Aegean Airlines: Greece's market leader, now 25 years old, proves its endurance
Aegean Airlines recently celebrated its 25th anniversary. On 28-May-1999 its initial fleet of two Avro RJ100s operated its first flights from Athens to Heraklion and Thessaloniki.
Since then it has acquired the former flag carrier Olympic Air (in 2013) and established itself as Greece's leading airline. Today the group flies 249 routes and has a fleet of 63 Airbus narrowbodies and 16 turboprops.
In 2023 Aegean Airlines Group posted its highest-ever revenue and profits for the second year running, with double digit EBIT margins, in spite of low cost airlines' growth and market share gains in Greece.
In the face of strong competition and a sometimes difficult domestic economy, Aegean's first quarter century has proved its powers of endurance.
- Aegean Group carried 5% more passengers in 2024 than in 2019. Passenger numbers have grown at 8.8%pa CAGR over the past 20 years.
- The group's revenue and profits hit record highs in 2023. Double digit growth continued in 1Q2024, when it almost broke even at the EBIT level.
- Aegean's fleet is modernising, upgauging and growing - and allowing for longer routes.
- Aegean is number one by seats in Greece, although it has lost seat share while LCC share has grown.
- Aegean's pricing is competitive and its loss of market share does not appear to have harmed its profitability.
Aegean Group carried 5% more passengers in 2024 than in 2019
Aegean Airlines Group carried 15.7 million passengers in 2023, which was 25.9% more than in 2022. This was a new record total for Aegean and 4.7% above 2019, when it carried 15.0 million passengers.
The group's ASK capacity in 2022 was 20.4 billion, up by 22% year-on-year and 10% above 2019.
Aegean's year-on-year passenger growth of 26% in 2023 was faster than the overall Greek market, which grew by 14%, and faster than the 24% growth in passengers at its main hub, Athens International Airport.
However, this reflects the fact that Aegean's traffic recovery had underperformed the Greek market in 2022.
In 2022 passenger numbers in Greece were 1% below 2019 levels, and Aegean Group's passenger numbers were 17% below its 2019 traffic.
Passengers have grown at 8.8%pa CAGR over past 20 years
Over the 20 years from 2003 to 2023, Aegean Group passenger numbers grew at a compound average growth rate of 8.8% pa.
Since the acquisition of Olympic Air in 2013, the CAGR has been 5.7% pa, although in the period 2013 to 2019 (before the COVID-19 pandemic), the average rate was 8.9% pa.
Aegean Airlines Group: annual passenger numbers, 2007 to 2023 and 1Q2024
The group's revenue and profits hit record highs in 2023
Having already exceeded 2019 for revenue, EBIT and net profit in 2022, when all three were at record highs, Aegean's 2023 financial results produced another record set of figures.
Its revenue of EUR1,693 million was up by 27% year-on-year, its EBIT of EUR246 million was up by 68%, and its net profit was up by 58%.
Compared with 2019, the revenue figure was 29% higher and the two profit measures were double the 2019 results.
Aegean Airlines Group: revenue, EBIT and net profit (EUR million), 2004 to 2023
Double digit growth continued in 1Q2024
In 1Q2024 capacity, traffic and revenue continued to grow at double digit rates year-on-year.
ASKs were up by 121%, and passenger numbers grew by 11%. Revenue rose by 17% (while costs were up by the lower rate of 13%).
1Q2024 RASK was up by 4%; CASK was up 1%
Aegean Group almost achieved break-even at the EBIT level in 1Q2024, a period that is typically loss-making due to seasonally lower demand.
Its EBIT loss was narrowed to EUR7.2 million from a loss of EUR14.7 million last year.
Its 1Q2024 RASK was up by 4% year-on-year, and its CASK was up by only 1% (thanks to an 8% drop in ex-fuel CASK).
Aegean's fleet is modernising, upgauging and growing…
At the end of 2018 Aegean Airlines Group had a fleet of 61 aircraft, of which 49 were Airbus A320ceo narrowbodies and 12 were turboprops.
Since then it has added new technology aircraft, in the form of A320neo family narrowbodies.
As at 4-Jun-2024, the group fleet of 79 aircraft now includes 33 A320ceo family aircraft and 30 Airbus 320neo family aircraft, with 16 turboprops.
The narrowbodies include 18 of the larger A321 varieties, of which five are A321ceos and 13 are A321neos (including three currently inactive).
The group's average fleet age is 10.1 years (9.3 years, excluding the turboprops).
Aegean's aircraft order book consists of three A320neos and 14 A321neos, all for delivery from 2024 to 2028.
The Airbus neos offer lower fuel consumption and lower carbon emissions, cost efficiencies and longer range, while the larger A321neos also bring unit cost advantages.
…and allowing for longer routes
Four of Aegean's A321neos on order have extended-range capabilities. They will be deployed to destinations outside Europe, mostly to the south and southeast of Greece, with flight times of 4 hours-7.5 hours.
