Analysis Reports

The past few years have not been kind to large airports in Asia Pacific.

With regional lockdowns, a morass of COVID-19 travel requirements and stubbornly closed international borders, the recovery in the region has trailed behind the rest of the world.

However, as lockdowns have ended and borders reopened passenger traffic in the region has started to return to more ‘normal’ volumes. In 1H2023 there has been the situation of airports enjoying a steep rebound in traffic, with travellers eager to return to destinations that have been cut off to them in the past few years, or to explore new destinations.

A new CAPA - Centre for Aviation report looks at the region's ten largest airports in 1H202023 and their recovery prospects.

LOT Polish Airlines and Star Alliance partner United Airlines ended their 20-year-old codeshare agreement in late Sep-2023.

Under the agreement, LOT carried United's code to four European destinations from Warsaw, while United carried LOT's code on to 17 US cities from Chicago.

However, the codeshare did not cover services between Poland and the US, nor any onward services from its four US destinations, other than Chicago.

Meanwhile, LOT remains the sole operator on Poland-North America. Moreover, its nine North Atlantic routes position it as the dominant airline by capacity between the whole Central Europe region and North America.

The end of the United codeshare optically reduces LOT's North American footprint. However, the airline's strength in this market – its biggest international region by ASKs – looks set to remain.

KLM's Dutch LCC Transavia has described its government's plan to reduce flight numbers at Amsterdam Schiphol as "very unwise", flawed, and taken without consultation.

It argues that newer, quieter aircraft, sound insulation and more efficient routeing of flights would be preferable in terms of reduced noise for local residents, without the need for capacity cuts.

Transavia CEO Marcel de Nooijer has warned that "shrinkage is an incentive to move flights abroad", adding, "We are now looking at all foreign airports, especially in the border region" (Luchtvaartnieuws, 19-Sep-2023).

Both Transavia and, in particular, its sibling airline Transavia France have a high dependence on their main airport (Amsterdam Schiphol and Paris Orly, respectively).

This CAPA - Centre for Aviation analysis report examines the reliance of Europe's leading low cost airlines – the legacy group subsidiaries and the independent LCCs – on their biggest market by capacity.

Ryanair, easyJet and Wizz Air depend less on their biggest airport or any single country, compared with Transavia, Vueling and Eurowings.

It would be no exaggeration to say that the COVID-19 pandemic set Thailand’s air transport and tourism sectors back by years. Both reduced to not much above zero in 2020 and 2021. But traffic is coming back, and there is great anticipation that visitors from China – by far the biggest provider – will now start to return to previous levels.

Accordingly, Airports of Thailand (AoT) has firmed up prior commitments to build a new airport in Chiang Mai, an important northern city, to support the existing one, and to construct a new terminal at Bangkok’s Don Mueang airport, which was once dismissed as redundant but is now again a key part of the city’s aviation infrastructure in the domestic and low cost segments.

But perhaps the more interesting development is the acknowledgement by Bangkok Airways, already a long-time operator of three small Thai airports and latterly of a larger one to the south of Bangkok in a vacation hot-spot, that it is considering investing in a new airport in the ‘Andaman Triangle’, working on a PPP basis with Airports of Thailand.

To have an airline cooperating in PPP projects outside the United States, in Southeast Asia, while not unique, will certainly generate curiosity in the region.

US domestic centric airlines faced an interesting challenge in 2Q2023 and that has continued into 3Q as strength in international demand outpaced domestic performance.

But Alaska Air Group is seeing some early signs of a rebalance in the market. 

The company is also adopting a prudent view about the recovery in business travel as some workers in the tech sector are returning to the office on a more frequent basis. 

Alaska Air Group has altered its network to tilt a bit more towards leisure markets, but it is also keeping up frequencies in key business markets. However, for now the recovery in its corporate volume remains around 75%. 

When considering tourism in Türkiye, which is the world’s fourth most visited country, one tends to think of the magnet that is Istanbul. But many of its coastal resorts, especially on the west and south coasts, have drawn increasing numbers of tourists over the past three decades – and many of them away from the Spanish resorts.

