unaligned

When the dust settled on a big round of airline consolidation nearly a decade ago, four large companies came to dominate the industry. A new merger scramble could challenge that cozy arrangement. A brewing fight over the future of the budget carrier Spirit Airlines may give rise to a credible, albeit still smaller, competitor to the industry’s giants. In February, Frontier Airlines and Spirit announced plans to merge, promising to create a national budget airline that would help keep fares low. JetBlue Airways this week made its own bid, of $3.6b, for Spirit, which said late Thursday night that it would consider the proposal. Whether Spirit ends up merging with Frontier or JetBlue, the combined company could pose a more formidable threat to the nation’s four largest airlines — American Airlines, Delta Air Lines, United Airlines and Southwest Airlines — which have a combined 66 percent share of the domestic market. The four operate in a league of their own, especially at their hub airports in cities like Atlanta, Dallas, Houston and Newark, where they each control a large share of gates and flights. In an illustration of the industry’s lopsided nature, Alaska Airlines, the fifth-largest carrier last year, controlled just 5 percent of the domestic air travel market, while United, the fourth biggest, had nearly 13%. A combined Frontier and Spirit would control over 8% of the market, and JetBlue and Spirit together would command more than 10%. “You’re facing American, United, Delta and Southwest with such enormous fleets and market penetration,” said Samuel Engel, a senior vice president and airline industry analyst at ICF, a consulting firm. “It is reasonable that a beefier No. 5 will make for a stronger competitor.”<br/>

JetBlue Airways is planning to trim its summer schedule to avoid flight disruptions as it scrambles to hire ahead of what executives expect to be a monster peak travel season. “We’ve already reduced May capacity 8-10% and you can expect to see a similar size capacity pull for the remainder of the summer,” Joanna Geraghty, JetBlue’s COO and president, said in an email to staff on Saturday. The airline canceled more than 300 flights over the weekend, a week after bad weather in Florida kicked off hundreds of flight cancellations and delays on JetBlue and other carriers. Airlines are scrambling to staff up to handle a surge in travelers this spring and summer. Staffing shortages contributed to hundreds of flight cancellations and delays last summer and airlines executives have been looking for ways to avoid a repeat. “Despite these challenges and, based on your feedback that the schedule is wound too tight, we know the best plan is to reduce capacity now,” Geraghty wrote. “I think everyone recognizes that the industry still remains very much in recovery mode, so we believe this proactive step is the right decision.” JetBlue didn’t immediately respond to a request for comment.<br/>

JetBlue Airways is offering flight attendants $1,000 bonuses if they don’t call out from work starting Friday through the end of May as the carrier tries to ensure adequate staffing during a surge in travel demand, according to a company message. Flight attendants will also receive $100 bonuses for picking up open trips, said the message, which was shared with staff Friday. Part-time flight attendants would receive $500 for meeting attendance goals. JetBlue’s latest incentive shows it is willing to pay crews extra to avoid potentially costlier flight disruptions as travelers return in droves after two years of the Covid pandemic. Staffing shortages have hamstrung airlines over the past year, particularly during Covid peaks, such as widespread omicron cases that sidelined crews during the year-end holidays. JetBlue, United, American and others turned to bonuses or even triple pay to ease staffing shortages. Cowen’s Helane Becker says she’s not 100% convinced on JetBlue-Spirit deal<br/>“The spring rewards programs comes at a time where every flight makes a difference as hours are tight and staffing levels are not where they need to be,” Ed Baklor, JetBlue’s head of customer care and programs, said in the memo. Baklor last month urged flight attendants not to turn down assignments. JetBlue didn’t immediately comment but COO Joanna Geraghty on Wednesday said that JetBlue will “continue to moderate capacity as needed” as the airline industry grapples with staffing shortages and high fuel prices. The incentive program starts days after JetBlue made a surprise, $3.6b, all-cash offer to buy discount carrier Spirit Airlines, throwing Spirit’s $2.9b deal to combine with fellow ultralow-cost airline Frontier Airlines into question.<br/>

Larry Allen has worked in various jobs at Dallas Fort Worth international airport for over 40 years. Before the pandemic, Allen worked as a baggage handler, making just over $2 an hour and relying on tips to get by. When Covid-19 hit the US, Allen was told not to come back into work and wasn’t recalled until one year later, when he took a position as a wheelchair agent. He now makes only $8 an hour, plus tips, but those tips aren’t guaranteed and can vary widely and he relies on social security benefits and Medicare. In his late 60s, Allen walks a few miles every day at work, and at his age worries about the physical toll working in the airport has taken on his body and his ability to eventually retire comfortably. He is pushing to organize a union among his co-workers at the airport to improve wages, benefits and working conditions. “We need more money and more respect for the work we do. Eight dollars an hour is just not enough,” said Allen. “A union is an advantage, to get proper wage and insurance so if you get sick, you’ll have some medical coverage, and if something happens, you’ll have somebody to represent you and back you up.” Allen is one of many airport workers around the US who took part in protest actions last month to pressure government officials at local, state and federal levels, and the CEOs of large airlines, including United, Delta and American Airlines, to sign on to a Good Airports pledge, committing to ensuring airport workers are paid living wages, provided affordable healthcare and have the right to organize a union. The actions were part of a campaign led by the Service Employees International Union (SEIU) for airport workers to bargain through a union for improved pay, working conditions, healthcare and sick leave.<br/>

