MIAMI — The Entry Into Service of the Airbus A350, the ANA ‘Star Wars’ jets, the crash of Germanwings 9525 and the finding of Malaysian Airlines 370 debris. In the final year of US Airways and the sudden resignation of United Airlines CEO, what were the most significant aviation news in 2015? Our staff, contributors and analysts share their opinion about the year’s top events.
Chris Sloan – President and Founder
Whether Boeing or Airbus want to admit it or not, the frothy new aircraft order bubble of the last five years has popped. Orders of mainline aircraft are on pace to be the softest since 2010 – the nascent days of the global “Great Recession” economic recovery. While deliveries and backlogs are at record levels, the sales guys are feeling pretty lonely. As of now, once the $10 billion China Southern 737 MAX’ order finalizes, Boeing’s 2015 order book will stand at 743 aircraft versus 1,432 in 2014 – about a 50% decline. Airbus is far ahead with 1,007 new aircraft orders captured but this too is substantially down from 1,456 orders from the previous year.
Anecdotally, the most recent Dubai and Paris Air Shows were a bust compared to previous years. Most delivery positions for high demand aircraft are sold out for years. And there are plenty of headwinds: cheap oil delaying retirement of some older aircraft, economic softness the world-over particularly in Latin America, Europe, and Russia. The topper is a glut of excess airframes especially in the wide-body market (Richard Anderson’s used 777 for $7 million comments withstanding). Increasing production bridge gaps between current and next generation A330s and 777s coupled with a VLA (Very Large Airplane) market clinging to life-support are only making matters worse. The clear and present danger are black swan events like the Transfer shutdown, Malaysia’s restructuring and Skymark’s near collapse leading to order cancellations and more excess aircraft dumped onto the market.
This isn’t to say there aren’t bright spots and blockbuster orders to be had out there. Boeing did after all secure a record $38 billion dollar order for 300 new aircraft (nearly half its new orders this year) from China back in September. But the simple fact is that most customers have done most of their shopping for the foreseeable future.
Enrique Perrella – Publisher & Editor-in-Chief, Airways Magazine
For me the most significant event of 2015 was the merger of LAN and TAM. Two completely different airlines, with two completely different cultures, merged to become LATAM. Their new corporate image is strong, modern and elegant, and encompasses the concept they want to portray to the world. This airline has become a major player in the Americas and should be expanding its network in 2016 with the arrival of the A350 and newer 787s.
Roberto Leiro – Executive Editor
The biggest 2015 aviation headline has been the crash of Germanwings 9525, The accident has put into practice new cockpit occupancy procedures, and has also changed the psychological assessment of pilots and cabin crew, who already undergo a series of background checks during the hiring process by both the airline and authorities. The crash was also a major blow to Lufthansa, which has one of the most formidable safety records in the industry.
Vinay Bhaskara – Senior Business Analyst
The most significant aviation event of 2015 wasn’t really an aviation event at all. Instead, it was the continued and sustained drop in the price of oil (now below $35/barrel for West Texas crude at a pipeline near you!). The drop in oil prices has had several knock off effects that have cascaded throughout the industry. Demand for Airbus and Boeing’s newest planes has cooled off, though the rise in profits has helped offset some of that. On the plus side for the duopoly that controls global aviation, selling the A330 ceos and 777-300ERs necessary to bridge production to the new re-engined aircraft is probably a bit easier.
The decline in oil prices has also given a new lease on life to airlines with mediocre business models around the world, boosting everyone’s financial results by 5 percentage points or more. India’s basket case of an airline industry is once again raking in profits, and airlines that had been under increasing pressure after years of losses now have more breathing room worldwide. In the US, the effect has mainly been to make wildly (by airline industry standards) profitable airlines even more wildly profitable. At the same time, they might be wilder than wildly profitable if airline investors weren’t so skittish about capacity growth.
Alex McIntyre – Correspondent
After taking delivery of its first Boeing 787 early in 2015, American Airlines formally operated its first revenue flight with the aircraft on May 7, flying from Dallas/Fort Worth to Chicago O’Hare. Afterward, the airline wasted little time putting the Dreamliner to international use, opting to service Beijing, Shanghai, and Buenos Aires courtesy of the Boeing 787 from its DFW hub alone. American plans to kick off service to Tokyo’s Haneda Airport with the 787 in early 2016, launching a daily flight from Los Angeles after taking over the route from Delta Air Lines.
