA, Boeing and the US
airlines that operate the MAX—American Airlines, Southwest
Airlines and United Airlines—had issued various statements
standing by their belief in the safety of the MAX and reiterating
there was not enough evidence to link or know the cause of the
crashes.
Almost 60 MAXs with US airlines continued to fly. FAA’s stance
was particularly notable because the aircraft was designed and
built by an American company, and because when a major ground-
ing occurs, it typically starts with an FAA order. While there is
precedent for other authorities to make the first call on a ground-
ing, the speed and scale with which significant aviation authori-
p7-10 Newsbriefs.indd 7
NEWSBRIEFS
NEWSBRIEFS
ties—especially EASA—diverged from FAA was unprecedented.
At 2:30 p.m. US ET March 13, about three hours after the
Canadian announcement—the US did a U-turn. The way in
which it announced that it was also grounding the MAX, with
immediate effect, was also unusual in that it was made not by
DOT or FAA, but by US President Donald Trump.
FAA acting administrator Dan Elwell held a press conference
soon after, explaining that refined satellite tracking data, com-
bined with some undefined physical evidence from the wreck-
age of the Ethiopian Airlines crash site, prompted the change of
opinion.
FAA’s emergency order stated the new information concern-
ing “the aircraft’s configu-
ration just after takeoff
that, taken together with
newly refined data from
satellite-based tracking of
the aircraft’s flight path,”
indicated similarities with
what happened to the Lion
Air flight.
“Suffice it to say the
evidence found on the
ground made it more likely
GETTY IMAGES/STEPHEN BRASHEAR
that the flight path was
closer to Lion Air,” Elwell
told reporters.
The order’s language
suggested the discovery of
wreckage that established
the aircraft’s flight-control
surface positions. Flight
610 began to experience flight-control issues shortly after
retracting its flaps after takeoff. Those issues are the focus of
that ongoing investigation.
The refined satellite data, meanwhile, came from space-
based ADS-B provider Aireon.
“The way the [initial] data was presented, it was not showing
credible movement of an aircraft,” Elwell said.
The resulting track, including flight 302’s altitude variations,
lined up closely with flight 610’s known track. This suggests 302
was struggling to maintain altitude and then dove rapidly to
impact, as happened with 610.
Elwell, explaining why the agency was the last to issue a
MAX grounding, said, “we are a fact-driven, data-based orga-
nization. We make actions based on data, findings and risk
assessment. That data coalesced today, and we made the call.”
But questions were soon asked about why the US was last
to make a grounding call, and US lawmakers began calling for
oversight of FAA’s decision-making processes.
US House transportation and infrastructure committee chair
Peter DeFazio (Dem-Oregon) and House aviation subcommittee
chair Rick Larsen (Dem-Washington) issued a statement say-
ing, “despite repeated assurances from the FAA in recent days,
it has become abundantly clear to us that not only should the
737 MAX be grounded but also that there must be a rigorous
investigation into why the aircraft, which has critical safety sys-
tems that did not exist on prior models, was certified without
requiring additional pilot training. While a lot of data has yet to
be recovered that will help explain why Ethiopian Airlines flight
302 went down, as chairs of the committee and subcommittee
with jurisdiction over the FAA and NTSB, we plan to conduct
rigorous oversight with every tool at our disposal to get to the
bottom of the FAA’s decision-making process.”
atwonline.com | April 2019 | ATW 7
3/15/19 3:02 PM
 NEWSBRIEFS
What US airlines and associations said about the Boeing MAX grounding
In the days following the March
10 crash of an Ethiopian Airlines
Boeing 737 MAX 8 in Addis Ababa,
FAA and the three US airlines
that operate the MAX—American
Airlines, Southwest Airlines and
United Airlines—stood by the US’
initial decision to not ground the
aircraft, and all expressed con-
fidence in the MAX’s safety, as
did major pilot associations. Two
large US unions representing flight
attendants, however, called on FAA
to ground the aircraft.
On March 13, the US became the
last to issue a grounding order after
satellite and wreckage evidence
indicated potential similarities
with the Oct. 29, 2018, crash of a
Lion Air MAX 8 in Indonesia. The
grounding was expected to last
weeks, perhaps months.
Here are summaries of what
some of the US airlines and airline
union associations said about the
grounding.
Southwest, which had 34 MAX
8s in service, was the only airline to
put a name to its statement, which
was signed by CEO Gary Kelly and
placed on the airline’s website.
“We have been continually work-
ing with the FAA, Boeing, and
others within the US government.
I have been in contact daily. This
afternoon, the FAA issued its
order to ground the MAX, with our
knowledge and support,” Kelly said.
“Safety is our top priority. It always
has been. It always must be. ...
Southwest has a long history with
the 737 and a stellar safety record.
In 48 years, it’s the only aircraft
we’ve flown. We’ve been part of the
Boeing 737 story as it’s developed
over time. The MAX is the latest
version. ... Our experience with the
MAX, along with the other US oper-
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8 ATW | April 2019 | atwonline.com
p7-10 Newsbriefs.indd 8
ators, has been phenomenal. We’ve
operated over 40,000 flights cover-
ing almost 90,000 hours. … Based
on all the extensive data that we,
our US counterparts, and the FAA
have access to, there is no reason to
question the safety of our MAX air-
planes. That makes sense because
that’s the way our aerospace and
aviation system is designed to work.
History proves—air travel is extraor-
dinarily safe.”
American, which has 24 MAX 8s,
said in its statement on the airline’s
site that it averaged 85 flights per
day with the type, out of 6,700
departures.
“American regularly monitors
aircraft performance and safety
parameters across our entire fleet,
including extensive flight data col-
lection. This data, along with our
analysis, gives us confidence in the
safe operation of all of our aircraft,
and contributes to American’s
exemplary safety record. American
has flown more than 2.5 million
passengers—during 46,400 oper-
ating hours encompassing nearly
18,000 flights—safely on our MAX
8 fleet since the first one was
delivered in Sepember 2017 and
began commercial service later that
November,” American said.
United, which has 14 MAX 9s
accounting for about 40 flights a
day, said, “We have and will con-
tinue to be in close contact with
investigators as well as Boeing to
share data and fully cooperate with
regulatory authorities.”
The Air Line Pilots Association
(ALPA), which represents 61,000
pilots at US and Canadian airlines,
said it supported the FAA and
Transport Canada groundings.
“Out of an abundance of cau-
tion, North American regulators
have acted in the best interests of
aviation safety. ALPA continues to
monitor the situation and is working
alongside aviation authorities in the
United States and Canada to uphold
the safety and integrity of our air
transportation system. We strongly
encourage the investigative authori-
ties responsible to expedite the
investigation of Ethiopian Airlines
Flight 302 and identify any correc-
tive action, if necessary, in order to
return this aircraft to service,” ALPA
said.
The Association of Flight
Attendants (AFA), which had ear-
lier called on FAA to ground the
MAX, welcomed the US decision.
“The 737 MAX will now get
the focus it needs to address the
concerns of undetermined safety
issues. We must focus on the
needed fix, rather than the uncer-
tainty of flight,” AFA president
Sara Nelson said. “Lives must
come first always. But a brand is
at stake as well. And that brand is
not just Boeing. It’s America. What
America means in international
aviation and by extension in the
larger world more generally—that
we set the standard for safety,
competence, and honesty in gover-
nance of aviation.”
Norwegian, meanwhile was the
first airline to publicly confirm it
would be seeking compensation for
the groundings. The airline has 18
MAX 8s and grounded them volun-
tarily March 12. It is putting Boeing
787s on some MAX transatlantic
routes. CEO Bjorn Kjos, in a video
released by the company, said, “It
is quite obvious that we will not
take the cost related to the new
aircraft that we have to park tem-
porarily. We will send this bill to
those who produce this aircraft.”
3/15/19 3:02 PM
 For daily news stories, go to atwonline.com/dailynews
AIRLINE NEWS » FULL NEWS COVERAGE AT WWW.ATWONLINE.COM
NORTH AMERICA
American Airlines is targeting
$1.3 billion in “profitability ini-
tiatives” in 2019, with $1 billion
coming via revenue-generation
strategies. One initiative
includes adding 100 depar-
tures at home hub Dallas Fort
Worth International Airport
with 15 new gates coming
online midyear, giving it about
910 daily flights.
JetBlue Airways revised its
first-quarter RASM guidance
downward, citing several areas
of weakness. The new guid-
ance has year-over-year (YOY)
RASM declining 1.5%-3.5%.
Previous guidance, issued
in January, saw a 2% YOY
decline to a 1% bump. The
New York-based carrier con-
tinues to make market-driven
changes to its network and
capacity plans.
Southwest Airlines received
FAA approval to conduct
Hawaii services, linking
San Francisco Oakland
International Airport and
Honolulu Daniel K. Inouye
International Airport, with a
single daily frequency. The
Dallas-based carrier will
steadily add flights on other
routes—including intrastate
runs—through midyear.
North Carolina-based Eastern
Air Lines is seeking permis-
sion from the US Department
of Transportation to operate
twice-weekly roundtrip Boeing
767-300ER services from New
York to Jinan, China, with a
technical stop in Anchorage,
Alaska.
Alaska Air Group regional
carrier Horizon Air started
scheduled services from a
new passenger terminal at
Paine Field Snohomish County
Airport (PAE) north of Seattle,
Washington state. Alaska
Airlines plans to operate 18
daily departures from PAE to
Las Vegas, Phoenix, Portland,
San Diego, Los Angeles,
San Francisco, San Jose and
Orange County, California. The
carrier acquired eight 76-seat
Embraer E175s to serve PAE.
The US Department of
p7-10 Newsbriefs.indd 9
NEWSBRIEFS
Transportation issued fines Airbus A321 flights from E170 service from May 28.
of $1 million to American Moscow Zhukovsky to Paris
Airlines and $750,000 to Charles de Gaulle from April Belavia Belarusian Airlines
Delta Air Lines for extended 23. It will start 2X-weekly will launch 4X-weekly Minsk-
tarmac delay incidents at air- Zhukovsky-Nice A320 service Tallinn Embraer E175 service
ports across the US over the from May 4. The carrier also from May 30.
last several years. plans to launch 3X-weekly
Moscow Domodedovo- Azur Air received its second
United Airlines named Robert Bordeaux A320 service Boeing 777-300ER and will
Rivkin as SVP and general from June 1 and Moscow operate to Dubai (UAE),
counsel. Domodedovo-Montpellier then to Varadero (Cuba) and
A320 service from June 2. Cancun (Mexico).
Ural Airlines will resume
MIDDLE EAST/AFRICA daily domestic Zhukovsky- Saudi Arabian Airlines
Kaliningrad A321 service from (Saudia) CEO Jaan Albrecht
Omani LCC SalamAir will open June 3-Oct. 26. told ATW the carrier is evalu-
a second operations center at ating a major widebody fleet
Salalah Airport, in the south- Aeroflot Airline will launch order within the next six
west of the Arabian nation. daily Krasnodar-Simferopol months, such as either an
The airline, which began ser- and Volgograd-Sochi Boeing Airbus A350 or Boeing 787.
vices in 2017, operates to 14 737-800 service from June 2.
destinations in the Middle East Utair Aviation is develop-
and the Indian subcontinent S7 Airlines resumes 3X-weekly ing its domestic network
with a fleet of three Airbus Moscow Domodedovo-Vienna from Khanty-Mansiysk when
A320s and an A320neo, Airbus A320 service from it begins 3X-weekly Ufa,
with plans to add five more April 30. The carrier will also 2X-weekly Omsk and Kogalym
A320neos in the 2029 first launch 3X-weekly Novosibirsk- ATR 72 service in the summer
half. Astana (Kazakhstan) Embraer 2019.
Turkish leisure car-
rier Corendon Airlines will
establish a base in May at
Germany’s Cologne Bonn
Airport, with Boeing 737 MAX
8s, operating 25X-weekly
flights to 11 destinations.
partner
of choice
Air Seychelles will end ser-
vice to Abu Dhabi May 11
and increase frequencies to
Mumbai, India, from 5X- to
6X-weekly beginning May 12; to streamline
and to Johannesburg, South
Africa, from 6X-weekly to daily your supply chain.
beginning June 3.
RUSSIA
The Irkutsk region
Development Corp. will
acquire 51% of IrAero Airline
and plans to invest in the
carrier’s further growth. The
airline will be developed with
Ramport Aero, which oper-
ates Zhukovsky International
Airport near Moscow.
Pobeda Airlines plans to
increase traffic by 40% and
carry at least 10 million pas-
sengers in 2019 as the Aeroflot
LCC subsidiary expands its
aircraft fleet and network. ajw-group.com
Yekaterinburg-based Ural
Airlines will launch 3X-weekly
atwonline.com | April 2019 | ATW 9
3/15/19 3:03 PM
 NEWSBRIEFS
AIRLINE NEWS » FULL NEWS COVERAGE AT WWW.ATWONLINE.COM
ASIA-PACIFIC
Japan Airlines named its new
medium- to long-haul LCC
Zipair and revealed plans to
begin service on two routes,
from Tokyo Narita to Bangkok
and Seoul in summer 2020.
Zipair will initially use two
Boeing 787-8s.
Thai AirAsia owner Asia
Aviation dropped negotiations
to acquire shares in Thai LCC
Nok Air and said it would not
proceed further.
The South Korean government
granted approval for three new
LCCs—Cheongju-based Aero
K, Seoul-based Air Premia and
Yangyang-based Fly Gangwon.
India’s Jet Airways was forced
to ground a total of 25 aircraft
because of lease payment
defaults, as negotiations con-
tinue over a bailout plan and
an ownership reshuffle for the
Mumbai-based carrier.
Thailand’s startup airline
Kom Airlines firmed an order
for six SSJ100 regional jets
from Sukhoi Civil Aircraft Co.
All six aircraft, in a single-
class 100-seat configuration,
will be delivered between
2019 and 2020, with the first
arriving in the third quarter.
Total list price value is $300
million.
Vietnam LCC Vietjet Air con-
firmed an order for 20 Boeing
737 MAX 8s and 80 737 MAX
10s. The order was initially
announced at the Farnborough
Passenger Convenience & Shorten Aircraft Turnaround
10 ATW | April 2019 | atwonline.com
p7-10 Newsbriefs.indd 10
Air Show in July 2018. The
first MAX 8 is expected to be
delivered in the fourth quarter
of 2019.
Cathay Pacific Airways con-
firmed it was in active negotia-
tions to potentially purchase
a stake in LCC Hong Kong
Express, which is controlled by
HNA Group.
Vietnam-based startup
Bamboo Airways finalized
the purchase of 10 Boeing
787-9s. The privately owned
airline plans to operate on
medium-haul destinations in
Japan, South Korea, Singapore
and Australia before launching
long-haul operations to Europe
and North America.
Air Vanuatu ordered two
Airbus A220-100s and two
-300s, becoming the first
carrier in the Pacific region to
order the type. First delivery is
scheduled for June 2020.
China Eastern Airlines
appointed former VP Li
Yangmin as president of the
state-owned Shanghai-based
carrier.
Vietnam Airlines will move
its Moscow flights from
Domodedovo to Sheremetyevo
International Airport
Terminal D from July 2.
EUROPE
International Airlines Group
ordered up to 42 Boeing 777-9
aircraft (18 firm orders and 24
for Stowage Bins
Komy Co., Ltd
options) for British Airways.
If all options are exercised, the
deal is valued at $18.6 billion
at list prices.
Central and Eastern European
LCC Wizz Air took delivery
of the first of 184 Airbus
A321neos it has on order. The
aircraft is powered by Pratt
& Whitney GTF engines and
has a 239-seat, single-class
layout.
Eurowings is moving a large
part of its long-haul opera-
tions to Frankfurt and Munich,
the group’s main hub, as part
of a wider strategy to rethink
of how to tackle the leisure
travel market. As part of the
move, the Lufthansa Group
LCC will base four Airbus
A330-200s in Frankfurt and
three in Munich. Eurowings
has also initiated union talks
about merging its various air
operator’s certificates to gain
efficiencies after a period of
strong growth.
Swiss International Air Lines
(SWISS) completed the first of
five nose-to-tail Airbus A340-
300 cabin refurbishments. The
renovated A340s will have
223 seats—eight in first class,
47 in business and 168 in
economy class—and should be
completed by summer 2019.
Brussels Airlines is upgrading
the cabins and introducing a
premium economy class on its
newly acquired Airbus A330-
330s. The Lufthansa Group
subsidiary is replacing seven
leased A330s in its long-haul
www.komy.com
fleet with second-hand aircraft
and refurbishing the cabins of
the new arrivals at a cost of
€10 million ($14.1 million) per
aircraft.
Scandinavian Airlines (SAS)
will begin testing smaller-
scale, long-haul flights start-
ing in summer 2020 with
three Airbus A321LRs, which
are expected to produce
15%-18% lower emissions.
The aircraft will offer a three-
class cabin product of busi-
ness, premium economy and
economy.
EasyJet appointed Neil Slaven
as UK country director to drive
the LCC’s UK strategy. The
UK carrier is also converting
3,000 flight attendant licenses
and aircraft spare parts into
its Austrian air operator’s cer-
tificate.
Swedish regional carrier
Braathens Regional Airlines
will automatically include
“climate compensation” for all
carbon dioxide (CO2) emis-
sions from flights in its ticket
prices, from April 1.
Scottish regional airline
Loganair added new services
linking three Scottish destina-
tions with London Southend
Airport. The Glasgow-based
carrier will launch a 3X-daily
weekday service from
Aberdeen May 12, followed
by the same frequency from
Glasgow May 28. Services
from Stornoway will connect
with the Glasgow service en
route to London Southend. All
services will be operated by
49-seat Embraer E145s.
Lufthansa ordered 20 addi-
tional Airbus A350-900s and
has decided to return six of its
14 A380s in 2022 and 2023
as it invests in smaller wide-
bodies.
EasyJet CEO Johan Lundgren
is pressing ahead with plans to
partner directly with hotels to
boost ancillary revenue.
Dublin-based LCC Ryanair
plans to open 22 new French
routes early in winter 2019
because of strong demand, as
it pushes ahead with its plan
to expand rapidly in France.
3/15/19 3:04 PM
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 ANALYSIS
Supersonic
Reimagined
F
ifty years after the frst fight of the Anglo-
French Concorde, supersonic air travel
could be poised to make a comeback. But
environmental groups are questioning
whether a return to high-speed fight is appropriate
with commercial aviation coming under increasing
pressure to reduce its emissions.
Boeing’s announcement in February of a
“signifcant investment” in Aerion vaulted the
supersonic business-jet developer from struggling
startup to serious contender. Of the companies hoping
to feld a new-generation supersonic transport by the
mid-2020s, Aerion now looks most likely to be frst.
On the heels of news that it will provide
engineering and manufacturing support for Aerion’s
AS2, Spirit AeroSystems, Boeing’s biggest supplier,
announced it would design the pressurized fuselage
for the Mach 1.6 business jet. Aerion already has
GE Aviation onboard, developing the engine, and
Honeywell, providing the avionics. More supplier
announcements are expected shortly.
Boeing’s investment was a surprise, and its value
not disclosed, but its scale can be inferred from the
fact that two people on Aerion’s new fve-member
board are senior Boeing executives. And who they
are is revealing: Mike Sinnett, VP-product strategy
and future airplane programs at Boeing Commercial
Airplanes, and Ken Shaw, VP-supply chain at
12 ATW | April 2019 | atwonline.com QQ
To comment on this article, contact the editor at karen.walker@informa.com
ATWApril2019 ANALYSIS.indd 12
Can a supersonic airliner be
environmentally acceptable?
BY GRAHAM WARWICK
AIREON AS2 supersonic
aircraft concept
AERION
Boeing Global Services.
Boeing has long worked with NASA on supersonic
transport technology, most recently on low-sonic-
boom designs, but has shown no inclination in the
past few decades to develop its own aircraft. Now
it has aligned the Aerion investment under its NeXt
business unit, formed to pursue future urban, regional
and global mobility initiatives, from air taxis to
hypersonic airliners. And Aerion may be starting with
a supersonic business jet, but it wants to apply its
technology to larger aircraft over time.
“We are focused on disrupting every segment of
aviation with effcient supersonic aircraft,” Aerion
CEO Tom Vice says. “We at Aerion, and at Boeing,
have continued to study the market, economics
and technology required for commercial airliners.
I believe it is just going to take time to create a
sustainable commercial supersonic airline market.”
NOISE RULES
Supersonic aircraft need more thrust, with implications
for fuel burn, noise and emissions. Aerion’s technology
is focused on producing an aircraft that can meet the
same Stage 5 landing and takeoff noise limits as newly
certifed subsonic airliners, while fying as effciently
and cleanly as possible at both supersonic and subsonic
speeds. Unlike Denver-based startup Boom Supersonic,
Aerion is not pushing for special supersonic noise rules.
3/13/19 12:38 PM
 “We have to meet today’s strict regulatory and QUOTABLES
certification requirements while we also build
sustainable supersonic flight that not only the
regulatory agencies can accept, but the public will
“We’re flying bigger planes,
embrace,” Vice explains. “And Aerion airliners—
Aerion Boeing airliners—will have to be as
but into more congested skies
environmentally responsible as our business jet.” here in the US. So we’re building
The AS2 is not a low-boom design, and bigger tubes and bigger airports,
Aerion’s business case—like that of Boom for its but not new runways and not
55-seat Mach 2.2 Overture airliner—is based on new places to go.”
flying supersonically over water, but subsonically
Delta Air Lines CEO Ed Bastian
over land. But if, as hoped, rules are amended
eventually to permit flight above Mach 1 over
land, Aerion plans to exploit a phenomenon called ”Our industry has built incredible
Mach cutoff to fly at Mach 1.2 without producing Ferraris, but the [US] ATC system
a discernable boom on the ground—a capability it makes them operate on gravel
calls boomless cruise. roads.”
“We do not advocate the lifting of the restriction United Airlines CEO Oscar Munoz
on overland supersonic flight without there first
being an acceptable technical and operational
approach that attenuates the noise generated by the
“I don’t begrudge competition;
sonic boom,” Vice says. “We actively oppose any that’s part of the miracle of
company that takes an irresponsible approach to aviation in the US.”
the elimination of Mach 1 overflight restrictions.” Alaska Air Group chairman and CEO Brad Tilden
Vice believes there are only two valid
approaches that will lead to supersonic flight “Qatar Airways is not a
over land: low boom and no boom. “I think it
will take decades for [low-boom] technology to
Mickey Mouse airline.”
find its way into production aircraft,” he says. “I Qatar Airways CEO Akbar Al Baker
believe boomless cruise will be the first operational
capability that will reliably achieve supersonic “China is … er … we fly there.”
flight over the US that the regulator will accept and American Airlines chairman and CEO Doug Parker, on
the public will embrace.” the US-China market. American canceled its loss-making
Europe already is lining up against the US to Chicago-Beijing services, saying there was too much capacity
oppose any relaxing of noise rules to enable a in the market.
renaissance of supersonic flights, and there are
no such aircraft programs active on the continent. “Many people have this mistaken
Environmental groups also are painting dire notion that if you reduce cost or
pictures of the noise and emission impacts— burdens, you are reducing safety
assessments Boom disputes.
Ensuring supersonic transports return to stay
or consumer protections. We reject
will require more than just high speed. The AS2 that notion.”
US Department of Transportation deputy secretary Jeffrey Rosen
“provides the first environmentally responsible
platform that can begin a long, sustainable
design cycle that will allow us to grow in speed “I don’t want Albert Einstein
responsibly,” Vice says. to be my pilot.”
Boeing’s backing suggests the commercial US President Donald Trump
aircraft giant believes Aerion is on the right
track to a sustainable return of supersonic air
travel.

