IATA present awards to Alitalia and Rome FCO airport over… baggage handling!

In what may seems a paradox, IATA presented both Alitalia and Rome Leonardo da Vinci “Fiumicino” airport with a certificate of recognition “for the results obtained thanks to the progress of the program for baggage handling Bip – Baggage Improvement Program”, AvioNews reports.

To whomever has flown through Fiumicino during the second half of July until the end of August, this may seem rather odd. As this article from the USA Today reminds us, in the near past Fiumicino (as well as Alitalia, whose base is at Fiumicino) has been plagued by baggage handling problems during the Italian peak summer holiday season. Lost baggages and long delays in finding them have become so common that people simply started avoiding flying in and out of FCO with checked baggage during July and August. Chronic under-staffing has been pinpointed as the main reason for the situation, yet the more fundamental problem lied in the old, outdated baggage handling system.

Apparently, new technology investments have warranted IATA to praise FCO and Alitalia for their effors. Yet, the peak season is still to come, and we just hope that this certificate of recognition didn’t come too early…

Qatar Airways named Airline of the Year by Skytrax

It may not come as a surprise, but now it is official. Qatar Airways has been chosen by Skytrax as the Airline of the Year. The long-standing 5 star-rated airline – now serving 100 international destinations from its home-base of Doha – has been the rising star (together with Abu Dhabi’s Etihad Airways) of the airline industry.

With economy, business, and first class service all rated 5 stars for long-haul flights, Qatar has been atop the World of excellence together with more prestigious and historic airlines like Singapore Airlines and Cathay Pacific. But if the latter two have a more modest growth rate in terms of revenues and destinations, Qatar is launched in a fast-increasing strategy that has seen the company grow bigger and bigger after being established in 1993.

As the Middle East pushes forward to be the World’s preferred hub thanks to its “bridge” location between the Americas and Europe on one side and Asia and Africa on the other, Qatar has outclassed and outperformed both Emirates and Etihad Airways in its quest for the Gulf leadership. Efficiency of scale and a fast-growing demand – partly thanks to an easy access to the booming Indian market – have fueled this staggering growth. Yet, its Qatar Airways’ service that sets the airline apart from the competition. As anyone who has flown Qatar Airways can witness, the attentive service that accompanies every flight is a distinctive mark of the airline. Good food and beverages, well-prepared and genuinely nice flight attendants, comfortable seats (even in economy) and, for premium travelers, probably the best Lounge in the World at the Doha airport make it not-so-difficult to understand Skytrax’s (and customers’) choice.

So, what’s on hold for Qatar Airways? The (often forgotten) cargo division is growing rapidly, leveraging the ever increasing flux of freight from Asia to/from Europe, adding revenue (and profits) to the company’s balance sheet. Then, there is the prospect of joining an alliance for strengthening Qatar Airways reach, a strategy that Etihad Airways is likely to embrace soon. The existing code share agreements say Star Alliance, yet the desire of being the best of the class may push Qatar Airways towards oneworld, where the company could join other fellow 5 star airlines like Kingfisher Airlines, Cathay Pacific, and Malaysia Airlines. Whatever Etihad decides (or Qatar Airways, whichever move first) may influence the decision of QA, as it seems more than unlikely that both airlines join the same alliance.

And then, there are the routes. Big orders are in place for Qatar, which has a firm order for 80 A350s and 30 firm order plus 30 options for B787s. With a fleet that is already the youngest out there (with planes averaging only 4.1 years), it seems likely that QA will try to further expand an already far-reaching network. The new Doha airport seems poised to be well-equipped to accommodate such ambitious plans, and the country’s emergence as a business, tourist, and events destination (Asian Games in 2006, World Cup in 2022, Summer Olympics next?) seem to go along well with further network expansion.

One thing is for sure: Qatar Airways is redefining the standards of air travel in terms of comfort and service, remaining highly profitable in an ultra-competitive industry where margins are historically thin. While this trend is set to continue, future challenges loom as the price of oil will be a big question mark and as the airline will grow from a young, vibrant company to a more mature one. In the end, Emirates, the Gulf forerunner, set the bar high: after all these years in business, the Dubai carrier is becoming a legacy airline that’s continuing to be fresh and competitive, mainly thanks to its top management vision. If Qatar will be able to follow Emirates’ example, it could shine even brighter than its Emirati neighbor.

Airbus or Boeing? American Airlines dilemma

When the news came out of American Airlines intention of putting together an order for 200 new narrow body airplanes, many observers were skeptical. How could a company who has been losing market share in the past few years (and that has been in red for countless time now, with only reportedly 1.5b USD in cash on hand) want to place such a big order? Yet, it makes perfect sense.

Whoever flew American Airlines on a domestic flight recently, knows that one of the main problems crippling AA and its fully-owned subsidiary American Eagle is the age of its planes. Old, tired MD-81/82 and B757 still carry thousands of passengers every day on short and medium haul routes like Miami – Boston and ORD – SFO. Comfort of the passengers aside, though, the problem lies in the inefficiencies that these planes carry with themselves. With an average age rounding 20 years, continuous maintainance is necessary, spiking up costs and causing costly delays (especially in wintertime).
Another thing to consider: as the standard airplane is depreciated over 25 years, these planes risk to become a serious liability on AA’s balance sheet as soon as 2015-16. No wonder then that American wants to modernize its fleet to become more fuel efficient and to save money that could help the glorious company become profitable again.

Now, the fun part begins. While American Airlines signed an exclusivity agreement with Boeing in the ’90s, this agreement is expired now. As the only major full-service airline (Southwest forgive us) running only on a fleet of Boeing, American Airlines is in the (sweet) position to try to get a bargain from Airbus, the Boeing’s European rival all-too eager to get another foothold in the lucrative US market. And apparently Airbus is really eager to offer preferential service, fantastic loan conditions, and other perks to American if what has been dubbed one of the biggest deals in the aviation industry’s history goes through.

And what is Boeing doing? Well, the negotiations made the Chicago, IL-based company fall from the sky. Not expecting it, the company is scrambling to put together a counter-proposal attractive enough for American not to switch, at least partially, to its arch-rival.

Yet, it seems a hard battle against time for Boeing. American Airlines seems to have all the interests in accepting the succulent offer that Airbus put on top on the shelf. First of all, it will get a fleet of modern, more efficient (when compared to 737s) A320s, including the new NEOs that can save around 15% of gas – not a small feat giving the high fuel price these days. Second, the financing options are very attractive and Airbus would help the company train AA’s pilots and giving extra help in plane mantainance, easing up the transition for American Airlines. Furthermore, AA would diversify its portfolio and have more bargaining power over the two companies in the future, more so if we count the future entrance of Bombardier in the medium weight planes segment. Diversifying its portfolio would also streamline operations and reduce costs since this hefty order would include only A320s (for now, at least), a plane which is mainstream and easily mantainable nowadays. Plus, the 6b financial deal that Airbus put together seems really too-good-to-be-true for cash-strapped AA.

Of course, it is possible that in the end the board will decide to split the order to maintain good rapport with Boeing; but in the end, the threat for Boeing is big. Airbus could start from A320s today, and go on with A350s and A380s tomorrow.
In any case, even a partial deal with Airbus would mean a huge victory for the European company and a big blow for the Chicago-based Boeing.