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The 747 has been in the spotlight since the Aug-2016 passing of lead engineer Joe Sutter. The iconic aircraft's milestones and fade from service come into focus again with the impending retirement of Cathay Pacific's passenger 747 fleet. A Cathay Pacific 747-400 was the final commercial flight to depart Hong Kong's old airport at Kai Tak, while another Cathay 747 was the first commercial flight to land at the new airport at Chek Lap Kok – with that flight also the first to use a Polar Routing, one which has changed the Asia-North America market for all airlines.
After the 01-Oct-2016 return to Hong Kong of Cathay's final passenger 747 flight, CX543 from Tokyo Haneda, Cathay's last three passenger 747s will be decommissioned from normal service. The global fleet of passenger/combi 747-400s will then decrease to 204, according to CAPA's Fleet Database. The 747-400s in regular, non-charter service will number 175. Six airlines – British Airways, United, KLM, Lufthansa, Qantas and Thai Airways – operate 10 or more 747s, accounting for 65% of what is left of the regular in-service fleet. United will retire its 747 fleet by 2018, while British Airways and Qantas (which operates the slightly newer 747-400ER) look likely to be some of the last 747 (non-8i) operators, with service stretching into 2020.
Attempts by WestJet’s competitors to flood the London market with capacity in order to undermine the low cost airline’s widebody experiment in the London Gatwick market have not produced the end result of driving WestJet from the trans-Atlantic space. WestJet is sending a clear message to its competitors that it plans to remain firmly entrenched on long haul routes. The company is currently examining options for more widebody aircraft, and is discussing further long haul expansion with its pilots.
After a rocky start to its highly anticipated long haul service to London, WestJet is posting load factors on its routes to Gatwick that are higher than system average, and concludes that the flights are delivering positive returns.
An interesting pattern in WestJet’s passenger composition on the company’s trans-Atlantic service to Gatwick is the number of US-originating passengers from large metropolitan areas that currently have nonstop service to London – a dynamic that the airline attributes to its lower fares. The US-originating customers are boosting WestJet’s sixth freedom traffic flowing over Canada to long haul destinations.
A guiding principle for ultra-low cost carriers (ULCCs) is delivering a unit cost performance excluding fuel of USD6 cents or lower. Both of the publicly traded US ULCCs easily met that criterion in 2015, and based on calculations from the CAPA CASK database, Allegiant Air and Spirit Airlines posted sub-USD6 cents unit costs including fuel for 2015.
Maintaining cost discipline is paramount in any operating environment, but especially in the US domestic market where most airlines, including ULCCs, are having a tough time gaining pricing traction. Spirit and Allegiant both have some cost challenges looming in 2016 but are obviously attempting to keep their costs below the USD6 cent benchmark. Spirit expects to post a flat unit cost performance excluding fuel for 2016, even with the ratification of new flight attendant contract, but faces some maintenance headwinds throughout the year. Spirit is working to accomplish improved operations and generate more positive customer sentiment on a cost-neutral basis.
Allegiant is also facing cost pressure from the first batch of heavy maintenance on its Airbus narrowbody fleet, and from labour productivity challenges. However, over the long term Allegiant’s decision to accelerate the retirement of its MD-80s and move to a single fleet of Airbus narrowbodies should create some cost tailwinds in the medium term.
Part 1 of CAPA's analysis of Spanish LCC Volotea highlighted its rapid growth, but noted that its load factor left room for improvement. The Spanish LCC flies almost two thirds of its seats in domestic Italy and France, but operates in a total of 12 countries and 66 airports across Europe. It concentrates on small and medium-sized airports, with Italy and France dominating its list of leading routes.
This second part of CAPA's report on Volotea looks at its generally favourable competitive position on its leading routes (it is the biggest airline on 15 of its top 20 routes). This positive competitive standing has been carried onto the majority of the 32 routes that Volotea has launched in the past year, although its low frequencies and very strong summer bias limit its appeal to business passengers and give it a leisure focus.
Volotea's average trip length sits between those of regional airlines and Europe's principal LCCs. This is evidenced by the fact that two of its most frequent competitors are Hop (Air France's regional airline) and Ryanair (Europe's leading LCC). Volotea's fleet strategy is now to replace its 125-seat Boeing 717s with 150-seat A319s. This will result in it butting up against LCCs more often.
The A380 is once again under media scrutiny, despite there being no major movement on the type. Comments from Air France and Qantas about not taking further A380s have long been assumed, and it has been apparent that Malaysia Airlines does not even have the need for its A380s. Singapore Airlines not renewing the lease on its first A380 is hardly surprising, and offers no definitive conclusion about the A380 or second-hand market; early A380s had different production and are not as efficient as later models. The lack of movement on the A380neo continues to irk the model's largest customer by far, Emirates, and may not make for a productive relationship as Emirates weighs an A350 or 787 order.
For most, the A380 continues to fly. How and where it flies is changing. Flights to and from the Middle East are becoming more common as Gulf airlines, and mostly Emirates, take delivery of A380s. A further shift to the Middle East is inevitable. In Japan there has been a near exodus of A380s; airlines dropping the type as they moved from Narita to Haneda, which cannot accommodate the A380 during the day, and Singapore Airlines down-gauging. Intra-Asia flying is decreasing – notable given the growth of A380s based in the region. Services by the A380 to Australia are growing, perhaps as it becomes an easy market for airlines to redeploy capacity amid European security concerns and trans-Pacific overcapacity.
Chile recorded a solid 9.7% increase in passenger growth for the first seven months of 2016, with domestic passengers growing 9% and international passenger growth reaching nearly 11%. Although Chile has not been immune to the economic degradation in Latin America, its economy is more stable than in other countries in the region.
Some changes have taken place in Chile’s domestic market during the last year – most notably the transition of the country’s second largest domestic airline Sky into a low cost carrier. As it has undertaken a change in its business model Sky’s international passenger numbers fell for the Jan-2016 to Jul-2016 time period, but the airline is adding some international markets in 2016 and 2017, upping competition with its familiar rival, LATAM Airlines Group.
Another airline aims to start operations in Chile during early 2017 with aspirations to compete with LATAM and Sky on domestic routes. Paravai Líneas Aéreas may not pose a huge threat, but its ambitions reflect a belief that perhaps Chile’s duopoly needs to be shaken up.