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Capacity and demand surge in China-New Zealand market as airlines eye further growth
26-Apr-2024

Capacity and demand surge in China-New Zealand market as airlines eye further growth

With visitor flows from China to New Zealand recovering strongly, capacity in this market is expected to exceed pre-pandemic levels during the southern hemisphere winter season.

The resumption of flights to New Zealand by Sichuan Airlines means that six Chinese airlines are now operating there. Some of them plan significant capacity increases in coming months.

New Zealand was already a popular market for mainland China's airlines before the pandemic, which is a major reason why capacity and demand is rebounding more quickly than in many of China's other international markets.

Although China's outbound travel has been generally slow to gain momentum, it is a good sign that it returning to pre-pandemic levels in certain markets - particularly a long haul destination like New Zealand. This bodes well for other countries that are waiting for Chinese traffic flows to bounce back.

China-New Zealand routes are dominated by the Chinese airlines, but having this many extra foreign airlines boosts Auckland Airport's competitiveness.

The China market is important for New Zealand, both in terms of current service and potential demand. This market was growing rapidly before the COVID-19 pandemic, and there is scope for further expansion that will be helped by having such a broad range of Chinese airlines already flying to New Zealand on multiple routes.

Premium Analysis
easyJet marks 20 years in Berlin, but Ryanair is now Brandenburg's biggest airline
25-Apr-2024

easyJet marks 20 years in Berlin, but Ryanair is now Brandenburg's biggest airline

easyJet is celebrating the 20th anniversary of its first Berlin flight, which flew to Schoenefeld from Liverpool on 28-Apr-2004. In 2018 easyJet added Berlin Tegel to its airport network when Air Berlin exited, and it soon became the biggest operator by seats in the German capital city.

When Berlin Brandenburg Airport replaced its two predecessors on 31-Oct-2020, easyJet became the first airline to take off from the new airport the following day.

easyJet expects to fly to more than 50 destinations from Berlin this summer, including five new destinations. Moreover, it has demonstrated its commitment to Brandenburg with on-site investments, including a hangar.

Nevertheless, easyJet rationalised its Berlin operations in 2022 and it is far from its pre-pandemic capacity: for the week of 29-Jul-2024 its Brandenburg schedule has only 39% of the seats that it offered across Schoenefeld and Tegel in the equivalent week of 2019.

In 2018 and 2019 easyJet was Berlin's biggest airline. Ryanair assumes that mantle this northern summer.

Analysis
What’s in a brand, where an airport is concerned?
25-Apr-2024

What’s in a brand, where an airport is concerned?

Branding has become increasingly important as a field of marketing, and noticeably so in the air transport sector - where airlines are no longer assessed by their 'sexiness', as they were 40 or 50 years ago, but by a host of metrics that collectively identify their 'brand value', 'brand equity' and 'brand sustainability'.

A leading brand valuation and strategy consultancy, Brand Finance, has published an annual report on how branding applies to airlines and airports in 2024.

In the former case the biggest brands by all the metrics are also the biggest airlines with few exceptions.

The same is true of airports, with a noticeable paucity of winners among small airports in the sustainability category, where some of them have actually been the most active. Most of the 'leaders' are from cities that are global powerhouses.

Meanwhile, a spat in California between two neighbouring airports over the selection of a new name for one of them demonstrates how, at the end of the day, an airport's name can be its most important feature and benefit of all.

Premium Analysis
United and Alaska Air lay the foundation to defy historical 1Q losses in the US
24-Apr-2024

United and Alaska Air lay the foundation to defy historical 1Q losses in the US

Both United Airlines and Alaska Air Group appeared to have cracked the code to create meaningful results in 1Q - typically the weakest quarter for US airlines.

Each airline's profitability in 1Q2024 was wiped out by the grounding of their respective Boeing 737 MAX-9 fleets early in 2024, after the inflight blowout of a door plug on an Alaska Airlines 737-9.

Hopefully, the aircraft groundings should be a one-time event; but United and Alaska are bullish that profitability in 1Q2024 could become a common occurrence.

Premium Analysis
Edinburgh Airport – VINCI to take a controlling interest; becomes second largest UK airport operator
24-Apr-2024

Edinburgh Airport – VINCI to take a controlling interest; becomes second largest UK airport operator

Quietly and stealthily, the French airports operator VINCI - with more than 70 assets worldwide, the leading private sector operator - has been building its portfolio in the UK, while all eyes have been on its acquisitions elsewhere.

Having already acquired Belfast International (100%) in 2018 and a majority stake in London Gatwick Airport the following year, VINCI has now moved to take a similar position to that at Gatwick by acquiring 50.01% of the equity at Edinburgh Airport, which serves the Scottish capital city and the second most visited tourist city in the UK.

The transaction should be completed in the summer of 2024, at which time VINCI would become the second largest airport operator in the UK by passenger numbers.

