Issue No. 840

The Dubai Order Frenzy

Airlines Go on a Shopping Spree at The Dubai Airshow

Pushing Back: Inside The Issue

In the Before Times, the biennial Farnborough and Paris Airshows were where airframers announced masses of orders from the world's airlines. Those two shows have been idled for two years during the pandemic, but the Dubai Airshow was not. And this year the usually sleepier and more regional airshow was a doozy. Airlines signaled their faith in the recovery by going on something of a shopping spree, announcing orders for almost 500 jets. Airbus was the big winner, with two marquee orders: Air Lease Corp.'s order for 111 aircraft and Indigo Partner's for 255. Boeing did all right as well, with orders from a new Indian startup and airlines in Africa.

But ALC and Airbus buried the lede, as we journalists like to say. The lessor is the launch customer for a new aircraft, a freighter variant of the A350, something Airbus had signaled it would launch. But unlike other aircraft launches, there was no champagne or confetti or even a standalone press release. Instead, the A350F's launch was buried in a release about ALC's order for 111 Airbus jets.

Elsewhere in this issue, we held the second annual Skift Aviation Forum virtually last week, and airline leaders were bullish (and not just about buying aircraft) about the recovery. American Airlines is exiting 27 routes, while United Airlines is ending nine. The leaders of both airlines say they will have enough staff to handle what is expected to be a busy holiday season, but face a pilot shortage on at their regionals for next year. And KLM's Pieter Elbers expressed surprise at the crazy-high load factors his airline saw on November 8, the first day the U.S. re-opened to vaccinated travelers. For more from the conference, turn to the Weekly Skies section below.

Weekly Skies

On November 8, the first day that the U.S. reopened to vaccinated foreign travelers, KLM‘s aircraft across the North Atlantic were 97 percent full, a remarkable statistic in the best of times but even more striking now, during a global pandemic, when planes plying international routes are on average about 60 percent full.

“This is a testimonial and a proof of the willingness of people to travel,” KLM CEO Pieter Elbers said at the Skift Aviation Forum last week. “It’s a demonstration of people wanting to get back in the air.”

The North Atlantic was the most important market for KLM before the pandemic,. The airline lacks a domestic market, as the Netherlands is too geographically small to sustain a large internal airline industry, so KLM makes its money by connecting passengers through its hub in Amsterdam. “It is the backbone of our long-haul network,” Elbers said.

A growing part of this travel is premium leisure, or leisure passengers buying premium-class fares for vacation travel. KLM is “in a good spot” to capture some of this demand, as its business cabins are relatively small, compared with its competitors’. But it offers more premium economy options than some of its competitors. KLM already had begun adding a premium-economy fare class to its flights before the pandemic, and. this work is picking up steam now that the recovery is underway, Elbers said.

Prior to the U.S. reopening, KLM had begun restoring its routes to the U.S., and most of its pre-pandemic destinations are back in service. The carrier now is working on adding frequency to its flights, and cargo helped keep KLM’s flights to the U.S. in business. But Elbers noted the road ahead will be “bumpy.”

“The world is on its way to recovery,” he said, but the recovery is likely to be “stop and go.” Some parts of the world are re-imposing restrictions, testing requirements, and quarantines in response to fresh surges of Covid-19. Asia remains largely shuttered, although Elbers is encouraged by recent moves in Japan, Thailand, South Korea, and Singapore to reopen, even if partially. China’s recovery is still “far away,” but Elbers said, “I stay optimistic.”

Business travel’s return is an open question, although Elbers noted European companies are sending workers back out on the road as vaccination rates improve in the continent. Most of the travel to the U.S. so far has been leisure, but small- and medium-size enterprises have resumed business travel across the Atlantic, if modestly. “We need to wait a little on longhaul [business] traffic,” he said.

It’s not just the nature of travel that the Covid-19 pandemic has changed. The way airlines view their role in climate change also has changed. Elbers pointed to KLM’s years-long efforts to mitigate its carbon emissions, but said the trend toward more environmentally sustainable airlines has accelerated. KLM is stepping up the amount of sustainable aviation fuel (SAF) it buys but acknowledges it cannot go it alone. IATA recently adopted more stringent carbon-emissions goals, and Elbers believes that with the airlines acting in concert, the supply of SAFs, now minimal, will grow in response to demand.

