Chart toppers Digital watch Winning mindsets

Annual rankings of the world’s biggest How operators are making the most of Rundown of all those recognised at the
carriers by full-year revenue and traffic important technological advancements latest Airline Strategy Awards evening

Airline Business
STRATEGY FOR AIRLINE BOARDROOMS WORLDWIDE SEPTEMBER 2023

FlightGlobal.com/airlines From

INTERVIEW

MESFIN TASEW
Delivering the next
phase of growth at
Ethiopian Airlines
 CONTENTS
Volume 39 Number 3
September 2023

Chart toppers
Annual rankings of the world’s biggest
carriers by full-year revenue and traffic
Digital watch
How operators are making the most of
important technological advancements
Winning mindsets
Rundown of all those recognised at the
latest Airline Strategy Awards evening COMMENT
STRATEGY FOR AIRLINE BOARDROOMS WORLDWIDE SEPTEMBER 2023
4 Short positions
Airline Business
FlightGlobal.com/airlines From BRIEFING
INTERNATIONAL
6 Quarterly review
8 Early signs of ‘normalisation’ effects
9 Air cargo loses pandemic-era shine
INTERVIEW 10 Operators aim to avoid false start
MESFIN TASEW AMERICAS
Delivering the next
phase of growth at 11 Hawaiian’s key role after Maui fire
Ethiopian Airlines
EUROPE
14 BA makes transformation headway
ASIA-PACIFIC
15 Hong Kong seeks Greater purpose
MIDDLE EAST FREIGHT FORTUNES
16 Flydubai, Air Arabia target growth Page 9
COVER STORY
18 Leading the way
INTERVIEW
Ethiopian Airlines chief 22 Growth vision While much of the attention in
executive Mesfin Tasew is Saudi Arabia is on the impact of new players in the
market, Flyadeal chief executive Con Korfiatis can
guiding Africa’s stand-out
already attest to the country’s untapped potential
performer into its next phase
24 Stronger foundations Chief executive Peter
HOW TO CONTACT US Foster says Air Astana has the cost structure to
firstname.lastname@flightglobal.com
cope with demand ‘normalisation’ as the Kazakh
LONDON BUREAU Phone +44 (0)208 652 5200 carrier grows beyond pre-Covid levels
Airline Business editor Lewis Harper
Executive editor Graham Dunn
Air transport editor David Kaminski-Morrow RECOVERY STRATEGY
Head of strategic content Murdo Morrison SPECIAL REPORT Page 15
Consulting editor Mark Pilling
WORLD AIRLINE RANKINGS
SINGAPORE BUREAU Phone +65 6780 4314 26 Path to profits Robust revenues as markets
Asia-Pacific managing editor Greg Waldron
Asia-Pacific reporter Alfred Chua reopened enabled airlines to restore profitability
US BUREAU Phone +1 617 397 2809 in 2022 – but pandemic scars were still evident
Americas managing editor Jon Hemmerdinger 32 Loading back up Passenger traffic among
Americas air transport editor Pilar Wolfsteller
Americas aviation reporter Howard Hardee leading global carriers sharply recovered last year,
PRODUCTION
helping load factors climb above 80%
Group production manager Isabel Burton TECHNOLOGY
Layout copy editors Tim Norman, Rachel Warner
Art editor Tim Noonan 34 Digital answers While battling antiquated systems
DISPLAY ADVERTISING Phone +44 (0)208 652 8798 and legacy practices remains a significant barrier,
Key account managers Katie Mann & Grace Murphy most carriers are investing in their digital futures
IT FUTURE
FLIGHTGLOBAL PUBLISHING MANAGEMENT AWARDS
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COMMENT
Short positions
The industry has swung from predictions of pandemic-era aircraft oversupply to a tight,
unpredictable capacity environment. With fresh airframe and engine woes exacerbating
the situation, this is a post-Covid ‘new normal’ that most executives could live without
I t seems crazy to think that only a
couple of years ago ample aircraft
availability was one reason why the
industry was seen as favourable to
start-up carriers.
Today, if you do not have capacity to
hand, your options can be extremely lim-
ited – even if you are a long-established
airline with pipelines to OEMs, lessors
and the best MRO facilities.
Whether it be engine recalls, parts
shortages, maintenance delays, or late
deliveries of new aircraft, capacity is
hard to come by, often grounded when
you do have it, and expensive to main-
tain, particularly if it involves the
latest-generation technology.
Talk to airline chiefs and stories
emerge of carriers having to wet-lease
capacity to cover for grounded wet-
leased capacity that was already covering
for grounded capacity, or aircraft leasing
deals falling through at the last minute
because the previous operator decided it
wanted to extend its deal after all, or
because another carrier gazumped them.
Leaders of airlines operating older
aircraft types have even been heard to
express relief that they are yet to take
the plunge on newer technology, given
its vulnerability to reliability issues
and spares shortages.
LACKING COMPONENTS
Among other impacts, airlines that are
still bringing grounded capacity back
into their fleets are having a hard time
doing so. AirAsia, for example, in late
August blamed the “shortage of aircraft
components and cabin furnishings in
the market” for the delay in bringing its
stored aircraft back to service.
When it comes to new aircraft, chief
executives acknowledge that deliveries
are now expected to be six months late.
Programme delays, meanwhile, have
given older jets – notably the Airbus
A380 – an unlikely stay of execution.
Lufthansa now expects to continue
operating its recommissioned A380s
through the late 2020s or early 2030s
4 | Airline Business | September 2023
Airlines recently learned, for exam-
kamilpetran/Shutterstock
ple, they will need to remove hundreds
of Pratt & Whitney PW1100G geared
turbofan engines from the wings of Air-
bus A320neo-family jets by the end of
2024 to inspect for defective high-
pressure turbine and compressor discs.
Among operators of those engines,
low-cost carrier Wizz Air estimates the
need for increased removals will result
Lufthansa will continue to in a potential capacity reduction of 10%
in the second half of its fiscal year. Air
operate recommissioned New Zealand also warned of a potential
‘significant’ impact on its schedules.
A380s for many years yet Also in early September, Boeing
said that roughly 165 of the 737 Max 8s
in its inventory of undelivered aircraft
due to factors including delayed deliver- will require detailed inspections and
ies of new Boeing 777-9s. rework to address a recently revealed
Lufthansa is also waiting on delayed issue with the jets’ aft-pressure bulk-
Airbus deliveries: “We have A320s sit- head, slowing its deliveries of the type.
ting on the ground in Toulouse [and] More information is to come on how
Hamburg,” says group chief executive many in-service aircraft might have
Carsten Spohr. “There are A350s on the defect and require fixes.
the ground in Toulouse. We’re waiting And on parts shortages, “I think it
for almost every aircraft right now.” will get worse, because now you are
Amid the delays, some airline chiefs starting to see the secondary affect…
note how slow delivery of new-genera- everybody is buying up spare parts, so
tion types will have a negative impact on you are creating even bigger demand
the industry’s sustainability mission. than is actually required”, Air Serbia
At many carriers, network opportu- chief executive Jiri Marek says.
nities are being left untapped. He sees no incentive for OEMs to
Moreover, aircraft availability issues scale up production to meet current
have also been cited by carriers that demand, when they know it will nor-
have ceased operations this year – malise eventually.
including Flybe and Go First – albeit Constrained capacity might not be a
other factors were clearly in play. bad thing for airlines per se, but unpre-
Recent developments suggest the dictability can be. This is a potentially
challenges might get worse before they years-long headache that airline chiefs
get better. are reluctantly learning to live with. ■
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QUARTERLY REVIEW
Catching up on key industry news
Latest rundown of the biggest industry developments, covering the period mid-June through to mid-September
17-30 JUNE
Polish flag-carrier LOT Polish
Airlines appointed chief com-
mercial officer Michal Fijol as its
new president and chief execu-
tive, replacing interim chief, and
chief corporate officer, Katarzyna
Lewandowska, who had been in
charge since Rafal Milczarski’s
departure at the end of 2022.
Airbus gave a strong indication
that the airframer will seek to
replace its A320neo family with a
“relatively conventional” design
in the mid-2030s, in parallel with
the possible introduction of a
hydrogen-powered aircraft.
Indian low-cost carrier IndiGo
placed a firm order for 500
A320neo-family aircraft at Paris
air show. Chief executive Pieter
Elbers said the aircraft would
“bring us well into the next dec-
ade” with delivery over 2030-35.
Air India firmed its previously
announced commitments covering
over 500 aircraft from Airbus and
Boeing during the Paris air show.
Airbus chief commercial officer
Christian Scherer said he foresees
a swing in the supply-demand
balance in the widebody sector
which, he believes, could be
sharper than that affecting the
single-aisle market.
Elbers and IndiGo colleagues marked the carrrier’s Paris order
6 | Airline Business | September 2023
Freight giant FedEx said it would
ground more aircraft after both
revenues and operating income
declined during its fiscal fourth
quarter due to “demand weak-
ness and cost inflation”.
US airlines suffered operational
meltdowns in New York City as
severe weather hit the region,
cancelling hundreds of flights
and prompting a spat between
United Airlines and the Federal
Aviation Administration.
A report from the US Department
of Transportation’s Office of the
Inspector General found that the
Federal Aviation Administration’s
air traffic controller shortage was a
safety risk factor that needed to be
addressed promptly.
JULY
Norwegian entered into an
agreement to purchase compa-
triot Wideroe.
London Gatwick’s operator for-
mally applied to begin routine
operations on its northern paral-
lel runway in order to increase
the airport’s capacity.
IATA director general Willie
Walsh called on politicians to
resolve issues with ATC
performance in the USA and
Europe, as fears over peak-season
BillyPix
travel disruption become reality
in some cases.
US carriers American Airlines and
JetBlue Airways said they would
formally terminate their Northeast
Alliance at the end of July.
Indian carrier SpiceJet said it
would receive an equity infusion
from chief executive Ajay Singh,
as it looked towards improving
its long-term prospects.
Royal Air Maroc outlined plans
to expand its fleet to 200 aircraft
over the next 15 years, under a
partnership programme with the
country’s government.
FedEx said former Atlas Air
Worldwide chief executive John
Dietrich would become its chief
financial officer on 1 August.
Turkish Airlines formally estab-
lished a wholly-owned subsidi-
ary to run low-cost operation
AnadoluJet. It later said it
expected to have the unit operat-
ing in its own right in 2024.
Three Ryanair executives,
including group chief Michael
O’Leary, visited Ukraine’s largest
airport to reiterate the low-cost
carrier’s intention to make a
speedy return to the country once
safe operations are possible.
Finnair chief executive Manner said he is leaving the industry
IATA voiced its opposition to
proposals that would see night
flights banned at Brussels airport
on the grounds of reducing noise.
Iberia became part of the joint
venture between by fellow One-
world carriers British Airways
and Qatar Airways, expanding
what had already been described
by its founders as “the world’s
largest airline joint business”.
A US judge tossed out Indian car-
rier Go First’s lawsuit against
Pratt & Whitney. The airline in
March had alleged that defective
PW1100Gs had forced it to
ground half its 54 A320neo-
family jets.
Boeing pushed back its expected
first 737 Max 7 delivery until
next year, marking continuation
of its struggle to get the
long-delayed aircraft into
customers’ hands.
Azerbaijan Airlines said it would
merge its operations with its sub-
sidiary operator Buta Airways,
and unify them under the main
carrier’s AZAL brand.
AUGUST
Indian low-cost carrier Akasa Air
became the first Asia-Pacific
operator to take delivery of a
higher-density Boeing 737 Max.
BillyPix
FlightGlobal.com/airlines
The new delivery took its fleet up
to 20 aircraft – the threshold
under which Indian carriers
are clear to operate international
services.
Israeli operator Israir Group
agreed a six-month extension to
the deadline for completing nego-
tiations over its proposed acquisi-
tion of Czech carrier Smartwings.
US ultra-low-cost carrier Spirit
Airlines said summer travel
demand was “softer than
expected” as travellers chose
more long-haul international des-
tinations than domestic ones, in
an observation echoed by other
operators including Frontier
Airlines and JetBlue.
US freight operator Western
Global Airlines voluntarily filed
for Chapter 11 bankruptcy pro-
tection, as it sought to implement
a restructuring plan to cut debt
and stabilise the business.
Turkish Airlines and Thai Air-
ways signed a preliminary agree-
ment to deepen their relationship
through plans to establish a joint
venture on routes through Istanbul.
Oman Air indicated that closer
ties with low-cost carrier
SalamAir are likely under a
restructuring plan outlined by
the flag-carrier’s chairman. It
later unveiled a new board
of directors.
Cash-strapped Pakistan announ-
ced its intention to privatise flag
O’Leary voiced support for Ryanair’s eventual return to Ukraine
FlightGlobal.com/airlines
carrier Pakistan International
Airlines, as the country works to
stabilise its economy.
China scrapped a ban on
outbound group travel to over 70
countries, including to major
economies like the USA, UK,
Japan, India and South Korea, in
a further relaxation of Covid-
era measures.
Mexico’s government said it
would create a new carrier based
on defunct operator Mexicana’s
assets, after securing a compensa-
tion agreement with workers to
take over the brand.
The Australian Competition and
Consumer Commission allowed
Qantas and Emirates to continue
coordinating their operations for
another five years.
Kazakhstan’s government for-
mally opened invitations to
potential investors for the
privatisation of regional operator
Qazaq Air.
Finnair chief executive Topi
Manner said he was stepping
down from his position, and
leaving the flag-carrier to take up
a new role outside the industry.
US start-up carrier Red Way
ceased operations roughly two
months after launching out of
Lincoln, Nebraska.
Garuda Indonesia said that dis-
cussions for a merger with Pelita
Air Service were under way.
Boryspil Airport
Spanish airline group Air
Nostrum doubled its commit-
ment for Hybrid Air Vehicles’
Airlander 10 to 20 aircraft.
An effort to revive UK leisure
carrier Monarch Airlines stalled,
barely two weeks after its
relaunch was announced, amid a
lack of funding.
Abu Dhabi International airport
said operations would begin at its
new Terminal A in “early
November”, several years after
the facility was slated to open.
A proposal by Mexican aviation
authorities to further reduce traf-
fic at Mexico City Benito Juarez
International airport – the coun-
try’s busiest – drew criticism
from airlines and associations.
1-15 SEPTEMBER
KLM hit out at the outgoing
Dutch government’s intent to go
ahead with capacity cuts at its
Amsterdam Schiphol hub to
counter noise pollution.
Qantas chief executive Alan
Joyce stepped down from the air-
line effective immediately – two
months earlier than planned –
after intense local media cover-
age of apparent controversies.
Vanessa Hudson therefore
stepped up earlier than planned.
UK leisure carrier Jet2 named
existing director Robin Terrell as
non-executive chairman, as long-
standing leader Phillip Meeson
stepped down.
Hudson became Qantas chief executive earlier than planned
The latest IATA data showed
global airline passenger traffic
was at 95.6% of 2019 levels in
July, as the industry neared par-
ity with pre-Covid demand.
Lufthansa Group dropped the
Eurowings name from its newest
leisure unit, renaming it
Discover Airlines.
Aeroflot Group said it had com-
pleted a settlement with lessor
AerCap concerning a batch of air-
craft that were retained as part of
a Russian government seizure of
foreign-built fleets.
Preliminary investigation into the
serious UK air traffic control fail-
ure in late August traced the root
cause to a processing conflict trig-
gered by a single flightplan.
US airlines began adjusting their
third-quarter financial expecta-
tions in response to higher-than-
anticipated fuel costs and
extreme weather events.
Pratt & Whitney parent RTX said
airlines will need to remove
hundreds of PW1100G engines
from Airbus A320neo-family jets
by the end of 2024 to inspect for
defective high-pressure turbine
and compressor discs.
The US Federal Aviation Admin-
istration returned Mexico’s avia-
tion safety rating to “Category 1”,
the highest level, allowing air-
lines once again to increase con-
nectivity between the USA and
its southern neighbour. ■
BillyPix
September 2023 | Airline Business | 7
BRIEFING INTERNATIONAL
LEWIS HARPER LONDON
Early signs of ‘normalisation’ effects
After a bumper summer period with more record financials, the industry’s prospects this winter are dividing opinions
inancially speaking, the glob-
F al passenger airline industry
rarely comes as close to having a
singular positive narrative as it
did during the peak summer
travel months in the northern
hemisphere.
Constrained capacity and still-
rampant post-Covid passenger
demand have given most incum-
bents a very welcome balance-
sheet boost, despite high-profile
airspace, ATC and weather-related
challenges in some markets.
“Planes were full during July as
people continue to travel in ever
greater numbers,” said IATA
director general Willie Walsh in
early September, as the associa-
tion released its latest traffic and
capacity data. “Importantly, for-
ward ticket sales indicate that
traveller confidence remains high.
“And there is every reason to
be optimistic about the continu-
ing recovery,” he adds.
Global airline traffic was at
95.6% of 2019 levels in July this
year, IATA’s data shows, on capac-
ity at 96.1%. Within that data,
North American and Latin Ameri-
can airlines saw traffic above pre-
Covid levels, while even the lag-
gard Asia-Pacific region was at
91.2% of 2019 traffic.
But as traffic and capacity near
parity with pre-Covid data, a
series of factors are prompting
airline leaders to keep a close eye
on what comes next.
Many continue to argue that
although visibility is limited, in
some cases by the short booking
windows that are commonplace in
the pandemic recovery, strong
demand and yields are persisting
into the northern hemisphere win-
ter months. And few would argue
that there are any reasons to panic,
perhaps citing unfounded con-
cerns about headwinds that
accompanied 2023’s arrival.
Lufthansa Group said in early
August, for example, that it expects
no let-up in recent high demand
for air travel in the second half of
2023, and a “further slight
increase” in passenger yields.
8 | Airline Business | September 2023
Walsh says ticket sales reflect high confidence among travellers
But there are also significant
players highlighting signs of mar-
ket ‘normalisation’ against the
backdrop of a moderation in the
post-Covid travel boom and rising
costs. In many cases, those obser-
vations are from markets and air-
lines that powered out of the
Covid-19 crisis relatively quickly,
so are at a more advanced stage of
the recovery’s life-cycle.
Some carriers expect
strong demand and
yields to persist in
northern hemisphere
winter months
“Over the last couple of weeks,
things have changed and sequen-
tially gotten worse,” said Frontier
Airlines chief executive Barry
Biffle in mid-September, as the US
ultra-low-cost carrier downgraded
its sales and capacity projections.
“You’ve gone from industry sales
being flat to now being down ver-
sus 2019… You’ve got fuel, capac-
ity and demand all heading the
wrong direction.”
The recent earnings season had
already seen some carriers point
to the inevitability of weaker year-
on-year financial comparisons
during the third quarter.
Turkish budget airline Pegasus,
for example, said in August that
IATA
year-on-year comparisons will turn
“increasingly difficult” in the sec-
ond half of the year, after the
“exceptionally strong” unit reve-
nue environment in the same
period of 2022.
Pegasus also says it expects the
spread between its revenue per
available seat kilometre and its cost
per available seat kilometre to “nor-
malise” across the rest of this year.
Also on the topic of ‘normalisa-
tion’, Frontier and several other
US carriers noted customers were
prioritising spending on long-haul
travel over domestic flights this
summer – the latter market having
already enjoyed its post-Covid
boom in 2022. Heading into win-
ter this year, Alaska Airlines chief
financial officer Shane Tackett
said in early September that there
were early signs of that long-haul
boom moderating and “normal”
seasonal patterns returning.
Amid that potential shift in mar-
ket dynamics towards something
that looks more like 2019, US air
fares have been trending down-
wards from 2022 and 2023 highs.
Elsewhere, Ryanair group
chief executive Michael O’Leary
was among the first to flag a simi-
lar trend in fares potentially
emerging in Europe.
“We expect Q2 [July-September]
traffic to be up about 11% [year on
year], but the pricing will be mate-
rially softer,” he said in late July.
O’Leary also noted that
close-in bookings had been “a
little bit softer” than during the
April-June period.
Meanwhile, the director general
of the Association of Asia Pacific
Airlines in early September cited
the potential for “cutbacks” in
travel spending in the near term,
even as the region’s airlines
continue to see strong demand.
Subhas Menon points to
“uncertainties in the wider macro-
economic environment, in addi-
tion to increased living costs”.
His comments came amid con-
tinued concerns about the health
of the global economy and con-
sumer spending power, even as
some indicators give reasons for
more optimism on the outlook.
FUELING COSTS
Importantly, any demand mod-
eration is starting to happen in an
environment where costs –
which had been more than offset
by high fares – continue to rise.
Notably, the end of the peak
northern hemisphere summer
season has been accompanied by
a rise in jet fuel prices.
“Fuel jumped up a bit after
everybody’s [second-quarter]
earnings calls, so I don’t think we
were alone in updating fuel in the
third quarter to reflect that fuel
has gone up 20-ish percent,”
United Airlines chief financial
officer Gerry Laderman said in
early September.
In Europe, Icelandic carrier
Play also flagged higher fuel costs,
which are exacerbating the chal-
lenges created by high inflation.
“It is now clear that this very
significant [fuel] price increase,
together with general price
increases due to inflation, is likely
to have a negative impact on the
financial results this year,” said
the carrier in early September.
The winter months will give a
firmer indication of where the
recovery is heading next. But in
an industry that was forecast by
IATA to achieve a net profit mar-
gin of just 1.2% this year, dynam-
ics do not need to change drasti-
cally for more carriers to start
feeling the pinch. ■
FlightGlobal.com/airlines

