After First-Quarter Losses, U.S. Airlines Look Forward to a Record Summer
Pushing Back: Inside the Issue
It’s easy to forget now, toward the end of April when mask mandates are falling and travel restrictions are easing worldwide, that the Omicron variant surged just a few months ago. The coronavirus variant was responsible for much of the red ink the U.S. industry spilled in the first three months of this year, making a historically weak quarter even worse. But that’s in the past. What’s ahead is summer.
And this summer, the largest U.S. carriers see almost untrammeled — or, yes, “pent-up” — demand, finally marking the “inflection point” CEOs have talked about throughout the pandemic. CEOs are hammering home that they believe Covid-19 has gone from a pandemic to an endemic, seasonal disease.
Epidemiologists may have different opinions, but the public seems so far to be backing up the the CEOs’ claims. Forward bookings are strong even now, and are expected to get even stronger as summer approaches. In fact, United Airlines believes this summer could see record transatlantic travel as people rush to take vacations they put off for two years. Even the pilot shortage in the U.S. could redound to the airlines’ benefit by forcing capacity cuts and increasing yields. (That’s the silver lining of the pilot shortage. The rest of that picture is murkier, of course.)
We’ll get a fuller picture of how the pilot shortage is affecting smaller U.S. carriers as they report their earnings in the next few weeks. Will the smaller airlines be as optimistic about summer? Stay tuned.
The Airline Weekly Lounge Podcast
Cape Air CEO Linda Markham warns that the U.S. industry’s every-airline-for-themselves approach to easing the pilot shortage may not be the best way to address supply. Edward “Ned” Russell and Madhu Unnikrishnan discuss her comments, and our favorite spokes-seagull. Then, Delta Air Lines was the industry’s bellwether on financials with the recovery turn it saw in March apparently set to carry other U.S. airlines back to the black. Listen to the episode, and go here for an archive of the ‘Lounge.
Weekly Skies
There are two main issues limiting American Airlines schedule this summer: staffing and fleet. The mainline carrier will fly several points less capacity than it would like due to these concerns despite robust demand that executives say will flip it to the black in the second quarter.
While the Fort Worth, Texas-based carrier has acknowledged a negative impact from the well-documented U.S. pilot shortage since last fall, the situation has apparently worsened. No longer is it only limited to American’s regional operations but it is also constraining its mainline schedule.
The airline has exceeded its pilot hiring target with 600 hires to date in 2022, American CEO Robert Isom said during a first-quarter earnings call on April 21. However, a bottleneck getting those crew members trained and certified means the carrier will fly less than it wants through the end of the year.
“We have the supply coming in, [but] the school house is really running at full speed here,” American Chief Operating Officer David Seymour said.
American is the only one of the U.S. Big 3 — itself plus Delta Air Lines and United Airlines — to acknowledge pilot staffing issues at its mainline operation. Smaller carriers, including Alaska Airlines and JetBlue Airways, as well as the regional airlines that fly for the Big 3, have acknowledged a shortage and trimmed flights this summer as a result.
“We’re ready for the summer, and we have sized the airline for the resources we have available,” Isom said when asked about staffing issues, including of pilots. American has reduced its full-year capacity outlook to down 6-8 percent compared to 2019, from a January forecast of down roughly 5 percent.
American regional operation, American Eagle, has taken the biggest hit from the pilot situation. Departures will be down roughly 20 percent year-over-three-years in the second quarter compared to a 5 percent decline for the airline’s mainline operation.
The other big limiter of American’s schedule are aircraft delivery delays at Boeing. The airline has not received a new Boeing 787 since April 2021, when the planemaker halted deliveries due to Federal Aviation Administration quality concerns. American received only one of 19 787s it expected in 2021 and, now, Chief Financial Officer Derek Kerr said it will only receive seven this year with the balance arriving in 2023 and 2024. The delivery delays forced American to cut some international flying this summer, and end service to Hong Kong.
The airline ordered 30 more Boeing 737-8s in February to help make up for the shortfall in widebody aircraft. However, those Maxes will not begin arriving until 2023.
