09-Dec-2011 2:12 PM

United ends 2011 as world's largest airline as Emirates encroaches on the number three spot

Analysis

The single operating certificate that was granted to United-Continental last month will see the combined entity overtake Delta Air Lines as the world's largest airline. American Airlines has dropped to third in the ranking, based on available seat kilometers, and through capacity cuts associated with its bankruptcy may fall to fourth place next year, allowing Emirates to swoop in as third largest. If American and US Airways merge they would likely fall just under United Airlines but could catch up in subsequent years.

Emirates has moved into fourth place (by ASKs). Five US carriers feature on the top ten, while no mainland Chinese carrier is yet in the top flight although Hong Kong-based Cathay Pacific is in at number 10. China Southern (12th) and Air China (14th) are knocking at the door and could enter the Top 10 in 2012, if cutbacks are enacted by Europe's majors, including British Airways.

Other fast movers in 2011 have included Qatar Airways (20th) and Turkish Airways (23rd) and both are expected to keep climbing the rankings next year, likely ending the year well inside the Top 20, possibly at the expense of KLM and Air Canada.

Southwest (8th) and Ryanair (22nd) are the only two LCCs on the global ASK ranking (see separate LCC ranking).

World's biggest airlines by Seats and ASKs per week: Dec-2011*

	Dec-11	Dec-11	Dec-2011 ASKs Rank
Airline	Seats per Week	ASKs per Week	Dec-2011 ASKs Rank
United Airlines	3,413,491	7,665,515,192	1
Delta Air Lines	3,695,967	6,581,811,561	2
American Airlines	2,635,886	5,170,662,578	3
Emirates	923,900	4,217,113,594	4
Lufthansa	1,777,916	3,533,501,344	5
Air France	1,368,058	3,141,969,384	6
British Airways	971,338	3,052,413,092	7
Southwest Airlines	2,885,994	3,052,412,207	8
US Airways	2,023,024	2,601,232,405	9
Cathay Pacific Airways	572,675	2,523,178,383	10
China Southern Airlines	1,776,508	2,466,987,278	11
Singapore Airlines	468,655	2,287,649,767	12
Air China	1,143,859	2,095,274,291	13
Qantas Airways	775,275	2,019,158,660	14
Air Canada	839,535	1,883,710,525	15
China Eastern Airlines	1,428,628	1,877,730,572	16
Korean Air Lines	661,093	1,851,529,373	17
KLM	562,488	1,810,865,254	18
All Nippon Airways	1,450,406	1,661,498,854	19
Qatar Airways	450,542	1,657,121,443	20
Thai Airways	518,285	1,601,256,591	21
Ryanair	1,417,878	1,590,511,473	22
Turkish Airlines	870,525	1,565,599,051	23
Japan Airlines	936,509	1,538,978,651	24
TAM	966,389	1,431,062,886	25
Total for top 25 airlines	34,534,824	68,878,744,410

Longer flights drive growth

The world's airlines are scheduling 3.2% more flights this month, translating into 5.3% more seats and 7.3% more ASKs than in Dec-2010. With ASKs growing faster than flights and seats, airlines are opening longer flights. Growth in this area is spurred by network carriers China Southern, Emirates, Etihad, Qatar and Turkish Airlines.

China Southern

China Southern this year has taken delivery of A380s and is deploying them on domestic routes before international flights, which it has yet to announce the details of but are expected to be sent to Europe and North America. Large growth at the carrier is occurring to Australia and New Zealand where China Southern hopes to become a new link between Australia and Europe. The carrier is planning a fourfold increase in flights to the region over the next three years, increasing its services to 110 flights a week - 16 a day.

Emirates

Emirates had envisioned large growth in the US early last decade but put the plan on hold after the Sep-2001 terrorist attacks. The country will see a larger Emirates presence over the next few years, with the carrier starting a daily route to Seattle early next year. (A flight to Dallas will also be started, but one of its two daily Houston services will be withdrawn.) Chicago is a likely future destination. Emirates last month ordered 50 B777-300ERs to fuel medium-term growth this decade.

Etihad

This past third quarter was Etihad's best as the carrier continues to grow, seeing strong demand on ultra-long-haul flights, and nears its first annual profit.

