Of all European countries west of Turkey, none have added more airline seats since 2019 than Portugal (see “By the Numbers”). That reflects a boom in tourism, which propelled state-owned TAP Air Portugal to a brawny 9 percent operating margin during the final quarter of 2022, and a 7 percent operating margin for the full year. In the final quarter of 2019, TAP’s operating profit barely came in above zero. And it earned just a 2 percent operating margin percent for all of 2019. As TAP rebuilt its schedules faster than most other European airlines, its Q4 revenues were the most in company history. The fourth quarter, however, was not without its headaches, many of them in fact. TAP endured labor shortages, labor unrest, episodes of social strife, air traffic control bottlenecks, aircraft delivery delays, a shortage of aircraft parts, and even one of its new A320 Neos grounded in Guinea for four months after it hit and killed two airport workers upon landing. Lisbon airport, meanwhile, has for years grappled with severe capacity shortcomings, stifling TAP’s growth ambitions. Another lingering issue is financial leverage, even after collecting about $2.6 billion in state aid since the start of the pandemic—its most recent taxpayer gift came for Christmas, in the form of roughly $1 billion. For TAP, the true Santa Claus might be an acquiring rival, with Air France/KLM making no secret of its desire. TAP was privatized and sold to a group that included JetBlue and Azul founder David Neeleman last decade but was rep-nationalized since. Now Lisbon wants to try again. According to a Reuters report in February, Lisbon “wants to start TAP’s privatization process soon.” One can see why Air France/KLM would be interested, and not only because of TAP’s impressive operating profits last year (which incidentally were way above even the company’s own expectations). TAP’s Brazilian network is second to none among European carriers, and Lisbon one of Europe’s best European gateways to all of South America. TAP has a formidable western and southern African network too, buttressed by traffic tied to linguistic commonality and old colonial ties. It’s been amplifying its North American network too. And Portugal’s fast-growing tourism sector carries extra appeal amid uncertainties about the future of business traffic. New network opportunities beckon as longer-range A321s arrive. But management stresses the need to control costs as inflation bites. This includes labor costs, with new contracts subject to negotiations. The overriding goal: To transform TAP into “a sustainably profitable airline.”

-Jay Shabat

Korean Air-Asiana Merger Faces Further Delays From European Regulators

The Korean Air and Asiana Airlines merger is facing further delays for international approval. The European Union announced that it would be extending its decision date on the proposed acquisition from July 5 to August 3.

The combination of Korea’s two largest airlines was originally announced in November 2020 by the Korean government and Korea Development Bank. The deal would be worth more than $600 million. Korean Air will take an approximately 65 percent stake in Asiana and consolidate the airline.

The European Commission opened an in-depth investigation in February to assess whether the transaction could hurt competition. Preliminary concerns from the first phase of its review addressed the potential antitrust issues for passenger transport and cargo transport services between South Korea and the European Economic Area. Specifically, authorities EC mentioned reduced competition for four direct routes from Incheon to Paris, Frankfurt, Rome, and Barcelona.

Korean Air is a member of the SkyTeam alliance. Following the successful completion of the merger, Asiana will become part of SkyTeam and be integrated into Korean Air, making it the world’s seventh-largest airline according to The Korea Times. Asiana is currently a member of the Star Alliance.

The transaction sought approval from fourteen regulatory bodies. Korean Air submitted required business combination reports to nine countries in January 2021. Since then, it has received approval from mandatory bodies like Australia, Korea, Malaysia, Singapore, Turkey, Taiwan, and Vietnam. 

China approved the merger in December 2022, and the U.K. recently gave its approval in March 2023. Thailand and the Philippines concluded that the submission of a business combination report was not necessary.

The EU, Japan, and the U.S. have yet to give the green light. The transaction is in a preliminary consultation phase in Japan, while the U.S. deemed it necessary to take more time for review.

-Sherry Sun

How India Is Preparing for Its Goal of 1 Billion Airline Passengers

The Indian ministry of civil aviation has set a long-term goal of reaching one billion air passengers by 2040, as stated in their 2019 “Vision 2040 for the Civil Aviation Industry in India” document. 

