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.

    San Jose Mineta airport: strong growth despite long haul setbacks

    Even as Lufthansa and Air China ended long haul flights from San Jose Mineta International in 2018, the airport still posted record passenger growth for the year, and its prospects still remain solid now that Delta Air Lines has declared the San Jose, California, region as one of its newer focus cities.

    Given the proximity of San Jose to Delta’s US west coast trans Pacific gateway in Seattle, it is a safe bet that Delta will not add long haul service to Asia from the airport, but the focus city status guarantees a level of commitment from Delta for service expansion.

    San Jose is now enjoying a prolonged period of stable passenger growth, which should continue given its stature as the closest airport to the booming Silicon Valley technological hub; its designation as a focus city for Delta adds a certain level of security for the airport for the future.

    To read on, visit San Jose Mineta airport: strong growth despite long haul setbacks

    Lufthansa and competing LCCs erode yields in Germany and Austria

    Lufthansa Group has cautioned that home markets in Germany and Austria are suffering downward yield pressure due to “carriers willing to accept significant losses to expand their market share”.

    Competition has certainly intensified since the 2017 demise of the Air Berlin Group. Lufthansa Group took on some of airberlin’s capacity, but so did easyJet. Ryanair accelerated its expansion in Germany and bought Lauda in Vienna, where LEVEL and Wizz Air also entered.

    In the German domestic market the gap left by airberlin has mainly been filled by Lufthansa’s Eurowings subsidiary and easyJet. In the German international market this gap has mainly been filled by Eurowings, Ryanair and easyJet.

    The Austrian domestic market is now dominated by Lufthansa Group’s Austrian Airlines. In the Austrian international market, LCC new entrants are growing faster than Lufthansa Group.

    Not only is low yield competition against Lufthansa Group increasing, but also a growing share of its own capacity is now operated by its lower yield subsidiary.

    Eurowings has grown the group’s market share in Germany, although not in Austria, but has also contributed to yield erosion in both markets. Not a truly low cost airline in CASK terms, Eurowings has not done enough to lower the group’s high unit cost.

    To read on, visit Lufthansa and competing LCCs erode yields in Germany and Austria

    Malaysia Airlines & Singapore Airlines: competitors, natural partners

    Malaysia Airlines and Singapore Airlines are pursuing increased cooperation as the two airline groups increasingly rely on partnerships to improve their strategic position in Southeast Asia’s highly competitive marketplace. While the two airline groups will remain competitors, there are mutually beneficial opportunities for close cooperation, particularly in the Malaysia-Singapore market.

    The two have a deep-rooted history, having been split from a single airline in 1972, seven years after Singapore gained independence from Malaysia. Singapore-Malaysia relations have hardly been warm, but their flag carriers have maintained a limited codeshare relationship and have remained on relatively friendly terms.

    Singapore Airlines has clearly been more successful, reporting annual profits every year without a single blip and becoming one of the world’s best premium airlines.

    Malaysia Airlines has struggled, reporting losses most years despite multiple restructuring attempts, and has been shrinking. An investment or merger is unlikely at this stage, but Malaysia Airlines could still gain from partnering and learning from its neighbour.

    To read on, visit Malaysia Airlines & Singapore Airlines: competitors, natural partners

    Europe’s rail system often complementary to air – not the alternative

    It has become somewhat de rigueur in Europe to propose that rail travel should be an enforced substitute for air travel domestically and even on short haul international routes, even if it means legislating for it.

    Last year a CAPA sister publication, the Blue Swan Daily, published an article in which one Norwegian politician was quoted as proposing that an actual cap should be placed on air travellers, which seems to be taking things to a different level again.

    That article ended with the observation: “The cat is out of the bag now. Environmentalists all over the world…will read this and…in no time what might appear to be a rather strange proposition is absorbed into the public consciousness and quickly grows”.

    Perhaps France’s National Assembly Member, François Ruffin, read it, because he announced plans to submit a legislative proposal on 03-Jun-2019 aiming to limit domestic air traffic that is able to be replaced by rail. The proposition is currently co-signed by 14 other MPs.

    “It is high time to land. Our targets for reducing carbon emissions are incompatible with the growth of air transport, or even with its being maintained. It’s up to us to join the Netherlands, Belgium, Sweden and other European nations that take this issue seriously”, Mr Ruffin stated.

    But, across Europe, while rail is often a boon to travel, the reality often is that trains are complementary to other surface and air travel systems and do not represent a holistic alternative solution.

    To read on, visit Europe’s rail system often complementary to air – not the alternative

    Women in US airlines: gender equality still lags significantly

    United Airlines recently joined numerous corporations headquartered in Chicago that had pledged to increase gender equality in leadership roles by 2030.

    That promise follows Delta’s recognition in 2018 as one of the US’ best work places for women, after the airline achieved 100% pay parity for men and women.

    Those are positive developments for a country and industry that still have much runway ahead in their consistency of promoting women into the upper echelons of the executive ranks. At most of the large US airlines, women are still greatly under-represented in top management positions and it still seems that it will take decades before a female rises to the ranks of CEO at any of the largest US airlines.

    There has also arguably been little movement on improving the work-life balance for women in the workforce in order for females to rise through the ranks. Unfortunately, there is still too little attention paid to the number of women that opt to exit the workforce altogether after being forced to choose between family and a career.

    To read on, visit Women in US airlines: gender equality still lags significantly