The airline’s first Dreamliner flight certainly marked a highlight for aviation enthusiasts (who flooded Flight 2320 in the morning’s early hours), but more broadly it opens the door to more “long-and-thin” routes to operate profitably in 2016.
When Southwest’s CEO Gary Kelly repeatedly dubbed 2015 “the year of Houston,” it’s clear he wasn’t kidding. In the early morning hours of October 15, Southwest Airlines officially pulled back the curtain on its new five-gate international terminal at Houston Hobby. Flight 305 to Cancun marked the airline’s first international plane to lift off from the airport, boldly ushering in a new era of international flying from Southwest. The new facility represents just the first of three international gateways for Southwest, a historically domestic-bound carrier, as international traffic comes into greater focus for the airline. Currently the largest carrier nationally, Southwest looks to spread its wings to international skies, right at home from one of the airline’s first ever destinations.
One could easily look at the U.S. airlines raking in record profits and grouse over their unwillingness to pass along the buck this holiday season. But in reality – largely due to pricing pressures stemming from the Dallas and Chicago markets, and softness in key international markets – the average airfare has descended slightly, to the benefit of many consumers. While more precipitously, falling oil has translated into record profits, the airlines’ facing unit revenue declines and labor negotiations are bound to inflate non-fuel related costs qualifies as one of 2015’s biggest storylines. Wall Street has dully taken note, keeping many airline stocks about flat (or in some cases, with less value) this year despite gleaming profits.
Brett Snyder – Founder and Editor-in-Chief, The Cranky Flier
As far as the US industry goes, I think the most significant event of 2015 was the firing of United CEO Jeff Smisek. United has long had a culture problem, and it was clear that a change was needed. When the board saw the opportunity to kick Smisek out, they opted to bring someone in who was known for his people skills. When Oscar Munoz started, there was a palpable shift in the way people felt about United both inside and out. (Ok, not really far outside, but at least among industry-watchers.) The long-suffering employees seemed to have hope that change was coming. Yes, there have been bumps in the road with Oscar’s heart attack. But if he can pick things up where he left off when he returns, then United has a real shot at becoming a truly competitive airline. That will make every other airline work harder and it can only be good for travelers.
Henry Harteveldt – Travel Industry Analyst and Advisor, Atmosphere Research Group
In 2015, we witnesses the near-flawless cutover and integration of US Airways’ and American Airlines’ reservations systems. That was one for the textbooks. High praise to all involved in that enormous effort.
Also, it is worthy to mention hooliganism displayed by some Air France workers on their company HQ in Paris.
Delta’s attempts to stop funding reauthorization the Export-Import bank and to counter the ME3 carriers, the scandal that cost Jeff Smisek his job as United’s CEO, and the airline’s selection of Oscar Munoz as the new CEO and the shameless, cowardly attack on the Metrojet flight 9268 from Egypt to Russia were also major news.
Paul Thompson – Correspondent
The most significant event of 2015 happened early in the year, with the first delivery and introduction of the Airbus A350. Though it came to market after the competing 787 Dreamliner, its “XWB” width is proving highly popular with passengers who have flown in economy. The single most important plane of the year is ANA’s 787 painted like R2D2, from Star Wars. It not only generated a lot buzz about “Star Wars – The Force Awakens” but it made planes cool, especially ANA, perhaps an airline not known to many travelers from the U.S.
Eric Auxier – Commercial Pilot and Contributor
There were three major aviation news in 2015. The finding of Malaysia Airlines MH370 flaperon in Réunion Island. This is the first confirmed piece of wreckage from the flight, which disappeared on March 8, 2014 with 239 people on board.
Also, the drop in oil prices has allowed airlines to reap in record profits, and the unfortunate Germanwings crash blamed on suicidal FO are my top three news.
Benét Wilson – Founder and Editor-in-Chief, Aviation Queen LLC
The most significant aviation event to me was the abrupt resignation of United Chairman, President and CEO Jeff Smisek. Yes he was dogged by what the industry saw as difficulties after United and Continental announced their merger in May 2010. But the conventional wisdom about Smisek’s tenure was it’s better to stay with the devil you know than the devil you don’t. But when the U.S. Attorney for New York starts a probe over a sweetheart route for the chairman of the Port Authority of New York and New Jersey (which manages United’s Newark hub) — and your own company does an internal investigation — United knew it was time to move on. United brought in a new (and diverse!) face in Oscar Munoz and now haa the chance to reboot and put a new face on the airline. And don’t feel too bad for Smisek – he walked away with a lump-sum severance payment of $4.875 million in cash, along with outstanding salary and vested benefits, lifetime flight and parking benefits and the title to his company car.
