MIAMI — As 2015 begins, the ever-changing airline industry is preparing for another year that promises to bring challenges, triumphs, and rewards. 2014 was a year of record profits, large aircraft orders and several tragic events. In 2014 the industry welcomed more than 110 Boeing 787 Dreamliners to the sky, the new Hamad International Airport in Doha, Qatar opened and we saw the delivery of the first Airbus A350 to Qatar Airways.
We also saw the final passenger DC-10 flight, the final passenger MD-11 flight, and the final DC-9 passenger flight in the US. The year 2015 is now upon us and the industry is more than ready to take it on in hopes for improved profits, a smaller carbon footprint and improved passenger safety. We reached out to our staff and the CEOs of major airlines around the world and asked for their predictions for the aviation industry in 2015. Here is what they said:
Ghaith Al Ghaith, CEO FlyDubai
Aviation in the UAE continues to play an important role and is poised to contribute 37.5 percent to Dubai’s GDP by 2020, as Dubai International Airport continues to cement its role as the world’s busiest airport by passenger numbers.
Flydubai in 2014 had a record year, launching 23 new routes and creating a network of 89 destinations across the GCC, Europe, Africa and the Indian Subcontinent, 56 of which were previously underserved. In 2015 we will continue to support the UAE governments 2020 vision to attract 20 million tourists to Dubai by adding more routes, more frequencies and more aircraft.
Dr. Temel Kotil, CEO, Turkish Airlines
Although being a cyclical industry, I think that the global aviation will continue to grow in parallel to the development of technology and globalization. Day by day, more and more people will commence to fly, the plane will be more accessible for everybody.
The increase of the seamless connections will enable air travel very attractive, and the fares of tickets will became more and more competitive. I assume that the center of gravity of the global aviation market is still moving from the West to the East. So this become more closer to Istanbul day by day. I also assume that the crucial importance of Istanbul will become more concrete in the next 10 years. Besides, the African market also will gain more importance in the near future. So, one can say that we appreciate the African market as it is a still not yet totally “discovered” aviation market.
Furthermore, as we are a global network carrier flying more countries than any other airlines with the biggest international network, one can say that we are targeting the entire “globe.” We are connecting the entire world via our hub in Istanbul, we are flying almost every point in Europe and crucial points in the Middle East, Africa, Americas and Asia. Sure, we will increase of efficiency in the Americas and Asia, while commencing flights to the Australia.
David Cush, CEO, Virgin America
Aviation is by far one of the most dynamic industries in the world. And with each year, we aim to raise the bar even higher in the guest experience with a focus on our industry-leading product and service across our business-friendly flight network.
Our modern and convenient new facilities at Dallas Love Field allow us to continue to expand our footprint in the Dallas market, with premium service to major business destinations on both the East and West coasts. Of course, innovation remains a priority – as of December 2014 we became the first airline to install Gogo’s next-generation ATG4 WiFi service fleet wide, so our guests can enjoy a better web experience on every flight. We will continue to invest in our product to stay ahead of the competition in 2015.
Chris Sloan : President & Founder – Airways
- The bubble on new aircraft orders will pop, with new orders being far below 2013 and 2014 levels.
Though the Bombardier CS300 will fly early in 2015, there will be another EIS delay on Bombardier’s CSeries program, already delayed by more than two years. The airframer’s lack of transparency doesn’t give comfort or guidance.
The Alaska Airlines versus Delta Air Lines Battle of Seattle will escalate into an all-out war, with American becoming a sort of white knight for AS. PeoplExpress will NOT resume service. American, Southwest, Delta, and United will become more aggressive in their pricing models to combat Spirit’s increasing market share in their key markets and hubs, particularly Dallas/Fort Worth, Chicago O’Hare, and Los Angeles. Southwest, American and Delta have already begun to respond with new products and lower fares, but this will accelerate.
Spirit will perversely benefit from this move as airline’s yields lower with their fares until oil begins to rise again. The price of oil will begin to rise again. Airline’s short term bonus windfall won’t last forever and capacity discipline (which has been rising) will have to return. Half of my predictions will not come true. This is the commercial aviation industry after all.
Benét J. Wilson : Co Editor-In-Chief – Airways
The good news I see in my prediction for 2015 is that we’ll see an increased focus on the passenger experience by U.S. airlines. The bad news is that it will be mainly for travelers who pay the most to fly. Delta Air Lines and Virgin America are currently the only two carriers that offer a version of premium economy, although not at the same level as seen on European carriers. I expect other U.S. carriers will look at offering a similar product as a way to capture the traveler who wants a bit more, but isn’t quite ready to spend at business or first class levels. Happy New Year!
