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March passenger demand growth falls to a nine-year low

passenger demand nine-year low
Photo: O'Hare International Airport.

A late Easter saw March deliver the slowest growth in global air passenger demand for any month in the past nine years.

The International Air Transport Association said that demand rose 3.1 percent compared to the same month a year ago but annualized growth had been relatively steady since October at 4.1 percent on a seasonally adjusted basis.

The load factor dipped by 0.9 percentage points to 81.7 percent as the April Easter holiday arrived a month later than 2018.

“While traffic growth slowed considerably in March, we do not see the month as a bellwether for the rest of 2019,’’ IATA director general Alexandre de Juniac said.

“Nevertheless, the economic backdrop has become somewhat less favorable, with the IMF having recently revised its GDP outlook downward for a fourth time in the past year.”

International demand rose just 2.5 percent globally, down from the 4.5 percent year-on-year growth in February and almost 5 percentage points below the five-year average pace.

READ air freight weakness persists as fuel costs bite.

The worldwide load factor fell 1.2 percentage points to 80.8 percent as capacity climbed 4 percent and outstripped the growth in demand.

Latin American carriers had the fastest growth at 5.5 percent, followed by Europe (4.7 percent) North America (3 percent), Africa (2.1 percent) and the Asia Pacific (2 percent).

The Middle East was the only region to see a drop in international demand, its second month of decline, which IATA attributed to broader structural changes in the area. Passenger demand fell 3 percent and the load factor declined 4 percentage points to 73.8 percent.

Global domestic demand grew by 4.1 percent, down from 6.2 percent in February, with China and India again the big drivers.

The load factor fell 0.3 percentage points because of a  4.5 percent rise in capacity.

Australia was the only country in the basket reported by IATA to record reduced demand. The fall of 3.2 percent was accompanied by a 2.1 percent reduction in capacity, limiting the impact on load factors to a drop of 0.9 points.

“Despite March’s slowdown, the outlook for air travel remains solid,’’ de Juniac said. “Global connectivity has never been better.

“Consumers can choose from more than 21,000 city pair combinations on more than 125,000 daily flights. And airfares continue to decline in real terms.”

 

 

 

Delta now allows elite status reclaim after ‘life-changing’ events

Delta frequent flyer status relcaim
Photo: Delta Air Lines.

There’s nothing worse than losing hard-fought frequent flyer status due to an unforeseeable life-changing event and Delta Air Lines now allows Medallion SkyMiles members to do something about it.

Delta’s Reclaim My Status program is aimed at members who have seen their status lost or reduced after has been interrupted by events such as becoming a parent, recovering from an illness or injury and caring for a family member.

Other potential reasons include changing jobs or careers or getting a degree.

READ: Dreamliners replace Qantas jumbos on Sydney-San Francisco

The airline says each situation will be evaluated on a one-on-one basis and members who have suffered a loss or change of status need to be ready to resume their traveling when they to file a claim.

It advises applicants to make sure they’re ready to travel before they submit their request and says it will typically be reviewed within five business days but warns it could take up to two weeks.

They will need to have documentation to verify that the event that led to the change occurred and if approved will be returned to their original status free of charge for three months.

To extend that status beyond the three months they will need to meet the minimum travel and spend threshold for their particular tier.

This varies according to the tier but starts with 6250 Medallion Qualification Miles (MQMs)  or eight Medallion Qualification Segments (MQSs) for silver to 31,250 MQMs or 35 MQs for Diamond.

When you enroll in the program also makes a difference.

Doing it on or before December 31, 2019, will see your status extended through January 31, 2021 — assuming you meet the threshold.

Do it after January 1, 2020, and those who meet the threshold will see their status extended to January 31, 2022.

“Getting back into travel after a big change can be stressful, and this is one more way we’re showing Medallion Members that we are here for them when they need it,” said Delta senior vice president Sandeep Dube.

“Loyalty is a two-way street and as a leading consumer brand, we are always looking for new ways to take care of our customers.”

 

New Korean hybrid will offer industry-leading economy legroom

Korean Air Premia seating
Air Premia's plans mean that the amout of legroom in its economy class will be world-leading. Photo: Recaro

Fresh off the back of signing a deal for three leased Boeing 787-9 Dreamliners, new Korean carrier Air Premia is revealing an onboard product that includes a roomy economy class and recliner-type premium economy.

