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Southeast Asia's low-cost airlines are betting on the travel demand despite their competition woes
Southeast Asia's largest budget airlines are on a brutal capacity expansion race, despite increasing cost pressures which are squeezeing profitability. Qantas Airways shut down Jetstar Asia in Singapore due to this. In the last two decades, low-cost carriers have proliferated across Asia as disposable incomes increase and travel demand is strong from Chinese tourists. Demand for air travel in Asia is expected to grow faster than other regions in the next few decades and carriers like Vietnam's VietJet Aviation and Malaysia-headquartered AirAsia are to buy more planes to add to their already large orderbooks as they seek to gain market share. The margins in Asia-Pacific are smaller than those of other regions. This year, the International Air Transport Association, an industry association, expects Asia-Pacific carriers to have a net profit of just 1.9%, compared to a global average 3.7%. Since the pandemic, airlines in Asia have restored much of their capacity, which has increased competition, particularly for budget-conscious travellers and lowered airfares from their recent highs. ForwardKeys data show that international airfares in Asia fell 12% from 2023 to 2024. AirAsia reported a 9% drop in average airfares for the first quarter, as the airline increased capacity and passed on savings from lower fuel costs to its customers. Costs such as airport fees and labour are on the rise, and a lack of new planes has led to an increase in leasing and maintenance charges. The changing landscape has led Australia's Qantas, to announce that Jetstar Asia, its low-cost intraAsia subsidiary operating at a loss and after 20 years of operation, will shut down at the end of July. Jetstar Asia reported "high cost increases" in its Singapore base. These included double-digit increases in fuel prices, airport fees, security charges, and ground handling. Sheldon Hee is the Vice President of IATA Asia-Pacific. He said that operating costs are increasing in the region. In a white paper published in February, aviation data firm OAG said that Asia-Pacific is the most competitive aviation market. Rapid capacity expansion has driven airfares down "perhaps to a level where profits are compromised". The report stated that the balance between supply and demand, costs and revenue has never been more important. "GO BIG OR GO HOUSE" Southeast Asia is unusually dominated by budget international flights. CAPA Centre for Aviation statistics show that two thirds of all international seats in Southeast Asia were booked on budget airlines, compared with one-third worldwide. Analysts say Qantas chose to shift Jetstar Asia aircraft to Australia and New Zealand, where they can operate more efficiently. Brendan Sobie, an independent aviation analyst based in Asia, says that budget operators in Southeast Asia struggled to make a profit even before the pandemic. Now there are also higher costs. Low-cost carriers provide bargain fares because they keep their operating costs low. The economies of scale are achieved by large fleets of a single aircraft type. Jetstar Asia had only 13 planes, a fraction of the size of its local competitors. Singapore Airlines' low-cost subsidiary Scoot, which is part of AirAsia, had 53 aircraft as of March 31. VietJet, which includes its Thai branch, had 117 planes. Low-cost Philippine carrier Cebu Pacific had 99. The four companies will add more aircraft to their fleets in the coming year, and even further into future. VietJet signed a preliminary deal on Tuesday to purchase up to 150 additional single-aisle Airbus aircraft at the Paris Airshow. The airline said that this was only the beginning of its ambitious growth plans. This deal follows weeks of ordering 20 A330neo wide body planes and 200 Boeing 737 MAX jets. Tony Fernandes, the CEO of AirAsia said that it is in discussions to purchase 50 to 70 single-aisle long-range jetliners and 100 regional jets to allow for expansion to new destinations. Subhas Menon is the director general of Association of Asia Pacific Airlines. (Reporting and editing by Lisa Barrington)
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Report says future low-carbon material projects will need funding of $1.6 trillion.
