The US and Australia have concluded a landmark Open Skies aviation agreement that will eliminate restrictions on US-Australia air services for the carriers of both countries and clear the way for increased competition on one of the world's mostlucrative and protected long-haul routes.

"Today's agreement begins a new era where American and Australian consumers, airlines and economies can enjoy the benefits of lower fares and more convenient service," said US secretary of Transportation Mary E. Peters.

Under the new agreement, airlines from both countries will be allowed to select routes and destinations based on consumer demand, without limitations on the number of US or Australian carriers that can fly between the two countries orthe number of flights they can operate.

The agreement also removes restrictions on capacity and pricing, and provides opportunities for co-operative marketing arrangements, including code-sharing,between US and Australian carriers.

Importantly the deal ends a virtual duopoly on the route held by Qantas and UAL Corp.'s United Airlines. Qantas controls 75 per cent of the market share on the Australia-U.S. route, from which it derivesaround 15 per cent of its net profit.

The deal will allow Australian carrier Virgin Blue Holdings Ltd. to begin flights to the US by the end of the year - but leaves Singapore Airlines, which has long covetedthe route, still without access.

Last year the Australian government denied Singapore Airlines' request to start services in the corridor on the grounds that opening up the route to the Asian carrier would bring only minor tourismbenefits and could hurt the economy.

''The agreement to liberalise for Australian and American carriers on the US route is long overdue,'' Singapore Airlines' vice president for public affairs, Stephen Forshaw said in a statement. ''But it is only half a step.''

The company repeated its accusation that the Australian government was unfairly protecting Qantas from competition by denying Singapore Airlines access to the lucrative transpacific route.

Although the 1946 US-Australia aviation agreement was significantly amended in the 1980s, it still contained restrictions on capacity, routing, pricing and codesharing, and there was no provision for charter flights. In 1999, the two countries took a major step toward liberalising air services when they agreed to remove restrictions on US-Australia air cargo services.

Qantas Freight Enterprises today announced that it had agreed to a six-year wet lease extension on three Boeing 747-400 Freighter aircraft leased from Atlas Air Worldwide Holdings Inc. Executive General Manager Qantas Freight Enterprises, Grant Fenn, said the agreement confirmed Qantas' long term commitment to growing its internationalair cargo business.

"The operation of our dedicated freighter fleet since 2003 has been a great success. They are used to operate a mix of scheduled and charter services and support Qantas passenger aircraft belly hold capacity to key cargo destinations around the globe.

"We currently operate seven scheduled weekly B747F freighter services from Australia into China, five weekly services from China to the United States, four weekly services from the US into Australia and one weekly service from Hong Kong, Europe and Shanghai into Australia."

Fenn said in 2006/07 Qantas carried nearly 340,000 tonnes of air freight, an increase of more than 100,000 tonnes since dedicated freighters were introduced in 2003.

Bank of China-owned, Singaporebased lessor BOC Aviation has signed agreements with Qantas Airways of Australia for the lease of eight new Airbus A320 aircraft.

Th e aircraft will be delivered new from Airbus between the third quarter of 2010 and fi rst quarter of 2011 and will be operated by the carrier’s fastgrowing low fare subsidiary Jetstar.

Th e deal announced today marks the second time BOC Aviation has worked with Qantas - BOC supplied the fi rst three A320s to be operated by Jetstar in 2004. As with the existing Jetstar fl eet, the new aircraft will be powered by V2500 engines from IAE International.

BOC Aviation is a leading Asiabased aircraft leasing company with a portfolio of over 70 modern aircraft fl ying with airlines worldwide. In addition, the company has 64 aircraft on fi rm order for delivery through to 2013.

Indian media is reporting that MAS plans to start a dedicated freighter service between Kuala Lumpur and Delhi this year and is also considering using Delhi as its cargo transit point from Amsterdam and Frankfurt. At present, MAS has no dedicated freighter services to India.

“Th ere is a burgeoning demand for air cargo and we’ll issue licences forcargo operations once the metro and 35non-metro airports across the countryare upgraded and developed,” mediareports quote an unnamed ministry official as saying.

Airlines should brace for turbulence in 2008 as the US slowdown will hit profits, despite robust cargo demand in emerging markets, the head of industry body IATAwarned.

“Fasten your seatbelts. There is likely to be turbulence ahead,” said International Air Transport Association director general and CEOs, Giovanni Bisignani.

IATA had earlier this month warned of a slowing in growth in international air traffic to 5 per cent in 2008, down from 7.4per cent last year.

For the month of January IATA said global air passenger traffic growth slowed to 4.3 per cent from 6.7 per cent the previous month, while air freight grew 4.5 per cent,easing slightly from 4.7 per cent.

“January traffic results show that we could be at a turning point. A month’s data is not enough to define a trend. However, the sharp shift in demand growth patterns makes it clear that the US credit crunch is negatively impacting air travel,” Bisignani said in a statement.

Bisignani also warned industry profits would slide in 2008. “We are an industry out of intensive care but we are still sick,” Bisignani said of the air industry which continues to struggle with soaring fuelprices and over capacity.

The strong euro had also had a negative impact on European airlines, which saw only 0.3 per cent growth in January, down from 5.5 per cent in December inpassenger traffic, IATA said.

“While intra-Europe traffic remained relatively strong, the largest drop came in long-haul markets. This is largely due to the strong euro weakening the competitiveness of Europe’s airlines,” IATA said.

But global air freight growth rates held up in January as the booming economies of China and India helped the world economy to weather a slowdown in theUnited States.

