African Airlines Association

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.

CAPA World Aviation Yearbook 2013: Country, Airline data in a comprehensive 1,000 page report

CAPA has today issued a world first 1,000 page CAPA World Aviation Yearbook 2013. We are happy to provide the report, in 10 parts to allow easier management, for free download by industry leaders.

The 2013 Yearbook contains a global overview, with extensive summary data for the largest 50 aviation countries and detailed analysis of more than 70 leading airlines, covering all regions of the world.

Full data sets are included for each airline and region, covering fleets, orders, delivery dates, capacity by route/region and premium profiles, making the CAPA Yearbook an invaluable resource.

South African Airways codeshares with Etihad and Jet have mutual advantages for all - except Star

South African Airways has become the latest carrier to join the embrace of the Gulf carriers, signing a codeshare agreement with Etihad which adds 22 new codeshare connections between Africa and the Middle East and follows another important codeshare agreement with India’s Jet Airways. The agreements mark a shift for cash-strapped SAA towards recognition that as an end-of-line carrier it must develop a more virtual long-haul network. Such partnerships are part of SAA’s long term turnaround strategy and allow the carrier to extend its network without the need to commit capital to expensive long-haul aircraft.

SAA acting CEO Nico Bezuidenthout said the codeshare agreements would grow the carrier’s revenue, with initial expectations that the Etihad partnership would add about ZAR100 million (USD11 million) a year to revenue.

Meanwhile Etihad will increase its already comprehensive African coverage with the addition of SAA which improves access to the continent’s biggest economy.

Why Emirates and friends will soon reshape American aviation

Shortly after Emirates Airline announced its remarkable breakthrough partnership with Qantas in Sep-2012, Emirates CEO Tim Clark said he had also been talking to American Airlines for some time and publicly expressed hopes that the two would also establish a close relationship. This was despite the fact that American already had an extensive codeshare relationship with Etihad; and the third Gulf carrier, Qatar Airways, has since been invited to join the oneworld alliance – which American leads.

The Gulf airlines, and particularly Emirates, have had a devastating impact on European long-haul hub carriers. The impact will be different for US airlines, but despite the different geography, it will be much bigger than most expect. For one thing they will cut across the developed boundaries of the global alliances.

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.

Ethiopian Airlines expands its global footprint to link the world's high growth regions

Ethiopian Airlines will extensively expand its network in 2013, adding Asian destinations as well as increasing its footprint in Africa and linking the two high growth regions to South America.

In Africa, Ethiopian added flights to Blantyre in Malawi and Ndola in Zambia on 31-Mar-2013, increasing its African network to 45 destinations, including 16 domestic points. The carrier also has begun negotiations with the Malawi Government to take a 49% strategic stake in failed flag carrier Air Malawi after being selected as the preferred bidder among eight chosen applicants.

The Asian network will be expanded with the addition of Ho Chi Minh City, Manila and Seoul Incheon in Jun-2013 operating from Ethiopian’s existing Asian hubs, Hong Kong and Bangkok. And Ethiopian will become the first African carrier to take advantage of the natural transfer traffic synergies that link the three regions, and form part of its strategy to develop its Addis Ababa base into a Dubai-style hub of Africa.