Major US airlines warned about a spike in jet fuel prices, adding to costs during the busy summer travel season. Jet fuel in Chicago, Houston, Los Angeles and New York averaged $3.18 a gallon on Tuesday after the Labor Day holiday weekend, up more than 30% compared with July 5, according to industry group Airlines for America. Fuel and labor are airlines’ biggest costs. A spike raises questions about how much of the increase carriers have been able to pass along to customers this summer after fares fell from last year. The higher cost forecasts come as Southwest narrowed its unit revenue outlook for the current quarter. The Dallas-based carrier said it expected unit revenue to fall 5% to 7% from last year in the three months ending Sept. 30. In July, Southwest said revenue could drop as little as 3% this quarter from last year. “While August 2023 close-in leisure bookings were on the lower-end of the Company’s expectations, modestly impacted by seasonal trends, overall leisure demand and yields continue to remain healthy,” the carrier said in a securities filing. Southwest said that it expects fuel to average $2.70 to $2.80 a gallon this quarter, up from its earlier estimate of up $2.55 to $2.65. It maintained its forecast for capacity to rise 12% from 2022. Other carriers warned increased costs could affect their results. Alaska Airlines said higher fuel prices will eat into its pretax margin this quarter.<br/>
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US Secretary of Transportation Pete Buttigieg said the department is making substantial progress on air travel disruptions and keeping Americans safe when they fly. However, there's one key thing that could derail progress — a government shutdown. "What would not help us in the progress we're making right now is a government shutdown," Buttigieg told Yahoo Finance at the Goldman Sachs Communacopia and Tech Conference on Wednesday (video above). "If we went through a shutdown, a lot of the progress that we have been making on building up air traffic control, staffing, and readiness in training would be stopped in its tracks. We'd lose the momentum that we've gained over recent weeks and months, and it would send us in the wrong direction." This week, lawmakers returned from their summer recess as the clock begins ticking to pass spending legislation before the government shuts down at midnight on Sept. 30. Stifel chief Washington policy strategist Brian Gardner recently told Yahoo Finance that a government shutdown now looks "pretty likely." "I think a shutdown is certainly above 50/50," Gardner said. "I'm probably in the 60% to 65% range at this point." Economists have been split on the economic impacts of a government shutdown this fall, though the airline industry could be particularly affected as it has faced chronic challenges stemming from the pandemic such as shortages of pilots, flight attendants, and air traffic controllers as well as aging infrastructure. Though there are reportedly more close calls occurring on runways, Buttigieg reiterated that air travel remains remarkably safe. Even small incidents get deep scrutiny, he said.<br/>
President Joe Biden's administration likely will delay until December a decision on whether to make it easier for sustainable aviation fuel made from corn-based ethanol to qualify for subsidies under the White House's signature climate law, two sources familiar with the discussions said on Wednesday. The administration has been divided over the issue, which has prompted a fierce lobbying push from US. Farm Belt stakeholders that see sustainable aviation fuel (SAF) as crucial for the ethanol market's growth. Environmental groups, on the other hand, say clearing land to grow crops for fuel is counterproductive to curbing global warming. The White House did not immediately respond to a request for comment. John Podesta, a senior White House adviser on clean energy, has been tasked with resolving the issue, Reuters reported in August. At the time, a White House official told Reuters that the administration's SAF policy seeks to include ethanol, but "we are trying to seek alignment with stakeholders on the question of modeling." At issue is a requirement in last year's Inflation Reduction Act (IRA) that SAF producers seeking tax credits must demonstrate with an approved scientific model that their fuel generates 50% less greenhouse gas emissions over its lifecycle than petroleum fuel.<br/>
The Mexican government said Wednesday it postponed an order to reduce flight frequency at Mexico City International Airport (AICM) until January. The order, which was originally due to take effect in November, will cut flights to 43 per hour from 52 and has raised concerns from the aviation sector. The reductions will not apply to international flights, the statement said. Some 1,000 flights a week will be slashed by the measure, national air transportation chamber Canaero said in a statement last week. The cuts follow previous flight caps at the airport last year launched by the government to reduce saturation in the Mexican capital’s airspace and boost activity in the newer, state-run Felipe Angeles International Airport (AIFA). The International Air Transport Association (IATA) said last week the government move does not take into account the interests of consumers, nor does it respect the necessary consultative process with operators and users.<br/>
Britain’s aviation regulator will launch an independent review into the failure of the air traffic control system over the August bank holiday that grounded hundreds of aircraft and left thousands of passengers stranded. The review by the Civil Aviation Authority comes after an interim report by the National Air Traffic Services found that a “logic error” occurred after a part of its system incorrectly processed a flight plan from an airline that was due to fly over UK airspace. As airlines stepped up calls for their costs to be covered, Nats said the failure was a “one in 15mn event”. The agency described it as “an extremely rare set of circumstances presented by a flight plan that included two identically named, but separate waypoint markers outside of UK airspace”. The outage on August 28 was the worst in more than a decade and led to the cancellation of over 1,500 flights on the day, with more on subsequent days as airlines tried to recover their schedules. Tim Alderslade, CE of industry body Airlines UK, said carriers were “seeking clarity on what options exist for Nats to cover our costs under the current legislation”. Michael O’Leary, CE of Ryanair, criticised the interim report as a “whitewash” and claimed that it downplayed the impact of the outage on the industry. He said the disruption had left the low-cost airline with a bill of between GBP15m and GBP20m in passenger refunds. Nats said it stood by its report, which detailed the sequence of events that started when the agency received information about a flight due to cross the UK’s airspace later that day. Airlines have to submit flight plans detailing their routes and timings to air traffic controllers in order to minimise the risk of mid-air collisions, including waypoints or markers along the route.<br/>
