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.

    Istanbul New Airport: impact on other airports in Istanbul and beyond

    Istanbul’s new airport – one of the world’s largest – opens on 29-Oct-2018, involving what is claimed to be the world’s biggest airport transfer of services and appropriate infrastructure from the existing Atatürk Airport. Not only in terms of passenger numbers, but also in geography – the two airports are more than 45 km apart.

    The opening of the airport and its completion, in double-quick time, opens the door to much greater competition throughout the West Asia, Eastern Europe and Middle East regions, where the so-called ‘Middle East Big Three’ (MEB3) airlines and the airports that support them have held the upper hand. At the same time, Istanbul’s Atatürk has been capacity-constrained, necessitating the sharing of international traffic with Sabiha Gökçen Airport in the eastern part of the city.

    This report looks at the implications for all the big airport players in this part of the world, for the existing Atatürk and Sabiha Gökçen and for Turkish Airlines and Pegasus Airlines – the two main Turkish carriers.

    To read on, visit Istanbul New Airport: impact on other airports in Istanbul and beyond

    Turkish Airlines SWOT: more growth for the Istanbul superconnector

    The Turkish lira crisis, accentuated by a diplomatic row with the United States, further weakened an already sluggish currency. In early Oct-2018 the lira was down by 38% year-on-year against the US dollar. This highlights uncertainties about the macroeconomic and geopolitical backdrop for airlines operating in Turkey. In 2016 Turkish Airlines (THY) reported a rare loss as a result of a demand slump following a series of terrorist attacks and a failed coup.

    Nevertheless, in 2018 THY expects to grow passenger numbers by 9%, to add USD1.5 billion in revenue, and to achieve an EBITDAR margin of 25%, compared with its 10-year average of 20.4%.

    Turkey is a large and growing aviation market and provides a solid platform for THY’s global connecting strategy. THY has an efficient cost structure, a young fleet and orders to ensure continued growth. Compared with its Gulf-based superconnector competitors it has a small Asia Pacific network, but is strong in regions lying within narrowbody range of its Istanbul hub. Faced with capacity constraints at Atatürk Airport, the Istanbul New Airport is scheduled to start operations in late Oct-2018 and will provide THY with plenty of room for further growth.

    To read on, visit Turkish Airlines SWOT: more growth for the Istanbul superconnector

    Indonesia-China market: rapid growth benefits Citilink, Garuda, Lion 

    The Indonesia-China market is growing rapidly, driven by inbound tourism, and is starting to capture the attention of LCCs. There are now more than 60,000 one-way weekly seats from Indonesia to China during peak periods, compared to 10,000 peak one-way weekly seats five years ago.

    Lion Air has pursued rapid expansion in the Indonesia-China market over the past two years, launching more than 20 charter routes between the two countries. Lion’s capacity share in the Indonesia-China market has grown from literally zero three years ago to nearly 30% currently.

    Garuda Indonesia has tripled its China capacity over the past three years, while its LCC subsidiary Citilink has launched several charter routes. The Garuda Indonesia Group now has nearly a 40% share of Indonesia-China seat capacity. Citilink plans to begin operating scheduled services to China in late Oct-2018 with an initial three routes, resulting in the only scheduled LCC capacity in the Indonesia-China market.

    To read on, visit Indonesia-China market: rapid growth benefits Citilink, Garuda, Lion 

    Nordic Aviation Capital: the world’s largest regional aircraft lessor

    Established in 1990, Nordic Aviation Capital (NAC) is the world’s leading lessor and owner of ATRs, Bombardier Dash 8s and turboprops generally. It is also the world’s largest independent manager of leased regional jets. Overall, it is the biggest regional aircraft lessor on the planet.

    With its headquarters in Billund, Denmark, and regional offices in Limerick, Fort Lauderdale, Singapore and Hong Kong, NAC has 72 airline customers in 48 countries. Its biggest operator is Garuda Indonesia, its customers including some of the world’s largest regional airlines and the regional subsidiaries of major airlines.

    NAC’s most recent annual report (covering the year to Jun-2018) boasts of 22 consecutive years of earnings growth and a 19% return on equity, illustrating the financial success of its focus on regional aircraft leasing.

    To read on, visit Nordic Aviation Capital: the world’s largest regional aircraft lessor

    A340 fleet: last Asian operator, Philippine Airlines, bows out

    Philippine Airlines (PAL) has become the latest airline to phase out A340s, operating its last A340-300 scheduled flight at the end of Sep-2018 without fanfare. PAL accelerated the retirement of its last four A340-300s, a sensible decision given the recent rise in fuel prices.

    There are still 156 A340s in commercial operation, according to the CAPA Fleet Database. However, there are no more aircraft of the type in Asia, where only five years ago there were 11 operators.

    The size of the active A340 fleet has been cut in half over the past seven years. More retirements are likely as rising fuel prices force airlines to re-examine the economics of ageing four engine aircraft.

    To read on, visit A340 fleet: last Asian operator, Philippine Airlines, bows out

    US Big 3 global airlines’ fleets: nuanced changes

    The large three US global network airlines have solid order books and their fleet plans are largely firmed up for the foreseeable future. But there are shifts occurring as American, Delta and United make subtle adjustments in order to ensure their fleets are sized appropriately.

    American has cancelled an order for Airbus widebodies and deferred deliveries of narrowbody jets, while ordering some replacement regional jets. Delta is in the process of replacing a portion of its mainline fleet with new build aircraft, even as it has historically been a big player in the used aircraft market.  United has also ordered regional jets and additional widebodies, and is also actively looking for used aircraft.

    All of these moves show that fleet management is a science; airlines are constantly reviewing their fleet plans and making nuanced changes to their aircraft portfolios in order to strike the right cost and revenue balance.

    To read on, visit US Big 3 global airlines’ fleets: nuanced changes