Industry Intelligence – catch up on CAPA’s exclusive market analysis insights

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. Here’s some of the reports published over the past week.


Iran-Western Europe aviation: capacity to slump further as tensions rise

The US air strike that killed Iranian General Qasem Soleimani signals a significant further escalation in tension between Iran and the West.

The landmark 2015 deal to limit Iran’s nuclear programme in exchange for relief from sanctions (JCPOA) prompted a period of strong growth in international airline capacity to/from Iran. However, US President Donald Trump abandoned the deal and reimposed sanctions in 2018, and this led to a dramatic fall in international capacity.

Western Europe – the only region in the West with direct air links to Iran – enjoyed strong growth in capacity to Iran in 2016 and 2017, but suffered from a dramatic fall in 2018 and 2019. Five of the seven Western European airlines that served Iran in 2017 pulled out in 2018. Now only Iran Air, Mahan Air, Lufthansa and Austrian Airlines provide direct services between Iran and Western Europe, and the number of routes has dropped from 20 to 12.

The latest developments must surely further depress demand for Iran-Western Europe air travel.

TO READ ON, VISIT: Iran-Western Europe aviation: capacity to slump further as tensions rise


Sun Country Airlines seizes on an unexpected opportunity from Amazon

Just over two years ago, in Dec-2017, the US airline Sun Country Airlines undertook a business model change after being purchased by Apollo Global Management and naming ULCC veteran Jude Bricker as its CEO.

Mr Bricker and Apollo have been working to change Sun Country’s fortunes through the adoption of a low cost model and an overhaul of its fleet. The airline’s new management has also reworked Sun Country’s network towards better handling of the nuances it experiences in seasonal demand at its base in Minneapolis.

The company is now taking a major step in its business diversification through a new deal to operate cargo aircraft with Amazon. It is apparently an opportunity Sun Country was not seeking, but it will no doubt give the airline a level of stability that it hasn’t enjoyed in the past.

TO READ ON, VISIT: Sun Country Airlines seizes on an unexpected opportunity from Amazon


South Pacific Airline Outlook 2020s: New long haul opportunities

Airlines in the South Pacific region are entering a pivotal period in many respects.

Qantas is faced with order decisions that will help shape its fleet for decades, but it must also make a call on whether to go ahead with its much-hyped Project Sunrise. This would mean that it would launch the world’s longest flights from Australia’s east coast to London or New York by 2023.

At the same time, Air New Zealand is preparing to introduce its own ultra-long haul nonstop flights to New York in 2020. These plans are being developed against the backdrop of slowing demand and weaker financial performance, which has prompted Virgin Australia and Air New Zealand to initiate cost cutting programmes.

For Pacific Island airlines, fleet renewal is the major focus as they bring in new aircraft types to boost tourism.

TO READ ON, VISIT: South Pacific Airline Outlook 2020s: New long haul opportunities


LCCs make LaGuardia a battleground in proposed Delta-WestJet JV

It has been close to six months since Delta Air Lines and WestJet received the green light from Canadian regulators for their proposed immunised transborder joint venture (JV). The US government has not yet approved the tie-up, but Delta is confident of gaining the blessing from US regulators in 1H2020.

However, it is still unclear what stipulations US regulators will place on Delta and WestJet in order for the operators to move forward in establishing their JV. US low cost airlines have stepped forward with varying recommendations, ranging from a divestment of WestJet’s slots at New York LaGuardia airport to an outright rejection of the deal.

Recent precedent would indicate that some sort of contingencies are likely to be required by the US DoT for Delta and WestJet to move forward with the JV; but it will come down to how much credence the agency will give to the arguments put forward by critics of the proposed tie-up.

TO READ ON, VISIT: LCCs make LaGuardia a battleground in proposed Delta-WestJet JV


80% of the UK public see aviation important to the economy: NATS

Eight out of ten of the British public have a positive view of aviation, which they see as important both personally, and to the UK economy as a whole; and two thirds said the pros of aviation outweigh the cons. This is according to a new survey performed for the UK’s air traffic services provider, NATS (formerly National Air Traffic Services).

However, the support has been diluted compared with attitudes a year ago, a  decrease which “may be linked to people’s increasing concerns about air and noise pollution and reflects the public’s growing environmental consciousness”.

And, in contrast to a recent report produced for the UK government appointed Committee on Climate Change, only a third of respondents agreed that people should be discouraged from travelling.

Meanwhile, Europe’s archaic ATC system is creating an additional 3 million tonnes of CO2 emissions annually, for no added value and for no other reason than to maintain separate national ATC systems.

TO READ ON, VISIT: 80% of the UK public see aviation important to the economy: NATS


St Louis airport lease is off: the end for US lease deals?

The privatisation by lease of the United States’ airports – or at least a handful of them – has lurched from failure to failure since 1996.

Just when it looked as if the largest of what would have been three to date, Lambert airport at St Louis, Missouri, might just go through, the mayor sprung word on the city just before Christmas that no request for proposals would be issued, despite the interest of some of the biggest private-sector names in the business.

With a city Board meeting due on 15-Jan-2020, at which a decision is looking likely to end the procedure altogether, the future is looking bleak not only for the Lambert privatisation but also those of other airports where cities had signified interest.

That would leave only the public-private partnership route for specific infrastructure projects as a method of privatisation in the US.

TO READ ON, VISIT: St Louis airport lease is off: the end for US lease deals?