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Asian Carriers Fuel Airplane Orders

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SINGAPORE — The world’s biggest aircraft manufacturers expect airlines in the Asian-Pacific region to spend close to $2 trillion on shiny new jets over the next two decades, but some industry-watchers are questioning if carriers really need all those planes.

Much of the growth in Asian commercial aviation has been fueled by aggressive new budget carriers like Malaysia’s AirAsia Bhd. and Lion Air of Indonesia. Low-cost airlines, nearly unheard of in Asia just 10 years ago, now account for a quarter of the seats in the region.

Most airlines in Asia have ordered more planes than their current fleets in the hope of capturing a bigger slice of the market, and that is raising concerns among analysts that the rise in capacity could outpace that of passenger demand.

Airbus Group EADSY -0.55% NV on Tuesday said it expects airlines in the Asian-Pacific region to buy planes worth $1.8 trillion over the next 20 years. That view is close to the $1.9 trillion estimate Boeing BA +0.91% Co. gave a day earlier.

Asia’s “macro economic context is looking good in the long term but every airline believes its market share will grow. That cannot happen,” said Bertrand Grabowski , the head of aviation finance division of Germany’s DVB Bank SE.

He said some airlines in Asia will fail and their aircraft will as a result need to be redeployed.

“We aren’t yet talking about over-ordering, but certainly there’s very aggressive ordering,” he said.

However, Boeing and Airbus say the orders are in line with their growth projections as they rake in new deals.

“There is a good balance between supply and demand,” said John Wojick , who heads global sales of commercial aircraft at Boeing, noting that he is comfortable with the company’s current global backlog of 5,080 planes.

Smaller regional airlines in Asia are making a big push for new capacity as they foresee market growth. At the Singapore Airshow on Tuesday, Vietnamese budget carrier VietJetAir signed firm orders for 63 Airbus A320 jets, as well as purchase rights for 30 more, in a deal valued at $9.1 billion at list prices.

The order is at least several times the size of the current fleet of 11 leased A320s at VietJetAir, which flew 4 million passengers last year.

Also on Tuesday, Myanmar’s state-owned Myanma Airways entered a leasing agreement for 10 Boeing 737 jets that will nearly double the company’s current fleet of 12 planes.

The deals add to the hundreds of jets already on order among Asia’s premium carriers and low-cost airlines.

AirAsia and Lion Air have more than 1,000 new jets on order between them that will be delivered over the next decade. The order books at Boeing and Airbus are nearly full. An airline looking to buy single-aisle planes, the workhorse of the industry, is now unlikely to get delivery slots over the next four to five years.He said Indonesian budget carrier Lion Air is likely to look to place some of its aircraft with other airlines through leasing deals, taking advantage of its existing delivery slots with both Boeing and Airbus.

Lion Air is likely to receive about 45 new planes this year from Boeing, Airbus and European turboprop aircraft maker ATR. Still, the airline is confident it can fill them.

“The Indonesian market is still growing by 15% per year. We feel there’s still opportunity to grow domestic services in Indonesia. Plus Lion has enormous opportunity to expand internationally,” said Leithen Francis, a Lion Air spokesman.

Concerns of rapid expansion in the industry come as even as many of the region’s traditional airlines like Singapore Airlines Ltd. and Malaysian Airline System Bhd. are struggling from intense competition.

A spokeswoman for AirAsia said some of the new orders will replace older aircraft “to ensure we keep a young and efficient fleet.”

Asia’s full-service carriers have, in recent years, seen budget airlines eat into their market share on shorter routes. On longer routes to the U.S. and Europe, they have to compete against international airlines, particularly Gulf carriers, such as Emirates Airline and Qatar Airways.

Still, Boeing and Airbus are eager to sell more of their flagship jets to the region’s airlines, as reflected by their expectations that the region will take delivery of over a third of total planes being produced through 2034.

Airbus brought its entire leadership team to Singapore for the city-state’s biennial air show, where its latest jet, the widebody A350, made its first flying display at an international air show on Tuesday.

“We are on track to certify the A350 and deliver it to Qatar Airways by the end of this year,” Fabrice Brégier , said Airbus president and chief executive.

Airlines in the Asia-Pacific will need 10,940 new planes in the next 20 years, Airbus said Tuesday, with 4,100 of those being widebody jets that typically carry 300-500 passengers. Airbus’s projections are slightly below the 12,820 jets that Boeing expects region to take.

– WALLSTREET JOURNAL

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Aviation

Aircraft Averts Crash, After Losing Door Mid-Air in Abuja

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The Nigeria aviation community heaved a sigh of relief on Thursday, after CL60 aircraft operated by Triton Aviation lost a door mid-air, yet managed to land safely.

The incident had forced the crew to declare an emergency shortly after take-off from the Nnamdi Azikiwe International Airport, Abuja, which panicked the aviation industry.

It was gathered that the aircraft, with registration number T7-SEI and flight identification DWC052, was en route to the Murtala Muhammed Airport, Lagos, when the incident occurred at about 4:20 pm.

According to the incident report, the crew informed the air traffic control tower that a door had opened in flight, prompting the approach radar controller to direct the aircraft back to Abuja for an emergency landing.

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The report further showed that the aircraft took off from Runway 22 at 4:17 pm UTC. It was “about three nautical miles from the airport, climbing through 3,000 feet, when the crew transmitted a distress call: ‘Mayday, Mayday, Mayday.’”

Following the distress call, airport fire and emergency personnel, as well as the medical team, were immediately alerted and placed on standby. Fire and rescue teams were also directed to designated positions to prepare for the aircraft’s return.

