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.
Central Europe’s smaller airlines grow. Consolidation likely
The only airline based in Central Europe that ranks among Europe’s top 20 airline groups by passenger numbers in 2018 is Wizz Air –ranked at number nine, with almost 34 million passengers. The second largest airline based in the region, LOT Polish Airlines, carried just under nine million passengers in 2018, placing it at number 23.
The two next largest airlines carried only broadly half of LOT’s traffic: Blue Air with five million and airBaltic with four million. There are a further nine Central European airlines that had more than 100k seats in 2018: SmartWings, TAROM, CSA Czech Airlines, Air Serbia, Croatia Airlines, Adria Airways, Bulgaria Air, Montenegro Airlines and Albawings.
This report presents a brief look at these smaller Central European airlines, i.e. those of Blue Air’s size and below. They are characterised by their small scale, focus on European destinations (mainly in Western Europe), significant use of regional aircraft types in many cases, relatively rapid growth (but not in all cases) and use of partnerships to widen their reach (whether codeshare or full alliance membership).
A number of them are at least partly state-owned, but private investors are also not uncommon in the region’s airlines. Consolidation looks likely.
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Salt Lake City Airport: Solid prospects in the consolidated US market
Salt Lake City International airport is one hub that has persevered during US airline consolidation resulting in four mega airlines controlling roughly 72% of the country’s system wide seats.
The airport remains a pillar of Delta’s US domestic hub network, and the airline has endorsed a massive USD3.6 billion reconstruction at Salt Lake City scheduled for completion in 2024.
Even as certain long haul flights have waxed and waned at Salt Lake City during the last few years, the airport maintains year-round service to two of Europe’s capitals and hubs for Delta’s SkyTeam JV partners, and Delta has reportedly not ruled out resuming service to Asia in the not too distant future now that it can leverage connections from Seoul, which is the hub of its latest JV partner and fellow SkyTeam alliance partner Korean Airlines.
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US-to-Latin America aviation: JVs and LCCs change the dynamics
US airlines are dominant on markets between the USA and Latin America, and in many ways that dominance will remain intact as the large US airlines work to solidify immunised joint ventures between the two regions.
Hubs in both those regions will continue to play key roles in North-South traffic flows as those JVs evolve, with Sao Paulo, Bogotá, Panama City, Lima and Santiago continuing to bolster their connectivity between the two regions.
Low cost airlines based in the US and Latin America will continue their expansion as new aircraft models with the capability of operating on longer routes and benefitting from improved cost performance create opportunities for expansion into markets previously not viable. However, it appears that expansion will occur at a measured pace as most operators in the region are using new generation narrowbodies to drive cost efficiency.
To read on, visit US-to-Latin America aviation: JVs and LCCs change the dynamics
Southwest & Alaska Air: positive momentum in early 2019
Two of the US’ lower cost airlines – Southwest and Alaska – posted solid unit revenue performances in 4Q2018 that will continue in 1Q2019, but the factors driving their respective outlooks are largely unique to each operator.
Aside from fairly solid underlying trends, Southwest is benefitting from the lapping of headwinds that pressured its unit revenue performance early in 2018, including a suboptimal flight schedule driven by Boeing 737 Classic retirements.
Alaska is reaping the benefits of revenue synergies from its merger with Virgin America and its own lower capacity growth in early 2019. The company is cautioning that there is some choppiness in close-in fares during early 2019, but is declaring that its revenue performance during 1Q2019 will outperform the industry.
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Myanmar international passenger growth slows but China market booms
Myanmar’s aviation market has grown rapidly over the past decade, tripling in size. However, 2018 marked by far the slowest rate of growth this decade.
International passenger traffic grew by only 2% as visitor numbers to Myanmar increased by less than 3%. Tourism is critical to Myanmar as inbound visitors account for most international traffic and a large portion of domestic traffic, which declined by 5% in 2018.
A bright spot has been the Myanmar-China market, which grew rapidly in 2018 boosted by a 40% increase in Chinese visitor numbers. Even faster growth from China is expected in 2019 due to a new more liberal visa policy introduced in late 2018 that has already led to several airlines entering the Myanmar-China market.
There are 26 routes connecting Myanmar and China in Feb-2019, compared to only six a year ago. The number of airlines competing in the Myanmar-China market has grown from four to 11 as seat capacity has more than doubled.
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