Tag: today’s travel news

Long-haul business demand boosts Lufthansa

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European aviation giant Lufthansa Group has seen a “positive” trend for business travel for the first few months of 2024, particularly for long-haul flights to North America, India and Japan as it looks to add more capacity on these routes.

The group, which suffered a €350 million financial hit from a series of strikes by workers earlier this year, saw its total revenue increase by 5 per cent to €7.4 billion during the first quarter despite the impact of cancellations caused by the industrial disputes. Passenger numbers were also up by 12 per cent year-on-year to 24 million in Q1.

But the strikes still had a huge financial impact on Lufthansa’s Q1 results, which saw the company’s operating loss balloon to €849 million, compared to a loss of €273 million during the same period of 2023.

The core Lufthansa Airlines operations suffered particularly high losses of €640 million in the quarter due to the strikes. The company said the carrier would be looking to “reduce operating costs, stop new projects and assess the need for additional staff in administrative areas”.

Carsten Spohr, the company’s CEO, said: “We are now leaving the first quarter behind us, which was mainly impacted by strikes, and are at a turning point. We have reached long-term wage agreements for the majority of our employees.

“We are still seeing strong demand, which is even significantly higher than last year for the summer. We are therefore continuing to expand our offering and are growing on long-haul routes in particular.”

Spohr added that the group, which also includes Austrian Airlines, Brussels Airlines, Eurowings and Swiss, was set to enjoy “another very strong summer” with current bookings up by 16 per cent on last year.

“I am particularly pleased that we are continuing to see a positive trend not only among leisure but also business travelers,” said Spohr. “We are now devoting all our energy to further expanding our premium customer offerings and ensuring punctual and reliable flight operations.”

The group said that global demand for flights “remains strong”, including business travel where long-haul routes have performed particularly well.

“In addition to the traditionally strong North American routes, demand from business travelers on the India and Japan routes in particular is growing this year,” said Lufthansa in its update to investors.

The company also highlighted the launch of its new Lufthansa Allegris long-haul cabins, with the first flight featuring these upgraded services due to begin on Wednesday (1 May) on Airbus A350 flights between Munich and Vancouver.

Lufthansa said that capacity for the second quarter would be around 92 per cent of pre-Covid levels, but the year-on-year increase in Q2 will be lower than originally planned due to “further investments in operational stability and delayed aircraft deliveries”. Capacity in Q3 is expected to rise to 95 per cent of 2019 levels.

The company admitted that passengers had been “reluctant to make short-term bookings for April and, to a lesser extent, May during the wage disputes that have now been resolved”.

State Dept. issues ‘worldwide caution’ travel alert

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State Dept. issues ‘worldwide caution’ travel alert

APD and SAF mandates could dampen travel demand

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Increases to Air Passenger Duty, combined with SAF mandates imposed without incentives, will lead to a reduction in travel by 2030 as costs are passed on to passengers, said Virgin Atlantic CEO Shai Weiss at a travel industry event yesterday.

Speaking at the Business Travel Association’s Spring Conference in London, Weiss said the airline and wider industry is supportive of what appears to be an imminent SAF mandate announcement from the UK government, but that if it is imposed without support for sustainable aviation fuel (SAF) production or airline incentives, the cost of travel is going to rise.

“The government promises incentives but it’s us [the airlines] that have to fund it [SAF production]. And if it’s the airlines that have to fund it, guess who’s going to help fund it? You [passengers] are going to have to share in that economic activity,” said Weiss. “Without any action we will see a reduction in travel demand by 2030 due to increased pricing. That’s a natural position to be in.”

Weiss said a “worst case scenario” would see the introduction of a mandated but insufficient SAF production. As a result, airlines would have to pay a “buyout” which is “three to five times more expensive than traditional jet fuel”. “That translates to $20 to $30 per ticket that is passed on to our collective customers and, with the APD increases, what do we see? A reduction in travel when everyone else is increasing travel. That’s what’s going to happen in this country.”

The UK government is expected to pass legislation in the coming weeks that will require airlines taking off from the UK to use at least 10 per cent SAF by 2030 which would mirror an EU mandate already in place. The current government has already committed to introducing the SAF mandate as a policy.

Pointing to Virgin Atlantic’s operation of the first transatlantic flight powered entirely by SAF last autumn, Weiss said: “We’ve shown it’s possible so now we need to make sure the fuel is abundant. We need a 100 to 150 times scale-up to get to the SAF mandate level. I expect that legislation to be passed but I’m not expecting to see production scale-up because I don’t think the incentives are going to be created.”

Weiss said the government’s announcement last week of an increase in PPE for non-economy passengers was “absolutely short-sighted”. He added: “Our passengers have to support the government’s candy shop approach to taxation in my mind is a flaw. This industry is already taxed through the roof. At a time when this country needs economic growth the government taxes us. This approach to business is disappointing.”