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    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.

    Toulouse Airport: Chinese consortium sells; French companies wait

    Four years ago in 2015 a consortium of two Chinese companies (CASIL Europe) secured a majority stake – but not overall control – in Toulouse Blagnac Airport, France’s sixth busiest, despite widespread concern throughout the country that major French companies were overlooked. There was clearly political interest in the transaction.

    CASIL is the acronym for China Airport Synergy Investment Limited. CASIL Europe is a joint venture that includes the Chinese state-owned group Shandong Hi-Speed Group and Hong Kong-based investment company Friedmann Pacific Asset Management; it took a 49.99% stake in Toulouse Airport in France through a French-registered company of that name.

    But the government retained a 10% stake and it is equally clear it isn’t going to sell it. While the consortium has honoured its pledges, investing in the airport and growing passenger traffic, it has decided enough is enough and will now sell its stake.

    Waiting in the wings are the unsuccessful bidders from the initial privatisation.

    To read on, visit Toulouse Airport: Chinese consortium sells; French companies wait

    Southern Europe-US airline traffic growing at 12% p/a

    Air routes from southern Europe to the United States make up a small part of the North Atlantic market, comprising only five countries (Spain, Italy, Portugal, Greece and Serbia, in order of size).

    Nevertheless, this segment is growing fast. Over the past five years, it has grown seat numbers at an average of 12% pa – twice the rate of the total Europe-US market.

    This growth will be maintained in the year to Jun-2019, driven by a number of new services. In summer 2019, new services from these southern European countries to the US include one from Spain, six from Italy, three from Portugal and one from Greece.

    The big three US airlines account for three of the top four airlines by seats on southern Europe-US, with only Iberia from Europe ranking in the top four. However, US airlines have been outgrown by European airlines, so that both groups have almost the same capacity, with airlines such as Norwegian, Air Italy and LEVEL having made their presence felt in recent years. This market segment also includes Emirates as a fifth freedom operator from both Italy (Milan-New York) and Greece (Athens-New York).

    The southern North Atlantic is underserved with direct connections, partly as a result of the northern European focus of the JVs in the global alliances. Its dynamic growth looks set to continue.

    To read on, visit Southern Europe-US airline traffic growing at 12% p/a

    US airlines’ trans Atlantic market softens as Brexit looms

    The trans Atlantic was the best performing international entity for the three large global US airlines in 2018. But some softness is surfacing in the market in early 2019.

    Both Delta Air Lines and United are warning that challenges are arising on trans Atlantic routes after their respective unit revenue performance in those markets during 4Q2018 fell drastically from strong results posted earlier in the year. And with growing uncertainty over the fate of Brexit, headwinds in the trans Atlantic market could intensify as 2019 progresses.

    Delta has previously stated that the bulk of its capacity growth in 2019 would be geared toward international expansion, but given some of the weakness in the trans Atlantic, the airline has decided that to adjust capacity in those markets after the US’ peak summer travel season.

    To read on, visit US airlines’ trans Atlantic market softens as Brexit looms


    ANA invests in Philippine Airlines as PAL expands

    Philippine Airlines (PAL) is planning further rapid expansion of its international operation over the next few months as it launches services to Hanoi, New Delhi and Phnom Penh and adds frequencies to 12 of its 39 existing international destinations. PAL’s international seat capacity will increase by nearly 10% this summer, pressuring yields and profitability as the airline tries to increase sixth freedom traffic.

    PAL is growing capacity to continental North America by nearly 50% this summer, supported by the delivery of A350-900s. As PAL introduces 17 additional weekly frequencies to North America it is trying to attract more transit traffic in the highly competitive North America-Southeast Asia market – leading to the decision to add Hanoi, New Delhi and Phnom Penh.

    PAL’s expansion this summer will result in more competition with several North Asian airlines, including its new strategic partner All Nippon Airways (ANA). On 29-Jan-2019 ANA Holdings announced the acquisition of a 9.5% stake in PAL Holdings, the parent company for PAL and the full service regional subsidiary PAL Express.

    While the deal is strategically significantly for PAL, which has been trying to secure a foreign airline investor for years, the stake is small, and the USD95 million investment is pocket change for ANA. The fact that the transaction values PAL at only USD1 billion, despite group revenues of over USD2.5 billion and an extremely attractive slot portfolio at congested Manila, reflects the challenges PAL faces.

    To read on, visit ANA invests in Philippine Airlines as PAL expands

    Low cost long haul narrowbody aircraft: Asian gamechanger?

    Japan is poised to become the first market in Asia with significant low cost long haul narrowbody operations following commitments from two Japanese airlines. Jetstar Japan and Peach both plan to begin operating A321neoLRs in 2020, enabling Japan’s two largest LCCs to expand in the Japan-Southeast Asia market.

    Low cost long haul narrowbody is a relatively small but fast growing segment. In 2019 most of the growth will again be across the Atlantic, as Norwegian puts its first batch of A321neoLRs into service. Norwegian already operates several low cost long haul narrowbody routes in the Europe-US market using 737 MAX 8s that it began operating in 2017.

    So far there have been very limited low cost long haul narrowbody operations in Asia. However, there are huge opportunities within the vast Asia Pacific region for LCCs to utilise the improved range of new generation narrowbody aircraft.

    A potential A321neoLR order from AirAsia X could be a game changer and bring the low cost long haul narrowbody model to several more markets in Asia Pacific.

    To read on, visit Low cost long haul narrowbody aircraft: Asian gamechanger?