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.
Middle East and Africa LCCs: huge growth opportunities, but challenges
It has been nearly two decades since LCCs began to penetrate the Middle East and Africa markets. Comair was the pioneer in Africa, launching its budget brand kulula.com in 2001, and Air Arabia was the pioneer in the Middle East, launching operations in 2003.
While the LCC sector in the Middle East and Africa have since expanded, the LCC model has hardly proliferated in the way that it has in other regions. There are only 200 aircraft currently operated by LCCs based in the Middle East and Africa.
There are now 14 LCCs based in eight countries throughout the Middle East and Africa. However, most are small, and the main players are concentrated in three markets – Saudi Arabia, South Africa and the UAE.
LCC growth seems inevitable, but overcoming challenges, particularly in Africa’s highly protective aviation market, will not be easy.
To read on, visit Middle East and Africa LCCs: huge growth opportunities, but challenges
North Asia LCC market’s 24 LCCs and active start-ups
LCCs arrived in North Asia much later than in the other major sub-regions of Asia Pacific – Southeast Asia, South Asia and Australasia. However, North Asian LCCs have grown rapidly over the past five years, narrowing the gap with their Asian peers.
There are now 24 LCCs based in North Asia, compared to only 11 LCCs five years ago. The North Asian LCC fleet has quadrupled over this period, from 165 aircraft in Apr-2014 to 662 aircraft in Apr-2019.
However, North Asia is still relatively unpenetrated by LCCs; in 2018 LCCs accounted for only 14% of total seat capacity within North Asia.
There are huge opportunities for rapid LCC growth across all the region’s markets, from gigantic China and Japan to tiny Mongolia. The existing LCCs are well placed to benefit from the anticipated growth and there is yet another group of several proposed start-ups waiting in the wings, eager to launch services in the promising North Asian market.
To read on, visit North Asia LCC market’s 24 LCCs and active start-ups
Suddenly Middle East aviation is becalmed; Africa too is stalling – again
CAPA’s Middle East-Africa Summit to be held in Dubai on 27/28- Apr-2019 comes at a very interesting time in the evolution of the Middle East and African markets.
After years of rapid growth, the big three Gulf carriers, each with their different issues, are undergoing a significant transition. At the same time Saudi Arabia’s long-dormant industry has been revitalised and is starting to show the promise of which the largest market in the region is capable.
But in Africa, with one or two notable exceptions, it appears to be business as usual: lots of aspiration but little forward movement. The reasons are legion; many are present in markets globally, but nowhere else in the world is the intensity of such a wide range of barriers to growth so apparent.
Colombian airlines: positioning to capitalise on growth
Colombia has been one of the fastest growing domestic aviation markets in Latin America during the past decade, with domestic passenger levels more than doubling during that period.
Similarly to other growing Latin American markets, Colombia has logged solid economic growth, witnessed the emergence of a growing middle class and entered into a period of political stability.
During the past year, operators in Colombia have battled currency pressure and rising fuel prices. Nevertheless, the country’s airlines believe that a good deal of upside remains for Colombia over the long term, and are working to position themselves to capitalise on that that growth.
The country’s largest airlines – Avianca and LATAM Airlines Colombia – are planning to expand during the next couple of years, adopting different approaches to that growth. Avianca has revamped its regional operations, while LATAM plans a capacity push during the next three years.
It remains to be seen how Colombia’s smaller operators will navigate the push by the country’s largest airlines to ensure that they maintain their leading positions in the market. But all airlines serving Colombia are working to exploit some forecasts showing total passenger levels could reach 100 million during the next decade.
To read on, visit Colombian airlines: positioning to capitalise on growth
London Gatwick Airport: BA and Norwegian drive widebody growth
British Airways CEO Alex Cruz has said that the airline is considering adding one or two more widebodies to its fleet at London Gatwick (LGW). This would extend a multi-year trend of growth by BA in its widebody operations at London’s number two airport.
According to data from OAG Schedules Analyser, 15.5% of BA’s LGW frequencies and 25.8% of its LGW seats will be operated by widebodies in summer 2019. This compares with 8.5% of frequencies and 15.2% of seats 10 years ago and 12.6% of frequencies and 21.1% of seats in summer 2012 (the year before LCC Norwegian entered).
LGW’s twin aisle market has been stimulated in recent years by Norwegian’s 2013 entry and BA’s response and by more recent widebody entry by China Eastern, Qatar Airways, China Airlines, Rwandair Express, Cathay Pacific, Westjet and Thomas Cook Airlines. BA is still the biggest widebody operator by frequencies, but has been overtaken by Norwegian on widebody seat count.
Rapid widebody growth at LGW has driven faster growth in average seats per frequency than at all other London airports apart from London City. In addition, it has outpaced Heathrow’s widebody growth, taking LGW’s share of all London twin aisle frequencies from 10% to 15% over the past decade.
To read on, visit London Gatwick Airport: BA and Norwegian drive widebody growth
Airport ownership: Macquarie and Vinci transactions
What airport privatisation activity there has been in Europe recently has in the main been focused on the eastern part of the continent and on primary concession deals.
However, one secondary transaction has just taken place in what is the ‘capital of Europe’ (Brussels) and another has been authorised for the second airport serving London, the financial capital of the continent.
In the first instance, the transaction highlights the desirability of an airport, which in global terms is not a large attraction to a raft of new financial sector investors including a relative rarity, an insurance company. Also, it highlights the way that the addition of a simple connecting building between terminals at the expense of a dank tunnel can transform an airport.
The second is remarkable not so much for the buyer – whose sights must be zeroed on any primary level airport coming to market at the moment – but more for the sellers, and why they are exiting this airport now.
To read on, visit Airport ownership: Macquarie and Vinci transactions