general

U.S. airlines are reducing their capacity through the end of the year in a bid to cool an oversupplied domestic market that has led to lower fares and reduced profits despite strong summer travel demand. For passengers, that could mean higher fares are on the way. Over the last week, U.S. airlines had “one of the industry’s largest week-over-week capacity reductions,” shaving almost 1% off of their capacity planned for the fourth quarter, Deutsche Bank said in a note Sunday. Airlines now expect to grow flying about 4% year over year during the final three months of the year. “Despite the sizeable overall reduction, we expect to see further cuts in the weeks ahead as carriers are expected to continue to refine their schedules,” Deutsche Bank airline analyst Michael Linenberg wrote in the note. U.S. airline executives have noted strong demand but a domestic market that’s awash in flights, forcing them to dial back growth plans, which could drive up fares. The latest U.S. inflation report earlier this month showed airfare in June fell 5.1% from a year earlier and 5.7% from May. Reducing capacity could drive up fares for consumers and boost airlines’ bottom lines, if travel demand holds up. Getting fares in the market that are profitable to airlines but palatable to consumers is crucial for the industry as consumers have pulled back on spending in other areas.<br/>

A U.S. appeals court on Monday blocked the U.S. Transportation Department’s new rule requiring upfront disclosure of airline fees pending a full review of the regulation. The DOT issued final rules in April requiring airlines and ticket agents to disclose service fees alongside the airfare, saying it would help consumers avoid unneeded or unexpected fees. The 5th U.S. Circuit Court of Appeals granted the industry’s request to block the rules saying it “likely exceeds DOT’s authority and will irreparably harm airlines” pending a full review by the court.<br/>

The Competition Bureau says it is launching its market study of domestic airline service as concerns around prices and quality persist.<br/>Competition commissioner Matthew Boswell says "many Canadians are frustrated by the cost and quality" of air travel in Canada, and that he aims to put forward recommendations on how to improve it. The watchdog says the study will zero in on the state of competition among carriers, barriers to entry and growth in the market and obstacles for travellers looking to make informed choices. The bureau says Air Canada and WestJet command roughly 80% of the domestic market and that fares "may be relatively high." Meanwhile, the number of passenger complaints lodged with the country's transport regulator has reached new highs topping 72,000, resulting in wait times of up to two years.<br/>

Hours after Israel’s security cabinet authorised Prime Minister Binyamin Netanyahu and his defence minister to decide how to retaliate for a deadly attack in the Golan Heights, airlines such as Air France and Lufthansa on Monday cancelled or delayed flights to Beirut. Israel blamed Hezbollah for the attack. The Lebanese-based militant group has denied responsibility. Flights to and from Beirut airport were cancelled or delayed on Monday as tensions escalated between Israel and the armed political group Hezbollah after a strike in the Israeli-occupied Golan Heights killed 12 children and teenagers. Air France said on Monday that due to the security situation at the destination, it will suspend flights between Paris-Charles de Gaulle and Beirut for the days of July 29 and 30, 2024. "Air France is monitoring the situation in Lebanon in real time," the airline said. The airline said evaluation was ongoing regarding flights scheduled for Tuesday.<br/>

North Korea's recent campaign of launching trash-carrying balloons toward South Korea has disrupted operations of Incheon International Airport, the South's main gateway, on 12 occasions, a lawmaker said Tuesday, citing government data. According to data from the Seoul Regional Aviation Administration submitted to Rep. Yang Bu-nam of the main opposition Democratic Party, runways at the airport have been shut down for a total of 265 minutes across 12 occasions due to the balloons sent from North Korea. The first disruption incident occurred from 10:48 p.m. to 11:42 p.m. on June 1, four days after North Korea first began launching the balloons. The most severe disruption occurred on June 26, when runways were shut down on eight occasions, resulting in 166 minutes of halted takeoffs and landings. "North Korea's trash balloons not only have landed within the premises of the presidential office but also have had a broad impact on the operations of Incheon International Airport and flights there," Yang said. He added that the government must work to suspend the vicious cycle connected to both anti-North Korean leaflet balloons from the South and trash balloons from the North.<br/>