The technical failure that led to hundreds of flight cancellations and severe disruptions for thousands of people traveling in and out of Britain last week resulted from a “one in 15m chance,” the country’s air traffic control service said on Wednesday. “We have processed 15m flight plans with this system,” Martin Rolfe, the CE of Britain’s National Air Traffic Service, told the BBC’s “Today” program. And the service, he said, had “never seen this before.” On Wednesday, the service published a report based on an internal investigation of the event, detailing what Rolfe described as “an incredibly rare set of circumstances.” According to the report, the air traffic control system encountered two separate pieces of navigational data in one aircraft’s flight plan that had the same name. As a result, the system’s primary and backup computer systems both shut down to avoid passing incorrect information to the controllers. The service then reverted to manual air traffic control, meaning that fewer flights could be processed. “Keeping the sky safe is what guides every action we take, and that was our priority during last week’s incident,” Rolfe said. The problem was fixed several hours later, but 799 outbound and 786 inbound flights were canceled on Aug. 28, according to Cirium, an aviation analytics company. The disruption continued into Aug. 29, when more than 300 flights were canceled. Rolfe apologized again to the affected passengers, many of whom were stranded in airports or on tarmacs for hours or had to wait several days for alternative flights. He said that if the issue were to happen again, the National Air Traffic Service would be able to deal with it.<br/>
The bogus jet-engine parts supplied by a UK company under investigation for fraudulent documentation included turbine blades, a crucial component of an aircraft’s propulsion system. “Maintenance organizations have reported examples of turbine engine blades supplied by AOG Technics without valid airworthiness documentation,” the European Aviation Safety Agency said in a response to queries from Bloomberg News. “While this is a matter for concern, to date there have been no reports of problems resulting from the suspect unapproved parts.” The risk that turbine blades with falsified origins may have made their way onto the world’s most popular passenger-jet engines underscores the urgency with which regulators and industry players are scouring their records for parts supplied by London-based AOG Technics. Until now, regulators hadn’t identified any specific parts. Bloomberg News reported last week that European aviation regulators had determined that AOG Technics supplied parts of unknown origin for repairs of CFM56 jet engines. EASA said at the time that in every suspect case it had examined, the documentation had proved to be false. The proliferation of undocumented parts has sent shock waves through an industry where every component requires verification to ensure aircraft safety. Without such assurance, it’s impossible to know whether uncertified parts will be as durable under stress. The fact that turbine blades are among the fake parts that supplied suggests the potential for costly and even dangerous consequences. They play an integral role in the operation of jet engines, operating at high temperatures and under tremendous amounts of pressure. Over the years, engine-makers have developed alloys and coatings that are engineered to handle such conditions. <br/>
Just over 3.4m passengers travelled through Dublin Airport last month, representing a 12% increase on the same month last year. New figures published by Daa on Wednesday showed passenger numbers in the eight months to August totalled 22m, with almost half of those, or 10.1m, travelling during the busy summer months of June, July and August. About 12% more passengers have passed through Dublin Airport so far this year than during the first eight months of last year. Dublin Airport recorded its second busiest ever day in August with just shy of 119,000 passengers travelling through on Sunday, August 13th. London Heathrow and London Gatwick were the first and second most popular destinations for people travelling through Dublin this summer respectively. This was followed by Amsterdam Schipol, Malaga, Faro and London Stansted. Meanwhile, 308,000 passengers flew to and from Cork Airport during the month of August, representing a 14% increase on August 2022, making it the busiest August for passenger traffic since 2008. Tuesday, August 8th was the busiest day of August at Cork Airport and was also the busiest day of the year so far with almost 13,000 passengers flying that day.<br/>
Airlines in India plan to forgo costs for passengers who reschedule or cancel flights during the Group of 20 summit taking place this week. IndiGo, Air India Ltd. and Vistara are offering a waiver to people with travel planned to India’s capital, New Delhi, between Friday and Sunday as carriers expect disruptions to schedules. Ahead of the G20 summit, Delhi traffic police have restricted movement of vehicles, and airlines are adjusting their operations to free up capacity and airport space for the influx of business leaders and government officials attending the meeting hosted by Prime Minister Narendra Modi. Delhi airport, the country’s busiest, is running out of parking and landing slots as India’s rising middle class takes to the skies in the world’s most-populous nation. The insolvent Go Airlines India Ltd.’s grounded fleet is also eating into the space at airport. Zurich Airport International AG is building a second airport, capable of handling 70 million passengers annually, to expand the capacity in Delhi. Operated by GMR Group, Delhi airport said last week it received requests from airlines to cancel about 160 in combined arrivals and departures and made provisions for the required parking of aircraft. It has a parking capacity for 72 charter aircraft.<br/>