The country recognizes the need to focus on growing infrastructure and hiring manpower to accommodate the growing number of passengers, which is expected to grow six-fold to around 1.1 billion by 2040.

The government also has plans to construct an additional 26 airports under its regional connectivity scheme and invest $11.9 billion to modernize and construct new airports by 2025.

Additionally, India is also increasing the number of flying training organizations and facilities for aircraft maintenance, repair, and overhaul, said Indian civil aviation minister Jyotiraditya Scindia.

As economic growth, rapid urbanization, rising disposable income and a young population push the aviation sector from 14 million domestic passengers in 2013 to 144 million, India would need a civil aviation infrastructure and capability that would be able to support a $20 trillion economy by 2047, Scindia said.

India’s air passenger traffic increased 47 percent year-on-year to 123.2 million passengers in 2022, almost 15 percent lower to 2019. 

Speaking at an aviation event in New Delhi this week, Scindia said the civil aviation infrastructure in India has grown from 74 airports in 2013 to 148 airports, waterdomes, and heliports today.

India’s six metro cities – Delhi, Mumbai, Chennai, Bengaluru, Kolkata, and Hyderabad – today have a capacity of close to 192 million passengers. “In the next four years these cities will have a capacity of 420 million passengers per year,” Scindia said.

He further said that by the end of this year, Delhi Airport will grow from the current 70 million to 100 million passengers.

Talking about increasing fleet size to accommodate a growing number of air passengers, Scindia also he expects India’s fleet to grow from the present 700 to over 2,000 planes in the next five to seven years.

The minister also cited Air India’s record order of 470 aircraft touted as the largest order in international civil aviation history.

However, this record order of Air India has also brought to the fore a debate on market access as foreign carriers, mostly Middle Eastern ones, have been seeking additional capacity to serve more routes in India.

Many carriers fear that Air India’s 470 jets may capture most of the market.

Dubai’s Emirates, Turkish Airlines and Kuwaiti carrier Jazeera Airways have all called for sharp increases in air traffic rights to and from India to meet demand.

While Dubai has requested an extra 50,000 seats a week from about 65,000 a week on India routes, Kuwait’s Jazeera Airways has called for the current weekly allowance to be taken up from the present 12,000 seats to 28,000 seats.

However, speaking to Reuters, India’s civil aviation minister Jyotiraditya Scindia has said that the country has no plans to increase air traffic rights for the United Arab Emirates. 

Scindia instead urged domestic carriers to fly long haul and help establish new hubs.

Here it’s worth noting that following the merger of Air India and Vistara, India would be left with only one full-service carrier. 

In his interview to Reuters, Scindia said Air India’s widebody plane order and IndiGo’s twin-aisles to some destinations were signs that “transition” had begun.

“The minute you give direct connectivity to international locations directly from Delhi, any passenger is going to prefer a direct connect, rather than going through another country’s hub,” he said.

-Peden Doma Bhatia

Delta Says It’s No. 1 in South America. American Says No Way

Delta Air Lines dominates many aspects of the U.S. airline industry. It makes the most money; it has set pilot wages; it has declared that Wi-Fi will be free. But does it dominate travel between the U.S. and South America?

Delta President Glen Hauenstein last week declared that Delta’s partnership with LATAM has made it the region’s leading carrier. Needless to say, his view is not shared by American Airlines, the leader in South America and Latin America since it bought Eastern Airlines’ Miami hub in 1989.

Hauenstein, speaking March 14 at a J.P. Morgan investor conference, declared, “In South America, when you put LATAM and Delta together, we go from a number three position as Delta to a number one position from U.S. to South America, and we’re gaining share, as we speak.“ In September, the Transportation Department granted anti-trust immunity to the joint venture between Delta and Santiago-based LATAM.

Dennis Tajer, spokesman for Allied Pilots Association, which represents American pilots, attended the conference with several other APA officials. They were perplexed. “It was like ‘really?’,” Tajer said.  “The pilots I was with were saying, ‘You expect them to brag on New York and Atlanta and maybe the transatlantic, but you do not expect them to say that they’re number one in South America.

