American Airlines APA Decline Merger with ALPA
Abhishek Nayar
03 Jun 2023
In a significant development in the aviation industry, the board of directors of the Allied Pilots Association (APA), the union representing American Airlines flight deck crew, recently rejected a proposal to join the much larger and more powerful Air Line Pilots Association, International (ALPA).
Background of the Allied Pilots Association (APA)
The Allied Pilots Association (APA) is a well-known labor organization that protects the interests of American Airlines flight deck personnel, including pilots and co-pilots. Since its inception in 1963, the APA has been crucial in negotiating contracts, improving working conditions, and lobbying for its members' rights. The APA plays an important role in maintaining the welfare of flight crew workers by focusing on safety, professionalism, and fair treatment.
The Proposal to Join ALPA
The proposal to merge with the Air Line Pilots Association, International (ALPA) was presented as a way to combine the strength and resources of both unions. ALPA is one of the world's largest and most powerful pilot unions, representing over 63,000 pilots from numerous major airlines. The proposal's supporters said that joining ALPA would provide the APA with more negotiating power, better representation, and a bigger support network.
The Board of Directors’ Decision
The APA's board of directors, comprised of representatives elected by the union's members, was critical in determining the proposal's destiny. The idea needed a two-thirds majority to proceed with the voting process. Despite long talks and deliberation, however, the proposal obtained just 50% of the votes cast, falling short of the needed threshold.
Reactions and Analysis
The proposal's rejection by the board of directors has spurred analysis and debate in the aviation sector. According to several industry analysts, the decision illustrates worries about the possible loss of autonomy and influence that a merger with ALPA may entail. They say that preserving a distinct identity and the flexibility to make autonomous decisions are critical for the APA to properly handle the particular difficulties that its members confront.
It polled APA members last year and discovered that 67% of them supported "seeing what a merger between APA and ALPA looks like." 52% of responding pilots said they "strongly support" the proposal. The poll included 7,722 flight deck professionals, or almost half of all American pilots.
Conclusion
The Allied Pilots Association (APA) board of directors' rejection of the request to join the Air Line Pilots Association, International (ALPA) represents a key turning point for the organization. The decision shows the APA's different viewpoints and raises concerns about the organization's future direction. As the aviation business evolves, it is critical for the APA to analyze and adjust its methods in order to successfully represent the interests of American Airlines flight deck personnel.
With Inputs from FlightGlobal
Read next
UK King’s Bench judgment paves way for lessors to claim future rentals under a lease agreement
Reeva Chugh Arora
03 Jun 2023
In a summary judgment for VS MSN 36118 CAV Designated Activity Company vs. Spice Jet Limited[1], the High Court of Justice, King’s Bench Division, allowed both the claims of the Claimant (lessor) for (i) accrued sums due; and (ii) for future rentals said to have become due upon Events of Default.
The claim for accrued sums due was a straightforward claim and as such was not defended by the Defendant (lessee).
For the claim for future rentals said to have become due upon occurrence of Events of Default, the Claimant’s case was based on Clause 23.2.2 (y) of the Lease Agreement which read as:
“23.2.2 In addition to the foregoing, Lessee shall be liable (x)………….
(y) all remaining Rent due until the redelivery of the serviceable Aircraft shall become due and payable to Lessor and (z)….”
While accepting the claim for future rentals, the Court observed:
“The fact that it is a draconian provision is hardly unusual in a list of remedies in an aircraft lease drafted for the protection of the lessor. Where there has been an Event of Default it is not particularly unlikely that the lessor would wish to secure future payments by advance payment, the monies being repayable after redelivery and full payment.”
AviLeague’s interpretation and two cents:
Given the current Indian aviation scenario, the judgment is a much-needed respite for the lessors and is expected to lead to more extensive negotiations on default and redelivery provisions. It is advised that the lessors should ensure that Events of Default provision includes security payment of future rentals immediately upon occurrence of a default with excess sums (if any) to be returned to lessee upon redelivery of the aircraft. Further, given the recent Go First’s moratorium, the default remedies should be strengthened to state that future rentals remain a liability of lessee even if the lessee enters insolvency.