Qatar

Qatar is adding long-haul routes but is focusing strongly on South Asia, and India in particular, as it looks to catch up from its position as the fifth largest carrier between the Middle East and India.

Turkish Airlines

While the big three Gulf network carriers primarily use widebody aircraft, Turkish Airlines is embarking on a novel strategy of deploying B737-900ERs on medium-haul thin routes. Whereas other carriers serve the route a few times a week with large aircraft, Turkish is pursuing daily frequencies with less capacity. It will first start this strategy in Africa but could expand it to Central Asia and India.

While some Middle East carriers deploy A319s and A320s, Turkish's B737-900ERs will have further range and can carry more passengers, with CEO Temel Kotil telling CAPA the cost is closer to that of a widebody.

Worldwide capacity: Dec-2010 vs Dec-2011*

	Dec-2010	Dec-2011	% chg
Grand Total Flights per Week	558,317	576,410	3.2%
Grand Total Seats per Week	69,522,777	73,209,997	5.3%
Grand Total ASKs per Week	118,079,692,352	126,646,732,454	7.3%

Growth at alliances, LCCs and unaligned carriers

The world's LCCs have again grown their share of global aviation to 22.5% of total seats. Of the global alliances, only SkyTeam has grown its share this month, to 16.2% of seats.

LCC vs Unaligned vs Alliances capacity and shares (%) of global aviation: Dec-2010 vs Dec-2011*

Alliance		Dec-2010	Dec-2011	% Change	% of Totals
Alliance		Dec-2010	Dec-2011	% Change	Dec-10	Dec-11	Variance
oneworld	Flights per Week	55,375	56,361	1.8%	9.9%	9.8%	-0.1%
	Seats per Week	7,735,087	7,912,797	2.3%	11.1%	10.8%	-0.3%
	ASKs per Week	17,275,433,876	18,004,223,903	4.2%	14.6%	14.2%	-0.4%
SkyTeam Alliance	Flights per Week	80,302	89,466	11.4%	14.4%	15.5%	1.1%
	Seats per Week	10,081,057	11,869,613	17.7%	14.5%	16.2%	1.7%
	ASKs per Week	19,029,196,189	22,455,147,563	18.0%	16.1%	17.7%	1.6%
Star Alliance	Flights per Week	141,037	141,383	0.2%	25.3%	24.5%	-0.7%
	Seats per Week	16,811,165	17,280,855	2.8%	24.2%	23.6%	-0.6%
	ASKs per Week	30,776,376,824	32,833,410,837	6.7%	26.1%	25.9%	-0.1%
Low Cost Carriers	Flights per Week	105,602	112,458	6.5%	18.9%	19.5%	0.6%
	Seats per Week	15,424,186	16,508,117	7.0%	22.2%	22.5%	0.4%
	ASKs per Week	18,226,468,326	19,848,579,183	8.9%	15.4%	15.7%	0.2%
Un-Aligned Carriers	Flights per Week	176,001	176,742	0.4%	31.5%	30.7%	-0.9%
	Seats per Week	19,471,282	19,638,615	0.9%	28.0%	26.8%	-1.2%
	ASKs per Week	32,772,217,138	33,505,370,968	2.2%	27.8%	26.5%	-1.3%

Largest low-cost carriers

Volaris

The largest mover in the top 25 LCCs based on ASKs was Volaris, the Mexican LCC that moved up six ranking positions and had the highest overall growth rate, 58%, of all of the top 25 LCCs. Volaris has benefited from Mexicana's 2010 exit and started rapidly increasing capacity in late 1Q2011. Volaris has now doubled its US presence while maintaining healthy load factors. Volaris is expanding out of Mexico City, a point it initially shunned, although smaller Mexican carrier InterJet has seen the largest overall growth.

Read more about the dynamic of the growing Mexican market: A year after Mexicana's exit, Aeromexico, Mexican LCCs and US carriers are main beneficiaries

Air Berlin and Indigo

Also making big moves in rankings were Air Berlin and Indigo, who each moved up two rankings. Air Berlin's growth, however, has not been followed with profitability. Indigo is the largest carrier in India, which has the second-highest domestic growth rate after Chile, and is currently the only profitable one in the market.

