The effects on demand of a recent oil price spike associated with the crisis in Syria and weaker-than-expected growth in several key emerging markets have prompted the International Air Transport Association (IATA) to adjust its airline industry profit outlook for 2013 downward by $1 billion, to $11.7 billion. Still, 2013’s performance should prove considerably better than that of 2012, when the industry turned a net profit of $7.4 billion.
Air Transport and Cargo
News and issues relating to international air transport and cargo carriers, national airlines and regional airlines, including aircraft, engines, personnel, acquisitions, accidents, safety, security and training.
Prominent aviation industry figures fear that a list of priorities developed to keep the NextGen ATC modernization effort on track during a time of funding pressure and ongoing “sequestration” budget cuts in the U.S. could undermine the ambitious, two-decade effort.
The recent global financial recession notwithstanding, long-term airline traffic growth will average 4.7 percent per year, while cargo traffic grows at a slightly higher annual rate, 4.8 percent, according to the latest 20-year market forecast published by Airbus. However, the company projected a marked disparity between traffic growth in “advanced” and “emerging” markets. COO for customers John Leahy noted a divergence in gross domestic product GDP trends between the groups since 2000.
The bid by Malaysia’s AirAsia to launch a low-fare airline in India with the Tata Group has hit some unexpected turbulence as Singapore Airlines prepares to launch a joint venture with the very same investors.
Facing high costs and increased competition, Air France-KLM’s management must pick its battles. Having announced plans for up to 2,800 job cuts on September 18, the European airline this week deferred a decision on whether or not it will provide further investment to plug holes in the sieve-like balance sheet of Alitalia. It holds a 25-percent stake in the Italian carrier, and Italy’s government has indicated it would be willing to see the Franco-Dutch group increase that share to 50 percent.
American Airlines parent AMR and US Airways agreed to extend their merger deadline by about a month to allow for the antitrust case filed by the U.S. Justice Department to run its course.
The general assembly of the International Civil Aviation Organization (ICAO) this week will debate proposals for a global market-based mechanism (MBM) to control the increase in carbon-dioxide emissions from air transport. As an interim measure aimed at reaching consensus, negotiators for the 28-state European Union (EU) have offered to alter its existing emissions trading scheme (ETS) so that it would apply only to flying activity within EU airspace and not to all stages of intercontinental flights.
A pair of first flights last week carried big stakes for each of the respective airplanes’ North American airframe makers. But while the maiden mission of the Boeing 787-9 meant a return to “business as usual” in Everett, Washington, the first flight of the Bombardier CSeries outside Montreal, in Mirabel, Quebec, marked the climax of a project on which the Canadian company has bet its future.
Congestion at China’s three major international airports–Beijing Capital, Shanghai Pudong and Guangzhou Baiyun–has quashed Xiamen Airlines’ plans to offer long-haul nonstop flights from the People’s Republic using Boeing 787s starting next August. Increasing demand for slots from foreign airlines and China’s four big carriers to operate point-to-point services from the three big airports leaves smaller carriers such as Xiamen no choice but to look at other Chinese cities as ports of entry into China.
World airlines collected $27 billion in revenue from products and services other than ticket sales last year, according to the latest annual report by research company IdeaWorks. The total came from data from 53 airlines that disclose ancillary revenue activity.