Incheon International Airport earned the Airports Council International's (ACI) highest level of customer experience accreditation for the second year in a row, its operator announced, Wednesday. Launched in 2019, the ACI's customer experience accreditation program is the industry's first and only customer experience certificate that assesses customer experience management and service innovations of the world's airports, aiming to improve overall airport experience. The announcement was made during the fifth ACI Customer Experience Global Summit in Incheon. Last year, the airport became the first in the world to acquire level 5 in the five-tier system for its customer service and systematic operations handling increased demand for air travel. "We are very pleased that we have partners like Incheon airport that … bring very good values for the community that they serve and … and is leading, especially in customer experience service," ACI Director-General Luis Felipe de Oliveira said during a press conference.<br/>
A 170.6b pesos ($3b) project to modernise the main international airport in the Philippines has attracted three potential bidders, including India’s GMR Group, the Philippine transportation secretary said on Wednesday. Ranked among the world’s worst international gateways, the aging Ninoy Aquino International Airport (NAIA) badly needs an upgrade to end chronic flight delays, address congestion, and improve facilities. The other two possible bidders were conglomerate San Miguel corporation and a Manila consortium, whose $4.9b unsolicited proposal for the project was rejected earlier, Secretary Jaime Bautista said. India’s GMR group has been operating an airport on the Philippine tourism island of Cebu. “We want somebody who has experience in operating an airport ... and, of course, with a very good financial background. Those are two major requirements,” Bautista said in an interview on the sideline of an Association of Southeast Asian Nations (ASEAN) summit in Indonesia. Bautista said the government would try to find overseas investors through two roadshows, in Singapore next week and in Paris in the third week of September, before opening bidding in the last week of December, and naming a winner in January. The winning bidder must then operate and maintain the airport, the capacity of which would be doubled afer the upgrade to about 60m passengers a year, Bautista said, adding the concession period being offered was 25 years. Apart from NAIA, the Philippines is seeking financing to upgrade four other airports, on Busuanga island, Zamboanga city, Sanga-Sanga island and General Santos city. It will also build a new airport in Brooke’s Point town on Palawan island. The secretary presented the five projects during a business matching event on Wednesday on the sidelines of an ASEAN business summit. No deals had yet been agreed at this early stage, he said. “This is more to give them information and we will need to do further communication with the audience,” he said.<br/>
General Electric Co.’s aerospace business could eventually see annual revenue soar above $40b thanks to strong demand for air travel and airlines snapping up new planes to modernize their fleets, its top executive said. Those tailwinds, in addition to rising sales at GE’s military aviation business, put the company on track for mid to high single-digit percentage rates of growth “for some time,” CE Officer Larry Culp said Tuesday. “We’re really on a record pace,” Culp said, elaborating on long-term growth targets for the division GE released in March. The view underscores air travel’s post-pandemic resurgence and how airlines are logging huge new-aircraft orders to freshen their fleets. It also highlights Culp’s expectations for continued momentum at GE Aerospace after it becomes a standalone company early next year following the planned spinoff of GE’s energy related businesses. Culp’s plan to turn the once-sprawling conglomerate into a pure-play aerospace manufacturer has renewed investor interest. GE has soared more than 70% in 2023 while the S&P 500 Index gained about 17% in the same period. GE has said booming demand for jet engines and maintenance services at GE Aerospace, which generates the majority of the broader company’s profits, should help it more than double earnings this year. The unit, which primarily manufacturers and services jet engines, last exceeded $30b in sales in 2019, just before the pandemic brought air travel to a near standstill. It’s since seen growth jump into high gear, with sales last year rising 23% to $26b.<br/>
Airbus delivered 52 planes in August to bring the total so far this year to 433 units, the European planemaker said on Wednesday. It also sold 117 planes to bring the total so far this year to 1,257, or 1,218 after cancellations. Its total backlog of unfilled orders topped 8,000 units for the first time at the end of August following a surge in air travel demand since the pandemic. New business booked in the month included a previously announced order for 75 jets from Wizz Air. Airbus is targeting 720 deliveries in 2023.<br/>
The global air cargo market has continued to see strengthening demand during July 2023, according to data released by the IATA. After a disappointing start to the year, IATA has found that air cargo demand has almost reached 2022 levels, sitting just 0.8% behind the level of demand in July 2022. DG Willie Walsh said that compared to the data for June, which showed demand was 3.4% below 2022 levels, the latest findings were a “significant improvement” and continued the strengthening trend that began in February. However, he also added that the industry would need to watch carefully to see how the trend could evolve over the rest of the year: “Many fundamental drivers of air cargo demand, such as trade volumes and export orders, remain weak or are deteriorating. And there are growing concerns over how China’s economy is developing. At the same time, we are seeing shorter delivery times, which is normally a sign of increasing economic activity. Amid these mixed signals, strengthening demand gives us good reason to be cautiously optimistic.”<br/>