Column: Aviation in Curacao: To be or not to be…

By Roger Cannegieter
A few weeks ago I e-mailed my short summary to my friends. One of the aerlines members of the editorial team invited me to post the story here. So here’s my general analyze of the aviation in Curaçao.

Atlantic Airlines sent a delegation to go excellarate obtaining its air operators certificate. Talks will also continue with banks for local funding and with CAP (airport) for available space at the airport. Negotiations with travel agencies, tour operators and the free trade zone are also ongoing. The airline says to have two Boeing 737-200Advanced aircraft already available by the end of October which could be flying by the 1st of December if all certificates have been obtained. Atlantic Airlines route structure aims at flights to the Dominican Republic, St. Maarten, Aruba, Bonaire, Venezuela and the United States.

The air connection between Aruba, Curaçao and Bonaire is improving. BonairExpress/CuraçaoExpress is doing a decent job in filling the gap DCA left behind with their ATR42. The 737 in my opinion is too large for island hopping with high frequency. Only during peak seasons an aircraft of this size can be attractive. Looking at the number of 737s Atlantic Airlines wants to start with (only two) island hopping might not be a bad move. Two daily flights or combining other Caribbean flights with Aruba might bring Atlantic Airlines more profits.

The Caribbean is currently well served to Jamaica with Air Jamaica being the leader. BonairExpress/CuracaoExpress is covering the Netherlands Antilles and Aruba pretty well with satisfying loads reported. Connections to the Dominican Republic can be improved. Aeropostal of Venezuela currently flies from Curaçao to Santo Domingo on almost a daily basis. In the past both Aeropostal and DCA/ALM operated flights to Santo Domingo with decent load factors so it can be done. St. Maarten is currently underserved as BonairExpress/CuracaoExpress still doesn’t have enough capacity to increase its flights here. Atlantic Airlines can be the savior when they start 737 flights on this route. The number of passengers and cargo an aircraft of this size can carry is ideal for this route. Caribbean people are known for taking a lot of baggage when they fly so the 737 is a good aircraft for this route.

Aeropostal, Aserca, Avior Airlines and AeroSol fly from approximately five destinations in Venezuela to Curaçao in total. The Venezuelan market is a large market which might attract more passengers in the future. Brazil so far has a small market which cannot scheduled flights, only charter flights. Same goes for Ecuador. These countries are great destinations as leisure charter markets but don’t offer enough demand for yearround flights, just seasonal services. With more Colombians discovering Curaçao, I would also focus more on this market as well. This market also has quite some potential…

Miami is the South American and Caribbean gateway to the U.S. All Latin American and Caribbean airlines have between two and four daily flights to Miami. American Airlines’ fortress hub in Miami also offers many flights. American Airlines currently has about nine flights per week to Curaçao. In the past ALM operated three daily flights with very good load factors, so more flights are possible. Atlantic Airlines can be a nice here. Surinam Airways will bring more competition on this route soon when they start Miami flights from Curacao. Atlantic Airlines is good for the local and regional travellers, but American Airlines can feed passengers from their entire U.S. network to Curaçao through their Miami hub. Most Latin American airlines flying to Miami have their own local markets that can support daily flights to Miami where American Airlines also takes a piece of the cake here. Canada has potential during the winter charter season.

No other European destination comes close to Holland here. Germany has some potential (especially divers) and Portugal as well. TAP Air Portugal operates charter flights to Curaçao to cater for the increasing Portuguese population on Curaçao. The Portuguese who live in Curaçao are the wealthier classes from Portugal (Funchal). I can see TAP operate scheduled flights again to Curaçao but now is not the right time yet. Two flights a week would be a nice start but this is still a long way ahead in my opinion.

As you can see Curaçao has potential. With tourism slowly increasing we might see a brighter future in the aviation as the success of the aviation is linked to the tourism for the biggest part. The local market of Curaçao cannot generate enough to fully support the aviation in its entirety. Just like all other Caribbean islands, Curaçao will always be heavily dependant on tourism. The charter business will play a significant part in this.

Paris Airshow 2005: Getting the Big Picture…

Every aviation analyst as well as aviation enthusiast was anxiously waiting for the opening hour of this year’s Paris Air Show. With the hype around both Boeing and Airbus, this year’s Paris Air Show promised to be yet another milestone in aviation with three breakthrough aircraft being offered to airlines, the Boeing 787 and Airbus’s A350 and A380. Visitors could watch with much amazement the flying capabilities of the A380, while the A340-600 performed its usual flying display at low speeds combined with sharp turns. Big orders placed by (new) Indian airlines came as a surprise to most. Orders from the Middle East were modest with only one major single order placed by an Arabian airline so far.