American’s recovery outlook is downright bullish despite the constraints. The carrier forecasts its first quarterly profit since the pandemic began in the second quarter. It also expects total revenues to increase 6-8 percent compared to the same period in 2019.
Leisure travelers continue to drive that recovery thought corporate flyers, who have largely sat out the recovery until now, are coming back in force. Over the course of the first quarter, domestic corporate revenues increased to 85 percent of 2019 levels in March from half of three years ago in January. American anticipates business travel revenues will recover to 90 percent of pre-pandemic levels in the second quarter.
“The gap between 90 and 100 [percent] is really due to long-haul international demand and certain pockets of domestic demand. But we’re continuing to see demand come in,” Raja said when asked about the business recovery.
Long-haul international demand had recovered to 60 percent of 2019 levels in March, Isom said. However, overall international passenger capacity will fully recover in the second quarter driven by the addition of flights to nearby destinations, including the Caribbean and Mexico. System capacity is forecast at down 6-8 percent year-over-three-years in the quarter.
Executives did not express significant concerns about a new Covid wave, nor of any fallout from the war in Ukraine or other geopolitical events. In terms of the higher fuel expenses from more than $100 per barrel oil, Kerr said American is confident that it can pass on the added costs to travelers through higher ticket prices.
American, like Delta, saw an inflection point in demand occur in March. After losses in January and February executives attributed to the Omicron surge, the airline turned a profit in March on “surging demand brought on by reduced infection rates, relaxed restrictions and tremendous pent-up demand,” as Isom put it.
American posted a net loss of $1.6 billion in the first quarter. Revenues were $8.9 billion, down just 16 percent from 2019. Unit costs excluding fuel and special items — a metric that measures an airlines’ costs — was up 13 percent year-over-three-years. Average fuel prices, however, jumped 18 percent to $2.80 per gallon in the first quarter from the fourth quarter.
The airline flew 19 percent less passenger traffic on nearly 11 percent less capacity in the first quarter compared to 2019.
In the second quarter, American forecasts a 3-5 percent pre-tax margin. Unit costs excluding fuel will remain elevated with an 8-10 percent year-over-year increase. And fuel expenses are forecast to jump at least another 28 percent compared with the first quarter.
United to Return P&W-Powered 777s to Service
United will see a massive capacity boost this year when its 52 sidelined Boeing 777s return to service.
The carrier plans to return the Pratt & Whitney-powered 777-200s to its active fleet gradually throughout the year, as soon as the FAA signs off on approved fixes to the engines. The fleet was grounded in February 2021 after an uncontained engine failure over Denver. United said it is pleased with the progress it has made with the engine-maker and airframer on the proposed fixes.
The 777s are central to United’s upgauging strategy, CEO Scott Kirby told investors on April 21. Through these aircraft, and with additional 787s and new Airbus A321neos, United aims to increase its gauge by 30 percent by 2026, he said. Upgauging will drive CASM-ex down.
The timing of United’s upgauging is fortuitous. The carrier forecasts torrid demand in the second quarter, with gains seen in all parts of its network, except for Asia-Pacific. Even there, however, management was encouraged by the uptick in demand for flights to Australia and South Korea as soon as those countries lifted their travel restrictions. Domestic leisure forward bookings are robust, and near Latin America is performing well. And the carrier is anticipating “record” transatlantic demand, Chief Commercial Officer Andrew Nocella said.
United is virtually licking its chops in anticipation of summer. The airline expects unit revenues to be 17 percent higher in the second quarter than in 2019. The recovery has already begun: Unit revenues in March were 9 percent than three years ago, Nocella said.
Even with the pilot shortage, United does not anticipate any dearth of aviators. The carrier plans to hire 200 pilots per month this year. But the shortage will be felt most acutely by smaller and mid-size airlines. “The pilot shortage is real,” Kirby said. “Most airlines will not be able to realize their capacity plans because there simply aren’t enough pilots, at least not for the next five years.”
Not that United is immune. Its regional affiliates are struggling to hire pilots. This is limiting United’s ability to broaden its network to many small and mid-sized cities.
