Video: Airbus Annual Press Conference 2013 (uncut)

Airbus President and CEO Fabrice Brégier and other top Airbus executives reviewed the company's 2012 highlights and commercial activity, as well as detailed the company's strategies and prospects for 2013, during a traditional year-opening media event held in Toulouse, France today.

Scroll below for the video. It is 1h21m in length.

Synopsis

Airbus delivered a company record of 588 aircraft to 89 customers, 17 new, and exceeded its order target of 650 by winning 914 gross orders. These orders include 305 A320 family CEO (classic engine), 478 NEO (new engine option), 82 A330/A340s, 40 A350XWB and nine A380s. Airbus’ backlog is now at 4,682 aircraft valued at over US$638 billion.

Deliveries were 10 per cent higher than the 2011 record (534) and 2012 was the 11th year in a row of increased production. In single aisles, Airbus made 455 deliveries, up from 421 in 2011. Widebody deliveries reached a record 103 aircraft (87 in 2011), underlining the success of the A330 Family which is being produced at the highest monthly production rates ever, 9.5 in 2012 which will rise to 10 in early 2013. The A380 delivery target of 30 was achieved up from 26 in 2011.

Airbus’ share of total aircraft sales by value (above 100 seats) in 2012, is 41 per cent gross (41.5 per cent net). Net orders reached 833 aircraft worth US$96 billion. These include 739 A320 Family aircraft taking Airbus past the 9,000th single aisle order. Of these, 478 are NEO, confirming its over 62 per cent market dominance since launch. In the widebody market, 58 A330s and 27 A350 XWB were ordered. The A350-1000 won significant upsizing orders. In the very large aircraft segment, Airbus won nine out of 10 orders.

In 2012, the A350 XWB progressed well. The final assembly line became fully operational, the structural assembly of the first A350 XWB that will fly was completed and “electrical power on” of the aircraft was accomplished.

Airbus Military had a successful year delivering 29 aircraft (20 light and medium military transport, four P-3 conversions, and five A330 MRTTs). The order target was exceeded despite difficult global conditions, reaching 32 (28 C295 and four CN235). Additionally, the A330 MRTT was selected as the preferred bidder by the Indian Government.

The A400M progressed well with the completion of 300 hours of Function and Reliability testing leading towards civil and military certification in Q1 2013 and first delivery in Q2 2013, with a total of four deliveries by the end of the year. Currently four A400Ms are in final assembly with a further 13 in production. The military backlog stands at 220 aircraft (174 A400M, 17 MRTT, five CN235, and 20 C295 and four P-3).

Airbus recruited 5,000 employees in 2012 increasing the global employee figure to 59,000 and targets recruiting some 3,000 in 2013 to support all programme developments.

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2011 gives airlines mixed signals. Passenger traffic up 5.9% but freight contracts 0.7%

The International Air Transport Association (IATA) reported that full year 2011 passenger demand rose 5.9% compared to 2010, in line with long-term growth trends. In contrast, cargo markets contracted by 0.7% for the year.

Growth in demand lagged behind capacity increases at 6.3% for passenger and 4.1% for cargo putting downward pressure on load factors and fares. The average passenger load factor for 2011 was 78.1%, down from 78.3% in 2010, while the freight load factor was just 45.9%, down from 48.1% in 2010.

2011 was the year of constrasting signals. Healthy passenger growth, was offset by a declining cargo market. Optimism in China and India contrasted with gloom in Europe. Towards the latter half of the year while the US grew, China and India shrank. Traffic grew but profits shrank.

International Passenger Markets

International air travel rose 6.9% during 2011, bouyed by 6.2% growth from February to July, but dipped to 1.2% from September to December. International capacity climbed 8.2%, pushing the passenger load factor down to 77.4%.

Robust business travel to long-haul markets saw European carriers shrug off the ill effects of the sovereign debt crisis and post the second highest growth rates, behind Latin American carriers. Demand rose 9.5% last year while capacity climbed 10.2%, resulting in a load factor of 78.9%.

North American carriers had the industry’s highest load factors for the year at 80.7% reflecting a tight approach capacity management which grew 6% in the face of a demand increase of just 4% for the year.

Latin American airlines led the industry in traffic growth in 2011 with a 10.2% rise in demand compared to 2010. This also was the only region in which demand growth outstripped capacity growth for the full year, with capacity up 9.2%.