Airbus SE has clamped down on internal travel and events as part of a cost-cutting drive at the European planemaker, according to people familiar with the matter. While customer-facing employees are still required to be on the road, other functions are being asked to justify any additional spending, said the people, asking not to be identified discussing internal policies. A spokesman for Airbus declined to comment. Airbus has initiated a savings project called Project Lead in response to persistent supply-chain constraints that are weighing on its delivery and production goals. Christian Scherer, who oversees Airbus’s commercial airline business, said at the Farnborough Airshow last week that the program aims to reconcile spending with a production ramp-up plan that “was going to be a little bit higher than what it turns out to be.” Scherer initially sent out a company-wide directive laying out the cost-saving effort a few weeks ago, and individual departments have since followed up with their own specific requests to trim costs, some of the people said. <br/>

Airbus demonstrated demand for its A330neo during the Farnborough air show, as the backlog for the twinjet shows signs of an uptick after five years of trending downwards. Orders for the re-engined aircraft reached 337 at the end of 2019, as strong activity and a delivery ramp-up followed the initial handover to Portugal’s TAP the year before. But the backlog – which stood at 293 five years ago – declined to 175 by the close of 2023, as the Covid-19 pandemic caused havoc in the long-haul market. Over the three years from 2020-22 the airframer’s orders for 42 A330neos were wiped out by 91 cancellations. These cancellations included more than 60 from AirAsia – a carrier which had strongly backed development of the aircraft. Production rates for the A330 line dropped to just two aircraft per month as the pandemic set in, halting the A330neo’s ramp-up momentum. Airbus also recorded 28 A330neo cancellations from Iran Air last year, as an order which was placed in 2016 – but subsequently overtaken by political events – was removed from its books.<br/>

Embraer plans to almost double revenues from sales of its regional and business jets over the next decade but is keeping its options open on whether to launch a larger aircraft that would challenge Airbus and Boeing. Francisco Gomes Neto, CE, said the Brazilian aerospace and defence company was “very focused on selling the products we have”. “We have a very modern and competitive portfolio of products. We have the potential to be a $10bn company by the end of this decade and with our existing products,” he told the Financial Times at the Farnborough air show. Embraer, which generated $5.3bn in sales in 2023, has been ramping up production of its commercial jets since the Covid-19 pandemic hit global travel. It ended the second quarter with a $21.1bn order backlog, its highest in seven years. Shares in the group have soared more than 80% since the start of the year. The world’s third-largest civil aircraft manufacturer is the leading producer of regional jets, which are smaller than the narrow-body planes built by aerospace giants Boeing and Airbus. Its latest and largest model, the E195-E2, can carry up to 146 passengers. Embraer has in the past regularly played down any interest in breaking the duopoly by entering the competitive market for single-aisle aircraft. Industry attention over the possibility has intensified, however, amid turmoil at Boeing after the mid-air blowout of a section of one of its 737 Max aircraft in January and as Airbus struggles to boost output because of supply constraints. Gomes Neto said that “while we feel good talking about Embraer as a potential to break the duopoly . . . we don’t have any concrete plans now to launch a bigger aircraft”. However, he added, “we are always making studies in the different segments . . . in business jets, commercial and defence as well . . . We have people working on all those markets to see the opportunities we have.”<br/>

Hyundai Motor and Kia, Korea's leading automotive companies, on Monday held a joint demonstration for their integrated air taxi service technology in Indonesia, the companies said. The automakers said they held a public event to demonstrate their combined integrated advanced air mobility (AAM) technology at Samarinda Airport near Indonesia's new capital of Nusantara. The event was organized to showcase Hyundai and Kia's envisioned demand-responsive transport service, named Shucle, and related AAM services to fit the actual user environment. It was attended by officials from the Indonesian transport ministry, the Nusantara Capital City Authority and representatives from the Korean automakers. Attendees were given the chance to experience the Shucle service firsthand. The flight demonstration was made using the Korea Aerospace Research Institute's air vehicle Oppav. Powered by Hyundai Motor Group's powertrain technology, Oppav flew approximately 2 kilometers along a predestined route. With its vast land area covering over 18,000 islands, Indonesia is known as a country with high growth potential for the air taxi business due to the difficulty of developing road transportation.<br/>