Wednesday, March 22, 2017

Omni Airways Ltd Gulfstream G-V (c/n 641) C-GUGU

Captured arriving at Long Beach Airport (LGB/KLGB) at 12:26pm pst following a short flight from Los Angeles International Airport (LAX/KLAX).

(Photos by Michael Carter)

U.S. Air Force orders KC-10 engine overhauls

The U.S. Air Force placed a $16.9 million order to Northrop Grumman to provide engine overhauls for the branch's KC-10 Extender aircraft.

The agreement with Northrop Grumman continues the Air Force's engine support projects for the tanker. Earlier in March, the branch awarded Kelly Aviation Center with a $1 billion KC-10 engine support deal.

The work will be performed in Cincinnati, Ohio, and is expected to be complete by the end of September 2017.

Northrop Grumman received all funding at the time of the contract award. The Air Force Life-cycle Management Center is the contracting activity.

The Air Force's KC-10 Extender is an Air Mobility Command tanker and cargo aircraft used to boost mobility for U.S. and allied aircraft. The plane is capable of refueling fighters and carrying fighter support personnel simultaneously while also transporting cargo during overseas deployments.

The tanker can carry up to 75 people and almost 170,000 pounds of equipment at a range of roughly 4,400 miles without refueling.

(Ryan Maass - UPI)

Gulfstream G650 (c/n 6262) N662GA

 Another new "Green" G650 arrived at Long Beach Airport,
following a flight from the factory at Savannah-Hilton Head International Airport (SAV/KSAV). "GLF18" touched down on Rwy 30 at 11:37am pst after its 4 hour 13 minute flight on Monday March 20, 2017.

(Photos by Michael Carter)

‘Monumental’ shift: Why 21 airlines are moving terminals in May at LAX

A move by Delta Air Lines into new terminals at Los Angeles International Airport this spring will set off what LAX officials are calling “a move of airlines never before seen at a major U.S. airport.”

Some 21 airlines will be relocated to accommodate Delta’s move from Terminals 5 and 6 to Terminals 2 and 3, with much of the work taking place from May 12-16, officials announced Tuesday.

Schedules could still change, but these airlines are expected to make these move as a result of the realignment:

• Air Canada (moving from Terminal 2 to Terminal 6)

• Allegiant (T3 to T5, T6 check-in)

• Avianca (T2 to Tom Bradley International Terminal, T3 check-in)

• Boutique Air (T3 to T6)

• Copa (TBIT, T6 check-in to TBIT, T3 check-in)

• Delta (T5/T6 to T2/T3)

• Frontier (T3 to T5, T6 check-in)

• Hainan (T2 to TBIT)

• Hawaiian (T2 to T5)

• InterJet (T2 to TBIT, T3 check-in)

• JetBlue (T3 to T5)

• Qatar (T2 to TBIT)

• Southwest (T2 to TBIT, T1 check-in)

• Spirit (T3 to T5)

• Sun Country (T2 to T5, T6 check-in)

• Thomas Cook (T2 to TBIT)

• Virgin America (T3 to T6)

• Virgin Australia (TBIT, T3 check-in to TBIT, T2 check-in)

• Volaris (T2 to TBIT, T2 check-in)

• WestJet (T2 to T3)

• XL France (T2 to T6)

“Delta’s move is one more element of LAX’s massive modernization effort which continues the transformation of the airport and will improve the guest experience,” said Sean Burton, president of Los Angeles World Airport’s Board of Airport Commissioners. “While moving 21 airlines over three nights is a monumental task, Delta and the LAWA team have been planning and preparing for months to ensure a smooth transition.”

Delta is planning up to $1.9 million in improvements over seven years to modernize and connect Terminals 2 and 3 to the Tom Bradley International Terminal. Delta’s flights will operate from as many as four terminals at times during the move.

The realignment actually began in January, when American Airlines exchanged four gates in Terminal 6 for four gates in Terminal 5 held by Delta.

