International market: Air France-KLM plans to bid for shares of TAP Portugal; Southwest sells tickets through OTA for the first time
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Civil Aviation Resources Network, March 2, 2025: What are the latest developments in the international aviation market this week (2.22-2.28)? Civil Aviation Resources Network takes you through the relevant news of the past week, so that you can have a clear view of the important information.
[Market Dynamics]
1. IATA: Passenger aviation demand "accelerated" growth in January
According to the latest report from the International Air Transport Association (IATA), global aviation demand (measured in revenue passenger kilometers (RPK)) increased by 10% year-on-year in January, while capacity (measured in available seat kilometers (ASK)) increased by 7.1%. Passenger load factor in January increased by 2.2 percentage points year-on-year to 82.1%, setting a record high for the month.
International demand in January continued to grow faster than domestic demand, with the former increasing by 12.4% year-on-year, while domestic demand increased by 6.1%. International capacity increased by 8.7% year-on-year, while domestic capacity increased by 4.5%. The load factors for both international and domestic demand hit record highs in January, with the load factor for international demand increasing by 2.7 percentage points year-on-year to 82.6%, while the load factor for domestic demand increased by 1.2 percentage points to 81.2%.
Figure: Global air passenger volume and capacity growth in various regions in January 2025. Source: IATA
2. Report: Less than 10% of airlines invest in startups
According to a report from the Lufthansa Innovation Center (LIH), airlines focus mainly on startups related to sustainability and artificial intelligence in terms of venture capital, but generally speaking, they are more conservative in spending in this area. The report found that only 7% of 340 "commercially related" airlines that are members of the International Air Transport Association (IATA) have invested in startups.
These airlines (including United Airlines, JetBlue Airways and KLM Royal Dutch Airlines) first focus on startups engaged in the field of sustainability, followed by AI. The report pointed out that more than half (55%) of the startup investments made by airlines in 2024 are related to sustainable innovation in the aviation industry.
3. Airline IT spending reached $37 billion in 2024
According to estimates, airline IT spending reached $37 billion in 2024, up from $35 billion in 2023. SITA released the "2024 Air Transport Industry IT Insight Report", which shows that as airlines' revenues hit record highs and passenger volume continues to grow, airlines' IT investment is at its highest level since 2019.
After IT spending fell from 4.1% of revenue in 2022 to 3.6% in 2023, the indicator rose to 3.8% in 2024. The report also shows that 72% of IT executives at the world's top 379 passenger airlines believe that technology spending will grow further in 2025. Respondents said the main areas in which they plan to invest IT resources are cybersecurity, data analysis and sharing, and passenger management.
[Policy Management]
4. Australia approved Qatar Airways' equity transaction with Virgin Australia to promote competition in the aviation market
On February 27, Australia approved Qatar Airways' purchase of a 25% stake in Virgin Australia from US private equity firm Bain Capital, posing a challenge to Qantas, which has long dominated Australian routes. Australian Treasurer Jim Chalmers said the deal is expected to strengthen competition in the aviation industry and that the deal was extensively discussed between the government and industry, unions and other stakeholders.
Qatar Airways offered to buy a minority stake in Virgin Australia for an undisclosed amount in October last year after the Australian federal government rejected its request for extra flights on Sydney, Melbourne, Brisbane and Perth routes in 2023.
5. The EU lifts interim measures in its antitrust investigation of Lufthansa
The European Commission said on February 27 that it had lifted the previously announced interim measures in its antitrust investigation of Lufthansa. It said last month that it would order Lufthansa to restore the connection of charter airline Condor to Lufthansa's short-haul network in order to provide passenger traffic for Condor's Frankfurt-New York route.
The order is related to an investigation into a joint venture between Lufthansa, United Airlines and Air Canada, which the European Commission believes could restrict competition on flights between Frankfurt and New York.
【Airline Airport】
6. American Airlines supports the Heathrow Airport reform movement
American Airlines is fully supporting a new movement to reform the way London Heathrow Airport is regulated. On February 24, American Airlines announced that it had joined an industry organization called "Reinventing Heathrow", becoming the organization's first non-British contracting airline.
The movement was launched on February 10 and brings together multiple organizations. Other members include British Airways parent company IAG, Virgin Atlantic, the International Air Transport Association (IATA) and the Arora Group. Its goal is to "make urgent and fundamental reforms to Heathrow's regulatory model." In early February, the organization submitted its "reasons for change" to the UK Civil Aviation Authority (CAA), promoting a review of the airport's operations before further investment and expansion.
