Issue No. 881
The All-Star Markets for Passenger Growth, From Cancun to Riyadh
Pushing Back: Inside the Issue
A mammoth hurricane in Florida. A financial hurricane in the UK. Russia still at war. A global economy showing signs of distress.
Even as worldwide demand for air travel stays strong, airlines face a challenging backdrop of economic, geopolitical, and environmental shocks. In one sense, a slowing economy is helpful — it’s pushing oil prices downward. Having topped $130 a barrel this spring, Brent crude is now back below the $90 mark. Jet fuel prices, despite high refining spreads, have fallen sharply as well. On the other hand, most non-U.S. airlines face the scourge of a strong dollar, erasing much of the benefit of falling fuel prices. Japanese and now British carriers are among those feeling dollar duress.
Virgin Atlantic is one of those British carriers. It was in the news for two separate reasons last week, one for joining the SkyTeam Alliance and one for criticizing London policymakers for allowing the pound to get pounded. Other airlines have bigger problems to address, like Indonesia’s financial insolvency which it’s now managing through the U.S. bankruptcy courts. Scandinavia’s SAS gave a bleak financial outlook as it navigates its own U.S. bankruptcy proceeding. Nigeria’s aviation woes are even more systemic, but that’s not stopping Ethiopian Airlines from investing in a new local airline.
Speaking of aviation woes, Boeing is a poster child, getting another dose of unwelcome regulatory news last week. Delayed recertification for its 737-7s and -10s, in any case, didn’t stop Canada’s WestJet from placing a major new Max order. In the meantime, Washington is trying to stop American and JetBlue from joining forces — a trial is now underway in Boston. Washington separately wants to stop what it believes are unfair airline pricing practices. And United will stop serving New York JFK, again.
Airline Weekly Lounge Podcast
The “real revenue growth” at American Airlines is in blended trips, or travel that includes both business and personal aspects, Chief Commercial Officer Vasu Raja said at the Skift Global Forum earlier in September. Listen to Skift Founder and CEO Rafat Ali and Raja’s fascinating discussion in full. Listen to this week’s episode to find out. A full archive of the 'Lounge is here.