atwonline.com | April 2019 | ATW 13

ATWApril2019 ANALYSIS.indd 13 3/13/19 12:39 PM

 FOR BETTER
OR WORSE
Air France-KLM Group adapts under a new CEO and
with a new government stakeholder. BY KAREN WALKER
AIR FRANCE
Airbus A320
ROB FINLAYSON
A
lmost all marriages go through rough patch-
es. The nearly 19-year-old Air France-KLM
Group partnership has probably endured
one of its rockier periods this past year as
strikes, competition and management changes impacted
earnings and led to boardroom and political friction. Like
any long-lasting marriage, however, the group’s partners
seem to recognize they are better off together than apart.
Formed in 2004, the Air France-KLM alliance
came under scrutiny in February when it emerged that
the Dutch government had acquired a 14% stake in
the group, nearly matching the French state’s 14.3%
stake. Until then, the Dutch government had a 5.9%
stake in KLM only. Other key group shareholders in-
clude Delta Air Lines and China Eastern Airlines, which
each have a 10% stake.
Explaining the move, the Netherlands Finance Minis-
14 ATW | April 2019 | atwonline.com
ATW_APRIL 14-18 COVER STORY.indd 14
KLM BOEING
787-9
KLM
try said it wanted “a position which is similar to the posi-
tion of the French state . . . to be able to exercise direct in-
fuence over future developments at the Air France-KLM
holding company to ensure that Dutch public interests
are optimally assured. . . . It has become apparent that
signifcant decisions about the strategy of KLM have in-
creasingly been taken at the level of the Air France-KLM
holding company.”
Te move rufed feathers, especially as it followed a
letter from Dutch fnance minister Wopke Hoekstra,
who wrote two weeks earlier to the KLM Royal Dutch
Airlines board expressing support for KLM CEO Pieter
Elbers when it was rumored he could be forced out.
Air France-KLM CEO Ben Smith, who took the helm
of the company in August 2018, subsequently renewed
Elbers’ contract and made him joint group CEO along-
side Air France CEO Anne Rigail.
3/15/19 2:53 PM
 Tat seemed to calm the situation and dispel concerns
of a rift between Elbers and Smith, a former Air Canada
senior executive who is the frst non-French national to
head the group.
But some analysts were not convinced, and they have
questioned whether long-simmering tensions between
Air France and its smaller, but more proftable, sister
carrier reached a fashpoint. KLM’s €1.07 billion ($1.22
billion) full-year 2018 operating proft overshadowed the
€266 million operating proft posted by Air France. Te
group’s overall full-year operating proft, meanwhile, de-
clined by almost €600 million to €1.3 billion in 2018,
AIR FRANCE-KLM
mostly because of industrial action by Air France workers
in early 2018 that led to the resignation of Smith’s prede-
cessor, Jean-Marc Janaillac, in May.
Bernstein analyst Daniel Roeska reiterated in a re-
search note that reducing tensions and making the power
balance between the two airlines more even were “key
prerequisites” to moving Air France-KLM forward. He
added, however, that the impact of the increased Dutch
stake was unknown.
“With the Dutch government now joining the fray on
an ownership level, and likely securing more infuence in
the group board, we wonder whether this will be benef-
cial or detrimental to reconciling the diferences between
Paris and Amsterdam,” Roeska said.
Other industry observers feel the corporate and po-
litical frictions have yet to be resolved, noting that El-
bers and Smith did not shake hands at a February press
conference, and that Dutch fnance and transportation
secretaries were summoned to Paris to “explain” the
group stake.
“Te [Dutch] government is now demanding an extra
Dutch nonexecutive ofcer seat in the group’s board, but
that will probably meet with strong resistance on the part
of the French,” an industry source told ATW. “Te Dutch
government bought its shares out of the free foat, and
rumor has it that nearly half of that was taken over from
a large investor who wanted to sell its share of about 6%
for a premium.
“Rumors were that the French government was going
to reduce its stake and the Dutch government could buy
an amount from the French, but that did not happen. In
the aftermath of the recent ‘turbulence’ around the re-
appointment of Elbers, the Dutch government decided it
wanted more infuence at the group level and so bought a
total of 14% group shares, although still with only about
10% of voting rights.”
ATW_APRIL 14-18 COVER STORY.indd 15
AIR FRANCE-KLM CEO Ben
Smith (above) and KLM CEO
Pieter Elbers
KLM
Restructuring
Air France-KLM is being restructured under Smith, and
he has made considerable progress in his frst months,
most notably securing new labor deals with all of Air
France’s employee groups—a feat that eluded his prede-
cessors. Industrial action cost the company some €300
million last year.
Smith has also made changes to the group’s gover-
nance structure, streamlining it and creating a CEO
committee of himself, Elbers, Rigail and group CFO
Frederic Gagey.
Other key early moves have included the shutting
down of the short-lived hybrid French airline Joon,
which is being reintegrated into the mainline carrier,
and the rebranding of regional carrier HOP! as Air
France Hop.
Smith’s next mission is to simplify the group’s feet
and network, and to more closely integrate the two
main airlines. But some believe that job could be made
more difcult by the recent politics.
“We worry that national, diverging interests will
slow the group down in its much-needed restructuring,”
Roeska said, noting that it could make Smith’s job “sig-
nifcantly more challenging than it was to begin with.”
Full-year 2018 trafc fgures released by the group
show a continued disconnect between the carriers’ in-
dividual performances, with the smaller Dutch unit
experiencing the strongest growth while Air France’s
fgures, as with its fnancials, were negatively afected by
the strikes. KLM saw a 4.5% increase in passenger num-
atwonline.com | April 2019 | ATW 15
3/15/19 2:55 PM
 Group and airline 2018 full-year results