Airport officials said it will be the largest relocation of airlines in the history of LAX, which is the second-busiest airport in the United States, and the fourth-busiest in the world.

(City News Service / The Daily Breeze)

Tuesday, March 21, 2017

Southwest Airlines Boeing 737-7H4 (36642/2878) N934WN

Rolls for takeoff on Rwy 30 at Long Beach Airport (LGB/KLGB) on November 12, 2016.

(Photo by Michael Carter)

Kaiser Air Boeing 737-59D (25065/2028) N732KA "Victoria"

On March 15, 2017, I was very pleased to capture all three Boeing 737's operated by Oakland, California based Kaiser Air at Long Beach Airport (LGB/KLGB). The carrier was operating special charter flights for the online search engine giant, Google. I hope you enjoy the following photos and each aircraft's history.

Michael Carter
Editor and Chief
Aero Pacific Flightlines

Taxies on Delta towards a Rwy 30 departure.
Rolls for takeoff on Rwy 30 at Long Beach Airport (LGB/KLGB), March 15, 2017.
(Photos by Michael Carter)

The aircraft began life almost 26 years ago being delivered to Scandinavian carrier Linjeflyg as SE-DNE on April 15, 1991. On January 1, 1993 the carrier was merged into Scandinavian Airlines System (SAS) and the aircraft returned to leasing company BBAM.

On March 15, 1993 it was leased to British Midland as G-OBMX and operated with the British carrier until being transferred to bmi British Midland on February 1, 2001 and again returned to leasing company BBAM.

On March 24, 2001 the aircraft joined the Luxair fleet as LX-LGN and served with the carrier until once again going back to BBAM in early 2005.

April 7, 2005 saw the aircraft join the Czech Airlines (CSA) fleet as OK-WGD "Rakovnik" where it would serve until being leased to Aeroflot-Nord (an Aeroflot regional carrier) as VP-BKP on June 15, 2008. On December 1, 2009, Aeroflots association with the regional company ended and the carrier became known as Nordavia which still operated the aircraft as VP-BKP until it was withdrawn from service and stored on October 12, 2011.

The aircraft was acquired by Southern Aircraft Consultancy on February 28, 2014 and fitted with winglets in March 2014.

The aircraft was bought by current operator Kaiser Air on April 29, 2014.      

Kaiser Air Boeing 737-7BX (30740/776) N737KA "Lani"

Caught at Long Beach Airport (LGB/KLGB) on March 15, 2017 operating a charter flight for Google.

This aircraft was delivered to GECAS and leased to Midway Airlines on February 21, 2001 as N365ML, ex Boeing N1786B and served with the carrier until its demise on July 17, 2002 when all 12 Boeing 737-700's were returned to GECAS (11) and BouAS (1). 

On January 28, 2003 it was leased to Australian carrier Virgin Blue as VH-VBT "Launie Lass" where it served until being leased to Kaiser Air on March 31, 2009 with whom it still serves.

(Photos by Michael Carter)

Kaiser Air Boeing 737-86N(WL) (28643/828) N733KA "Konani"

Short final to Rwy 30.

Captured arriving at then departing from Long Beach Airport (LGB/KLGB) on March 15, 2017 while operating a special charter flight for Google.

The aircraft was originally delivered to GECAS and leased to Pegasus Airlines as TC-APK on April 26, 2001, ex Boeing N1787B.

It was returned to GECAS on July 16, 2003 as N643SH and leased immediately to Shenzhen Airlines as B-5050 on July 23, 2003. It served with the Chinese carrier until being returned to GECAS on December 4, 2015 as N881TM and stored. 

On March 17, 2016 it was stored at Tucson (TUS/KTUS) where it was fitted with wiglets then leased to current operator Kaiser Air on June 16, 2016.

(Photos by Michael Carter)

jetBlue Airways Airbus A320-232 (c/n 2160) N568JB "I Love Blue York"

Taxies towards a Runway 30 departure at Long Beach Airport (LGB/KLGB) on February 22, 2017.

