Jan 24 & Jan 25

It was 2 hassle days for me (Tet holiday in Vietnam), then I decided to listen to podcasts and videos instead of reading e-news.

My list for these Tet holiday: Rửa bát. All of them are related to the aviation industry.

1. What’s next for the airline industry? (Goldman Sachs)

The podcast answers 3 questions: (1) What is the biggest problem in the aviation industry, (2) What comes after Boeing Max 747 toll? and (3) What are trends in the upcoming decade. To (1), it’s still the cost problem, with the categories ranging from ground maintenance, labor to fuel,…To (2), declining revenue, definitely, and also recurring cost from cancelled flights.. To (3), they are consolidation (mostly for cost synergy purpose); diversification of product offerings: more seat options and more in-flight services and the upsurge of business travel.

2. The future of air travel (McKinsey)

After listening to the podcast, I remember three major differences between air travel today and years ago. Firstly, after many years, the aviation industry has experienced five profitable years, more than any other period before. The catalyst is the structural change in revenue management when most of the profits come from ancillary revenue (in-flight services, advertising, frequent flyer programs, seat upgrade,…). Second, while airline is a capital, fix-cost heavy industry, it is the only one that can pull down its cost year by year, making air travel accessible to everyone. Thirdly, companies are diversifying their product offerings: more seat type, more in-flight service,…)

Besides, the guests also talked about two rising trends in the future: flyskam and flying taxis. Flyskam (a campaign opposing commercial travel as it contributes largely to global carbon emission) is a threat to European companies, as the expense of a weekend regional flight is nearly equal to the expense of staying at home and going to pub/ a football match. Flying taxis is expected to happen in the near future (at least ten years from now) due to the lack of energy density in the current electric battery.

3. Why don’t we have electric planes yet (CNBC)

Electric airplanes are the future with many life-changing applications: air taxis, more affordable regional flights and more environmentally friendly long-haul flight. However, it will not come soon due to the burden of electric battery: we cannot produce the E-battery which is able serve regional flights for the next 10 years.

4. Why Airbus and Boeing dominate the sky? (CNBC)

Both of these companies are the first-mover in the industry, Boeing from America and Airbus from EU. (2) They excel other competitors, esp new entrants in capital capacity and technology knowledge. (3) They are supported by governments (lobbying for a long time)

      5. Biggest US airline companies reported earnings (Finimize)

Southwest experienced a loss as the ground of Boeing 747 Max has continued to take it toll on the carrier. Follow the loss, but fewer is American Airlines, and Delta is the winner when all of its fleet originating from Airbus. 

6. Do Airlines make money from first-class? (CNBC)

Yes. They do, and this revenue stream even accounts for a large pie of their top line. However, in recent years, these seat types are exposing to threats from the shift from physical meetings to video conferencing, leading to the decreasing number of business travel.