But airlines aren’t alone in the fight. Manufacturers, governments, and airlines must work together to reduce air travel’s carbon footprint. Governments have a role in mandating more SAF production and in streamlining air traffic control to allow more efficient flight paths. Manufacturers should be more aggressive in developing new propulsion systems. And airlines should accelerate fleet transformation to retire less efficient aircraft types. “We need to address all the different levers to make progress,” he said.

KLM has done so in recent years, with the introduction of more efficient regional jets, the Embraer 195-E2 and new Boeing 787s for its long-haul fleet, while retiring older Boeing 747s. The carrier still is deciding on which next-generation aircraft will replace its fleet of aging Boeing 737s, although Elbers declined to tip his hand.

Electric aircraft, like the “air taxis” American Airlines, United Airlines, and Virgin Atlantic, among others, have ordered, will play a role in reducing airlines’ carbon footprints, but the technology as it is now is still at too early a stage to make a significant impact. “It’s a start,” Elbers said.

— Madhu Unnikrishnan

TAP’s Africa Expansion on Hold — For Now

Before the pandemic, TAP Air Portugal had plans to expand its African network beyond its strongholds in Lusophone Africa, but those plans have been put on hold, as the carrier grapples not just with the pandemic but with its financial restructuring, CEO Christine Ourmieres-Widener said.

“I think for 2022, we need to be still very cautious — why, because first, we are in restructuring and we are under state aid,” she said at the Skift Aviation Forum last week. “It would be for us difficult to move out of these countries without taking a significant risk in investing in new destinations.”

Instead, the carrier will focus on strengthening its network in Lusophone Africa and bringing it back up to 2019 levels. That part of the network, as well as Brazil, have particularly resilient during the pandemic, fueled by strong visiting friends and relatives (VFR) traffic. The split between VFR and business traffic has been about 60-40, but business traffic is rising in both Brazil and TAP’s Africa network, thanks to recent high commodity prices.

After the U.S. reopened to vaccinated travelers on November 8, TAP saw demand for its U.S. routes surge, Ourmieres-Widener said. The carrier has restored 10 of the 11 North American destinations it served before the pandemic, she said.

Madhu Unnikrishnan

United Aims to Beat Margin-Leader Delta on Quality

“We will win customers on quality,” United CEO Scott Kirby said at the Skift Aviation Forum last week on how he plans to beat U.S. margin leader Delta Air Lines at its own game. And Kirby had plenty of examples to cite: The addition of premium-heavy “high-J” Boeing 767-300ERs that fly to Europe, the Bombardier CRJ-550 that met pilot contract rules while bringing a dual-class product to smaller cities, and a return of in-seat entertainment screens to its domestic mainline narrow-body fleet to name a few. And, while further out, United is investing in new spaces in Denver and Newark, and possibly in Washington, D.C.

These improvements coupled with United’s seven hubs located in many of the U.S.’s largest markets give the airline the “structural ability” to be the “leading margin airline,” said Kirby. This is a competitive shot over the bow of Delta that, prior to the Covid-19 pandemic, was the major carrier with the highest margin in the U.S. market. Delta generated an earnings before interest and taxes (EBIT) margin of 14 percent in 2019 compared to 10.6 percent at United and 8.5 percent at American, according to data from S&P Capital IQ.

In October, Delta Chief Financial Officer Dan Janki said the airline is focused on “prioritizing driving margins, profitability and restoring our balance sheet” in 2022. It will do this through the continuation of many of the programs it began before the Covid-19 pandemic: Replacing smaller regional jets with new larger, more efficient aircraft; Updating aircraft cabins with additional premium seats; and accelerating investments in its hub airports. Delta plans to release more details of its 2022 plans at an investor event in December.

“There’s room for both of us to do really well,” said Kirby on United’s competition with Delta. “[But] I think we will win. We’ve just got a better hand of cards.” By “cards,” Kirby referred to what he sees as United’s better located hubs.

Kirby’s embrace of quality is new for the long-time airline executive. At America West Airlines and US Airways he was known for an obsessive focus on keeping costs down and maximizing revenue. Similarly, at American, where he was president under CEO Doug Parker from 2013 until 2016, he backed the decision to remove in-seat TV screens from narrow-body aircraft.

“I always had a boss before,” he said when asked about his apparent change of heart. “I have definitely evolved, as I’ve seen how customer service and product matter. But as the hand has changed, it’s given me the chance to really focus on it.”

American now stands alone among the U.S. Big 3 airlines without — and no plans to add — seatback screens to its narrow-body jets. United unveiled plans to install them across its fleet, beginning with new Boeing 737 Max aircraft, in June. Delta never opted to remove such screens in the first place and offers them on nearly all of its mainline jets.