“Delta is not number one in Latin America or South America,” Tajer said. “But the fact that they’re talking about it means they are coming after us.”  South America refers to the continent, while the term Latin America generally includes South America, Central America, Mexico and most islands of the Caribbean. 

On Tuesday, Jose Freig, American’s vice president of operations and commercial for Mexico, the Caribbean and Latin America, said, “American Airlines has connected travelers with South America for more than 30 years, and, today, we are proud to serve as the leading U.S. airline in the region, with more flights and seats to more destinations than any other single carrier or partnership. 

“Our current network includes service to 16 destinations in South America, including the only nonstop service from the U.S. to Montevideo, Uruguay and Pereira, Colombia,” Freig said in a prepared statement. “Together with our partner GOL, we are able to offer our customers an unparalleled network in the region, and we look forward to continued growth through our partnership with JetSMART.” American and Rio de Jainero-based GOL are codeshare partners: American is an investor in Santiago-based JetSMART.

What do the statistics say?

Mike Arnot, spokesman for Cirium, an aviation analytics company, said Hauenstein is correct when it comes to present and future available seat miles (ASM), which measure capacity, between the U.S. and South America.

“The combined schedules for Q1 and prospective for Q2 2023 put Delta and LATAM about 14% ahead of American on capacity,” Arnot said in an e-mail. “Those schedules could still change for Q2.” 

However, “looking at actual passenger revenue share for the full year ended 2022, American took around 27 percent of the market, whereas Delta and LATAM combined for 18 percent.”  Arnot said. “LATAM had 12.4% of the revenue while Delta had 5.8 percent”, he said.

In terms of ASMs for the 12-month-period ending in March 2023, American and GOL had 32 percent, while Delta and LATAM had 28 percent.  Another measure, counting seats instead of ASMs, benefits American, because Atlanta is farther from South American markets than Miami is, and thus accumulates more ASMs flying to the same destination. In terms of seats, for the year ending March 2023, American and GOL had 32% of seats, while Delta and LATAM had 22 percent.

American’s Miami hub has long been the focal point for service to South American and Latin America, although American serves Latin America from all of its hubs including Charlotte, a major hub for the Caribbean. Meanwhile, Delta is growing rapidly throughout the region, focusing on its Atlanta and New York hubs, and relying largely on LATAM for Miami service.

American said that from Miami, it offers up to 27 peak daily flights to 16 destinations in South America. Additionally, American offers up to 20 daily flights to 10 destinations in Central America, up to 12 daily flights to five destinations in Mexico and up to 84 flights to 40 destinations in the Caribbean.

Systemwide, American said, it offers up to 34 daily flights to 16 destinations in South America. It also offers up to 35 daily flights to 10 destinations in Central America, up to 117 daily flight daily flights to 25 destinations in Mexico and up to 171 flights to 40 Caribbean destinations including the British Virgin Islands starting in June.

As for Delta and LATAM, during March they offer 169,038 seats between the U.S. and South American joint venture countries (Brazil, Colombia, Chile, Peru, Paraguay, Uruguay). “That represents a 30 percent share of seats, and is larger than any other competitor,” said Delta spokesman Morgan Durrant. “Our network is built around where customers want to fly most, and demand to Latin America (including Caribbean) has been strong,” Durrant said. 

Last month, Delta said it will operate seasonal winter service between New York and Rio de Janeiro starting Dec. 16, the third new route announced with LATAM Group. The route “adds to Delta and LATAM’s position as the No. 1 joint venture partnership for service between NYC and South America,” Delta said.

Last week, Delta said it will operate its largest-ever winter holiday schedule to Latin America, with frequency increases on 16 routes from New York, Atlanta, Detroit and Minneapolis. The carrier will offer more than 25,000 daily outbound seats, a 20 percent increase compared to 2022, to 44 destinations.  The flights will operate seasonally from Dec. 16 through Jan. 7.

-Ted Reed