The detailed analysis of the judgment is set out below.
Analysis of the judgment
Relying of Cause Clause 23.2.2 (y) of the Lease Agreement, the Claimant submitted that once there has been an Event of Default, as is the case here, the Claimant is automatically entitled to payment of all sums which would become due up to the date of redelivery under the Lease, i.e. the Expiry Date under the Lease Agreement.
The contentions raised by the Defendant and the discussion and observations of the Court were as follows:
1. The Defendant argued that Clause 23.2.2 (y) was a badly drafted provision where the grammar did not make sense, (y) being a subparagraph of “Lessee shall be liable” It was a provision that did not explain when it operated and what the trigger was: unlike Clause 23.2.1 it did not appear to require any exercise of a right by the Claimant but appeared to arise automatically upon an Event of Default.
The Hon’ble Court observed that although the grammar is unsatisfactory, it is clear from Clauses 23.2.1 and 23.2.2 that Clause 23.2.2 provides for a number of consequences which follow on the declaring of an Event of Default. Whilst the remedies under Clause 23.2.1 are options in favour of the Claimant, 23.2.2 provides for automatic consequences of an Event of Default. Clause 23.2.2 starts with “In addition to the foregoing, Lessee shall be liable…”.
2. The second argument raised by the Defendant was that it was impossible to know in advance on what date redelivery would take place. The Redelivery Date was not a fixed date and depended on whether one of the eventualities in Clause 4.2 of the Lease Agreement, which defines Expiry Date occurred. If sub-clause (i) to (vi) applied, redelivery might occur on a different date to the end of the eight-year lease period.
The Hon’ble Court opined that the provision “all remaining Rent due until the redelivery of the serviceable Aircraft shall become due and payable” is an acceleration clause. Whilst the two uses of “due” are confusing, the provision “shall become due” deems sums which would not otherwise be due (yet) to be due and payable. The Court further observed that Clause 4.2 (vi) of the Lease Agreement already states that:
“(vi) if Clause 22.2 is applicable, the Expiry Date shall be the date upon which the Aircraft is redelivered in accordance with that Clause.
For the avoidance of doubt, the obligations of Lessee in respect of payment of Rent and all other obligations of Lessee shall continue (pro-rata) to be payable and valid in respect of those days prior to the Expiry Date.”
3. Thirdly, the Defendant submitted that the wording as to “redelivery of the serviceable Aircraft” added a further layer of uncertainty. Clause 23.2.2 (y) did not even provide for sums due on the Expiry Date to be due. It referred to all remaining rent due “until the redelivery of the serviceable Aircraft.”
The Hon’ble Court observed that though the words are unsatisfactory, the prima facie redelivery date is the Expiry Date unless extended. It cannot have been intended that the acceleration provision would cover sums after the Expiry Date . Nor can it cover a possible early redelivery on a basis which could not at the relevant time be contemplated. In the Court’s view, Clause 23.2.2 (y) is intended simply as an inelegant way of referring to the Expiry Date . No other meaning can be attributed to the provision and it is not so unclear that it should simply be discarded as incomprehensible.
4. Fourthly, the Defendant submitted that the consequences of the Clause 23.2.2 (y) were extraordinary. The Claimant was seeking to rely on a clause with draconian effect where the wording was difficult to make sense of at best. The Claimant would on its interpretation receive all rentals in advance with no provision at all for accelerated receipt. If this was what the Lease Agreement had intended, it would have used clear words.
The Hon’ble Court opined that the fact that it is a draconian provision is hardly unusual in a list of remedies in an aircraft lease drafted for the protection of the lessor. Where there has been an Event of Default it is not particularly unlikely that the lessor would wish to secure future payments by advance payment, the monies being repayable after redelivery and full payment.
