Rising fuel prices may present an obstacle, but the airline recovery in the United States appears to be on track for now. With the Omicron coronavirus variant receding and pandemic restrictions being eased, the airline industry turned a corner last month, according to an analysis by the Adobe Digital Economy Index, which draws on online sales from six of the top 10 US airlines. According to the analysis, ticket sales for domestic flights in February exceeded those for the same month in 2019, a first since the pandemic began two years ago. “We’re seeing things open up in terms of people’s thinking about travel,” said Vivek Pandya, who led the analysis. “The question now becomes: How much can that momentum continue to push forward?” Travelers spent an estimated $6.6b on domestic flights in February, about 6% more than three years earlier, according to the analysis. The number of tickets sold was up 4%, while fares were up about 5%, lagging overall inflation. Early data indicate that the trends are holding up this month, too. The data bodes well for airlines, which have been preparing for months for what the industry expects to be a robust summer travel season. It also matches the optimism that several carriers expressed ahead of an investor conference hosted by JP Morgan on Tuesday. Story has details.<br/>
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Travel demand has bounced back faster than expected this year, major airlines said Tuesday, a welcome trend for an industry battered by Covid and a sign that carriers expect to pass along higher fuel prices and other costs on to customers. US jet fuel prices last week surged to 2008 highs, propelled by Russia’s invasion of Ukraine, which sparked worries about scarcer crude supplies as countries sanctioned the oil producer. Though jet fuel prices have eased, they’re still up 35% so far this year. The mix of stronger demand and higher costs is promising more expensive tickets, which were already on the rise before Russia’s attack on Ukraine and generally rise during peak spring and summer travel periods. “We are very, very confident of our ability to recapture over 100% of the fuel price run-up in the second quarter and through probably the end of the summer,” Delta President Glen Hauenstein said during a JPMorgan investor conference. Customers last month spent $6.6b on airline tickets on carriers’ websites, the first time in the pandemic both bookings and sales surpassed a similar pre-Covid month, Adobe said Tuesday. Average fares sold by US travel agencies rose to $464 in February from $409 a month earlier, according to the Airlines Reporting Corp. Delta reiterated that bookings are outpacing 2019 and Hauenstein said the airline last week had its highest one-day cash sales in its more than 90-year history. Delta said it expects Q1 sales to come in at 78% of 2019 levels, up from its forecast in January for a recovery of as little as 72% of 2019 levels. (Airlines have been comparing revenue and capacity to 2019 to show how much they have recovered since before the pandemic.)<br/>
Airlines and hoteliers have warned that the conflict in Ukraine is causing high-spending US travellers to hold off visiting Europe, slowing the industry’s long recovery from the pandemic. Dermot Crowley, CE of the Irish hotel group Dalata, said that “concern” over the Russian invasion of Ukraine “may make North Americans nervous about coming to Europe”, while French hotel operator Accor said it expected bookings across all hotel groups in Europe to suffer. A US airline official agreed, saying American tourists were likely to be put off visiting parts of the continent, particularly central or eastern Europe, citing the slowdown in US visitors travelling east during the first Gulf war. Heathrow airport last week warned that “concerns from US travellers over war in Europe” was contributing to “huge uncertainty” about passenger numbers this year. Travel marketing company MMGY said 47% of Americans planning trips to Europe had decided to “wait and see” how the situation in Ukraine unfolds. Many industry executives say passengers from the US are particularly sensitive to travel near conflict zones, and the crisis in Ukraine has evoked memories of the 1990-1991 Gulf war when tourism from North America to Europe collapsed. Flight booking data underline the travel executives’ fears. Bookings between the US and Europe fell 13% week-on-week in the seven days following Vladimir Putin’s invasion of Ukraine on February 24, according to research firm ForwardKeys. Hopper, a travel app, also reported weakening demand for transatlantic flights. In the week following the start of military action, bookings for all European countries except Belgium, Iceland and Serbia declined between 10 and 30%, according to Forward Keys.<br/>
