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US Investigating Bombardier Over Garuda Indonesia Jet Sales

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The US Department of Justice (DOJ) has requested several documents from Canadian plane maker Bombardier to aid an investigation into claims of fraud regarding deals with Indonesian airline Garuda Indonesia. Bombardier is currently under investigation for the same deals in the UK.

Bombardier is now being investigated in the US and the UK for bribery and corruption regarding sales of its CRJ1000 in Indonesia. Photo: Bombardier

According to Reuters, the US has joined the ongoing investigation in the UK regarding the sale of jets to Garuda Indonesia in 2011 and 2012. The US DOJ has requested several documents from Bombardier, which the manufacturer is said to be providing. Bombardier is fully cooperating with authorities on both sides of the Atlantic.

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Which deals are being investigated?

The deals that are being investigated center on the sale and lease of Bombardier’s CRJ1000 jets to the Indonesian airline just over a decade ago. There have been several accusations of bribery and corruption, but as the investigation is ongoing, specific details haven’t been revealed.

The SFO in the UK announced its investigation in November 2020, and Bombardier came forward to say they would happily cooperate in providing evidence. Since the deals took place so long ago, the current CEO, Eric Martel, was not in the top job at the time and has said they were unaware of any internal issues. Bombardier is using external lawyers to examine the issue and carry out an internal review.

Garuda Indonesia has been accused of bribery over deals with Airbus and Rolls-Royce. Photo: Getty Images

Bombardier isn’t the only one being investigated

Bombardier has been dragged into instigations in the US and the UK because of other deals made by Guarda. Previous investigations found that ex-CEO of Garuda Indonesia, Mr Emirsyah Satar, received additional financial payments for orders the airline placed with both Airbus and Rolls-Royce.

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Mr Satar was detained, convicted, and jailed for bribery and money laundering. Airbus was forced to pay $4 billion, and Rolls-Royce paid $800 million in a settlement. However, while the investigations were ongoing, investigators became suspicious of several Bombardier deals. Bombardier has also faced investigation in Sweden and Spain over the past few years for similar alleged crimes regarding rail deals.

Bombardier is cooperating with both investigations but could end up with a hefty fine. Photo: Bombardier

What if Bombardier is culpable?

Since the investigation is ongoing, it isn’t known how likely it is that Bombardier could be found guilty of any wrongdoing. No official charges have been brought against the company or an individual at this stage. If there is evidence of bribery or corruption, the manufacturer will likely be slapped with a large fine.

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If there is any evidence of an individual taking bribes, then criminal charges can be brought against one person. This is what happened to Mr Satar. This could end up with jail time and a criminal record as well as a fine.

With the main investigation taking place in the UK, Bombardier is allowed to provide additional evidence. Providing evidence before being asked for evidence can result in a softer penalty. But, with a joint investigation in the US, the manufacturer may still find itself with a large penalty; not ideal after one of the worst years in aviation history.

What do you think of the situation with Bombardier? Let us know your thoughts in the comments. 

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Source: https://simpleflying.com/us-bombardier-garuda-indonesia-investigation/

Aviation

SAS Was The First Airline To Operate A Polar Route

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Scandinavian Airlines (SAS) came into existence shortly after the Second World War, following a merger between airlines from Denmark, Norway, and Sweden. Eight years after commencing operations, it had made history by becoming the world’s first airline to operate scheduled flights that traversed the polar ice caps. Let’s examine these services further.

SAS Douglas DC-6
SAS flew piston-engined Douglas DC-6s on its first polar route. Photo: SAS via Wikimedia Commons

Testing since 1952

1954 heralded SAS’s (and indeed the world’s) first-ever scheduled commercial air route over the polar ice cap regions. With these areas begin remote and uninhabited, such routes carried an additional element of danger in terms of the plane’s (and its occupants’) rescue prospects in the event of a crash. As such, SAS began tests two years beforehand, in 1952.

According to Scandinavian Traveler, SAS operated its first experimental transpolar flight from Los Angeles to Copenhagen in November that year. A Douglas DC-6B named Arild Viking, made the trip in 28 hours, with stops in Edmonton (Canada) and Thule (Greenland).

