As another year passes, and a pretty awful one for the airline sector, the Airline Business editors take a look back at some of the key moments and stories of the year just gone and look at some of the stories that might make the headlines in the year ahead.
Mark Pilling, Airline Business, editor
As a reporter 2009 has been a brilliant year. That’s what I always tell people when we bemoan the health of the Airline Business.
I say this because a crisis always sorts out the strong and weak, the best leaders, the worst leaders, the winners and the losers. And the stories that follow from this excitement are always more interesting in my experience than those during the good times.
And this crisis has been spectacular. In particular I would point to the staggering falls in business class traffic and the equally tragic (for the airlines, not the travellers) falls in yields. This more than anything else has holed the fortunes of the network carriers well below the water line.
Another big topic for 2009, and one that had threatened to be overshadowed by the recession, was the environment. It is deeply ironic in my view that the industry is fighting its corner on the environment, and essentially what green measures will cost in the longer term, when it is fighting for its short-term survival.
From the industry’s point of view the adoption of a common position across airlines, airports, ATC etc was a ground-breaking move and did a lot to establish it on some moral high ground, at least for the time being. And it seems to have fought off punitive taxes for now.
I give a special mention to the strongly performing Latin American air transport industry in 2009, and especially Enrique Cueto and Pedro Heilbron, the CEOs of Chile’s LAN and Panama’s Copa Airlines respectively. Both were deserving winners at this magazine’s 2009 Airline Strategy Awards and run two of the best airlines around.
Graham Dunn, Airline Business managing editor
For a journalist I think it is harder to look any further than Lufthansa for stories in 2009. The Star Alliance carrier led the consolidation trail with its acquisitions of Austrian Airlines, bmi and Brussels Airlines – and if the latter deal provided little in headlines, the purchases of Austrian and BMI certainly kept us busy. The deal for Austrian, with its last minute dealings with the EC on concessions accompanying the purchase, went right to the wire during the summer. Similarly not only were the twists and turns aplenty in its acquisition of bmi, having acquired it, there were just as many questions about what it intended to do with it - the long-term plans for which are still to be decided. Throw in that also launched two new airlines in 2009 – Milan Malpensa-based Lufthansa Italia and cargo joint venture Aerologic – no airline was busier than the German national carrier.
For the year ahead, I think the focus – especially in Europe – has to be on labour and to what extent the network carriers are able to push through the changes they are seeking to adjust their cost-bases. We’ve already seen the strain across various airlines in Europe, notably cabin crew strike at BA – aborted at least into the new year. My feeling is it won’t be the only run-in airlines have with labour this year.
Lori Ranson, North America Editor – Air Transport Intelligence
Big stories for 2009. Captain Sullenberger’s historic ditching of a US Airways A319 into New York’s Hudson River. Sullenberger dedicated part of his time in the limelight to express concern that low pilot pay rates could be driving talent away from the industry.
The February 2009 crash of a Colgan Airways Bombardier Q400 that unleashed a wave of scrutiny of US regional airline fatigue management, training and hiring practices. A proposed pilot fatigue rule is scheduled for publication in January.
Larry Kellner’s surprising announcement in July that at 50 he would be vacating the top post at Continental Airlines at year-end. It was interesting to sit down with Kellner and his successor Smisek, who have worked in tandem at Continental for roughly 15 years together and see them interact first hand. .
Southwest’s failed attempt to buy its rival in Denver Frontier Airlines, which ultimately led to US regional Republic Airways Holdings buying two branded airlines. Talking to Bedford in the middle of the competition for Frontier, he hinted at both the cross fleeting planned between Frontier and Midwest and plans to shed Midwest’s excessive costs.
The planned merger of El Salvador’s TACA and Colombian carrier Avianca will create the fourth largest airline group in Latin America, and combined will serve over 79 destinations.
Air Canada’s previous CEO Montie Brewer steps down suddenly and is replaced by a former executive with the carrier Calin Rovinescu, fueling widespread speculation that a second formal restructuring this decade was imminent. But Rovinescu and Air Canada’s management eventually won key concessions from labour groups, won a key reprieve on pension funding and secured a financing package to build a foundation to weather the current economic downturn.
Late in the year American and Delta started a heated competition to take a stake in struggling Japan Airlines, with both carriers and their partners offering substantial financing packages to JAL. If Delta succeeds JAL will join the SkyTeam alliance, leaving Oneworld with a significant and strategic geographical gap in Asia.
United’s decision to split its widebody fleet revamp between Airbus and Boeing ordering a total of 50 A350s and 787s. The carrier heads into 2010 examining its narrowbody options and has reportedly invited Bombardier and Embrarer into those discussions.
What might be in store for 2010. Oneworld carriers seeking anti-trust immunity will weigh accepting DOT’s tentative approval of the deal that includes carve-outs. I expect DOT will follow a similar pattern from its approval of the Star Alliance joint venture, which ultimately required carve outs after the US Department of Justice voiced concerns over competition.
Both the Transportation and Justice will co-operate more closely during evaluations of antitrust applications on transpacific routes filed by members of the Star Alliance and Japan Airlines and its yet-to-be antitrust partner.
If JAL chooses Delta, American will mount a ferocious campaign to block anti-trust approval for those carriers.
Overall for the industry the one wildcard is sustained capacity discipline. It will be interesting to see if carriers continue to adhere to conservative growth targets if current positive revenue trends continue.
Victoria Moores, Features Editor, Airline Business
My personal highlight of 2009 would have to be back in February, when I travelled “around the world in eight days” with Virgin entrepreneur Richard Branson. The trip was to flag up the launch of V Australia, which joined the transpacific gap in the Virgin long-haul network.
It’s not every day that an opportunity like this comes along, but this trip also stands out because it marked my personal leap into our various social media channels and video content, which became increasingly important as the year progressed.
On the Virgin trip I travelled with our mascot, Stefan the Pilot, who has his own cult following. I began to write for the Airline Business Blog and Twitter through my @VictoriaOnAir account, which I later used to cover the World Low Cost Airlines Congress in Barcelona in real-time.
I also dived into the deep end of video presenting, interviewing Branson on very little sleep, marking the first of many video interviews throughout the year. Our latest Airline Business Debate programme shows just how far we’re come and you can be sure we’ll be pushing things along still further in 2010.
For the year ahead, I’m keen to see how the relationship between short- and long-haul operations evolves. Low-cost carriers have aggressively taken short-haul market share, putting intense pressure on legacy airline yields and pushing their focus on to long-haul routes.
For a long-haul carrier to be successful you need feed, but for the low-cost model to work you need simplicity. With carriers like British Airways having scaled back their short-haul presence, partly in response to low-cost competition, there’s an obvious disconnect there.
How will these two contradictory objectives tie together as we move forward? That’s my question for 2010.