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Saturday, October 04, 2008

Fewer fly on US airlines, more flights on time

Flight and route cuts by major U.S. airlines during summer fuel price spikes helped carriers save money and improve on-time performance, the U.S. Transportation Department said on Thursday.

The 19 biggest commercial airlines flew 60 million passengers in August, three million fewer than the same period a year ago.

On-time performance for the industry was 78.4 percent, up about 7 percent from last year and the best on-time performance for August since 2003.

Cancellations were also down.

Better weather helped to improve airline performance in August as did more efficient operations of connecting service.

August is the last peak air travel month of the summer season, so industry usually improves its on-time record in the fall.



Sunday, September 28, 2008

US bans all Croatian airlines

The US aviation authority has put Croatia on a black list of countries whose airlines do not meet its safety standards.

The decision was made by the US Department of Transportation's Federal Aviation Administration (FAA) following its first assessment of Croatia.

The country was given a Category 2 rating - meaning a Croatian airline would not be permitted to operate to the US.

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Tuesday, June 24, 2008

Fuel costs could 'devastate' airlines

The skyrocketing price of fuel could "devastate" the airline industry and hurt the economy, according to a report from the Business Travel Coalition released Monday.

Pressured by rising fuel costs, major airlines could collapse as early as this year, the coalition said. The failure of just one airline could disrupt travel for 200,000 to 300,000 daily passengers and cause between 30,000 and 75,000 immediate job losses, said the coalition.

The failure of more than one airline could result in 100,000 job losses, said the report, particularly in such hubs as Atlanta for Delta Air Lines, Chicago for UAL Corp.'s (UAL) United Airlines and Continental Airlines' Houston.

"Already depleted cash reserves are dwindling fast, and unless the fuel crisis lessens, airlines face not the now familiar protracted restructuring in bankruptcy, but outright and immediate extinction," said the report.

Business travel would be disrupted, as would the airborne supply chain for goods like pharmaceuticals, electronics and auto parts.

Rising fuel costs hit airlines hard. Fuel expenses are expected to total $61.2 billion this year, compared to $41.2 billion in 2007, according to the Air Transport Association.

Some major airlines, such as Northwest Airlines, United Airlines, Delta and U.S. Airways, continue to operate despite filing for bankruptcy in the last several years. But the credit crisis would make it harder for a bankrupt airline to keep operating while trying to restructure its business, according to the coalition.

The lack of bankruptcy financing is part of the reason why smaller airlines like Aloha, ATA, Champion, Eos and Skybus recently stopped operating, said the report.

Analysts who cover the industry disagreed that a major carrier would crumble this year, because the airlines still have enough cash to survive into 2009.

"I think it's more likely that any large airline bankruptcies would occur next year," said Philip Baggaley of Standard & Poor's, who has assigned his lowest ratings to U.S. Airways, AirTran Airways and JetBlue Airways. "At least at current fuel prices, most of them have enough liquidity to get through several more quarters. But it could get rather more uncomfortable by 2009. Oil prices are the largest variable."

Robert Mann Jr., an industry consultant, said the airlines have enough cash to ward off collapse for this year, and that capacity cuts should help them survive.

"The cuts in flying are designed to cut cash loss and that's what I hope happens," said Mann.

Raymond Neidl of Calyon Securities agreed that the airlines have enough cash to avoid disaster in the near future, though he expects that the number of carriers will shrink through consolidation.

"Nobody's going into bankruptcy this year," said Neidl. "Airlines die slow, and they always seem to come up with the cash to keep going."

Delta plans to acquire Northwest Airlines, though the merger is yet to be finalized.


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Thursday, June 19, 2008

Airlines face billions in losses, Senate panel told

U.S. airlines may lose as much as $13 billion in 2008 as surging fuel prices outpace fare increases, the chief of the Air Transport Assn. told a Senate committee Tuesday.

This year's financial results will be "on par" with the industry's worst ever as carriers' combined fuel costs reach $61 billion, the association's chief executive, James May, said. The record loss is $11 billion in 2002, the group said.

