Oakland airport's aviation director chats with Today in the Sky

08 October 2009

Editor’s note: The AirAsia X event was the marquee event during my visit to Oakland International Airport last month. But I also got to sit down with Deborah Ale Flint, the Acting Aviation Director at Oakland International. I pitched her questions that were submitted by Today in the Sky readers. Read on to see what she had to say. Read here for more on my day spent with the team at AirAsia X.

Ben Mutzabaugh: The San Francisco Bay Area is a dynamic aviation market, with three major airports serving the metropolitan area. Given what seems to be tight competition between the three Bay Area airports, many of our readers are curious how all those pieces fit together. Tell me a little bit about what Oakland is doing to cement its spot in such a competitive market.

Deborah Ale Flint: We’re doing quite a bit in terms of generating new business. I think (last month’s AirAsia X event) is an example of just such that type of business approach. With this relationship with AirAsia X … certainly we’re celebrating the partnership with the Oakland Raiders, but Oakland Airport also has been pursuing AirAsia X for service out of Oakland International Airport. So, the two have paralleled very nicely.

We have identified numerous markets that we feel are under-served here for the Oakland Airport and the East Bay of the San Francisco Bay Area. This one fits very nicely into that marketing plan.

Mutzabaugh: That would be Kuala Lumpur?

Ale Flint: Definitely Kuala Lumpur, and the intermediate stop for AirAsia X has yet to be determined. There are a couple of options that we’re looking at and working with them on – selling them, to a certain extent – on that intermediate stop. So we’re in heavy discussions with them in that regard.

Mutzabaugh: AirAsia X’s aircraft currently do not have the range for an Oakland-Kuala Lumpur nonstop flight, correct?

Ale Flint: As it did (in September with the AirAsia X Oakland Raiders flights), one of the concepts could be something that involves London and U.S. service as well as Southeast Asia service. I think there are some unique opportunities that they can have in there as well.

So, (AirAsia X) could not go to Kuala Lumpur nonstop. But (the flight) could stop in Tapei. It could stop in Seoul.

You know, you mention the competition amongst the Bay Area airports. I think what separates Oakland is the fact that not only are we a low-cost airport – and that’s intrinsic in everything that we do – but, the population for the market that AirAsia X would serve is right here.

Alameda County has one 1.5 million people in it. That’s larger than San Francisco County. When you couple that with (Alameda County neighbor) Contra Costa County – which is another million people – that is a large catchment area. For Alameda County, over 20% of the people are of Asian ancestry. So, even for people who would be doing friends-and family-type visits, the market is here.

Obviously the Bay Area is a great market for any type of air service. (The East Bay is particularly attractive when you look at things like) household income -- $80,000 plus – to the rich corporate (market) that is here. And the pharmaceutical companies that have headquarters here in the East Bay … there’s definitely a strong catchment area for good service to Asia.

Mutzabaugh: One of the things that caught my attention when I was talking to AirAsia X CEO Tony Fernandes is that he said one of the things that stood out about Oakland was the connectivity. I think most people’s reaction would be that San Francisco – with its United hub and the base for Virgin America – would be the Bay Area’s best bet for connectivity.

But, Tony said he thinks their customers would be more likely to take advantage of the low-cost carriers here in Oakland – like JetBlue and Southwest, for example – and book their own connecting options. Is that something you would expect as well?

Ale Flint: I would definitely expect that. I think that an analysis will show that there is a strong percentage of people per flight that would create their own “self-connect,” per se. We’re seeing that already with the Volaris and Southwest market. There is not a codeshare agreement, per se, but many Southwest passengers will automatically connect themselves onto Volaris flights. I think that’s indicative of what people’s decisions would be for AirAsia X service.

(Note: Southwest and Mexican low-cost carrier Volaris have announced plans for a codeshare pact that would allow passengers to buy a single ticket that would allow them to connect from a Southwest flight to a Volaris flight to Mexico – or vice versa. Despite the announcement, however, the carriers have not yet implemented the planned codeshare arrangement.)

Mutzabaugh: So, you’re seeing that already with Southwest and Volaris?

Ale Flint: We see that people are making those decisions. (For example, we’ve seen passengers) come from Seattle on Southwest into Oakland and then hopping on to a Volaris flight to Guadalajara.

Mutzabaugh: We’ve seen many low-cost airlines ramp up service across the Bay in San Francisco. In particular, Southwest, JetBlue and Virgin America.

Given that, what can Oakland do to try to hold on to local passengers – and airlines – and keep them on this side of the Bay? Or what can you do get passengers to come back to this side of the Bay if they’ve started going to San Francisco to take advantage of the proliferation of new low-cost carrier flights there?

Ale Flint: We are working with JetBlue to continue to show that they can continue to make money with service out of Oakland. There are so many things about Oakland airport that translate into profits. The people of the East Bay, they want to fly out of the Oakland airport. And they don’t want to fly out of San Francisco. So, they will go to Oakland airport if the flights are there.

