Air Canada, American Airlines and US Airways trans-Atlantic pax traffic up, Delta down in May-2010
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All-premium UK-US airlines. BA cuts LCY frequency; La Compagnie quits LTN; Odyssey to launch in 2017
There have been two notable recent developments in the market for all-business class services on the North Atlantic: British Airways is to reduce its London City-JFK A318 frequencies and France's La Compagnie is to withdraw from Luton-Newark to concentrate its 74-seat Boeing 757 operations on Paris-Newark (its only other route).
BA's 32-seat London City operation has been suffering from significant load factor declines, particularly on the outbound flights. These flights make a refuelling stop in Shannon, where passengers can pre-clear US customs, but this may not be a sufficient incentive for some passengers to take an indirect flight. La Compagnie expressed concerns about uncertainties in the UK post-Brexit, but its route economics must anyway have been struggling, due to Luton's lack of suitability as a premium market and its lack of feed.
So far there has been no reaction to these developments from the new-start Odyssey Airlines, which plans to launch an all-business class London City-New York service in 2017. It will no doubt be attempting to find a balance between relief that its level of competition has reduced, and some anxiety that its launch may coincide with a softening of market demand.
North American airlines reduce CASK in 2015 thanks to lower fuel, but ominous labour cost trends
North America’s large major global network airlines enjoyed significant unit cost reductions for the full year 2015, according to CAPA's CASK Database, as average fuel cost per barrel remained at record lows for most of the calendar year. The decline in fuel costs in some instances helped to offset a challenging apparent trend in increasing salaries, wages and benefits, and profit-sharing expense.
Favourable fuel cost trends for those airlines should continue into 2016 as fuel costs per barrel for both WTI and Brent Crude are projected to fall year-on-year compared with 2015. For what forecasts are worth, fuel prices are projected to begin climbing in 2017; however, prices will remain far below 2014, when prices averaged over USD90 per barrel.
Falling full costs have helped lower the unit cost trend line year-on-year for global full service airlines, but, along with fuel cost inflation starting in 2017, some North American global network airlines will also face rising labour costs. Delta is in the process of pilot negotiations, United’s has agreed up to 31% increases for its flight attendants and is still in negotiations with its mechanics. Depending on the outcomes of the pilot negotiations and mechanics votes, Delta and United will face inflationary labour cost pressure during the next two years.