"I don't think anybody predicted this extraordinary jump in prices," said May, whose group represents the biggest U.S. carriers.

The updated forecast came as airlines announced more cuts Tuesday. Northwest Airlines said it would cut its capacity later this year by 3% to 4% and trim its workforce because of high fuel prices. Northwest says it has not yet finalized the number of positions it wants to eliminate.

"In response to these extraordinary fuel costs, we are taking prudent actions to reduce our capacity and right-size," CEO Doug Steenland said. "This will allow us to better match our capacity to customer demand as airfares, by necessity, must increase."

Air Canada said separately it would cut up to 2,000 jobs and reduce capacity 7%.

United Airlines earlier projected its 2008 fuel bill would hit $9.5 billion, more than $3.5 billion higher than 2007.


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Wednesday, June 11, 2008

Major airlines roll back weekend fare increase

NEW YORK (AP) - A number of major airlines rolled back a weekend fare increase Monday, the first time in more than half a dozen attempts that a widespread price hike failed to take hold across the struggling industry.

Carriers declined to say whether the shift signaled concerns about falling customer demand. Still, the decision served as a reminder that passengers - many reeling from financial worries of their own - may be nearing a tipping point in terms of how much they will pay to fly.

"This could be the first sign that demand is softening," said Graeme Wallace, chief technology officer of airfare research site "Up until now, the (airlines') statements have been that they expect demand to stay high."

AMR Corp.'s American Airlines launched the $20 roundtrip increases across much of its domestic network Saturday. That move was quickly matched by many of its closest competitors, including UAL Corp.'s United Airlines and Delta Air Lines Inc.

Continental Airlines Inc. was among the carriers that matched the increase over the weekend, but it rolled back the higher prices Monday morning, putting pressure on other carriers to do the same.

Spokeswoman Julie King said the Houston carrier rescinded the increase "for competitive reasons."

Carriers are prohibited from collectively agreeing to raise or lower fares, but nothing stops them from following a rival's lead. As a result, most major airlines tend to jockey for position when filing fares to a central booking system, which is updated three times daily.

Airlines have been scrambling to cut costs and increase revenue as jet fuel prices have soared by about 77 percent more than it did a year ago.

A number of airlines recently laid out sweeping plans to cut jobs, slash flights and ground dozens of less efficient planes. Carriers hope they can push fares even higher by reducing the number of available seats in the air.

The industry has been generally successful in raising prices and fuel surcharges in recent months.

Twelve out of 17 increases have taken hold since the start of the year, with six of the successful increases coming in just the last two months, according to a FareCompare tally.

Because the airline industry is so price-sensitive, carriers typically keep airfare increases in place only if competitors match the prices on the same routes. That has prompted airlines to look for other ways to boost revenue.

American, the biggest U.S. carrier, last month raised the stakes when it became the first major carrier to say it would start charging some fliers $15 to check the first bag. The Fort Worth, Texas-based airline also raised a number of other charges.

"Even when we raised fees a couple of weeks ago, we said that wasn't the only thing we were doing, that we would still be trying to recoup fuel costs through fare increases," spokesman Tim Wagner said. "The (fuel cost) increase is so incredible, we have to find a way to pass it on."

American's new baggage charge is scheduled to take effect on tickets bought on or after June 15. The carrier last week said the $15 fee would affect fewer than one in four customers this summer and won't lengthen lines at boarding gates.

Other major carriers, many of which already charge to check a second bag, have not said they will begin charging passengers to stow a first bag in the cargo hold, although they are not ruling it out either.

"We are still studying that very carefully," said Robin Urbanski, spokeswoman for Chicago-based United, the No. 2 U.S. carrier.


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Monday, June 09, 2008

Thai Airways cuts back on U.S. flights

Thai Airways International will halt its direct flights between Bangkok and New York starting next month because of rising fuel prices, the company said Saturday.

Thailand's national carrier said its board agreed Friday to end the direct flights July 1 and to reduce flights to Los Angeles from seven to five a week as part of an energy saving plan. It also plans to end direct flights to Los Angeles later this year, the company said.

