general

Global airlines are forecast to return to profit for the first time since 2019 next year, as the industry recovers from the impact of the Covid pandemic and demand for travel remains strong despite a weakening economy. The IATA, an industry body, on Tuesday said it expected airlines to report a net profit of $4.7b in 2023, after racking up more than $185b of losses during the previous three years of limited flying because of government travel restrictions. Willie Walsh, Iata’s DG and a former boss of British Airways, said the economic recovery highlighted the airline industry’s “resilience”. “The expected profits for 2023 are razor thin. But it is incredibly significant that we have turned the corner to profitability . . . the industry has great capability to adjust to fluctuations in the economy,” he said. Passengers rushed back to the skies as border restrictions eased across most countries this year, and demand is expected to hit 85.5% of 2019 levels in 2023, up from 70% this year. Still, Walsh warned there was still “much more ground to cover” to put the industry “on a solid financial footing”. With the sector’s profitability historically reliant on a clutch of North American and European carriers, Walsh said many other airlines were still “struggling” with high costs including fuel, “onerous” regulation and inefficient infrastructure. Airlines in Africa, Latin America and Asia-Pacific are forecast to post losses in 2023, and Iata said China’s zero-Covid policies had “critically held back” the recovery of air travel across Asia. Globally, airlines are expected to post the $4.7b profit on $779b in revenues, a net profit margin of just 0.6%, down from 3.1% in 2019.<br/>

Airline passengers face higher ticket prices as the industry moves towards its target of reducing emissions to net zero by 2050, the head of a global trade association said on Tuesday. Willie Walsh, DG of the IATA, which includes most of the world's major airlines, called for swifter action in Europe to drive up scarce production of greener Sustainable Aviation Fuel (SAF). Air fares have already jumped this year as a result of higher prices for conventional fossil-based jet fuel. "You cannot expect an industry making on average $1 profit per customer to absorb the increases we’ve seen," Walsh told reporters at an annual media briefing. "Going forward as we see increases in carbon costs...there has to be an impact on ticket prices as the industry transitions to net zero. The airlines cannot absorb increased costs." Environmental groups argue that air higher travel costs will help to rein in emissions by curbing growth in traffic. Walsh praised efforts by the United States to lift output of clean fuels, in apparent contrast with European objections that new U.S. incentives could create an uneven playing field. "In the U.S. it is recognised that Sustainable Aviation Fuels are part of the answer and they are heavily focused on additional production," Walsh said.<br/>

For many years, going to the airport in the United States has meant trudging through dark and low-ceilinged terminals, crowding in dreary security checkpoints and throwing elbows to secure one of the few power outlets at the gate. “A bus depot is not a great way to describe it, but that’s kind of the methodology that a lot of American passengers saw,” said Ty Osbaugh, an architect who helps lead the aviation practice at the architecture firm Gensler. Airports built in the 20th century were largely designed to get customers in, out and through as quickly as possible. They didn’t account for the high volume of passengers we see today or the logistical demands the age of Homeland Security would create. According to the trade group Airports Council International-North America, the average airport terminal in the United States is more than 40 years old. That’s not the case overseas, where some of the world’s grandest airports are designed for passengers to actually enjoy their experience. In Singapore’s Changi Airport, for example, a towering indoor waterfall, forested walking trails and a glass-bottom bridge compete for travelers’ attention. It’s given many Americans “terminal envy,” Osbaugh said. Now, US airports are catching on with a wave of modernization projects. With the urgency higher than ever — U.S. airports are in need of $115b in improvements, according to a 2021 survey by the airport trade association — and an injection of funds from the bipartisan infrastructure law, there’s new money and momentum for version “2.0 of airport design,” Osbaugh said.<br/>

