The most valuable airspace in the world

The Most valuable Airspace in the World

This is east Asia, comprised of China, Japan, Korea, and Taiwan, and this is Europe.

2.4 billion people live in these two idiots, 1/ third of the population of the world. More impressively, each of these two regions has a GDP of about $20 trillion. Combined, just these countries account for half of the world’s economic activity.

They are two of the world’s most dense, most the developed, and most economically interlinked reasons, and at home to the world’s largest and most influential cities eight playing doing them is just one country- Russia.

This more or less means that on country controls whether Europe can get to Asia and vice versa, and for a while, they could not.

During the Cold War, almost universally, non-Soviet airlines were not allowed to fly over the Soviet Union. This proved a massive barrier to travel.

In the 1950s, flying on BOAC, who later becomes British Airways, the fastest route from London to Tokyo involved leaving London at 10 AM on Friday and stopping in Rome, Beirut, Bahrain, Karachi, Kolkata, Yangon, Bangkok, and Manila before finally arriving in Tokyo at 6 am on a Sunday.

All in all, that was 36 hours and 10,000 miles of travel to get between two cities 6000 miles apart, and that was also their first service on the comic jet plane.

Their slower and cheaper propeller plane service would leave London on a Sunday and not arrive in Tokyo until Thursday after 88 hours of travel. It was just usually inefficient, but there is a better way over the arctic was the first to the blocking process overflying the Arctic, but other airlines soon followed.

These roads were fast used to get to the American west coast more quickly. This involves developing new navigation systems to overcome the issue of the traditional magnetic compass is not working correctly in the high north.

In the 1950s, no commercial airplane had the range to fly to the American west coast nonstop but what is this new polar route they would take an irritably quick way from Copenhagen stopping in Kangerlussuaq Greenland and Winnipeg, Canada before arriving in Los Angeles. This cut what was previously a 36-hour trip down to 22.

With essays having to prove that commercial fires over the Arctic were both safe and commercially viable, other airlines quickly followed not only setting up routes to the American west coast but also the far east.

The most direct route from London to Tokyo flies over Siberia, but since that area space was close to the alliance, choose another way the other way around the world.

In 1960, only 40,000 people lived in Anchorage, Alaska and Alaska had just become a state the year before but is the airport emerged as a crucial stopping point between Europe and Asia.

BOAC’s twice-weekly polar route from London to Tokyo and leave Heathrow at 1:45 PM arrive in anchorage is 1/2 hours later stuff for an hour to refill, and then fly the remaining seven hours to Tokyo.

All in all, it was timetabled to take only 17 1/2 hours half of what the trip took before. It was as drastic a reduction in travel time as Wayne Concorde cut NewYork to London flights from six hours to three. BOAC wasn’t the only one.

All the major European career set up routes to the far east via Anchorage in the 1960s and 1970s. While anchorage these only a few dozen daily commercials fires mostly to the continental US today, in the 1970s, it was served by Air France, SAS, KLM, Iberia, Lufthansa, Japan Airlines, Korean Air, and more.

This tiny town in Alaska quickly became one of the most connected and cosmopolitan areas of the world, with passengers on flight cruise from all over the world stopping overall because of where it was.

As aircraft became more advanced with more prolonged rains, there were a few airlines that managed to stop in Anchorage on their way from Europe to East Asia.

Finnair, for example, starting flying from Helsinki to Tokyo nonstop in 1983 by operating in the international area space north of Russia over the north pole. This made what is today a nine-hour flight 13 hours, but it was still faster than stopping in and anchorage.

Overwhelming, though, airlines continue to fly through Anchorage. Eventually, though, the Soviet Union did, of course, fall in 1991, and with that, Russia starts it to grant overflight rides to European and East Asian airlines.

Their first head to modernize and Anglicize their air traffic control system. All international pilots and air traffic controllers worldwide speak English, but before, since there were few international flights over Russia, the Russian air traffic controllers didn’t speak English.

