A New Quarter Beckons

Pushing Back: Inside the Issue

Time is not the only thing that’s flying. We’ve now just about reached the second quarter of 2024, and airlines worldwide are planning an 8% increase in seat capacity versus the same quarter last year. East Asia’s big markets are finally getting back to normal. In other regions, airlines will fly more this year than last simply because they can, with labor and other fleet utilization constraints easing. Demand is still strong. Fuel has largely stayed at manageable levels. Now, imagine how much more airlines would be growing if Boeing was delivering planes on time, and if Airbus narrowbodies weren’t grounded by engine woes?

Speaking of Boeing and Airbus, the latter is clearly benefitting from the former’s safety and quality concerns. Korean Air, for one, snubbed the B777-X in favor of A350-1000s. Japan Airlines, meanwhile, ordered Airbus narrowbodies for the first time ever. It’s buying more A350s as well. 

Japan Airlines separately presented an updated business plan that emphasizes, among other things, a need to attract more non-Japanese travelers. It also warned that demand on North America and China routes has disappointed in the early months of 2024, but that forward bookings beyond April look better.

SAS’s fortunes look a lot better now that it’s a mere formality away from exiting bankruptcy. It will do so with a new ally: Air France-KLM. Air India’s fortunes are improving too, as its CEO discussed at a Skift summit in Delhi last week. Rival IndiGo, which held an analyst day event, joined Air India in highlighting the Indian market’s immense growth prospects. Airline traffic, IndiGo said, is expected to grow from about 230m passengers today to 510m by the end of the decade.

Some other news from last week: Troubled JetBlue unsheathed its meat cleaver, slicing off cities from its route map. In South America, JetSMART launched an invasion of Columbia’s domestic market. AirAsia, as it prepares to integrate with AirAsia X, is adding more routes to Taiwan. And Frontier will touch down at New York’s JFK for the first time.

And now… a warm welcome to the year’s second quarter!

Airline Weekly Lounge Podcast

Gordon Smith and Jay Shabat discuss the global airports that look set to be the big winners and losers in the coming quarter. Listen to the episode here, and find a full archive of the Lounge here.

Weekly Skies

Air India’s Turnaround

• What’s the latest in Air India’s turnaround adventure? CEO Campbell Wilson delivered an update at the Skift India Summit last week. Speaking with Skift’s Asia editor Peden Doma Bhutia, Wilson said the airline’s five-year business plan is now about 18 months in, with lots already accomplished—new aircraft orders, an influx of new talent, a rebranding, and so on. The ultimate goal: restoring Air India’s past status—long since eroded—as a “top-tier, world-class airline.” 
• The company was reprivatized in 2022, while at the same time taking control of Vistara (a rival airline) and AirAsia’s Indian venture, which is now, for all practical purposes, merged with Air India Express. The Vistara integration will take longer. Also in the mix is Singapore Airlines, for which Wilson once toiled. Singapore stands to own a quarter of the new Air India, partnering with majority shareholder Tata, one of India’s largest conglomerates. 
• Wilson sees enormous growth potential, hence the planned acquisition of more than 500 new planes—it’s currently receiving a new aircraft from either Airbus or Boeing roughly every six days. Asked about its order for B777-9s, Wilson clarified that these are options only, for now. But if Air India does decide to buy them, they’d be useful for flights to North America. 
• Air India Express alone plans to reach a fleet of 100 planes within the next year, focusing on price-sensitive domestic and shorthaul international markets. But the company’s biggest opportunity, Wilson made clear, was in the longhaul intercontinental arena, a market long ceded to Gulf carriers. To win back Indian travelers, Air India intends to improve its product, service, loyalty program, connectivity, network, technology, brand, etc. And Wilson makes no apologies for supporting a protectionist approach to Gulf rivals, who he says force passengers to make inconvenient connections through their hubs. Air India, by contrast, plans to add many new nonstop routes, to and from at least three Indian hubs. Delhi, he says, works well for east-west traffic flows. Mumbai can capture flows from southern India, as well as sixth freedom traffic between Asia and Africa, and between Europe and Australasia. After Delhi and Mumbai, Air India’s busiest airport is Bengaluru in the south.  

