UK, Italy and Japan team up for new fighter jet - PM announces today.

The UK will work with Italy and Japan to adapt and respond to the security threats of the future, through an unprecedented international aerospace coalition announced by the Prime Minister today (Friday).

The Global Combat Air Programme (GCAP) is a new partnership and ambitious endeavour between the UK, Japan and Italy to deliver the next generation of combat air fighter jets.

The Prime Minister will visit a UK RAF base today to launch the first major phase of the programme, which aims to harness the combined expertise and strength of our countries’ defence technology industries to push the boundaries of what has been achieved in aerospace engineering to date.

Due to take to the skies by 2035, the ambition is for this to be a next-generation jet enhanced by a network of capabilities such as uncrewed aircraft, advanced sensors, cutting-edge weapons and innovative data systems.

By combining forces with Italy and Japan on the next phase of the programme, the UK will utilise their expertise, share costs and ensure the RAF remains interoperable with our closest partners. The project is expected to create high-skilled jobs in all three countries, strengthening our industrial base and driving innovation with benefits beyond pure military use.

The Prime Minister said:  "The security of the United Kingdom, both today and for future generations, will always be of paramount importance to this Government.

That’s why we need to stay at the cutting-edge of advancements in defence technology – outpacing and out-manoeuvring those who seek to do us harm.

The international partnership we have announced today with Italy and Japan aims to do just that, underlining that the security of the Euro-Atlantic and Indo-Pacific regions are indivisible. The next-generation of combat aircraft we design will protect us and our allies around the world by harnessing the strength of our world-beating defence industry – creating jobs while saving lives."

It is anticipated that more likeminded countries may buy into GCAP in due course or collaborate on wider capabilities – boosting UK exports. The combat aircraft developed through GCAP is also expected to be compatible with other NATO partners’ fighter jets.

During a visit to RAF Coningsby today, the Prime Minister will view the Typhoon aircraft which have been at the heart of the UK’s air policing for two decades. The new combat aircraft designed by GCAP is expected to replace the Typhoon when it comes out of service. The Prime Minister will also meet Quick Reaction Alert Station engineers and pilots, who protect the UK’s skies 24 hours a day, 7 days a week.

The UK, Italy and Japan will now work intensively to establish the core platform concept and set up the structures needed to deliver this massive defence project, ready to launch the development phase in 2025. Ahead of the development phase, partners will also agree the cost-sharing arrangements based on a joint assessment of costs and national budgets.

Alongside the development of the core future combat aircraft with Italy and Japan, the UK will assess our needs on any additional capabilities, for example weapons and Uncrewed Air Vehicles.

A report by PricewaterhouseCoopers last year, suggested the UK taking a core role in a combat air system could support an average of 21,000 jobs a year and contribute an estimated £26.2bn to the economy by 2050.

Defence Secretary Ben Wallace said:  "This international partnership with Italy and Japan to create and design the next-generation of Combat Aircraft, represents the best collaboration of cutting edge defence technology and expertise shared across our nations, providing highly skilled jobs across the sector and long-term security for Britain and our allies."

GCAP sits alongside our other defence cooperation with international allies, including the AUKUS partnership and NATO – to which the UK remains the leading European contributor.

The UK defence industry is already leading the world in advanced aerospace engineering. At BAE Systems’ new ‘factory of the future’ in Lancashire, for example, the company is pioneering the use of advanced 3D printing and autonomous robotics in military aircraft.

New Canadian North 737 service between Calgary and Yellowknife while more jets on Edmonton - Yellowknife route

Canadian North, the popular boutique airline for Canada’s Arctic has confirmed it will add daily nonstop Boeing 737 jet service between Yellowknife and Calgary to start from 14th February next year.

The new jet route provides easier and faster access to Northern destinations out of Canadian North’s Yellowknife hub which will greatly enhance travel opportunities. The carrier will also increase its jet service between Edmonton and Yellowknife.

The new Calgary to Yellowknife 737 jet flights will operate daily, Monday through Sunday, on Canadian North’s Boeing 737 jet aircraft allowing travellers quick, comfortable and smooth jet service.  Passengers will be treated to complimentary fresh, never frozen, hot inflight meals and beverage service topped off with its signature warm cookie and speciality coffee service. Travellers can accrue and redeem Aeroplan™ or Aurora Rewards™ points on these and all other scheduled Canadian North flights.

“We are strengthening our airline, providing more travel options to our core market in Canada’s North and High Arctic.  These new flights to our Western Arctic hub in Yellowknife deliver enhanced jet service to our passengers and cargo customers,” said Michael Rodyniuk, Canadian North’s President and CEO.  “This is all part of our Go-Forward Plan, strengthening our core market, our Northern Scheduled Service, delivering on our mission to Make life better in the communities we serve.”

