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.
Biometric facial technology at airports: limits, but moving ahead, with President Trump’s support
Los Angeles International Airport (LAX) has implemented biometric facial recognition (BFR) as a security measure, under a test procedure.
Several other U.S. airports, and others around the world, are trialling the same technology, or different versions of it. The impetus has come from a U.S. President Trump highly focused on security and immigration, and it may be adopted widely before long, taking precedence over fingerprint and iris-recognition technologies.
But no technology is perfect, and there remains work to be done in this area.
Basic economy fares meet American Airline’s and Delta’s expectations; United needs to catch up
One of the most closely watched developments in the US aviation industry during 2017 was the roll-out of basic economy fare structures by the three large US global network airlines – American, Delta and United.
The fares were designed as a means to match prices with ultra low cost discounters, but ULCCs have argued that basic economy pricing has ultimately created a tool for those large airlines to revenue manage their inventory better. Indeed, American and Delta have both cited close to 50% upsale rates from basic economy, and Delta believes the income from those bare bones fares represents a small contribution to its incremental revenue base.
United had a different experience with its roll-out of basic economy, and has not experienced the same benefits as it rivals. Now the airline is making tweaks to the offering, and its performance in managing its basic economy offering will be closely watched in 2018.
Beijing Capital airport: 2017 record, but stays #2 to world busiest Atlanta as Beijing Daxing looms
Such is the growth of the China market that accolades become normal. Beijing Capital International Airport announced its 2017 passenger traffic as a record, but Beijing Capital has set a new record every year since 2004.
The airport handled 95.8 million passengers in 2017, a year-on-year increase of 1.4 million, or 1.5% growth. Beijing Capital had double-digit percentage growth until 2011, and then had growth of 5% or so. While this is slowing, it is from a larger base, although the additional 1.4 million passenger figure of 2017 was the slowest in a decade.
Beijing Capital is the world’s second largest airport. Atlanta Hartsfield-Jackson remains the largest, and the only airport to carry over 100 million passengers a year. Atlanta’s traffic has declined by 0.3%, so while Beijing Capital has narrowed the gap with Atlanta, it appears unlikely that it will overtake Atlanta.
From 2019 some airlines at Beijing Capital will move to the new international airport, Beijing Daxing. Their existing Beijing Capital slots will only gradually be made available to other airlines. Beijing city’s total passengers will increase, but across two airports.
Australia-Bali airline market: full service airlines Qantas and Lion Group accelerate Bali growth
Bali in Indonesia is a large and very competitive market which historically has consisted mainly of price sensitive leisure passengers. It seems to be creating an almost insatiable demand for capacity. And full service carriers are now driving a new phase of expansion between Bali and Australia.
FSCs will account for nearly 40% of Bali-Australia capacity in Jul-2018, compared to approximately 27% in Jul-2016. Qantas and Lion Group’s full service brand Batik have entered the market, while the two FSC incumbents – Garuda and Virgin Australia – have expanded slightly.
Qantas is launching Melbourne-Bali in Jun-2018, supplementing its relatively new Sydney-Bali service. Lion Group also intends to launch Melbourne-Bali in late Mar-2018, supplementing new Brisbane-Bali and Perth-Bali services. The Lion Group subsidiary Batik Air is seeking to launch several more Australia-Bali routes in 2019, using its future fleet of A321neoLRs.
Why Europe’s LCC fleets will continue to grow. Ryanair leads; Wizz Air has most orders
Aircraft operated by LCCs are 20% of the total airline fleet in Europe, a higher share than in any other world region. Over the decade from 2007 to 2017, Europe’s LCC fleet almost doubled in size, while the continent’s total fleet grew by less than a quarter. LCC widebody numbers have more than tripled, but their share of Europe’s LCC fleet was still only around 3% in 2017, similar to the global average.
Europe’s LCCs account for a disproportionate share of the continent’s aircraft orders, with 42% – although they are far behind Asia Pacific’s LCCs on absolute order numbers. European LCC orders are equivalent to two thirds of LCC aircraft in service, compared with only one third for all European airlines.
Ryanair has Europe’s largest LCC fleet, while Wizz Air has the highest number of LCC aircraft orders. As a percentage of aircraft in service, the much smaller Primera Air’s orders represent the biggest bet on the future. Boeing has the highest number of aircraft in service with Europe’s LCCs, but Airbus leads on aircraft orders, thanks to its A320neo family.
Etihad Airways withdraws 777-200LRs and A330Fs, but has bigger strategic decisions to make
The work of the Etihad Aviation Group’s new Group CEO Tony Douglas has begun. Etihad Airways CEO Peter Baumgartner continues to look after the main Etihad flying operation. There is a big task ahead for management to reshape, and ultimately transform, Etihad into a smaller, more focused airline.
Etihad has already retired A340-500 and -600s, which are likely to be broken up, and the airline has parked its A330-200Fs, most of which are leased. Etihad may next logically retire its passenger A330s, which are the oldest in its fleet.
Etihad plans to sell its five 777-200LRs, which it bought from Air India. The 777-200LRs are valued at USD50 million, or more. Etihad has further work ahead as it reduces its existing fleet and likely consolidates its aircraft order book.
Bangkok Don Mueang Airport: world’s largest LCC airport to surpass 40 million passengers in 2018
Passenger traffic at Bangkok Don Mueang Airport has more than doubled over the last four years, driven by rapid expansion in Thailand’s low cost airline sector. Don Mueang handled 38 million passengers in 2017, matching its annual throughput from over a decade earlier when it was Bangkok’s main and only airport.
Don Mueang was gradually repositioned as an LCC airport in the years following the opening of Bangkok Suvarnabhumi Airport. The airport is now the world’s largest LCC airport, and in 2018 will likely become the first airport ever to handle more than 40 million LCC passengers in a single year.
Thai LCCs currently account for 94% of seat capacity at Don Mueang, and LCCs overall accounted for 97% of total traffic at Don Mueang in 2017.