Operating
Revenues Operating Net debt
Capacity Change result Change Change Change
(€ m) margin (€ m)
(€ m)

+2.5% 16,073 +1.2% 266 -69.2% 1.7% -3.8 pt 3,556 -36

+2.3% 10,955 +5.0% 1,073 -0.5% 9.8% -0.5 pt 2,826 -454

+2.4% 26,515 +2.5% 1,332 -30.7% 5.0% -2.4 pt 6,164 -195

2017 restated for implementation of the new IFRS accounting standards

SOURCE: AIR FRANCE-KLM GROUP

bers, to 34.2 million, compared to the 0.4% rise at Air
France and HOP! to 51.4 million. Te group said anti-
government protest movements in France at the end of
last year also had a negative impact on revenue of about
€15 million. KLM’s full-year trafc, measured in RPKs,
rose 4% against a 3.2% increase in capacity, resulting in
a 0.7-point increase in load factor to 89.1%. Conversely,
Air France and HOP!’s trafc in 2018 increased 1.9%
on 1.4% capacity growth, leading to a 0.5-point load
factor rise to 86.2%.
A strong performer in 2018 was the group’s Transa-
via carrier, which saw trafc increase by 10.1% on an
8.4% growth in capacity, causing load factors to rise 1.4
points to 92%.
Combined, trafc across Air France, KLM, HOP! and
Transavia grew 3.5% on 2.7% more capacity, resulting
in a 0.7-point load factor increase to 87.9%. Te group as
a whole recorded a 2.8% increase in full-year passenger
numbers, exceeding 100 million for the frst time.
Financially, the group reported a 2018 net proft
of €409 million, more than double 2017’s €163 mil-
lion, on a 2.5% year-over-year increase in revenue to
€26.5 billion.
So there have been plenty of pockets of good news
and positive trends in the group’s 2018 numbers, de-
spite the strikes and politics. And whatever their per-
sonal compatibility, Smith and Elbers are each widely
regarded as among some of the industry’s most ca-
pable leaders.
Te question is, how do Smith and his executive
team navigate the group through the politics and fnd
ways to improve competitiveness relative to peers like
Lufthansa Group and International Airlines Group
(IAG) in the face of a tough operating environment for
network carriers? Tat’s an especially tough call when
Air France-KLM—essentially because of Air France—
is behind Lufthansa and IAG on restructuring, cost cut-
ting and LCC competitiveness.
Minister working group
One potentially positive sign that the new Dutch stake
might ultimately prove to be a help, not a hindrance,
that supports the group’s strategic plan came in early
March when French and Dutch government ofcials an-
nounced that they would work together to strengthen
cooperation on the future strategy of the group, aiming
to announce joint recommendations by the end of June.
French economy and fnance minister Bruno Le
Maire and the Netherlands’ Hoekstra said they shared
the priority of strengthening the airline group and im-
proving its competitiveness. Tey also expressed sup-
port for Smith, and said they stood behind “all the deci-
sions taken by the board of directors” to modernize the
group’s governance.
Le Maire and Hoekstra will establish a working group
headed by Martin Vial, director general of France’s state
participation agency, and Christiaan Rebergen, treasurer
general of the Dutch Finance Ministry.
Te working group will focus on “strengthening the
cooperation between France and the Netherlands, with
the objectives of good governance of the Air France-
KLM Group, its continued development, its growth
and improved results of the group,” the ministers said.
“In the spirit of partnership,” they added, they will

16 ATW | April 2019 | atwonline.com

ATW_APRIL 14-18 COVER STORY.indd 16 3/15/19 2:55 PM

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ATW_PM_04.indd 17 3/15/2019 8:03:01 AM

 “We wonder whether this will be benefcial or detrimental to reconciling
the differences between Paris and Amsterdam.”
examine a number of issues, including the stakes
of both states in Air France-KLM and the group’s
capital structure, the composition of the board of di-
rectors, the defense of interests at the Paris Charles
De Gaulle (CDG) and Amsterdam Schiphol (AMS)
hubs, and the two countries’ “respective visions on
the long-term strategy” being deployed by the airline
group’s management.
“Te fnal outcome must be a fair and balanced one
for all sides. We are frmly committed to reaching a
conclusion on that fnal outcome before the end of
June 2019,” the ministers said.
Smith, meanwhile, is not putting any part of what
the company describes as its “go forward strategy” on
ice while the government shareholders work out how
to work together.
Smith’s strategy plan received unanimous approval
when presented to the group’s board of directors ear-
ly this year. It was this plan that established the new
CEO committee, and which aims to increase collabora-
tion across all of Air France-KLM’s business units to
improve overall group proftability. In other words, the
plan—and proft growth—hinges on the group becom-
ing more closely aligned. At the same time, Smith wants
to leverage the brands of Air France, KLM and Transa-
via in their respective markets. Tis means Air France-
KLM “can now rely on two strong brands,” supported
on the regional side by Air France Hop and KLM City-
hopper, and on the LCC side by Transavia, Smith said.
Smith also wants to reinforce the group’s position at
its CDG and AMS hubs.
With Paris, Smith has asked the French Senate for
improvements at CDG and Orly airports, hoping the
ongoing privatization process will be an opportunity.
Wait times frustrate Air France customers at Paris air-
ports, Smith said, as do 30- to 40-min. walking times to
catch connecting fights.
“We do not have those problems at [Amsterdam]
Schiphol,” Smith pointed out. “It may be the most ef-
fcient airport in Europe. Tere is no problem at im-
migration or security checks; everything is much more
streamlined.”
An alignment between Air France, civil authorities
and the main airport has yet to be found, Smith said,
but privatizing Groupe Aeroports de Paris would put
Air France on an equal footing with its competitors.
Smith also said the planned construction of a new
terminal at CDG, with an anticipated capacity of 30
million to 40 million passengers annually, was key to
18 ATW | April 2019 | atwonline.com
ATW_APRIL 14-18 COVER STORY.indd 18
Daniel Roeska, Bernstein analyst
the competitiveness of France’s major airports over the
next 20 to 25 years.
Other parts of the strategy plan include operation-
al processes in the areas of feet and network strategy,
commercial and alliances strategy, human resources,
purchasing, and digital and data management that will
be simplifed.
Fleet and cabins
On the long-haul feet front, the group will take deliv-
ery of three Airbus A350-900s and six Boeing 787-9s
during 2019. Air France will retire its last Airbus A340
in 2020, and KLM will retire its last Boeing 747 the
following year. In a bid to “improve operational ro-
bustness,” Air France will add “additional reserve air-
craft,” Smith said.
Air France will also accelerate its cabin retroft pro-
gram to ensure that its premium product mirrors that
of KLM by ofering fully fat seats to all business-class
passengers “as soon as possible.”
Internationally, the European Commission in Feb-
ruary approved a transatlantic joint venture agreement
among Air France-KLM, Delta Air Lines and Virgin
Atlantic that will see the group acquire a 31% stake in
Virgin Atlantic.
Te three have already begun a codeshare partner-
ship, marking a step toward closer cooperation targeted
under their expanded joint venture with Delta, a fellow
SkyTeam global alliance member.
Te new codeshare deal ofers Virgin Atlantic cus-
tomers up to 58 new routes from 18 UK airports across
the Atlantic via Paris and Amsterdam, while Air France
and KLM customers will have access to 24 new Vir-
gin Atlantic or Delta-operated North American routes
departing the UK, including connections via London
Heathrow or Manchester.
Gagey described the group’s full-year results as “re-
silient,” but added that “many of our problems are now
behind us.” Elbers noted he looked to 2019 “with con-
fdence” and Smith stressed the “real progress” that has
taken place over the last fve months. He also looked to
the future, stating that the group’s goal was “to position
ourselves as the leading airline in Europe.”
If beating the competition, not each other, is the
goal, the Air France-KLM partnership may be renewing
its vows by year end.
Helen Massy-Beresford and Kerry Reals contributed to this
article.
3/15/19 3:57 PM
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ATW_PM_04.indd 19 3/15/2019 8:03:03 AM

 ACADEMY
GROWTH
Pilot training facilities are ramping up
worldwide. BY ROBERT MOORMAN
CAE
T
he numbers tell the story. CAE projects a
total requirement for 255,000 new airline
pilots over the next decade, while Airbus
forecasts 94,000 new pilots will be needed
in Europe alone. Boeing sees a need for more than
30,000 new pilots each year over the next 15 years.
Aircraft manufacturers are directly supporting the
multiple eforts to recruit and train those pilots. Boe-
20 ATW | April 2019 | atwonline.com
ATW_APRIL 20-22 simulation & training.indd 20
CAE AIRBUS A350 full
flight simulator
ing Flight Services has three pro forma fight training
campuses located in Singapore, near London Gatwick
Airport and in Miami.
Airbus is opening the Airbus Flight Academy Eu-
rope in Angoulême, France, which will add ab initio
instruction to its portfolio of training services. Plans
call for the academy to train up to 200 pilot cadets an-
nually, using a feet of single- and multi-engine aircraft
3/14/19 2:10 PM
 “Airlines are getting involved much earlier in the pilot creation process.”
Nick Leontidis, CAE

equipped with full digital cockpit technology. Te facil- easyJet. Under the agreement, all easyJet pilots will train
ity also will house full fight simulators (FFS) and fight at CAE’s training centers at Gatwick, Manchester and
training devices (FTDs). Milan. Tese centers will begin training in the second
But it is among the specialized training and simula- half of 2019 and will house nine Airbus A320-family
tor providers where the ramping up of pilot programs FFSs and three FTDs.
and facilities are really seen.
“Airlines are getting involved much earlier in the pi- Ab initio
lot creation process,” CAE group president-civil avia- L3 Commercial Training Solutions (L3 CTS) expects to
tion training solutions Nick Leontidis said. “Tey are train about 1,700 pilots in 2019. In some instances, ab
looking for training to their unique professional stan- initio training comes with a provisional job ofer from
dards from day one. Airlines
are not just looking for frst of-
fcers to fll the right seat. Tey’re
looking for candidates with the
potential to become captains
within the organization.”
Flight training academies are
producing an increasing propor-
tion of the pilots fying in today’s
commercial airlines, Leontidis
said. More objective assessments
for ab initio training are being
enabled.
“Te industry is moving to-
ward the inclusion of the unique
operators’ cultural reality as se-
lection criteria,” he said.
CAE works with over 300
L3 COMMERCIAL TRAINING SOLUTIONS

airlines and trains more than

135,000 pilots annually. To meet
growing demand, the Canadian
company has launched more
than 10 pilot creation programs
worldwide over the last two
years. Tey include an 18-month
program launched with Aeromexico in May; an AirA-
sia multi-crew pilot license cadet training program that
started in August; an 18-month American Airlines pro-
gram launched in April; and a CityJet mentored cadet
training program launched in June 2016. In February,
CAE acquired Avianca’s share of their training joint
venture, which includes Avianca’s training assets, as part
of a 15-year training outsourcing agreement.
In November 2018, CAE signed a C$170 million
($127 million), 10-year training contract with LCC
L3 CTS
one of L3 CTS’ partner airlines; hiring is contingent on Boeing
787-9
the cadet passing all ground and fight school courses. full flight
“We’re seeing diferent rates of growth globally, but simulator
the underlining rate for us is about 6.5% per year,” L3
CTS president Robin Glover-Faure said. “Pilot demand
remains very high and is fueled by the growth of new
commercial aircraft coming into the global feet, which
in turn is fueled by the underlying GDP growth that is
occurring globally.”
A challenge for trainers, Glover-Faure said, is the