“In contrast, exports to Asian regions and commodity exporting countries have shown very strong growth rates and this is helping to maintain trade activity.” IATA’s data mirrors recent trends in trade, with strong growth from emerging countries helping to cushion a slowdown in the United States.

China Eastern Airlines took delivery of the third of three Airbus A300-600Fs at EADS EFW’s facility in Dresden, Germany which it formerly operated in itspassenger fleet.

“With three converted A300-600 freighter aircraft implemented to its fleet, China Eastern will perfectly meet the increasing needs of the prospering Chinese airfreight market, one of the fastest growing markets worldwide”, said EADS EFW president and CEOs, Dr Andreas Sperl.

EADS has delivered a total of 155 converted freighters to almost 30 customers worldwide.

Air China continues to negotiate with Beijing Capital Airport to purchase the latter’s 24 per cent stake in Air China Cargo, the country’s largest cargo carrier.

In December, Air China announced plans to raise its stake in Air China Cargo to 76 per cent from 51 per cent through the purchase of Gold Leaf Enterprise Holdings’ stake in Air China Cargo shareholder Langxing Co.

Beijing-based Air China Cargo has suffered operating losses in recent years and reported a net loss of RMB382 million (US$55.4 million) in the first nine months of 2007. Subsequently the carrier has increased its capacity in the booming Shanghai market and floated the possibility of a cargo joint venture with China Eastern Airlines.

Meanwhile, Cathay Pacific chief executive Tony Tyler has expressed the carrier’s commitment to help fund any bid by Air China for China Eastern Airlines. The move is widely seen as an attempt to ensure its 17.5 per cent stake in Air China remains viable, as well as strengthen Cathay’s presence in Shanghai where China Eastern is based.

Shanghai Airlines has announced plans to increase its flights between China and Thailand to tap growing passenger and cargo traffic.

The carrier has started a new route, from China’s newly emerging economic province of Chongqing to Bangkok, and is aiming to have a direct service between Shanghai and Bangkok by the end of the year.

The carrier has offered all-freighter services between Bangkok and Shanghai with three flights a week since 2006 using Boeing 757 freighters with 30 tonnes of capacity.

Late last year, Shanghai Airlines doubled the number of flights between Shanghai and Phuket to four a week and the airline started flying Shanghai Phuket route two years ago on a ‘regular charter’ basis.

Nearly one million Chinese tourists visited Thailand last year and the Tourism Authority of Thailand expects the number to reach 1.3 million this year with Pattaya, Phuket and Koh Samui being the most popular destinations. Freight movements between the two countries have also been surging due to growing trade volume with significant shipments of IT components from Thailand to China.

Hong Kong International Airport (HKIA), Asia's third-busiest airport, reported surging passenger and cargo traffic in January leading up to theLunar New Year period.

Its passenger throughput surged 14 per cent year-on-year to hit four million passengers in January, thanks to the increasing number of outbound Chinese mainland tourists who started their travelling plan before the Chinese New Year holiday, said Hong Kong Airport Authority.

Cargo volume handled by the world's busiest airport for international air cargo also jumped 8.9 per cent to 295,000 tonnes in the same period, the authority added.

The head of Asia Pacific's airline industry' grouping has called for stronger' participation in key international policy'issues by the carriers.

Director general of the Association' of Asia Pacific Airlines (AAPA), Andrew' Herdman said Asia Pacific carriers have' become key global players in the industry' and should have a greater say in industry'issues.

"The growing influence of Asia Pacific' needs to be matched by stronger engagement' in key international policy issues,"' he said according to a report in Aviation' International News.

In Herdman's view, because the area' has been able to show growing economic' leadership, it also must be ready for' increased political activity on broader'policy issues.

"AAPA will continue to engage with' industry associates and other stakeholders' to ensure that Asia Pacific views are' given proper weight," he said.' The region had a 27 per cent share of' 2006's worldwide 2.1 billion scheduled' airline passengers and a much larger' 41 per cent of the 16 million tonnes of' global air cargo.

"If these trends are sustained, within' the next decade, Asia Pacific will have' the largest share of passenger traffic,"' said Herdman.

AAPA's 17 member carriers reported' US$3.4 billion operating profit on revenues' valued at US$83 billion in 2006-07.' The airlines' almost 1,500-strong fleet' transported 285 million passengers–just' over half of them on domestic routes and' 10 million tonnes of freight. The group' accounts for 18 per cent of worldwide' passenger totals and 32 per cent of'cargo traffic.

Herdman sees growth prospects in' Asia Pacific as remaining "bright," although' he calls for sustained progress' to "truly liberalise" the marketplace. "We' need to work toward greater harmonization,' and speak with a common voice on'wider international issues," he said.

An important step toward permitting' operators to compete globally would be'"relaxation of national ownership and'control rules," said Herdman, who is'critical of US-style "Open Skies" agreements.'He sees these arrangements, which'typically delete restrictions on capacity,'destination, frequency, and pricing, as'falling short of genuine liberalization.'"Almost without exception, domestic'markets remain basically closed to foreign'competition," he said.

The 2001 APEC Multilateral Agreement' on Liberalisation of International' Air Transport, involving Brunei, Chile,' New Zealand, Singapore and the U.S.' has been "probably the most ambitious' step" toward a multi-region liberalization' template, he said.

More recent moves have included' the so-called ASEAN roadmap for deregulation' between member countries'' capitals by this year and on all services' among those states by 2015. Different arrangements' are being prepared between' ASEAN subregions, while talks continue' with China, Japan and Korea.

AAPA officials have praised a recent' Open Skies agreement between' Singapore and the UK for its "fresh' thinking" on ownership and control.' The "landmark deal," they said, is particularly' noteworthy since it provides full' cabotage rights to designated airlines on' both sides, said Herdman.