We are the nation’s No. 1 on-time airport. And that translates into money. That reliability translates into fuel savings. For instance, there are at least five minutes of saved taxi time – from the terminals to the runway – at Oakland compared to San Francisco. When you translate that, say for an A330 or A340, you know that’s (somewhere in the range of) $700,000 per year based on a five-times-a-week flight schedule. That’s real money. So, our cost-per-enplanement are always relatively low. They’re lower than the other Bay Area airports, and that translates to the bottom line of these airlines. That’s a business model that we’re going to continue to stick with. And our customer service continues to improve as we’ve modernized our facilities. We have great facilities now without having passed on a significant amount of cost to the air carriers. They can run a successful, profitable business out of Oakland.

Mutzabaugh: We did see JetBlue start flying out of San Francisco in the past year. And it looks like they’ve pulled down some of their flight schedule at Oakland. So, presumably, some of those flights that were pulled down at Oakland are now operating out of San Francisco?

Ale Flint: One has to do a very detailed analysis to really follow the flights – particularly over the last year as the economy and the airlines have adjusted (to it). But, I think there has been some leakage to San Francisco, yes.

Mutzabaugh: Do you think it’s because JetBlue senses an opportunity there, or do you think they were motivated more by making a competitive response to the start-up of Virgin America and the return of Southwest to that airport.

Ale Flint: Yes, I think it is a competitive reaction to what’s been happening in San Francisco with Virgin America and Southwest.

France Wants To Maintain Good Relations With Malaysia, Break New Ground

07 October 2009

France wants to maintain its good ties with Malaysia and has asked Malaysia to consider the technologiacal capability of its companies in waste management, land transport and nuclear power to explore new areas in relations between the two countries.

This was conveyed by French Prime Minister Francois Fillon to Datuk Seri Najib Tun Razak during their meeting at his official residence at Hotel Matignon here Tuesday, in conjunction with the Malaysian Prime Minister's four-day visit to France starting Sunday.

Najib told Malaysian journalists that at the meeting he conveyed AirAsia's aspiration to obtain landing rights in Paris.

He said AirAsia's application for landing rights at the Orly Airport was appropriate in view that the airline was the biggest customer of the Airbus A320.

He said Fillon informed him that AirAsia was offered landing rights outside Paris and the application for landing rights in Paris would be considered.

The meeting also touched on global issues like the new world financial architecture and climate change, he said.

On his meeting with the secretary-general of the Organisation for Economic Cooperation and Development (OECD), Angel Gurria, on Tuesday, Najib said Gurria noted Malaysia's efforts to improve it standing after it was reported to have been blacklisted by the OECD.

According to news reports in April, Malaysia and three other countries, which had been blacklisted by the OECD, were taken off the list after they agreed to adopt the OECD's regulations.

It was also reported that the G20 leaders meeting in London, also in April, had cited Malaysia, the Philippines, Uruguay and Costa Rica as uncooperative tax havens, based on an OECD list.

Najib said Gurria also suggested that Malaysia take part in a study on performance in education which involved more than 60 countries to benchmark its performance against other countries.

On nuclear energy, Najib said it was a long-term option and not an easy undertaking.

"Somewhere along the line, if we decide that there is a strong case for Malaysia to generate electricity by using nuclear power, then we will take that decision but not immediately," he said.

He said the government needed to correct the fuel mix as it was not optimal currently since it utilised too much coal and gas.

The first move was to increase the hydro component and look at renewable energy such as solar, he said.

On the establishment of the Unesco-Malaysia Cooperative Trust Fund, which he announced when addressing the Unesco's general conference Tuesday, Najib said the intention was to provide the less developed countries with enhanced capacity to deliver quality education.

"You train the teacher, the teacher will be productive for many years. It's much better then giving financial assistance because the teacher can be a multiplier factor in terms of educating students with quality teaching," he said.

AirAsia boost MERCY Malaysia's relief efforts in Padang

06 October 2009

Relief efforts to help the people of Padang are still actively in progress after the Indonesian province was struck by two major earthquakes recently. AirAsia, as part of its corporate social responsibility program, provided complimentary seats and cargo space to Mercy Malaysia, to fly-in volunteers and aid supplies to the scene of the catastrophe. ?The airline played a major part in enhancing the relief efforts and was an early responder to the call for help, just hours after the tragic earthquake struck.

Six volunteers and 530 kilos of aid supplies from MERCY Malaysia left Kuala Lumpur for Padang today, on flight AK 474 at 5pm. This group of volunteers will join other Mercy Malaysia volunteers who are already on the scene. The first batch of volunteers left for Padang on 1 October 2009 with 120 kilos of aid supplies, followed by two volunteers on 2 October 2009 (Friday) and five volunteers plus 150 kilos of supplies yesterday (Sunday).