LEWIS HARPER & DOMINIC PERRY LONDON
Air cargo loses pandemic-era shine
Freight was a saviour for many carriers during Covid-19, but that elevation in fortunes increasingly looks like a blip
he global air cargo market is
T heading for a potential
“winter of discontent” amid
plummeting rates, softening de-
mand and rising capacity.
Recent outlooks from airline
industry association IATA and air
freight data specialist Xeneta
both suggest the Covid-era air
freight boom – which had already
reversed in volume terms – is
now rapidly losing its shine in
terms of yields.
Aside from having a near-term
impact on revenues and profita-
bility at airlines, the changing
market is prompting questions
over whether some carriers
moved too quickly to secure fresh
long-term freight capacity com-
ing out of the pandemic.
Developments such as the
slowing of the rapid e-commerce
growth seen at the height of
Covid-19 are not helping to calm
jitters regarding potential
freighter oversupply.
FALLING YIELDS
IATA’s recent market analysis
shows global air cargo yields
were down 38% year on year in
June, leaving them at around
40% above 2019 levels. In July
they had dropped to 35% above
2019 levels. Xeneta’s most recent
analysis – released in early
August – shows a 41% year-on-
year fall in air freight rates in July,
marking the fourth consecutive
month in which they had fallen
by around 40%.
“What will be concerning air-
lines and forwarders is the con-
stant month-on-month decline in
average rates, and the quickening
pace of this fall since the turn of
the year,” says Niall van de Wouw,
chief air freight officer at Xeneta.
As rates fall, data from IATA
and Xeneta continues to show
air cargo demand trending
below Covid-era highs and pre-
Covid levels.
IATA data indicates that global
demand measured in freight
tonne kilometres (FTKs) peaked
at some 7% above 2019 levels for
FlightGlobal.com/airlines
Cargo airlines including Fedex have been reducing fleet utilisation
full-year 2021, on capacity –
measured in available cargo
tonne kilometres (ACTKs) –
down 11%. The airline associa-
tion’s most recent data shows
FTKs were down 0.8% year on
year in July this year and were
some 3.3% lower against 2019.
Capacity was 11.2% and 3.2%
higher respectively.
That supply-demand imbal-
ance is one reason for falling
freight rates.
41%
Year-on-year fall in
freight rates in July,
according to Xeneta
At the same time. when it
comes to demand trends, IATA
noted in early September that
“many fundamental drivers of air
cargo demand, such as trade vol-
umes and export orders, remain
weak or are deteriorating”.
Xeneta offered no better news
from its analysis, stating that in
the coming months, it expects
“air freight volumes will remain
muted”.
Crucially, the maritime
shipping industry has normal-
ised, with flows at key ports no
longer suffering the Covid-era
challenges that created further
cargo capacity tightness and
promoted a modal shift towards
BRIEFING INTERNATIONAL
reversals in fortunes between
those segments.
Beyond the short-term
impacts, one consequence of the
inflated rates and lack of belly-
hold capacity during the peak of
Covid disruption was a scramble
for dedicated cargo aircraft, nota-
bly for passenger-to-freighter
(P2F) conversions. On the back of
this soaring demand numerous
viper-zero/Shutterstock
new conversion lines were
opened or planned, and orders
placed for their output.
But with freight rates now
sliding, some are beginning to
question whether the glut of new
air transport. Amid that ‘normal- aircraft can be entirely absorbed
isation’, IATA notes that mari- by the market.
time shipping rates have been
falling even faster than air cargo POTENTIAL OVERSUPPLY
ones, at 81% year on year in Although some, particularly new-
June, putting them at parity with build aircraft, will be destined for
2019 levels. replacement as older aircraft are
The air cargo outlook could retired, consultancy IBA says
brighten, IATA suggests, amid the there are “signals of potential
easing of inflation in major econ- oversupply” of 737-800 converted
omies. “This, in turn, could freighters, forecasting that 60 will
encourage the central banks to enter the market in 2023 alone.
loosen the money supply, which Ian Putzger, an air cargo market
could stimulate greater economic specialist, and contributor to
activity,” says Willie Walsh, Airline Business’s sister title Air
IATA’s director general.
But for now, when it comes to
Cargo News, is also eyeing the
market warily.
air freight demand, Xeneta sug- “[In early August] there were
gests the key questions is: “How nine converted 737-800 freight-
low will it go?”. And when it ers up for grabs, a stark differ-
comes to yields, Xeneta says that ence from a year ago, when con-
shippers will likely enjoy “lever- version lines were booked into
aging their enhanced buying 2026,” he says.
power after the pricing pain of “The widebody market isn’t
the pandemic”. looking much better, and boom-
Already, dedicated cargo air- ing passenger demand augurs
lines big and small – including more bellyhold capacity coming
market leader Fedex – have been into a saturated market, further
grounding aircraft and reducing depressing yields.”
utilisation of their in-service Putzger says a key unanswered
fleets as rates and demand fall. question is how airlines view the
Moreover, on 7 August, US freight market in the longer term.
freight operator Western Global While “there was a lot of talk
Airlines voluntarily filed for about the strategic importance of
Chapter 11 bankruptcy protec- cargo” in the wake of the
tion, citing, among other chal- pandemic, “the volume of those
lenges, a customer shift away statements has weakened over
from dedicated freighters. the past year”.
And among the airlines groups For now, Xeneta forecasts a
that cover passenger and freight “winter of discontent” in the air
operations, there have been stark freight sector. ■
September 2023 | Airline Business | 9
BRIEFING INTERNATIONAL
ALFRED CHUA TAIPEI GRAHAM DUNN LONDON GREG WALDRON SINGAPORE HOWARD HARDEE CHICO, CALIFORNIA
Operators aim to avoid false start
Ambitious all-premium carrier Bermudair joins the likes of Bonza and Starlux in seeking to find a niche in the market
n 1 September, the storms
O around the US east coast
passed sufficiently to allow
all-premium carrier Bermudair
to launch a day later than
planned. By then the early fail-
ure of US start-up Red Way and
stalled progress in funding a re-
launch of UK charter carrier
Monarch Airlines had provided
a reminder that weather is just
one thing that can blow new car-
rier plans off-course.
Bermudair marks a twist on
the previously seen all-premium
carrier model, which focused on
long-haul routes – mostly across
the Atlantic. Bermudair plans to
deploy Embraer 175s, which will
ultimately be configured in all-
premium, 30-seat configuration,
on services to Westchester
County airport near New York
City, Boston and Fort Lauderdale.
HISTORY LESSONS
Despite a chequered history –
French operator La Compagnie is
the only such carrier to last the
course and Bermudair founder
Adam Scott’s own Odyssey Air-
lines is still to take flight – Scott is
confident the timing is right for
the model to work connecting
Bermuda with the US East Coast.
“It is my belief that this mar-
ket… supports an elevated prod-
uct more akin to a private jet than
a traditional mainline carrier,”
Scott says. “At the same time, we
have got to make sure that we
have [the right] number of seats
and, of course, underlying eco-
nomics that work.”
By the time Bermudair
launched, US start-up Red Way
had pulled the plug on operations
Bermudair is deploying Embraer 175s to the US east coast
10 | Airline Business | September 2023
Glenn Chai says the Starlux business model will be fully realised
just two months after launching
out of Lincoln, Nebraska.
It came as moves to revive
Monarch Airlines faltered, almost
as soon as it had broken cover. In
mid-August a new iteration of the
carrier emerged via a new website
and social media presence, with
the aim of beginning operations in
2024 using Airbus narrowbodies.
However, barely two weeks
later the airline said its board had
been “forced to put the brakes
on” the relaunch process, citing
“exhausted” start-up funding,
which has been drawn down “far
more rapidly than anticipated”.
It is not the first UK airline
revamp to falter since the pan-
demic. A relaunched Flybe col-
lapsed in January after less than a
year. Flybe’s losses were running
at an estimated £5 million ($6.3
million) per month, partly blamed
on the lingering impact of Covid
and aircraft delivery delays.
Another high-profile UK start-
up, Global Airlines, is planning to
launch transatlantic services from
London Gatwick next summer
using Airbus A380s.
Bermudair
Starlux
“We’re a lot further along that
you think,” founder and chief
executive James Asquith said at a
Global Airlines event in London
on 27 July, stating that two years
of work were behind the project.
“We haven’t just gone out and
bought a bunch of A380s.”
“Our market is outside
of Taiwan – it is the
Asia-North America
market, with more
than a billion people”
Glenn Chai
Chief executive, Starlux
The company recently claimed
it has reached terms of agreement
for three more A380s, on top of an
earlier agreement for a single air-
craft. It indicates that the three lat-
est aircraft are stored in the USA.
Asquith acknowledges that the
transatlantic market is “littered
with failed carriers”, but insists:
“We’re doing it very differently.”
While the pandemic created an
obvious handicap on demand, the
glut of grounded aircraft did make
sourcing aircraft easier and
cheaper than usual – if only until
the supply chain crunch hit.
A number of carriers, includ-
ing Norse Atlantic and Play Air-
lines in Europe, Avelo and Breeze
in the USA, and Akasa Air in
India, have taken strides since
launching post-pandemic.
Taiwanese carrier Starlux
launched operations in January
2020, just weeks before Covid
closed national borders. It was not
until September 2022, when the
Taiwanese government began eas-
ing border controls, that it could
begin more regular operations.
Pitched as an upmarket, bou-
tique carrier, with a fleet of
around 20 new-generation Air-
bus A321neos, A330neos and
A350-900s, Starlux has joined the
crowded trans-Pacific market.
Starlux chief executive Glenn
Chai tells FlightGlobal that while
the airline has “already accom-
plished” building up its regional
network, its fledgling trans-Pacific
network means “our business
model has not been fully real-
ised”. He adds: “Once we have
reached the scale, we will achieve
good profitability.”
Transit passenger are a key part
of the business. “I think it is point-
less to just look at Taiwan as a sin-
gle market,” he says. “If we just
look at Taiwan – with around 23
million people – then it is point-
less to establish Starlux. Our mar-
ket is outside of Taiwan – it is the
Asia-North America market, with
more than a billion people.”
WEIGHING SCALE
Another ambitious start-up, Aus-
tralian low-cost carrier Bonza, is
now seven months into opera-
tions. The carrier in July cut five of
its initial routes, but its chief exec-
utive Tim Jordan says this is rela-
tively small given the scale of its
launch. “The ramp-up we went
through from January through
May was the biggest in Australian
aviation history,” he says.
Bonza, which is backed by
investment firm 777 Partners, is
targeting new segments in the
Austalian domestic market, and
all but two of its initial 27 routes
were unique to the carrier. “We’re
creating a brand-new market that
is not coming out of anybody’s
pockets,” Jordan says. ■
FlightGlobal.com/airlines

PILAR WOLFSTELLER LAS VEGAS
Hawaiian’s key role after Maui fire
Carrier’s response to the devastating wildfires is the latest example of an airline being critical to crisis relief efforts
W hen fast-moving brushfires
tore across the Hawaiian
island of Maui on 8 August, it
was unclear just how destructive
they would be.
Two days later, the ancient
city of Lahaina, once the capital
of the Kingdom of Hawaii, was
almost completely destroyed,
and more than a hundred people
were dead.
As chief executive of the state’s
local air carrier, Hawaiian Air-
lines’ Peter Ingram knew the
airline had a special responsibil-
ity to jump into action. With just
under 500 employees based on
the island, about 87nm (157km)
southeast of Hawaiian’s base in
Honolulu, the carrier also had the
infrastructure and local
knowledge in place to quickly
begin relief efforts.
As had been the case with sev-
eral disasters around the world
this year – including the devastat-
ing earthquakes in Turkey – a
local airline was to play a critical
role in the response.
“In the immediate aftermath,
one of the things we recognised is
that we had a very important role
to play as the primary provider of
passenger air transportation
between the islands and from the
islands to the US mainland and
internationally,” Ingram told Air-
line Business in late August.
“We quickly identified a need
to spool up our emergency
response team and open an emer-
gency operations centre. We were
focused on the mission of sup-
porting our team on the ground
in Maui, that was clearly going to
be under tremendous stress for
an unknown period of time.”
EVACUATION MISSION
A second priority was to begin
evacuating people who needed to
leave Maui – to either return to
other islands or the US mainland,
or to seek shelter elsewhere
because they lost homes or were
displaced from hotels.
“Those early hours were fairly
chaotic,” Ingram says. Airline
FlightGlobal.com/airlines
Ingram says the airline felt a ‘special responsibility’ to take action
workers had no idea how many
people might arrive at the airport
attempting to escape. “We were
really focused on maintaining the
reliability of our schedule, add-
ing extra capacity if we could,
which we did.”
“In the immediate
aftermath we
recognised that we
had a very important
role to play”
Peter Ingram
Chief executive, Hawaiian Airlines
All told, the airline operated
41 flights from Maui on 9 August
and 54 on 10 August.
“We freed up as many of our
neighbour-island aircraft – our
Boeing 717 fleet – as we could,
to get people off the island,”
Ingram says.
In the 72 hours following the
catastrophe, the airline carried
more than 17,000 passengers
from Maui. It dropped fares to
Honolulu to $19 per seat in the
main cabin, and issued travel
BRIEFING AMERICAS
port its tourism-reliant economy.
Only the northwest portion of
Maui is affected, while the rest of
the island is open for business.
Hawaiian has also noticed a shift
in traffic patterns, but says it is
yet unsure how the changes will
affect its earnings.
“The very short-term demand
for inbound traffic to Maui from
the US mainland is down right
now and it’s hard to predict as the
situation evolves, the depth of
that and the length of how that is
going to continue,” Ingram says.
Travel between the islands,
especially on the Honolulu-to-
Marco Garcia/FlightGlobal
Maui route, the airline’s busiest
interisland route, is “a little bit
down overall”.
“The other thing we’ve noticed
is that the traffic patterns are a lit-
tle bit different: we have a lot of
waivers and flexible booking con- demand for people who want to
ditions for guests that needed to fly over from Honolulu to Maui
change their plans. in the early hours [of] the morn-
In the first week after the fires, ing, and will spend the day in
Hawaiian said its aircraft brought Maui and then come back in the
almost 35,000kg (77,000lb) of afternoon.” Many of those travel-
essential cargo, ranging from lers are supporting relief efforts.
blood and medical supplies to
communications equipment and EVIDENT CHALLENGES
animal kennels, food, water, While the cause of the fires was
amenity kits and blankets, as well still under investigation, it is
as emergency personnel, to the increasingly evident that disas-
disaster zone. ters like this are a long-term chal-
Ingram travelled to Maui him- lenge facing commercial aviation.
self early in the crisis, offering With climate change already
support to the airline’s staff, some affecting operations in many parts
of whom lost their homes in the of the world, airlines increasingly
blaze. It took two days for all need to take into account phe-
employees to be accounted for. nomena such as rising land and
“There’s really not a lot I can sea temperatures, intense and
do in terms of helping them do destructive convective weather,
their jobs, but I wanted to make drought and flooding.
sure they understood that the In the near term, however,
resources of the entire company Ingram’s focus is on recovery
were with them,” he says. “By from what was one of the deadli-
Friday afternoon, we were able to est fires in recorded US history.
confirm that all of our team mem- “It’s going to be an awfully
bers were safe, tragically a num- long rebuilding process,” he says.
ber of them still had friends or “We’ve been a part of the commu-
family members who were miss- nity here for almost 94 years and
ing, [and] a number had lost their we’re committed to supporting
properties and their belongings.” this recovery in the months and
Several weeks on, the state’s years ahead because we know it’s
leaders were imploring travellers a long road ahead of Lahaina and
to return to the island, and to sup- the rest of Maui.” ■
September 2023 | Airline Business | 11
BRIEFING EUROPE
LEWIS HARPER LONDON
BA makes transformation headway
Leadership, resourcing, product investment and technology are key to Sean Doyle’s overhaul of the UK flag carrier
ritish Airways is halfway
B through a transformation of
the business under the leader-
ship of Sean Doyle, focused on
building the brand’s ‘premium’
reputation, improving engage-
ment with staff and increasing
the resilience of the technology
that underpins operations.
Doyle’s efforts to transform BA
began when the former Aer
Lingus boss took over at BA in
October 2020, replacing Alex
Cruz. The latter had overseen
three profitable years for the
British flag carrier in the run-up
to the pandemic and had
initiated an overhaul of the
operator’s premium product. But
he also faced challenges around a
perception of excessive cost-
cutting, high-profile technology
failures and strained relations
with staff – notably amid the
handling of job-losses and con-
tract renegotiations as Covid-19
grounded operations.
Speaking during a second-
quarter earnings briefing by BA
parent company IAG in late July,
Doyle split the airline’s ongoing
transformation effort into four
“key components”: leadership,
resourcing, product investment
and technology.
One of Doyle’s priorities, he
explains, has been to bring in “a
lot of very, very strong leaders”
to spearhead change at the
business, including KLM’s Rene
de Groot as chief operating
officer and former LATAM
Airlines and Lufthansa execu-
tive Dirk John as chief digital
and transformation officer, both
appointed in July 2022.
Challenges around technology
failures at BA have frequently
14 | Airline Business | September 2023
Doyle outlined changes that will underpin BA’s ‘premium’ plan
made the news in recent years,
and Doyle says the carrier is
working under its new leader-
ship to build “new foundations”,
including through a programme
to migrate its data centres into the
cloud. The airline is also redevel-
oping its website and “looking to
transform the digital experience”
for customers.
STRONGER WORKFORCE
On the resourcing effort, Doyle
notes that BA has taken on
around 13,000 more people since
“the start of the end of the pan-
demic” in early 2022, including
3,000 in the first half of 2023
ahead of the summer peak. The
airline’s workforce had shrunk
from around 40,000 pre-Covid to
less than 30,000 in 2021.
The relative lack of experience
among BA’s staff was cited by
IAG chief executive Luis Gallego
British Airways
as among the reasons for the UK
carrier’s operational struggles this
summer, when compared with
the stronger performance of sta-
blemate Iberia. Another fresh
leadership appointment, BA’s
Heathrow director Tom Moran, is
helping to address operational
challenges at the airline’s main
hub, Doyle notes.
And as BA’s workforce heads
back towards 2019 levels, Doyle
says the airline is making “signifi-
cant improvements” in employee
engagement – an important
development for new starters and
for existing staff who may have
suffered morale issues during the
turbulent pandemic years.
“We’re putting a lot of work into
making sure that people have the
right skills, the right training and
the right tools to do the job of the
day, and to make sure we support
all of our front-line operational
people in looking after our cus-
tomers,” he says.
“That’s trending very much in
the right direction.”
When it comes to investments,
Doyle cites “significant fleet
deliveries”, including the six
more Boeing 787-10s announced
as IAG’s second-quarter earnings
were released. Those jets and
more of BA’s existing fleet will be
equipped with its new business-
class product, as part of the afore-
mentioned push to improve the
airline’s ‘premium’ credentials.
“We now have 55% of our
Heathrow fleet with the [new
Club class],” he states. “That will
rise to 63% by year-end and [we
will] start reconfiguring the
787-8s and -9s next year.”
The airline has also increased
its call-centre capacity by 30%
year on year, Doyle says, through
investment in new sites in Delhi,
The carrier has
taken on around
13,000 more people
since early 2022
Bucharest and Kuala Lumpur.
That came after another raft of
negative press stories during the
pandemic, citing long waiting
times for BA customers as they
sought refunds or to make
changes to bookings.
“So there’s a lot of foundations
going in, a lot of progress being
made and very exciting develop-
ments that will begin to impact
the business positively in the
next 12 months,” Doyle states. ■
FlightGlobal.com/airlines