22 dignitaries were onboard as well as SAS’s chief polar navigator Einar Sverre Pedersen. Tests continued, including transpolar journeys from Los Angeles to Stockholm and Oslo to Tokyo, while SAS awaited clearance to begin its commercial transpolar services.

SAS Douglas DC-6B
SAS made its first experimental transpolar flight in 1952. Photo: SAS Museet via Flickr

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Service begins

US authorities finally granted SAS, with the help of the Los Angeles Chamber of Commerce, the rights to carry paying passengers on its California-bound transpolar routes in 1954. Just under two years after the first experimental flight across the pole regions, on November 15th, 1954, SAS’s (and the world’s) first revenue-earning transpolar flight departed.

This route also connected Copenhagen and Los Angeles, although its stops were different to the test flights. It touched down en route in Kangerlussuaq (Greenland) and Winnipeg (Canada), as seen in the map below. It proved a success, with the route’s popularity prompting SAS to increase its frequency to three times a week after just two years, in 1956.

A wide variety of passengers used this route. On the one hand, it was popular among film stars traveling to and from Hollywood, gaining SAS further publicity. American tourists also used the route as a gateway to Europe, as SAS allowed a free onward connection. Today, SAS continues to serve Los Angeles International Airport from Copenhagen and Oslo.

SAS Polar Map
SAS’s first transpolar service stopped in Kangerlussuaq and Winnipeg. Image: GCMap

Also advantageous for transpacific flights

The advent of polar routes also proved a game-changer for transpacific flights between Asia and North America. This, along with relaxations regarding the use of Russian airspace, removed the need for such journeys to make a stop in Anchorage, Alaska along the way.

Boeing explains that the use of direct polar routes on transpacific services benefits both airlines and their passengers. Regarding the establishment of four cross-polar routes in 1998, the US-based manufacturing juggernaut states that:

Flight times are reduced by an hour or more, and fuel requirements are reduced by several thousand pounds. The savings are even greater if a polar route eliminates the need for an intermediate stop. The combined effect of these savings is reduced operating costs, lower emissions levels, and more competitive fares for passengers.”

Did you know about SAS being the first airline to operate a polar route? Perhaps you’ve even flown on such a service yourself? Let us know your thoughts and experiences in the comments!

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Source: https://simpleflying.com/sas-first-polar-route/

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Aviation

Canada Not Ready To Relax India Flight Ban

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Canada is not planning to relax its India travel ban any time soon. The Canadian government is likely to announce another one-month extension on the direct flight ban, forcing travelers to take complicated routes instead. Let’s find out more about this decision.

Air Canada 787-9
Direct flights between India and Canada remain suspended since late April, leaving thousands stranded. Photo: Air Canada

Delayed

According to the Hindustan Times, Canada will announce another one-month extension to the ban on direct flights from India. The ban was originally set to expire today, on 21st June, but the government has opted to extend it for at least one more month, until 21st July. The decision comes as the number of cases of the Delta variant, first seen in India, continues to grow in Ontario.

Air India Boeing 777-300ER
Air India has also suspended all of its Canadian operations as the ban remains in place. Photo: Vincenzo Pace | Simple Flying

While the health situation in India has changed drastically since the ban was put in place on 22nd April, the risk remains high. Canadian authorities consider the Delta variant to be 150% more transmissible than the original strain, pushing provinces to demand a continuation of the direct flight ban. For now, don’t expect to see direct flights between the two countries any time soon.

Not the only way

Notably, unlike most others, Canada’s ban is on direct flights and not travelers themselves. This means passengers could enter Canada if they break their journey in a third country and take another COVID-19 test. Indeed, reports have begun emerging of travelers opting to purchase expensive tickets in order to fly to Canada from India with a stop of COVID-19 testing.

Currently, very few countries have their borders open to Indian travelers. However, passengers have been creative with their stops. Cities like Belgrade, Mexico City, Addis Ababa, and others have emerged as popular locations to break journeys and take another COVID-19 test.