The Boeing Company and Jakartabased Garuda Indonesia announced at the Singapore Air Show that the airline has ordered four 777-300ER (Extended Range) airplanes. The order is valued at more than US$1 billion at current list prices.

Additionally, Garuda confirmed a previous unidentified order for seven Next-Generation 737-800s placed in 2007, and announced that it has converted 18 of its existing 737-700s on order to 737-800s and six 777-200ERson order to 777-300ERs.

"We are extremely pleased with the support provided by Boeing to restructure previous purchase commitments," said Emirsyah Satar, president-director and chief executive officer of Garuda Indonesia. "This will enable Garuda to strategically implement its fleet renewal and expansion plan to meet the demands of a changing marketplace."

With this recent announcement, Garuda's total order now stands at 25 737-800s and 10 777-300ERs jetliners. Additionally, the airline acquired purchase rights for an additional 25 737-800s and 10 777-300ERs. Garuda along with all other Indonesian carriers are banned from flying to the European Union over safety concerns, something that is widely viewed as a key factor in Garuda choosing Boeing over Airbus for its fleet renewal.

Garuda, the fl agship carrier for Indonesia, currently operates a mixed fl eet that includes 43 737-300/400/500/800 airplanes as well as 747-400s, and operates both domestic and international routes in Pan-Asia and the MiddleEast.

The Boeing Company and Jakartabased Lion Air announced recently an order for 56 Next-Generation 737-900ER (Extended Range) airplanes. Th is order, valued at more than US$4.4 billion at current list prices, brings Lion Air¡¯s combined orders for the 737-900ER to 178. Additionally, the airline acquired purchase rights for an additional 50 737-900ERs.

To date, eight customers have placed orders for 227 Next-Generation 737- 900ERs. Th e 737 is the best-selling commercial jetliner in history, with more than 7,700 orders from more than 245 customers around the world. Boeing has more than 2,000 unfulfilled orders for the airplane with a value exceeding $145 billion at current list prices.

Singapore Technologies Aerospace Ltd (ST Aerospace) recently unveiled its latest hangar in Singapore at its wholly-owned subsidiary, ST Aerospace Engineering Pte Ltd (STA Engineering), in Seletar.

Following the groundbreaking ceremony in April 2007, the 4,860 sqm (51,333 sq ft) hangar is now completed and launched at a ceremony last month. Th e two-bay S$17.3 million (US$12.4 million) hangar is capable of accommodating up to two narrow-body aircraft.

With today¡¯s offi cial opening of the two-bay hangar, ST Aerospace now has eight wide-body and 13 narrow-body bays in Singapore, and off ers worldwide operations with a total capacity of 25 wide-body and 43 narrow-body bays in key aviation hubs.

Besides capacity expansion, ST Aerospace has also been expanding its capability off erings across its global maintenance, repair and overhaul (MRO) network. One of these is the introduction of Passenger- To-Freighter (PTF) conversion in STA Engineering, and a Boeing 757-200 is currently undergoing PTF conversion at its Seletar facility. Until recently, freighter conversions have been performed at ST Mobile Aerospace Engineering Inc (MAE) and ST Aviation Services Co (SASCO).

Singapore Airlines was forced to cancel an Airbus A380 flight to Sydney because of a fuel pump defect last month.

¡°It was a difficult delay. A problem presented with a fuel pump, and this is the sort of problem that doesn¡¯t show till engine start-up,¡± SIA said in a statement. ¡°This problem does occur from time to time with aircraft generally, but requires some time to fi x,¡± it said, adding that a replacement pump did not solve the problem.

Passengers were transferred to a Boeing 747-400, but because of the larger capacity of the A380 not all of them could be accommodated.

Just one month earlier SIA grounded the only other commercially operating A380 in the world after it became unhinged from a tow truck and rolled off the apron and onto a grass verge. Once it take delivery of its third A380, the carrier said it would start commercial flights to London on March 18.

Global aerospace/defence group and Airbus parent, EADS has announced a long-term R&D partnership with two Singapore universities. The National University of Singapore (NUS) and Nanyang Technological University (NTU) both signed agreements for research and development cooperation.

Th e NUS agreement will facilitate the setting up of joint research collaborations between the University and EADS. One of these collaborations is the newly launched ¡°Flow Control Project¡±, jointly set up by NUS and Airbus, one of EADS¡¯ global companies.

Th e present project is focused on the fundamental study of flow control technologies for reducing drag around streamlined bodies. Th e NTU agreement signifies the intention of both EADS and NTU to collaborate on aerospace topics. One research project was recently launched in January 2008 with the NTU School of Mechanical and Aerospace Engineering (MAE) involving a helicopter airspeed sensor is being developed for Eurocopter.

At both universities, EADS also awarded funding for students in the form of EADS Singapore TechMasters scholarships for top NTU MAE undergraduates and overseas internship sponsorships for NUS undergraduates.

The Civil Aviation Authority of Singapore (CAAS) and the European Aviation Safety Agency (EASA) recently signed an agreement on enhanced cooperation on the safety oversight of the Airbus 380. Under the agreement, CAAS and EASA will exchange information and analysis on airworthiness and flight operations matters pertaining to the A380. Both sides will also collaborate to address issues arising from the A380 operations, enabling close monitoring and safety oversight of the A380 fleet in service, the two organizations said in a statement.

Korean Air has announced an expansion of its A380 fleet with the purchase of three more A380 aircraft in addition to the fi ve it ordered in 2003.

