More evidence of capacity constraint among U.S. airlines appeared in a recent quarterly earnings report from one of the fastest-growing carriers in the country. Virgin America, which has seen annual available seat mile (ASM) growth average 28 percent for the past three years, has reconsidered its fleet expansion strategy and said it would move to cut the number of airplanes it plans to add over the rest of the decade.
Tough economic times are resulting in innovations by carriers in the Asia Pacific region looking beyond traditional business models through strategic realignments and new product offerings. Recent ground-breaking deals include Virgin Australia selling a 10-percent stake to Singapore Airlines (SIA) and buying 60 percent of Tiger Airways; the new partnership between Emirates Airline and Qantas; and Etihad Airways purchasing a 10-percent stake in Virgin Australia.
Decelerating growth at Virgin America has led the airline to reconsider its fleet-expansion strategy and move to cut the number of airplanes it plans to add over the rest of the decade. Under a revised agreement reached with Airbus, Virgin America’s order for current-generation A320s will shrink from 30 airplanes to 10, all scheduled for delivery in 2015 and 2016, the airline announced Friday.
The association representing major U.S. airlines expects that carriers will scale back capacity early next year, aligning it more closely with passenger demand to offset record high jet fuel prices. Airlines for America (A4A) projects a 2.4-percent reduction in scheduled domestic flights, a 1.3-percent decrease in domestic seats and a 0.1-percent cut in domestic available seat miles (ASMs) in the new year. This year, domestic ASMs rose a modest 0.1 percent over last year’s total seat capacity.
Hurricane Sandy closed the major New York City metropolitan area airports and forced the cancellation of more than 20,000 flights as it swept the Northeast region of the U.S. last week, leaving widespread flooding in its wake. The Category 1 hurricane, combined with cold fronts from the north and west, also disrupted operations at airports in Boston, Philadelphia, Baltimore and Washington, D.C. Other airports nationwide and internationally felt the ripple effect of the cancellations.
Striking pilots and engineers of India’s Kingfisher Airlines have accepted a three-month portion of their eight months of unpaid salaries and agreed to return to work, even as management struggles to get its suspended Scheduled Operator’s Permit reinstated. Still, civil aviation minister Ajit Singh warned that paying salaries alone would not guarantee that Kingfisher would fly again. “I think the Kingfisher problem is much bigger; even if they pay the salaries today, are they going to take off and fly? I don`t think so,” he said.
A Southwest Airlines Boeing 717, acquired during the merger with AirTran, was rammed by a catering truck on October 12 after the driver lost control of the vehicle on the ramp at Milwaukee’s Mitchell Field. The driver said he was unable to stop when a soft-drink can became lodged between the truck’s brake pedal and the floor. Southwest said the aircraft fuselage was substantially damaged at the forward and mid-section joint. None of the 108 people on board was injured. Southwest mechanics are inspecting the aircraft.
A story in this week’s Loveland, Colo. Reporter Herald says that Allegiant Airlines’ suspension of service from Loveland in August was due to airline CEO Maurice Gallagher’s concern about safety based on too much local air traffic and the airport’s lack of a control tower. Local city officials, as well as representatives of the Transport Workers Union representing Allegiant flight attendants want to know why, if flight safety is the reason for the pullout, the airline plans to continue operating service to Las Vegas through the end of October.
Jumpjet, a start-up “luxury travel club” launched on Tuesday, aims to provide per-seat private jet travel at first-class airline prices. Under its program, customers pay a fixed monthly fee over a 12-month period that allows them to book a seat on 10 round-trip flights per year, without any extra per-flight-hour charges, on third-party charter aircraft flown by Wyvern- or Argus-audited operators.
The International Air Transport Association (IATA) has issued an improved forecast for global airline profits this year, but the latest projections point to more pain for Europe’s carriers. IATA now predicts the world’s airlines will achieve a combined profit of $4.1 billion this year ($1.1 billion higher than its last projection of $3 billion made in June 2012).