European Commission announced (26-Jan-2023) the EU rules establishing a dedicated airspace for drones (U-space) entered into force on 26-Jan-2023. The U-space creates conditions for both drones and manned aircraft to operate safely and will allow the industry to continue scaling up the market for the drone sector and services. The commission noted the new rules will support more complex and longer distance operations, in particular in low level and densely operated airspace and when out of sight of the remote pilot. The next steps will involve member states designating their U-space areas and service providers as well as work on information exchange and navigation performance standards. [more - original PR]
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Setting aside the volatility around the Christmas/New Year holiday period, there has been no significant change in Europe's capacity recovery trend since it entered the range of 84% to 86% of 2019 capacity levels in May-2022.
In the week of 30-Jan-2023 Europe's airline seat numbers are at 85.5% of the equivalent week 2019, or a shortfall of 14.5%.
This has slipped back from 92.0% in the first week of Jan-2023 and Europe is now in sixth and last place in the regional ranking, leapfrogged by Asia Pacific, where capacity is down by 12.5% versus 2019. Africa and Middle East are down by a single digit percentage, whereas capacity in Latin America and North America is up by single digit percentages compared with the equivalent week of 2019.
For Europe, schedules are now much more stable than in the depths of the COVID-19 pandemic, and constrained capacity has been beneficial for air fares.
The reopening of Asian markets is yet another welcome sign that global air travel continues its march towards pre-pandemic levels.
In particular, China’s lifting of many of its most stringent policies is resulting in the US operators Delta Air Lines and United Airlines evaluating how they approach serving the country.
That cautious approach is reflected in a request by the lobbying group Airlines For America to extend existing slot use waivers for certain routes to Asia, due to testing requirements and visa requirements.
Essentially, US airline operators are taking a wait-and-see approach before deploying significant capacity back into some regions in Asia, since the full recovery in demand could take some time to materialise.
But promising trends are emerging from other regions in the Asia-Pacific.
Premium Analysis
Adani Airports to bid on more airport tenders; likely not affected by parent company issues02-Feb-2023
Adani Airports to bid on more airport tenders; likely not affected by parent company issues
India’s Adani Airports continues to develop as a major player in the privatisation of the country’s airports. However, controversy with its parent Adani Group threatens to have spill-over effects on potential upcoming bids for the latest round of regional airport privatisations.
Following troubled initial concessions of four key Indian airports in 2006 - where several bidders walked away - the Indian government and Airports Authority of India have made strides repairing their image to investors and restarted the privatisation process across a number of regional airports.
At the same time, influence of the early indigenous investors has waned. GMR Group and GVK, which won a number of high value and high-profile concessions in early rounds of bidding, have seen reduced success in recent years and have chased foreign projects via partnerships and collaborations.
Instead of chancing its arm in risky foreign markets like its peers, Adani Group has concentrated its attention within India. It has taken concessions at eight regional airports since 2019, also buying a majority stake in Mumbai International and the Navi Mumbai International development project.
Adani has announced it is open to investigate further privatisation opportunities, with a round of up to 11 new concessions forthcoming. However, the Indian conglomerate has also been hit with allegations of financial wrongdoing, sending its stock market valuation plummeting and putting significant pressure on founder, Gautam Adani. Though these are not likely to have any impact on the airports division.
Analysis
European airlines dominate upper rankings in CAPA-Envest global airline sustainability benchmarking01-Feb-2023
European airlines dominate upper rankings in CAPA-Envest global airline sustainability benchmarking
More than any other region globally, Europeans are engaged with the concept of sustainability. According to the EU statistics agency Eurobarometer, EU citizens believe climate change is the single most serious problem facing the world, with 93% considering it to be a ‘serious’ problem, and 78% considering it to be ‘very serious’. As a percentage, 94% of Europeans say protecting the environment is ‘important’ to them, and 53% say it is ‘very important’.
This concern about sustainability has an impact on consumers’ behaviour around travel and tourism. A Eurobarometer survey from Oct-2021 found a large majority of EU citizens (82%) are prepared to change at least some of their travel and tourism habits to be more sustainable. This includes choosing transport options based on their ecological impact (36% of respondents), paying more in order to protect the natural environment (35%), and contributing to carbon-offsetting activities (34%).