Starting in 2010, Korean Air will introduce the A380 on high-density routes from Seoul to the US west coast, with subsequent destinations likely to include cities on the US east coast and Europe. Deliveries to Korean Air for the three additional aircraft are scheduled to take place in 2012 and 2013.

¡°Our decision to purchase the A380 aircraft is in line with our vision to become a global leading carrier providing the best quality of service to our passengers,¡± said Yang Ho Cho, chairman and chief executive officer of Korean air.

State-owned Kuwait Airways plans to lease as many as fi ve aircraft by June to expand its fleet, reported Reuters, citing an unnamed company official.

The Kuwaiti government is planning to sell 40 per cent of the airline to the public and 35 per cent to a long-term investor within two years, and has said it will not buy new planes until the privatisation was complete. The carrier currently has 17 aircraft in its fleet.

Boeing and Bahrain's national carrier Gulf Air recently finalised negotiations for up to 24 Boeing 787 Dreamliners in a deal that is worth nearly US$3.9 billion.

Th e deal includes 16 firm orders for B787s with purchase options for eight additional B787s. Meanwhile, Gulf Air is set to introduce a non-stop Shanghai service as part of the airline's growth strategy.

The four-times-a-week service will commence on 16 June and will be operated using an Airbus A340-300. Th e service will be later upgraded to daily flights during the latter part of this year.

"China is one of the fastest growing economies and for Gulf Air it is strategically important that we launch into this booming market this year," Gulf Air chief executive Bjorn Naf said.

Virgin Atlantic, made history recently by being the first airline in the world to fly one of its aircraft on biofuel from London Heathrow to Amsterdam.

Together with partners Boeing, GE Aviation and Imperium Renewables, Virgin Atlantic flew a Boeing 747 using a biofuel composed of babassu oil and coconut oil. These oils are environmentally and socially sustainable, according to Virgin.

Both are found in everyday cosmetic products, such as lip balm and shaving cream, and do not compete with staple food sources. In addition, the babassu nuts and coconuts were harvested from existing, mature plantations. No modifications were made to either the aircraft or its engines to enable the flight to take place.

Only the flight crew and technical advisors - who monitored flight data for later analysis - were onboard for the flight. "Today marks a biofuel breakthrough for the whole airline industry," said Virgin Atlantic president Richard Branson. "Virgin Atlantic, and its partners, are proving that you can fi nd an alternative to traditional jet fuel and fly a plane on new technology, such as sustainable biofuel.

"This pioneering flight will enable those of us who are serious about reducing our carbon emissions to go on developing the fuels of the future, fuels which will power our aircraft in the years ahead through sustainable next-generation oils, such as algae."

The Virgin Atlantic flight is the first step in a broader industry- wide initiative to commercialise alternative fuel sources for aviation and Virgin Atlantic will be sharing the results with those also seeking to cut their carbon emissions in the rest of the industry, the carrier said.

The results of the biofuel flight will be analysed by Virgin Atlantic, Boeing, GE Aviation and Imperium Renewables and used for the research and development of next-generation biofuels that can help reduce carbon emissions. Boeing will use the findings from this flight in another demonstration flight later this year.

British Airways is planning further expansion of its operations in the Middle East and Asia to off set slower growth in North America, which has traditionally been its mainstay, reported Gulf News.

Th e Middle East remains one of the fastest growing sectors in the aviation world. As corporate business growth out of the UK into the Middle East has reached double figures in recent years

UK freight carrier Atlantic Airlines has signed agreements with BAE Systems Regional Aircraft for the long-term lease of a further six ATP Freighters. The addition of the six leased ATPFs will bring the airline's operational fleet of this 8-tonne freighter aircraft type to eleven.

The first two leased aircraft (msn 2012 and 2013) were delivered in the last quarter of 2007 to Atlantic Airlines' engineering facility at Coventry Airport, following conversion into a Large Freight Door (LFD) variant at the Romaero plant in Baneasa, Bucharest.

At Coventry, Atlantic Airlines installed the BAE Systems E-Class interior into these aircraft. The first aircraft was completed late in 2007 and has entered into revenue service, with the second to enter service early in 2008.

The remaining four leased aircraft are also being converted at Romaero. The first delivery this year will be in the first quarter (msn 2008), followed by two in the second quarter (msns 2007 and 2014) and the final aircraft in the third quarter (msn 2016).

The airline currently operates a total of five ATPFs. Four of these are LFD variants and are leased from Regional Aircraft. The fifth aircraft is a bulk-loaded E-Class variant that is leased from International Air Parts Pty Ltd.

All Atlantic Airlines ATPFs are configured to operate either as fully containerised aircraft with the airline's own bespoke handling system and ULDs, or as a fully bulk-loading aircraft with a vertical transverse net configuration, providing up to a maximum of nine individual loading zones.

Volga-Dnepr and KrasAir have opened a new cargo terminal at Yemelyanovo Airport in Krasnoyarsk, the third largest city in Siberia.

The new terminal will facilitate the growth of AirBridgeCargo (a part of Volga- Dnepr Group) at Krasnoyarsk with up to 40 flights a week, including services from Asia to the US and Canada from the airport. AirBridgeCargo currently operates 20 flights from Krasnoyarsk, connecting Frankfurt, Amsterdam, Shanghai, Hong Kong, Beijing, Tokyo while domestic routes are operated between Krasnoyarsk and Khabarovsk and Yuzhno-Sakhalinsk.

The new hub is the first phase of what is to become the first Russian air cargo intermodal hub.

Alenia Aeronautica has said it is meeting its commitments as a supplier for the Boeing 787 and not contributing to delays, after Boeing announced further delays to the Dreamliner programme as a result of its various suppliers around the world being unable to meet their delivery targets.