The rules that bolster compensation for air passengers subjected to delayed flights and damaged luggage have been largely upheld in a Federal Court of Appeal ruling. The court on Tuesday dismissed the appeal that challenged the validity of the passenger bill of rights, with the exception of one regulation that applies to the temporary loss of baggage. Earlier this year, Air Canada and Porter Airlines along with 16 other appellants that include IATA brought the challenge to the passenger bill of rights to a Federal Court of Appeal panel. The airlines argued that the country’s passenger rights charter violates global standards and should be rendered invalid for international flights. This includes the most recent amendment made to the passenger protections that require airline compensation if they cannot provide a new reservation within 48 hours of a flight cancellation or “lengthy delay” for delays and cancellations outside of the airline’s control such as major weather events or a pandemic. The three-year-old federal regulations took on renewed relevance to thousands of Canadians in 2020 as pandemic lockdowns and border closures grounded fleets and prompted mass flight cancellations. A request from the airlines to suspend the Air Passenger Protection Regulations (APPR), initially launched by the airlines in 2019, was turned down by the Federal Court of appeal in 2020. <br/>

The Beijing Capital International Airport no longer requires a negative COVID-19 test result for entry to terminals, starting from Tuesday, state media said. Entrants do not need to provide a certificate of a negative nucleic acid test, the Beijing News, a newspaper owned by the Chinese Communist Party, said.<br/>

A post-war reopening of Russian airspace is an important target for the airline industry, given the congestion and competition concerns created by the current situation, in the view of IATA DG Willie Walsh. Speaking during a media briefing on 6 December, Walsh explained that congestion over Europe is being exacerbated by airspace restrictions over Belarus, Russia and Ukraine, creating a “major issue” in the region. “If you look at the closure of Ukrainian airspace, Russian airspace and other parts of the world, the amount of traffic that’s flowing through Europe has increased over certain routes and that’s not sustainable,” he says. “Longer term, we are going to have to see a return to more normal operations.” Moreover, once China relaxes its Covid-19 travel restrictions, Walsh notes that its airlines could have a competitive advantage over European peers on Asia-Europe routes, given they can still overfly Russia. “As we see China relax restrictions and reopen, then the issue of access through Russian airspace becomes a bigger question for the European carriers, particularly if it remains open for Chinese carriers to fly to Europe,” he says. “The issue is that if Russian airspace is open to some but not all, you have to question why it is closed to some but not all,” Walsh says. “That’s the debate that we are going to have to have as we go through 2023.” Ultimately, Walsh argues that in the event of the war in Ukraine ending, “we should be looking to reopen Russian airspace to have it accessible to all airlines to transit through the traditional Siberian overflights, so that Europe can access Asia in the most efficient way possible. We have to hope that the war ends.” <br/>

China’s return to the skies as it eases COVID-19 restrictions is ramping up concerns about congestion and possible trade tensions as far away as Europe, as carriers seek to restore lucrative services without some of them being able to fly over Russia. Western airlines have not had access to Russia’s East-West air corridors since Moscow’s February invasion of Ukraine triggered Western sanctions and retaliatory bans by Russia. But Chinese cargo carriers kept flying and passengers may follow. “I don’t see there’s any appetite for removing sanctions while the war continues,” Willie Walsh, director general of the International Air Transport Association, told Reuters. But that could have unforeseen effects as China returns to the international air passenger market. “That clearly will have a big impact on traffic flows between Europe and Asia. I think it will also start raising questions from European carriers as to whether it’s fair that some carriers can travel to Europe through Russian airspace and others can’t,” he said on the sidelines of an airlines briefing. “I expect that to become more of an issue of discussion in 2023,” he added. Walsh’s comments shed light on emerging concerns over the knock-on effect of the closure of Russian airspace to 36 Western countries, whose impact has until now been dampened by a slump in travel demand to China. Chinese authorities have begun revising the country’s draconian zero-COVID policies, and may announce further steps on Wednesday. The potential impact is far-reaching because one flight between Europe and Asia usually generates three throughout the air traffic network as passengers take connecting flights to and from major hubs, according to Brussels-based Eurocontrol.<br/>