Qatar A350
Passengers have been taking one-stop and two-stop itineraries from India to reach Canada. Photo: Vincenzo Pace | Simple Flying

Once passengers test negative, they are free to enter Canada once again. However, quarantine and testing rules on return still apply to all travelers from India. This includes a three-day stay in a hotel on arrival, a negative test, and 14 days of home quarantine. However, the ban still leaves space for travelers from India looking to return to reunite with their families, for studies, or any other reason.

Airlines locked out

For Air Canada and Air India, the announcement means another month of missing out on lucrative flights from India. Considering the larger Indian diaspora in Canada, ties between the countries are robust. This contributed to millions of yearly passengers between the countries, meaning big business for the flag carriers.

For now, any wishing to fly must be prepared for long journeys with multiple stopovers to reach Canada. However, an incoming proposal could make the hotel quarantine requirement obsolete for fully vaccinated individuals. As vaccination rates rise, we could see the flight ban also eased in the coming months.

What do you think about Canada’s decision to extend its flight ban? Let us know in the comments.

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Source: https://simpleflying.com/canada-indian-flight-ban-extended/

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Aviation

Vietnam Airlines Set To Receive $174 Million In Aid From Banks

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Vietnam’s flag carrier Vietnam Airlines will receive a total of 4 trillion dong ($174.8 million) from three Vietnamese banks. The airline has been struggling to cope with the financial impact of the ongoing pandemic. The loan will be used to keep the airline out of bankruptcy but it might not be enough.

Vietnam Airlines has been offered a loan from three Vietnamese banks. Photo: Airbus

According to reporting by Reuters today, three banks will lend interest-free loans over the next month. The three banks are Vietnam Maritime Commercial Joint Stock Bank, Saigon – Hanoi Commercial Joint Stock Bank, and SeABank.

In total, the three banks will hand over 4 trillion Vietnamese dong ($174.8 million) to save Vietnam Airlines from bankruptcy. While this might sound like a lot, the airline recorded a net loss for the first quarter of this year of just under 5 trillion dong ($217 million). So, this loan amount won’t even cover the first quarter.

According to experts from the Vietnamese Ministry of Planning and Investment, the airline could have a net loss of 10 trillion dong ($435 million) for the first half of the year.

Raising capital

With such huge losses, the airline needs more than a loan to get back on its feet. The plan is for the airline to raise its own capital by issuing new shares to its current shareholders before the end of the year.

Vietnam Airlines will sell 11 of its older A321s to help boost its cash flow and pay debts. Photo: Airbus

Furthermore, Vietnam Airlines announced earlier this month that it would sell 11 Airbus A321s to help improve cash flow issues. Although the airline has said it is selling the aircraft to modernize its fleet, there is little doubt that financial issues had a lot to do with the decision. The aircraft for sale are just over 12 years old.

The banks’ decision to lend money to the airline is slightly surprising to some. In recent weeks reports suggested that banks were unwilling to lend money to the airline. According to local media outlet Dealstreetasia.com, the airline was behind on repayments, and creditors considered legal action to get the airline to pay up.

The Vietnamese government has an 86% stake in the airline. The government is also helping fund the banks. Photo: Airbus

There is a chance the banks had their minds changed by the Vietnamese government. The government owns 86% of the airline. The government had promised a bailout package to commercial banks but was slow to pay up.

Banks have been asking the government to restructure debt payments and make changes to interest fees to help prop up banks and other businesses. The result is that the government-owned airline is being propped up by banks that are relying on government loans themselves.

Currently, Vietnam Airlines’ worries are closely tied to the ongoing COVID-19 outbreak. It looks as though the airline won’t recover until case numbers go down. Unfortunately, cases are on the rise in Vietnam. Bank loans may not be enough to tide the airline over until it can unground aircraft and get back to a regular schedule.

What do you think of Vietnam Airlines’ situation? Do you think the airline can recover? Let us know your thoughts in the comments.

