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.
Singapore Airlines A350-900ULR creates premium economy glut
Singapore Airlines (SIA) is slated to take delivery within the next few days of its seventh and final A350-900ULR, completing a dramatic expansion phase which has enabled the airline to expand its presence in the US market significantly and rapidly. All seven aircraft, which are in a low density configuration with 94 premium economy and 67 business class seats, have been delivered in a period of less than three months.
SIA has used the new A350-900ULR fleet to launch 20 nonstop weekly flights to the US, generating 1,880 weekly one-way premium economy seats and 1,340 weekly one-way business class seats. The premium economy capacity is remarkable, given that premium economy is usually a niche product with 20 to 40 seats per aircraft.
Singapore Airlines has offered extremely low premium economy fares between Southeast Asia and the US since opening sales of the 20 flights several months ago.
The fares are significantly less than SIA’s lowest premium economy fares in shorter long haul, and even medium haul, markets. In many cases SIA is offering cheaper premium economy fares than regular economy fares on the same routes for the same dates of travel – an unsustainable scenario that could lead to adjustments in SIA’s A350-900ULR operation as early as next year.
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Ethiopian Airways leads cross-border strategy in Africa
Airline groups from Asia, Europe and Latin America have successfully pursued expansion over the years by adopting cross-border strategies. Africa has emerged as the latest testing ground for cross-border joint ventures, with Ethiopian Airlines pursuing several projects.
Ethiopian has had a pan-Africa strategy for several years, starting with the launch of its West African affiliate, ASKY, in 2010. Ethiopian launched a second JV in 2014, in Malawi. However, Malawi Airlines is still tiny, operating only two aircraft, and implementation of the group’s cross-border strategy has, until very recently, been painfully slow.
The strategy has accelerated significantly this year with the establishment of several new projects. A new JV in Chad launched at the beginning of Oct-2018 and a subsidiary in Mozambique launched on 1-Dec-2018. A JV in Zambia is next in line and Ethiopian is also on the hunt for more new airline projects throughout the vast continent.
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San Diego International Airport: accommodating stellar growth
San Diego International airport is enjoying record passenger numbers and several new route additions during 2018 are fuelling that growth.
Those rising passenger numbers are forecast to continue for the foreseeable future and the airport is working towards expanding Terminal 1 by 11 gates, as well as adding a new roadway to ease some of the traffic congestion that passengers face in reaching San Diego International.
But some community groups believe more needs to done to ease congestion on travel to the airport, with one local government official proposing the construction of a cable operated tramway. It could take some time to reach consensus on the best remedy for improving transit to the airport but overall, finding ways to accommodate growth is a good problem to face.
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Latin American aviation outlook: uncertainty blankets 2019
Latin American airlines continue to face a level of uncertainty in 2019 as new governments in the region’s two largest markets settle in and navigate trade disputes, geopolitical issues and a potential global economic slowdown.
Currency devaluation in Brazil and Argentina and volatile oil prices are combining to force Latin operators to take a cautious approach to 2019, but domestic demand in each of those markets appears to be stable as customers opt for domestic instead of international travel.
The growth of Latin American ULCCs and low cost airlines continues unabated as new start-ups in Chile and Argentina work to grow their respective market shares domestically; however, yields in those markets are likely to remain under pressure well into 2019.
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