Sky-high airfare was a boon for US airlines coming out of the Covid-19 pandemic. But airline executives are now seeing lower domestic fares as carriers’ schedules swell and customers opt for trips abroad over closer destinations that were popular during the pandemic. Southwest Airlines, Alaska Airlines and American Airlines are among the carriers that have forecast slower revenue growth or weakness for the third quarter, despite strong demand. The NYSE Arca Airline Index is down more than 6% this week, slimming its gains to 37% so far this year. Airline shares have largely outpaced the S&P 500 this year, which is up marginally this week and has advanced 18% in 2023. Domestic US airfare is currently averaging $258 for a round-trip ticket, down 11% from last year and 9% from 2019, according to fare-tracking company Hopper. International tickets, in comparison, are up 8% from 2022 and are 23% more expensive than 2019, averaging $958. The latest US inflation report showed a sharp drop in airfare. The shift marks a new chapter in airlines’ recovery from the pandemic and a potential challenge to domestic-focused airlines after the peak summer travel season, which traditionally fades in mid-August when schools reopen. That’s happening while corporate travel demand still hasn’t recovered to pre-pandemic levels. Southwest on Thursday said it expects unit revenue to drop as much as 7% in the current quarter from a year ago on a 12% increase in capacity. An airline’s revenue per available seat mile is a measure of how much a carrier generates compared with how much capacity it is offering. The Dallas-based airline blamed its forecast on faster-than-usual capacity growth. Overall, Southwest still expects record revenue for the quarter, but estimated unit costs, excluding fuel, would rise between 3.5% and 6.5% from the same period in 2022.<br/>
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A bill to raise the mandatory commercial pilot retirement age to 67 from 65 and make other aviation reforms has stalled due to disagreements on whether to revise pilot training rules. Last week, the US House of Representatives voted 351-69 to pass the bill that would reauthorize US FAA aviation safety and infrastructure programs for the next five years. Senate Commerce Committee Chair Maria Cantwell said the effort was stymied over pilot training rules. "We're not willing to lower the safety standards to get a bill," Cantwell said. "Until that issued is resolved, we're not moving forward in the committee." A proposal would allow pilots to complete 150 hours of required training in a flight simulator. Pilots currently can count 100 hours toward their required 1,500 training hours in a flight simulator or flight training device. More stringent pilot training requirements were imposed after the February 2009 crash of Colgan Air Flight 3407 near Buffalo, New York, that killed 50 people, the last major U.S. passenger airline fatal crash. The House voted to retain the pilot training rules in the bill it passed last week. Senator Ted Cruz, the top Republican on the committee, said the committee had earlier been ready to pass legislation until Senate Democratic Leader Chuck Schumer "threw a hand grenade in the middle of the markup and caused it to be canceled." Schumer opposes changing the pilot training rules. The House measure bars airlines from charging fees to allow families to sit together on flights but does not include many consumer protection issues sought by the White House.<br/>
PM Rishi Sunak is under pressure from MPs in his ruling Conservative party to subsidise manufacturers of low-carbon aviation fuel in the UK to help the industry cut emissions. More than 60 parliamentarians, most of them Tories, have signed an amendment to the government’s energy bill calling on ministers to introduce financial support to create a UK industry producing so-called sustainable aviation fuels or SAFs. These greener fuels form the basis of the aviation industry’s pledge to reach net zero emissions by 2050, given the huge technological challenges in developing hydrogen-powered airliners or electric propulsion systems that would allow aircraft to be powered by greener forms of energy. The pressure comes amid internal debates in the Conservative and main opposition Labour party over their green policies before next year’s general election. The wrangling started after voters handed the Tories an unexpected by-election victory in London last week in protest against a plan by Sadiq Khan, the capital’s Labour mayor, to extend a charge on heavily polluting vehicles across the capital. The amendment to the energy bill, tabled by former Conservative transport secretary Chris Grayling, calls on the government to step in to create a “price stability mechanism” to incentivise fuel companies to produce more SAFs. This would mean the state agrees to a set price underwritten by the government for fuel, similar to schemes used to underwrite nuclear and offshore wind projects. Industry executives believe such a system is critical to building production of the fuels at scale and bring down the huge cost difference with conventional jet fuel. John Holland-Kaye, CE of London’s Heathrow airport, said a price stability mechanism would be “hugely important” in encouraging banks to provide the “cash flow” to new UK fuel producers. SAFs are made from materials ranging from used cooking oil and fats to household waste and non-food crops, and can reduce overall carbon emissions by up to 80 per cent compared with conventional jet fuel, according to industry calculations.<br/>
Infrastructure giant Ferrovial has set up an artificial intelligence hub and plans to widen the AI use by next year at its main toll road and airport businesses, such as London’s Heathrow, the head of the hub told Reuters. Ferrovial has been providing artificial intelligence services to its businesses and employees since April after two years of work on an AI solutions centre in Spain. “We have been very fast ... Highways and airports are using artificial intelligence solutions, but the volume of technology we are going to deploy by 2024 will be much higher,” Luis Carlos Pietro Fernandez said at the Ferrovial headquarters in Madrid. The builder of highways, airports, metro lines and the largest shareholder in Heathrow Airport has recently moved its holding company to the Netherlands as part of efforts to become listed in the United States, one of its key markets. Ferrovial is working with Microsoft AI products, but has its own, completely isolated version, and is building the framework for an AI service that will help its various businesses. The hub has created a tool for Heathrow, Britain’s largest airport, to predict how passenger traffic would change if a conflict or natural disaster occurred elsewhere and affected the normal flow of passengers, Fernandez said. It can also identify anomalies, such as cracks in airport runways, making inspection work easier. Ferrovial, which is also responsible for the expansion and future operation of New York’s JFK airport, is developing tools to help identify bottlenecks at airports and quickly alert airlines in the short term. Among other things, they would be able by next year to detect when airport counters are starting to fill up and more need to be opened. <br/>
Travelers entering Korea from any airport or seaport across the country will be able to declare taxable items and pay taxes via a mobile application starting next month. The Korea Customs Service announced, Thursday, that the mobile customs declaration service, which had previously been available only at the Gimpo International Airport and Terminal 2 of Incheon International Airport, will be expanded to all of the country's airports and seaports in August. Starting Aug. 1, all travelers entering Korea via Terminal 1 of Incheon International Airport, six local international airports (Gimhae, Jeju, Cheongju, Daegu, Muan and Yangyang) and seven seaports (Incheon, Busan, Gunsan, Pyeongtaek, Sokcho, Donghae and Jeju) will also be able to declare taxable goods and pay taxes via Korea Customs Service's mobile app. Once a traveler declares a taxable item, the app generates a QR code to be scanned at a goods declaration section of a port upon arrival. Then, an electronic notice of payment will be issued via mobile and travelers may pay taxes on the app. Before the update, travelers received the notice of payment on paper even after mobile customs declaration and paid taxes later.<br/>
Jet engine maker Safran raised profit and cashflow forecasts on Thursday after core income jumped in the first half, led by demand for spares and services as airlines boost flights to meet a recovery in travel demand. Recurring operating income rose 33% to E1.397b ($1.55b) and revenues rose 26% to 10.945b on a like-for-like basis in the first six months, the French aerospace supplier said. Safran generated almost E1.5b of free cashflow. The Paris-based group said it was now targeting full-year recurring operating income of E3.1b versus 3.0b previously. Deliveries of the current-generation LEAP engines, used on all Boeing 737 MAX jets and about half of Airbus’s A320neo fleet, rose 69% to 785 units.<br/>