These routes will include the Gulf, both new destinations (e.g. Bahrain, Doha, Oman), and currently served (Riyadh, Jeddah, Dubai); Central Africa (eg Lagos, Addis Ababa, Nairobi), and in Asia (potentially Delhi, Mumbai, Almaty).
Aegean is number one by seats in Greece, but has lost seat share while LCC share has grown
In the week commencing 3-Jun-2024, Aegean Group (Aegean Airlines and Olympic Air) is offering 118% of the seat capacity it had in the equivalent week of 2019.
However, the Greek market overall is at 130%, and low cost carriers in Greece are at 178%.
Aegean is still the leader by seats in Greece, but as a result of its slower than the market recovery from the pandemic, it has lost seat share.
Greece: top 15 airlines by seats, week of 3-Jun-2024
|
Rank |
Airline |
Seats |
Seat share |
Percentage of 2019* |
|---|---|---|---|---|
|
1 |
422,282 |
19.4% |
223% |
|
|
2 |
259,580 |
11.9% |
188% |
|
|
3 |
140,836 |
6.5% |
166% |
|
|
4 |
136,461 |
6.3% |
277% |
|
|
5 |
117,246 |
5.4% |
223% |
|
|
6 |
91,494 |
4.2% |
107% |
|
|
7 |
75,716 |
3.5% |
158% |
|
|
8 |
59,528 |
2.7% |
- |
|
|
9 |
55,072 |
2.5% |
173% |
|
|
10 |
54,160 |
2.5% |
148% |
|
|
11 |
50,238 |
2.3% |
82% |
|
|
12 |
38,677 |
1.8% |
135% |
|
|
13 |
37,912 |
1.7% |
115% |
|
|
14 |
34,592 |
1.6% |
61% |
|
|
15 |
30,404 |
1.4% |
16% |
Aegean Group is now at 20.8% of seats, down from 22.7% five years ago, while LCCs' combined share is at 39.2%, which is up from 28.5% five years ago (2019).
Ryanair, the leading LCC and number two operator in Greece overall, has grown its seat share to 11.9% from 8.2% five years ago. easyJet, ranked third overall, has increased its share to 6.5% from 5.0% over the same period.
Greece: Aegean Airlines Group and LCC seat share, week of 3-Jun-2024
|
Seats |
Seat share |
Percentage of 2019** |
|
|---|---|---|---|
|
Aegean Group* |
452,686 |
20.8% |
118% |
|
LCCs |
853,519 |
39.2% |
178% |
|
Total market |
2,177,051 |
100.0% |
130% |
Aegean's pricing is competitive
Aegean Group is a full service airline group, but its pricing is very competitive.
The group's 2023 passenger revenue per passenger of EUR97.9 was 5% below LCC easyJet's EUR102.7 (financial year to Sep-2023).
Major legacy airlines have only a small share in Greece - the highest ranked is British Airways with only 2.5% of seats - but comparison with Lufthansa is also informative.
Aegean's revenue per passenger was 11% below Lufthansa Group's EUR 110.2 on its Europe network.
The ultra-LCC Ryanair reported EUR73.2 per passenger (financial year to Mar-2024) - comfortably below all of the above.
Nevertheless, Aegean is well placed against full service airlines and easyJet on pricing, thanks to an efficient cost structure.
Ryanair, easyJet, Aegean Airlines Group and Lufthansa Group*: average passenger revenue per passenger (EUR), 2023**
Aegean's loss of market share does not appear to have harmed its profitability
Aegean's plan to add longer routes to its network will go some way towards plugging the gap left by its lack of widebody aircraft and its need to rely on Star Alliance partners for long haul destinations (although this gap will remain).
However, the most important market for Greece is inbound tourism, which is largely short/medium haul. This has helped Greece to be one of Europe's fastest recovering markets after the COVID-19 pandemic, led by rapid LCC expansion.
Although Aegean has lost share in the recovery, this is only the continuation of a longer term process.
The group's seat share of 20.8% in the week of 3-Jun-2024 compares with 29.4% 10 years ago. Over the same period, LCC share has risen to 39.2%, from 27.8%.
Nevertheless, Aegean has a creditable record of profitability, particularly since the acquisition of Olympic Air in 2013.
Setting aside the pandemic years, the group's EBIT margin has only once fallen below 6% (and only twice below 8%) since 2013. It has been double digit for the past two years.
Aegean has prioritised profitability over market share
This healthy profitability is a sign that LCC competition is not currently really harming Aegean. Low cost airlines have grown the whole market, but Aegean operates in a different market segment.
Among full service airlines serving Greece, Aegean is the clear market leader, thanks to very competitive pricing and a strong product.
Aegean's recovery from the pandemic has prioritised profitability over market share.