Once the changes were made, airlines quickly switched to flying non stop from Europe to Asia over Siberia. Now that left Anchorage mostly deserted.

The airport built a large and modern international terminal in 1982 to handle all the traffic passing through the airport, but then, less than years later, all those airlines that kept the busy airport left in droves.

Today, that international terminal, built to handle hundreds of flights per month, only sees a trip in a few days. Russia, meanwhile, is prospering thanks to the opening up of its airspace.

Flying to Asia over Siberia saves airlines vast amounts of time and money, so Russia, therefore, charges airlines vast amounts of money to do so.

Exact numbers vary by airline and are kept secret, but for each round trip flight between Europe and Asia, Siberian overflight fees are believed to account for up to $100 of a single passenger’s ticket price.

Russia has an enormous amount of power by controlling this airspace, and they use it to their advantage. One hundred thirty-three countries have signed the International Civil Aviation Organisation’s Transit Agreement, which essentially allows airlines from any country to fly through the signatory’s airspace, but Russia, however, has not, so they can pick and choose which country’s airlines gt to fly through their airspace.

The country can and has used its airspace as a geopolitical weapon-in 2014 they threatened to shut down their airspace to European Union airlines in response to sanctions, in 2017 they threatened to close the airspace to Dutch airlines in response to a reduction in landing slots for a Russian airline at Schiphol airport, and in April 2018 they tacitly threatened to close their airspace to US airlines in response to US military action in Syria.

But Russia not only decides which countries can fly in its airspace, but it also determines which specific airlines.

There is more or less a rule that only one airline per European country can overfly Russia.

There are certainly exceptions- both British Airways and Virgin Atlantic are London based, for example, but both overfly Siberia on their routes to Shanghai and Hong Kong, but air France is the only French airline with Siberian overflight rights, Lufthansa is the only German airline with overflight rights, Iberia is the only Spanish airline with overflight rights, and so forth.

For the longest while, this wasn’t a problem. European countries aren’t that big, and few had more than one intercontinental airline, but nowadays, however, that’s changing.

We see more and more budget airlines competing with the large, established carriers in long-haul routes, but, with this system of overflight permissions, the legacy carriers more or less have a monopoly on east routes.

SAS, for example, operates out of Norway, Denmark, and Sweden, and they have Siberian overflights rights that take them to destinations like Tokyo, Beijing, and Shanghai. SAS is, therefore, the only Scandinavian airline allowed to overfly Siberia.

But also in Scandinavia is Norwegian Air. As one of the largest low-cost airlines in the world, Norwegian has pioneered long-haul budget flying, mainly focusing on flights from major European cities to the US.

The airline has said, though, that it wants to expand eastwards. They already have flights from Copenhagen, Oslo, and Stockholm to Bangkok and from London to Singapore, but these destinations are far enough south that they don’t involve flying over Siberia.

The airline has repeatedly applied for Siberian overflight rights and repeatedly been denied. They argue that SAS does not operate any flight from Norway to Asia, so they should be granted permission as the only Norwegian airline but, since SAS is partially registered in Norway, Russia isn’t allowing permission.

Norwegian does have a subsidiary legally registered in the UK. Still, It’s unlikely that Russia would grant overflight rights to this since British Airways and Virgin Atlantic also have overflight rights.

Norwegian airlines also have a subsidiary based in Ireland that does not have an airline with Siberian overflight rights but, SAS also has a subsidiary based in the country, which could mean that Russia will deny rights to this subsidiary too.

As of now, Russia has not granted overflight permission to any budget airline. Others have tried – Icelandic airline Wow Air and Icelandair have attempted to negotiate overflight rights- but Russia views overflights as a way to make money and wants to charge fees that would make it impossible for a low-cost airline.

