Relentless travel demand has sent bookings at U.S. carriers soaring, translating into bumper earnings. However, their shares have not shown the same trajectory as questions linger about the sustainability of consumer spending. Airline shares have suffered because of bearish sentiment about the broader economy as interest rates are up sharply and inflation remains high, analysts said. That’s even though consumers have shifted their spending to leisure activities like travel. US Global Jets ETF, an exchange-traded fund that includes airlines and is seen as a proxy for the industry, is down about 30% from pre-pandemic levels even as passenger traffic has hit record highs. In the same timeframe, S&P 500 has gained about 31%. Even after a rally in airline stocks so far this year, shares of United Airlines and Delta Air Lines still trade at 5.2 and 7 times forward profit estimates, respectively. That’s well below the S&P 500’s 19.1 multiple and below the industry’s average of 8.27, according to Refinitiv Eikon figures. “It is hard for airlines to decouple from the macro trade,” Jefferies analyst Sheila Kahyaoglu said. Airlines will again have an opportunity to sell their story when they report earnings starting this week. Delta, which reports Q2 results Thursday, expects profits to nearly double this year, but its shares are still down 21% from 2019 highs. United has forecast a four-fold jump in earnings this year, but its shares are down about 40% from pre-pandemic levels.<br/>
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Tornadoes and thunderstorms battered the greater Chicago area on Wednesday, temporarily forcing O'Hare and Midway airports to halt all air traffic, officials said, as tornado sirens echoed through the third biggest US city. At least eight tornadoes touched down in four counties in northeastern Illinois, including four in Cook County, which is home to Chicago, as officials warned people to take shelter. All departures of commercial flights into O'Hare and Midway airports were grounded, and outgoing flights from the two airports were delayed, the US FAA reported. More than 300 flights in and out of O'Hare and another 32 in and out of Midway were canceled, according to FlightAware. Off-site air traffic controllers assumed control of the airspace as the on-site controllers needed to evacuate the towers at O'Hare and Midway, the FAA said. Normal operations resumed after the storms passed, the FAA said.<br/>
Airlines have warned that staff shortages at air traffic control across Europe are causing “unacceptable” disruption to travellers as the peak summer travel season begins. Aviation veteran Willie Walsh, chief executive of industry trade group Iata and former boss of British Airways, on Wednesday hit out at the “disappointing” performance of air traffic control bodies in Europe, which he blamed on “a lack of ATC resources nationally”. “While some areas of ATC performance have improved over 2022, we remain unacceptably behind 2019 levels,” he said. Walsh singled out Gatwick airport in London, which he said was suffering from “local . . . resource issues”, as well as staffing problems seen in France and Germany. EasyJet, the biggest airline at Gatwick, this week cancelled 1,700 flights scheduled for the summer months, blaming “challenging conditions” caused by air traffic control issues across Europe. Gatwick said it was “well-resourced” for the summer, but only 40 per cent of flights from Gatwick departed on time in the week ending July 2, the most recent period with available data, according to Eurocontrol, the region’s air traffic control manager. NATS, the company subcontracted to run Gatwick’s air traffic control operations, did not respond to a request for comment. Paris Charles de Gaulle, Lisbon and Rome’s Fiumicino airports also all saw fewer than 50 per cent of flights departing on time. Eurocontrol has repeatedly warned of a “challenging” summer, and traffic “overloads” in regions including London, Brussels and Barcelona. The aviation industry is battling to avoid a repeat of last summer’s travel chaos, which was caused by industry-wide staff shortages as companies failed to recruit new staff quickly enough when borders fully reopened following the coronavirus pandemic. Major airlines, airports and ground handling companies are confident that their staff numbers are now sufficient to handle the summer getaway in Europe, with an average of more than 30,000 daily flights scheduled in July and August. Air traffic control has instead emerged as the biggest potential flashpoint. <br/>
Airport drop-off charges for drivers have increased by almost a third at UK airports over the past year, according to the RAC. These are fees charged for dropping off someone as close to a terminal as possible. The biggest hike in so-called kiss and fly charges are at Southampton and Belfast airports, the RAC has found. Airports argue the higher fees are to deter drivers from lingering around and help to keep flight costs down. The Airports Operator Association, which represents airports in the UK, told the BBC the increased revenue helped "keep charges to airlines lower" and helped "maximise the range of flights that can be offered to all passengers." Story has more.<br/>