The Italian company delivers complete composite fuselage sections to Global Aeronautica, its joint venture with Vought in the US, which subsequently adds components to the structures before shipping them to Boeing's final assembly line in AirBridgeCargo plans to use Yemelyanovo hub to fly to North America and Asia. Everett, Washington.

Boeing has identified the Charleston operation as part of the problem with its complex 787 supply chain. Alenia has said that its Grottaglie factory in southern Italy is on schedule to deliver the first two preproduction sets of fuselage sections (numbers 44 and 46), as well as the first four production sets, according to a report in Aviation International News.

Last month, it reported that progress with production sets fi ve through nine is well advanced, and that work has just started on the 18th set. Alenia is also constructing the 787 horizontal stabiliser for Boeing.

The 787's fuselage sections are being built using “one-piece barrel” technology to maximize the amount of composite materials and to avoid the use of thousands of rivets typical of aluminum fuselages, saving between 15 and 20 per cent in weight. The process involves a computer-controlled robot applying layers of carbon fibre on a huge mould to create a single-piece section. The section has to be baked in a large autoclave because the 787 fuselage measures about 19 feet in diameter and the larger sections made by Alenia Aeronautica are more than 49 feet long.

For the 787 program, Alenia formed a new subsidiary called Alenia Composite at the purpose-built Grottaglie site, where it erected a 682,000-sq-ft building. The runway of the nearby airport was extended from 5,500 feet to 11,500 feet to allow operations of the transport aircraft that carry Dreamliner subassemblies. Overall, Alenia is investing about US$1.3 billion in the 787.

British Airways World Cargo managed to stabilise its overall yield in the third quarter of its financial year (October-December 2007) with an average load factor up by 2.8 percentage points compared to the same quarter of 2006, the carrier said without giving actual figures.

BA World Cargo managing director Steve Gunning said he is cautious about prospects for the rest of this year. "Our yields are holding at the moment but it is still early days. Price pressures continue to exist in this industry and I think will continue to do so for years to come."

BA World Cargo financial controller Sean Doyle added: "We've seen a notable volume recovery in the UK market and demand out of the Americas continues to grow, helped by our expanded shorthaul freighter network into Europe. "The strong euro, combined with tough conditions, means that the market remains challenging in Europe and price pressures continue to be a feature of the market in South Asia."

As for the short-term view on the industry, Gunning said: "This year has started reasonably well, but whether that turns into a good year rather than just a good month has still to be seen. In terms of volume growth for the industry this year, I am probably slightly in the cautious camp. I think I would have been more bullish six months ago than I am today."

The Boeing Company and KLM Royal Dutch Airlines recently celebrated the delivery of the airline's first 777-300ER (Extended Range). The aircraft joined KLM's fleet of 15 Boeing 777-200ERs when it arrived at Amsterdam Schiphol airport in mid-February.

The fuel-efficient 777-300ER is the world's largest long-range twin-engine airplane. In KLM's configuration, the airplane is capable of carrying 425 passengers in a two-class configuration with a maximum range of 14,685 kilometres (7,930 nautical miles) at a cruising speed of 0.84 Mach.

Scandinavian carrier SAS Cargo's annual result for 2007 was aff ected by "hard competition in key markets" resulting in a drop in profi ts compared with a year earlier. Turnover for the year was SEK 3,355m (€363m) while profi t came in at SEK 22m (€2.4m).

"The air cargo industry has experienced some big changes in recent years, with consolidation among customers and over capacity in key markets," said Kenneth Marx, president and chief executive offi cer of SAS Cargo Group A/S. "SAS Cargo is going through a transition process in order to adapt to these changes. Th is has aff ected the result for 2007, which is not at a satisfactory level."

SAS Cargo said the air cargo industry was experiencing "some big changes", with consolidation among customers and over-capacity in key markets. SAS Cargo was going through a transition process in order to adapt to those changes, stated Marx, and that had affected the result for 2007 which was "not at a satisfactory level".

Outsize and heavyweight air cargo specialist, Volga-Dnepr Airlines, has carried the longest ever shipment on board one of its IL-76 freighters - a telescopic slip joint transported from Prestwick in Scotland to Pointe Noire, Congo.

Measuring 1,981cms in length and 82cms diameter, the 15,500 kilos slip joint was delivered on board one of the airline's new IL-76TD-90VD freighters on behalf of TransOcean Off shore Deepwater Drilling Inc. It was part of a 22,500 kilos shipment that also included a 762cm long, 6,000 kilos ‘pup joint cross over'.

Billionaire Richard Branson plans to start an airline in Russia in order to tap the 10 per cent annual growth of the market there. Th e new carrier will tentatively be called Virgin Russia and could begin operations within 12 months.

Th e carrier will initially fly domestic routes, with international routes to be added at a later date. Russia¡¯s economy expanded by 8.1 per cent last year, the fastest pace since 2000 and the country is in its 10th consecutive year of growth. Russian airlines flew 45 million passengers last year, an 18 per cent increase from 2006.

Vancouver International Airport has been given the green light to participate in Canada's international air cargo transshipment programme by the Federal government. The programme simplifies air carrier access to the airport for air cargo transshipment, allowing the airport to seek new market opportunities and increase its transshipment activity.

The programme allows air cargo to be moved through Canada for shipment to third countries. For example, cargo could be fl own from the US into Vancouver, stored temporarily, and then fl own to an Asian destination. Similarly, international air cargo could also arrive from overseas and then be shipped by rail or road from Vancouver to the US, allowing the airport to take full advantage of the Asia-Pacificgateway and corridor.

