Corporate Travel Analysis Reports For South Pacific

As 2016 draws to a close, in a series of five Q&A reports, the Blue Swan Daily, in conjunction with its parent CAPA - Centre for Aviation, reviews the past year for aviation in the Australia Pacific region and what lies ahead for 2017.

In an uncertain world, from the disruption of Brexit to the likely confrontationalist attitudes of a Trump administration, and instability in many parts of the world, from Russia to the Middle East to Asia, Australia and New Zealand's aviation sectors are mostly in rude health, with liberal policy settings and globally high service levels. Yet each of the main airlines in Australia and New Zealand still relies heavily on its domestic markets.

As heavy fog, snow and the occasional stray reindeer lead to what will be the almost inevitable havoc at Europe's airports this Christmas period, the Blue Swan Daily looks at the European regulation providing protection to passengers travelling to and from the EU - as well as the airline industries' push to ensure the right balance is maintained.

Delays, cancellations and denied boarding are an unavoidable part of air travel, particularly during the busy winter festive season. For those travelling to Europe, EU Regulation 261/2004 (the "Regulation") sets out a series of entitlements available to eligible passengers in the event of such delays.

Western Sydney Airport (The airport of dreams) is currently planned to become operational in 10 years' time. That is sufficiently long to be beyond political horizons and for the usual assortments of opponent to form up once again: political opportunists, environmentalists, NIMBYs and every other form of inertia that prevents airports being built, or even used effectively. No doubt there is often merit in some of the arguments, but mostly not.

Although it happened on the other side of the world, the potential change this weekend's partnering agreement between Lufthansa and Etihad will have for Australia and New Zealand can't be understated.

As New Zealand's economy sparkles, trans-Tasman activity is growing at well above historic rates. New Zealand GDP is projected to increase 3.5%, against Australia's 2% for the current financial year.

As Qantas now looks to expand its own services westbound towards Europe - with the recent announcement of Perth to London direct 787-9 Dreamliner services scheduled to commence in early 2018 - looking east Christmas was almost ruined following the blow dealt to Australian's largest carrier as a result of the US Department of Transport's (DoT) rejection of a proposed joint venture with American Airlines (AA) across the Pacific. This, despite Australia's Competition and Consumer Commission and New Zealand's Ministry of Transport approving the proposed venture earlier this year.

Qantas announced today that its international operation is expected to report an earnings before interest and tax (EBIT) loss of over AUD450 million in 2011/12. This compares with a loss of AUD216 million attributed to international in FY2010/11. Overall forecast for the year is steeply downgraded to AUD50-100 million. The larger international loss is largely a result of one-off restructuring costs pegged at AUD370-380 million.

According to the carrier, the "structural issues" in the business have been compounded by the impact of global economic factors - including increased fuel costs, the high Australian dollar and weakness in the UK and Europe market - as well as allocating a AUD100 million one-off cost to last year's industrial action.

Inbound traffic to Australia has softened in the past two months, causing yields to fall, and outbound premium traffic is showing some signs of weakness. But Qantas Group's domestic business has boomed over the past year, with Tiger temporarily quietened and Virgin relaxing its pressure on the leisure end of the market.