"The change of the flight plan is to lessen the impact of the rising energy price which has affected the entire industry," the company said in a statement. "If the fuel prices goes down, we will consider resuming the direct flights."

Airlines have been struggling to contain costs this year as oil prices have skyrocketed.

Scores of start-up airlines have gone out of business because of rising fuel prices. Several major carriers have also announced they are increasing fuel surcharges or adding a baggage surcharge, reducing capacity, deferring plane orders or shedding jobs to deal with rising costs.


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Thursday, June 05, 2008

Fliers in for pain as airlines pack it in

The USA's air-travel map is shrinking fast, dropping scores of routes and flights that airlines simply can't afford anymore in a world of $130-a-barrel oil.

A USA TODAY analysis of fall airline schedules shows the nation's most popular vacation destinations will be among the biggest air-service losers. Many flights to Honolulu, Orlando, Las Vegas and other favorite vacation venues have vanished or will soon because cheap tickets bought by tourists don't cover the cost of getting there.

Travelers who fly among the USA's biggest business airports - such as New York LaGuardia, Chicago O'Hare and Dallas/Fort Worth - will probably see the fewest changes, because there's ample demand and fares are high.

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Sunday, June 01, 2008

Return flight to bankruptcy possible for U.S. airlines

ATLANTA - Airlines are cutting U.S. flights, shedding employees, putting off plane orders and even talking about combinations.

But with cash bleeding fast, fuel prices high and credit tight, nothing they do may be able to stop several major airlines' return flight toward bankruptcy, and possibly liquidation.

Unlike when four of the six legacy carriers filed for bankruptcy protection between 2002 and 2005, airlines facing bankruptcy in this climate may find it tougher to reorganize because of tight credit markets and they have fewer unencumbered assets to use as collateral for loans.

"It may be Darwin's law of the fittest. If one of the carriers goes into bankruptcy and liquidated, it would take a lot of seats out of the market and other carriers would benefit," Calyon Securities airline analyst Ray Neidl said.

A handful of small carriers in recent months have filed for bankruptcy protection or gone out of business altogether.

With losses piling up for most of the major airlines, maintaining a strong cash position is important to avoid the same fate.

Spiralling fuel costs and limited means to trim other costs quickly makes that a tricky proposition.

"Unlike 2002, 2003, 2004, when it was largely a revenue problem that drove them into distress, this is largely a fuel price problem," said Fitch Ratings analyst Bill Warlick. "You could argue that the risk associated with fuel price spikes is largely uncontrollable in contrast to the revenue problem post 9/11, which was addressed through a variety of measures such as cutting costs."

Several of the carriers used their first trip through bankruptcy protection to wipe away debt, resize their fleets and terminate employee pensions.

"There are fewer opportunities to restructure now that the initial work is done," Warlick said.

American Airlines, the largest U.S. carrier, teetered on the verge of bankruptcy before winning employee concessions in 2003. Because of high pension and debt obligations, as well as the hefty price of fuel, the unit of Fort Worth, Texas-based AMR Corp. is again facing the possibility of a future cash crunch.

It had US$4.5 billion in unrestricted cash at the end of March, but Neidl projects that AMR could have a negative cash balance by the end of 2009 if oil prices remain at the current level of roughly $130 a barrel. Covenants on some of American's debt require the airline to maintain at least $1.25 billion in unrestricted cash at the end of each quarter through at least the middle of next year.

At the current fuel price level, Chicago-based UAL Corp., parent of United Airlines, and Tempe, Ariz.-based US Airways Group Inc., both of which have had trips through Chapter 11, also face the potential for precarious cash positions by the end of next year, according to Neidl's projections. Fitch Ratings said Thursday that US Airways would face a growing risk of violating one of its debt covenants if adverse fuel trends persist through the remainder of this year.

The debt covenant issue wouldn't necessarily force a bankruptcy filing, as airlines could re-negotiate debt agreements with lenders or sell assets to pay off debt. Neidl believes airlines would take drastic actions before the end of 2009 if current fuel trends continue.