Rohan Anand – Analyst and Contributor
In 2015, we were given some semblance of hope that the mistery around Malaysian Airlines MH370 would be unsheathed, and then… nothing.
Also, we saw the jaw-dropping footage of a TransAsia ATR72-600 that crashed shortly after takeoff from Taipei’s Shanghsa downtown airport.
Other major news were:
- SkyMall’s parent company, Xhibit, went bankrupt;
- The Boeing 787 (finally) joined the AA fleet, and the carrier wasted no time in deploying them on routes to Asia;
- United finally went live with its new website after a 2… 3? (I’ve lost count) year delay;
- Air India and Jet Airways were restored to Category I status by the FAA after failing safety audits in 2014;
- IAG acquired Aer Lingus, and former Aer Lingus CEO jumped to take the lead of Malaysia Airlines to save it from another unsuccessful “restructuring;”
- Speaking of which, Malaysia formed a game-changing codeshare agreement with Emirates, a la Qantas + Falcon Route strategy of 2012, and will retreat from serving continental Europe on its own metal save for 2x A380 services from London Heathrow to Kuala Lumpur;
- American successfully re-banked its operations in its Dallas/Ft. Worth and Chicago O’Hare hubs;
- Thai pulled out of Los Angeles (and the US altogether) after 35 years of service;
- American Airlines and Qantas announced plans to start a Joint Venture;
- Air India commenced the first nonstop flight from the US West Coast to India;
- Montreal landed Air China as its first Asian carrier (and flight to Asia in general) by way of Beijing, and Cuba also got in on the deal as Air China added a tag-on 5th freedom route from Montreal to Havana (which is still causing several people to scratch their heads);
- United and Delta have (or will) withdraw all services to the Middle East, and
- Southwest opened a new International terminal at Houston Hobby
Michael Slattery – Correspondent
By far the most significant – the price of oil. The fall from $65/barrel in early 2015 to $36 (today) means that most airlines were able to reap big profits for the year, and that trend is likely to continue in 2016. Don’t expect lower fares based on the oil price, however!
The relatively smooth and seamless transition toward a single operating certificate for the AA/US Airways merger.
Nicolas Bernier – Correspondent
US Airways went into the sunset on October 17, 2015 as it completely merged with American Airlines. This leaves now only three major legacy carriers in the United States: American, Delta, and United.
Also, a major news in 2015 was the bankruptcy of Russia’s second largest airline, Transaero, which ceased operations last October 25. This leaves Aeroflot Group as main airline group in Russia.
Also, the ups and downs in Bombardier, which included a major executive management shakeup in February, the drought of orders for the CSeries program, failing to be behind schedule and over budgeted, causing $1 Billion investment by the Government of Québec to keep the company alive. Despite this traumatic year for the airframer, the company finally obtained the certification of the CS100 last December 18.
Jack Harty – Former AirwaysNews Senior Correspondent
Thinking back to 2015, I think the most significant event in the U.S. airline industry was Jeff Smisek stepping down and somebody else taking over the reigns at United, although it was a bit turbulent. Almost all of the U.S. airlines are very strong players in both the operational and management senses with United being one of the exceptions. Living in Houston, I have been following the merger fairly closely, and I think it was best that somebody new took over the reigns because a change in leadership that focuses on improving United for both employees and the customers is what is needed. If history has taught us anything, this may work, or well, it worked for Continental when Gordon Bethune took over.
Who can forget the final US Airways flight? Out of all the firsts and lasts flights this year, it seems safe to say that it might have been the most historic, especially since it occurred during the cutover with US Airways and American finally operating on the same computer system. Although there is still a bit more work to be done to finish the American/US Airways merger, this sort of marks the end of consolidation wave we have seen in the U.S. airline industry.
Finally from a loyalty perspective, American switching over to a revenue based system was also major news story since the amount customers spend is now becoming a bit more important that miles/segments flown for determining one’s status with an airline.