Aeromexico Part 2: US expansion as Delta Air Lines JV is implemented and LCC competition intensifies
Aeromexico is pursuing further expansion in the US market following the implementation of its joint venture with Delta Air Lines. Aeromexico has been forced to divest more than 20 slot pairs at Mexico City to competitors in the Mexico-US transborder market, but is able to continue to add Mexico-City US flights by reshuffling slots.
Aeromexico is launching five US destinations in 2017 – Atlanta, Detroit, Portland, San Jose and Seattle – which will extend its US network to 22 cities. Aeromexico is also expanding in Los Angeles, its largest US destination, with new flights from Monterrey and Guanajuato.
Aeromexico will be operating over 30 routes to the US by the end of 2017 – with more likely to be added in 2018. Delta also operates 38 routes in the Mexico-US market, only two of which are also served by Aeromexico. Frequency increases from both Aeromexico and Delta are being implemented on several of the existing 66 routes that are covered under the new JV.
Croatia Airlines: Zagreb hub strength, but growing LCC competition & high CASK a challenge
Reports that Croatia Airlines' long running search for a strategic partner may be returning to the top of its agenda once more throw the spotlight on the Zagreb-based flag carrier. Croatia has enjoyed healthy growth in its aviation market in recent years, driven by strong inbound tourist traffic. However, Croatia Airlines' growth has not kept pace. It is still the biggest airline in this market, but its seat share has halved since 2008.
Codeshare relationships with fellow Star Alliance members help to shore up Croatia Airlines' position at Zagreb, where it is still the biggest airline. However, LCC competition dominates its other two international bases in Split and Dubrovnik. Competition in the very seasonal Croatia market is particularly fierce in the summer months.
Croatia Airlines has managed to remain in profit since 2013, when it recovering from a previous four year period of loss-making, but with wafer thin margins. A key challenge for Croatia Airlines is that it has a high level of unit cost, even by comparison with full service airlines, and with a very large gap to LCC unit cost levels.
Aeromexico Part 1: long haul capacity grows by 40% as Asia is doubled and 787 fleet expands
Aeromexico has just completed an ambitious expansion of its long haul operation, which has resulted in a 40% increase in seat capacity over the past year. Capacity to Asia has doubled in just four months, although on a small base, while Aeromexico is offering up to 40% more flights to Europe this summer compared to last year.
The early Jul-2017 launch of services to Seoul extends Aeromexico’s network to 10 long haul destinations. Over the past year Aeromexico has added frequencies to six of the nine existing long haul destinations; all except one of these is now served daily.
Aeromexico still has a relatively small widebody fleet consisting of 17 aircraft. However, this represents growth of more 40% compared to the 12 widebody aircraft it was operating last summer.
New CAPA research has shown that some USD255 billion is being invested in new (greenfield) airport projects around the world.
Together with the investment at existing airports in projects such as new runways and terminal buildings, runway and terminal extensions and miscellaneous ones (USD845 billion), that means that USD1.1 trillion in airport infrastructure projects are planned or under way within a timescale that continues (in some extreme cases) for four decades into the future.
The research is drawn from CAPA’s newly relaunched Global Airport Construction Database, which tracks airport projects in every region around the world. The database is updated daily and is constantly live and viewable for premium CAPA Members via centreforaviation.com
Brexit: easyJet seeks Austrian AOC to preserve traffic rights; highlights dark cloud over aviation
On 14-Jul-2017 easyJet said that it hopes to receive an Austrian AOC "in the near future" for a new subsidiary – easyJet Europe – to ensure intra-EU traffic rights post Brexit. Around half of easyJet's passengers come from the EU27 (the 27 countries of the EU once the UK leaves) and around 30% fly on intra-EU27 routes.
As the most exposed UK airline to a single European aviation market (ex UK), easyJet is right not to sit around waiting for regulatory clarity. Other airlines are also showing some signs of unease about the continued uncertainty. IAG has questioned the EU's ownership and control rules and Ryanair has mused over how to maintain EU majority control if UK shareholders are excluded from the definition. Wizz Air is even looking at a UK licence.
