Catch up on CAPA’s exclusive Market Analysis pieces – Wizz Air, LOT Polish, Jet2.com and Thai Airways 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.


    Central Europe airlines: Wizz Air leads, LOT Polish growing fastest

    In late Jun-2018 LOT Polish Airlines took delivery of its third Boeing 787-9 aircraft and its fourth 737 MAX-8. As at 26-Jun-2018, LOT had outstanding orders for 18 aircraft: nine 737MAX-8s, five 787-9s and four Embraer E190s. The Polish carrier has enjoyed a strong return to growth since 2016 after emerging from a lengthy period of restructuring.

    LOT’s CEO Rafał Milczarski told CAPA TV in early Jun-2018 that LOT is aiming to become “Central Europe‘s favourite airline”. Currently, LOT is number three by seat capacity in Central Europe, behind the leader Wizz Air and third placed Ryanair. However, LOT is already the biggest airline on routes within Central Europe and the region’s only significant long haul operator.

    Seat growth from Central Europe is 10.5% in 2018, according to data from OAG Schedules Analyser, and LOT is the region’s fastest growing airline by seat capacity. Wizz Air and Ryanair have a strong presence in a number of countries across the region. This summer, LOT has also established a base outside Poland, launching two new trans Atlantic services from Budapest to New York JFK and Chicago.

    To read on, visit Central Europe airlines: Wizz Air leads, LOT Polish growing fastest


    Aviation infrastructure: Crisis in Europe and Asia

    Europe vs the Asia Pacific: Two regions challenged by exorbitant demand for better air and ground infrastructure

    The airline industries of the Asia Pacific and Europe are both expected to deliver robust net profits of above USD8 billion in 2018, with each region anticipated to account for around 25% of the forecast industry total. The average profit per passenger, according to IATA, is expected to be USD7.58 for Asia Pacific and USD5.10 for Europe.

    While 2017 saw the Asia Pacific and Europe record similar traffic growth of 9.4% and 8.2%, both markets include countries at varying levels of aviation development. The bottom line though is much more rapid growth than previous trends.

    For air navigation service providers (ANSPs), already congested segmentations of airspace generally continue to get busier, while recent economic and aviation development has spurred new air traffic growth in traditionally quieter areas.

    To read on, visit Aviation infrastructure: Crisis in Europe and Asia


    Jet2.com SWOT: a low cost airline with a tour operator attached

    Based on customer reviews, Jet2.com is the only European airline in TripAdvisor’s top 10 world airlines ranking, reflecting the UK low cost airline’s focus on customer service. This, and its close relationship with sister company Jet2holidays, allows it a partial escape from the commoditisation associated with competing only on price.

    Jet2.com and Jet2holidays (which provides almost half of the airline’s passengers) are managed as one business within the leisure travel segment of Dart Group PLC. The group achieved a 38% increase in revenue and a 27% increase in operating profit in the year to Mar-2018, but its operating margin dipped by 0.5ppts to 5.5%. The leisure travel segment typically achieves slightly higher margins than the group overall, but it also experienced a small decline for the second year running.

    This report considers Jet2.com’s strengths, weaknesses, opportunities and threats. The balance is currently tipped in favour of strengths and opportunities, but weaknesses and threats are visible.

    To read on, visit Jet2.com SWOT: a low cost airline with a tour operator attached


    Premium economy: Thai Airways considers joining the growing trend

    Thai Airways is evaluating the introduction of a premium economy product, which over the last few years has become more mainstream in the Southeast Asian market and globally. There are now over 12 full service airlines in Asia Pacific and over 20 FSCs globally offering premium economy.

    Three Southeast Asian flag carriers have introduced premium economy over the past three years – Philippine Airlines (PAL), Singapore Airlines (SIA) and Vietnam Airlines. The Vietnam Airlines and PAL examples indicate there is a potential niche for premium economy in leisure markets. Thailand is primarily an inbound leisure market, although premium economy would help Thai Airways compete for sixth freedom corporate traffic.

    Thai Airways is considering including a premium economy cabin on new widebody aircraft that it will soon order for delivery from late 2019 or 2020. Thai Airways is also considering fitting a premium economy cabin in the upcoming retrofit of its 777-200ER fleet.

    To read on, visit Premium economy: Thai Airways considers joining the growing trend


    US-Canada airline market: demand steady but tariffs create doubts

    Despite the trade rift between the US and Canada triggered by tariffs imposed by the US, the air travel market between the two countries remains stable. All of the largest airlines serving the market have increased their seat capacity between the two countries as the high season in the Northern Hemisphere kicks in.

    The largest airline operating between the US and Canada – Air Canada – is forecasting continued solid revenue growth in its transborder markets for 2Q2018, as it continues to execute its transit strategy for international travel through its hubs from smaller US markets. Some of its new introduced routes reflect its efforts to shore up its transit traffic.

    It remains to be seen whether the trade dispute will affect the ambitions of Delta and WestJet to form a cross-border joint venture, as well as the potential similar tie-up between Air Canada and United. Trade spats shouldn’t have any bearing on those pacts materialising, but uncertainty driven by US trade policy could change the calculus for those tie-ups.

    To read on, visit US-Canada airline market: demand steady but tariffs create doubts


    Taiwan-Australia: China Airlines, EVA, opposing strategies

    Taiwan is one of the few markets that are linked to Australia only via foreign airlines. Last year there was (remarkably) 28% growth with China Airlines’ expansion as part of a bold bid to pursue Australia-Europe Kangaroo Route transfer traffic via Taipei. Growth is continuing in peak 2018/2019, with a forecast 5% expansion consisting of upgauging in Brisbane and Melbourne offset by frequency reductions in Sydney.

    EVA Air has a considerably smaller footprint than China Airlines, with service only to Brisbane. EVA will operate greater capacity in Australia as it replaces A330-200s with its forthcoming 787-9s.

    Qantas and Jetstar do not have nonstop services from Australia to Taiwan (Qantas does codeshare with China Airlines). Taipei is on the lower end of route priorities for the group. Recent Asian growth has resulted in new/resumed service to Beijing and Osaka. Seoul was a contender, and likely to receive services before Taipei.

    To read on, visit Taiwan-Australia: China Airlines, EVA, opposing strategies