The incident report stated that at about 4:29 pm UTC, while in contact with the Abuja control tower, the crew asked whether the controllers could confirm if the door was open.

“The duty air traffic controller attempted to observe the aircraft using binoculars, but could not establish the door’s condition because of the aircraft’s position. The crew was subsequently informed that the controller could not confirm the situation visually,” the report said.

The aircraft eventually landed safely on Runway 22 at approximately 4:34 pm UTC, about 14 minutes after the Mayday call.

Following the landing, the duty controller observed that the aircraft’s door was missing from the fuselage, confirming the seriousness of the incident.

The jet was subsequently taxied to the international apron extension and parked with the assistance of a marshaller.

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Shell Endorses Regional Action Plan for Safe Helicopter Services

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Shell Nigeria Exploration and Production Company Limited (SNEPCo) has welcomed efforts to promote safe helicopter services across Africa in a proposed Regional Action Plan (RAP).

The plan, according to a company statement, is the highlight of a workshop organised in Lagos within the week by the Aviation subcommittee of the International Association of Oil and Gas Producers (IOGP) in partnership with London-based safety advocacy group, HeliOffshore.

Biztellers reports that the two-day Offshore Helicopter Industry Safety Workshop (OHISW) with the theme “Developing a Regional Action Plan,” followed on from a similar session last year which SNEPCo sponsored.

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It also provided administrative and logistical support for this year’s conference which was sponsored by ExxonMobil. SNEPCo, which pioneered Nigeria’s deepwater production at Bonga in 2005, relies on helicopter shuttles for operations and supports the workshop as part of its contributions towards safe services in Nigeria.

In an address at the opening session delivered by General Manager Contracting and Supply Chain, Charles Oranyeli, Managing Director SNEPCo, Ronald Adams said: “By developing a regional action plan, we can move beyond dialogue to alignment, ensuring that the safety leadership, industry standards, and collaborative approaches championed last year are embedded in a common roadmap for collective improvement. The most effective solutions will come not from isolated efforts, but from partnership, standardization, and coordinated action across the region.”

The workshop was attended by more than 80 representatives from oil and gas companies, the Nigerian Content Development and Monitoring Board (NCDMB), the Nigeria Civil Aviation Authority (NCAA), the Nigerian Safety Investigation Bureau (NSIB), helicopter operators and original equipment manufacturers.

The event concluded with participants deciding action items for the proposed Regional Action Plan including Search and Rescue (SAR) initiatives, implementation of IOGP Report 690 standards and establishment of formal industry leadership forums.

The IOGP has been active for over 50 years, supporting its more than 90 members around the world to promote “excellence in safe, efficient and sustainable energy.”

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Airfares Likely to Rise as Aviation Fuel Price Spikes by 80%

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The Airline Operators of Nigeria (AON) has declared that airlines operating in Nigeria have come under financial pressure following a sharp increase in the price of Jet-A1, also known as aviation fuel.

According to the group, the price of aviation fuel, has surged to about N1,800 per litre in many parts of the country, from about N1,000 per litre two weeks ago. This amounts to almost an 80 per cent increase within a short period.

Aviation fuel remains the largest cost component in airline operations, accounting for about 30 to 35 per cent of total operating expenses.

Industry stakeholders have linked the latest spike to the ongoing conflict in the Middle East, which has pushed up global energy prices.

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Speaking on Channels Television on Friday, the spokesperson for the Airline Operators of Nigeria, Prof Obiora Okonkwo, said the surge had placed airlines under severe financial strain.

According to him, most carriers have so far refrained from immediately transferring the additional cost burden to passengers, despite the pressure on their operations.

“Two weeks ago, we were getting Jet-A1 at about N1,000 per litre, which today is about N1,800, and even more in some stations. We have experienced an increase of about 80 per cent. That’s quite a spike,” Okonkwo said.
He explained that airlines were currently absorbing the losses in order to avoid worsening the economic burden on the travellers.

“We are not in a business where you can easily adjust your ticket price. Right now what we are doing is that we are bleeding. We are taking the blow. We are selling tickets at very non-profitable prices. We are losing a lot of money,” he said.

Okonkwo warned that the situation might not be sustainable if fuel prices continue to rise without government intervention.

“Obviously, adjustments will be expected anytime soon. But again, we are very sensitive to the economic situation of Nigerians and our travellers,” he added.

He noted that developments in the global oil market, particularly the recent release of reserve crude oil, could influence fuel prices in the coming weeks.

Okonkwo also urged the Federal Government to explore engagement with the Dangote Refinery as part of efforts to stabilise aviation fuel supply locally.

“We were more hopeless in a situation where there was no refinery in Nigeria in the last two years. Now that we have a refinery, we are hopeful that we can find a solution around it,” he said.

According to him, if the spike persists, some airlines may struggle to continue absorbing the losses associated with the rising cost of aviation fuel.

Meanwhile, the AON spokesperson also reacted to the decision by the Federal Competition and Consumer Protection Commission to sanction about five airlines over alleged price fixing.

Okonkwo said while the commission has regulatory powers, the aviation sector remains deregulated, making coordinated price fixing unlikely.

“There is no meeting of airlines where they agree to fix prices. Fixing prices would mean operating as a cartel, and that is not the case,” he said.

He explained that airline ticket pricing varies widely because different aircraft types attract different operating costs.

“Each airline determines its fares based on its own operational costs,” he said.

Okonkwo added that airlines must also demonstrate financial viability to regulators as part of the conditions for maintaining their operating licences.

“At every point in time, you must prove to the regulators that you are financially viable and capable of sustaining operations,” he said.

He urged regulators to take into account the fragile nature of the aviation industry when making policy decisions affecting airlines.

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