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Avianca’s strength in Colombia and Peru, two of Latin America’s fast growing markets, helped the carrier record strong financial results for 4Q2013 and FY2013.
The company also achieved other significant achievements in 2013 including rebranding all the carriers within the Avianca-TACA group to Avianca and the completion of a listing on the New York Stock Exchange to broaden its reach for funding for expansion.
A continued fleet renewal and long-haul growth is driving Avianca’s planned 8% to 9% capacity growth during 2014 as the carrier readies for the launch of new service from Bogota to London in Jul-2014. Given Avianca’s strong performance during 2013, it should be able to absorb the capacity increase without hurting its profits.
As Mexico’s aviation industry continues to evolve post-deregulation, the country’s largest carriers are working to entrench themselves in their respective business models. With Aeromexico clearly the country’s full-service carrier and VivaAerobus and Volaris adopting more ultra low-cost strategies, Interjet is assuming the role of Mexico’s hybrid carrier – touting both a more upscale product and lower costs.
Since its inception roughly eight years ago, Interjet has grown quickly, and is consistently ranked as Mexico’s second largest domestic carrier behind Grupo Aeromexico. Now it seems as if Interjet and Volaris trade off for those rights as each carrier has dedicated some of its expansion to international markets. Interjet now serves four Latin American markets and five destinations in North America.
Interjet seems poised to solidify its hybrid model in 2014 as headlines have emerged that it is looking to align with foreign carriers and aims to keep its less-dense fleet configuration as Volaris adds seats to its Airbus A320s to further lower cost. It also continues to add smaller 93-seat Sukhoi Superjet 100s to its fleet, which reflects Interjet’s strategy of offering its hybrid product in Mexico’s smaller markets.
The largest unserved trans-Pacific route by many accounts is between a well known city – New York – and one few have heard of: Fuzhou in China's Fujian province. The unexpected destination may have a low profile but is rich in history: Fujian people are known for their migratory habits and comprise large parts of the overseas Chinese diaspora, where they have created economic activity, from Chinese restaurants to bus services. Besides Chinatown, New York City even has a "Little Fuzhou". Ties remain strong, and in Mar-2013 there were an estimated 201 people travelling from Fuzhou to New York City each day, according to Amadeus Air Traffic.
All of this traffic moves via intermediate hubs, but in the near future Xiamen Airlines could consider deploying its forthcoming 787 Dreamliners on the Fuzhou-New York route. Xiamen would take some beyond traffic, but would make inroads in the point-to-point Fuzhou-New York market. That would be to the detriment of Cathay Pacific, the largest carrier between the two cities, as well as China Eastern and Air China, which are also the main operators on the market.
However, Xiamen Airlines may not find it as easy as that: Fuzhou-New York is a heavy VFR market that lacks premium yields to sustain the non-stop service. But Fuzhou-New York may be the most promising long-haul route for Xiamen Airlines' 787s. Xiamen Airlines is primarily a domestic carrier and China's most consistently profitable carrier. It is rightfully hesitant to embark on long-haul operations that are being encouraged and pushed by the government and it will not help that some members of Xiamen's recently-joined SkyTeam alliance are apparently giving the carrier a cool reception.
Allegiant Air’s strong top-line financial performance in FY2013 was belied by cost creep that is continuing into 2014 driven by maintenance expense and investments in yet-to-be revealed non-airline initiatives.
With Allegiant’s guidance of unit cost increases for FY2014, no US airline is escaping some level of cost escalation during the year. Similar to sentiments expressed by other carriers, Allegiant concludes it is making the necessary investments now to ensure a profitable future.
Even as Allegiant’s core business model – transporting cost-conscious travellers from small US markets to large leisure destinations – has essentially remained intact during the past couple of years, the carrier has also undertaken initiatives that are creating challenges in its cost performance in FY2014. While the company’s financial fundamentals still remain strong, wildcards in its cost structure remain, including negotiating labour deals amid increasing tension between management and employees.
CAPA – Centre for Aviation is pleased to announce 50 airline executives have already confirmed their participation at the CAPA Airline Fleet & Finance Summit at the Capella Singapore on 25/26 March.
CFOs/Finance/Treasury executives from some 20 airlines will be giving investor roadshow-style presentations on their fleet and financing plans and they will be joined by a similar number of carriers, represented by their Finance/Treasury and Fleet Management departments, in the Fleet Marketplace networking sessions throughout the Summit.
“This is an airline-centric air finance event. It's unique in the calendar for its focus on attracting airline finance heads to discuss their fleet plans and to test financial markets, particularly in the burgeoning Asia Pacific region, to meet the rising financing challenge facing the airline industry. This year we've attracted interest from US and European airlines keen to explore this new market, among them Allegiant and Lufthansa for example”, said CAPA Executive Chairman, Peter Harbison.
SilkAir 737 MAX fleet to open up network options while boosting Boeing’s narrowbody presence in Asia
While Singapore Airlines regional subsidiary SilkAir is now celebrating delivery of its first of 23 737-800s, it is the second part of its largest ever aircraft acquisition programme that could be a game changer. The Singapore Airlines (SIA) regional subsidiary plans to take the first of at least 31 737 MAX 8s in 2H2017, enabling efficiency improvements and new medium-haul routes.
SilkAir will have the opportunity to use the MAX’s improved range to open new destinations in North Asia, Central Asia and Australia. The improved economics of the aircraft also potentially opens up destinations in India and China which are not viable with current generation narrowbody aircraft.
SilkAir is only one of four Asian carriers that has so far committed to the 737 MAX, along with Thailand’s Nok Air, Virgin Australia and Indonesia’s Lion Air. Nok, which announced its order at the recent 2014 Singapore Airshow, also expects to be one of the first carriers to take the MAX when it enters service in 2H2017.