It will take “considerable time” for Hong Kong to recover its aviation hub status, as foreign airlines are reluctant to return to the city given its unpredictable Covid-19 travel restrictions, the head of a global airline association has warned. The DG of the IATA, Willie Walsh, on Tuesday also said mainland China remaining closed off to the rest of the world with its travel restrictions and the closure of Russian airspace would impact overall recovery for the industry next year. “The recovery of Hong Kong as a global hub will take considerable time,” Walsh told media in Geneva at IATA’s headquarters, adding that other aviation hubs were “without question” benefiting from the city’s travel curbs. Walsh said restoring confidence in Hong Kong as an aviation hub was not just about easing travel restrictions in the city, but also airlines having assurances that curbs would not be reintroduced, saying carriers had become “fed up with changing regulations” at short notice and they no longer wanted to “take that risk”. “So we will need to see greater stability before we can talk seriously about the recovery of Hong Kong as a hub. The damage to the status of Hong Kong as a hub has been very significant,” Walsh said.<br/>“As we continue to look at the recovery and as airlines put more capacity back, I think there will be a greater sensitivity to those markets that are unpredictable.” Singapore Changi Airport overtook Hong Kong as the top airport in the region, with 3.6m passengers passing through in October, while Hong Kong airport handled just 755,000 passengers in the same month – just 13% of pre-pandemic levels. <br/>

Australia’s domestic airlines have largely improved their reliability following a record poor performance in the middle of the year, according to data from the Australia’s competition regulator. In its quarterly airline competition report, the Australian Competition and Consumer Commission (ACCC) found that only 2.9% of all domestic flights in October this year were cancelled, a marked decrease against the record 6.4% recorded in July. Of the major operators, Qantas and Regional Express had the lowest cancellations during October, at around 2.2%, while Jetstar saw 3.9% of its flights cancelled during the month. Still, it was a significant improvement for the low-cost operator, which in July cancelled nearly one in 10 domestic flights. Delays also came down, with an average of 30.7% flights delayed in October, down from July’s record 45%. Qantas, in particular, overtook arch-rival Rex as the airline with the lowest rate of delayed flights, at 26%. Airlines in Australia were mired in operational woes in the middle of the year, amid staff shortages, supply chain issues and other resourcing challenges. Since then, operators have taken steps to mitigate these issues, including ramping up hiring and cutting back on flights. Despite the improvement in reliability, the ACCC notes that cancellation rates and delays in October were still higher than the sector’s average. The commission notes that while airlines reducing their schedules has helped bring down the likelihood of operational snags, it also meant that a full recovery “remains on hold”. The ACCC’s report shows that in October, airlines carried over 4.7m domestic passengers. While it is much higher than the pandemic years of 2020 and 2021, it is only 86% of pre-pandemic domestic passenger numbers. “The recovery in monthly passenger numbers first surpassed 90% of pre-Covid levels in April 2022. It subsequently peaked at 97% in June and has since remained at or below 90%,” says the ACCC. Capacity too, is still tracking below pre-pandemic levels, at around 85%, with the ACCC noting: “The airlines continue to hold back some capacity after struggling to reliably operate higher levels of flying earlier in the year.” ACCC traffic data in October also found that routes to and from Gold Coast were recovering stronger than the tri-city trunk routes connecting Brisbane, Melbourne and Sydney. Of the top five routes that recovered at least 95% of pre-pandemic passengers, four of these were flights from Gold Coast. In comparison, the ACCC found that Melbourne-Sydney recovered only 77% of pre-pandemic passenger numbers in October. “This may reflect the greater significance of business travel on these routes, with demand for business travel returning more slowly than leisure travel,” the ACCC states.<br/>