AirAsia’s X Factor 

• AirAsia will not be an airline anymore. Wait, what? Well, Capital A, its holding company, intends to hive it off to AirAsia X, leaving behind just auxiliary businesses like maintenance, logistics, and catering. It’s really just a post-Covid organizational and financial restructuring, one that won’t directly impact travelers. AirAsia the airline, to be clear, will remain AirAsia. For now, it still accounts for a large majority of Capital A’s total revenue, and the latter reported a solid 11% operating margin for Q4, along with a 13% operating margin for all of 2023. It’s a sign that demand is finally healthy again after a delayed post-Covid recovery. 
• Looking ahead, AirAsia intends to prioritize high load factors (at least 88%) to help foster more ancillary sales. It’s pleased to report that competitive pressures have eased in Malaysia and Thailand, its two most important markets (it also has ventures in Indonesia and the Philippines, and is close to adding another in Cambodia). AirAsia in its entirety remains about 15% smaller than it was in 2019, in terms of capacity. And it still expects to be about 10% smaller by year end. It still has lots of A321 Neos on order though, with more China and India flying on its radar. 
• As for AirAsia X itself, the carrier is currently operating only about 20 routes (compared to AirAsia’s roughly 200). Its accounts are a bit messy following a major restructuring, but Q4 shows an operating margin of 2%. It had an exceptionally strong first quarter though, which helped end 2023 with a full year margin of 20%. It’s a good sign, and evidence of dramatic cost cutting. But can it smoothly fuse with its shorthaul sister airline and generate consistent profits collectively? 
• Once pursuing just longhaul markets, AirAsia X is now flying shorter hops within Asia, to cities like Hong Kong and Seoul. But with A330-Neos and A321 XLRs on the way, it’s teasing new routes in “Europe, Africa, and the United States.” China, it says, has experienced a “great comeback” since last month thanks to visa relaxation.
• A final note about Malaysia, specifically AirAsia’s rival Malaysia Airlines. It’s been several years since the state-owned carrier published its internal financial statements. It did say last week however that it earned nearly $200m operating profit for 2023, its second straight year in the black. It did not provide a revenue figure but for comparison, rival Thai Airways earned a roughly $1.2b operating profit on $4.6b in revenue. 

Light at the End of the Bankruptcy Tunnel  

• SAS has moved one step closer to emerging from bankruptcy. The airline’s reorganization plan received court approval in New York, putting it on track to exit sometime before the end of June. When SAS first filed in the summer of 2022, existential questions loomed large. Would it survive? 
• A key moment came when Air France-KLM decided to invest, joining other investors in providing SAS with a financial lifeline. More importantly for the long term, it gave the carrier new strategic relevance as a future soldier in the SkyTeam army. Already, it’s sending planes to Delta’s Atlanta hub. Air France-KLM however, committed to just a minority stake for now. Only if SAS delivers useful synergies will the Franco-Dutch giant exercise its option to take full control. 
• As Airline Weekly has repeatedly emphasized, a central dilemma for SAS is that it doesn’t have one large-scale hub to concentrate its assets and traffic flows. Instead, it has three undersized hubs that struggle to develop intercontinental routes, which is important because intercontinental routes don’t generally face low-cost carrier competition. Norwegian, itself reborn from bankruptcy, is performing better than ever within Europe, having abandoned its quixotic pre-Covid longhaul ambitions. Happily for SAS, Ryanair and EasyJet have largely turned their attention to regions other than Scandinavia. But they’re not entirely absent.