ALFRED CHUA HONG KONG
Hong Kong seeks Greater purpose
Following talk of the territory losing its status as an international hub, its focus has switched to serving a wider region
ny passenger coming to
A Hong Kong today will be
greeted upon landing at the city’s
international airport by large
swathes of construction work
and an airport terminal abuzz
with activity.
It is a far cry from little more
than a year ago, when Hong Kong
international airport (HKIA) –
one of the world’s busiest airports
– was virtually a ghost town.
But while passenger numbers
have made a quick rebound since
borders reopened earlier this
year, Hong Kong is eyeing a
vastly different recovery strategy
amid its closer integration with
the mainland.
Speaking at the Hong Kong
Aviation Day held in early
August, the city’s finance secre-
tary Paul Chan says recovery “is
in sight”; a prognosis generally
echoed by speakers at the event.
Indeed, HKIA and home
carrier Cathay Pacific have made
strides in recovery.
Cathay recently posted its first
half-yearly profit in more than
three years. It is rebuilding its
network and aiming to operate at
around 70% of pre-Covid capac-
ity by the end of this year, and
fully recover by end-2024, in line
with IATA forecasts.
Vivian Cheung, the chief oper-
ating officer of HKIA operator
Airports Authority Hong Kong,
says the airport aims to reach
80% of pre-Covid traffic by the
end of this year and fully recover
by the end of 2024.
THIRD RUNWAY
The airport’s third runway – part
of the broader Three-Runway
System airport expansion project
– opened in 2022, even while the
city was mostly shut to interna-
tional traffic. Work is also ongoing
to build a second passenger termi-
nal, with the full system expected
to be operational around 2024.
Amid the glowing optimism it
was IATA director general Willie
Walsh – also in attendance at the
Aviation Day event – who
FlightGlobal.com/airlines
Lam says that being based in Hong Kong is Cathay’s ‘advantage’
perhaps best described Hong
Kong’s recovery story.
“Hong Kong is back, but for
me… Hong Kong is not trying to
go back to where it was… Hong
Kong is looking at a future that is
completely different,” he told a
packed hall during a roundtable
discussion.
This was a marked change
from April 2022, when Walsh
had used harsh words after being
asked about Hong Kong’s – and to
a larger extent, mainland China’s
– continued closure. At a brief-
ing, he said Hong Kong was
“effectively off the map” as a
global aviation hub, adding that it
was “disappointing” that the city
stuck to ‘zero-Covid’ restrictions
even while other countries glob-
ally were working towards reo-
pening their borders.
The different future that Walsh
now alludes to is one that sees
Hong Kong part of the Greater Bay
Area (short for Guangdong-Hong
Kong-Macao Greater Bay Area).
Chan, from the Hong Kong gov-
ernment, says Hong Kong is “the
heart” of the Greater Bay Area.
There are already plans in
place to develop the Greater Bay
Area connectivity. On the
passenger side, Hong Kong is
beefing up intermodal transfer
options to HKIA from neighbour-
ing cities – by land via the Hong
Kong-Zhuhai-Macau bridge and
by sea from Shenzhen’s Shekou
port, for instance.
BRIEFING ASIA-PACIFIC
“We see ourselves very much
as the international aviation hub
for the Greater Bay Area of over
80 million people, and to serve
such a large catchment area, the
land and sea infrastructure [are]
very important,” he says.
QUIET CONCERN
But if there was optimism about
the opportunities of the Greater
Bay Area, there was also quiet
concern that this came at the
Cathay Pacific
expense of Hong Kong’s old stand-
ing as an international hub, or that
it would increase competition
with other carriers in the area
Cathay chief executive Ronald vying for passenger demand.
Lam stresses that being based in Cathay’s Lam concedes there
Hong Kong “is our advantage” – needs to be a “mindset shift”
the airline has an extensive within the carrier.
international network, espe- “[We] treat the Greater Bay Area
cially to cities “popular with our as our [extended] market. So Hong
Greater Bay Area customers”, Kong, of course, is our market. But
such as in Japan. in the future, I think the entire
Greater Bay Area will be our exter-
nal market. So there [has to be] a
“Hong Kong is back, mindset shift… to see [the Greater
but for me… Hong Bay Area] that way,” he says.
As the airport moves along to
Kong is not trying to full recovery, HKIA’s Cheung
acknowledges that the sluggish
go back to where it recovery of Mainland China traffic
was… Hong Kong is will be one potential challenge.
China in pre-pandemic times was
looking at a future its top source market for passenger
arrivals, but current statistics
that is completely show Chinese travellers have
slipped to third position (13% of
different” all arrivals) – after Southeast Asia
Willie Walsh (30%) and Japan (16%).
Director general, IATA Still, she is confident that the
Chinese passenger arrivals will
return to being the top source
“Many secondary cities [in market in the near term.
Japan], other airports in the area Cheung adds that the increase
may not have direct connections. in slots from airport expansion
I think it’s very important that will allow HKIA “to build con-
we… as airlines… keep these nectivity” with secondary cities
advantages so that we can pro- in North America or Europe,
vide the international network something the airport was not
they want,” Lam says. able to do pre-pandemic.
HKIA chief executive Fred And Cheung notes that Hong
Lam adds that the airport does Kong “has a very unique posi-
not “see ourselves simply as an tion” in the Greater Bay Area.
international airport [for Hong “We have independent air ser-
Kong’s] 7 million people vices agreements with many
[commercially]”. countries,” she says. ■
September 2023 | Airline Business | 15
BRIEFING MIDDLE EAST
MURDO MORRISON DUBAI & SHARJAH
Flydubai, Air Arabia target growth
The UAE short-haul carriers share a hunger for post-Covid fleet and network expansions, but on quite different terms
he United Arab Emirates’
T two home-grown short-haul
airlines have come a long way
since their foundation as sup-
posedly low-cost upstarts. Both
are following their own growth
strategies as they bounce back
strongly from the Covid-19
downturn, expand their route
maps, and edge towards three-
figure fleet sizes.
Flydubai may have once
described itself as a low-cost air-
line, but with its plush headquar-
ters on Dubai’s developing east-
ern outskirts, freshly minted
codeshare agreements with two
leading North American opera-
tors in the shape of Air Canada
and United Airlines, and an
improved business-class product
destined for its Boeing 737 Max
and NG fleet, there is little no-
frills about Emirates’ independ-
ent sibling.
Speaking to FlightGlobal in
early September, chief executive
Ghaith Al Ghaith describes
Flydubai’s mission as “connect-
ing Dubai to places it was not
connected to”, complementing
“The term low-cost
carrier is about how
you manage cost
and not about the
customer experience”
Adel Ali
Chief executive, Air Arabia
the all-widebody offering of
Emirates, which Flydubai code
shares with on about 30 routes.
Flydubai serves around 120
destinations – including 20 intro-
duced this year – about three-
quarters of which do not overlap
with Emirates.
Just 25km away from Fly-
dubai’s Dubai International hub,
Sharjah’s Air Arabia has adopted
a different expansion path since
its foundation in 2003. A core
16 | Airline Business | September 2023
Flydubai’s chief laments the delayed arrival of new 737 Max jets
part of the all-Airbus A320 family
operator’s philosophy has been
establishing joint ventures with
local partners in Armenia, Paki-
stan, and the UAE emirate of Abu
Dhabi, where it partners with
Etihad. It also has offshoots in
Egypt and Morocco.
Like Al Ghaith, chief execu-
tive Adel Ali is reluctant to
describe his carrier as low-cost,
even though – unlike Flydubai –
it offers a single-class product.
“My belief is that the term
low-cost carrier is about how
you manage cost and not about
the customer experience. The
customer needs to be satisfied
and feel that they have had value
for money,” he says.
The airline operates 11 aircraft
from Abu Dhabi, launching its
operation there in July 2020 at
the height of the pandemic. “We
were invited by Etihad to provide
routes to feed their long-haul
operation, although most of our
traffic there remains point-to-
point,” says Ali. “Because of
when we started, the first 12
months were difficult, but things
are improving.”
HIGH HOPES
While his aspirations are modest
for Air Arabia’s year-old, two-air-
craft Armenian venture, Fly
Arna, Ali has high hopes for co-
owned Pakistan airline Fly Jin-
nah, which began flying domestic
Shutterstock
routes last year. Ali plans to
increase the fleet to five by the
end of the year, as well as seek
approval to launch international
services from its Karachi hub.
A Sudanese joint venture with
local conglomerate DAL Group,
which was announced last year, is
on “long-term hold” following
political upheaval in that country.
However, Ali says there is still
potential for other initiatives
within and outside the Arab world.
Both Flydubai and Air Arabia
are in the middle of extensive
fleet renewals. Air Arabia has 71
aircraft, all powered by CFM
engines, including nine
A321LRs. At the 2019 Dubai air
show it ordered 120 A320neo
family jets, including 27
A321LRs and 20 A321XLRs.
Although Air Arabia intended to
begin taking deliveries of those
aircraft next year, Ali says 2025 is
now a more realistic start date.
The LRs – with their 4,000nm
(7,400km) range – have allowed
Air Arabia to introduce flights to
the likes of Bangkok, Kuala
Lumpur, and Milan. The XLRs
will allow deeper penetration into
Africa, Southeast Asia, and
Europe, including the UK, says Ali.
Flydubai’s 79-strong 737 fleet
includes 46 Max 8 and three Max
9 jets. In 2021 it cut by 65 the
total number of aircraft on order
with Boeing to 186. While it is
steadily replacing its NG variants
with the Max, Al Ghaith says
delayed shipments will force it to
retrofit its latest business-class
product on older-generation
aircraft and keep some up to four
years longer than their intended
eight-year life.
“We have an aggressive plan to
introduce as many Max variants
as quickly as we can,” he says.
“Our biggest disappointment is
that they are not coming as fast as
we would like.”
Flydubai has business-class
cabins on all its aircraft, but its
newest come with 10 premium
suites with a sliding privacy door.
Although its business class caters
largely for Flydubai customers
travelling for leisure but happy to
pay for extra comfort, Al Ghaith
says it is also vital for codeshares
with Emirates and others to work.
LOOKING NORTH
Route expansion is also on the
cards for Flydubai, including into
Africa and the former Soviet
Union. “When I was with
Emirates, it was all about east and
west,” says Al Ghaith. “But going
north is a big potential, and we are
making that happen, including
more destinations in Kazakhstan
and Uzbekistan. We also don’t go
to enough places in Africa.”
Both carriers have rebounded
impressively from the impact of
the pandemic, recording strong
profits in their latest financial
results. “In the last six months we
have seen the highest demand for
traffic ever,” says Al Ghaith.
Over at Air Arabia, Ali says
that with “demand continuing to
exceed supply across the market,
yields are holding”.
As for the futures of the
long-standing leaders who have
led their respective airlines since
they took to the skies, Al Ghaith
has been tipped to replace
73-year-old Emirates boss Sir Tim
Clark when he retires. Mean-
while, Ali insists he has no plans
to quit. “This is my enjoyment,”
he says. “The day it turns into a
job is the day I will step aside.” ■
FlightGlobal.com/airlines
INTERVIEW MESFIN TASEW

REPORT
LEWIS HARPER
LONDON

PHOTOGRAPHY
BILLYPIX

Leading
the way
Drawing on almost four decades of
experience with the business, Ethiopian
Airlines chief executive Mesfin Tasew is
guiding Africa’s stand-out performer
into its next growth phase

Tasew is pictured at the Palace of

Westminster, where he was marking
50 years of UK flights by Ethiopian

18 | Airline Business | September 2023 FlightGlobal.com/airlines

 I
f experience counts when an airline is
selecting its next chief executive, then
Mesfin Tasew ticked a lot of boxes as he
became group chief executive of Ethio-
pian Airlines in March last year.
In almost 40 years with the business,
Tasew had most recently been leading Togo-
based ASKY Airlines, which has become the
benchmark airline for Ethiopian’s nascent
equity-partnership strategy. Prior to that, he
had been Ethiopian Airlines’ chief operating
officer for more than a decade – and chair of
its Covid-19 taskforce towards the end of that
period – having previously worked as chief
information officer and head of the group’s
maintenance and engineering unit.
“It’s a big responsibility,” he tells Airline
Business of stepping up to lead the group as
Tewolde Gebremariam’s successor last year.
“I have to learn but it’s not a big jump.
“I am very familiar with the operation of
Ethiopian Airlines.”
Indeed, much of Ethiopian Airlines’ growth
strategy – codified in its Vision 2035 document
– overlaps with Tasew’s work history. Aside
from the overriding aim to grow its core func-
tion of connecting the African continent with
the rest of world via its Addis Ababa hub, key to
its strategy is the expansion of its equity partner-
ship strategy in other countries, investments in
the latest technology – both fleet-wise and in
terms of its key IT systems – and building the
business’s status as the biggest aviation group in
Africa, through expansion of its maintenance
and engineering functions in particular.
Airline success might be the exception rather
than the rule on the African continent, but
Tasew has plenty of reasons to believe he can
deliver on that strategy – not least after Ethio-
pian achieved the goals of its Vision 2025 road-
map several years early, as it powered ahead of
rivals to become the continent’s stand-out
success story in the decade leading up to Covid.
Another reason is the strength of the Star
Alliance carrier’s emergence from the
pandemic.
“In the fiscal year that ended 30 June this
year, we carried 13.8 million passengers, which
is 14% higher than in the pre-Covid period,”
Tasew recounts. “In terms of revenue, we gener-
ated slightly more than $6 billion, which is
about 50% more compared to pre-Covid.
“In terms of revenue passenger kilome-
tres, we are right at the 2019 level and in
terms of available seat kilometres we are
5% higher,” he continues.
FlightGlobal.com/airlines
“So when you see all these things together,
we can confidently say we have fully recov-
ered from the impacts of Covid and in several
parameters are even ahead of where we were
pre-Covid.”
As Tasew points out, those positive metrics
have not happened by accident.
Looking back to his role chairing Ethiopian’s
Covid-19 response, he cites several important
steps taken by the business, which created the
foundations for where it is today.
They broadly fall under the categories of
business diversification, keeping a cool head
when the crisis hit, maintaining a unity of
purpose among employees, and being as agile
as possible with decision-making.
Diversification of the business was “very
important”, he recalls.
“We can confidently say we
have fully recovered from the
impacts of Covid and in several
parameters are even ahead”
“Many airlines in Africa focus only on pas-
senger operations, so that when the passenger
operation stopped functioning, they became a
victim,” he says. “But since Ethiopian Airlines
is doing passenger, cargo and MRO, it immedi-
ately switched to cargo, which was in big
demand during the Covid period.”
And crucially, unlike many peers, “we
didn’t panic when Covid came”, Tasew says.
“They had to do downsizing of their fleet and
downsizing of their workforce, but Ethiopian
Airlines didn’t do that. We maintained our fleet,
by using some of the passenger aircraft for cargo,
and we maintained our entire workforce.
“That helped us to quickly recover when
the impact of Covid became less and less.”
AGILE WORKING
Maintaining the workforce came alongside an
effort to maintain the aforementioned unity of
purpose. Tasew highlights the importance of
employees changing roles and working extra
hours at the height of the pandemic, giving the
example of passenger agents moving to help
out on cargo operations.
And when it came to agility, Tasew cites
the speed of Ethiopian’s response to the
changing market. ❯❯
September 2023 | Airline Business | 19
INTERVIEW MESFIN TASEW
❯❯ “We didn’t sit down, closing our offices,”
he says. “We just looked for opportunity. And
we found cargo the good opportunity. And
we quickly jumped into it, redirected our
resources quickly, and we managed to make
best use of that.”
Today, cargo demand and yields have been
on a downward trend from Covid-era highs
around the world, but Tasew hopes yields
will stabilise “after a while”, noting that
beyond Ethiopian’s dedicated fleet of 15 cargo
aircraft, “we have five 777 freighters aircraft
on order” and that cargo remains a key part of
the group’s diversification strategy.
Nevertheless, freight fell to 30% of Ethiopi-
an’s revenues in the year to June, Tesew says,
having peaked at around 50% during Covid. It
had been at 15% going into the crisis.
Whatever comes next for freight, the seg-
ment’s Covid-era performance enabled the
business to be ready for the recovery in pas-
senger demand, which has been roaring back
over the past 18 months. Passenger numbers
were up 10% on pre-Covid levels in the year
to June, Tasew says.
And with passenger services on the up
again, the Ethiopian chief has increasingly
been able to focus on growth plans at the car-
rier’s Bole International airport hub.
“Our strategic roadmap shows that Ethiopian
Airlines would like to expand in all continents,”
he says, noting that the carrier serves, for exam-
ple, 20 points in Europe already.
The African market is likely to see the big-
gest proportion of that growth, Tasew says,
given “our core operation is to connect Afri-
cans together, and also Africans to the rest of
the world”.
Central to that African growth, beyond
expanding the list of around 63 destinations
served on the continent by Ethiopian, will be
the equity partnerships that form a key part of
the group’s future strategy. Under that initia-
tive, Ethiopian is working with local partners
to launch new carriers.
“Ethiopian Airlines would like to expand its
network in Africa, using equity partnerships in
different countries,” he explains. “The air trans-
port industry in Africa is underdeveloped and
the infrastructure is underdeveloped, but we see
a big hope that there is a big opportunity to
enhance the air transport service in Africa.
“So a core element of our strategy is to part-
ner with smaller airlines in Africa.”
Today, Ethiopian has equity investments in
three operators, with more to follow.
“ASKY in Togo is doing extremely well –
they have been profitable in 2021 and 2022,”
Tasew says of the carrier he led before taking
20 | Airline Business | September 2023
UK importance
Part of Airline Business’s interview with Mesfin
Tasew – and the photography – was
undertaken at the home of the UK government
in London, the Palace of Westminter.
Tasew was in the country to celebrate 50
years of service to the UK.
Demonstrating its commitment to that
market, Ethiopian has since announced the
opening of flights to a third UK destination
from winter 2024: London Gatwick services
will complement its existing links with
London Heathrow and Manchester.
“After Covid is over, the demand is
growing faster than expected,” Tasew says
of Ethiopian’s UK services.
“Leisure is a big portion of it, but people
travel for education – many Africans come to
the UK for education – and UK investors
travel to Africa for investment and Africans
come here for trade,” he explains, adding
that “many Africans live in the UK”.
But the airline’s long history in the UK goes
beyond air travel connectivity, Tasew states.
“We are working very closely with UK
companies also to support our MRO
operations,” he says, citing GE Caledonian as
an important partner as Ethiopian develops
its engine repair capabilities in Addis Ababa.
“We also have a lot of strategic
agreements with UK companies, primarily
for the supply of aircraft parts and services,”
Tasew continues.
Furthermore, UK financial institutions play a
key role in financing Ethiopian’s aircraft,
guaranteed by UK Export Finance. That
financing has been worth more than $1.3
billion over the past 10 years or so, Tasew says.
“And also we get our insurance services
for all of our fleet, all our operations, from
UK insurance underwriters,” he states.
the group chief executive role. “In 2023 they
are growing fast, so we are very happy and
proud of the performance of that airline.”
Indeed, he describes ASKY as “probably
the strongest regional airline in West Africa”,
serving 25 cities and providing a template for
what other partnerships could become.
Elsewhere, Malawi Airlines “has been prof-
itable for the past two years but it’s smaller
scale – it will have to expand”, he says.
And Zambia Airlines is at a relatively early
stage of its development. “It is not performing
well but it is just at the beginning,” Tasew states.
In terms of carriers yet to launch, Nigeria Air
is due to begin commercial operations in Octo-
ber, he says. “The new Nigerian government
has indicated its full support and we are in
good shape,” he states, while acknowledging
that “there are a number of things to be done”.
Ethiopian is also working on “another
national carrier in Democratic Republic
of Congo”.
Regarding the health of African airlines in
general, Tasew says Ethiopian sees little ben-
efit from the under-par performance of many
of the continent’s other high-profile players,
such as Kenya Airways and South African
Airways – two airlines that are hoping to
emulate Ethiopian’s pan-African model with
their own group structure but have faced their
own financial challenges in recent years.
“I can’t say we have benefited from the
weakness of African airlines,” he says. “71%
of the African traffic is being served by non-
African airlines and Ethiopian Airlines’ share
is only 15%.”
GLOBAL COMPETITION
Big players on flights to and from the conti-
nent notably include Middle Eastern connec-
tors Emirates and Qatar Airways, alongside
Turkish Airlines and its hub in Istanbul, all of
whom serve long lists of African destinations
and have been adding capacity to the conti-
nent coming out of Covid. National flag carri-
ers such as British Airways and Air France
also fly significant capacity into the continent.
“So our competition is with major [global]
carriers, not with African carriers, and I think
the other non-African airlines have probably
benefited more out of the weakness of the
African aviation industry,” he says.
Still, Tasew laments that African carriers
have not recovered quickly enough from the
pandemic downturn compared with peers else-
where, noting that Ethiopian takes that “as a
responsibility of a pan-African airline – to assist
the African air transport industry to grow”.
Helping it on that journey, a key part of
FlightGlobal.com/airlines
Ethiopian’s strategic roadmap is enhancing its
business in technological terms. Tasew
includes investment in the airline’s fleet
within that technology mission, noting that
one priority is a fresh widebody order.
“By 2035 we are planning to have a total of
271 aircraft,” he says. “Today we have 143, so
we will be nearly doubling the fleet.
“And there is a roadmap that shows how
many aircraft Ethiopian Airlines needs to
operate every day during the coming 12 years.
We are going to order the aircraft from the
manufacturers to support our growth in line
with our fleet plan.”
That means Ethiopian needs many more air-
craft than the 27 or so outstanding orders it has
today, with those future jets an important part
of the carrier’s sustainability efforts, Tasew
notes, as they deliver efficiency savings.
When it comes to technology, Tasew also
cites an “immediate” focus on digitising
customer-facing systems.
“As you know, the general trend is to
transform customer services, using the latest
information technology so that passengers will
plan their journey based on the digital informa-
tion they get, they will choose their carriers,
they will do their own booking, they will buy
their tickets, they will get all the information
they need using online services,” he says.
“That is another area where Ethiopian Airlines
has planned to focus, starting immediately.”
He further highlights “operational excel-
lence” as an area for technological investment
in the coming years.
“To bring operational excellence we will
continue to invest in new technologies to
enhance the productivity of our staff, to
improve the efficiency of our operation and
also to reduce our costs,” Tasew explains.
With grand plans for investment and
expansion through to 2035, nearer-term chal-
lenges such as rising costs are being closely
monitored, as are network opportunities.
The reopening at the turn of the year of
China – a focus market for Ethiopian in pre-
Covid years, not least because of the two
country’s long-standing closeness in political
and economic terms – has been particularly
important for the carrier’s passenger and cargo
markets in recent months.
“China is a very important market for Ethi-
opian Airlines,” Tasew says. “Our network is
designed in such a way that we connect Afri-
cans with the rest of the world and China is
one of probably one of the biggest trading
partners with Africa.
“Today, we fly to five cities for passenger
operations including Hong Kong, and nine
FlightGlobal.com/airlines
Airport ambitions
Expansion works at Ethiopian Airlines’ Bole
International airport hub in Addis Ababa are
bringing its annual capacity above 20 million
passengers, but talk of a new 100 million-
capacity facility has been ongoing for several
years now.
The new airport is expected to be built at
Bishoftu, to the southeast of Addis Ababa.
Crucially, however, obtaining the right to
build on the proposed land is a sticking point.
“The land is already defined, but we still
didn’t secure it,” Tasew says.
“We are still under discussion with the
regional government on how to resettle the
people who are using the land.”
He is not, however, unduly worried about
any delays.
“Ethiopian Airlines has been investing at
the existing airport to have incremental
expansions,” he states, adding that those
works mean the current facility will be able to
accommodate the carrier’s operations for at
least another five years.
Still, the new airport is important to the
expanding carrier.
“We are going to drive it and it will
happen,” Tasew says. “Hopefully we will se-
cure the land before the end of the current
fiscal year.”
Chinese cities for cargo, with a total of 66
weekly flights to China.”
Passenger capacity to China is expected to
be fully restored to pre-Covid levels by
November, Tasew states, while cargo capacity
is already above 2019 levels.
As China services and others grow beyond
pre-Covid levels, Tasew is philosophical
when asked about the likely moderation of
pent-up demand coming out of the crisis, and
any potential challenges that might create
given the impact of high cost inflation.
“The higher yield that we are getting today
is helping us to cope up with the increased
operational costs,” he states. “But we hope
that operating costs, particularly for aircraft
parts, will decline, as manufacturers resume
normal operation.
“Generally, fares will have to be adjusted in
accordance with the operating costs like fuel
price, so it will be a dynamic relationship and
we are closely monitoring it.”
Like peers, Ethiopian has seen operating
costs increase “significantly”, Tasew says,
exacerbated by inflation that has been particu-
larly high the airline’s home country.
And when it comes to aircraft parts, the
problems do not only relate to costs. “The parts
shortage is a critical problem for the entire air-
line industry,” Tasew says. “We use different
techniques to mitigate the impact of parts short-
ages until the industry bounces back and starts
providing the parts as it used to before Covid.”
MITIGATING DELAYS
Amid a “struggle to get the parts and keep the
aircraft flying”, Ethiopian is yet to see aircraft
grounded because of the shortages, he says, and
has so far seen no need to extend the lease terms
of older aircraft to mitigate the impact.
Tasew also says Ethiopian has not seen
delays in the deliveries of new aircraft from
Airbus, or with Boeing 787s. He does note,
however, an “exception” with Boeing 737
Max deliveries, which are being delayed “by a
few months”.
That is a relatively minor concern as Tasew
leads Ethiopian towards its 2035 goals, confi-
dent that they are achievable – and that the
Ethiopian government sees the value the
group brings to the country.
“The Ethiopian government considers
Ethiopian Airlines as a strategic asset,” he states.
“Not as a business that generates revenue and
profit but as a strategic asset for the economic
development of the country and for the security
of the country because we are landlocked.”
Operating in Africa is likely to bring new
challenges in the coming years. The absence
of moves to create a sustainable aviation fuel
industry in the region, for example, was the
subject of much discussion at this year’s
IATA AGM.
But armed with nearly 40 years’ experience
with the business and a whole new set of
learnings from the Covid-19 crisis, Tasew has
the opportunity to maintain and potentially
enhance Ethiopian’s hard-earned status
locally and in the global aviation sector. ■
September 2023 | Airline Business | 21
INTERVIEW CON KORFIATIS
REPORT
GRAHAM DUNN
ISTANBUL
PHOTOGRAPHY
BILLYPIX
Growth vision
While much of the attention in Saudi Arabia is on the impact of new players in the market,
Flyadeal chief executive Con Korfiatis can already attest to the country’s untapped potential
W
hile the arrival of new entrants
is grabbing the headlines as
part of Saudi Arabia’s ambi-
tious plans to create a new
global aviation hub and triple passenger num-
bers by 2030, growth has been part of the
story since day one for local carrier Flyadeal
and its chief executive Con Korfiatis.
“It was always going to be an exhilarating
ride because of the potential,” Korfiatis told
Airline Business during an interview in June.
“The whole idea of establishing Flyadeal in the
first place was you had basically a duopoly
and visions around growth and diversification
were starting to come out, and they decided in
the aviation industry to open up.”
Flag carrier Saudia, which together with
Flynas were the primary operators in the
Kingdom at the time, was one of three com-
panies to put itself forward, through the cre-
ation of a new low-cost unit.
“The reason for that was the Saudia Group
were firmly at the top end of the market, the
other airline was effectively a hybrid airline,
and somebody was going to come in and
give it a shot,” Korfiatis says. “They figured
rather than leave it to someone else, they’d
have a shot at it themselves.”
Enter Flyadeal. Korfiatis was already well-
versed in low-cost start-ups following spells
leading Jetstar Asia, Viva Macau Airlines, and
Garuda Indonesia unit Citilink and, in 2017,
Flyadeal launched.
“We started out of the gates gangbusters,”
he says. “We were six months behind the
other guys who set up, and the aircraft were
full from day one. And as quickly as we could
bring them in, we were filling them. We had a
business plan that frankly in terms of long-
term outlook has not deviated that much, but
the timing of the roll-out and how we staged it
has dramatically changed.”
22 | Airline Business | September 2023
That saw the carrier, at least prior to the
pandemic, focus on domestic routes.
“We honestly thought with the aggressive
capacity we were planning that we would
need to spread ourselves further so we don’t
overload fewer routes and end up with empty
seats. But what we found is as quickly as we
brought the aircraft in domestically… we
were filling them. So it kind of made sense to
hold back on international expansion.”
That proved a fortuitous strategy given that
it meant when the pandemic hit, the airline
had limited exposure to the loss of interna-
tional markets and a wide domestic network
to fall back on when internal flights could
resume.
“That domestic flying came back in two
and a half months. [And] because people
couldn’t go internationally, it sparked the
domestic tourism industry around the same
time,” he says.
RAPID RECOVERY
While the relatively rapid recovery in opera-
tions from the pandemic enabled the airline
to avoid the salary and labour cuts pain much
of the industry endured, it did initially
emerge from the crisis with more aircraft than
it needed.
“We came out with 27 aircraft, because
our orderbook started delivering,” he
explains. Flyadeal had before the pandemic
switched an initial commitment for up to 50
Boeing 737 Max jets for Airbus A320neos
after the former’s grounding. Deliveries of
the 30 A320neos on firm order began in the
summer of 2021.
“When Covid came along we tried to delay
things as much as we could, but we could
only do small things. So the capacity came
and honestly, for a period of time it was too
much,” says Korfiatis.
“But then as things came back, things
really took off and we filled that capacity
quickly and we have gone from having a bit of
over-capacity to now we are short of aircraft.
“It’s been driven by the fact the tourism,
albeit starting from an extremely low base, is
growing quickly. The Umrah market opened
and is coming back and in bigger numbers
than we had pre-Covid, so we have that from
an inbound point of view. And from an out-
bound point of view, people are allowed to
travel again. It’s been incredibly busy and it’s
continued.”
The growth has been such that the carrier
is looking at options for additional capacity.
“We are thinking about leasing some aircraft
short-term, we are thinking of exercising
options we have with Airbus, we are think-
ing about a campaign to add more aircraft to
our orderbook. So it’s a nice place to be.”
Flyadeal’s Airbus A320 fleet will reach 32
by year-end – around half of which are Neos.
“Our orderbook is for another five over the
next two years, and we are looking to go to
market for additional capacity from 2024
onwards,” he says. “The intent is 100, 100-
plus aircraft by 2030. And maybe by then a
small sub-fleet of widebodies as well.” Fly-
adeal currently wet-leases three Airbus A330s
for Haj operations, but Korfiatis says in the
longer-term there could be a requirement for
year-round services.
While it proved opportune to be a domestic
carrier prior to the pandemic, Flyadeal has
since moved into the international space. It
launched flights to Dubai and Kuwait in 2021
and now operates a string of international
destinations from Damman, Jeddah, Madinah
and Riyadh. This summer it added flights to
the Georgian capital Tbilisi and Turkish cities
Antalya, Bodrum and Trabzon.
“Late in the year we are looking at south
FlightGlobal.com/airlines
“This is the fourth time I have
done a low-cost start-up. And
every market I’ve done,
people say ‘the demographic
here doesn’t like this sort of
product’. And [it was] no
different in Saudi Arabia”
Asia, so Pakistan and India,” he says. “The
predominant proportion of growth from here
on will be international.
“Having said that, the domestic network is
not mature,” he adds. “We are in 20 of the 25
biggest airports. So we still have airports we
don’t operate and dots to join, and there is
still existing growth on the existing routes.”
While the other carriers granted licences
along with Flyadeal fell away – SaudiGulf
launched in 2016 but has since suspended
operations, while Qatar Airways’ Al Maha
unit failed to start – Flyadeal is now firmly
established in the market.
Cirium schedules data for August shows
Flyadeal was the third biggest operator in the
Saudi market, accounting for more than 11%
of seat capacity.
And amid Saudi’s Vision 2030 growth
aspirations, a fresh round of operators are on
the way.
At the network carrier end of the market
that includes Riyadh Air, the new flag carrier
which aims to connect the Saudi capital to
FlightGlobal.com/airlines
the rest of the world, and plans are under way
for an airline to serve the ambitious new des-
tination project city Neom.
In the low-cost segment, both Kuwait’s
Jazeera Airways and Central European budget
carrier Wizz Air are among those taking steps
to enter the market.
CONFIDENT OUTLOOK
Korfiatis, however, is more than confident
about there being enough demand.
“The targets for Saudi Arabia are for tri-
pling the passenger numbers by around 2030.
Even with all the activity in the market place
– Saudia are talking about getting a lot more
aircraft, we are saying that, the other local air-
lines are saying that, and new airlines coming
along as well – the sum of that doesn’t fully
get you to 300 [million].” he says.
“Our demographic exists in every market,
because we are the true low-cost in Saudi
Arabia. And the other stuff that is coming in
is going after a different demographic to that.
We already play Kingdom-wide. Albeit we
are headquartered in Jeddah, our larger base
is actually in Riyadh already and it is pro-
jected to stay that way.”
Korfiatis’ optimism also comes from his
general confidence in the demand for low-
cost air travel.
“This is the fourth time I have done a low-
cost start-up. And every market I’ve done,
people say ‘the demographic here doesn’t like
this sort of product’. And [it was] no different
in Saudi Arabia.
“Clearly when we launched, we didn’t suc-
ceed by stealing market share from the other
airlines. We actually grew the market. People
were doing long trips by buses before we
came along. The market is there, there’s no
question about it. It is no different to the rest
of the world.
“If you look at where we are now and where
we might be on the maturity curve, the propor-
tion of the traffic this demographic represents
is still low compared to other markets where it
has been around for longer,” he says. “So there
is a lot of growth to come.” ■
September 2023 | Airline Business | 23
INTERVIEW PETER FOSTER
REPORT
LEWIS HARPER
PARIS
Stronger
foundations
Long-serving chief executive Peter Foster says Air Astana
has the cost structure to cope with demand ‘normalisation’
as the Kazakh carrier grows beyond pre-Covid levels
W
hile the entire airline industry
was given a harsh reminder
about the impact of outside
factors on its fortunes during
the Covid-19 crisis, for some carriers the tur-
bulent backdrop did not relent, even as the
worst of the pandemic was over.
Air Astana is a case in point: unrest in its
home country during January 2022 was soon
followed by neighbour Russia’s invasion of
Ukraine, creating a host of fresh challenges.
But under the long-term leadership of Peter
Foster, Kazakhstan’s flag carrier managed to
remain profitable last year as it grew above
pre-Covid traffic levels, having already moved
back into the black in 2021, as it continued to
demonstrate that opportunities can be found
in the toughest of environments.
NETWORK EXPANSION
Speaking to FlightGlobal in June, Foster
explained that the airline’s growth has contin-
ued this year and that it is looking forward to
future network expansion opportunities as it
updates its fleet and sees rapid demand expan-
sion at its low-cost unit FlyArystan. At the
same time, however, he acknowledges that Air
Astana is operating in a world where inflation-
ary pressures, capacity constraints, staffing
shortages, high costs and moderating demand
mean the industry might be heading towards a
raft of ‘normalisation’ challenges sooner rather
than later.
Those factors are likely to test Air Astana’s
– and the wider industry’s – mettle in the
24 | Airline Business | September 2023
coming months, Foster says. But he is
confident that his business is well-placed to
continue its successful emergence from the
pandemic years.
“We feel we’re in a pretty good place at the
moment, notwithstanding the structural
problems in the industry, in terms of a lack
of resources, supply chain, so on and so
forth,” he states.
That confidence partly stems from the air-
line’s performance and restructuring work
during the pandemic.
Air Astana was helped in securing its foun-
dations during the Covid-19 crisis by the
Kazakh government’s “relatively liberal atti-
tude towards travel into and out of the coun-
try”, Foster explains.
“So really, it was just a question of finding
places where we could fly to… Certain coun-
tries had a relatively pragmatic approach to
Covid, such as Dubai, the Maldives, Montene-
gro, and various others.”
After “completely re-doing” its interna-
tional network, Air Astana worked with its
business partners “to manage that finan-
cially”, Foster says, ultimately meaning it did
not require government or shareholder
support – BAE Systems remains a 49%
shareholder, with Kazakhstan’s sovereign
wealth fund holding 51% – during the global
industry crisis.
Furthermore, unlike many of its peers, Air
Astana remained financially sound without
significant recourse to cargo markets at the
height of the pandemic.
And as it sought to stay on the front foot,
Air Astana “never made anybody redundant”
during the crisis, enabling it to “get off and get
going again very quickly”, he says.
That approach goes some way to explain-
ing why Air Astana was on solid foundations
when Russia’s invasion of Ukraine last year
threatened to bring a whole new air travel cri-
sis to the region.
The war has undoubtedly created airspace
headaches for Air Astana – insurance and air-
craft registration issues meaning it stopped
overflying Russia last year. However, rather
than being thrown off course, Air Astana has
benefitted from the shifting south of passen-
ger traffic that would have once of flown to,
from and through Russia.
“Structurally, what’s happened is that there
has been a shift [in traffic] from the Russian
Federation down to Central Asia, and
Kazakhstan is extremely well placed to bene-
fit from that,” Foster explains. “So we have
found a lot of traffic that’s actually come our
way, following the loss of Russian fights and
Russian overflights.
“Whilst what is happening [in Ukraine], of
course, is deeply tragic and concerning, from
a strictly business point of view, we have been
able to absorb those difficulties and have been
able to go forward very positively.”
DEMAND ENVIRONMENT
Those factors are contributing to a “very
strong” demand environment today, Foster
says, which is being served by a group fleet
of 45 or so aircraft – up from around 35 in
2019 – on a mixture of domestic and interna-
tional services.
Low-cost brand FlyArystan – which still
operates under the Air Astana AOC –
accounts for around 16 of those aircraft, and
continues to be a significant driver of the
business’s growth.
“It has gone from around 4 million passen-
gers in 2019 to around 8 million today,” Fos-
ter states.
That growth has come from opening up the
local market to a “completely new segment of
passengers” in what is a huge country.
Still, despite Air Astana’s impressive
growth, Foster is acutely aware that it is not
immune from some of the industry-wide chal-
lenges that are on the horizon – including the
eventual moderating of the pent-up travel
demand that has defined the past 12 months
or so for so many carriers.
FlightGlobal.com/airlines

