International market: More than 5,000 flights will be replaced by railways; the EU tightens airline merger regulations
What are the latest developments in the international aviation market this week (10.14-10.20)? The Civil Aviation Resource Network takes you through the relevant news of the past week, allowing you to have a clear overview of important information.
Market dynamics
1. U.S. Department of Transportation: Flight cancellation rate continues to rise in July
According to the latest report from the U.S. Department of Transportation, in July 2023, the number of flights operated by U.S. airlines increased compared with the same period last year and June 2023, but the flight cancellation rate also increased.
In July, U.S. airlines reporting data flew more than 623,000 flights, an increase of 2.5% from July 2022 and an increase of 3.7% from June 2023. However, airlines have also canceled 2.5% of scheduled flights, up from 1.8% a year ago and 2.1% in June 2023. Additionally, airlines handled 45.6 million bags in July and reported a baggage handling error rate of 0.75%, up from 0.70% in June 2023 and 0.64% in July 2022.
2. More than 5,000 European flights will be replaced by rail travel by 2030
According to the latest forecasts from the Dutch Institute for Transport Policy Analysis (KiM), more than 5,000 European flights will be replaced by rail travel by 2030. A report released by the agency this week estimated that around 850,000 air passenger journeys (equivalent to 5,600 flights) between Amsterdam and 13 European cities could be replaced by trains by 2030.
By 2040, this number is expected to increase on routes from Amsterdam to London, Bristol, Birmingham, Paris, Basel, Brussels, Berlin, Hannover, Hamburg, Dusseldorf, Frankfurt, Munich and Copenhagen of approximately 1.6 million passenger journeys.
policy management
3. The EU will tighten rules on airline mergers
Didier Reynders, the new EU Antitrust Commissioner, said that EU regulators will require airlines seeking to merge to provide stricter concessions to ensure fair competition.
Airlines often voluntarily give up valuable airport slots to competitors to clear the way for deals. But there is evidence these concessions did not always work on previous deals, with some slots not being used or not being used on originally planned routes. Brussels will now require airlines to ensure slots are allocated to rivals on routes where competition issues exist. In some cases, airlines may also be required to sell assets unrelated to their core passenger operations to obtain a license.
4. UK regulator supports lowering Heathrow passenger fees
London Heathrow Airport and three airlines have tried, but failed, to significantly adjust how much the British hub will be able to charge passengers in the coming years.
The Competition and Markets Authority (CMA) has largely backed the view of the Civil Aviation Authority (CAA), which told Heathrow that it must reduce average passenger charges from the current £31.57 per passenger to 2024. £25.43 and remain “roughly” at this level until the end of 2026.
Heathrow has appealed to the CMA, hoping to be allowed to further increase these fees to £40 per passenger, while British Airways, Delta Air Lines and Virgin Atlantic want the fees to be reduced to less than £20 per passenger.
5. Australia’s antitrust agency will supervise the domestic air travel industry
Australia will ask its competition regulator to monitor domestic passenger flights in a bid to increase competition in an industry dominated by Qantas. Qantas is currently under scrutiny for suspected anti-competitive behavior.
According to a joint statement issued by Australian Finance Minister Jim Chalmers and Transport Minister Catherine King on October 18, the Australian Competition and Consumer Commission (ACCC) will monitor the prices, costs and profits of Australia's domestic air passenger transport sector.
aviation airport
6. American Airlines’ operating profit margin in the third quarter was only 5.4%, saying it will welcome many benefits in 2024
American wants investors to see the big picture, not the details, when it comes to earnings. In the third quarter, despite hitting an all-time high of $13.5 billion in revenue and an operating profit of $728 million (after special items), American's operating profit margin after special items was only 5.4%, lagging behind its peers. Excluding special items related to one-time payments to pilots under the new contract approved in August, American's operating loss would have been $223 million.
That's in stark contrast to the stellar quarterly results posted by Delta Air Lines and United Airlines, which posted double-digit margins. However, American Airlines said that the company will see many benefits in 2024, including huge growth opportunities in premium products and loyalty revenue, and the resumption of flights to many small and medium-sized markets with higher profitability (Delta Airlines and United Airlines are in These markets have undergone contraction), international expansion, the return of business travelers, etc.
