See below the list of current and pending members of the Global Alliances.
Although North America is Copenhagen Airport's single largest long haul market, eastwards traffic to the Middle East and Asia is collectively larger. And much Gulf carrier traffic is connecting onwards to Southeast Asia. Copenhagen will be the first destination for Emirates' 615 seat, two class A380. On the same week in Dec-2015 that Emirates begins service with the world's most densely configured A380, Qatar Airways will bring its Doha-Copenhagen service to double daily. Etihad does not serve Scandinavia, but is probably laying the groundwork via a partnership with SAS.
Copenhagen's next developments could be from Cathay Pacific, which has flagged possible service. Copenhagen discussed growth developments at CAPA's LCC Airports Congress in Bangkok, and World Routes in Durban. Asian growth may not necessarily come at the expense of incumbents. Copenhagen expects Singapore Airlines to increase flights from five times weekly to daily. Pressure may be mounting on Thai Airways, but Copenhagen is reportedly its best performing European point. Meanwhile North America capacity is growing as SAS and Norwegian add services.
The civil war erupts. The rift between the large three global US network airlines and medium sized airlines operating in the country is growing. Airlines housed in those two sectors are on opposite sides of the Gulf "subsidy" campaign waged by American, Delta and United. This is reflected in the recent partnering of JetBlue and Hawaiian Airlines, along with other airlines, to create the US Airlines for Open Skies Coalition to promote benefits of the open skies agreements the US holds with over 100 countries.
But Hawaiian and JetBlue are also publicly denouncing the detriments of a fundamental tenet of the business strategy adopted by the large three US airlines during the last decade – immunised joint venture agreements. Hawaiian and JetBlue believe joint ventures have resulted in higher fares and decreased consumer choice.
JetBlue has requested that the US government review joint ventures to ensure those pacts benefit consumers. US regulators recently have shown an eagerness to undertake scrutiny of the country’s largest airlines, so JetBlue believes it has favourable odds of gaining traction on its request.
Part 1 of this report on Greece reviewed the status of these key industries, which account together for over a fifth of the country's GDP and in many ways represent one of the key areas of hope for Greek employment and economic growth.
The other part of the equation is the ownership of the country's airports, still mostly in government ownership.
On 11-Jul-2015, the European Union delivered a new bailout offer to the Greek government; this included a requirement to sell down a range of government owned infrastructure, including its airports. This offer is still subject to ratification on both sides, but if finally agreed should stimulate considerable interest from investors.
As Part 1 described, passenger growth at several of these airports has been impressive over the past two years, generating some hopes for strong valuations. The Greek air travel market comprised 38.6 million passengers in 2014, an increase of 15% over 2013, as new airline capacity was added, largely by Aegean and Ryanair.
Greece aviation and tourism - Part 1: potentially major forces in supporting economic re-development
Greece has long been a tourism magnet for sun-hungry northern Europeans, quite aside from its remarkable historic attractions. Now, as the country's tottering economy seeks to recover from its near-Grexit experience - and to help stave off the almost inevitable next round of brinkmanship in a few months - aviation and tourism are core to employment and wider economic prospects.
In 2014, travel and tourism was expected to account for one in every five jobs in Greece, as well as accounting for 20% of the country's GDP. Clearly the health of this industry is a vital ingredient in any recovery. Moreover, around 15% of inward investment is in this sector.
The apparent inability of Greece to repay either its debts - or the debts it took on to service its original debts - makes predictions difficult. One substantial fear is that social unrest might upset the stability necessary for essential investment and the tourist trade.
Air France-KLM's 6M2015 passenger traffic figures indicate RPK growth of just 0.7% for the group, compared with 5.8% for IAG and 3.6% for the Lufthansa Group. With a passenger load factor of 84.2% for the period, Air France-KLM is filling more of its seats than IAG (79.3%) and the Lufthansa Group (78.3%). Its capacity discipline is welcome, but has been forced on it by successive losses.
Moreover, its poor financial track record highlights the challenges faced by Air France-KLM in making a profit from these seats - and cost cutting remains a priority. Key to this is labour productivity improvement. A recent agreement signed by KLM pilots is a positive step in this regard, by contrast with ongoing deadlock between Air France and its pilot union.
In this report, we consider Air France-KLM's main strengths, weaknesses, opportunities and threats.
We suggest that Air France-KLM should be more positive in developing commercial relationships with Etihad and Chinese partner airlines and more aggressive with the growth of its LCC subsidiary Transavia (if pilots allow it).
LOT Polish Airlines, completing a restructuring, is planning to double in size by 2020 and launch additional service to North America and Asia, where new routes to Bangkok, Seoul Incheon and Tokyo Narita have been announced. Two more long-haul routes will be announced in autumn 2015 and by 2020 LOT plans to have 10-12 long-haul routes as it becomes the hub for "the new Europe" across Eastern and Central Europe, where there is growth but no clear domination yet by Aeroflot, Air France-KLM, IAG or Lufthansa. Yet LOT's "new" world is actually an old, restrictive world where fellow Star Alliance carriers can veto even internal partnerships, which will hurt LOT's long-haul performance. LOT's position is reflective of other carriers feeling constrained from larger members across all of aviation's global alliances.