atwonline.com | April 2019 | ATW 21

ATW_APRIL 20-22 simulation & training.indd 21 3/14/19 2:10 PM

 Dual
Benefits
Regional airlines work together
to grow pilot base. BY BILL CAREY
US REGIONAL AIRLINE Cape Air and express cargo carrier
Mountain Air Cargo have announced a pilot “pathway” program
that allows pilots to transition between the two airlines to gain
flight hours and experience.
Under the new program, Cape Air twin-engine piston pilots can
transition into Mountain Air ATR 42/72 twin-engine turboprops to
gain pilot in command (PIC) turbine time. Mountain Air Cargo pilots
who fly Cessna C208B Caravan single-engine turboprops can gain
PIC multi-engine flight time as captains at Cape Air.
After fulfilling their commitments as captains, Cape Air pilots
will be hired and paid as ATR captains but will serve as second in
command on the ATR until gaining 200 hours of flight time prior to
acting as PIC. Caravan captains or ATR first officers at Mountain
Air Cargo can transition to Cape Air as captains.
A scheduled and Part 135 carrier based at Barnstable Municipal
Airport, Massachusetts, Cape Air operates a fleet of Cessna 402C
and Britten-Norman Islander BN2 twin-engine piston aircraft.
In September 2017, it announced an order for 100 new Tecnam
P2012 Traveller 11-seat piston twins, the first 20 of which are due
to arrive this year.
Cape Air and JetBlue Airways started a university “gateway”
pilot training effort in 2007 that is considered a model pathway
program. In September, it announced the Cape Air-Spirit Jetway
Program to train pilots for careers at Florida-based ultra-LCC
Spirit Airlines.
“We have worked hard internally, and with our partners, to devel-
op these various pathways to suit the growing and ever-changing
needs of the industry,” Cape Air president Linda Markham said. “It
is our goal to identify, train and nurture our employees throughout
their careers in order to sustain a healthy pilot base and most
importantly, a safe operation.”
Mountain Air Cargo, based in North Carolina, participates in the
Purple Runway pathway program with cargo carrier FedEx Express.
The program provides a means for students with two or four-year
college degrees to begin their pilot careers with Mountain Air Cargo
and transition to FedEx.
“The industry needs more of these types of agreements to
ensure we can meet the needs of the marketplace and the needs of
the pilots,” Mountain Air Cargo president Craig Bentley said.
22 ATW | April 2019 | atwonline.com
ATW_APRIL 20-22 simulation & training.indd 22
growing trend of first officers transitioning to captain in
less time—five or six years—to keep up with demand.
UK-based L3 CTS has training centers in Bangkok,
Tailand, Southampton, and the soon to be fully op-
erational London Training Center near Gatwick. L3
also has airline academy sites, which focus on ab initio
training, in Sanford, Florida; Hamilton, New Zealand;
Ponte de Sor, Portugal; and at three sites in the UK.
TRU Simulation and Training supplies 737 MAX
and 777 flight training suites to Boeing and A320 FFSs
to Airbus.
“We will continue to invest heavily to enhance our
products and customer support services, all the while
collaborating with our growing customer base,” TRU
air transport division VP and general manager George
Karam said. Te US-based company has developed evi-
dence- and competency-based training courses as well
as environment-specific simulation courses for weather
and air traffic control.
“As airlines continue to struggle with a global pilot
shortage, less expensive, lower-level devices that are
fully compliant with new international standards will
likely become part of the solution for a subset of cus-
tomers,” Karam said.
Diversity
Training companies are also casting a wider net in
where they look for potential pilot recruits. L3 CTS
launched its Pilot Pathways program to attract a more
diverse group of prospective airline pilots from vari-
ous markets. Te program includes a new female pilot
scholarship program, and the first three recipients will
be announced this year.
“Tis is not just the right thing to do; we won’t get
the number of quality pilots needed unless we reach
out to a more diverse group,” Glover-Faure said.
Similarly, CAE has a Women in Flight scholarship
program that it operates with Aeromexico, AirAsia,
CityJet, easyJet and an unnamed carrier.
“As part of this first edition, CAE will provide fi-
nancial support to aspiring female pilots by awarding
five full scholarships to one of CAE’s selected airline-
mentored cadet pilot training programs across our
global training network,” Leontidis said. “With
women currently representing less than 5% of pilots,
we want to take a proactive approach to promote a
better gender balance and tap into a wider pool of
talent.”
3/14/19 2:10 PM
 CRITICAL
CHOICES
Questions loom over aviation’s global carbon
emissions scheme. BY HENRY CANADAY
I
CAO in March made what it said was “another
set of important decisions” toward implementa-
tion of the Carbon Offsetting and Reduction
Scheme for International Aviation (CORSIA).
Te ICAO Council reached an agreement for put-
ting into operation the Technical Advisory Body (TAB),
a group of experts nominated by states with a mandate
to make recommendations to the council regarding eli-
gible emissions units for use by airlines in CORSIA, the
scheme designed to address the increase in total CO2
emissions from international aviation above 2020 lev-
els, ICAO said.
Te group added that it had also approved terms
of reference for the advisory body, including tasks and
working methods.
Te council also approved the Emissions Units Cri-
teria (EUC) that the advisory body will use to assess
which emissions unit programs are eligible under the
scheme.
ICAO said it would issue an open invitation on the
ICAO CORSIA website, through which emissions unit
programs that wish to be considered by TAB for eligi-
bility in CORSIA can apply.
“Tese decisions related to TAB are critical to the
Council’s adoption of eligible units for CORSIA, rep-
resenting another milestone in fulflling the requests
made by the 2016 Assembly,” ICAO Council president
Olumuyiwa Benard Aliu said.
Geneva-based Air Transport Action Group (ATAG),
which represents the commercial aviation sector on sus-
tainable growth issues, welcomed what it described as
“another signifcant milestone” in the development of
CORSIA.
Te decision was “fundamental in providing cer-
tainty to carbon markets as they develop projects ready
to be supported by airlines ahead of the pilot phase of
ATW_APRIL 23-28 carbon offsets.indd 23
CORSIA in 2021,” ATAG executive director Michael
Gill said. “It is important for the industry that strong
sustainability standards are applied for the types of eli-
gible ofsets. Tis will ensure that CORSIA is an efec-
tive climate measure, which has always been a key prior-
ity for the industry.”
Airlines are keen to have clarifcation about which
types of units they will be allowed to buy to ofset their
excess emissions as part of CORSIA.
Te ICAO announcements came just a few days after
European Union (EU) ofcials urged ICAO to agree
at its assembly in September on a “long-term goal” to
address the aviation industry’s rising CO2 emissions be-
yond the shorter-term scope of CORSIA, an objective
that industry representatives, including ATAG, believe
may be difcult to achieve. ATAG believes it could take
another three years for ICAO to negotiate such a deal.
Decision time
CORSIA will start to bite in 2021 with CO2 ofset pay-
ments. At present, CORSIA is having modest impacts
on both airline trafc and CO2 emissions. But there
are big decisions to be made, on airline participation,
on eligible ofset markets and on Europe’s reaction to
the program. Further, CORSIA’s efectiveness and costs
will also depend on the wider adoption of CO2 pricing
around the world.
ICAO’s goal is to hold international air travel’s net
CO2 emissions fat from 2020 to 2040, after which
new aircraft technology might actually reduce emis-
sions. With trafc expected to grow between 3% and
4% annually through 2040, and improvements in fuel
efciency and operations only partially trimming emis-
sions, stability requires another tool. So airlines will pay
others to reduce CO2 on the ground, where emission
reduction is easier than at 35,000 feet, or replace car-
atwonline.com | April 2019 | ATW 23
3/14/19 3:10 PM
 bon-based jet fuels with less carbon-intensive fuels. Net
CO2 growth should be zero.
Tat is the basic idea of CORSIA. Participation is
voluntary until 2027 and supposed to be mandatory
afterward, except for a few small underdeveloped or
landlocked nations. By mid-January 2019, 78 countries
whose airlines represent 77% of international air travel
had voluntarily committed to CORSIA from its outset.
Others, including China, Russia, Brazil and India, are
not yet on board. Since CORSIA applies only to routes
between two participating states, the portion of interna-
tional trafc so far covered is substantially less than 77%.
Each airline from a participating state pays for
its share of the CO2 increase. For the frst decade,
CORSIA treats every airline as if it grew at the aver-
age pace of all airlines. In the 2030s, payments become
based more on each airline’s actual growth; fast-growers
pay more per average gallon of jet fuel. Rapidly expand-
ing international LCCs will be at least slightly disad-
vantaged against their more slowly growing legacy rivals
and will see this disadvantage coming.
How much will CORSIA cost? Like a trading
scheme and unlike a carbon tax, CORSIA imposes pay-
ments for only the increase in fuel use, not all fuel burn.
ICAO estimates refect several assumptions on CO2
volumes to be ofset and on ofset prices. At the outset,
expected prices range from about $7 to $22 per ton of
CO2, at 2018 price levels, rising to $13 to $40 per ton
by 2035. Airlines’ total payments would be $2 billion
to $7 billion in 2025, rising to $6 billion to $26 billion
in 2035.
Tese are not trivial sums, but they work out to only
0.2% to 1.5% of revenue from international aviation.
Since one barrel of oil yields nearly half a ton of CO2,
CORSIA would cause the price of fuel to rise by $7 to
$20 per barrel in 2035, but only on the increase in fuel
burn. If airlines price fares by average costs, that would
cut cumulative growth in air trafc by a percent or two
by the mid-2030s. If they price by marginal costs, the
cut would be deeper.
But there are still plenty of questions about how
CORSIA will work in practice. First, ICAO must still
decide on the CO2 ofsets and replacement fuels eligible
for purchase.
Offset challenges
Carbon ofsets have a long and mixed history. Te Unit-
ed Nation’s “Achievements of the Clean Development
Mechanism” manifesto says that ofsets saved almost
2 billion metric tons of CO2 in the developing world
24 ATW | April 2019 | atwonline.com
ATW_APRIL 23-28 carbon offsets.indd 24
from 2001 through 2018—about 6% of the CO2 the
world produces annually. Te Imperial College of Lon-
don surveyed frms that were voluntarily buying ofsets
and found ofsets generated signifcant economic ben-
efts, but the college did not independently verify CO2
reductions. US Stanford University researchers found
that a California program of ofsets by reforestation was
reducing CO2.
But a German environmental consultancy, Oeko
Institut, found that most CO2 ofsets it reviewed were
either overestimated or were payments for CO2 reduc-
tions that would have occurred anyway and thus were
not additional benefts of the ofset program. Te Oeko
consultants reported that ofsets from renewable energy
projects such as wind, hydroelectric, waste heat recov-
ery and fossil fuel switches were the least likely to re-
duce emissions.
Te challenge of ensuring valid ofsets is well known
to environmental advocates. Jialiang Zhang is a con-
sultant for Navigant, which has supported the World
Bank’s carbon pricing report for seven years. Jialang
checks of the criteria valid ofsets should meet: “Tey
should be measurable, additional to what would other-
wise occur, avoid double counting, and be permanent
and independently verifed.”
Similarly, replacing oil with alternative fuels can
be tricky. Some alternatives are already used in trivial
quantities by airlines. But objective experts must calcu-
late the real avoidance of CO2 emissions, recognizing
all production and transportation requirements over the
entire lifecycle, before this avoidance should be credited
against ofset obligations.
ICAO, therefore, must still decide on its criteria for
eligible ofsets and how to turn these criteria into a list
of specifc projects airlines can secure as CORSIA cred-
its. Te tighter the criteria and the tougher their en-
forcement, the more CORSIA will actually accomplish
its goals. But that probably also means higher ofset
prices.
ETS ft
Next up is an EU decision on how its Emission Trading
System (ETS) will ft with CORSIA. North American
airline lobbying organization Airlines for America (A4A)
wants US carriers to pay only for CORSIA ofsets, not
the ETS allowances currently costing $23 to $29 per ton
of CO2, when fying to and between EU nations. IATA
and Airlines for Europe (A4E) want the same exclusion
for all airlines fying between EU member states.
Te problem is CORSIA only seeks to fatten CO2
3/14/19 3:10 PM
 Summary map of regional, national and subnational carbon pricing
CARBON PRICING INITIATIVES initiatives implemented, scheduled for implementation and under
consideration (ETS and carbon tax).

NORTHWEST TERRITORIES SASKATCHEWAN

ALBERTA MANITOBA
ICELAND
CANADA ONTARIO
EU KAZAKHSTAN REPUBLIC
BRITISH QUéBEC NEWFOUND-
UKRAINE OF KOREA
COLUMBIA LAND AND
LABRADOR
WASHINGTON PRINCE
RGGI
OREGON EDWARD JAPAN
ISLAND
CALIFORNIA
VIRGINIA NOVA SCOTIA
NEW TURKEY CHINA
BRUNSWICK
MEXICO MASSACHUSETTS
THAILAND VIETNAM

COLOMBIA
CôTE D’IVOIRE

BRAZIL

RIO DE JANEIRO
SãO PAULO
NEW
CHILE SOUTH AFRICA AUSTRALIA ZEALAND
ARGENTINA

NORWAY SWEDEN

DENMARK FINLAND
BEIJING
UK TIANJIN SAITAMA
ESTONIA
TOKYO
IRELAND LATVIA
HUBEI
POLAND SHANGHAI
CHONGQING FUJIAN

GUANGDONG TAIWAN
PORTUGAL
SHENZHEN

CATALONIA SLOVENIA SINGAPORE

FRANCE LIECHTENSTEIN
SWITZERLAND

Tally of carbon pricing initiatives ETS implemented or scheduled for implementation ETS and carbon tax implemented or scheduled
implemented or scheduled for Carbon tax implemented or scheduled for implementation Carbon tax implemented or scheduled, ETS under consideration
implementation
ETS or carbon tax under consideration ETS implemented or scheduled, carbon tax under consideration

16 The circles represent subnational jurisdictions. The circles are not representative of the size of the carbon pricing
instrument, but show the subnational regions (large circles) and cities (small circles).

8 Note: Carbon pricing initiatives are considered “scheduled for implementation” once they have been formally
45 2 adopted through legislation and have an ofcial, planned start date. Carbon pricing initiatives are considered “under
consideration” if the government has announced its intention to work towards the implementation of a carbon pricing
initiative and this has been formally confrmed by ofcial government sources. The carbon pricing initiatives have been
23 25 classifed in ETSs and carbon taxes according to how they operate technically. ETS not only refers to cap-and-trade
21
systems, but also baseline-and-credit systems as seen in British Columbia and baseline-and-ofset systems as seen in
Australia. The authors recognize that other classifcations are possible. Due to the dynamic approach to continuously
improve data quality, changes to the map not only refect new developments, but also corrections following new
National level Subnational level information from ofcial government sources, resulting in the addition of the carbon tax covering only F-gases in Spain.

