general

Domestic air travel demand has “fully recovered” from the Covid-19 crisis, according to IATA, with overall global traffic now less than 10% down on 2019 levels as international markets catch up. Commenting on the airline association’s latest traffic data, which covers April 2023, IATA director general Willie Walsh cites “sustained strong air travel demand”, which is being boosted by “the easing of inflation and rising consumer confidence”. Walsh also highlights declining jet fuel prices as an indicator of “moderating cost pressures” at airlines. Global domestic traffic during the month – measured in revenue passenger kilometres (RPKs) – was 2.9% up on April 2019, while international RPKs were at 83.6% of 2019 levels, IATA data shows. Both metrics were boosted by China’s relaxation of Covid-19 restrictions as 2023 began, improving connectivity in one of the world’s largest airline markets. Overall, the global industry’s traffic was 9.5% down on 2019 levels in April, on capacity – measured in available seat kilometres – some 7.5% lower. That continued an improving trend seen since December 2022, when RPKs were 23.1% down and capacity 22.1% lower, having trended in the -26% to -22% zone for much of the second half of last year. Among the domestic markets, India’s traffic was some 14.7% higher than 2019 levels in April this year, IATA says, while China’s was up 6% and the USA’s 3.3%. Those increases were offset to some extent by Australia being 12.7% down on the same basis, Japan 4.4% lower and Brazil 2.4% down. Notably, China’s domestic traffic had been down 55.5% as recently as December 2022. Asia-Pacific continues to weigh on the recovery of international markets, with its airlines seeing traffic down 34.4% versus 2019 levels in April. Crucially, however, that is a significant improvement from their international traffic being down by almost 50% as recently as December 2022, as the reopening of China also feeds through to the international RPK data. <br/>

The city of Austin said it will pay $88m to settle a dispute with the private company that operates an auxiliary terminal at the local airport that municipal officials sought to seize and demolish as part of an expansion project. Under the deal, LoneStar Airport Holdings will soon begin to transfer management and operations of the terminal, the city-run airport said Thursday in a statement. The facility will remain operational as a hub for low-cost carriers Frontier Airlines and Allegiant until construction on the new facility begins in 2025, airport officials said. LoneStar entered into a 40-year contract in 2016 to renovate and operate the auxiliary terminal, but just a few years later, city officials sought to acquire the leasehold interest and initiated eminent domain proceedings. The Austin-Bergstrom International Airport has struggled to keep pace with a surge in passengers seeking flights as the city’s population continues to grow. Municipal officials have argued that the expansion plan will help address that need by adding at least 10 new gates.<br/>

Athens International Airport shareholders have given the go ahead for the sale of a 30% stake in the country’s biggest airport by privatisation agency HRADF, a senior official from the agency said on Thursday. State-owned HRADF, the Hellenic Republic Asset Development Fund, has hired Bank of America, Morgan Stanley and Deutsche Bank to act as advisers on the sale of its stake. The other shareholders are Germany-based manager AviAlliance, which currently holds 40%, Greece’s sovereign wealth fund HCAP with a 25% stake and Copelouzos group, which owns 5%. The shareholders have signed a memorandum of understanding, opening the way for AviAlliance to acquire a further 10% stake, with HRADF’s remaining 20% to be sold through an initial public offering (IPO) for listing on the Athens Stock Exchange, the official told Reuters on condition of anonymity. The full 30% stake could be valued at between E800m and E1b. Greece’s privatisation agency had originally aimed for the sale to take place in the first half of the year, but the official said the new target was for it to conclude by the end of the year, subject to market conditions. Tourism is a key driver of growth for Greece, accounting for at least a fifth of its gross domestic product.<br/>

Hungary's government is looking for a "friendly" co-investor to acquire Budapest Airport and to then also operate the airport, Economic Development Minister Marton Nagy said on Thursday. Nagy said the government was seeking a majority stake but the issue was open to negotiation. He said the acquisition could be closed by the end of 2023, with the government in talks with several airport operators, one of them in Qatar. Since Prime Minister Viktor Orban took power in 2010, his government has boosted Hungarian ownership in energy, banking, telecoms and the media, and has been planning to buy the airport for years. In 2021 Orban's government submitted a non-binding offer to buy the airport but later the process was halted. The government revived the idea in February 2023, when Nagy was put in charge of holding talks about the acquisition. "The state would like to buy the airport together with a friendly co-investor, who could also be able to operate the airport," Nagy told a briefing. The biggest shareholder in Budapest Airport, with 55.44%, is AviAlliance GmbH, formerly Hochtief AirPort GmbH, owned by Canada's Public Sector Pension Investment Board (PSP Investments). AviAlliance said on Thursday that the Hungarian "government recently communicated its continuing interest in taking over the airport." "Even though the shareholders did not initiate the purchase, AviAlliance and its co-shareholders are obliged to consider any purchase offers in the interest of their funds," AviAlliance said in an emailed reply to Reuters questions, adding it was a long-term oriented investor in the airport.<br/>