Having few assets that aren't already being used as collateral on existing loans and the tight credit markets could make it difficult for US Airways, for instance, to raise financing to allow it to reorganize in bankruptcy if it had to file for the third time since 2002, Warlick said, adding that under those circumstances liquidation could result.

US Airways declined to make an executive available to discuss the airline's financial situation.

Atlanta based Delta Air Lines Inc. and Eagan, Minn. based Northwest Airlines Corp., which are seeking to combine, had a combined total of $5.8 billion in unrestricted cash at the end of March, but at current fuel prices Neidl projects that could dwindle significantly by the end of next year. Delta also has said it expects to incur $1 billion in one-time integration costs from its acquisition of Northwest. Both Delta and Northwest exited Chapter 11 bankruptcy protection just last year.

Neidl's cash projections include unrestricted cash and short term investments, but exclude auction-rate securities.

The airlines are furiously trying to remove domestic flights from the air to reduce costs. At least two have announced plans to cut U.S. capacity by double digit percentages and trim thousands of jobs. Others are putting off buying certain new planes.

The price of oil has doubled in the last year. But fare increases have fallen well short of keeping pace with the price of fuel. As their finances have been buffeted, stocks of most major airlines have plummeted by double digit percentages over the last year.

"Obviously, there are things that are outside of our control," said Beverly Goulet, American's vice-president of corporate development and treasurer. "The first thing that comes to mind is the price of jet fuel."

But Goulet said American, by cutting U.S. capacity, imposing new fees on travellers and taking other measures, has been working hard to position itself to remain viable in the current economic and fuel environment. The airline currently isn't considering bankruptcy.

"It's an interesting reflection on perceptions out there to hear people talk about the benefit of walking away from obligations," Goulet said. "Would it be easy to walk away from debt? Yes. But as a manager of this business, as people who take on obligations to those stakeholders, we don't think that's the appropriate way to think about those kinds of tactics."

Goulet said the airline industry will have to change in the face of persistently high fuel prices, and she insisted American doesn't plan to give up.

Neidl said in a recent research note that mergers, which are supposed to make the industry more efficient, may not work in the current environment because there is a large cash outlay up front and high execution risk. He believes the current crisis, which he described as the biggest challenge the industry has ever faced, may serve to cool the merger frenzy.

For their part, Delta and Northwest insist they are pushing ahead with their plans to combine in a stock swap deal that would create the world's largest carrier, and officials dismissed speculation by some analysts that Delta could possibly walk away from the deal. United and US Airways had been discussing a possible combination of their own, but on Friday the companies said there won't be an agreement "at this time."


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Friday, May 23, 2008

Flight delays cost $41B in 2007 - study

Domestic flight delays cost the industry and passengers $40.7 billion in 2007, according to the Joint Economic Committee from the House and Senate, which released a report Thursday.

As part of this overall cost from the delays, passengers lost an estimated $12 billion worth of time that would otherwise have been spent on business and play, said the committee report.

These late flights cost airlines $19.1 billion in extra staffing, fuel and maintenance costs - mainly from planes idling at the gate but also from taxiing delays and from circling airports in holding patterns, according to the report.

The cost to airlines includes $1.6 billion in fuel costs, as idling planes wasted 740 million gallons of jet fuel, the report said, releasing more than seven million metric tons of carbon dioxide into the air. This was based on the 2007 average wholesale fuel cost of $2.15 per gallon.

The committee also said that delays caused $9.6 billion in "spillover costs" to other industries that rely on air traffic, like restaurants, hotels, retailers and public transportation.

The calculations from the Air Transport Association, a trade group that represents the airline industry, are significantly different. ATA spokesman David Castelveter said that delays cost the industry $8.1 billion last year, which is less than half of the $19 billion estimate from the Joint Economic Committee. Castelveter said the industry cost is expected to rise to $10 billion this year. He said that he doesn't exactly know how the committee arrived at its calculation, so he doesn't know why the number is different.

The committee study, based on an analysis of 10 million domestic flights, said more than 20% of all flight time last year was wasted on delays. It said most delays were caused by other flights arriving late.

