Despite all the rhetoric last year about increased air fares, worldwide they actually declined four percent, proving once again how hard it is to gain traction on using that route toward profitability. The news came from Expedia’s financials which were released this week.

It logged a 12 percent decrease in air tickets sold in the fourth quarter, providing one of the best indicators yet of how far demand has dropped and confirming that airlines will have to do more in the way of capacity cuts to keep up. The drop in the number of tickets sold resulted in a 16 percent decline in Expedia revenues in the fourth quarter when revenue per air ticket decreased four percent, primarily reflecting a lower mix of higher revenue merchant air tickets at Hotwire. The airlines are not the only ones to raise fees for travelers since the decline was offset by higher booking fees the company imposed.

For 2008, the company reported a two percent increase in revenue per air ticket which resulted in a corresponding increase in its air revenue. Illustrating the difference between the first half of 2008, Expedia reported that the number of tickets sold was flat as the eight percent growth in the first half was decimated by the experience in the back half of last year. Expedia cited lower passenger demand resulting from airline capacity cuts and softening demand.

Airfares: Prices Fell Again in January

SuperJet Opens U.S. Office
Even has it prepares for the third SuperJet 100 to enter the flight test program, SuperJet International opened a North American office, bringing with it some familiar names to lead the North American sales effort.

SuperJet named John Buckley, late of ATR North America, as vice president, business development, who will head up the North American operation. Joining him is Patrick Sullivan who heads up customer service for the Americas, providing early product support and assisting parent-company Sukhoi Civil Aircraft Company’s FAA certification program.

The Washington office will cover regional jet marketing, customization and support and is co-located with partner Alenia at 1625 I Street, NW, Suite 1200, Washington, D.C., 20006, Tel: + 1 202 293 3433 Fax: + 1 202 293 0677

“North America is an important market segment for an efficient and modern 100 seat jets as the Sukhoi SuperJet 100,” said Alessandro Franzoni, Chief Executive Officer of SuperJet International. “The establishment of a permanent North American sales and customer support office is a clear indication of our belief in the significant market potential of the region for our aircraft.”

The program, and other small single-aisle jets gained a boost last week when Boeing noted that the new programs, including those in Japan, Brazil and China, cannot be ignored, citing it as a reason for it to keep out of that level of aircraft.

Designed, developed and built by Sukhoi Civil Aircraft Company (SCAC), the Sukhoi Superjet 100 family is comprised of 78- and 98-seaters in basic (SSJ100/95B and SSJ100/75B) and long-range (SSJ100/95LR and SSJ100/75LR) configuration. The first SSJ100 was rolled out from SCAC’s final assembly shop at Komsomolsk-on Amur on September 26, 2007. First flight was successfully accomplished last May 19, 2008.

With two aircraft in the air since December 24, 2008, the program scored almost 100 flights for a total of over 300 hours. The first two aircraft are currently in test flight with a third aircraft scheduled to joint the flight test program in spring 2009. The certification plan calls for Russia civil certification by November 2009, followed by EASA certification in 2010 and FAA certification thereafter.

Grim Markets Provide Opportunities
The global leasing market, expected to benefit as airlines retain cash to cope with current economic conditions, will reach $279 billion by 2015, according to a newly released report by Global Industry Analysts. The company cited the fact that aircraft leasing companies are continuing to make profits in an otherwise grim marketplace. The market is witnessing continued leasing deals being signed between the leasing companies and airlines worldwide, said GIA, citing the dearth of financial resources to fund internal purchases of aircraft.

In its report Aircraft Leasing: A Global Strategic Business Report, the company noted that while commercial jets represent the largest category in the global aircraft leasing industry, business jets represent the fastest growing segment.

However, leasing companies are not expected to be impacted by the economic realities as lease rates decline, even for most favored aircraft, affecting revenues for leasing companies. “Further, airline closures and capacity rationalization among airlines may force leasing firms to postpone or cancel orders and focus on re-placing existing fleet,” it said. “However, the market is expected to witness a surge in airlines' reliance on sale-and-lease-back agreements for financing aircraft purchases, keeping the prospects of leasing companies buoyant. “

GIA said growth in Eastern Europe is balancing the impact of the economy on Western Europe and, in fact, described the overall European aviation market as “booming.” It also said, unsurprisingly, that Asia-Pacific represents the fastest growing market worldwide, with a projected compounded annual growth rate of more than 10 percent over the next few years.

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