Issue No. 865

Summertime, and the Fares Are Easy

High Demand + Less Capacity = Higher Revenues. Or so Airlines Hope

Pushing Back: Inside the Issue

Delta Air Lines became the latest in a long list of U.S. carriers to cut summer capacity. Now, almost all the U.S. majors and mid-tier airlines have cited some combination of staffing, air traffic control issues, weather, and aircraft availability for the schedule cuts, which are aimed to ensure operational reliability. But there is a big silver lining. With demand expected to be through the roof this summer after two years of the pandemic, airlines stand to reap significant revenues. Fares will be higher, but so will yields, even on domestic leisure routes.

Half a world away, IndiGo is optimistic about India's airline market and also reports that summer demand is strong. But IndiGo has a slightly different problem ahead of it. The carrier so far has been passing higher fuel costs on to passengers, but CEO Ronojoy Dutta predicts the market will reach a point soon where higher costs will dampen demand. He said the Indian airline industry is engaging in a "balancing act" now, one that carriers around the world could soon find themselves in if fuel costs continue to rise. Meanwhile, JetBlue was among the first U.S. airlines to hint that it could start its own balancing act this autumn, if inflation and oil prices keep growing and tip the U.S. into recession. But for now, on the cusp of summer, the fares are easy.

The Airline Weekly Lounge Podcast

Just how bullish is IndiGo CEO Ronojoy Dutta on India’s airline market? Very, very bullish. But Edward “Ned” Russell and Madhu Unnikrishnan note in this week's episode that others have predicted that India’s aviation market is about to take off (Kingfisher? Jet Airways?). So what makes Dutta so confident? Listen to this week’s episode to find out. A full archive of the 'Lounge is here.

Weekly Skies

IndiGo is navigating between dual headwinds, unfavorable foreign exchange and sharply rising fuel costs, and is reaching a limit of how much of these higher costs it can pass on to passengers. But despite these negative forces, the Indian carrier…

Sky Money

Air New Zealand issued A$550 million ($389 million) in medium-term notes on May 26. The fixed-rate debt is split into an A$300 million 4-year tranche and an A$250 million 7-year tranche. Proceeds will be used to redeem NZ$400 million ($258…

Routes and Networks

American Airlines is adjusting its international service plans for the winter. The carrier will return to Auckland with a daily nonstop from Dallas-Fort Worth from October 29 through March 25. American suspended Auckland flights, at the time from Los Angeles,…

State of the Unions

Alaska Airlines pilots voted 99 percent in favor of a strike if their union, the Air Line Pilots Association (ALPA), and the airline fails to reach a new contract. To clarify, a strike is not imminent. The U.S. National Mediation…

Fleet

The drama between Airbus and Qatar Airways over the A350 will head to trial, a UK High Court judge ruled last week. The three-month trial is expected to begin next summer.