The Seoul-based hybrid carrier, which is in the process of starting up to compete with hometown leviathans Korean Air and Asiana Airlines, secured an air operator’s certificate earlier this year.

“Air Premia combines low-seat-density strategy, 35-inch economy, and 42-inch premium economy, with high operational efficiency, single fleet and seat configuration, which allows the company to deliver the best-in-class comfortable seats and services at reasonable prices,” the airline says.

READ: Hawaiian looks to expand Japan network.

Indeed, a 35-inch standard seat pitch would be to my knowledge the most offered in standard economy class by any airline, although local competition Korean Air and regional rival Japan Airlines both offer relatively spacious seat pitch compared with many other carriers.

It’s going to be a superb seat too: “CL3710” may not exactly roll off the tongue but it’s one of the best fully-featured economy class seats, whose structure and kinematics maximize the amount of knee space available for passengers.

Air Premia’s selection is another impressive win for both German manufacturer Recaro and for the passenger experience. Given its very generous seat pitch, it seems to me that the airline’s CL3710 is up there with other carriers’ extra-legroom ‘economy plus’ style offerings.

Premium economy onboard Air Premia will see the Recaro PL5350, one of the better premium economy options on the market.

Korean Air Premia seating
The premium economy PL3530 is an impressively customizable product. Photo: Recaro

“With its ergonomic design and numerous configuration possibilities, Recaro’s PL3530 premium economy class seat also delivers ultimate comfort and functionality,” says the German seat maker, explaining that the “individually adjustable calf rest, foot bar, stowage and privacy features contribute to a better flight experience and passenger comfort.

A wide range of customizable options allows carriers to create their own premium product and find a perfect balance between comfort and economics.”

This ability for customization is increasingly popular among airlines, and particularly in premium economy where there’s not a lot of clear blue water between the premium economy aboard airline X versus that of airline Y.

The airline plans to start service next September, with long-haul routes including Los Angeles and San Jose (south of San Francisco near Silicon Valley) mooted from 2021.

Honolulu and Vancouver are included in what Air Premia calls “further target destinations” as the airline takes up more aircraft, with Munich and Cairns also previously mentioned as part of its plans for a total of 10 787-9 Dreamliners by 2024.

Given that the routes involved are just about under the twelve-hour block time mark for their current operators, it would seem relatively feasible for the airline to operate each route daily with one aircraft, suggesting a total of ten daily services for the fledgling carrier in its first half-decade.

The evolution of the ‘hybrid airline’ concept is fascinating, with the airline promising “low-cost air travel with upscale and full-service features through a widebody service”.

South Korea’s booming tech sector and substantial middle-class population segment, combined with an extensive diaspora and its popularity as a holiday destination, suggest that Air Premia may have a greater chance than most airlines at success.

“As a hybrid airline we promise our passengers a combination of comfort and quality at a reasonable price,” chief executive officer Jong Chul Kim explains.

It sounds like Air Premia may well be able to deliver on that promise if it executes its onboard product plans well.

 

 

 

Qantas sells Melbourne terminal, sees ‘mixed’ domestic demand

Qantas terminal demand
Qantas chief executive Alan Joyce Photo: Qantas

Qantas has revealed a deal to sell its terminal at Melbourne Airport for $A355m as chief executive Alan Joyce said the carrier was set to make record full-year revenue and remains in “a fundamentally strong position” despite some slowing in domestic demand.

The Melbourne terminal sale will see the airline receive $A276m in cash this financial year with the remaining value to be accrued in future periods.

The transaction includes a 10-year access agreement for Terminal 1 with all aeronautical and retail assets transferring to Melbourne Airport.

But the carrier retains exclusive access to Terminal 1 — including lounges, for domestic services — and says options to operate off-peak international flights from the terminal are being assessed.

READ: Landfill-free Qantas flight highlights plan to slash waste.

The details were contained in a group trading update which showed third-quarter revenue increased 2.3 percent to $A4.4 billion compared to the prior corresponding period.

This was despite the shift of the busy Easter holidays into the fourth quarter of the current financial year.

The update did not include underlying profit figures but Qantas said group unit revenue was up by 4 percent and its share of corporate travel revenue had increased by 2.5 percentage points to its highest level in three years.

Unit revenue was also up in group domestic and international operations and Qantas Loyalty continued to see strong revenue growth.

