CAPA Insights

2024 was a historic year for the aviation industry, as global passenger traffic finally achieved a full recovery to pre-pandemic levels, supported by continued strong travel demand.

This strong demand coupled with restricted capacity drove higher load factors and impacted consumers in the form of higher airfares.

Airlines benefited from lower fuel prices, but non-fuel costs generally increased across the board.

These market dynamics are expected to help keep airline operating profits at historically high levels.

Supply chain issues remained a major restriction on industry growth throughout the year, headlined by aircraft delivery delays and significant additional engine maintenance requirements.

Airlines were particularly impacted by being unable to introduce new aircraft as planned, limiting their growth potential, increasing the average fleet age, hampering efforts to improve efficiency and cut emissions, and driving greater demand and costs for maintenance and aircraft leasing.

Service providers to airlines were among the major beneficiaries of the supply chain problems, with many lessors and MRO providers reporting high demand and record financial performance.

In 2024, Lufthansa Group's acquisition of a 41% stake in Italia Trasporto Aereo (ITA Airways) saw significant regulatory developments, marked by consistent back and forth with the European Commission (EC).

The EC's intense scrutiny resulted in conditional approval in Jul-2024, requiring remedies to address competition concerns, such as slot transfers at Milan Linate and agreements to enhance competitiveness on transatlantic and Central European routes.

The year witnessed extensive negotiations, culminating in Nov-2024 with the selection of easyJet, IAG and Air France-KLM as remedy takers.

For ITA Airways, 2024 marked a turning point, as the opportunities of an integration into Lufthansa's network started to become much more of a reality.

Condor Flugdienst has announced a 13% reduction in its summer 2025 schedule from Hamburg Airport Helmut Schmidt, citing rising costs. Several routes will be removed and planned growth, including new destinations, has been cancelled.

The airline's CEO Peter Gerber criticised Hamburg's fee increases and called for competitive cost structures at German airports. This follows Ryanair's 12% reduction in its German summer schedule and calls for the government to reduce taxes and fees.

Hamburg Airport's CEO dismissed the criticism, suggesting airlines are using Hamburg to influence negotiations elsewhere. The Vereinigung Cockpit (VC) union instead urged balanced reforms, emphasising corporate responsibility and stakeholder collaboration over regulatory cost cuts.

The Saudi Air Connectivity Program (ACP) has made remarkable progress in its efforts to develop the Kingdom's air network, having attracted 12 international airlines, added 22 routes and 1.5 million seats of capacity in 2024, according to ACP CEO Majid Khan.

At the CAPA Airline Leader Summit Asia & Sustainability Awards in Hong Kong and CAPA Airline Leader Summit World & Awards for Excellence in Belgrade, both held during Nov-2024, Mr Khan outlined ACP's bold ambitions to add more airlines and routes each year.

As carriers from across Asia Pacific, Europe and North America reduced activity in China in 2024, new leaders emerged in the market.

Aeroflot became the leading foreign carrier operating to China out of Europe by frequency and seats in 2024 and that will continue into 1Q2025 based on advanced published schedules.

ACI EUROPE's air traffic report for Aug-2024 revealed Polish airports recorded an increase in passenger traffic of 25.5% compared to 2019, marking the highest performance among EU+ countries.

Smaller and regional airports outperformed larger hubs in Poland in terms of traffic recovery in 2023, with the fastest recovering airports being Lodz, Rzeszow, Poznan, Katowice and Krakow.

Polish airports plan extensive infrastructure developments to manage traffic growth until the Central Communication Port (CPK) becomes operational in 2032. CPK is expected to enhance the overall efficiency of Poland's air transport system by integrating various modes of transport and significantly increasing capacity.

The inauguration of Nuuk Airport's 2,200m runway on 28-Nov-2024 marked a transformative milestone for Greenland's aviation landscape, positioning the capital as a central hub for domestic and international air travel. Air Greenland commemorated the occasion, as its A330neo became the first long haul aircraft to land on the new runway.

The expanded infrastructure, including a terminal with resumed international capabilities as of Oct-2024, enables direct connections to North America and Europe, reinforcing Nuuk's strategic importance.

Challenges persist, including the current security level two status requiring additional screening for transit passengers, but plans to achieve 'One Stop Security' by mid-2025 are underway. Exciting developments include new routes such as United Airlines' Newark service and SAS' Copenhagen flights in 2025, heralding a new era of growth in Greenland's air connectivity.

On 16-Nov-2024, Avelo Airlines launched twice weekly Hartford-Montego Bay service. This is the airline's first scheduled international service, followed shortly afterwards by the launch of twice weekly Hartford-Cancun service on 20-Nov-2024.

The ULCC, which launched operations from Hollywood Burbank Airport in Apr-2021, has since expanded service to 49 destinations from seven US operational bases including Hartford Bradley International Airport and Tweed New Haven Airport.

The carrier previously operated public charter international services to Cancun, Montego Bay and Punta Cana in partnership with Apple Vacations in early 2024.

Avelo has eyed international operations for some time, however competition in high demand Latin leisure markets may prove challenging.

New NAIA Infrastructure Corporation (NNIC) assumed the maintenance and operation of Manila Ninoy Aquino International Airport (NAIA) on 14-Sep-2024, tackling the hefty task of modernising the 76 year old airport.

The consortium, which includes San Miguel Corporation and Incheon International Airport Corporation, is expecting NAIA's capacity to increase from 35 million to 62 million passengers once the modernisation is complete.

Pegasus Airlines was the deserving winner of CAPA - Centre for Aviation's 2024 Global Environmental Sustainability Airline/Airline Group of the Year, having rapidly transformed its sustainability performance.

Pegasus has become a world leader for unit emissions and broader ESG performance while more than doubling its passenger traffic and tripling the size of its network.

Following the awards ceremony at the CAPA Airline Leader Summit Asia event in Hong Kong in Nov-2024, Pegasus Airlines general counsel and sustainability director Ali Uzun provided insights into sustainability developments at the airline and broader industry trends in an exclusive interview.