Airline Market Review 2018 Airline Market Review 2018 Timeline of 2018
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AIRLINE MARKET REVIEW 2018 AIRLINE MARKET REVIEW 2018 TIMELINE OF 2018 July JetBlue founder David Neeleman cements plan to launch a new US carrier in 2021 by signing for 60 A220s at Farnborough air show September Former Air Canada executive Ben Smith takes January March November the helm at Air France-KLM Niki Lauda-led consortium Qantas carries out first non- Icelandair drops planned May boss aiming to settle the Laudamotion wins race for stop flight from Australia to merger with Wow Air, which Efforts to find an investor labour issues that prompted assets in Austrian carrier the UK after launching 17h in turns looks to Indigo for Air India fail after the departure of Jean-Marc Niki, in which Ryanair later sector flight from Perth to Partners in its search for privatisation process fails to Janaillac takes majority stake London Heathrow investment draw any bids Feb Apr Jun Aug Oct Dec | | | | | | | | | | | | Jan Mar May Jul Sep Nov August April Loss and restructuring IAG buys shares in measures revealed in Jet October December Norwegian to support Airways delayed second Delta Air Lines receives the Royal Air Maroc announced two bids for the low-cost quarter results show first Airbus A220 bound for plans to become operator, both of which are mounting challenges facing a North American carrier Oneworld’s first new full rejected Indian carriers February Lion Air 737 Max 8 (flight alliance member for six Qatar Airways takes delivery JT610) crashes, 189 dead years of first A350-1000 June Issue of lack of diversity and female representation among senior airline management is under- scored by Ill-judged joke from Qatar Airways chief Akbar Al-Baker 2 | FlightGlobal AIRLINE MARKET REVIEW 2018 REVIEW OF 2018 While wider political tensions dominated much of the agenda unable to pass these additional costs through higher fares. Airlines to cease operations this year included Primera, which and continue to cause potential headaches for airlines, it was was grounded before its attempts to tackle the emerging long- the return of a familiar problem in the shape of rising fuel “This year has been tougher than we though it would be,” haul low-cost market on the Transatlantic had really begun. prices that did the most to knock airlines from their high-profit says IATA chief economist Brian Pearce. “There was a quite a altitude during 2018. squeeze on airline margins in the second and third quarters That sector remains an area of much development, though because of the sharp rise in fuel costs.” still only a small part of overall capacity. Questions have Fears of a potential trade war have circled following the Trump surrounded the most high-profile European carrier in the administration’s introduction of tariffs on certain products But it still remains, relatively speaking, a profitable period for segment, Norwegian, throughout the year, after IAG bid for aimed at Europe, Canada and, most notably, China. This airlines. IATA expects industry profits has kept a threat hanging over potential global economic to be only $5 billion lower in 2018 development, joining other concerns such as the relentless than the $37.7 billion the industry Industry net profits by region uncertainty around Brexit in Europe and political shifts in made in its record-breaking 2017. several other countries. Ultimately, though, it is only the rapid development of the Iranian airline market has directly Profits for the larger groups have been kyboshed by Trump policy, halting hoped-for aircraft proved particularly resilient. While deliveries. there have, especially more recently, been airline failures, these have Higher fuel costs, however, were to prove all too real for largely affected smaller operators airlines. The barrel price of crude oil climbed a third over on the fringes of the industry. the course of the year, reaching the mid-$80s. While these Avianca Brazil, which filed for the more recently have dropped back sharply – moving below equivalent of bankruptcy protection year-beginning levels by December – the higher oil price had in December, is the largest operator already contributed to a string of profit warnings across the to enter formal restructuring this globe during the second half of the year as many carriers were year. Norwegian Source: IATA outlooks; 2018 and 2019 is forecast, figures for 2017 are revised since June 18 IATA outlook. Questions have surrounded the most high-profile European carrier in the segment, Norwegian, throughout the Other includes net total for Africa, Latin America, Middle East year, after IAG bid for the airline 3 | FlightGlobal AIRLINE MARKET REVIEW 2018 the airline. Norwegian, which has long defied its sceptics, was commitments regarding a lack of plans to add fifth-freedom NortH AMERICA emboldened by a stronger start to the year and resisted the flights. This, however, has done little to improve relations with Net profit: $14.3bn bids. IAG remains a small shareholder, and potentially a buyer, their US counterparts. Indeed, Qatar Airways ended the year Performance: Continues to lead industry profitability and the late fall in oil with eyes continuing to watch developments over the winter. poised to act on its earlier threat to walk out of Oneworld, prices during the year gave its relatively unhedged carriers a further boost Key issue: United Airlines’ expansion strategy began to gain momentum, as it heaping much of the blame on its relations with American bid to regain market share. This helped the carrier increase revenues enough to And the year ended with attention surrounding the future of Airlines, whilst the US carriers have gone on the attack over help offset rising fuel costs another player in that field, Icelandic operator Wow Air, after Qatar’s involvement with expanding Air Italy. ASIA-PACIFIC low-cost investment gurus Indigo Partners emerged as a Net profit: $9.6bn potential white knight following the collapse of its proposed One airline that is definitely quitting a global alliance is SkyTeam Performance: While some markets continued to enjoy strong financial fortunes, intense competition and devalued currencies against the US dollar contributed acquisition by Icelandair. carrier China Southern Airlines. The airline will not renew its to severe challenges in others as fuel costs rose membership of SkyTeam next year as it follows a strategy of Key issue: Indian carriers struggled notably with challenges at Jet Airways and a That was one of several rolling airline stories across the year. pursuing partnerships with carriers around the global failed attempt to privatise Air India, despite it being one of the fastest growing domestic air travel markets during the year In Europe, Michael O’Leary’s attempts to engage unions at Ryanair and overcome its operational issues continue to Uncertainty surrounded China’s HNA Group for much of EUROPE Net profit: $7.5bn dominate headlines. The sprawling nature of its operations the year. The group, which like Etihad had made a number Performance: A string of carriers on the fringes fell foul of the more challenging mean that despite getting several unions on board, there international investment in aviation companies in recent conditions as the peak summer season ended, resulting in a series of airline remains plenty of work to do. Unions too were a familiar years, sold several assets during the year, as part of efforts to failures Key issue: Concerns around Brexit continue to hang over Europe. British airlines problem for airline management at Air France-KLM – resulting overcome liquidity problems. or those with a strong UK presence undertook a string of measures, including in the early departure of group chief Jean-Marc Janaillac after adding new AOCs, to insulate themselves from the changing landscape a pay deal was voted down. It was another tough year in the Indian airline market, where MIDDLE EAST over-capacity and fierce competition compounded the rising Net profit: $600m Meanwhile, more than a year after Etihad Airways Group cost and weak currency environment. The year began with Performance: Challenging conditions for all three Gulf majors, which for a pulled the plug on its investments in Air Berlin and Alitalia, the failure to secure any bidders for a stake in debt-laden variety of reasons, have found their respective financial performances suffering Key issue: Etihad Airways remains in introspective mood as new chief executive those stories continue to play out. Jockeying for position in state carrier Air India, and was followed later by key players Tony Douglas attempted to steady the ship and focus on its core airline the battle for markets vacated by Air Berlin continues, notably Jet Airways, IndiGo and SpiceJet all swinging to losses in the operations after recent years of acquisitions at Berlin and Vienna, while the Italian carrier remains in normally profitable second quarter. The high-profile problems Latin AMERICA restructuring with little clarity yet on its future. at Jet in particular dominated headlines, as it embarked on a Net profit: $400m major restructuring and sought to raise capital. Performance: While the key Brazilian economy has improved countries in the region have faced increased challenges from the strong US dollar environment New Etihad chief Tony Douglas spent most of the year focusing Key issue: Moves to abandon the one-third built Mexico City airport after a on the core airline’s challenges – taking direct management of Weak currencies also impacted a number of countries, notably referendum organised by the incoming Mexican government, caused a blow to the carrier in a group restructure – and showing little of the in key economies Latin America where it is impact travel airline hopes of adding much-needed airport capacity in the city global appetite that dominated the group he inherited. Fresh demand in Brazil and Argentina as a result. Elsewhere in Latin AFRICA talk of a mega Gulf tie-up with Emirates resurfaced, but with America much of the narrative was set by fast-expanding low- Net loss: -$400m Performance: Another challenging year for some of the region’s biggest little outward evidence so far that there is any more political cost operators in the region.