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7. United Airlines: Domestic demand is “strong”, revealing the risk of continued war
On October 17, United Airlines announced that “domestic demand is strong and stable” and profits in key international markets have hit “record highs.” But it also detailed the potential impact on the business of the continued Israel-Hamas war.
United's total revenue increased 12.5% in the third quarter, and domestic revenue increased 8.7%. United said: "Domestic revenue in the quarter was the second-highest on record and the domestic system remains stable and profitable." United's international passenger revenue increased 23.6% year-over-year. United Airlines, which has suspended flights to Tel Aviv, said the continuation of Israel's war will lower its revenue and profit forecasts.
8. British Airways will restart flights to Abu Dhabi
After a four-year hiatus, British Airways announced on October 19 that it will restart daily flights between London Heathrow Airport and Abu Dhabi in April next year. Flight services will begin on April 20 and will be operated by Boeing 787-9 aircraft throughout the year.
Summer flights will depart Heathrow at 22:25 and arrive in Abu Dhabi at 8:30 the next morning, while flights from Abu Dhabi will depart at 10:10 and arrive in London at 15:20. Winter flight arrivals and departures from Abu Dhabi will be delayed by one hour.
9. Air France will end most flights to Orly Airport
Air France announced on October 18 that it plans to remove most of its current flights at Paris Orly Airport by the summer of 2026 as video conferencing rises, domestic business travel declines and more travelers turn to trains. Transfer to Paris Charles de Gaulle Airport. Exceptions are made for flights between Orly and Corsica.
Starting in the summer of 2026, Transavia, the low-cost airline of the Air France-KLM Group, will offer flights to Toulouse, Marseille and Nice from Orly Airport. According to Air France data, passenger traffic on domestic routes at Paris Orly Airport fell by 40% from 2019 to 2023, while passenger traffic on same-day round-trip flights fell by 60%.
10. Istanbul Airport expects more competition from low-cost airlines
Istanbul Airport (IGA) is one of the success stories of air travel in its recovery from the pandemic. The airport handled 64.3 million passengers last year, making it Europe's busiest airport and the seventh busiest airport in the world, according to Airports Council International.
But IGA executives acknowledged that if it wants to continue this growth momentum, IGA cannot rely solely on hub airline Turkish Airlines. IGA expects to handle 77 million passengers this year and aims to reach 100 million passengers by 2027, its acting chief executive Selahattin Bilgen said this week.
product service
11. American Airlines will adjust its small and medium-sized enterprise loyalty program
American Airlines announced on October 16 the launch of a new corporate loyalty program for small and medium-sized businesses. The program, called AAdvantage Business, allows eligible businesses and their travelers to earn bonus miles and loyalty points by booking business travel through American Airlines’ direct channels, such as its website or mobile app. Under the new program, qualifying businesses must have at least five employees, and there is no minimum spend required for businesses to start earning miles.
As a result of the new service, American Airlines will retire its predecessor Business Extra program. According to American Airlines, Business Extra members have been notified of the change and they will no longer receive Business Extra points after signing up for AAdvantage Business. According to American Airlines’ regulations, their current points can continue to be used until January 31, 2024.
12. Delta Airlines adjusts some loyalty thresholds and adds benefits
Facing a flood of criticism over changes to its SkyMiles loyalty program announced in September, Delta Air Lines said on Oct. 18 it would roll back some of the changes and offer new "select benefits."
Delta Air Lines has reduced the Medallion Qualifying Dollar Dollar (MQD) limit required in 2024 to qualify for various Medallion memberships in 2025. Silver membership requires 5,000 MQD compared to the 6,000 MQD announced in September. Obtaining Gold membership requires 10,000 MQD instead of the previously announced 12,000 MQD. Platinum membership requires 15,000 MQD instead of the previously announced 18,000 MQD, and diamond membership requires 28,000 MQD instead of the previously announced 35,000 MQD.
13. Southwest Airlines will lower the threshold for loyalty program membership
Southwest Airlines announced on October 16 that it will reduce the number of flights or points required to qualify for priority in its Rapid Rewards loyalty program in 2024. Starting January 1, 2024, Southwest Airlines will require loyalty program members to take 20 one-way flights, instead of the current 25.
