ARC NEWS
WestJet plans 20 new routes for mid-2023
February 14, 2023
WestJet plans to launch 20 new domestic and transborder routes during mid-2023 as Canada’s second-largest airline continues its strategic focus on flights from western Canada. The mainline with these new routes scheduled to launch in May and June plans to increase service compared with 2022 levels by 30% from its Calgary hub, 50% from Edmonton and 10% from Vancouver. New routes from these western Canada cities are scheduled for Atlanta, Austin, Chicago, Nashville and Seattle. Three new US destinations scheduled include flights to Washington DC Dulles International airport, to Detroit and to Minneapolis, Minnesota. This will increase connectivity to other US destinations for WestJet customers through the carrier’s codeshare with Delta Air Lines. Service will also resume from Calgary to Chicago and from Vancouver to Orlando. The airline also plans to resume flights to four Canadian destinations from Edmonton in the summer, including to Penticton, Nanaimo, Montreal and Ottawa. WestJet during February is scheduled to operate 50% more flights out of Canada compared with that month in 2022, schedules data shows. The mainline, however, recently walked back some of its international network plans by cancelling flights from Halifax to Dublin, Glasgow, London Gatwick airport and Paris. WestJet said on 30 January that the decision was the result of its “strategic decision to suspend transatlantic flying from select Canadian cities as it continues to responsibly manage and recover its network in response to capacity constraints impacting the aviation ecosystem”.


Asian lessors face pressure to write down Russia losses
February 13, 2023
Asian-based lessors will likely be pressured into following their Western counterparts in writing down their Russian exposure, in the view of Tasos Michael, chief executive of Inception Aviation. During a Royal Aeronautical Society webinar on 9 February, Michael said that while a number of Western-headquartered leasing companies had recorded writedowns on assets trapped in Russia, Asian platforms had for the most part "sat on the fence" in the hope that the conflict would be resolved before they had to take action. "I think in time the other leasing platforms will be pressured into writing down these assets in some way, because I just don't see any quick solution here," he says. In the first quarter of 2022, AerCap recognised a pre-tax write off of $2.7 billion relating to its assets in Russia, while Avolon recognised an impairment of $304 million in respect to its exposure to Russia. David Yu, professor of practice in finance at New York University and chair of Asia Aviation Valuation Advisors, points out that while lessors with publicly traded equity or debt have written down their Russian exposure, it has been more difficult to ascertain the actions of private or government-owned lessors in Asia. With several of these platforms among the top 10 biggest lessors globally, Yu expects they will need to take some form of action. Michael believes that the chances of lessors being able to successfully reach a financial settlement with Russian airlines and insurers on claims are "pretty remote". "There are a number of laws in the US that prohibit the transfer of computer chips... They prohibit the transfer of technology that can be used for military purposes, and of course an aircraft has a lot of very useful components in it," he notes. One impact of the claims is that there will be hikes in insurance premiums for all lessors, regardless of their exposure to Russia. Michael says he has heard that some lessor insurance premiums rose by 1,000% for renewal. The observes that legal action taken by lessors against insurers in courts globally have already been "very large" and that legal costs will rack up for some time. With this in mind, Michael questions whether it makes sense for lessors with small claims to pursue them to conclusion. "If you have a small claim, it's almost not worth it. If you have one aircraft with a value in the tens of millions, do you want to spend $5 million fighting your claim, or should you just try to settle with your insurers and find a middle ground?" At some point there will need to be discussions, settlements and some "very hard questions", he adds. Michael sees it as "far from clear how this will play out", as each claim is likely to be different in terms of circumstances and the wording of policies. He believes that the evidential burden of concluding the cases will be "huge".


​EU Court annuls state-aid decision benefiting Wizz
February 13, 2023
The European General Court has annulled a 2008-dated decision by the European Commission to approve Romanian state aid to Timisoara International airport that benefited Wizz Air. The court found that the Commission committed several errors of law when examining the nature of the measures and whether they would confer an advantage, such as by providing a steeper discount on airport charges for the carrier. It also rejected the argument from the Commission that action challenging the decision, which was brought by regional airline Carpatair, was inadmissible. The court considered that Carpatair was directly and individually concerned by the decision, as the agreements between Timisoara and Wizz were likely to have a substantial effect on its competitive position. Carpatair first submitted a complaint to the Commission challenging the aid in 2010. The carrier now operates as a charter, wet-lease and ACMI dedicated airline, with a fleet of three aircraft.


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