​Financiers see emerging split in airline market as fortunes vary
September 22, 2021
The airline market is bifurcating between carriers that have been able to recover their operations and generate revenue and those facing a less certain future, it was suggested during an industry conference on 21 September. Paul Da Vall, head of Investec Aviation Equity Fund at Investec Bank, says the "well funded" and "highly liquid" airlines, whether they are back to full service or not, are "well supported and that looks set to continue". "I think the market has priced in their survival," he said during the Airline Economics Growth Frontiers London conference. "I don't think at the start of the pandemic you would have really predicted that yields would have been squeezed as far as they have been for that section of the market, but I think it's fairly overheated, or at least there is a lot of interest in that part of the market on the basis that survival is assured." In contrast, Da Vall says, there is "quite a large part of the market" where things are "very complicated". Geographical differences in the development of the pandemic are having a "big impact" on the prospects of airlines in certain regions. "We're seeing a lot of stress in Asia, which perhaps wasn't necessarily that predictable that Asia would be struggling as it is with borders shut, real tight restrictions on movement of people," he says. "And obviously we're seeing now some cases in Asia that are serious cause for concern. I do think there will be further stress in that market." Fellow panellist Patrick den Elzen, managing director of Arena Aviation Capital, says there are airlines "that will make it", as well as a "large group of airlines where the jury is still out". The latter group, he says, are being kept alive on state support and other sources of funding, unlike their more successful peers who "can actually generate revenue the old-fashioned way by flying passengers around". Den Elzen expects these weaker carriers will probably "be very close to getting into prolonged trouble if this industry is not able to come back to what it was before Covid within the next, let's say, 12 to 24 months". "So I think we are certainly not there yet," he says, "and there is going to be, I'm afraid, a lot of problematic cases for a prolonged period of time." Da Vall adds: "The equilibrium that us as managers want to be able to have for our investors won't return for some time."

EASA to ease airworthiness management constraint for group fleets
September 22, 2021
Europe’s aviation safety regulator is seeking to amend rules on managing continuing airworthiness of fleets, with the aim of removing barriers to management for all aircraft operating within a carrier group. The European Union Aviation Safety Agency has set out proposals to change the regulations in a formal opinion which will be submitted to the European Commission. Carriers licensed under EU regulations need to have their own continuing airworthiness management organisation approved as part of the air operator’s certificate for the aircraft they operate. But EASA says this obstructs implementation of a common airworthiness system for all aircraft within a carrier group, resulting in duplication of tasks and prevention of short-term interoperability of aircraft between different AOC holders. “These barriers are more significant nowadays due to the evolution of the business model of the EU air carriers into air carrier business groupings,” it says. The result is “complex” operational arrangements between different airworthiness management organisations that report to a single executive board, adds EASA, and potential regulatory differences in interpretation of processes within the same group. Some carriers, it says, believe the situation creates a “competitive disadvantage” against non-EU operators that are not subject to the same legal constraints. EASA claims the proposed amendment aims to reduce the regulatory burden and increase cost-efficiency, cutting duplication and increasing fleet interoperability – improvements which will contribute to a quicker recovery of the aviation industry while maintaining safety levels. “It will foster the international competitiveness of the EU air carrier business groupings,” it states. The amendments amount to an “evolution” of concepts including contracts between operators and airworthiness organisations, collaborative information exchange between national authorities, and mutual recognition. As part of the proposed changes, says EASA, at least two carriers forming part of the same business group can use the same airworthiness organisation within the group – with a contract established if an operator is not itself approved as such.

USA to ease restrictions on inbound international travel
September 21, 2021
Beginning in November, the USA, will lift quarantine restrictions for non-essential travellers arriving in the nation who are fully vaccinated against Covid-19, giving hope to airlines for a resurgence of international travel following a similar policy decision in Canada. Travellers to the USA will need to provide proof of vaccination and recent negative Covid-19 test results before boarding a flight to that country, the White House's Covid-19 response coordinator Jeff Zients said on 20 September. The USA decided on this strategy after consulting for months with working groups that vetted options within US agencies and with other governments to create "equitable and clear policy", White House press secretary Jen Psaki said on 20 September during a briefing. "The older rules were not equitable in our view and were a bit confusing," Psaki says. The USA's easing of travel restrictions follows the Council of the European Union's 30 August removal of the USA from its list of countries for which restrictions on non-essential travel should be lifted, 10 weeks after adding the country to the list. "The [Biden] administration’s decision to safely expand international travel to the United States is welcome news for our customers and United is ready to implement these new requirements," United Airlines stated on 20 September in response the news of the USA's easing of inbound international travel restrictions. US and European carriers throughout the summer months have been eagerly awaiting just such an announcement. Canada in September also began lifting restrictions on non-essential travel for people who are fully vaccinated. The White House on 26 July had said that the USA would keep Covid-19 travel restrictions in place for arrivals from the UK and the European Union, despite Europe having better success than the USA at both vaccinating its overall population and in battling the rise in infections caused by the delta variant of Covid-19. A few weeks earlier, on 15 July, US president Joe Biden said during a press conference that his Covid-19 advisers were assessing “how soon we can lift the ban" on non-essential travellers from Europe "within the next several days”.


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