See below the list of current and pending members of the Global Alliances.
Air Canada is making a solid push in the US transborder market in 2016, as it works to leverage sixth freedom traffic from its growing international long haul operations. The expansion involves new routes, the re-launch of other markets, and also service to hubs of Air Canada’s Star Alliance partner United Airlines.
The airline’s sixth freedom strategy has been a mainstay of its business plan for a number of years, after Air Canada valued that traffic at several million dollars. It is working to position its hubs as attractive transit points from US destinations that do not have direct access to markets in Asia and Europe.
Air Canada believes that given the solid projections for the US economy, its latest transborder push should be successful. The airline is the lone operator in many of the new markets, providing an opportunity for Air Canada to continue to grow its annual sixth freedom traffic flows.
Delta Air Lines has opted to expand its stake in Aeromexico, following a similar move earlier in 2015 when it increased its investment in Brazilian airline Gol. Delta has also invested in China Eastern Airlines during 2015, and unsuccessfully pursued a stake in Japanese airline Skymark.
With low fuel costs propelling record profitability at US airlines, perhaps the time is right for Delta to solidify investment to build a competitive network for the long term. Its moves during the past year reflect an aggressive pursuit of strengthening its presence in Latin America and Asia.
By enlarging its stake in Aeromexico, Delta also grows its ability to exert influence over the airline, something that Delta believes could help Aeromexico improve its overall business strategy.
Brazil’s TAM is aiming to launch services in 2016 to Johannesburg, making it only the sixth airline with long haul or transoceanic flights solely within the Southern Hemisphere. TAM will compete with current codeshare partner South African Airways (SAA) on the Sao Paulo-Johannesburg route.
The new TAM service will be the first oneworld link between South America and Africa, plugging a hole in the alliance’s round the world offering. Qantas now links Australia with South Africa and South America while TAM sister carrier LAN also operates over the South Pacific.
Star will also be able to offer a round the world product completely in the Southern Hemisphere from Dec-2015, when Air New Zealand launches services to South America. Star member SAA is now the only carrier linking South Africa to South America, also serving Australia.
Royal Jordanian has completed a challenging turnaround and is on track to post a profit for 2015 after incurring steep losses in 2013 and 2014. A drastic network restructuring and efficiency improvements driven by the introduction of Boeing 787s has enabled the flag carrier to return to the black despite lingering unfavourable market conditions in the Levant region.
Royal Jordanian is starting to resume network growth – albeit modestly and with relatively low risk. Guangzhou and Jakarta are being added in early Dec-2015 while Kuala Lumpur is being upgraded to non-stop by improving utilisation of its widebody fleet.
The addition of Guangzhou and Jakarta expands Royal Jordanian’s long haul network from seven to nine destinations. Its short/medium haul network, which shrunk by over 10 destinations in 2014, is also starting to see modest growth.
Clouds loom over Cross-Strait airline market as Taiwan faces political change. Hong Kong may benefit
The ruling, and pro-Beijing, KMT party is expected to lose the Jan-2016 elections in Taiwan. Under the KMT's leadership Beijing and Taipei have forged closer ties, including the launch of charter and then scheduled Cross-Strait flights between mainland China and Taiwan, which had been prohibited for decades. There has been growth, with increase in overall frequency as well as destinations available to be served in the still tightly-regulated market.
An outstanding gripe from the Taiwanese side was that, for complex reasons, their airlines were not permitted to carry transfer traffic from mainland China to Taiwan and beyond to other markets – such as Australia and North America, two popular long haul markets from mainland China and for which Taiwan is well positioned to be a hub. Earlier in 2015 when relations were warmer, Taiwanese carriers were expected to receive transfer traffic rights by the end of the year. But as the Taiwanese political situation has turned unfavourable to Beijing, an Oct-2015 meeting did not grant transfer traffic rights. The bigger risk is that cooling relations would slow Cross-Strait liberalisation – or at an extreme, recede. One outcome could be that visitor growth would instead funnel through the Hong Kong hub.
Delta opts to flesh out its 2016 European network with new flights from Minneapolis, Detroit and RDU
Delta Air Lines is branching out in its 2016 trans-Atlantic schedule, bolstering service from its lower-profile hubs in Minneapolis and Detroit. It is also introducing service from Raleigh-Durham to Paris, having initially mooted the route eight years ago.
The airline is playing to its positions of strength with the addition of trans-Atlantic services from its hubs in the interior of the US, which should allow Delta to both tap a large pool of local passengers in the metro region of Minneapolis and Detroit and also garner connecting traffic from US midwest spoke routes by touting one stop connections to popular European destinations and hubs of partner airlines.
Delta has been growing in Raleigh at a solid clip during the last couple of years, increasing the number of point to point markets it operates from the airport. The introduction of service to Paris is the next phase of that build up, and a key win for Raleigh-Durham International Airport, which has been working to enlarge its roster of long-haul services.
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.