Embraer’s Optimism 

• The Brazilian aircraft builder Embraer gave an update on its business while delivering its earnings presentation last week. Of relevance to scheduled airlines is the company’s E-Jet product, a key fleet type for carriers like Azul, Porter Airlines, and KLM’s Cityhopper unit. These are Embraer’s largest customers for the E195-E2, a plane that competes with the Airbus A220. The E195-E2 is absent in the U.S. market, however, due to pilot contract restrictions on what carriers like Delta, United, and American are allowed to outsource. But they are allowed to fly Embraer’s smaller and earlier-generation E175s (E1s). 
• In fact, American earlier this month placed an order for as many as 133 additional units (90 of the orders are firm). These are 76-seat planes configured in two classes. As Brett Snyder of CrankyFlier.com points out, American’s scope clause allows for more 76-seater flying than either Delta or United. It’s an important reason why it’s pursuing a network strategy that prioritizes regional markets. As Embraer remarked, “E1s continue to be the workhorse in regional aviation in the U.S… Our big competitors were saying that the regional market is dead, but as you can see, it’s not as dead. It’s more alive than we all believe.” Separately, Embraer said supply chain bottlenecks remain an issue. Recall that Boeing had a deal to purchase Embraer before the pandemic, ultimately walking away. Imagine if Boeing had a merger integration on its plate right now, adding to its many other challenges. 

Data Review for U.S. Airlines 

• The U.S. Department of Transportation is examining how the 10 largest U.S. airlines handle, use and collect passengers’ personal information. The review will include a look into airlines’ policies and procedures, along with a probe into whether airlines have “unfairly or deceptively” monetized passenger data with third parties. In particular, the DOT will examine American, Delta, United, Southwest, Alaska, JetBlue, Spirit, Frontier, Allegiant and Hawaiian. 
• “Airline passengers should have confidence that their personal information is not being shared improperly with third parties or mishandled by employees,” said U.S. Transportation Secretary Pete Buttigieg. For its part, Airlines for America, a trade group that represents some of the biggest airlines in the country, said the industry was committed to protecting passengers’ personal data. Carriers have poured billions into IT, according to the group. Since 2018, airlines have spent around $36 billion, including $7.3 billion in 2023.

— Jay Shabat

Additional reporting by Gordon Smith and Meghna Maharishi

Fleet

Seoul Focus for Airbus A350

• Korean Air has confirmed a major new contract for Airbus widebodies. The flag carrier is adding 33 A350s to its fleet, comprising 27 -1000s and six of the smaller -900 variant. The list price of the deal is $13.7 billion, although airlines typically negotiate discounts for such large orders. Korean says the new jets will be largely used for fleet replacement and renewal. It also highlighted synergies with Asiana Airlines – which it is in the final stages of acquiring. Only the United States has yet to give the merger its approval. 
• While precise configurations are yet to be confirmed, the -1000 has capacity for between 350 and 410 in a regular three-class setup. The shorter -900 typically seats between 300 and 350 passengers, again in the three-cabin layout. In a statement, Korean Air referenced Seoul to New York as an example of a route well suited to the new aircraft. The airline currently flies between the capitals twice-daily. 
• The deal comes at a busy time for Korean Air. Aside from the Asiana transaction, it also has more than 100 other new planes in the pipeline. These include 50 A321neos, 10 Boeing 787-9s, 20 787-10s, and 30 737 Max 8s. But it does not include B777-Xs. Boeing was eagerly hoping to win Korean Air’s support for the new plane. Its decision to buy the A350-1000 instead is a heavy blow.