(Photos by Michael Carter)

Monday, March 20, 2017

Reprieve Likely for U-2 Dragon Lady

The U-2 Dragon Lady seems likely to fly on for several more years.
(U.S. Air Force)

The U.S. Air Force is preparing to extend the service life of the U-2S Dragon Lady for several more years. Under previous budget plans, the evergreen spyplane was due to be retired in 2019-20, leaving only the unmanned RQ-4B Global Hawk to perform the high-altitude reconnaissance mission. Managers at the Lockheed Martin (LM) Skunk Works in Palmdale, California, are preparing upgrade proposals for the U-2’s sensors and communications fit.

Gen. “Hawk” Carlisle, who retired last week as commander of Air Combat Command, told AIN last November that “we’re trying to find the money” to retain the U-2. Now a senior Air Force official has told the Skunk Works that the 27-strong fleet will be retained until at least the mid-2020s. “There’s a lot more runway in this jet yet,” said Kyle Franklin, the new U-2 program manager for LM. “We could offer a quantum leap in capability,” he told AIN last week.

Two upgrades for the U-2 are already being developed. A Celestial Object Sighting System (COSS, or “star tracker”) has been designed by Draper Laboratories as an alternative means of navigation. The U-2 flies daily around the borders of North Korea, which has frequently jammed GPS signals. Raytheon has designed an active clectronically scanned array (AESA) for the U-2’s advanced synthetic aperture radar system (ASARS) that would be redesignated ASARS-2B. Both systems are nearing flight test. The aircraft’s alternative electro-optical imaging system, designated SYERS-2C, has recently been upgraded by UT Aerospace Systems to offer 10-band multispectral capability. The U-2’s legacy SIGINT system has been replaced with the Northrop Grumman Airborne Signals Intelligence Payload (ASIP).

Meanwhile, flight tests of the U-2 with an Open Mission System (OMS) have continued at Palmdale. Three different defensive systems, an electronic attack payload and several classified payloads have now been integrated. Communications systems that allow the U-2 to act as a gateway between fifth- and fourth-generation combat aircraft have also been tested.

In recent media briefings, officials from Northrop Grumman have contended that the Global Hawk can provide an equivalent capability to the U-2. The Air Force has part-funded integration of the Dragon Lady’s imaging systems on the unmanned jet. But the U-2 airframe offers superior performance. It flies much higher and faster, with a greater payload. All except four jets in the U-2 fleet were built in the 1980s, and have 80 percent structural life remaining. LM officials say that over the past decade, the U-2 has demonstrated an unequalled 95 to 97percent mission success rate. According to their analysis of 2015 USAF data, the U-2S collected twice the imagery of the Global Hawk with the same on-station total times.

Lockheed Martin has proposed replacing the U-2 with a semi-stealthy, long-endurance, high-altitude aircraft designated TR-X. To save on acquisition costs, it would re-use the U-2’s engine and sensors, the latter being housed in twin, wing-mounted pods with interchangeable options, similar to the U-2 today. The Skunk Works has indicated a price of $3.8 billion for 30 TR-X aircraft, but is also offering costed options for enhanced low observability, such as conformal antennas.

(Chris Pocock - AINOnline News)

Airlines Oppose Raising Fee Passengers Pay for TSA Service

U.S. airlines are heartened by President Donald Trump’s support of creating a new air traffic control organization, but find themselves at loggerheads with the administration over its proposal to increase the security fee they collect from passengers to help pay for services of the Transportation Security Administration (TSA).

When the government last increased the security fee, some $1.3 billion in collections was diverted to help offset the federal deficit, said Sharon Pinkerton, Airlines for America (A4A) senior vice president for legislative and regulatory policy. A4A, which represents most major U.S. airlines, opposes any further increase. “Our first concern is about raising a fee at the same time you’re diverting $1.3 billion annually away,” Pinkerton told reporters on March 20, during a teleconference to discuss the industry’s 2016 financials. “That seems backwards. The first thing that Congress and the administration have to do is return that money to TSA.”