The fourth quarter of this year will be a “lit-
mus test” for his carrier and the wider indus-
try, Forster suggests.
“Last year was very strong, unnaturally
strong really for a fourth quarter,” he says.
“This year, will there suddenly be an end to
this boom in the market? Will discretionary
travel cease to be so frequent? Will business
travel partially go back online?
“I think the answer is that that is inevitable
[but] the question is the timing.”
Not that Foster is unduly worried.
“Airlines that took the opportunity to
restructure during Covid have emerged with a
much stronger structural foundation,” he
says. “Those airlines that restructured will go
into the medium to longer term with a much
healthier fundamental cost structure.
“That certainly is the case as far as we’re
concerned,” he says.
And that is fortunate, because Foster
describes the current airline cost environ-
ment as “very high pressure”, exacerbated in
the second half of the year by fuel prices
being on the rise again.
“All of the costs are suffering from very sig-
nificant inflationary pressures, so it’s putting
an enormous pressure on the cost base, which
is shoving up yields,” he states.
As an example of the severity of some of
those cost increases, Foster cites “dramati-
cally” higher staffing costs, including pilot
salaries that have risen by 40-50% over the
past 18 months or so.
FlightGlobal.com/airlines
“How long can the market continue paying
these necessarily higher prices in order to
cover these extra costs, driven by inflation?”
he asks. “And what’s the reaction from con-
sumer groups, governments, so forth?
“Demand is not in inelastic, airlines cannot
keep raising prices to cover inflation forever.”
Despite that concern, in common with
many of his peers, Foster also laments the fact
that “we have to fly less than we’d like” in the
current capacity-constrained environment.
“How long can the market
continue paying these
necessarily higher prices in
order to cover these extra
costs, driven by inflation?”
When it comes to the airline’s metal, two fac-
tors are weighing on expansion: delivery
delays and the grounding of aircraft because
of issues with Pratt & Whiney engines.
“Roughly speaking, all aircraft deliveries are
being delayed to the order of about six months,
which is disruptive,” Foster says.
Furthermore, the airline’s current Airbus
A320neos and Embraer E190-E2s are vulner-
able to the high-profile issues with their
PW1000G-family engines.
Foster highlights low-cost unit
FlyArystan’s strong growth
Air Astana
“The upshot of that is that we are short of
capacity,” Foster says, adding that the airline
is flying its in-service fleet “as aggressively as
we can” to offset those factors.
The “single biggest story” in the industry
today is, however, the return of Asia, accord-
ing to Foster. While Southeast Asia is “doing
very well” in terms of demand, China has
been “less strong than anticipated”.
Speaking before China removed more
restrictions on outbound group travel in
August, Foster speculates that the slow return
of the Chinese market might partly reflect a
reticence among its citizens to travel so soon
after the country’s draconian Covid-19 restric-
tions were dropped, and also economic chal-
lenges in the country.
Still, he assumes that it will “start to pick up
in 2024”.
The full return of that key market would be
another important milestone for Air Astana’s
journey beyond the Covid-19 crisis.
As that journey continues, Foster acknowl-
edges that he leads a business in an industry
where “crises will always happen”.
And they will “always be unexpected and
different”, he says, observing that the pan-
demic “reminds us just how much airlines are
required to keep healthy cash balances and
how those balances can drain very quickly”.
Cash, then, will be a key component to Air
Astana’s future success, as will the “very tight
and flexible decision-making” that helped it
through the past three years. ■
September 2023 | Airline Business | 25
WORLD AIRLINE RANKINGS FINANCIALS

REPORT
GRAHAM DUNN
LONDON

Path to profits
Robust revenues as passenger markets reopened enabled many of the world’s leading
airlines to restore profitability in 2022 – but the scars of the pandemic were still evident

L
eading airline groups returned to the
black at an operating level in 2022 after
two years of pandemic losses, though
profitability remained well down on
pre-pandemic highs.
FlightGlobal analysis of financial results for
the leading 100 airline groups shows that
improved financial performance was driven by
a jump in revenues. Collective revenues for the
100 biggest airline groups by turnover stood at
around $750 billion – within sight of the near
$800 billion the same groups posted in 2019.
Notably it is a rise of more than 50% on the
same carriers’ performance in 2021.
The higher revenues reflect the sharp pick-
up in passenger traffic in 2022 as markets reo-
pened. However, capacity and traffic have not
recovered to pre-pandemic levels as quickly.
The bigger improvement in revenues is fur-
ther driven by higher yields, in a part a prod-
uct of continued capacity constraints. The
revenue improvement is even higher if local
currency is used, as the strong dollar in 2022
against most currencies results in lower
values after currency conversion.
Data available for 73 of the 100 biggest
airline groups by revenue shows a collective
operating profit for last year of $19 billion.
That compares to a loss of a similar size in
2021 and of $117 billion in 2020 at the height
of the pandemic. It is, however, less than half
the $44 billion profit the same groups made in
their last financial year before the crisis.
More than two-thirds – 51 of the 73 groups
for which operating data was available – were
profitable last year.
Leading airline groups were still not profit-
able at a net level, though. Data covering 79
groups shows a small net loss of $2 billion.
That, however, is a marked improvement on
the $41 billion these carriers lost in 2021.
A majority, 47 of the 79 carrier groups to dis-
close a net result, were profitable. However, 32
were loss-making for the year, reflecting the
impact of factors such as restructuring costs.
IMPROVED FORTUNES
Notably, after cargo activities had done much
to see operators through the crisis, it is pas-
senger activities that have driven the
improved fortunes. Revenues among leading
cargo players were roughly unchanged in
2022 at $74 billion, comfortably above 2019
levels. While profitability weakened as cargo
yields fell, it was still higher than 2019 levels.
Low-cost and leisure carriers in particular
enjoyed a sharp bounce back. Revenues
among these carriers doubled to $140 billion
last year – higher than the $137 billion gener-
ated in 2019. Network carrier revenues stood

Revenue evolution since pandemic for 10 biggest airline groups in 2022

($/m)
55,000
2022
2022
50,000
2019 2021
2019 2022
45,000 2019 2022 2019
2020

40,000 2022
2019
35,000 2
2021 2021
30,000
2021
25,000
2021
20,000 2020 2020
2020
2020
15,000

10,000

5,000

0
s up gs Ex up
Line Gro oldin Fed Gro
a Air nes es H nsa
Delt an A
irli lin Luft
ha
eric e d Air
Am Unit
Passengers Cargo Other

26 | Airline Business | September 2023 FlightGlobal.com/airlines

 at $520 billion. While still up sharply on the
$333 billion generated in 2021, the previous
year had been supported by increased freight
activities. Overall network carrier revenues
for those within the top 100 remained short of
the almost $600 billion generated before the
pandemic in 2019.
There also remained a pronounced differ-
ence in fortunes by region, and among some
countries within those regions. That is most
obvious for Chinese carriers, which endured
heavy losses – in fact their worst year of the
crisis – as the country’s zero-Covid strategy
and lockdowns were increasingly at odds
with the reopening seen across other markets.
US carriers have, as they did before the
crisis, led the financial performance out of the
pandemic. North American airlines had
already made the most progress in recovering
revenues in 2021, and figures covering 21
leading operators show revenues surpassed
pre-pandemic levels last year. North
American carrier revenues of $285 billion
were $25 billion above 2019 levels.
Five of the 10 biggest airline groups by rev-
enue in 2022 were US carriers, including the
four largest.
The region also continues to be the most
profitable. North American carriers had
returned to an operating profit already in 2021
– though in part helped by US government
pandemic-related support. Strong demand
and yields helped leading North American
carriers, covering 19 airlines, post operating
2022
2019 2022
2021
2021
2020
Gro
up
MG
irates -KL
Em ce
Fran
Air
FlightGlobal.com/airlines
Delta Air Lines became the first airline group to pass $50 billion revenues in 2022
profits of $9.8 billion for last year. That
though is less than half the $23.4 billion the
same carriers enjoyed before the crisis, and
several airlines remained loss-making.
The figures are even stronger when looking
at US carriers alone. Canadian carriers
endured a tougher 2022 financially. Air Can-
ada, while much improved on 2021,
remained in the red last year – as did Air
Transat – while privately owned WestJet has
not released financial results for 2022.
AMERICAN ACCOUNTS
North American carrier profitability was far
less obvious at a net level. Figures for 18 carri-
ers, which do not include the profitable
FedEx, were less than $1 billion for 2022.
European airline revenues, covering 24 air-
line groups, almost doubled from just under
$100 billion to $191 billion in 2022. That rev-
enue jump is even more pronounced in local
currency, before weakness against the strong
dollar is factored in. That too is a factor in last
year’s revenues falling short of the $209 bil-
2019
2019
2022 2022
2021
2020
2021
2020
roup IAG nes
Airli
est
thw
Sou
RTX
lion the same 24 carriers generated in 2019
before the pandemic. It also should be noted
that a number of carriers, including EasyJet,
SAS and TUI Group, have financial years that
closed in the second half of 2022 – and there-
fore incorporate more time operating in a mar-
ket with Covid-related travel restrictions.
Another factor is the drag on Russian carri-
ers through isolation from many international
markets as a result of the invasion of Ukraine.
Aeroflot revenues, for example, are roughly
half those of pre-pandemic levels.
Improved load factors and yields helped
European carriers jump back into profitability
for the year. Figures for 18 European carriers
within the top 100 group posted collective
profits of $8.8 billion compared with a loss of
over $23 billion (among 23 carriers) in 2021.
This is also $3 billion short of the $11.8 bil-
lion profit that European carriers posted
before the pandemic – though the same cave-
ats around direct comparison as above apply.
It was a mixed year for Asia-Pacific carriers.
While many carriers enjoyed a recovery of ❯❯
2019
2022
2021 2019
2020 2020
roup
sG
Air way
Qatar
Source: FlightGlobal
September 2023 | Airline Business | 27
WORLD AIRLINE RANKINGS FINANCIALS

