AIRLINE OUTLOOK.

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Author: Fiorino, Frances

The Star Alliance is giving "every indication that the [US Airways-America West] merged carrier would be welcomed," Dennis Tierney told US Airways employees in a June 13 staff newsletter. Tierney, US Airways director of alliances, was referring to comments made by 16 Star airline executives who met in Nagoya earlier this month. Membership would be beneficial for the merged entity, giving it global growth opportunities, similar to those US Airways has enjoyed since joining the alliance in May 2004. (America West holds numerous code-share agreements but is not a member of an alliance.) Tierney said US Airways' global reach has "vastly expanded" as a result of Star membership, enabling the carrier to offer competitive prices on hundreds of routes and enjoy higher yield traffic. US Airways has seen increased revenue from passengers booking through Star's Asia-Pacific member airlines, he says. Interline revenue from Asia-Pacific alliance members increased more than 70% in the May-December 2004 period, compared with the same period in the previous year. (The planned merger is part of US Airways' reorganization plan, which is pending approval by U.S. Bankruptcy Court.)

Although it switched airframe manufacturers, AirAsia kept CFM International as its engine supplier, ordering 120 CFM56-5B/Ps to power the 60 Airbus A320s it bought in March. The value of the sale is $750 million. AirAsia's current fleet of 26 Boeing 737-500s is under pressure as the Malaysia-based low-cost carrier continues to expand. "The business climate is incredibly healthy," says Chief Executive Tony Fernandes, noting only 6% of Malaysians, 1.5% of Thais and 0.8% of Indonesians have traveled by air. The carrier's first A320 is due in December. Counted as Southeast Asia's first discount carrier, AirAsia began in 2001 by flying 200,000 passengers. It expects to fly 8 million this year on 51 domestic Malaysian and regional routes to Thailand, Indonesia, China, Singapore and the Philippines. With local financing partners, it has begun two regional subsidiaries, Indonesia AirAsia and Thailand AirAsia.

GE Commercial Aviation Services (Gecas), a unit of GE Commercial Finance, is opening offices in Mexico City, New Delhi, Sao Paulo, Shanghai and Toronto. "With the growth of the airline industry outside the U.S., we wanted to be able to respond more quickly to customer needs," said Norman Liu, executive vice president, commercial operations. Gecas has also announced an expansion of its passenger-to-freighter conversion program to include four Boeing 747-400 freighters. Israel Aircraft Industries (IAI) will convert the aircraft. EVA Airways will lease the first three aircraft from Gecas Singapore following a purchase-and-leaseback transaction and conversion by IAI. Delivery of the first converted aircraft is scheduled for the spring of 2007.

M7 Aerospace has delivered the 20th ATR 42 regional airliner converted from passenger to freight configuration at its San Antonio MRO facilities, according to the specifications of the company's proprietary Supplemental Type Certificate (STC). M7 is currently developing an additional STC to likewise convert ATR 72s and expects FAA approval for ATR 72 certification in the coming weeks.

Continental Airlines plans to double the number of first-class seats on its expanding Boeing 757-300 fleet to meet demand. The current nine-aircraft fleet will increase to 17 and the first-class cabin will be equipped with 24 seats instead of the current 12. Economy seats will shrink to 192 from 210. The first of the reconfigured aircraft is scheduled for completion this summer; the remainder, in 2006.

Virgin Atlantic is now offering bilingual Japanese language studies on London-Tokyo routes. English-speaking travelers may learn Japanese, and vice versa.

The airline teamed with Univerb, a Swedish company that offers self-study language courses using audio-based methodology. The course, geared to both business and leisure travelers, covers basic to fluent conversation skills and is available to passengers through the airline's inflight entertainment systems. Virgin now offers Spanish and has plans to include Cantonese and Mandarin courses eventually on Far Eastern routes.

Hi-Tec Systems has been awarded a five-year security consulting contract by the Advanced Airport Systems Technology Research Consortium (Astrec) in Japan to strengthen security procedures for all modes of transportation, including those at Narita International Airport. The goal is to improve the "Hands-Free Travel" initiative for intermodal transportation, which includes use of Radio Frequency Identification luggage tags. This would permit travelers to arrange luggage pickup at home or hotel," says Ronald R. Polillo, Hi-Tec's vice president for homeland security and defense. New Jersey-based Hi-Tec is also expected to develop security plans, and provide a review of the baggage screening design of Narita's new Terminal 1. A major global gateway, Narita handles an estimated 25 million passengers a year.

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EDITED BY Frances Fiorino