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.


    Air France-KLM under pressure from new dynamics

    Growth in seat numbers in France has been sluggish over the past decade by comparison with European and global rates.

    Air France-KLM has barely grown at all, increasing annual capacity in France in 10 years by the percentage that global aviation typically grows in one year. Its Transavia LCC subsidiary has grown faster, but competitor LCCs – led by easyJet – have driven most of the growth in France. In addition, three low cost long haul operators (Norwegian, WestJet and LEVEL) compete in France.

    Outside Air France-KLM, local airlines in France are small, but market dynamics are changing. Two French airlines – Aigle Azur and XL Airways France – have recently gone bankrupt.

    These sad events may ease the growth ambitions for two other French airlines Corsair and French Bee, which have long haul expansion plans (including Paris-New York launches from both next summer). Corsair’s growth plans have been renewed following its sale by TUI to Intro Aviation.

    At the same time Air Corsica, the biggest French airline by seats that is not part of Air France-KLM, continues to operate its domestic-focused network.

    Just as Air France looks for a path to improved profitability, competition could be intensifying.

    To read on, visit Air France-KLM under pressure from new dynamics


    Paris-New York aviation market: Corsair, French bee and others

    Two French airlines are to launch Paris Orly to New York Newark services in Jun-2020.

    The leisure airline Corsair, sold by TUI Group to Intro Aviation earlier this year, plans to deploy A330-900neos on the route from Sep-2020. The LCC French bee will deploy A350-900s. Both are long haul specialists, but neither currently operates to New York.

    Since these plans were announced, another leisure focused French airline that had long been operating between Paris and New York went into receivership: XL Airways France, which operated from Paris CDG to Newark, was the fifth largest of eight airlines on the city pair before hitting financial difficulties.

    Paris-New York is the biggest intercontinental city pair by seats from continental Europe and Paris CDG-New York JFK is the largest intercontinental airport pair by seats from continental Europe. Paris-New York has only 44% of London-New York’s annual seats in 2019, but it has grown faster since 2012. The Air France/Delta JV’s share is higher than the British Airways/American JV’s share on London-New York but this is falling, and there are more competing airlines.

    Corsair and French bee will follow three other new entrants on Paris-New York since 2015: Norwegian, LEVEL and (briefly) Primera Air.

    To read on, visit Paris-New York aviation market: Corsair, French bee and others


    Canada aviation: WestJet defining its priorities under new owner Onex

    Canada’s second largest airline, WestJet, has gone through numerous changes to its business model during the last decade – introducing two new subsidiaries, Encore and Swoop, adding new regional partners, forging a new joint venture and launching long haul operations, first with 767s and then with next generation 787s.

    The dizzying pace of change has drawn its fair share of scrutiny from the investment community, reflecting the dichotomy that airlines face in satisfying the shortsightedness of markets while also crafting long term strategic plans.

    WestJet won’t be subject to the quarterly whiplash that other airlines face now that it is being bought by the private equity firm Onex for CAD5 billion. But the airline continues to forge a clear growth strategy that entails building deep partnerships to broaden its international reach and continuing to capture a larger share of Canada’s corporate travellers.

    To read on, visit Canada aviation: WestJet defining its priorities under new owner Onex


    Alaska Air Group works diligently to meet post-merger goals

    Alaska Air Group’s merger with Virgin America was one of the more seamless in US aviation history from an integration perspective, and with the combination largely complete, Alaska is now working to reach its long term margin and leverage targets.

    With the exception of Hawaii, the company is also benefitting from an overall positive pricing environment and has raised its unit revenue outlook for 3Q3019. Alaska is also reaping benefits from new revenue initiatives, including segmented fares and other ancillary products, as it works to deliver an ancillary performance that mirrors its larger network peers.

    Alaska also appears to be benefitting from some stabilisation in highly contested transcontinental markets; however the airline is cutting some mid- and transcontinental routes as it works to maximise the overall profitability of its network.

    To read on, visit Alaska Air Group works diligently to meet post-merger goals


    Aeroflot Group SWOT: Russia’s number one on course for 2023

    Aeroflot Group reported an 11.4% increase in passenger numbers for the first eight months of 2019, in line with its target growth rate for the year. The group is on course to achieve its 10th straight year of traffic growth. From 2008 to 2018, its compound average growth rate in passenger numbers was 17.0%.

    This was boosted by acquisitions in 2011, but its average over the past five years, based on organic growth, has still been a vigorous 12.2%. Its growth has been resilient to fluctuations in the macroeconomic and geopolitical backdrop in Russia.

    Aeroflot has no plans to slow down. Its target to carry between 90 million and 100 million passengers in 2023, compared with 55.7 million in 2018, implies continued growth of approximately 11% pa.

    CAPA’s analysis of Aeroflot Group’s strengths, weaknesses, opportunities and threats suggests that it is well placed to achieve this target.

    To read on, visit Aeroflot Group SWOT: Russia’s number one on course for 2023