In the inaugural budget document it released on March 16, the Trump administration proposed raising the Passenger Civil Aviation Security Services Fee instituted in the aftermath of the Sept. 11, 2001 terrorist attacks “to recover 75 percent of the cost of TSA aviation security operations.” That suggests the $5.60 security fee per one-way trip (not to exceed $11.20 per round trip) must grow substantially. The TSA says it spent $6 billion on aviation security expenses in Fiscal Year 2016, offset by $2.2 billion in collections—37 percent of its costs.

Trump’s “America First: A Budget Blueprint to Make America Great Again,” contends that $80 million per year in spending could be recouped by eliminating or reducing “unauthorized and underperforming” TSA programs to focus on its screening role at airport security checkpoints. It proposes eliminating TSA grants that support law enforcement patrols by state and local jurisdictions and reducing the VIPR (Visible Intermodal Prevention and Response) program that deploys teams of armed federal officers to provide security at rail and bus stations, airports and other transportation hubs.

Last summer, when the industry faced a “meltdown” at airports because of overwhelmed TSA security lines, airlines, airports and the federal government collaborated to alleviate the problem, Pinkerton noted. A4A and member carriers spent nearly $50 million on hiring contractors to support TSA screeners, and airlines now participate in a daily telephone call with security authorities to evaluate airport staffing requirements. As of December 2016, 9.5 million people were enrolled in the TSA PreCheck and Customs and Border Protection Global Entry expedited screening programs—a steady increase over previous years but well short of the goal of 25 million, A4A says.

“I guess the question would be, given the way we’ve worked together in the past, what would the need be for increasing the TSA fee? And that simply has not been demonstrated to us—far from it,” Pinkerton said. “We think that the system we have in place now should be able to realize those efficiencies and ensure that passenger wait times are not excessive.”

In the case of the TSA security fee, Pinkerton argued, the Trump administration apparently has decided that it can raise money by taxing airline passengers. “We strongly disagree with that increase, especially given the revenue diversion,” she added.

At the same time, A4A is “thrilled” with the Trump administration’s support of a proposal to create a new organization to manage the nation’s air traffic control system, separate from the Federal Aviation Administration. Noting that the federal government faces a partial shutdown after April 28 if Congress fails to renew spending, Pinkerton said a separate ATC organization would be detached from politics and better able to accomplish the FAA’s long-running NextGen modernization program.

“Frankly NextGen progress has been painfully slow, and we think that given the amount of money that’s been spent—$7.5 billion in the last decade—we, and I should say, consumers, deserve more progress than we’ve been able to make so far,” she said.

(Bill Carey - AINOnline News)

Textron Aviation Fields Third Flight-test Longitude

Textron Aviation added the third Cessna Citation Longitude to its flight-test program on March 17. FAA certification of the new super-midsize jet is expected by the end of 2017.
(Photo: Textron Aviation)

The third Cessna Citation Longitude joined the flight-test fleet on Friday, making a one hour, 40 minute maiden flight from Wichita Colonel James Jabara Airport to nearby Beech Field, where the super-midsize business jet model will be manufactured. According to FlightAware, the twinjet—registered as N702GL—reached an altitude of 13,600 feet and speeds up to 256 knots during the flight.

Test pilots Corey Eckhart and UJ Pesonen, along with flight-test engineer Mike Bradfield, successfully tested various systems, according to Textron Aviation. The aircraft will be used for avionics and systems development, as well as collecting flight simulator data, it added.

The third aircraft joins the test program less than six months after the first Longitude flew. To date, the first two flight-test aircraft have completed 125 flights, logging more than 250 hours. Certification of the Citation Longitude is expected by year-end, Textron Aviation said.

Meanwhile, the company has started assembly line flow in the company’s east campus Plant IV manufacturing facility at Beech Field, with the first four production Longitudes currently on the line.