“As an Arctic airline, Canadian North continues to show its focus on making life better for Northern people and communities. This expansion of service will add seats, significantly enhance connections, and give our residents more access to vital services they need.” Mark Fleming, Vice Chairman of Canadian North’s Board of Directors.

Canadian North is a 100% Inuit-owned airline connecting people and delivering essential goods throughout Canada’s North – safely, and reliably with friendly and caring customer service. Canadian North Airlines services 25 communities within the Northwest Territories, Nunavik and Nunavut, as well as Ottawa, Montreal, Edmonton and now Calgary with a versatile fleet of Boeing 737 and ATR 42 aircraft. Canadian North is also the premier charter services provider for large resource sector clients requiring dependable, efficient and economical fly-in/fly-out air service and it operates flights across North America and beyond for sports teams, cruise lines, tour operators and many others. Canadian North is owned by Makivvik Corporation and Inuvialuit Development Corporation.

Virtual Reality Pilot Training

 

First-of-its-kind Technology Addresses Worldwide Pilot Shortage, Escalating Demand for Flight Schools and Urgent Need to Reduce Air Pollution

Loft Dynamics AG, creator of the world's first and only virtual reality (VR) simulator authorized by a major aviation regulator, today announced it has re-branded and raised $20M in financing. This is the company's first institutional round, led by U.S. technology investors Craft Ventures, Sky Dayton, and Up Ventures. The funding will accelerate Loft Dynamics' growth into international markets, particularly the USA. The rebranding from VRM Switzerland to Loft Dynamics positions the company for global expansion at a time when the pilot shortage has reached a crisis point and the need to reduce air pollution has never been more urgent.

"After many years in development, we are ready to expand Loft Dynamics to become a global company and bring our technology and training solutions to the world," said Fabi Riesen, Co-Founder & CEO of Loft Dynamics. "This funding comes at exactly the right moment as we will be able to meet the escalating demand for flight schools and accelerate the range of aircraft types we support."

Loft Dynamics is already serving customers such as Airbus Helicopters, Air Zermatt, Colorado Highland Helicopters, Helitrans Norway, Meravo, and Mountainflyers. Flight schools, airlines, fleet operators, governments, and aircraft manufacturers are queuing up for a better solution to pilot training. With fewer pilots coming out of the military, and the mass retirement of pilots during the COVID-19 pandemic, the global need for trained pilots has never been higher. Loft Dynamics delivers highly efficient, exceptionally realistic, non-polluting, and dramatically less expensive pilot training.

"When open-minded entrepreneurs apply innovative technology to a safety objective, large changes are possible in a short time frame. Loft Dynamics is paving the way for the integration of Virtual Reality applications in pilot training," said Patrick Ky, Executive Director and head of the European Union Aviation Safety Agency (EASA). "EASA looks forward to seeing the flight safety benefits of this as soon as possible, in line with the objective of EASA's Rotorcraft Safety Roadmap of increasing safety by 50% by the end of 2028 compared with 2017 figures."

Strike to close three Scottish airports in the run up to Christmas

At least three airports serving isolated island communities in Scotland will have to be closed after Unite union calls strike action on 19 and 20 December, cruelly ending Christmas family reunions and celebrations.

Staff are walking out over a bitter pay dispute in which they've already turned down a 5% increase, will force the closure of the Outer Hebridean islands of  Barra and Benbecula airports as well as Shetland's Sumburgh Airport. The action will also cause reduced hours at Stornoway Airport which will only be open for between 13.00 and 19.45 on both days. Kirkwall Airport will only be open for the morning on both days and only for inter-island flights.

The union says the striking firefighters will provide cover in case of medical emergencies and the airports operator Highlands and Islands Airports Limited says there is established local on-call medical emergency processes for any such eventualities. 

Inglis Lyon, HIAL’s managing director said: “We deeply regret the disruption and inconvenience to our airline partners, passengers, and local communities that this action will cause.

Against the backdrop of unprecedented financial pressures, we presented an enhanced pay offer to colleagues that maximised the flexibility within the Scottish Government’s pay policy, which HIAL is bound by.

We recognise the challenges colleagues face due to inflationary pressures and the cost-of-living crisis.  However, the claim for a rise of at least RPI is unrealistic, and any further offer must be met from cost savings within existing budgets.  

We will continue dialogue with the trade unions in an attempt to avoid further industrial action.”

One local resident said that her family Christmas plans were now in tatters as her children whom had been booked to arrive on 19th December, would not now be able to arrive in time. Their first festive get together since the onset of the covid pandemic have now had to be cancelled. 

 

Ameriflight names Alan Rusinowitz as New President and Chief Operations Officer

Ameriflight has confirmed the appointment of Alan Rusinowitz as President and Chief Operating Officer. This executive team addition comes on the cusp of Ameriflight Chief Executive Officer, Paul Chase, tendering his resignation.