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Source: https://simpleflying.com/vietnam-airlines-bank-aid/

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Aviation

Electric Planes Are Inevitable

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In a short documentary about airlines, Wendover Productions shares why electric planes are inevitably coming. “It doesn’t currently make sense for airlines to care about climate change,” the narrator of the video said. These are some of the top polluters in the transportation industry, but they basically just get a pass due to a lack of cleaner alternatives.

For airlines, the thing that enables profits is to not care about climate change. Global warming mitigation efforts to adequately make up for airline emissions would cost so much that the airline companies would suffer financially — not something they are willing to do if not forced.

“Carbon doesn’t have a cost for airlines. With few exceptions, emitting more carbon does not cost the airlines anything, but it enables them to make more profit. So, the theoretically correct thing for airlines to do is to emit the amount of carbon that enables them to generate the most profit, regardless of environmental consequences.”

Airlines sometimes do care about climate change for public relations reasons — it looks good to care about the planet, or to pretend to care about the planet if you are convincing enough. Airlines that are seen as “green” or “greener” are usually more desirable to those wanting to fight climate change. It’s the consumers, not the for-profit businesses, who are demanding that the businesses care.

“Net carbon-zero is expensive. Biofuel development is expensive. Sustainable aircraft development is expensive. All more expensive than would make sense if airlines and aircraft developers exclusively cared about PR.”

Why Airlines Are Starting To Take Climate Change Seriously

The narrator explained that airlines and aircraft manufacturers are terrified of regulation. In France, the national assembly passed a bill that would ban short-haul flights on routes that could be traveled in 2½ hours or less by train. Several other European countries have proposed similar bills, and airlines just don’t have good enough arguments against these regulations.

“A move away from the shortest-haul, most replaceable flights will be the start, but it won’t end there.”

Since airlines are one of the more carbon-intensive industries, they will start facing these challenges — unless they become less carbon-intensive. That is, unless they take fighting climate change seriously — see it as something they need to do rather than as an act to simply appear green.

The narrator noted that flying won’t stop and governments won’t restrict it — and that it’s needed. However, governments will put pressure on the industry to reduce its carbon footprint. One way is to have airlines price their carbon footprint into the cost of flying. They can do this by structuring so that greener flying is cheaper flying. A great example of this is hefty carbon taxes.

Airlines Care About Climate Change Because It’s Competitive To Do So

The video pointed out that the airline industry cares because airline companies are pragmatic. Some of the things that have helped this industry so far are biofuels, engine efficiency improvements, and carbon offsetting.

One solution that can really turn flying into an actually sustainable method of transportation is the creation of electric aircraft. These already exist, and more are being developed. As the underlying technologies improve and become cheaper, it will become much more feasible to develop larger passenger and cargo electric aircraft. (So far, we are talking about rather small planes with quite limited range/capabilities.)

“There’s not a whole lot technologically that has or is preventing electric aircraft from existing. What is, is the business case. Batteries are just more expensive and less energy dense than fuel, so with carbon emissions always having been free for airlines, it’s just always made sense to use petroleum-based fuel.”

When you think about that for a moment, you can also see that a high price on carbon would result in a quicker transition to electric aircraft.

The narrator pointed out another challenge: developing aircraft is pretty expensive and getting an aircraft certified for commercial use using a new type of motor is even more so. So, why should an aircraft company go through all of this for something that doesn’t make sense in the business case? The answer to that question is the evolution of the said business case.

New Business Case In Favor Of Clean Energy

For the first time, there’s a new and strong hypothesis of a business case that’s been developed and if it works, it could dramatically shift how commercial aircraft work in generations.

“Electric aircraft inherently have constraints. While much progress has been made in the past decade to bring down the price of batteries, and they now cost 1/10th as much per kilowatt-hour compared to a decade ago, less has been done to increase battery energy density — that is, the amount of electricity stored per pound or kilogram.”

The narrator explained that with EVs, weight doesn’t matter with the primary novel application. It’s easier to increase the range by bringing down costs and add more batteries instead of improving their energy density. For aircraft, it’s much different. The lighter they are, the further they can fly. Adding additional batteries to provide the energy to carry the weight of those batteries is something aircraft need to do in order to fly further.

