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.


    Australia-Bali airline market: Lion’s Malindo expands. AirAsia X next?

    Competition is intensifying in the Australia-Bali market as Malaysia’s Malindo Air launches services in 2Q2019 from Adelaide and Sydney to Bali, using fifth freedom rights. Virgin Australia is also launching services from Darwin to Bali in Apr-2019, and Qantas is adding capacity from Sydney to Bali by upgauging to A330s.

    Malindo already competes on the Melbourne-Bali and Brisbane-Bali routes and its Indonesia-based sister airline Batik Air serves Perth-Bali. With the launch of Adelaide and Sydney the Lion Group will therefore compete on the five largest Australia-Bali routes.

    Malaysia’s AirAsia X is also now considering the launch of services from Bali to Australia using fifth freedom rights, taking a page from the strategy playbook of rival Malindo. However, AirAsia X will have to settle on a limited number of frequencies or wait for Malaysia to negotiate an expanded air services agreement with Indonesia, since the current bilateral caps the number of fifth freedom Bali-Australia weekly frequencies to 28.

    To read on, visit Australia-Bali airline market: Lion’s Malindo expands. AirAsia X next?


    Are airline open skies still open in the US?

    In early 2018, when the US and the governments of the UAE and Qatar reached a truce over the years-long subsidy debate between American, Delta and United and Emirates, Etihad and Qatar, many questioned how long the cease fire would last.

    The answer was: barely a few months. American argued that fellow oneworld member Qatar Airways could be violating aspects of the agreement through its stake in Air Italy, which was adding services from Milan to Miami and New York JFK.

    The argument continues to simmer, but proving that Qatar is in fact violating the terms of the truce could prove difficult.

    Nonetheless, it did appear to many foreign governments that the highly influential Big 3 were trying to turn the clock back to an era where national airlines were protected from competition, regardless of the wider national interest.

    To read on, visit Are airline open skies still open in the US?


    Future airline travellers: suppliers need to be more nimble than ever

    Attempting to determine how to satisfy the needs of the future traveller is growing more complex as travel suppliers wade through a dizzying array of emerging technologies and rapidly changing traveller behaviour and preferences.

    There is no shortage of research into future traveller trends, but the challenge facing travel suppliers is determining which trends will ultimately have staying power, as well as selecting the best technologies that cater to customers whose preferences continue to evolve in a constantly changing travel landscape.

    Sales channels will continue to evolve, and there is the potential for virtual reality to play a major role in the development of new travel store fronts.

    To read on, visit Future airline travellers: suppliers need to be more nimble than ever


    Ireland aviation: good geography, good policies

    The Republic of Ireland punches significantly above its weight in the aviation market, with airline capacity significantly outperforming the country’s size by population.

    Based on total seat capacity for the week of 8-Jul-2019, Ireland is the world’s number 40 aviation market and number 15 in Europe (source: OAG). This compares with its ranking by population at 121 in the world and 25 in Europe (source: indexmundi.com).

    It has three significant ‘natural’ advantages: its geographic position between Europe and North America, its strong cultural and economic links with the UK, and strong links with North America as a result of the Irish diaspora.

    These factors position it well to build on strong point-to-point traffic flows both to its east and its west to act as a transit point between Western Europe and North America. Ireland’s natural advantages have been boosted by a longstanding liberal policy stance by its governments and regulators towards aviation, as well as having a history of producing successful aviation leaders.

    There must be something in this mix that works. In the ultra LCC Ryanair and national airline Aer Lingus Ireland has Europe’s two most profitable airlines by operating margin.

    In addition, Ryanair is the continent’s biggest airline by passenger numbers.

    To read on, visit Ireland aviation: good geography, good policies


    Airline JVs in the US: evolving, with greater scrutiny

    Open skies pacts in the US have reached a certain level of maturity, and the result is the continued evolution of, and establishment of, airline joint ventures. But JVs are garnering new levels of scrutiny, and recently established immunised pairings now have some operating conditions that were absent in the past.

    JV applications between Hawaiian and Japan Airlines, Delta and WestJet American, and Qantas and American and LATAM Airlines Group are awaiting the administration’s approval, and it will be instructive to see what conditions the administration might impose in granting approval of those proposed tie-ups.

    Even as the US and UK have reached an agreement to keep air services at status quo after the Mar-2019 Brexit deadline, the uncertainty swirling around Brexit and the UK and European partners of US airlines could create challenges in the North Atlantic. It is an example of how trade and aviation are becoming even more entangled in the current operating environment.

    To read on, visit Airline JVs in the US: evolving, with greater scrutiny


    US airports infrastructure: extensive investment necessary

    Airports Council International-North America (ACI-NA) has reiterated what has become an annual call for the US government to invest USD100 billion into airports urgently or risk falling behind other countries.

    Bearing in mind President’s Trump’s comment on the U.S.’s ‘Third World’ airports in the run-up to the 2017 Presidential Election, overall they already have fallen further behind. ACI-NA also called for an adjustment in the Passenger Facility Charge to enable airports to build more facilities.

    Some changes have taken place in the way that U.S. airports are financed and administered since the Trump Administration took office. This report looks at what those changes were, and weren’t, while majoring on the ACI-NA funding demand and whether that sort of money is needed as urgently as the organisation thinks.

    To read on, visit US airports infrastructure: extensive investment necessary


    Amal A380s: a possible model for the Umrah market

    While most of the world is shedding a tear for the demise of the A380, Malaysia Airlines is pushing forward with its aspirations to grow its share of the religious pilgrimage market by pursuing expansion at Amal – using the A380. Amal is a new unit and sub-brand that aims to capture a 60% share of Malaysia’s Umrah market and a 10% share of Indonesia’s much larger Umrah market within the next three years.

    Amal has already taken over the management and sales of A380 charters from Malaysia to Jeddah and Madinah in Saudi Arabia. In Apr-2019 Amal plans to take over scheduled flights to Jeddah and Madinah that are now under the Malaysia Airlines brand using A330s. The Madinah scheduled flights will be upgauged to 486-seat A380-900s, whereas the Jeddah scheduled flights will continue to be operated – at least for the time being – with 290-seat A330-300s.

    Amal is targeting the massive Indonesia-Saudi Arabia pilgrimage market by offering connections via Kuala Lumpur. Malaysia Airlines already offers one-stop connections to Saudi Arabia from four Indonesian destinations and is planning to add another three or four Indonesian destinations in 2Q2019, operating scheduled flights with 737-800s on which the passenger complement will consist almost entirely of passengers connecting to Amal’s Jeddah and Madinah flights.

    Amal has long term ambitions to expand in other Asian markets, potentially with A380 flights originating in other countries. Umrah is a huge and fast growing market that is potentially suitable for some of the A380s that will need new homes next decade as several airlines start to phase the type out.

    However, it will be challenging for Amal to operate outside Malaysia due to regulatory restrictions and the need to overcome airport infrastructure challenges that preclude A380 operations in several key Umrah markets.

    To read on, visit Amal A380s: a possible model for the Umrah market