Analysis Reports

Since the election of Argentina’s new president Alberto Fernandez and the former president Cristina Kirchner as vice president in late 2019, speculation has grown over how the new government will oversee the reforms of the previous administration that paved the way for new entrant low cost operators to launch operations in the country. 

In the very early days of the administration there have not been any earth shattering changes to the overall status quo of the current state of Argentina’s aviation industry, but there are some troubling signs emerging, including what appears to be heightened scrutiny of the operations of the low cost operator Flybondi and declarations by the new CEO of state-owned Aerolineas Argentinas that the previous liberalisation was unrestricted. 

Those developments could suggest that further liberalisation in the country is a non starter, and protectionist policies could creep back into Argentina’s aviation landscape. And perhaps there should be some cause for concern over how the government could oversee low cost operators in the future. 

Headlines

Delta Air Lines to invest USD1bn into emission mitigation over 10 years

Air New Zealand recovers more than 890 tonnes of waste in two years under 'Project Green'

Norwegian Air reports 1.7m tons of CO2 saved in 2019

Swedavia launches electric aviation strategy to enable first commercial electrified route by 2025

Royal Schiphol Group launches nitrogen oxide emissions reduction plan of action

One of the benefits of having a portfolio of airlines is an ability to shift aircraft among those operators, and that has been a benefit to Azul and TAP Air Portugal in the past.

Now with the plans by Azul founder David Neeleman to launch a new US-based airline, Azul and Breeze Aviation (Mr Neeleman’s new company) have reached a deal for Breeze to take a number of Azul’s older Embraer 195s, while LOT Polish Airlines will also take a portion of the aircraft. 

Although the Embraer 195s have a certain cost disadvantage in comparison with the Embraer 195-E2s Azul is adding to its fleet, Breeze and LOT can drive a degree of cost efficiency because fuel costs are higher in Brazil compared with the US and Europe. LOT has already purchased some E-Jets from Azul and has touted being the largest E-Jet operator in Europe. 

The transaction is also shedding a sliver of light on Breeze’s network strategy, as the company highlights the Embraer 195’s charter potential and the aircraft’s suitability for shorter haul flights. 

Vienna International Airport’s CEO, Julian Jäger, said recently that the airport does not anticipate double digit passenger traffic growth in 2020, after a 17% year-on-year increase to 32 million in 2019. He added that "slots in Vienna are becoming scarce", and the airport is anticipating 3% to 5% growth in 2020, and after 2020, "much flatter" growth still than in the past two years.

The airport has not only recovered from losing Air Berlin. Austrian Airlines has grown its connections, but low cost airlines are taking advantage of what appears to be a surprising pricing advantage over rivals that is offered by Vienna.

However, with an additional runway deferred the availability of slots is becoming a serious issue.

After growing rapidly in new markets during the past couple of years, Spirit Airlines is taking a pause in new city additions in 2020, instead opting to bolster frequencies on certain routes and connect exiting points in its system that are not currently linked together.

The result of the shift is that the number of seats deployed in Spirit’s immature markets is falling, and fewer new routes coupled with some culling the airline has done in its network should help Spirit preserve solid operating margins. 

Despite the pause in new city growth, Spirit is adding a couple of new international points in its network in 2020 to Barranquilla and Bucaramanga, Colombia, expanding the number of destinations on its Colombian route map to five. 

The novel coronavirus outbreak (2019-nCoV, now Covid-19) is forcing major schedule changes for airlines across the Asia-Pacific region, with the Chinese mainland carriers and air services most affected.

Outside the mainland markets, Hong Kong has been hardest hit by the industry’s latest crisis and both Cathay Pacific and Hong Kong Airlines have borne the brunt of the downturn.

A rebound is likely, if the post-SARS experience is a predictor. But conditions have changed 17 years later and the outcome could be different, particularly if the virus continues to spread.

Headlines

IEA: Global carbon dioxide emissions flatlined in 2019

TUI Group: 'Hydrogen can play a crucial role' as a long term substitute to fossil fuels

NATS receives B grade from CDP for climate change efforts

Researchers find small altitude change could reduce warming effect of contrails by 20%

On 11-Feb-2020 Air Italy announced that its shareholders Alisarda and Qatar Airways, operating through AQA Holding SpA, had resolved to liquidate the airline.

Operations are to be suspended from 26-Feb-2020.

Formerly operating as Meridiana, it rebranded in Mar-2018 as part of a restructuring plan following the sale of a 49% stake to Qatar Airways in Sep-2017. The plan included fleet modernisation with aircraft procured from Qatar Airways and an expansion of the fleet from 11 aircraft in 2018 to 50 by 2022. It also aimed to reverse the airline's years of decline as Meridiana and for Air Italy to carry 10 million annual passengers by 2022 (versus 2.4 million in 2017).

Sadly, none of its ambitions were fully realised. It refocused from its Olbia base on Sardinia to Milan Malpensa and launched new long haul services to New York, Miami, San Francisco, Los Angeles and Toronto. However, other long haul services came and went and a second hub at Rome Fiumicino failed to take root.

The 737 MAX grounding certainly did not help, but Air Italy simply did not reach sufficient scale (its network continued to shrink), it struggled with LCC short haul competition and could not achieve profitability.

South America airline group Sky took a major step in 2019 with the establishment of a new subsidiary in Peru, and through its own resolve and with the help of market exits by other Peruvian domestic competitors, in less than a year of operations Sky has become the third largest domestic operator in Peru based on passengers carried. 

Now that Sky is firmly entrenched in Peru’s domestic market, the airline is examining new international routes and is planning to introduce service from Lima to Cancún and Punta Cana in Apr-2020. The airline has also set its sights on serving the US from Lima, and hopes to inaugurate flights to Miami later in 2020. 

Sky’s international ambitions outside South America are only just beginning, and once the airline begins taking delivery of its AirbusA321XLR narrowbody aircraft, it will be able use those jets to reach further into North and Central America and points into the Caribbean from its major bases in Lima and Santiago. 

After a highly successful CAPA Middle East & Africa Summit held in Dubai in May-2019, CAPA - Centre for Aviation will again hold this annual regional summit in Amman (Dead Sea) on 2-3 March 2020 – CAPA's first venture in Jordan. The summit will be supported by the host, Airport International Group (AIG), the operator of Amman-Queen Alia International Airport. 

An array of senior figures and experts in the travel and aviation industry will provide an in-depth update on the Middle East and Africa, exploring the driving factors behind change and what is likely in store for the future. They will also provide analysis and insight into one of the biggest forces of change – sustainability, and how it is impacting the industry in a big way.

The emergence of LCCs will also be explored.

C-level speakers confirmed to take the CAPA stage during the course of the 2-day summit include: Ethiopian Airlines CEO, Tewolde GebreMariam; flyadeal CEO, Con Korfiatis; Jazeera Airways CEO, Rohit Ramachandran; Ryanair CCO, David O’Brien; Jordan Aviation President & CEO, Captain Zuhair Al-Khashman; Royal Jordanian CEO, Stefan Pichler; and Libyan Airlines Chairman, Eng. Abdelati El Meshkhi, among others.