Nepal's aviation regulator has banned helicopters from conducting "non-essential" flights, including those for sight-seeing, for two months after a deadly crash in the Everest region in which six people were killed. Five Mexican tourists and the Nepali pilot of a small helicopter operated by the private Manang Air company were killed on Tuesday when their chopper crashed while returning from viewing Himalayan peaks, including Mount Everest. “Non-essential flights like mountain flights, external load operations (sling flights) and showering of flowers by helicopters (will) be restricted till September,” the Civil Aviation Authority of Nepal (CAAN) said in a Twitter post late on Wednesday. Nepal, which is in the midst of the annual June-September monsoon season, has formed an investigation committee to find out what caused Tuesday’s crash.<br/>
Airlines are urging the new government to relieve the huge burden from exaggerated operational costs, which is 15-20% higher than in other countries, attributed largely to taxes on fuel, revenue and importing aircraft, saying this issue should be fixed within the first 100 days. The Airlines Association of Thailand (AAT) yesterday asked Pita Limjaroenrat, leader of the Move Forward Party and first in line to attempt to garner the votes for prime minister, to take care of three issues: removing obstacles for aircraft imports and integrating cooperation between airlines and airports; setting an appropriate level of excise tax on jet fuel and enhancing airline competitiveness by increasing the rights to fly to target countries; and reducing visa fees for travellers. Pita said the party acknowledged industry concerns from the Tourism Council of Thailand earlier and would plan future discussions with AAT to formulate a plan to urgently fix these problems. He said Thailand lost opportunities because of its inability to become an aviation hub, attributed to regulatory issues or public administration. Singapore can draw many flights and has a tourism promotion apparatus in place to attract Mice (meetings, incentives, conventions and exhibitions) travellers, said Pita.<br/>
Powerful business interests in the Philippines have once again banded together with a plan to give Manila's crowded and aging airport a much-needed face-lift. Six conglomerates have come together to form the Manila International Airport Consortium (MIAC). The group has submitted a 267b-pesos ($4.8b) investment plan to fix up the airport before the government has started accepting bids. The COVID crisis doomed a previous proposal from the private sector to upgrade Manila's airport. This time around, MIAC is counting on President Ferdinand Marcos Jr.'s infrastructure agenda to bring the airport project to fruition. "We are here today because of one shared goal and vision, and that is the rehabilitation and modernization of the Ninoy Aquino International Airport or NAIA," Kevin Tan, CEO of the conglomerate Alliance Global Group, said during a June 19 event with his MIAC peers. Apart from Alliance Global, MIAC's Philippine members include Aboitiz, Ayala, LT Group, Filinvest and JG Summit Holdings. The consortium has also brought in the U.S. investment fund Global Infrastructure Partners. The Philippine Department of Transportation plans to refurbish the Manila airport through a public-private partnership. The airport will become privatized as soon as 2024, and MIAC is essentially waiting for authorities to approve its bid. Ninoy Aquino International Airport (NAIA) is Manila's one main hub. Barring congestion, the airport is conveniently located 30 minutes away from Makati, Manila's financial district. NAIA has the capacity to handle 31m passengers a year, but in 2019, the year before the COVID pandemic grounded travel across the word, traffic reached 47.9m passengers. Because of the lack of infrastructure, a traveler would need to arrive well ahead of time to depart, and port-of-entry procedures take just as long.<br/>
Tonga's only domestic airline, Lulutai, now has its only available aircraft flying again. The plane had run off the runway at 'Eua last week, sparking concern for travellers, including tourists, to the outer islands. The passengers travelled back to Tongatapu by sea. But Lulutai Airlines is now flying and accepting bookings for services to the outer island groups of Ha'apai, Vava'u, the Niua's and to 'Eua. There has been little information made public about the reason for the Chinese-built Harbin Y12 aircraft sliding off the Eua runway, which resulted in a grounding. Lulutai has another plane, a SAAB340, which is undergoing extensive repairs. There was concern in the tourism sector because many prospective visitors come to Tonga to visit the outer islands. Domestic transport issues are further complicated by ongoing issues with sea ferry services. Lulutai Airlines was established two years ago by the government after the private operator, Real Tonga, ran into problems. The new airline absorbed most of the assets of Real Tonga, but the owner of that company has now called on the government to allow private enterprise back into the sector.<br/>