A measure to give Boeing Co. a reprieve by allowing certification work to proceed on two new 737 Max models is unlikely to be added to a must-pass defense bill in Congress, dealing a temporary setback to the company. The provision, which would give Boeing more time to certify the Max 7 and Max 10 models without having to add costly upgrades to their safety alerting systems, is opposed by some lawmakers and family members of crash victims. There’s no indication the provision will be in the annual defense authorization bill, Washington Democrat Adam Smith, the chair of the House Armed Services Committee, said in an interview. Smith is one of the top negotiators on the defense measure. A Senate aide also said the Boeing legislation isn’t going to make it into the bill. The aide asked not to be named because lawmakers are still negotiating the final defense package. Those negotiations are fluid and the text could still change. Supporters including Maria Cantwell, chairwoman of the Senate Commerce, Science, and Transportation Committee, had been trying to attach compromise language to a bill setting Defense Department policy. It’s still possible they could get it across the finish line this year, including as part of a year-end government spending bill, but time is running short before Congress adjourns. Congress’ omission would be a blow to Boeing, which is working with the Federal Aviation Administration to finalize certification of the two Max models. The FAA has said a law passed in 2020 requires it to halt work on the jets after the Dec. 27 deadline until Boeing can extensively redesign their safety alerting systems. <br/>

Boeing’s final 747 is set to roll out of the company’s cavernous factory north of Seattle as airlines’ push for more fuel-efficient planes ends the more than half-century production run of the jumbo jet. The 1,574th — and last — 747 is scheduled to leave the assembly plant late Tuesday before it is flown by a Boeing test pilot, painted and handed over to cargo and charter carrier Atlas Air Worldwide Holdings early next year. “It’s a very surreal time, obviously,” said Kim Smith, vice president and general manager of Boeing’s 747 and 767s programs out of the assembly plant here. “For the first time in well over 50 years we will not have a 747 in this facility.” The lone 747, covered in a green protective coating, sits inside the company’s massive assembly plant in Everett — the largest building in the world by volume, according to Boeing. The building was constructed specifically for the jumbo jet’s start of production in 1967. Inside, Boeing crews have spent the last few days swinging the landing gears, fine-tuning cargo handling systems and finishing the interiors before the final 63-feet-tall and 250-foot-long aircraft leaves the building. Tails with customer logos that have bought the 747 line part of one of the doors. The end of 747 production doesn’t mean the planes will disappear entirely from the skies, since the new ones could fly for decades. However, they’ve become rare in commercial fleets. United and Delta said goodbye to theirs years before the Covid pandemic, while Qantas and British Airways landed their 747s for good in 2020 during a worldwide travel slump. “It was a great plane. It served us brilliantly,” British Airways CEO Sean Doyle said on the sidelines of an event at John F. Kennedy International Airport with partner American Airlines last week. “There’s a lot of nostalgia and love for it but when we look to the future it’s about modern aircraft, more efficiency, more sustainable solutions as well.” The hump-backed 747 is one of the most recognizable jetliners and helped make international travel more accessible in the years after its first commercial flight in January 1970. Its four powerful engines were efficient for their time. <br/>

Airbus SE abandoned its delivery target for this year after supply-chain disruptions ripping through the industry proved too severe to overcome for the world’s biggest planemaker. The European manufacturer moved away from a goal to hand over 700 planes, while saying that it won’t fall “materially short” of the guidance. As of the end of November, Airbus had handed over 565 units, with 68 delivered last month alone. Deliveries usually accelerate significantly in the final stretch of a year, giving Airbus some hope of coming at least close to its goal. It’s the second time this year that Airbus has lowered the target, after originally projecting 720 handovers before cutting the guidance in July. The aviation industry has been beset by parts shortages on everything from small components to engines. The crisis has been compounded by soaring energy prices squeezing suppliers, and CEO Guillaume Faury cautioned last week that there’s unlikely to be any improvement until the end of next year. Supply constraints also mean that Airbus will adjust the speed of production-rate increase on its bestselling A320-series jets to 65 units a month in 2023 and 2024, it said. At the same time, the company maintained its goal of lifting production of the family of single-aisle jets to 75 a month in the “middle of the decade.” <br/>