For now, Wow airline had planned to start flights from Reykjavik to Delhi, India, which, in a direct routing, would fly over Russia but can route around Russia by only adding 45 minutes in extra flight time if an arrangement isn’t made before flights started in December 2018.

Russia is a powerful politically-savvy country that knows that these overflight rights are a vast negotiation tool. Pulling the rights of a country’s airline would be a huge financial blow, and granting rights is also a considerable advantage.

Competition, though, is good for the consumer, and this current system stifles it. Until Russia starts granting overflight rights to budget airlines, nonstop flights to Asia will be sta expensive.

The fact that this shortcut over Siberia is now open at all, however, saves millions of passengers yearly enormous amounts of time and money.

Airbus vs Boeing

Airbus vs Boeing [The Economics of Long-Haul Flights]

If you have been alive for the past ten years, you surely have heard about two planes

  • Airbus a380
  • Boeing 787 Dreamliner

These two planes have dominated the news cycle worldwide because they are both intensely Innovative a 380 Is the largest passenger plane ever existed, While the Dreamliner is the most efficient and It has an unrivaled focus on passenger comfort.

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Concealed by the fanfare, however much deeper story on economics, innovation, and how the Airline industry works. So believe it or not, the airbus a380 started working in 1988.

Airbus Vs Boeing

More people were flying than ever, and airports were not getting much more significant. Airbus eyed the success of Boeing 747 and needed the bigger aircraft to compete.

At first, Airbus considered making a super-wed jet by placing two a340 fuselages side by side but later opted for the design we see today-a fully double-decker jet.

An a380 can hypothetically carry as many as 868 people in an all-economy configuration. Although the densest in practice is 615 seats, that is more than double that of the 787.

Airbus decides to focus on making high capacity aircraft because they believed in the hub and spoke model of aviation.

Large Airlines’ Business Model

With the hub and spoke model, passengers travel from small airports, we will Hartford Connecticut as our example- to a long haul destination, such as London, England, and will need to connect through the hub.

In the case of Hartford, passengers would likely take a short flight to New York, Atlanta, or Chicago to catch their transatlantic flight to London.

This is inefficient for passengers. On almost all routings, the Hartford and London, passengers have to fly away from their destination to catch their transatlantic flight. However, for airlines, there is conceivably an advantage.

Let say just for the sake of explanation that there are only six airports in the United States – NewYork, Boston, Dc, Los Angeles, San Francisco, and Seattle. If an airline had one flight from every destination to every other destination, they would need to run 16 routes.

airlines business model

If they just have one hub airport on each coast, we will say Newyork and LA. They just need to have one route from each secondary airport to one hub and one transcontinental hub to hub route.

The hub and spoke model was also popular in the past because the airlines believed that it was more cool cost-efficient to fly fewer flights at a higher capacity. It’s simple economy economics, really. Doing a lot of one thing together is cheaper than doing a lot of one thing separately.

It’s efficient at that range, Boeing made such a relatively small aircraft because they believe in an entirely different model of aviation, the point to point model.

In this model, to get passengers from Hartford to London, airlines just run a direct flight between Hartford and London. Obviously, demand would be lower, but there is still demand.

In the past, to fly a route like this, and the airline would have had to use an aircraft with higher capacity than demand because smaller airplanes could not fly such a distance nonstop.

Given that, airlines resorted to the hub and spoke model to concentrate all the demand on specific routes where they could fill large, long-haul planes. Now with the aircraft like the Dreamliner, airlines fly long routes with less demand while still being efficient.

The Economics of Long-Haul Flights

Obviously, there will be a quite high demand on the one transcontinental route, so airlines can put a large aircraft such as a380, on that route to fulfill its desire. Since its release, the a380 has been placed on those long-haul, high demand routes known as trunk-routes.

The second busiest long-haul route in the world, Dubai, to London, sees eight a380’s a day. And that’s an addition to five smaller planes that fly that route.

The Dreamliner serves a very different purpose. It’s a pretty modest size plane. It can only hold around 220 passengers in a typical configuration.