Rusinowtiz will be responsible for planning and executing current and future business operation strategies. He will amplify Ameriflight’s vision as the unparalleled leader in scalable, outsourced aviation services to the regional express airfreight market.

“The board and I are confident that Alan is the optimal person to build on Ameriflight’s momentum,” said Ameriflight Owner and Chairman Jim Martell. “He is a well-established leader with significant experience working in our niche of the airline industry, delivering value to both customers and employees, and attaining key performance goals through effective asset utilization. We are pleased to have him on board.”

Rusinowitz joins Ameriflight as a results-driven business leader and a hands-on executive with a demonstrated record of growing shareholder value by leading companies through strategic operational improvements and development. He’s highly regarded for his successes in airline operation management, as well as his focus on safety culture and continuous improvement. His vast background and successes in leading a variety of extensive projects brought him to the attention of Ameriflight.

Focusing on China Eastern Airlines Smart Aviation

On November 29th, a research report entitled “Research on the Digital Transformation Path of Civil Aviation Industry – A Case Study of China Eastern Airlines and Lufthansa” was published in German, Chinese and English. The report was collaboratively written by senior experts and scholars from the Institute for Technologies and Economics of Lithium (ITEL), Germany and the University of International Business and Economics (UIBE), Beijing. Representatives from Embassy of Germany in China, Chinese Embassy in Germany, the Institute of European Studies of Chinese Academy of Social Sciences, China Eastern Airlines and other organizations attended the conference.

This research report's lead writers are Ulrich Blum, Dean of ITEL and Professor Lan Qingxin, Dean of UIBE Yangtze Delta Region Trade Institute, who have led many important research projects in fields including smart aviation ecosystem, aviation hub construction and smart logistics. The research selected China Eastern Airlines and Lufthansa, the representative civil aviation enterprises of the two countries, as the main research objects, compared the digital development paths of civil aviation in various countries in such aspects as national planning, international environment and technical practice, and probed into the experience and enlightenment of aviation industry in pursuing digital transformation.

As the main research object of this collaborative research, China Eastern Airlines is the seventh largest airline in the world, with its flights reaching 1,036 destinations in 170 countries and regions. The airline has achieved remarkable achievements in many fields, such as in-flight Internet, green flight, and intelligent maintenance and services. Li Zhijun, an executive of the Information Department of China Eastern Airlines, pointed out that the digital transformation of aviation industry must be centered on customer demands.

Recently, China Eastern Airlines organized the 2022 North Bund International Aviation Forum, and discussed the construction of intelligent civil aviation transportation system with more than 150 guests from the global aviation industry. At the forum, the company released major achievements in the endeavors to become a "super carrier" and realize "intelligent aviation". The construction of Smart China Eastern Airlines will greatly boost the brand value of China Eastern Airlines.

New and restored services plus increased frequencies dominate Air Canada's summer 2023 schedule.

Air Canada has announced a new service between Montreal and Fort McMurray that will launch next June as part of the carrier's Canadian summer schedule. For summer 2023, Air Canada is also restoring suspended services and increasing frequencies on popular routes across Canada, as the company augments its Canadian network following the pandemic.

"As the country's flag carrier, Air Canada's increased Canadian summer schedule further reinforces our role in providing critical connectivity to Canadians coast-to-coast. Our new Montreal-Fort McMurray service brings easier access from eastern Canada to one of the critical economic hubs of Alberta. And with the prudent restoration of suspended routes and increased frequencies on others, we are improving our customers' options for domestic travel. We are looking forward to an exceptional summer, with service on 97 domestic routes to 51 Canadian airports, making us the largest Canadian carrier, with the most seats and capacity available for travellers," said Mark Galardo, Senior Vice President of Network Planning and Revenue Management at Air Canada.

"Furthermore, we've built our Canadian summer schedule to synchronize with our recently announced summer international schedule, facilitating connectivity through our hubs for our customers, whether they're travelling within Canada, across the border to the US, or to our many destinations worldwide. "

New service between Montreal and Fort McMurray will begin June 20, 2023. Flights will be operated year-round, three days a week, by Air Canada Rouge using an Airbus A319 aircraft with 136 seats in a Premium Rouge and Economy Class configuration. With its new Montreal and existing Toronto service, Air Canada will be the only carrier connecting Fort McMurray non-stop to Quebec and Ontario.

Flight	Departs	Arrives	Days of Week
AC1943	Montreal 08:15	Fort McMurray 10:38	Tuesday, Wednesday, Thursday
AC1942	Fort McMurray 12:05	Montreal 17:52	Tuesday, Wednesday, Thursday

Air Canada also announced this week, the resumption of several seasonal routes and one previously suspended route. This includes daily Gander-Toronto flights beginning June 1, London, Ontario-Montreal flights beginning June 17, four-times-weekly Fort McMurray-Toronto flights resuming May 1, and three-times weekly Calgary-Quebec City flights starting June 19. In addition, Air Canada is planning daily widebody service on its Ottawa-Vancouver route while also offering multiple options to popular leisure destinations, such as Kelowna and Victoria through its three main hubs.

