Analysis Reports

At the Paris Air Show on 16-Jun-2025 LOT Polish Airlines announced an order for 40 Airbus A220s, plus options for a further 44. This was the biggest aircraft order by a European airline at the biennial event.

This is the airline's first ever Airbus order. It follows a competition between Airbus and Embraer, which is LOT's long-standing existing regional jet supplier and which offered its Embraer E2.

LOT has taken the view that the A220 offers advantages over the E2 in its higher gauge, longer range and benefits in unit cost and sustainability.

The A220 order, when fully delivered in 2031, forms the final phase of a major fleet upgrade for LOT that began more than a decade ago.

Aimed at facilitating LOT's expansion and its relocation to Poland's new 'Central Communication Port', it is an important strategic move.

Perhaps the biggest takeaway from Spirit Airlines' decision to ask US regulators to scrutinise the new "Blue Sky" partnership between JetBlue Airways and United Airlines is that the floundering ultra-low cost airline has nothing to lose by challenging the tie-up.

Spirit uses familiar arguments in its opposition to the partnership, including higher fares, market concentration, and the interline agreement between JetBlue and United masquerading as a codeshare pact.

It is yet to be revealed whether Spirit will prevail in convincing regulators that its arguments warrant action.

JetBlue and United have approached their partnership carefully in the wake of JetBlue and American Airlines being forced to unravel their Northeast Alliance (NEA), and the current presidential administration could be less inclined to play close attention to Blue Sky.

First conceived in 2014 (the original idea came in 1946!), and under construction since 2018, the Western Sydney International Airport (WSI) is nearing completion and is scheduled to open before the end of 2026 - potentially offering, in the long run, serious competition to the Kingsford Smith Airport.

Numerous milestones have been reached, including the completion of the runway and then the terminal building in early Jun-2025.

Concurrently, a 20-year Master Plan has been published and is now subject to public scrutiny before finalisation.

Any observer will immediately notice the vast amount of care lavished on the sustainability statement, which encompasses DEI initiatives and concern for 'First Nation' inhabitants, as well as a lengthy environmental section (one of the most comprehensive ever published).

But then, the management of an airport that is currently government-owned, but could yet be sold or leased to the private sector, will be aware that it will become one of the first post-COVID greenfield airports, that there will be intense scrutiny of its targets and achievements in that environmental respect, and that it will inevitably be compared with other new airports in Asia and Europe.

A by-product of the drop in Canada-US transborder demand, after shifts in US trade policy, was the decision by Canadian airlines to redeploy some capacity back into the domestic market.

A lingering question from the reallocation of capacity is whether there's a danger of a supply-demand imbalance occurring in Canada's domestic market.

For now, Canadian airlines seem optimistic that a rational marketplace will ensue, as they navigate the northern summer high season.

Rwanda's new Bugesera International Airport is a teenager already - and it hasn't even been built yet. The government has been forced into a further USD500 million cash injection in it for this fiscal year, supported by a Development Bank loan, and that is putting immense pressure on the national debt.

The Qatari government, through Qatar Airways, is a silent partner so far, as part of its drive to build its presence in the African continent - but may have to step up to the plate. If, and when, the airport is finished (2027 or 2028 depending on who you believe), it will then face the challenge of pitching for regional business and influence against the likes of Addis Ababa (which will get a brand new airport of its own eventually) and Nairobi.

At least some of its peers also have challenges of their own, to level the playing field a little.

And RwandAir doesn't have an actual or anticipated fleet to be thinking about large scale expansion.

Moreover, political tribal issues are once again in evidence in the region; no one really wants to go there again.

One way the government is looking at putting the new and existing airports - and the country - on the map is by attracting global sporting events to Rwanda, in a smaller scale imitation of what Gulf countries (Qatar, Saudi Arabia etc) have been doing, starting with hosting a Formula 1 Grand Prix annually.

Some may say well 'Good Luck with that', but it could work.

