Analysis Reports

The Brazilian airport concession programme, the most reported of any by CAPA - Centre for Aviation, over 14 years, has progressed sometimes rapidly and sometimes staggered its way through seven tranches.

It seemed to have come to a natural conclusion with the São Paulo Congonhas deal, leaving only the two Rio de Janeiro airports to be sorted out - a first time concession and a reconcession that the new government decided should be in tandem.

But the government and the regulator, Anac, have got the bit between their teeth and earlier this year they introduced a programme, AmpliAR, which aimed to attract over USD800 million in private sector funding to rehabilitate what has since risen from 50 to over 100 small regional airports - some little more than grass strips in the jungle - and rapidly. The programme is about to commence, and should complete within a year.

The big question is: what sort of incentives are going to be offered to established investors, including foreign ones (most of the world's leading investors in the sector are already in Brazil) to make this offer attractive, which is a primary objective of the government?

And that challenge became more difficult recently, when it was revealed that instead of the habitual 'block' system, each airport will be tendered individually.

Singapore Airlines (SIA) is confident that it has the right foundations in place to allow it to weather the latest wave of industry challenges - and also to take advantage of the next phases of Asia Pacific growth.

SIA's operating results are coming under the same pressures as those of most other Asian airlines - with headwinds from supply chain issues, competition, tightening yields, and geopolitical uncertainty.

While its earnings remain strong, these factors have contributed to a dip in the airline's operating profitability.

SIA has proven to be one of the most robust and consistent performers in the Asia Pacific region over many years, which inspires more confidence in its fundamental strategy than with most of its neighbouring rivals.

In a recent results briefing, the airline outlined some of the network, financial, and business model elements that underpin its strategy.

Group capacity is still expanding, although the subsidiary Scoot's growth has flattened off, due to narrowbody groundings.

The continued recovery in the mainland China market is a welcome sign for SIA.

The International Air Transport Association (IATA) anticipates improved airline profitability for 2025 and resilience in the face of continued global economic and political shifts. However, its projections represent a fall in net profits on its previous released numbers, but margins are expected to increase.

In an update to its 2025 airline industry financial outlook, released at its AGM in New Delhi, India, IATA predicted industry net profits of USD36.0 billion, improved from the USD32.4 billion earned in 2024. This is slightly down on the previously projected USD36.6 billion (Dec-2024).

The projected net profit margin at 3.7% is an improvement from the 3.4% earned in 2024 and up 0.1pp on the previously projected 3.6%. Return on invested capital at 6.7%, is also an improvement from the 6.6% earned in 2024, but largely unchanged from previous projections.

Operating profits at USD66.0 billion, are also an improvement from an estimated USD61.9 billion in 2024, but down from the previously projected USD67.5 billion.

The standout projection though is that the industry will not exceed the anticipated USD1 trillion revenues, albeit will still hit record annual levels. Total revenues are projected to reach USD979 billion (+1.3% on 2024). Total expenses will hit USD913 billion (+1.0% on 2024, but below the previously projected USD940 billion).

Total traveller numbers will also reach a record high but will again miss a key milestone. An anticipated 4% rise over 2024 will bring annual passenger traffic to 4.99 billion for 2025, a revision from the 5.22 billion projection from the end of 2024.

Total air cargo volumes will follow the same trend reaching 69 million tonnes, up 0.6% on 2024, but below the previously projected 72.5 million tonnes.

Europe's six independent LCCs have 29% of all narrowbodies based in Europe, compared with 25% five years ago and 9% two decades ago.

Ryanair, easyJet, Wizz Air, Jet2.com, Pegasus Airlines and Norwegian have a combined narrowbody fleet of 1,550 aircraft. Of these, 1,215 are with the top three (Ryanair, easyJet, Wizz Air) - more than the combined narrowbody fleet of Lufthansa Group, IAG and Air France-KLM.

The low-cost brands of the three major European legacy airline groups have an aggregate narrowbody fleet of only 435 aircraft.

The independent LCCs have 1,067 outstanding narrowbodies between them, compared with 263 for the big three legacy groups (of which 103 are earmarked for their low-cost brands). The expansion of the independent LCCs' share of Europe's narrowbody fleet looks unstoppable.

As the US administration of the US President Trump nears six months in office, the policy effects on airlines seem mixed. The tariff tizzy created by the president has affected US domestic demand, and inbound international travel.

Yet at the same time, the expected lighter regulatory touch did materialise after the Department of Transportation dropped a Biden-era lawsuit against Southwest Airlines, and the agency does not appear to be prioritising other regulations introduced by the former Transportation Secretary, Pete Buttigieg.