At the same time GIP, the majority shareholder at Edinburgh now, continues the downscaling of its airport activities...except where they concern VINCI, which is becoming the de facto operating partner of the funds manager (which has recently been wrapped up in the giant BlackRock asset manager).

But there are other factors to consider while the deal is secured, such as the position of the minority investors at Edinburgh, which represent major Australian pension funds.

And it does pose the question of whether VINCI might be tempted to go for a 'full house' of UK capital city airports by taking a look at least at what Cardiff Airport has to offer.

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Latest News Headlines

339 news items were published to CAPA Members in the past two days. What could you be missing?
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Ryanair published (24-Apr-2024) a report by York Aviation, stating the LCC contributes GBP14 billion p/a in gross value added (GVA) to the UK economy and supports 98,000 jobs. Ryanair Group CEO Michael O'Leary announced the following growth plan in the UK through to the end of the 2020s:

  • Traffic to grow 22% to 65 million passengers by 2030;
  • Over 1000 new jobs to be created for pilots, cabin crew and engineers by 2030;
  • Opening of a new engineering training facility at Prestwick;
  • 20 new Boeing 737 MAX 10 aircraft, for a total of 135.

Mr O'Leary added: "While halving [air passenger duty] on domestic flights from Apr-2023 allowed Ryanair to add more domestic routes (and bases) to our UK schedule, UK airports and passengers are still suffering an enormous penalty when UK APD imposes [a] GBP13 tax on all UK tickets for 2024. Ryanair can continue to grow UK traffic, jobs, and tourism but the Government must scrap this... tax for all travel and instead pursue air travel growth policies". [more - original PR]

Wizz Air announced (25-Apr-2024) it expects to expand operating margins, increase operational cash and further reduce net debt in FY2025. The forecast is based on improved operational metrics, current trading dynamics and continuing capacity constraints in the wider market. Wizz Air reiterated its expectation of roughly flat year-on-year capacity growth for H1FY2025 and full FY2025. It is trading positively into summer 2024 with selling load factors and pricing trending higher year-on-year in Q1FY2025 and Q2FY2025. [more - original PR]

Airbus reported (25-Apr-2024) the following commercial aircraft highlights for 1Q2024:

  • Gross commercial orders: 170 aircraft, up from 156 in 1Q2023;
  • Net orders after cancellations: 142 aircraft, no change from 1Q2023 due to no cancellations;
  • Order backlog: 8626 aircraft at the end of Mar-2024;
  • Deliveries: 142, up from 127 in 1Q2023, comprising:
  • Airbus is targeting approximately 800 commercial aircraft deliveries in 2024;
  • Aircraft programmes:
    • A220: The production ramp up continues towards 14 aircraft per month in 2026, with a focus on the programme's industrial maturity and financial performance;
    • A320 Family: Production is progressing towards 75 aircraft per month in 2026. The first customer A321XLR entered the final assembly line in Dec-2023 and entry into service is expected in 3Q2024;
    • A330: Production continues towards four aircraft per month in 2024;
    • A350: Airbus plans to increase the production rate to 12 per month in 2028.

Airbus CEO Guillaume Faury stated: "We delivered first quarter 2024 results against the backdrop of an operating environment that shows no sign of improvement", noting: "Geopolitical and supply chain tensions continue". My Faury added: "The strong momentum on widebody aircraft underpins our decision to increase the production rate for the A350 to 12 aircraft a month in 2028". [more - original PR]

IndiGo placed (25-Apr-2024) a firm order for 30 A350-900s, to support its long haul international network expansion plans, with purchase rights for 70 additional A350 family aircraft "for possible future needs under certain conditions". The aircraft will be powered by Rolls-Royce Trent XWB engines and deliveries are expected to commence in 2027. IndiGo CEO Pieter Elbers said the order "marks a new chapter for IndiGo and will further shape the future of the airline and for Indian aviation at the same time". [more - original PR]

US FAA announced (25-Apr-2024) the award of USD76.1 million for 45 airport related infrastructure projects across 22 states under the FY2024 Airport Infrastructure Grants programme. Recipients include:

Southwest Airlines CEO Bob Jordan announced (25-Apr-2024) the carrier plans to suspend operations at Bellingham International Airport, Cozumel Airport, Houston George Bush Intercontinental Airport and Syracuse Hancock International Airport on 04-Aug-2024. The carrier also plans to reduce capacity at Atlanta Hartsfield-Jackson International Airport and Chicago O'Hare International Airport. Mr Jordan stated: "To improve our financial performance, we have intensified our network optimization efforts to address underperforming markets". [more - original PR] [more - original PR - II]

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CAPA-Envest Global Airline Sustainability Benchmarking & Rating Report 2023

This report aims to benchmark the performance of the world’s major airlines – to understand their relative carbon emission quantity and intensity with respect to passenger and freight transport.

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