American Airlines will add a second nonstop flight between Dallas/Ft. Worth and Sao Paulo June 9. The new flight will be operated five days a week during peak season and thrice-weekly between Sept. 7 and Nov. 22. The route will be served with a 767-300.
Last year, ATW introduced a new award to recognize airlines achieving a commercial rebirth through a life-changing transformation. The first recipient, Aer Lingus, successfully implemented a low-cost business model, demonstrating that a traditional flag carrier can "change its spots." This year's winner, Air New Zealand, likewise survived a near-death experience in 2001 to remake itself into a profitable and innovative competitor across different markets.
Don't look now, but US legacy airlines are in better shape to challenge their low-cost rivals than at any time since the start of the millennium. Sure, that sounds farfetched. After all, in many respects the US legacy carriers entered 2005 in much the same way that they entered 2004: Awash in a sea of red ink, facing continued yield erosion and with a cost structure that is not sustainable in today's market. Without the bank of GE, half of them probably would be in liquidation by now.
Jazz brings together a variety of sounds, blending them into a rhythmic pattern of music, merging a wide range of chords and instruments into what could be called a harmonic convergence. The same thing could be said about Air Canada Jazz, a Regional carrier that over the past four years consolidated four airlines with disparate fleets, thousands of employees, separate languages and distinct corporate cultures to create a single product.
For Christian Heinzmann, these are uneasy times. “The most difficult year Luxair has ever experienced� was 2003, the CEO of Luxembourg’s national carrier told ATW recently, and although he expected the parent company to show a positive operating result for 2004, with the airline breaking even, he recognizes that much remains to be accomplished.
Saying that the airline industry's fortunes will improve somewhat in 2005 is overly optimistic for some carriers while being a bit too dark for others. Yet, on average that's what the year will bring...unless.
Dynamic packaging, a hot topic in the US for a couple of years, has been slow to take off in Europe but is widely anticipated to become a force. For the package tour and charter airline segment, already struggling to come to grips with changes wrought by the advent of low-cost carriers, that looms more as a threat than a promise (ATW, 11/02, p. 30).
As at every other airport in the US, business bottomed out at San Francisco International immediately following 9/11. While many airports struggled back to their feet as passengers returned, it's been an uphill climb for SFO. Rather than wait for nature to take its course, managers launched an aggressive, innovative marketing campaign to increase business and draw new carriers to the beleaguered facility.
The factors that contributed to a buoyant market for air cargo last year should continue in 2005, with solid traffic (FTK) growth propelled by trade from Asia, particularly the booming China market, which had exports valued at $851 billion in 2003. Through the first 10 months of 2004, IATA airlines reported that international FTKs rose 14%, with double-digit increases recorded across all regions.
Five years ago, the airline industry was buzzing with claims of 20% savings on aircraft purchasing by shrinking the multitude of options offered to and demanded by airlines when ordering aircraft. Today, with acquisition costs and airline yields moving in opposite directions, the need for standardization and simplification is more pressing than ever. Yet progress remains slow, and what has been achieved is being driven more by manufacturers eager to pare costs and complexity out of the production process than by airlines intent on cutting sticker prices.
The universe of profitable US airlines shrank further during the third quarter ended Sept. 30 as fuel prices climbed throughout the summer while back-to-back-to-back-to-back hurricanes pummeled those carriers with extensive route networks in Florida and the Caribbean. Yields in the hypercompetitive domestic market continued to erode, although a rise in load factor offset about half the decline.
The stronger-than-expected traffic recovery this year in conjunction with the emergence of a thriving low-fare sector in many parts of the globe has contributed to a healthy restoration of demand for new and used transport aircraft, leading to a reduction in the overall number of stored jets and driving up lease rates for the more popular types, experts say.
Managerial grit that sometimes borders on cockiness seems to keep El Al Israel Airlines aloft against all commercial odds as perhaps the ultimate ethnic niche carrier. Maybe it's a mindset composed of equal portions of self-reliance and chutzpah (a Yiddish expression loosely translated as utter nerve or supreme self-confidence) that somehow translates into viability for the small airline with the outsized reputation.