Vinay Bhaskara, Senior Business Analyst
Here are my predictions for 2015 Airbus announces an A380neo, prompting Tim Clark to immediately order 140 aircraft and Akbar Al Baker to immediately give 140 interviews where he alternates between saying that Qatar Airways will order the A380neo and that Qatar Airways will sell its existing A380 fleet… within the same interview.
Boeing wins a sped up Air Force One replacement contest with the 747-8i, marking the beginning of the end for the Queen of the Skies. United blinks first in the brewing battle in Los Angeles, making the hub even more regional-heavy and pulling back roughly 50 daily departures. American takes the lead in the market over Delta, powered by its new gate space at TBIT. By the third quarter, American is more profitable than Delta (on a margin basis), and both companies surpass $70 billion in market cap by year-end(American is currently at $38.3 billion and Delta is currently at $41.2 billion). I’ve put actual money on this prediction (I’m long both AAL and DAL).
American gets its labor house in order, with most employee groups eschewing the example of the flight attendants. Envoy capitulates and gets E175s. American announces that AAdvantage will be revenue-based in 2016. United places an order for the CSeries, taking a page out of Delta’s playbook. United achieves record profits. Jeff Smisek keeps his job, prompting thousands of angry United employees to launch Tumblr blogs. Spirit and Frontier increasingly brush up against each other in major markets as both try to take advantage of rising fares at US majors.
Southwest is profitable (again), but management has its first major skirmish with labor groups unhappy with the slowing rate of compensation increases and changes in work rules. Southwest announces plans for Canada and Hawaii, and orders the 737 MAX 9. JetBlue announces record profits under new management. Mint rolls out to Boston – LA and Boston – San Francisco, and JetBlue orders the A321neoLR to serve South America from Fort Lauderdale.
Alaska Airlines sees margin dilution in Seattle, still reports record profits. Allegiant gives up on Hawaii, and adds more A320s to its fleet. And now for an international speed round. We find out what happened to MH 370. SpiceJet collapses, Vistara is a big success in India thanks to resurgent business travel. British Airways orders the Boeing 777X, Lufthansa suffers another year of turmoil due to labor. Air France and Alitalia also suffer due to labor, prompting a hard look at labor union laws in Europe for the first time.
Aerolineas Argentinas goes bankrupt, as does Conviasa due to the price of oil. FastJet and Ethiopian Airlines hit their groove, becoming dominant players in a blistering African travel market. Secondary Chinese cities get a bunch of new nonstop links to the US, powered by local market subsidies. Atlanta is still the world’s busiest airport. That’s all folks, Happy New Year and here’s to an awesome, AvGeek 2014.
Jack Harty, Senior Correspondent
2015 will be another busy year in the commercial aviation industry, but since I’m a college student, I’m not going to put any money down on my predictions. So, please take them with a grain of salt, but maybe I’ll actually get one or two right this year! A lot is unknown about the future of the Airbus A380 and Boeing 747 programs.
Both programs received very few, if any, orders in 2014, and the manufacturers haven’t been very clear about the program’s futures. While Airbus’ CEO has remarked that it will offer a stretch version, nobody knows if there is an actual customer. With certainty, Airbus and Boeing will have to address it in 2015, because one would imagine that their shareholders are getting a little antsy with low order numbers. Airline frequent flyer programs will continue to evolve and focus around those who spend the most money rather than people who fly more. It’s just become the nature of the business these days, because frequent-flyer programs can be expensive to operate. It’ll be interesting to see how the new American program will look in 2016 should it decide to make more changes.
Additionally, while all airlines offer complimentary upgrades to elites, I predict that airlines will focus more heavily on offering customers the change to upgrade to business or first for a fee to get a little extra revenue. Unfortunately, this will not please those who love the free upgrades. To be honest, I really want to predict that Southwest will introduce a checked bag fee. Southwest is now the only U.S. carrier to offer free checked luggage since jetBlue announced that it would begin charging for checked luggage.
Yes, Southwest’s shareholders know the airline is losing millions of dollars, but no bag fees sets the airline apart. Plus, Southwest would have to pay a lot of money to remove it from its advertising. So, I predict that Southwest will not begin charging for checked luggage, but I could see them starting to charge for the second piece of checked luggage and keeping the first one free. On a much lighter note, I predict that I’m going to retire from journalism–for real this time–at the end of the year. I did announce that I would be retiring in 2014, but unfortunately, some things came up. Although, I’m excited to return for another year, and I believe that this will be one of my best years of covering the airline industry with the Airways team.