But ultimately numbers will determine success or failure for Kirby. Onboard product improvements are not cheap to install or operate — any added weight increases fuel burn. They must, eventually, be justified by higher fares, or passenger “yields” in airline parlance. The pandemic has given Kirby some breathing room on this as few — if anyone — in the industry are looking for profits or record margins from United for some years to come.

Investors will eventually want to see a return on these investments. And that may be shareholders returns or, just maybe, beating Delta in the margin game.

Edward Russell

Copa Posts Profit on Strong VFR, Leisure Demand

Copa Airlines’ recovery happened faster than expected, especially given the Panamanian carrier has virtually no domestic routes. Visiting friends and relatives (VFR) and leisure traffic are fueling its climb out from the pandemic.

The nature of its business has changed, however. CEO Pedro Heilbron observed that before the pandemic, VFR, leisure, and business travel each accounted for one-third of Copa’s traffic. Now, VFR and leisure account for about 40 percent each, and business travel comprises just 20 percent. This appears unlikely to change in the near term.

The carrier flew 70 percent of its pre-pandemic capacity in the third quarter and is planning to add more in the fourth quarter and the first quarter of next year. It has maintained six flight banks at its hub in Tocumen, which is unlikely to change, although Copa is operating fewer flights in each bank. “But of course, Covid has not gone away,” Heilbron said.

Competition in the region is heating up, however, as carriers scramble to tap into demand to vacation hotspots in South America. “There’s quite a bit of action…especially from new entrants, or not new entrants but new entrants to the region,” Helibron said.

Demand within Latin America also remains robust, despite inflation and foreign-exchange headwinds. Recently, Azul said its international travel demand had withered a bit due to both visa delays and unfavorable foreign exchange making tickets more expensive for Brazilians. Heilbron said Copa has noticed few such issues.

Above all, Copa plans to be flexible until the pandemic has fully receded. Heilbron noted that the carrier added capacity last November in anticipation of strong year-end demand, which never materialized. This year is expected to be different, but he said the carrier reserves the ability to flex capacity down if needed.

Copa is in the midst of a re-fleeting. The last of its Embraer E190s exited the fleet in the quarter. It sold two Boeing 737-700s, and is transferring two more 737-800s to its Wingo unit in Colombia. Copa accelerated deliveries of 12 737-9s it has on order from Boeing with the aircraft now due to arrive from next year through 2025. Copa plans to take delivery of an additional two -9s by the end of the year and two more next year. Copa ended the quarter with 87 aircraft in its fleet and plans to end the year with 89 planes.

Copa reported a third-quarter adjusted operating profit of $49 million, down 63 percent from 2019. Revenues for the quarter were $445 million, down 37 percent from two years ago.  Copa expects to operate 83 percent of its 2019 capacity in the fourth quarter.