Airbus Jousts Boeing for JAL

• It’s not just Korean Air. Japan Airlines (JAL) announced additional plane orders as well last week, giving the lion’s share of the new business to Airbus. JAL will take another 21 A350-900s (remember, it lost one in a fire earlier this year). It will also take another 11 A321 Neos. But it’s also in for another ten B787-9s from Boeing. Interestingly, the new A350s are mostly intended for international routes—its existing -900s are flown domestically. What’s more, the A321 order is a first for JAL—it previously relied on Boeing for its narrowbody needs; indeed, Max 8s are scheduled to start arriving around 2026. (Note: JAL was one of the last major airlines in the world to refrain from ordering either Maxs or Neos, until opting for the Max last year; now it’s buying Neos too). 
• Separately last week, JAL presented an update to its business plan, with strategies to boost its international, domestic, and low-cost businesses (Jetstar, Spring, and Zipair). It wants to grow other businesses too, including cargo, ground handling, and loyalty. Encouragingly, it also raised its operating profit forecasts for the fiscal year that ends next week, as well as the subsequent two years.
• That said, the airline did note that in January and February of this year, international flights performed “weaker than we had expected.” It specifically noted U.S. and China routes. Outbound demand from Japan was weak as well. However, bookings for travel beyond April look better. 
• Discussing the updated business plan with investors, JAL President Yuji Akasaka remarked, “I think it is safe to say that the pandemic is fully behind us.” But she also cited a major challenge for the future: Japan’s shrinking and aging population, which will affect both the supply of aviation workers and demand for air travel. Naturally, Japan’s Big Two airlines (All Nippon is the other) are striving to carry more non-Japanese passengers to compensate for the expected domestic declines. Currently, about 60% of JAL’s passengers originate overseas. The shift is facilitated by the weak Japanese yen. 

Boeing in Crisis

• Boeing’s CFO addressed an investor event in London last week, naturally on the defensive given all that has troubled the iconic American company. Brian West reassured that management is committed to addressing its safety and quality concerns, highlighting a current effort to reduce “traveled work,” which loosely means undertaking tasks at different times or in different places than normal, due to late arrival of parts, for example. 
• In the meantime, Boeing has yet to receive FAA certification for its Max-7 and Max-10. Same for its B777-X. On top of that, it has potentially contentious labor negotiations now underway with its machinist union. On a more positive note, Maxs (B737s) and Dreamliners (B787s) are still selling like hotcakes—both are sold out through 2028. “The backlog is big, and that backlog also represents over seven years of production that we’ve got to go fulfill.” 
• Helpfully, Boeing will soon close two “shadow factories” that have been conducting unplanned rework on both Maxs and Dreamliners. When it does so, and gets all those planes delivered, some of Boeing’s “most highly skilled labor” can go back to producing new planes. West expects the productivity benefit to be “enormous.” 
• Looking farther into the future, he made clear that Boeing continues to invest heavily in research on next-generation technologies: “As it pertains to longer term, there needs to be advanced engine technology and aerodynamic investment in order to get an airplane that’s 20% to 30% more efficient than we are today, and that will not be rushed. I will say that there is broad investment around capabilities in order to get to another platform in the future… Whatever that future looks like, it’s not the right moment, but our people are working on capabilities that we know are going to be part of that eventual solution.”

E2 Reaches ETOPS Milestone

• Embraer’s flagship passenger airliner has passed a major regulatory hurdle. The E2 platform has secured 120-minute extended twin-engine operations (ETOPS) approval from a trio of global aviation agencies. With up to two hours of permitted diversion time, it allows E2 operators to fly more direct non-limiting routes over water and other remote areas. 
• The green light applies to both the E190-E2 and E195-E2. It comes from the FAA, European Union Aviation Safety Agency, and from Brazil’s Civil Aviation Authority. Before ETOPS can be awarded, the operating fleet usually needs to reach cumulative flying hour milestones. Embraer said the E2 certification came “later than expected” due to the Covid-19 crisis which “significantly reduced aircraft operations, slowing down the accumulation of flying hours required.”

Kiwi Calling

• Air New Zealand has published a ‘global open invitation’ to start-up companies and innovators. In what it describes as a “novel approach,” and a first for any airline, it is calling upon those with an interest in the sustainable aviation fuel (SAF) sector to get in touch. The ultimate goal is for the flag carrier to find new supply partners and associated opportunities.
• The company has published an overview of its SAF requirements based on network, fleet, sustainability targets and other core criteria. The airline says this is intended to “kickstart discussion for ongoing collaboration as well as identify new opportunities.” 
• Kiri Hannifin, Air New Zealand Chief Sustainability Officer, described SAF as “integral to the aviation industry’s future”, which she acknowledged “faces a very steep challenge to decarbonise.” The carrier predicts that it will need SAF to make up approximately 20% of its total fuel uptake by 2030. This is alongside a “long-term and strategic regulatory package,” which it says it is actively advocating for. 
• The Star Alliance member operates a broad fleet reflecting its diverse missions and geography. These range from the Boeing 787-9 Dreamliner and Airbus A320, to ATRs and Q300 turboprops.

