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.


Turkish Airlines & Pegasus: the slumping lira isn’t all bad news

The value of the Turkish lira (TRY) lost a quarter of its value against USD between 08-Aug-2018 and 13-Aug-2018, before starting to rally. For both Turkish Airlines (THY) and its low cost rival Pegasus Airlines, it’s not all bad news.

Their currency exposure is complex; both have significant costs and revenues in USD and EUR in addition to those in the local currency, TRY. The different mix of revenues and costs in these currencies for each airline is such that a weaker TRY may be better for Turkish Airlines than for Pegasus. Both airlines reported 1H2018 financial results as the currency crisis was unfolding, but Pegasus maintained its EBITDAR margin guidance for the year and THY actually increased its guidance.

For both, this may have been too soon for any impact on underlying demand to be visible. Traffic figures for Aug-2018 may be the first indicator, but ticket pricing (and aircraft financing) in hard currencies by both airlines should help to mitigate the impact.

To read on, visit: Turkish Airlines & Pegasus: the slumping lira isn’t all bad news


Air France-KLM, Air Europa JV: EUR-Latin America aviation transforming

Air France-KLM and Air Europa are planning a new metal neutral joint venture for Europe-Central/South America routes. They are deliberating the detail of a collaboration that will widen and deepen existing commercial cooperation between Air Europa and both Air France and KLM over more than 15 years.

This includes “an in-depth legal analysis of the terms of this possible future agreement in order to ensure compliance with all applicable laws and regulations”. It is hoped that the JV might launch in the summer of 2019.

Bilateral commercial cooperation between the SkyTeam partners is limited to codeshares on routes from their respective hubs to destinations in Europe. If concluded, the new JV would be the first such agreement between the two, and Air Europa’s first JV.

In the market from Europe to Central/South America, Air France-KLM and IAG are neck and neck in the capacity ranking. IAG’s JV with LATAM would pull ahead, whereas Air France-KLM’s planned JV with Air Europa would maintain near parity in capacity and give it a clear lead in the number of destinations in Central/South America. It would also help to strengthen Air Europa in its intensifying competitive battle with its Spanish rival Iberia.

To read on, visit: Air France-KLM, Air Europa JV: EUR-Latin America aviation transforming


Air freight passes cyclical re-stocking peak; protectionism threatens

World air freight traffic, measured in freight tonne kilometres (FTKs), grew by 2.7% year-on-year in Jun-2018 (the most recent month for which global figures are available). This was slower than the 3.8% recorded for May-2018 and the 4.7% year to date growth rate for the first six months of the year. The strong upturn in air cargo demand enjoyed in 2017 has eased, but the outlook remains fairly healthy.

This year is expected to be only the second time since 2011 when both cargo traffic and cargo yield increase together. Air freight yields are buoyed by rising jet fuel prices, although yield growth is easing and never matches fuel price growth. There is a gathering cloud on the horizon for air cargo in the guise of increasing rhetoric and action on protectionist trade policies prompted by US President Trump.

To read on, visit: Air freight passes cyclical re-stocking peak; protectionism threatens


ADS-B implementation deadlines at risk: Space based ATM

With ADS-B Out equipage mandates lagging, can space based technology be the answer to aircraft tracking? Space based automatic dependent surveillance broadcast (ADS-B) technology has been heralded as revolutionary for the air traffic management (ATM) industry.

Eliminating the need for often costly ground based infrastructure, a space based ATM network could, theoretically, monitor the entire globe. Presently, ground based air traffic surveillance is designed to work around airports and populated areas but it falls short, or simply does not exist, over oceanic areas or the poles. Satellite based coverage is free from these limitations and is considered to be a reliable way to track aircraft over oceans and remote regions.

To read on, visit: ADS-B implementation deadlines at risk: Space based ATM


737MAX, A321neo face engine availability delays as production ramps up

Boeing’s latest production challenges with its 737 powerhouse reflect the effects that it and rival Airbus are experiencing as they push narrowbody production to unprecedented levels. It is not clear how Boeing’s declaration that it will deliver fewer narrowbodies in 3Q2018 will affect its airline customers.

Its largest 737 Max customer, Southwest Airlines, has 30 firm deliveries for 2019 as it works to retire some older 737-700s. If Boeing does not catch up on its aircraft deliveries, the delays could possibly create trickle-down effects for Southwest and its fleet planning for next year.

Boeing is not alone in facing production challenges. Airbus at one point had close to 100 new jets left unfinished due to engine shortages. Both CFM and Pratt & Whitney have encountered varying degrees of teething problems with their new generation engines against a backdrop of Boeing and Airbus declaring their intent to push narrowbody production rates even higher.

To read on, visit: 737MAX, A321neo face engine availability delays as production ramps up


A350-900ULR: Singapore Airlines could be the sole customer

 The first A350-900ULR has rolled out of the paint shop in Toulouse ahead of the delivery to its launch customer – and perhaps the only customer – Singapore Airlines (SIA). The aircraft is scheduled to enter service on 11-Oct-2018 as SIA resumes nonstop flights from Singapore to Newark, following a five-year hiatus.

The A350-900ULR is a new longer range variant of the A350-900 developed by Airbus for SIA. It is available to other airlines but will likely only be acquired by SIA, given SIA’s unique ultra long range requirement. SIA ordered seven A350-900ULRs in 2015. All seven aircraft are now in assembly and will be delivered by the end of 2018.

To read on, visit: A350-900ULR: Singapore Airlines could be the sole customer