It should not be particularly surprising that European airlines are among the leaders when it comes to the sustainability and the environmental performance of their business.
The Greek government’s stake in Athens Airport – it has the majority share of the equity, directly or indirectly – was always likely to be reduced once the Greek debt crisis began to recede.
Four years ago the share held by the Hellenic Republic Asset Development Fund (HRADF) was to be disposed by way of a trade sale, but that decision was overturned by the government.
Now agreement has been reached between HRADF and the largest private sector shareholder, AviAlliance, with 10% of it going to AviAlliance, which will put it in a position of control over the airport’s future direction.
The CEO of HRADF, Dimitrios Politis, said recently that the fund had reached an agreement with AviAlliance and AviAlliance Capital to proceed with an initial public offering (IPO) for the fund's 30% stake in Athens International Airport. Mr Politis added that the stake was expected to be valued at between EUR800 million and EUR1 billion.
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CAPA Outlook: State of the Industry
Jonathan Wober, Chief Financial Analyst, CAPA - Centre for Aviation
Wizz Air Group CEO József Váradi provided (26-Jan-2023) the following outlook:
- Continued cost management is driving ex-fuel CASK towards earlier guidance. Wizz Air caught up with peers in terms of systematic jet fuel hedging impact through FY2024. Ex-fuel CASK is expected to return to pre-COVID-19 levels in FY2024;
- Continued evidence of a solid fare environment as average fares are trading above 2019 and 2022 levels. Mr Váradi added booking volumes are ahead of 2022 levels towards the end of Jan-2023. Mr Váradi said: "We remain optimistic and maintain our RASK guidance for H2 F23 at mid-single digits above the same period in 2019";
- On track to operate 35% higher capacity compared to H2FY2020. For H1FY2024, the planned ASK growth is 30% compared to 2023 and 65% compared to 2019. As with the Q3FY2023, the company expects slightly more ASK contribution from longer routes connecting locations in the Middle East and Near East, as this region continues to attract a higher volume of passengers;
- Load factors improving. The load factor gap is expected to continue to close compared to 2019 in the coming quarters as recent network investments start to mature;
- Overall net loss expected in FY2023, however profitability is forecast for FY2024, subject to no adverse pandemic or geopolitical events. [more - original PR]
Bonza placed (27-Jan-2023) its services on sale and launched its airfare list. Customers are able to book on 15 routes to 12 destinations as part of a phased rollout. Bonza chief commercial officer Carly Povey stated: "We're committed to low cost fares which will in turn, stimulate new markets for Australia's domestic tourism industry". [more - original PR]
AlphaStruxure announced (26-Jan-2023) an agreement to design, construct and operate integrated microgrid infrastructure at the New Terminal One (NTO) facility at New York John F Kennedy International Airport. The 11.3 megawatt microgrid will provide NTO with sustainable, locally generated and cost-predictable energy and is expected to deliver immediate greenhouse gas emissions reductions of 38% compared to grid-sourced energy. The project will feature the largest rooftop solar array in New York City and on any airport terminal in the US, with all available and viable rooftop areas being used for the project. When complete, NTO will be the first airport transit hub in the New York region that can function independently of the power grid. [more - original PR]
Phoenix Mesa Gateway Airport reported (25-Jan-2023) it handled 1.9 million passengers in 2022, an increase of 6.5% compared to 2019 and a new record for annual passenger throughput. The airport handled 199,287 passengers in Dec-2022, its eighth record month of 2022. [more - original PR]
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20-Jan-2023 10:49 AM
WTTC: Dubai the top city for traveller spend in 2022, Hong Kong predicted to top rankings by 2032
World Travel & Tourism Council (WTTC) reported (18-Jan-2023) the top cities by international traveller spend for 2022 and its prediction for 2032, as follows:
- 2022:
- 2032:
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Find Out MoreCAPA-Envest Global Airline Sustainability Benchmarking & Rating Report 2022
The CAPA-Envest Global Sustainability Benchmarking Report - 2022 provides an understanding of the status of emissions in the airline industry. It provides an independently evaluated “airline sustainability rating” system, based upon a range of key emissio