Samoa Airways, via its official Facebook account, confirmed (22-Sep-2017) it plans to launch operations on 14-Nov-2017, although flights remain subject to regulatory approval. The carrier has selected Auckland as its first destination.
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NDC, airline distribution, travel apps, payments: CAPA presents a blockbuster travel agenda22-Sep-2017
NDC, airline distribution, travel apps, payments: CAPA presents a blockbuster travel agenda
Airline sales and distribution practices are evolving at a mind numbing rate. Apps are being developed that utilise the power of artificial intelligence combined with constantly adaptive robots, chatbots; payment models are being developed that will reshape the way we think of money; and, in the ever vital realm of distribution, there is almost a state of war.
Never in the history of the industry have so many moving pieces been under stress to adapt to a combination of new demands and technological advances.
On the one hand the airline is striving to escape the terrorism of commoditisation, experimenting with new options and trying to escape legacy practices. These are often rusted on, internally within the airline and externally with its providers, so change comes hard. But around it the world is in turmoil. Millennials are demanding instant satisfaction, using mobile to communicate and ever anxious to explore the latest technology. In essence, control has long since passed to the consumer.
Grasping back some of the initiative – or at least keeping in touch with fresh developments – occupies a leading space in any airline boardroom that is enlightened enough to grasp the paroxysms that characterise the new environment.
Session 3 of CAPA’s World Aviation Summit in London on 12-Oct-2017 presents the industry’s thought leaders in a three hour symposium that seeks to unravel some of the key changes under way and in prospect.
If it doesn’t provide all the answers, it will at least lay out many of the challenges and the foundations for future decision making.
Poland has been pondering the construction of a new airport for some time. Poland is slightly unusual in that the capital’s city region around Warsaw is only as large by population as other conurbations such as the Silesian one around Katowice, and the population is well spread out across the country. For that reason, a new airport to serve Krakow and Katowice was discussed a decade or so ago.
It appears now that the preferred site for a new airport is between Warsaw and Lodz, in the centre of the country, but that is not an appealing prospect for the many smaller airports dotted around Poland that stand to lose from such a development.
There is no certainty that this airport will be built, but the government is firmly favours it.
Analysis
California expansion by Alaska and Southwest reflects healthy competition in a dynamic market23-Sep-2017
California expansion by Alaska and Southwest reflects healthy competition in a dynamic market
In the mature US aviation market expansion opportunities tend to centre on airlines playing to their strengths, connecting the dots in their respective networks to maximise geographical value. That is the path Southwest Airlines is adopting with its recent expansion in California, adding service from airports where it has a commanding presence into markets where it is equally strong.
Of course, Southwest’s expansion from California is occurring as Alaska Airlines leverages its newfound strength in the state after acquiring Virgin America. The message the new routes send is not subtle – Southwest has no intention of allowing its strength in California to wane.
However, the competitive overlap with Alaska on Southwest’s new flights to the Californian cities of San Jose and Sacramento is minimal, and the push appears to be an offensive move by Southwest to fill in network holes and capitalise on the stable economy of Northern California.
Premium Analysis
Ryanair, not always getting better: stalls over connections, court labour ruling & cancelled flights22-Sep-2017
Ryanair, not always getting better: stalls over connections, court labour ruling & cancelled flights
Ryanair has barely put a foot wrong over more than three years since introducing its 'Always Getting Better' programme in 2014. However, a few recent stumbles have interrupted Ryanair's previously sure-footed approach.
Firstly, it was leapfrogged by easyJet on the provision of a connections product (see CAPA report). Secondly, the European Court of Justice (ECJ) ruled that Ryanair could not rely on the Irish courts for jurisdiction in any possible dispute over employment contracts. Employees may be able to sue the company in more favourable jurisdictions and this could possibly lead to higher labour costs, although Ryanair insists not.
Thirdly, in an entirely self-inflicted wound, Ryanair announced the cancellation of 40-50 flights daily until the end of Oct-2016 to restore its on time performance, which had slipped due to poor crew rostering.
Ryanair's customer service and product improvements have helped it to strong traffic growth, higher load factor and wider profit margins since 2014. Its new problems may threaten these trends, but they do not spell the end of Ryanair's ultra low cost model.
Moreover, Ryanair has responded to challenges before: the programme was introduced after the issue of two profit warnings in 2013. Nevertheless, for now, Ryanair is not always getting better.
Premium Analysis
Philippines-Middle East market: Philippine Airlines resumes expansion as Cebu Pacific Air retreats22-Sep-2017
Philippines-Middle East market: Philippine Airlines resumes expansion as Cebu Pacific Air retreats
Philippine Airlines (PAL) is resuming expansion to the Middle East after adjusting its strategy for competing in the intensely competitive Philippines-Middle East market. The flag carrier is introducing business class on all Middle East routes after serving the market for nearly four years with all-economy aircraft.
PAL will be operating 33 weekly nonstop flights to seven destinations in the Middle East in Dec-2017, compared to 24 weekly nonstop flights to four destinations in Dec-2016. Seat capacity will be up 22%.
PAL will need to overcome intensifying competition from Middle East airlines, which will be operating 101 weekly flights to the Philippines in Dec-2017, compared to 76 frequencies in Dec-2015. PAL has benefited from Cebu Pacific’s recent suspension of three Middle East routes but the LCC’s decision to cut capacity to the region highlights how difficult it is for a Philippine carrier to be profitable in the Middle East market.
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25-Sep-2017 10:10 AM
CDB Aviation Lease Finance signs purchase agreement for 60 Boeing and 45 Airbus aircraft
China Development Bank Financial Leasing (CDB Aviation Lease Finance) announced (22-Sep-2017) its subsidaries entered into purchase agreements for 60 Boeing aircraft and 45 Airbus aircraft.