(Chad Trautvetter - AINOnline News)

Embraer's Legacy 450 Sets Speed Record

An Embraer Legacy 450 operated by Canadian fractional provider AirSprint recently set speed records on round-trip flights from California to Hawaii late last year, the company announced on Thursday. The Hawaii trip was not only a first for the aircraft, but also for the passengers.

The customer demonstration trip left Oakland International Airport on December 5 with two pilots, four passengers and 300 pounds of baggage for Maui Kahului Airport. According to Embraer, the flight lasted five hours, 14 minutes and covered 2,428 miles, the fly-by-wire twinjet's longest flight to date. The National Aeronautic Association (NAA) recorded the aircraft’s average speed at 449.91 mph (NAA uses statute miles).

The Legacy then left Hawaii the following day for San Francisco International Airport with three passengers and the same amount of baggage. This flight lasted four hours, 27 minutes and covered 2,379 miles. Thanks to average tailwinds of 24 knots, the NAA confirmed that the average speed was 525.89 mph.

(Samantha Cartaino - AINOnline News)

Boeing Business Jets Taps Greg Laxton as New Leader

Boeing Business Jets has named Greg Laxton as its new leader. Most recently, he served as sales director for Air China, Air China Cargo, Shandong Airlines and Shenzhen Airlines. Laxton’s predecessor, David Longridge, was named v-p of sales and marketing for commercial aviation services in early December.

Laxton attended California State University Northridge and earned a bachelor’s degree in earth science and geography. He also earned a master’s degree in aeronautical science from Embry-Riddle Aeronautical University. Laxton then served as a fighter pilot in the U.S. Air Force, where he logged more than 4,000 flight hours and retired as a lieutenant colonel.

He joined Boeing in 2004 as the capture team lead for the F-15K follow-on programs in Singapore and Korea. Besides the F-15K, Laxton has led campaigns for the 737 Airborne Early Warning and Control aircraft.

“We are very excited to have Greg on board and look forward to introducing him to the world of business aviation at ABACE in Shanghai in April,” a Boeing Commercial Airplanes spokeswoman told AIN.

(Samantha Cartaino - AINOnline News)

American Airlines CEO: How Do We Beat Delta? We Bet on New Aircraft

American CEO Doug Parker said his airline has a revenue gap with Delta and is on the way to making it up -- thanks largely to its modern fleet.

In 2016, American's 2016 revenue per available seat mile was 6.2% behind Delta's, according to a chart Parker displayed at last week's JPMorgan transportation conference.

For American, "all the leverage is in closing this gap," Parker said. "It can be done and it's happening.

"You only do that with the most aggressive fleet modernization in the history of the industry," he said.

"We are outspending Delta and we can catch them," he said. "American had the second-oldest fleet in the industry; now we have the youngest."

At the end of 2017, the average age of American's aircraft will be 9.8 years, down from nearly 14 years in 2012. (American has nearly 950 aircraft). The average fleet age is 10.4 years at Southwest, 14.4 years at United and 16.6 years at Delta.

This year, American will take delivery of 57 new aircraft. By the end of 2017, it will have taken delivery of 395 new aircraft since the 2013 merger with US Airways, while retiring 391 old aircraft. New aircraft are more fuel-efficient and can be more appealing to passengers.

Buying aircraft costs money. Between 2014 and 2017, American's capital expenditures, mainly for aircraft, totaled $22.7 billion, while Delta spent $12.3 billion and United spent $12.2 billion.

But Parker's point was that airline investors should try long-term thinking.

"You care more about the month's {revenue per available seat mile} than I do," Parker said. "You guys are thinking too short term. It sounds whiny {but} we need you to think long term."

A fourth chart showed that 80% of American investors today are "low turnover," up from 44% at the time of the merger.

