Reuters blog archive

from Breakingviews:

Malaysia Airlines plight points to riskier world

By Una Galani

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

Fatal air accidents almost never happen, fortunately for both passengers and investors in airlines. Yet Malaysia Airlines has been struck twice by tragedy in little over four months. The aviation industry may have its own set of challenges, but it is a reminder that even more robust businesses need to consider political risk carefully.

A long-range surface-to-air missile is suspected to have brought down flight MH-17 killing all 298 people on board when it crashed over eastern Ukraine on July 17. Another Malaysia Airlines flight en route to Beijing disappeared in March without a trace. The chances of either were vanishingly small. Fatal accidents per a passenger departure have more than halved in number since 1990, according to the International Air Transport Association.

The airline industry is one of the least able to financially absorb shocks. High oil prices and intense competition for market share have already driven several close to the brink. In Asia, high levels of government ownership set the scene for undisciplined expansion. State-controlled and loss-making Malaysia Airlines was already planning to announce a major restructuring within the next year. That may now need to be accelerated.

from Data Dive:

Charting the Malaysian airliner disappearance

For the third day, search and rescue operations from 10 different countries failed to find any trace of the missing Malaysian plane that disappeared about an hour into a flight to Beijing. Here's a map of the plane's last known location: 

There are numerous theories as to why the plane disappeared, but nothing concrete. Here's Reuters with one scenario:

from Stories I’d like to see:

Picking government contractors, high-flying Dubai, and a dubious drug on the market

1. Who picks the contractors?

In the wake of the failed launch of there has been some spectacular insider coverage, particularly by the Washington Post and New York Times, of the failure of the private contractors to deliver what they promised when they won the assignments to build the federal insurance exchange. But while there has been some mention of problems with the contract procurement process itself (focusing on the notion that in Washington the IT providers who win the contracts are better at winning IT contracts than at doing cutting-edge IT), one piece of the story has so far been missing: Who actually decided to award the contract to CGI and the others who shared the work? And on exactly what basis?

We know the winners had invested heavily over the years to get on a list of pre-qualified companies who could bid on contracts like this one, a tortuous process that the best and brightest technology companies outside the Beltway typically don’t bother with because they have too much more rewarding work to do in the private sector, where the bidding process is more straightforward. But we still haven’t gotten a good picture of who in the government runs these processes.

from Breakingviews:

EasyJet’s growth will get harder to replicate

By Olaf Storbeck

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

EasyJet is turning improved customer service into bundles of cash. The numbers are especially impressive in the context of the millions being lost by many of Europe’s legacy airlines on short-haul flights. It also makes a stark contrast with the low-cost rival Ryanair, which has issued two profit warnings since September.

from Breakingviews:

Ryanair shares still expensive despite rapid descent

By Olaf Storbeck

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Ryanair is well known for the cheapness of its flights. But its shares are expensive and that remains true even after a 12 percent dive on Nov. 4.

from Breakingviews:

Cathay-Qantas spat to clear cloudy Hong Kong skies

By Robyn Mak

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

A dispute between Cathay Pacific and Qantas Airways could clear up Hong Kong’s fuzzy rules on airline ownership. The city’s dominant operator is challenging its Australian rival’s plan to set up a budget carrier. The stakes are high: a Qantas victory could spark a scramble by others to establish a local base. But no matter who wins, Hong Kong should benefit from greater legal clarity.

from The Great Debate:

Why airline mergers are inevitable

The American Airlines/US Airways merger talks are on hold due to the ongoing antitrust trial led by the Department of Justice. The D.O.J. is concerned, from the perspective of protecting consumers’ interests, that the resulting airline would have too much market power in many of its locations. Though this is true (assuming nothing about the airlines’ business was changed and no assets were divested), the underlying issues are broader than that.

This is an inevitable story of consolidation and creative destruction and the cyclicality of the two. This proposed merger -- or one like it -- will happen. It’s just a matter of time. But let’s compare an American Airlines/US Airways pairing with two, comparable, big-headline mergers.

from Global Investing:

Turkey: ceasefire with PKK may bring economic gains

Turkey's ceasefire last month with the Kurdish militant group PKK could boost its trade partnerships multilaterally, as increasing prospects for stability in the region bring economic opportunities in the Middle East and Africa.

The halt in the decades-long armed campaign came on March 21 after the leader of the Kurdistan Workers' Party, Abdullah Ocalan, sent a letter with the announcement from the island prison cell where he has been held since 1999 when he was arrested for treason.

from Stories I’d like to see:

Congress’s friendly skies, and battle of the dumb lawyers

1.   Air Congress:

As a snowstorm threatened Washington, D.C., last Wednesday night, there were TV news reports showing members of the House hustling down the Capitol steps so they could get to the airport to catch flights home. This reminded me of something I’ve been curious about for a while.

Several years ago, when I was doing reporting for a book on the aftermath of 9/11 about how the airlines lobbied Congress to block airport security initiatives that they thought would be too onerous, I was told that each airline has a travel agency-like staff in Washington that is an adjunct of its lobbying office. Its sole purpose, one airline lobbyist told me, is to assist members of the House and Senate with their weekly trips home and back. These staffers get the call if a legislator has to change flights because of a last-minute vote.

from India Insight:

Fare wars over India: You win, airlines lose

(Any opinions expressed here are those of the author and not of Reuters)

Indians like it cheap -- be it a car, a phone call or airfare. If that plane ticket is about 25 percent cheaper than a train ticket, you can imagine the rush to buy.

Airlines in India are doing just that. Jet Airways, until recently the biggest Indian carrier, offered 2 million tickets at nearly half price in a “goodwill gesture”. Its website crashed soon after, just as SpiceJet’s did when it offered a million tickets for just 2,013 rupees  last month. That led many to believe the offer was a hoax.