Issue No. 889
KLM's New CEO Wants a Balanced Dutch Carbon Policy
Pushing Back: Inside the Issue
What do airlines and Taylor Swift have in common? Their tickets are exceedingly expensive right now.
High-priced tickets are good news for the airline industry, currently underpinned by strong demand and tight supply, even beyond the current holiday season. The countervailing headwind has been sharply rising costs. But look at what’s happening in oil markets. As Airline Weekly prepared to publish on Wednesday afternoon (November 23), West Texas Intermediate crude oil was trading at $77 a barrel. As recently as November 4, the price was $93. This summer, it briefly surged above $120.
This combination of resiliently high airfares and falling fuel prices — assuming they don’t rise again — bodes well for industry profits this quarter, outside of China anyway. There, the country’s three largest airlines lost a combined $3.8 billion last quarter. Their collective operating margin: negative 41 percent. IATA, incidentally, said November 18 that China’s recent move to shorten quarantine periods “has not impacted the bookings data in any meaningful way.”
Many are hoping that India can to some degree replace China as a growth engine for international air travel. Major changes are underway in India’s airline sector, including Air India’s attempted transformation into a leading global competitor. According to Bloomberg, the Tata Group plans to merge the four airlines in which it holds ownership stakes: Air India, Vistara, Air India Express, and AirAsia India. In the meantime, Air India is negotiating a large aircraft order, raising new funds, and adding new longhaul routes, including new Mumbai connections to New York, Paris, and Frankfurt. That is as rival IndiGo counts on a growing armada of Airbus planes to thrive; SpiceJet trying to survive; Jet Airways is trying to revive; and newcomers like Akasa arriving.
Still alive — for now — is a deal to merge Avianca and Viva Air. But they’ll have to convince the Colombian government to agree. The U.S. government, meanwhile, disagrees with the notion that American teaming with JetBlue would benefit consumers. The partnership’s fate is now in the hands of a federal judge. Government approval of the Korean Air-Asiana merger is likewise uncertain. What was it that Taylor Swift said? Regulators gonna hate, hate, hate.
Airline Weekly Lounge Podcast
Airlines want more planes to meet travel demand but, with supply chains backed up, there are few new models to go around. That's good news for aircraft lessors with more than 90 percent of leases being renewed, up from around 60 percent historically, Air Lease Corp. Executive Chairman Steven Udvar-Hazy said at the Skift Aviation Forum. Listen to this week’s episode to find out. A full archive of the 'Lounge is here.