Source: World Bank Group State and Trends of Carbon Pricing 2018 Report

atwonline.com | April 2019 | ATW 25

ATW_APRIL 23-28 carbon offsets.indd 25 3/14/19 3:10 PM

 GLOBAL EMISSIONS COVERAGE Regional, national and subnational carbon pricing initia-
tives: share of global emissions covered.

25%
Share of global annual GHG emissions

51
20%

15% 50
46 47
41
38
37

32
10%

24

5% 21
16 19
9 10 15
Number of
implemented initiatives

2 4 5 6 7 8
0%
1991

2001

2011
1997

2007

2017
1995

2005

2015
1992

2002

2012
1996

2006

2016
1993
1994

2003
2004

2013
2014
1998
1999

2008
2009

2018
2019
1990

2000

2010

2020

Finland carbon tax (1990 )
Poland carbon tax (1990 )
Norway carbon tax (1991 )
Sweden carbon tax (1991 )
Denmark carbon tax (1992 )
Slovenia carbon tax (1996 )
Estonia carbon tax (2000 )
Latvia carbon tax (2004 )
EU ETS (2005 )
Alberta SGER (2007 )
Switzerland ETS (2008 )
New Zealand ETS (2008 )
Switzerland carbon tax (2008 )
Liechtenstein carbon tax (2008 )
BC carbon tax (2008 )
RGGI (2009 )
Iceland carbon tax (2010 )
Tokyo CaT (2010 )
Ireland carbon tax (2010 )
Ukraine carbon tax (2011 )
Saitama ETS (2011 )
California CaT (2012 )
Japan carbon tax (2012 )
Australia CPM (2012 - 2014)
Québec CaT (2013 )
Kazakhstan ETS (2013 )
UK carbon price foor (2013 )
Shenzhen pilot ETS (2013 )
Shanghai pilot ETS (2013 )
Beijing pilot ETS (2013 )
Guangdong pilot ETS (2013 )
Tianjin pilot ETS (2013 )
France carbon tax (2014 )
Mexico carbon tax (2014 )
Spain carbon tax (2014 )
Hubei pilot ETS (2014 )
Chongqing pilot ETS (2014 )
Korea ETS (2015 )
Portugal carbon tax (2015 )
BC GGIRCA (2016 )
Australia ERF Safeguard Mechanism (2016 )
Fujian pilot ETS (2016 )
Washington CAR (2017 )
Ontario CaT (2017 )
Alberta carbon tax (2017 )
Chile carbon tax (2017 )
Colombia carbon tax (2017 )
Massachusetts ETS (2018 )
Argentina carbon tax (2019 )
South Africa carbon tax (2019 )
Singapore carbon tax (2019 )
China national ETS (2020 )

Note: Only the introduction or removal of an ETS or carbon tax is shown. Emissions are presented as a share of global GHG emissions in 2012 from (EDGAR) version 4.3.2
including biofuels emissions. Annual changes in GHG emissions are not shown in the graph. Due to the dynamic approach to continuously improve data quality using ofcial
government sources, the carbon tax only covering F-gases in Spain was added. The information on the China national ETS represents early unofcial estimates based on the
announcement of China’s National Development and Reform Commission on the launch of the national ETS of December 2017.

Source: World Bank Group State and Trends of Carbon Pricing 2018 Report

26 ATW | April 2019 | atwonline.com

ATW_APRIL 23-28 carbon offsets.indd 26 3/14/19 3:11 PM

 PRICES IN IMPLEMENTED
CARBON PRICING INITIATIVES

US$ 140/
tCO2e 139 Sweden carbon tax Note: Nominal prices on April 1, 2018, shown for illustrative purpose
only. The Australia ERF Safeguard Mechanism, British Columbia GGIRCA,
Kazakhstan ETS and Washington CAR are not shown in this graph as
price information is not available for those initiatives. Due to the dynamic
approach to continuously improve data quality using ofcial government
US$ 130/ sources, the carbon tax covering only F-gases in Spain and F-gas tax in
tCO2e Denmark were added. Prices are not necessarily comparable between
carbon pricing initiatives because of diferences in the sectors covered
and allocation methods applied, specifc exemptions, and diferent
compensation methods.

US$ 120/
tCO2e

US$ 110/
tCO2e

Switzerland carbon tax,

US$ 100/ 101
Liechtenstein carbon tax
tCO2e US$/tCO2e

UK carbon price foor,

Spain carbon tax, Ireland carbon tax, 25
US$ 90/ Denmark carbon tax (F-gases)
tCO2e
Alberta CCIR,
23
Alberta carbon tax

US$ 80/
tCO2e Slovenia carbon tax,
77 Finland carbon tax Korea ETS 21

US$ 70/
tCO2e

64 Norway carbon tax (upper)

US$ 60/
tCO2e EU ETS 16
New Zealand ETS,
California CaT,
55 France carbon tax 15
Ontario CaT,
Québec CaT
US$ 50/
tCO2e

US$ 40/
tCO2e
36 Iceland carbon tax
9 Beijing pilot ETS
US$ 30/ Denmark carbon tax Portugal carbon tax,
29 (fossil fuels) Switzerland ETS 8
tCO2e
27 BC carbon tax 7 Shenzhen pilot ETS
Shanghai pilot ETS, Saitama ETS,
Tokyo CaT, Colombia carbon tax, 6
US$ 20/ Latvia carbon tax
tCO2e 5 Chile carbon tax
RGGI, Chongqing pilot ETS,
Norway carbon tax (lower) 4
Fujian pilot ETS,
US$ 10/ 3 Mexico carbon tax (upper),
tCO2e Estonia carbon tax, Hubei pilot ETS, Japan carbon tax
Guangdong pilot ETS 2

Mexico carbon tax (lower), 1 Tianjin pilot ETS

Poland carbon tax, Ukraine carbon tax <1
US$ 0/
tCO2e

Source: World Bank Group State and Trends of Carbon Pricing 2018 Report

atwonline.com | April 2019 | ATW 27

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 CARBON PRICING IN NUMBERS

INTERNATIONAL CARBON PRICING INITIATIVES

88 NDCS
plan or consider using carbon pricing
56%
of global GHG emissions
offsets or other carbon pricing schemes
will cover about a fifth of global green-
and/or market mechanisms are covered by these NDCs
house gas emissions when China’s trad-
REGIONAL, NATIONAL AND SUBNATIONAL CARBON PRICING INITIATIVES
ing system begins in 2020. Te CO2
45
NATIONAL
25
SUBNATIONAL
51
CARBON PRICING INITIATIVES
prices implied by these programs vary
jurisdictions with carbon pricing initiatives implemented or scheduled for implementation
dramatically, from as low as $1 per ton
in Mexico and Poland to $64 to $139
WOULD COVER ANNUAL GLOBAL GHG EMISSIONS OF

11 GtCO2e = 20% per ton for some sectors in Scandina-

via. Most prices bunch below $20 per
PRICES IN THE IMPLEMENTED INITIATIVES ton.
US$1-139/tCO 2 e
46% of the emissions covered are prices <US$10/tCO e
So the world is moving toward pric-
2 ing carbon, but very unevenly, and
Carbon pricing revenues raised Annual value of carbon with some huge gaps—for instance, the
by governments in 2017 were pricing initiatives in 2018 is

US$33 billion
Higher compared to US$22 billion in 2016
US$82 billion
Higher than the value of US$52 billion for 2017
domestic US market. Tough some US
states have begun charging for CO2,
INTERNAL CARBON PRICING INITIATIVES
the US has no national program. Nor
do Russia or Middle Eastern and Afri-
OVER 1,300 COMPANIES 84% can nations.
are using or planning of these companies are located in
to use internal carbon pricing jurisdictions with (scheduled) mandatory carbon Where might or should the world
in 2018-2019 pricing initiatives
be headed? A 2017 report from the
INTERNAL CORPORATE CARBON PRICES ARE IN THE RANGE OF
Carbon Pricing Leadership Coalition
US$0.01-909/tCO2e called for pricing CO2 at $40 to $80
per metric ton in 2020 and $50 to
$100 per ton by 2030. Te authors judged
Source: World Bank Group State and Trends of Carbon Pricing 2018 Report
these levels consistent with holding temper-
emissions for the next two decades. Te EU wants to ature increases below 2 degrees Celsius.
reduce CO2 emissions more than 2% annually in the A 2016 paper by William Nordhaus, who won a No-
2020s. Tat seems to point toward stiffer charges, and bel Prize for several decades of work on the interaction
some EU states have already enacted new carbon taxes. of the economy and environment, estimated the right
But if the EU undercuts CORSIA by trying to pile charge at about $36 per ton in 2015, in 2018 dollars,
its own charges on inter-member flights, it might wreck escalating at 3% a year, which would make it about $56
or damage the world’s only global program to limit in 2030, on the low side of the coalition’s estimates. But
CO2. Tere are much bigger environmental stakes in Nordhaus was seeking to maximize consumer income,
global aviation than in intra-EU flights, and these given both possible environmental damage and the
stakes will grow even bigger in the future. costs of avoiding it. He did not seek a rigid 2-degree
EU transport commissioner Violeta Bulc is hopeful the ceiling.
union can compromise with CORSIA and is waiting to CORSIA seems to imply CO2 costs well below ei-
learn how complete CORSIA participation and how strict ther of these levels, but well above the nonexistent
its offset criteria will be. Others, including members of the charges for most CO2 today. ICAO’s plan is thus ahead
European Parliament, seek a tougher stance. Before 2021, of the global commitment of any other industry. It will
the EU could lift ETS obligations from inter-member ultimately make sense only if other industries are com-
flights, as airlines would like, fully apply ETS to these mitted, by themselves or by their governments, to car-
flights, apply ETS to only a portion of CO2 generated on bon pricing.
these flights or set another policy altogether. But here the consequences are twofold. If the world
Te EU perspective raises another question: How moves further toward carbon pricing, CORSIA would
does CORSIA fit with non-aviation moves toward lim- be one part of a general CO2-cutting strategy. But the
iting CO2? After all, aviation accounts for only 2% of costs of CORSIA’s offsets could rise as low-hanging
CO2 emissions, and international flights covered by fruit is plucked by other programs or mandates.
CORSIA are only 1.3%.
Te World Bank now expects that taxes, trading, Helen Massy-Beresford contributed to this article.