Another thing explained in the video is that all of the viable electric aircraft are propeller-driven, mainly because of the cost. It’s more costly to develop an electric jet engine. Also, it saves time for short-range flights.

“Airlines need to find a use case for short-range, slow, electric aircraft. Conveniently, it already exists.”

The narrator explained that United Airlines flies to sixteen destinations less than 250 miles or 400 kilometers away from its Denver, Colorado hub. These destinations include Aspen, Montrose, and a few others that are high-yield and high-frequency locations even though they are close to Denver.

These flights also connect tourists to popular ski towns. The narrator spoke of Widerøe in Norway. Out of its 47 destinations, 19 are within 250 miles of Widerøe’s Tromsø hub. Many of these routes are over distances fewer than that. Another airline, Cape Air, doesn’t fly any routes over 250 miles in length.

“The use case for electric aircraft already exists because airlines like Cape Air have already found it, just not yet using electric aircraft. They fly from hubs to small destinations on 9-seat propeller aircraft and partner with mainline airlines to offer connecting itineraries.”

For them, the range constraints plaguing electric aircraft don’t really matter since the routes are short. The speed constraints are also irrelevant in this case. In the case of Cape Air, electric aircraft could easily replace all of its flights and also take over some of Delta, JetBlue, United, and other larger airlines’ routes.

How Cape Air Could Be The Highest Operating-Margin Airline In The World

The U.S. Department of Transportation’s Order Re-Selecting Airline is a document for its essential air service subsidized flights from Boston Logan Airport to August and Rockland. Routes such as the smaller, remote communities across the nation are subsidized by the U.S. government. This is to improve connectivity and economic opportunity in these areas.

Since the bids from airlines to operate these routes are public records, the video was able to look at Cape Air’s records and see just how the airline benefited, while making a case for switching to electric airplanes. Cape Air won the bid to operate the route to Rockland, Maine — receiving a subsidy of $2,218,126 for the first year — 2019–2019. That number grew to almost $2.5 million by their fourth year. Rockland has a tourist season but is normally quieter during the winter months. Cape Air’s flights to Rockland vary due to this and they can operate anywhere between three daily round-trip flights in the winter and six in the summer.

Breaking Down The Math

“They’re obligated to operate some 1,365 flights annually representing 12,285 total available passenger seats in each direction. According to Cape Air’s estimates, this route should cost some $3,350,746 a year to operate. They estimated some 15,122 total passengers would fly but publicly available data shows that only 6,733 boarded their planes in Rockland in 2019.

“Assuming it’s roughly the same in the other direction, as one would expect, that means they saw only 13,466 total passengers, representing a 54.8% load factor. Selling tickets for an average of $83, the airline likely, therefore, brought in $1,117,678, which combined with their $2,247,721 year-two subsidy means that they earned some $3,365,399 in revenue. Subtracting their annual cost estimates, that means they only turned $14,653 in profit or $1.09 worth per passenger.

This shows just how tight airlines’ margins can be. But what would they be if they were operated by electric airplanes? Excessive fuel costs would be the first thing to go. Electricity, although not free, has a much lower cost compared to fossil fuel. Electricity can also be converted into capital costs instead of an ongoing cost by investing in solar or wind energy generation, which is something Cape Air has been eyeing.

For Cape Air, its $844,002 in annual fuel costs could be eliminated if it made the switch to electric. Other costs would go up and ownership cost would probably double, at least. Maintenance costs would be much lower than with traditional internal combustion driven aircraft — similar to electric cars.

The three factors together put Cape Air on track for a 40% reduction in operating costs, which is notable.

“On their Rockland route, assuming no change in revenue, that would take $1.09 in per passenger profit and turn it into $100.62 — a number so dramatically different that it doesn’t even sound correct.”

The video has other examples, and its key point is that electric aircraft aren’t just inevitable, but make the most sense by far. The proven business case along with the case study of Cape Air shows a glimpse of the financial benefits airlines would have by making the switch to electric for their shorter routes.

You can watch the full video here.


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Source: https://cleantechnica.com/2021/06/21/electric-planes-are-inevitable/

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