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/ Vol. 5 / No. 2 / FEBRUARY 2013
Airline News
AMAC Aerospace, the Swiss-based
provider of corporate aviation mainte-
nance and completion services has just
started work on its third widebody and
largest aircraft completion project to
date a Boeing 747-8i. The work, for
an unnamed VIP Middle East private
customer, represents a full two-year
contract and calls for full nose to tail
outfitting.
Activity will be carried out in the
company's new wide-bodied aircraft
hangar, inaugurated in September,
2012 at AMAC's Euroairport Basel
Mulhouse facilities.
The production programme will fea-
ture a new integrated concept featuring
Greenpoint Technologies `Overhead
Space Utilization' (OSU) loft, designed
for multiple sleeper berths or lounges.
These will be positioned at the aft of
the aircraft cabin. AMAC's engineer-
ing team shall also work on the instal-
lation of private and work areas within
the VIP cabin with, avionics systems,
a master bedroom and master lavatory,
VIP lavatories throughout the cabin,
guest areas and special lighting and
configurations for both day and night.
AMAC will also install Audio Video
on Demand (AVOD), SATCOM / TV,
external cameras (left, right, tail and
belly cams) and RGB mood lighting.
"We are extremely pleased to be taking
on this new and highly prestigious
contract for an existing customer in the
Middle East and AMAC will be dedi-
cating a sizeable team to the project,"
The profit divide:
Bridging the gap in unit
costs for legacy carriers
With low-cost carriers encroaching
on ever more markets, the profitability
of traditional airlines will continue
to remain under threat. Recent years
have seen the worst of this shift,
with flag carriers in Europe strug-
gling to keep afloat and Chapter 11
bankruptcy protection befalling a
number of their American counter-
parts. Indeed, ensuring the long-term
survival of these legacy carriers will
require bridging the gap in unit costs
that separates them from their lower
priced competition. This is not a
precise science, however, as recent
efforts by the traditional airlines to cut
costs have measured results ranging
from mild success to dismal failure.
So what options are in line for these
long-established carriers to regain
some of their competitiveness?
Although trends in annual yield
vary amongst the legacy carriers,
the issue that lies at the heart of this
problem is the prolonged tendency for
changes in unit costs to outpace unit
revenues. The downward pressure
on airline yield is being fuelled by
a number of factors, but namely the
increased competition from low-
cost carriers and changes in demand
attributed to the cyclical nature of the
industry. The traditional airlines have
sampled a number of measures to bring
their unit costs in line with those of the
low-cost model, including the start-up
of their own `no frills' subsidiary
airlines, introducing wage scaling,
reducing staff levels and increasing
aircraft turnaround sequences, all in
the aim of boosting productivity.
`In most cases, the strategy of
legacy carriers to fight fire with fire
by establishing their own low-cost
subsidiaries has not proven very
successful. Airline start-ups including
Germanwings, Iberia Express and
Go Fly to name but a few, are all
testament to this. Whether it was
persistent losses, takeovers or a
conflict of interest with core company
services, for a number of these carriers
it also managed to incite a strain on
industrial relations. Existing pilots
voiced their displeasure with the threat
posed by revised contracts aimed at
scaling back salaries and associated
benefits. In essence, we can see
traditional airlines initiating efforts to
lower costs or by starting additional
carriers in order to compete in the low
cost segment,' comments the CEO of
AviationCV.com, Skaiste Knyzaite.
On the flipside, certain
endeavours by major carriers
to boost their productivity have
generated encouraging results. For
the overwhelming majority of legacy
carriers, load factors have shown a
positive rate of growth over the last
twenty years owing to better asset
utilisation and operational planning.
Similarly, there have been impressive
advances to aircraft turnaround
times (alongside improved airport
infrastructure), effective ancillary
revenue strategies, increased product
scope and lower maintenance costs
through fleet type consolidation. While
these have measured respectable
changes to the income statement, the
fact remains that a large number of
legacy carriers are expected to report
further losses for 2012.
`Airlines should evaluate the
individual merits and shortcomings
of their business segments in order
to harness further cost savings and
efficiency improvements. In many
cases, real increases to the bottom line
can be achieved through outsourcing
certain functions of an airline's setup.
While there was a considerable amount
of bad publicity associated with the
outsourced maintenance activities
of American Airlines, this needn't
imply similar prospects for other
carriers. Indeed, airlines including
Delta, British Airways, Qantas and
LOT Polish Airlines have all begun to
reap the benefits of outsourcing one
or a number of functions, be it sales,
IT or HR and maintenance. Critically,
however, many traditional carriers
continue to be burdened with the
established pay levels and overhanging
pensions that make up their largest
expense labour. While a number of
low-cost carriers maintain competitive
labour expenses through the use of
personnel leasing agencies, it would
appear that the classic recruitment
structure of legacy carriers fails to
bridge this gap,' comments
Skaiste Knyzaite.
AMAC starts completion work on VIP B747-8i
for Middle East client
said Bernd Schramm, AMAC Group
Chief Operating Officer.
The undertaking of this project follows
hard on the heels of AMAC successfully
completing a Boeing 777-200LR. The
aircraft was delivered to the Middle East
in October.
Earlier this year AMAC was approved
by Boeing as a Boeing Warranty Service
Center and further complementing its
widebody completions expertise on
Boeing and Airbus aircraft, it recently
achieved European EASA Part 145 ap-
proval to undertake heavy base mainte-
nance on Boeing 777 series, B747-400,
B747-8i and Airbus A330 / A340 series.
Base and line maintenance services on
these types can now be provided to all
AMAC customers, with no restrictions.
Kenya Airways & Rwandair
seek strategic partnership
Kenya Airways and RwandAir have
announced reaching their intent of form-
ing a strategic partnership and stronger
relations between the two airlines. This
will greatly benefit both parties as well as
their extensive clientele. Kenya Airways
currently offers four flights per day
between Kigali and Nairobi with a wide
network available to the rest of the world.
RwandAir is flying to Nairobi three times
daily and also serves Mombasa from its
base in Kigali. The combined flights will
offer more choice to passengers and better
connectivity at the Nairobi hub.
Chief Executive Officer, Dr. Titus
Naikuni stated: "In line with our strategy
to exploit the untapped economic
potential of the African continent, this
partnership with RwandAir allows us,
together with our colleagues in African
aviation, to further strengthen and
enhance our services and network."
RwandAir Chairman, Girma Wake
commented: "We're pleased to have
agreed to this cooperation intent with
Kenya Airways. We can now offer more
choice for passengers who wish to travel
to Rwanda where tourism, trade and
investment are on the rise. It is important
that we provide the right infrastructure
together with partner airlines."
The collaboration promises to
also strengthen the areas of cargo,
maintenance and flight training. Already,
RwandAir is using the brand new flight
simulators of Kenya Airways to train its
pilots.
Benefits for the consumer will
initially be felt through improved
synergies in the form of scheduling
and passenger handling, however,
additional value will become apparent
as the relationship evolves with further
refinement of reservation systems as well
as a frequent flyer partnership between
the two companies.
The finer details of this strategic
cooperation will be mapped out in
various agreements which the airlines are
currently reviewing for finalisation. ·