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.
Blockchain technology: potential to improve data visibility & commonality could benefit aviation MRO
Blockchain is an open, distributed ledger that records transactions permanently, verifiably in a very secure manner. It offers the potential to improve the visibility and commonality of data in a very wide range of possible applications. In the area of aircraft maintenance, repair and overhaul (MRO), these qualities are very important.
Blockchain could help to ensure that all data about the status of an engine or other part are always up to date and can be securely shared by all interested parties – for example, the manufacturer, the airline, the MRO service provider, and the lessor. This could improve the efficiency of maintenance planning and of airlines’ capacity scheduling.
A Nov-2017 CAPA report looked at blockchain’s potential in aviation more broadly. This report focuses on its possible use in MRO.
New York’s John F Kennedy Airport seeks private sector input for next stage of its development
As the commercial and financial centre of the United States, New York City is one of only two cities to merit Alpha ++ rating in the Global Cities Index, according to the Globalisation and World Cities Research Network.
At the heart of its air transport network is John F Kennedy International Airport (JFK); not a hub as Atlanta, Chicago O’Hare, Dallas-Fort Worth and other such airports are, but a gateway to and from the rest of the world for a huge metropolitan area that is intimately bound up in international trade and commerce. Investment is needed to improve the terminals, and with the PPP experiment at LaGuardia Airport under way, the private sector will be asked to contribute at JFK also.
This report looks at present and future growth trends at JFK, local airport statistics, how the airport matches up to other airports across a range of metrics, as well as at construction activities and ownership.
SAS SWOT: Scandinavia’s biggest airline by seats makes best return in years, but challenges remain
SAS’ results for the year to 31-Oct-2017 reveal its best result since 2009, and a return on invested capital above its target for only the second time in at least a decade.
However, its FY2018 outlook indicates no further improvement. This throws the spotlight on the challenges faced by SAS in achieving consistent returns in its very competitive markets.
SAS is the biggest airline in Scandinavia by seat share, but has been overtaken by Norwegian by total passenger numbers. It has a strong brand, particularly among the region’s frequent flyers, but its cost base is still too high by comparison with the LCCs against which it competes. Its long haul network is small, but has fairly robust niche routes, and its long haul offer is supplemented by Star alliance membership.
CEO Rickard Gustafson has done well to reshape the corporate structure of SAS, to lower its costs, and improve its balance sheet and profitability since his arrival at the airline in 2011. His decision to open SAS’ first bases outside Scandinavia, in London and Málaga, shows the kind of creative thinking needed to survive and thrive.
Alaska Air and jetBlue work toward key fleet decisions; Airbus and Embraer await the outcome
The two major low cost, higher frills airlines in the US – Alaska Air Group and jetBlue Airways – are both in the process of fleet reviews, aiming to strike the right balance of flexibility for the future. Each airline is also working to create the right mix of owned versus leased aircraft in order to achieve favourable levels of unencumbered aircraft in their respective fleets.
The most high profile decision for Alaska is the ultimate fate of the Airbus narrowbody fleet and order book it inherited with its acquisition of Virgin America. For now, Alaska seems focused on more pressing merger related issues, stressing the first lease for Virgin America’s A321 narrowbodies does not expire until 2019.
JetBlue is undertaking heavy scrutiny of its subfleet of 100-seat Embraer 190 jets, while also evaluating optioning the Airbus A321LR for potential trans-Atlantic expansion, against the backdrop of working to achieve ambitious cost reductions by a self-imposed deadline of 2020.
Joon: Europe’s (compromise) newest airline manages to break all the LCC subsidiary start-up rules
Europe’s newest airline, Joon, took to the skies on 1-Dec-2017 from Paris CDG on routes currently operated by its parent Air France. Its first routes were to Barcelona, Berlin Tegel, Lisbon and Porto, deploying A320 aircraft transferred from Air France.
Joon was established by Air France on 20-July-2017, after an agreement allowing its creation was reached with unions – not an ideal formula for a low cost airline. It will provide service to Air France under a wet lease agreement, operating certain scheduled flights from CDG on behalf of its parent company.
Joon is Air France’s modest response to the high level of competition in the airline industry, particularly from Gulf airlines on long haul. Long haul routes will be added in summer 2018, initially to Cairo, Cape Town, Tehran, Fortaleza and Seychelles.
With Joon, Air France hopes to reduce costs and achieve a targeted increase in its customer base. Air France’s growth has been constrained by weak financial performance for many years, and Joon is intended to offer it the chance to grow again.
American Airlines maintains higher leverage levels as its fleet revamp continues full steam ahead
American Airlines is a stand-out among US airlines for the massive fleet restructuring it has undertaken during the past few years. Since the close of the merger between American and US Airways in late 2013, American has inducted 496 aircraft into its fleet, while retiring 469 aircraft.
It is a huge undertaking against the backdrop of other significant projects related to merger integration, including a complex reservations system cutover. Managing the financing of those aircraft is also no small task, reflected in American’s projected capex in 2018 falling below USD5 billion for the first time in four years.
The result of American’s dizzying pace of fleet replacement is an average mainline fleet age of 10 years, which is far below those of its major US rivals. However, the airline’s leverage is significantly higher than at its peers, which is one factor in American’s decision to hold higher cash balances than Delta and United.