flight international

fiightglobal.com 8-14 March 2016 | Flight International | 31

TRAFFIC GROWTH

WORLD AIRLINE TRAFFIC 2015*

RPK (millions) Load factor**

% change % change

Asia-Pacific 1.503 8.9 79.2 1.6

Europe 1.088 5.1 81.5 0.7

Latin America 236 6.1 80 0

North America 1.555 4.5 83.7 0.3

SOURCE: Flightglobal *To 30 Dec when available **%: traffic/

capacityx100

FINANCIALS

US DOLLAR ADVANTAGE HELPS AMERICANS CONSOLIDATE FUEL COST BONUS

Fourth quarter 2015 results for US

airlines, which report financial

results earlier than foreign rivals,

underlined the extent to which they

made the most of consolidation,

sharply lower fuel costs and a solid

economic backdrop to post record

high profits.

Healthy returns came across the

board, with major legacy carriers

and ultra-low-cost carriers seeing

2015 operating profits surge

between 35%, at the low end, and

more than 800% in the case of

regional carrier SkyWest.

Combined, leading US carriers’

operating profit more than doubled,

to about $27.3 billion in 2015,

while net profits more than trebled,

to just over $24 billion. Those

returns followed an equally impres-

sive fourth quarter.

The strong performance of US

carriers has underpinned expecta-

tions 2015 will turn out to have

been a record year for the airline

industry profits globally. IATA fore-

casts a collective industry profit of

$33 billion.

However, the USA looks like the

outstanding performer. While the

sharp fall in oil price has helped all

airlines, existing fuel hedges and

sharp currency movements have

tempered the gains for many non-

US carriers. In contrast, the rela-

tively limited hedging levels and

lack of exposure to exchange loss-

es in buying fuel – priced interna-

tionally in US dollars – has helped

the gains from lower oil price reach

US airlines’ bottom lines.

Though collective US carrier

revenues dipped 1% during 2015,

this was far outweighed by lower

costs. Delta Air Lines, for example,

increased revenues only 1%, to

$40.7 billion, but cut operating

costs 14%, while its fuel bill was

down 44%. Delta’s operating profit

topped the industry, surging nearly

fourfold to $7.8 billion.

Another stand-out was Allegiant

Travel Company, the Las Vegas ultra

low-cost carrier that operates pri-

marily point-to-point leisure routes.

Its operating profit more than dou-

bled to $372 million, giving it an

operating margin of 29%; the high-

est among US major carriers. ■

Brussels Airlines, which faced increased

pressure at its home base from the arrival of

low-cost carriers Ryanair and Vueling in

2014, continued its expansion with a second

consecutive year of double-digit passenger

traffic growth. This outpaced the extra capac-

ity added to the network, helping it lift load

factor more than two points.

Europe’s low-cost carriers continue to

expand. Norwegian and Vueling both record-

ed double-digit rises in traffic, while EasyJet,

Ryanair and Wizz Air raised passenger num-

bers 6.9%, 17.5% and 22%, respectively.

CHINESE FORTUNES

Passenger traffic among leading Asia-Pacific

carriers grew at the fastest rate of the three

biggest regions, increasing just shy of 9% in

2015. As this outpaced the additional 6% of
      capacity, Asian carriers also enjoyed the
      biggest improvement in passenger load fac-
      tors for the year. However, while the collec-
      tive Asia- Pacific load factor increased almost
      two points to 79.2%, it was the only one of the
      three big regions to see average load factors of
      under 80% among leading carriers.
      Despite the wider turmoil in Chinese finan-
      cial markets, the country’s carriers enjoyed
      strong fortunes. Air China, China Eastern,
      China Southern and Hainan Airlines all
      increased passenger traffic by double digits in
      2015 – increases in line with or above the ca-
      pacity they added.
      But according to Joanna Lu, Ascend
      Flightglobal head of advisory in Asia, sched-
      ule data from Flightglobal Innovata points to
      an expected slowdown in Asia-Pacific ca-
      pacity growth, from 7.6% year-on-year in
      December 2015 to just over 3% in June 2016.
      That slowdown, she says, is being driven by
      changes in the growth patterns of North
      Asian countries, particularly China and

Fuel hedges and

sharp currency

movements have

tempered gains for

many non-US carriers

Japan. For international routes, though, Chi-

nese carriers are looking more aggressive in

market development, with double-digit

growth common in routes to markets such as

Japan, South Korea and Thailand. Chinese

carriers, she says, are serious about long-haul

network expansion. And, she notes, for the

first time, 2015 saw Chinese airlines overtake

US carriers in terms of seat capacity on Chi-

na-US routes. ■

Hainan was one of four operators in China to enjoy double-digit increases in passenger numbers

Imaginechina/REX/Shutterstock

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