Catch up on CAPA’s exclusive Market Analysis pieces – Fiji Airways, Philippine tourism, Southwest Air and more

    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.

    Fiji tourism: growth to accelerate as Fiji Airways doubles in size 

    Fiji Airways is planning to double in size over the next decade as part of an ambitious 10-year business plan which supports a government objective to accelerate tourism growth. Tourism is Fiji’s largest industry, and is expected soon to surpass USD2 billion in spend per annum.

    Fiji Airways dominates its home market, accounting for over 60% of international passenger traffic and 100% of domestic traffic. Fiji is not adopting a liberal aviation policy to stimulate tourism, but is instead focusing on expanding its flag carrier to provide the capacity needed to fill an influx of new resorts.

    The airline aims to attract more visitors by improving its service standards and joining the oneworld alliance as a connect member, which will raise global awareness for Fiji Airways and Fiji as a destination. Fleet renewal and expansion is being pursued with 737 MAX 8s, slated to be delivered from Nov-2018, and an order for new generation widebody aircraft that could be placed by the end of 2018.

    To read on, visit Fiji tourism: growth to accelerate as Fiji Airways doubles in size 

    Philippines tourism: Siargao booms as Cebu Pacific and PAL expand

    Siargao has emerged as a popular alternative holiday destination in the Philippines, boosting traffic at the island’s small airport. Siargao is known for surfing and uncrowded pristine beaches, but has historically not attracted as many tourists as other Philippine destinations due to accessibility issues.

    Sayak Airport on Siargao had limited flights until 2017, when the Philippine Airlines Group and the independent regional airline SkyJet launched services. The Cebu Pacific Group also launched flights to Siargao from Manila in late 2017 and added capacity from Cebu.

    Cebu Pacific and PAL have both added more flights to Sayak Airport in 1H2018. The airport now has 65 weekly return frequencies, compared to only seven return frequencies two years ago.

    To read on, visit Philippines tourism: Siargao booms as Cebu Pacific and PAL expand

    Southwest Air SWOT: cost control key: millennials must be the focus

    There is no argument that Southwest is among the most successful airlines in the history of global aviation. Its longstanding profitability is unmatched, and its favourable customer sentiment has endured throughout the inevitable cyclical environment that both US and global airlines face.

    But at times Southwest can be a slower performer: cost control is key, and adapting its brand to reach a larger millennial audience than do its peers – especially in the realm of technology. With the ever-growing importance of the millennial traveller, the airline needs to be attuned to that age set’s preferences in order to continue exploiting its all-powerful brand, especially as it continues to contemplate additional international expansion.

    Southwest also faces the age-old challenges that plague the majority of airlines – maintaining cost efficiency and favourable labour relations.

    This report considers Southwest’s strengths, weaknesses, opportunities and threats.

    To read on, visit Southwest Air SWOT: cost control key: millenials must be the focus

    Saudi Arabian Airlines SWOT: of tourism, dual brand & airports

    Saudia (also known as Saudi Arabian Airlines) embarked on an ambitious transformation programme three years ago aimed at improving its efficiency and product. The airline has since taken delivery of over 70 aircraft, resulting in a younger fleet and higher service standards, as well as an accelerated growth rate.

    Passenger traffic has increased from 28 million in 2014 to 35.5 million in 2017. Growth will further accelerate and is expected to reach 45 million passengers in 2020.

    The focus at the main brand is on international growth using a redesigned hub in Jeddah, where Saudia will gradually move into a new terminal over the next several months. The Saudia Group has also begun implementing a dual brand strategy which uses its new LCC subsidiary flyadeal to help maintain its strong position in the domestic market as competition intensifies.

    To read on, visit Saudi Arabian Airlines SWOT: of tourism, dual brand & airports

    Israel aviation: El Al loses share to LCCs as EU skies open

    The phased introduction of the EU-Israel Open Skies agreement, signed in 2012 and executed in 2013, reached its final stage in summer 2018. This provides for the removal of frequency restrictions and has contributed to a 15% seat capacity increase in the overall Israel market this summer compared with last summer.

    Israel’s leading airline, El Al, has been losing share for a number of years, whereas low cost airlines have enjoyed a surge in their share of seats and passengers. Wizz Air, easyJet, Pegasus Airlines and Ryanair are now particularly active in Israel (but other LCCs are also present). El Al considered a merger with Israir Airlines, but the plan was withdrawn after the two sides failed to agree terms and Israel’s Antitrust Authority opposed it.

    European destinations dominate international schedules to/from Israel, while long haul routes represent a relatively small share of capacity. To a very large extent, for geopolitical reasons, Israel is an end of line destination served from the west (Europe and, to a lesser extent, North America), but with very few direct links to its east and south.

    To read on, visit Israel aviation: El Al loses share to LCCs as EU skies open

    Flybe SWOT: Europe’s leading independent regional airline stalls again

    Flybe is Europe’s largest independent regional airline, the UK’s biggest airline in the domestic regional market (i.e. excluding London), and it has no airline competition in most of its network. This sounds like the basis for printing money.

    However, it struggles to make a sustainable level of profit. Flybe reported another net loss for the financial year to Mar-2018 – its sixth time in the red in the past eight years. This suggests that it may have a fundamental, structural problem, or may need better execution of its strategic aims.

    It may be a bit of both. Regional airlines inherently have a high unit cost level and typically work best when focused on a narrow niche. Flybe overexpanded in the past and overcommitted to aircraft that were not best suited to its network.

    In spite of a depressed share price, Flybe has not yet attracted a bid and must focus on self-help. It is now on a course of fleet reduction, focusing mainly on the Bombardier Q400, but also retaining the Embraer E175 for longer, thicker routes. This, together with tighter cost control, presents the opportunity for Flybe to seek a way to sustainable profitability.

    This report considers Flybe’s strengths, weaknesses, opportunities and threats.

    To read on, visit Flybe SWOT: Europe’s leading independent regional airline stalls again

    Chatbots and millennials. Airline distribution in transition

    The CAPA Americas Summit earlier this year addressed the airline distribution landscape – one of the fastest evolving elements of the industry at large, as airlines work to determine the best avenues for maximising their retailing strategies and enhancing positive brand awareness.

    Voice technology and chatbots are emerging as the new frontiers in distribution and retailing, joining applications such as Twitter and Facebook, as desktops are all but obsolete in researching and booking travel.

    Even as airlines continue their work to drive consumers to their own websites, a resounding message from industry players is that airlines need to study the digital and mobile habits of customers carefully, particularly the importance of messaging platforms to today’s airline passengers.

    To read on, visit Chatbots and millennials. Airline distribution in transition