Major airlines expect fuel costs to keep rising through the end of the year, putting a dent in profits for an industry that has seen earnings growth in 2023. United Airlines, Delta and American have all seen fuel costs rise since the beginning of the year along with commodity prices for oil. Strong demand has so far helped profits grow each quarter. But all three airlines are forecasting yet another increase in costs during the current quarter and warning that it could hurt their bottom lines. The higher fuel costs could potentially lead to pricier fares for travelers at a time when high inflation is still squeezing consumers. Airlines are also worried about travel demand slumping because of global conflicts, particularly the war in Gaza. The U.S. has issued a global advisory for citizens overseas because of rising tensions and the potential for violence. Fuel prices and the war’s impact on travel to Israel both factored into United Airlines disappointing financial update. The company expects profit of $1.50-$1.80 a share, depending on when travel resumes to Tel Aviv. That would mark a sharp drop in profit from a year ago after two quarters of solid gains.<br/>
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Mexico is looking to reduce an airport usage fee by 8%-12%, a top official told Reuters late on Wednesday, providing clarity into the government's plans following airport groups' complaints of "unilateral" changes being made to their operations. Mexico is aiming to reduce the airport-usage fee, also known as the TUA, but "it's still up for negotiation," Deputy Transportation Minister Rogelio Jimenez Pons said. Travelers pay the airport-usage fee as part of the cost of their plane ticket and operators pocket the funds. It adds about $22 to more than $60 to the price of an international flight and about $8 to $40 for a domestic ticket, depending on the airport. The reduction of the fees, some of the highest in Latin America, is meant to cut ticket costs for consumers and boost air travel in the country, Jimenez Pons said. Fees should be cut by the first quarter of next year, he added. Jimenez Pons clarified that the usage fee for government-controlled airports, which includes the country's busiest, the Mexico City International Airport, are also set to be lowered. The reduced tariffs are part of an overhaul on the five-year plans airport operators have with the government. ASUR, which operates nine airports in southeast Mexico, said earlier this week the draft for its next plan had to be scrapped after the tariff change announcement.<br/>
Europe's major airlines are set for another bumper quarterly earnings season after a summer of record post-pandemic travel, but turmoil in Israel, the spillover impact on oil prices and worries about a global recession may cloud the outlook. Strong earnings growth for the third quarter will be driven by a busy summer and strong demand projected for the rest of the year even as inflation remains high and fuel prices rise, analysts say. "The Atlantic has been very strong in particular .... Intra-European travel has been doing very well," said aviation analyst James Halstead, adding that limited planes meant ticket prices could stay high. "You've got a squeeze on capacity at the same time as strong underlying demand." Britain's easyJet said earlier this month it wanted to more than double profits and expand its fleet, even though fuel prices could mean higher ticket prices. But heightened geopolitical instability following attacks by Palestinian group Hamas in Israel on Oct. 7, which has led to flight cancellations, higher oil prices and worries over consumer sentiment in Europe, could weigh on airlines' outlooks. For the third quarter, Air France-KLM is expected to report operating income of E1.37b, up 33% from last year, according to a company-provided consensus. Revenue is tipped to rise 7% to 8.7b. IAG's operating results before exceptional items are seen at E1.55b, up 28% from a year ago, while Lufthansa is expected to report adjusted earnings before interest and tax of E1.4b, up 24%, while revenue is seen rising 8% to 10.84b, according to consensus figures provided by the companies. Air France and IAG report on Friday and Lufthansa on Nov. 2.<br/>
Heathrow airport has sharply cut its losses and raised its passenger forecasts following an “extraordinary” summer of travel. The UK’s biggest airport on Thursday said it expected 79.3mn passengers to travel through it this year, up from a previous forecast of between 70mn and 78mn. Heathrow raised its forecasts after it handled 29mn passengers this summer, as airports and airlines across Europe enjoyed soaring demand for travel. The airport reported particularly “robust” demand from long-haul markets including Asia-Pacific, where there has been a rapid recovery to 94 per cent of pre-pandemic passenger numbers following the reopening of many borders earlier in the year. The airport now expects total passenger numbers to return to 2019 levels next year. Many of the airlines that operate from Heathrow have reported bumper profits, but Heathrow has remained lossmaking for the year to date. The airport reported