Jetstar’s international services had been heavily impacted in the third quarter by the timing of Easter but unit revenue had continued to grow and the broader Jetstar group had seen an 8 percent increase in ancillary revenue per passenger.

“The Group continues to perform well, with strength in key parts of our portfolio helping to hedge against headwinds in other areas,’’ Joyce said.

“Internationally, the outlook is positive and continues to improve. The long-term fleet and network changes we’ve made are delivering revenue growth, and total market capacity in the fourth quarter is contracting in response to higher fuel prices.

“Domestically, demand is mixed. The resources sector continues to grow and we’re capitalising on that with a lot of extra flying in Western Australia and Queensland.

“Leisure demand was very strong over Easter and is holding up well, and we’re pleased with our growing share of the corporate and small business segments.

“We’re seeing increased softness in parts of the domestic corporate market for May and June, particularly financial services, telecommunications and some areas of construction.

“Growth is also slowing in the small business market. We’ll have a better sense of how temporary this is after the Federal Election, which always has a dampening impact on travel demand.

“Overall, we expect the Group to achieve a record level of revenue this financial year and strong cash flow as we continue to deliver for shareholders, customers and our people.”

Commenting on the terminal sale, Melbourne Airport chief executive Lyell Strambi said the agreement was an important step that would ensure the ongoing commercial success of the airport’s biggest customer.

He said the new arrangements, scheduled to start from July 1, would be phased in to minimize disruption to travelers and would include an enhanced retail offering.

“We’ve been very focussed on delivering a better passenger experience. First and foremost we want to improve efficiency and reduce the stress of travel, but our research tells us that today’s passengers are looking for more,” he said

“Better range and choice of what they eat and drink, and retail options to satisfy everything from travel essentials to luxury. With the certainty we can now give tenants, the first step will be to reopen a number of existing locations.”

Other features will include the flexible use of parts of the terminal to allow it to swing to international operations.

 

 

FAA warns against counter-drone systems

FAA counter drone warning

The US Federal Aviation Administration has warned airports against installing systems designed to disable a drone because of the potential risk to aircraft and air traffic control services.

The US regulator is happy to help airports install detection systems but does not want them using technology designed to bring down drones.

The statement is in response to increasing worries at airports and airlines about the impact of the growing number of unmanned aircraft systems (UAS) and incidents of illegal use near airports.

The issue grabbed international headlines in late 2018 when Gatwick Airport was shut down by illegal drone activity during the busy pre-Christmas period.

The airport was shut down over three days and the travel plans of 140,000 people were disrupted after reports of illegal drones.

Since then there have been other reports globally of drones near aerodromes — Dubai airport was briefly closed in February because of a suspected sighting — and some airports and countries such as Australia have been trialing drone detection technology.

A number of countries are also introducing rules that require users to register drones.

READ: Aussie tets help FAA approval of US drone deliveries.

The FAA said it understood and shared airport safety and security concerns raised by the malicious or errant use of drones.

It said it was continuing to work closely with airport operators who were considering detection systems or had already done so.

It had already provided important information and expected to supplement this “as we refine our processes and procedures for safe UAS detection system use and coordinated operational response at or around airports”.

“The FAA also provided information regarding the prohibition on the use of non-federal counter-UAS technologies at or around airports,’’ it said.

“These systems could pose an aviation safety risk by interfering with aircraft navigation and air navigation services.

“The FAA does not support the use of counter-UAS systems by any entities other than federal departments with explicit statutory authority to use this technology, including requirements for extensive coordination with the FAA to ensure safety risks are mitigated.”

 

Woman kicked off plane after ignoring safety briefing

safety
Photo: Airbus

A woman kicked off an Air New Zealand flight at Wellington Airport for reportedly refusing to pay attention to safety instructions is garnering little sympathy.

The woman and a male companion were in the exit row and refused to read the safety card or watch the video.

Passengers sitting in the exit row are required to read the safety card and familiarize themselves with the appropriate procedures in case of an emergency.

READ: Videoing and carry-on baggage slowing evacuation and risking lives.

They also have to be capable of operating the emergency exit and they can be removed from an aircraft if they fail to comply with instructions from the cabin crew.

That’s what happened in this case, according to passengers on the Auckland-bound plane.

One passenger told news site Stuff that the woman looked down at her book when the video started playing and a flight attendant held up the safety card.