Antalya Airport is the main gateway to many of these Turkish resorts and is the third busiest airport in the country.

Now managed under concession by two of the leading lights in airport operations, Fraport and TAV (with that concession recently extended for another 25 years), the airport has embarked on an ambitious renovation and enhancement programme that will cater ultimately for 80 million passengers a year.

That is a very high figure to aim for when growth is expected to come mainly from tourists, and no one can say for sure that they will become an extinct species by the time the expansion works are complete. With that in mind, it is perhaps not surprising that two key lenders, European and Asian development banks, have included exacting environmental and governance clauses in their loan agreements – a portent for the future.

This is part two of a two-part report.

Many overseas airlines are taking advantage of a strong demand recovery in the Australian market by ramping up their services to that country. Because of this, Australian routes are playing a particularly large role in their post-pandemic strategies.

Several airlines have increased Australian capacity levels up to – or beyond – 2019 levels, and there have also been some new entrants and new routes in this market.

Part two of this analysis looks at two examples of airlines that have started new routes – United Airlines and Vietjet (part one focused on Cathay Pacific and Philippine Airlines). Some of the challenges facing airlines in the post-pandemic environment are also discussed.

This report draws on information presented during the CAPA Australia Pacific Aviation Summit held 14-15-Sep-2023 in Brisbane. A wide range of industry executives addressed these and many other topics affecting the Australasian airline and travel sectors during the CAPA event.

When considering tourism in Türkiye, which is the world’s fourth most visited country, one tends to think of the magnet that is Istanbul. But many of its coastal resorts, especially on the west and south coasts, have drawn increasing numbers of tourists over the past three decades – and many of them away from the Spanish resorts.

Antalya Airport is the main gateway to many of these Turkish resorts and is the third busiest airport in the country.

Now managed under concession by two of the leading lights in airport operations, Fraport and TAV (with that concession recently extended for another 25 years), the airport has embarked on an ambitious renovation and enhancement programme that will cater ultimately for 80 million passengers a year.

That is a very high figure to aim for when growth is expected to come mainly from tourists, and no one can say for sure that they will become an extinct species by the time the expansion works are complete. With that in mind, it is perhaps not surprising that two key lenders, European and Asian development banks, have included exacting environmental and governance clauses in their loan agreements – a portent for the future.

This is part one of a two-part report.

The boom in demand for travel to and from Australia shows no sign of abating, making this market a key part of the international recovery strategies of many overseas airlines.

United Airlines is making a major push into Australia in the upcoming southern summer season, while Cathay Pacific and Philippine Airlines have quickly rebuilt towards their pre-pandemic levels.

Vietjet has been a notable addition to this market, with the launch of new routes to the largest Australian cities and plans for further expansion.

Senior executives from these four airlines talked about their Australian operations and plans during the CAPA Australia Pacific Aviation Summit held in Brisbane on 14-15-Sept-2023. Tourism Australia also gave some insights into the bigger-picture trends in the Australian market.

Part one of this report will look at the market overview, and Cathay Pacific and Philippine Airlines.

Part two will discuss United Airlines and Vietjet, along with some of the continuing post-pandemic challenges facing airlines.

On 13-Sep-2023 the European Parliament voted to increase the use of sustainable aviation fuels (SAF) at EU airports.

Under the legislation, which still needs approval by EU member states, the share of aviation fuel that must be sustainable will rise from 2% in 2025 to 70% in 2050. These percentages have increased since the EU's SAF mandate, known as ReFuelEU, was first drafted in 2021.

Airlines and fuel suppliers, both old and new, are working to increase production of SAF from its current very low levels. Government and regulators also need to implement policies to grow SAF supply.

SAF mandates are one element of this, although IATA has criticised this approach for resulting in higher prices, thereby diverting resources from other environmental investment.

Tax credits and other incentives, as introduced in the US, are another government intervention to stimulate SAF production.