Catch up on CAPA’s exclusive Market Analysis pieces

    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.


    Mexico-US aviation: currency, fuel, other pressures soften the market

    Airlines operating to, from and within Latin America are experiencing headwinds driven by high fuel prices and currency pressure –particularly in Argentina and Brazil.

    But airlines have also faced challenges in the Mexico-US transborder market due to overcapacity, currency depreciation and travel warnings over certain leisure markets. Aeromexico, the largest Mexican airline operating between Mexico and the US, is dropping five US routes in 2019.

    Some US airlines are seeing slight signs of improvement in the Mexican market as 2018 draws to a close. But Southwest Airlines does not foresee a dramatic improvement in operating conditions.

    To read on, visit Mexico-US aviation: currency, fuel, other pressures soften the market


    Manchester Airports Group: investing offshore as UK rivals step up

    Manchester Airports Group (MAG) is increasingly seeking investment opportunities in Eastern Europe and has confirmed its participation in the Bulgarian Government’s tender process for the concession to operate Sofia Airport under a EUR4 billion 35-year concession. MAG had previously expressed interest in the proposed concession on Lithuanian Airports, a stalled procedure, and in the Belgrade Airport concession.

    MAG’s bid will be supported by the Chinese company Beijing Construction and Engineering Group (BCEG), which is a key member of the consortium building the Airport City at Manchester Airport, and which is itself expected to attract Chinese companies.

    MAG is the only UK airport operator known to be showing any interest in investing in foreign airports at this time.

    But slowing traffic at Manchester, noticeably more so than at other, peer airports, raises questions as to whether the MAG management should be paying more attention to local matters – or whether this is in fact a sound group strategy, designed to ensure group sustainability, as Brexit issues threaten growth.

    To read on, visit Manchester Airports Group: investing offshore as UK rivals step up


    Garuda-Sriwijaya tie up: an Indonesian domestic aviation duopoly?

    Garuda Indonesia’s LCC subsidiary Citilink has taken over management of Indonesia’s third largest airline group, Sriwijaya, resulting in further consolidation in the country’s domestic market. The Garuda and Sriwijaya groups consist of four airlines which together account for approximately 45% of Indonesia’s domestic market; Lion Group occupies most of the rest.

    Managing four brands could prove to be difficult, particularly given that the Garuda-Sriwijaya deal does not include equity (yet). However, combining the four airlines gives Garuda a powerful portfolio of slots in Indonesia’s tightly constrained airport system, enabling it to compete more efficiently against the rival Lion Group.

    Sriwijaya survived earlier periods of consolidation, making it the only remaining significant domestic competitor after Lion and Garuda, but has struggled in recent years as domestic market competition has intensified.

    To read on, visit Garuda-Sriwijaya tie up: an Indonesian domestic aviation duopoly?


    Saudia adds lie-flat on narrowbody A320ceos and A321neoLRs

    Saudia has introduced a lie-flat business seat on a portion of its A320 fleet, joining a small but fast growing group of airlines with narrowbody lie-flat products. Saudia’s new narrowbody lie-flat product is part of a broader initiative aimed at improving its service offering and attracting more sixth freedom passengers.

    Saudia plans to outfit lie-flat business seats on 22 narrowbody aircraft – seven retrofitted A320ceos and 15 new A321neoLRs. The first retrofitted A320ceo was recently completed and is currently serving Geneva.

    There are also plans for the airline to retrofit another six A320ceos over the next six months and deploy the subfleet to six existing destinations in continental Europe. Saudia also intends to deploy a new fleet of 15 A321neoLRs, slated to be delivered from 2020 with the same lie flat seats, mainly on existing European routes. New destinations in the UK and eastern India are also under consideration.

    To read on, visit Saudia adds lie-flat on narrowbody A320ceos and A321neoLRs


    LCC/ULCC model disrupting Latin America aviation

    There’s been a raft of changes in Latin America’s low cost sector during the past two to three years, with start-ups in Chile, Argentina, Peru and Central America. At the same time, some of the older LCCs in Latin America have built up sizeable seat share in two of the region’s largest markets – Brazil and Mexico.

    As new competitors have emerged the region’s existing airlines have adapted their models to ensure that they compete effectively, since low cost ambition in Latin America shows no sign of abating. The ULCC group Viva plans to decide on a third country for its franchise within the region over the next 12 to 24 months, and the Chilean LCC Sky also plans to launch a new airline in Peru during 2019.

    All of the ambition is driven by the still untapped potential in Latin America. The country’s largest airline – LATAM Airlines Group – calculates trips per capita in its domestic South American markets at just 0.6 in 2017. Given the difficult topography of much of Latin America, where other transport modes are inadequate, this could become much higher than other markets.

    To read on, visit LCC/ULCC model disrupting Latin America aviation


    Alitalia: politics trumps business logic. Again

    The 31-Oct-2018 press release from perennial loss-maker Alitalia that its administrators had received two binding offers and a non-binding expression of interest was in accordance with the previously communicated timetable for the planned sale of the airline. However, it may turn out to be as meaningless as all the other announcements and deadlines about the sale of Alitalia since the airline entered administration in May-2017.

    The most recent announcement did not divulge the names of the bidders, but easyJet publicly revealed itself to be behind the expression of interest. In addition, Italy’s state-owned railway company Ferrovie dello Stato had already said that it would make an offer (in effect, as a proxy for the state). Several media outlets reported that the third bidder was Delta Air Lines, although it would only be allowed a minority stake. Lufthansa, previously a bidder, has said that it is no longer interested.

    The administrators will have to propose the best offer to the government. Although the Italian state currently has no shareholding in Alitalia, the final decision will be for the Minister for Economic Development. As in the past with Alitalia, politics are likely to trump any other logic.

    To read on, visit Alitalia: politics trumps business logic. Again