easyJet is reportedly expected to make a strategy announcement upon the release of its full year results on 16-Nov-2010, centreing on gaining greater share of the business passenger market (Sunday Telegraph, 13-Nov-2010). The ‘easyJet-style business proposition’ is expected to involve greater flexibility for business passengers willing to pay slightly more than regular customers although the carrier will reportedly stress that the move does not represent a departure from the airline's egalitarian ethos. The airline is also believed to have looked at pre-assigned seating but a final decision has not been made on the matter. The carrier also plans to target the leisure market in part through its recent agreement with the Low Cost Travel Group to offer packaged holiday products including flights, hotels and airport transfer.
easyJet plans business passenger push
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European airlines: 1H2016 results show a widening gap between the haves and have-nots
The last of Europe's leading listed airline groups reported 1H2016 results on 19-Sep-2016. This now allows analysis of the aggregate trends for the 15 largest European airline groups listed on the stock market that publicly report financial results for the first six months of the calendar year. These groups account for 53% of ASKs flown to/from/within Europe by all airlines and 71% of ASKs flown by European airlines (week of 19-Sep-2016, source: OAG).
Collectively, these 15 groups enjoyed an improvement in operating margin in 1H2016 versus 1H2015. This was achieved in spite of heavy downward pressure on unit revenue – thanks largely to lower fuel prices, which allowed them to cut unit costs more rapidly. However, there was a wider range of levels of profitability in the individual results compared with last year.
Moreover, in margin terms, there was a trend towards the strong getting stronger and the weak getting weaker. Further, there has been a number of profit warnings in the sector – particularly since the UK's Brexit referendum. This may mean that further improvements in the aggregate results of Europe's listed airline sector will be harder to achieve in 2017.
Palma de Mallorca Airport: new Eurowings base in price-sensitive market; capacity is accelerating
The announcement by Eurowings that it plans to establish a base with two aircraft at Palma de Mallorca Airport next spring focuses attention on Spain's number three airport by passenger numbers. One of Europe's most important airports for LCC capacity, Palma is also very dependent on the summer schedule. The low point of the winter schedule has 78% fewer seats than the peak summer week.
Traffic at the airport held up relatively well during the second phase of Spain's 'double-dip' recession in 2011 to 2013, but its passenger growth has lagged that of the country as a whole since then. The mix of airlines has been in some flux, with Palma's leading airline airberlin gradually losing share to LCCs and the seat-only sales of charter airlines. Ryanair, number two at the airport, has returned to capacity growth there in 2016 after two years of cuts.
Eurowings' new base at Palma in May-2017 will follow the establishment of bases at the airport by easyJet and Norwegian in 2016. It is certainly a market that seems to attract the interest of Europe's leisure-focused airlines, but strong capacity growth at Palma (and elsewhere in Spain) increases the downward pressure on yields in a price-sensitive market.