But then, could even this new infrastructure handle it if Rwanda suddenly became Africa's leading sports venue?

Both the country and the new airport are in for some interesting times ahead.

The Qantas Group's decision to close down its Singapore-based Jetstar Asia subsidiary reflects the cost and competitive pressure on the LCC, and also allows the group to shift aircraft to better-performing markets in Australasia.

On 11-Jun-2025 Qantas announced that Jetstar Asia's last day of service would be 31-July-2025. Its 13 Airbus A320s will be used to boost the group's Australian fleet by replacing leased aircraft, upgrading regional operations, and also adding capacity in Australia and New Zealand.

The loss of Jetstar Asia's network will have a minimal effect on Singapore's connectivity, as only a handful of the airline's routes were exclusive.

It will mean a loss in competition, however, and leaves Scoot as the only Singapore-based LCC.

From the Qantas perspective, this does mark another step back from its multi-airline ambitions. But it is an entirely reasonable move to cut its losses and look to allocate resources to its surging home market.

LEVEL reached its eighth anniversary at the start of Jun-2025, when it also surpassed the milestone of carrying three million passengers since its launch in 2017.

LEVEL is IAG's long haul low-cost brand, based at Barcelona El Prat Airport, from where it serves five destinations in the United States and two in Latin America.

It is Barcelona's largest long haul operator, and its only low-cost operator flying nonstop to the US and Latin America. It has outlasted all but one European low-cost long haul airline (French Bee).

Moreover, although LEVEL is IAG's smallest airline by traffic and capacity, it is now also the group's fastest growing airline.

Chile's capital, Santiago, is stuck out on the edge of the globe - like New Zealand, and Norway's Svalbard archipelago.

But its airport punches well above its weight, handling almost 26 million passengers in 2024, which was the fifth highest total in Latin America.

A lot of that is down to Chile's almost unique position as a source of rare earth minerals, and its accomplished book-keeping, which marks it as a leading economy in the region.

The airport is government-owned but private sector-managed, and the government has decreed a huge expansion there, which would triple capacity by 2050.

That puts a burden on the concessionaire, but so far that consortium has delivered the goods, and it's 'reward' might well come in the form of a concession extension.

The airport does need new infrastructure for sure: capacity is evident 24/7.

The question is: where will the extra business come from, with LCC capacity below the regional average and the lack of a substantive airline alliance network?

Now that the busy summer season is under way in the Northern Hemisphere, travel trends in long haul markets are likely to draw heavy scrutiny - executives at many US airlines have remained bullish about demand in international markets after domestic leisure bookings have softened.

Capacity continues to grow in trans Atlantic and trans Pacific markets from the US, and strength in premium products shows no signs of waning. Yet elements that will be monitored in upcoming earnings discussions are whether point of sale from the US to long haul international markets has remained robust, and the continued robust performance of premium product revenues.

As the summer unfolds, a clearer picture should emerge regarding the health of long haul markets from the US.

But for now, executives remain optimistic on the resiliency of those markets.

A couple of years ago the Swedish authorities released a report recommending the partial privatisation of Stockholm Arlanda Airport, which is the country's main gateway. There has been no movement on that proposal specifically, but now the government says it will take a broader approach and review the state's role as the owner and manager of airports holistically.

The state organisation Swedavia is responsible for 10 of the main airports, with municipalities counting for nearly all of the rest.

Sweden is almost alone in this. Of the other four Nordic countries only one (Finland) is known to have committed to a similar review in the last decade. Throughout the Nordics there are concerns that small regional airports (of which there are many) might suffer if only the main airports were privatised.

At the same time, another review will be made of Stockholm's Bromma Airport. The chances are that it will close, to be turned into a housing estate.

And Arlanda Airport will come under scrutiny too - an airport which has underperformed compared to most of its peers, but which is set to receive EUR4 billion for modernisation and expansion.

The key to all this is how quickly changes are agreed and implemented. The private sector would be attracted to some of the airports, at least, but does not care much for vacillation.