Madhu Unnikrishnan

In Other News

  • While Avianca may be on the verge of emerging from Chapter 11 bankruptcy restructuring in the U.S. — a judge approved its plan on November 2 — it widened its loss to $359 million in the third quarter, or $17 million more than the quarter before. Other metrics are moving in a more favorable direction: Revenues rose 194 percent year-over-year to $608 million while expenses increased only 119 percent to $796 million. Avianca operated 142 aircraft at the end of September; a net reduction of three from June following some juggling: eight Airbus A321s and A321neos were removed while five A320s and A320neos were added.
  • Bankrupt Philippine Airlines lost almost $28 million during the nearly two months from its U.S. Chapter 11 filing on September 3 through the end of October, a court filing shows. The carrier did greatly improve its cash position during the period: Cash and cash equivalents stood at $267 million on October 31 compared to a dire $29 million when it sought court protection. The boost was thanks to $505 million in debtor-in-possession financing that was approved at the beginning of October. A shrunken PAL aims to exit Chapter 11 quickly under a creditor-backed restructuring plan that was submitted last month.
  • Thai Airways lost 9.6 billion baht ($29 million) excluding special items during the first nine months of 2021. Including a 73.1 billion baht benefit from one-time items, including a 60.7 billion baht gain from restructuring its debt, the airline generated a 51.5 billion baht net profit for the period. Revenues totaled almost 15 billion baht, or down 66 percent compared to the first nine months of 2020. But, owing to Covid-19 travel restrictions, the Thai was a fraction of itself during the period: passenger traffic was down almost 94 percent year-over-year on an almost 71 percent cut in capacity. The airline, like the industry as a whole, points to rising vaccination rates and the reopening of borders for its continued recovery. Thai plans to fly 36 routes serving Asia, Australia, and Europe in the fourth quarter after suspending its entire international network during the crisis.
  • UK regional carrier Flybe is the latest Covid-19 casualty planning a reboot. The airline plans to resume flights from a base in Birmingham with a fleet of De Havilland Dash 8-400s in early 2022. A statement indicated that the airline will fly both domestic and international routes to the EU. If its restart succeeds, Flybe will join ExpressJet Airlines and RavnAlaska in the U.S. in coming back from a pandemic closure.
  • Jet2‘s losses in the half year that ended in September were 53 percent worse than the previous year, down to £170 million ($229 million). But the pandemic had not struck in the first part of last year’s first half results. In this year’s first half, the carrier endured lockdowns, quarantine requirements, and the UK’s “traffic light” system of restrictions, the company noted in its first-half results. In addition, Jet2 did not operate any scheduled flights between April 1-June 24. The booking curve was very short for most of the period, but is lengthening; the outlook for next summer looks promising, the carrier said. Traffic ticked up in October after the UK suspended its traffic light restrictions. In October, Jet2 placed firm orders for 51 Airbus A321neos, with options to go up to 75 of the type.
  • Lynx Air is the latest ultra low-cost startup to make a go of it in Canadian skies. The Calgary-based carrier plans to begin flying in 2022 with a fleet of Boeing 737 Max jets; Lynx has orders and lease agreements for 46 aircraft due over the next seven years, the airline said. The carrier will be led by Australian airline executive Merren McArthur, who has previously worked as CEO of Tigerair Australia, Virgin Australia Regional Airlines, and Virgin Australia Cargo. Lynx is privately held.

Edward Russell & Madhu Unnikrishnan

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Boeing has a tough road ahead of it if it plans to design a clean-sheet new aircraft, but it still should do so, Air Lease Corp. Executive Chairman Steven Udvar-Hazy said at the Skift Aviation Forum last week.

The airframer needs a mid-market airplane to replace the 757, or else it will lose that part of the market to the Airbus A321. But even if it moves forward with a new design, Boeing may have lost the battle, because by the time a new airframe launches, the installed base of A321s will be huge, Udvar-Hazy said.

In addition, Boeing is hamstrung by current engine technologies. Any new aircraft designed now could be obsolete before it rolls off the production line, as engine advancements move ahead. But, if Boeing waits for a next-generation engine, it will be even further behind Airbus in the space, Udvar-Hazy said. He added that the airframer perhaps should have explored re-engining the 757 before retiring the type.

That’s not the least of Boeing’s problems, according to Udvar-Hazy. The airframer’s 787 delivery delays have cost ALC $500 million and prompted to lessor to cancel three of its orders. 737 Max deliveries still haven’t caught up after the grounding that ended last year. And the 777X program remains behind schedule. “Boeing needs to get its house in order,” Udvar-Hazy said.

But Airbus isn’t immune to problems, either. The European airframer could struggle to reach its ambitious production target of more than 60 A320s per month. CEO Guillaume Faury has assured investors that the company is working with its suppliers to meet the ramp-up. But Udvar-Hazy cautioned that suppliers could find it difficult to staff up and train employees after downsizing earlier in the pandemic, and this could ripple across Airbus’ production lines.

Separately, Udvar-Hazy said ALC passed on a 777X freighter Boeing pitched, opting instead to be the launch customer for the A350F. Boeing proposed starting deliveries of the 777XF in 2028, Udvar-Hazy said.

Madhu Unnikrishnan

Fleet Briefs

  • Virgin Australia signed letters of intent to lease seven more Boeing 737-800s, which would bring its all-737 fleet to 84 aircraft. The airline did not disclose when the jets would arrive. Virgin Australia flew 64 737s — plus Airbus A320s and A330s, Boeing 777s, and ATR turboprops — at the end of 2019, according to Cirium Fleets data. It shrank to an all-737 airline through its voluntary administration restructuring.
  • Icelandic startup Fly Play has leased two additional Airbus A320neos from China Aircraft Leasing (CALC). The aircraft, which were previously disclosed as a letter of intent, are due to arrive in March and will support Play’s growth into a hub-and-spoke discounter with flights to both Europe and North America. Combined with its existing fleet and a previous lease agreement with GECAS for four A320neo and A321neo jets, Play anticipates operating nine aircraft in 2023 with a target of 15 by 2025.
  • South Korea was set to re-certify Boeing’s 737 Max on November 22, allowing the beleaguered aircraft to return to the country’s airspace, Bloomberg reported. Only one South Korean carrier operates the Max: Low-cost carrier Eastar Jet. However, Korean Air has orders for 30 Maxes and Jeju Air for 40 Maxes. The re-certification comes almost a year to the day that the U.S. lifted its grounding order on the aircraft.
  • Italian planemaker Tecnam has revealed specs for the planned P-VOLT electric prop it is developing with Rolls Royce. The aircraft, which is based off Tecnam’s in-service P-2012 Traveller, would be able to carry two pilots and nine passengers up to 85 nautical miles using contemporary battery technology, or a project 145 nautical miles with 2030 batteries. Cape Air and Widerøe have committed to the electric aircraft.