Frequency Increases

Route	Frequency (Summer 2023 versus Summer 2022)
Edmonton-Montreal	Increases to four times daily from twice daily
Vancouver-Montreal	Increases to six times daily from five daily
Calgary-Toronto	Increases to 13 times daily from 11 daily
Kelowna-Vancouver	Increases to eight times daily from seven daily
Winnipeg-Toronto	Increases to seven times daily from five daily
Saint John-Toronto	Increases to three times daily from once daily
Kelowna-Toronto	Increases to two times daily from once daily
Quebec City-Vancouver	Increases to five times from three times weekly

World's First C919 Aircraft Delivered to China Eastern Airlines

On December 9th, the world's first C919 aircraft, with the registration number B-919A, was delivered to its world’s first launch customer, China Eastern Airlines (CEA).

The C919 is China's first homegrown large passenger aircraft in accordance with international airworthiness standards, and owns independent intellectual property rights.

It features an advanced aerodynamic design, propulsion system and materials, as well as lower carbon emission and higher fuel efficiency. A pattern of a Chinese seal reading "world's first C919" in Chinese is printed in the front part of the plane delivered.

The aircraft adopts a 164-seat configuration that comes with a two-class cabin layout, including 8 business class seats and 156 economy class ones. In the economy cabin, the middle seat in each three-seat row is 1.5 cm wider than its neighbouring ones, which offers more comfort.

With an aisle height of 2.25 meters, the plane comes with an efficient air filtration system, a passenger-centric lighting system and low noise.  Besides, there are twenty 12'' drop-down screens that can play 1080P videos.

On the day of the delivery, a maiden flight of the C919 aircraft was made by three senior CEA pilots from the Shanghai Pudong International Airport to the Shanghai Hongqiao International Airport.

After arriving at the Shanghai Hongqiao International Airport and passing through a water gate, the aircraft was officially commissioned into the fleet of CEA.  It is expected to be put into commercial use in the spring of 2023.

CEA, as the world's first airline operator for C919, boasts a fleet of nearly 800 airplanes. It has rich operational experience and enjoys comprehensive advantages. Passengers will soon be able to catch an early experience of the superior and reliable performance of the C919 with CEA .

China Eastern Airlines takes delivery of the world's first COMAC C919 aircraft (airlinerwatch.com)

Norwegian carried 1.4 million passengers in November

In November, Norwegian had 1.4 million passengers, an increase of 37 percent compared to November last year. The load factor was 79.5 percent and routes to beach destinations in Southern Europe were particularly popular with a load factor of close to 90 percent from Norway.

“We are satisfied with this month’s traffic numbers and associated top-line, and glad to see that a total of 1.4 million passengers chose to travel with us. While we are now in the low-season, demand for air travel continues to be persistent, particularly to our many popular beach destinations. In November, the load factor on routes to sunnier destinations was close to 90 percent from Norway. I am particularly delighted about this month’s punctuality, proving to be the best so far this year and a result of the efforts of our many dedicated colleagues who are doing their utmost to serve our customers every day,” said Geir Karlsen, CEO of Norwegian.

Norwegian had 1,374,828 passengers in November, up 37 percent from November last year. The load factor in November was 79.5 percent. The capacity (ASK) was 2,122 million seat kilometres, while actual passenger traffic (RPK) was 1,686 million seat kilometres. In November, Norwegian operated an average of 64 aircraft and 99.7 percent of the scheduled flights were completed. Punctuality, as measured by the number of flights departing within 15 minutes of scheduled time, was at 90.3 percent in November.

Continued solid demand for air travel

“We are well positioned to respond to seasonal variations. We have adjusted our capacity to meet the lower demand during the winter season and have hedged a total of 15 percent of our estimated fuel consumption for 2023. Looking ahead, we continue to see a pent-up demand for air travel, especially to sunny beach destinations. We recently launched several new routes to destinations across Europe, and we are eager to welcome both passengers and new colleagues during what we expect to be a busy summer of 2023,” said Karlsen.

Norwegian is Norway’s largest airline and one of Europe’s leading low-cost carriers. Norwegian has 4,000 employees and is increasing its staff with additionally 750 employees across the company’s bases in the Nordics and in Europe for the summer of 2023. For the summer of 2023, Norwegian plans for a fleet increasing to 85 aircraft. This will allow Norwegian to offer more departures on the most popular routes, giving the customers even more flexibility as they plan their travels. Norwegian currently has 239 routes for sale in the summer period, running from March to October 2023.