Luis Linares, Correspondent
In 2015, I think we can expect Airbus and Boeing to pull the trigger on two very different aircraft. On the very large aircraft (VLA) side, Airbus will acquiesce to Emirates and develop an A380neo with Rolls-Royce engines and probably a stretched -900 variant. Emirates is the largest A380 operator and has ordered a total of 140 of the current -800 series.
I would be very surprised if Airbus were to turn its back on such an important customer. If Airbus were to ignore Emirates, I honestly do not think Boeing could get the attention of Emirates with the 747-8i. Emirates is looking to reach the entire U.S. West Coast with the A380neo, and the latest 747 offering does not have the range and passenger numbers to meet the airline’s vision. Speaking of Boeing, the pressure is very strong to replace the popular “flying pencil” that is the 757 with a new small airplane (NSA). Airbus already teased potential customers by talking about a long-range version of the A321neo.
Boeing is evaluating a design that would carry a passenger and cargo load similar to that of the 757, but in the 4,000 nautical mile range. The aircraft would retain similar 757 external characteristics, but it would incorporate much of the technology that is found on the 787. Currently, the big three U.S. airlines (American, Delta, and United) are using part of their 757 fleets the thinner routes in their trans-Atlantic operations. This niche market is unlikely to disappear and should motivate both plane makers to act sooner than later.
Another area I will be watching with great interest will be what the fully merger American and US Airways will do with their combined frequent flier program. For the duration of 2015, the airline will not follow Delta and United in their new focus on money spent, rather than mileage flown, for their customers to reach elite status. I am going to go out on a limb and say the new American will find a middle ground between the two models, such as waiving the stricter fare rules to earn miles for customers who are already elite members.
Customer loyalty is definitely at stake in the frequent flier game. Unfortunately, the game itself is not as enjoyable as it used to be when it comes to redeeming miles. Ten years ago, I enjoyed round-the-world first class comfort on seat 3A aboard British and Qantas 747-400s for about 250,000 American Advantage miles, with a very reasonable ticket tax. Last week, I was looking into exchanging miles for a business class ticket from the U.S. to South Africa via London, only to find out that “carrier imposed fees” amount to roughly $1,500 USD, plus the fact that there is no seat availability until May.
I only expect airlines to get stingier, and add other charges like co-pays for mileage redemption and more penalties for re-depositing miles, would a passenger choose to cancel plans. Any enjoyment that is left in redeeming miles is being sucked out by the rapid decompression the airlines continue to impose on their customers. I heard the next rule change will involve having to give donate an vital organ to the airline on top of the required mileage, taxes, and other fees!
Mike Slattery, Correspondent
If I was a betting man, I’d wager that airfares will drop by at least 5 percent in 2015 reflecting, at last, the significantly lower oil (and jet fuel) prices of the latter half of 2014. I also predict Emirates will announce something to rival Etihad’s “The Residence” because the Middle East “Big Three” just cannot be outdone.
Benjamin Bearup, Correspondent
I predict that 2015 will be a year of record profits for the airline industry. Ticket prices will stay relatively the same, but with better last-minute sales on flights. Oil prices will once again rise at some point in the year but most likely not to prices seen in previous years. With a low oil price, you may see airlines deferring deliveries of next generation aircraft and keeping older aircraft in service longer (I’m looking at you Delta). 2015 will be an exciting year aircraft development. Will Boeing finally work out the 787 production problems? How will Airbus manage the ramp up of A350 production? I am most looking forward to see how Boeing and Airbus manage the production gap between current generation aircraft and next generation aircraft such as the A320, 737, A330, and 777.
The year 2015 will most likely determine the fate of the 747. I believe Boeing will announce it will cease production in late 2016 to early 2017. Who knows — maybe they will use the vast amount of Everett space currently used for the 747 to open another 737 line or the heavily rumored “New Small Aircraft” to partially replace the 737 and 757. We will learn what Airbus plans to do with the A380 in the future. Will they re-engine it? Will they expand it? Or will they shut the program down all together?
It will also be a difficult year for Virgin America. I predict they will experience a merger at some point in 2015…cough….cough….Jetblue. Finally I predict/wish a large amount of international traffic expansion from my hometown Atlanta. Gone will be the days of seeing 30+ 767-300s all wearing the widget livery of Delta Airlines. With the airports new incentive program, I predict Atlanta will attract carriers such as Alitalia, Turkish Airlines, and Aerolineas Argentinas. What do you predict the year 2015 will bring to the airline industry? Comment below to share your opinions. And Happy New Year! —– Contact the editor at email@example.com