While some delays are "unavoidable" because of weather and mechanical problems, "the staggering levels of delays experienced in 2007 and the significant costs these delays had on the U.S. economy are troublesome," read a statement from the bipartisan committee, chaired by Sen. Charles Schumer, D-NY.

The report is the latest bit of bad news for a battered industry, whose top players include Delta Air Lines (DAL, Fortune 500), United Airlines (UAL) and American Airlines (AMR, Fortune 500). Carriers have have been raising ticket prices and attaching fees to basic services to try and minimize losses, and Delta and Northwest Airlines (NWA, Fortune 500) are working on a potential $3.1 billion merger.

Some of the nation's busiest airports caused the biggest drag on air travel, said the committee, with Atlanta Hartsfield-Jackson International accounting for nearly 19 million delayed passenger hours, with nearly 18 million hours for Chicago O'Hare International and more than 12 million hours for Dallas-Fort Worth International.

From a passenger perspective, the worst offender was the comparatively tiny New Castle County Airport in Delaware, which averaged 55 minutes of delay per passenger in 2007, compared to 16 minutes per passenger at the Atlanta airport. By this measure, the best airport was Honolulu International, with an average of five minutes delay for passenger.

The committee said traffic will only get more crowded, putting further strains on the industry. The report said that flight volume is up 43% since 1998, and is projected to keep increasing 2.7% annually, from 689 million passengers currently, to more than 1.1 billion in 2025.

The report blamed "seven long years of laissez-faire government policies," including a failure to convert the nationwide radar system for aviation tracking to a system based on satellites. The committee said that congestion could be alleviated by opening military air space off the eastern seaboard for commercial traffic.

"Opening up a portion of this underutilized space would allow commercial airlines to avoid congested areas over New York City, Washington, Atlanta and Florida or bypass bad weather when it arises on the east coast, thus significantly reducing delays," said the report.

But if anyone's to blame for delays, it's Congress, according to Michael Derchin, an airline industry analyst for FTN Midwest Securities Corp.

"They've not funded the [Federal Aviation Administration] and the air traffic control system, which is using 1960s technology," he said. "The fix is to get the air traffic control system fixed. It's now at a point where it's a crisis, and now Congress is blaming everyone else, and they're the ones who started it to begin with."

Castelveter, the ATA spokesman, said the Department of Defense agreed to open some military airspace to relieve congestion in the New York and New Jersey region for the Memorial Day weekend. But for the long term, he said the government must update the air traffic control system from radar to satellite to cut down on delays.

"It's the equivalent of using an electric typewriter, when others are using computers, Treos and Blackberries," he said.


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Saturday, March 15, 2008

Europe gives US airlines 'go green' ultimatum

US airlines must pay for their carbon dioxide emissions or face a curb on flights to the European Union, the EU transport commissioner has warned.

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Friday, February 15, 2008

Blue skies for airlines after US-Aussie deal

Australia and the United States have finalised the long-awaited Open Skies Agreement which will allow vast expansion of air travel and competition on the busy trans-Pacific route.

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Monday, February 11, 2008

Talks spell 'V' for victory for Virgin Blue

Australia and the US could sign an "open skies" agreement this week that will give Virgin Blue clearance to launch 10 weekly services to the US by the end of this year.

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Monday, December 03, 2007

Trouble on the horizon for U.S. airlines

A slowing U.S. economy and soaring oil prices could cripple the U.S. airline industry's fledgling recovery and push carriers into seeking merger partners.


Saturday, October 27, 2007

U.S. airlines watch fleets age as they wait for new planes

It is not just flights that are getting delayed. U.S. airlines are also putting off purchases of new planes, meaning their fleet of aircraft, on average, is aging right along with passengers.

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Sunday, October 21, 2007

Open skies ends a closed shop

Passengers will soon have more choice over which airline to fly with from Heathrow to the US.

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Wednesday, October 17, 2007

Finnair plans fastest air link between India-US

Finnish carrier Finnair, which operates services to Helsinki from here and Mumbai, plans to offer the fastest link from India to the US - a route where it sees demand growing.

