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Traffic and Capacity

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Airlines seek to match capacity (supply) with traffic (demand), to produce consistently high load factors, to help them maintain their pricing and yields (see CAPA's Aviation Glossary for more background in traffic terminology). It is a difficult balancing act, made more challenging by volatile global economic conditions. Traffic is generally growing much faster in the emerging markets of the Asia Pacific, Middle East, Africa and Latin America and Eastern Europe regions, compared to the more mature aviation markets of Western Europe and North America.

CAPA covers hundreds of traffic reports from airports, airlines and industry bodies every month. Our Diamond Members can opt to receive them as they happen via CAPA Alerts.


47,060 total articles


2,052 total articles


LOT Polish Airlines: now restructured, and long haul focus is on 2020 growth. Partnerships critical

20-Sep-2016 9:30 PM

On 8-Sep-2016 LOT Polish Airlines announced its "2020 profitable growth strategy". This involves a goal to achieve "sustainable viability", after a restructuring programme which returned LOT to operating profit in 2014 after six loss-making years. Its privatisation may even be back on the agenda.

LOT currently ranks behind LCCs Ryanair and Wizz Air by share of traffic in Poland, which offers superior traffic growth potential versus Europe as a whole. The airline aims to increase passenger numbers from 4.3 million in 2015 to 10 million in 2020, growing its fleet from 43 to 70 aircraft. LOT's expansion will focus on long haul, particularly North America and Asia, where it currently has only five routes and where competition is considerably lower than on short/medium haul. Initial plans include the launch of Warsaw-Seoul this winter and a return to Warsaw-New York Newark next summer.

According to (limited) data from LOT, its restructuring has left it with a fairly efficient cost base and this will be important in competing with LCCs. LOT's growth will focus on long haul but will need short-haul European feed – and partnerships. Although LOT no longer appears to be considering leaving the Star Alliance, it remains excluded from American and Asian JVs. Further, those JVs preclude members from working with LOT. Partnership growth will be as critical as it will be challenging.

All-premium UK-US airlines. BA cuts LCY frequency; La Compagnie quits LTN; Odyssey to launch in 2017

14-Sep-2016 5:35 PM

There have been two notable recent developments in the market for all-business class services on the North Atlantic: British Airways is to reduce its London City-JFK A318 frequencies and France's La Compagnie is to withdraw from Luton-Newark to concentrate its 74-seat Boeing 757 operations on Paris-Newark (its only other route).

BA's 32-seat London City operation has been suffering from significant load factor declines, particularly on the outbound flights. These flights make a refuelling stop in Shannon, where passengers can pre-clear US customs, but this may not be a sufficient incentive for some passengers to take an indirect flight. La Compagnie expressed concerns about uncertainties in the UK post-Brexit, but its route economics must anyway have been struggling, due to Luton's lack of suitability as a premium market and its lack of feed.

So far there has been no reaction to these developments from the new-start Odyssey Airlines, which plans to launch an all-business class London City-New York service in 2017. It will no doubt be attempting to find a balance between relief that its level of competition has reduced, and some anxiety that its launch may coincide with a softening of market demand.

Copa Airlines sees positive trends for Latin American demand. A full recovery remains distant

9-Sep-2016 9:49 PM

Panama’s Copa Airlines is joining other Latin American airlines in expressing cautious optimism that some negative trends in the region are starting to stabilise, after a tough couple of years of challenging economic conditions. Copa, in particular, believes that weakened demand is beginning to improve, driven in part by some currencies within Latin America that are strengthening against the USD.

For 2H2016 Copa is continuing to post stronger close-in bookings that began to improve in 2Q2016, which is a positive sign for airlines operating in the region. Some of the upswing in bookings stems from capacity reductions by most Latin American airlines, to right-size supply with demand. That capacity discipline should continue in 2017, since all of the region’s major airline groups have worked to defer aircraft deliveries in order to maintain a proper supply-demand balance and lower capex commitments.

Similarly to other Latin American airline groups, Copa has worked to shore up its balance sheet to withstand overall economic weakness in many of its markets. Its cash balances at the end of 2Q2016 increased from the first quarter, and its leverage was the best among some of Latin America’s publicly traded airlines.

Alaska Air: the airline's network diversification continues ahead of closing Virgin America merger

1-Sep-2016 8:24 PM

During the next couple of years Alaska Air Group faces one of the most important milestones of its 84-year history with the presumed approval and closing of its merger with Virgin America, followed by the complex integration of the two companies.

Alaska has not offered capacity guidance for 2017, but its mainline fleet is projected to grow by just a single aircraft as it completes the phase-out of its Boeing 737-400 Classics. Its regional subsidiary Horizon begins deliveries of Embraer 175s in 2017, which could drive most of the group’s capacity growth for the year. But it is likely that Alaska is aiming to grow total ASMs below 2016’s increase of 8.5%.  

As it prepares to close on its acquisition of Virgin America Alaska is continuing its stand-alone network evolution that includes capitalising on loosened operating restrictions at Newark airport, which helps the company bolster its position on the US east coast. Alaska is also targeting more midwestern markets in 2017, one feature of its efforts to diversify its offerings during the last few years.

Brazil's Azul relies on an arsenal of resources to counter weak domestic demand

1-Sep-2016 8:17 PM

Brazil’s third largest domestic airline Azul has been forced to curb its once rapid growth as the country’s economy will endure its second consecutive year of contraction during 2016. Similarly to all Brazilian airlines, Azul has been plagued by soft domestic demand and a sharp currency decline that creates challenges for expenses denominated in the USD – such as fuel and aircraft costs.

Although it will take some time for Brazil’s economy to recover fully from its current recession, some encouraging trends are beginning to take effect. Recently the BRL has gained some ground against the USD, which is a welcome sign for Brazilian airlines.

Azul has used many tools to adapt to Brazil’s current economic slump, including a new relationship with the European airline TAP and equity infusions from foreign investors. It has also show a willingness to lower fares in some markets, particularly to the US, to ensure that it retains a strong market presence once Brazil embarks on a steady path to economic recovery.

Gol nears the end of a crucial debt overhaul, but challenges in Brazil still loom large

26-Aug-2016 11:38 PM

During the past year the Brazilian airline Gol has been engaged in a comprehensive restructuring plan, creating a more stable capital structure to withstand Brazil’s tough economic downturn. The company is in the final stages of that restructuring, which has entailed reworking its aircraft order book and shrinking its fleet; advancing ticket sales with its frequent flyer supplier; and making an attempt to restructure international bonds that received a tepid reception from the market.

The comprehensive restructuring is designed to create stability for Gol as it faces the economic realities ushered in by Brazil’s recession, and to sustain its leading competitive position against its rivals in the intense Brazilian market. Although Brazil’s largest airlines Gol and TAM continue to shrink their domestic capacity, other airlines are continuing to grow capacity in Brazil’s troubled domestic market.

Gol has also undertaken network changes to improve connectivity throughout Brazil from the airports it serves in São Paulo and Rio de Janeiro. This action is to improve its positioning among corporate clients, a positioning that remains important over the long term despite continued weakness in that passenger sector.