Friday Flyer – October 6, 2023

This week saw a long-standing FAA designation against Mexico reversed.  The background is that the US FAA downgraded Mexico’s air safety rating to a category 2 in May 2021.  This had a huge impact on the market share of the Mexican airlines in the US-Mexico market.  This week, the air safety rating was upgraded back to a category 1, opening the door for more air travel by the Mexico-based airlines to fly to the US.  So far Aeromexico and Viva Aerobus were quick to announce their expansion plans into the US and others are sure to follow.  This should open the door to more competitive fares into Mexico given the increase in competition.

Interesting Aviation News

  • Ancillary revenue for airlines is a hot topic these days as the share of revenue continues to increase for airlines and the opportunity for airlines continues to grow.  This week a report came out on the state of ancillary revenue in the industry.  There are a lot of great numbers in here, so worth a look at the summaries at least.  This supports the case that PROS is making to provide pricing science through our Dynamic Ancillary Pricing solution.
  • Last week I shared a few new airline orders that were announced by large carriers.  United continued the trend this week with another announcement for orders totaling 110 new planes from Boeing and Airbus.  They haven’t been shy about making large orders lately.  They currently have over 800 aircraft on order with a plan of having 75% of their fleet be “new generation” by 2030.  These orders continue to come in as the backlog for delivery grows at the major manufacturers.  For example, this order of 110 won’t begin delivery until 2028.  But if the airlines are betting on strong demand continuing, they need to get in the queue now. 
  • Speaking of aircraft orders, last week I shared that Air Canada made a large order for widebody Dreamliners.  Those orders continue the trend of Air Canada focusing on higher density (read: fewer premium seats).  They’re making this bet as they try to win more Americans flying to their long-haul destinations.  This article does a nice comparison of the aircraft density amongst the big 3 US airlines against Air Canada. 
  • The consolidation in Europe continues this week with the announcement that SAS Airlines (large airline based in Denmark, connecting Scandinavia) will take on new ownershipstake from Castlelake (an investment firm) and the Air France/KLM Group.  This changes the ownership structure significantly and will lead to SAS leaving the Star Alliance and joining Skyteam.  While the ownership stake by AF/KLM is expected to only be 20% to start, but it would have options to gain more control after two years.  The deal is still subject to US-bankruptcy court as this is part of SAS coming out of their bankruptcy proceedings.  This continues the battle between IAG, LHG, and AF/KLM airline groups in Europe, fighting for more control of that market.
  • London’s Heathrow Airport is trialing a program that allows passengers to schedule their security screenings in advance.  The goal, obviously, is to reduce the amount of time you need to wait and to make the timing more predictable.  It will be interesting to watch this play out and see if it catches on elsewhere.

Interesting Aviation Fact

You may have heard the term “heavy maintenance” for aircraft.  This is a specific maintenance activity that happens periodically.  This video shows an Etihad plane going through that process.  

Cool Aviation Photo

This week’s photo is a throwback to the late 1970s at London’s Gatwick Airport.  This is just a sampling of the airlines/airplanes you would have seen.  Some that are still around and others that are long gone.  (h/t: Andrew B.)