Airlines across the Americas ponder when the demand bubble will burst
Behind the declarations of numerous airlines that demand remains quite strong, one glaring question remains - when will the thirst for travel born from the pandemic be quenched?
No definitive answer is emerging as airline executives try to determine the shape demand will take later in 2023 and beyond. Work-from-home trends continue to evolve, given that more businesses are mandating more time in the office for employees.
But consensus is building that some shifts in work patterns are permanent. Outside forces creating constraints in the airline industry - supply chain bottlenecks and infrastructure challenges - show no signs of improving in the near future.
The only certainty that currently exists is that the narrative could change as time passes, and as more clear-cut patterns materialise.
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Virgin Atlantic CEO: so much more efficient after pandemic
On 5-Jun-2023 Virgin Atlantic announced its first ever route to South America: a service from London Heathrow to São Paulo, planned for May-2024. It also announced a new route to Bengaluru for Mar-2024.
Speaking to CAPA TV at the IATA AGM in Istanbul the same day Virgin Atlantic CEO, Mr Shai Weiss, displayed a renewed confidence in his airline's post-pandemic recovery, with capacity almost back to 2019 levels.
In the week of 12-Jun-2023 the airline is offering 97% of the seat capacity it offered in the equivalent week of 2019; this is slightly ahead of the 94% average for all capacity touching Europe.
Perhaps more importantly for Mr Weiss, he said Virgin Atlantic "is so much more efficient than we were, on the back of consolidated operations at Heathrow and the nature of the transformation that we conducted during the pandemic".
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Slow recovery continues for Japanese outbound air travel
Although Japan's pandemic-era entry restrictions have been dismantled, the lingering reluctance of Japanese travellers to fly overseas remains a significant obstacle to airline demand recovery.
Japanese outbound leisure travel was one of the most important Asia-Pacific traffic flows before 2020. This makes it a major concern to many airlines based in Japan and elsewhere that demand out of Japan is still sluggish.
In many other countries international travel surged as soon as border restrictions were lifted.
Inbound tourism to Japan has followed this trend, but it has not occurred with outbound travel to anywhere near the same degree.
There is hope on the horizon, however, as some airline executives involved in this market are starting to see positive signs of improvement for upcoming peak travel periods.
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Lufthansa, CityLine and City Airlines - another alternative labour platform
On 7-Jun-2023 Germany's Civil Aviation Authority (Luftfahrt Bundesamt) confirmed that City Airlines had received an air operator's certificate (AOC). The airline, which was registered in Munich by Lufthansa Group in May-2022, will serve as a feeder at the group's hub in the Bavarian capital and also, potentially, at Frankfurt.
The name of Lufthansa Group's newest member, 'City Airlines', is very similar to that of the group's existing regional airline Lufthansa 'CityLine', which also provides feeder traffic to the hubs.
The main difference is that City Airlines will only operate Airbus narrowbodies - likely A319s - whereas CityLine also operates Bombardier and Embraer regional jets.
City Airlines will take on a role with some similarities to CityLine, so why is it needed?
The answer is to provide Lufthansa Group with another new platform to help it around restrictive terms in pilot agreements, thereby lowering labour costs and increasing labour flexibility - in particular, Lufthansa CityLine's operation of mainline narrowbodies could end in 2026, and the group needs to mitigate the impact of that possibility.
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Financial turnaround means Malaysia Airlines can invest in customer experience
Malaysia Airlines has made a strong financial and operational recovery from the COVID-19 crisis, allowing the airline to turn its focus to customer and fleet investments. The company appears poised to achieve its long-awaited return to net profitability this year.
While this is partly due to the booming demand environment that is lifting many airlines, Malaysia Airlines' restructuring efforts have undoubtedly made it more financially robust for the longer term.
Malaysia Airlines is due to begin receiving Boeing 737 MAX aircraft this year - despite delivery delays - and intends to start a selection campaign to cover the next stage of its narrowbody replacement.
On the widebody side, Malaysia Airlines is due to receive its first A330neos next year. In the shorter term, it is looking to boost its widebody fleet with more leased aircraft.
Taking in new aircraft will update both the fleet and cabin product. In the meantime, other improvements to aircraft cabins and services are under way or planned, as the airline enhances its customer experience proposition to compete better in the full service and premium sectors.
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New Central Polish Airport to open in 2028; gets master plan approval to 2060
Slowly but surely the Central Polish Airport is taking shape - or the 'Solidarity Hub' as it is also known, in a hark back to the 1980s trade union that played a major role in the downfall of socialism in Poland.
The government recently authorised a master plan, by which it would open in 2028 with a capacity of 40mppa, scalable to 65mppa. That is a large number by Poland's standards - there were only 49 million passengers in the entire country in 2019.
And there are other issues, such as military demands - the world has changed for the worse since the airport was originally conceived - and the impact on several other, existing airports, which have been befriended in their cause by Ryanair.
But even though a spade hasn't been turned yet, this airport will be watched closely to see if it can achieve its original aims of being a 'national' airport, accessible from just about anywhere in the country by rail.
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Paraguay again set to privatise Asunción Airport; what will the interest be this time?
The privatisation of airports caught on rapidly in Latin America two and a half decades ago - initially in Mexico and Argentina, latterly in Brazil - and is to be found in many countries now. One exception was Paraguay, the small state sandwiched between Bolivia, Argentina, Brazil and Uruguay.
Paraguay has a mindset of its own, and that has manifested in this industry in an avoidance of privatisation activity, but that was not always the case. A PPP (Public-Private Partnership) deal was to have been struck in 2015 for the Asunción Airport, which serves the capital, but it was suspended following several legal glitches of the kind that are commonplace in that part of the world.
Ultimately, the civil aviation authority decreed that a new terminal at the airport would be self-funded instead - but that was never going to happen. So in 2023 a partnership deal is back on the cards and both the newly elected president and the defeated challenger are in favour of it.
The question now is whether previously interested parties (there were quite a few) can be enticed back, and if the regional leader can be attracted this time as well. On the surface the airport does not seem to have that much going for it...but that surface is there to be scratched beneath.
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Venice Airport's owner plans EUR2 billion investments; high on the sustainability the city needs
Numerous airports around the world are constructed on land reclaimed from the sea and others are intended. Most of them have their structural issues, but in the case of Venice it is not so much the airport as the city that is sinking into the Adriatic Sea, while its population decreases and tourist numbers increase.
SAVE, which owns Marco Polo Airport in Venice, Italy, has announced a major upgrade of the airport facility.
The city suffers from severe environmental issues. The land is boggy, and the city is slowly sinking. Many buildings do not have proper foundations, and they are gradually subsiding into the waters of the lagoon. Venice's historic buildings are crisscrossed by hundreds of canals and the ground floors of many of Venice's buildings are now uninhabitable. There are regular flooding events, and tourist walking trails are likely to change on a daily basis.
The long term outlook for the city may not be promising, but that hasn't stopped the Marco Polo Airport's owner and operator, SAVE, from designing a master plan that would increase capacity to 21mppa, with a high emphasis on sustainability.