With Airbus having the A318, A340-600 and the A380-800 present as both static and flying displays, combined with the orders announced during the press visiting days, Airbus dominated the Paris Air Show taking up about 65 percent of all orders announced during the show. With more details published about the A350 airlines are now also looking at the possibilities this aircraft offers. In total Airbus sold 261 aircraft worth 29.1 billion U.S. dollars during the air show, while Boeing chalked up 148 orders worth 14.8 billion U.S. dollars. Of these Airbus orders, at least 125 were placed by Indian airlines. Airbus came back with a vengeance. Even though the Indian airlines appear to be on a rebound, some aviation observers are sceptical about the massive orders placed by these airlines. Most of these Indian airlines are new and still need to prove themselves. Even so one of these airlines ordered 100 A320 aircraft while another ordered the A380-800 to many people’s surprise. Some of these airlines focus on a hub-to-hub strategy while others focus on the point-to-point philosophy giving us a mixed picture of which strategy will prove to become the winner in India. Boeing on the other hand announced smaller orders for the 777 and the 737.

While Airbus is known to announce its orders at major events, Boeing has a more conservative approach by not giving flying displays and announcing orders as they are placed. Some observers think Boeing should be worried with the large Airbus orders but worries are probably an overstatement. Boeing’s orderbook so far has been very good, with the 787 and 737 still leading the way. The new 747 Advanced is also said to enter its final development stage and is almost ready for launch. Boeing still remains determined about the point-to-point strategy becoming the future way of flying which explains Boeing’s confidence in their highly advanced and successful 787 which until now has over 200 orders. Airbus is now seeing the potential of this medium capacity (ultra) long-range market and now offers the A350 which some people still see as a rebuffed A330. Some observers think the end of the A340-200/-300 and the A330-200/-300 is coming closer with the introduction of the A350. The aircraft’s projected capacity and range are very close to Airbus’s own A340 and A330 as well as the 787 and 777 offered by Boeing. Airbus now offers aircraft for both the hub-tot-hub operations as well as to point-to-point operations.

Looking back on this year’s Paris Air Show it shows that Airbus was getting ready for a comeback. The silence on Airbus’s side for the last few weeks only made us wonder more about what Airbus was working on. The sudden rise of Indian airlines gives both aircraft manufacturers more reason to focus on this market. Unlike the doubts that some observers may have, the fact is that airlines have placed large orders whether they have come as a complete surprise or whether the orders were expected. Only time will tell whether these big orders can support the expected growth in air travel. One thing is sure, after this year’s Paris Air Show, it has become clear that the aviation industry is on a rise again with more large aircraft orders expected to be announced before the end of this year. Aircraft manufacturers can look forward to a full production line for the coming years which can be a good indication of more things to come…

Boeing and Airbus: Do or Die…

As some of you already know, Boeing has been very successful with its latest aircraft, the 787. Airbus is struggling to come up with a true competitor to this new aircraft. The A350 has not generated that much interest from airlines around the world as the 787 has. The Paris Air Show is coming closer and every aviation enthusiast as well as every aviation expert is discussing about what we all can expect fro Boeing and Airbus.

With Boeing launching a new aircraft and the first all-composite commercial aircraft, the 787, Boeing has given hints that it will launch a complete new aircraft family based on the technologies used on the 787. Boeing is currently studying a new 747 model under the name 747 Advanced. Also going around in the press these days is the hype around a 737/A320 replacement aircraft with Boeing being rumored to be studying a new 737/A230 replacement aircraft behind the curtains. Boeing has said in the past it will base all its new aircraft on the technologies used on the 787. This would give Boeing a lead over its arch-rival, Airbus. It will take Boeing minimal investment in a complete new family of aircraft once the 787 truly proves its money’s worth. Once proven, the door opens to Boeing to offer a new family of aircraft, from narrowbody aircraft to widebody aicraft, from short-medium range aircraft to ultra-long range aircraft. Airbus has launched the A380 with the first flight already completed. The A350 is Airbus’s answer to the 787. Airbus has only received 10 commitments for the proposed A350, while Boeing has already received 200+ orders for its 787. Up until now the 787 has showed us that this aircraft is clearly the aircraft of choice to a lot of (key) airlines. Airlines are starting to see the benefits of more composites in aircraft and Boeing is currently showing the way. Airbus who before the 787 was known for being the leader in the usage of composite materials in its aircraft is now seeing its market rapidly diminishing with Boeing gaining more ground and popularity with the 787. The thought of Boeing coming with an entire range of new aircraft, does give one the right to say that Airbus must be very worried at the moment and must go back to the drawing boards and brainstorm about the direction in which Airbus wants to go in the coming years.

With Boeing slowly winning back its marketshare from Airbus and the possibility of launching a new 737/A320 replacement aircraft, Airbus has a reason to be worried about its own line of aircraft. Airbus has been very successful with its A320 aircraft family. If Boeing will announce a 737/A320 sized aircraft with 787 technologies, this may hurt Airbus in a bigger way than we might think. Airbus might see their marketshare drop significantly if they don’t come up with a new aircraft design to compete with Boeing’s new products. Airbus may well be in its own dilemma and must determine whether the A350 will be its next ‘attack’ on Boeing or whether a complete new A320NG will be a better move for Airbus. Both these aircraft types are strategically seen as crucial aircraft for the future airline markets. Aircraft in these ranges are the next focus points for many airlines around the world. How this all will play out, will be something worth paying attention to. One thing is sure, the Paris Air Show promises to be the best air show in a very long time with both Boeing and Airbus wanting to be at their best and showing their muscles. We should all pay close attention to Airbus and Boeing and what may lie ahead of us and the commercial aviation industry….