AirAsia Group CEO Dato' Sri Tony Fernandes said, "We are glad to participate in the relief efforts and provide the necessary comfort to the people of Padang. As an airline with the largest presence in ASEAN, it is our obligation to assist our neighbours who are in dire need of help.

"We applaud MERCY Malaysia for their dedication and determination in providing relief and care to the people of Padang. We are proud to work together with MERCY Malaysia in this noble endeavor, and we will continue to provide assistance as long as the need arises," said Fernandes. ??

For MERCY Malaysia, AirAsia's contribution and support for MERCY Malaysia's relief mission in Padang, Indonesia, signifies the airline's commitment to provide relief assistance to the earthquake victims.

"We are grateful for AirAsia's support which is valuable to us to maintain our effort in providing sustainable humanitarian relief especially to the quake affected victims in Indonesia," said MERCY Malaysia President Dr. Ahmad Faizal Perdaus.

"We truly hope that other organisations can step up to emulate this effort by AirAsia so that we can continue to provide assistance to the affected communities," he also said.
In Indonesia yesterday, AirAsia flew 142 guests from Jakarta-Padang and 122 guests from Padang- Jakarta. The majority of guests onboard both flights were families of the earthquake victims. Together on the flight were Indonesian-based relief agencies, Indonesian journalists and airport authority officers from Jakarta who facilitated the landing of AirAsia's aircraft at Minangkabau Airport, Padang. Also flown in was 1.5 tonnes of aid supplies, comprised of assorted food and clothing items.

Indonesia AirAsia CEO Dharmadi said, "Families of victims on both flights appreciated our initiative. We were touched by their stories and could not imagine the hardship that they are going through. We will definitely do our best to help the people of Padang.

"We grieved as we learned the number of casualties caused by the tragic earthquake. With all the help coming in to Padang and its surroundings from local and international relief agencies, we are confident that the province will be able to be re-established soon," added Dharmadi.

This is not the first time that AirAsia has come to the aid of people and nations in the region at times of tragedy. AirAsia was in the forefront of relief efforts in the wake of the tsunami that struck the region in 2004, Cyclone Nargis in Myanmar (2008) and the earthquake which struck Sichuan in China (2008). AirAsia has also supported the recovery of Bali, Indonesia, after the terrorist bombings in 2005, by giving away 12,000 free seats on its flights.

The earthquake occurred in West Sumatera, Indonesia, on 30th September, 2009 at 17:16:10 Indonesian time. The earthquake measured 7.6 on the Richter scale and struck at sea, 50 km from Padang, the capital city of West Sumatera, Indonesia. Even while relief and rescue efforts were underway, another earthquake, measuring 6.6 on the Richter scale, struck the same area the following day --? Oct. 1, 2009.? The number of casualties is still unknown, with the death toll rising by the hour.

No Changes For AirAsia's Earnings Estimates, Says ECM Libra

05 October 2009

KUALA LUMPUR -- No changes are required to AirAsia's earnings estimates, says ECM Libra Investment Research, adding that it has already factored in the deferment of aircraft deliveries.

The deferment of eight aircraft deliveries in 2011 is expected as AirAsia had previously mentioned its intention of doing so following the decision in early August to defer seven aircraft deliveries in 2010 to 2014, ECM Libra said in a research note on Monday.

It said the deferment would reduce AirAsia's capital expenditure in 2010 and 2011 from RM3.5 billion and RM3.3 billion to RM2.3 billion and RM2.2 billion respectively.

The decision to phase out the use of Boeing 737 aircraft is expected, ECM Libra said.

Operationally, the expected improvement in efficiency from the use of the newer A320-200 aircraft will be seen in AirAsia's Thai and Indonesian associates, it said.

AirAsia launches Low Fare Madness Promotion

05 October 2009

AirAsia has launched what it calls a Low Fare Madness promotion on all seats, and all flights departing primarily from Malaysia (excluding AirAsia X flights). The promotion, which begins today 5 October will run until 11 October 2009, for travel between 12 October and 19 November 2009.

The promotional fares are available for destinations departing from Malaysia (Kuala Lumpur, Penang, Johor Bahru, Kota Kinabalu, Kuching, Langkawi) to destinations such as China, Indonesia, Brunei, Philippines, Singapore, Thailand, Vietnam, Cambodia, and domestic destinations within Malaysia from as low as RM 49 (all in fares) one way.

Kathleen Tan, Regional Head of Commercial, AirAsia Group said, “Following our recent success of AirAsia’s 48 Hour’s Sale regional campaign, we decided to reward our guests further with our Low Fare Madness offer from hubs primarily in Malaysia to further tease our guests travel appetite and entice travel demand further. With this campaign, GoHoliday, AirAsia’s one stop travel portal is also offering exclusive last minute sizzling deals and fantastic packages, including “Free Rooms” for over 180 Asia Pacific hotels online at goholiday.airasia.com.”

