INFocus Newsletter1

SEPTEMBER 2016 NEWSLETTER

Global Air Travel Slows as Passengers Fear Uncertainty

Airbus Is Being Investigated by UK Fraud Authorities

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Zika fear prompts travel warning for Miami

INFocus Newsletter2

Federal health authorities on Monday urged pregnant women not to visit a South Florida neighborhood where new cases of the Zika virus have emerged, the first time officials have warned against travel to part of the continental United States because of the outbreak of an infectious disease.

Officials issued the “unprecedented” warning following the identification of 10 new infections in a dense urban pocket north of downtown Miami and after “aggressive” efforts to combat Zika’s mosquito-borne spread had proved insufficient.

“It is truly a scary situation,” said

Tom Frieden, director of the Centers for Disease Control and Prevention. “This is a really tough mosquito to control.”

The travel warnings and growing outbreak mark a troubling but not unexpected turn for efforts to stem the virus’s spread through the United States, and they could have profound impacts on Florida’s tourism-heavy economy. They also demonstrate how even the best prepared communities may struggle to deal with a virus that spreads so readily.

Most people infected with Zika don’t show symptoms, but the virus can have devastating consequences during pregnancy. A woman infected with Zika

can pass the disease to her fetus, stunting brain development and causing other severe defects.

Zika fear prompts travel warning for Miami, CDC’s first in U.S.By Lena H. Sun, Drew Harwell and Brady Dennis

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Almost all of the 1,661 Zika infections in the continental United States came from travelers to Puerto Rico or nearly 50 countries, such as Brazil and Colombia, where outbreaks are widespread. But 14 cases of Zika infections caused by mosquito bites in the United States have been announced by health officials since Friday, leading to worries of an expanding local spread.

The primary species of mosquitoes that has carried the virus is present in 30 U.S. states, and the South’s warm, humid climate is particularly fertile ground for Aedes aegypti, a breed that bites only humans and thrives in urban neighborhoods. A second mosquito species, Aedes albopictus, can also carry the virus.

The CDC’s travel warning covered only about a square mile of north Miami, Frieden said, because that mosquito typically travels only 150 meters during its lifetime. But the threat could arise in other communities across the United States because 40 million people travel to Zika-affected areas every year and could silently pass on the virus to mosquitoes, leading to new outbreaks.

Experts have been expecting local transmission of Zika. Miami “is just the one outbreak we know about,” said Peter Hotez, dean of the National School of Tropical Medicine at Baylor College of Medicine. “I think it’s equally possible that multiple outbreaks are simultaneously occurring up and down the Gulf Coast and Florida.”

The CDC is advising that all pregnant women should be asked about travel to Zika-infested areas during routine prenatal visits. Any pregnant women who have traveled to Zika areas — including

this area of Florida — are advised to get tested for Zika.

Women who have visited the affected area north of Miami since June 15, when Zika’s local spread appears to have begun, were told to avoid getting pregnant for at least eight weeks.

Women were also advised to use protection during sex, because the virus can be transmitted sexually. Men were told to wait at least six months before attempting conception if they see symptoms of the Zika virus disease, including fever, rash and joint pain.

There is no medical treatment for Zika and no vaccine.

The Zika-affected area of Miami, bounded by Biscayne Boulevard and Interstate 95, encompasses a dense, diverse mix of urban land ranging from high-end art galleries to aging bungalows, making it more difficult for crews to control for mosquitoes and eradicate standing water, the CDC said.

The area also includes Wynwood, a once-predominantly Puerto Rican enclave known as Little San Juan that has become

one of Miami’s trendiest neighborhoods. A magnet in the ’80s for artists seeking cheap studio space, Wynwood is now renowned for its outdoor art, and its blocks of intricate murals and warehouse graffiti draw visitors from around the world.

The CDC has dispatched an emergency-response team of experts in birth defects, mosquito control and other fields to assist in combatting the outbreak. Six of the 10 new cases identified Monday were people who showed no symptoms but were identified through the local health department’s door-to-door survey.

More alarming, Frieden said, is that “aggressive” strategies aimed at slowing Zika’s spread “don’t seem to be working as well as we would have liked,” possibly because mosquitoes have become resistant to insecticides or because they are thriving in “cryptic breeding places,” small puddles of standing water where eggs can continue to hatch.

