US airlines are caught between the competing influences of cheaper jet fuel and flagging travel demand, the CE of US Airways said Tuesday. For now, dropping oil prices are winning the tug-of-war, and airlines expect improved fortunes in 2009, CE Doug Parker said. But it is too soon to celebrate, he said, warning that the full impact of economic weakness on travel bookings has yet to be seen. 'Clearly, the economy will have some effect on demand for airline travel. The other economic impact has been the substantial decline in fuel prices,' Parker said. 'In some sense, those two offset each other. It's hard to tell at this point if the drop in fuel is enough to offset what we may see in demand declines.'

ANA, whose fiscal-first-half profit fell 79.1% year-over-year to Y22b (US$227.4m), is taking measures to stabilise itself as Japan officially slides into recession, and is considering launching a low-cost subsidiary. Competing in a country where unit costs are high and a region where LCCs are continuing to assert themselves, ANA now feels it must react. 'We have higher ticket prices but equally higher revenues [compared to LCCs] and are evaluating a new business model to possibly include a low-cost subsidiary based somewhere else in Asia,' VP-network planning Shuichi Fujimura said. He said the new airline should be able to operate with unit costs 50% lower than ANA's. Premium passengers would remain with the mainline.

Air NZ is not ruling out further job losses on top of the 200 redundancies announced Wednesday due to a slump in long haul travel. In a bid to save more than NZ$20m a year the airline is slashing the 200 from its workforce of about 11,000. CE Rob Fyfe said the volatile airline sector made forecasting impossible and more layoffs could not be ruled out. However, if businesses did not adapt or react to customer demand they could make the situation worse for staff further down the track. Fyfe said it cost about $100m a week to run Air NZ and things could go wrong rapidly if costs were not contained. The business had a 5% profit margin. The airline had parked one 747 up and another aircraft would join it by early next year.

The Italian govt has agreed to sell Alitalia's assets to a group of Italian businessmen at an improved price, paving the way for the relaunch of the bankrupt carrier in private hands after a two-year hunt for a buyer. Alitalia's best assets will be sold to the CAI consortium for E1.052b including debt. The near conclusion of the deal after Alitalia's tumultuous search for a buyer that included a failed auction and a failed takeover by Air France-KLM is a feather in the cap for Prime Minister Silvio Berlusconi, who had promised to save Alitalia. With no other bidders in the fray and Alitalia's cash likely to run out this month, CAI's takeover was never in any danger of being rejected, but there was speculation it could be asked to modify its offer, delaying the airline's restructuring.

After a backlash from some of its elite fliers, Delta has halted a program on Delta-operated aircraft that allowed customers to purchase better seat assignments on certain flights. The airline in late October began offering coach customers on certain flights the ability to purchase a better seat assignment in their cabin for US$5 to $25. The so-called 'coach choice seats' represented less than 10% of all seat assignments available on Delta-operated flights. But in an e-mail Monday to elite fliers, a Delta official said that some Medallion members of the carrier's frequent flier program were upset that their access to preferred seats without charge at the time of booking was restricted as a result of the new program. He said Delta would revert back to the original preferred seat program offering Medallion members unrestricted access to preferred seats.

Southwest has agreed to pay US$7.5m for bankrupt ATA Airlines' landing slots at New York LaGuardia, a move that would raise Southwest's profile in the nation's largest air market. Southwest would get 14 slots, enough to operate seven takeoffs and seven landings per day. The deal is dependent on approval by US bankruptcy court, a Southwest spokeswoman said Tuesday. If approved, Southwest expects to begin flying to LaGuardia next year. Southwest serves Islip Airport on Long Island but does not fly into LaGuardia, Kennedy or Newark. The New York airports, however, are notorious for congestion. Southwest for many years has favoured less-crowded secondary airports where it can service planes and get them back in the sky quickly.