A report on Thursday said that $250 billion has been allocated for the production of low-carbon material in sectors with heavy emissions, such as chemicals and fuels. However, future projects requiring low-carbon material will require more than five-times this amount of funding. Mission Possible Partnership report said that newly industrialised countries like Indonesia and Morocco had already secured a quarter of the $250 billion invested in clean industrial plants. The report stated that 69 projects were in operation, using clean energy for the production of materials. The report also tracked $1.6 billion of projects announced, but not yet funded, with the newly industrialized "sunbelt countries" accounting for 59%, while the United States, the European Union and China each accounted for 18%. Faustine Delasalle is the CEO of this organisation. She said, "The new generation energy-intensive industrial plant will move to places where there are abundant, reliable, affordable, and clean electricity sources to produce materials chemicals, and fuels." The MPP, a non-profit organization based in the United States that aims to promote the growth of the low-emissions industry with the support of the Bezos Earth Fund (BEF) and the World Economic Forum. Delasalle said that the new industrial sunbelt is set to surpass Western nations in ammonia sectors, creating major ripples across the global economy. The Industrial Transition Accelerator was established at the COP28 Summit in Dubai in order to encourage investment in green projects. Delasalle also serves as executive director of the ITA. According to the report, green ammonia (used as fertiliser) and sustainable aviation fuels are the fastest-growing sectors of clean industry. The report stated that in the metals industry, there are 33 projects for primary steel plants with near-zero emissions, but 90 more projects must be funded by 2030 to achieve net-zero goals. Aluminium has 44 projects, but requires 165, it said. Reporting by Eric Onstad. (Editing by Jane Merriman.)
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A report warns that poor grid planning could cause data centres to be located in different parts of Europe.
A report by the energy think tank Ember on Thursday showed that Europe's top data centres are facing a major change as developers will move to wherever connection times can be shortened. The data centre construction boom has been a phenomenon in recent years, as tech companies compete to offer the best artificial intelligence (AI), which relies on a newer generation of power-hungry servers. The report stated that this could lead to a geographic shift in investments in Europe, as developers search for places with better power access and shorter lead-times. The report stated that by 2035, half the data centres in Europe could be located outside of the main hubs Frankfurt am Main, London, Amsterdam Paris and Dublin. It said that this could lead to the loss of billions in investment from congested countries as data centres in Germany contributed 10,4 billion euros ($12billion) in GDP by 2024, which should double by 2029. The report stated that only France is expected to continue data centre investments as grid constraints remain relatively low. The report stated that it can take 7-10 years to connect a new data center to the grid at legacy hubs, and some projects could face delays as long as 13 years. It said that the wait time in Italy is only three years. "Grids ultimately decide where investments go... they are now effectively an instrument to attract investment," Elisabeth Cremona Senior Energy Analyst, Ember. She said that in order to make other projects a reality, Europe must now take grids into consideration and invest in this infrastructure. She said that the process is similar for any industry looking to electrify or is new. By 2030, the electricity consumption of data centres is expected to triple in Sweden, Norway, and Denmark. Austria, Greece Finland, Hungary Italy Portugal Slovakia, Portugal, Slovakia, and Slovakia are all expected to see a three- to fivefold increase in data centre consumption by 2035, compared to the year 2024. ($1 = 0.8692 euros)
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SkyWest and Lithuania deals lift Embraer to Paris Airshow
Analysts and investors welcomed the new deals announced on Wednesday by Brazilian planemaker Embraer during the Paris Airshow. These included a large regional jet order placed with SkyWest, and a military agreement signed with Lithuania. Embraer shares climbed up to 5% after the announcements, making the company the best performer in Brazil's benchmark index Bovespa. This also highlighted positive sales momentum. Embraer had a rough start at Le Bourget on Monday as Polish carrier LOT chose Airbus' A220 Regional Jet over Embraer's E2 Family after a fierce competition. Hard-fought battle for a landmark 40-airplane deal. SkyWest, a U.S. carrier, placed a firm 60 E175 order valued at $3.6 Billion at list price. There are options to purchase 50 more. Arjan Meijer of Embraer Commercial Aviation described the deal as a "mega-order" and added that the E175 is the "cornerstone for regional aviation in North America." Analysts at Santander praised the "strongly positive development" as it was for Embraer, due to the significant boost in its backlog of orders and the indications that the demand for first-generation models will continue to be strong in the region. Itau BBA also revealed that South Africa's Airlink intends to lease ten second-generation E195E2 jets. This move, Itau BBA believes, could lead to future orders from Azorra. NATO BOOST Lithuania announced that it has selected Embraer’s KC-390 Airlifter as its main airlifter, paving way for the purchase of three aircraft. The financial details of the deal were not revealed. Analysts believe that the move could lead to more orders coming from European and NATO nations, including Portugal, Hungary, and The Netherlands The C-130, which is a competitor of Lockheed Martin’s aircraft, was also chosen. Bradesco BBI wrote in a client note that the increase in European defense investment could lead to at least 50 additional orders for the C-390. Embraer is the third largest plane manufacturer in the world after Airbus. Its jets are selling well, and this has created a tailwind. The company's shares are up 30% this year after a 150% increase in 2024. Reporting by Gabriel Araujo, Sao Paulo. Additional reporting by Paul Sandle, Paris; and Paula Arend Laier, Sao Paulo. Editing by Mark Potter and Margueritachoy.