5. Alternatively, the Defendant argued that the provision was at least a penalty clause which could only be determined finally at trial.
As for the contention that Clause 23.2.2 (y) is a penalty clause, the Hon’ble Court observed that it would certainly be arguable were it not for the effect of Cause 10.2.1., which provides that the monies paid in advance are potentially repayable, and all that has occurred is an acceleration of payments subsequently due. The
Court further stated that there is nothing extravagant, exorbitant or unconscionable in requiring a commercial party to pay immediately the full amount of the lease in the event of non-compliance with its terms and there is nothing in principle objectionable in an acceleration clause. In effect, it renders Clause 23.2.2 (y) a form of security payment and in the Court’s view does not have the characteristics of a penalty.
The Court thus accepted the Claimant’s claim for Future Rentals
Read next
Boeing CEO Provides Hints About New Aircraft
Abhishek Nayar
03 Jun 2023
In recent years, the aviation industry has experienced tremendous challenges, and Boeing, one of the largest aircraft manufacturers, has not been exempt. Boeing's CEO, Dave Calhoun, has lately voiced confidence about the company's recovery trajectory and potential to catch up to competitor Airbus. Calhoun's statements as he prepares for the upcoming Paris Air Show have provided insight on Boeing's future ambitions and a potential technological shift that could shape the aviation industry as a whole.
Boeing CEO's Resilience in the Face of Airbus Competition
The Paris Air Show is extremely important to aircraft manufacturers all over the world. It provides a venue for businesses to present their latest concepts, establish agreements, and gain a competitive advantage. Boeing CEO Dave Calhoun has expressed confidence about the company's revival and its resolve to reclaim market share from rival Airbus.
Boeing is planning an additional MAX assembly line in Everett to supplement the three in Renton. In North Charleston, a second assembly line is being planned to allow output to increase to 10 planes per month.
NASA Collaboration on Innovative Airframe Design
During the recovery discussion, Dave Calhoun alluded to Boeing's partnership with NASA to develop an innovative airframe design. This partnership represents a fundamental technological shift in the aviation sector. The newly designed airframe design has the potential to revolutionize the appearance and functioning of future airliners.
Calhoun expressed excitement about "now putting it on a real aeroplane and watching it fly." And, perhaps, by 2028, we will have shown to ourselves that it is capable of doing the job." He also stated that Boeing is investigating additional technologies that are expected to be mature enough for the next all-new aircraft. One example he gave was improved composite materials.
The Significance of Technological Transition
The prospective technological shift in airframe design is extremely important for the aviation sector. The combination of modern technology and novel materials has the potential to significantly enhance numerous important areas of aircraft performance and efficiency.
Collaboration between Boeing and NASA
Boeing and NASA's relationship exemplifies the benefits of collaboration in the aviation industry. Both organisations may combine their knowledge and increase the speed of innovation by merging skills and resources. Boeing's substantial aircraft manufacturing expertise, combined with NASA's technological developments and research skills, results in a strong combination.
The Aviation Industry's Future
The collaboration between Boeing and NASA, as well as the possible technological shift in airframe design, point to an exciting future for the aviation sector. Aircraft designs will continue to push the envelope as the industry advances, concentrating on sustainability, efficiency, and passenger pleasure.
Conclusion
Dave Calhoun, Boeing's CEO, is optimistic about the company's comeback and ability to compete with Airbus. Boeing's future ambitions will take on new dimensions as a result of its partnership with NASA to create an innovative airframe design. This possible technical change has the potential to revolutionize the aviation industry by improving performance, fuel efficiency, and passenger comfort.
With Inputs from SeattleTimes
Read next
Air India to Reinstate 3 More Weekly Flights to The US
Radhika Bansal
03 Jun 2023
With the crew shortage situation easing progressively, Air India is set to reinstate three more weekly flights to the US this month. Earlier this year, the Tata Group-owned airline temporarily suspended six weekly US flights; three have already been reinstated.
