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.
China & N Asia, massive inbound tourism opportunity for India
In 2017, India received 10.2 million foreign visitors, of which around 2 million were land border crossings from Bangladesh. A striking feature of the remaining 8 million foreign arrivals is the relatively small share of visitors from North Asia who represent a key driver of tourism in other Asian destinations.
The three largest markets in the region – China, Japan and South Korea – accounted for only around 7.5% of foreign arrivals (excluding Bangladesh) in India, compared with more than 35% in the case of Thailand.
However, simplified visa requirements, improved air connectivity, long haul low cost airlines and an increased focus on promotion and product development could stimulate tourism flows.
To read on, visit China & N Asia, massive inbound tourism opportunity for India
ICAO carbon offset scheme falters; airline biofuel use grows
On 27-Aug-2018 the Indian LCC SpiceJet became the country’s first airline to operate a flight using biofuel. Sustainable aviation fuels (SAF) were first used by an airline in Feb-2008, when Virgin Atlantic flew a Boeing 747 on a test flight from London to Amsterdam.
Since then, a number of other airlines have conducted test flights demonstrating that a variety of source products, including algae, jatropha plants and municipal waste, can be converted into aviation fuel. IATA hopes that one million flights will use biofuels in 2020.
ICAO’s Carbon Offsetting and Reduction Scheme in International Aviation (CORSIA) will begin its pilot phase in 2021, but emissions reporting by airlines will start in Jan-2019. Monitoring, reporting and verification provisions have been agreed for CORSIA, but rules on the use of biofuels and credits to offset aviation emissions are not yet complete.
In its efforts to reconcile competing interests, CORSIA has stirred some controversy, attracting criticism on environmental grounds. Moreover, China is no longer on the list of voluntary participants and Russia has expressed doubts over the scheme.
To read on, visit ICAO carbon offset scheme falters; airline biofuel use grows
Moscow Domodedovo Airport suffers traffic dip but prepares for growth
Moscow’s and the Russian Federation’s second largest airport, Domodedovo (DME), handled 30.7 million passengers in 2017. Although it returned to growth last year, this figure was virtually unchanged from 2013. Traffic fell again in 1H2018, in spite of a boost from the FIFA World Cup held in Russia this summer.
DME ranked as Europe’s 13th biggest airport by passenger numbers in 2017. It is mainly a point-to-point airport, although 17.8% of passengers were transfer traffic last year. Terminal developments to expand and integrate terminals 1 and 2 are aimed in part at improving the handling of transfer traffic at an airport that is dominated by domestic and short/medium haul international flights.
Together with new runway capacity, they are also aimed at ensuring that DME is positioned for more consistent growth in the future.
To read on, visit Moscow Domodedovo Airport suffers traffic dip but prepares for growth
Basic economy fares; major US airlines push the ULCCs
Overall, the roll-out of segmented fares by the three large global US airlines during the past year seems to have produced positive results. But there has also been some churn in the evolution of tiered fares, as United pulled back on an aggressive roll-out of its Basic Economy offering and American has adjusted product accoutrements of its lowest fare offering to become more competitive with Delta.
Even with those adjustments, the upsell rates from basic economy for American and Delta remain solid, which bodes well for each company reaching its respective revenue goals from segmented fare schemes.
There has obviously been some effect on US ULCCs from a larger pool of lower fares in the US marketplace, and during the past year Spirit has worked to shore up operations and its product. And although Spirit’s revenue growth was solid in 1H2018, pressure on its fares remains intact.
To read on, visit Basic economy fares; major US airlines push the ULCCs
Alaska Air SWOT: merger completion and meeting challenges
Alaska Air Group was historically understated in the US airline industry, building a strong franchise in the Pacific Northwest and delivering solid profitability before the large US airlines began adopting their mantra of a sea change in the industry.
During the past few years Alaska has faced significant new competition from Delta Air Lines at its Seattle hub and headquarters and has undertaken an acquisition, and merger with, Virgin America.
With the bulk of the merger integration completed, Alaska is now entering a new chapter in its history, and markets are viewing the company through the lens of improving margins and delivering on promised merger synergies.
This report examines Alaska’s strengths, weaknesses, opportunities and threats.
To read on, visit Alaska Air SWOT: merger completion and meeting challenges
Low cost long haul narrowbody: AirAsia X, NokScoot join the party
Malaysia AirAsia X, Thai AirAsia X and NokScoot are preparing to add narrowbody aircraft to supplement their current all widebody fleets. AirAsia X could soon be operating the longest narrowbody routes by an Asian LCC but the world’s longest scheduled low cost narrowbody routes will likely remain concentrated in the transatlantic market.
The AirAsia X Group plans to convert 40 of its A330-900neo orders to A321neos or A321neoLRs with deliveries expected to begin in 2Q2019. The group’s Thai affiliate will operate the initial batch of A321neos followed by its Malaysian subsidiary. Malaysia AirAsia X has operated an all widebody fleet since commencing operations in 2007 while Thai AirAsia X has only operated widebody aircraft since launching in 2014.
Thai AirAsia X rival NokScoot has only operated widebody aircraft since launching services in 2015. NokScoot is adding two 737-800s in 4Q2018 and is looking at potentially acquiring four longer range 737 MAX 8s in 2019.
To read on, visit Low cost long haul narrowbody: AirAsia X, NokScoot join the party
SE Asia-London market: Garuda Indonesia learns a difficult lesson
Garuda Indonesia is dropping London after four years and several unsuccessful attempts at serving the London market. Garuda’s decision to stop providing an online product to London ends a colourful chapter in its history that dates back a decade, when it ordered 777-300ERs as part of an ambitious long haul expansion plan for the then reinvigorated flag carrier.
Pulling out of Heathrow is hardly a surprise, given that Garuda’s London service has been highly unprofitable. Garuda has been restructuring in a bid to return to profitability and therefore cannot afford to continue covering losses on the Jakarta-London route.
Garuda’s strategy for serving London was flawed from the beginning, resulting in several adjustments. Garuda has only offered nonstop flights in both directions for less than year.
To read on, visit SE Asia-London market: Garuda Indonesia learns a difficult lesson