"One of the key goals of the Asia-Pacific Gateway and Corridor Initiative is to make our West Coast ports and airports a destination of choice worshippers that take goods back and forth between Asia and North America," said Canada's Minister of International Trade, David Emerson.

"With this new transshipment capacity, the Vancouver International Airport is moving one step further toward becoming a true transportation and logistics hub for the whole North American market," he added.

Importantly, the Canadian Transportation Agency can authorise any Canadian or foreign air carrier to use Vancouver International Airport to transship international air cargo, even if these rights are not provided in Canada's bilateral air transport agreements.

ACE Aviation Holdings is looking at several ways to wring the most value from its Air Canada stake, including sales to private equity players and even a linkup with a US airline, ACE's chief executive told Reuters.

ACE CEO Robert Milton said he still prefers the original plan of distributing the 75 per cent interest in Canada's dominant carrier to shareholders before winding up the holding company structure, rather than buying back the minority.

But weakness in Air Canada's stock price has prompted ACE to keep all its options on the table, he said after the shrinking holding company reported a fourth quarter net income of CAD$1.13 billion (US$1.13 billion).

"In my view, as I watch the US airlines scurrying around to merge, anybody that actually ties up with Air Canada gets a unique piece of geography relative to the way the US guys would split it up," Milton said.

Boeing mechanics began major assembly of the new 777 Freighter at the company¡¯s Everett, Washington facility recently. Workers took the first step in major assembly for the new 777 Freighter by loading its 97-foot-long wing spar into the automated spar assembly tool (ASAT).

The ASAT automatically drills, measures and installs more than 5,000 fasteners into the spar. The spar is the internal support structure that runs through the full length of the wings and provides support to the wing.

The 777 Freighter will fly farther and provide more capacity than any other twin-engine cargo airplane, according to Boeing.

Final assembly started last month on the second flight-test airplane for the new Boeing 787 Dreamliner. While this is the second of six flight-test airplanes, this Dreamliner is actually the fourth on the production line. It follows the two airplanes that will be used for static and fatigue testing.

"We've received significantly less ¡®travelled work' on this airplane," said Steve Westby, vice president of 787 Final Assembly and Change Incorporation. "Th e degree of completeness of sections at the partners is significantly better than Airplane #1. Condition of assembly is much better and we will see continued improvements on the condition of each assembly shipped. All this helps to bring us back into alignment with the original design of our production system."

Boeing faces increasing customer ire after announcing last month a second delay for the 787, pushing first deliveries back to early 2009, about nine months behind schedule. Boeing's problems with the 787 mirror those of Airbus, whose A380, the world's largest passenger jet, was delayed two years before the first delivery last October to Singapore Airlines.

Currently 21 B787 airplanes are in various stages of production. Th is number includes the static and fatigue airplanes, which will not be delivered to customers. Since its launch in April 2004, the 787 Dreamliner has amassed 857 firm orders valued at US$144 billion from 56 airlines.

American Airlines Inc. has said it will move its entire London service network from London Gatwick to London Heathrow Airport this year.

The move is a result of the recent "open skies" treaty between the European Union and the United States which allows airlines to fly between any US city and any European city from 30 March, replacing treaties between individual countries. The treaty also removes limits on the number of flights, aircraft and routes, and lets airlines set fares according to the market.

American previously said it would keep one of its two daily Dallas Fort Worth-London flights at London Gatwick Airport after a new international air treaty in late March opens up Heathrow to more routes.

But American spokesman Tim Smith said American has secured the landing and takeoff slots it needs to move its remaining Gatwick flight to Heathrow as of April 13. It made no sense to keep its station open at Gatwick for just one flight, Mr. Smith said.

But he also noted that American also wanted to beef up its Heathrow service.

"Other airlines are in the process of announcing new flights to Heathrow and switching some of their London capacity in that direction," Mr. Smith said. "All these things came together on this decision."

A 1977 US-UK treaty limited the number of competitors on US-London routes and allowed only two US and two British carriers to serve Heathrow. Continental Airlines Inc., Delta Air Lines Inc., US Airways Inc. and Northwest Airlines Inc., which were kept out of Heathrow by the 1977 treaty, have announced plans to start Heathrow service from US cities, joining American and United Airlines Inc.

The potential Northwest Airlines-Delta Air Lines merger is stuck in limbo after pilots and state politicians continue to pose significant hurdles. NWA's hometown paper, the Star Tribune, quoted a source calling the merger agreement "ready to sign" as soon as the respective pilot unions resolve issues concerning seniority. Reuters reported that US$445 million in loans and lease concessions provided to NWA prior to its exit from bankruptcy are contingent upon its maintaining a hub and headquarters in Minnesota.

"They have a legal commitment to this state, and we expect them to uphold it," a Minneapolis Airports Commission spokesperson told the news service, while Minnesota Gov. Tim Pawlenty reportedly wrote a letter to the CEOs of both carriers saying, "We trust and expect these commitments to be honored." A spokesperson for Pawlenty told Reuters that the airlines would discuss the issue "at the appropriate time, after a merger is announced." Separately, the Star Tribune reported that Air France KLM will invest US$750 million in the combined Delta/ NWA. It is a SkyTeam partnerof both US carriers.

United Airlines and Continental are in advanced negotiations and could complete a merger quickly if Delta and Northwest strike a deal, according to US press reports.

Such a deal is expected to trigger more consolidation in the highly competitive airline industry as rivals try to match or out-size Delta-Northwest, which would become the world's largest airline.

United, owned by UAL Corp., and Continental must wait for the Delta-Northwest talks to run their course because Northwest can block any deal involving Continental. Th at veto power is a vestige of Northwest's one-time stake in Continental.

