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On 12-Aug-2013 a historic milestone rolls around, when Etihad Airways turns 10 years old. The carrier, which proudly advertises itself as the fastest growing airline in the history of aviation, has helped usher in a revolution that has reshaped the global airline industry.
Etihad Airways was born as the national airline of the UAE via a Royal Decree issued in Jul-2003. Less than six months later it began operations, with just one aircraft. It launched itself in the midst of a major shake-up of the Middle East’s market and with a mission to support the development of Abu Dhabi as a business and leisure destination and help realise the transformation of the city into a global hub.
A decade on, Eithad Airways has achieved its objectives. Through a combination of rapid organic growth, aggressive partnership development and innovative equity acquisitions, the carrier has become one of the headline players not only in the Middle East, but in global aviation. Few carriers can boast such success in such a small amount of time. Fewer still can claim to be part of a revolution that is helping to change how the world connects.
As Manchester Airports Group (MAG) considers its route network development strategy, three major external factors will shape its future:
Firstly, the UK Airports Commission’s deliberations on future UK airport capacity increases and where they should be, if at all.
Although Manchester Airport handles more passengers, for now at least it appears to play a secondary role in the group’s strategy to MAG's recent acquisition, Stansted Airport.
Secondly, the delivery (or not) of ‘HS2’, the high-speed rail system that would serve Manchester Airport directly and also a station at Derby, close to the group’s East Midlands Airport.
Finally, the creation of an ‘airport city’ on land close to Manchester Airport, which will be the UK’s first such planned development. All these factors impose on Manchester Airport’s route network planning, which has already been undergoing a transformation in recent years.
This is the first of a two part report on MAG, the ingredients in its network planning – LCCs, Gulf airlines and China – and the likely role of the Airport City.
Eastern European low-cost carrier group Wizz has unveiled plans to expand its Vilnius base in Lithuania and establish its third Ukrainian base in Lviv. The announcements follow other recent expansion announcements that will see Wizz expand its bases in Bulgaria and Macedonia.
In the Lithuanian capital Vilnius, Wizz Air will expand its fleet of A320s at the airport to three aircraft. The carrier will use the additional aircraft to launch three new routes and increase frequencies on five existing routes.
Meanwhile the group’s Ukrainian subsidiary Wizz Air Ukraine plans to base one A320 at Lviv from 30-Apr-2014. The aircraft will be used to launch five new routes from Lviv, which Wizz Air Ukraine now serves with three routes. The A320 to be based at Lviv Airport will be Wizz Air Ukraine’s fifth aircraft overall.
Virgin Australia and Tigerair Australia are beginning to flex their muscles with Tigerair Australia making its first strategic move since becoming part of the Virgin Australia Group in Apr-2013 by launching direct services between Sydney and Perth as the carrier takes delivery of its 12th A320 in Dec-2013.
Virgin Australia meanwhile has taken another step to challenge Qantas’ domestic regional network domination with the launch of the first direct link between its home base of Brisbane and Cloncurry.
The changes signal the start of Virgin Australia’s ambitions to duplicate the successful Qantas/Jetstar model which seeks to separately maximise the returns from the full service and leisure markets.
Philippine Airlines (PAL) is planning to launch services to London in early Nov-2013, the first step in an ambitious plan for resuming flights to Europe. PAL has secured Heathrow slots but the flight times are not ideal as they do not support connecting services, which the carrier will likely need to sustain the new route.
PAL will face intense competition from several carriers in the Manila-London market as well as in planned new services to continental Europe. While PAL will be the only airline offering non-stop service between the Philippines and Europe, the market is well served on a one-stop basis by several Asian and Gulf carriers.
PAL announced on 17-Sep-2013 that London Heathrow will be its first European destination since 1998 with flights beginning on 4-Nov-2013. The Manila-London Heathrow route will initially be served with five weekly frequencies using 777-300ERs.
Air Serbia’s recent rebranding from Jat Airways is the beginning of a number of significant developments for the airline which will also lead to changes in the Serbian aviation market. Through its partnership with Etihad Airways, Air Serbia will be establishing a medium sized hub in Belgrade with a restructured network featuring 12 new destinations and a new fleet of A319 aircraft. Through this hub other airlines within the Etihad’s ‘equity alliance’ will be able to take advantage of an increased presence in the Eastern European region.