— Gordon Smith and Jay Shabat

Routes and Networks

SMART Moves in Columbia

• South American low-cost giant JetSMART has launched domestic operations in Colombia. Inaugural flights between Bogotá and Medellín, and from Medellín to Cartagena heralded the start of the new operation. JetSMART is operating a total of eight routes in the first phase of its Colombian domestic debut. 
• The LCC has huge ambitions for the venture, which marks its fourth domestic market after Chile, Argentina, and Peru. It says it will double passenger numbers at Bogotá’s El Dorado Airport Terminal 2 from 1.4 million to 2.8 million in its first year. 
• While JetSMART is new to the Colombian domestic market, it is already a huge player elsewhere on the continent. It already serves the country on an international basis with links from Santiago, Chile and Lima, Peru. JetSMART CEO, Estuardo Ortiz, said the decision to start operations in Colombia came from “a deep understanding of the needs of travelers in the region.” 
• The airline was founded in 2016 and is part of the Indigo Partners group which includes Frontier and Wizz Air. American Airlines is also a minority shareholder. JetSMART has one of the largest fleets of any South American airline and serves more than 75 routes. It flies an all-Airbus fleet of 35 A320 family jets which collectively carried more than 25 million passengers last year. By 2028 it is aiming to fly 100 million passengers with a fleet of 100 aircraft. 

JetBlue Slashes Network

• JetBlue has told crewmembers that it is cutting a slate of routes as part of its strategy to restore profitability following the termination of the Spirit Airlines merger. Starting June 13, JetBlue is ending service in Kansas City; New York’s Stewart International Airport; Bogotá, Colombia; Quito, Ecuador; and Lima, Peru. Service from Stewart International Airport had been suspended since the pandemic. JetBlue said the routes listed above were unprofitable, according to the internal memo.
• “These decisions are never easy, however, these markets have recently fallen short of our expectations,” JetBlue said in a statement. The memo also said the termination of the Spirit merger and Northeast Alliance contributed to these cuts, as JetBlue previously counted on both initiatives to help it grow. 
• JetBlue is also ending the following routes: Aguadilla-Tampa; JFK-Detroit; and Orlando-Salt Lake City. The carrier is also cutting flights from Fort Lauderdale and Los Angeles. Capacity at LAX will also be reduced from 34 flights a day to 24. 
• The carrier said these cuts will allow it to redeploy its fleet to better-performing routes from its focus cities, while increasing ground time for its aircraft, which would reduce delays. JetBlue also said these cuts would help its operations as it deals with Pratt & Whitney GTF engine issues that have forced it ground a portion of its aircraft. The carrier said it would instead shift focus to its “bread and butter” cities — routes along the East Coast, the Caribbean and visiting-friends-and-family destinations.

Fly91 Takes Flight

• The first commercial flight of India’s newest airline, Fly91, took to the skies last week. The Goa-based airline’s maiden mission was on the Goa-Bengaluru, with Goa to Hyderabad following suit. 
• Fly91 began with an aim to revolutionize the regional aviation landscape in the country. In an earlier interview with Skift, managing director and CEO Manoj Chacko said that Fly91 would focus on regional airports in India, describing them as underserved.
• The company is aiming to have 350 employees by the end of its first year of operations. It is also looking at increasing its current two-aircraft fleet, with the intention of adding four planes within the first year. 