Russia’s commercial aircraft fleet could falter within months and risks being largely grounded in a few years as sanctions block essential spare parts from Boeing and Airbus, according to Jefferies Group. “They’ll be able to fly for the next six months to a year fairly well, then parts start breaking and you’ll need replacements,” Jefferies analyst Sheila Kahyaoglu said during a conference call Tuesday on the implications of Russia’s invasion of Ukraine. “Then you’ll start getting into safety issues.” Commercial jets needing heavy maintenance, typically carried out every six years, will be stricken because required components won’t be available, Kahyaoglu said. “People in Russia are not going to be able to get around.” Crippling economic sanctions mean the prospects for air travel—domestic and international—for those in Russia look increasingly uncertain. The country’s 789 commercial planes account for about 2.7% of the global fleet, Jefferies said. Flag carrier Aeroflot PJSC has 187 aircraft with an average age of 6.3 years, according to its website. Most aircraft operated by Russian carriers are rented from foreign leasing firms, including AerCap Holdings NV. Russian authorities are keeping some of them, leaving the fate of jets worth about $10b hanging in the balance. There’s little hope of foreign owners retrieving their planes, which may eventually become worthless, according to Kahyaoglu. “Good luck getting an aircraft out of Russia,” she said. “Those aircraft are in six years going to be totally dead money, because they’re not going to be able to get the parts at all.”<br/>
Russia’s Air Transport Agency fired an official who publicly outlined the country’s plan to keep airlines flying despite sanctions over its invasion of Ukraine, Kommersant reported. Valery Kudinov was in charge of overseeing airworthiness at the agency. At an event last week, he told reporters of preparations to keep foreign-owned aircraft worth up to $10b in the country rather than return them to lessors. According to news agency reports, he said then that more than 100 aircraft had already been re-registered in Russia, and spare parts held back by Boeing Co. and Airbus SE were being sought from outside the country, including in China, which had refused. While the Air Transport Agency disavowed his comments at the time, the plan Kudinov outlined has largely taken shape. President Vladimir Putin signed a law on Monday allowing state-owned Aeroflot PJSC and other Russian airlines to keep hold of aircraft and re-register planes. The agency declined to comment Tuesday on issues related to its staff. Bermuda and Ireland removed aircraft in Russia from their airworthiness registries. Leasing firms are looking for ways to maintain the planes in India, Hong Kong and elsewhere, Bloomberg reported previously. AerCap Holdings NV, the world’s biggest leasing firm, has more than 150 planes in Russia, the largest exposure of any foreign lessor. “Those aircraft are unlikely to be returned,” Cowen analyst Helane Becker wrote in a research note.<br/>
Michelin’s decision to stop exporting to Russia includes freezing a supply contract with flag carrier Aeroflot for airplane tires, dealing a further blow to the country’s aviation industry. The French manufacturer on Tuesday said it would also halt operations at a factory near Moscow, accounting for about 1% of its global passenger car tire production. Michelin earns about 2% of sales in Russia and employs about 1,000 people in the country, three quarters of them at a plant at Davydovo, according to the statement. Cie. Generale des Etablissements Michelin follows a host of firms -- from food and credit card companies to automakers and fashion retailers -- to pull out of Russia following President Vladimir Putin’s invasion of Ukraine. Cigarette maker Imperial Brands Plc on Tuesday said it has started negotiations on transferring its Russian assets and operations. Read more: Sony, Uniqlo Join Global Brands Disappearing From Russia Michelin’s exports to Russia included airplane tires as part of a contract with Aeroflot, according to a spokesman. The trade was halted under European Union sanctions barring the supply of aircraft, parts or services to airlines linked to Russia. The EU has also closed its airspace to Russian planes. The French company has been increasingly moving into the specialized tire business for jets as well as vehicles like tractors. Michelin’s plant at Davydovo, where production will come to a halt, has a production capacity of 1.5m to 2 tires a year and employs about 750 people making passenger car tires and retreaded truck tires. The move by Michelin is a further sign that the war in Ukraine has intensified already stressed supply chains for automakers. Ukraine is a key source of wire harnesses that power car electrical systems, while Russia is a source of supplies needed to make tires.<br/>