Noisy planes would be banned from taking off or landing at East Midlands Airport (EMA) during the night under new plans. A major hub for freight flights, a noise action plan for 2024 to 2028 is proposing bans on three categories of the noisiest planes (QC4, QC8 and QC16 ratings). The suggested changes also would see penalties to airlines flying louder planes at night increased. A consultation closes on 31 July. The airport said night flights - which are classed as taking place between 23:00 and 07:00 - account for 45% of its operations, and includes passenger services as well as freight. Under the airport's planning conditions, noise must not exceed 55 decibels for more than 16km around the site between those hours. This level of noise currently extends to about a 12km radius of the airport but is forecast to reach 14km by 2025. EMA says it has a freight capacity of 450,000 tonnes a year, forecast to reach 700,000 by 2040, with 9,000 people working across 100 companies on the site, generating £723m and handling 4.7m passengers.<br/>

Chinese airlines are avoiding flying over Russian airspace in newly approved flights to and from the United States, according to flight tracking website FlightAware and industry officials. Russia has barred US airlines and other foreign carriers from flying over its airspace, in retaliation for Washington banning Russian flights over the U.S. in March 2022 after the country invaded Ukraine. FlightAware records show Chinese flights recently approved by Washington are not flying over Russia, while previously approved Chinese airline US flights are still using Russian airspace. On May 3, the US DoT said it would allow Chinese airlines to increase US passenger services to 12 weekly round-trips, equal to the number of flights Beijing has permitted for American carriers. Previously, only eight weekly flights by Chinese carriers were allowed. USDOT Assistant Secretary for Aviation and International Affairs Annie Petsonk declined to answer a question about whether the Biden administration had required that the Chinese carriers avoid Russian airspace as a condition of approving four new flights. Petsonk said the gradual rise to 12 flights for China and the United States "is the kind of measured pace that we are likely to see". The 12 weekly flights are a small fraction of the more than 150 round-trip flights allowed by each side before restrictions were imposed in early 2020 due to the COVID-19 pandemic.<br/>

The European Union’s 27 member states have lodged a formal complaint with the Georgian government over the resumption of air travel with Russia, which began on May 20, the privately-run Georgian television company Mtavari Arkhi reported on May 29. The EU countries conveyed their position through Paweł Herczyński, the bloc’s ambassador to Georgia, during a meeting in Tbilisi with economy minister Levan Davitashvili. He stressed that the decision to approve direct flights with Russia contradicted the member states’ unanimous move last year to ban flights and close EU airspace to Russian aircraft. The diplomat later told journalists: “We expressed concern that the decision to resume flights contradicts the EU’s decision to isolate Russia and increase pressure on Russia [following its invasion of Ukraine]. We were assured that sanctioned planes would not fly to Georgia.” Tbilisi’s decision “contradicts our determination to isolate Russia and put pressure on it to change its tactics when it comes to the brutal and aggressive war Russia continues to wage.” Davitashvili commented that “an honest open dialogue” had taken place, adding: “We talked about the geopolitical situation. We spoke about the fact that the situation in Georgia cannot be discussed in the same context as the situation in other countries. Georgia has a particularly difficult situation with a direct border with the Russian Federation, and 20% of Georgian territory is occupied, so the context here is different from that of EU member states.”<br/>

The mayor of New Zealand’s largest city on Thursday proposed the sale of its 18.1% stake in Auckland International Airport Ltd (AIA) to reduce debt and avoid increases to local taxes or cuts to services. The airport, New Zealand’s largest, has a market value of about NZ$13b ($8.25b), meaning the city’s stake is currently worth about NZ$2.4b. It is the airport operator’s biggest shareholder. Auckland Mayor Wayne Brown said that the sale would permanently improve the city council’s financial position, helping it to fill a $325m budget shortfall and avoid service cuts. In the financial year ended June 30, 2022 the city had NZ$11.1b of debt, a figure that is expected to have increased in the current year. An AIA spokesperson said in an email that the company had no concerns about the proposed stake sale, which would not affect day-to-day operations, and it was up to investors to make their own decisions. The airport does not expect to be involved in any sales process, the spokesperson added. Under the mayor’s proposal, local government taxes, known as rates, would only increase by 6.7%, which is in line with New Zealand’s inflation rate, and other services in the city would not have to be cut. “It makes absolutely no sense to retain those shares when we could realise the capital gains and wipe NZ$2b of debt from the council books for good. The savings from that are huge,” Brown said. “If we don’t sell now, we’ll have to put rates up by double-digits and make bigger cuts.” The plan needs majority approval from the city’s elected council members at a vote set for June 8 and it is not guaranteed to pass.<br/>