The best-known of these investors is Warren Buffett. Buffett's Berkshire Hathaway is now the largest or second-largest owner of the big four U.S. carriers. It owns about 9% of American shares, 9% of United, 8% of Delta and 7% of Southwest shares.

Buffett "is not the only one," Parker said. "Now we're getting firms coming in that are buy and hold."

One other point: The revenue gap with Delta was shown on a chart comparing revenue adjusted for stage length. The chart showed that American lags Delta by 6.2% and lags United by 12.2%. Arguably, calibrating United's revenue with American's average stage length, about 1,200 miles, overstates United revenue. In any case, Parker's presentation focused on the comparison with Delta.

Delta Chief Financial Officer Paul Jacobson has countered Parker's argument at two recent investor conferences, where he has said that operating older aircraft benefits the airline, its investors and its passengers.

"Many of you who are new to the Delta story would look at Delta's fleet age, which is among the oldest in the United States, at least in the domestic markets," Jacobson said at a Raymond James conference.

"It would probably defy logic for me to tell you that despite having the oldest fleet, we have the highest reliability, we have the lowest maintenance unit cost, and we have the highest customer satisfaction among all of our peers," he said.

"While our average fleet age is old, we have a very healthy mix of both new aircraft and older airplanes which not only gives us the ability to utilize the savings of the newer airplanes, but also gives us added flexibility in the case of a downturn," he said.

In a downturn, Delta could stop flying older, paid-for airplanes at virtually no cost, Jacobson said. In fact, it could even use those airplanes for parts, which would "ultimately lower the cost of operations for the remaining aircraft that are flying," he said.

Another Delta advantage is lower debt. In a recent letter to American's pilots, leaders of the Allied Pilots Association Charlotte base wrote that American's debt load, which stood at $22.5 billion on Dec. 31, "is more than all the other network carriers combined."

Parker discussed the high debt load on American's third-quarter earnings call in October. "Borrowing money at 3% interest to buy aircraft is good policy," he said.

"That leaves us cash balances that are in excess of the target," he said. "We think the right thing to do with that is to return it to our shareholders. But the way we protect ourselves is having a much higher liquidity balance than others."

(Ted Reed - TheStreet)

Sunday, March 19, 2017

Kelowna Flightcraft McDonnell Douglas DC-10-30(F) (47928/192) C-GKFD

Captured arriving on and departing from Rwy 9 at Miami International Airport (MIA/KMIA) on February 8, 2017.
(Photos by Michael Carter)

The aircraft which wore registration N54644 during pre-delivery test flights from the factory at Long Beach Airport (LGB/KLGB), was delivered to Lufthansa on March 10, 1975 as D-ADJO "Essen." She operated with the carrier until being leased to Sabena on July 14, 1994 with whom she served with for 5 months then returned to Lufthansa on December 19, 1994. On March 22, 1995 the aircraft was transferred to Condor where she finished her carrier serving Lufthansa and it's subsidiaries. 

She started a new carrier back in the United States on November 13, 1997 operating for Continental Airlines as N17087 until being withdrawn from service on December 7, 2000.

On October 31, 2001 she was leased to World Airways Cargo as N304WL and converted to a DC-10-30(F). She served with the carrier until February 17, 2010 when she found her way to current Canadian operator Kelowna Flightcraft which keeps this beautiful "DAC Heavy" flying.

Cathay dives to 2016 operating loss on competition woes

The Cathay Pacific Group posted an operating loss of HK$525 million ($70.2 million) for the year ended 31 December 2016, as a strong local currency, slowing Chinese economic growth, and intense competition put pressure on yields.

The poor operating result marks a significant contrast to the operating profit of HK$6.7 billion posed in 2015.

Revenue dropped 9.4% to HK$92.8 billion, and it posted a net loss of HK$575 million. The net loss is its first since 2008, when it posted a deficit of HK$1 billion as it booked sizeable losses from fuel-hedging contracts.

