Economic trends:
Fuel prices appear to have stabilised, and spot prices are back at the level before the March increase.
Airline traffic:
May traffic was buoyant for the US majors, with revenue passenger km rising 7.6 percent and load factors up 3.2 points. Six of the 10 majors enjoyed double digit growth. Delta and USAir continue to eliminate unprofitable international flights.
After the European majors' poor April, when international RPKs only grew by 3.3%, traffic growth returned to a more healthy 6.2% in May, although load factors fell fractionally. A 10% growth rate pushed the Far east freight market into the lead over the North Atlantic.
Financial results:
Air France posted an operating profit, but restructuring and other financial items pushed the carrier into another major loss. Finnair and KLM improved their results in 1995/6. Results for seven European airports operators show a healthy picture.
North Atlantic market:
Northwest is increasing its North Atlantic capacity by 62%, by going double-daily from Detroit to London and Frankfurt and from Minneapolis to Amsterdam, and by temporarily operating a daily Amsterdam-New York flight instead of KLM. Based upon 1994 IATA data, the proposed American/British Airways alliance, together with USAir and Canadian Airlines, accounts for 28.1% of North Atlantic traffic. The United/Lufthansa group is second with 28.1%.
European competition:
A study by British Midland shows how fares are significantly lower on routes with more competition than on duopoly routes of similar length. The report shows how on six routes fares were rising until BM entered, after which they fell. Other forces at play include Ryanair on London-Dublin and the Eurostar train on London-Paris.
Source: Airline Business