They can also achieve this qualification by accumulating 35,000 level qualification points. Additionally, travelers can earn A-List Preferred status next year by taking 40 one-way flights (up from 50 currently) or accumulating 70,000 tier-qualifying points. Loyalty program members in 2024 will also earn 1,500 tier-qualifying points for every $5,000 spent on applicable Chase credit cards, up from the current $10,000.
14. United Airlines will launch a new boarding sequence to save time
United Airlines will change its boarding order next week so that economy class passengers who choose window seats board before those who choose middle and aisle seats. United said the change could save two minutes during the boarding process.
The new check-in procedures will be implemented on October 26. United said boarding times have increased by two minutes since 2019. The new check-in process will be implemented on all domestic flights and some international flights.
15. Emirates launches new initiatives to support neurodiverse passengers
Emirates and Dubai International Airport are working with local schools, autism groups and key stakeholders to launch a new initiative aimed at improving the travel experience for neurodiverse travelers.
The initiative, called Travel Rehearsal, is designed to give neurodiverse travelers practice traveling in airports and on planes, where they are given boarding passes and screened to recreate the full travel experience. Participants will be accompanied by family members and therapists throughout the process, with activities designed to help families feel more empowered during their travels while providing important lessons for Emirates and the airport.
Aircraft manufacturing and fleet
16. American Airlines ordered 4 E175 aircraft for its subsidiary Envoy Airlines
Embraer said on October 19 that American Airlines had placed a firm order for four E175 aircraft for its subsidiary Envoy Airlines. This is American Airlines’ second order for this regional aircraft this year.
American Airlines previously announced an order for seven E175 aircraft in June, highlighting that the U.S. regional aviation market is recovering from the difficult years caused by the new coronavirus epidemic.
distribution technology
17. Saber will distribute Air France-KLM’s NDC content
Air France-KLM has extended its distribution agreement with Sabre. The two parties announced on October 19 that Saber will provide Air France-KLM’s EDIFACT and New Distribution Capability (NDC) content. NDC offerings will include continuous pricing and customized packages and will be rolled out to Saber-connected agents in phases over the next year.
other
18. Airlines express dissatisfaction with Dutch plan to phase out EU fossil fuel subsidies
Airline bosses have criticized a Dutch plan to phase out fossil fuel subsidies across the EU, saying such a move would be impractical until affordable greener travel alternatives become available.
European airline executives including Ryanair CEO Michael O'Leary and Lufthansa CEO Carsten Spohr say train fares remain too high to replace air travel, and policymakers are trying to shore up the industry by cutting subsidies. More sustainable plans will be counterproductive.
The Dutch government announced last month that it would spend up to 46.4 billion euros in 2023 to support the use of fossil fuels through direct subsidies or tax policies, which indirectly led to the use of more polluting energy. More than 3.6 billion euros of this amount is for airlines, as fuel used by the aviation industry is currently fully tax-free within the EU.
19. Airline executives call on the UK to enact new passenger compensation rules
Airline executives called on the UK on October 18 to enact new rules that would allow airlines to share liability for irregular flights with air traffic control agencies and airports to avoid the burden of compensating customers falling entirely on airlines.
Loganair chief executive Jonathan Hinkles told the UK Parliament's transport committee: Airlines must have recourse... We cannot be the insurer of last resort for everything that goes wrong in our industry. In August, an air traffic control failure in the UK caused the cancellation or delay of thousands of flights. The head of the British air traffic control agency NATS promised that this situation would not happen again. Airlines say that although it is not their fault, they are responsible for compensating customers.
20. Insurance companies cancel insurance on some airlines in Israel and Lebanon
Three industry sources with direct knowledge said that the aviation war insurance company has notified a number of Israeli and Lebanese airlines to cancel insurance due to regional conflicts, and some of these cancellations have already taken effect.
Europe-based, U.S.-based aviation war insurers and London-based Lloyd's of London can issue seven-day notices of cancellation or other changes to terms and conditions in the event of a major conflict that they believe results in excessive long-term insurance risk.