Frieden and other officials say they expect additional cases of “homegrown Zika” within the coming weeks.

Zika’s spread in Florida has cast a new spotlight on congressional inaction that

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INFocus Newsletter4

prevented further funding to help fight the virus. Republicans and Democrats in Congress have been deadlocked for months over the fate of a $1.1 billion spending bill that would help fight the spread of Zika. Negotiations over a bipartisan spending package crumbled in late June, with neither side willing to reopen talks. Congress is out of session for August, and lawmakers are not expected to resume legislative business until after Labor Day.

Senate Democrats have blocked the funding package drafted by congressional Republicans over politically motivated language, including provisions that would deny Zika-related funds from being sent to Planned Parenthood and loosen environmental regulations on pesticides. Senate Minority Leader Harry M. Reid (D-Nev.) last week urged Senate Majority Leader Mitch McConnell (R-Ky.) to call a special session of Congress, saying “Zika is a public health emergency that requires immediate bipartisan action, and the American people can’t afford to wait several weeks for a response.”

Senate Republicans responded by blaming Democrats for blocking the House-passed spending bill. McConnell spokesman Don Stewart said, “The White House has acknowledged that there are hundreds of millions in unspent Zika funds available already, but have not explained why they’ve been so slow in using the funding they already have.”

Sen. Marco Rubio (R-Fla.) last week issued a statement urging President Obama to immediately tap the remaining Ebola funds, but on Monday he also pushed for Congress to come back to Washington early to vote on a long-term Zika spending bill.

“A week ago, before the cases were

announced, I had asked President Obama to take $300 million that’s disposable, that he has under his control,” Rubio said at an event in Clearwater, Fla. “I’m prepared to go back in a moment’s notice and vote on this and get it done quickly given the state of affairs now.”

The travel warnings and Zika’s spread have forced Florida to confront a unique threat to its tourism industry, the bedrock of the state’s economy. Businesses across the state rely heavily on flocks of travelers to its beaches, theme parks and tourist traps, and Florida last year became the first state to welcome more than 100 million tourists in a single year.

More than a million Floridians work directly in the state’s tourism industry, and tourism and travel spending in the

state climbed to $89 billion last year, state economic data show. Those dollars filter down into virtually every industry, including hotels, restaurants, health care and housing.

The Zika warnings, coming in the thick of mosquito season, remain clustered in a square-mile pocket 220 miles south of Orlando’s theme-park mecca. But businesses say they’re worried that even the appearance of a dangerous outbreak could shake confidence among young families, the backbone of the state’s tourism economy.

“That’s absolutely what’s frightening a lot of businesses here: Tourism is Florida’s major economy, and the service sector is hugely dependent on people coming from everywhere,” said Susan MacManus, a political-science professor at the University of South Florida in Tampa. “Businesses want to believe it’s very localized in Miami. But on the other hand, they’re realistic — and fearful it’ll go beyond that.”

Some countries have issued warnings about travel to Florida, including the United Kingdom and Ireland, which over the weekend advised women who are pregnant or trying to become pregnant to “consider postponing their travel” to the state.

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Airbus Group SE said the U.K. Serious Fraud Office has opened a criminal investigation into allegations of fraud, bribery and corruption relating to some of its third-party consultants.

The Toulouse, France-based planemaker said in a statement Sunday that it’s cooperating with investigators probing its civil aviation business. Airbus had flagged to U.K. regulators and the European Export Credit Agencies earlier this year “misstatements and omissions” involving the outside contractors in some export financing applications, which it found through an internal probe.

The credit agencies, including U.K. Export Finance, have suspended some of the backstop financing that Airbus uses to help sell commercial aircraft since the first revelations made four months ago. Airbus said in a July 27 statement that a process for re-establishing export credit “has been agreed and is ongoing.”

Until the financing is restored, Airbus and rival Boeing Co. face the challenge of navigating an uncertain market with limited government assistance. Chicago-based Boeing has been unable to tap trade financing because a congressional impasse has left the U.S. Export-Import bank with too few directors to approve

deals.

Jefferies Equity Research estimates that export-credit agencies last year provided 7 percent of financing for Airbus plane deliveries, compared with 45 percent from leasing companies and 40 percent from airlines themselves.

