Every 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.
In this week’s edition, our global team of experts deliver you a wealth of insightful commentary on the latest news and trends affecting the commercial aviation industry, including:
- Avianca moves build network utility through Synergy’s pursuits. CAPA Latin America Summit report
- Ryanair: fixing rostering problems, but CAPA analysis says more to this than simple pilot shortage
- Singapore-India market grows by 17%, despite bilateral constraints for SIA as Indian airlines expand
- Brussels Airlines takes on Thomas Cook Airlines Belgium’s schedule, paves way for VLM to return
- Philippine Airlines plans Australia and India expansion using A321neos with auxiliary fuel tanks
Avianca moves build network utility through Synergy’s pursuits. CAPA Latin America Summit report
Latin American airline group Avianca has declared its ambitions to emerge as one of two pan Latin American airlines that will dominate the region due to ongoing consolidation in the region. Avianca is already the dominant airline in Latin America’s third largest market Colombia, and holds a solid position in one of the region’s most promising air travel markets, Peru.
After putting a potential merger with Avianca Brazil on hold a couple of years ago, Avianca is now actively pursuing a tie-up with its Brazilian sister company as the country’s economy begins a slow recovery. Avianca believes a strong position in Brazil, coupled with pursuits by its parent Synergy in Mexico and Argentina, allows for Avianca branded airlines to compete effectively for passengers in Latin America’s most important markets.
In the short term, Avianca is close to announcing a fourth European destination in Germany, and is also seriously examining launching service to Rome and Paris. The company concludes an opportunity exists to connect passengers to those destinations through its largest hub in Bogota.
Ryanair: fixing rostering problems, but CAPA analysis says more to this than simple pilot shortage
Ryanair’s flight cancellations in the six weeks to the end of Oct-2017 have been followed by the cancellation of more flights in the coming winter. This will slow its passenger growth from 9% to 7.5% in FY2018 and from 8% to 7% in FY2019. Ryanair is also increasing pilot recruitment and, at four major bases, pilot pay. Ryanair has also withdrawn its bid for Alitalia to “eliminate all management distractions”.
Ryanair insists that the latest measures will rectify its crew rostering problems. Some observers had inferred a deeper problem, namely a shortage of pilots, but CAPA analysis in this report does not support this. However, pilot retention and career development may need more management attention and may be starting to receive it. After four years of trying to be nicer to passengers with its ‘Always Getting Better’ programme, CEO Michael O’Leary may now be adopting a more cuddly approach with is pilots.
Ryanair has a history of quick changes when things go wrong. Mr O’Leary has held his hands up, admitted to errors and apologised. The cuddly new Mr O’Leary has not lost his resolve to make sure the same thing does not happen again.
Singapore-India market grows by 17%, despite bilateral constraints for SIA as Indian airlines expand
Growth in the Singapore-India market has accelerated significantly over the past year, despite Indian-imposed bilateral restrictions limiting expansion by the Singapore Airlines (SIA) Group. Singapore-India passenger traffic has increased by 17% through the first eight months of 2017, driven partially by a surge in Indian visitor numbers to Singapore.
Indian airlines have been the main beneficiary of the growth, since Singapore-based airlines are now fully utilising their traffic rights to most Indian metros. Air India Express, IndiGo, Jet Airways have all launched new routes to Singapore over the past year.
More expansion from Indian airlines is likely, as they are still not fully making use of their rights in the existing Singapore-India air services agreement. A new bilateral agreement is a possibility, but would likely only provide Singaporean airlines with an incremental increase. Many features of India’s aviation policy is still mired in protectionism – despite the policy’s obvious failure over the years.
Brussels Airlines takes on Thomas Cook Airlines Belgium’s schedule, paves way for VLM to return
Belgium’s aviation landscape is entering a transition phase. Brussels Airlines is acquiring assets of rival carrier Thomas Cook Airlines Belgium (TCAB), following approval by the Belgian Competition Authority for a deal agreed in Mar-2017, and VLM Airlines is to return.
From the end of Oct-2017 Brussels Airlines will take on all of TCAB’s 160 pilots and cabin crew, as well as all of its slots and routes, and will acquire two of TCAB’s five A320s. It will then become the main supplier of airline seats to Thomas Cook Group’s tour operators in Belgium.
Earlier in 2017 the Dutch holding firm SHS Aviation BV took a majority shareholding in TCAB, giving it ownership of TCAB assets not sold to Brussels Airlines or redeployed elsewhere in the Thomas Cook Group. It is expected to use TCAB’s AOC to relaunch the previously bankrupt VLM Airlines in Belgium later this year (details of its business model are awaited).
Thomas Cook’s Belgian tour operators will benefit from its new airline partner’s bigger flight network, improved schedule and greater range of services and product features, fortifying it against its leisure rival TUI Group. Brussels Airlines will significantly increase the number of leisure destinations in its route network, giving it another boost in its clawing back of market share from LCCs.
Philippine Airlines plans Australia and India expansion using A321neos with auxiliary fuel tanks
Philippine Airlines (PAL) plans to use a new subfleet of longer range A321neos to expand in Australia and launch services to India. In 2018 PAL is taking delivery of six A321neos with two auxiliary centre fuel tanks, enabling flights of over eight hours.
PAL has opted for a low density 176-seat two class configuration for its first six A321neos. Lie flat seats will be provided in business class, providing a premium product similar to that in long haul widebody aircraft, and both cabins will have seatback IFE.
PAL has orders for 21 A321neos, for delivery from 2018 to 2024. However, after the initial six longer-range aircraft are delivered in 2018, the airline intends to take the remaining 15 aircraft from 2019 in standard two-class configuration as replacements for A320ceos.