Catch up on CAPA’s exclusive Market Analysis pieces – CSA Czech Airlines, Southwest Airlines, Singapore Airlines, American Airlines and more

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.

Travel Service: purchase of majority stake in CSA Czech Airlines shows fast growing group’s ambition

Travel Service, which has been operating since 1998, is the Czech Republic’s biggest airline company. It operates scheduled flights under the SmartWings brand, as well as offering charter and ACMI flights and business jet hire. Scheduled flights are generating an increasing proportion of its revenue and raising its profile. Travel Service has subsidiary airlines in Slovakia, Poland and Hungary.

Travel Service’s network is strongly focused on leisure routes and its schedule is more seasonally skewed than those of almost any other European airline, with 270 scheduled routes this summer and only 39 this winter. It makes use of wet leases (both in and out) to smooth out the seasonal demand fluctuations. Trading as SmartWings, Travel Service has leading market positions on its biggest scheduled summer routes. However, although profitable for the past five years, the airline has slim margins.

In Oct-2017 Travel Service agreed to increase its stake in the national flag carrier CSA Czech Airlines, from 44% to almost 98%. Although Travel Service Group carries fewer scheduled passengers than CSA, its overall operation is much larger, as evidenced by its fleet of 34 Boeing 737s, compared with CSA’s 18-strong fleet. The fast growing group has ambitions to operate a fleet of 70-80 aircraft.

To read on, visit Travel Service: purchase of majority stake in CSA Czech Airlines shows fast growing group’s ambition

 

Southwest Airlines believes it can attain positive RASM and flat cost growth in 2018

Southwest is joining the US majors Delta and American in forecasting positive unit revenue growth in 4Q2017, and the country’s largest domestic airline also believes it will achieve a positive performance in that metric in 2018 as it works to attain a flat unit cost performance for the year.

The company has not finalised its capacity plans for 2018 but is declaring its ASM growth will fall below 5.7%, and range from 3% to 4% in 1H2018. Southwest’s international expansion is likely to slow in 2018 as the airline focuses on preparing for new service to Hawaii. Details of Southwest’s plans for Hawaii remain scant, but the airline is hinting it could launch inter-island service at some point in the future, which would spur a significant market disruption in that region.

Southwest has not escaped pressure from discounting in the US market place, but the company is experiencing some improvement in 4Q2017 as yields appear to be trending in a more positive direction.

To read on, visit Southwest Airlines believes it can attain positive RASM and flat cost growth in 2018

 

Singapore Airlines A380: seat density increase, new cabin products to improve fleet profitability

Singapore Airlines (SIA) is increasing seat capacity on its A380 fleet as it introduces new premium products, kick starting a new phase of capacity growth. SIA’s ASKs have been on the decline since 2013 but ASK growth will resume over the next three years as the average density of its A380 fleet increases by 14%.

SIA will significantly increase economy and premium economy capacity across its A380 network, which currently includes 12 routes. First class capacity will be cut by 50% but revenues should not decline significantly as load factors improve. Business class capacity will increase slightly and SIA is hoping for higher business class load factors and yields as passengers respond positively to the product improvements.

Profitability of the A380 operation should improve, more than offsetting the investment in the new products. SIA is committed to maintaining a fleet of 19 A380s for several years; a phase out of the fleet or reduction is not an option as it is nearly impossible to remarket the aircraft.

To read on, visit Singapore Airlines A380: seat density increase, new cabin products to improve fleet profitability

 

American Airlines joins rival Delta in upbeat forecast of higher ASM growth in 2018 as 4Q RASM rises

American is joining rivals Southwest and Delta in offering an upbeat assessment of the US operating environment for 4Q2017 as some of the pricing pressure the country’s airlines felt in the third quarter appears to be easing. American’s forecast is driven by improving pricing patterns and its own set of revenue initiatives including the roll-out of segmented fares that feature its basic economy option.

The airline has concluded pricing began to rebound strongly in Sep-2017, and American believes the positioning of basic economy in the market place is driving the revenue momentum it expects to achieve in the final quarter of 2017.

But just as pricing pressure shows some signs of abating, American and Delta are planning robust increases in 2018 capacity. The growth obviously raises questions about industry pricing, but American remains bullish that its unit revenue growth in 2018 will outpace unit cost inflation. Some of Delta’s increase stems from the airline’s decision to resume international growth as those entities show signs of strength.

To read on, visit American Airlines joins rival Delta in upbeat forecast of higher ASM growth in 2018 as 4Q RASM rises

 

Japan Airlines: seven months since growth restrictions ended. New flights, partners and fleet plans

Japan Airlines is seven months into its long-awaited ending of growth restrictions and is pulling together the ingredients for developing more expansive growth than previously forecast. On 01-Apr-2017 JAL was no longer restricted by Tokyo about the investments and business developments it could make, a response designed to counter any advantage JAL gained over ANA during JAL’s state-sponsored government rehabilitation.

So far, JAL has moved flights between Tokyo’s Haneda and Narita airports, as well as adding frequencies (London and Bangkok) and all new services (Melbourne and Kona). The company has forged partnerships with VietJet, Aeromexico and Hawaiian Airlines to support new and existing growth.

JAL is also improving its anchor JV with American Airlines and is due to cut over to Amadeus Altea. JAL is still to flex its pent-up capability and grow in continental North America, where the airline is evaluating further services to existing markets as well as all-new destinations, including North American cities that do not yet have service to Asia.

To read on, visit Japan Airlines: seven months since growth restrictions ended. New flights, partners and fleet plans