The Chicago Tribune reported that United hasn't ruled out bidding for Delta if Delta can't close the deal with Northwest. Th at would give Chicago-based United the ability to play Northwest and Houston-based Continental off each other in a search for the best possible deal.

The paper also reported that Continental Chief Executive Lawrence Kellner would run the combined company and that its headquarters location would be settled later.

Airfreight traffic between Brazil and the Middle East has expanded by 60 per cent, according to the Arab Brazilian Chamber of Commerce. Air cargo shipment rose from 2,200 tonnes in 2006 to 3,400 tonnes last year.

To the United Arab Emirates (UAE), a country to which Brazil got a direct flight in October, shipments have grown even more, 169 per cent, from771 tonnes to 2,000 tonnes.

"It was already expected for this to happen," stated Arab Brazilian Chamber of Commerce president Antonio Sarkis Jr.

In terms of value, exports by air to the UAE grew 127 per cent between 2006 and 2007, from US$22 million to US$52 million while shipments to the League of Arab States posted a slight reduction, down 4 per cent from US$ 421 million to US$ 404 million.

The Chamber of Commerce believes that the growth in volume above the growth in revenues is due to the inclusion of lower value-added products in air shipment in recent months. Th is may be a result of the greater availability of aerial transport, with the inauguration of the direct Emirates flight between São Paulo and Dubai, in October.

Bogota, Columbia-based consortium, Synergy Aerospace has signed a Memorandum of Understanding (MoU) with Airbus for 10 A350-800s and 10 options. This further commitment comes in addition to the 47 A320 family aircraft and 10 A330-200s that its subsidiaries already have on order, making it a key customer for Airbus in Latin America.

The group includes subsidiaries, Colombia-based Avianca and SAM, Ocean Air of Brazil, Peru-based Wayra and VIP in Ecuador.

"This new order consolidates our fleet renewal and expansion programme. Our affiliates will be the biggest beneficiaries of Airbus' outstanding product. We will also benefit greatly from the commonality of these A350s with our A320 and A330 aircraft," said Synergy Aerospace president German Efromovich.

The Kenya Civil Aviation Authority has granted Ethiopian Airlines a licence to fly cargo on the Addis Ababa-Nairobi route for a two-year period.

The license paves the way for one of Africa¡¯s most competitive airlines to fly cargo ¨C using a B757 ¨C between thetwo cities fi ve times a week.

Ethiopian Airlines is among 30 other domestic and international operators that successfully applied for licences to operate in Kenya.

Eight of the newly licensed airlines and routes were granted to charter operators who are mainly involved in flying European tourists in and out of the coastal resort of Mombasa.

The licences were issued to charter operators based in Amsterdam, Italy, Hungary, and the Czech Republic. Recent outbreak of violence and subsequent mass cancellation of booking, however, means that the licensees are unlikely to begin operations in the first half of this year.

Charter airlines Monarch and Euro Fly have also been licensed to fly more frequently to Mombasa¡¯s Moi International Airport.

Also licensed was Egypt Air, which operates passenger services between Nairobi and Cairo.

It got a two-year licence to operate an international non-scheduled cargo service on the Cairo-Sharjah-Khartoum- Eldoret-Nairobi-Cairo route. It will, however not pick or drop cargo between Eldoret and Nairobi.

Domestic operators Fly 540, Blue Sky Aviation and Imatong also received rights to increase frequencies on various routes and will mainly connect key tourist destinations like Ukunda and Mara.

Bangalore-based Quikjet Cargo - operated by joint venture company Aviation Consultancy Services Pvt Ltd - will begin domestic air cargo operations from April this year.

Aviation Consultancy Services is a joint venture between Cardinal Aviation Pte Ltd, a private equity firm in Singapore, and Mumbai-based logistics firm AFL Pvt Ltd. "In the first phase, Quikjet will be using two-three Boeing B737-300 cargo planes to cover the main Indian metros using Bangalore’s new airport as a hub," according to AFL managing director and chairman Cyrus Guzder.

Quikjet is pitching itself as a premium player which will off er overnight services. Once its domestic operations are firmly in place, Quikjet plans to expand into international cargo operations. "In the second phase, which would commence by the end of this year, we would start operating to the Middle East and Southeast Asian countries," using Boeing 757 freighters on these routes. According to Dinesh A. Keskar, vicepresident, sales (commercial airplanes) of Boeing Co., the domestic air cargo market is expected to grow at 9.1 per cent a year, but there are just 12 dedicated freighters serving the domestic market.

This potential has attracted several possible new entrants, including: Jet Airways (India) Ltd, Kingfisher Airlines Ltd, Flyington Freighters Ltd - a Hyderabad cargo airline promoted by Deccan Chronicle Holdings Ltd, Mumbai- based Avicore Aviation Pvt Ltd and New Delhi-based Aryan Cargo Express Pvt Ltd.

In what amounts to one of the most signifi cant developments for the Indian air cargo industry, the Indian government recently changed foreign investment rules to allow foreign carriers to take up to a 74per cent stake in cargo airlines.

Previously foreign direct investment (FDI) was capped at 49 per cent and international carriers were not allowed to invest in cargo operations.

"The Cabinet decision says that no direct or indirect investment by foreign airlines will be allowed in case of scheduled, non-scheduled and chartered airlines. However, 74 per cent FDI from foreign airlines will be allowed in cargo carriers," a civil aviation ministry official was quoted as saying in a Business Standard report.