The Oneworld carrier says the biggest challenge is the capacity added by other airlines, as well as the growth of direct flights between China and international destinations, which cuts out its Hong Kong hub. In addition, the strong Hong Kong dollar discouraged mainland Chinese from visiting Hong Kong, and also lowered the value of Cathay’s earnings overseas.

ASKs rose 2.4% as it grew capacity across all regions, but load factor slipped 1.2 percentage points to 84.5%.Southeast Asia was the only region to see an improvement in load factor, rising 1 percentage point to 84.2%.

Passenger yield fell 9.2% to HK$0.54. Cathay says this metric was under “intense pressure…reflecting overcapacity in the market, a decline in premium class demand, and weak foreign currencies.”

Group cargo revenue fell 13.2% to HK$20 million. Cargo capacity at both Cathay Pacific and Cathay Dragon grew 0.6%, but cargo load factor only rose 0.2 percentage points to 64.4%. Demand on European routes was weak, but grew marginally on transpacific routes.

The carrier’s liquid funds as of 31 December stood at HK$20.1 billion, just down from HK$20.6 billion at the end of 2015.

“We expect the operating environment in 2017 to remain challenging,” says Cathay chairman John Slosar. “Strong competition from other airlines and the adverse effect of the strength of the Hong Kong dollar are expected to continue to put pressure on yield. The cargo market got off to a good start, but overcapacity is expected to persist.”

(Greg Waldron - FlightGlobal News)

Chile's Sky launches new livery

Chile's Sky Airline has unveiled a new livery as it updates its branding.

The Santiago-based carrier's new colors are dark purple and fluorescent green, with a simpler design on its aircraft tail.

Sky has also launched a new website and new uniforms for employees.

Asset Image
(Sky Airline)

The all-Airbus A320 family operator had previously painted its aircraft in a blue and green livery, with a sun and palm trees on the tail.

Sky is Chile's second largest carrier, although it operates only about half the number of flights that dominant player LATAM Airlines Chile does. It flies mostly within Chile, and operates to a handful of international destinations.

(Ghim-Lay Yeo - FlightGlobal News)

Saturday, March 18, 2017

Volaris Is Becoming More Like Spirit Airlines

A first-bag fee on trans-border flights will help Mexican budget airline Volaris produce more stable profits in the future.

Volaris is in many ways the Spirit Airlines of Mexico. Each one offers rock-bottom base fares, stimulating air travel growth in both countries. Spirit and Volaris then charge extra for a variety of optional services that customers can choose from.

However, checked-baggage fees are a key area where the two carriers have diverged. Spirit Airlines started charging passengers for checking a bag nearly a decade ago. It now generates hundreds of millions of dollars a year from bag fees. By contrast, stricter regulations in Mexico have prevented Volaris from charging passengers for their first checked bag.

The regulatory environment in Mexico is starting to thaw, though. As a result, Volaris was recently able to implement a first-bag fee on international flights. This move to act more like Spirit Airlines could be very good for Volaris investors in the long run.

A big ancillary revenue gap

Spirit Airlines and Volaris both try to maximize their ancillary revenue, because it represents a relatively stable source of revenue that's less affected by changes in demand. Over the years, the two carriers have steadily rolled out new optional services while working to squeeze more revenue out of their existing fees.

However, Spirit Airlines has been far more successful at diversifying its revenue away from pure ticket sales. During 2016, its non-ticket revenue per passenger flight segment came in at $51.87, compared with an average fare of $55.54. By contrast, Volaris' non-ticket revenue per passenger was far lower, at about $18.50, even though its average fare was slightly higher at $58.

Lower bag-fee revenue accounts for much of this discrepancy. On most routes, Volaris customers are entitled to two free carry-on personal items plus a free checked bag, whereas Spirit Airlines fares include only a single free personal item.

Volaris starts charging for bags on some routes

Volaris got its first taste of charging for the first checked bag in late 2016, after it set up a new subsidiary based in Costa Rica. The regulations governing Volaris' operations in Central America don't prohibit such a fee. However, the Costa Rican subsidiary is brand new and will represent a very small percentage of Volaris' total capacity this year.