Edward Russell

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State of the Unions

Regional affiliates of American Airlines and United Airlines are taking drastic measures to attract pilots amid an increasingly dire pilot shortage in the U.S. A shortage that has prompted United to cut service to at least nine smaller cities and may limit the recovery — and growth — of the industry next year.

“Given all the accelerated [pilot] retirements that happened during Covid, and the fact that most airlines — including us — are growing a lot on the other side, the pilot shortage is now real,” United CEO Scott Kirby said at the Skift Aviation Forum last week. “We don’t have enough pilots to fly all the airplanes. So the 50-seaters are at the bottom of that pile, and markets that rely on 50-seaters are the ones that are going to lose service.”

The Chicago-based carrier has already confirmed that it will exit nine smaller cities — or 11 if you count the loss of U.S. Essential Air Service contracts — almost exclusively served by 50-seat regional jets, including Bombardier CRJ200s and Embraer ERJ-145s. Cities losing United service include College Station, Texas; Evansville, Ind.; Lansing, Mich.; and Wausau, Wis.

“While there is no shortage of people who want to be pilots — we have had to put some incentives in place for regional pilots,” American CEO Doug Parker said at the forum. While he did not go as far as Kirby as saying there was a pilot shortage, the fact that American is offering incentives to attract crews to its regional affiliates that operate American Eagle flights is indicative of hiring challenges.

American offers crews up to $187,500 in bonuses for taking jobs at its wholly-owned subsidiaries Envoy, Piedmont Airlines, or PSA Airlines. These incentives are divided up between sign-on bonuses when they begin work, additional money when they upgrade to captain at one of the regional airlines, and yet another bonus if they ultimately flow through to American mainline. And at United, affiliate CommutAir is offering new hires $50,000 sign-on bonuses, and GoJet Airlines up to $40,000 to new crew members. To put these numbers in perspective, the minimum pay for a new first officer at GoJet is a little over $34,500 annually.

The concerns about pilots are not new. Regional airlines have been working to address a forecast crew shortage for over a decade. The situation was made worse after the FAA implemented new training and hour requirements — the “1,500 hour” rule — in 2013 in response to a fatal Colgan Air crash four years earlier. But the pandemic has exacerbated the situation even more: After easy hiring in 2020 and 2021 as larger carriers around the world downsized, major U.S. carriers have been hoovering up regional airline pilots to keep up with a surprisingly fast recovery.

“The top five U.S. airlines lost enough pilots in 2020 to completely empty four U.S. regional airlines,” Courtney Miller recently wrote in The Air Current putting the problem into perspective.

A recent report from Oliver Wyman found that, after an abundance of pilots in 2020 and 2021, North American carriers will face a shortfall of nearly 10,000 pilots by the beginning of 2022 and that number will only rise as the decade continues. 

“The biggest issue we see for 2022 is that [the] supply of seats will be lower than investors are estimating because of gating factors including a lack of pilots, mechanics and customer service agents, among others,” wrote Cowen & Co. Analyst Helane Becker in a report on November 12.

And any lack of pilots will, as Kirby put it, hit the smallest cities the hardest. These are the destinations served with single-class 50-seat jets that, with pilots scarce and costs rising, airlines are removing at an accelerated rate in favor of larger, newer models. United plans to retire roughly 200 of these small jets by the middle of the decade.

Some of the other staffing areas of concern cited by Becker have already hit some airlines. American and Southwest Airlines faced large operational disruptions earlier this fall when weather and other events exacerbated an already tight labor situation. Both carriers have scaled back their schedules, and are offering extra pay and bonuses to ensure smooth operations over the upcoming holiday travel season.

