Analysis Reports

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The regional airlines Loganair, Aurigny Air Services and Blue Islands will begin a new three-way commercial partnership in 2022.

According to the CAPA Fleet Database, the three airlines have a total fleet of 60 aircraft, of which 56 are in service at the end of Nov-2021. This represents well over half of the total UK/Channel Islands regional airline fleet.

Regional airlines represent only 2.3% of UK seats in the week commencing 29-Nov-2021, but provide important regional connectivity, with 11.2% of frequencies. They are much more significant in the domestic market, operating 12.2% of seats and 34.7% of frequencies.

The new partnership builds on existing agreements between Jersey's Blue Islands and Guernsey's Aurigny and between Scotland's Loganair and Blue Islands, adding a new relationship between Loganair and Aurigny.

It will involve codeshares between the three airlines, to offer a wider range of connections, in addition to frequent flyer programme coordination. More unusually for a commercial partnership, the three also plan to co-operate on technical and purchasing matters.

One of the most interesting market developments during the pandemic is the unique partnerships that have emerged. The latest – a proposed joint venture between Allegiant Air and Viva Aerobus – is arguably the most intriguing and demonstrates how the ULCC model is evolving. 

In essence, the two ultra-low cost operators are combining to accelerate growth in one of the busiest markets in the world. And in Allegiant’s case, the proposal solidifies a strategy for international expansion. 

Of course, obtaining regulatory approval is the next step, but the would-be partners believe they have a compelling case for injecting fresh ultra-low cost competition into the Mexico-US transborder market. 

The CAPA Australia Pacific Aviation Summit, CTC Corporate Travel Summit and Regional Aviation Symposium will be held in Sydney on 07/08-Dec-2021.

The hybrid event will mark CAPA’s long-awaited return to in-person events, drawing key leaders and decision makers from across the industry. The bumper summit will feature four events under one roof, combining the CAPA Australia Pacific Aviation Summit, CTC Corporate Travel Summit, Regional Aviation Symposium and CAPA Gala Dinner.

High profile speakers and panellists will include Qantas Group CEO Alan Joyce, Air New Zealand CEO Greg Foran, Qatar Airways Group CEO Akbar Al Baker, Virgin Australia CEO Jayne Hrdlicka, Regional Express Deputy Chairman John Sharp, Bonza CEO Tim Jordan, Tourism Australia MD Phillipa Harrison, Hawaiian Airlines CEO Peter Ingram, Scoot CEO Campbell Wilson and Australian Minister for Trade, Tourism and Investment Dan Tehan.  

The emergence of the Omicron variant of COVID-19 has caused many Asia-Pacific countries to adjust their border settings, and if they go further down this path in coming weeks it could derail promising signs of recovery in the airline and travel industries.

The Omicron wave once again illustrates the problem of different countries taking widely varying actions, and in some countries there are differences even between states, or between state and central governments. This patchwork of requirements and restrictions risks creating confusion for travelers and airlines. The update below outlines how some key Asia-Pacific markets – India, Japan, Australia and Singapore – have reacted to the latest COVID-19 development.

Up until this point in 2021 the most interesting partnerships in the Americas have occurred in the US and Latin America, as American solidified its tie-ups with Alaska and JetBlue and also worked to ensure its stature in Latin America via a new partnership with JetSMART and a deeper relationship with GOL. 

Now, in an interesting turn of events in Canada, rivals WestJet and Air Transat have agreed to codeshare on selected routes in order to ensure their competitiveness in the trans Atlantic market, which will emerge as a highly competitive market in the Northern Hemisphere’s summer of 2022 - if the impact of new variants of COVID-19 can be kept in check. 

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Based on current schedules, Europe's 4Q2021 capacity projection has stabilised at 71% of 2019 levels.

Looking ahead to 1Q2022, 88% is projected. However, even before the emergence of the 'Omicron' variant of the coronavirus, the pattern of previous quarters suggests that this is likely to be trimmed.

The World Health Organisation has said that the global risk from Omicron is "very high", dubbing it a variant of concern. There have been some increases in travel restrictions as a result and the outlook for 1Q2022 is now more uncertain.

Europe's capacity recovery has anyway lost momentum in recent weeks. Seat numbers for Europe are 28.7% below the equivalent week of 2019 in the week of 29-Nov-2021. This represents a slide of 4.1ppts over the past five weeks.

Europe is now down from fourth to fifth (just) in the regional capacity recovery ranking. Asia Pacific capacity is down by 36.8%, but the Middle East is slightly above Europe, with seats down by 28.5%. Africa is down by 25.0%, Latin America by 14.4%, and North America by 13.7%.

For Europe and all regions, Omicron's impact will shape the next phase of aviation's recovery.

In 2004 the earthquake and tsunami wrought havoc with the northwestern part of Indonesia. Just down the coast from the worst-affected province in North Sumatra is Medan, Indonesia’s fourth largest city.

The government has long intended that the island of Sumatra should receive special attention and there are good economic reasons to do so, particularly the oil and gas business in the Aceh province to the north.

Medan has the main airport for the region, one of 50 million people in all, and earlier in 2021 it was announced that PT Angkasa Pura II, one of the state airport operators, was seeking a strategic partner to develop the airport into a ‘western hub’ for Indonesia.

Now that partner has been found, and it is India’s GMR Airports.

'Hub' should really be interpreted as ‘gateway’ here, because it isn’t easy to envisage what it would be a hub for, or which airlines are going to help it achieve that goal. But the airport does have a sound infrastructure in place with an ‘airport city' to be added to it.

For AirAsia there has been a welcome recovery in Malaysian domestic demand in the last part of 2021 as internal travel restrictions ease in the group’s most important market.

Third quarter operating statistics made fairly grim reading for AirAsia. The effects of the COVID-19 delta variant caused the governments in the group’s major Southeast Asian markets to impose limitations on domestic travel. This was particularly true in Malaysia and Thailand, where the AirAsia units based in those countries had to suspend most of their remaining operations.

In Malaysia, the number of new daily cases peaked at more than 600 in late Aug-2021, according to the Our World in Data website. However, the daily case count had fallen again to 173 by 24-Nov-2021.

At the same time, Malaysia’s vaccination rate continues to climb, with 76.3% of the population fully vaccinated as of 25-Nov-2021. The fully vaccinated rate for eligible adults is above 90%.

These two factors combined – daily case numbers and vaccination rate – prompted the government to lift many of its interstate travel restrictions in the fourth quarter.

For AirAsia, this means its Malaysian domestic operation can ramp up, which is important, given that the airline’s international operations remain largely halted.