On March 1, Volaris implemented a first-bag fee on its international routes from Mexico to the U.S. and Puerto Rico. The fee starts at $15 if the reservation is made at the time the ticket is purchased. This is a much more significant development, because Volaris has devoted about 30% of its capacity to these trans-border routes in recent years.

Trans-border routes are likely to become an even bigger part of Volaris' business going forward. The weak peso makes flights to the U.S. more attractive relative to domestic routes within Mexico. Additionally, Volaris will receive some extra slots at Mexico City International Airport later this year, allowing it to start several new routes to the United States.

Good news for investors

The "unbundling" strategy has driven rapid growth and consistently strong margins for Spirit Airlines over the past five years. Volaris has also grown rapidly, but its profitability has been far more erratic. Its lower bag-fee revenue contributes to these big swings in earnings -- although it's certainly not the only factor.

Volaris isn't going to use its new baggage fees to gouge passengers on international flights. Instead, CEO Enrique Beltranena says this new revenue stream will allow the carrier to reduce its base fares. This is still a good result for investors, though. Lower base fares will stimulate more traffic, helping Volaris keep its planes full and enabling its future growth.

Furthermore, if Mexican regulators see that allowing a first-bag fee can drive fares down, they will be more likely to ease the domestic bag-fee regulations in the future. That could lead to even bigger ancillary revenue opportunities for Volaris a few years down the road -- adding to its already massive long-term growth potential.

(Adam Levine-Weinberg- The Motley Fool)

Production of China’s New Airlifter Confirmed

An early-build Y-20 airliner powered by Russian D-30KP2 turbofans.
(Chinese internet) 
China has confirmed series production of the Xian Y-20 “Kunpeng” strategic airlifter and a re-engining with domestically produced turbofans. Chinese state television announced the news at the same time as the go-ahead for production of the Y-20 stealth fighter was revealed.

Speaking to the Chinese media on the sidelines of the recent Chinese People's Political Consultative Conference, Y-20 design chief Tang Chang Hong said that after eight months of operational trials, the People’s Liberation Army Air Force (PLAAF) is pleased with the airlifter. Tang revealed that a timetable is in place to install domestic engines for the Y-20 by next year or 2019. Currently the aircraft is powered by four Russian Soloviev D-30KP2 turbofans, producing 10.5 tonnes of thrust.

Chinese-made Shenyang-Liming WS-20 engines will produce 14 metric tons (30,864 lbs) of thrust, and thereby enable the Y-20 to achieve its maximum payload of 66 metric tons (146 lbs). Touted as China’s most powerful engine, the WS-20 has been flight-tested on an IL-76 testbed since 2014.

China Aviation News reported in 2016 that Xi’an Aircraft Industrial Corporation has the capacity to produce more than 20 Y-20 annually. However, the production line is not meeting its full potential this year due to the limited number of D-30 deliveries and the uncertainty of the WS-20 re-engining program.

“The successful development of the Y-20 is a testament to Chinese industry's ability to produce large scale, high-end equipment and the mastery of technology by the Chinese scientist and researchers.” Tang said. “The Y-20 is a good starting point and will enable us to produce larger and more ‘important’ aircraft projects.” He also noted that a civilian variant of the Y-20 will be developed.

The Chinese media revealed in early March that the Y-20 could be used as a carrier for China’s air-launched rocket system. The head of the China Academy of Launch Vehicle Technology, Li Tong Yu, said his agency has developed a new generation of air-launched space vehicle capable of delivering 100 kg (220 lbs) of payload into low-orbit. The Y-20 will be used to air-launch the rocket. A variant with a payload up to 200 kg (440 lbs) is under development.

Li highlighted that China in recent years has been developing numerous small satellites. Deploying them via conventional rockets would be costly, and the Y-20 will aim to solve that problem.

(Chen Chuanren - AINOnline News)