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.


    Turkish airports: TAV Airports results point to a future after Atatürk

    When it was disclosed that Istanbul’s Atatürk Airport was to close to passenger operations and to be replaced by Istanbul Airport (of which TAV Airports would not be involved in the financing or developing) it looked not only like the end of an era for TAV, but that the firm would be severely impacted financially.

    It might still be early days but financial results from 1Q2019, the quarter in which the transition was finalised, indicate that TAV has not just rolled over and given up the fight.

    In addition to positive financials, the acquisition of a large stake in Turkey’s third busiest airport, an ever-growing services provision (including at the new airport) and the evaluation of future projects across Europe and Africa demonstrate that it is still very much alive and kicking.

    To read on, visit Turkish airports: TAV Airports results point to a future after Atatürk


    Europe low cost airline ranking: Volotea quietly carves a growth niche

    According to data compiled by CAPA, the share of passengers travelling with Europe’s top 30 airline groups that was carried by LCCs increased from 40.6% in 2017 to 42.3% in 2018. Passenger numbers carried by 17 European LCCs grew by 13.2%, compared with 8.5% growth for the overall top 30 groups.

    The LCC list can be divided into a leading group of nine with more than 10 million passengers in 2018 and a group of eight smaller airlines. The larger group, headed by Ryanair and easyJet, gets all the attention. The smaller group, however, grew at almost twice the rate of the larger LCCs in 2018.

    Europe’s fastest growing LCC outside Russia was Volotea, which grew faster than any LCC not owned by another airline group (only Aeroflot’s subsidiary Pobeda grew faster). With a strategy placing it between regional airlines and the major LCCs, Volotea has quietly carved out a niche for itself and achieved rapid growth since its 2012 launch.

    To read on, visit Europe low cost airline ranking: Volotea quietly carves a growth niche


    737 MAX grounding hits North American airlines’ high season

    The worldwide grounding of the Boeing 737 MAX fleet continues to have knock-on effects for the aviation industry, particularly in capacity, network planning and financial projections.

    The two US major airlines American and United have already cut their 2019 capacity forecast as a result of the grounding, and American has also slashed its earnings per share (EPS) projections for this year.

    Canada’s two largest airlines – Air Canada and WestJet – are also facing lower capacity deployment in 2Q2019, and Air Canada in particular has been forced to take several mitigation measures, including using larger gauge aircraft that could affect higher yielding connections in hubs and wet-leasing aircraft to cover other operations.

    WestJet is joining other North American MAX operators in its finding that the grounding of the aircraft during the first quarter affected its ability to capture close-in and higher yielding traffic.

    Even when the MAX jets eventually gain approval to re-enter service, it will take some time for airlines to restore their network and operational efficiency. Operators are declining to say whether discussions about compensation are occurring; but there is no doubt that they will eventually seek some form of reparation.

    To read on, visit 737 MAX grounding hits North American airlines’ high season


    Airlines investing in airports. A rare breed

    The interest being shown by Kenya Airways in Nairobi’s Jomo Kenyatta Airport – and the manner in which it is being resisted – has focused attention on the desire some airlines have to integrate themselves horizontally with their service outlets.

    Kenya Airways is one of several quite large airlines that are either engaged in this practice or are on the verge of doing so, with many other smaller examples dotted around the globe. They do it for a variety of reasons, but a lack of confidence in the government and airport operators figure highly. In many cases, there is little in the way of local regulation to stop them.

    There is no single region of the world where such practices are more popular than others, but it does seem to have caught on in Southeast Asia, where  airlines have at one time or another applied for the rights to operate one or more airports. In their own country or abroad, and either alone or in consortium with airport operators and investors.

    Different jurisdictions take varying positions in airline ownership in their airports. Regulatory authorities are generally wary of airlines taking too large a share, for fear of their distorting competitiveness in airport access, for example limiting the amount of any investment to around 5%.

    But there is no hard and fast rule and different markets may have very different priorities.

    To read on, visit Airlines investing in airports. A rare breed


    GMR Airports: GMR Infrastructure finally gets fresh investment

    It was five years ago that India’s debt-laden GMR Infrastructure began to look around for new investment into its airports division and an IPO has often been considered the way forward.

    Suddenly, though, a significant equity transfer has been arranged.

    This involves a huge Indian company that is in the domestic airline sector but has never managed to break into the airports one, along with a foreign Sovereign Wealth Fund which previously restricted itself to the global hubs that one tends to associate with such financial edifices, and another foreign entity, a private equity firm that is a newcomer to the sector.

    (There is never a dull moment in the Indian airport sector.)

    To read on, visit GMR Airports: GMR Infrastructure finally gets fresh investment


    Argentina LCCs at risk if Ms Kirchner returns

    Argentina’s current president Mauricio Macri has followed through on pledges to liberalise the country’s aviation market and the result has been a 32% jump in passenger growth from 2015 to 2018.

    The more liberal approach, coupled with Argentina’s low trips per capita, has attracted a flock of new low cost airlines hoping to cash in on the opportunity in the country to stimulate traffic. Three low cost airlines are now based in Argentina – Flybondi, Norwegian Air Argentina and JetSMART Argentina.

    Mr Macri is presiding over economic turmoil ahead of an election in Oct-2019. Speculation is growing that Argentina’s former President Cristina Fernández de Kirchner could challenge Mr Macri, and if her team were to win the election, her Peronist policies will likely become vastly different from those of her predecessor.

    To read on, visit Argentina LCCs at risk if Ms Kirchner returns


    North American airlines and AI: usage is becoming more widespread

    As the aviation sector’s investment in Artificial Intelligence (AI) reaches approximately USD2 billion by 2025, North American airlines are stepping up their commitments to using AI in a variety of business functions.

    Air Canada has been one of the more vocal North American operators about the promise of AI, and now the airline has committed to creating AI labs with the aim of using big data and AI functionality in its maintenance and frequent flyer programme. Delta is also using AI in everything from maintenance to HR functions.

    Those are the latest examples of North American airlines going beyond discussing AI’s potential, and there is little reason to doubt more operators will continue to disclose more applications of AI. For now, it is tough to determine the returns on investment from AI; but airlines seem to have little doubt about the returns AI can generate.

    To read on, visit North American airlines and AI: usage is becoming more widespread