- Boeing purchase agreement:
- Aircraft ordered: 42 Boeing 737 MAX 8, 10 737 MAX 10, eight 787-9;
- List price: USD7.4 billion. Boeing granted "significant price concessions", which were "in accordance with customary business and industry practice";
- Deliveries: 2019 to 2024;
- Funding: The Boeing aircraft will be funded through a mix of sources which may include interbank borrowing, the issue of bonds, commercial bank loans, pre-delivery payment financing, other debt and equity financing and the group's working capital;
- Deal finalisation date: 01-Dec-2017;
- Airbus purchase agreement:
- Aircraft ordered: 30 A320neo, 15 A321neo;
- List price: USD5.2 billion. Airbus granted "significant price concessions", which were "in accordance with customary business and industry practice";
- Deliveries: 2022 to 2024;
- Funding: The Airbus aircraft will be funded through a mix of sources which may include interbank borrowing, the issue of bonds, commercial bank loans, pre-delivery payment financing, other debt and equity financing and the group's working capital;
- Deal finalisation date: 17-Nov-2017. [more - original PR]
Thai Airways reported (24-Sep-2017) the following traffic highlights for Aug-2017:
- Passengers: 1.7 million, +10.3% year-on-year;
- Passenger traffic (RPKs): +15.1%;
- Passenger load factor: 80.1%, +6.0ppts;
- Domestic: 84.3%, +1.1ppts;
- Europe: 83.6%, +5.0ppts;
- Regional: 78.6%, +6.9ppts;
- Australia: 77.4%, +6.6ppts;
- Cargo: 57,205 tons, +21.7%;
- Cargo load factor: 64.7%, +8.9ppts. [more - original PR]
JAL Group reported (24-Sep-2017) the following traffic highlights for Aug-2017:
- Passengers:
- Domestic: 3.2 million, +6.2% year-on-year;
- International: 749,347, +0.1%;
- Southeast Asia: 277,767, -1.5%;
- China: 133,650, -5.7%;
- America: 111,353, +3.5%;
- Hawaii/Guam: 97,818, -3.9%;
- Europe: 64,315, +11.5%;
- Korea: 54,163, +3.7%;
- Oceania: 9968, -21.5%;
- Passenger load factor:
- Domestic: 78.2%;
- International: 83.1%;
- China: 88.5%
- Korea: 84.8%;
- America: 83.4%;
- Southeast Asia: 83.4%;
- Guam: 82.9%;
- Europe: 80.5%;
- Oceania: 79.5%;
- Cargo:
- Domestic: 34,751 tons, +6.9%;
- International: 31,347 tons, +21.3%. [more - original PR]
Boeing projected (22-Sep-2017) demand for 4210 new aircraft, valued at USD650 billion, over the next 20 years for customers in Southeast Asia. The company's Southeast Asia Current Market Outlook forecasts the region will continue its strong annual traffic growth at 6.2%, outpacing the world average of 4.7%.
- Regional jets: 40 aircraft, valued at less than USD5 billion;
- Narrowbody: 3230 aircraft, valued at USD370 billion;
- Small widebody: 610 aircraft, valued at USD170 billion;
- Medium/large widebody: 320 aircraft, valued at USD110 billion;
- Freighters: 10 aircraft, valued at less than USD5 billion. [more - original PR]
Seattle-Tacoma International Airport reported (21-Sep-2017) traffic highlights for Aug-2017:
- Passengers: 4.8 million, +0.5% year-on-year;
- Domestic: 4.3 million, +0.4%;
- International: 510,107, +0.8%;
- Cargo: 39,420 tonnes, +18.2%;
- Freight: 34,620 tonnes, +19.9%;
- Domestic: 23,220 tonnes, +20.3%;
- International: 11,401 tonnes, +19.1%;
- Mail: 4800 tonnes, +6.9%;
- Freight: 34,620 tonnes, +19.9%;
- Aircraft movements: 39,883, -1.6%. [more - original PR]
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Find Out MoreAirlines, airports, tourist organisations and the music business: the case for greater co-operation
This report examines the credentials of a number of airlines and airports that are actively involved in the promotion of musical events, including performances on their own property (e.g. on board or in-terminal).
Air-Rail Report: Air-Rail Developments
This report looks at what is new in the business and how the air-rail industry has developed.
25-Sep-2017
Investing In Latin America: Stimulating Untapped Demand In The Latin American Marketplace
Recorded at CAPA Latin America Aviation Summit
Latin America’s low cost airline expansion has lagged other regions. Central America, driven by Mexico has a high (domestic) LCC component, but South America, even with a 50% LCC share in the large Brazilian domestic market, lacks any significant penetration.
Overall, international LCC activity is very limited. This is changing as some of the branded LCCs expand into new territory, but it is only with greater liberalisation that opportunities for the branded LCCs will be able to make a substantial difference.
- What are the reasons for limited LCC penetration in Latin America?
- Is there a significant low cost electorate – e.g. proportionately to other regions (i.e. 30%+)?
- Which countries offer the main opportunities for LCC expansion?
- How do investors feel about investing in this sector?
CAPA – Centre for Aviation, Chairman, Peter Harbison in conversation with:
Indigo Partners, Founder & Managing Partner, William Franke
Global Networks
Issue 41
- The Transformers: airlines changing network dynamics
- Aircraft Innovations: new models are changing the route options
- Latin America: The role of connectivity for LATAM Consolidation & Alliances
Airline Models Evolving
Issue 40
- Changing Business Models: The challenge of responding to travel trends
- Alliances and Beyond: Global alliances in transition
- Airports of the Future: The evolution of the airport