At the outset of the pandemic, United, with its reliance on business travel and huge network in Asia, was uniquely battered among the major airlines. But it retooled its network to increase flights to domestic leisure destinations, particularly in Florida. Now, with Asia reopening and business travel returning, United believes it is uniquely positioned to take advantage of the recovery.
To illustrate this, Nocella noted that business travel was 30 percent lower than in 2019 during the first quarter, but in March was only 20 percent lower. The airline sees “considerable upside” in business travel as offices reopen, particularly in San Francisco, where United has a hub. Tech companies have lagged other industries in returning to business travel, but Nocella sees signs that even United’s tech corporate accounts are putting workers back on the road. “We are bullish on business,” he said.
Kirby was even more positive. “There has been a structural change in travel,” he said. “Once people get back to traveling, you realize how much you missed it. It’s not just pent-up demand … We are social creatures and we need to be with others,” he said.
“I happen to believe we will surpass [2019] on a permanent structural basis,” he added. “But that’s just one guy’s opinion.”
Despite all the optimism, United spilled more red ink in the first quarter. The carrier reported a $1.4 billion adjusted net loss on $7.6 billion in operating revenue, down 21 percent from 2019. This generated a pre-tax margin of negative 23.2 percent. There were some bright spots. Cargo, for example, generated $627 million in revenue, up 119 percent from 2019. United believes cargo yields will remain strong in the near term and that it will have enough belly-hold capacity to meet demand, even as it scales back cargo-only flights.
In the second quarter, United anticipates operating margins of 10 percent. The airline expects to be profitable for the full year.
“We are in the first inning of the recovery,” Kirby said. “That’s why just barring something bad happening in the world, in 2023 getting to 2019 margin levels seems pretty easy.”
Big Jump in Tech Bookings at Alaska Airlines
Tech companies are making a big return to business travel, with Alaska Airlines and others reporting a significant uptick in corporate bookings in recent weeks.
“There’s just been this material, as in a 50-point change, in booking levels for some of these big [tech] guys in the last few weeks,” Alaska Chief Commercial Officer Andrew Harrison said during the airline’s first-quarter earnings call on April 21. He did not name names but given Alaska’s headquarters in Seattle and hub in San Francisco, these companies likely include industry heavyweights like Amazon, Facebook, and Microsoft.
The return of these corporate flyers is very good news for the industry. The business travel recovery as a whole has lagged behind leisure flyers, who have come back in droves since the summer of 2020. But although holidaygoers and those visiting friends and relatives have helped fill aircraft, they have done so at lower fares than are typically paid by road warriors. This has made the return of corporate travel one of the biggest watched items for airlines, and the return the big tech firms a significant hurdle for carriers like Alaska and United, which rely heavily on demand in the major tech hubs.
Roughly 70 percent of 2019 corporate demand has returned, Alaska CEO Ben Minicucci said. This compares with the already fully recovered leisure segment at the airline. And Harrison said the return of business travelers helped drive yield improvements in the first quarter, when they rose to up 9 percent in March compared with three years earlier from an average of up 3.5 percent across the entire three-month period.
Alaska’s new codeshare with American and membership in the Oneworld alliance have “opened up a lot of doors” for new corporate customers, Harrison said. However, he could not say how much this benefitted Alaska in the first quarter, and said he anticipated a clearer view by the September quarter.
But even as road warriors return, staffing constraints have put the brakes on Alaska’s recovery. The airline plans to fly 6-9 percent less passenger capacity than in 2019 during the second quarter, and revised down its full-year capacity outlook to flat to down 3 percent year-over-three-years from up 1-3 percent just a month ago. The main issue is pilot staffing and training that bubbled over into a higher number of flight cancellations at Alaska earlier in April.
“It’s a question of how we get the pilots through the schoolhouse, and out on the line,” Minicucci said. Alaska is meeting its target of hiring 600 mainline pilots and a “couple of hundred” for its regional subsidiary Horizon Air this year, he added.
Alaska is confident in the supply of new pilots, Minicucci said. The airline has roughly 500 trainees working through in its existing pipeline, which includes the recently opened Ascend Pilot Academy flight training school and other pathway programs. In addition, Alaska backs efforts by Airlines for America (A4A), the Regional Airline Association (RAA), and other trade groups to boost federal financial assistance for pilot training.