The passenger said the woman then picked up her phone.

“A flight attendant said very patiently ‘Can you please watch what’s happening because this is the exit row’,’’ the witness said.

“The flight attendant was super kind and kept asking her, but the woman put her fingers in her ears.”

The couple’s “shockingly arrogant behavior” delayed the plane’s departure for about 25 minutes before they were escorted off.

When told police were waiting for them, the woman took out her phone and loudly tried to make a booking with Jetstar, the witness said.

New Zealand police confirmed they were asked to meet a passenger at the airport and that she was issued with a Civil Aviation Authority infringement notice for using a mobile phone.

Air freight weakness persists as fuel costs bite

fuel IATA freight weakness
Photo: Wikicommons

Weak global air freight conditions are persisting as world economic activity wanes and higher fuel prices are again set to hit airline profits

Global air freight demand increased just 0.1 percent in March compared to the same period in 2018 and was down in seasonally adjusted terms by 1.5 percent over the past year.

The key Asia-pacific region, which accounts for more than 36 percent of the total market, was down by 3.4 percent compared to March 2018.

However, this was up from the 12 percent decline the previous month and all other regions showed growth.

The International Air Transport Association described the March result as a significant improvement over the 4.9 percent contraction in February but noted capacity growth had outstripped demand for 11 of the past 12 months.
It said significant headwinds for air cargo included a 1 percent fall in global trade volumes over the past year, weakening economic activity and consumer confidence as well as falling global export orders since September.

“Year-on-year demand for air freight edged back into positive territory in March with 0.1% growth,” said IATA director general Alexandre de Juniac.

“After four consecutive months of contraction, this is an encouraging development,’’

“But the headwinds from weakening global trade, growing trade tensions and shrinking order books have not gone away.”

The lack-luster air freight figures come after another IATA report predicted higher oil prices meant global airline profits would be up to 1 percentage point lower than its $US35.5bn forecast in December.

The airline group said the US decision to end waivers to countries wanting to import oil from Iran was causing more uncertainty than usual in global oil prices.

IATA said its December forecast that industry profitability would stabilize at close to 2018 levels was based on Brent crude oil prices averaging $US65 per barrel in 2019.

They were currently $US5 per barrel higher and had been up to $US10 more.

“The impact in 2019 of higher crude oil spot prices will depend on the crack spread, fuel hedging, the extent cost increases can be passed through to consumers and mitigating measures by airlines,’’ the report said.

“We’ve assumed no change in the crack spread and that 50 percent of fuel consumption is hedged.

“With no pass-through to consumers or mitigating measures, each $US5/b increase in the price of jet fuel reduces industry net profit margins by around 0.5 percentage points.”

The report said that if fuel prices stayed above the December expectation — and this was dependent on the response from other oil producers — there would be a reduction in forecast industry profitability of up to 1 percentage point.

 

 

 

 

 

 

Landfill-free Qantas flight highlights plan to slash waste

qantas waste reduce
Waste not. What to expect on a sustainable journey (left)compared to the current version. Photo: Qantas

Qantas has operated the first-ever commercial flight to produce no landfill as it highlighted plans to eliminate 75 percent of its waste by the end of 2021.

Waving off the flight from Sydney Wednesday, Qantas Domestic chief executive Andrew David said Qantas and low-cost offshoot Jetstar currently produced an amount of waste equivalent to 80 fully-laden Boeing 747 jets a year.

The move to cut waste, known as Project Bowerbird,  will see Qantas 100 million single-use plastic items removed over the next 18 months.

READ: Dreamliners replace Qantas jumbos on Sydney-San Francisco.

This will include 45 million plastic cups, 30 million cutlery sets, 21 million coffee cups and four million headrest covers.

“We want to give customers the same level of service they currently enjoy, but without the amount of waste that comes with it,” David said.

All the inflight products aboard Wednesday’s Sydney-to-Adelaide flight will be disposed of via compost, re-use of recycling.

The flight would typically produce 34 kilograms of waste and the route produces about 150 tonnes annually, according to David.

About 1000 single-use plastic items were substituted with sustainable alternatives or removed altogether from the flight, including individually-packaged servings of milk and Vegemite.

Plastic cups were replaced with paper alternatives while food containers were made from sugar cane pulp left over from refineries.