Not everyone believes the service cuts are entirely driven by staffing issues. Regional Airline Association (RAA) President Faye Malarkey Black said earlier in November that she was unaware “regional unable to meet capacity due to a [pilot] shortage.” Instead, she suggested that United and other major airlines’ desire to retire inefficient small jets may be behind some of the recent cuts.

United Senior Vice President of Domestic Planning and United Express Ankit Gupta, also speaking at the forum, is still optimistic about next summer. He does not expect staffing to limit the airline’s ability to recover to 2019 capacity levels. But what Gupta did not say was that it is easy to recover top line available seat miles (ASMs) when more, larger mainline jets are added — United plans to take delivery of 48 new Boeing 737 Maxes in 2022 — even as 50-seat models are removed.

“I’m really excited about … getting back to 2019 [flying] levels but with better product and better planes,” said Gupta on United’s Summer 2022 schedule. “Just getting rid of those single-cabin 50-seaters, especially in markets where they should not be flying — [I’m] really excited about that.”

Edward Russell

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Routes and Networks

American Airlines‘ and JetBlue Airways’ new Northeast Alliance giveth and taketh when it comes to routes. After pronouncements of new routes and destinations — particularly by JetBlue — from Boston and New York, American has loaded a schedule that shows the trade off that comes with transferring slots to its lower-cost partner. The Fort Worth, Texas-based carrier will end 13 routes from New York LaGuardia, five from New York JFK, and two from Boston — or 19 total given Boston-LaGuardia is one of the suspended routes — according to Cirium schedules. Not all is lost, JetBlue flies or will fly six of the routes from LaGuardia (Charleston, S.C., Martha’s Vineyard, Nantucket, Orlando, Portland, Savannah), three from JFK (Liberia and San José, Costa Rica, and San Antonio), and both from Boston (the LaGuardia shuttle and Raleigh-Durham). The routes that lose service altogether are: LaGuardia to Asheville, Bangor, Myrtle Beach, Pensacola, Philadelphia, and Traverse City; and JFK to Montreal and Toronto.

But, and arguably more important to judge overseeing the U.S. Department of Justice’s suit against the Northeast Alliance, American and JetBlue’s combined seat capacity from Boston, JFK and LaGuardia will be up during the first six months of 2022 compared to three years prior, Cirium data show. JFK will be up 15 percent and LaGuardia 23 percent, while Boston is flat.

An American spokesperson said the cuts were about “optimizing” its schedule to “better connect customers with the destinations most important to them.”

American’s route exits are not limited to the northeast. The airline will drop eight more routes elsewhere across its system: Charlotte to Champaign/Urbana and Toledo; Chicago O’Hare to Charlottesville; Philadelphia to Baltimore/Washington, Charleston, W. Va., and Ottawa; and Phoenix to Calgary and Vancouver, Cirium schedules show. The airline will continue to serve all of the cities effected by the cuts, just from other hubs in its system.

And there are some additions to American’s map: Rapidly growing Austin will gain daily nonstops to Denver on an Airbus A319 from December 16, and Albuquerque on an Embraer E175 from January 4.