“Now, you have to take destiny into your own hands,” Minicucci said of airlines’ pilot supply efforts.
Alaska reported a net loss of $143 million in the first quarter. Revenues were down 10 percent to $1.7 billion on a nearly 2 percent increase in expenses to $1.9 billion compared to 2019. Executives attributed the increase primarily to $75 million in charges related to the early retirement of Alaska’s Airbus A320s and A321neos, as well as higher labor costs. Unit revenues increased less than 1 percent year-over-three-years on a 17 percent increase in unit costs excluding fuel. Alaska paid an average of $2.62 per gallon for fuel in the first quarter, up 16 percent from the fourth quarter.
Looking ahead, Alaska maintains its forecast of profits in the second quarter and for the full year. Total revenues are forecast to increase 5-8 percent compared to 2019 in the second quarter, though unit costs excluding fuel are expected to jump 16-19 percent year-over-three-years. Fuel expenses are forecast to rise at least 14 percent from the first quarter.
Play Realizes Transatlantic Ambitions
After arriving on Play‘s first flight to the U.S., CEO Birgir Jónsson paused to relish the moment. The inaugural flight, to Baltimore-Washington from the startup airline’s Reykjavik hub, was the realization of its business strategy: To offer budget-focused hub-and-spoke network connecting both sides of the Altantic.
“We have always had our sights set on today,” he said the Baltimore airport gate area on April 20. “This is the day we connect the transatlantic over Iceland.”
The discounter, essentially a reboot of defunct Wow Air, has its work cut out for it. Its first U.S. flight was just over half full — 100-plus passengers on a 192-seat Airbus A321neo — and load factors still lag several points below the 72 percent target it set for 2021. The airline filled 66.9 percent of its seats in March, the latest data available. But with the Baltimore launch, which is soon to be followed by Boston in April, and New York Stewart in June, Play will start funneling planned-for feed into its previously Europe-centric network.
“In May or June we will fly as many passengers in one month like we did the whole of last year. We are seeing a healthy growth in utilization and load factor,” Jónsson said in an interview ahead of the launch flight. Play forecasts a profit in the second half of 2022.
Play is one of a new crop of long-haul, low-cost startups with their eyes on the transatlantic. Norse Atlantic Airways plans to begin flights between its Oslo base and three U.S. destinations by the end of June with former Norwegian Air Boeing 787s. Both Play and Norse follow in the footsteps of failed predecessors. Play embraces its likeness with Wow, while Norse distances itself from Norwegian Air’s former long-haul operation, which it increasingly mimics.
The startups enter a competitive marketplace where network carriers are piling on flights for the summer. Industry capacity between Europe and North America is scheduled to be down nearly 11 percent in the third quarter compared with 2019, according to Cirium schedule data. The decline is significantly less than the 38 percent to Asia and 23 percent to South America, but slightly more than the 9 percent to Africa.
But the odds are long for Play. No long-haul, low-cost carrier has ever succeeded flying the transatlantic. Norwegian Air and Wow Air both failed, as did their predecessors dating all the way back to Laker Airways‘ Skytrain in the late 1970s and early 1980s.
Covid, high oil prices and inflation, and the war in Ukraine are all added obstacles for Play. Concerns that Jónsson is relatively unconcerned about.
“If you’re going on holiday, you’re not going to abort your summer vacation if you have to pay $30 more for the airfare, especially if you’re going transatlantic,” he said. “In actual fact, the way consumers behave, it’s the price of a beer.”
The beer in his analogy is equivalent to added fuel expenses that Play estimates it needs to recoup since oil prices spiked after Russia’s invasion of Ukraine in February. And even then, Jónsson said, the airline’s estimates were made in March when Brent crude prices were over $120 per barrel. Brent now hovers just over $105 per barrel.
For its U.S. launch, Play sees roughly 70 percent of bookings coming from American travelers. This balance is unusual for European carriers that tend to see higher points-of-sale in Europe than the U.S. Jónsson said the majority of these bookings are for travel onto Europe rather than to visit Iceland.
