aviation airlines fold as growth slows


recommended a new flight protection scheme financed by bonds or insurance and backed by a small levy on all flights. The proposals sparked predictable reactions, with the levy idea welcomed by travel trade associations and denounced by airline bodies. The government delayed responding, only for Thomas Cook’s failure to require repatriation of 150,000 UK passengers. Yet full implementation of the review’s proposals appear unlikely.


AIRLINE PROFITS Leading carriers continued to report substantial profits despite the challenge of diminishing yields. In the US, Delta Air Lines reported


a pre-tax profit of $5.2 billion for 2018 GHVSLWH D


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bill. United Airlines followed profits of bELOOLRQ LQ


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appearing on course to break both figures in 2019, while American Airlines weighed in with a 2018 profit of $1.9 billion. In Europe, British Airways and Iberia


owner IAG reported a pre-tax profit of € bELOOLRQ IRU


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was on course to report similar for 2019. The group could agree a €1 billion takeover of Spanish carrier Air Europa in November. Ryanair reported a full-year profit of €1 billion for the 12 months to March


The Deloitte view


The introduction of any technology brings disruption as well as benefits. This is certainly true of unmanned aviation, covering everything from drones to ‘urban air mobility’, including air taxis. While drones have been in the headlines for the disruption caused, their benefits arguably offset their occasional negative impact – for example, in delivering life-saving supplies to remote areas. Drones are a catalyst for three major


opportunities: automation, electrification and democratisation of low-level airspace. While the first two are well documented, the democratisation of low-level airspace


deserves more debate. It refers to automation of the airframe as well as the airspace management tools and finance models that govern them. At present, airlines pay a fee for airspace use which is passed on to consumers. This funds the national air navigation service providers and their operations and funding structures are heavily regulated. However, with projected aircraft


movements set to increase more than tenfold in the next five years, it’s not feasible for passengers to continue to pay for the airspace use of both manned and unmanned aviation.


For unmanned aviation to develop


further in its applications and to realise the benefits it can offer, the financing models, along with the supporting regulatory frameworks, should be revised. Rather than looking at unmanned aviation as a burden on the airline charge, there is an opportunity to change a system of which the principles have not changed in the last 50 years. Once achieved, more people and companies can access, enjoy and benefit from the airspace, thereby lowering the cost per aircraft movement and making it better


for everyone. █James Cranswick, director, Aviation


%


Flights will continue whatever happens [but] there are head- winds facing the industry that aren’t due to Brexit


FIGURE 45: LONDON & UK REGIONAL AIRPORT TRAFFIC, 2018


20 40 60 80


0 61% 60% 40% 39%


as annual passenger numbers hit 142 million with the takeover of Vienna-based Laudamotion. The carrier made O’Leary group chief executive as it rebranded its operations in Poland as Buzz and in Malta as Malta Air, and O’Leary emphasised the opportunity in the situation, arguing: “As weaker European airlines are sold and fail, airports are competing to attract Ryanair.” That did not make Ryanair immune


to the need to curb expansion. In August, O’Leary announced plans to cut 1,500 jobs by the new year. He told employees: “It’s been a challenging summer and we face a difficult winter.” Rival easyJet also reined in expansion, though with less drama and while relaunching tour operator brand easyJet Holidays. Having increased capacity 10% for the 12 months to September, easyJet announced capacity growth in 2020 would be nearer 3%. However, easyJet’s purchase of Thomas Cook’s slots at Gatwick suggested chief executive Johan Lundgren sees scope for growth. The carrier reported a e bPLOOLRQ SURILW IRU WKH \HDU WR 6HSWHPEHU BA celebrated a 100th birthday of sorts


London airports


Regional airports


% of passengers % of passenger flights


Source: CAA


in August as it launched its first Airbus A350 flights and unveiled a new Club Suite business class. But in September, it’s first- ever strike by BA pilots cost it €137 million. Virgin Atlantic revealed designs on


30 Travel Weekly Insight Report 2019-20


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