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Air India reduces international flights by 15% on widebody aircraft
Air India announced on Wednesday that it would reduce international flights on its widebody aircraft to 15% in the coming weeks. The company cited ongoing safety inspections as well as operational disruptions after last week's fatal crash of a Boeing 787 Dreamliner. The authorities continue to investigate the crash that killed 241 and was the deadliest aviation accident in the last decade. In a press release, the airline stated that 26 of its 33 Boeing 787/8 and 787-9 aircraft had passed inspections and were cleared to fly. Tata Group's airline announced that the cuts would be effective until mid-July. The aim was to "ensure stability, improve efficiency, and minimise any inconvenience for passengers." Air India said that additional checks will be conducted on its Boeing 777 aircraft in the near future. The flight AI171, bound to London's Gatwick Airport from Ahmedabad crashed shortly after takeoff, killing everyone on board except one and approximately 30 people on the surface. Air India Chairman N. Chandrasekaran had said earlier on Wednesday that the plane which crashed had a history of clean engines. Chandrasekaran told Indian broadcaster Times Now that Air India Flight 171's left engine had last been serviced in March 2023, while the right engine is new and was installed in March 2025. The Dreamliner is equipped with GE Aerospace GEnx engines. Air India cited geopolitical tensions and "night curfews" in European and East Asian airspaces as factors that contributed to the cancellation of 83 flights in the last six days. Reporting by Abhijith Ganahapavaram and Surbhi Mishri, Mrinmay dey and Abinaya V. Editing by Timothy Heritage and Alan Barona.
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Waymo tests its cars in NYC and applies for an autonomous driving license
Alphabet’s self-driving division Waymo announced on Wednesday that its vehicles would be returning to New York City for autonomous testing next month, as the company continues to scale up operations in the U.S. As Waymo continues to expand its testing, Tesla is preparing to launch limited trials for its autonomous taxi service this weekend with just 10 cars. This shows the growing momentum of self-driving car development. Waymo applied for a permit with the New York City Department of Transportation in Manhattan to operate autonomously. Waymo stated that "this is not an extension, but we do have plans to bring our fully autonomous ride hailing service to the city at some point in the future." Waymo's first drive will be manual in order to get the permit. If approved, this would be the first time New York City has tested autonomous vehicles. Waymo has said that it will advocate for a law change in New York State, which currently prohibits driving a car without a human driver. In 2021, the company brought their cars to Manhattan for manual driving and data collection. Waymo announced on Tuesday that it would expand its operations to include more of the San Francisco Peninsula and Silicon Valley. It received California approval last month to expand its operations. Waymo, the only U.S. company to offer robotaxis with paid passengers, has over 1,500 vehicles and provides more than 250,000 rides per week in San Francisco, Los Angeles, Phoenix, Arizona, and Austin, Texas. (Reporting from Juby Babu, Mexico City; editing by Alan Barona).