Stewart, Play’s New York-area gateway, is something of an out-of-the-box move given the airport’s nearly 70-mile distance — or a nearly hour-and-a-half drive — from Midtown Manhattan. Jónsson said the airline got “a lot of raised eyebrows” for the decision. Given Stewart’s large catchment of suburban New Yorkers and Play’s connections into Europe, he was confident in the market. This is in contrast to the failed point-to-point flights that Norwegian Air tried at Stewart from 2017-19.
Play already is looking at growth beyond the upcoming summer season. The airline has announced three cold weather destinations — Geneva, Liverpool, and Orlando — for travelers looking for escape during the winter months when east-west transatlantic demand is historically at its lowest.
As for Orlando, which is Florida’s busiest airport and a leisure destination in its own right, a new rail link to South Florida that is due to open by the end of the year or in early 2023 influenced Play’s air service decision. The airline is one of the first to publicly acknowledge the role that Brightline played. Brightline is the first intercity rail link in the U.S. that actually stops in an airport terminal.
“The big thing is by landing at [Orlando] you have the best connection to many points of interest in Florida through this train line,” said Jónsson, who added that Play considered multiple Florida destinations before selecting Orlando. Brightline will initially connect the airport to West Palm Beach, Fort Lauderdale, and Miami, but is planning an extension to Disney World and Tampa in the coming years.
In Other News
- It’s finally happened. The Oneworld alliance has suspended Russia’s S7 from the group. The carrier and Oneworld said the suspension was a mutual decision based on S7s inability to operate international routes, due to Western sanctions on Russia stemming from its invasion of Ukraine. Earlier, Oneworld had allowed members to decide whether to continue their partnerships with S7.
- Japan Airlines has revised down its financial guidance for the fiscal year that ends in March. The carrier now forecasts revenues of ¥682 billion ($5.3 billion), compared with earlier guidance of ¥766 billion, an 11 percent decrease. The carrier attributes the Omicron variant and resulting lockdowns in Japan, as well as continuing weakness in international demand, for the revision.
- Nordic Aviation Capital aims to emerge from U.S. Chapter 11 bankruptcy protection in May. The U.S. Bankruptcy Court for the Eastern District of Virginia has signed off on the company’s reorganization plan to reduce total debt by $4.1 billion. The lessor is funding its reorganization through $337 million in new equity financing and $200 million in revolving credit loans. Nordic has 350 aircraft in its portfolio.
- So far, Western airframers and OEMs have not suffered for a lack of Russian titanium, and production ramp-ups planned by both Airbus and Boeing should proceed as planned. Russian titanium still is available, but due to sanctions, the country’s ability to do quality certifications has been curtailed, industry sources said. If the Ukraine war and its resulting sanctions grind on, a shortage of certified titanium could become acute.
- One pandemic-era airline practice is ending. EASA, the EU’s aviation regulator, will bar cargo in the passenger cabins of aircraft from July 31. Thus ends European airlines’ use of “preighters” to bolster revenue while passenger traffic plummeted. “Following a review of the operational context for transport of cargo in passenger cabin, the agency has concluded that the logistical challenges that arose in 2020 as a result of the COVID-19 crisis no longer exist to the same extent,” EASA said.
- Speaking of cargo, Gol’s plans to expand into the logistics and package-delivery space is gathering steam. The Brazilian carrier is joining up with Mercado Livre, an e-commerce and online auction company. The deal includes Gol operating a fleet of six Boeing 737-800 freighters with the option to add another six by 2025.
- And more cargo. AviaAM Leasing has acquired another Boeing 737 to convert into a freighter. The lessor started acquiring 737s for passenger-to-freighter conversions last year and has completed work on three, with the latest becoming the fourth. The work will be carried out by Taikoo Aircraft Engineering Company in China.
- And even more cargo! Air Canada has begun cargo operations in Halifax by basing a Boeing 767F there. The freighter is now flying Toronto-Halifax and will being flying cargo routes to Frankfurt, Cologne, Istanbul, and Madrid next month.