The Airbus investigation adds to the scrutiny of the role played by cross-border intermediaries. Monaco-based Unaoil SAM, which served as a go-between for companies and officials in the Middle East, Africa and former Soviet countries, was searched by authorities earlier this year amid allegations of corruption.

Airbus said in the July 27 filing that it’s undertaking a sweeping review involving “legal, investigative, and forensic accounting” of consultants and other third parties used to support sales. The European planemaker said it’s also using greater due diligence to screen potential contractors.

“The group cannot exclude that the comprehensive review and these enhancements of its controls and practices lead to additional commercial disputes or other consequences in the future,” the filing said.

Airbus Is Being Investigated by UK Fraud AuthoritiesBy Mark Deen, Andrea Rothman and Julie Johnsson

Over the upcoming weeks, TripCase will be rolling out our new notification center, alerting you with important details about your account and trips like never before. Check out TripCase on iTunes or Google Play for the latest update!

TripCase v4.7 is available!

INFocus Newsletter6

FORT WORTH, Texas – American Airlines is continuing to elevate the customer experience by adding complimentary premium movies, TV shows, music and games in the Main Cabin on all domestic flights offering seatback entertainment systems or Wi-Fi. Beginning this month, customers will have unrestricted access to the best and largest content library among the U.S. carriers from their own device or seatback entertainment systems. “American is further investing in and personalizing how our customers travel by giving them

the most in-flight entertainment options onboard our aircraft,” said Fernand Fernandez, American’s vice president – Global Marketing. “Our employees do an outstanding job taking care of our customers and combined with a fleet of aircraft that is the youngest of the U.S. carriers and onboard products like complimentary premium entertainment and snacks, American is creating an unmatched travel experience that all of our customers can enjoy.”

Customers traveling on American flights will be able to enjoy premium shows like

HBO’s “Game of Thrones” and “Silicon Valley” as well as new movie releases such as “Captain America: Civil War,” “The Boss” and “The Lobster.” Available inflight entertainment will vary by aircraft type.

Nearly 300 of American’s aircraft have seatback entertainment, with more being added every month. All American domestic mainline aircraft and two-class regional jets offer in-flight Wi-Fi.Customers can download the American Airlines mobile app to access this free, premium entertainment.

American Airlines Introduces Free, Permium Inflight EntertainmentPress Release

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Worldwide airline traffic is growing at the slowest pace in five years as terrorist attacks weigh on demand, with Europe being hurt the most, the International Air Transport Association said.

Passenger demand, measured by revenue for each seat flown a kilometer, grew at an annualized rate of about 3.5 percent in the first half, the industry group said in a report Thursday. IATA represents about 260 airlines making up 83 percent of global air traffic.

“The fragile and uncertain economic backdrop, political shocks and a wave of terrorist attacks are all contributing

to a softer demand environment,” Tony Tyler, the group’s chief executive officer, said in the report. He added that it’s “too soon to know” whether recent terrorist attacks, such as the ones in Istanbul and Nice, France, would have a long-term impact.

Airlines have been plagued by high capacity and reduced fares that have caused unit revenues to decrease for more than a year. United Continental Holdings Inc., American Airlines Group Inc. and Delta Air Lines Inc. are among carriers that in recent weeks announced they are trimming growth plans to try to curb the overabundance of flights and seats.

U.S. airline shares fell on Tuesday after Delta announced that passenger revenue for each seat flown a mile dropped 7 percent in July. the Bloomberg U.S. Airlines Index has declined about 20 percent this year.

Global traffic rose 5.2 percent in June. Europe saw the lowest increase in the month, 2.1 percent, because of the attacks and uncertainty following Britain’s vote to exit the European Union, IATA said. The Brexit vote is expected to continue to weigh on the market in coming months, the group said.

Global Demand for Air Travel Slows as Passengers Fear UncertaintyBy Dagney Pruner, Bloomberg

In the years since its founding as an intra-Texas low-cost carrier (LCC) in 1967, Southwest Airlines has grown into the second largest U.S. airline as measured by the capacity of its domestic route network.