Middle Eastern carriers’ traffic rose 8.9% for the year, against a 9.7% climb in capacity, putting pressure on load factors, which at 75.4%, was the second lowest, behind only Africa. While airlines in the region have slowed their pace of expansion, their price competitive products and well-positioned hubs enable carriers to continue to improve their share of long-haul markets.

Asia-Pacific airlines experienced the widest traffic-capacity gap for the year, with annual traffic up 4.1% versus a 6.4% climb in capacity driving average load factors down to 75.9%. There is no let up in the imbalance and December load factors further slid to 74.7%. A significant part of this slowdown was due to the earthquake and tsunami in Japan, which was coupled by a business slowdown in key Asian economies in the latter half of the year.

African airlines saw passenger demand rise a mere 2.3% for the year, primarily due to civil unrest in North African countries like Egypt and Libya. Capacity climbed a mere 4.4% for the 12 months and load factors were the weakest in the industry at 67.2%.

Domestic Passenger Markets

Domestic RPKs (Revenue Passenger Kilometres -- a measure of actual performance) account for about 37% of the total market. In North America domestic operations constitude about 66.5% of operations. In Latin America, domestic travel accounts for 47.3%. In Asia-Pacific, the large domestic markets in India, China and Japan mean that domestic travel accounts for 42.2% of the region’s operations. It is less important for Europe and most of Africa where domestic travel represents just 11% and 11.6% of operations respectively. And it is negligible for Middle Eastern carriers for whom domestic travel represents just 5.5% of operations.

Passenger demand in domestic markets for the full year rose 4.2% against a 3.1% increase in capacity, leading to load factors of 79.3%. Individual markets varied dramatically in their performance.

US demand rose just 1.3% for the year but capacity growth too was near flat at 0.5%, reflective of the market's maturity and a sluggish US economy. Industry leading load factors of 83%, helped boost airline revenues.

Chinese domestic demand rose a strong 10.9% in 2011 on a 7.8% capacity increase, keeping load factors at a high 82.2%, helping the profitability of the country’s airlines.

India had the strongest annual growth globally, with passenger demand up 16.4% but capacity was increased a dizzying 18.6% driven mostly by IndiGo, SpiceJet and GoAir, and load factors dived to a dismal 74.7%. Indian carriers seemed to show no sense of moderation and the imbalance during December, traditionally the one of the highest months of air travel, worsened with a 15.5% increase in capacity on a passenger traffic increase of only 9.3%. Like 2008, Indian carriers seem to be intent on devouring each other and themselves with blind capacity increases. This imbalance is once again keeping Indian carriers leading the world -- in losses.

Japan's airlines are still feeling the impact of last year’s earthquake and tsunami. Demand is down 15.2% as is capacity by 11.5%. Load factors were the lowest at a mere 58.8%.

Brazilian carriers saw a 13.7% increase in demand and grew capacity 11.2%. Load factors remain low at 69.3%.

Air Freight (Domestic and International)

Air freight markets shrank 0.6% in 2011, but, December performance increased 1.5% over November, reflective of growing business confidence with growth of the largest economy in the world -- the United States. Even though dedicated freighter fleets have been reduced, airlines have added twin-aisle passenger aircraft like the Airbus A330 and the Boeing 777 which provide plenty of cargo space. This capacity expanson, has seen freight load factors decline to 45.9%.

The Bottom Line

2012 is still showing significant contrasts. The US economy is improving, but Europe, China and India are slowing down. Will the Eurozone crisis explode? Or will the political leaders be able to put a rabbit out of the hat? What impact with the new EU-ETS have on global air travel

It is far to early to predict.

What are your thoughts for 2012? Do you see a trend? Spare a moment and share your views via a comment.

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From fear to cautious optimism - Indian aviation review 2010, trends for 2011

Air travel is directly linked to economic activity, and it is globally recognised that the industry grows at roughly twice the GDP growth rate. Conversely, the industry shrinks twice as fast too. Across the world, the harsh economic conditions of the last two years forced the air travel industry to make their organisations leaner and meaner, and find ways to efficiently offer their customers significantly better value along with an improved travel experience. The trends and events that shaped these changes in 2010 were:

The Mega-Terminal Arrives
2010 saw the inauguration of the massive integrated Terminal 3 or T3 at Indira Gandhi International Airport. Integrated terminals are a key part of large hub airports, and by extension drive the fortunes of the world’s leading airlines which are based there. London Heathrow’s T5, Beijing’s T3, Dubai’s T3, Hong Kong International, and Singapore Changi T3 are existing examples of how mega terminals deliver economic benefits and generate employment. In the next few years, Mumbai and possibly Bangalore will get their own large integrated terminals.

