Analysis for Middle East
22-Apr-2013 7:00 PM
nasair has long been the junior partner in the Saudi Arabian aviation market, but five years into operations its fortunes have begun to change. In 3Q2012, the airline reported its first-ever quarterly profit. It also managed to breakeven in the final quarter of the year, ending 2012 with a small loss. Load factors have hit a record 75% and nasair has turned its operational performance around to generate more revenue.
With the improving financial momentum and promising passenger traffic, the carrier is optimistic about its prospects for 2013. Sulaiman Al-Hamdan, Group CEO of NAS Holding – the parent of nasair – has announced the carrier is targeting a 50% increase in passenger traffic for 2013. As if that wasn’t ambitious enough, the carrier is also targeting a 100% increase in revenue and its first ever full-year profit.
19-Apr-2013 11:30 PM
Delta Air Lines has reignited its battle against the US Ex-Im Bank through new litigation that revives old arguments that the bank’s loans disrupt the competitive balance among global airlines. But the carrier and its co plaintiffs in the new litigation, Hawaiian Airlines and the Air Line Pilots Association (ALPA), are using a framework imposed on the bank in approving loans as their latest line of defence, claiming recently approved financings violate a new Congressional mandate that governs how the bank assesses loan approvals.
Delta is taking aim at familiar adversaries in its latest quest to squelch Ex-Im aircraft financing, arguing that the aircraft the bank plans to finance for the Gulf powerhouses of Emirates and Etihad will continue to hurt the viability of US carriers. But the airline is also setting its sights on financial support Ex-Im is evaluating for its SkyTeam partner Korean Air and Latin America’s new powerhouse LATAM Airlines Group.
19-Apr-2013 10:00 PM
Air Mauritius is well on the road to recovery, a year into a five-year plan that aims to implement a new business model that restructures its operations to become less dependent on traditional, but flagging, European markets and instead turn the airline’s focus to the growth markets around the Indian Ocean Rim and Asia.
A seven step recovery plan launched in Feb-2012 as profits crumbled into losses saw Air Mauritius undertake a major network consolidation which involved withdrawing its services to Germany, Italy and Switzerland as well as service reductions to China, Australia and Africa. But, with its network brought back into balance, and profitability restored, Air Mauritius has resumed a growth path with plans to launch a direct service to Beijing and reinstating some suspended routes and capacity in key markets.
19-Apr-2013 7:00 PM
Norwegian Air Shuttle narrowed its net loss in 1Q2013 and turned its operating result around from a loss of NOK574.6 million (USD99 million) to a profit of NOK69.2 million (USD12 million). Capacity continues to grow rapidly, with ASKs up 21% (11% due to longer average sectors), but load factor dipped by 1ppt to 76%.
Nevertheless, RASK grew 2% and revenues were up 23%, while unit costs were down 8%. Further CASK reduction remains a key target and the establishment of new bases outside high wage Scandinavia, both in Europe and in Asia, provides an opportunity to lower labour costs.
Norwegian recently announced a seventh widebody route (Oslo-Fort Lauderdale) for its long-haul network, which will launch on 30-May-2013 along with Oslo-New York. Its strategy of growing long-haul operations through new routes at the expense of frequency will help it to establish a wider presence more rapidly, but will reduce the available cost efficiencies at remote bases and restrict its appeal mainly to the leisure passenger. Norwegian’s long-haul network may struggle to be profitable for some time.
16-Apr-2013 7:00 PM
From the first US Open Skies agreement with the Netherlands in 1992, and the subsequent granting of antitrust immunity to the KLM-Northwest joint venture in 1993, the evolution of airline alliances has been rapid and far reaching. Bilateral codeshares, immunised JVs, multilateral branded global alliances, the Etihad equity alliance: why are there so many models? In the first of a series of reports based on CAPA’s recent Airlines in Transition conference in Dublin, we examine the history and evolution of airline alliances and partnerships.
After decades of strict regulation of international traffic rights post WWII, which controlled destinations, capacity, frequencies and prices, a campaign for more liberal air services agreements (ASA) between nations began to gather pace in the US from 1977. In the words of Jeffrey Shane, General Counsel, IATA and a former senior US aviation regulator, any attempt to modify an ASA was characterised by a "highly calibrated, tit-for-tat mode of negotiation".
16-Apr-2013 8:00 AM
Australia needs to urgently negotiate expanded international air capacity which is constraining access to services from some of the country’s most important markets in Asia along with the United Arab Emirates. Capacity for several Asian markets, including China, Hong Kong, Vietnam, Malaysia and the Philippines, is fully utilised by carriers from those countries which are important source markets for both tourism and trade.
The Australian Government is being criticised for not negotiating new bilateral capacity to keep pace with demand. Melbourne Airport CEO Chris Woodruff said at the Australian Airports Association convention in Nov-2012: “These agreements provide the framework in which we can go out to the international market and attract new air services to meet the increasing demand for travel to and from Australia. The Government needs to lead from the front on this issue. Our bilateral agreements need to provide plenty of capacity for future growth in passenger numbers.”
15-Apr-2013 2:00 PM
Dubai International Airport (DXB) continues its inexorable march to become the world’s largest airport by international passenger traffic. At the end of Mar-2013, the airport announced it had been confirmed as the world’s second busiest airport for international passenger traffic, moving ahead of Paris’ Charles de Gaulle airport for the first time on a month to month basis.
Only London Heathrow Airport remains a bigger hub for international traffic. Given the pace of traffic growth in Dubai, the capacity constraints at London Heathrow and the dithering by UK authorities about runway capacity in southeast England, it is only a matter of time before Dubai becomes the world’s largest international passenger hub.
Dubai Airports believes DXB can take the top spot by the end of 2015.
12-Apr-2013 8:00 AM
Australian carriers Qantas and Virgin Australia have built substantial virtual global networks with each relying on large long-haul operators to carry their passengers beyond their Asia-Pacific networks.
Qantas and Virgin Australia have recognised that as end of line carriers they cannot compete with network airlines such as the Gulf and Asian carriers that can aggregate passengers at their geographically advantageous hubs. The Australian carriers are instead using the long-haul capacity pipelines these carriers offer to serve markets they lack the capital to service in their own right.
Virgin Australia led the way, initially with a neighbourhood alliance with Air New Zealand effectively merging their trans-Tasman business. The carrier, under the stewardship of new CEO John Borghetti struck a deal with Gulf carrier Etihad, securing access to the European market. Similar deals with Delta Air Lines followed adding the United States coverage and finally perhaps the most important of them all, Singapore Airlines.
Qantas struck back with its own seismic announcement that it would partner with the biggest of them all, Emirates in a move that provides the platform to stem heavy losses on its long-haul network and return it to profit in FY2015.