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Hawaiian Airlines faces capacity competition while its focuses on building balance sheet strength

22nd May, 2015

Hawaiian Airlines is bracing for industry capacity increases on its North American routes during 2Q2015 ahead of the debut of new flights by Virgin America in 2H2015. At the same time the airline’s international routes are facing some pressure due to the elimination of fuel surcharges and currency fluctuations.

Despite those challenges Hawaiian maintains a bullish outlook for 2015 as it works to leverage its dominant position in the inter-island market and embarks on a course of de-levering its balance sheet now that it is taking a breather in aircraft deliveries and long-haul expansion.

After stating in late 2014 that it was examining various forms of capital allocation, Hawaiian has outlined a USD100 million share purchase programme now that it has achieved certain balance sheet targets, which provided the airline some flexibility to consider alternative uses of cash.

CAPA Australia Pacific Aviation Summit 2015, Sydney, 3-5 Aug: corporate aviation, airports, airlines

21st May, 2015

Qantas CEO Alan Joyce and Malaysia Airlines’ newly appointed CEO Christoph Mueller will headline the third annual CAPA Australia Pacific Aviation Summit at the Sheraton on the Park, Sydney, along with a host of C-level airline, airport and other aviation stakeholders.

This year’s CAPA Summit, on 3-5 August, will feature a 2-day high level Aviation Summit (4/5 August) preceded by the Corporate Travel Summit and Airport Innovation summits (3 August).

The key themes of this year’s aviation Summit include C-level responses to the swirling ‘open skies’ debate, the outlook for key markets as fuel prices recede, as well as workforce productivity in aviation.

Sichuan Airlines becomes China's 7th airline to have 100 aircraft. Next 10 years: another 100

21st May, 2015

Sichuan Airlines is due to take delivery of an Airbus A320 family aircraft on 22-May-2015, giving the Chengdu-based carrier 100 aircraft. Sichuan becomes the seventh airline in China to have a fleet of 100 or more aircraft. Globally Sichuan will be the world's 50th largest airline by fleet size. Sichuan intends to take another 100 aircraft over the next decade.

Sichuan's hinterland is mostly in China's west, from Xi'an and Kunming to Chengdu and Chonqging, although it also has a large presence along China's eastern seaboard. Sichuan carried just under 20 million passengers in 2014, almost all domestic.International flying, which accounts for 9% of Sichuan's seats in May-2015, is mostly around Northeast and Southeast Asia but limited long-haul links extend to Australia, Moscow and Vancouver.

All of China's Big Three airlines – Air China, China Eastern and China Southern – have a direct or indirect stake in Sichuan Airlines, creating competing interests in China's booming west.

Azul believes Brazil-Buenos Aires service is unviable, partially driven by fifth freedom competition

20th May, 2015

As the major US airlines sought improved access to Latin America in the 1990s, Brazil and Argentina were persuaded - with some reluctance - to agree to open skies bilateral conditions. One consequence of this liberal environment has indirectly been to open up fifth freedom access between the two countries.

Brazil’s third largest airline Azul concludes now that it cannot profitably serve Buenos Aires, due in part at least to the participation of third country airlines. Buenos Aires is a market in high demand among its customers, but the abundant capacity, including from airlines operating fifth freedom services through Brazil to Argentina, puts this out of the question.

With Buenos Aires unviable for Azul in the short to medium term, it looks as if the airline will focus on more international expansion to the US until its Airbus A350s begin arriving in 2017.

Azul is also keen to strengthen its existing partnership with United and initiate a tie-up with JetBlue, which has a strong presence in Azul’s US markets. Those aspirations likely exclude any consideration by Azul of examining a potential partnership with Gulf airlines.

Australian Corporate Travel Outlook: A vibrant marketplace - and the focus is not just on cost

19th May, 2015

Australian travel managers and buyers are under increased pressure, with economic uncertainty forcing organisations to reduce travel spend. Many have responded by tightening their policies and ensuring greater compliance. Others are revisiting the end-to-end processes and trying to identify savings through increased efficiency, as guest writer, Allan Leibowitz explains in the lead up to CAPA's Corporate Travel Innovation Summit at the Australia Pacific Aviation Summit 2015, to be held in Sydney from 3-5 Aug-2015.

Adding to the pressure is a growing need for duty of care, with organisations under legal and moral obligations to ensure the safety of all travellers on the road. TMCs report that most clients have some form of duty of care system in place, with traveller tracking services the most popular option. The major TMCs have proprietary solutions, often bundled into their overall service offering, and many organisations also use third-party providers for pre-trip information and on-the-ground support and evacuation in times of crisis.

Spirit Airlines foresees continued unit revenue pressure, but still delivers strong topline results

13th May, 2015

Spirit Airlines plans to introduce 24 new routes in 2Q2015 after adding Cleveland to its network earlier in the year. The biggest push during 2Q is from Houston Intercontinental, where the airline is adding eight new nonstop destinations that include seven to Latin America.

The rapid route expansion results in Spirit having a significant portion of its network under development, which along with some lingering pricing compression in other market is pressuring Spirit’s unit revenues. It projects a unit revenue decline of 14% to 15% for 2Q2015, which wider than the nearly 10% drop it recorded in 1Q.

Spirit has refined its FY2015 operating margin guidance to a still healthy 24% to 27% as it still faces some lingering pressure in Dallas, one of its larger markets. But it is still the reigning lowest cost producer in the US, which gives is some leverage to navigate the current competitive environment.

American Airlines launches Dallas-Beijing, accelerating US airlines' refocus on China over Japan

11th May, 2015

American Airlines' 07-May-2015 launch of daily Dallas-Beijing services gives Dallas/Fort Worth airport, in the space of a year, its trifecta of Greater China destinations: Beijing, Hong Kong and Shanghai. Dallas becomes the 10th North American airport to offer flights to the three cities. Four airports – Los Angeles, New York JFK, San Francisco and Vancouver – have services to additional cities; San Francisco has the most with six greater China destinations.

The Dallas-Beijing service also cements a turning point for American Airlines' Asia network, which in 2015 will be larger in mainland China than Japan, the historical Asian focus for US airlines. American in 2015 will have 22% more seats to mainland China than Japan. United also will now have an 11% larger network in China than it has in Japan in 2015. Delta remains anchored on Japan, with twice as many non-stops seats there as to China, although the gap has been narrowing.

Prospects for Indianapolis International Airport look promising after good 2014 passenger growth

23rd April, 2015

Indianapolis International Airport has weathered US airline consolidation fairly solidly, posting an uptick in passengers during 2014 after a few years of modest declines. It is gaining traction during 2015 with new service from its largest airline Southwest and the entry of ULCC Allegiant Air into the market.

The airport should continue its growth in 2015 driven by Indianapolis hosting the NCAA final four men’s basketball tournament in Apr-2015 and one of the largest gaming conventions Gen Con held in 2H2015. Tourism is one of the drivers in the region’s economy, which ensures a certain level of passenger throughput at Indianapolis International.

Indianapolis’ airfares appear to be stable, and its cost per enplanement generally falls in the mid-range among US airports. After a push by Allegiant, the airport’s management is pursuing additional airlines, hoping to attract service from some of the US hybrid airlines and other ULCCs.

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