New Terminals, Old Policies - Trouble in transit
Integrated terminals raise the issue of modernising archaic government policies and procedures to ensure that they efficiently deliver the benefits of transit hubs. Domestic transfers in North America and Europe reflect the integration of airport security systems across a nation’s airports.

Boarding pass of 8th April wrongly stamped as 18th April.

But in India, airline and airport employees can enter the arrivals concourse without being frisked or having their bags x-rayed, which means that airport security must no longer consider the arrivals area as sterile. Convenience for the employee becomes a nightmare for the passenger. A transit passenger arriving in Delhi has to walk almost a kilometre to the security checkpoint, undergo another security check, and then walk back to the boarding gate of their connecting flight, which could be as far as their original arriving gate. And if the passenger is unlucky enough not to have had their boarding pass or baggage tags properly stamped at security check, they’ll have to go all the way back to security and do it again. One can imagine the impact on flight schedules, let alone the one and half kilometre walk to and fro.

Convenience for the employees at the expense of passengers and the concept of the stamp should be done away with altogether. Sterile arrivals will eliminate the need for a transit security check, and if a departing passenger is properly checked and the system is strong, the departure concourse will be sterile, and the stamp is redundant. If the system isn’t leak-proof, no amount of stamping will ensure security.

Instead of using the CISF as mere guards bunched at the security checkpoint, the Bureau of Civil Aviation Security should drive efficiency through increased use of modern surveillance systems, profiling, and roving CISF personnel within the terminal where malicious or drunk persons are likely to let their guard down.

Air Travel for Leisure
Fragmented families living in distant cities, stressed workers taking frequent but shorter breaks, a globally aware and affluent generation that is expanding its travel in India and abroad, and business executives using their airline miles and hotel points for family vacations will all spur air travel. Coupled with a lack of proportional growth in surface transport capacity, growth is being led by the leisure and VFR (visiting friends and relatives) traveller. The sky-high air fares seen recently testify to the increasing demand.

Value Airlines Dominate
Sasta, sundar, aur tikaoo (cheap, beautiful and durable) is the ethos of a value conscious nation. With different value perceptions and expectations, the Indian market won’t see a traditional low-cost carrier in the RyanAir mould any time soon. Instead, existing value carriers such as GoAir, JetLite, IndiGo and SpiceJet, along with low-fare services Kingfisher Red and Jet Konnect will continue to thrive, and enter the international segment.
These value carriers, which run on the business model of JetBlue, Southwest Airlines, or Virgin America, focus on lean value chains and operational efficiencies to deliver a lower fare with some freebies like a 20kg baggage allowance. However, with the Indian economy resurgent, we’re already seeing a drift back to full service carriers, putting pressure on the value carriers that had gained 55% of the market in 2010. Expect significantly higher fares in 2011 as oil prices and airport charges continue to rise.

Bottlenecks on ground, Planes in the Air

Despite new or upgraded airports across the nation, aircraft continue to hover over metros, especially Mumbai and Delhi, while they wait for a landing slot. Precious aviation fuel is wasted and tons of emissions are needlessly added to Indian skies, not to mention hours of wasted time and productivity.

The problem lies in people and processes, not infrastructure itself. Mumbai is unable to handle 700 flights a day with two crossing runways (effectively 1.5 runways), while London Gatwick is able to operate over 700 flights in just 16 hours with only one runway.

The regulators and operators need to fill the critical vacancies in air traffic control urgently, and implement proposals to reduce flight separation timings from the current two minutes to one. This will optimise the massive investments made so far in airport infrastructure which is causing airport operators to hike fees to recover costs thus depressing air traffic.

Flight Goes Social
The air travel industry embraced social media to increase passenger engagement and build brand awareness and loyalty. SpiceJet, Kingfisher and Jet Airways are actively using Facebook, but are yet to catch up on the preferred social network in the air travel world – Twitter. The micro-blogging site is perfectly suited to the “here and now” world of air travel. Airlines, hotels, car agencies and others use the service to announce last minute deals; and aircraft manufacturers like Airbus, Boeing, and Bombardier use it to announce new developments and toot their horn whenever the media writes about them.

