Air France-KLM enters 2009 in prime position to clinch a fierce battle for a stake in Alitalia as the Italian carrier crawls toward its planned rebirth as a smaller, private airline in just over 10 days. After a three month tussle for a stake of up to 25%,Air France-KLM appears, for now, to have the edge over Lufthansa despite aggressive German lobbying and overt political opposition from Rome, two sources close to the talks said. At stake is access to Europe's fourth largest aviation market amid a severe industry downturn, combining busy business routes from Italy's export-driven north with one of the world's top tourist destination markets targeting Rome in the south. CAI, the group of Italian investors that bought Alitalia for E427m last month, hopes to have a foreign partner in place when it officially relaunches the carrier with a revamped network and fewer staff on January 13, one of the sources said. Italian media have reported that CAI has already picked Air France-KL M with a formal signing of the agreement expected next week, but both sources denied such a decision had been made.

China Southern made US$6.3m from fuel-hedging last year as prices surged to a record and then tumbled 70%. The carrier closed all of its fuel-hedging positions in September, a spokesman, who declined to be identified, said Monday. The airline's passenger numbers rose 5.1% last year, the least in five years, it said Sunday. The fuel-hedging gain contrasts with China Eastern and Air China, which have both reported possible losses from such contracts. China Southern's profit and a US$440m govt bailout may help the carrier withstand waning travel demand caused by the nation's slowing growth. The airline flew 59.8m passengers last yea, 37% of the nation's total travellers, according to the statement. Cargo volume was little changed at 872,000 tons.

An unruly passenger so disrupted an international Delta Sunday, the Atlanta-bound plane was diverted to a Canadian airport where authorities took the subject into custody. Flight 47 from Moscow to Atlanta made an unscheduled stop at Gander International Airport in Newfoundland, and the unidentified passenger was arrested by the Royal Canadian Mounted Police, said a Delta spokeswoman. The plane was carrying 206 passengers when it departed Moscow earlier Sunday. Elliott said the decision to eject the passenger was made by the plane’s captain. She would not release details about the individual or what that person allegedly did.

Finnair could be forced to cut one third of its routes due to shrinking demand because of the global economic crisis, CE Jukka Hienonen said in an interview published Friday. 'Today we fly to more than 100 destinations. If worst comes to worst, we will need to cut one third... of our routes,' Hienonen told the Iltalehti daily. 'We hope that cutting our routes by 9% (as announced earlier) will be enough (but) we are not forced to keep any route. It is not profitable to fly with empty aircraft,' he said. If it had not been for the airline's profitable Asian routes 'we could afford to keep only about 20 (of today's 40) European routes,' he said. The company had announced some 2,000 temporary layoffs for two weeks this year to cut costs. Since then, oil prices have dropped dramatically, but that is not enough to ward off cuts to routes and jobs, Hienonen said. 'The oil price is down now and that has decreased fuel costs, but business travel has fallen sharply due to the recession ,' he said, adding: 'I would have preferred expensive oil and (high) demand.'

A Muslim family that was ordered off an AirTran Airways flight on New Year's Day received an apology and refund on Friday from the airline, which said its decision to bar the passengers was necessary. Atif Irfan said that federal authorities removed him, seven family members and a friend from the flight after passengers overheard members of the group talking about the safest place to sit on the plane. He said they were being careful to avoid any 'buzzwords' like 'bomb' that would trigger a security alert. The group was flying out of Reagan Washington National Airport and was headed for a religious retreat in Florida when other passengers apparently overheard the conversation and reported it to authorities. AirTran issued a statement apologizing to the nine and the other passengers who were inconvenienced by the incident. It said the airfare of the nine was refunded and other passengers would be reimbursed for expenses incurred by taking other flights.

Etihad Airways flew more than 6m passengers in 2008, a 34% jump on 2007, the company said. 'The growth during 2008, Etihad's fifth year of operations, saw passenger numbers total 6,021,931 and the average seat factor rise from 68% to 75%,' the statement said. 'The airline has also taken delivery of nine new aircraft boosting its fleet to a total of 42.' Last year, Etihad launched six new routes - Beijing, Minsk, Almaty, Kozhikode, Chennai and Moscow - as well as signing a record order of US$43b at the Farnborough International Airshow for up to 205 Airbus and Boeing aircraft. Capping a hugely successful year, a record 20,937 passengers flew with Etihad on December 19 making it the airline's busiest day, it says.

Ryanair on Sunday called on the Board of Aer Lingus to explain why Aer Lingus’ CEO Dermot Mannion has recently been granted 'an indefensible and unprecedented' E2.8m on lifeboat ‘Failure Bonus’, if Aer Lingus undergoes a change of control. The Aer Lingus Chairman Colm Barrington is reported to have said the arrangement is 'perfectly normal.' Ryanair called this unprecedented, because it is not compensation for loss of office, but rather a spectacular secret bonus, which can be triggered by Dermot Mannion himself should he choose to resign immediately following a change of control of Aer Lingus. Ryanair says it believes that this should be put to all shareholders for approval at Aer Lingus’ next AGM, which will allow all shareholders to consider whether Mannion, who has delivered what it terms substantial operating losses in two of the last three years (2006 and 2008), should be able to trigger such a bonus.