Taiwan Trio for AirAsia

• AirAsia is bolstering its footprint in Taiwan. The LCC has announced three new fifth-freedom routes linking Taipei and the southern city of Kaohsiung with Japan. From May 31, the company’s AirAsia X subsidiary will fly from the Taiwanese capital to Tokyo Narita. This link will be operated by Airbus A330s which feature 12 premium flatbed seats. Meanwhile, from June 15, Thai AirAsia will fly from Taipei to the Japanese city of Okinawa. A day later, it will start services from Kaohsiung to Tokyo Narita. Both routes will be served by A320s. 
• The wider AirAsia Group already operates nine routes from Taiwan, including Kota Kinabalu, Chiang Mai, and Cebu. The company said the investment aligns with its goal of making Taiwan “a virtual hub” to connect passengers between Southeast and Northeast Asian destinations. 

Routes In Brief:

• Frontier Airlines is adding New York to its network. The ULCC has said it will fly out of Newark and JFK to San Juan in Puerto Rico starting in June. The new routes mark Frontier’s return to the New Jersey gateway after a two-year absence. Frontier pulled out of Newark in 2022 citing high operating costs. It is the first time Frontier will operate out of JFK. The routes are part of Frontier’s efforts to refocus its network as it grapples with an oversupply in popular leisure markets.
• Australian low-cost disruptor Bonza has launched a new link from the Gold Coast. The maiden flight from the Queensland city to Darwin touched down on March 20. The service is operated twice-weekly and joins the Sunshine Coast-Darwin and Melbourne-Alice Springs on Bonza’s Northern Territory route map. Tim Jordan, the airline’s CEO, credited the state government’s Territory Aviation Attraction Scheme in helping secure the new route. 
• Korean Air is ramping up its international program for the coming summer season. Highlights include a resumption of the Seoul to Zurich link, with a thrice-weekly service and a return of the Busan to Bangkok route after a four-year hiatus. Budapest, Manila and Dallas will all enjoy additional frequencies. The carrier says the moves will see its international ASK reach approximately 96% of pre-pandemic levels.
• Starlux Airlines increased Taipei to San Francisco to a daily frequency on March 20. The development represents a significant uplift in capacity from the previous thrice-weekly schedule. The route was launched on December 16 and is the Taiwanese carrier’s second trans-Pacific link after Los Angeles. Both U.S. destinations are served by Airbus A350s with a premium-heavy, four-class configuration. Starlux operates a total of 23 routes from Taiwan, including cities in Japan, Vietnam and the Philippines.
• India’s largest airline IndiGo is strengthening its international network. The carrier, which already holds nearly 60% of the domestic market share, is set to commence direct flights between Mumbai and Colombo, Sri Lanka starting next month. The LCC has also announced 11 new Qantas codeshare routes in Australia starting March 31. Last year, the airline ordered 500 Airbus A320neo family aircraft as part of its expansion plans.

— Gordon Smith

Additional reporting by Meghna Maharishi

The Landing Strip: Airport Updates 

• Fraport, the company that runs Frankfurt Airport, has told investors that “after three years of Covid-19, we can finally say the pandemic is more or less over.” Frankfurt’s traffic is still about 10% shy of its 2019 levels, with China traffic alone about 20% down. But trends are positive, and Fraport is optimistic based on published schedules for the months ahead. 
• In 2026, the airport will open a third terminal, offering more capacity for future growth. By then, Lufthansa will hopefully have more B787s based in Frankfurt, as well as its new B777-9s. Sure enough, Fraport mentioned Lufthansa’s aircraft delivery delays as one reason why it’s still not fully recovered traffic-wise (labor strikes aren’t helping either). Besides a few Dreamliner routes to North America and India, Lufthansa’s current longhaul network from Frankfurt is serviced by B747s, A340s, and A330s. All of its A350s are in Munich. 
• Turning to a sensitive subject, Fraport said it will soon start negotiating airport fees with airlines. And it’s adamant that increases aligned with consumer price inflation (roughly 2% to 3%) wouldn’t adequately cover Frankfurt’s sharp increase in labor and material costs. “It’s absolutely clear that we cannot go for an increase of 2% or 3% for the next year.” 
• Fraport, importantly, also manages many other airports around the world, including Greece where it expects another strong summer. It’s bullish on Antalya in Turkey too, despite “four million passengers from Russia [that] are still missing compared to 2019.” Greek and Turkish beach resorts do compete with each other, however, and it’s unclear to what extent the pace of demand of the past two summers will persist. Fraport, by the way, will open a new terminal at Lima’s airport in Peru later this year.

