- IATA Code
- International Airlines serving this region (excluding codeshares)
Location of Asia Pacific
13,892 total articles
132 total articles
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.
Growing demand for air freight capacity to cater to Papua New Guinea’s booming resources sector and seafood exports appear to have encouraged carriers Qantas and Skyforce to apply for dedicated freight allocations from the Australian International Air Services Commission.
Qantas through its subsidiary Express Freighters Australia and Sydney-based Skyforce Aviation have applied to the IASC for a total of 53 tonnes of freight capacity per week each way on the Australia-Papua New Guinea route. A total of 77.5 tonnes capacity per week in each direction is currently available under the bilateral air services agreement between the countries which allows for a total of 100 tonnes per week.
Currently Pacific Air Express has the market to itself after HeavyLift Cargo Airlines collapsed in 2012. The state of Queensland is a major source of supplies for PNG’s mining sector, while also serving as a transit point for some of the country’s Japan-bound fresh tuna exports.
Virgin Australia has scored an important victory against Qantas in the battle for access to bilateral capacity between Australia and Italy, being awarded 300 of the 1000 weekly seats available on the route.
The Italy decision is likely to set the scene for other markets where Virgin Australia may seek to challenge Qantas’ dominant third country carrier codeshare seat allocation as they come up for review over the next few years. Both carriers are competing for bilateral seat capacity to maximise the benefits of their largely virtual networks to Europe.
Qantas had previously held Australia’s entire codeshare capacity entitlement on the Italy route under two determinations. The carrier had to have the first of these involving 600 seats renewed for a further five years by the Australia’s International Air Services Commission (IASC). The remaining 400 seats held by Qantas are not due for renewal until 2015, at which point it can expect a further challenge from Virgin Australia.
Virgin Australia on 08-Apr-2013 was granted 300 of the 600 seats available for five years. It will offer the seats between Australia and Rome via Singapore and between Australia and Milan via Singapore and via Abu Dhabi.
Virgin Australia has been granted approval to buy a 60% stake in LCC Tiger Australia by the Australian Competition and Consumer Commission (ACCC) and in so doing puts in place the final piece of a puzzle that allows Virgin Australia to compete against the Qantas Group on a level footing.
The ACCC agonised over the ground-shifting decision with concerns that returning the Australian market to a duopoly would remove the benefits that Tiger Australia had brought as a third competitor when it launched in Nov-2007. The commission delayed its decision by nearly six weeks while it sought more information from Virgin Australia and Tiger Australia to provide the comfort it needed.
Ultimately ACCC chairman Rod Sims concluded that “this acquisition is unlikely to lead to a substantial lessening of competition in the Australian market for domestic air passenger transport services”.
Virgin Australia chief executive John Borghetti said: “By partnering with Tiger Airways, we can use our local expertise to build a sustainable budget carrier, which will offer great value airfares and benefit jobs and tourism in Australia.”
Regional Australia has become the new competitive focus for domestic carriers in the wake of Virgin Australia’s acquisition of Skywest in Western Australia and moves by Qantas to firm up its position in the East.
Skywest has provided Virgin Australia with a much needed boost to its regional network allowing it to better compete with Qantas. Regional traffic is growing but Virgin Australia’s efforts to enter some markets are being hampered by regulatory restrictions on many routes in the interest of service stability. Virgin Australia has already intimated that it could move its headquarters from Brisbane in frustration at a decision to delay tenders for regional Queensland routes until 2014.
Qantas is responding to the renewed threat of increased competition on its regional network, having added another four Bombardier Q400 turboprops to its fleet. It will take delivery of more regional aircraft in 2H2013, including another five Boeing 717s, to bolster capacity.
Australia needs to urgently negotiate expanded international air capacity which is constraining access to services from some of the country’s most important markets in Asia along with the United Arab Emirates. Capacity for several Asian markets, including China, Hong Kong, Vietnam, Malaysia and the Philippines, is fully utilised by carriers from those countries which are important source markets for both tourism and trade.
The Australian Government is being criticised for not negotiating new bilateral capacity to keep pace with demand. Melbourne Airport CEO Chris Woodruff said at the Australian Airports Association convention in Nov-2012: “These agreements provide the framework in which we can go out to the international market and attract new air services to meet the increasing demand for travel to and from Australia. The Government needs to lead from the front on this issue. Our bilateral agreements need to provide plenty of capacity for future growth in passenger numbers.”