Three years of airline industry turmoil and restructuring have left their mark on the maintenance, repair and overhaul aftermarket, where suppliers are scrambling to stay abreast of the changing needs of their airline customers while coping with tough competition and excess hangar capacity, itself a result of some of those changes.
In early October, the price of oil topped $52 a barrel, representing a 60% increase over the year-ago period. According to the Air Transport Assn., every $1 increase in the price of a barrel adds $425 million in annual operating expenses for US airlines. That means they are spending an extra $9.93 billion on Jet A this year compared to 2003.
As turnaround stories go, Air New Zealand's is about as good as it gets. In just over 2-1/2 years under MD and CEO Ralph Norris, the company has come from the nightmare of writing off NZ$1.45 billion-the largest writeoff in New Zealand corporate history-to posting combined annual profits of NZ$331 million over its last two fiscal years.
Low-profile but profitable, Turkish Airlines is on a roll with an order for 51 new aircraft and plans to build a new $350 million technical base (see box, p. 42), soaring on the winds of a robust economy and rising demand for leisure and business travel. Earnings are at record highs and passenger traffic was up 26% in the first half of the current year.
They won't have to move a mountain to build the grand new Terminal 5 at Heathrow but they did move two rivers, the Duke of Northumberland and Longford, from under the existing airfield and the middle of the T5 construction site. The diversion of the rivers into two new channels will allow the site to be surveyed by archaeologists as the construction teams move forward.
The nine largest US passenger airlines in aggregate reported a net loss of $2.26 billion for the spring quarter ended June 30 compared to a net profit of $171.9 million in the year-ago period (the 10th, ATA Airlines, did not release results in time to be included in this report). Extraordinary writeoffs at Delta Air Lines totaling $1.65 billion and soaring fuel prices masked significant improvement at most carriers, however.
Charles Darwin wrote, "It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change." British Airways CEO Rod Eddington warns that achieving that responsiveness is extremely difficult-"Changing airline culture is like trying to perform an engine change inflight," he maintains. While not all legacy airline CEOs have to face as daunting a task as that, the magnitude of reform required to meet the actual or threatened competition from low-cost carriers is enormous, and for many airlines seemingly impossible to achieve.
France is Europe's largest tourist destination, with 75.5 million visitors annually including some 15.5 million Germans, 12.7 million Britons and 12 million Dutch flocking to the country. Per capita GDP is above the European average, and with 61 million inhabitants it has the largest population in Western Europe after Germany. Yet air travelers in France have fewer opportunities to take advantage of low-cost airlines than those in almost any other country in Europe.
People may not be out in the streets demonstrating for change, but they are at their home PCs and Internet cafes making bookings for seats on a revolution sweeping across Asia. The era of the low-cost carrier has arrived and perhaps sooner than most would have expected in a region still making the transition from tightly drawn bilateral agreements to freewheeling open skies arrangements.
Airlines in 1964 were very excited about technology. The industry that had been pushing the limits of piston engines and propellers since the 1930s recently had been presented with the greatest gift imaginable-a deus ex machina if there ever was one-the jet airplane.
Airline relationships with each other have gone through an extensive period of maturation during the past 40 years, most dramatically in the international arena. The industry has transitioned from a close-knit association of thinly spread operators legally coordinating commercial activities in a sanctioned cartel, self-regulating fares and service levels to provide maximum benefits for both airline and passenger-or so they claimed-to today's system of alliances battling on a global stage increasingly open to free-market competition.
With its year-round fine weather, excellent beaches and inexpensive hotels and restaurants, Tunisia is a natural alternative for Europeans eager to enjoy a holiday on the Mediterranean without paying Southern Europe prices. Tunisair capitalizes on that market, particularly in the summer months when it operates its aircraft as much as 16 hr. per day on mostly short- and intermediate-haul flights into Europe.