Edward Russell

Route Briefs

  • Northeast Alliance routes aren’t the only things changing for JetBlue in 2022. Speaking at the second annual Skift Aviation Forum last week, Head of Revenue and Planning Scott Laurence reiterated that the carrier will (emphasis ours) launch its delayed service between Boston and London. New York-London Heathrow and Gatwick flights began in August and September, respectively. No word yet on what London airport the Boston route will land at.
  • And JetBlue wasn’t the only one making routes news at the forum. Southwest Airlines Vice President of Network Planning Adam Decaire said the carrier would return to Newark if it can secure what it views as an adequate number of runway timings and gates at the congested airport. While he did not indicate what that number of flights is, he was clear that it is more than the 16 runway timings it gave up when it left the airport in 2019. Southwest serves the New York City area via LaGuardia and Long Island MacArthur airports.
  • French Bee will add Los Angeles to its map next April. The long-haul leisure carrier will connect LAX and Paris Orly four-times weekly with an Airbus A350 from April 9. The new route will complement its service to Newark that resumed in July, and San Francisco that returned in October. In October, French Bee President Marc Rochet said the carrier anticipates “huge” leisure demand between France and the U.S. next summer, particularly for its economy and premium economy product.
  • Eurowings will add four new dots to its map this winter; three of which are new for the entire Lufthansa Group. The budget carrier will connect Dusseldorf to Tromsø, Norway from December 4, and Rovaniemi, Finland, from December 5; and Stuttgart to Luleå and Kiruna, Sweden, from December 19. Flights will operate through March. Prior to the crisis, the group’s namesake carrier Lufthansa only served Tromsø from Frankfurt and Munich.
  • And Wizz Air continues to invest in the “investible” Italian market. The discounter will base a fifth Airbus A321neo at Rome Fiumicino next year that will allow it to add 13 new routes from the airport in June and September. Wizz will connect Rome to Belgrade, Ibiza, Kefalonia, Menorca, Palma de Mallorca, Podgorica, Preveza, and Rhodes from June; and to Basel, Lyon, Madrid, Turku, and Yerevan from September. Wizz is facing off with Ryanair, as well as the newly launched ITA Airlines, at Fiumicino.
  • Australia’s Rex Airlines continues to expand its jet operations with service to Brisbane from December. The carrier will offer twice daily service between Brisbane and Melbourne from December 17, and Sydney from December 20. As part of its expansion, Rex will base a Boeing 737-800 at the Brisbane airport. Rex, previously just a regional carrier, began flying 737s in April following cuts at Qantas and the restructuring of Virgin Australia.
  • Canada’s second largest carrier WestJet will make its debut at sought-after London Heathrow next spring. While the airline has not set a date, it will connect Calgary and Heathrow with a Boeing 787. No word if the new route will replace WestJet’s Calgary-London Gatwick flight.
  • And that’s not all for WestJet: Its budget arm Swoop will expand in Edmonton with nine new routes to Palm Springs from December; Ottawa from April; Halifax and Kelowna from May; and Charlottetown, Comox, Moncton, Regina, and Saskatoon from June. Swoop operates a fleet of 10 Boeing 737-800 aircraft.
  • Vietnam Airlines will make its U.S. debut with new service to San Francisco from November 28. The carrier will initially offer twice-weekly flights between Ho Chi Minh City and SFO with an Airbus A350-900, per Cirium schedules. San Francisco is the airline’s first regularly-scheduled U.S. destination.
  • After United Airlinesretreat from nine (or 11) regional destinations earlier in November, the carrier is adding a new dot to its map: Texarkana, Texas. United will begin daily service between Houston Intercontinental and Texarkana with a Bombardier CRJ200 on February 13, Cirium schedules show. The route will be flown by subsidiary CommutAir and not Air Wisconsin, which operated flights to the majority of cities United is exiting.

Edward Russell

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Feature Story

Airframers racked up 493 aircraft orders at a surprisingly newsy Dubai Airshow last week. Airbus counted 404 commercial aircraft and Boeing another 72 jets — or 78 including previous orders to undisclosed customers — with the balance sprinkled between ATR and Embraer.

What’s more, Airbus quietly launched the anticipated freighter version of the Airbus A350 with an order for seven from Air Lease Corporation (ALC). The new freighter, which will have a maximum structural take-off weight of 109 tons and is capable of flying fully-laden for 4,700 nautical miles, will give Airbus the chance to seriously challenge Boeing’s dominance in the space, which includes line-built freighter versions of its 747, 767, and 777 aircraft.

“Our industry is very resilient,” Airbus Commercial Chief and Head of Airbus International Christian Scherer said at the outset of the show. The airframer’s 404 aircraft commitments came from a collection of carriers but its headline grabbing deal was an order for 255 A321neos from private equity firm Indigo Partners for its four budget carriers: Frontier Airlines, JetSmart, Volaris, and Wizz Air.

While Airbus was the clear leader at the show, Boeing held its own. The Chicago-based planemaker landed an order from Indian startup Akasa Air for 72 737 Maxes — split between the 737-8 and high-density -8200. Akasa plans to begin flights next summer and is led by former Jet Airways CEO Vinay Dube and backed by Indian businessman Rakesh Jhunjhunwala. The Akasa order comes nearly three months after India’s aviation regulator, which had been one of a few notable global holdouts along with China and Russia, recertified the Max at the end of August.

“We booked about 309 orders net this year — 720 gross — that’s a pretty good start. Those discussions are continuing at this airshow and the year’s not over. We expect more orders before the year’s end,” Boeing Commercial Airplanes CEO Stan Deal told CNBC at the start of the airshow. The airframer recorded significant orders from the likes of Alaska Airlines, Gol, Southwest Airlines, and United Airlines earlier in 2022.

Deal’s optimism came even as the airframer faces supply chain and other challenges ramping up its Max line from the grounding that ended a year ago. At the same time, deliveries of Boeing’s marquee widebody 787 remain halted amid production quality issues, and the first delivery of its next new aircraft — the 777X, which was launched at the Dubai Airshow in 2013 — is delayed to at least the end of 2023.

