Global airline earnings are set to suffer their first annual decline in six years after reaching a record in 2016 as higher oil prices clip margins, according to the industry’s main trade group. Net income is likely to total $29.8b worldwide in 2017, the IATA said Thursday. That’s 16% lower than the $35.6b forecast for this year, a figure that itself represents a downward revision from the $39.4b estimated in June. The decline would be the first since 2011, when high fuel prices and disruption caused by the so-called Arab Spring political protests and a devastating earthquake and tsunami in Japan led earnings to fall by half. While airlines have this year been reaping record profits following a slump in the price of crude, IATA reckons a barrel of oil will average $55 in 2017, up from $44.60, lifting jet-fuel expenses to almost 19 percent of overall costs. Alexandre de Juniac, IATA’s new CEO, said the profit slide amounts to a “very soft landing” for the sector. “These three years are the best performance in the industry’s history,” De Juniac said at IATA’s annual media day in Geneva. At the same time, “risks are abundant -- political, economic and security among them. And controlling costs is still a constant battle in our hyper-competitive industry.” Though the higher oil price will squeeze earnings, airlines have improved their ability to “efficiently restructure and manage their business,” making the industry more resilient, said De Juniac, formerly CEO of Air France-KLM Group, where he clashed with unions over cost cuts. IATA pared the earnings forecast for this year because of slowing global economic growth and a 2% increase in non-fuel costs. The new 2016 estimate, still an all-time high, suggests industry profit will be $300m higher than in 2015, with a margin of 5.1% of sales, also a record. Growth in passenger traffic is set to slow to 5.1% in 2017 from an anticipated 5.9% this year, IATA said. That’s less than the expected increase in capacity, so average seat-occupancy levels will slip below 80 percent. Even so, the industry group sees fares stabilizing as worldwide gross domestic product picks up.<br/>
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Airlines said Thursday a UN warning mechanism designed to avoid a repeat of the 2014 downing of a Malaysian airliner over Ukraine is "useless" and called for urgent new ways of detecting dangers to aircraft posed by war zones. A new system should also contain information on other security threats and not just conflict zones, according to officials of the IATA, representing some 265 airlines. A conflict zones repository launched in April last year by the ICAO was meant for states to provide information on potential risks around the world so that airlines could avoid those regions. However, it does not contain enough information and even that is not provided fast enough for airlines to use in real time, a security expert with IATA said on Thursday. "The repository is inadequate, woefully inadequate," Nick Careen, IATA's senior VP for airport, passenger cargo and security, told journalists at a briefing in Geneva. "If it's not timely and relevant, it's useless." A spokesman for Montreal-based ICAO said it had nothing to add to changes announced in July, when it restricted the data to information provided by states where a conflict is occurring. One of the problems regulators have faced is sensitivities of nations about including warnings given by their neighbors. IATA's Careen said airlines do have access to a lot of the security information they need for their daily operations but it is stored in various locations and complicated to access.<br/>
The US DoT proposed requiring airlines to tell consumers if passengers can use mobile phones for calls during their flight, and said it’s considering banning voice calls, rekindling a years-long debate centered on jabbering seatmates in close-quarter cabins. “Consumers deserve to have clear and accurate information about whether an airline permits voice calls before they purchase a ticket and board the aircraft,” Transportation Secretary Anthony Foxx said Thursday. “Today’s proposal will ensure that air travellers are not unwillingly exposed to voice calls, as many of them are troubled over the idea of passengers talking on cell phones in flight.” The department also is seeking comment in coming months on whether it should simply ban voice calls on flights within, to, or from the US, the news release said. Airlines oppose the proposal, and flight attendants who would referee disputes over noisy phone use support it. “The American public does not want voice communication in flight,” Sara Nelson, president of the Association of Flight Attendants-CWA (AFA), said. “Anything short of banning voice calls is reckless. It threatens aviation security and increases the likelihood of conflict in the skies.”<br/>
