ISTAT: Warning signs for airline industry

March 9, 2015: There are warning signs the global airline industry needs to heed, says John Luth, CEO of the US consultancy Seabury Group.

The economic recovery isn’t uniform across the globe, Luth said in the keynote address to ISTAT, the International Society for Transport Aircraft Traders at its 2015 conference in Phoenix.

Luth said North American airlines had to “fix” themselves before consolidation into four major carriers that now control 71% of the market. In Europe and Asia, the top four carriers control far less traffic. In Europe, low cost carriers now control 40% of the market while in Asia LCCs control 19%, a sharp rise over a few years ago.

Luth said there are “significant” problems in Europe, less so in Asia but not as well balance as in the US. (Separately, Embraer noted to us last October during our visit to their offices in Brazil, that LCC growth in Asia not only stopped growing but is contracting.)

In a statistically-ladened presentation, Luth said joint venture agreements, such as Air France-KLM, are producing better results than alliances. Airlines that are not part of JVs are lagging in profitability.

Seventy-eight of cargo capacity growth has been in belly capacity in recent years, Luth said.


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