Tiger Airways has scrapped plans to establish a JV airline in South Korea, citing the global economic slowdown and regulatory uncertainties. Tiger and its 51% local partner, the Incheon Metropolitan City Govt, stated the climate is 'not conducive to the successful launch of a new airline at this time'. The carrier, which was originally due to commence operations in August 09, had rescheduled its launch for 2009 after encountering delays in its application process. Incheon Tiger Airways had intended to operate from South Korea to China, Japan, east Russia and Mongolia with an initial five A320s. Two South Korean budget carriers, Yeongnam Air and Hansung Airlines, suspended services in 2008, due to rising competition and weak demand. But regulatory uncertainties (ie protectionism) are understood to have been the major hurdle.

Garuda will open 16 new royutes this year, comprising 13 domestic and three international routes, and add more aircraft to its fleet, the airline company announced Saturday. The new routes will begin gradual operation from Jan. 16, and will later be supported by 14 new Boeing 737-NG aircraft to be delivered in mid-2009. The new international routes will link Denpasar with Adelaide, Denpasar with Hong Kong and Surabaya with Hong Kong. 'We need to establish a strong network, especially in the Indonesian region, so we can create new markets for our new planes more easily,' the Jakarta Post daily on Saturday quoted Garuda spokesman Pujobroto as saying. Garuda currently operates 54 aircraft, including six new 737-NGs delivered last year. By 2013, Garuda plans to have 128 planes in its fleet.

The govt of Tanzania has fished from the central coffer US$2m to inject into the crisis-ridden national airline. Tanzanian Infrastructure Minister Shukuru Kawambwa on Friday assured the public that the govt would gradually inject more funds into the Air Tanzania Corporation Limited. Mustapha Nyang'anyi, board chairman of the state-run company, has earlier indicated that his company needed $73.6m to revamp its operations.

Few decisions have been more perplexing for airline executives than weighing how many aeroplanes to fly but veteran executives argue the industry has had an unlikely ally: US$147-a-barrel oil. The unprecedented surge in oil prices, which peaked in July, gave carriers little choice but to retire dozens of older, less efficient aircraft. Ed Bastian, president of Delta, predicted recently that 2009 industrywide domestic capacity will be 14% below where it was last year. A stunning reversal in fuel costs, capacity cuts and a spate of new passenger fees are expected to return US airlines to profitability in 2009 even as the industry confronts what may be the steepest downturn in its history. “What’s happened is that this time around the existence of excessive fuel prices probably led airlines to be better prepared than they’ve ever been before,” Herb Kelleher, the co-founder and former CE of Southwest, told the FT last year. The unfolding credit crisis has made financing n ew aeroplane purchases much more expensive for established carriers, and all but impossible for a new wave of start-up airlines to invade less crowded routes.

As Atlantic City struggles with the recession and plunging casino revenue, an effort is underway to lure more airline carriers to start service to and from Atlantic City Airport. The effort has already had one modest success: Spirit Airlines, the only regular carrier operating at the airport, announced it will begin service between Boston and Atlantic City on May 1. A coalition formed to promote the airport is targeting new markets in Boston, Chicago, Atlanta and cities east of the Mississippi. Bart Mueller, executive director of the South Jersey Transportation Authority, which operates the airport, said the effort to lure new business is due in part to the hard times the Atlantic City region is experiencing. 'I've always been a believer that out of catastrophe walks opportunity,' he said. 'Some of the conversations we're having now we would not have been having six months ago, and that's a good thing.'

The first passenger flight from Europe in 18 years has landed at Baghdad airport. The Swedish charter flight resumed air links between Iraq and Europe for the first time since the UN imposed sanctions on Iraq after the 1990 invasion of Kuwait. The Nordic Leisure airliner carried 150 people. More international flights were expected this weekend, including one from Hong Kong, Iraqi Transport Minister Amer Abduljabbar Ismail said. Earlier this week, Air France-KLM and Iraq's transport ministry signed a preliminary accord which will see Iraqi Airways taking off for European destinations and Baghdad airport being renovated. In the aftermath of the 1991 Gulf War, state-owned Iraqi Airways was hit hard by UN sanctions imposed against Iraq and its service declined rapidly. After the US-led invasion in 2003, the airline slowly resumed flights and today the carrier flies to the regional capitals and major cities of Amman, Beirut, Tehran, Cairo, Istanbul, Damascus and Dubai.

Airlines in the region have cut their ticket prices to around 40% to cope with the drop in demand at this time of the year. Wafa Al Zahed, GCC Regional Manager of Egypt Air said, “We are now in the low season and the traffic, particularly, in the Middle East and northern Africa (MENA) is on the decline in recent times. “The prices came down by about 40%depending on the period and special offers,” added Al Zahed. “Normal reduction in prices,” he pointed out, adding that the prices would go up again during the period, January 12-17 as the vacation of the first term of the academic year begins in the UAE. Al Zahed said most of the airlines’ have moved to handle this low-demand period in the year and remove the fuel tax from the passenger. Airlines have reduced the fuel tax from air tickets by up to 20%. Emirates said that the reduction list ranged between 20-35% on tickets for more than 50 destinations in Arab and Asian countries. The Fly Emirates offers reduced 20% on tickets in case a ticket is bought in a month and has a six-month validity.