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.
Southeast Asia-Middle East airline market: Qatar Airways grows rapidly, adds seven secondary cities
Capacity in the Middle East-Southeast Asia market has increased by nearly 50% over the past four years. Qatar Airways has expanded at easily the fastest rate, and has accounted for nearly half of the total capacity added.
Qatar now has more frequencies to Southeast Asia than Emirates, although Emirates is still significantly larger overall. Qatar has 16 destinations in Southeast Asia, giving it three more destinations than Emirates and the largest network among airlines from outside Asia.
Qatar has added three secondary destinations in Southeast Asia over the past three months, becoming the only airline from outside Asia to serve Chiang Mai and Penang.
On 7-Mar-2018 the airline unveiled plans to launch another four secondary destinations in Southeast Asia over the next year – Cebu, Davao, Da Nang and Langkawi, three of which currently do not have any links outside East Asia. Qatar is able to launch boutique destinations in Southeast Asia by relying on its extensive European network and by deploying smaller widebody aircraft (A330-200s or 787-8s) or, potentially in time, its future fleet of A321neo long range narrowbody aircraft.
Delta Air Lines and United fleets: airlines keep pressure on Boeing for a viable 757/767 replacement
The US major airlines Delta and United marked major historical milestones in 2017 with the retirement of their venerable Boeing 747 widebody fleets. The two airlines have solidified their replacements for the 747s: Delta is incorporating Airbus A350-900s into its fleet, and United is using 777-300ERs as its primary replacement for the 747. United reworked its widebody order book in 2017, switching from A350-1000s to the A350-900 to replace its 777-200ERs.
American has a small number of 787s remaining in its order book, and is currently studying its options for 22 A350-900s that it has on order as it works to determine its overall fleet composition in the future.
All three airlines are following Boeing’s evaluations and development of a new mid-market aircraft as their respective 757 and 767 fleets continue to age. United has identified replacement of those aircraft as a near term target, and widespread reports have cited Delta expressing interest in becoming a launch customer for Boeing’s mid-market jet.
Airline market Latin America-Europe: Central America the fastest growing, potential for much more
Over the past five years airline seat numbers between Europe and Central America have grown faster than any market to Latin America from Europe. Total Europe-Central America capacity in the year to 30-Jul-2018 will almost double from five years earlier, while growth on Europe to all of Latin America will be one third, according to OAG data.
Growth in Europe-Central America has mainly been driven on the European side. As at Jul-2018, over the past five years airport numbers in this market in Central America will have increased from seven to nine, while those in Europe will have grown from 11 to 23. The number of airlines will be up from 17 to 24 (all but one is European) and they will operate 43 routes, versus 21 five years ago.
Charter/leisure airlines and secondary airports (particularly in Europe) have been important to growth in this market, although primary European hubs and Mexico City remain significant, as do the airlines Iberia, Aeromexico, Air France-KLM and Lufthansa. From Europe, Madrid has the highest number of routes (seven). On the Central American side, routes are more concentrated on a smaller number of airports and Cancún leads with 21 routes.
Aircraft leasing accounts for half of world’s commercial aircraft fleet. Lessors shun widebodies
According to data from the CAPA Fleet Database, half of the commercial aircraft in service with the world’s airlines are leased. The penetration of leased aircraft is higher in Latin America, Europe and Asia Pacific and lower in North America and Africa. The leased aircraft share grew strongly in the 1980s and 1990s, but has broadly plateaued in the past decade.
Lessors’ share of aircraft orders has consistently been much lower than leased aircraft’s share of the fleet in service. A significant proportion of leased aircraft are subsequently added to lessor fleets through sale and leasebacks.
Analysis of the CAPA data on leased aircraft suggests that regional jets and narrowbodies are disproportionately popular among lessors, both by aircraft in service and by orders.
Turboprops, and in particular widebodies, appear to be proportionately less favoured by lessors.
Skymark Airlines SWOT: IT investments to target corporates & partners. Int’l growth uncertain
Skymark Airlines, born as a low cost operation, was to be Japanese aviation’s “third arrow”, a competitor to ANA and JAL. Skymark entered bankruptcy rehabilitation after an ill-fated A380 order caused financial distress, was a management distraction, and prevented Skymark from improving its domestic proposition.
ANA, originally a competitor, is now a minority shareholder in Skymark. Skymark joins ANA’s large airline portfolio that includes Air DO, Solaseed and StarFlyer.
Yet Skymark need not stagnate. Japan’s aviation future is focused on international expansion. Skymark plans to take a few additional 737s and enter scheduled international services, ideally with new slots at Haneda.
However, this is uncertain territory for an airline that has so far only been domestic, and nearly unknown outside Japan. Skymark would be better to improve its domestic position through corporate contracts, a loyalty programme, and transfer passengers from foreign airlines, should Skymark upgrade its IT. Skymark could consider upgauging through larger narrowbodies.
Airline traffic rights: JetBlue targets United over Star partner Air China’s fifth freedom plan
JetBlue Airways has been one of the most vocal opponents of the years-long campaign by the three large US global network airlines – American, Delta and United – to combat what they deem as unfair government subsidies awarded to Emirates, Etihad and Qatar.
One driver for the US Big 3 airlines’ subsidy blitz was Emirates’ utilisation of fifth freedom rights to launch service from Dubai through Milan to Delta’s hub at JFK. Subsequently, Emirates introduced fifth freedom service from Dubai through Athens to Newark Liberty airport – United’s main trans-Atlantic gateway. The crux of the argument is that those airlines could use illegal subsidies to encroach on lucrative trans-Atlantic routes.
Now United’s state-owned Star Alliance partner Air China aims to use fifth freedom rights to launch new service to Panama City through United’s hub at Houston Intercontinental. As a consequence, JetBlue is singling out United for its silence on Air China’s proposed route pairing, and is arguing that all state-owned airlines should be treated in a similar manner.
Fiji aviation market: Fiji Airways adds fifth A330 and renews 737 fleet. Needs to justify protection
Fiji Airways is accelerating expansion with the acquisition of a fifth widebody aircraft. The airline plans to take delivery of an additional A330-200 in mid-2018, enabling the airline to launch services to Tokyo Narita in Jul-2018.
Narita will become Fiji Airways’ fifth long haul destination after Hong Kong, Los Angeles, San Francisco and Singapore. San Francisco and Singapore were launched in 2016 as the airline added a fourth A330.
Capacity expansion across Fiji Airways’ short and medium haul network is also planned for late 2018 and early 2019, as Fiji Airways replaces its five 737NGs with five higher density 737 MAX 8s. The airline expects to achieve 8% to 10% growth in 2018, and an even higher rate of growth is likely for 2019.
Fiji’s tourism industry will benefit, since Fiji Airways already accounts for more than 70% of Fiji’s international capacity. But as this role depends heavily on the government’s regulatory protection from competition, the question needs continually to be asked whether protecting the flag carrier offsets the inevitable reduction of inbound tourism. It is again time for reviewing that equation.