The US Senate voted 57 to 40 on Tuesday to overturn a 13-month-old public health order requiring masks on airplanes and other forms of public transportation, drawing a quick veto threat from President Joe Biden. Last week, the White House said it would extend the current COVID-19 mask requirements at airports, train stations, ride share vehicles and other transit modes through April 18 but pledged a new review. The order was set to expire on Friday. The mandate has drawn significant opposition from Republicans who note that the Centers for Disease CDC said last week that 98% of Americans live in places where it is safe to ditch indoor masks. Republican Senator Rand Paul, who led the repeal effort, said the vote "sent a message to unelected government bureaucrats to stop the anti-science, nanny state requirement of travel mask mandates." The CDC order said the mask mandate could help prevent the spread of COVID-19 in crowded transport settings. The repeal vote fell shy of the two-thirds majority that would be needed to override a Biden veto. The White House said Tuesday "circumstances under which masks should be required in these settings should be guided by science, not politics." Eight Democrats joined all but one Republican - Senator Mitt Romney - in voting to reject the rule.<br/>
US airline executives, who frequently never agree on anything, concur on at least one thing: that the industry faces a pilot shortage. The obvious next step is what to do about it but that is already too late as carriers prune schedules, in part, to mitigate its effects this summer. “What can you do about it?” JetBlue CEO Robin Hayes said of the pilot shortage at a J.P. Morgan investor conference Tuesday. “Well, obviously, focusing on automation and technology … but also creating career paths.” JetBlue benefits from its gateway program, which offers interested applicants various paths from university programs to flight schools to becoming a pilot at the airline. Launched in 2016, Hayes said the four-year program has recently begun producing “significant numbers” of new pilots for the carrier. But in his comment Hayes highlighted the issue airlines face addressing the pilot shortage today: JetBlue’s program takes four years to produce a new cockpit crewmember. Some other programs, including ATP Flight School, claim they can train a new pilot in as little as seven months if they work at it full time. No matter what timeline one uses, what the industry does today to address the problem will take some time before it filters through to actual flights and schedules. Senior executives at both Republic Airways and SkyWest Airlines, the two largest U.S. regional airlines — carriers that operate, for example, American Eagle and Delta Connection flights — do not expect the situation to ease until sometime in 2023. Both have cut their schedules this year as a result. The latest of which was SkyWest’s notification to the Department of Transportation that it would end government-subsidized flights to 29 smaller cities due to a lack of pilots. Regionals are feeling the brunt of the pain. <br/>
The airline industry is escalating its campaign against a California law that gives pilots and flight attendants who are based there more rest and meal breaks than they are guaranteed under federal regulations. A study commissioned by an airline trade group and released Tuesday warns that the result will be higher costs that would force carriers to cut flights and raise fares. The trade group wants the US Supreme Court to strike down a 2021 appeals court ruling which held that California-based flight crews are covered by the state’s requirement that workers be free from all job duties for 10 minutes every four hours and for a 30-minute meal break every five hours, even during flights. The ruling by the 9th US Circuit Court of Appeals in San Francisco came in a lawsuit filed by flight attendants for California-based Virgin America, which was bought by Alaska Airlines in 2016 and no longer exists. The dispute boils down to a question of who gets to write labor regulations covering airline workers. The FAA sets safety standards for airlines, including minimum rest requirements for pilots and flight attendants to guard against fatigue that could lead to accidents. The industry argues that since deregulation in 1978, FAA’s authority has pre-empted states’ efforts to oversee airlines.<br/>
The US Senate on Tuesday passed legislation that would make daylight saving time permanent starting in 2023, ending the twice-annual changing of clocks in a move promoted by supporters advocating brighter afternoons and more economic activity. The Senate approved the measure, called the Sunshine Protection Act, unanimously by voice vote. The House of Representatives, which has held a committee hearing on the matter, must still pass the bill before it can go to President Joe Biden to sign. The White House has not said whether Biden supports it. A spokesman for House Speaker Nancy Pelosi declined to say if she supports the measure but said she was reviewing it closely. Senator Marco Rubio, one of the bill's sponsors, said supporters agreed the change would not take place until November 2023 after input from airlines and broadcasters. The change would help enable children to play outdoors later and reduce seasonal depression, according to supporters. "I know this is not the most important issue confronting America, but it's one of those issues where there's a lot of agreement," Rubio said. "If we can get this passed, we don't have to do this stupidity anymore." <br/>