The rash of orders from Dubai is a remarkable upswing for a normally sleepy, regionally oriented airshow. Most marquee aircraft deals come at the big biennial Farnborough and Paris airshows, which were cancelled in 2020 and 2021 due to the the Covid-19 pandemic. The uptick in Dubai appears to give truth to the cliché “pent-up demand” that airline executives bandy about when they speak of the recovery, but, in this case, for new metal.

The biggest, and arguably most notable, deal at the show was the order from Indigo. The 255 A321neo deal has, as Scherer told Air Transport World, effectively sold out all of its available delivery slots for the popular narrowbody jet for the foreseeable future. Airbus has plans to raise A320-family production rates to 64 aircraft a month from 43 by 2023, and potentially to 75 aircraft a month by 2025 to meet its backlog for new planes.

The deal will allow Indigo-owned airline Wizz, for one, to realize its ambitious growth targets. Wizz will take 102 aircraft — 75 A321neos and 27 A321XLRs — from the Indigo order, raising its firm orderbook to 335 planes. The airline also has options for another 19 A321neos and purchase rights for a further 75 of the jets. Wizz CEO József Váradi aims to double the size of the airline in five years, and grow it to roughly 500 aircraft by the end of the decade in a move that could make it the second largest European discounter after Ryanair.

“Wizz Air is an ambitious airline with a strategy that seeks to grow the company,” said Váradi at the airshow. He cited “very attractive terms” for the order that — to paraphrase — catapults Wizz “towards our aim of being a 500 aircraft group.”

Frontier picked up 91 A321neos. JetSmart will receive 21 A321neos and two A321XLRs that will be used to grow under a new partnership and equity investment from American Airlines. And Volaris will take 39 A321neos.

ATR and Embraer also received commitments in Dubai. ATR took 11 orders for its ATR 72-600 turboprop, and signed a letter of intent with Japanese regional startup Toki Air to eventually operate ATR 42 aircraft. And Embraer received an order from Nigeria-based Overland Airways for three Embraer E175s plus purchase rights for another three aircraft.

Airbus’ New Freighter

Airbus’ new A350F is a sign that the airframer believes cargo demand will continue to grow, and an acknowledgement that it is playing catch-up in this lucrative market with archrival Boeing. ALC’s order for seven freighters was part of the leasing giant’s 111-aircraft order Airbus order, which also includes 25 A220-300s, 55 A321neos, 20 A321XLRs, and four A330neos.

“We had the vision to be first adopters of the A321 and are convinced we have made the right choice again on the A220 and A350F, responding to what we see the market will need in the period of recovery ahead,” ALC Executive Chairman Steven Udvar-Hazy said. 

Airbus admitted in its second-quarter earnings call that Boeing dominated the air freighter sector. The U.S. airframer has a lineup that includes the 747-8F, 767F, and the 777F, while Airbus’ offerings were much more limited. At the time, Udvar-Hazy recommended that Boeing double down on the sector and capitalize on its advantage against Airbus. “Boeing needs to focus on that,” he said at the time.

In July, Airbus announced that initial research and development on the A350F had begun but, with the announcement in Dubai, the manufacturer has officially launched the program. Airbus did not specify an entry-into-service date for the new aircraft. In addition to the aircraft’s maximum structural take-off weight specs, the aircraft can reach 6,000 nautical miles — Hong Kong to Paris, for example —with its maximum volumetric weight of 92 tons.

“ALC’s endorsement confirms the global enthusiasm we see for this quantum leap in the freighter space and we applaud its insightfulness in selecting it and in beating everyone to the finish line for the first A350F order announcement,” said Scherer. “It has seen the formidable value the A350F brings to the cargo market.”

Air cargo demand already is ahead of where it was pre-pandemic, fueled by a surge in online shopping that the industry now sees as a structural change in retail. This surge has contributed to the constraints of maritime shipping and is driving a modal shift toward air freight, especially now that the cost of air shipment is only about five times the cost of surface transport, versus 12 times costlier before the pandemic.

Airbus forecasts cargo demand between now and 2040 to grow by almost 3 percent per year for general freight and 5 percent annually for express, or package, freight. This will require a global fleet of 2,440 freighters, of which 880 are expected to be new-build aircraft. Boeing’s commercial market outlook predicts the world’s freighter fleet will by 70 percent larger in 2040 than it is now.

Edward Russell and Madhu Unnikrishnan

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