LOT prefers to remain in Star but provided it gains greater participation. It hosted the bi-annual board meeting in late Jun-2015 in hopes of gaining leverage. LOT needs a few years to prove its new strategy to potential strategic and equity partners but an alliance decision may be needed in the short-term: a change in alliance rules means Star carriers can leave by 31-Dec-2015 without paying exit fees, which can be very substantial.
Brazil’s fourth largest airline Avianca Brazil marks a milestone in Jul-2015 when it formally joins the Star Alliance. With Avianca Brazil finally entering Star the alliance will be able to fill some of the void left by TAM, which jumped to oneworld in 2014 as a result of its 2012 merger with LAN.
But Star has also been courting Brazil’s third largest airline Azul, whose chairman David Neeleman recently prevailed with his partners in acquiring TAP Portugal, a Star member which is also the largest carrier in the Brazil-Europe market. For now Azul does not seem interested in joining a global alliance and is instead focusing on concluding codeshare discussions with JetBlue and United. But eventually Azul could reconsider and give Star two Brazilian members.
Although Brazil is presently enduring economic weakness, Star’s pursuit of two airlines to fill the gap created by TAM’s exodus shows the long-term strategic value of the country, which is by the largest in Latin America. Star clearly sees a need for two Brazilians members in order to fully restore its presence in the Brazilian market.
A modest push by Delta Air Lines out of JetBlue’s fortress in Boston during 2014 raised questions about the mega airline’s intentions for Boston, and if its moves signalled heightened competition with the airport’s largest airline JetBlue.
Over a year later the two airlines appear to be coexisting peacefully in Boston, leveraging their respective strengths as the airport’s two largest airlines. JetBlue has roughly 125 daily departures from the airport, pushing forward to its goal of 150.
Delta, meanwhile, appears to be making minor changes in Boston, leveraging new markets where it has areas of strength and shedding routes that may not be working within the larger context of its network.
Taiwan’s EVA Air is entering a new phase as it launches Houston on 19-Jun-2015. Houston is EVA’s first new long-haul destination in five years and is part of a major push in the North American market that also includes the anticipated launch of services to Chicago in 2016.
EVA is relying heavily on connections to Southeast Asia as it launches Houston and continues to add capacity to North America. EVA plans to boost feed to its growing North America operation by adding capacity to Southeast Asia through additional frequencies which will ultimately create a second bank of connection flights at Taipei for the Southeast Asia-US market.
To support growth in Southeast Asia, EVA is pursuing modest expansion of its A330 fleet that will provide interim capacity prior to the delivery of new-generation A350s or 787s. EVA plans to place orders for at least 20 A350s or 787s by the end of 2015.
Indonesian flag airline Garuda Indonesia is resuming international expansion as it takes its last batch of four 777-300ERs and acquires 30 787-9s along with 30 A350s. The expansion comes as Garuda's outlook improves after a challenging 2014, which led to a restructuring of its international network and a hiatus from international growth.
The additional 777-300ERs will support international capacity growth in the near-term, including more capacity to Saudi Arabia in 2H2015 and new services to Frankfurt and Paris in 2016. The 787-9s and A350s will partially be used to replace Garuda’s fleet of A330s from 2020 but will also enable further growth of the carrier’s medium and long-haul networks.
Meanwhile Garuda is adjusting its widebody fleet plan by opting not to include a first class cabin in its additional 777s, although at least for now it will maintain a first class product in its original fleet of six 777-300ERs. Garuda also plans to remove the business class cabin on six A330s, giving it an all-economy product similar to the A330s operated by low-cost rivals Indonesia AirAsia X and Lion Air.
The planned joint venture between Royal Air Maroc and Qatar Airways will be a relatively small but tidy affair. More importantly, it signals the future direction: each carrier will work more with partners. Qatar Airways plans more JVs, with a IAG one highly anticipated. Qatar has an existing JV with Cathay Pacific. RAM is planning a JV with Iberia, with the Iberia and Qatar partnerships likely to be followed by joining the oneworld alliance. RAM will give oneworld a long-sought expanded presence in Africa.
Under the JV, RAM will operate from Casablanca to Doha three times a week from 09-Sep-2015 with its 787-8, supplementing Qatar’s existing daily service. Qatar is expected to open a service to Marrakech. Qatar will gain access to RAM’s Africa network from Morocco while RAM beyond Doha is eyeing Asian connections. Accessing Qatar’s Asian network has smartly taken precedence over a risky plan for RAM to fly to Beijing.
There’s no shortage of heat and light in the US vs Gulf airlines battle. But not much to make it clear why the Gulf airlines’ relatively limited impact should attract so much focus.