28 ATW | April 2019 | atwonline.com

ATW_APRIL 23-28 carbon offsets.indd 28 3/14/19 3:11 PM

 connect
together
embrace your loved ones wherever they are
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 CEBU PACIFIC'S first
Airbus A321neo
TRADING
UP
New narrowbodies and a growing middle-
income market fuel Cebu’s expansion.
BY CHEN CHUANREN
P
hilippine LCC Cebu Pacific experienced a
weak 2018 as it battled higher fuel prices and
a weakened peso. The airline saw its third-
quarter earnings drop from PHP42 million
($824.6 million) in 2017 to a loss of PHP518.4 million
in 2018. Cebu also lost some domestic market share,
ending at a low of 52% as LCC competition increased.
Tis year, however, is looking brighter, and Cebu
president and CEO Lance Gokongwei is focused on
making the most of opportunities to grow as a company
and expand market share.
“2019 is the year we accelerate growth,” Gokongwei
said during ceremonies to launch the airline’s frst Air-
bus A321neo service. “In 2019, we expect capacity to
grow from the low- to mid-teens, and it is the time to
expand and strengthen the opportunities.”
With a new aircraft scheduled to enter service
each month, there will be an injection of 11% to 12%
more seats.
Cebu carried more than 20 million passengers in
2018; for 2019, it aims to reach between 22.5 million
and 23 million. Gokongwei expects to be able to keep
fares fat, helped by stabilizing fuel prices and the better
fuel economics of the neo. He added that passenger de-
mand continues to outpace terminal slots at congested
30 ATW | April 2019 | atwonline.com
ATW_APRIL30-31 Cebu Pacific.indd 30
CEBU PACIFIC
Manila Airport, so the immediate focus is on upgauging
existing services in and out of Manila from the A320 to
the A321neo to maximize slot availability. Te A320s
will be reassigned to other Philippine airports.
Fleet plans
Cebu will take delivery of 12 aircraft in 2019, compris-
ing six A321neos, fve A320neos and a single ATR 72-
600 turboprop. By 2022, the airline plans to have 83
aircraft, including 27 A321neos, with an average feet
age of just fve years.
Gokongwei said there are no plans to acquire addi-
tional aircraft, and the feet priority was on new A321n-
eo integration.
With its widebody feet, Cebu is forecast to still have
eight A330-300s by 2022.
“Te A330s are doing well from both the passenger
and the cargo perspectives, and we will see how we can
move them around the network,” Cebu VP-commercial
planning Alexander Lao said.
Even so, Cebu seems set to make a decision by the
end of this year or early 2020 on which widebody air-
craft type it will order and is considering either the
A330neo or the Boeing 787, Cebu senior advisor for
engineering and feet management Ian Wolfe said on
3/14/19 1:37 PM
 “In 2019, we expect capacity to grow from the low- to mid-teens, and
it is the time to expand and strengthen the opportunities.”
the sidelines of the Aviation Week MRO Southeast Asia
conference in March. Te carrier will likely order 13 to
16 aircraft, he said.
If the replacement widebodies begin arriving in
three years’ time, the A330ceos will be about eight
years old, and Cebu would likely look to sell them,
since a key part of its business model is operating a
young fleet.
Te airline’s A330ceos are used on both longer-haul
and short-haul routes, and the new aircraft type would
have to do the same, Wolfe said. Tat means the model
selected would need to be able to operate two-to-four-
hour flights efficiently as well as 10-to-11-hour flights.
While the carrier has previously discussed the possibility
of operating longer-range routes to the US west coast,
this would not be a driving decision factor, Wolfe said.
Cebu issued a request for information for its wide-
body replacement in 2018, and a more formal request
for proposals seems likely around mid-2019.
Growth markets
Cebu is looking to further develop its network out of
Philippine airports Clark and Cebu by linking them
to new destinations or adding frequencies on existing
routes.
Gokongwei plans to double the Clark-based fleet to
four aircraft by the end of 2019. Te carrier started op-
erating out of Clark, a former US air base, in 2006 with
a single aircraft. Cebu’s parent company, JG Summit
Holdings, has a 33% stake in the North Luzon Airport
Consortium, which won a 25-year contract to operate
Clark’s new Terminal 2.
Clark has a growing middle-income market that is
even larger, as a percentage, than Manila’s, Lao said.
“Clark should be seen as an airport for the greater
Northern Luzon catchment area, rather than as an al-
ternative to Manila,” he explained.
GDP in the Philippines is forecast to grow at an an-
nual rate of around 5%, and Cebu sees this economic
growth trickling down to the outer Philippine regions,
raising the middle-income population across the country.
While southeast Asia continues to be Cebu’s core market,
north Asia has seen significant demand, with strong in-
bound traffic from China and outbound traffic to Japan.
ATW_APRIL30-31 Cebu Pacific.indd 31
Lance Gokongwei, Cebu Pacific
Te A321neo will allow the airline to reach desti-
nations in Russia, northern Japan, China and to some
Australian cities, but in the next 12 months, as the new
aircraft come online, the focus will be mostly on boost-
ing the existing network.
“We will lean towards where we are already operat-
ing, but that wouldn’t stop us from launching some-
thing new,” Lao said. “Cebu-Macau is one example.”
None of Cebu’s aircraft is equipped with IFE sys-
tems, and Wi-Fi service on its A330s was removed be-
cause of lack of usage. Instead, Lao said, the airline is
tapping into the “bring your own device” trend. Each
Recaro SL3510 seat on the A320neos and A321neos
is being equipped with USB charging ports. In what
seems counterintuitive, the A330 cabins will not
be equipped; this is likely because of the anticipated
phaseout.
Cargo
Another source for improved revenue is air freight. For
the first nine months of 2018, Cebu’s cargo performance
was up 24.6% year-over-year to PHP4.1 billion.
“Te Philippine economy is doing very well, and
that is driving our results, both internationally and do-
mestic. Te country imports a lot of items from abroad,
especially from countries like Japan, Korea and China.”
VP-cargo Alex Reyes said.
Cebu City has long been a trading center and spe-
cific trade patterns occur in the Philippines. From a
supply chain point of view, most goods are produced
around Manila’s metro area, leading to strong demand
for morning flights to distribute these items across the
country. Return flights ferry agricultural goods, raw
materials and time-sensitive items. For example, Philip-
pine mangos are brought to Manila to be consolidated
before being sent on for export.
Te A321neo has a greater cargo carrying capacity of
around 12 tonnes and Cebu wants to capitalize on that.
Te airline has also contracted for two ATR 72-500s to
be converted into freighters, with the first scheduled for
delivery in the first quarter of 2019. Te ATR freighters
will specialize in domestic goods.
Adrian Schofield contributed to this article.
atwonline.com | April 2019 | ATW 31
3/14/19 1:37 PM
 WHEN
LESS IS
MORE
US steps back on airline
rulemaking; Europe stands firm.
BY BEN GOLDSTEIN AND KERRY REALS
T
he US Department of Transportation
(DOT) has embarked on a regulatory
reform effort that it says will save billions
of dollars and relieve the air transport
industry of rules that cost more to implement than
the revenue they generate, but do not enhance safety.
In Europe, meanwhile, a more hardline approach is
being taken, with some of the stifest protections for
passengers that airlines are challenging in courts.
US DOT deputy secretary Jefrey Rosen says the de-
partment produced more than $2 billion in industry-
wide cost savings in fscal 2018, gains he credited to the
agency’s mission to “advance safety and other regulatory
objectives without harming the economy through bur-
densome regulation.”
“Many people have this mistaken notion that if you
reduce cost or reduce burdens, you are reducing safety
or consumer protections or whatever the regulatory ob-
jective is. We reject that notion,” Rosen told an Airlines
for America (A4A)/IATA regulatory reform forum in
Washington DC. “Tis is not some blind ideological
rush to slash good rules with wild abandon. . . . It’s a
measured consideration of the costs and benefts to the
public with safety as a touchstone.”
Perhaps no rulemaking more encapsulates DOT’s
regulatory reform agenda than an anticipated policy
that would reinterpret the meaning of the phrase “un-
fair or deceptive practices” from the consumer protec-
tion statute in the transportation code. Te language,
32 ATW | April 2019 | atwonline.com
ATW_APRIL 32-33 airline regulations.indd 32
which predates both deregulation and the
establishment of FAA, can be a headache for
airlines, regulators and consumers because of
its vague meaning and unclear application.
Southwest Airlines associate general coun-
sel Bob Kneisley said during the forum panel
following Rosen’s speech that DOT has a
ready-made guide for interpreting the phrase
in the Federal Trade Commission (FTC),
which has nearly identical regulatory author-
ity under the FTC Act. Under FTC rules, an
unfair or deceptive practice must have the
tendency to mislead a “reasonable consumer,”
and the injury caused to the consumer must
be material, among other specifcations.
“I think it’s really important to re-
member that there are unfair and decep-
tive practices for sure, and those should
be the target of the regulatory process,
but you can’t make that case based on the
mere fact that you have an idea that you
think consumers might like better than the practice
that’s currently being provided by the industry,” IATA
general counsel Jef Shane said. “I think this is a very
important inquiry the DOT is undertaking, and I’m
very hopeful that we’ll see a clear defnition of ex-
actly what DOT’s statutory authority to regulate is.”
Rosen said “the most important part” of last year’s FAA
Reauthorization Act was “what’s not in the bill,” refer-
ring to several controversial provisions abandoned by
lawmakers during eleventh-hour negotiations. Tese in-
cluded moves by some lawmakers to regulate seat pitch
minimums and ancillary fees.
While Rosen acknowledged that implementing the
roughly 35 new rulemakings mandated by the legisla-
tion would be “challenging given time and resource
constraints,” he expressed optimism that DOT could
manage the task without deviating from the Trump ad-
ministration’s agenda of regulatory reform.
Te provisions struck from the fnal bill included a
measure from Senator Ed Markey (D-Massachusetts)
that would have placed restrictions on airlines’ abilities to
charge fees for ticket changes and cancellations, as well as
an amendment from the House of Representatives that
would have banned carriers operating so-called fag of
convenience business models from fying in the US.
Congress did approve a provision calling on DOT to
prescribe minimum dimensions for seats and lavatories,
but only if narrow dimensions are found to cause a safe-
ty risk to passengers in the event of an aircraft evacua-
3/14/19 3:14 PM
 tion. FAA, for its part, has repeatedly determined that
such a risk does not exist, although the matter will be
fully settled by the DOT’s inspector general in a report
expected to be released later this year. For the time be-
ing, industry watchers are not concerned the provision
will lead to new requirements for carriers.
Sensible rules
Rosen said DOT “will not hesitate to move forward
with sensible rules where they do exist,” and cited an
upcoming rulemaking on emotional support animals as
an example of the kinds of industry-backed regulations
the department is interested in pursuing.
IATA VP-members and external relations Doug
Lavin said he expects the final rule will allow for dogs
that are “trained specifically to address a handicap or
difficulty,” as opposed to the current system where emo-
tional support animals can be almost any species and
need not be trained for any legitimate service function.
Lavin said the loose definition of service animals was an
“open door that needs to be closed.”
DOT’s agenda of regulatory reform contrasts with
where Europe has headed. Some of the most consumer-
friendly airline passenger rights regulations in the world
reside under the European Commission’s authority.
Compensation paid to customers who endure flight
delays has weighed heavily on carriers’ balance sheets,
prompting airlines to look for new ways to exploit the
gray areas around defining what constitutes an extraor-
dinary circumstance that could be considered beyond
their control.
Under the European Union’s Regulation 261/2004
(EU261), passengers on flights operated by EU carriers
are entitled to claim up to €600 ($683) in compensa-
tion if their flight is delayed by more than three hours
or canceled, provided the disruption is not the result of
“extraordinary circumstances.”
Te amount they are entitled to claim depends on
the length of the flight and is clearly defined in the leg-
islation. Situations in which the airline is exempt from
paying compensation, however, are less clear, giving rise
to several high-profile legal disputes in which an airline
went to court to try to prove the disruption was beyond
its control.
In a recent example, a Dublin court backed Ryanair’s
refusal to pay compensation to Ireland-based passengers
whose flights had been delayed or canceled as a result of
strike action by the airline’s staff. Swords District Court
ruled in February that no compensation was owed un-
der EU261 to Ryanair customers affected by last sum-
ATW_APRIL 32-33 airline regulations.indd 33
mer’s strikes because the industrial action was beyond
the airline’s control.
Te UK Civil Aviation Authority (CAA), however,
previously arrived at a different conclusion, announc-
ing Dec. 5, 2018, that it was taking enforcement action
against Ryanair on behalf of UK passengers because
the airline had “rejected” direct compensation claims
from customers relating to flight disruptions caused by
strikes. CAA said enforcement action is ongoing and
may eventually have to be dealt with in UK courts.
Coby Benson, a flight delay compensation solicitor
at UK-based Bott and Co., believes that strikes caused
by disagreements over working conditions are “not ex-
traordinary circumstances since they are both within
the airline’s control and, also, an inherent part of run-
ning a business.” A court in Luxembourg shared Ben-
son’s view in July 2018 when it ruled Lufthansa should
pay compensation to two passengers whose flight had
been disrupted by strikes by airline employees in 2016.
Te last few years have been characterized by indus-
trial actions at a number of European airlines, includ-
ing Ryanair, Lufthansa and Air France, and has resulted
in rising compensation bills. Lufthansa says the overall
cost of “irregularities”—which includes passenger com-
pensation payouts—increased in the first three-quarters
of 2018 to €350 million.
A mess
IATA DG and CEO Alexandre de Juniac called the rule
a “mess for airlines and passengers” and a “bonanza for
claims agencies and their dubious practices” during a
2018 keynote speech at IATA’s Wings of Change Europe
conference in Madrid. De Juniac criticized the European
Court of Justice for issuing “intolerable interpretations”
of the rule which “do nothing to help passengers,” and
said the only solution to the regulatory headache was a
“wholesale reform” of the rule.
In the meantime, carriers in Europe are stuck writ-
ing checks each time there is a lengthy delay, which
continues to pose legal and logistical hurdles and ul-
timately raises the price of airfare for consumers.
“I’ve heard from airlines who say they’d be offering a
much lower-cost product, they’d be challenging easyJet
and Ryanair and other LCCs in Europe, if they didn’t
have to pay these fees so often, which of course keeps
the ticket price up,” Shane said. “Tis whole thing
needs to be recalibrated to better take into account costs
and benefits.”
Which is the path that DOT now also seems to find
preferable.
atwonline.com | April 2019 | ATW 33
3/14/19 3:14 PM
 AIX HAMBURG PREVIEW
CABIN
INNOVATIONS
BRUSSELS AIRLINES’ new Airbus A330 business-
class cabin was designed by JPA Design.
I
n a sign that segmentation is not confined to
economy passengers, for whom many airlines now
offer premium economy options, Collins Aerospace
is developing a product that would offer a simi-
lar premium option within the business-class cabin,
inserting seats that fall between business and first.
Te company has developed the design for airlines
that do not want the expense of a separate frst-class
cabin but do want to provide business-class passengers
a more upscale option. Te concept will be shown at the
Aircraft Interiors Expo (AIX) in Hamburg in early April.
Te design takes the form of “an integrated transition
to a ‘semi-frst’ environment that would work well for fre-
quent fiers who pay just a bit more,” Collins Aerospace
VP-strategy, interiors business Ed Kinnier told ATW.
34 ATW | April 2019 | atwonline.com
ATW_APRIL 34-35 AIX HAMBURG cab.indd 34
Traditional and new industry
players explore the aircraft
interiors space. BY ALAN DRON
BRUSSELS AIRLINES
Tis half-step up from business class would be placed
at the front of the cabin, with subtly diferent front-end
cabin monuments surrounding the passengers to cre-
ate more exclusivity. “Tink of it the way an automo-
tive company might have a series of trims within the
same platform . . . the highest-end trim and a little bit
of change to the body while keeping some consistency
within the cabin,” Kinnier said.
Collins will also show at AIX its M-Flex Duet concept,
a wheeled unit that, once an aircraft has reached cruising
altitude, turns an aircraft cabin’s exit areas into what the
company describes as a social zone or “revenue accretion
zone” where snacks or chilled drinks are served.
Te unit would be wheeled from a galley area and re-
turned before landing.
3/14/19 3:17 PM
 “Think of it the way an automotive company might have a series of
trims within the same platform.” Ed Kinnier, Collins Aerospace

“Essentially, it maximizes dead space while in

flight,” Kinnier said.
Te unit is in the certification process, and Collins
already has a customer, he said.