Air India CEO and Managing Director Campbell Wilson said the crew shortage situation is progressively easing. "We had suspended 6 of the 47 weekly flights to the US. We have reinstated 3 of those and the other 3 will be reinstated by the end of June," he said in an interview this week.
Six weekly flights -- three each to Newark and San Francisco -- were suspended due to a shortage of crew. In recent months, some long-haul flights have been impacted due to crew shortage issues.
Currently, Air India, every week, operates 44 flights to the US and 14 to Canada. The airline flies to San Francisco, New York, Newark, Washington and Chicago in the US and to the cities of Vancouver and Toronto in Canada.
Air India has embarked on a five-year transformation plan and is augmenting its fleet as well as expanding services. This year, the carrier will be taking 11 new Boeing 777 planes. Talking about the availability of talent, Wilson said there is not a large pool of Boeing 777 pilots, and most are already working for the airline.
“To get 11 aircraft to operate in a short time, we have to go to the expatriate market until we can develop and build our pool... we have promoted a lot of people from another fleet to the 777 aircraft. We need to also operate other aircraft and have the requisite amount of experience for operating 777s. He noted that it is a temporary importation of talent until we can build our own (talent) in a year or so," he noted.
The airline is hiring 550 cabin crew members and 50 pilots every month. "In the case of cabin crew members, it is about ten times and in the case of pilots, it is about five times on an annual rate of the pre-privatised airline," he said.
As part of the transformation plan, Air India Express and AIX Connect (earlier known as AirAsia India) are being merged while the process for merging Vistara with Air India is also in progress. Vistara is a joint venture between Tata Group and Singapore Airlines.
In February, Air India announced placing orders for 470 aircraft from Airbus and Boeing, including 70 wide-body planes. Out of the total, 250 will be from Airbus and 220 from Boeing. There is also an option to purchase additional 370 aircraft from the two plane makers.
Aircraft Deliveries in Line
"The first narrow-body aircraft will come around July or August. The first wide-body aircraft (A350) will come around October," Mr Wilson said about the induction plans from the historic order placed for 470 planes earlier this year. Currently, Air India has 122 planes and is expanding its fleet. The airline expects to have six A350 and eight B777 aircraft by the end of this year. So far, the carrier has taken 9 B777 planes on lease.
In February, Air India announced that it would buy 250 aircraft, including 40 wide-body A350 planes, from European aviation major Airbus and 220 planes from US aircraft maker Boeing under separate deals. The order comprises 40 Airbus A350s, 20 Boeing 787s and 10 Boeing 777-9s wide-body aircraft as well as 210 Airbus A320/321 Neos and 190 Boeing 737 MAX single-aisle aircraft. According to the Air India chief, the true transformation will happen from next year onwards as it will get all the leased aircraft, start retrofitting old aircraft and deliveries from orders for 470 planes.
On the challenges ahead, Mr Wilson said it will be the sheer scale and pace of change as the airline was under-invested for quite some years. "So, the transformation that the main airline needs is significant. It is also merging the airlines... building training capacity and supporting the unprecedented growth path from a standing start," he added.
About the domestic industry, he said, "We all want a healthy, growing and stable ecosystem that is good for the consumers, economy, travellers, airlines, staff..." A repeated cycle of failures is not good for all of the stakeholders. So, that is a natural evolution and it has happened elsewhere too, he added. Regarding the ongoing five-year transformation plan ‘Vihaan.AI', he said it has been a healthy start.
On wet leasing of aircraft by airlines, Mr Wilson said it is a short-term measure to allow supply and demand to be in balance. "In the short term, it is a perfectly reasonable thing. In the long term, I think, we need to be careful that it does not undercut the incentive to invest in your own assets and put the skin in the game to grow the market... in a sustainable way," he noted. IndiGo has taken aircraft on a wet lease as part of expanding its international presence.
