Issue No. 722

Korean Air and Asiana's Troubled Times

There was plenty to discuss at this year's annual IATA meeting in Seoul, from raging trade wars to the status of the B737-MAX. But it wasn't exactly an upbeat affair. Though IATA's economists still expect the industry to earn a hearty $28b profit this year, that's down from the $36b figure they forecasted in December. Slowing global trade, make no mistake, is a deep concern.

Air New Zealand's concerns about slowing demand are well founded. But the airline, benefitting from retreats by many of its longhaul competitors, expressed confidence about its new fiscal year that begins next month. Also confident are Indian carriers like IndiGo and SpiceJet. Neither wowed anybody with their calendar first quarter results. But with Jet Airways out of the picture, both are becoming more aggressive strategically. IndiGo is still keen on intercontinental flying, and SpiceJet is now flying planes with business class seats.

Seats are hardly the only thing AirAsia wants to sell. But for all its non-airline ambitions, seats—along with ancillaries—are still the most important thing it sells. And it continues to do so profitably, in its two largest markets Malaysia and Thailand, and now in the Philippines too. In Russia, Aeroflot has a money-losing present but a highly-promising future. Just to the east, Wizz Air avoided some of the intense yield pressures felt by airlines farther west.

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