❯❯ fortunes as markets began increasingly Some of the region’s strong performances Following the completion of formal
opening up from Covid travel restrictions as are in Australia and New Zealand, where the restructurings of the Latin America region’s
the year progressed, the strict lockdowns that financial year closed in June. Qantas and Air major carriers, together with the relatively
remained in place in China were a drag on the New Zealand were among the most profitable early lifting of Covid restrictions meaning it
performance of the region as a whole – and operators in the region. Korean Air and Singa- was the first region to reach pre-pandemic
Chinese carriers in particular. pore Airlines were also profitable, as well as capacity and traffic levels, there is a clear rev-
Revenues at the big three – China Southern, the Japanese carriers. Contributing factors enue recovery for the region’s airlines.
Air China and China Eastern – hit their lowest include strong cargo performance, even if dip-
point since the pandemic. Demand at the ping on previous highs, and high yields from DOUBLING REVENUES
country’s smaller private carriers was simi- constrained capacity. Revenues reached $32.5 billion for the nine
larly stifled. This explains why despite the However, heavy losses incurred by Chinese leading Latin American airline groups, almost
pick-up in revenues across other operators in carriers – the big three racked up combined net double the previous year, and around the $31.9
the region, collective revenues across 33 air- losses of over $17 billion in 2022 – mean over- billion the same carriers generated in 2019.
line groups increased by only around a quar- all the region’s operators remained loss-mak- The region’s leading carriers also returned a
ter on 2021-22 to reach $158 billion. That is ing. Leading carriers, covering 24 operators in modest profit at an operating level – figures for
only a little over two-thirds of 2019 levels. the region, made an operating loss of $7.6 bil- eight airline groups generating a profit of $836
While currency movements against the lion and a net loss of $14.5 billion. The latter million. While the same carriers did likewise
strong US dollar affect the comparison with figure also includes a $3.7 billion profit from at a net level, the collective $1 billion profit is
2021 and 2019, the figure does include a num- Garuda Indonesia – a one-off result of its debt- wiped out when excluding one-off financial
ber of carriers with financial years closing in restructurings, which created the anomaly of gains relating to LATAM Airlines Group
March or June 2023 – meaning they reflect making the Indonesian carrier the most profit- restructuring – putting it broadly a break even.
more open markets. able in the world last year by that metric. That is roughly the same level of profitability
the same carriers recorded before the crisis.
Revenue split by region (top 100 groups 2022) The big Gulf carriers were among the quick-
Region 2022 revenue Change v 2021 Change v 2019 est in restoring capacity, a trend that has con-
North America $285bn 46% 10% tinued as more international markets reopened
Europe $191bn 91% -9% from the pandemic. Revenues among nine
Asia-Pacific $158bn 27% -30% Middle East carriers were around $77 billion,
Middle East $77bn 75% 17% higher than the $66 million in 2019. Emirates
Latin America $33bn 83% 3% and Qatar Airways in particular have revenues
Africa $9bn 29% 13%
well above pre-pandemic levels.
Total $753bn 54% -6%
Emirates and Qatar Airways reported
Source: FlightGlobal analysis
record operating profits of $3.9 billion and
$3.3 billion respectively – though the latter’s
7RSDLUOLQHVE\RSHUDWLQJSUR¿W 
net profits were down on 2021 highs. This
Airline/Group 2022 ($m) 2021 ($m) 2019 ($m)
contributed to a collective operating profit of
Emirates Group* 3,867 -76 1,883
Delta Air Lines 3,661 1,886 6,618
$7.6 billion, though data was only available
Qatar Airways Group* 3,258 2,882 -310 for Air Arabia and El Al among other leading
Turkish Airlines 2,779 1,414 585 Middle East carriers.
United Airlines Holdings 2,337 -1,022 4,301 The relatively small number of African
Korean Air 2,232 1,280 246 carriers featuring among the 100 biggest make
Singapore Airlines Group* 1,958 -452 43 analysis of this region difficult. Ethiopian Air-
Qantas Group** 1,850 -1,113 -1,544 lines though reported a strong increase in its
Ryanair* 1,656 -560 1,250 revenues to $6.1 billion. ■
American Airlines Group 1,607 -1,059 3,065
Source: FlightGlobal analysis *Mar 23 year end **Jun 23 year end
Editor’s note: The Airline Business financial
rankings cover the 100 biggest airlines, or
Top 10 low-cost carriers by revenue (2022) groups where they are part of a wider airline
Airline 2022 ($m) Change v 2021 Change v 2019
group, in 2022. These are sourced from airline
Southwest Airlines 23,814 51% 6%
financial statements, annual reports, govern-
Ryanair* 11,321 98% 20%
9,158 52% 13%
ment and regulator sites. Estimates are used for
JetBlue Airways
EasyJet** 7,349 268% -9%
airlines which have not disclosed financial
IndiGo* 6,985 95% 33% results, but are likely to be among the 100
Spirit Airlines 5,068 57% 32% biggest carriers, for indicative purposes. Results
Wizz Air* 4,101 107% 34% are converted at average exchange rates for the
Frontier Airlines 3,326 61% 33% period in question into US dollars for compari-
Azul 3,091 68% 7% son purposes. Results are taken for the most
Gol 2,945 115% -16% recent financial where available, ie the year
Source: FlightGlobal analysis, year ending Dec 22 except *Mar 23, **Sep 22
ending March or June 2023. ❯❯

28 | Airline Business | September 2023 FlightGlobal.com/airlines

 WORLD AIRLINE RANKINGS FINANCIALS

❯❯ 50 biggest airline groups by revenue (2022)

Rank Airline/group State/territory Revenues ($m) Change (%) Operating result ($m) Net result ($m)
2022 2021 2022 v 2021 v 2019 2022 2021 2019 2022 2021 2019 Year end
1 2 Delta Air Lines USA 50,582 69% 8% 3,661 1,886 6,618 1,318 280 4,767 Dec
2 3 American Airlines Group USA 48,971 64% 7% 1,607 -1,059 3,065 127 -1,993 1,686 Dec
3 4 United Airlines Holdings USA 44,955 82% 4% 2,337 -1,022 4,301 737 -1,964 3,009 Dec
4 1 FedEx USA 42,743 -7% 20% 1,064 2,922 996 - - - May
5 5 Lufthansa Group Germany 36,966 70% -15% 1,587 -1,960 2,265 832 -2,578 1,356 Dec
6 6 Emirates Group UAE 32,600 81% 15% 3,867 -76 1,883 3,000 -1,037 456 Mar
7 7 Air France-KLM Group France 27,753 65% -9% 1,254 -1,913 1,275 782 -3,873 328 Dec
8 14 IAG UK 24,254 144% -15% 1,321 -3,253 2,921 453 -3,451 1,917 Dec
9 8 Southwest Airlines USA 23,814 51% 6% 1,017 1,721 2,957 539 977 2,300 Dec
10 10 Qatar Airways Group Qatar 20,954 45% 49% 3,258 2,882 -310 1,210 1,540 -1,924 Mar
11 13 Turkish Airlines Turkey 18,426 72% 35% 2,779 1,414 585 2,725 959 788 Dec
12 31 TUI Group Germany 15,920 237% -13% -48 -1,731 151 - - - Sep-22
13 18 Qantas Group Australia 13,666 110% 2% 1,850 -1,113 -1,544 824 -339 -1,245 Jun
14 9 China Southern Airlines China 12,936 -18% -42% -3,349 -1,539 1,567 -5,010 -1,708 446 Dec
15 24 Singapore Airlines Group Singapore 12,927 129% 11% 1,958 -452 43 1,569 -713 -123 Mar
16 26 Air Canada Canada 12,735 149% -12% -144 -2,439 1,248 -1,308 -2,882 1,117 Dec
17 15 ANA Group Japan 12,648 40% -31% 889 -1,532 562 663 -1,271 256 Mar
18 23 Ryanair Ireland 11,321 98% 20% 1,656 -560 1,250 1,383 -279 719 Mar
19 16 Korean Air South Korea 10,583 38% 0% 2,232 1,280 246 1,377 558 -488 Mar
20 20 Japan Airlines Group Japan 10,189 69% -20% 482 -2,078 796 135 -1,319 481 Mar
21 19 Alaska Air Group USA 9,646 56% 10% 70 685 1,063 58 478 769 Dec
22 28 LATAM Airlines Group Chile 9,517 86% -9% 135 -964 742 1,593 -4,492 190 Dec
23 17 UPS Airlines USA 9,253 21% 46% 211 297 223 80 155 141 Dec
24 21 JetBlue Airways USA 9,158 52% 13% -298 -80 800 -362 -182 569 Dec
25 11 Air China China 8,361 -31% -59% -5,266 -2,614 2,116 -6,712 -2,918 1,050 Dec
26 12 China Eastern Airlines China 7,388 -35% -60% -4,701 -2,096 1,457 -5,555 -1,894 503 Dec
27 50 EasyJet UK 7,349 268% -9% -34 -1,247 591 -215 -1,175 443 Sep-22
28 36 IndiGo India 6,985 95% 33% -38 -827 -39 -38 -828 -35 Mar
29 22 &DWKD\3DFL¿F*URXS Hong Kong SAR 6,518 11% -52% 453 -186 439 -836 -711 216 Dec
30 58 Jet2.com UK 6,141 264% 35% 480 -444 234 355 -432 141 Mar
31 29 Ethiopian Airlines Ethiopia 6,100 23% 57% - 1,123 - - 1,367 234 Jun
32 34 Saudia est Saudi Arabia 5,500 38% -18% - - - - - - Dec
33 32 Cargolux Luxembourg 5,100 15% 126% - 1,718 114 1,600 1,295 20 Dec
34 38 Spirit Airlines USA 5,068 57% 32% -599 -57 501 -544 -473 335 Dec
35 39 Etihad Airways est UAE 5,000 59% -11% - 408 450 - - -870 Dec
36 35 Asiana Airlines South Korea 4,804 23% -19% 463 84 -374 21 -464 -702 Dec
37 27 $HURÀRW*URXS Russia 4,761 -7% -55% -152 -305 938 -580 -617 209 Dec
38 30 China Airlines Taiwan 4,734 0% 0% 199 692 3 96 336 -39 Dec
39 33 Atlas Air Worldwide Holdings Group USA 4,549 13% 66% 522 711 -461 356 493 -293 Dec
40 37 EVA Air Taiwan 4,267 25% -3% 273 344 198 49 316 189 Dec
41 51 Wizz Air Hungary 4,101 107% 34% -492 -554 375 -563 -765 312 Mar
42 48 Avianca Group Colombia 4,047 102% -13% 80 - -554 -322 - -894 Dec
43 53 Air New Zealand Group New Zealand 4,006 117% 31% 374 -454 256 261 -399 185 Jun
44 42 Aeromexico Group est
Mexico 3,750 67% 6% - -648 143 - -925 -122 Dec
45 61 TAP Air Portugal Portugal 3,684 126% 0% 284 -1,751 53 69 -1,881 -107 Dec
46 69 Virgin Atlantic Airways UK 3,523 177% -7% -254 -818 -28 -422 -666 -70 Dec
47 41 Air India Group est India 3,500 31% -10% - -478 -1,091 - -1,421 -1,091 Mar
48 63 Virgin Australia est Australia 3,450 119% -17% - - -96 - - -226 Jun
49 25 Hainan Airlines Holdings China 3,403 -35% -67% -4,220 543 115 -3,001 729 106 Dec
50 46 Frontier Airlines USA 3,326 61% 33% -45 -395 308 -38 -102 251 Dec
Source: FlightGlobal

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'HFHPEHURUGXULQJXQOHVVVWDWHG(VWLPDWHVEDVHGRQKLVWRULFDORUSDUWLDOGDWDKDYHEHHQXVHGIRULQGLFDWLYHSXUSRVHV'DWDIRUWRSDLUOLQHJURXSVLQFOXGLQJVXEVLGLDULHVZKHUHDYDLODEOHDWÀLJKWJOREDOFRP

30 | Airline Business | September 2023 FlightGlobal.com/airlines

WORLD AIRLINE RANKINGS TRAFFIC

REPORT
GRAHAM DUNN
LONDON

Loading back up
Passenger traffic among leading global carriers sharply recovered last year, outpacing
the additional capacity they restored and helping load factors climb back above 80%

W
hile overall passenger traffic lines in the world by traffic in 2020; China
among the world's biggest carri- Southern Airlines ranking as the biggest air-
ers remained well down on pre- line by that metric that year.
crisis levels in 2022, the combi- However, as China remained largely closed to
nation of strong demand set against international travel and doubled down on its
constrained capacity delivered a welcome zero-Covid strategy, last year was to prove the
boost in load factors, which helped underpin toughest for the country’s carriers. No Chinese
the industry’s improved revenue performance. operator featured among the 10 biggest by traffic.
FlightGlobal analysis across the 100 biggest US carriers had also benefited from a large

American Airlines
airline groups last year shows a 64% increase domestic market to fall back on in the early part
in passenger traffic as measured in RPKs, of the pandemic, and then were among the first
compared with the same carriers in 2021. to reap the benefits of rebounding international
The same airlines increased their capacity American Airlines tops the list for 2022 travel when the USA eased restrictions for a
40% in 2022 versus the previous year, reflecting string of countries in November 2021.
the reopening of borders as travel restrictions volumes last year reflects the opening of long- American Airlines was the biggest airlines
were gradually lifted. Capacity levels were, rela- haul international markets for passenger travel. group last year as measured by RPKs, just
tive to demand, kept higher during 2021, in part The bigger gap of passenger traffic to pre- ahead of United Airlines and Delta Air Lines.
reflecting that services could be made profitable pandemic levels, compared with revenues – American was also top of the list by passenger
by increased cargo contributions or to retain a 27% down compared with a 6% shortfall in number, followed by Delta, Southwest Air-
presence in key markets during the pandemic. RPKs – illustrates the extent to which higher lines, Ryanair and United – though Ryanair’s
This, combined with supply chain caps on yields supported the industry’s stronger figures are for the March year-end so cover a
the speed at which airlines could return financial performance last year. more favourable operating period.
capacity even once restrictions were lifted, The strong US carrier performance helped
helped drive a more than 10 percentage point REGIONAL SPLIT bring leading North American carrier traffic
jump in collective load factors among leading The various dynamics of markets and govern- within 14% of pre-pandemic levels for 2022
carriers from under 70% in 2021 to just over ment strategies for dealing with the pandemic – – only bettered by Latin American airlines,
80% last year. That is less than three percent- or more specifically the unwinding of travel which were within 9% of 2019 levels.
age points down on load factors for the same restrictions – is clearly evident in the differing It was European and Middle East carriers
airlines pre-pandemic in 2019. fortunes of US and Chinese carriers. that enjoyed the biggest pick-up in demand,
The top 100 airline groups carried a little In the early stages of the pandemic, Chi- traffic doubling in both regions last year.
over 3 billion passengers in 2022. That is up nese carriers – buoyed by a large domestic Chinese carrier traffic falls dragged growth
42% on 2021, though still almost a billion short market – were among the first to restore a down among Asia-Pacific airlines as a whole
of the 3.9 billion the same airlines flew in 2019. semblance of traffic. The big three Chinese last year. While traffic covering 37 leading car-
The higher rate of RPK growth over passenger carriers featured among the eight biggest air- riers in this region did rise 39%, it remained at
only half pre-pandemic levels – the region
3DVVHQJHUWUDႈFE\UHJLRQ with the most ground to recover on 2019. Nota-
7UDႈF 53.EQ &DSDFLW\ $6.EQ /RDGIDFWRU 3DVVHQJHUV P bly, Singapore Airlines Group enjoyed the big-
5HJLRQ  Y Y  Y Y   gest upturn in traffic of any carrier in the top
North America 1,713 43% -14% 2,068 27% -11% 82.8% 960 20, with a more than five-fold rise in 2022.
Europe 1,737 104% -18% 2,086 70% -15% 82.8% 889 Unsurprisingly, given that both short-haul
$VLD3DFL¿F 1,262 39% -51% 1,691 19% -46% 74.6% 746 travel and leisure were the first markets to open
Middle East 612 112% -19% 786 63% -21% 77.9% 164 up post-pandemic, low-cost carriers are more
Latin America 351 58% -9% 426 51% -8% 82.4% 236 advanced in their traffic recovery. Traffic among
Africa 65 71% -15% 92 35% -20% 70.6% 20 budget operators closed to within 10% of 2019
:RUOG  64%       levels last year, while network carriers remained
Source: FlightGlobal analysis almost a third down on pre-pandemic levels. ■

32 | Airline Business | September 2023 FlightGlobal.com/airlines

7RSDLUOLQHJURXSVE\SDVVHQJHUWUDႈF 
Rank Airline/Group State/territory 7UDႈF Change &DSDFLW\ Change /RDGIDFWRU 3D[ Year-end Notes
53.P $6.P  P
         
 1 American Airlines Group USA 346,939 34% -11% 418,704 21% -9% 82.9 199.3 Dec
 2 United Airlines Holdings USA 332,736 60% -14% 398,787 39% -13% 83.4 144.3 Dec
3 3 Delta Air Lines Group USA 314,527 45% -18% 375,261 20% -15% 83.8 175.0 Dec Pax estimate
4 7 Air France-KLM Group France 237,567 105% -19% 282,826 44% -15% 84.0 83.3 Dec
5 12 Emirates Airline UAE 225,867 141% -22% 284,044 78% -23% 79.5 43.6 Mar
6 15 IAG UK 215,749 174% -24% 263,592 116% -22% 81.8 94.7 Dec
7 13 Lufthansa Group Germany 207,035 132% -30% 259,381 79% -28% 79.8 101.7 Dec
8 6 Ryanair est Ireland 207,000 72% 14% 222,000 52% 17% 93.2 168.6 Mar RPK estimate
 4 Southwest Airlines USA 199,263 20% -6% 238,883 12% -6% 83.4 157.0 Dec
 11 Qatar Airways est Qatar 168,000 77% -1% 209,617 31% -12% 80.1 31.7 Mar RPK estimate
 14 Turkish Airlines Turkey 162,655 88% 6% 201,735 58% 7% 80.6 71.8 Dec
 43 Singapore Airlines Singapore 113,628 450% -19% 133,032 94% -22% 85.4 26.5 Mar
 28 Air Canada Group Canada 106,990 216% -29% 132,836 147% -27% 80.5 36.0 Dec Pax estimate
 5 China Southern Airlines China 102,078 -33% -64% 153,848 -28% -55% 66.4 62.6 Dec
 10 $HURÀRW*URXS Russia 98,407 -2% -37% 117,651 -6% -38% 83.6 40.7 Dec
 25 Qantas Group Australia 97,693 184% -23% 117,528 132% -22% 83.3 45.7 Jun
 20 LATAM Airlines Group Chile 92,588 84% -26% 113,852 68% -24% 81.3 62.5 Dec
 21 Wizz Air Hungary 86,807 99% 32% 97,779 76% 40% 87.8 51.1 Mar
 38 EasyJet UK 84,874 260% -21% 97,287 192% -16% 85.5 69.7 Sep ‘22
 17 JetBlue Airways USA 84,556 28% -2% 103,740 19% 1% 81.5 39.6 Dec
 18 Alaska Air Group USA 82,590 33% -8% 97,719 16% -9% 84.5 41.5 Dec
 22 IndiGo India 80,737 86% -2% 100,013 64% 4% 80.7 75.3 Dec DGCA (scheduled only)
 19 Spirit Airlines USA 63,805 23% 13% 78,144 19% 16% 81.9 38.5 Dec
 8 China Eastern Airlines Holdings China 61,288 -44% -72% 96,211 -40% -64% 63.7 42.5 Dec
 9 Air China Group China 60,355 -42% -74% 96,212 -37% -67% 62.7 38.6 Dec
 41 ANA Holdings Japan 58,611 167% -35% 85,778 56% -33% 68.3 38.7 Mar
 64 TUI Group est Germany 55,000 450% -8% 64,000 392% -9% 85.9 16.7 Sep ‘22 RPK/ASK/LF estimate
 42 Saudia Saudi Arabia 52,193 148% -24% 76,947 81% -19% 67.8 24.0 Dec AACO/Pax estimate
 46 Japan Airlines Group Japan 50,401 178% -31% 73,282 55% -19% 68.8 34.5 Mar
30 31 Lion Air Group est Indonesia 50,000 67% -26% 65,000 30% -28% 76.9 40.0 Dec Estimate
 23 Volaris Mexico 48,577 27% 44% 56,767 26% 44% 85.6 31.1 Dec
 44 Air India India 48,000 140% -27% 60,000 100% -26% 80.0 20.2 Dec Calculated from DGCA
33 36 Ethiopian Airlines est Ethiopia 47,000 88% -1% 68,000 70% 5% 69.1 13.7 Dec RPK/ASK/LF estimate
34 35 Etihad Airways UAE 45,850 83% -44% 56,000 50% -46% 81.9 10.3 Dec RPK calculated
35 29 Frontier Airlines USA 41,260 26% 6% 51,027 16% 13% 80.9 25.5 Dec US DOT
36 39 Pegasus est Turkey 39,850 73% 14% 47,643 44% 8% 83.6 26.9 Dec RPK calculated
37 34 Grupo Aeromexico est Mexico 38,700 34% -17% 47,500 24% -16% 81.7 21.7 Dec Estimate based on 11m
38 72 Jet2 UK 36,927 380% 15% 42,051 244% 19% 87.8 15.5 Dec UK CAA
 52 TAP Air Portugal Portugal 36,782 147% -13% 45,960 94% 0% 80.0 13.8 Dec
40 16 Hainan Airlines Group est China 35,000 46% -72% 51,700 -41% -68% 67.7 21.0 Dec RPK/ASK estimate
 53 Avianca Colombia 33,934 132% -24% 41,596 117% -24% 81.6 25.0 Dec
 46 Copa Airlines Panama 33,433 77% -2% 39,308 64% -3% 85.1 10.3 Dec
43 30 SkyWest Airlines USA 33,250 5% -9% 40,351 -7% -11% 82.4 39.9 Dec US DOT
44 24 S7 Airlines Group est
Russia 33,250 -5% -13% 40,000 -5% -10% 83.1 16.0 Dec RPK/ASK/LF estimate
45 40 Gol Brazil 32,618 47% -22% 40,724 51% -20% 80.0 27.4 Dec
46 70 Korean Air South Korea 31,651 267% -62% 42,374 80% -58% 74.7 11.0 Dec
47 37 Azul Brazil 31,561 27% 5% 39,579 26% 10% 79.7 27.5 Dec
48 56 WestJet est Canada 30,000 140% -30% 36,500 3% -27% 82.2 16.0 Dec Estimate
 79 Virgin Atlantic Airways UK 29,073 316% -27% 40,413 175% -19% 73.4 4.3 Dec UK CAA
50 76 Air New Zealand New Zealand 29,032 306% -2% 34,280 222% -6% 84.7 15.8 Jun
6RXUFH)OLJKW*OREDODQDO\VLVRIDLUOLQHVWDWHPHQWVUHVXOWVDQGDQQXDOUHSRUWVDVZHOODVUHJXODWRU\LQGXVWU\DQGJRYHUQPHQWGDWD1RWHV)LJXUHVIRUFDOHQGDU\HDUZKHUHDYDLODEOHRUODWHVW¿QDQFLDO\HDUXQOHVVVWDWHG
(VWLPDWHVEDVHGRQKLVWRULFLQGXVWU\GDWDKDYHEHHQXVHGIRULQGLFDWLYHSXUSRVHVZKHUHSDUWLDORUIXOOWUDႈF¿JXUHVDUHXQDYDLODEOH'DWDIRUWRSDLUOLQHJURXSVLQFOXGLQJVXEVLGLDULHVZKHUHDYDLODEOHDWÀLJKWJOREOFRP

