Each week, CAPA – Centre for Aviation, produces informative, thought provoking and detailed market analysis of the aviation industry. With supporting data included in every analysis, CAPA provides unrivalled and unparalleled intelligence.
AA & Southwest Airlines: labour strife; plus ça change….
For all the conclusions drawn by senior executives that the US airline industry has moved into a new era of sustained stability, one mainstay from the past remains in place – the onset of labour slowdowns when negotiations get tense. Both American and Southwest have suffered from slowdowns by their mechanics during 2019 and both have taken legal action to remedy those actions.
Southwest recently achieved a truce with its mechanics after forging a new five-year deal that offers generous compensation to those employees.
American remains embroiled in conflict with its mechanics at a time when the busy US travel season is now under way. And the airline’s mechanics appear to be ratcheting up their rhetoric against American, amping up their threats to strike.
The latest slowdowns reflect a never ending cycle in the airline industry, and beg a pertinent question – is there a way to mitigate impasses in negotiations other than purposeful work slowdowns that ultimately blemish airline brands?
To read on, visit AA & Southwest Airlines: labour strife; plus ça change….
European airline margin charts: Wizz Air could take #1 from Ryanair
Lufthansa Group’s 16-Jun-2019 profit warning, in which it cut 2019 adjusted EBIT guidance by 20%, is another signpost as the European airline industry slips into a cyclical downturn.
At the same time, Air France-KLM CEO Benjamin Smith has estimated a five-year timeline to catch up with the profitability of IAG and Lufthansa Group. Air France-KLM has long reported lower operating margins than its rivals and this looks likely once more in 2019, even after Lufthansa’s reduced guidance.
IAG has led the three in recent years and Ryanair has consistently outperformed them all. However, Ryanair’s heavy margin decline last year narrowed its lead over IAG.
According to consensus forecasts from Thomson Reuters, Ryanair will lose its long-held crown as Europe highest margin airline group to Wizz Air this year, with IAG in third. Norwegian is forecast to remain at the bottom and again to be the only European airline group to make an operating loss this year.
Analysts are forecasting that nine out of the 14 listed European airline groups will suffer from a fall in operating margin this year.
This report ranks listed European airlines by operating margin in 2018 and by consensus forecast margins for 2019.
To read on, visit European airline margin charts: Wizz Air could take #1 from Ryanair
Korean LCC Jeju Air goes upmarket; business class, lounge
Jeju Air will become the first South Korean LCC with a business class seat in early Jul-2019 when it puts into service retrofitted 737-800s with 12 recliner seats in 2×2 configuration. The new product will debut on Jeju’s new Busan-Singapore service and will be available on a limited number of other medium haul routes from Busan.
Jeju Air also recently became the first South Korean LCC to open a lounge: the ‘JJ Lounge’ opened in Apr-2019 at Seoul Incheon Terminal 1 and can only be accessed by Jeju Air passengers – on a pay for entry basis.
South Korea’s first and largest LCC has always followed somewhat of a hybrid model. The opening of a lounge and introduction of a business class product, albeit on a trial basis, represents a further shift in Jeju’s strategy.
To read on, visit Korean LCC Jeju Air goes upmarket; business class, lounge
Aviation emissions: Sweden’s ‘flight shame’; possible jet fuel tax
“There is only one way to finance costs created by climate change – through taxes”.
Swedish Finance Minister Magdalena Andersson’s 20-Jun-2019 comments to a Netherlands-hosted conference on carbon pricing and aviation taxes represent a growing view among Europe’s politicians and electorates. The conference proposed a jet fuel tax.
The Swedish word flygskam, ‘flight shame’ in English, underpins an anti flying movement that has spread from Scandinavia to other European countries. It reflects a growing sentiment, particularly in the developed world, that flying is a source of guilt and shame because of its climate change impact. Sweden introduced a per trip aviation tax in 2018, but Ms Andersson would like to introduce a tax on jet fuel. Meanwhile, the 2018 tax and public sentiment towards aviation’s climate change impact are depressing demand for air travel in Sweden.
Only a small proportion of the world’s population flies, but for those that do, it can account for a very significant proportion of the CO2 emissions attributable to them individually.
As a result of ‘flight shame’, this is causing a small but growing number of people to reduce or even eliminate discretionary air travel. Global aviation should watch Sweden with care.
To read on, visit Aviation emissions: Sweden’s ‘flight shame’; possible jet fuel tax