airBaltic announced (Sep-2019) the company is on track to achieve the revenue target of EUR500 million to EUR510 million for 2019. The EBITDAR margin is expected to remain in the range of 23% to 24%, compared to 22.6% in 2018. 2H2019 revenue is expected to exceed 1H2019 revenue, as a result of traditional seasonality trends. The carrier expects financial performance to improve in 2H2019. [more - original PR]
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The head of Russia's competition authority, the Federal Antimonopoly Service (FAS), has called for more competition in the country's low cost airline segment. He has even suggested that Aeroflot launch another LCC to compete with its low cost subsidiary Pobeda.
Pobeda is the country's only LCC, with 7.2 million passengers in 2018 giving it a 5.2% traffic share. It has 100% of domestic LCC capacity and approximately 40% of international LCC capacity to/from Russia, against fragmented foreign low cost competition.
Pobeda has grown rapidly since its Dec-2014 launch and the relative underpenetration of air travel in Russia suggests that it will be able to continue to channel latent demand through its low fares.
However, Pobeda's load factor has peaked, and it slipped to an underlying operating loss in 1H2019.
More low cost competition would help to accelerate the growth in air travel's penetration levels in Russia and might even focus Pobeda on an even more efficient cost structure. Aeroflot's preference would be for others to launch competitor airlines.
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Haneda's new slot awards - what routes to gain access?The latest tranche of international slot allocations at Tokyo’s Haneda Airport will open up new route opportunities for Japan’s two major carriers, and will also likely mean a further shift of international service from Tokyo Narita Airport.
Japanese regulators have allocated the new Haneda slots to certain international markets, but the key decisions about specific routes are yet to be revealed by Japan’s airlines.
Haneda slots are highly coveted due to the airport’s capacity constraints, and its proximity to one of the world’s most valuable passenger markets in the Tokyo metropolitan area. All Nippon Airways (ANA) and Japan Airlines (JAL) use a dual-hub system in Tokyo, although Haneda is more desirable as it is much closer to central Tokyo than Narita.
The CAPA Latin America Aviation & LCCs Summit in Curaçao on 16/17-Sep-2019 will bring together leaders from across the region to explore the key strategic issues impacting aviation in Latin America. Hosted by Curaçao Airport Partners, CAPA’s Latin America summit returns for a third year and will focus on the regional aviation outlook and issues affecting the region’s LCCs.
Latin America’s aviation industry is undergoing dynamic changes, with improvements to airport and airspace infrastructure and greater operational efficiency for airlines. Airport privatisation processes are underway, the global alliances framework is well established, open access arrangements are in place and regional economies are recovering.
While regional travel demand is buoyant, potential impediments to further growth remain, including infrastructure constraints and high costs.
Against this backdrop, the CAPA Latin America Aviation & LCCs Summit will feature key industry leaders to provide invaluable insights. Attending airlines include Air Antilles, American Airlines, Azul, Copa Airlines, Flybondi, GOL, interCaribbean, LIAT, United Airlines and Winair.
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Air Europa/AF-KLM JV vs an IAG/LATAM JV on Europe-LatAmNext year Air Europa and Air France-KLM are hoping to launch their new metal-neutral South Atlantic joint venture, announced in Aug-2018 and originally hoped to begin this summer. Negotiations have taken longer than expected, in spite of common SkyTeam membership and existing codeshare cooperation.
Based on OAG data for the week of 12-Aug-2019, Air France, Air Europa and KLM are respectively second, fourth and fifth by seats on Europe to Latin America excluding Caribbean.
The market leader Iberia combines with British Airways to make IAG the leading airline group in this market. However, the Air Europa/Air France-KLM JV would have a higher seat share than IAG and would be neck and neck with the planned IAG/LATAM Airlines JV.
Meanwhile, Air Europa has launched three new routes this summer (Panama City, Medellín and Iguazu). This gives it more destinations than any other operator between Europe and Central/South America, where its capacity is up by 20% year-on-year in Aug-2019.
Iberia's 18% growth is focused on frequency increases, rather than new destinations. The Air Europa/Air France-KLM JV would have a significant lead over the IAG/LATAM Airlines JV in the number of destinations in Latin America excluding Caribbean.
It has been an eventful 2019 for Brazil’s aviation market since Avianca Brasil ceased operations and Brazil’s largest airlines began jostling for some of the defunct airline’s more attractive assets.
Azul joined other airlines in working to obtain Avianca Brasil’s slots (particularly at São Paulo Congonhas airport) and now, armed with new slots, the airline is launching flights on the key Rio de Janeiro business route. Its service on the route will pale in comparison to those of GOL and LATAM Airlines Brazil, but breaking into that market is key for Azul’s domestic evolution.
As the shakeout in Brazil’s domestic market after Avianca Brasil’s exit continues, Brazil’s economy is facing some headwinds after its growth forecast for 2019 has been cut, and general overall recession concerns are rising for countries worldwide.