The new trend in 2010 was the increasing use of Twitter by service providers not directly connected to the passengers.

Airports like London Heathrow, Dallas-Fort Worth, and Detroit, and even air traffic control agencies like Eurocontrol use Twitter to inform passengers not only about flight delays because of congestion, weather, or a volcano, but also about possible delays on highways or subways to the airport. Heathrow airport even tweets links to articles about single malt Scotch whisky to drive revenues for their retailers. Hopefully the advent of 3G in India will start seeing business travellers use their smart phones for more than just email or instant messaging. Readers can follow me @BLRAviation

The Robin Hood Act

More passengers in India travel by rail in day than by all airlines in a year, which helps maintain the wrong image of air travel as a luxury and air travellers as rich people with bottomless wallets. The government, government controlled companies like oil marketers, and both private and public sector airports impose punitive taxes and levies in the belief that air travellers will pay whatever they’re charged.

During the economic crisis, governments and airports across Asia-Pacific cut fees and taxes to keep air travel stimulated. India was the only country to increase them.

As a result, while industry body IATA says that Asian airlines will lead the world in 2010, with five of the world’s top six airlines in m-cap from Singapore, Japan and China, Indian carriers, though, have losses of $1.75 billion, and are barely able keep their heads above water.

To liberate the industry and realise the massive potential of the Indian market, government and airports will have to abandon their myopic policy of fleecing the “rich” to ostensibly subsidise the aam aadmi (common person), which in reality leaks away to other non-intended beneficiaries.

New Aircraft, New Interiors
The next few years will see a wave of new aircraft which dramatically improve the flight experience. In 2010 Boeing started delivering 737s fitted with new sky interiors, and finally conducted the first flight of the much delayed 787 Dreamliner. Hopefully the dream will become reality in 2011. Airbus announced the A320NEO (new engine option), and its gargantuan A380 became mainstream. SpiceJet is expected to introduce sky interior fitted 737s in the next three years, and IndiGo is rumoured to be an early customer for the A320NEO.

Globally, in-flight internet connectivity has taken off in the US, and internationally with Emirates and Lufthansa. How long before Indian carriers jump on this money earning service? Don’t hold your breath.

The Industry Consolidates
Cost pressures created a wave of consolidation. Delta and Northwest merged, as did United and Continental. This year, British Airways will complete its merger with Iberia. Even the conservative Lufthansa acquired Swiss and Austrian airlines.

In India, GVK acquired Bangalore airport, effectively creating a triopoly along with GMR and AAI.

2010 also saw airlines signing alliance membership deals which should fructify in 2011.

Kingfisher is due to join the oneworld alliance and hopefully Air India will finally complete its merger with Indian Airlines and join the Star Alliance. Can we look forward to Jet Airways announcing their joining SkyTeam in 2011? I think it’s a perfect fit.

The Fall and Fall of Air India

Enough has already been said about the decline of Air India, along with reasons and remedies, so I’ll just provide a simple comparison. The accumulated losses of Air India will feed every hungry citizen of India for a year through the Akshaya Patra program.

It’s time to ask whether we need a national carrier on tax-payer life support. Across the world, national carriers that could not hack it – Alitalia, JAL, and others - have gone in to bankruptcy away. European governments have long exited their national carriers. The US, thankfully, never had one.

However, the Indian political, bureaucratic, and labour aristocracy sees Air India as a Kamadhenu. But the milk has been long exhausted, and they are now sucking out its lifeblood.

Independence in 2011
Something I'd like to see change in 2011 is the role of the Civil Aviation Ministry.
This leviathan is a regulator, inspector, accident investigator, airport operator, ATC operator, airline operator, and policy framer. Anybody who’s in the aviation industry has to approach it for the smallest of requests. Wasteful cross-subsidisation and conflicts are bound to occur, and perceptions of cover-up, sloth, and corruption, will arise.

It is time to remove non-core activities from the ministry and the Government can start by making the DGCA, Air India, AAI ATC operations, and AAI airport operations completely autonomous.

It must also set up a totally independent accidents investigation board, which had been called for after the Mangalore accident but has now been conveniently forgotten. A board under the ministry cannot be considered truly independent.

Note: This article was published in an abridged form in The Mint newspaper (a joint venture of The Hindustan Times and The Wall Street Journal) on January 1, 2011

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