AirAsia delays delivery of 8 more planes

05 October 2009

It is also unwinding leases with GE Commercial Aviation Services and others

PETALING JAYA: AirAsia Bhd has received the nod from Airbus SAS to delay delivery of eight A320-200 aircraft originally scheduled for 2011.

This means the low-cost carrier will now defer a third or 16 of 48 aircraft deliveries scheduled for 2010 and 2011, after making a similar move in July when it deferred the delivery of eight aircraft for 2010.

The budget carrier is also unwinding all its leases with GE Commercial Aviation Services (GECAS) and other lessors for early return of 13 B737.

It will also sell two of its own B737 aircraft in a bid to realign capacity with the increased demand and move towards using one aircraft type for greater efficiency.

“We will defer eight of the 24 deliveries (scheduled) for 2011. We got the deferment from Airbus,’’ AirAsia group chief executive officer Datuk Seri Tony Fernandes told StarBiz.

The deferments will push back deliveries to 2014.

Globally, many airlines have delayed taking delivery of new aircraft due to the sluggish economic conditions and lack of passenger demand.

In AirAsia’s case, Fernandes also attributed the aircraft deferment in 2011 to doubts over the timely completion of the new low-cost carrier terminal.

This is despite assurance from Malaysia Airports Holdings Bhd the new terminal will be completed on time by the third quarter of 2011.

AirAsia became the largest customer for the Airbus A320-200 in December 2007 after it placed a firm order for a total 175 aircraft, with an option for 50 more. The budget carrier has so far taken delivery of 63 A320s, which are used for its services in Malaysia, Indonesia and Thailand.

Additionally, it has a fleet of 17 B737s, of which four are its own while the other 13 are leased from GECAS and other lessors.

“We have also closed a deal with GECAS to return nine of the B737s leased from them in stages in 2010 and sell two of our own to Mexico’s VivaAerobus,’’ Fernandes said.

AirAsia is also in talks with several parties to sell the balance two of its B737s and unwind leases for the remaining B737.

He said proceeds from the sale would be used to pay off loans for the aircraft and that the sale would have no impact on AirAsia’s bottom line.

“This alignment will have a huge impact on our Indonesian and Thai operations as they will increasingly be using the A320 instead of B737 and that makes them hugely more efficient,” he said.

“We see the two operations turning the corner and there should be positive upswing in their profits,’’ he said, adding: “We are really bullish on Indonesia and the growth in passenger numbers in the last quarter was very encouraging.”

“Our Indonesian operations have the potential to be as strong as our Malaysian operations and we see stronger revenue growth from our Thai operations,” Fernandes said. “Having two strong affiliates on top of our Malaysian operations puts us in a position of strength.’’

For airlines, the third quarter is usually the weakest quarter but Fernandes said: “AirAsia is seeing better passenger growth.

“We are very pleased with the third-quarter numbers but they will not be as good as the second quarter.”

AirAsia reported a net profit of RM139.2mil for the second quarter ended June 30 on revenue of RM657mil due to improved passenger volumes, higher ancillary income as well as write-backs on certain provisions.

After the company’s private placement of shares last month, Fernandes said the company was targeting RM1bil in reserves by the year-end.

On route expansion, he said plans were in place for the carrier to fly to three routes in India – Coachin, Calcutta and Trivandrum – this year.

“Most of our growth is in new routes but these are not new destinations. It is how we link the dots once we go to a new destination,’’ he said.

Fernandes was recently named Team Principal of 1Malaysia F1 Team Sdn Bhd, which will participate in the next season of Formula One via Lotus F1.

Asked if his involvement will see him paying more attention to F1, he said: “I am very much on top of things at AirAsia, that’s my baby.’’

More Daily Flights from Phuket to Hong Kong

03 October 2009

Thai AirAsia annouces new direct daily flights from Phuket to Hong Kong and supports a new hub Phuket International Airport in Phuket. It will operate on November 15, 2009 bringing load of low fares and better connectivity from Phuket direct to Singapore, Hong Kong, Jakarta, Medan, Ho Chi Minh City.

After Thai AirAsia began its service from Phuket to Singapore in 2007, the airline now introduce new route from Phuket to Hongkong with daily flights. Celebration fare starts from 999 one way. Bookings for the Phuket- Hongkong route are opened for sale from 5 October until 11 October 2009 while the travel period is from 15 November – 31 July, 2010

Thai AirAsia’s new hub will begin with two aircrafts, Airbus A320 based in Phuket in mid November and in line with its business plan, it will introduce more exciting new route such as Phuket- Chiangmai, Phuket-Jakarta and Phuket – Ho Chi Minh City, Phuket- Medan