In Jan-2016 a CAPA report highlighted the uncertainties for aviation if the UK voted to leave the EU. It urged the UK government "to start planning for the exit the minute the referendum is concluded". Eighteen months later, there is no obvious sign of any progress towards the necessary EU-UK agreement on air services. The UK Transport Secretary still wants the "best possible access to European aviation markets", but is still not able to say how that can be achieved.
With no WTO style fallback option, an EU-UK agreement on aviation must be prioritised.
Upcoming Event
Sydney: CAPA Australia Pacific Aviation & Corporate Travel Summit
CEOs from airlines and airports across Australia, New Zealand and the Pacific Islands, plus a selection of leaders from airlines serving the region, debate the hot topics facing aviation ‘Down Under’ in the year ahead.
Atlanta Hartsfield-Jackson International Airport pax up 1%, cargo up 8% in Jun-2017
Atlanta Hartsfield-Jackson International Airport - traffic highlights for Jun-2017:
- Passengers: 9.4 million, +1.3% year-on-year;
- Domestic: 8.2 million, +0.5%;
- International: 1.2 million, +7.5%;
- Cargo: 58,043 tonnes, +7.9%;
- Freight and Express: 54,837 tonnes, +6.5%;
- Domestic: 21,166 tonnes, +2.4%;
- International: 33,671 tonnes, +9.3%;
- Mail: 3206 tonnes, +39.0%;
- Freight and Express: 54,837 tonnes, +6.5%;
- Aircraft movements: 77,398, -0.4%;
- Domestic: 70,364, -0.9%;
- International: 7034, +5.0%. [more - original PR]
Kenya Civil Aviation Authority, Kenya Airports and Kenya's Ministry of Transport, Infrastructure, Housing and Urban Development, via their respective Twitter and Facebook accounts, confirmed (23-Jul-2017) the official opening of the KES2.5 billion (USD24.1 million) Isiolo International Airport. The airport (ICAO code HKIS) features a 1400m runway and is located on 330ha of land in Isiolo county, although half of the runway extends to Meru County. The new 150m by 75m apron offers two 150m by 23 m taxiways able to handle Code C aircraft. The 5000sqm passenger terminal building has capacity to handle 125,000 passengers p/a. The airport also features a 1025sqm administration block, a 200 space carpark, one baggage carousel, nine check in counters (domestic and international), a VIP lounge, and restaurants and duty free shops. [more - original PR]
Auckland International Airport - traffic highlights for Jun-2017:
- Passengers: 1.4 million, +8.8% year-on-year;
- Domestic: 660,243, +6.2%;
- International: 773,027, +11.0%;
- Aircraft movements: 13,308, +4.6%;
- Domestic: 9019, +4.4%;
- International: 4289, +5.1%. [more - original PR]
Queensland Airports Ltd reported (21-Jul-2017) the following passenger traffic highlights for its member airports in FY2017:
- Passengers: 8.3 million, +2.4% year-on-year;
- Gold Coast Airport: 6.5 million, +3.3%;
- Domestic: 5.4 million, +2.0%;
- International long haul: 550,993, +11.0%;
- New Zealand/South Pacific: 567,726, +8.9%;
- Townsville Airport: 1.6 million, -0.4%;
- Mount Isa Airport: 182,208, -2.4%;
- Longreach Airport: 32,231, -11.6%. [more - original PR]
- Gold Coast Airport: 6.5 million, +3.3%;
Volaris reported (21-Jul-2017) the following financial highlights:
- Three months ended 30-Jun-2017:
- Operating revenue: MXN5982 million (USD322.3 million), +16.6% year-on-year;
- Passenger: MXN4252 million (USD229.1 million), +11.5%;
- Non-ticket: MXN1730 million (USD93.2 million), +31.4%;
- Operating costs: MXN5943 million (USD320.2 million), +25.3%;