Cutlery was produced from starch sourced from crops that were not genetically modified.

The items were collected by Qantas cabin crew for reuse, recycling or composting in multiple waste streams.

Customers used digital boarding passes and electronic bag tags where possible, with staff on hand to make sure any paper passes and tags were disposed of sustainably.

The Sydney-Adelaide flight was also carbon offset.

Qantas offers the industry’s biggest carbon offset scheme and from mid-2019 will offer customers 10 frequent flyer points for every dollar spent offsetting their travel from Australia.

 

 

Virgin management restructure sees executive departure

Virgin Australia restructure

New Virgin Australia chief executive Paul Scurrah has wasted little time putting his stamp on the airline group with a corporate restructure that has prompted the departure of group executive Rob Sharp.

Sharp, a former Qantas executive who joined Virgin seven years ago to head Tigerair Australia before becoming group executive, departs the group May 10 after his position was eliminated.

It has been replaced by the dual roles of chief commercial officer and chief operations officer and a global recruitment process is underway.

This is similar to the structure at the airline before 2016 when then chief executive John Borghetti restructured management and introduced John Thomas as group executive

This is the second major change announced by Scurrah since taking over the top job six weeks ago from his predecessor.

READ:  New Virgin boss scores a win in deal to delay MAX deliveries.

He announced on April 30 that he would push back deliveries of the Boeing 737 MAX aircraft until 2021.

A deal negotiated with manufacturer Boeing saw 15 orders converted from the controversial MAX 8 to the bigger MAX 10 aircraft and deliveries of the MAX 10 brought forward.

A global recruitment process is underway to fill the new roles which are being filled in the meantime by insiders Merren McArthur and Stuart Aggs.

The highly-respected McArthur is currently the chief executive of Tigerair Australia and will be acting chief commercial officer.

She previously led alliances and revenue management, launched the airline’s cargo operations and headed Virgin Australia Regional Airlines.

Aggs will act in the COO role. He was previously head of safety and is seen as having the right operational expertise for the new job.

The restructure came after a two-day offsite leadership meeting to map out a path for the airline.

Scurrah said prior to the meeting that it would look at potential “quick wins” and what could be done to make the group stronger.

Survey finds 1 in 5 will never be comfortable flying the MAX

Boeing survey 737 MAX
Photo: Boeing

Just 19 percent of travelers surveyed by Barclays investment bank said they would be comfortable boarding a Boeing 737 MAX immediately after the planes return to service.

The bank, which downgraded Boeing shares from equal weight to overweight as a result of the survey, found that 21 percent of 1756 people surveyed in Europe and North America who flew at least once a year did not feel they would ever be comfortable flying on the plane.

Twenty percent said they would wait a few months before flying on the MAX while 23 percent said they would delay a year or more, according to the Chicago Tribune.

The remaining 17 percent of respondents were unsure.

The bank revealed the survey in an investment note that prompted a fall in Boeing shares.

It comes as the manufacturer is grappling with the fallout of two 737 MAX crashes in less than five months. The crashes, in Indonesia and Ethiopia, killed 346 people and led to the grounding of the global 737 MAX fleet.

READ: Boeing boss again defends MAX software design.

Boeing is working with the US Federal Aviation Administration and other regulators around the world on software and training changes it says will prevent a re-occurrence of the crashes.

Regulators need to approve the changes as safe before the controversial aircraft can return to the skies and it is not yet clear when that will happen.

Although the figures show the majority of people would eventually fly on a MAX, they underscore the big task the US manufacturer has ahead of it to restore trust in the aircraft after the crashes and a flurry of media reports about issues at the company.

It was not all completely bad news — the survey found experienced flyers were more amenable to getting backing on a plane than those who flew only occasionally. North Americans were also more trusting than their European counterparts.

The survey found 40 percent of people who flew six or more times a year would be willing to get back on a MAX.

But the bank noted that almost half of respondents would not fly on a MAX for a year or more.

“If given a choice between a MAX and another aircraft type on otherwise identical flights, 52 percent would choose the other aircraft type,’’ it said.

Barclays said it expected the recovery of 737 MAX production to take longer than expected and predicted airlines would be unlikely to take the plane as quickly as they were before the crashes.

Boeing chief executive Dennis Muilenburg has acknowledged that the company has to re-earn passenger trust and prove that the plane is safe.

 

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