Intermodal Road-Rail Transportation for Express Transport Services

By Sofia Ohnell – Chalmers University of Technology

Express transport services are produces in highly modularized transport systems, a fact that implies that one subsystem can be exchanged for another without causing a need for major changes in other parts of the system. Express goods are not common on a large scale in freight railway transport systems, as those are often not considered reliable enough for time-critical goods. The point of departure becomes: how can intermodal road-rail transportation as a production system for express transport services be matched with the core logistical function? The match would then be forming the common part of the goods production and consumption systems in the various links of a supply chain in such a way that the match simultaneously fulfils the transport operator’s demand for cost efficiency, the shipper’s or proxy customer’s demand for service quality and the demands for sustainable transportation from the society.

Thus the aim of this thesis is to show how such a system for express transport services, based on the functions in an intermodal road-rail system, should be organized to match core logistical requirements and make the system trustworthy among logistics service providers.

The research presented is positioned within the subareas (1) management and control, (2) service concepts, and (3) functionality of the physical production system. The papers included in the thesis apply different modeling approaches, each of which shows the item of study from a slightly different perspective compared to the previous ones.

Paper 1 presents a survey of seven suppliers of express and parcel transport services on the Swedish market, in total 20 services are included. Paper 2 includes a case study of a pilot test where intermodal road-rail transportation was incorporated with an airfreight transport system, while paper 3 introduces and uses an evaluation model for intermodal road-rail overnight transportation.

In conclusion, it is proposed that a shift to intermodal transportation starts with less-than-trucload goods rather than overnight express and parcel goods. If solid intermodal transport systems for less-than-truckload goods can be built, they could serve as the basis to which other types of goods are added. through an efficiently designed co-production of transport services together with consolidation. To support the build-up of transport systems, a model is made of how a transport system is formed by transport networks, which connect different intermodal transport chains. Lastly, it is suggested that a clear separation, between intermodal transportation as a technical production system and the business and marketing concept of transport services, is made.

Low Cost Airlines: a Veritable Chance for the Development of Small Airports and Regional Tourism

By Silke Hörsch – Bournemouth University

The news of low cost airlines’ success in Europe inundate our media continuously: more number of passengers, a higher turnover and an increased profit rate are noticed compared to the previous years. Research institutions as well as scientific magazines show their interest in this topic by providing a large number of studies and articles about the operating features and future perspectives of low cost airlines.

Low cost air travel has not been existing for some years only. With the ‘US Airline Deregulation Act’ in 1978, the skies in the United States have been deregulated now for more than 20 years. So-called ‘liberalisation’ of the European transport market took place in 1993 with the introduction of the ‘third package’ that made free pricing and full cabotage possible. In Continental-Europe, low cost air travel became very popular recently with a huge number of start-ups in 2002. Theories about future growth of low cost airlines predict that in the medium term they will be able to enlarge their results, but in the long term they will not be able to take away crucial shares of the market from the incumbents.

As low cost airlines sell tickets at low costs, they also have to ‘produce’ at low costs which means they have to save money wherever possible. One important instrument for reducing costs is by flying to small, so-called ‘secondary airports’ that are situated close to conurbations or major hubs of traditional airlines. These airports charge less or nothing, because they expect their non-aeronautical revenue to increase from the enhanced number of passengers. Additionally, there is a potential for the regional economy around these airports to benefit from these passengers.

However, more traffic also means that facilities have to be adapted or enlarged. This concerns the airport and the service providers in the regions. There is no guarantee for future return if the airline exits the market or ceases operation. Taking the example of the Frankfurt-Hahn Airport and the Hunsrück region, the author analysis the changes in terms of number of passengers / guests, companies / employment and investments, and evaluates if low cost airlines are a substantial chance for the airport and the region.

IT Investments at European Airlines – Is IT Viewed as a Strategic Resource?

By Klara Eriksson and Selma Mu – Lund University School of Economics

IT investments are essential parts of a company’s strategy. Deciding whether to invest or not to invest in a certain IT project requires multiple considerations. Our aim has been to find out which are the most important ones. Our study has been conducted as a quantitative one based on a survey inquiry; our 17 respondents operate in the airline industry, a sector which is information intensive but at the same time, for various economical and other factors is forced to be careful about high capital IT investments.

Starting from a theoretical model of IT investment justification we have constructed two new model versions ranking the appraisal techniques and the expected benefits; we have found that the major points of consideration are the existing IT- and operations system together with the software applications, system integration and long-term costs and benefits. Concerning the expected benefits, the financial ones take the first place, budgets inclusive return on investment calculations. Intangible considerations like securing future business, gaining competitive advantage and improve customer relationship are also ranked as the utmost priorities.

In general we can conclude that approximately the two thirds of our respondents consider IT as a strategic resource of the company. It is mostly IT professionals who see IT also as an opportunity for their company. Curiously, those three respondents who determine IT’s roll merely as a support function, have all IT background. Furthermore, three quarts of all respondents confirm that IT is a useful weapon first of all in rivalry with competitors, one of the main battlefields defined by Porter.

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