Airliners and airlines have never been so efficient, but it's taking longer than ever to get to our destination.

That was one of the main beefs raised by airline executives at a commercial aviation summit in Washington DC last month organised by the industry's main representative body, Airlines For America (A4A).

And America is just one of the countries around the world where chronic congestion of airports and airways is forcing airlines to add more and more hours and minutes to the scheduled flying time of each flight.

The president and chief executive of New York-based JetBlue Airways, Robin Hayes, told the A4A summit that the so-called block time – the official scheduled flying time – between New York and Washington DC used to be 60 minutes. 

But that has ballooned to 80 minutes to allow for airways congestion.

And it is replicated on routes across the country. Airlines once allowed around five hours 30 minutes for the westbound journey against prevailing headwinds from New York to Los Angeles.

Now, no airline allows less than six hours and some, like Delta, which ironically opposes airspace reform, allow six hours 25 minutes.
With the US Department of Transport publishing monthly on-time performance statistics, no airline wants to gain a reputation among flyers for unreliability. Airlines would rather increase block times.

Even the definition of "on time" has been massaged in the past 20 years to reflect chronic airways congestion. "On time" is now officially defined – in most countries, not just the USA – as within 15 minutes of schedule. So your flight can be 15 minutes late and still gets the "on time" tick of approval in the official statistics.

“Proponents of the status quo either don’t understand, or they misrepresent, the data,” A4A president and chief executive Nicolas Calio told the Washington summit. “Airlines are increasing block time to accommodate delays in the national airspace … That’s not a sign of improved airspace.”
It's a global problem.

Even in the sparsely populated continent of Australia, flights that used to take an hour can now take 30-40 per cent longer.

Adelaide West Beach airport to Melbourne Tullamarine – 643 kilometres, according to global aviation supplier Rockwell Collins' database – used to take 65 minutes eastbound and 70 minutes westbound. Airlines now allow 80 and 85 minutes.

The official flying time for Australia's busiest route, the 706 kilometres between Melbourne and Sydney, used to be 70 minutes northbound and 75 minutes southbound. It's now officially 85 and 95 minutes.

Adelaide-Melbourne is a virtually identical distance to the route connecting Europe's main business capitals, London and Frankfurt, which are 656 kilometres apart (Heathrow airport to Frankfurt Main airport, named after the nearby river). Yet the official flight time, once around one hour 30 minutes, is now as much as one hour 50 minutes for an actual flight time of less than an hour.

This is in spite of the European Union's attempts to reduce airspace congestion through an initiative called the Single European Sky (SES), launched in 2004 through its air traffic co-ordinator, Eurocontrol.

"Inefficiencies in Europe's fragmented airspace bring extra costs of close to five billion Euros each year to airlines and their customers," the EU complained in 2013 at the announcement of yet another attempt to reform the system. "They add 42 kilometres to the distance of an average flight forcing aircraft to burn more fuel, generate more emissions, pay more in costly user charges and suffer greater delays. The United States controls the same amount of airspace, with more traffic, at almost half the cost."

According to the EU, the problem in getting all of Europe's national ATC agencies working together is all about money. 

"Experience shows that member states, which are either sole or majority owners of (air traffic management) service providers, have a strong tendency to focus on steady revenue streams of the user-financed system of air traffic control services, and can be therefore reluctant to endorse fundamental change towards a more integrated operating airspace," it says.

"The existing SES decision-making processes allow too easily  progress to be blocked by national vested interests."

Britain (which has just voted to leave the EU) found its solution to fixing air traffic control (ATC) issues in the partial privatisation of its ATC provider, National Air Traffic Services (NATS), at the turn of the century.

As a public-private partnership separated from the aviation industry regulator, the Civil Aviation Authority, NATS, which has garnered a global reputation for innovation, is now owned 54 per cent by the UK government, 42 per cent by the Airline Group (of European airlines) and four per cent by Heathrow airport.

While not supporting full privatisation, critics of the mess that US airlines find themselves in see the separation of the ATC provider from the regulator as a first step in providing the necessary investment to renovate the airspace system.

A4A and the ATC union earlier this year supported a proposal to separate ATC services from the US Federal Aviation Administration as a new non-profit agency, but the idea was stalled in Congress.

American Airlines chief executive Doug Parker says backers of reform won't give up. 

“Those who understand the system best, support reform," he told Air Transport World. "There is simply nothing radical or unusual about this concept. 
"More than 50 other nations have moved to this structure in one form or another. Some did it decades ago. None have chosen to reverse course. We need to get this ATC reform done.”

With air traffic doubling every 10 years on average and tripling every 20 years, the global problem of ATC delays is becoming more urgent.

Airlines are being urged to introduce technology which will see fewer bags lost while saving them money.

A new report estimates that using radio frequency identification technology to track bags could save airlines $US3 billion over the next seven years and reduce the number of mishandled bags by 22 per cent by 2022. The figure assumes RFID is deployed at 722 airports, representing 95 per cent of passengers globally, by 2021.

