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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.


46,128 total articles


2,046 total articles


Allegiant Air faces new competition from US ULCCs as fleet and labour deals drive some cost creep

20-Aug-2016 10:11 PM

Niche US ULCC Allegiant Air should be embarking on a period of greater stability after reaching an agreement with its pilots and completing a safety review with the US FAA. The airline also recently placed its first order for new aircraft with Airbus, which will help to accelerate the retirement of its ageing MD-80s that are creating reliability challenges for Allegiant.

Although the pilot agreement and aircraft deal will drive long term benefits for Allegiant, the airline faces some cost pressure going forward from increased labour expense and inefficiencies in operating more than one fleet type. As it braces for some cost inflation, Allegiant is also facing increased competitive overlap with fellow ULCCs Frontier and Spirit, which reflects subtle changing dynamics in the US domestic market.

For the moment, the overlap between Allegiant and other ULCCs remains small. But the likelihood of increasing competition is strong as the opportunities in medium sized markets created by consolidation among the US’ largest airlines continue to grow.

Pegasus Airlines: FY operating loss now likely after more red ink in 2Q. Capacity growth slows

17-Aug-2016 5:41 PM

Pegasus Airlines is having a difficult year. Its 2Q2016 results revealed a year on year widening of its operating loss for the third successive quarter. A series of geopolitical and terrorist events in Turkey have weighed on demand for international travel in particular.

Although Pegasus slowed its capacity growth in 2Q, this did not arrest the trend of plunging unit revenue. In spite of low fuel prices, Pegasus has not been able to match the fall in RASK with a sufficient reduction in its unit cost.

In response to its weak 2Q and 1H results, Pegasus has issued a profit warning, lowering its guidance for FY2016 and implying an operating loss for the year. After a number of years of double digit passenger growth, it now targets an increase of only 5%-7% this year (it previously expected 13%-15%). A more cautious approach to growth makes sense in the current environment.

Airberlin makes network cuts, refocusses on North America long haul and new premium product

16-Aug-2016 11:59 PM

Despite low fuel prices that have carried the global airline industry to record margins, airberlin's 2Q2016 losses have widened. This was its fifth successive quarter of unit cost growth outpacing unit revenue growth (they both fell, but unit revenue fell faster). Airberlin improved its cost structure, but CEO Stefan Pichler said that 2Q "was more challenging than expected on volumes and yield". It now seems likely that 2016 will be yet another year of red ink for airberlin, which is 30% owned by Etihad.

Airberlin's ongoing restructuring continues to involve capacity and headcount cuts to improve cost efficiency. In addition, airberlin is seeking cost synergies by coordinating some support functions with Etihad Airways Partners airlines.

Still predominantly a short/medium haul operator, airberlin is expanding its long haul network with new routes in the US and the Caribbean. This long haul expansion, accompanied by the launch of a short/medium haul premium product, attempts to position airberlin more squarely as a full service network airline. This is a further move away from its LCC past, just as LCCs are encroaching on long haul in addition to short haul.

Hawaiian Airlines emerges as the unit revenue champion among US airlines in 1H2016

9-Aug-2016 9:36 PM

Hawaiian Airlines’ unique geography continues to benefit the company in 2016 as favourable capacity trends are one factor in its industry outperformance in unit revenue metrics. Hawaiian’s outlook for the remainder of 2016 remains positive as industry capacity on its routes to North America and long haul destinations remains relatively benign.

The airline is acknowledging slight pressure in its inter-island operations due to heightened competition with the smaller operator Island Air. Hawaiian plans to adjust its inter-island schedule later in 2016 to maximise peak flying and cut some off-peak flights.

Hawaiian is expanding service to the Tokyo market in 2016 after being awarded new slots at Haneda airport. But the expansion is not affecting Hawaiian’s overall growth targets of a 2.5% to 5.5% increase in capacity, which is significantly lower than the double-digit expansion it recorded from 2011 to 2013.

Spirit Airlines feels sting of Southwest’s discounting. First signs emerge of changing network mix

6-Aug-2016 11:59 PM

Efforts by Spirit Airlines to create some pricing traction in the US domestic market during the early high travel season during 2Q2016 have been foiled, largely by Southwest Airlines. The result was continued weakening of yields for the airline, a metric that has been a mainstay for Spirit during the last couple of years. The airline’s double-digit yield decline slightly worsened from 1Q2016 to 2Q2016.

Spirit is forecasting some improvement in the US revenue environment in 3Q2016 as the airline starts to lap the onset of pricing dilution in the US market that started in mid-2015, and as its own capacity slows in comparison with 2Q2016.

The airline is also making network moves in late 2016 to reflect its new strategy of adding mid-size markets that are less competitive. Spirit is making a push from a new market – Akron-Canton – and is also expanding from Orlando. At the same time, Spirit is exiting markets featuring a mix of low and high levels of competition as it works to change the structure of its network, now that larger airlines are more wilful in matching the ULCC’s fares.

Lufthansa still Number 2 vs IAG & Air France-KLM. Soft RASK justifies more ASK trimming for all

5-Aug-2016 2:55 PM

Lufthansa Group's detailed 2Q2016 results confirmed the headline numbers that it pre-released with a profit warning on 20-Jul-2016. After increasing its operating profit in 1Q, the group suffered a decline in 2Q. Among Europe's big three legacy airline groups, Lufthansa was the only one to report lower 2Q profits. In 1H2016, IAG again has the best operating margin of the three, followed by Lufthansa and then Air France-KLM. However, LCCs Ryanair and Wizz Air are more profitable than any of them.

Lufthansa's full 2Q report provides an opportunity to compare the capacity growth and unit revenue performance of each of the Lufthansa Group, Air France-KLM and IAG for 2Q2016. Unit revenue has been soft for some time for all three, but seems to be weakening further. Lufthansa cautioned that advance bookings, especially on long-haul, have declined significantly, citing repeated terrorist attacks in Europe and greater political and economic uncertainty.

Against this backdrop, IAG and Lufthansa have reduced their capacity growth plans, while Air France-KLM has retained its 1% ASK growth outlook for its network airlines. CAPA's analysis highlights the inverse relationship between capacity growth and RASK growth. Further capacity haircuts may follow.