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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.

    Melbourne Tullamarine Airport’s extraordinary decade; now growth slows

    Australia’s Melbourne Tullamarine Airport has enjoyed a period of rapid international growth over the past decade. Melbourne exceeded 5 million annual international passengers for the first time in 2009 and crossed the 10 million mark only eight years later in 2017.

    International passenger traffic grew another 9% in 2018 but growth is slowing considerably in 2019. China, which has been one of the main drivers in recent years, is slowing and Tullamarine lost one of its largest foreign airlines at the end of 2018 when AirAsia X moved to Avalon Airport.

    Other growth markets have emerged for Melbourne in recent years, including India, Sri Lanka, Japan, the Philippines and Vietnam. These markets should continue growing, along with Indonesia and the more mature market of North America, helping fill the void.

    To read on, visit Melbourne Tullamarine Airport’s extraordinary decade; now growth slows

    WestJet and Onex, a new privatisation trend?

    There is always discussion in the aviation industry about taking certain companies private as public firms are increasingly subject to meeting shorter term financial targets to satisfy analysts and investors.

    But it is rare that large airlines opt for privatisation, or are pursued by a private equity firm. That’s why Onex’s plans to acquire Canada’s second largest airline, WestJet, is intriguing on many levels. Although WestJet’s more recent financial results are somewhat lacklustre compared with its historical performance, the airline is far from a distressed company.

    However, Onex’s pursuit of WestJet was no doubt attractive to the airline as the acquisition gives the airline some breathing room to execute on two important strategies to sustain its position and profitability for the long term – the maturation of its ULCC Swoop and the expansion of its long haul network.

    To read on, visit WestJet and Onex, a new privatisation trend?

    Kumamoto Airport privatisation: ANA, JAL in the consortium

    As part of the ongoing privatisation of Japanese airports, a consortium comprising a cross-section of Japanese commerce and industry has just signed an agreement for the private operation of the Kumamoto Airport under concession.

    The consortium includes Japan’s two main airlines. Japan Airlines (JAL) and ANA Holdings announced that the consortium had signed a basic agreement with Japan’s Ministry of Land, Infrastructure, Transport and Tourism (MLITT) under the terms of a 33-year concession contract.

    As in Brazil, but at a time when Japan’s airports for the most part are not being privatised in blocks, a number of smaller airports are coming to the market. Although on the surface they may not appear to have much to offer to investors, Japanese firms at least are keen on taking them on.

    To read on, visit Kumamoto Airport privatisation: ANA, JAL in the consortium

    Australia-Thailand aviation market: AirAsia fills a void

    Thailand is one of the most popular tourist destinations for Australians, generating over 800,000 visitors and 1.6 million passengers per year. However, capacity cuts by Thai Airways and the suspension of Sydney-Bangkok services by Emirates are driving a 30% drop in seat capacity in the Australia-Thailand market.

    AirAsia has pounced on this opportunity and is launching its first ever nonstop service between Australia and Thailand. Thai AirAsia X will compete against Thai Airways on the Brisbane-Bangkok route from 25-Jun-2019, when it launches four weekly flights, and could add more Australia-Thailand routes by the end of 2019.

    Long haul LCCs are well positioned, given that the Australia-Thailand market consists mainly of price sensitive leisure passengers. Jetstar already serves the market nonstop and both AirAsia and Scoot offer attractively priced one-stop options on multiple city pairs.

    Asia’s other major LCC group, Lion, has looked closely at entering the Australia-Thailand market, using its affiliate Thai Lion. However, Thai Lion has decided against launching Australia services for now due to regulatory obstacles, which leaves an opening for AirAsia.

    To read on, visit Australia-Thailand aviation market: AirAsia fills a void

    Berlin Tegel: easyJet’s operation revives the airport but needs time

    EasyJet’s entry into Berlin Tegel airport in Jan-2018, in addition to its base at Berlin Schoenefeld, made it the leading airline at Tegel and in Berlin overall. Tegel barely noticed the gap left by the demise of airberlin in Oct-2017, thanks to easyJet’s rapid ramp-up, growth by Eurowings and Lufthansa, and the entry of Ryanair.

    Previously suffering from the slow bleeding of capacity by airberlin, Tegel’s growth has been revived and it is now Germany’s number two LCC airport. Tegel’s renaissance has partly been at the expense of Schoenefeld. In Mar-2019, total passenger numbers grew by 25.1% at Tegel, whereas they fell by 8.1% year-on-year at Schoenefeld.

    However, for easyJet all is not plain sailing at Tegel, in spite of its leadership position. Capacity expansion by all the major airlines has created a fiercely competitive market at the larger of Berlin’s two airports. This has put pressure on easyJet’s unit revenue performance and caused it to push back the break-even point for its Tegel base, now expected to be loss making for a second year.

    To read on, visit Berlin Tegel: easyJet’s operation revives the airport but needs time

    Virgin Atlantic-Thomas Cook Airlines’ long haul tie up to face hurdles

    Virgin Atlantic has reportedly expressed interest in buying the long haul operations of Thomas Cook Airlines. The specialist leisure airline is the UK’s number five operator of widebody aircraft, while long haul specialist Virgin Atlantic is second in this regard. Thomas Cook Airlines’ seven Airbus A330-200s would fit well with Virgin’s three of the same variant and its 10 A330-300Es.

    The majority of Thomas Cook Airlines’ capacity is short/medium haul and unlikely to interest Virgin. However, Virgin is likely to be attracted by its routes from the UK to North America and the Caribbean. Thomas Cook Airlines’ long haul operations also include Central America, which Virgin no longer serves.

    On six overlapping routes to North America and two to the Caribbean a combination of the two airlines would lead to a high market share, and this may raise competition concerns. Other hurdles include Thomas Cook Airlines’ strongly seasonal schedule, skewed to the summer to a much greater extent that Virgin’s more year-round operation. There is also likely to be competition from other bidders, who may be prepared to buy all of the Thomas Cook Group’s airlines to expedite a deal.

    To read on, visit Virgin Atlantic-Thomas Cook Airlines’ long haul tie up to face hurdles

    Manchester Airport, UK’s number 3 airport, shrugs off Monarch’s exit

    Among Europe’s top 20 airports by 2018 passenger numbers, Manchester (ranked 20th) is one of a very small number neither to serve a capital city, nor to be the hub of a national flag carrier airline. LCCs and charter airlines have approximately two thirds of seats at Manchester.

    Its schedule focuses principally on leisure routes to destinations in Europe, but it is also the UK’s number three airport for capacity to North America. Moreover, it has good connections with major hubs in Europe and the Gulf.

    Manchester Airport celebrated its 80th birthday in Jun-2018, during a year in which passenger traffic growth slowed to its weakest rate since the global financial crisis. This was the result of Monarch Airlines’ collapse in Oct-2017. However, traffic continued to increase and, now in its 81st year, Manchester is returning to stronger rates of growth.

    To read on, visit Manchester Airport, UK’s number 3 airport, shrugs off Monarch’s exit