Its composite construction makes it extremely light and fuel-efficient, which helps reduce operating costs. In the late 1990s, Boeing started to see slower sales on their large 747’s and 767’s and began to consider what to build next.

They initially looked at creating a plane called the Sonic Cruiser, which would have had the same fuel efficiency as conventional aircraft, while flying 15% faster just under the sound barrier.

Airplane Money Making Model

Airlines were initially enthused; however, after the attacks on September 11th and the rising cost of fuel, airlines were more interested in fuel efficiency rather than speed.

The 787 deliver on that promise by reaching up to 102MPG per seat compared to the a380’s paltry 74 MPG per seat. The Dreamliner also has an enormous range of up to 8000 miles, and better yet.

It’s economies of scale except that it doesn’t extend to the airline industry. For a larger aircraft, you need more ground stuff, more flight attendants, more check-in agents, More fuel, more of pretty much everything.

That only cost that stays the same is pilots, and that only ones reduced are gates and take-offs. When you are now doing more flights at the most substantial, most expensive, you end up spending more money.

Airports like Hartford, Connecticut, cheap labor is cheap, take off fees are cheap, everything costs than at JFK or Newark. There are just fewer flights to compete with.

Not only that but flying direct flights costs a ton because the airlines only have to pay off our flight costs that I talked about a lot in my’ why flying is so expensive’ video once, rather than twice.

Route Choice and Efficiency

United Airlines was a major innovator of the point to point model with their new Newark hub. Newark is an airport Suited to serve smaller planes, so United took the opportunity to open up direct flights to a smaller destination on British sales using narrow-body planes stretched to the upper limits of their range.

United primarily uses the Boeing 757 smaller destinations like Shannon, Ireland, Belfast, Northern Ireland, Glasgow and Edinburgh, Scotland, and Manchester, Newcastle, and Birmingham, England. Often the United flight from Newark is the only translation flight serving these airports.

How airlines choose the route

United can operate this route because the East Coast of that US and British isles are just close enough together to reach with a narrow-body plane. With the 787, Airlines can open even longer routes between smaller destinations. Courses like these are called long and skinny long distance, but the skinny demand.

These include routes like Tokyo to Seattle, London to Chennai; India, Wuhan; China to San Francisco, Beijing to Boston, Nairobi, Kenya to Paris; Santiago, Chile to Madrid; Warsaw, Poland to Beijing; Doha to Edinburgh, Scotland, the list goes on.

The efficiency of this plane also has allowed for an entirely new class of airline budget. The three leading players in this category are Jetstar airlines based in Australia, Scoot airlines based in Singapore, and Norwegian airlines based in both Scandinavia and London.

Wrapping Up

Short-haul airlines have been possible for a while because of efficient short-range airplanes, but this is the first time there has been such a capable long-haul airplane, so these three lines use the reduction in operating cost to offer significantly lower ticket prices, while also using the principles of budget airlines that I outlined in the ‘How Low-cost Airlines Like EasyJet and Ryanair Works‘ article, what’s even more exciting for us consumers in the upcoming Boeing 737 max.

This plane quickly redeveloped version of the long-existing Boeing 737 featuring a more substantial capacity, more extended range, and higher fuel efficiency. This means that we could conceivably see super low demand routes like Manchester to Cleveland. Lyon to New York and Belfast to DC operated in the near future.

Norweigan airlines have already hinted add plans to use today 737 max to open up an auxiliary transatlantic hub in Edinburgh-a relatively small City.

So the A380 was a failure. Airbus has not received a new order these years, and it recently announced that it would be cutting back it’s production do only 12 a year.

Meanwhile, the 787 has amassed almost 1,200 orders. Point to point flying has always been better for the consumers, but with these recent innovations, it’s now better for airlines too. Given that, it’s clear that point to point flying is genuinely the future of every aviation.