— Jay Shabat

Feature Story

Q2 Capacity Preview: Asia’s Revival Drives Global Growth 

We’re now just days away from the start of 2024’s second quarter. Get ready: It’s going to be significantly busier than last year’s Q2.  

Despite all the aircraft supply bottlenecks frustrating airlines, the number of scheduled flights worldwide next quarter will increase 8% versus the same quarter a year ago. That’s according to an Airline Weekly analysis of Cirium Diio data, which also shows Q2 capacity measured by ASMs/Ks up 11%. The number of total flights will increase 7%.

At this point, the industry has now fully recovered from where it was in 2019, at least in terms of seat and ASK/M capacity. Both will be 5% greater this Q2 than five years earlier. The number of total flights, however, will still be down 2%. Countries with fewer seats and fewer flights today than pre-pandemic include Japan, the U.K., Canada, Germany, and Indonesia (seat declines for the latter two are dramatic, exceeding 20%). The giant U.S. market, still the world’s largest, is busier by seats and ASMs but not flights.   

Looking again at comparisons with last year (2023), almost all major airports worldwide will see seat capacity up next quarter. In fact, of the 100 busiest airports, a mere six will see a decline. Two of these six are in Vietnam (Ho Chi Minh City and Hanoi), which experienced an earlier capacity bubble that’s now popping. Another two are in Mexico: Mexico City (where capacity is moving to alternative airports) and Cancun (where Volaris and VivaAerobus are suffering GTF engine-related aircraft shortages). Another is Newark, where airlines like United are removing capacity due to New York-area controller shortages. Finally, there’s Antalya, the Turkish beach resort, where Turkish Airlines and Aeroflot are showing big y/y declines. (Note that Turkish is currently transitioning some flights to its revamped low-cost unit now called A-Jet). For the record, half of these decliners (Mexico City, Ho Chi Minh City, and Hanoi) are also down compared to 2019.

Regarding Q2’s total worldwide seat growth of 8% y/y, much of that is led by recovery in East Asia. Pandemic-era travel restrictions were already gone last spring, even in late holdout markets like China. But most East Asian airline markets were slow to normalize their international flight offerings. The restoration is now underway, resulting in large y/y capacity gains for airports like Hong Kong (Q2 seats up 44%), Shanghai Pudong (44%), Osaka Kansai (33%), Seoul Incheon (23%), Taipei Taoyuan (22%), Tokyo Narita (22%), Bangkok Suvarnabhumi (20%), Kuala Lumpur (20%), Jakarta (14%), Singapore (14%), and so on. As you can see, all of East Asia’s major markets are rapidly adding back capacity. And there’s more room to run, with all of the above airports except Pudong still down from 2019 levels. Hong Kong will still be 27% smaller vs. 2019. But that’s an extreme case. Most of the others are down in the single digits.

What airports outside of East Asia are showing unusually high y/y growth? Abu Dhabi, for one. Its 29% increase in Q2 scheduled seats stems from Etihad’s renewed expansionary zeal, along with the ramp-up of two new LCCs, namely Air Arabia Abu Dhabi (partly owned by Etihad) and Wizz Air Abu Dhabi. Air France and British Airways are also now flying to the Emirate. Others like India’s IndiGo have added lots of new seats.

Rome Fiumicino deserves mention with a 23% y/y jump in seats next quarter. Sure enough, Ryanair continues to bombard the market with more and more flights (Italy is its largest country market). Alitalia’s successor ITA is growing. And North America’s longhaul airlines (Delta, United, American, Air Canada, and Air Transat) are all responding to a transatlantic leisure boom with more capacity.