Routes and Networks
- Breeze Airways is making something of a power move to enter the New York market. The David Neeleman-led startup will launch the only transcontinental flights from Westchester Airport that, located north of New York City, serves some of the area’s poshest suburbs — and allows travelers to skip long drives to either Newark or New York JFK airports. Flights to Los Angeles and Las Vegas begin in September, and San Francisco in November; all will be flown with Airbus A220 jets. Breeze will also connect Westchester to Charleston, S.C., Jacksonville, and Norfolk from June; and New Orleans and Savannah from September.
- Not every airline is brushing off high fuel expenses ahead of a hoped for busy summer. Icelandair has cancelled its planned seasonal Reykjavik-Anchorage nonstop that was due to operate from May through September with “fuel is the main factor,” an airline spokesperson told the Anchorage Daily News. The route is not the only transatlantic market to drop out of schedules for this summer: United Airlines pulled planned Washington-Berlin and Newark-Prague service for opaque reasons, and American Airlines is suspending nonstops between Charlotte and Frankfurt from June through September, per Cirium. All in, industry capacity between Europe and North America is scheduled down 11.5 percent compared to 2019.
- Speaking of cuts, American will also exit Eureka-Arcata, Calif., on August 15. The airline is ending flights to Phoenix as part of what a spokesperson described as a regular evaluation of its “network to meet customer demand.” American began flights to Eureka in June 2021, per Cirium.
- AirBaltic is expanding its new Tampere, Finland, base before it even takes off. The airline will connect the Finnish tech center with Amsterdam twice weekly from June 1. The Tampere base opens in May with an initial bevy of six new routes.
- Volaris plans to operate the first U.S. route from Mexico City’s new Felipe Angeles airport. The discounter has applied for authority to begin flights to Los Angeles by year-end. One big, hitch remains: The U.S. needs to upgrade Mexico’s safety rating before Volaris, or any other Mexican airline, can add new transborder flights.
State of the Unions
Cape Air CEO Linda Markham is worried that airlines are doing the industry a disservice in pursuing individual approaches to boosting pilot supply as the industry works to ease the shortage in the U.S.
“I almost wish there could be a conversation around a table about working together, and not robbing Peter to pay Paul, so to speak. That’s been the biggest challenge,” Markham said. While the numerous pilot pathways — job commitments provided by an airline for trainees that join a specific program — help increase supply, they have fostered a competitive environment among airlines of all sizes for pilots that can be detrimental to the industry as a whole, she added.
This competitiveness has created challenges for the airlines at the bottom of the industry ladder: regionals. Carriers ranging from sector leaders Republic Airways and SkyWest Airlines to Alaska Airlines-subsidiary Horizon Air and independent Cape Air are all seeing elevated attrition rates that have forced them to pare flying this year, and likely into 2023. In recent weeks the issues have spread to major airlines, including Alaska and JetBlue Airways, which cancelled flights due to pilot and broader staffing shortages.
And although almost all airline executives are sounding the alarm about the shortage, there is little collaboration across the industry, from regionals to low-cost carriers and major airlines. And, complicating matters, the Air Line Pilots Association (ALPA) denies there is a shortage.
“All airlines are impacted by the shortage and are taking determined, but individual steps to remedy,” Regional Airline Association CEO Faye Malarkey Black said when asked about industry collaboration to address the shortage. A unified approach is “particularly important,” she said, and added that industry stakeholders are at least united in lobbying Congress to help lower the barriers to entry to becoming a pilot. ALPA, she said, is the only major player that is not participating.
Cape Air was among the first airlines that identified and worked to ease what was long a looming pilot shortage. The airline launched one of the first U.S. pathway programs, with JetBlue, in 2007, and now has since added a similar offering with Spirit Airlines. And, last year, Cape Air launched a partnership with the Leadership in Flight Training Academy, of LIFT Academy, where graduates fly as first officers for the airline until they qualify for captain after which they spend 12 months at Cape Air before transitioning to Republic.
Cape Air is generally happy with its pathway programs and partnership with LIFT Academy, Markham said in an interview with Airline Weekly. However, first officers often leave as soon as they qualify to fly at a larger regional and that is detrimental to Cape Air. “We need to have a return on our investment because, with our first officer program, we’re blocking the right seat and that’s a missed revenue opportunity of us,” she said.