Police in Brazil charged 10 people Wednesday, including former govt officials, for contributing to the country's worst airline accident. All 187 people on board and 12 people on the ground died when the TAM Linhas Aereas Airbus A320 overshot a recently repaved runway at Sao Paulo's Congonhas airport in July 2007. Those criminally charged include the former head of the national aviation authority (ANAC), as well as officials at TAM and at the airport authority Infraero. They are all accused of violating national aviation security and could face prison terms of up to 6 years. Official audits said the botched landing was partly due to an incorrect positioning of the plane's thruster controls, which they blamed on pilot error and lack of training by TAM. But the police said Wednesday that govt and airline officials had contributed to the cause of the accident by failing to observe a series of security procedures.

Air travel is one of the sectors that is hardest hit by the global slowdown. But low cost carriers are not complaining, as a growing number of travellers opt for getaways on a shoestring budget. Built to handle only 15m passengers a year, the Low Cost Carriers Terminal in Sepang is now bursting at the seams. More Malaysians, including business travellers, are choosing to downgrade from big name airlines to budget carriers amid a sluggish economy. Travellers are seen to be picking cheaper and nearer destinations to stretch their dollars as well. AirAsia is capitalising on this trend by scrapping the airline's fuel surcharge to boost sales. While leading airlines are cutting capacity, AirAsia is adding 20% more seats by buying another 37 aircraft. The budget airline is targeting 24m passengers across the region next year.

Philippine Airlines said Wednesday an unprecedented surge in fuel prices left it with a loss of US$113.8m during the fiscal first-half. The company's total comprehensive income of $45.8m in April-June was ''more than erased'' by the fuel price-increases in the following quarter. The revenue for April-September -- the first half of the company's fiscal year -- rose by 16.5% to $848.7m as the airline increased its passenger load by 11.2% from a year ago to 4.19m passengers. However, total expenses ballooned 37.3% during the same period to $971.8m, with fuel accounting for $386.8m. Additional income from changes in valuation of outstanding derivative assets amounting to $9.3m reduced losses to $113.8m.

An Argentina congressional committee urged President Cristina Fernandez Tuesday to expropriate the country's top airline as the govt moves to bring the carrier under state control. Argentina is in talks to take over Aerolineas Argentinas, owned by Spanish travel group Marsans. But negotiations have stalled as the two sides have been unable to agree on how much the company is worth. The committee's recommendation opens the way for lawmakers to present legislation calling for the company to be expropriated, said a congressman. Argentine officials have said the govt should not have to pay for the airlines, arguing their debt load of an estimated US$890m exceeds their value -- a charge Marsans denies.

Lufthansa will reduce the workforce, including management, at its CityLine subsidiary by 20% (500 positions) by 2010 and cull 14 CRJ200s from the regional's fleet of 72 aircraft, an LH spokesperson confirmed. The company hopes to make the cuts without layoffs and will try to offer displaced workers positions elsewhere with Lufthansa Group. Last year LH placed an order for 15 CRJ900s for CityLine and took over Swiss International's order for 30 E-190s. LH subsidiary Air Dolomiti will take the first E-190, with the distribution of the remaining aircraft unannounced. CityLine transported 7.3m passengers last year, approximately 10% of LH's total.

Qantas was forced to deal with another drama Wednesday night when about 100 of the airline's passengers were stranded at Launceston and Melbourne airports. Passengers on QantasLink flight QF 2286 were forced to wait for several hours after a damaged door led to the cancellation of the 5pm Melbourne-bound flight. Passengers were told the de Havilland DHC-8 was deemed unfit to fly and alternative flights had to be arranged. One passenger, whose direct flight to Brisbane with Qantas had already been cancelled, said many passengers would miss connecting flights. 'It's just a massive inconvenience and I'm not feeling very happy about it,' she said. She said passengers were given a A$15 meal voucher as they sat around and waited for five or more hours for the rescheduled flights.