an adjusted pre-tax loss of GBP19mn for the first nine months of the year, down from a GBP442mn loss for the same period in 2022. This came despite an increase in operating profit to GBP1.1b, from GBP685m, as revenues rose from GBP2.1b to GBP2.7b. Heathrow pinned its overall losses on the higher cost of servicing its debt following rises in interest rates, and a cap imposed by the UK aviation regulator on the landing fees it can charge airlines. The UK’s competition regulator this month upheld a decision by the Civil Aviation Authority that Heathrow should cut its charges to airlines by almost a fifth from GBP31.57 per passenger to GBP25.43 from next year. “The charges we are allowed to levy are too low,” said Heathrow’s CFO Javier Echave. “The change in inflation and interest rates should have been factored in by the regulator, but unfortunately they have not got it right,” he said.<br/>
The UK’s air traffic controller has been given regulatory approval to raise the fees it charges airlines by more than a quarter, weeks after a systems failure left thousands of passengers stranded and triggered a row with carriers. The Civil Aviation Authority said on Thursday it would allow the National Air Traffic Services to lift charges to about GBP2.08 a passenger per flight between 2023 and 2027 at its regulated business, which provides air traffic control services for aircraft flying in UK airspace. Since the charge per passenger per flight is GBP1.65 at present, the new fee amounts to a rise of 26%. The watchdog’s decision angered airlines, which have spent weeks unsuccessfully calling for compensation from Nats for the disruption over the August bank holiday weekend. Tim Alderslade, CE of sector body AirlinesUK, said the increase “simply cannot be justified” and that airline passengers would “inevitably end up footing the bill” as the charges would be passed down through higher ticket prices. The CAA said its decision would allow Nats to recover the losses suffered during the pandemic and improve its services. “Our decision will provide the resources and investment required . . . to provide a resilient, high-quality service for passengers and modernise its services, while recovering costs from the pandemic,” said Andrew Walker, CAA chief economist. Mike Clancy, general secretary of Prospect union, which represents air traffic control workers, welcomed the regulator’s decision. “The CAA have been right to resist pressure from airlines to lower costs even further. This would have led to less investment, fewer air traffic controllers and a less resilient system with more delays for passengers,” he said. Nats, a public-private partnership, is owned by the government, pension funds and a group of airlines. It has apologised for the major disruption caused by its failure over the busy bank holiday, which caused the cancellation of more than 1,500 flights on August 28 and more on subsequent days as airlines tried to recover their schedules.<br/>
Airlines criticised a decision by Britain's aviation regulator on Thursday to increase the amount they can be charged for air traffic control services to help national provider NATS recoup costs incurred during the COVID-19 pandemic. NATS has been in the spotlight after an outage in late August which caused thousands of flight cancellations and delays across Britain and Europe and which airlines have said cost them millions of pounds. Airline executives last week called for new rules on passenger compensation in the event of such disruption. Trade group Airlines UK, which represents carriers like easyJet and Ryanair, said the higher charges "simply cannot be justified while it remains unclear what action will be taken to ensure airlines and their customers do not see a repeat of this disruption". The Civil Aviation Authority (CAA) on Thursday confirmed a provisional decision taken in July that NATS could set an average unit rate for regulated activities at 64 pounds ($78) in nominal terms from 2023 to 2027, up from 47 pounds. Trade group Airlines UK, which represents carriers like easyJet and Ryanair, said the higher charges "simply cannot be justified while it remains unclear what action will be taken to ensure airlines and their customers do not see a repeat of this disruption". The Civil Aviation Authority (CAA) on Thursday confirmed a provisional decision taken in July that NATS could set an average unit rate for regulated activities at 64 pounds ($78) in nominal terms from 2023 to 2027, up from 47 pounds.<br/>
Brazilian planemaker Embraer said Thursday its firm order backlog reached $17.8b at the end of Q3, including a newly announced order by SkyWest for 19 of its E175 jets. Its backlog grew by $500m from the previous quarter, Embraer said in a securities filing. Embraer delivered 43 aircraft in the third quarter, compared with 33 in the year-ago period, totaling 105 aircraft delivered year-to-date. Earlier on Thursday, the planemaker said that SkyWest had ordered 19 of its E175 jets for $1.1b, with deliveries expected to start in the final quarter of 2024. The new aircraft will be flown by United Airlines under a capacity purchase agreement, Embraer said.<br/>