7. Lufthansa Group and Air India expand code-sharing agreement
Lufthansa Group and Air India announced the expansion of their code-sharing agreement, adding 60 new routes. Under the latest agreement, Air India has started a new codeshare agreement with Austrian Airlines, and its existing agreement with Lufthansa and Swiss has been expanded from 55 routes to nearly 100 routes.
The newly added codeshare routes will cover 12 Indian airports and 26 European cities. Flights between India and Germany or Switzerland currently operated by Air India and Lufthansa Group airlines will also be included in the expanded codeshare agreement.
8. Air France-KLM and Scandinavian Airlines expand codeshare agreement
Air France, KLM and Scandinavian Airlines have expanded their existing codeshare agreement to add new destinations in Brazil and South Africa.
As part of this expansion, Scandinavian Airlines customers can now reach Fortaleza and Salvador in Brazil, Johannesburg and Cape Town in South Africa. This expansion builds on the agreement reached by the three airlines in 2024, which covers their respective European networks and routes to and from Tokyo, Japan.
9. Qantas announces investment in cabin upgrades as profit grows in first half of first half Qantas announces "significant" cabin upgrades for its Boeing 737 fleet, after reporting an 11% year-on-year profit increase in the first half of fiscal year. Qantas announced on February 27 that it had made a pre-tax basic profit of A$1.39 billion in the six months to December 31, 2024, thanks to "strong" demand for both its full-service and budget airline businesses. Qantas' international business saw load factors in first class, business class and premium economy classes increase by 2.5 percentage points. However, average international fares fell by 6.6% as capacity grew by 10%. Qantas announced it will upgrade business and economy class on 42 Boeing 737 aircraft, promising a modern "like-new" cabin with new seats, carpets and mood lighting, as well as "fast and free wifi" and more luggage storage space. 10. Air France-KLM CEO says it is ready to bid for TAP Air Portugal
Air France-KLM CEO Ben Smith said on February 28 that he is ready to submit a project proposal for the privatization of TAP Air Portugal and intends to invest in the local economy and connect Portugal's secondary cities.
Air France-KLM Group, Lufthansa and British Airways parent IAG have all expressed interest in the privatization of TAP Air Portugal, and the Portuguese government hopes to complete this work this year.
11. British Airways parent IAG's profit exceeded expectations and plans to implement a stock buyback
Thanks to cost control and the lucrative transatlantic routes that began to take off, British Airways parent IAG announced on February 28 that its annual operating profit increased by 27%, exceeding market expectations. IAG also said it plans to implement a 1 billion euro ($1 billion) stock buyback.
Overall, European airlines have been plagued by rising costs and delayed aircraft deliveries over the past year. However, IAG said it is confident of achieving profits and returns because travel demand remains strong. IAG's adjusted operating profit was 4.44 billion euros, beating analysts' expectations of 4.08 billion euros.
12. Heathrow Airport says slowing growth shows the need for new runways
Heathrow Airport in the UK predicts slower passenger growth in 2025, highlighting the need for new runways. A few weeks ago, the British government expressed support for the airport's expansion with the intention of promoting trade and economic growth. Heathrow CEO Thomas Woldbye said Heathrow also needs government support in faster planning approvals, airspace modernization and funding structures.
Last year, 83.9 million passengers passed through Heathrow Airport, 3 million more than the pre-epidemic record set in 2019. Heathrow expects passenger numbers to grow more slowly to 84.2 million this year. The airport's two runways are full, and the only way to increase passenger numbers is for airlines to use larger aircraft. In contrast, Paris and Amsterdam airports have four and six runways, respectively.
13. London Gatwick Airport expansion gets support, but final decision postponed to October
London Gatwick Airport's plan to convert its north runway (currently used only for aircraft taxiing) into a fully operational runway has received initial support from the government, but the deadline for a final decision has been postponed to October 27. Transport Secretary Heidi Alexander said in a written ministerial statement: "I will issue a decision that is inclined to approve, providing some additional time to seek opinions from all parties on the relevant terms before making a final decision." She added: "The decision to set a new deadline does not affect the decision on whether to grant development permission for the above application." Gatwick Airport must provide detailed information on noise mitigation measures and improved airport travel conditions through public transportation by April 24.
[Product Service]
14. EasyJet launches new promotion for British Airways loyalty program members
EasyJet has launched a new promotion for members of British Airways' Executive Club loyalty program. British Airways Gold, Silver and Bronze cardholders can get a one-year membership in the EasyJet Plus program at half price. A year's membership in easyJet Plus normally costs £249, but now BA Executive Club members can get it for just £122.