Read next
Saudi’s PIF Firm Acquires 13 Aircraft Including Airbus and Boeing
Abhishek Nayar
03 Jun 2023
AviLease has made a significant investment to increase the size of its fleet in order to improve its capabilities and fulfil the growing demand for aircraft leasing services. The new purchase from Avolon comprises both narrow and wide-body aircraft, significantly bolstering the company's market position.
The Beginnings of AviLease
AviLease, a notable aircraft leasing firm located in Saudi Arabia, was founded in 2022. Since its inception, the firm has quickly acquired prominence for its dedication to providing high-quality aircraft to airlines all around the world. AviLease focuses on delivering unique leasing solutions that meet the demands of its clients. AviLease has established itself as a trustworthy partner in the aviation sector by focusing on customer satisfaction and operational efficiency. AviLease, which is wholly owned by the Saudi Public Investment Fund (PIF), has a fleet of 45 aircraft but aims to expand to 300 by the end of the decade.
Overview of the Aircraft Acquisition
AviLease's recent acquisition of 13 additional aircraft demonstrates the company's commitment to expanding its fleet while supporting the growing demand for air travel. The purchase comprises an array of narrow and wide-body aircraft, allowing AviLease to meet the needs of various airlines. AviLease has greatly diversified its portfolio and increased its capacity to service a larger client base with seven Airbus A320neos, two A330neos, and a Boeing 737 MAX 8.
Benefits of Fleet Expansion
AviLease and its clients will profit greatly from the fleet growth. For starters, a larger fleet enables AviLease to provide a broader selection of aircraft types, meeting the different demands of airlines running both short- and long-haul routes. AviLease's greater flexibility allows them to reach a larger client base and form better industry alliances.
Analysis of the Airbus A320neo
The Airbus A320neo is one of the most important aircraft bought by AviLease. The A320neo is a next-generation narrow-body plane that combines cutting-edge technology, fuel efficiency, and passenger comfort. The A320neo has become a popular choice for airlines worldwide due to its unique design and optimized performance.
Evaluation of the Airbus A330neo
AviLease's acquisition of two Airbus A330neos expands its wide-body aircraft capabilities even more. The A330neo is a cutting-edge aircraft that offers outstanding performance, efficiency, and passenger comfort. Because of its greater range, it is appropriate for long-distance flights, opening up new opportunities for airlines running intercontinental routes.
Review of the Boeing 737 MAX 8
AviLease's recent acquisition of a Boeing 737 MAX 8 demonstrates the lessor's commitment to provide a varied variety of aircraft to its clients. The popular 737 MAX 8 narrow-body aircraft is noted for its fuel economy, dependability, and passenger comfort.
The Impact on the Saudi Aviation Industry
The increase in AviLease's fleet has had a substantial influence on the Saudi aviation sector. AviLease's acquisition of more aircraft boosts the country's position as a hub for aviation services and contributes to economic growth. The availability of a varied variety of aircraft models expands Saudi Arabian airlines' options, promoting healthy competition and pushing industry innovation.
Environmental Considerations
AviLease understands the value of environmental sustainability and includes it in their fleet growth plan. AviLease's dedication to cutting carbon emissions and minimizing its environmental imprint is demonstrated by the inclusion of fuel-efficient aircraft types such as the Airbus A320neo, A330neo, and Boeing 737 MAX 8.
Comments
"AviLease embarked on its journey last year with ambitious aspirations to become a leading institution across the aviation leasing value chain by establishing a diverse fleet of modern aircraft manufactured by leading global companies," AviLease chairman Fahad Al-Saif said. "The agreement with Avolon, a global leasing company, is a true testament to our strength and unwavering purpose, and it will provide us with additional opportunities for direct expansion."