FlightGlobal.com/airlines September 2023 | Airline Business | 33

 TECHNOLOGY STRATEGY
REPORT
MARK PILLING
LONDON
Digital answers
While battling antiquated IT systems and legacy practices remains a significant barrier, most
carriers are investing in their digital futures, cognisant of the big revenue and cost benefits
V
“ ery few airlines look at digital tech-
nology and innovation as a funda-
mental policy pillar,” says Alex
Cruz, the former chairman and
chief executive of British Airways and low-
cost carrier Vueling. “How many airlines for
instance have a chief digital officer as
opposed to a chief information officer?”
The answer is relatively few. Delta Air Lines
does. It created the role of senior vice-president
and chief digital officer last year, appointing
airline veteran Eric Phillips, who was running
airport customer service and cargo.
Phillips took on the new role in June 2022,
tasked with leading a team focused on
“enhancing customer interactions with Delta’s
digital tools and channels, including develop-
ing new and better capabilities on Delta.com
and the Fly Delta app to address customer
needs before, during and after travel”.
Another example is in India. Indigo
appointed ex-Emirates executive Neetan
Chopra as chief digital and technology officer
in 2022 to lead the low-cost player’s digital
strategy. And more will arrive.
34 | Airline Business | September 2023
For Cruz, adding digital leadership into the
C-suite is essential in a world where the
exploitation of websites and applications to
sell and deliver air travel, manage the cus-
tomer experience, and achieve operational
excellence, is a key enabler. Throw in how
airlines are increasingly using artificial intel-
ligence technology, and the need for greater
digital leadership becomes clear.
PUSHING BOUNDARIES
Airlines are often unfavourably compared
with the world’s leading retailers – the
so-called digital natives such as Amazon and
Uber – when it comes to pushing the bound-
aries of digital development.
“It is easy to see looking from the outside
that digital innovation amongst airlines is
underwhelming,” says Montie Brewer, an
industry veteran who was chief executive at
Air Canada and is now on the boards of Alle-
giant Travel and Finnair, and airline
employee travel company ID90T.
“The safety culture of airlines means they
are process heavy and your DNA is risk
MyCreative/Shutterstock
averse. Innovation is, by definition, risky,”
explains Brewer.
“This means that finding the airlines that
are using digital technology to deliver a
transformational story is hard,” says Cruz,
who advises private equity investing in travel
and technology companies, in addition to
being on the board of WestJet. “Most of the
success stories are around single topics,
where digital technology is used to solve a
discrete problem,” he believes.
During the pandemic years, investment in
digital technologies at many carriers trickled
to a halt as spending was frozen in the battle
to survive. “Airlines were focused on ‘block-
ing and tackling’ rather than pushing the
boundaries of the digital experience in our
industry,” observes Mark Dunkerley, the
former chief executive of Hawaiian Airlines,
who serves on the boards of Airbus, Spirit
Airlines and Volotea.
This did not apply to all. “During Covid
there were airlines who had the strategy to
use technology more effectively when it
comes to retailing who doubled down on this
FlightGlobal.com/airlines
effort,” says Brewer. “Others stopped, so the
gap has grown.”
That tide is turning as carriers seek to
extract greater value from digital solutions.
According to Cruz, the digital focus covers
the three main areas of the airline: commer-
cial, operational and finance.
There is vast potential to improve all three.
For instance, many carriers are running an
operational heart, sometimes dating back half
a century, that is a mishmash of inter-con-
nected systems that manage flight, aircraft,
crew and airport operations.
For network or legacy carriers, the reserva-
tions system, and all the associated systems
around it, which can also be decades old, is
the commercial heartbeat of the airline, and
one of the least flexible in delivering the type
of product progressive airlines desire.
TOP PRIORITIES
So, what is the priority for the digital leader in
the airline C-suite? For all players, making a
better website and app, that continuously
improve, is paramount. Legacy carriers have
the additional priority of modernising their
reservations and distribution systems.
The latter sounds simple but is an enor-
mous undertaking that delves right to the air-
line’s commercial heart, the relationship with
the global distribution systems Amadeus,
Sabre and Travelport, and the risk of upset-
ting high-value corporate customers.
For the brave this means replacing legacy
IT systems and undoing traditional distribu-
tion practices to give them greater flexibility
to sell and package their products, and
deliver a more personalised service, all with
aims of growing revenue and reducing costs.
“Finding the airlines that are
using digital technology to
deliver a transformational
story is hard”
Alex Cruz
Former chief executive of
British Airways and Vueling
FlightGlobal.com/airlines
Apps that continuously improve are an important focus for digital leaders at airlines
The challenge and risk are daunting, and
the pace of change is slow, but the digital
technology appears ready and the will to
deploy it is rising.
“The fact that LCCs own and control their
own APIs [application programming inter-
faces – the software that connects two parties
without any user intervention] is the main
difference between them and network carri-
ers,” says Ann Cederhall, a travel technology
expert at consultancy LeapShift.
For years the website, that most basic of
digital technologies, has been, and will
remain, along with the mobile app, the core
digital tool for all carriers; be they network or
low-cost players.
It is the use of this tool, specifically in the
ability of low-cost carriers to sell their seats
and ancillary products exactly as they choose,
that sets them apart from legacy airlines.
Mexican low-cost carrier Volaris, which
will operate over 120 Airbus family narrow-
BillyPix
Tada Images/Shutterstock
bodies by year-end, used the pandemic, when
there were no customers, to develop and
launch a new website, explains Daniel
Gelemovich, digital and marketing director at
the carrier.
Volaris worked with Google to develop a
website that has many of the functions of an
app to cater for travellers who have low-end
mobile devices or mobile plans with low
data. “One of our challenges is that many of
our customers are first-timers, so the user
experience must be very easy for our non-
digitally savvy customers,” says Gelemovich.
SHOPPING CARTS
Getting the basics right, such as having a fast
and easy to use website sounds obvious but is
the highest priority when it is the primary
sales and customer interaction tool.
Airlines are seeking to match the global
retailers in this regard, but there is a key
difference in their product offering, explains
Gelemovich.
“The shopping cart for an airline is much
smaller [compared to say Amazon], so in that
sense it is more complex to recommend addi-
tional products or products that match with
others,” he explains.
“Also, airline ticket purchases are much
more separated, compared to retail customers
who can be purchasing every week,” notes
Gelemovich. “Analytic capabilities and fast
development of new products requested by
the market, such as deeper flexibility options
after the pandemic, are key.”
A trend that airlines are copying from the
retail world is a closer relationship with the
customer by encouraging them to sign up.
“Getting people signed up and logged in is
good for business and good for customer satis-
faction,” says Gelemovich. Having customer
profiles and permissions also enables a carrier ❯❯
September 2023 | Airline Business | 35
TECHNOLOGY STRATEGY
More legacy airlines are
looking beyond decades-
old distribution standards
❯❯ to deliver personalised travel offers in a
more sophisticated manner.
Many experts interviewed for this article
praise the apps developed by a range of carri-
ers for their user-friendliness and features
such as automated rebooking. Apps by Amer-
ican Airlines, Qatar Airways, Qantas, Delta
and Ryanair are all mentioned.
“Creating a great app is a huge plus, and it’s
not rocket-science,” believes Azim
Barodawala, the chief executive of Volantio, a
tech company with an automated product
that moves select customers on popular ser-
vices to alternative off-peak ones, post-book-
ing, with compensation enabling airlines to
resell peak inventory at a profit.
LIFESTYLE PLATFORM
Malaysia’s AirAsia is seeking to go one step
beyond with its Super App. It was launched in
October 2020 as a new brand for airasia.com,
“completing AirAsia’s transformation from a
digital airline into a comprehensive lifestyle
platform for everyone”, said the carrier.
At the time, AirAsia Group – now Capital A
– chief executive Tony Fernandes said: “Just
like how we built AirAsia as a brand, airasia.
com will emerge as the Asean super app, your
best travel and lifestyle companion.”
The Super App has developed over the
past three years to enable customers to buy
flights, hotels, transport, food and ‘e-hailing’
services. Revenue from the Super App grew
by 175% in the first quarter of 2023 to
RM159 million ($35 million), with 12.8 mil-
lion active monthly users on average and 5.9
million transactions.
For all carriers, exploiting the web or app to
sell more ancillary products is a massive win.
According to ancillary revenue consultancy
36 | Airline Business | September 2023
managing, selling and distributing their prod-
ucts for a variety of reasons.
“Traditional carriers have outsourced their
core IT systems to the PSS (passenger service
system) providers, such as Amadeus, so they
do not run their own distribution anymore,”
says Cederhall. This slows progress on ancil-
lary product development for carriers with
this approach, for example.
Many carriers are also operating with such
antiquated technology that “it can be difficult,
expensive and time-consuming to get a simple
idea out there that will work”, notes Brewer.
Over the past decade, the digital technol-
TierneyMJ/Shutterstock
ogy to give legacy carriers the freedom to
match low-cost carriers in selling the travel
product has been in development, but it is
slow to arrive, and it slows innovation. “On
the retail side there is tremendous leverage
Ideaworks, in 2022 these revenues increased for airlines if they can use technology more
to $102.8 billion, nearly back to the 2019 peak effectively,” according to Brewer.
of $109.5 billion. Several low-cost players,
with Allegiant, Spirit, Wizz Air and BUILDING BLOCKS
VivaAerobus among them, regularly generate A key digital technology and a building block
over half of their revenue from ancillaries. in unlocking this opportunity is IATA’s New
LeapShift’s Cederhall notes: “To achieve Distribution Capability (NDC). The word
this level of ancillary revenues carriers need “new” in NDC is somewhat incongruous
to be API-centric and integration-centric.” now, as it was launched in 2012.
This means having control of their product so In 2015, Tony Tyler, who was then IATA’s
they can package, price and sell via the web director general, wrote: “Now it is time for the
and app, which is inherent in the low-cost next major transformation: The New Distribu-
carrier business model. tion Capability will change the way air travel
Legacy carriers would love to have such is retailed by giving travel agents and travel
freedom, while retaining the corporate travel management companies the capability to
volumes they capture via the GDSs. Getting access features and options typically availa-
the best of both worlds is the target, which is ble only on airline websites.”
much easier said than done. However, Tyler was careful to note that
The network carriers have developed NDC is not a system, but a new communica-
increasingly sophisticated websites but are tion protocol aimed at replacing the indus-
held back from commercial innovations in try’s 1980s-era pre-internet protocol, used by
legacy carriers and the GDSs, called
EDIFACT.
“What’s different and According to one industry
analyst, as the emerging
disruptive about American can NDC-based digital solu-
tions roll out “it will put
Airlines is what they’re doing airlines in control again,
ey’ve
isn’t necessarily that they’ve enabling them to be
more agile and enabling
deployed new technology. ogy. them to use all the
sales channels effec-
’ve
What’s different is they’ve tively. They can target cost
wrapped a disruptive savings and revenue
generation”.
commercial strategy
around it”
Cory-Garner
Cory Garner
Independent consultant
FlightGlobal.com/airlines
 It has been a long journey. Lufthansa was
the first to use NDC, enabling travel agents to
connect directly to its booking system in 2015
and adding a surcharge to those not wishing
to use this channel. Others such as British
Airways and Air Canada followed suit, all
seeking to sell their product as they wish and
achieve lower GDS fees.
More recently, Oneworld partners Ameri-
can and Finnair are two carriers using NDC to
overhaul their distribution technology and
commercial approach. The digital technolo-
gies that give this capability are termed offer
management systems.
From April 2023, American began to offer
its best available fares to third-party travel
agency channels only through NDC connec-
tions. In a statement, the carrier said it is
“continuing our commitment to deliver
modernised retailing experiences to travel
retailers and corporate customers utilising
NDC technology”.
Industry experts estimate that some 40%
of American’s fares will be removed from the
traditional distribution channels in a move
described by one “as possibly larger than the
shake-up Lufthansa undertook five to six
years ago” and a “radical change on a
massive scale”.
DISRUPTIVE STRATEGY
According to Cory Garner, now an independ-
ent consultant after 22 years in senior com-
mercial roles at American and latterly chief
executive of travel technology consultancy
T2RL: “What’s different and disruptive about
American Airlines is what they’re doing isn’t
necessarily that they’ve deployed new tech-
nology. It has been around for a while. What’s
different is they’ve wrapped a disruptive
commercial strategy around it.
“It’s going to be imperfect and it’s going to
take a long time,” explains Garner, who led
American’s move to modernise its merchan-
dising strategy. “The point is, until a big
carrier like American yanks a gigantic
amount of content off the shelf, nobody’s
going to do anything. And that’s why for 10
years, nobody’s done anything, at least in the
corporate space.
“The way this all shakes out is it all rotates
around corporate travel,” adds Garner. “The
GDS’s business model is dependent upon
their continued control over access to corpo-
rate travel. And historically, pre-pandemic
airlines were very reticent to take too many
chances with corporate travel because corpo-
rate travel tended to be higher yielding and
harder to replace.
FlightGlobal.com/airlines
“Post pandemic that has all changed,” he
notes. “The mix of corporate volume has gone
down and the relative yields of corporate ver-
sus leisure is not as pronounced as it once
was. That gives airlines like American the
appetite to take more risks than they would
have before.”
Thomas Rajan, vice-president of global
sales at American, wrote in an open letter ear-
lier this year to travel industry partners: “It’s
been nearly 40 years since the launch of EDI-
FACT and it’s time to provide all travellers a
retailing experience befitting the 21st century.
We keep hearing this work is complicated
and it just needs more time.
“We agree it’s complicated, but we’ve
proven it can be done and there are partners
ready now and resourced.”
The repercussions of American’s bold
move, which the airline believes is showing
positive signs, is others will feel confident
they can follow suit. United Airlines and
Delta are following a similar strategy without
as much public fanfare as American.
Finnair is seeking to demonstrate that a
medium-sized flag carrier can reap the bene-
fits too. “We are in the third chapter of our
digital journey, which started back in 2014
when we built a new website and mobile
app,” says Rogier Van Enk, senior vice-presi-
dent of customer engagement at Finnair.
During the pandemic, the second chapter
saw it radically increase the number of cus-
tomers booking and serving their travel via its
digital channels. It also increased the volume
of fares offered exclusively on its website, for
AirAsia’s Super App allows its customers to purchase flights, hotels, transport and food
example removing most of its domestic con-
tent from the GDSs in 2023.
The percentage of direct sales has
increased to 66% of sales today compared
with 33% pre-2020, levels demonstrating
how a direct interaction with customers pays
dividends, says Van Enk. In addition, three-
quarters of travellers perform self-service
tasks using Finnair.com and its app, com-
pared with just one in three in 2019.
The third chapter of Finnair’s story has
seen it set a deadline of 2025 to move com-
pletely to direct distribution, selling 100%
via third parties with NDC capability and its
own website. “We are the first carrier to pub-
licly set a hard deadline to sunset EDIFACT,”
says Van Enk.
“Although there are risks attached to this
approach, it is costly running the legacy
technology alongside NDC-enabled technol-
ogy and Finnair wants to avoid this burden,”
he explains.
UNLOCKING REVENUE
The move will unlock revenue, says Van
Enk. For example, he estimates that only one
in 100 transactions made using EDIFACT-
based systems deliver ancillary revenue,
compared with one in 10 for an NDC-based
transaction and one in two for one made via
its website or app.
While the move to use NDC to build new
sales channels is important, another use of
NDC-enabled technology is dynamic or con-
tinuous pricing. “It is a transformational trend
to shift from traditional pricing to continuous ❯❯
Wisely/Shutterstock
September 2023 | Airline Business | 37
TECHNOLOGY STRATEGY
❯❯ pricing and is a tool for legacy carriers to
compete with LCCs,” says Garner.
Consultancy T2RL, which notes there is
confusion in the industry about exactly how
to describe dynamic pricing, defines it as:
“Offering prices that are not constrained by
the 26 letters of the alphabet that represent
traditional booking classes.” In other words:
“You need enough price points that you can
talk about price independently of any notion
of booking class.”
CONTINUOUS ADJUSTMENT
The principal benefits of dynamic pricing
are the ability to increase booking yields
because pricing can literally be adjusted con-
tinuously as bookings rise and fall, and as a
tool for legacy carriers to compete with
LCCs, explains Garner.
“Dynamic pricing gets rid of booking
classes and opens up more space to get the
price right for the customer, as well as achieve
a higher load factor,” says Finnair’s Van Enk.
The carrier has dynamic pricing on its web-
site and on its NDC-enabled sales channels.
Low-cost carriers perform dynamic pricing
natively because it is relatively simple to do
via the airline’s website. A T2RL survey pub-
lished in early 2022 showed that several air-
lines have dynamic pricing to a degree,
mainly supporting their direct channels, their
websites, and are increasingly deploying the
technology required to do it for their indirect
channels, such as online travel agents.
Another digital technology beginning to be
introduced is the industry-led ONE Order ini-
tiative, which according to IATA, “aims to
modernise the order management process in
the airline industry”.
Updating back-office systems involving multiple departments is a complex undertaking
38 | Airline Business | September 2023
“Dynamic pricing gets rid of
booking classes and opens up
more space to get the price right
for the customer, as well as
achieve a higher load factor”
Rogier Van Enk
Senior vice-president of customer
engagement, Finnair
As can happen with digital solutions, they
do not sound very sexy and are part of an air-
line’s back-office systems, but if implemented
well and coupled with offer management sys-
tems go to the heart of an airline’s commercial
strategy and can have a significant impact on
revenue and costs.
According to Amadeus: “NDC allows air-
lines to have greater control and autonomy
over what they sell through different chan-
nels – ‘the offer’. But an airlines’ creativity
here is capped because of the limitations from
legacy standards and processes – as defined
by the needs of PNRs (Passenger Name
Records), EMDs (Electronic Miscellaneous
Document), or e-tickets – and it limits what
the airlines can deliver: ‘the order’.”
“The difference between offer and order is
that an airline can make a lot of progress on
merchandising with a new offer system – a
new shopping system – but there’s a certain
amount of progress that they can’t make
unless their cash register is fixed,” explains
VTT Studio/Shutterstock
Finnair
Garner. The change to ONE Order systems
removes the limitation on what products can
be ordered and paid for, he adds.
This is hardly innovative, as online retailers
such as Amazon have been doing it for years,
but in the legacy airline world this is a revolu-
tion. ONE Order is also not new, having been
introduced by IATA in 2015, with Lufthansa
and United both conducting pilots with the
system in 2019. However, back-office technol-
ogy changes of this nature that involve multi-
ple airline departments take years and are
fiendishly difficult to pull off.
CONCRETE BENEFIT
According to T2RL’s Ian Tunnacliffe, its sen-
ior vice-president of consulting: “The biggest
concrete benefit of the switch to offers and
orders will be the use of continuous pricing.
Airlines that invest in the ability to price each
offer individually, without the restrictions of
booking classes and filed fares, are likely to
see a benefit comparable with the original
introduction of revenue management systems
in the 1980s.”
Lufthansa has said it will transition to a
complete NDC-enabled offer and order world
by 2030, while Finnair is working with
Amadeus on being one of the first carriers to
move to this brave new world.
“It will give us a first-mover advantage,”
says Finnair’s Van Enk. “We are now getting
to how we should have designed a digital air-
line from the beginning.”
The transformation of legacy carriers into
digital airlines is clearly far from finished and
will take years to achieve. However, the tech-
nology and the standards needed to imple-
ment it appear to be in place.
Now comes the hard, expensive and time-
consuming work of technical, engineering
and commercial execution. Easy to write,
much tougher to do. ■
FlightGlobal.com/airlines
AWARDS WINNERS

The Airline
Strategy Awards
The latest running of the industry’s big annual awards night saw airline executives from
around the world recognised for their achievements during the gathering in London

laska Airlines’ Ben Minicucci,

A Pegasus’ Guliz Ozturk and

Singapore Airlines’ Goh Choon
Phong were among those
recognised at the Airline Strategy Awards in
London on 16 July, along with former
American Airlines chief executive Doug Parker.
The awards – which have been held since
2002 – recognise individuals, airlines and
companies supporting air transport that have
demonstrated dynamic leadership and clear

vision. The event is organised by FlightGlobal
in partnership with the civil aviation practice
of Korn Ferry, the largest human capital
solutions provider in the world.
“While the impacts of the Covid-19
pandemic will be felt by airlines for some time
yet, the variety of stories behind this year’s
award recipients reflects the extent to which
the industry has moved beyond crisis mode,”
says Graham Dunn, executive editor at
FlightGlobal and host of the awards.
Recipients in eight award categories –
Executive Leadership in Asia-Pacific, Europe,
North America, Latin America & Caribbean
and Middle East & Africa, plus Air-Cargo, Digi-
tal and ESG Leadership – were selected by an
independent panel of industry experts, follow-
ing nominations overseen by FlightGlobal’s
Airline Business and Korn Ferry. Airline Busi-
ness also presents its own award, recognising
an individual making a lasting strategic contri-
bution to the industry.
Collins Aerosapce is a platinum sponsor of
the awards, while category sponsors include
CFM International, Cirium, SmartKargo,
Tampa International Airport and Volantio. ■
More photos from this year’s event can be
found at flightglobal.com/strategyawards
Leo Johnson/FlightGlobal
(Left to right): Airlink chief executive Rodger Foster; Alaska Airlines senior vice-pres-
ident, legal and general counsel Kyle Levine and vice-president of inflight operations
Matt Prainito (receiving the award on behalf of chief executive Ben Minicucci); Atlas
Air Worldwide chief executive Michael Steen; JetSmart chief executive Estuardo Ortiz;
Pegasus chief executive Guliz Ozturk; Singapore Airlines regional vice-president Europe
Lee Sek Eng (receiving the award on behalf of chief executive Goh Choon Phong); former
American Airlines chief executive Doug Parker; Volaris digital director Daniel Gelemovich;
and awards host Graham Dunn, executive editor of FlightGlobal
JUDGING PANEL
Montie Brewer is a former chief executive of Air Rigas Doganis advises governments and airlines
Canada who currently serves on the boards of on air transport policy, and is a former chief exec-
Allegiant Travel Company, Finnair and ID90. utive of Olympic Airways. He sat on the boards of
Chris Browne is a former chief operating offic- South African Airways and EasyJet.
er at EasyJet and managing director of both Norman Liu is president of Nordic Aviation
Thomson Airways and First Choice Airways. Capital and is also a senior advisor to Global
Christina Cassotis has been chief executive at Infrastructure Partners and a board member of
Allegheny County Airport Authority in Pitts- GA Telesis. He is a former chairman, president
burgh, Pennsylvania, since January 2015. and chief executive of GECAS.
Alex de Gunten is the business development Chris Tarry established independent consul-
officer of Heico Aerospace. He has served as tancy and advisory business CTAIRA in 2002.
executive director of the Latin American and Prior to that, he was one of the most highly
Caribbean Air Transport Association (ALTA). rated aviation analysts in the London market.