Other notable growers next quarter include Bogota, Doha, Moscow Sheremetyevo, Munich, Philadelphia, Charlotte, Hyderabad, Athens, Jeddah, and Berlin. Reasons vary. In some cases, the gains reflect a booming market (Athens, for one). In other cases, it’s a mere bump from still-depressed levels relative to 2019 (i.e., Moscow and Munich).

The U.S. has just five airports in the global top 20, each growing at a different pace. Atlanta, still number one in the world by seats, will be up 6% next quarter. Dallas-Fort Worth (DFW), Denver, and Chicago O’Hare will all be up between 10% and 11%. Finally, there’s Los Angeles LAX, up just 4%. DFW and Denver are two of America’s fastest-growing hubs over the past half-decade, while O’Hare and LAX have suffered from major cutbacks by American. Atlanta, as it happens, is roughly the same size today (in seats) as it was in 2019.

Europe’s list of busiest airports is still led by London Heathrow, whose seat count will rise 4% y/y next quarter. Like Atlanta, Heathrow is similar in size today as it was five years ago. Paris Charles de Gaulle will be up 5%, Amsterdam 7%, Frankfurt 5%, Madrid 11%, and Barcelona 13%. Then comes Rome, as discussed above.

As the vast majority of major airports get busier this year, the same is true of most airlines. Recall that this time a year ago, carriers were struggling with labor shortages and other difficulties ramping up capacity. Many of those frictions have eased, even as the aircraft shortage has worsened. American Airlines currently flies more seats than any other carrier in the world. And it plans to grow 10% y/y in the April-to-June quarter. It’s not just easing labor shortages, of course, that’s motivating and enabling carriers to grow. It’s also a strong demand environment across most major airline markets, along with relatively stable fuel prices and a push toward using larger planes on average. Airlines are reducing aircraft ground time too (GTF issues notwithstanding).  

The largest airline in the world that’s not growing next quarter? It’s JetBlue, trying to regroup after a twin judicial thrashing of its strategic plans. Other Q2 downsizers include Gol (now in bankruptcy) and Virgin Australia. JetBlue, importantly, is also shrinking because of all the GTF Neos it’s forced to ground. The same is true for Volaris, Hawaiian, Air New Zealand, and Wizz Air (not including its Abu Dhabi venture). On the other side of the coin, many airlines are growing by double-digits, including giants like Ryanair, China’s Big Three, and even IndiGo despite its GTF misfortunes. Frontier, the struggling U.S. LCC, stands out with 31% seat growth next quarter. Avianca, which is adding seats to its planes, is showing a 27% increase. As it rebuilds, Cathay Pacific’s seats are growing at a 30% annual clip. Of course, there are some airlines that aren’t with us anymore, like India’s Go First, Canada’s Lynx, and Malaysia’s MYAirline. WestJet closed Swoop. Thai Airways closed Smile.

Airports are growing this year. Airlines are growing. And so are country markets—only a very few aren’t. Mexico is the largest airline market in the world whose Q2 seats will be down y/y. Vietnam’s decline is a double-digit one, in part because of the heavy retrenchment of Bamboo Airways. Israel’s decline is steeper still, owing to the conflict in Gaza. Sweden, Argentina, Iran, Bangladesh, and Kazakhstan are some other markets for which Diio data highlight a contraction. India, interestingly, is now the world’s third largest country market, surpassing Japan. Only the U.S. and China are larger.

Airlines will naturally adjust their Q2 schedules as the quarter unfolds. It’s clear though: The global airline industry remains in expansion mode, on track to record the fourth consecutive year of seat growth since the debacle of 2020. The stars are aligned, furthermore, for 2024’s total worldwide seat capacity to finally exceed that of 2019. 2023’s capacity, alas, was still 3% below. 

— Jay Shabat