Catch up on CAPA’s exclusive Market Analysis pieces – Hawaiian Airlines, Pegasus Airlines, Cebu Pacific 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.

CAPA commercial aircraft lessor rankings: GECAS, AerCap & Avolon lead

According to the CAPA Fleet Database at 28-Aug-2018, the commercial airline fleet includes 16,902 leased aircraft. The vast majority of the leased aircraft, 88%, are in service, while 12% are currently in storage. Leased aircraft represent 53% of the commercial aircraft fleet (in service and in storage).

In CAPA’s lessor rankings by aircraft numbers and by aircraft market value, the world’s two biggest lessors each top one of the lists. GECAS is number one by fleet size, whereas AerCap takes the crown for most valuable aircraft portfolio. Avolon, ranked at number three in both charts after an acquisitive 2017, has ambitions to jump ahead of the two leaders.

However, none of these leading three currently has the highest number of lessor orders. That prize currently belongs to Air Lease Corporation, a signal that it too has growth ambitions. Orders point to the future and the leader board for lessor orders also includes a number of Russian and Chinese institutions that do not currently rank highly for their existing portfolios.

To read on, visit CAPA commercial aircraft lessor rankings: GECAS, AerCap & Avolon lead

Hawaiian Airlines: a positive cargo outlook as inter-island ops start

Hawaiian Airlines has recently marked a milestone, launching dedicated freighter service in the inter-island market with turboprop aircraft. Although the operation is small, and likely won’t drastically alter the company’s inter-island cargo market share, it is a unique opportunity for Hawaiian to bolster its cargo revenue. It is also a line of business that Hawaiian aims to grow, now that the operation is up and running.

The company’s expansion into the inter-island cargo market occurs as Hawaiian’s outlook for its long haul cargo remains solid, driven by high yields on inbound US goods.

To read on, visit Hawaiian Airlines: a positive cargo outlook as inter-island ops start

W/Europe-M/East capacity: only British Airways exploits opportunities

The Middle East is Europe’s second biggest intercontinental region by seat capacity after North America, while Europe is the Middle East’s number two region after Asia Pacific. However, analysis of capacity by country between the two regions highlights certain imbalances.

Although Western Europe’s leading countries are bigger overall aviation markets than those of the Middle East, the Europe-Middle East market is more concentrated at its eastern end than at it western end. The top three Western European markets (UK, Germany and Italy) have one third of Europe-Middle East seats in 2018, whereas the top three Middle Eastern markets (UAE, Israel and Qatar) have close to three quarters.

Moreover, capacity growth to/from the Middle East has been rapid outside the biggest European countries, led particularly by Emirates and Qatar Airways. The global connections offered by Emirates, Qatar Airways and Etihad significantly boost the importance of the UAE and Qatar in Europe-Middle East capacity.

In view of the fact that most of the passengers in these markets do not originate or terminate in the Middle East, British Airways has however been much more strategically astute in exploiting the network of partner Qatar Airways to expand its network reach significantly.

To read on, visit W/Europe-M/East capacity: only British Airways exploits opportunities

SE Asia fleet: Lion slows growth; AirAsia, VietJet more aggressive

Southeast Asia’s largest airline entity, the Lion Group has further slowed fleet expansion in 2018 and is on pace to take delivery of only 17 aircraft this year. The Indonesia-based airline group has significantly slowed its expansion in the past three years, since taking an all-time high of 57 aircraft in 2015.

Lion still has around 450 aircraft on order, but a large proportion of these will be used to replace its existing fleet. AirAsia and VietJet now have more growth aircraft on order than Lion.

The AirAsia and AirAsia X groups combined have nearly 500 aircraft on order, but a smaller fleet in service than Lion’s. VietJet now has commitments for over 300 aircraft, despite only reaching 60 aircraft in its in-service fleet in early Aug-2018.

To read on, visit SE Asia fleet: Lion slows growth; AirAsia, VietJet more aggressive

Pegasus Airlines SWOT: Turkey’s ultra-LCC is set for further growth

In 1H2018 the ultra-LCC Pegasus Airlines achieved passenger growth of 13.9%, a slightly faster pace than its FY2018 target of 11%-13%. It also narrowed its losses in the seasonally loss-making first half, recording an operating profit margin of -2.7% versus -8.6% a year earlier.

Both Pegasus and its leading local rival, Turkish Airlines, enjoyed a strong return to profit in 2017 after rare losses in 2016, when a series of geopolitical and terrorist events in Turkey had weighed on demand. Turkey enjoyed a healthy recovery in air traffic in 2017 and Pegasus’ traffic growth outpaced that of Turkish. This recovery continued into 2018, but the recent slump in the Turkish lira is a reminder of the macro risks faced by Pegasus.

Nevertheless, in spite of the unfolding currency crisis at the time of its 1H2018 results (on 13-Aug-2018), Pegasus has maintained its FY2018 guidance. Its position as Turkey’s leading low cost airline has led to consistent strong growth over many years – the kind of track record that breeds confidence.

In this context, this report considers Pegasus’ strengths, weaknesses, opportunities and threats.

To read on, visit Pegasus Airlines SWOT: Turkey’s ultra-LCC is set for further growth

Cebu Pacific Air SWOT: Asia’s first LCC, Philippines market leader

Cebu Pacific is Asia’s oldest LCC, having launched services in 1996 – four years before Lion and five years before AirAsia. However, after initially following a pure LCC model, Cebu Pacific became distracted and adopted more of a hybrid or FSC model. Cebu Pacific’s parent JG Summit subsequently realised this was a mistake and the airline returned to its LCC roots in 2004. It has not looked back since.

Cebu Pacific started to pursue rapid expansion in 2005 and has since increased its passenger traffic tenfold – from 2 million in 2005 to 20 million in 2017. Cebu Pacific became the largest airline group in the Philippine domestic market in 2009 and its domestic market share has been more than 50% since 2013. While Philippine Airlines is still bigger in the international market, Cebu Pacific now has a significant international presence and has captured over 20% market share since 2015.

Most importantly, Cebu Pacific has been consistently profitable since completing an IPO in 2010. Cebu Pacific has outperformed PAL in virtually every metric for the last decade and has become one of the strongest airlines in Asia.

Cebu Pacific has limited its risk by not following other Southeast Asian LCCs in establishing overseas JVs and placing large aircraft orders. Its strategy may seem overly conservative, but has been very successful – and profitable – as Cebu Pacific has cashed in on its dominant and first mover position in the fast expanding Philippines market.

To read on, visit Cebu Pacific Air SWOT: Asia’s first LCC, Philippines market leader