Chicago Midway Airport

Southwest beats unit costs estimates despite posting a first quarter loss

A first quarter loss at Southwest Airlines was accompanied by a better-than-expected result in the carrier’s unit cost performance driven in part by labour productivity improvements. The carrier is striking a cautiously optimistic tone regarding the rest of the year, indicating it should record a favourable financial performance if fuel prices remain at current levels. But until Southwest completes the integration of AirTran Airways into its operations by 2014, the carrier will be constrained in reaching its full revenue potential.

Favourable gains on the settling of certain fuel hedge contracts helped Southwest to record a first quarter profit of USD98 million. But excluding special items the carrier’s loss was USD18 million compared with a USD20 million profit the year prior. The airline’s operating income tumbled USD100 million to USD10 million as the carrier recorded fuel and oil expense of USD1.5 billion, a 45.5% rise from 1Q2011. On a combined basis with AirTran, Southwest’s operating revenue was USD86 million.

Asia Pacific airports move up the ranks in 2011, with Beijing this year to overtake Atlanta

The rankings of the world’s busiest airports for 2011 show key developments and lasting changes in global aviation, although the world’s busiest airport by total passenger movements, Atlanta Hartsfield-Jackson International Airport, continued to hold off Beijing, the world’s second busiest airport, in 2011, according to Airports Council International (ACI). It is, however, expected that Beijing, driven by exponential GDP growth, will overtake Atlanta in 2012, ending the airport's 14-year reign in the top spot.

While Beijing Capital is the dominant airport in China, it is on track to become be the world’s busiest hub by the end of this decade, leaving London and even ambitious Dubai in its wake. And new developments will ensure the city of Beijing has an airport in the top spot: its new airport at Daxing, south of Beijing, could have up to nine runways and ultimate capacity to handle around 370,000 passengers per day, or a staggering 135 million passengers p/a. This would increase capacity at Beijing area airports to around 220 million p/a – almost a quarter of a billion passengers.

US airport privatisation prospects boosted by additional slots, but is the demand there?

There are a number of factors weighing on the prospects for what, so far, has not been a successful stab at privatising America’s airports in a ‘pilot’ programme that is now 16 years old. They include delays to reauthorisation of the bill that funds airport projects through the FAA’s Airport Improvement Programme; the lapse of the emergency regulation that removed the application of the Alternative Minimum Tax to airport bonds; lingering suspicion in too many local and regional government departments as to the motives of private investors (especially foreign ones); and most recently a change in the law that permitted an extension in the number of privatisation ‘slots’, irrespective of the demand, and which is at least one positive development. 

Congress finally agreed on a four-year bill to ‘reauthorise’ the activities of the Federal Aviation Administration (FAA) after no less than 23 short-term extensions had been made since the previous one expired in Sep-2007. However, the nature of the legislation means that four FAA accounts are frozen in the light of the economic and financial downturn, including the air traffic control modernisation programme and the Airport Improvement Programme (AIP). The level of the AIP has been reduced as well, by USD165 million to USD3.35 billion.

Where are the world's leading LCC airports?

LCCs now account for about a fifth of all flights globally, making it increasingly vital for airports and air traffic management providers to understand the sector and its drivers. Worldwide, of the top 20 airports for LCC aircraft movements, 12 are in the US, four are in Europe and the remainder are in the Asia Pacific region. (By seats, ten are in the US, and five each in Europe and Asia Pacific). As ever, though, the global LCC market is in flux. Airlines expand or contract their operations at airports in relation to their own growth trajectories and the changes in season.

Competing bills to influence US airport privatisation prospects

Two US senators from Illinois have introduced competing bills dealing with infrastructure privatisation. One of them, Democratic Senator Dick Durbin, introduced a measure that would require repayment of any previous federal grant monies the airport (or other infrastructure provider) had received, in the event of it being privatised. In contrast, Republican Senator Mark Kirk aims instead to encourage such privatisation. His bill would remove the limit on the number of airports that can be privatised and ease other restrictions.