The chances that the federal government could hand off the US air traffic control system to private management are increasing, say advocates who report they are getting supportive feedback from President-elect Donald Trump and his team. US Rep. Bill Shuster, who chairs the House of Representatives Transportation Committee, has met with Trump and incoming Transportation Secretary Elaine Chao to make his case for moving the nation's 14,500 air traffic controllers and their mission out of government control and into a non-profit organization. Shuster and other privatization advocates argue that spinning off air traffic control into a non-government entity would allow for a more efficient system and rapid, cost-effective improvements of technology, in part by avoiding the government procurement process. The National Air Traffic Controllers Association, the union that represents controllers, came out in favor of Shuster's legislation earlier this year. But he has run into bipartisan opposition in both the House and the Senate and push back from some of the nation's airlines. Opponents say the US system is so large that privatization would not save money, would drive up ticket costs and could create a national security risk.<br/>
Chinese airlines are capitalizing on the wanderlust of China’s rising middle class by expanding their long-haul routes, and at a pace that is fast upending the hierarchy of global aviation. Since September, Chinese carriers have added seven direct flights to North America—including routes from second-tier cities less known abroad including Zhengzhou, Qingdao and Xiamen. By comparison, U.S. carriers launched just two China routes in all of 2016. Sichuan Airlines opened a new direct route between Los Angeles the northern Chinese city of Jinan on Tuesday. It is the third nonstop US flight the airline has started operating since October. Hainan Airlines, China’s biggest privately owned carrier, by itself launched 13 new long-range routes this year, including a new Beijing-Las Vegas flight initiated last week. The result is that trans-Pacific travel, where American carriers were once the most conspicuous, is becoming an increasingly Chinese affair. “Chinese airlines are going to be as dominant, if not more dominant, than the big three US carriers within the next decade,” said John Grant, a UK-based aviation industry consultant. Grant characterised the situation as a “land grab,” with China’s airlines scrambling to secure new routes—even commercially shaky ones—in the hope they will become viable in the future. Last year, for the first time, Chinese airlines overtook their American counterparts in the number of scheduled US-China flights. Now the gap is widening: Chinese airlines are scheduled to operate 781 China-US flights this month, compared with 596 by US carriers, according to aviation data firm OAG. Several factors are driving the trend, starting with the growing Chinese appetite for travel. Last year 120m Chinese tourists journeyed abroad, four times the number that ventured overseas a decade earlier, according to Chinese government figures. Over the same period Chinese visitors to the US grew 10-fold to 2.6m.<br/>
China’s low-cost carriers are thriving and poised for further growth as their larger rivals struggle to turn a profit during tough times for the airline industry, according to analysts. With a business model based on cheap air tickets and reduced operating costs, the budget airlines are maintaining profitability at a time when the mainland’s aviation industry is haunted by a weaker yuan and the prospect of rising fuel costs. Their success may even force long-haul operators to copy some of their cost-cutting tactics, according to some industry experts. Offering cheap air tickets has proved a big selling point for China’s growing army of domestic travellers, said Sun Fei, an analyst at Deutsche Bank. For example, the one-way trip from Shanghai to Chengdu departing on December 19 offered by China’s largest budget carrier, Spring Airlines, offers one of the lowest priced tickets, at just 449 yuan. The flight has a similar departure time to others on the same route but with reduced services such as in-cabin catering, and a fee for checked-in baggage. “I will choose to buy a cheaper ticket for our family trip if the departure time is suitable,” said Lily Wang, an education consultant from Guangzhou, who flies frequently in China. “I think people have a misunderstanding that low-cost equates to a lack of safety, but that is not the case. I think it is unnecessary to provide additional services such as food and drinks or entertainment for a journey of less than two hours. Sometimes I do not eat what the network carriers serve because the food in the planes is always not tasty.”<br/>Many of the mainland’s bigger, long-haul airlines are finding it hard to stay profitable, weighed down by dollar-denominated debt made more expensive by the devalued yuan. On top of this, many industry analysts believe Opec’s recent agreement to cut oil production will drive up fuel costs.<br/>
