United States of America
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Air Travel is frequently the most practical method of covering the large distances between cities in the USA. The domestic air system is extensive, with dozens of competing airlines, hundreds of airports and thousands of flights daily. The US is the world's largest aviation market. Domestic airlines have mostly rebounded since September 11. Delta (now merged with Northwest), United (merged with Continental) and US Airways (merged with American) have each entered and emerged from bankruptcy still flying, though mergers and downsizing have had an impact on the travel experience. The US has three major international airlines that function in a similar manner and size as a national carrier; American Airlines, United-Continental Airlines Holdings and Delta Air Lines. The expansion of LCCs such as Southwest Airlines, Virgin America and JetBlue has increased competition and lowered prices domestically and in some cross-border markets.
The Federal Aviation Administration (FAA) is an agency of the United States Department of Transportation with authority to regulate and oversee all aspects of civil aviation in the US. The Transportation Security Administration (TSA) is the government agency responsible for security in all modes of transportation and is solely responsible for carrying out screening of passengers and their baggage (both checked and carry-on) at 450 airports across the US.
Airports in United States of America
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A decade ago it would have been unheard of for Air Canada to contemplate reaching an investment grade credit rating. The airline had emerged from bankruptcy protection, but was still struggling financially. It would teeter on the verge of another formal restructuring before setting out on a course to restructure its financial foundation – a process that has allowed the airline to improve its balance sheet and leverage.
Air Canada’s leverage targets for YE2018 will not meet the general proxy for an investment grade rating; however, its lower capital commitments and debt refinancing could create an opportunity for achieving that status beyond 2018.
Attaining an investment grade credit rating likely remains a longer term goal for Air Canada as its major financial goals in the short term remain paying down debt that is creeping up due to a fleet renewal, as well as funding growth to drive long-term shareholder value. More meaningful shareholder returns will likely occur once the company reaches what it deems as acceptable progress in debt management, and reaches a certain maturity level in growing its international network.
This is Part 2 in a two part series on Air Canada. Part 1 dealt with long haul LCC subsidiary, rouge.
The largest airport outside Asia with flights to Japan is, perhaps surprisingly, none other than Honolulu. Approximately 19 flights a day in 2016 depart Honolulu for Japan, creating a nearly hourly beach shuttle. Among all global airports Honolulu is eighth largest for international flights, outpaced by airports such as Taipei and Bangkok, but Honolulu still has more Japanese flights than Singapore, Manila or Kuala Lumpur.
All Nippon Airways is proceeding with plans to deploy its forthcoming fleet of three A380s exclusively to Honolulu from 2019. Honolulu presents opportunity, but also protection. Despite all the changes to aviation and tourism over the last decade, Japanese demand to Hawaii has remained consistent. It is also strongly, almost exclusively, outbound Japanese – good for ANA since passengers will pay a premium for a Japanese airline.
Following Japan Airlines' bankruptcy and restructuring in 2010, ANA has overtaken JAL as the country's main international airline and outpaced it, except in Hawaii. Hawaii, with its leisure point-to-point demand, is not core to ANA's strategy. But ANA has a very different, non-operational reason for allocating the A380s to Hawaii.
During the past year Air Canada has found itself defending its double-digit capacity growth, stressing that 90% of its capacity in 2015, 2016 and 2017 is being deployed to its international network – an entity the company believes is far from reaching maturity. Recently the airline has outlined plans to introduce a raft of new long haul flights to Europe and Asia operated by Air Canada mainline and its low cost arm – Air Canada rouge.
Air Canada stresses the pillars of its international expansion – Boeing 787 widebodies and the establishment of its low cost subsidiary rouge – enable the company to enter international markets it once considered unviable due to higher costs. During the summer of 2018 rouge will nearly reach its 50 aircraft cap, and Air Canada needs to start determining if there are further opportunities to grow its low cost unit. Those evaluations will partially dictate Air Canada’s overall growth levels beyond 2018.
In the short term Air Canada is not seeing any broad changes in consumer behaviour, reflected in its solid booking curves. Weaker markets in Western Canada, hit by the downturn in the oil sector, are stabilising as capacity cuts have resulted in a rational supply-demand scenario.
This is Part 1 in a two part series on Air Canada. The second instalment will focus on the airline’s costs and balance sheet management.
California's Ontario International Airport Part 1: Change of ownership allows it to compete with LAX
Ontario International Airport has languished in the shadow of Los Angeles’ LAX for many years, prompting a growing call for separation from Los Angeles World Airports. At last the umbilical cord is about to be cut, and local city councils will be in control of its destiny.
But the difficulties that OIA has had to face will not all go away. They include a huge urban catchment area, where industry was hit hard by the recession and wages are low and, above all, an image that it is no more than a low cost facility without any real gravitas.
The ownership change opens the door, at least potentially, to private sector investment and management in the long run, but costs must be reined in and the bottom line improved first.
This report looks at present and future growth trends at the airport, local economic and airport statistics, how it matches up to competing airports across a range of metrics, at construction activities and in detail at the ownership issue.
jetBlue Airways, armed with its premium product Mint, is poised to disrupt the trans-Atlantic market
Periodically throughout the last few years jetBlue has hinted that long haul trans-Atlantic flights could be a possibility at some point in its evolution. But in mid-2016 the company took a more concrete step towards serving trans-Atlantic routes by altering its Airbus order book – potentially to support long haul expansion.
JetBlue’s decision to option the Airbus A321LR occurs at a time when airlines such as WestJet, Norwegian Air Shuttle and WOW Air are pushing the low cost model into the long haul international market. Perhaps the steps those airlines are taking to carve out the low cost niche in the long haul space has accelerated jetBlue’s evaluations of trans-Atlantic service. The company has declared that it would make a decision about its options for the long-range Airbus narrowbody in 2017 ahead of the narrowbody’s debut in 2019.
The biggest drivers for jetBlue’s decision to enter the long haul trans-Atlantic market are identifying routes where it can inject low fares to stimulate traffic and drive revenue. The company’s base in Boston is emerging as the epicentre for those potential opportunities.
Frontier Airlines began 2016 making meaningful strides in its on-time performance, besting its closest US ULCC rival Spirit Airlines. But its performance in the busy summer months of Jun-2016 and Jul-2016 slipped, due largely to challenges in ground handling. Now Frontier faces the task of restoring its OTP to consistently higher levels.
Frontier’s network composition is slightly different from those of the two other US ULCCs, Allegiant and Spirit. Its average weekly frequencies fall between those offered by its ULCC counterparts and, in some ways, Frontier’s network changes seem more rapid than those of other ultra-low cost airlines as it works to tailor the ULCC model to its specific strategy.
As a privately held company, Frontier does not discuss its growth prospects as freely as Allegiant and Spirit. But the airline has an ample pipeline of Airbus deliveries that will drive its growth over the medium to long term. During the past year the prospect of an IPO to fund Frontier’s growth has surfaced and quietened down; but at some point in the not-too-distant future the company’s investors will seek rewards for their endeavours.