IATA Establishes Modern Airline Retailing Program

The International Air Transport Association (IATA) announced the establishment of the Modern Airline Retailing program to advance customer centricity and value creation in the airline industry. The transformation will be accelerated by a consortium of advanced airline adopters that will work together through IATA. Consortium participants include American Airlines, Air France-KLM, British Airways, Emirates, Finnair, Iberia, Lufthansa Group, Oman Air, Singapore Airlines and Xiamen Airlines. 

In today’s environment, the customer experience is affected by decades old standards, processes and technology and the airline industry must adopt modern retailing practices that will create additional value for travelers and reduce the hassles of increasingly complex passenger document checking requirements.

Modern Airline Retailing will solve this dilemma and unleash value creation opportunities by transforming airline distribution to a system of “Offers and Orders” that will parallel what most other retailers use. 

“Our aim is to create value for travelers by meeting their needs. We know that passengers want a seamless digital experience; and they expect consistent service irrespective of how they purchased their travel. With the strength of a global consortium of leading airlines behind us, the next few years are set to see an accelerated and comprehensive transformation of the customer experience,” said Muhammad Albakri, IATA’s Senior Vice President, Financial Settlement and Distribution Services. 

Transitioning to Modern Airline Retailing 

The Modern Airline Retailing program is built on three pillars:

Customer Identification

• Industry standards, which build on the One ID standard, allow passengers to streamline their journey with advance information sharing and a contactless process at the airport based on biometric recognition. Furthermore, this program will also allow airlines to offer a seamless experience across different channels and touchpoints and have greater visibility into third party travel sellers with whom they are dealing.  

Airlines Cut Losses in 2022; Return to Profit in 2023

The International Air Transport Association (IATA) expects a return to profitability for the global airline industry in 2023 as airlines continue to cut losses stemming from the effects of the COVID-19 pandemic to their business in 2022. 

• In 2023, airlines are expected to post a small net profit of $4.7 billion—a 0.6% net profit margin. It is the first profit since 2019 when industry net profits were $26.4 billion (3.1% net profit margin). 
   
• In 2022, airline net losses are expected to be $6.9 billion (an improvement on the $9.7 billion loss for 2022 in IATA’s June outlook). This is significantly better than losses of $42.0 billion and $137.7 billion that were realized in 2021 and 2020 respectively.

“Resilience has been the hallmark for airlines in the COVID-19 crisis. As we look to 2023, the financial recovery will take shape with a first industry profit since 2019. That is a great achievement considering the scale of the financial and economic damage caused by government imposed pandemic restrictions.  But a $4.7 billion profit on industry revenues of $779 billion also illustrates that there is much more ground to cover to put the global industry on a solid financial footing. Many airlines are sufficiently profitable to attract the capital needed to drive the industry forward as it decarbonizes. But many others are struggling for a variety of reasons. These include onerous regulation, high costs, inconsistent government policies, inefficient infrastructure and a value chain where the rewards of connecting the world are not equitably distributed,” said Willie Walsh, IATA’s Director General.

2022

Improved prospects for 2022 stem largely from strengthened yields and strong cost control in the face of rising fuel prices. 

Passenger yields are expected to grow by 8.4% (up from the 5.6% anticipated in June). Propelled by that strength, passenger revenues are expected to grow to $438 billion (up from $239 billion in 2021). 

Air cargo revenues played a key role in cutting losses with revenues expected to reach $201.4 billion. That is an improvement compared with the June forecast, largely unchanged from 2021, and more than double the $100.8 billion earned in 2019.

Overall revenues are expected to grow by 43.6% compared to 2021, reaching an estimated $727 billion.

Most other factors evolved in a negative manner following a downgrade of GDP growth expectations (from 3.4% in June to 2.9%), and delays in removing COVID-19 restrictions in several markets, particularly China. IATA’s June forecast anticipated that passenger traffic would reach 82.4% of pre-crisis levels in 2022, but it now appears that the industry demand recovery will reach 70.6% of pre-crisis levels. Cargo, on the other hand, was anticipated to exceed 2019 levels by 11.7%, but that is now more likely be moderated to 98.4% of 2019 levels.

On the cost side, jet kerosene prices are expected to average $138.8/barrel for the year, considerably higher than the $125.5/barrel expected in June. That reflects higher oil prices exaggerated by a jet crack spread that is well-above historic averages. Even with lower demand leading to reduced consumption, this raised the industry’s fuel bill to $222 billion (well above the $192 billion anticipated in June).

“That airlines were able to cut their losses in 2022, in the face of rising costs, labor shortages, strikes, operational disruptions in many key hubs and growing economic uncertainty speaks volumes about peoples’ desire and need for connectivity. With some key markets like China retaining restrictions longer than anticipated, passenger numbers fell somewhat short of expectation. We’ll end the year at about 70% of 2019 passenger volumes. But with yield improvement in both cargo and passenger businesses, airlines will reach the cusp of profitability,” said Walsh.