Radio Frequency Indentification (RFID) tags allows airlines to accurately track bags in real time at key points of a journey and airlines which have already deployed the technology, such as US carrier Delta Air Lines, have seen a 99 per cent success rate for tracking luggage.  Delta also found the technology provided it with more data and tracking information.

The report by the International Air Transport Association and global technology provider SITA said RFID would address mishandling of bags during transfer from one flight to another by ensuring ground handlers could track bags more efficiently.

It could  be deployed for less than 10 US cents a passenger but generates savings of more than 20 US cents per passenger, the report said.

Although baggage operations have dramatically improved over the past seven years, mishandled bags still cost the industry $US2.3 billion annually and a major frustration for passengers.

About 23 million bags were mishandled last year, down from 47 million in 2007 despite a sharp increase in passenger numbers. SITA estimates this has already saved the industry $22.4 billion.

 Ultra high frequency RFID has been the standard for airline baggage since 2005 and has a number of advantages over the traditional barcode used to track luggage: it is not line of sight, it has a greater range, a high read speed, ruggedness and low cost.

Yet it is compatible with the existing technology and the report suggests one area barcodes could remain the best choice is in sorting bags because a system needs to know which particular label has been read at an exact point.

Officials releasing the report in Dubai noted that RFID supported  IATA’s Resolution 753 requiring that by 2018 airlines keep track of every item of baggage throughout its journey by focusing on four events. These events are the handover of the bag from the passenger, the loading of the bag on the aircraft, unloading and transfer and the unloading during the arrivals process.

“ Deploying RFID globally will increase accuracy and reduce mishandling rates, said SITA chief technology officer Jim Peters. “This is a win-win situation – passengers will be happier, operations will run smoother and airlines will save billions of dollars.”

IATA head of global baggage operations Andrew Price said there had been more work in recent years to help airlines reap the benefits of RFID technology,

“The advances in the technology and the immense benefits it brings to the airline industry has prompted IATA to revisit and fully explore the benefits of RFID today,’’ he said.
 

Passengers who think airports are crowded now should brace themselves to deal with twice as many people by 2035.

The International Air Transport Association is predicting passenger numbers will almost double from 3.8 billion this year to 7.2 billion in 2035 based on an annual compound average growth rate of 3.7 percent.

But it  warned of long delays for passengers and flights unless air transport stakeholders work together to improve infrastructure.

The airline industry group also cautioned a  strengthening of the current trend towards trade protectionism could cut growth to 5.8 billion, affecting aviation jobs and the global economy, as barriers slow growth to an annual compound growth rate of 2.5 percent.

"Economic growth is the only durable solution for the world’s current economic woes, '' IATA director general Alexandre De Juniac told the World Passenger Symposium in Dubai on Tuesday. "Yet we see governments raising barriers to trade rather than making it easier. If this continues in the long-term, it will mean slower growth and the world will be poorer for it

Based on the 3.7 percent growth figure, IATA forecasts the Asia-Pacific region will be the biggest growth driver with China tipped to provide 817 million new passengers annually in 2035 and displace the US as the world’s biggest aviation market.

The US will gain an additional 484 million passengers to retain second place while India, with an additional 322 million passengers, will replace the UK in third place.

Indonesia and Vietnam are also forecast to grow quickly to round out the top five with 135 million and 112 million new passengers, respectively.

Routes to, from and within the Asia-Pacific will grow at 4.7 per cent to see an extra 1.8 billion passengers a year in two decades’ time to bring the overall market size to 3.1 billion.

North American growth of 2.8 per cent annually will see 1.3 billion passengers travelling each year, up by 536 million, while Europe will record the slowest growth rate of 2.5 per cent to add 570 million passengers and hit 1.5 billion travellers annually by 2035.

The Middle east will continue to grow strongly at 5 per cent per year to add 238 million passengers annually by 2035 and bring to total market size to 414 million passengers. The United Arab Emirates will top the region’s growth at 6.3 per cent a year.

Africa is also expected to see strong growth of 5.1 per cent annually for a total market of 303 million passengers while Latin American markets will grow by 3.8 per cent annually to 658 million passengers.

IATA has a roadmap to handle the growth called the Simplifying Business Program which includes initiatives to make airport and security checkpoints more efficient, provide customers with better real-time information and improve the way tickets are issued and itineraries recorded.

Part of this is proposal called One Identity, which would mean passengers would need to prove their identity just once and eliminate the need for repeated ID checks.

But whether the aviation industry and governments are capable of coping with the massive growth remains to be seen.

De Juniac called for players in the air transport industry to work together to embrace “speed, innovation to meet the challenges of growth and rising passenger expectations’’.

But he warned of problems with airport and airspace capacity, citing rising congestion in Europe and potential issues in the Gulf region and China.

“I fear we may be headed for an infrastructure crisis that will impact air travellers,’’ he said. “Inadequate infrastructure negatively impacts the passenger experience in the form of flight delays, longer routes and inefficient schedules.

“Then there is the cost to economies of lost business opportunities, employment and social development. Remember aviation is a critical catalyst for economic and social development, supporting 63 million jobs and some $2.7 trillion in economic impact.”