40 | Airline Business | September 2023 FlightGlobal.com/airlines


EXECUTIVE
LEADERSHIP:
NORTH
AMERICA
BEN MINICUCCI,
ALASKA AIR
GROUP
Ben Minicucci’s
leadership of Alaska
Air Group is a success
story that touches
many of the industry’s
biggest themes – all
from an airline that is up against formidable opponents in the shape
of the US majors.
“They punch above their weight,” one of the judges noted.
The group entered 2023 in a strong position, having recorded
impressive financial results for the full year. However, there was no
guarantee of that success, given that Alaska Air’s markets were
among the most affected by Covid-19 restrictions in the early
months of the pandemic.
But it recovered well in 2021, then saw record revenue in 2022.
The business’s strong share price performance this year, relative to
its peers, reflects the fact that it remains on track to deliver an industry-
leading pre-tax margin for full-year 2023.
And Minicucci – who became chief executive in March 2021 follow-
ing a long carrier with Alaska Airlines – has been delivering what judges
agreed is an “impressive” update to the group’s strategy, which now
benefits from the full integration of Virgin America.
Today, operations are already growing above pre-Covid levels, un-
derpinned by an accelerated transition to an all-Boeing 737 fleet for
mainline operations and an all-Embraer E175 fleet for regional flights.
The carrier has also invested in its guest experiences and infrastructure
at its hubs, and ensured key workers have fresh labour agreements.
Judges also cited Alaska’s continued strong focus on ESG issues
under Minicucci’s leadership.
Ultimately, judges agreed that Minicucci demonstrates how airline
leaders can successfully meet the needs customers, employees and
shareholders alike.
Lewis Harper
EXECUTIVE LEADERSHIP:
ASIA-PACIFIC GOH CHOON PHONG,
SINGAPORE AIRLINES
While many of its peers in the Asia-Pacific re-
gion were still reeling from the effects of the
Covid-19 crisis, Singapore Airlines was confi-
dently poised to take advantage of the
Leo Johnson/FlightGlobal
FlightGlobal.com/airlines
Event platinum sponsor:
EXECUTIVE LEADERSHIP: Category sponsor:
EUROPE
GULIZ OZTURK, PEGASUS
Turkish low-cost carrier Pegasus has been a standout performer in
Europe over the past 12 months, under the leadership of chief
executive Guliz Ozturk – a pioneer among female leaders in the coun-
try’s aviation sector.
“It’s a successful low-cost airline, it’s going through a digital trans-
Leo Johnson/FlightGlobal
formation and it made a profit it 2022, which not many carriers did,” a
judge said.
Indeed, since becoming chief executive in May 2022, Ozturk has
built on the work of her predecessor Mehmet Nane and guided
Pegasus into a strong position as it powers out of the Covid-19 crisis.
A record financial performance in 2022 was the result of an ongoing
programme of flexible capacity management, competitive pricing, an-
cillary revenue growth, cost control, strong digitisation efforts and oper-
ational efficiency.
“They had the highest EBITDA margin in the industry last year… it’s
something that should be recognised,” another judge said.
That performance has continued into 2023, as Pegasus grows its
fleet and expands its network into Europe and the Middle East. Nota-
bly, its first-quarter revenue was more than 50% above its 2019 income.
Amid those impressive financials, the airline’s heavy focus on digital
transformation particularly impressed the judges.
Judges further noted that it has also excelled in the more traditional
budget carrier sphere of ancillary revenues.
Judges also highlighted Ozturk’s work on gender diversity, as she
leverages her position as a pioneer among female leaders in the
country’s aviation sector.
Furthermore, Pegasus
has a strong focus on
sustainability and is an
early adopter of sustaina-
bility-linked financing
arrangements.
“Pegasus have done a
Leo Johnson/FlightGlobal
really good job across a
range of areas,” a judge
concludes.
Lewis Harper
chance to fly people again, once restrictions “It has emerged as a more nimble, resilient
were lifted. and diversified company,” one judge said.
Under the continued strong leadership of Indeed, judges complimented the group’s
chief executive Goh Choon Phong, the group three-year transformation programme, while
has therefore emerged confidently from the also noting that it delivered on the digital side
Covid-19 crisis, keeping its status as a leading of the business – an area that drew particular
light in the region. praise from the panel.
That reflects important moves made by Goh And crucially, its bet on India might pay off,
to ensure Singapore Airlines kept its workforce judges noted, with the group’s multi-hub strat-
plentiful and on an operational footing, ready egy beginning a fresh era through its stake in
for countries to open their borders again – a key the “new” Air India.
development for an airline that has no domestic Judges were also impressed by the group’s
market to fall back on. use of Scoot as a true growth asset, rather than
More than that, however, judges were a defensive move against budget opponents.
impressed that Goh still took the opportunity It may not be a new story that Singapore
to transform the business during the Airlines is in a strong position within the re-
pandemic downturn, rather than solely rely- gion, but Goh’s leadership has ensured it con-
ing on equity injections and past successes to tinues to be one step ahead of its peers.
see it through. Lewis Harper
❯❯
September 2023 | Airline Business | 41
 AWARDS WINNERS

❯❯ EXECUTIVE LEADERSHIP: ernment red tape tend to weigh on cross-bor-

LATIN AMERICA
ESTUARDO ORTIZ, JETSMART
Under the leadership of founding chief execu-
tive Estuardo Ortiz, Latin American airline
der operations in particular.
And despite the extra challenges created
by the Covid-19 pandemic, Ortiz has ensured
that JetSmart emerged confidently from the
crisis. Today it has bases in its home country,

JetSmart has made an impact that belies its
size over the past few years.
The Chile-based ultra-low-cost carrier has
been making strides through organic and inor-
ganic growth since its launch in 2017, notably
in the tough intra-region markets.
“I consider them to be the first true
intra-Latin America low-cost carrier,” said
one judge.
Judges were impressed by several aspects
of the Indigo Partners-backed carrier’s story,
noting that the odds were stacked against its
success in a region where regulation and gov-
Argentina and Peru, and further international
expansion is likely – including plans to launch a
base in Colombia later this year.
JetSmart’s expansion focuses on offering
new, point-to-point routes that do not neces-
sarily go through traditional hub airports.
As that strategy proves successful, judges
complimented the airline’s focus on maximis-
ing efficiency and its ambition to have the low-
est cost in the market.
They also noted that JetSmart has not been
afraid of bold moves, such as the acquisition of
Norwegian Air Argentina.
Leo Johnson/FlightGlobal
Showing the airline’s maturity and further im-
pressing the judges, JetSmart is working under
a commercial partnership with American Air-
lines, through which the US major has invested
in the carrier.
“My hat goes off to JetSmart,” a judge said.
“What it has achieved so far is very promising.”
Lewis Harper

EXECUTIVE AIR-CARGO LEADERSHIP Category sponsor:

LEADERSHIP: JOHN DIETRICH
AFRICA & AND MICHAEL STEEN,
MIDDLE EAST ATLAS AIR WORLDWIDE
RODGER FOSTER,
AIRLINK Atlas Air Worldwide’s success story culminated earlier this year, as a
deal to take it private reflected the high value investors saw in the US
Leo Johnson/FlightGlobal

While Rodger Foster air-cargo player.

had led South African
regional carrier Airlink
for more than 30
years, it is the airline’s
successful recent reinvention as an independent operator in its own
right, flying in one of the toughest of markets, that has caught the
eye of the judges.
“It is a small airline doing great things,” noted one judge, of the
Embraer regional jet operator which has branched out on its own.
The airline had until early 2020 operated as a franchise carrier for
South African Airways. However, Airlink ended its 23-year-old franchise
agreement with SAA amid the latter’s financial restructuring, deciding to
itself operate a number of routes that were to be dropped.
To support that move the airline formally changed its name from SA
Airlink to Airlink in October of that year and began operating under its
own 4Z designator code. This transition was achieved largely against
the backdrop of the Covid pandemic.
Under Foster’s leadership, Airlink has turned a challenging situation
into a market opportunity. The carrier has impressively seized the
chance to establish itself as a new independent carrier in South Africa,
building a strong domestic and regional network.
Airlink pitches itself as a premium regional carrier, and that position-
ing is underlined by its building of a network of partnerships, including
codeshare agreements with Emirates, Qatar Airways, United Airlines
and British Airways.
Airlink is also easing into a broader Africa strategy, announcing in
November 2022 that it was acquiring a 40% strategic equity holding in
privately owned Windhoek-based FlyNamibia.
Judges note that Airlink’s successful strategy shift is repeatable else-
“They are world-leading in what they are doing,” said a judge.
Indeed, an investment group led by Apollo Global Management
completed its acquisition of Atlas in March, in an agreement that saw
Atlas shareholders receive a significant premium to the company’s
share price.
Judges noted that this validated the work done by the leadership
team over recent years.
At the time of the deal, Atlas was led by chief executive John Di-
etrich, who had succeeded Bill Flynn at the beginning of 2020. Dietrich
has since moved on, but Atlas has continued its tradition of picking
long-serving executives for the top role, with chief commercial officer
Michael Steen stepping up in May.
Dietrich’s time at the helm of the company was marked by the con-
tinuation of an effort to expand and diversify Atlas’s service offerings.
With an ever-growing fleet, Atlas continued to push into express,
ecommerce and passenger services, and the aircraft leasing business,
alongside traditional air cargo.
“They have a complex and diversified business model,” another
judge noted, describing this as a positive strategic move in an often-
challenging air-freight market.
Describing Atlas as “successful and robust”, judges complimented
its broad suite of services across ACMI, CMI, charter and dry leasing,
highlighting an enviable customer base of shippers, forwarders, airlines,
express operators and
charter purchasers.
Furthermore, the
company has outpaced
the market and taken
share in recent years,
Leo Johnson/FlightGlobal

where. ”You don’t have to be a huge airline with huge financial resourc- judges noted.
es to succeed. It is a model for Africa. It shows what can be done,” an- “They are a standout
other judge said. player,” a judge said.
Graham Dunn Lewis Harper

42 | Airline Business | September 2023 FlightGlobal.com/airlines

 Event platinum sponsor:

THE AIRLINE BUSINESS AWARD Category sponsor: DIGITAL LEADERSHIP VOLARIS Category sponsor:
®
DOUG PARKER
Since founding Volaris in 2005, chief executive
Few airline leaders have taken such an active Enrique Beltranena has been determined to give the Mexican
role in the shaping of the modern, consolidat- low-cost carrier a digital heartbeat and a clear identity in the online
ed and more resilient US airline industry than Doug Parker. marketplace as well as within its internal operations.
Parker this year stepped down as chairman of American Airlines, an He once said: “Volaris is a digital company that just happens to fly
airline he first entered the industry with as an MBA recruit in its finance planes.”
department in 1986. The scale of the airline group he leaves behind is Under his leadership, the airline has capitalised on the ability of a
testament to the force Parker has been in the US market. start-up to build a digitally-focused business from a clean sheet of
Parker joined America West Airlines as chief financial officer in 1995 (virtual) paper.
before becoming chief executive in 2001 – starting an extraordinary 21 Volaris has pioneered an impressive range of digital products and
years at the helm of a carrier which, following two reverse takeovers, tools – all of which are based on the principle of customer self-
would ultimately see him lead the biggest airline in the world. service – with sev-
The timing of that first appointment, 10 days before the 9/11 terror eral launched
attacks, could hardly have been tougher. over the past two
However, it was in consolidation and the gaining of strength to better to three years.
withstand such crises where Parker made his mark. After a period of res- As one judge
tucturing, America West launched a takeover attempt of US Airways in observes: “Volaris
2005, pulling off a reverse-merger the following year. has taken an inte-
The opportunity then arose to acquire American Airlines out of its grated approach,

Leo Johnson/FlightGlobal
formal restructuring in 2013. The merger brought together airlines with consistently pio-
combined revenues of almost $39 billion and 170 million passengers. neering digital
It also brought, at least until the pandemic hit, profitability. Parker technology and
would later draw attention with his bold assertion that he American solutions over the
Airlines and the industry would be profitable in good and bad years. past few years to
That the modern drive revenue, improve customer service and reduce costs.”
day American Airlines During the Covid-19 pandemic Volaris used the down time con-
was able to follow last structively, relaunching its website and developing an app that
year’s profit return by shows personalised offers depending on the traveller’s itinerary.
delivering a first-quar- One of the most successful digital tools developed by Volaris is an
ter profit this year for automated disruption handling system that manages flight cancella-
the first time since the tions virtually. This was developed in the months after Covid,
Covid-19 crisis hit spurred by congested customer service lines at the call centre.
underlines the resil- And despite a strong increase in traffic as demand returned to the
ience the US airline market, the carrier’s digital service focus means it has only hired 2%
industry has more agents.
Leo Johnson/FlightGlobal

achieved, thanks in “From day one, Volaris has been built with the mission of making
no small part to as much as possible automated, using digital technology in a smart
Parker’s vision. and appropriate way,” observes another judge.
Graham Dunn Mark Pilling

ESG LEADERSHIP sustainability effort in November 2022 with NZ0 “journey” or plan, Category sponsor:
AIR NEW ZEALAND the launch of its “Mission Next Generation which it revealed in 2022,
Aircraft” project. to reach net-zero carbon
Air New Zealand is demonstrating that small- This is an accelerator programme designed emissions by 2050. Other
er network carriers can play a strong role in to progress two of the carrier’s ambitious envi- key parts of this plan are
decarbonisation and diversity strategies and ronmental goals: fly its first commercial dem- the use of SAF; continued
embed them into the core vision and mission onstrator flight from 2026; and begin replac- fleet renewal; operational
of an airline. ing its 23-strong Q300 domestic fleet with a carbon efficiency; and car-
“It has a more sustainable aircraft from 2030. bon removal solutions.
very compre- In February 2023, it named Heart Furthermore, the airline says that its Diver-
hensive and Aerospace, Embraer and Universal Hydro- sity, Equity & Inclusion strategy holds the car-
clear strategy gen as new partners in Mission Next rier accountable in its employment strategy
on both Generation Aircraft, joining Airbus and ATR by setting out how it will create a truly inclu-
fronts,” says a as long-term partners for the airline as it sive workplace for its people.
judge. seeks not only a sustainably powered re- One of Air New Zealand’s key metrics is to
Leo Johnson/FlightGlobal

Air New gional aircraft from 2030 but also clean en- increase the percentage of women on the air-
Zealand ergy and infrastructure. line leadership team to 50%, among a raft of
kicked off a This innovative aircraft development project other strategic diversity initiatives.
pioneering forms a key part of Air New Zealand’s Flight Mark Pilling

FlightGlobal.com/airlines September 2023 | Airline Business | 43

ANALYSIS MARKET OUTLOOK
Inevitably unsustainable outcomes
Mature markets appear most vulnerable to negative consequences as the post-Covid ‘good times’ come to an end
CHRIS TARRY
CTAIRA
R egular readers of this col-
umn will recall my scepti-
cism around ‘building back
better’ and suggestions that ‘it
will be different this time’.
Many airline performances
have been flattered by a favoura-
ble but transient imbalance
between demand and supply,
where pent-up demand has coin-
cided with capacity still at levels
below those in the corresponding
period in 2019.
The fundamentals increas-
ingly show that there is a broader
set of economic and related fac-
tors that is becoming more influ-
ential, where the inevitable out-
comes will be a number of
familiar, but for most not neces-
sarily welcome, structural
changes. The greatest negative
impacts are likely to be felt by
full-service airlines operating in
mature markets.
While there should be no
doubt about how difficult it has
been to restart and rebuild activ-
ity after the pandemic, I am sure
that there will be numerous
theses that examine what more
needed to be done by manage-
ments, beyond adding back
capacity. Record profits have gen-
erally not depended on volume
growth, which, in a competitive
market, reinforces why the
current conditions and outcomes
are unsustainable.
MORE CAPACITY
There are of course a number of
cases where low-cost carriers, but
by no means all in this sector, are
now profitably operating signifi-
cantly more capacity than in the
corresponding period in 2019.
The latest data for Ryanair, for
example, shows capacity some
30% higher for August, with
44 | Airline Business | September 2023
Some low-cost airlines are benefiting from volumetric growth
Wizz Air seeing even higher
growth. Such airlines are benefit-
ing from volumetric growth
through a series of new market
and substitution effects.
In the past we have argued
there is generally very little
difference in Europe between
travelling economy on either a
full-service airline or low-cost
carrier. The reality now is that it
is possible to separately acquire
almost all of the attributes on
offer by a fuller service airlines
both on the ground and in the air,
which will make it easier for trav-
ellers to “vote with their wallets”
and reinforce the substitution
effects away from the fuller-
service airlines.
Over the summer, although at
least some airline managements
have continued to report record
results, there have been increas-
ing and accelerating signs that
strongly suggest these “good
times” are over.
Even allowing for the effects of
seasonality, fares do appear to have
turned a corner and are headed
down towards previous levels.
In the second week of Septem-
ber, for example, we saw Spirit
Airlines’ management announce
that it “has seen heightened pro-
motional activity with steep dis-
counting for travel booked for the
second half of the third quarter
through the pre-Thanksgiving
travel period”. As a result, its
quarter of 2019, and at American,
some 26.9% higher.
What is clear is that costs in
the USA are structurally increas-
ing, not least as new labour
contracts are put in place.
Indeed, most recently it has
been reported by United Airlines
and its pilots that a new working
agreement would add $10 billion
Alexandra Morosanu/Shutterstock
of value to their existing contracts.
We have also seen American’s
management announce reduced
operating margin expectations for
the third quarter, where these are
now at 4-5% rather than 8-10%,
as not only have fuel prices
increased but they estimate that
operating margin will be a nega- their new pilots’ contract will
tive 14.5-15.5% compared with a reduce the operating margin by
previous expectation of negative 1.7 percentage points.
5.5-7.5%.
Taking the observation about INCREASED PRESSURE
having both high costs and high What should be particularly clear
fares a little further, the problem is that unless there are conditions
inevitably comes when the gap of strong and indeed excess
narrows, as fares fall and costs rise. demand, it is difficult, if not
impossible, for airlines to pass
Fares appear to have through higher costs.
For those airlines that cannot
turned a corner and are or do not grow volumetrically,
the outlook is clearly one of
headed down towards increased and downward pres-
sure on revenues on one side of
previous levels the equation and a structural
increase in costs on the other.
These effects and their impacts
If we look at the headline fig- are not universal. As we have
ures for Delta Air Lines in the sec- seen in the past, such challenges
ond quarter of 2023, we will see provide opportunities for other
that capacity, measured in avail- airlines to increase their presence
able seat miles (ASMs), was some and market share in mature mar-
4% lower than in the correspond- kets. However, at an industry
ing period in 2019, with passen- level it will reinforce where the
ger revenue per ASM (PRASM) future growth lies, with the focus
some 20.8% higher. continuing to move away from
Similarly, ASMs at American mature markets.
Airlines were 96% of the level in Airlines in growth markets are
2019 and the PRASM was some not immune from cost pressures;
22.4% higher. So far so good, if it is just that they face better pros-
you are only taking a snapshot of pects for structural growth. It is
revenue over this particular point perhaps an oversimplification
in time and reference period. that all that needs to be done to
There is also a need to look at identify the winners in the future
costs. In the case of Delta, the is to “follow the money”, as it is a
headline CASM in the second little bit more complicated than
quarter of 2023 was up by 30.7% that. But it is a pretty good
compared with the second starting point. ■
FlightGlobal.com/airlines

Flight caps don’t fit the objectives
Governments should aim to change behaviour and incentivise airlines, rather than limiting movements at airports
SHASHANK
NIGAM
SIMPLIFLYING
he Dutch government re-
T cently announced that it is
going ahead with a cap on flights
at Amsterdam Schiphol airport.
Flights will be capped at 452,500
per year, 9.5% below 2019 lev-
els. This may seem like an iso-
lated government policy in the
heart of Europe, but it is not.
The Mexican government is
reducing capacity at the Mexico
City International airport to 43
operations per hour. This had
already been reduced from 62 to
52 operations per hour in 2022,
even though a feasibility study of
safely operating a maximum of
72 operations per hour had been
approved. The reductions last
year forced all-cargo airlines to
stop operating at the airport.
Across the Pacific, the Austral-
ian government has announced
plans to introduce flight caps and
a curfew at Brisbane airport.
Flight caps would limit the num-
ber of arrivals and departures to
45 per hour, less than when Bris-
bane operated a single runway,
and ban aircraft movements after
22:00. This would mostly impact
international departures to desti-
nations like Qatar and Fiji.
Most governments state that
their main reasons for the cap are
to address noise pollution, but
they also cite the need to reduce
greenhouse gas emissions, as
well as recurring logistical prob-
lems at the airports.
While environmental groups
support the cuts, among airports,
Schiphol is the only one in
favour. Unfortunately, most of
these government mandates have
not followed a consultative pro-
cess with the airlines operating at
these airports. These measures
sometimes come from public
pressures and, at other times,
FlightGlobal.com/airlines
ANALYSIS SUSTAINABILITY VIEWPOINT
Flights at Amsterdam Schiphol will be capped at 452,500 per year – a 9.5% reduction on 2019 levels
political motivations. In reducing
noise levels and emissions, cap-
ping flight movements may not
be the most effective approach.
For example, the stated goal of
the Dutch government is primar-
ily to reduce noise levels by 20%
and, ultimately, all emissions
from flights operating into
Amsterdam. The current flight
cap will be easy to circumvent.
In reducing noise levels
and emissions, capping
flight movements may
not be the most
effective approach
Capacity can just move across the
border to France. After all, Air
France has the support of the
French government much more
than KLM’s of the Dutch.
Overall emissions will remain
the same or increase if flights
move to other hubs such as
Paris. Moreover, while the air-
lines and their lobby group,
IATA, are up in arms about the
loss of jobs and the economic
impact, it is important to con-
sider how the environmental
concerns can be addressed.
Here are some more effective
steps that can be taken by the
governments to reduce noise and
emissions than flight caps.
Growing up in Singapore, I
saw only gleaming, brand-new
cars on the streets. That is
because Singapore has a policy
that requires cars to be exported
off the island once they are older
than 10 years. Newer cars pollute
less and are quieter, just like new
airplanes. If the Dutch govern-
ment insists that airlines only fly
the newest aircraft in their fleet to
the country, noise and emissions
automatically go down. Night-
time departures can be exclu-
sively designated for the newest
and quietest aircraft like the Air-
bus A220 or Boeing 787.
On my podcast, Maarten Koo-
pmans, the chief executive of
KLM Cityhopper, recently told
me that he operated a flight from
Amsterdam to Porto in the short-
est possible block-time, despite
flying at the slowest airspeed.
While that sounds paradoxical,
Koopmans and his team could do
that by flying the straightest route
possible to Porto. In doing this,
they deployed the continuous
descent approach. This also
allowed the airline to reduce
emissions by saving fuel.
Governments can also intro-
duce a “polluter pays” principle
September 2023 | Airline Business | 45
MJJ de Vaan/Shutterstock
and put the money in a clean
skies fund. This could take the
form of a small surcharge on
flight tickets, akin to fuel sur-
charges used in response to oil
price fluctuations, starting at less
than 10% of the ticket cost. Fre-
quent flyers who fly more will
pay progressively more.
SUSTAINABILITY FUND
The funds raised should be
transparently invested in green
technologies or pooled into a
sustainability fund. The cost of
decarbonising aviation is esti-
mated to be up to $5 trillion.
This way, frequent flyers can
play their part too.
In the future, flights operated
by aircraft featuring new technol-
ogies would be exempt from
these charges, creating an addi-
tional incentive for developing
greener alternatives.
Ultimately, limiting outcomes
like noise footprint and carbon
emissions by changing customer
behaviour and incentivising air-
lines is much more effective than
introducing flight caps. ■
Shashank Nigam is the chief
executive of SimpliFlying and the
host of the Sustainability In The
Air podcast, which is also
the title of his upcoming book
on sustainable aviation
ANALYSIS DATA