The airline’s fleet of 70 Cessna 402s seat nine passengers, including one in the right seat of the cockpit. If that seat is blocked, Cape Air can only sell eight out of nine seats on the aircraft. Its 30 Tecnam P2012 Travellers seat nine passengers without one in the right seat of the cockpit.
Markham hopes that a new letter of agreement with Cape Air’s pilots, represented by an arm of the International Brotherhood of Teamsters, that includes improved wages and work rules will help it retain more crew members for longer. Pilots are currently voting on the agreement.
Pay increases and other work-rule improvements would help address the number-one complaint among pilots: low wages. Many pilots blame the current shortage on the high cost of training and poor entry-level pay once someone is certified and begins flying for an airline.
One change that Markham is not calling for is a repeal of the U.S. FAA’s rule requiring that all commercial airline pilot have 1,500 hours of training. While other regional airline executives have called for its repeal, Cape Air is focused on working with the regulator to develop credits for training that can be applied to reduce the hour requirement. However, the unexpected departure of FAA Administrator Steve Dickson at the end of March, Markham said they “feel a little bit like we’re starting over again” on developing a credits program.
The pilot shortage has forced Cape Air to shrink its summer schedule, as many U.S. carriers have done. The carrier has exited Portland, Maine, which Markham said performed well last year. It also will operate fewer extra flights, or sections, on busy routes during peak periods this summer.
“Really, it’s a lot of the incremental flying that we’ve had to pull down,” Markham said. “Our big three is Boston [to] Nantucket, P’town, and Martha’s Vineyard — that’s where we’re really going to be looking at protecting our capacity.”
The cuts come just as travel demand is roaring back. Summer bookings at Cape Air already exceed 2019 numbers, said Markham. That makes its inability to fly additional sections on popular routes even more significant. Cape Air competes with JetBlue on its core routes between Boston and Martha’s Vineyard and Nantucket during the summer; a competitor that, with larger planes, can pick up many of the passengers the regional is likely to spill without adding frequencies.
Cape Air is scheduled to fly 8.5 percent fewer seats during the peak June-August period than it did in 2019, according to Cirium data. In addition to its core New England markets, the airline also has operations in the Caribbean, Midwest, and Montana.
Labor Briefs
- Last week the Association of Flight Attendants (AFA) won an election at Houston-based Avelo Airlines, which began flying in April 2021. Only 14 votes were counted, and the AFA won 8-6. The carrier is contesting the election, largely because of the small number of voters: it has filed suit against the National Mediation Board (NMB). But AFA President Sara Nelson says the election was delayed, partially due to the airline’s efforts. This meant that the original bargaining unit diminished due to attrition.
Meanwhile, at Utah-based Breeze Airways, which began flying in May 2021, the Air Line Pilots Association (ALPA) has filed to represent pilots. The NMB filing on April 7 said the union seeks to represent the carrier’s 69 pilots.
— Ted Reed
Landing Strip
The days of trains passing one block from the end of the runway at San Diego International Airport may be nearing an end. The airport, along with the local transportation planning organization the San Diego Association of Governments (SANDAG), the city of San Diego, and the Port of San Diego, have a two-pronged plan to get more people to their flights without a car.
“Our goal is that the first choice for any passenger going to the airport, we want transit to be so competitive that that’s the first choice,” SANDAG Deputy CEO Coleen Clementson told Airline Weekly. The first leg of the agency and its partners’ plan is a new station on the region’s light rail network, known as the Trolley, adjacent to the airport’s consolidated rental car center. San Diego’s regional rail, the Coaster, and Amtrak may also serve the station. The second leg, and the more ambitious one that SANDAG hopes will attract the most riders, is an automated people mover connecting the terminal complex at San Diego airport with the city’s Santa Fe Depot downtown.