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Air France, Delta to target Heathrow-U.S. routes

Air France-KLM and Delta Air Lines will team up on routes linking major U.S. cities and London's Heathrow airport in a direct challenge to rival British Airways.

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Monday, October 15, 2007

U.S. Plan for Airline Security Meets Resistance in Canada

Canadian airlines are balking at a Department of Homeland Security plan that would require them to turn over information about passengers flying over the United States to reach another country.

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Saturday, October 13, 2007

US will discuss JFK schedules with foreign airlines

Overseas airlines will join domestic carriers at an unusual meeting next month with U.S. authorities about flight scheduling practices at delay plagued New York's John F. Kennedy airport, officials said on Friday. (page not found)

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Tuesday, October 09, 2007

Australia to US flights could quadruple

THE aircraft manufacturer Boeing has predicted air traffic on the Qantas dominated Australia-North America route could nearly quadruple over the next two decades if the route were opened to more competition.

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Sunday, October 07, 2007

Airlines could see more green by abandoning cash

Major U.S. airlines, struggling to keep pace with their younger low-cost rivals, are rushing to enable wider use of credit and debit cards for in-flight purchases, a step that could spur both revenue and cost savings for the recovering industry.

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Thursday, October 04, 2007

Airline delays worsen in August

Washington: The airline industry's dismal on-time performance in 2007 continued in August with nearly 30 percent of flights delayed. (page not found)

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Wednesday, October 03, 2007

Virgin Blue set to grab a slice of US pie

Virgin Blue's plans to fly to North America have been given a boost after the Australian and US governments announced their intention to "conclude a comprehensive open-skies aviation agreement" early next year.

Footloose Adventure Travel

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Saturday, September 29, 2007

America's Worst Airlines

As air travelers' summer of hell draws to a close, stories of canceled flights, lost luggage and late arrivals abound. But while it might seem that the whole system is a mess, which carriers are actually the biggest culprits?

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Thursday, September 27, 2007

US airlines fall short on service

US airlines have not lived up to their commitment in 2000 to develop plans for ensuring passenger comfort and convenience during long ground delays, a government watchdog said late on Tuesday.

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Wednesday, September 26, 2007

Travelers' Rights: New Guidelines for Airlines

Those long lines of frustrated passengers stuck in airports or sitting on delayed flights may soon get some relief, according to a government report that will recommend that airlines must define what constitutes a long onboard delay, and then set a time limit on just how long passengers can be stuck on planes...

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Wednesday, September 05, 2007

U.S. airline delays top 1 million so far in 2007

U.S. airline delays for 2007 surpassed the 1 million mark in July, the same month major carriers scheduled a record number of flights - 647,600, the government reported on Tuesday. (page not found)

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Saturday, August 11, 2007

Singapore maintains fight for Pacific route

Singapore Airlines yesterday vowed to resume its campaign to fly the lucrative Pacific Route to the US after the Australian election campaign.

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Thursday, August 09, 2007

Airlines scramble for a piece of the Indo-US air space

With both state-run Air India and private carrier Jet Airways starting their operations to US and many more flights in the offing, the Indo-US air space is all set for a battle royale between the Indian, American and European carriers.

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Wednesday, August 08, 2007

Virgin hopes V for victory on LA run

Virgin Blue last week unveiled the branding of its new trans-Pacific carrier, which will link Australia and the US from late next year. It's to be called V Australia (it can't use the name Virgin because of complicated international ownership arrangements), the name chosen by the winning entrant in a competition run by Virgin Blue.

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Wednesday, July 25, 2007

Virgin Blue launches US flights

Virgin Blue today launched the name of its new long haul international airline, V Australia, which it plans will take to the skies by the end of next year.

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Wednesday, July 18, 2007

US airlines apply for new China nonstop service

Several U.S. airlines said Monday they will compete to fly new direct routes between the U.S. and China, eager to get a foothold in the fast-growing Chinese market.

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Wednesday, July 04, 2007

Virgin seeks clearance on Australia-US flights

Virgin Blue has stepped up plans to launch flights to the US by November next year by formally asking the Australian Government to renegotiate its US air transport treaty.

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