Global second-quarter results data

Earnings from the second three months of 2023 show most carriers recording revenues above pre-Covid levels,
as pent-up demand combines with constrained capacity to create strong yield in the passenger segment. In
many cases, that high income was achieved with traffic and capacity still with ground to make up on 2019 levels

Air Arabia Air Canada

2SHUDWLQJSUR¿W 1HWSUR¿W Revenue Passengers Fleet 2SHUDWLQJSUR¿W 1HWSUR¿W Revenue RPKs ASKs Fleet
(AED m) (AED m) (AED m) (m) (C$ m) (C$ m) (C$ m) (m) (m)

Q2 2019 204 210 1,144 2.34 55 Q2 2019 422 343 4,738 37,760 44,917 400

Q2 2020 -208 -239 120 0.04 56 Q2 2020 -1,555 -1,752 527 1,260 3,610 348

Q2 2021 20 10 496 0.69 58 Q2 2021 -1,133 -1,165 837 2,715 6,437 336

Q2 2022 161 160 1,114 1.86 64 Q2 2022 -253 -386 3,981 26,347 32,720 342

Q2 2023 382 459 1,396 2.29 71 Q2 2023 802 838 5,427 34,789 39,600 354

Air China Air France-KLM

2SHUDWLQJSUR¿W 1HWSUR¿W Revenue RPKs ASKs Fleet 2SHUDWLQJSUR¿W 1HWSUR¿W Revenue RPKs ASKs Fleet
(CNY m) (CNY m) (CNY m) (m) (m) (€ m) (€ m) (€ m) (m) (m)

Q2 2019 2,762 263 32,759 57,516 71,409 676 Q2 2019 423 98 7,021 75,776 85,211 551

Q2 2020 107 -5,244 12,390 16,629 24,897 700 Q2 2020 -1,553 -2,614 1,182 3,438 9,042 555

Q2 2021 2,615 -724 23,083 34,719 46,886 729 Q2 2021 -753 -1,492 2,750 17,870 39,657 542

Q2 2022 -6,522 -12,342 11,035 12,329 20,487 748 Q2 2022 386 325 6,707 61,365 72,127 534

Q2 2023 2,397 -770 34,545 48,695 69,487 902* Q2 2023 733 612 7,624 68,498 78,144 540
6KDQGRQJ$LUOLQHVÀHHWRIDURXQGDLUFUDIWFRQVROLGDWHGLQWRJURXSÀHHWGXULQJ+

Alaska Airlines American Airlines

2SHUDWLQJSUR¿W 1HWSUR¿W Revenue RPKs ASKs Fleet 2SHUDWLQJSUR¿W 1HWSUR¿W Revenue RPKs ASKs Fleet
($ m) ($ m) ($ m) (m) (m) ($ m) ($ m) ($ m) (m) (m)

Q2 2019 364 262 2,288 23,558 27,327 332 Q2 2019 1,153 662 11,960 100,838 116,391 1,579

Q2 2020 -288 -214 421 2,662 6,931 319 Q2 2020 -2,486 -2,067 1,622 11,637 27,489 1,394

Q2 2021 549 397 1,527 16,631 21,586 296 Q2 2021 441 19 7,478 67,627 87,798 1,413

Q2 2022 187 139 2,658 22,122 25,123 337 Q2 2022 1,017 476 13,422 92,563 106,479 1,471

Q2 2023 337 240 2,838 24,037 27,616 307 Q2 2023 2,163 1,338 14,055 96,593 112,104 1,470

$1$ ¿VFDO4 &HEX3DFL¿F

2SHUDWLQJSUR¿W 1HWSUR¿W Revenue RPKs ASKs Fleet 2SHUDWLQJSUR¿W 1HWSUR¿W Revenue Passengers ASKs Fleet
(yen bn) (yen bn) (yen bn) (m) (m) (EBIT, PHP m) (PHP m) (PHP m) (m) (m)

Q2 2019 16 11 501 25,294 34,792 305 Q2 2019 5,027 3,759 23,526 5.9 7,400 72

Q2 2020 -159 -109 122 1,994 6,865 300 Q2 2020 -6,291 -7,959 1,420 0.1 86 77

Q2 2021 -65 -51 199 4,454 12,735 284 Q2 2021 -5,863 -6,494 3,195 0.6 1,081 74

Q2 2022 -1 1 350 12,304 20,183 278 Q2 2022 -2,818 -1,888 13,973 4.2 4,232 77

Q2 2023 44 31 461 21,352 29,161 276 Q2 2023 2,523 2,672 22,674 5.5 7,100 80

China Southern Airlines Copa Airlines

2SHUDWLQJSUR¿W 1HWSUR¿W Revenue RPKs ASKs Fleet 2SHUDWLQJSUR¿W 1HWSUR¿W Revenue RPKs ASKs Fleet
(CNY m) (CNY m) (CNY m) (m) (m) (US$ m) (US$ m) (US$ m) (m) (m)

Q2 2019 1,673 -1,180 35,306 68,016 82,525 849 Q2 2019 83 51 645 8,447 9,923 104

Q2 2020 841 -3,472 17,823 25,456 38,013 857 Q2 2020 -358 -386 15 24 50 102

Q2 2021 2,346 147 30,323 49,805 64,609 869 Q2 2021 9 28 304 3,650 4,746 81

Q2 2022 -4,657 -7,447 19,346 19,117 30,294 880 Q2 2022 42 124 693 8,122 9,584 94

Q2 2023 2,900 -757 37,775 59,274 77,095 897 Q2 2023 195 18 809 9,376 10,890 101

Note: In row headers, Q2 refers to April-June period and H1 the January-June period, regardless of how each airline refers to period

46 | Airline Business | September 2023 FlightGlobal.com/airlines

 6/8 6/8 10/10 10/10
Asia-Pacific Asia-Pacific Americas Americas
carriers reported a carriers exceeded 2019 carriers reported a carriers exceeded
net profit in Q2/H1 revenue in Q2/H1 net profit in Q2 2019 revenue in Q2

Delta Air Lines (DV\-HW ¿VFDO4

2SHUDWLQJSUR¿W 1HWSUR¿W Revenue RPKs ASKs Fleet +HDGOLQHSUR¿W Revenue Passengers 6HDWVÀRZQ
($ m) ($ m) ($ m) (m) (m) before tax (£ m) (£ m) (m) (m)

Q2 2019 2,128 1,443 12,536 101,667 115,477 1,351 Q2 2019 174 1,761 26.4 28.8

Q2 2020 -4,815 -5,717 1,468 5,827 17,053 1,221 Q2 2020 -347 7 0.1 0.1

Q2 2021 816 652 7,126 53,567 78,100 1,127 Q2 2021 -318 213 3.0 4.5

Q2 2022 1,519 735 13,824 82,912 94,795 1,247 Q2 2022 -114 1,755 22.0 24.9

Q2 2023 2,491 1,827 15,578 97,854 111,033 1,249 Q2 2023 203 2,360 23.4 26.2

El Al Gol
2SHUDWLQJSUR¿W 1HWSUR¿W Revenue RPKs ASKs Fleet 2SHUDWLQJSUR¿W 1HWSUR¿W Revenue RPKs ASKs Fleet
(US$ m) (US$ m) (US$ m) (m) (m) (R$ m) (R$ m) (R$ m) (m) (m)

Q2 2019 20 78 584 6,277 7,532 43 Q2 2019 319 -195 3,141 9,317 11,365 127

Q2 2020 -40 -105 151 319 606 45 Q2 2020 -898 -1,997 358 773 990 130

Q2 2021 -57 -81 223 1,579 2,346 45 Q2 2021 -810 643 1,028 3,432 4,033 127

Q2 2022 9 100 516 4,478 5,489 45 Q2 2022 -192 -2,851 3,243 6,967 9,021 144

Q2 2023 90 59 630 5,654 6,516 45 Q2 2023 537 566 4,146 7,904 10,284 143

IAG ,QGL*R ¿VFDO4

2SHUDWLQJSUR¿W 1HWSUR¿W Revenue RPKs ASKs Fleet 3UR¿WEHIRUHWD[ 1HWLQFRPH Revenue RPKs ASKs Fleet
(€ m) (€ m) (€ m) (m) (m) (INR m) (INR m) (INR m) (m) (m)

Q2 2019 960 736 6,731 74,806 88,008 588 Q2 2019 15,094 12,031 97,869 20,700 23,300 235

Q2 2020 -2,182 -2,125 703 1,155 4,103 548 Q2 2020 -28,494 -28,494 11,438 1,300 2,100 274

Q2 2021 -967 -981 1,244 9,969 19,245 529 Q2 2021 -31,742 -31,742 31,703 6,600 11,200 277

Q2 2022 301 133 5,916 56,114 68,630 549 Q2 2022 -10,642 -10,643 130,188 21,900 27,500 281

Q2 2023 1,251 1,008 7,694 71,162 82,371 565 Q2 2023 30,907 30,906 171,609 29,000 32,700 316

Korean Air LATAM Airlines Group

2SHUDWLQJSUR¿W 1HWSUR¿W Revenue RPKs ASKs Fleet 2SHUDWLQJSUR¿W 1HWSUR¿W Revenue RPKs ASKs Fleet
(KRW bn) (KRW bn) (KRW bn) (m) (m) (US$ m) (US$ m) (US$ m) (m) (m)

Q2 2019 67 350 3,021 20,872 25,276 169 Q2 2019 40 -63 2,369 29,025 34,836 300

Q2 2020 150 162 1,685 1,623 3,791 166 Q2 2020 -695 -890 572 1,131 2,190 318

Q2 2021 197 130 1,951 1,798 5,531 157 Q2 2021 -358 -772 889 7,384 10,755 296

Q2 2022 736 450 3,332 6,186 7,728 154 Q2 2022 -112 -451 2,226 20,295 25,294 301

Q2 2023 468 372 3,535 16,846 20,060 156 Q2 2023 271 187 2,676 26,107 32,477 311

Lufthansa Group 1RUZHJLDQ

2SHUDWLQJSUR¿W 1HWSUR¿W Revenue RPKs ASKs Fleet 2SHUDWLQJSUR¿W 1HWSUR¿W Revenue RPKs ASKs Fleet
(EBIT, € m) (€ m) (€ m) (m) (m) (NOK m) (NOK m) (NOK m) (m) (m)

Q2 2019 761 226 9,578 79,236 95,150 764 Q2 2019 623 83 12,182 23,819 27,074 162

Q2 2020 -1,846 -1,493 1,894 2,413 4,307 760 Q2 2020 -2,991 -1,510 633 149 298 140

Q2 2021 -797 -756 3,211 14,044 27,335 734 Q2 2021 -766 2,779 336 302 527 51

Q2 2022 340 259 8,000 56,080 69,961 713 Q2 2022 1,359 1,248 4,869 6,190 7,627 65

Q2 2023 1,081 881 9,389 65,289 78,520 716 Q2 2023 651 538 6,871 7,348 8,702 81

FlightGlobal.com/airlines September 2023 | Airline Business | 47

ANALYSIS DATA

8/8 6/8 26/28 24/28

European European carriers Total carriers Total carriers
carriers reported a exceeded 2019 reported a net profit exceeded 2019
net profit in Q2 revenue in Q2 in latest period revenue in latest period

Pegasus 4DQWDV ¿VFDO+

2SHUDWLQJSUR¿W 1HWSUR¿W Revenue Passengers ASKs Fleet 8QGHUO\LQJSUR¿W 6WDWXWRU\SUR¿W Revenue RPKs ASKs Fleet
(€ m) (€ m) (€ m) (m) (m) before tax (A$ m) after tax (A$ m) (A$ m) (m) (m)

Q2 2019 71 59 407 7.4 10,800 83 H1 2019 551 377 8,760 62,534 74,576 314

Q2 2020 -109 -120 22 0.4 500 89 H1 2020 -647 -2,409 4,793 26,590 34,990 314

Q2 2021 -50 -65 155 3.7 6,300 93 H1 2021 -792 -647 3,604 12,989 20,537 311

Q2 2022 28 -40 504 6.5 11,900 95 H1 2022 -582 -404 6,034 27,260 37,127 322

Q2 2023 121 91 657 7.9 15,200 101 H1 2023 1,037 743 9,906 50,371 61,820 336

5\DQDLU ¿VFDO4 6LQJDSRUH$LUOLQHV ¿VFDO4

2SHUDWLQJSUR¿W 1HWSUR¿W Revenue Passengers Fleet 2SHUDWLQJSUR¿W 1HWSUR¿W Revenue RPKs ASKs Fleet
(€ m) (€ m) (€ m) (m) (S$ m) (S$ m) (S$ m) (m) (m)

Q2 2019 275 243 2,312 41.9 475 Q2 2019 200 111 4,102 36,341 43,559 208

Q2 2020 -188 -185 125 0.5 470 Q2 2020 -1,037 -1,123 851 184 1,800 220

Q2 2021 -305 -273 371 8.1 460 Q2 2021 -274 -409 1,295 1,857 12,571 171

Q2 2022 240 188 2,602 45.5 512 Q2 2022 556 370 3,928 22,773 28,819 189

Q2 2023 711 663 3,649 50.4 560 Q2 2023 755 734 4,479 33,933 38,150 199

Southwest Airlines Turkish Airlines

2SHUDWLQJSUR¿W 1HWSUR¿W Revenue RPKs ASKs Fleet 2SHUDWLQJSUR¿W 1HWSUR¿W Revenue RPKs ASKs Fleet
($ m) ($ m) ($ m) (m) (m) ($ m) ($ m) ($ m) (m) (m)

Q2 2019 968 741 5,909 55,567 64,350 753 Q2 2019 43 26 3,181 36,993 46,112 338

Q2 2020 -1,127 -915 1,008 9,035 28,786 737 Q2 2020 -140 -327 901 1,357 2,032 362

Q2 2021 594 348 4,008 44,561 53,775 736 Q2 2021 159 -62 2,176 16,153 25,941 372

Q2 2022 1,158 760 6,728 52,341 60,064 730 Q2 2022 605 576 4,535 41,277 51,798 380

Q2 2023 795 683 7,037 57,140 68,524 803 Q2 2023 1,034 635 5,149 48,364 59,074 419

United Airlines Volaris

2SHUDWLQJSUR¿W 1HWSUR¿W Revenue RPKs ASKs Fleet 2SHUDWLQJSUR¿W 1HWSUR¿W Revenue RPKs ASKs Fleet
($ m) ($ m) ($ m) (m) (m) (US$ m) (US$ m) (US$ m) (m) (m)

Q2 2019 1,472 1,052 11,402 101,390 117,868 1,344 Q2 2019 34 6 435 8,642 9,904 78

Q2 2020 -1,637 -1,627 1,475 4,780 14,425 1,307 Q2 2020 -102 -72 66 1,831 2,313 82

Q2 2021 -270 -434 5,471 45,889 63,751 1,315 Q2 2021 132 77 574 9,788 13,310 92

Q2 2022 878 329 12,112 87,391 100,753 1,323 Q2 2022 -20 -49 691 11,516 13,456 113

Q2 2023 1,517 1,075 14,178 102,259 118,348 1,325 Q2 2023 51 6 782 13,435 15,889 123

Source for data on p46-48: FlightGlobal analysis of earnings reports. Data for each period also available to FlightGlobal Premium
subscribers. Notes for data on p46-48: Results are at a group level. Unless otherwise stated, Q1 = January-March, Q2 = April-June,
Q3 = July-September, Q4 = October-December, H1 = January-June and H2 = July-December, regardless of how each airline refers
to the period. RPKs = revenue passenger kilometres. ASKs = available seat kilometres. Unless stated, fleet data covers operating and
stored aircraft at the end of the earnings period.

48 | Airline Business | September 2023 FlightGlobal.com/airlines

ANALYSIS DATA

Industry performance indicators

The latest global data for several important airline market indicators, including traffic and
capacity across passenger and cargo markets, share-price developments, and 12-month
fuel-price trends. Subscribers to FlightGlobal Premium can view a monthly version of this
data, which includes further metrics such as in-service fleet size and share prices for the
world’s largest operators. Visit FlightGlobal.com/Subscribe for more information
Global air passenger market, year-on-year* Global air cargo market, year-on-year*
demand and capacity trends, to July 2023 demand and capacity trends, to July 2023
20 20

10
0

% change year on year

% change year on year

0
-20
-10
-40
-20
-60
-30

-80 -40

-100 -50
Jan-19 Jul-19 Jan-20 Jul-20 Jan-21 Jul-21 Jan-22 Jul-22 Jan-23 Jul-23 Jan-19 Jul-19 Jan-20 Jul-20 Jan-21 Jul-21 Jan-22 Jul-22 Jan-23 Jul-23

Source: IATA Source: IATA

Notes: RPK = revenue passenger kilometres ASK = available seat kilometres Notes: Notes: CTK = cargo tonne kilometres ACTK = available cargo tonne kilometres
*Data for 2021, 2022 and 2023 compared with 2019 *2021 data compared with 2019. 2022 and 2023 data back to year-on-year comparison

RPK ASK CTK ACTK

Global passenger market: July 2023 snapshot Global air cargo market: July 2023 snapshot
Load factor Load factor
World share RPK ASK change Load factor World share CTK ACTK change Load factor
Africa 2.1% -8.2% -10.1% 1.5pp 74.6% Africa 2.0% 2.9% 11.0% -3.3pp 41.7%
$VLD3DFL¿F 22.1% -8.8% -7.3% -1.3pp 81.6% $VLD3DFL¿F 32.4% 2.7% 26.0% -10.4pp 45.7%
Europe 30.7% -5.5% -4.1% -1.3pp 87.7% Europe 21.8% -1.5% 5.3% -3.3pp 47.2%
Latin America 6.4% 3.9% 1.9% 1.6pp 86.7% Latin America 2.7% 0.4% 10.0% -3.1pp 32.2%
Middle East 9.8% -4.4% -5.4% 0.8pp 82.1% Middle East 13.0% 1.5% 17.1% -6.3pp 41.1%
North America 28.9% 2.4% 1.2% 1.0pp 89.7% North America 28.1% -5.2% 0.5% -2.2pp 37.0%
Total market -4.4% -3.9% -0.4pp 85.2% Total Market -0.8% 11.2% -5.1pp 42.1%
Source: IATA Note: Changes versus July 2019 Source: IATA Note: Changes versus July 2022

Indexed five-year share price trend at world's Five-year weekly jet fuel price
largest airline groups ($/gal)

20 5

10
4
0
3
-10

-20 2

-30
1
-40

-50 0
Sep-18 Sep-19 Sep-20 Sep-21 Sep-22 Sep-23 Aug-18 Sep-19 Sep-20 Sep-21 Sep-22 Sep-23

Source: FlightGlobal analysis of Yahoo Finance data Source: US Energy Information Administration
Notes: Basket of 18 airline groups covering North America, Europe and Asia-Pacific. Notes: US Gulf Coast kerosene jet fuel spot price FOB. Data to w/e 1 September 2023
Closing share prices w/c 3 September 2018 = 0. Data covers weekly closing prices to w/c 4 September 2023

50 | Airline Business | September 2023 FlightGlobal.com/airlines

 ANALYSIS DATA

LEWIS HARPER LONDON

T he latest Airline Business

Index shows the second
quarter of this year was marked
6.0%
by soaring revenue and a jump ZW (IGIQFIV 
in passenger numbers, as the in-
dustry exceeded the 2019
benchmark index score for the
first time since the pandemic.
The overall score of 101 (2019 =
100) marked a rise of three points
from the 31 March 2023 score of
98. The latest score is an increase of
Global airline
47 from the first index, which cov-
industry size on
ered the second quarter of 2020.
The new data reflects the global
narrative of airlines achieving rev-
101
2019 = 100
(+3)*
30 June 2023
enue significantly above 2019 lev-
els with fewer employees, aircraft 'LERKI JVSQ  1EVGL 
and passengers. 2' ! RSGLERKI
The revenue score of 115 is a
rise of six points from the first quar-
ter of this year and again outpaced
the recovery in passenger numbers
by some distance. Passenger num-
bers were up by five points at 95.
The workforce score was up
three points quarter-on-quarter at
97, while fleet size was flat at 98.
97 (+3)* 98 (NC)*

2019 = 100 2019 = 100

At the index’s lowest points in Fleet size on
the Covid-19 crisis, workforce Workforce size on
and fleet bottomed out at 81 and 30 June 2023 30 June 2023
95 respectively, compared with a Number of
revenue low point of 20 and a
lowest passenger-number score airline employees
of 10 – the latter two seen in the
second quarter of 2020.
Using data from 14 of the larg-
est airline groups that release
quarterly or half-yearly results –
covering the Americas, Asia-
Pacific and Europe – the index
115 (+6)* 95 (+5)*
2019 = 100 2019 = 100
considers four metrics: size of
workforce by employee number,
Second-quarter 2023 Second-quarter 2023
size of fleet, and revenue and pas- operating revenue passenger numbers
senger numbers at the end of the
most recent reporting period.

Notes: Data from reporting for the

three-month period to 30 June
2023 (or nearest half-year Airline Business Index trend
period), taken from public  3ZIVEPP
records. Workforce and fleet sizes 
compared with end-2019 levels. 
 ;SVOJSVGI
Revenue and passenger number 
metrics compared with data from  *PIIX

the equivalent period in 2019. 
Basket of 14 airlines based on the  6IZIRYI
largest carriers/groups that report 
 4EWWIRKIVW
quarterly or half-yearly results 
from FlightGlobal’s World Airline 
Rankings. Overall index score is 2SXI -RHI\


 

 

 

 

 

 

 

 

 

 

 
















an average of the scores for the












GSQTMPIH



























four individual metrics. WMRGI 5 

FlightGlobal.com/airlines September 2023 | Airline Business | 51