Five aircrew of a small Canadian airline are among 11 people detained in the Caribbean after 200 bricks of cocaine were seized on a passenger jet that was chartered to fly to Toronto. Pivot Airlines, which intends to begin flying this summer out of Waterloo regional airport, says its aircrew found the drugs on board the jet last Tuesday and alerted authorities at the Punta Cana International Airport in the Dominican Republic. “The Pivot crew immediately reported it to local authorities in accordance with Transport Canada-approved policies and procedures, as well as local and international laws,” the airline said Sunday. The drugs were seized by a Dominican drug control agency, which has issued a press release. The agency took 11 people into custody, including nine Canadians, pending an investigation. The airline said: “Our primary concern right now is our crew’s safety, security, ethical and humane treatment. We are making every effort to support them during this difficult time, and ensure their safe return to Canada.” The plastic-wrapped cocaine was found in compartments on board the Bombardier-built passenger jet which is registered in Canada. The cocaine weighs 210 kilograms, the Dominican agency said, and had an estimated street value of $18m in 2019 based on the price per gram at that time. Pivot Airlines is based in Mississauga and says it is waiting for demand for business travel to pick up before it launches passenger flights from Waterloo Region to Ottawa and to Montreal.<br/>

Start-up Canada Jetlines is targeting summer 2022 for its long-awaited launch, with plans to begin charter flights from Toronto Pearson airport. The new entrant intends to fly domestic-Canada routes and to international destinations, including those in the USA, Mexico and Caribbean. Jetlines announced its launch timeframe on 7 April but has not specified a date. CE Eddy Doyle says Pearson will be the carrier’s “primary travel hub”. “This partnership will allow us to better service both domestic and international travellers to and from Canada’s busiest airport,” he says. Jetlines positions itself as a “value-focused leisure carrier” instead of an ultra-low-cost carrier (ULCC), putting it more in the competitive segment occupied by companies like Sunwing Airlines and Air Transat. The nascent Canadian ULCC field is crowded with newcomers Flair, Lynx, and Swoop. Jetlines’ pace toward launch is picking up, as it works to obtain the necessary air operator’s certificate from Transport Canada before beginning operations. Jetlines announced on 4 April that it received conditional approval for flight attendant training. The first class is scheduled to begin this month, with an eye toward completion by the end of May, according to the company.<br/>

Chilean low-cost carrier JetSmart has been granted approval to launch a subsidiary in Peru, and will restore routes to Brazil in the course of the year. “We have decided to open up a new operation in Peru,” says Estuardo Ortiz, the company’s CE. “We just got the [air operator certificate] for JetSmart to become a Peruvian airline,” he adds. “We plan to start sales within the month and domestic operations by the second part of the year." According to Cirium networks data, the airline currently operates flights between Chile’s capital Santiago and the Peruvian cities of Lima, Trujillo and Arequipa. JetSmart, owned by US private equity firm Indigo Partners, announced plans to establish a Peruvian subsidiary in July 2020, and had expected approval in mid-2021. Ortiz says that once Chile’s Covid-related entry restrictions are relaxed, the carrier will reassess its post-pandemic growth strategy across numerous markets on the continent. “It has been almost two-and-a-half years with no growth,” Ortiz says.<br/>

The CEs of European start-up carriers Emerald Airlines and Flypop have cited the large pool of laid-off executives and other experienced airline workers as a boon for their businesses as they seek success in an historically challenging industry. The CE of Irish regional start-up Emerald Airlines, Conor McCarthy, described the development as “the single biggest benefit of Covid” for the fledgling operator, ranking it ahead of other positive crisis-related trends including the availability of better deals from lessors, handling agencies, software companies and maintenance firms. “The biggest benefit of Covid is we’ve had this amazing group of talent, and when I say talent, I mean at all levels,” he says. “They were freed up during Covid; they were laid off.” In Emerald’s Irish home market, McCarthy highlights the “major retraction by CityJet… SAS Ireland pretty much shut down operations, Norwegian International… that shut down, and Stobart Air, our predecessor in the [Aer Lingus] franchise, that went into liquidation. “But that left us with a huge pool of people with which to set up our team.” Emerald’s management group has “over 250 years of relevant aviation experience” as a result, McCarthy explains. That is important, he notes, because “the biggest danger is when you start to grow… if you don’t’ have discipline, if you don’t have shape and keep your strategy together… if you make some wrong steps, they come back and they haunt you.” He describes experienced staff as “the people who protect you”, adding: “They don’t stray into unknown territory.” Flypop CE Nino Singh Judge similarly says that Covid-19 has made it possible “to hire some seriously experienced people”.<br/>

