Each week, CAPA – Centre for Aviation, produces informative, thought provoking and detailed market analysis of the aviation industry. With supporting data included in every analysis, CAPA provides unrivalled and unparalleled intelligence.
Air Berlin and Monarch: airport impact of failed European LCCs
There were three big airline failures in 2017 in Europe – Alitalia, Air Berlin and Monarch.
The latter two were similar airlines, with regional low cost operations in Germany and the UK where they often had quite large proportions of the capacity. Air Berlin had its two main hubs at Berlin Tegel and Düsseldorf airports, operating both short and long haul, and was also a big player at Vienna Airport.
Monarch had five bases in the UK. Birmingham had the greatest Monarch capacity ratio, at almost 14%. Other factors are in play, but it is clear that Birmingham has not replaced all the Monarch capacity and the airport chose not to do so because it perceived there was too much capacity in the market and that was one of the reasons for Monarch’s demise.
On the first anniversary of their collapse (Oct-2017) this article examines what have been the effects on the respective regional airports caused by the failure of Air Berlin and Monarch.
To read on, visit Air Berlin and Monarch: airport impact of failed European LCCs
UK-Japan air service: BA’s new Osaka route as oneworld steps up
British Airways is to launch London Heathrow to Osaka Kansai International Airport on 31-Mar-2019. This will take the total number of weekly services by all operators connecting the UK and Japan from 35 to 39.
The number of UK-Japan services contributed by BA and JAL to the oneworld joint venture between Europe and Japan will increase from 28 to 32. This reinforces the dominance of the oneworld JV on UK-Japan routes (the remaining seven services are operated by Star’s ANA).
In addition, Finnair and JAL will contribute 38 weekly Finland-Japan frequencies to the oneworld JV, when Finnair increases its Helsinki-Osaka frequency from daily to 10 times weekly. The oneworld JV partners (which also include Iberia) will operate a total of 93 weekly flights between Europe and Japan, compared with 90 for the JV within the Star Alliance (Lufthansa Group and ANA).
BA’s cautious approach to Japan had arguably left UK passengers underserved with direct routes, handing the initiative to other European airlines (most notably Lufthansa).
BA expects that the route, serving Japan’s second largest city, will provide an attractive combination of business and leisure traffic. Starting with a four times weekly Boeing 787-800 service, BA is leaving itself scope to increase both frequency and gauge in the future.
To read on, visit UK-Japan air service: BA’s new Osaka route as oneworld steps up
Aircraft leasing in India: opportunity knocks for an Indian lessor
There are 652 commercial aircraft with operators in India at 17-Oct-2018 (including 34 in storage), according to the CAPA Fleet Database. Of these, 531 aircraft are leased, which is 81% of the total. This compares with a leased aircraft share of 52% in Asia overall and 53% globally. Indian airlines’ leasing dependency reflects their relative youth and/or financial fragility.
However, there are no indigenous Indian lessors and many of the world’s biggest aircraft leasing companies have only small fleets with the country’s airlines. Available data on aircraft orders for Indian operators show that only a very small percentage are currently through lessors. Nevertheless, leasing looks likely to continue to dominate aircraft financing in India and this share of orders will rise, for example through sale and leaseback.
CAPA India published a report in Sep-2018 examining the prospects for an Indian Aircraft Leasing Sector, noting Indian government initiatives to explore ways to stimulate the creation of resident aircraft leasing in the country. Building on that report, this report provides data from the CAPA Fleet Database to put some parameters around the scale of the opportunity for lessors in India, whether home-grown or offshore.
To read on, visit Aircraft leasing in India: opportunity knocks for an Indian lessor
US airline ownership: no promise of change to foreign ownership laws
Foreign ownership laws in North America have undergone minor changes within the past year, including the Canadian government’s decision to increase foreign ownership limits to 49% (with no foreign entity holding more than 25% of voting shares).
Legislation introduced in the US earlier in 2018 to remove ownership restrictions on the country’s airlines has – unsurprisingly – gained little traction. But at least the proposal created an opportunity for discussing changes to US airline foreign ownership stipulations.
The needle on foreign ownership levels of US airlines is not likely to move anytime soon, and the increase in foreign ownership levels in Canada’s airlines have not resulted in drastic changes in the country’s aviation landscape. The result is the status quo will remain in place for the foreseeable future as age old protectionist policies show no signs of changing.
To read on, visit US airline ownership: no promise of change to foreign ownership laws
American Airlines SWOT: high leverage overshadows its strengths
American Airlines is in the final stages of its merger with US Airways, after reaching major milestones that included merging more than 1,300 IT systems, moving its pilots and aircraft onto a single operating platform, and completing the rebanking of strategic hubs in Miami, Dallas and Chicago.
The airline enjoys the benefit of operating the youngest fleet among its large US global network peers, and has risen to take the title of the largest US domestic airline, just passing Southwest in US market share.
But despite those achievements and positioning, American’s financial leverage is significantly higher than its peers, and the company faces short term revenue pressure that could affect the lofty financial targets that it has set for itself.
This report examines American’s strengths, weaknesses, opportunities and threats.
To read on, visit American Airlines SWOT: high leverage overshadows its strengths
Eastern/Central Europe airports: long haul connectivity opportunities
By comparison with Western Europe, Eastern/Central Europe has very few airports with long haul connections. According to data from OAG Schedules Analyser for the week of 8-Oct-2019, there are 62 airports in Western Europe with direct flights to long haul destinations and only 16 in Eastern/Central Europe.
Moreover, while Western Europe has 25 airports with 10 or more long haul routes (and six with more than 50), in Eastern/Central Europe only the two leading Moscow airports have a double digit number of long haul routes.
Moscow Sheremetyevo has the greatest number of short haul to long haul connections in E/C Europe, mainly operated by Aeroflot. Outside Russia/CIS, Warsaw has the greatest number of short haul to long haul connections, with LOT Polish its leading operator. At Prague and Budapest, short haul to long haul connectivity is mainly provided by airlines from elsewhere.
To read on, visit Eastern/Central Europe airports: long haul connectivity opportunities