2023

In 2023 the airline industry is expected to tip into profitability. Airlines are anticipated to earn a global net profit of $4.7 billion on revenues of $779 billion (0.6% net margin). This expected improvement comes despite growing economic uncertainties as global GDP growth slows to 1.3% (from 2.9% in 2022). 

“Despite the economic uncertainties, there are plenty of reasons to be optimistic about 2023. Lower oil price inflation and continuing pent-up demand should help to keep costs in check as the strong growth trend continues. At the same time, with such thin margins, even an insignificant shift in any one of these variables has the potential to shift the balance into negative territory. Vigilance and flexibility will be key,” said Walsh.

IATA-McKinsey Study Shows Imbalanced Aviation Value Chain

                                       The International Air Transport Association (IATA) and McKinsey & Company published a study of profitability trends across the aviation value chain showing that profitability varies widely by sector. The study also shows that in aggregate, airlines underperform on the financial return that an investor would normally expect.

While there is no clear path to rapidly re-balance the value chain, the study concludes that there are some key areas—including decarbonization and data-sharing—where working together and burden-sharing will mutually benefit all value chain participants.

Highlights from the Understanding the Pandemic’s impact on the Aviation Value Chain study include:

 

• Capital Destruction: Despite delivering consistent operating profits pre-pandemic (2012-2019), airlines collectively did not produce economic returns above the industry’s Weighted Average Cost of Capital (WACC). On average the collective Return in Invested Capital (ROIC) generated by airlines was 2.4% below the WACC, collectively destroying an average of $17.9 billion of capital each year. 
   
• Value Creation: Pre-pandemic, all sectors of the value chain except airlines delivered ROIC in excess of the WACC, with airports leading the pack in the absolute value of return by rewarding investors with an average of $4.6 billion annually above the WACC (3% of revenue). When viewed as a percentage of revenue, Global Distribution Systems (GDSs)/Travel Tech firms topped the list with average returns of 8.5% of revenues above the WACC ($700 million annually), followed by ground handlers (5.1% of revenue or $1.5 billion annually), and Air Navigation Service Providers (ANSPs) at 4.4% of revenues ($1.0 billion annually). 
   
• Pandemic Changes: Although the pandemic (2020-2021) saw losses across the value chain, in absolute terms airlines’ losses led the pack, with ROIC falling below the WACC by an average of $104.1 billion annually (-20.6% of revenues). Airports saw ROIC fall $34.3 billion below the WACC and generating the largest economic losses as a percentage of revenue (-39.5% of revenues).

“This research reaffirms that airlines improved their profitability in the years following the Global Financial Crisis. But it also clearly shows that airlines, on average, were not able to benefit financially to the same degree as their suppliers and infrastructure partners. Rewards across the value chain are also disproportionate to risk. Airlines are the most sensitive to shocks but have limited profits with which to build a financial buffer,” said Willie Walsh, IATA’s Director General.

“The pandemic saw all players fall into economic losses. As the industry recovers from the crisis, the study’s most important question is: can a more balanced distribution of economic returns and risk be realized in the post-pandemic world?” said Walsh.

Several changes in the profile of airline economic returns are noted in the study:

 

• While network carriers underperformed the low-cost sector (LCCs) pre-pandemic, average economic returns by network carriers exceeded those of the LCCs during the pandemic. The gap between the two, however has narrowed as the recovery progressed.
   
• Airlines solely operating cargo flights has a profitable financial performance with an ROI of nearly 10%. Thus, the profitability all-cargo carriers was the reverse of airlines carrying both passengers and cargo. By comparison, the performance of all cargo carriers is still well below the average ROIC for freight forwarders which began the crisis at nearly 15% of revenues and grew to 40% of revenues by 2021.
   
• Regionally, it was clear that in aggregate North America carriers entered the crisis with the healthiest balance sheets and strongest financial performance. The picture of recovery was less clearcut in 2021, but having fallen the deepest in the crisis, the trajectory of the region’s recovery is also the steepest. 

Why do airlines generate insufficient economic returns?

An updated analysis of the forces shaping airline profitability originally done in 2011 with Harvard Business School’s Professor Michael Porter demonstrates there has been little positive change. 

 

• Competitive Fragmented Industry: The airline industry is intensely competitive, fragmented and subject to high barriers to exit with low barriers to entry.  
   
• Structure of suppliers, buyers and channels: A high concentration of powerful suppliers, the emergence of increasingly efficient alternatives to air travel, commoditized product offerings with low switching costs and a fragmented buyers’ community are characteristics of the operating environment. 