Emirates moved lock, stock and barrel to its new home at Emirates Terminal 3 Dubai International last week, thrilling more than a million passengers who have explored and made this ultra-luxurious, colossal facility their own lifestyle destination. By November 18, more than 500,000 passengers had flown from the terminal to Emirates' network and experienced the convenient check-in options, restaurants and cafes, shopping, premium lounges, hotels, spas and entertainment. An equal number of arriving passengers have been awestruck by the massive baggage hall with 18 baggage carousels, including four for outsized luggage, paid concierge and baggage storage services that all combine to provide a quick and easy getaway.

Business and first-class air travel dropped sharply in September due to the global financial crisis, IATA said Wednesday. Premium traffic on cross-border flights fell 8% in September from the same month in 2007, with Asia most affected. Economy air travel also decreased 4% in September, the month in which credit woes triggered severe market losses and raised worries about an economic decline that could hit both business and leisure travel. IATA said the ongoing financial turmoil has likely continued to pinch premium travel. 'Business confidence has fallen sharply in October, and with recession deepening further, significant falls in premium travel should be expected,' it said. IATA expects the airline industry to record losses of some US$5.2b in 2008.

US federal regulators have issued an emergency safety mandate to check fuel pumps on more than 560 Boeing 737 airliners flown by US airlines, the Wall Street Journal reported Wednesday. A representative of the FAA was not immediately available to confirm the Journal story. The inspections are unlikely to ground affected aircraft, according to the paper, which attributed its information to the FAA. The inspections, required for four versions of the 737, are meant to ensure that the fuel pumps turn off correctly. Failure to do that could result in fire or explosions, the paper said.

From booking tickets to catching your plane, flying out of Baghdad is usually a nightmare. But as violence has fallen in Iraq, more airlines are opening routes to the country and more Iraqis are clamouring for trips abroad, travel agents say. 'Last year we weren't even open because the security was bad. Now it's good, and I can employ six people,' said a travel agent, who with other agents estimated ticket sales had risen 15 to 35% in the last six months. Last month Turkish Airlines started direct flights between Baghdad and Istanbul, adding to existing flights from Baghdad to Beirut, Cairo, Damascus, Amman, Tehran and Dubai. Another agent said demand from Iraqis for foreign travel had remained constant, but more airlines were adding flights, boosting sales. 'We're always busy. We've had great demand but there have not been planes.'

Passenger traffic and flight movements through Thailand's six main airports shrank more than 11% in October, reflecting the downturn in the country's travel and tourism industry. Passenger flows through airports operated by Airports of Thailand including Suvarnabhumi last month totalled 4.23m, 11.29% lower than in the same period last year. Flight movements fell 11.57% year-on-year to 29,365. But the rate of contraction in October was less steep than the 20% drop in passenger numbers seen in September, a four-year low, which was partly a response to the prevailing political unrest at the time. The approach of high-season travel and lower ticket costs resulting from the reduction of fuel surcharges seemed to help arrest the contraction rate.

The number of domestic passengers passing through Christchurch Airport rose in October, while the number of international passengers fell. Christchurch International said the number of domestic passengers in October rose 19.4% from October last year. The number of international passengers decreased by 3.4% over the same period. Overall for the month of October, passenger volumes through Christchurch Airport increased by 12.4%. The Tasman route has held steady for the month, with no change in passenger numbers compared with last year. Jetstar's CE said the airline's trans-Tasman service from Christchurch has been one of Jetstar's most successful routes over three years of operation.

Boeing is expecting plane orders to dip this year and next from its industry record in 2007, as volatile oil prices and the softening economy catches up with airlines. 'We have reached the orders peak,' Boeing's commercial plane unit CE Scott Carson said Wednesday, predicting declining orders for his company in 2008 and 2009. The drop-off is not a great surprise, as airlines have recently scaled back growth plans in the face of record oil prices and signs that travel demand is slowing. The US plane maker booked a record 1,413 net firm orders last year, but has only 640 so far in 2008, with only six weeks left in the year. Boeing is still assessing the delays on its new 787 and other planes, after the strike by its assembly workers that stopped production at its Seattle-area plants for 58 days.