Airline Claims it Will Save $20 Million by Increasing Fuel Efficiency

by Josh Lew on

Etihad Airways has announced that it is on track to save $20 million this year because of the success of its fuel-saving techniques. The airline has taken steps to reduce weight and improve engine performance by increasing the number of engine washes and reducing cruising speeds.

The fuel-saving strategy is not a last desperate attempt to stay in business. Etihad has been wildly successful over the past year. In the first half of 2008, it saw an unprecedented 41% increase in the number of passengers when compared to the same period in 2007. The airline has recently added routes to China and plans to expand further in to Europe and North America.

The Abu Dhabi-based carrier has added new routes and is planning on expanding its fleet by more than 100 aircraft in the near future. However, a slowing world economy and a projected drop in the number of passengers flying into and out of the Middle East might put a damper on Etihad’s ambitious growth plans.

Another Low-Cost Carrier Fails

by Josh Lew on

Low-cost-carrier LTE ceased to operate today because of its financial predicament. The Spanish carrier stopped booking flights on Thursday, but some would-be holidaymakers were left with luggage in hand, waiting to get from rainy England to the sunny Canaries. LTE specialized in such routes and worked closely with several English tour operators.

LTE was not a newcomer to the LCC game. It has been operating for 20 years and, though its executives claim that they are trying to find a solution to their financial woes, the current state of the industry isn’t going to lend itself to any quick recoveries. Thomas Cooke Airlines, a charter service based in Manchester, is among the players stepping in to service LTE’s passengers and the tour operators that relied on the now defunct airline in the past. With European LCCs coming and going (mostly going, these days), one can almost hear Elton John crooning “The Circle of Life.” when all is said and done, the biggest beast, Ryanair and EasyJet, might be the only survivors.

Visa Wins Big at Olympics

by Josh Lew on

Visa wanted to use the Olympics to get its foot firmly in the door in Beijing. The results are good so far. The credit card giant has been almost as dominant as the US men’s basketball squad.

Visa started preparations well before The Games. They helped over 200,000 merchants become Visa-ready and installed nearly 90,000 ATMs country-wide.

So who is plopping down the plastic in China’s largely cash-based society? Americans, who else? Visa claims that nearly 20% of the revenue on the first day of the Olympics came from consumers from the US. Japanese were the second largest group of users, accounting for 13% of the day one total.

Visa is using the Olympics to get itself in good position for the future in China. But is China benefiting from the wider use of plastic? Small and medium-sized retail businesses are probably seeing immediate results with the souvenir-happy tourists who have descended on Beijing. Visa claimed that there were $10 million worth of sales on day one alone. That’s $10 million dollars into the local economy.

Talk about laughing all the way to the bank. China won’t be laughing in the future when it finds that domestic credit card debt is on the rise, but for now, unlike the Olympic events themselves, in the credit card game, everyone is a winner.

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United Airlines posts staggering $537M Q1 loss, plans to cut jobs

by Grant Martin on

United Airlines posted its quarterly earnings yesterday and they weren’t pretty. The Chicago based carrier lost 537 million dollars in the first quarter, nearly a third of its market value as its stock plunged 37%. It was the company’s largest loss since it came out of bankruptcy in the first quarter of 2006.

In tandem with these numbers, the airline also announced that it would be cutting over 1,000 jobs and reducing flights in an effort to save cash.

And thus we see how a major carrier weathers the storm of high oil prices and a tight market. Fortunately for them, they had the assets and bandwidth to handle a few consecutive quarters of rough seas. Carriers like ATA and Skybus could not. The real question is thus: How many months of high oil prices can the airlines handle?

I have a feeling that this is not the end of woes for the industry — each and every domestic carrier is facing the same market influences. It will be interesting to see how other airlines cope in the new oil market, what they do to keep ticket prices low and competition high. Perhaps they will raise fees on all likes of service from checked baggage to changed tickets. Or perhaps, as Richard Anderson of Delta Airlines suggested this week, they’ll all just raise ticket prices 20%.

Japan to home-grow new jet

by Abha Malpani on

It is said that a country’s aviation industry is not complete unless it can produce its own aircraft — hence the importance of “home-grown” jets. I have to add here that that is the most blah term given to a domestically manufactured plane that strengthens the nation’s economy and technological prowess, but hey who am I to make judgment?

Japan announced today that it would have its first home-grown passenger aircraft ready by 2013 and has a $1 billion plan in place. The 70-90 seater planes will be “grown” by Mitsubishi Heavy Industries and will target the short/medium-haul regional market. According to AP: this will be the first nationally funded, “made in Japan” passenger aircraft in three decades.

Surprisingly, China beat Japan to it by unveiling their first home-grown jet in December last year.