- Fuel: MXN1694 million (USD91.3 million), +24.5%;
- Aircraft and engine lease: MXN1378 million (USD74.2 million), +6.5%;
- Operating profit: MXN39 million (USD2.1 million), -90.0%;
- Net profit (loss): (MXN520 million) (USD28.0 million), compared to a profit of MXN935 million (USD50.5 million) in p-c-p;
- Passengers: 4.1 million, +11.6%;
- Passenger load factor: 85.7%, -0.4ppt;
- Total operating revenue per ASM: MXN128.9 cents (USD 6.9 cents), stable;
- Passenger revenue per ASM: MXN91.7 cents (USD 4.9 cents), -4.4%;
- Passenger yield: MXN107.0 cents (USD 5.8 cents), -3.8%;
- Cost per ASM: MXN128.1 cents (USD6.9 cents), +7.5%;
- Cost per ASM excl fuel: MXN91.6 cents (USD 4.9 cents), +7.8%;
- Operating revenue: MXN5982 million (USD322.3 million), +16.6% year-on-year;
- Six months ended 30-Jun-2017:
- Operating revenue: MXN11,637 million (USD600.5 million), +12.8%;
- Passenger: MXN8277 million (USD427.1 million), +7.2%;
- Non-ticket: MXN3361 million (USD173.4 million), +29.6%;
- Operating costs: MXN12,371 million (USD638.4 million), +36.1%;
- Fuel: MXN3586 million (USD185.0 million), +51.1%;
- Aircraft and engine lease: MXN3077 million (USD158.8 million), +22.5%;
- Operating profit (loss): (MXN733 million) (USD37.8 million), compared to a profit of MXN1224 million (USD63.2 million) in p-c-p;
- Net profit (loss): (MXN1881 million) (USD97.1 million), compared to a profit of MXN1536 million (USD79.3 million) in p-c-p;
- Passengers: 8.0 million, +13.5%;
- Passenger load factor: 84.5%, -1.1ppt;
- Total operating revenue per ASM: MXN126.7 cents (USD 6.5 cents), -3.3%;
- Passenger revenue per ASM: MXN90.1 cents (USD 4.6 cents), -8.1%;
- Passenger yield: MXN106.7 cents (USD 5.5 cents), -6.9%;
- Operating cost per ASM: MXN134.7 cents (USD 7.0 cents), +16.6%;
- Cost per ASM excl fuel: MXN95.6 cents (USD 4.9 cents), +12.1%;
- Total assets: MXN19,851 million (USD1024 million);
- Cash and cash equivalents: MXN5981 million (USD308.6 million);
- Total liabilities: MXN11,253 million (USD580.7 million). [more - original PR]
- Operating revenue: MXN11,637 million (USD600.5 million), +12.8%;
*Based on the average conversion rate at MXN1 = USD0.053871 for 2Q2017
*Based on the average conversion rate at MXN1 = USD0.051603 for 1H2017
Lufthansa Technik and Sapura Aero forms MoU to set up new MRO company for ASEAN
Lufthansa Technik entered (21-Jul-2017) into a MoU with Malaysia based Sapura Aero Sdn Bhd to set up a MRO company offering base maintenance for narrowbodies and widebodies serving Malaysia, Southeast Asia and South Asian markets. A structure for the proposed company is still under consideration. It may be operated and governed as a base maintenance facility within the existing base maintenance network of Lufthansa Technik. Sapura Aero and Lufthansa Technik are considering various type of cooperation for this project which includes but are not limited to a JV, an investor relationship, a landlord-tenant relationship or a combination of these types. Both parties will conduct respective assessments and agreed to progress the project with a view to finalise respective discussions and assessments by 31-Mar-2018. [more - original PR]
Want More News Like This?
Airline Models Evolving
- 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
Global fleet and financing review 2017
- Global Fleet Outlook: deliveries peak as orders decline
- Global Aircraft Leasing: global aircraft leasing continues its international shift from west to east
- CAPA Financial Outlook: margins to stay above past cyclical peaks