"At AviLease, we aim to contribute to the development of the aviation ecosystem in the Kingdom and enhance the financial sustainability of the sector, in line with the Public Investment Fund's strategy, which focuses on unlocking the potential of promising sectors and enhancing their global competitiveness to achieve the goals of Saudi Vision 2030," Al-Saif added.
Conclusion
AviLease's recent acquisition of 13 additional aircraft demonstrates its dedication to expanding its fleet and supporting the aviation industry's changing demands. AviLease expands its ability to service a varied variety of clients by using a combination of narrow and wide-body aircraft, including the Airbus A320neo, A330neo, and Boeing 737 MAX 8. This fleet increase creates new business prospects and strengthens AviLease's position as an industry leader.
With Inputs from AeroTime
Read next
USDOT Issued a $1.1 Million Fine to British Airways
Abhishek Nayar
03 Jun 2023
Passenger satisfaction and security remain critical in an era where air travel has become a fundamental component of modern society. The recent penalization issued by the USDOT against British Airways highlights the difficulties passengers confront as well as the responsibilities of airlines to provide timely and equitable service.
Background Information on British Airways
British Airways, which was founded in 1974, has a long history as the country's national airline. It has established a reputation for offering high-quality service and connecting travellers to places all around the world. However, British Airways, like any huge organization, has had its share of scandals and issues.
A Brief Description of the Fine Imposed by the USDOT
British Airways, the nation's renowned flag carrier, recently faced a substantial financial penalty of $1.1 million (£878,000) levied by US authorities. The airline was fined by the US Department of Transportation (USDOT) for failing to offer timely reimbursements to passengers for cancelled or rescheduled transatlantic flights. This occurrence has raised consumer protection concerns and emphasized the necessity of regulatory compliance in the aviation sector.
USDOT's Allegations and Claims
According to the BBC, the US Department of Transportation received over 1,200 complaints regarding British Airways. It stated that between March and November 2020, the carrier asked passengers to contact it to go over the reimbursement procedure, which included services that were significantly affected during the height of the global health crisis. Nonetheless, the USDOT stated that for several months, clients were unable to reach representatives by phone. It appears that British Airways fails to maintain proper customer service.
Passengers' Experience
Passengers who were kept waiting for their money to be refunded suffered greatly as a result of the delayed reimbursements. Many others were financially strained since they had already made alternate travel arrangements or were in desperate need of the reimbursed sum to meet severe financial obligations. The absence of prompt reimbursements harmed the airline's image among passengers who sought openness and dependability.
British Airways' Response
The United States is one of British Airways' primary markets. It now serves over 25 domestic locations, with more on the horizon. "We're very sorry that at the height of the unprecedented pandemic, when we were unfortunately forced to cancel thousands of flights and close some call centres due to government restrictions, our customers experienced slightly longer wait times to reach customer service teams," said a spokesperson for the operator.
Enforcement Actions by the USDOT
The penalties issued by the USDOT against British Airways are part of the agency's continuous efforts to ensure compliance with aviation passenger rights. The USDOT has been aggressive in investigating and penalizing airlines that fail to satisfy their requirements, delivering a clear message that passenger safety is vital. This enforcement action against British Airways serves as a warning to other airlines that prompt reimbursements for their consumers must be prioritized.
Similar Cases and Penalties
In recent years, the US Department of Transportation has been aggressive in fining airlines for passenger refunds. As an example, in January 2021, it announced that it was pursuing a $25 million penalty against Air Canada, accusing the carrier of failing to provide timely reimbursements. Furthermore, it ordered TAP Air Portugal to pay $1 million in COVID-19-related passenger reimbursements in November 2022.
Conclusion
The USDOT penalties issued to British Airways for delayed refunds send a strong message to the airline industry about the importance of protecting passenger rights. Refunds are not only a legal requirement, but they are also critical to retaining consumer confidence and happiness. To guarantee the safety of their customers, British Airways and other airlines must learn from this tragedy and prioritize quick refund systems.
With Inputs from BBC
Comment