Catch up on CAPA’s exclusive Market Analysis pieces – IAG, Indigo Partners, AENA, HK Express 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.

Problems with legacy airline IT systems, according to IAG. Disparate, complex, costly, order-centric

IAG’s annual Capital Markets Day in early Nov-2017 included an outline of the group’s digital and IT strategies, given by IAG Director of Strategy Robert Boyle. This presentation contained a neat summary of the problems with current airline systems.

As Mr Boyle pointed out, airline systems are a subset of the global travel ecosystem, and the airline industry “has been a global industry from the days when real time global transactions really weren’t feasible”. The architecture devised by the industry in the past was groundbreaking in many ways, but is no longer fit for purpose.

The IT infrastructure and systems in the airline industry were designed around batch processing and physical paper documents. Although much of the documentation has been transformed into electronic formats, there remains much that is legacy in the system. Customer records are not all in one place, there is complexity and unnecessary cost, and the airlines’ ability to personalise the offer is limited by systems that are order-centric rather than customer-centric.

To read on, visit Problems with legacy airline IT systems, according to IAG. Disparate, complex, costly, order-centric

 

Indigo Partners A320neo order gives Frontier, Volaris, Wizz & JetSMART platform to accelerate growth

Four ultra-low cost airlines from four distinct markets are planning rapid expansion under an ambitious order placed by LCC specialist equity group Indigo Partners. Indigo signed an MoU at the 15-Nov-2017 Dubai Airshow for 430 A320neo family aircraft which are intended for US-based Frontier Airlines, Hungary-based Wizz Air, Mexico-based Volaris and Chilean start-up JetsMART.

The order from Indigo is intriguing in that Indigo only owns a minority stake in Volaris and Wizz. The deal therefore could be viewed as a combined order from four loosely aligned airlines that are keen to leverage the economies of scale associated with a bulk aircraft order. The “order” is essentially a series of four MoUs between Airbus and each individual airline. In the case of Wizz and Volaris,  approval from all of the shareholders is needed. Frontier and JetsMART, by contrast, are wholly owned by Indigo.

Indigo is likely taking advantage of attractive pricing during a down year for aircraft orders. The investment firm appears confident the four airlines can absorb 430 new aircraft, given the strength of their home markets and the ULCC model, but could also eventuate in allocating aircraft to new ULCCs that have not yet been established.

To read on, visit Indigo Partners A320neo order gives Frontier, Volaris, Wizz & JetSMART platform to accelerate growth

 

AENA again reports positive financial and operational data, but there are dark clouds on the horizon

AENA’s financial results for the three months ended 30-Sep-2017 – the primary quarter for a country, Spain, where tourism is so important to the economy (14% of GDP) – show that the organisation’s relentless progress since its partial privatisation in Feb-2015 continues.

But there are worrying developments outside its control. The northern European countries, led by the UK then Germany, are extremely important to Spanish tourism and therefore to AENA, and it is why the fall in the value of the pound, and ‘Brexit’ generally, concern AENA so greatly. With British resident expatriate figures in Spain already falling, a tail-off in UK visitors would upset AENA’s future projections.

Just as AENA is heavily reliant on business from a select number of countries, so is it also reliant on the budget airlines that carry them to Spain. Further, a major issue facing not only AENA – but in fact all the airlines operating in and into Spain, all the tourist organisations, the hotels – is the Catalonian secession crisis, and its potential to spread unrest to other regions of Spain.

To read on, visit AENA again reports positive financial and operational data, but there are dark clouds on the horizon

 

HK Express SWOT: refocusing on cost base, ontime performance, & finding a place in new HNA strategy

HK Express has changed from being the HNA Group’s darling child. HK Express relaunched as the city’s only LCC at the favourable time of decreasing fuel prices and foreign exchange depreciation, while Japan and Korea sought to build inbound visitors and seize pent-up demand.

Reduced aircraft utilisation and growing slot challenges resulted in HK Express needing to focus on reducing its cost base and restoring operational integrity after its on time performance had dropped to the 60% range. A surprise Oct-2017 management change adds uncertainty about whether HNA is willing to work through the down cycle (perhaps inevitable, given the history of airlines) and build upon HK Express’ core strengths, or will instead seek greater alignment with Hong Kong Airlines, or perhaps even a quasi-merger.

HK Express has told the local regulator it will not add flights or destinations through 30-Apr-2018 as it formulates a new commercial plan.

To read on, visit HK Express SWOT: refocusing on cost base, ontime performance, & finding a place in new HNA strategy

 

Atlanta’s airport belies the city’s relatively low ranking on the global economic scale

Atlanta’s Hartsfield-Jackson International Airport retained its position as the world’s busiest for passenger traffic in 2016, having become the first airport in the world to serve 100 million passengers in a year in 2015, and looks set to remain in that position in 2017, even though Beijing Capital Airport is narrowing the gap.

In many ways, it dominates the aviation scene in the southeastern part of the U.S. in terms of its sheer domestic size and scope, an increasingly important role in international transportation, and as a competitor to well-established cargo hubs like Miami.

This report looks at present and future growth trends at the airport, local airport statistics, how it matches up to other airports in the vicinity across a range of metrics, at any construction activities, and at its ownership.

To read on, visit Atlanta’s airport belies the city’s relatively low ranking on the global economic scale

 

AirAsia X further delays London relaunch due to A330neo setback, adjusts fleet plan with more ceos

AirAsia X has again adjusted its fleet plan, shelving plans to operate new A330-900neos on long haul routes to Western Europe and adding secondhand A330-300ceos. The low cost long haul airline group continues to consider A350s – and has even been offered delivery slots in 2018 to support a potential near term relaunch of London – but has decided, for at least the short to medium term, to stick with an all-A330 fleet and focus on medium haul routes within Asia Pacific.

AirAsia X initially intended to use A330neos to resume services to Europe, starting with Kuala Lumpur-London Gatwick. However, Airbus’ decision not to increase the maximum takeoff weight of the standard A330-900neo from 242 tonnes to 245 tonnes means it can no longer make Kuala Lumpur-London or Kuala Lumpur-Paris without uneconomical payload restrictions.

AirAsia X still plans to begin taking deliveries of A330-900neos at the end of 2018, the aircraft to be operated in two-class configuration on existing routes within Asia Pacific. The group also plans to add six or seven single class A330-300s in 2H2018, enabling expansion in all three of its home markets (Malaysia, Thailand and Indonesia) prior to the arrival of the A330-900neos.

To read on, visit AirAsia X further delays London relaunch due to A330neo setback, adjusts fleet plan with more ceos