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Southwest Airlines has a more upbeat view on the domestic market than its US rivals


Southwest Airlines is beginning to see some positive trends in the US domestic market place even as its competitors are indicating that domestic yields should remain soft during the summer high season for travel in the US.

Southwest has arguably been a contributor to the soft domestic yields through its massive expansion from Dallas Love Field that started in late 2014. Since that time the airline’s competitors have cited the challenges created by the capacity additions and diluted pricing in the market.

But Southwest is maintaining a relatively positive outlook, driven by gains from a new credit card agreement that is helping to buoy its unit revenue performance. Aside from that boost, the airline believes yield trends overall have stabilised, and expects some slight improvement in 3Q2015.

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Understanding the Asia Pacific growth opportunities: Tony Fernandes explains the market

No-one doubts that Asia will become the dominant world aviation market over coming decades. North America and its airlines will necessarily be major beneficiaries of that expansion. For the time being however, the US-China market is only one third the size of US-UK’s and much lower yielding; Asia’s two biggest markets, China and Japan combined are still smaller than the UK market. But China-US capacity will double in the two years to Jul-2017, a trajectory that is likely to continue.
Meanwhile the nature of the Asian aviation markets has evolved greatly over the period of a decade. In Southeast Asia, nearly two thirds of all airline seats are on low-cost airlines, none of which existed a decade ago, implying a highly price sensitive underlying market.

In North Asia, this low-cost, price sensitive phenomenon is starting to take hold as well, albeit from a much lower market share. But it is growing fast, with many new entrants.

To understand fully how these forces will influence Asian consumer demand, we hear from Malaysia based Tony Fernandes, the man who sparked the LCC revolution in Asia and whose airline, AirAsia, has now carried 50 million passengers. In doing so, he has effectively deregulated international aviation across much of Asia.
The remarkable airline, with 9 operating entities, including cross border joint ventures in various countries, also includes three long-haul low-cost operators.

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