“It is difficult to see how these entrenched forces will change significantly in the near term. In most cases the interests of those in the value chain are simply too divergent to work as partners to drive change that could meaningfully alter the profitability profile across the value chain. That is why IATA will continue to call on governments to better regulate our monopoly or near-monopoly suppliers like airports, ANSPs and GDSs,” said Walsh.

Recent IATA polling shows public understanding of the need to regulate monopoly suppliers. Some 85% of consumers polled in an 11-country survey agreed that the prices that airports charge should be independently regulated, like utilities.

Cooperation

The value chain study also revealed some areas of common interest where greater cooperation would deliver benefits for all. Two of the examples noted in the study include:

 

• Data-driven efficiency gains: Aviation generates vast amounts of data. At the operational level, sharing data to build a more complete picture of how day-to-day decisions impact customers, airports terminals, airline schedules/crew movements, and runway utilization is already helping to drive efficiencies for all industry players at some airports. This same principle can be applied across the industry to make better long-term decisions in areas including infrastructure development, process improvements, and skills development. 
   
• Decarbonization: Achieving net zero carbon emissions by 2050 cannot be done by airlines alone. Fuel suppliers need to make sustainable aviation fuels available in sufficient quantities at affordable prices. ANSPs need to provide optimal routings that minimize emissions. Engine and aircraft manufacturers must bring to market aircraft that are more fuel efficient and take advantage of low or zero carbon propulsion means such as hydrogen or electricity. Those offering service in the airport environment will need to convert to electric vehicles. 

“There is no magic solution to rebalance the value chain. But it is clear that the interests of governments, travelers and other value chain participants are best served by financially healthy participants—and particularly airlines. A combination of better regulation and cooperation in areas of mutual interest could move the needle. And there are at least two areas ripe for collaboration and burden sharing—pursuing data-driven efficiency gains and decarbonization,” said Walsh.

“We are proud to partner with IATA since 2005 on understanding the value created across the aviation value chain. Over that time, the aviation industries have seen several crises and comebacks. But never has the aviation value chain overall returned its cost of capital. Airlines have consistently been the weakest element, even in their best years not quite returning cost of capital. But there are win-wins, and companies across the value chain can work better together to serve customers, and improve value,” said Nina Wittkamp, Partner at McKinsey.

Air Serbia commences direct flights to Ankara, Izmir and Budapest

During the upcoming summer season, Air Serbia will start operating flights between Belgrade and Izmir two times a week, and flights to Ankara four times a week. In the middle of March, the Serbian national airline will also commence direct flights between Belgrade and Budapest, which will be operated up to seventeen times a week during the summer season. Fares for new destinations are already available at the website, mobile application, as well as in Air Serbia stores, at the starting price of 59 euros for one-way flights to Ankara and Izmir in economy class, or 49 euros for one-way economy class flights to Budapest.

"Not a lot of time has passed since we announced the commencement of new services between Belgrade and Istanbul. We are now pleased to announce that starting on 28 March, our company will start flying to Ankara, and as of 15 April, to Izmir as well. Another new destination in our offer is Budapest, to which we are re-establishing operations after a hiatus of several years. Ahead of us is a summer season during which we will start operating flights to four new destinations in Italy, two in Germany, one in France and Sweden each, and we will also surprise our passengers with new summer holiday destinations. We believe that 2023 will be the year in which we will push our limits further, offering direct flights to almost 100 cities around the world", said Bojan Aranđelović, Head of Network Planning at Air Serbia.

Air Serbia will start operating flights to the capital of Hungary, Budapest, on 13 March, 2023. The number of flights will be gradually increased to up to seventeen flights a week. Budapest is located on the Danube, the second longest river in Europe, and is known for its thermal springs and numerous spas. The city landscape is rich with architectural landmarks from different historical periods. The tallest buildings are St. Stephen's Basilica and the Parliament. Andrássy Avenue is on the UNESCO World Heritage List, and it is where the famous Hungarian State Opera and Music Academy are located, and at the very end of the avenue is the magnificent Heroes’ Square.

Swiss Air-Rescue Service Rega orders 12 additional five-bladed H145s for its mountain bases

Swiss Air-Rescue Service Rega orders 12 additional five-bladed H145s for its mountain bases

The Swiss Air-Rescue Service Rega has ordered a second batch of 12 five-bladed H145 helicopters to be operated from its mountain bases. They will replace the current fleet of AW109SP helicopters. This new order follows an initial contract for nine H145s, announced in March this year. By 2026, Rega will operate an all-Airbus fleet consisting of 21 five-bladed H145s.

“To effectively operate life-saving air rescue services in Switzerland, we understand that the ability to perform optimally at altitude is paramount,” says Bruno Even, CEO of Airbus Helicopters. “The five-bladed H145 landed on the Aconcagua in Chile, a mountain that is nearly 7,000 metres high - no other twin engine helicopter has ever achieved this feat. That is why we are especially proud that Rega has put its faith in the five-bladed H145 and decided to make it the only helicopter type in its fleet to perform such critical missions.”