The decision has already piqued the interest of at least three global carriers - FedEx, Malaysia Airlines (MAS) and Australia-based HeavyLift Cargo Airlines - who have all reportedly approached the ministry seeking details on setting up and expanding their operations in India.

The government also approved 100 per cent FDI in maintenance, repair and overhaul (MRO) organisations, flying training institutes (FTIs) and helicopter services (up from 49 per cent).

Also, FDI in ground handling services and non-scheduled airlines has been increased to 74 per cent up from the earlier 49 per cent. However, FDI for scheduled airlines – a controversial area were the Cabinet has been divided – remains capped at 49 per cent. Th e decisions are expected to give a major boost to FDI in the aviation sector. In India, apart from Air India, which has dedicated freighter operations, Jet Airways has plans to start cargo operations in the next 18 months and Flyington Freighters and Aryan Cargo Express are also slated to start cargo services.

The move is expected to bring massive investment in MRO and ground-handling segments which is highly capital-intensive. Two foreign ground handlers already have a foot-hold in the Indian market: Menzies Aviation has a tie-up with Booba, whereas Singapore-based SATS has tied up with national carrier Air India to form ground handling companies.

In the MRO sector, apart from Air India, which is planning to set up four MRO facilities with Airbus and Boeing, GMR is tying up with Lufthansa Technik to set up an MRO, while Kingfisher is looking at a tie-up with Gulf-based aircraft maintenance service provider, GAMCO.

The Indian government has approved two new start-up passenger and cargo airlines - Avicore Aviation and ZAV Airways - while a United Arab Emirates company is seeking to launch a third.

Avicore will be based out of Nagpur and use B737s with a capacity of about 15-17 tonnes of freight. Kolkata-based ZAV is to buy two Bombardier-made CRJ-900s and two ATR 72-500s as well as six helicopters for heli-taxi services.

Meanwhile, UAE-based Indian cargo rail operator ETA-Ascon is negotiating with jet manufacturers for equipment to start a new Indian airline.

¡°We have started talking to Embraer, Bombardier and ATR to acquire 70-90 seater regional jets for the new airline in India,¡± managing director of Emirates Trading Agency-Associated Construction (ETA-Ascon) group Syed M Salahuddin, was quoted as saying in Gulf News.

The company recently launched a cargo rail service to move containers between Delhi and Bombay.

Kingfisher Airlines and Aeroflot have signed a "contemplation memorandum" aimed at broadening commercial collaboration between the two carriers. The two intend to further develop the cooperation in terms of the interline air service agreement currently in force and by signing a special pro-rate agreement and code-sharing agreement, the two said in a statement.

As a result of this cooperation Russian passengers will receive an enhanced access to the internal Indian network of Kingfisher and Indian passengers will have additional transit possibilities when fl ying by Aeroflot to Canada, the USA, Europe. The memorandum also expressed their intent for broadening their partnership, including mutual support in the field of ground service and to have regular consultations aimed at increasing their efficiencies.

Deccan Aviation Ltd has sold a new Airbus A320 aircraft and plans to sell another in two weeks, with both deals expected to fetch a total of at least US$10 million in profit.

Deccan has 52 A320 aircraft on order and made the decision to sell after determining that it would receive more planes than it needed for the year, chief executive, Ramki Sundaram said, adding that, "it is part of our fleet management."

The airline operations of Kingfisher Airlines are currently being merged with Deccan and the two together have ordered nearly 160 A320s and ATR turboprops. The two are scheduled to receive more than 15 A320 aircraft this year.

Air India has announced it will terminate codeshare agreements with Air France, KLM, Aeroflot, British Airways, Cathay Pacific, Continental Airlines and Royal Jordanian by March 2009, when it is scheduled to join the Star Alliance.

Meanwhile, Air India has selected Munich as its European hub, according to Civil Aviation Minister, Praful Patel. Network plans have not been disclosed.

Patel forecasts domestic Indian passenger traffic to grow by 25 per cent per annum over the next five years, with the Indian fleet to rise from 400 aircraft at present to approximately 2,500 by 2020. Th e number of airports in India will increase from 80 at present to 500 in 2020.

Air India plans to add more capacity to a number of US destinations as it eyes a growth of 25-30 per cent in its revenues this fiscal year from this sector alone. Th e revenue from this sector is expected to reach US$830 million in the current fiscal year, from US$760 million last year.

The airline plans to start flights connecting India's Bangalore silicon valley with the US' Silicon Valley with effect from August. Th e carrier, which plans to add 15 Boeing 777-300ER aircraft, will also start flights to Washington and Texas.

Last month the carrier started nonstop flights between New Delhi and New York making a total of 38 weekly flights to four US destinations, which also includes Chicago, Newark and Los Angeles. Much of the current capacity between India and the US is carried by European and Southeast Asian carriers utilising sixth freedom rights.

The Kingfisher Airlines-Air Deccan merger will be completed in April following a sale of shares that will raise US$300 million to finance immediate expansion needs.

"At the present moment, we are in talks to appoint a suitable merchant banker for the share sale by the end of this month," Deccan Aviation VP-Finance Anand Ramachardran said.

Deccan has also filed an application with regulators seeking permission for the merged airline to fly international routes starting in August, which will mark Air Deccan¡¯s fifth anniversary. Private Indian carriers must operate for fi ve years before legally being allowed to operate internationally.

Last month, the companies approved the swap ratio for the merger under which Deccan Aviation will issue three shares for every seven held in Kingfisher. Deccan will issue fresh additional shares to Kingfisher shareholders.

The airline business of Kingfisher will officially be merged into Deccan Aviation and the combined airline company will be renamed as Kingfisher Airlines, effective 1 April, subject to regulatory clearance.