About 45.2m passengers are expected to fly globally on US airlines during the 21-day holiday period from Dec. 16 through Jan. 5, up 3.5% from the same period in 2015, according to the leading airline trade group. Airlines for America said on average this means 73,000 more passengers are expected to fly daily, and the airlines are projected to offer a collective 99,000 additional seats per day—a 3.9 % increase over the winter holiday period last year. The group credits an improving economy and lower airfares for driving the growth in air travel. John Heimlich, chief economist for the trade group, said 2015 was a record year for travel on US airlines, topping the peak set in 2007. Based on data filed with the government for the first eight months of 2016, he said, traffic is up 3.5% from the prior-year period. If that trend holds, this year could set a record, he said. The trade group expects the busiest travel days to be Dec. 22 and Dec. 23, when daily volumes could hit 2.4m fliers. The lightest days should be Dec. 24, 25, 31 and Jan. 1, when volumes could fall to 1.8m travelers. On average, U.S. airlines carry about 2.2m passengers per day throughout the year. Ahead of Thanksgiving 2016, the trade group estimated that the number of travelers would rise 2.5% from the year-earlier holiday to 27.3m, making it one of the busiest November holiday seasons.<br/>
On the day President-elect Donald Trump lashed out at Boeing for the cost of replacing Air Force One, mechanics and engineers at the planemaker’s South Carolina factory were focused on another challenge: making the first 787-10 Dreamliner. The manufacturer is counting on the newest and longest Dreamliner to help turn its marquee carbon-fiber jet into a cash machine. So far, the -10 is meeting deadlines and hitting performance targets, a rarity in an industry where delays are the norm. The question is whether a glutted market will crimp profit and sales -- and whether Trump will further dent orders by raising trade tensions with China, a crucial market. Boeing’s newest widebody is central to a plan to erase $27.5b in deferred 787 costs that were accumulated over a decade of losses. The first of three planned flight-test planes was loaded onto the final assembly line in North Charleston over the past week, achieving a production milestone ahead of plan. “I’m very optimistic,” said Ken Sanger, a Boeing vice president overseeing development of the 787-10, the third Dreamliner model. “Without going into the numbers, the strategy is working very, very well.” For now, the first -10 lies in sections on the factory floor as workers inspect its spun-fiber frame. A white protective coating makes the segments look like giant larva. Over the next two weeks, mechanics will slide them to the first position on the assembly line, where the longest fuselage barrel will be joined to wings, nose and tail. It will mark the first of five stages of a metamorphosis into a sleek flying machine.<br/>
The co-founder of a project that saw a solar-powered aircraft complete the first fuel-free flight around the world this year expects electric passenger planes to operate in just under 10 years. Bertrand Piccard, who along with fellow pilot Andre Borschberg founded Solar Impulse, also shrugged off concerns that U.S. President-elect Donald Trump's appointment of a fossil fuel industry defender as his top environmental official could hamper global clean technology efforts. Since completing their historic fuel-free flight in July, Piccard and Borschberg have been working on projects to show how the technologies used in their plane can be used in other applications. Borschberg said they were especially interested in how the technology could be used to develop small electric planes with a flying time of about 1.5 hours. The two plan to announce their next project early next year, Borschberg said. "In 9 years and 8 months, you'll have 50 people travelling short-haul on electric planes," Piccard, founder and chairman of Solar Impulse told an IATA airlines association briefing in Geneva. "Why 9 years and eight months? Because since four months, I've been saying it will be '10 years'. It will happen," he added. Piccard said that it didn't matter what people thought about climate change because clean technology was getting cheaper and would help to drive growth. He cited examples of insulation making homes cheaper to live in, of LED lights reducing lighting costs.<br/>