But perhaps the current administration's greatest aspiration are its plans to introduce significant upgrades to the US' air traffic control system - a scheme whose success is far from certain.

For that country's being a world leader in so many advanced technologies, the United States' exposure to ancient moribund ones in the air traffic control sector almost beggars belief.

Recent instances have meant that a major New York area airport's flight schedules were severely reduced by issues that include air traffic control system failures and a reliance on copper wire-based telecommunication methods.

Before that, a few months ago a fatal accident took place at Washington between a commercial airliner and a military helicopter, in a scenario that much of the rest of the world struggled to get a handle on - with communications between the three parties apparently operating on different channels being among many of the unaccountable factors involved.

Since then, the Transport Secretary Duffy and the president have promised a "brand new ATC system", but independent experts (including those at the Reason Foundation) argue that it is more a case of putting sticking plasters on open wounds - or, if you prefer, putting lipstick on a pig.

The biggest bone of contention is the failure to put any emphasis whatsoever on remote/digital towers. There are zero of them in the US, and previous attempts to test them there have been abandoned.

At the same time other countries, and notably Sweden, Norway and Italy, are bounding ahead in this field, with multiple airports already being served by such towers, and identifiable savings already being made (along with other efficiencies).

A key international airport in London is also controlled by way of a remote tower.

There are, of course, other issues to contend with, such as public perception and safety.

A recent (May-2025) report commissioned by the Reason Foundation in the US recommends that Secretary Duffy and Congress should continue their encouragement and oversight of the Federal Aviation Administration. Their ongoing attention on FAA's air traffic control modernisation efforts should be sustained, with a particular focus on the near-term benefits that could be realised from proven remote tower technology.

This report repeats many of the Reason Foundation's observations, with further comment by CAPA - Centre for Aviation and provides a link to its report for further study.

The government of Spain is seeking to expand direct air services with Japan. It held meetings on 15-May-2025 with the Japanese government, and with representatives of Japan Airlines (JAL) and All Nippon Airways (ANA).

Currently the only direct Spain-Japan flights are a three times weekly service between Madrid and Tokyo Narita, operated by Iberia. The Spanish airline codeshares on the route with its oneworld partner JAL, and is part of the joint venture with JAL, British Airways and Finnair on routes between Europe and Japan.

Spain has much less direct capacity to Japan than other leading European markets, but tourism between Spain and Japan is growing rapidly.

The potential for increased nonstop capacity is significant.

Cebu Pacific is managing to maintain an impressive capacity growth this year, although it has had to cut back its targets slightly due to the continuing headache of engine availability.

The LCC was expecting to see its grounded narrowbody numbers reducing this year, but instead they have risen to new heights. This underlines the significant role of planning for the uncertainty many airlines are dealing with at the moment.

Despite the engine challenge, as well as delays to new deliveries, Cebu Pacific has secured enough additional aircraft to maintain growth rates that would make many other airlines envious.

Sustainability in aviation was a key theme at the CAPA Airline Leader Summit - Airlines in Transition in Athens on 8/9-May-2025.

IATA Director General Willie Walsh reiterated aviation's commitment to net zero carbon emissions by 2050. However, the world geopolitical backdrop is changing.

According to KLM SVP strategy, sustainability and transformation Zita Schellekens, "Worldwide, I think climate change has been largely politicised, unfortunately. It's science; it shouldn't be political at all".

"This is about climate change, and we're all disappointed in some of the political narrative that is going on," said IAG group sustainability officer Jonathon Counsell. "Climate change is driven by science and not politics, and this problem is not going away."

There was much discussion on the need to encourage the ramp-up in the production of sustainable aviation fuel (SAF) in addition to emissions intensity improvements from aircraft technology and operations.

As Mr Counsell said, "Why are we doing all these things to reduce emissions? It's about protecting our right to grow. Aviation delivers huge social and economic benefits".

A 2023 scheme to attract more private capital into the Philippines' airport system, among other things, might have seemed too ambitious at the time. But it has prompted enquiries for public-private deals, some of which are already in train, while there are two major airport development schemes in and around Manila which, when added to modernisation at the existing airport, should (in theory) give the capital the most extensive airport network of any Asian city.

And before that, the government has gone out of its way to put the air traffic control network right - as it promised it would.

Not everyone is in agreement with the government's aims, but it is clearly trying to put right a system that had got out of kilter compared to some of its neighbours.

There seems to be quite adequate interest from within the country itself, but a little more from abroad would - no doubt - be appreciated.

The problem is that the country does carry some baggage in that respect.