Race car tech

Williams Advanced Engineering and JPA Design
have joined forces to generate future aircraft interiors
through the application of JPA’s aircraft cabin experi-
ence and Williams’ Formula One motor racing-de-
rived technology.
Te companies believe there is potential for a step-
change in cabin layout.
“Te innovative use of lightweight materials, rapid
COLLINS AEROSPACE

product development and the maximization of avail-

able space is very much at the heart of the work we do
commercializing Formula One-derived technology,”
Williams MD Craig Wilson said.
Te partnership is exploring proprietary technolo-
gies from both parties to save weight while increasing
comfort and space.
Te two companies plan to reveal more details of their
partnership at AIX and the adjacent Passenger Experi-
ence Conference.
JPA Design unveiled some of its work on the re-
designed cabins of Brussels Airlines Airbus A330s.
Te EC01 ZIMflexible NG seat from ZIM Flugsitz,
with a personal USB port and 10.1-in. IFE screen,
was chosen for the 244-seat economy-class cabin in
a 2-4-2 layout. Te same company’s PC01 ZIMmagic
with 38-in. pitch and 40-degree recline, and a 13.3-
in. high-definition screen at each seat, was selected for
premium economy, a new class for the Belgian airline,
featuring a 21-seat 2-3-2 configuration. Tompson
Aero Seating’s Vantage model was the choice for busi-
ness class, in a 30-seat 1-2-1, 1-2-2 cabin to give direct
aisle access for all passengers.
In something of a “Back to the Future” approach
echoing some of the layouts on first-generation Boeing
747s and Lockheed L-1011s, Airbus’ designs for lower-
deck passenger modules, potentially including lounge
areas or quiet zones, will be among the contenders for
a Crystal Cabin Award. Te facilities could make new
ultra-long-haul services more comfortable, with work
and recreation space options.
Hear and see better
Turboprop manufacturer ATR will demonstrate tech-
COLLINS AEROSPACE’S M-Flex Duet transforms an
aircraft exit area into a snack bar during flight.
nologies designed to improve the cabin environment for
passengers with disabilities.
Hearing-impaired passengers face several potential
issues when traveling by air, ATR said. On an aircraft
without a hearing aid loop, it can be difficult for some
people to hear announcements above the ambient noise
of the cabin.
While many people with hearing loss have hearing aids,
those devices do little to help them hear clearly in group
settings, such as on board an aircraft. A magnetic induc-
tion loop, however, sends clear sound from a sound system
directly to the user’s hearing aid without any distortion or
background noise.
“We are currently investigating implementing a loop
either inside the entire ATR cabin or locally under spe-
cially designed seat covers, or in an overhead bin,” the
company said. A prototype hearing loop, AudioBack,
supplied by French company Bacqueyrisses, is being
evaluated on ATR aircraft.
ATR also plans to use AIX as an opportunity to dis-
cuss how to improve the cabin environment for visu-
ally impaired passengers through greater use of Braille.
Tis could be used to give more information than cur-
rently supplied on safety instructions, such as a tactile
diagram indicating the locations of emergency exits.
Signs or cards such as “life vest under your seat” and
“fasten your seat belt while seated” could also be pre-
sented in Braille.

atwonline.com | April 2019 | ATW 35

ATW_APRIL 34-35 AIX HAMBURG cab.indd 35 3/14/19 3:18 PM

 AIX HAMBURG PREVIEW
CONNECTIVITY
conversation
The debate on how to improve onboard Wi-Fi and
make money continues. BY VICTORIA MOORES
T
he Olympic Games motto Citius, Altius,
Fortius (faster, higher, stronger) could
well be applied to the inflight connec-
tivity (IFC) challenge. Airlines and pas-
sengers want onboard Wi-Fi to have all three attri-
butes, but achieving it is still a Herculean task.
High-speed connectivity in the air remains impor-
tant, but “stronger” is also becoming more relevant.
Customers are looking for stability, and that Wi-Fi ser-
vice strength will come from a more mature and joined-
up supplier base.
Just under a year ago, Airbus put together a consor-
tium of airlines, manufacturers, mobile network opera-
tors and satellite providers to harmonize infight connec-
tivity. Te Seamless Air Alliance now has 23 members,
including Aeromexico, Airbus, Air France-KLM, Collins
36 ATW | April 2019 | atwonline.com
ATW_APRIL 36-37 AIX HAMBURG con.indd 36
VIASAT-2, LAUNCHED
in June 2017, offers
high-speed inflight
connectivity to airlines.
VIASAT
Aerospace, Delta Air Lines, Etihad Airways, GOL Air-
lines, Inmarsat, Intelsat, Nokia, Panasonic, Safran, SITA-
ONAIR and Sprint.
Te Seamless Air Alliance wants passengers to be able
to connect their devices automatically, without having
to go through complicated login processes and paywalls.
Alliance CEO Jack Mandala described this quest for sim-
plicity as “one of the great technology challenges.”
“Te current practice of high prices, spotty cover-
age and poor performance, combined with quirky por-
tals and credit card payments, has limited uptake rates
to 10% or less,” a report published by the alliance ex-
plained.
Te current connectivity experience can be “brand-
damaging,” the report said. However, the next wave of
technology improvements—such as better antennas, mo-
3/14/19 12:12 PM
 “The conversation will center on how airlines can truly capture new
revenues and ongoing passenger loyalty from having a really great
onboard connectivity service.” Don Buchman, ViaSat
dems and satellite systems—could be the breakthrough.
“Ka High-throughput satellites (HTS) will remain
the big thing in technology with increasing awareness of
emerging global Ka HTS solutions. Tese big satellites
can provide incredible amounts of capacity in high-traffic
zones. We’ll also likely see a focus on flexible, high-effi-
ciency antenna systems that really boost gain and reliabil-
ity,” Tales VP-InFlyt Experience connectivity product
management and value proposition Sam Garg said.
With passenger numbers set to double by 2035, con-
nectivity providers will also need to prove their technolo-
gies can cope with future growth.
“As demand for connectivity continues to in-
crease, a committed long-term roadmap to future-
proof technology is essential,” Inmarsat Aviation VP
Dominic Walters said.
Many of these latest technologies will be showcased
at the Aircraft Interiors Expo (AIX) in Hamburg in
early April.
“AIX attendees can expect the latest updates from
inflight connectivity providers at the event. Tere will
undoubtedly be a lot of noise about what the techno-
logical advances will mean for airlines and, subsequent-
ly, their passengers,” Walters said.
Free, not cheap
Passengers increasingly expect connectivity to be free—
like the service they get at airports—leaving airlines to
cover the cost of installation, service charges and main-
tenance, as well as the operating penalties of increased
weight and drag. Tis means the commercial angle of
connectivity remains a hot and unresolved question.
“At AIX 2019, the conversation will center on how
airlines can truly capture new revenues and ongoing pas-
senger loyalty from having a really great onboard-connec-
tivity service,” ViaSat VP-commercial aviation and GM
Don Buchman said.
ViaSat has brought over 700 new aircraft online, with
customers that include American Airlines, Finnair, Jet-
Blue Airways, Qantas, United Airlines and Scandinavian
Airlines (SAS). “We’ve seen an overwhelming positive re-
sponse from the flying public, especially in social media,”
he said.
Tis is partly because big-brand companies, like Apple
Music, Netflix and Spotify, are building trust in the qual-
ATW_APRIL 36-37 AIX HAMBURG con.indd 37
ity of IFC. Buchman said this paves the way for airlines
to explore new revenue-generating business models.
Te geography of connectivity is also changing.
“We’re seeing rapid advances in the development
and adoption of IFC globally, with regions like Africa
and India now joining the digital transformation,”
SITAONAIR VP-customer programs Yann Cabaret said.
Cabaret agrees that airlines are focused on meeting
growing demand for connectivity, as well as finding ways
to generate revenue, increase passenger engagement and
further personalize the flying experience.
“Additionally, these solutions need to integrate and
work seamlessly with their existing IT infrastructures,”
he said. “We believe that, to support these needs, services
should be provided in a consistent manner on every fre-
quency band, with an open architecture.”
Tis increasingly joined-up approach goes beyond
passenger connectivity and into operations.
The whole experience
“At this year’s AIX, a major talking point for airlines and
suppliers alike will be how connectivity is enabling the
whole-cabin experience,” Panasonic Avionics product
marketing manager Caroline Reynolds said.
“For airlines and their staff, connectivity greatly im-
proves operational efficiencies. It enables crew to rapidly
deploy upgrades and new features with minimal impact
to the cabin and cabin services. It is also a means to drive
new business. Connectivity allows airlines to validate
payments in real-time and recognize revenue immediate-
ly. Tey can also increase ancillary revenues by upselling
services during the flight and generate revenue through
Wi-Fi sponsorship opportunities,” she added.
Which goes back to the Seamless Air Alliance’s goal of
creating a more joined-up experience. Te alliance esti-
mates that greater standardization could generate a 5%
annual improvement in take-up rates, cost per session,
operating cost and capital-equipment cost. “Even a small
step toward these objectives could create $11.4 billion
of value across the industry, with an upside to $36.7 bil-
lion,” the alliance said.
While the quest for “faster and higher” continues un-
abated, “stronger,” it seems, could be the way forward for
connectivity, the passenger experience and the bottom
line.
atwonline.com | April 2019 | ATW 37
3/14/19 12:12 PM
 Ah,
de Havilland!
The Q400 turboprop’s new owner resurrects a famous brand.
BY GRAHAM WARWICK
T
he de Havilland name has been absent from
commercial aviation for three decades. The
last Comet retired from airline service in
1981, and de Havilland Canada ceased
to exist after it was acquired by Bombardier in 1992.
Now the storied brand is set to make a comeback
after Canada’s Longview Aviation Capital agreed to
buy the Dash 8 program, including Q400 regional tur-
boprop production and the de Havilland name, from
Bombardier for $300 million.
But who is Longview, and can it support the more
than 1,000 Dash 8s in service around the world and keep
the Q400 in production against stif competition from
ATR—challenges with which Bombardier struggled?
Established in 2016, Victoria, British Columbia-based
Longview is the parent company of Viking Air. While
not a name familiar to most airlines, Viking has a long
association with de Havilland Canada, having previously
acquired from Bombardier the type certifcates for all
out-of-production types, from the DHC-1 Chipmunk
trainer to the DHC-7 Dash 7 regional airliner.
Viking supports all these aircraft, but also returned
the popular DHC-6 Twin Otter utility aircraft to pro-
duction. Te frst updated Twin Otter Series 400 was de-
livered in 2010, and the 140th aircraft is on the assembly
line in Calgary, Alberta. Major customers include Trans
Maldivian Airways, Grand Canyon Airlines and Cana-
dian regional carrier Kenn Borek Air.
But Longview chairman and CEO David Curtis is the
frst to admit that producing and supporting the Q400
poses a diferent scale of challenge.
“It is a very diferent operator group than the Twin
38 ATW | April 2019 | atwonline.com
ATW_APRIL 38-39 Q400.indd 38
Otter,” he said. “You’ve got large leasing companies who
have invested signifcant capital in these airplanes. You’ve
got large operators, like WestJet, Air Canada and Chorus,
who have big feets.”
Longview’s model is to produce new aircraft when
they help grow the core product support business. In
2016, the company acquired the former Canadair CL-
215/415 amphibious water-bomber program from Bom-
bardier. In addition to supporting the feet, Longview
acquired 11 piston-engine CL-215s that it is upgrading to
turboprop-powered CL-415EAFs. About 60% of them
are already sold, and the company is looking at putting
the CL-415 back in production in Calgary.
Turboprop market
Where does the Dash 8/Q400 ft into this?
“In the regional turboprop market, there’s a lot of
them fying. Tere’s 1,000-plus airplanes operating
around the world. Tey’ve got a production line that
can probably output about 32 airplanes [a year]. So it’s
a diferent animal,” Curtis said.
Te deal with Bombardier is expected to close by
the end of September. Longview plans to form a new
company in Ontario to produce the Q400 and support
the Dash 8 and Q400 feets worldwide. To be called
de Havilland Aircraft Company of Canada, it will be a
subsidiary of Longview and a sister company to Viking.
“It’s our intention to move as many of the people
currently on the Bombardier Q program, the Dash 8, as
we can over to the new de Havilland company,” Curtis
said. “Ten we’re going to carry on business as usual
and continue to produce aircraft. Te sales groups out
3/14/19 3:24 PM

