The Airline Weekly Halftime Show: A region-by-region look at developments that shaped the first six months of 2015

A full understanding of global aviation developments for the first half of 2015 will have to wait until carriers report their second quarter results, which they won’t start doing until later this month. But the dominant trends of the period are clear enough, many of them shaped by weak currencies outside the U.S., weak economies outside the U.S. and—most of all—cheaper fuel, even if the benefit of that is offset to varying degrees by wrong-way hedges and adverse currency movements. Cheaper fuel indeed brought cost relief to airlines worldwide in the first half—but not without concomitant revenue distress. That said, the majority of the world’s airlines enjoyed a profitable start to the year, which is why forecasters at IATA expect 2015 to be one of the industry’s best years ever. A closer look at the key H1 2015 developments in the 10 major regions of the world:

North America The U.S. airline landscape wasn’t perfect in the first half of 2015. International markets were lousy, some like Venezuela and Brazil especially so. Domestic markets began souring in May, partly as bloody competitive battles exploded in big markets like Dallas-Fort Worth. Revenues were under pressure more generally as big airlines began accelerating their growth and as smaller airlines grew even more rapidly, some like Spirit at a ferocious pace. But all this negativity was far outweighed by a single positive mega-event: the dramatic collapse in fuel prices that started in the middle of 2014, dampened a bit in some cases by wrong-way hedges but unbothered—unlike at most non-U.S. airlines—by currency movements. American, because it was completely unhedged, enjoyed a windfall for the ages, masking even its considerable revenue distress in markets like Latin America, where it’s a leader, and Dallas-Fort Worth, its single biggest market. In Q1, American managed to outperform Delta, the most adversely hedged of all U.S. airlines, and United, the most exposed to troubled overseas markets. United itself even outperformed Delta thanks to less baleful fuel hedging, although its overall nonfuel costs remain highest among the Big Three and its revenue pressures considerable due to heavy exposure to Asia, the oil bust’s impact on Houston and the loss of US Airways as a codeshare partner. As phenomenal as earnings were for the Big Three, the giant LCC Southwest—as well as JetBlue, Alaska, Spirit and Allegiant—all did even better, in part thanks to networks largely untainted by international distress. LCCs, by nature, also perform better when fuel prices are low, because their non-fuel costs, where they have a big advantage, carry greater weight. Of course, the dumb luck of cheap fuel wasn’t alone in fueling the extraordinary U.S. profit bonanza. U.S. carriers helped themselves by leading the industry with powerful tactics like seat densification, fleet rightsizing, improved merchandising, IT upgrades, retreats from underperforming hubs, overseas joint ventures and variable flight scheduling. The Big Three, for their part, are also attempting to block Gulf rivals and Norwegian from U.S. expansion. Shifting north, Air Canada similarly began the year with a profit bang, even if a less dramatic one than those of its U.S. neighbors. New deals with pilots and Jazz, surging sixth-freedom traffic, widebody densification, active deployment of Rouge, new bag fees and planned longhaul expansion to markets like Delhi and Dubai have the…

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Are U.S. airlines illegally colluding to restrain capacity and lift fares? The Department of Justice, at the urging of a senator citing a “public display of strategic coordination” at last month’s IATA meeting in Miami, is investigating the matter. The DOJ will need more evidence than that to build a case, although the whole ordeal is perhaps less a gallant fight for right than a populist tantrum.

The DOJ’s scrutiny, incidentally, comes as U.S. airlines actually grapple with just the opposite of what’s allegedly happening. Indeed, the supposed epidemic of rising fares is in reality a trend of falling fares. The evidence for that? One airline after another reporting unit revenue declines, the latest being Delta.

In a merger of two important airline suppliers, Amadeus plans to buy Navitaire, maker of the predominant reservation system used by LCCs. On the GDS side of the airline IT business, meanwhile, the topic on everyone’s mind is Lufthansa’s looming fees on third-party bookings.

South African Airways isn’t yet ready to break out the champagne and declare victory. The airline’s condition remains critical, but its vital signs are stabilizing, suggesting the worst might be over. Cheaper fuel, naturally, has something to do with that.

In the realm of labor relations, Southwest struck a tentative deal with its flight attendants while Lufthansa made concessions to avoid a strike by its own flight attendants. United, meanwhile, is making a big bet on biofuel.

The world has a new A350 operator—Vietnam Airlines joins Qatar Airways—and Airbus has a new A330 customer: the Chinese government.

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