Of course, converting car trips to the airport to train trips is easier said than done. The drawback of the San Diego area’s plans are that every ride would need to make at least one transfer to reach the airport: Either at the new station, or downtown at Santa Fe Depot. Forced transfers are well known to deter some riders versus offering a direct line, or one-seat ride, to the airport — for example extending one of San Diego’s existing Trolley or regional rail lines. Asked why this was not selected by SANDAG, Clementson said their studies found a people mover that has, for example, 2-minute headways between trains was the “best option for getting the most ridership.”
An ever-increasing number of U.S. airports are connected by rail to their local transit systems. While the quality of these connections vary widely from light rail or Metro stations directly adjacent to the terminal at Seattle-Tacoma and Washington National, respectively, to dedicated Airtrains that connect to regional lines like at Miami and New York JFK. While there are no data on how many travelers nationally use these connections, 48 percent of U.S. flyers at least had access to them in 2019, according to Federal Aviation Administration data.
Funding for the two projects that have an estimated $4 billion cost will come from several sources. The San Diego airport has committed $500 million from its $3.4 billion redevelopment of Terminal 1 — none of which comes from passenger facility charges (PFCs) collected by the airport from travelers, a spokesperson clarified. Additional funds will come from local, state, and federal sources, and potentially including from President Biden’s Bipartisan Infrastructure Law. Clementson said the local funding portion will require voter approval.
But if funding is secured, the first phase of the new station and people mover connection to San Diego airport could open as soon as 2028. Environmental studies and preliminary engineering work are forecast to take two years with a potential ground breaking in 2024.
Airport Briefs
- Hong Kong International Airport’s third runway is ready for business. The airport notified authorities that the runway has met ICAO standards and is “ready for commencing operation.” The airport did not provide a date when the runway, which is located north of the existing northern runway 7L/25R, will commence operations. Hong Kong’s strict border rules and quarantine requirements has pummeled traffic at the airport; it handled just 94,000 passengers in March, a 98.5 percent drop from three years earlier.
- Washington Dulles airport operator the Metropolitan Washington Airports Authority approved plans for a new $671 million, 14-gate concourse south of the existing Concourse C/D. The facility will replace the ground-level boarding gates on Concourse A, and is billed as the “first component of a very long term [capital] program for Dulles,” MWAA board member David Speck said. United Airlines, which uses the existing A gates for regional flights, will use the new concourse that will be built atop of the existing C/D AeroTrain station. MWAA hopes to secure up to $230 million in federal grants for the concourse from the Bipartisan Infrastructure Bill that passed last year. With the approval, the operator aims to begin construction in 2023 with an opening date target of 2026.
- The City of Austin launched a $404 million bond on April 20 to fund capital improvements at the city’s airport. Proceeds will be put towards the airport’s $2.1 billion capital plan that includes improvements to the terminal and new ground-level bus gates, a new centralized luggage handling system, and planning and construction of a new at least 10-gate midfield concourse. Austin airport has been a pandemic traffic winner with passenger boardings up 11 percent for the five-months ending in February compared to the same period in the airport’s 2019 fiscal year. Austin plans to price the bond on April 26, and close on May 18.
- Baltimore-Washington International Airport CEO Ricky Smith said the airport also plans to apply for some of the competitive grants available under the U.S. Bipartisan Infrastructure Law. Asked what it planned to seek funds for, he said the airport had “needs” that it could accelerate. Last year, the airport outlined future plans to build a secure passenger connector between Concourses C and D, an in-terminal hotel, new security checkpoint, and new air traffic control tower.
- KLM objects to a 33-percent increase in fees at Amsterdam’s Schiphol airport over the next three years. The airline claims that the airport, which it calls a “monopolist,” is using the fee increase under the Netherland’s Aviation Act , which governs the terms of Schiphol’s operating license to pass on its pandemic losses to airlines. KLM, and its affiliates Air France, KLM Cityhopper, Martinair, and Transavia, will appeal the increase to the Dutch Trade and Industry Appeals Tribunal.
- Spirit Airlines has reached a deal for a new maintenance hangar at Houston’s Bush Intercontinental airport. The carrier will take control of the existing building in June, and plans to staff up the facility after that. The new hangar will have two aircraft bays and ramp space for another four aircraft. Houston is Spirit’s second maintenance base after Detroit.