“The Q400, like many de Havilland aircraft programs, is in a
unique spot in the marketplace. … It’s got some significant value
propositions for operators.” David Curtis, Longview Aviation Capital
there are continuing to sell production.”
Curtis is determined to continue to produce the
Q400, although the aircraft struggles to sell against the
cheaper, if lower performance, ATR 72.
“I can tell you the least appealing option is to wind up
production and just be product support,” he said. “Tak-
ing the airplane out of production does not help [those
large lessors and operators] with their fleet planning.”
Longview also thinks there is continued demand for
the Q400.
“We do believe that there’s room for two programs.
ATR certainly has most of the market share—I think
they’re about 70% right now—but the Q400, like many
de Havilland aircraft programs, is in a unique spot in the
marketplace. Especially now that it has 90 seats, it’s got
some significant value propositions for operators,” Cur-
tis said.
Keeping the Q400 in production also supports
Longview’s business model.
“We didn’t buy it to close up production and just
be a product support company. You need to put air-
planes into the fleet to continue to have your product
support,” Curtis noted.
Workforce challenge
But there is a wrinkle. Bombardier has sold the Downs-
view, Toronto, site where the Q400 is assembled. Tis
gives Longview about three years to find a new home
for the program.
ATW_APRIL 38-39 Q400.indd 39
HORIZON AIR
Bombardier Dash 8 Q400
ROB FINLAYSON
“Tere’s lots of speculation that we’re a western Can-
ada company so we’re just going to move it back west.
But what people forget is finding aerospace workers is
incredibly difficult,” Curtis said. “Tere’s about 1,000
people on that site that are dedicated to the Q program.
I’ve had approaches from every airport community in
Ontario, and certainly across the country. Moving the
program is one thing. Hiring the people in order to the
execute the business—that’s an entirely different thing.”
Te company already would need to find about 900
people to restart CL-415 production.
“I would be taken away to an insane asylum if I
thought I was going to move the Dash 8 production
line west and start up a water-bomber program and ex-
pect to find 2,000 skilled workers in western Canada,”
Curtis admitted.
Viking will be 50 years old next year. From a re-
pair shop for Grumman flying boats, it has grown
into a more than $300 million business parented by
Longview. Te Q400 acquisition will boost the com-
pany to over $1 billion in revenue and make it the larg-
est turboprop aircraft manufacturer in North America.
What’s in a name? For Curtis, everything. “Longview”
was chosen because the company invests for the long
term, and now it is poised to bring back a foundational
name in civil aviation.
“We are not going to optimize this thing and flip it,”
he says. “We love the de Havilland brand. We are in it
for the long haul.”
atwonline.com | April 2019 | ATW 39
3/14/19 3:24 PM
 I
n 1999, a treaty was signed to create Open Skies
in Africa. Two decades later, Africa’s airlines and
passengers are still waiting for the promise of
true aviation liberalization to become a reality.
But new eforts are underway to bring cheaper, more
efcient air links to the continent.
In 1999, the Yamoussoukro Decision, named for the
capital of the West African state of Côte d’Ivoire where
it was signed, was hailed as the treaty that would estab-
lish the same sort of Open Skies agreements that have
transformed the transatlantic and other major markets.
Te treaty granted ffth freedom rights to all of its
DOORS
TO OPEN
Can a new push for African
aviation liberalization fare better
than the first? BY ALAN DRON
signatories—44 nations of the African Union—and
sought to eliminate restrictions on airline ownership
and fight frequencies between signatory states.
Implementation, however, foundered on the reefs of
restrictive visa regimes, high ticket prices, poor connec-
tivity and substandard infrastructure. Tese factors are,
in many cases, interlocking and reinforce the barriers
against Open Skies.
Yet Africa seems ideal for aviation liberalization. It
is a continent with a population of more than 1 billion
people, with a growing middle class, and it has long dis-
tances between cities.
But the continent remains badly divided by issues
of nationalism, as the CAPA Aviation Aeropolitical &
Regulatory Summit heard in Qatar in February.
African Airlines Association (AFRAA) secretary gen-
eral Abderahmane Berthé said that during his time as
CEO of Air Mali, he wanted to increase his airline’s
thrice-weekly service to an African destination to fve
times a week. But a senior ofcial of the aviation regula-
tor in the country his airline wished to serve told him
the Yamoussoukro Decision was one thing, but the sov-
ereignty of his nation was a diferent matter altogether.
Africa via Paris
Rigidity on sovereignty issues has brought about a bi-
zarre situation in which it is frequently easier for Euro-
pean citizens to obtain visas on arrival than it is for the
40 ATW | April 2019 | atwonline.com
ATW_APRIL40 africa.indd 40
citizens of other African nations. And in some cases, the
only way to fy between two African nations that do not
have direct connections is via a European hub, such as
Paris.
Monopolistic pricing of air tickets and airport servic-
es such as ground handling is another problem, South
Africa’s director of air transport Vuwani Ndwamato
said. Non-uniform—frequently high—taxes and charg-
es translate into air tickets that are substantially higher
than in other regions of the world.
In their 2018 book “Fly Africa,” National Aviation
Services CEO Hassan El-Houry and African entre-
preneur Eric Kacou estimated that “one dollar spent
in economy class in Africa enables passengers to travel
6.04 km. Te same dollar spent in Europe propels pas-
sengers an average of 44.44 km.”
Tis high-cost environment also means that LCCs,
which have increased the size of the market in other
regions of the world, are largely unable to operate in
Africa. Tis limits the passenger market to the wealthy.
Africa has about 16% of the world’s population, but ac-
counts for less than 4% of global air trafc.
Costs, the capital-intensive nature of the airline busi-
ness, and the lack of infrastructure all hinder the growth
of African airlines and connectivity. Only 23% of air-
line trafc on the continent is intra-African.
Te result of all these factors, RwandAir CEO
Yvonne Manzi Makolo said, is that “we have citizens
preferring to take a 16-hour bus journey rather than a
one-hour fight.”
SAATM
Frustrated by such attitudes, 11 African states decided in
2015 to form the Single African Air Transport Market
(SAATM), efectively making the Yamoussoukro Deci-
sion a reality; six more states have since signed up, and
SAATM was launched in January 2018.
“What we are seeing is a change in mindset,” Ma-
kolo said. “A lot of governments and bodies have seen
the full potential of the Continental Free Trade Area,
which, like the European Union, allowed for the free
movement of trade, services, people and investment
throughout Africa. For that, you need SAATM as well.”
A major factor in allowing SAATM to achieve its ob-
jectives will be improvements in the continent’s hubs to
encourage connectivity. A prime example of this is Ad-
dis Ababa, home of Ethiopian Airlines, with Casablanca
undertaking the same role for Royal Air Maroc. Nairobi
and Johannesburg also fulfll this role, and a new hub
airport is being built at Kigali, RwandAir’s home base.
“More African countries need to recognize the im-
portance of air transport in supporting the wider econ-
omy,” Makolo said. “Some airline CEOs are saying ‘let’s
have a coalition of the willing,’ and once people see that
this is the way to go, others will join.”
3/15/19 2:58 PM
TRENDS
TRENDS

AIRBUS & BOEING DELIVERIES* JAN-FEB 2019 AIRBUS & BOEING ORDERS* JAN-FEB 2019
TOTAL TOTAL VALUE
CUSTOMER PER AIRCRAFT TOTAL AIRCRAFT OF ORDERS
TYPE
MODEL DELIVERED TYPE CUSTOMERS ORDERED $(000) **

AIRBUS AIRBUS
A220-100 1 2 A220-100 1 1 162,000
A220-300 1 1 A220-300 1 1 183,000
A319ceo 1 1 TOTAL AIRBUS CUSTOMERS 1
A320ceo 8 9 TOTAL AIRBUS ORDERS* 2 345,000

A320neo 19 36 BOEING
A321ceo 2 7 737 MAX *** 2 9 1,094,400

A321neo 13 16 767-300F 1 4 881,200

A330-300 1 1 787-9 2 14 4,095,000

A350-900 9 13 787-10 1 4 1,353,600

TOTAL BOEING CUSTOMERS 6
A350-1000 1 1
TOTAL BOEING ORDERS* 31 7,424,200
TOTAL AIRBUS CUSTOMERS 46
*Gross orders only; excludes military/government, BBJ/VIP and private customers
TOTAL AIRBUS DELIVERIES 87 **estimated, based on current list prices ***737 MAX variant unspecifed
BOEING For more orders and deliveries, including customers, visit ATWOnline, Data & Financials
Source: Airbus, Boeing
737-800 6 8
737-900ER 2 10 AIRCRAFT VALUES
737 MAX *** 21 46
FBV @ 1.0% Inflation
747-8F 1 1 Year
Aircraft Built 2019† 2024‡ 2029‡ 2034‡
767-300F 1 2
Airbus A321-200 2006 $22.2 $14.3 $9.8 $5.9
777F 3 3
Boeing 757-200ER 1998 $10.2 $6.5 $3.9 $1.3
787-9 11 16
Boeing 737-900ER 2008 $25.4 $17.1 $12.1 $7.8
787-10 2 3
Values assume half-life, half-time condition. †Current Market Value - Most likely
TOTAL BOEING CUSTOMERS 37 trading price under current market conditions. 2019=NEW, rounded to nearest
TOTAL BOEING DELIVERIES 89 $million.‡Future Base Value - value in a balanced market, inflated at 1.0% p.a.,
rounded to nearest US$million. Source: AVITAS, Inc.

2018 AIRLINE & LESSOR FINANCIAL FULL-YEAR RESULTS

Operating Operating Operating Net Income/
Airline/Airline Group/
Region Revenue % Chg. Expense % Chg. Profit/Loss % Chg. Loss % Chg.
Lessor
($, 000) ($, 000) ($, 000) ($, 000)

AerCap Holdings Europe 4,799,980 -4.7 3,649,047 -4.0 1,150,933 -6.9 1,015,632 -5.6
Aeroflot Group Europe 8,810,880 14.8 8,527,680 20.2 283,193 -51.4 82,307 -75.2
Air Arabia Africa/Middle East 1,122,290 10.2 988,337 12.2 133,956 -2.4 -157,644 NM
Air Canada North America 13,251,100 11.2 12,380,600 13.5 860,510 -14.4 122,406 -91.8
Air France–KLM Europe 30,327,600 2.5 28,804,100 6.0 1,523,530 -30.7 467,811 150.9
Air Lease Corp. North America 1,679,702 10.8 1,039,564 14.6 640,138 5.0 510,835 -32.4
AirAsia Berhad Asia-Pacific 2,551,730 9.2 2,260,970 24.5 290,760 -44.1 411,840 8.9
Atlas Air Worldwide Holdings North America 2,677,724 24.2 2,394,182 25.1 283,542 17.2 270,567 21.1
Avianca Holdings Latin America/Caribbean 4,890,830 10.1 4,658,714 12.3 232,116 -21.0 1,143 -98.6
Bangkok Airways Asia-Pacific 854,886 -1.9 811,188 1.4 43,698 -39.0 8,068 -68.8
BOC Aviation Asia-Pacific 1,726,000 23.2 1,040,000 22.4 685,000 24.3 620,000 5.7
Cathay Pacific Airways Asia-Pacific 14,181,000 14.2 13,722,000 7.9 459,038 NM 299,428 NM
Chorus Aviation North America 1,063,690 7.3 904,894 4.7 158,792 25.2 49,100 -60.0
Copa Holdings Latin America/Caribbean 2,677,627 6.2 2,532,588 20.7 145,039 -65.8 88,096 -75.8
Finnair Group Europe 3,242,190 10.4 3,048,430 11.1 193,758 -0.6 172,369 -11.0
GOL Linhas Aereas Latin America/Caribbean 2,938,960 10.5 2,578,500 7.2 360,564 41.5 -200,809 NM
Grupo Viva Aerobus Latin America/Caribbean 510,150 34.6 461,986 160.5 48,164 13.8 43,239 53.1
LATAM Airlines Group Latin America/Caribbean 10,368,214 2.0 9,663,095 2.3 705,119 -1.3 181,935 17.1
Lufthansa Group Europe 40,988,100 0.7 37,795,500 1.8 3,202,620 -10.8 2,474,020 -7.6
Thai Airways International Asia-Pacific 6,103,350 3.9 6,380,460 10.3 -277,113 NM -353,933 NM
Volaris Latin America/Caribbean 1,388,250 10.0 1,433,040 13.5 -44,792 NM -34,929 NM
For all airlines, Fiscal 2018, year ended Dec. 31, 2018. NM: not meaningful statistically Source: ATW Research; Direct Airline and Airport Reports

atwonline.com | April 2019 | ATW 41

p41 Trends.indd 41 3/14/19 5:05 PM

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 CUSTOMER SERVICES

CONTACTS

ADVERTISING SALES Japan CLASSIFIED ADVERTISING SERVICES

North and South America Yoshinori Ikeda, Managing Miguel Ornelas http://www.atwonline.com
Beth Wagner Director, Pacific Business, Inc. Advertising Sales Representative
Publisher, Air Transport World Tel: +81 3-36616138 Tel: +1 661-480-7000 Subscription Services
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INDEX OF COMPANIES AND ADVERTISERS

Airbus ...................................................6 BAE Systems .......................................17 Komy Co., Ltd. ....................................10

airbus.com baesystems.com/intellicabin www.komy.com

AJW Aviation .........................................9 Boeing Commercial Airplanes ...........19 Textron Aviation ................................ C3
ajw-group.com boeing.com/widebody CESSNA.COM

ASM Training.......................................11 CAE .................................................... C2 Universal Air Travel Plan .....................8

aviationweek.com/asmtraining @CAE_Inc UATP.com

ATR - Avions De Transport Regional ..29 Commercial Ad ...................................42 Vienna Airport/Flughafen Wien............2
atr-intolife.com aviationweek.com/fleetintel viennaairport.com/culture

ATW Awards ..........................................4 Delta Tech Ops .................................. C4

awards.atwonline.com deltatechops.com

atwonline.com | April 2019 | ATW 43

904ATW43.indd 43 3/15/2019 7:42:40 AM

 interview:
Willie Walsh
CEO, International Airlines Group
in for the
LONG HAUL
IAG’s answer to the long-haul LCC market, Level, launched in June 2017. With two new Airbus
A330-200s being delivered this year, the airline will operate seven of the type on routes out of
Barcelona, Paris Orly and Vienna. Walsh spoke to ATW about Level’s progress and the long-haul
LCC market generally. INTERVIEW BY KURT HOFMANN
There are still long-haul LCC skep-
tics. What makes you a believer
in this market? Te way we view it,
there are several significant markets
that are underserved from the long-
haul point of view and which can
be best served with an LCC model.
But it is clearly challenging. Tere is
definitely a niche, however, and we
are going to serve that.
How are the current Level routes
doing? We are committed to
expanding Level, which is
doing exceptionally well
out of Barcelona. We
are looking for more
aircraft to add to
Barcelona. We
have identified a
number of new
markets that
are not yet being
disclosed.
44 ATW | April 2019 | atwonline.com
ATW_APRIL 44 INTERVVIEW.indd 44
“For all airlines, ultimately
you must make a return on
investment.”
Is Level profitable? As with every
new airline, there are launch costs.
We don’t disclose the financials
of individual airlines within the
group. But we are pleased with
Level’s performance. IAG has over-
all ASK growth plans for each of its
airlines, but we don’t break it down
by the markets or airports.
How is the Vienna base go-
ing? We had a fantastic launch
in Vienna, which is [in a] very
competitive market. Level provides
the opportunity to make our brand
even more relevant in the continen-
tal European market.
Air France’s hybrid LCC, Joon,
had a very short life. Why is
Level different? Air France
launched Joon and nobody knew
what it was. Our brand is clear;
we did a clear market resurge.
Joon also was not an LCC; it was
a lower cost airline. So, what’s
that? Tey were stuck in the
middle of nowhere trying
to make themselves
relevant. Level is
a long-haul LCC
that has proven its
market and is very
well received by its customers.
IAG took a small stake in long-
haul LCC Norwegian with the
aim of pursuing full takeover
discussions. IAG is now selling
those shares after it was not
able to make a deal. Do you
wish it had been different?
I’m pleased we did the invest-
ment and I would have liked to
have brought Norwegian into
the group, but it didn’t work
out. I met [Norwegian CEO]
Björn Kjos in late 2018. He has
proven—not to everyone but
certainly to us—that the long-
haul LCC market exists and that
the customer will embrace the
business model. T at’s exactly
how we see it. I still hope they
succeed.
What’s the key to making the
long-haul LCC model work? For
all airlines, ultimately you must
make a return on investment.
T at’s clear. You must not only
satisfy the demands of the
shareholders, but also satisfy the
investment, which is massive. To
succeed in any part of the market,
you have to be profitable.
3/14/19 5:27 PM
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