9.3% overall growth

Ryanair and Vueling were the only LCCs in the top 25 to have decreased capacity. Ryanair is grounding 80 aircraft this winter to preserve yields in the face of high fuel prices. Read more (open access): Ryanair raises full-year profit target by 10% following strong 1H profit and yield result

While Air Berlin and Indigo saw jumps in their rankings, other carriers saw impressive growth, including jetBlue, Norwegian and Virgin America. The distances between themselves and larger carriers in the rankings are often large enough that even substantial growth rates are not enough to close the gap. Spirit Airlines fell four places in the ranking, but its growth rate, 10.5%, was still above the 9.3% average.

Outlook

Southwest will maintain its position as the world's largest LCC since its ASKs are not only nearly double that of the number two carrier, jetBlue, but its acquisition of AirTran (#7) will further set it apart from other LCCs. Southwest aims to have a single operating certificate with AirTran in Mar-2012.

Ryanair may continue to ground aircraft during off-peak times if fuel prices do not improve, but is unlikely to drop below jetBlue.

EasyJet (#4) and Gol (#5) each plan capacity growth around 4% for 2012. Gol's slightly longer flight sectors may see it edge ahead of easyJet. While Gol has acquired fellow Brazilian carrier Webjet, Webjet will remain a subsidiary not integrated with Gol, limiting potential for Gol to shoot ahead on its own.

Jetstar (#9) will likely overtake WestJet (#8) as the carrier continues to add capacity, including on long-haul flights. Virgin Australia (#10) will soon exit this list as it completes its transition to a full-service carrier, allowing AirAsia to assume the rank of tenth largest LCC in the world and further move its way up on the list.

Top 25 LCCs worldwide by capacity (ASKs/week): Dec-2010 vs Dec-2011*

Airline	Dec-2010	Dec-2011	% change	Global rank		Ranking
Airline	Dec-2010	Dec-2011	% change	Dec-10	Dec-11	Varionce
Southwest Airlines	3,047,074,668	3,052,412,207	0.2%	1	1	-
Ryanair	1,612,783,117	1,590,511,473	-1.4%	2	2	-
JetBlue Airways	1,003,196,733	1,189,411,594	18.6%	3	3	-
EasyJet	1,002,515,198	1,054,868,687	5.2%	4	4	-
Gol	895,777,368	988,052,824	10.3%	5	5	-
Air Berlin	538,800,872	708,889,446	31.6%	9	6	+3
AirTran Airways	703,158,940	704,027,357	0.1%	6	7	-1
WestJet	637,404,815	677,374,415	6.3%	7	8	-1
Jetstar Airways	576,959,533	657,956,959	14.0%	8	9	-1
Virgin Australia	538,009,628	563,988,380	4.8%	10	10	-
AirAsia Bhd	477,817,002	527,079,150	10.3%	11	11	-
Lion Airlines	466,152,415	508,429,885	9.1%	12	12	-
Condor	358,259,359	407,317,917	13.7%	13	13	-
Norwegian Air Shuttle	320,862,085	385,477,288	20.1%	15	14	+1
Indigo	261,526,575	363,580,357	39.0%	18	15	+3
Frontier Airlines	321,449,669	363,350,108	13.0%	14	16	-2
Virgin America	259,837,398	350,169,261	34.8%	19	17	+2
Thomsonfly	302,152,344	320,404,300	6.0%	16	18	-2
Volaris	202,061,772	312,728,888	54.8%	25	19	+6
Wizz Air	246,384,322	304,503,785	23.6%	20	20	-
Spirit Airlines	270,487,326	298,792,471	10.5%	17	21	-4
Cebu Pacific	215,718,189	265,408,429	23.0%	23	22	+1
SpiceJet	216,228,275	262,814,025	21.5%	22	23	-1
Air Arabia	218,585,518	247,294,792	13.1%	21	24	-3
Vueling Airlines	212,666,505	181,777,722	-14.5%	24	25	-1
GRAND TOTAL	14,905,869,625	16,286,621,721	9.3%