Millions of flights take off and land in China every year, almost all of them using planes made by Boeing and Airbus, the world’s two leading aircraft manufacturers. For years, China has been working to change that, and this week it celebrated a milestone in that quest: the first commercial flight of a large passenger jet made in China. The C919 jet, made by Comac, a Chinese state-run aerospace manufacturer, flew about 130 passengers from Shanghai to Beijing for China Eastern Airlines on Sunday, according to Chinese state media. It is currently the only C919 plane being used for commercial flights. Comac, or the Commercial Aircraft Corporation of China, was established in 2008. Based in Shanghai, it is closely linked to Avic, the Aviation Industry Corporation of China, which makes the country’s turboprops, fighter jets and bombers. The C919 is a narrow-body plane comparable to the Boeing 737 and Airbus A320. Aviation experts said China faced stiff competition from the entrenched rivalry of U.S.-based Boeing and Airbus, a European company with national ownership stakes held by France, Germany and others. The two have dominated the sale of planes worldwide for years. Boeing’s CE, Dave Calhoun, speaking to reporters this week at a Boeing factory in North Charleston, S.C., called the C919 a “good airplane” that would eventually satisfy domestic demand in China, but said it would be “a long while” before the country built up enough production capacity to fill those needs. Calhoun spoke from a room overlooking a handful of Boeing 787 twin-aisle jets that were in the final stages of manufacturing, including one bearing the logo of Air China, the country’s flagship carrier. He said he was confident that the global market could accommodate a third big manufacturer.<br/>

Boeing CEO Dave Calhoun downplayed speculation that China's maiden commercial flight of its domestically produced C919 narrowbody jet could foreshadow the end of the duopoly currently held by the US planemaker and its European rival Airbus. On Sunday, China Eastern Airlines flew a C919 filled with passengers from Shanghai to Beijing - a milestone for manufacturer Commercial Aviation Corp of China (COMAC). Calhoun said the C919 is a "good airplane," but it will take a "long while" for COMAC to build the production capacity needed to meet Chinese airlines' demand. “Three providers in a growing global market of this size and scale should not be the most intimidating thought in the world,” Calhoun told reporters this week. “For us to get overly anxious about that, I think it's a silly prospect.” Boeing should focus on existing competition and position itself to "win that technology race," Calhoun said. He added that China remains "our friend, our customer," but business could proceed with "fits and starts" due to geopolitical tensions. Chinese airlines began returning the 737 MAX to service earlier this year. Although all Chinese users have restarted 737 flights, deliveries of the jet have been stalled amid friction between the United States and China. In April, the Chinese aviation regulator published a report on the 737, which was hailed by Calhoun at the time as an "important step" for restarting MAX deliveries after two crashes in 2018 and 2019 that killed a total of 346 people.<br/>

Airlines could face shortages of planes, engines and parts for several years as they try to meet a strong rebound in travel demand, the head of aircraft leasing giant AerCap told Reuters. Aerospace firms have predicted supply chain problems for at least 18 months as airlines clamour for jet deliveries to meet the new demand. But AerCap CE Aengus Kelly predicted pressure well into the second half of the decade. "The most important point in the longer term is the supply constraint that will last for many years," Kelly said in an interview, adding this would spread beyond production lines and into already congested repair or "MRO" facilities. Boeing CEO Dave Calhoun last week predicted supply problems for a "very long time". When asked at the Qatar Economic Forum to define such a period, he drew attention to the company's order backlog stretching over the next five to six years. "We feel very much the same, be it airframe issues, engine issues, MRO capability, both on the airframe and the engines," Kelly said, referring to Calhoun's mention of five years. Calhoun also said it would take until end-2024 before jetmakers were able to sharply boost aircraft output. Delivery delays have been blamed for part of the capacity squeeze. Kelly said the shortage of supplies had also been compounded by the more frequent repair visits required by the latest engines. "The new assets have great fuel burn and wonderful engineering ... but they are not as durable as the previous assets, such as the (Boeing) 737, the (Airbus) A320. So they come off wing faster and there's more time on the ground. And I just don't see that changing for years and years to come." Demand will also remain strong for the "foreseeable future," he said.<br/>

India's fast-growing airline industry faces higher leasing bills and growing hesitation from financiers after foreign lessors were blocked from recovering jets caught up in the bankruptcy of Go First, the head of leasing giant AerCap (AER.N) told Reuters. An Indian tribunal last month granted a request from India's sixth-largest carrier for bankruptcy protection, putting into effect a moratorium on its assets that prevents foreign aircraft lessors from taking planes out for almost a year. AerCap CE Aengus Kelly said the world's largest leasing company had earlier recovered planes from Go First, previously called Go Air, but called the court move "wrong and unfair" and warned of its wider implications. India's bankruptcy rules allow a maximum of 330 days to find a resolution, failing which a court can initiate insolvency. Lessors have argued such rules are only designed to cover assets the airline actually owns. They say the 2001 Cape Town Convention, which India has ratified but not fully implemented, overrides local law - something denied by Indian regulators. "The airline doesn't own these assets," Kelly said. "The decision by the courts will cost Indian companies". Aircraft lessors control about half the world's fleet including three-quarters of jets recently delivered to India. AerCap's warnings come days after SMBC Aviation Capital, the world's second largest lessor, warned the stand-off could shake confidence in the world's fastest-growing aviation market. India's aviation regulator has told the Indian tribunal that lessors' requests have been put on hold because local laws prevail over any international treaty signed by India.<br/>