Nigeria’s state oil company said it will allow airline operators to import aviation fuel to ease a shortage. “They will be granted a license to import petroleum products,” Nigerian National Petroleum Corp. Managing Director Mele Kyari said in remarks to lawmakers on Tuesday posted on the company’s Twitter account. The permits will enable the airlines to “bring in cheaper products whenever it is possible,” he said. Carriers in Africa’s biggest economy warned last week that flights may be disrupted because of a scarcity of aviation fuel. The West African nation has had gasoline shortages since the beginning of February, after the authorities rejected a batch of imported gasoline that contained too much methanol, making it unsuitable for domestic usage.<br/>
More than 100 international flights will be diverted away from Shanghai to other cities to ease pressure on quarantine hotels and isolation facilities in the financial hub as China battles growing pockets of Covid-19. A total of 106 flights on 22 routes will be diverted between March 21 and May 1, state broadcaster CCTV reported Tuesday, citing a statement by the nation’s aviation authority. The flights are operated by Air China Ltd., China Eastern Airlines Corp., Shanghai Airlines Co., Juneyao Airlines Co. and Spring Airlines Co., CCTV said, without providing details of which routes would be affected. China had earlier discussed diverting flights from Shanghai, the country’s prime gateway for international travel and home to its main stock exchange and many corporate headquarters. Pudong airport in the city’s east handled 40% of inbound international air passenger traffic since the start of the pandemic, according to local media Yicai. Shanghai, which reported 139 new Covid cases Monday compared with two at the start the month, has been implementing measures to contain the virus, including shutting most schools and public parks and blocking bus travel from other provinces. On Monday, authorities locked down Shanghai Tower, China’s tallest building. Nationwide, more than 5,000 new infections were reported Monday, the highest number since the early days of the pandemic, as the central government imposed mass lockdowns in parts of the country. Under the Civil Aviation Administration of China’s plan, international flights to Shanghai will be diverted to 12 other cities across the country, including Chengdu, Dalian, Hangzhou and Fuzhou.<br/>
Demand for flights leaving Hong Kong is up as much as 306% on the same time last year as residents pack their bags amid on-and-off talk of mass Covid testing and lockdowns. ForwardKeys, a Valencia, Spain-based travel data company, has observed a “steep rise” in outbound bookings from Jan. 4 to Mar. 7, with Singapore and Shanghai the most popular cities, according to data provided to Bloomberg. The period starting Feb 8. saw the biggest jump in bookings, a time when Hong Kong’s leader Carrie Lam was flagging ever tighter Covid restrictions. Public gatherings were limited to two from four, hair salons were closed and stricter vaccine checks were required in shopping malls and supermarkets. Talks of mass lockdowns had also started to swirl early last month. “People’s motivation is more to escape from a surge in Covid as more than 70% of travelers booked one-way tickets, increasing from only 26% pre-pandemic,” said Olivier Ponti, ForwardKeys’ vice president of insights. For the seven days commencing March 1, weekly bookings were up 113% year-on-year but still down 84% on pre-pandemic levels—underscoring how far away a recovery in air travel is for Hong Kong. Singapore is the most easily accessible destination to vaccinated Hong Kong residents, while Shanghai is only open to Chinese citizens. After a net record outflow of 71,354 people left Hong Kong in February, the exodus has continued this month as measured by official immigration border control data, although at a more muted rate. The net number of people leaving the Asian financial hub fell 20% last week. While Shanghai is popular, flights there are now swiftly being curtailed by authorities after a spike in infections.<br/>ity.<br/>
Mumbai International Airport has delayed a proposed dollar bond offering, according to people familiar with the matter, as market volatility prompts borrowers around the world to adjust their funding plans. The operator of India’s second-largest airport had said in an exchange filing in late February that it would be meeting with investors for the proposed issuance. But the financial market upheaval following Russia’s invasion of Ukraine means the deal was put on hold, the people said, asking not to be identified because the discussions are private. A spokesman for parent company Adani Group, controlled by one of India’s richest men, declined to comment when contacted by Bloomberg about the planned issuance. With global inflation spiking and investors bracing for higher interest rates, sales of dollar-denominated bonds in Asia outside Japan so far this year have slumped to the lowest for similar periods since 2016 at only about $50b. A number of Asian companies have recently shifted tack on issuance due to market volatility. <br/>