As previously reported by CAPA, Serbia's Government and Etihad Airways established on 1-Aug-2013 a strategic partnership to secure the future of Jat Airways which was subsequently renamed and rebranded as Air Serbia. The partnership included the acquisition of 49% of Air Serbia by Etihad on 01-Jan-2014 and Etihad being awarded a five-year management contract
Etihad and the Serbian Government agreed to both inject USD40 million into the airline while both parties will each provide up to USD60 million in further funding. Debt from Jat Airways was also written off by the Serbian Government which will allow Air Serbia to launch from a clean sheet.
Wizz Air recently unveiled plans to further expand its presence in the Eastern European market with expansion of its Skopje operations from Apr-2014.
The expansion will see the Hungarian-based LCC base a second aircraft at the Macedonian capital and launch three new routes, as well as increase frequencies on existing routes.
Since entering the market nearly two years ago, Wizz has grown to become the country's largest operator, accounting for more than a third of seats in week beginning 26-Aug-2013.
Russia’s Yamal Airlines has been transforming its operations over the past year with significant network development and fleet modernisation and expansion. The airline transported 912,000 passengers in 2012 and is aiming to increase its passenger traffic to 1.5 million in 2013.
Yamal is currently Russia’s 10th largest carrier overall with 42,500 total weekly seats on offer, according to CAPA and Innovata data. Domestically it is the seventh largest carrier in Russia with around 38,500 weekly domestic seats offered.
The outlook for troubled Serbian national carrier Jat Airways has improved significantly following the recent signing of an agreement with Etihad Airways.
The partnership will allow the modernisation of Jat’s fleet and changes to its network, while also closely working with Etihad to improve its efficiencies, revenue management and cost reduction measures. Abu Dhabi-based Etihad is also negotiating to acquire an equity stake in the small Serbian carrier with a deal expected to be announced on 22-Jul-2013.
If consummated, this will be Etihad's sixth equity arrangement, following those with Aer Lingus, airberlin, Jet Airways (pending), Air Seychelles and Virgin Australia.
Air Lituanica launched services at the end of Jun-2013, making it the first scheduled Lithuanian carrier since the collapse of FlyLAL in 2009 and Star1 Airlines in 2010. Air Lituanica will see Lithuania once again connected to other key European countries through a home-based carrier.
As the largest of the three Baltic states with a land area of 65,300km2, Lithuania has a population of about three million and had a GDP in 2012 of about USD42 billion, according to World Bank data. The country currently has four airports in Vilnius, Kaunas, Palanga and Šiauliai which are served by about 20 foreign carriers.
Aside from Air Lituanica, there are currently five other Lithuanian airlines including five charter carriers (Aurela, Avion Express, DOT LT, Grand Cru Airlines and Small Planet Airlines) and one cargo carrier (Aviavilsa). There have been no domestic services in the country since the demise of FlyLAL.
Jazeera Airway’s regional focus continues to pay dividends for the carrier, with passenger traffic up 7% in May-2013. The airline has seen “significant passenger pick-up” in May on a number of its most important regional routes, even in the face of heavy competition from both LCCs and regional widebody operators. Strong growth was reported on routes to Dubai, Beirut, Amman, Jeddah, Cairo, Sharm El Sheikh, Assiut and Sohag during the month.
Jazeera’s network covers 19 routes in 11 countries, concentrated on the Middle East with most destinations within two hours flight time of its Kuwait hub. Unlike LCC contemporaries in the Gulf region such as flydubai and Air Arabia, the company is concentrating on yield first and growth second. Jazeera aims to maximise profit on its existing sectors on a quarter to quarter basis, rather than trail breaking new markets and expanding its network coverage. This involves increasing frequencies on its highest-demand and most profitable routes, gradually building load factors and raising yield levels.
Russian regional airline RusLine is pursuing significant expansion in summer 2013, including the launch of five routes from Chelyabinsk Airport.
The fast-growing regional operator is Russia’s 16th largest domestic carrier with about 9,500 weekly domestic seats and about a 1% share of the Russian domestic market, according to CAPA and Innovata data. It is based at Moscow Domodedovo Airport, where it is currently the 10th largest domestic carrier.
But RusLine’s capacity will nearly double over the next couple of months as it launches several routes, including from Chelyabinsk and a new base at Voronezh, and adds capacity in several existing markets. The carrier plans to offer almost 20,000 weekly domestic seats in the Russian domestic market in Jul-2013, giving it almost a 2% share.