CAPA – Centre for Aviation launched the newest edition of its highly popular Airline Leader publication. The edition coincides with next week’s CAPA Low Cost Long Haul Summit in Seville, 4/5 Oct, and features a range of insightful pieces on one of the fastest growing sectors within aviation.
AT LEAST THREE more LCC groups are preparing to enter the Asia-Europe market over the next two years: WOW air, AirAsia X and Lion. WOW air will become the sixth LCC in the Asia-Europe market in Dec-2018 as it launches services from Reykjavik to Delhi. Thai AirAsia is looking at launching services to Eastern Europe in 2019 while Thai Lion Air is aiming to launch services to Western Europe in 2020.
However, LCCs only account for 2% of Asia-Europe capacity and are not likely to capture more than a 5% share in the foreseeable future. Intense competition from full service airlines, including Gulf airlines, and rising fuel prices make the Asia-Europe market a challenging proposition for long haul low cost entrants.
THIS REPORT OFFERS AN overview of Europe’s low cost long haul operators and their long haul fleets.
According to CAPA analysis of the CAPA Fleet Database, Europe has 49 aircraft that are currently deployed on long haul low cost routes. Not surprisingly, the majority of these aircraft are widebodies, but there are now four narrowbodies with low cost airlines based in Europe that are operating trans Atlantic routes.
These 49 aircraft are operated by just six airline brands: Norwegian, Eurowings, WOW air, Primera Air, French Bee and LEVEL.
Nevertheless, little more than five years ago, none of these airlines operated on long haul and some did not even exist at all. In spite of question marks over the profitability of the model (Norwegian, in particular, has struggled with losses in two of the four full years since entering long haul), Europe’s low cost long haul operators continue to develop and grow.
AIRBUS COMPLETED the first A321neoLR test flight on 31-Jan-2018 and expects the aircraft to enter service in 4Q2018. With an extended range and seat costs equivalent to much larger aircraft, it holds the promise of a much wider profile of city pair operations. But the impact is likely to be gradual, as limited numbers arrive in service. Long haul low cost operators are prominent among first movers.
LCCs Norwegian Air, Jetstar, Peach Aviation and Air Arabia are the leading LCCs to have committed to acquiring the A321neoLR. Air Arabia signed a deal with Air Lease in Nov-2017 for six A321neoLRs, while Norwegian announced in Jul-2016 the conversion of 30 A320neo orders to A321neoLRs. Both plan to take delivery of A321neoLRs from 1H2019.
Jetstar’s parent Qantas Group in Feb-2018 announced the conversion of 18 A321neo orders to the A321neoLR. Jetstar plans to take delivery of the 18 aircraft from 2020 to 2022.
And All Nippon Airways subsidiary Peach announced in Jul-2018 the conversion of two A320neo orders to the A321neoLR. Peach plans to take delivery of both aircraft in 2020 and will likely order more A321neoLRs for its new long haul operation. Jetstar and Peach have to wait until 2020 as there are no more available early slots.
SOUTH EAST ASIA’S LARGEST airline entity, the Lion Group, has further slowed fleet expansion in 2018 and is on pace to take delivery of only 17 aircraft in 2018. The Indonesia based airline group has significantly slowed its expansion in the past three years, since taking an all time high of 57 aircraft in 2015.
Lion still has nearly 450 aircraft on order, but a large proportion of these will be used to replace its existing fleet. AirAsia and VietJet now have more growth aircraft on order than Lion.
The AirAsia and AirAsia X groups combined have nearly 500 aircraft on order, but a smaller fleet in service than Lion. VietJet now has commitments for over 300 aircraft, despite only reaching 60 aircraft in its in service fleet in early Aug-2018.
To read the online version of this magazine, visit centreforaviation.com/analysis/airline-leader