“By selecting the five-bladed H145, we are ensuring that Rega will continue being able to provide its patients with reliable and professional medical assistance by air for the next 15 years,” says Ernst Kohler, CEO of Rega.

The five-bladed H145s will come equipped with a state-of-the-art navigation system, especially tailored to the operator’s needs that will enhance the mission capabilities and the safety of operations. The system will use new capabilities of the Flight Management System GTN750 Xi by Garmin. It will integrate and control a multi-sensor system that provides highly accurate and reliable navigation capacities. Even in the event of GPS signal loss, the helicopter will navigate safely thanks to Thales’ inertial navigation system. This solution will further boost the navigation performance in low IFR conditions and allows the helicopter to be certified as navigation procedure RNP-AR 0.1, which is the most accurate navigation procedure in the helicopter environment. The configuration also includes a new hoist by Vincorion that is being certified on the five-bladed H145, ensuring highest safety standards.

Rega operates 14 HEMS stations in Switzerland. Last year, the helicopter crews carried out 14,330 missions, including transporting 471 COVID patients.

The new version of Airbus’ best-selling H145 light twin-engine helicopter adds a new, innovative five-bladed rotor to the multi-mission aircraft, increasing the useful load of the helicopter by 150kg. The simplicity of the new bearingless main rotor design also eases maintenance operations, further improving the benchmark serviceability and reliability of the H145, while improving ride comfort for both passengers and crew.

In total, there are more than 1,600 H145 family helicopters in service, logging a total of more than seven million flight hours. Powered by two Safran Arriel 2E engines, the H145 is equipped with full authority digital engine control (FADEC) and the Helionix digital avionics suite. It includes a high performance 4-axis autopilot, increasing safety and reducing pilot workload. Its particularly low acoustic footprint makes the H145 the quietest helicopter in its class, while its CO2 emissions are the lowest amongst its competitors. 

Amount of blocked airline funds rising says IATA

The International Air Transport Association (IATA) warned that the amount of airline funds for repatriation being blocked by governments has risen by more than 25% ($394 million) in the last six months. Total funds blocked now tally at close to $2.0 billion. IATA calls on governments to remove all barriers to airlines repatriating their revenues from ticket sales and other activities, in line with international agreements and treaty obligations.   

IATA is also renewing its calls on Venezuela to settle the $3.8 billion of airline funds that have been blocked from repatriation since 2016 when the last authorization for limited repatriation of funds was allowed by the Venezuelan government. 

“Preventing airlines from repatriating funds may appear to be an easy way to shore up depleted treasuries, but ultimately the local economy will pay a high price. No business can sustain providing service if they cannot get paid and this is no different for airlines. Air links are a vital economic catalyst. Enabling the efficient repatriation of revenues is a critical for any economy to remain globally connected to markets and supply chains,” said Willie Walsh, IATA’s Director General. 

 

Airline funds are being blocked from repatriation in more than 27 countries and territories.  

The top five markets with blocked funds (excluding Venezuela) are: 

Nigeria: $551 million 

Pakistan: $225 million 

Bangladesh: $208 million 

Lebanon: $144 million 

Algeria: $140 million 

Nigeria  

Total airline funds blocked from repatriation in Nigeria are $551 million. Repatriation issues arose in March 2020 when demand for foreign currency in the country outpaced supply and the country’s banks were not able to service currency repatriations.  

Despite these challenges Nigerian authorities have been engaged with the airlines and are, together with the industry, working to find measures to release the funds available.  

“Nigeria is an example of how government-industry engagement can resolve blocked funds issues. Working with the Nigerian House of Representatives, Central Bank and the Minister of Aviation resulted in the release of $120 million for repatriation with the promise of a further release at the end of 2022. This encouraging progress demonstrates that, even in difficult circumstances, solutions can be found to clear blocked funds and ensure vital connectivity,” said Kamil Al-Awadhi as Regional Vice President for Africa and the Middle East. 

Venezuela 

Airlines have also restarted efforts to recover the $3.8 billion of unrepatriated airline revenues in Venezuela. There have been no approvals of repatriation of these airline funds since early 2016 and connectivity to Venezuela has dwindled to a handful of airlines selling tickets primarily outside the country. In fact, between 2016 and 2019 (the last normal year before COVID-19) connectivity to/from Venezuela plummeted by 62%. Venezuela is now looking to bolster tourism as part of its COVID-19 economic recovery plan and is seeking airlines to restart or expand air services to/from Venezuela. Success will be much more likely if Venezuela is able to instill confidence in the market by expeditiously settling past debts and providing concrete assurances that airlines will not face any blockages to future repatriation of funds.