Recorded at CAPA Australia Pacific Aviation & Corporate Travel Summit, 08-Aug-2019
What’s Really Going On Within The Competitive Market Within Australia?
Our panel of leading analysts will discuss:
- Where to next for airline stocks? What’s outlook for the key drivers: economic growth, capacity and fuel?
- Who are the ROIC stars and why? how are airlines valued relative to other industrials?
- Which airlines are better placed to weather economic storms?
- How can the industry learn to deal with fuel prices volatility?
- How are airlines faring in containing non-fuel costs?
Moderator: Aviation Week, Senior Air Transport Editor, Adrian Schofield
- Citi, Analyst – Industrials & Transport, Jakob Cakarnis
- Evans and Partners, Head of Research, Cameron MacDonald
- Ord Minnett, Senior Research Analyst, John O’Shea
- S&P Global, Lead Analyst, Director, Graeme Ferguson
- UBS, Analyst – Transport & Infrastructure, Matt Ryan
CAPA Latin America Aviation & LCCs SummitMore
Upcoming Event
16-17
Sep
Curacao: CAPA Latin America Aviation & LCCs Summit
CAPA’s events attract the highest calibre of thought-leaders in the industry. This includes strong C-Level executive representation from all types of business models – from full service, LCCs and hybrid airlines.
CAPA Low Cost Long Haul Global SummitMore
Upcoming Event
10-11
Oct
Hamburg: CAPA Low Cost Long Haul Global Summit
CAPA’s events attract the highest calibre of thought-leaders in the industry. This includes strong C-Level executive representation from all types of business models – from full service, LCCs and hybrid airlines.
airBaltic stated (Sep-2019) consolidated 1H2019 financial results were affected by a price increase of CO2 emission allowances, with a negative impact of EUR2 million, and changes in IFRS 16 accounting standards, which increased costs for the lease of Q400 aircraft by EUR2 million year-on-year. Other factors affecting results included the negative impact of an increase in pilot, crew and technician salaries and an increase in deicing costs due to weather conditions being less favourable than in 1H2018. airBaltic Corporation however operated in line with expectations for 2019. [more - original PR]
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13-Sep-2019 3:59 PM
ACI World forecasts developing world air traffic to overtake Western Europe and NA by 2022
Airports Council International (ACI) World reported (12-Sep-2019) new aviation hubs have begun to overtake the more mature markets of Western Europe and North America. The body has forecast that the world's airports are expected to welcome 10.7 billion passengers in 2022, the year in which emerging and developing markets are predicted to surpass advance markets. ACI forecasts that rising incomes in emerging markets with large populations and large land masses or numerous islands - where aviation is the only practical form of mass transportation - will "help propel global traffic to new heights in the coming years". [more - original PR]
Transat AT reported (12-Sep-2019) it expects its 4Q2019 to show a slight year-on-year improvement. The forecast is based on the following conditions:
- Transat's trans Atlantic market outbound from Canada and Europe accounts for a large portion of its business during the summer season, with 83% of capacity sold from Aug-2019 to Oct-2019. Load factors fell 0.9% compared to summer 2018, while booking prices are 2.1% higher;
- Transat's sun destinations outbound from Canada accounts for a lesser portion of its business during summer, with 83% of capacity sold and load factors up 5.6% year-on-year. Meanwhile, capacity for the company's sun destinations market during winter 2020 is up 9%, with 27% of capacity sold and load factors up 1.8%.
- The impact from currency variations and lower fuel costs in USD is not expected to significantly increase operating costs, provided aircraft fuel prices remain stable and the CAD maintains its current level against the USD, EUR and GBP. [more - original PR - English/French]
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13-Sep-2019 12:46 PM
British Airways starts cancelling services scheduled for 27-Sep-2019 in preparation for strike
British Airways commenced cancelling services scheduled for 27-Sep-2019 due to a planned pilot strike on that date (Reuters, 13-Sep-2019). The airline stated it plans to contact all affected passengers to offer them a full refund or a rebooking on an alternative date, destination or airline. As previously reported by CAPA, the earlier pilots strike 09/10-Sep-2019 resulted in almost all of British Airways' schedule being cancelled.
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13-Sep-2019 11:44 AM
IAM, TWU urge US DoT and FAA to enforce two sections of FAA Reauthorization Act of 2018
International Association Of Machinists And Aerospace Workers (IAM) and Transport Workers Union (TWU) urged (12-Sep-2019) the US Department of Transportation (DoT) and US FAA to implement sections 551 and 335 of the FAA Reauthorization Act of 2018. Section 551 concerns the increasing number of assaults directed at customer service agents at airports, and requires commercial airlines to develop and submit a plan detailing protocol for when these incidents occur to the DoT for approval and also to update training procedures. Section 335 requires the DoT to modify current rules regarding flght attendant rest to mandate a 10 hour rest period without exception. According to the unions, neither of these sections have been enforced. [more - original PR]
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