But though many have long since stopped viewing Southwest as an LCC, analysts say that the airline’s approach to dealing with weakening industry demand over the remainder of this year reveals

that its business model is still influenced by its low-cost roots.

“In the broadest sense of all, Southwest is still an LCC, and LCCs win more with cost advantages than with revenue advantages,” said Seth Kaplan, managing partner of the newsletter Airline Weekly.

Each of the four major U.S. carriers — United, American and Delta along with Southwest — reported softening

demand during earnings calls last month. Southwest, for example, projects that its unit revenue, defined as how much money it makes per seat for every mile it flies, will be down 3% to 4% this quarter compared with a year earlier.

The carriers attribute the softening market to a more competitive fare environment for close-in bookings and to weak corporate-travel demand.

By Robert Silk

Southwest shows it is still an LCC at heart

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In more than three years as a public company, Gogo has not reported a profitable quarter, and while that did not change Thursday, the company is betting it is finally on the right track.

While quarterly revenues rose 22 percent, Gogo said Friday it lost $40.2 million from April through June, with its

international commericial airline division responsible for much of the loss. But Gogo has long argue that selling its services outside of the United States is a key component of its business, and in the second quarter it signed up a major new customer, International Airlines Group, parent of British Airways, Iberia, and Aer Lingus.

Gogo will need to continue to win new global customers if it wants to finally turn a profit, while also keeping its main U.S. customers, Delta Air Lines and American Airlines, happy. But with its new satellite-based platform called 2KU finally operational, Gogo suspects it now has the right technology to sell worldwide.

By Brian Sumers

Gogo Doesn’t Have Profits Yet, But Says It Has Momentum

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Here are some notes from Gogo’s Thursday earnings call.

New WiFi is finally flying — but only on 10 planes

For two years, Gogo has bragged that its next-generation satellite WiFi called 2KU would revolutionize its business. But rollouts take time, and the product, while relies on two low-profile, high efficiency Ku-band satellite antennas, just started flying on Delta Air Lines, Aeromexico and Virgin Atlantic.

That’s the good news. The bad? It is now available on fewer than a dozen planes, so your chances of using it it are about as good as winning the lottery. By year-end, Gogo said the technology will be on 75-100 planes. Next year, it expects to install 2KU on 350-450 aircraft.

U.S. travelers will be most likely to find 2KU on Delta, which has committed to adding it on more than 600 aircraft. American also will install it on 134 Airbus A319s and A320s.

2KU is “exceeding expectations”

Public companies set expectations

partly so they can beat them and delight shareholders, so there isn’t that much significance to Gogo CEO Michael

Small’s assertion that 2KU is performing better than expected. But it’s better than the alternative.

On Aeromexico, Gogo said the 2KU system is supporting NetFlix even though the airline’s system is free on a trial basis, which means more passengers than usual are connecting.

Gogo has promised airlines 2KU would deliver peak speeds of 70 megabits per second to the plane, making it about eight times faster than the company’s typical U.S. domestic system, which rely on a network of ground-based cell towers. Gogo said Thursday it expects 2KU speeds to exceed 100 mbps next year.

Gogo is hopeful that guarantee will help it win more airline customers, despite fierce competition from ViaSat, Global Eagle Entertainment and others.

“What gives us confidence is how well 2KU is working and how badly airlines want it on their planes,” Small said.

Wifi coming to China flights

It doesn’t affect many travelers, but today’s Gogo systems lack coverage over

China, so service cuts out on any route crossing the country. This is mainly an issue for Delta Air Lines passengers.

Gogo said Thursday that it should solve this problem by December, giving Delta customers complete coverage on Asia flights.

Thinking about more than satellites

Gogo’s satellite coverage is receiving heavy attention, but most of the company’s U.S. equipped planes – the ones travelers love to complain about – connect to the Internet through cell towers. Historically, this has produced slow speeds, but Gogo has long said the sluggish connections can be improved.

Until recently, Gogo had said it hoped to bid on new spectrum called 14G that would markedly improve connections for its ATG – or air-to-ground – services. But Gogo said Thursday that it no longer sees 14G as a viable option.

“That’s taking too long and it’s not a compelling alternative to us given how well 2KU is doing,” Small said.

Small said the company is evaluating other technology to improve ATG systems and should make an announcement about its plans by year-end.

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