Air France

The A380 becomes mainstream, with 103 now in service: which airlines, destinations, stage lengths?

There are 103 A380s in service as of early May-2013. Emirates has 33 and Singapore Airlines has 19, so when assessing network scheduling, these two and their hubs predominate: of the 1,048 weekly A380 flights, 402 are from Emirates alone. Dubai and Singapore airport see the most A380 flights.

But there are some less predictable statistics. The airport to see the most A380 operators is Hong Kong followed by Paris and Los Angeles. The largest A380 destination that is not (yet) an A380-hub is London Heathrow. The UK and USA are the most common A380 destinations after Australia, Singapore and the UAE. Asia, not the Middle East, sees the most A380 flights; South America sees none. Guangzhou-Shanghai Pudong is the shortest A380 route at 1,202km while Los Angeles-Melbourne is the longest at 12,751km. Qantas and Lufthansa have the highest average sector length while Thai Airways is placing the most number of cycles – about two – on its aircraft per day. Qantas and Air France are placing the least (just over one).

LATAM Airlines Group continues to battle pressure in long-haul and Brazilian domestic markets

Weakness in long-haul markets from Brazil continued to pressure LATAM Airlines Group during 1Q2013 as competitive capacity increases triggered depressed loads and unit revenues in its international network. But LATAM’s efforts to restore strength in the Brazilian domestic market and the relative strength in the group’s Spanish speaking companies should help to offset some of the continuing pressure in LATAM’s international network.

The company’s attempts to bolster international service during the last year to offset some of the continuing weakness in the Brazilian domestic market have faltered somewhat due to competitive capacity increases by American and United in the US-Brazil market, and LATAM’s own expansion of supply in the market. The company’s overall capacity increase in its international markets during 1Q2013 was 12.3%.

European airline consolidation to enhance financials? Few deals to be done, at least locally

European airline margins have underperformed other regions for years. There are many reasons for this, but our analysis suggests that Europe’s relative lack of consolidation may be a significant one, since margins appear to be correlated with market concentration. Even after a number of significant deals over the past decade, the European market is less concentrated than North America, where consolidation has gone further, to the benefit of margins. Europe is also less concentrated than Asia-Pacific (analysed as its sub-regions), whose margins have consistently been the highest.

If consolidation brings structural benefits, are there still European deals that can make a difference? Europe has a long tail of small carriers, which are unlikely to have a significant impact, but comparison with North America points to the potential for further combinations among the top five. Nevertheless, there are hurdles to such deals, not least of which are the ongoing restructuring programmes at Europe’s Big Three and the incompatibility of LCC/FSC mergers, but some second tier groups could be targets.

Air France-KLM: it may be unfair to compare its 1Q2013 with Lufthansa's, but…

Two of the European Big Three reported 1Q2013 results within two days, so we can’t resist a comparison. Air France-KLM’s quarterly operating loss of EUR530 million was EUR171 million below Lufthansa’s. Air France-KLM shaved net debt from EUR6.0 billion at the end of 2012 to EUR5.9 billion; Lufthansa’s net debt is less than one third of this. AF-KLM’s 1Q RASK grew by 1.2%; Lufthansa’s by 2.8%.

Air France-KLM makes losses in Europe, where Lufthansa now claims a profit. In an attempt to fix this, Air France-KLM has Transavia for some leisure routes, Hop for French regional point-to-point and some hub feed, Air France’s provincial bases strategy (under review) for non-hub French routes and both Air France and KLM for everything else. Lufthansa has Germanwings for non-hub routes and Lufthansa for hub feed in Germany.

For FY2013, Air France-KLM isn’t saying whether it can improve on 2012’s EUR300 million operating loss, only that it aims to cut unit costs (ex fuel and currency) and net debt, whereas Lufthansa aims to beat last year’s EUR524 million profit.

Air Mauritius is on the road to recovery with an Asia-Africa focused network

Air Mauritius is well on the road to recovery, a year into a five-year plan that aims to implement a new business model that restructures its operations to become less dependent on traditional, but flagging, European markets and instead turn the airline’s focus to the growth markets around the Indian Ocean Rim and Asia.

A seven step recovery plan launched in Feb-2012 as profits crumbled into losses saw Air Mauritius undertake a major network consolidation which involved withdrawing its services to Germany, Italy and Switzerland as well as service reductions to China, Australia and Africa. But, with its network brought back into balance, and profitability restored, Air Mauritius has resumed a growth path with plans to launch a direct service to Beijing and reinstating some suspended routes and capacity in key markets.

CAPA Airlines in Transition report, Part 1: The natural history of airline alliances

From the first US Open Skies agreement with the Netherlands in 1992, and the subsequent granting of antitrust immunity to the KLM-Northwest joint venture in 1993, the evolution of airline alliances has been rapid and far reaching. Bilateral codeshares, immunised JVs, multilateral branded global alliances, the Etihad equity alliance: why are there so many models? In the first of a series of reports based on CAPA’s recent Airlines in Transition conference in Dublin, we examine the history and evolution of airline alliances and partnerships.

After decades of strict regulation of international traffic rights post WWII, which controlled destinations, capacity, frequencies and prices, a campaign for more liberal air services agreements (ASA) between nations began to gather pace in the US from 1977. In the words of Jeffrey Shane, General Counsel, IATA and a former senior US aviation regulator, any attempt to modify an ASA was characterised by a "highly calibrated, tit-for-tat mode of negotiation".