From the archives:
How the world has changed Jul/Aug 2024

Idly searching the internet for news of an old friend and colleague, I was surprised to find, near the top of the results, reference to an article published in Aviation Strategy. What serendipity!

The subject of the search was Dr Julius Maldutis — the airline guru on Wall Street through the 1980s and 1990s. The article found came from issue number 6, published April 1998.

Entitled “The dawn of a Golden Age”, the article commented on Julius’s then controversial and optimistically contrarian view that the airline industry was entering a period of sustained and profitable growth.

The reasons cited included an intake of new CEOs intent on profits, not market share; a prolonged period of aircraft supply shortage as manufacturers struggle to keep up with rising demand (nothing’s changed much); the new-fangled internet removing the need for printed tickets, agent intermediaries and commissions, and providing the ability to build load factors from the high 60s.

He was right in many ways, but cannot be blamed for not foreseeing the bursting of the dot-com bubble, the attacks on the Twin Towers in 2001, nor the Global Financial Crisis in 2008. It took another 20 years before the (now consolidated) US airline industry would generate healthy profitability.

The article contained a table of the top ten airlines ranked by number of aircraft in each of North America, Europe and Asia (but only the top five — the region not then deemed important), noting that over the previous 10 years “there has been significant change in the world’s largest airlines by region (although interestingly the top three has stayed the same in all three regions)”, and “what is certain is that when the table... is updated in 10 or 20 years’ time, some current household airline names — those who cannot gain new competitive advantages — will not be on it”.

It’s been a bit more than 20 years, but we happily updated that table. And, indeed, what were household airline names in 1998 have disappeared from the lists.

North America

In North America, the ranking of top three has not changed — American, United, and Delta. Fascinatingly the total fleet sizes of the latter two are close to the sum of the fleets that they and the airlines they subsumed in the intervening quarter century had had in 1998. Delta has ten more aircraft than it and Northwest had back then; United 31 more than it and Continental.

American in contrast has 195 more units in its fleet, 14% higher than the sum of the fleets of American, America West, TWA and USAir in 1998: equivalent to a net annual delivery of 7.5 aircraft over the period since then.

And those airlines involved as targets of the consolidating mergers — Northwest, Continental, TWA, USAir and America West — have seen their brand names disappear.

Five of the top ten in 2024 are LCCs of various flavours, with only Southwest (now the fourth largest carrier in the region) represented in the table in 1998, its fleet having grown three-fold over the intervening years (representing net average deliveries of nearly two 737s a month). Alaska Airlines meanwhile has outgrown the niche it occupied, to become the sixth-largest player with a fleet more than 2.5 times larger.

Europe

In Europe, there have been two outright failures from the top ten of 1998 — Swissair and Alitalia — their successor flag-carriers brought (or about to be brought) under the Lufthansa Group umbrella (along with Austrian and Sabena’s successor Brussels Airlines — both too small to register in the top ten back then).

The other household names that disappeared from the list (BA, Iberia, Air France and KLM) merged into groups that retain those brands as operating subsidiaries.

The three resulting legacy groups — Lufthansa Group, IAG and Air France-KLM have doubled their overall fleets over the period.

But five of the top ten are low cost carriers, a sector that hardly existed 25 years ago.

Ryanair (now the third largest fleet in the region) and easyJet (the sixth) were children of the early noughties. In 1998 they respectively operated 20 and 10 aircraft: their fleets have grown 30-fold in the period. Of the new entrants, Wizz has the same number of aircraft now as Lufthansa had 26 years ago, and Norwegian about the same as Nordic rival SAS — whose own fleet is now slightly smaller.

Asia and the Middle East

Asia provides the greatest contrast. For whatever reason, the table published in Issue #6 only listed the top five Asian carriers — the two main Japanese carriers, JAL and ANA; Korean, Malaysian, and Singapore. It is as if neither China nor India existed.

But in 1998 the Chinese carriers were still in process of being formed from the bowels of state monopoly CAAC. The Big 3 have increased their total aircraft numbers by nearly 15 times — equivalent to each receiving average net deliveries of three aircraft a month over the period. The fourth largest, Hainan Airlines, was also a mere start-up all those years ago.

ANA, a stalwart of previous rankings, has been relegated to tenth place. And Singapore Airlines, the once world-leading brand, is now below the radar. There was no concept of the superconnector Emirates in 1988, nor of LCCs like Air Asia or Lion Air.