IATA also released a survey of almost 7000 passengers which showed travellers wanted to do more of the traditional check-in processes before they arrive at airport and more than 70 percent now using online facilities.

A big number wanted to travel to the airport luggage free, with 26 per cent wanting their luggage picked up at home and 24 per cent wanting to drop off their bags “off airport’’.

Security and border control processes were seen as the biggest “pain points’’ and passengers were also keen to pass through security without having to remove personal items.  Four out of 10 chose their route based on their airport transfer experience.

The survey found in-flight wi-fi had gained in popularity and more than half of passengers wanted to connect during their journey, up 12 per cent on 2015.

Some 85 per cent also said they were prepared to share personal data to allow airlines and airports to offer them a more customised travel experience.

A recent Cathay Pacific warning that deteriorating conditions will mean a worse than expected second-half performance may be a sign of a turning tide for airline profitability.

The International Air Transport Association in its latest financial monitor report has raised the possibility that airline profitability may be peaking.
IATA found that post-tax profits in its second quarter sample for 2016 were about 20 per cent lower in dollar terms than in the same quarter the previous year.

The airline umbrella group said the margin on earnings before interest and tax rose to 9.9 percent from 9.8 per cent and was robust by historical standards.

“However, operating conditions are becoming more challenging and the industry profitability cycle is showing signs of peaking,’’ it said.

  Hong Kong's Cathay reported an 82 per cent slump in profit when it released first half results in August and said at that time that the overall business outlook remained challenging.

At that point , however, it expected that results in its second half would follow the normal trend and be better that the $353 million first half net profit.

It said earlier this month that this was no longer expected to be the case.

“Since the interim report was issued, the outlook for our airlines’ business has deteriorated,’’ Cathay said in a statement to the Hong Kong stock exchange. “Overcapacity and strong competition is putting particular pressure on our passenger business, with continued shortfalls in revenue compared with forecasts and heavy pressure on yield.

“Against this difficult revenue picture, we are engaged in a critical review of our business, the goal of which is to improve revenues and to reduce costs so as to maintain a strong financial position and to deliver acceptable financial returns.

“The review will consider all options for improving efficiency and productivity.”

Cathay faces competition from Chinese airlines expanding internationally as well as encroachment from Middle Eastern carriers keen to secure a slice of the growing Asian market. Analysts have suggested a new departure tax of up $HK180 in Hong Kong may also have played a part.

However, the airline is continuing to invest in its business with orders for new planes such as the A350 and Boeing 777X.

Cathay shares have lost more than a fifth of their value since the beginning of the year and the outlook revision saw its share price has hit its lowest level since 2009.

Nor is Cathay the only major Asian airline to have reservations about the outlook.

Asked about the IATA report last week, Singapore Airlines chief executive Goh Choon Phong  said the airline had been “quite public” about the challenges facing the airline industry and SIA.

Goh said these related to overcapacity generally and pressures on yield, with many airlines “discounting away” lower fuel prices.

“So yes there is a challenge and we acknowledge that,’’ he said.

Yet some observers point to Asian network changes, rather than global forces, as a major factor in Cathay's woes.

A recent report by analysts at Australia’s Macquarie Equities suggested the Hong Kong airline’s problems stem from its reliance on transfer traffic, its network carrier status and the growth of competing hubs which no longer need Hong Kong as a waypoint.

“Chinese services are increasingly bypassing Hong Kong, growing capacity on direct services into the US,’’ the analysts said. “Our financial year ‘17 data shows Singapore and Hong Kong capacity growth rates appear subdued in FY17 despite their proximity to China which continues to significantly increase its international capacity.

“Double-digit growth on direct US-mainland China services versus a low-single digit outlook for Hong Kong and Singapore points to a bypassing effect, as carriers cut out the middle man, reducing connecting traffic.’’

Other factors indicating the global well-being of airlines were mixed in the IATA financial report.

Global airline share prices rose by 0.9 per cent in September, with the index of North American carriers up by 4.3 per cent during the month but Asia-Pacific carriers down 4.7 per cent and European airlines remaining flat.

Brent crude oil prices were $US52 per barrel in early October after an agreement between oil-producing nations to cut output, although there were questions about how successful this would be.

Oil prices were around 5 per cent higher than a year ago and oil analysts were expecting a weak upward trend with prices remaining below $US60 per barrel for the year.

The report said there were signs that the downward pressure on yields, a measure of average fares, had eased and IATA said it would be monitoring this closely to see if there had been a turning point with this parameter.

Growth in premium international traffic continued to lag behind that of the economy and a 5.3 per cent increase for the first seven months for 2016 was down from 5.7 per cent a year ago.

But premium fares had held up better than those in economy and the segment’s share of revenues had risen slight this year on the important Europe-Asia markets and was unchanged across the Atlantic.

“As we have argued before, in the current environment, the high-yielding premium segment offers an important buffer for airline financial performance,’’ the report said.

Annual growth in passenger traffic slowed to 4.6 per cent in August, down from 6.4 per cent in July, in the face of a subdued economic backdrop.  However, it was still broadly in line with the 10-year average.