It comes after BA angered its Executive Club members by announcing in December that passengers would earn status points based on annual spending rather than miles flown. The customer backlash forced BA to withdraw some of its planned changes earlier this month. EasyJet Plus members enjoy benefits such as "fast" boarding, larger cabin bags, exclusive baggage check-in, seat selection and priority security lanes at certain airports.
15. Qatar Airways accelerates the implementation of Starlink wifi service
Qatar Airways has accelerated the process of launching Starlink wifi internet service on its Boeing 777 aircraft. It began introducing Starlink on its Boeing 777 aircraft in October 2024, and now has installed the high-speed internet system on 30 aircraft, more than 50% of its entire Boeing 777 fleet.
This progress is about 70% ahead of Qatar Airways' original planned schedule. Qatar Airways was able to achieve this progress because it reduced the installation time from 2-3 days to less than 10 hours per aircraft. This also means that by the end of the second quarter of this year, all of Qatar Airways' 57 Boeing 777 aircraft will be equipped with Starlink wifi service.
16. WestJet Airlines will reform its loyalty program
On February 27, Canada's WestJet Airlines announced that its WestJet Rewards loyalty program will introduce a number of adjustments starting April 30. WestJet points will replace WestJet dollars, and 1 WestJet dollar will be converted into 100 WestJet points. WestJet said points will not expire and member accounts will start showing point balances from April 30.
Members can earn points and "highest level eligible consumer credits" not only on basic fares, but also on ancillary products such as seat selection, checked baggage and upgrades. Government taxes and fees will be excluded. According to WestJet, members can fully redeem all fares including surcharges and taxes with points.
【Aircraft Manufacturing and Fleet】
17. ANA orders 77 aircraft from Boeing, Airbus and Embraer
Japan's ANA Holdings said on February 25 that it plans to order up to 77 aircraft to supplement its fleet and meet growing travel demand. In terms of the number of aircraft, the order is ANA's largest ever, worth more than 2.1 trillion yen (US$14 billion) at list prices, without considering any discounts.
The deal includes 68 firm orders and nine options, potentially bringing the total purchase to 30 Boeing, 27 Airbus and 20 Embraer aircraft. Firm orders include 18 Boeing 787 wide-body aircraft powered by GE engines and 15 Embraer E190-E2 regional jets. It also involves 27 Airbus A321neo series narrow-body aircraft and 8 Boeing 737 MAX. Aircraft deliveries are expected between 2028 and 2033.
【Distribution Technology】
18. Sabre adds Lufthansa NDC content in Lufthansa Group's home market
Lufthansa Group already offers its NDC-based content to Sabre-connected agents in its home markets of Germany, Austria, Switzerland and Belgium. Lufthansa began rolling out its NDC content on the Sabre platform in other regions last year - its home market was the last region to enable NDC fares and service features.
This latest move allows Sabre-connected agencies and travel management companies (TMCs) in more than 100 countries to access Lufthansa Group's NDC content. NDC fares from Lufthansa's leisure airline Discover Airlines are also available on the Sabre platform along with content from other Lufthansa airlines.
19. Southwest Airlines will sell tickets through OTAs for the first time
Expedia announced on February 26 that it will begin offering Southwest Airlines ticket bookings on its platform, marking the first time customers will be able to book Southwest Airlines tickets through online travel agencies (OTAs). All Southwest Airlines routes covering the United States, Mexico and the Caribbean can be booked on Expedia and its brands (Travelocity, Hotwire, Orbitz and CheapTickets).
This move marks another major change for Southwest Airlines, which has long resisted OTAs and encouraged customers to book directly as a way to increase customer loyalty.
[Others]
20. US Secretary of Transportation wants to increase recruitment of air traffic controllers and raise starting salaries by 30%
After a series of recent safety incidents once again raised questions about the continued shortage of air traffic controllers, US Secretary of Transportation Sean Duffy said on February 27 that the Trump administration will take measures to increase the recruitment of air traffic controllers. The Federal Aviation Administration (FAA) will open the recruitment window for air traffic controllers until March 17, and will increase the starting salary of trainees going to the FAA training academy by 30%, and shorten the process by more than four months to speed up the recruitment time.
The continued shortage of air traffic controllers has caused flight delays. In many facilities, air traffic controllers are forced to work overtime and six days a week to cover shifts. The FAA is currently short of about 3,500 fully qualified air traffic controllers, and the number of air traffic controllers has decreased by about 10% compared with 2012.