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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.


    Korean Air: a new CEO and Korean cuts first class routes

    Korean Air is considering joining a growing list of major international airlines in removing first class. Reducing, and potentially eliminating, first class represents a shift in product strategy under Korean’s new CEO Walter Cho, who took over from his late father Cho Yang-ho in Apr-2019.

    At the beginning of Jun-2019 the airline stopped selling a first class service on 27 international routes, although these routes are still operated with medium size widebody aircraft (A330s, older variant 777s and 787s) that are configured with a first class cabin. For now, the first class seats on these 27 routes are being sold as business class, but are expected to be removed as Korean Air embarks on a major widebody retrofit programme.

    Korean Air continues to sell first class on nearly 40 international routes, including all routes operated by A380s, 747-8s and 777-300ERs. However, the airline is also considering removing first class from these three large widebody aircraft types as part of future retrofits, potentially resulting in a consistent two class product across its international network.

    To read on, visit Korean Air: a new CEO and Korean cuts first class routes


    Cheongju Airport: LCC Aero K launches its new hub 

    Seoul has emerged as one of the world’s largest aviation markets, with traffic poised to reach the 100 million passenger milestone in 2019 or 2020. The market has more than doubled in size since 2009, when there were 44 million passengers.

    The Seoul market has become large enough – and is growing fast enough – to merit consideration of potential alternative airports to supplement Gimpo and Incheon. Cheongju, a joint military/commercial airport located an hour and a half to the south of Seoul, is vying for hub status as part of an ambitious aeropolis project.

    The low cost start-up Aero K has selected Cheongju as its base, which should significantly accelerate the airport’s growth. Cheongju already counts the existing Korean LCCs Eastar Jet, Jeju Air and Jin Air as its largest airlines and may add an LCC terminal to cater to growth as Aero K and the existing competitors expand.

    LCCs already account for more than 30% of passenger traffic at Incheon and will need to consider alternative hubs as Incheon approaches capacity. With improved ground connections to Seoul and lower costs, Cheongju Airport should be able to attract price sensitive leisure passengers travelling between South Korea and its three largest international markets – China, Japan and Vietnam.

    To read on, visit Cheongju Airport: LCC Aero K launches its new hub 


    Norwegian airports: Avinor looks to cut costs after its 1Q2019 loss

    Norway’s state-owned airport operator Avinor, which has responsibility for most of the country’s airports and, to a diminishing degree, the air traffic control system, reported a small loss in the first quarter of 2019. While that is not unusual for airlines, it is a little less so for airports.

    In fact, revenues did grow, and strongly in some segments. Moreover, Avinor’s airports have a good reputation for customer service, despite not a great deal having been spent on them recently.

    But Avinor is faced with the potential loss, for various reasons, of Norwegian and SAS services in the future, and while it is concentrating right now on cost-cutting, it might need to invest more in route development.

    To read on, visit Norwegian airports: Avinor looks to cut costs after its 1Q2019 loss


    Vienna: Flughafen Wien’s strong growth and fine tuning its airline mix

    For decades Vienna Airport has been possibly the primary transit point between western and eastern Europe, attracting carriers and traffic that have made the Flughafen Wien Group a successful financial enterprise.

    Increasingly the group is focused on activities at its home base, Vienna, where passenger traffic has been increasing steadily. Since 2016 the airport’s passenger growth has been exponential. That said, Vienna airport’s management is keener on full service carriers and the transit traffic that they can produce rather than on low cost carriers, and it frequently says so.

    Latest figures for the first quarter of 2019 suggest that the continued growth is still the case, but the airport management has to continue to grapple with a problem that many other airports would welcome: namely, the increasing numbers of low cost carriers and the passengers they generate (most of whom undoubtedly welcome them). It is a quandary that is not easily solved.

    To read on, visit Vienna: Flughafen Wien’s strong growth and fine tuning its airline mix


    Mexican aviation: Domestic shares shift as transborder rationalises

    Growth in Mexico’s domestic passenger market remained steady in 1Q2019 as nearly 12 million passengers travelled on the country’s airlines. But passenger share has shifted, with ULCC Volaris leapfrogging Grupo Aeromexico as the country’s largest domestic airline measured by passengers carried.

    Volaris made a domestic push in the first three months of 2019 with the introduction of 16 new routes while Aeromexico unexpectedly needed to deal with the grounding of the Boeing 737 Max. But even prior to the grounding, Aeromexico had planned temperate capacity growth in 2019, while its domestic ULCC competitors are on track for double digit increases.

    Both airlines see continuing capacity rationalisation in the US transborder market, which should continue to help yields recover on those routes. However, Aeromexico remains cautions in its approach on US transbroder routes while Volaris continues to expand

    To read on, visit Mexican aviation: Domestic shares shift as transborder rationalises


    Airbus A321neoLR: the longest range narrowbody, for now

    There has been speculation that a new longer range version of the A321neoLR, Airbus’ longest range narrowbody, could be announced at the Paris Air Show (which will take place 17-23 Jun-2019).

    Currently, only six A321LRs are in service with five airlines, but Airbus has been talking to customers about a possible A321XLR since the middle of last year.

    The A321LR has the longest range of any narrowbody, ahead of the currently grounded Boeing 737MAX-8. Led by the A321LR, the development and growth of a competitive long haul narrowbody market is opening up new city pairs that were not economical with widebodies on a pure point-to-point basis.

    It is also prompting new business models, such as LCCs, to challenge the dominance of legacy airlines on long haul routes. More than half of the A321LRs ordered or in service have a single cabin configuration, indicating a low cost/hybrid business model.

    This report focuses on the A321LR and its main airline operators, presenting data from the CAPA Fleet Database on the number of A321LR aircraft ordered and in service as at 29-May-2019.

    To read on, visit Airbus A321neoLR: the longest range narrowbody, for now


    Mach’s surprise bid for Air Transat, topping Air Canada

    Canadian aviation has been a hotbed of activity during the past few weeks; the country’s two largest airlines have announced major transactions they believe will better position themselves for the future.

    Onex plans to purchase WestJet for CAD5 billion and take the airline private, and Air Canada is moving closer to wrapping up due diligence for its proposed CAD520 million acquisition of Transat.

    But a Quebec real estate developer, Mach, has now entered the bidding for Transat with a higher price than Air Canada’s initial offer. Mach’s decision to pursue Transat occurs as speculation grows about whether regulators would approve Air Canada’s purchase of Transat, given the concentration the two airlines would create in some international markets from Canada.

    As the period of exclusivity for negotiations between Air Canada and Transat nears its end, Air Canada needs to decide if upping its offer for Transat is key for execution of its long term plan to maintain its competitive position in Canada’s aviation market.

    To read on, visit Mach’s surprise bid for Air Transat, topping Air Canada