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US ends investigation into 2,000,000 Nissan vehicles without seeking recall
The U.S. Auto Safety Agency closed on Wednesday a seven-year old investigation of 2.03 million Nissan Motors vehicles for issues related to rear suspension arm failure, without seeking a vehicle recall. In 2018, the National Highway Traffic Safety Administration opened an investigation that covered Nissan Altima 2013-2018 and Nissan Maxima 2016-2018 vehicles. This was upgraded to a engineering analysis in 2019. The investigation examined whether corrosion could cause the lower control arm in the rear suspension system to separate from the chassis, posing a safety risk. Nissan made a change to the design of the lower control arm in January 2018. This was done to increase the durability. Nissan didn't immediately respond to a request for comment on Wednesday. NHTSA stated that it had reviewed approximately 1,300 reports on the issue. A small number of complaints indicated they were in near-collisions. One complaint stated that a vehicle had made physical contact with an object by bumping into a trailer hitch on a truck. The agency stated that "Nissan admits that cracks can develop on control arms that are affected due to normal stress loads and that the salts used for road snow and ice treatments may cause corrosion which accelerates the crack's progression." The majority of reports were from states in the U.S. salt belt, which are prone to corrosion. Vehicles had traveled an average of over 113,000 miles (181,856 kilometers) when they failed. There have been no reported injuries. Nissan's 2019 customer satisfaction campaign saw more than 47,000 cars repaired with new parts. Some vehicles also received an extended warranty of up to 10 years. NHTSA stated that further investigation was not warranted due to the declining trend in reports, Nissan's countermeasures and their extended warranty coverage. (Reporting from Abhinav Paramar in Bengaluru, and David Shepardson at Washington; Editing and proofreading by Shreya Biwas and Marguerita Chy)
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Macquarie, a Macquarie company in Australia, has acquired stakes at UK airports
Macquarie Group, Australia's largest financial services company, announced on Wednesday that it had acquired from Ontario Teachers' Pension Plan stakes in the airports of Bristol City, Birmingham City and London City for an undisclosed sum. The investment bank has purchased a 55% share in Bristol Airport, 26.5% in Birmingham Airport, and 25% in London City Airport. Sky News broke the story of this deal, which is for London City Airport - the fifth largest airport in London - earlier this month. Macquarie said that through the investment it is committed to support the airports which serve more than 25 million passengers per year over the long-term by expanding their routes networks and further improving passenger experience. Macquarie announced that the deal for London City Airport has reached financial closure. The acquisitions of the other two airports will be completed by the fourth fiscal quarter in 2025.
US Safety Board wants to warn Boeing 737 MAX engine owners about smoke entering the cockpit
The National Transportation Safety Board released an urgent safety recommendation on Wednesday regarding the possibility that smoke could enter the cockpit or cabin in Boeing 737 MAX aircraft equipped with CFM International LEAP-1B engine.
The NTSB recommended that the LEAP-1A/-1C engines be evaluated for the possibility of the same problem. This recommendation follows two incidents involving a Southwest Airlines Boeing 737 MAX aircraft in 2023. The NTSB is asking the Federal Aviation Administration (FAA) to make sure that flight crews are informed of aircraft equipped with affected engines.
Southwest has confirmed that it is reviewing all recommendations and mitigation procedures are in place. Southwest informed its flight crews of the effects of bird strikes after two incidents that occurred in 2023. They emphasized the importance of adhering to established safety procedures.
CFM LEAP engines can be found on Airbus A320neo variants and Boeing 737 MAX. CFM is the largest engine manufacturer in terms of units sold. It's owned by GE Aerospace, Safran, and Safran.
The FAA and Boeing both agreed with the NTSB's recommendations. They also alerted the operators that, following a bird strike, smoke could enter the cockpit after the Load Reduction Devices (LRDs) were activated in the engines.
The FAA stated that it advised operators to review their crew training and procedures to make sure they addressed this potential problem. When the engine manufacturer creates a permanent solution, we will demand that operators implement it in a reasonable timeframe.
Boeing, GE, and Airbus have not yet commented.
The NTSB requested that the European Union Aviation Safety Agency (EASA) and the Civil Aviation Administration of China determine whether other variants of CFM LEAP engines are also susceptible of causing smoke to appear in the cockpit or cabin when the LRD is activated.
November is a month of celebration.
The FAA stated that it would not be necessary to require immediate
After two incidents involving bird strikes involving CFM LEAP-1B engines, the Boeing 737 MAX engine review board convened to address concerns.
The FAA was considering new takeoff procedures that would close airflow for one or both engines in order to reduce the impact of bird strikes and to prevent smoke from entering cockpits.
The NTSB will begin an investigation in 2024 into the Southwest left-engine bird strike near New Orleans and the subsequent smoke in cockpit incident that took place in December 2023.
Another incident took place on a Southwest flight departing Havana in March 2023, where a bird struck the cabin and caused smoke to fill it.
Boeing released a bulletin in February 2024 to alert flight crews about the potential effects of severe engine damage on flight deck and cabin. Reporting by David Shepardson, Editing by Chizu Gregorio and David Gregorio
(source: Reuters)