The chief executive of Icelandic budget airline Play has explained how last year’s IPO was an important step in taking risk “off the table” for the start-up carrier’s stakeholders following the missteps at defunct compatriot Wow Air. Speaking during the CAPA Airline Leader Summit on 8 April, Birgir Jonsson acknowledges that Play “has a shared DNA with Wow”, given a number of its executives worked at the operator, but that it had also learned from its predecessor’s mistakes – and is using the ownership structure created by the IPO to ensure they cannot be repeated. “We are going into a business model that is established – Icelandair has been doing it for decades and is doing it really well – and it is clear that it was possible to do it with a lower cost structure and capture that market,” Jonsson says. “Wow did it really well, then they made mistakes with their strategy.” Wow’s collapse in 2019 was attributed by CE Skuli Mogensen to an over-ambitious expansion plan that saw the low-cost carrier take on its first widebody jets and target new markets, just as oil prices were rising. Learning from that experience, Jonsson – who served a short term as deputy chief executive at Wow – says Play is taking a different approach. “We decided to take that risk off the table and announce that we were going to do an IPO, because that forces us to run the company in a different manner – the reporting of numbers and all the things you have to do as a listed company,” he explains. “It gives the whole structure of the company much more focus and discipline, because there’s no one guy who can have a big megalomania fit and decide to do something – which is a very good thing.”<br/>

The global aviation sector is struggling to recover from a pandemic-driven slump, but Kazakhstan's flagship carrier Air Astana is bucking the trend with a swing back to profit and record passenger numbers, its CEO said. The little-known airline, which is eyeing a listing later this year, is banking on even more growth as the COVID-19 slump recedes and demand for leisure travel soars. But Russia's invasion of Ukraine could make for a rough ride. Air Astana booked a $36.2m net profit last year, as major carriers including China's three-biggest airlines suffered billion-dollar losses while Indonesian airline Garuda limps through a debt restructuring. That marked a strong rebound from Astana's $94m loss in 2020 and was also up from a $30.3m profit a year earlier, according to the airline's chief, Peter Foster. Revenue for 2021 jumped 92% on-year to $756m, Foster added. "[It] was a good result. Far better than expected," he said. The upswing came as the Almaty-based company's traffic hit a record last year with some 3.5m passengers flying on Air Astana and another 3.1m on low-cost subsidiary FlyArystan, a nearly 30% increase on a combined 5.1m passengers in 2019 before the pandemic sent traffic plummeting. The rise tracked a broader jump in the Central Asian nation's aviation sector, which logged 7.6m domestic passengers last year, bouncing back from 4.6m in 2020 and 5.35m in 2019, according to Kazakhstan's national statistics bureau, a rise partly driven by an emerging middle class. "We think that Kazakhstan was the fastest growing domestic aviation market in the world last year," Foster said. Foster, a former Cathay Pacific executive and CEO of Royal Brunei Airlines, pointed to four drivers of Air Astana's standout performance -- strong domestic demand, high yields on regional routes, adopting more point-to-point routes and fleet upgrades.<br/>

Long-haul budget carrier AirAsia X appears to have slashed its orders for Airbus A330-900s by more than 60. The airframer has listed 63 cancellations for the long-haul twinjet during March, and AirAsia X’s commitment has fallen from 78 to 15 aircraft. AirAsia X co-founder Tony Fernandes had been a vocal proponent for the A330’s re-engining as the A330neo, and the carrier became its largest customer. But none of those ordered by the carrier has been delivered and the onset of the pandemic, and the financial pressure experienced by AirAsia X, have thrown doubt over the prospects of the order being fulfilled. The cancellation reduces the overall number of A330-900 orders by nearly 20%, to 262 aircraft, of which 69 have been delivered. Airbus has slowed A330neo production to just two per month as part of its efforts to address weak long-haul aircraft demand and the broader effects of the pandemic on air transport. But the setback for the long-haul programme has been partially mitigated by strong single-aisle orders during March. Airbus recorded an order for 54 A321neo and A320neo aircraft, and a separate agreement for 46 A320neos, both from undisclosed customers. It also listed an order for three A321neos from Spanish carrier Iberia and a single A320neo from a private customer. For the first three months of the year net orders stood at 83 aircraft and Airbus achieved 142 deliveries.<br/>