Analysis Reports

On 26-Feb-2021 a coalition of European aviation trade associations published 'Destination 2050', a plan to achieve net zero carbon dioxide emissions by 2050. The target covers all flights within and departing from Europe (specifically the EU, European Free Trade Association and the UK).

It plots a path to reach this target through a combination of new technologies, improved operations, sustainable aviation fuels and economic measures.

The target of net zero emissions by 2050 puts the European aviation industry ahead of the global aviation target to halve carbon emissions (relative to 2005 levels) by 2050.

The next CAPA Live event on 10-Mar-2021 will include discussions with a number of leading industry figures on the theme of 'Sustainable Aviation: Restoring travel in a responsible way'.

The degree of ‘recovery’ from the effect of the pandemic on aviation varies from country to country. Some are still a long way off resuming any sort of cohesive air service, whereas others are close to it.

India potentially lies in the latter category, and as Mumbai’s airport reopens its domestic terminal to provide more space for latent international operations at the other terminal, this report looks at the relatively low infection rate in India and at what the reasons might be.

It poses by consequence the question of whether India could benefit from a commercial advantage, at least for a short while, as air transport aspires to return to normality.

After nearly a year of navigating stringent travel restrictions and receiving no sector-specific financial support from the government, Canadian airlines are seeing some encouraging signs emerge in those two areas. However, it still could be some time before major relief materialises.

Since Mar-2020 Canada has mandated a 14-day quarantine for anyone entering the country, and a range of interprovincial restrictions have also been in place since that time. At the beginning of 2021 the country mandated negative COVID-19 tests for all passengers entering Canada, in addition to the existing quarantine. 

More recently, Canada has introduced new requirements that entail testing for passengers upon arrival.

In the meantime, Canada’s airlines continue to deal with a state of limbo they’ve been in since the onset of the COVID-19 pandemic. They have also agreed to cut service to warm weather destinations to combat the spread of the virus, which, in some ways, is rubbing salt into their wounds. 

With Brexit now completed and the UK signing, or chasing, trade deals around the world, a policy of awarding 'Freeport' status around the country has been reinstated. And at the same time the government is committed to improving the lot of the regions; that is how it got elected.

Free ports, or zones, are designated by the government as areas with little to no tax in order to encourage economic activity. While located geographically within a country, they essentially exist outside its borders for tax purposes.

Although the majority of applications will come from marine organisations, airports will be represented, and two of them have already played their cards.

One question which arises, though, is whether there is so much regional support through special economic zones and the like already that the status of Freeports will be diminished before they are even awarded. Also, will they be allocated where the need is the greatest?

According to the CAPA Feet Database, Europe's passenger jet fleet in service increased by 1.8% month-on-month in Feb-2021, to 3,400.

This is almost three times the Apr-2020 trough level, but 16% below the Aug-2020 peak recovery level. Moreover, it has changed little since Nov-2020 and represents only 56% of the total passenger jet fleet, compared with the world average of 65%.

Seat capacity in Europe also continues to lag the rest of the world, falling by 74.5% relative to 2019 in the week of 1-Mar-2021, according to OAG schedules and CAPA seat configurations. Middle East is down by 55.8%, Africa is down by 53.6%, North America by 45.1%, Latin America by 43.4%, and Asia Pacific by 33.9%.

Nevertheless, a combination of seat capacity and fleet in service data supports the conclusion that 1Q2021 will be the low point in this phase of the pandemic. European aviation can expect the recovery to start in 2Q2021.

Paris is the latest city where the cancellation, or postponement, or review, of a major airport construction project has been announced.

In this case it is not of the operator’s own volition – Groupe ADP has been told to do it by the French government, for environmental reasons.

As the COVID-19 pandemic enters its second year, and long-standing traffic projections go out the window, operators have to accept that governments are increasingly likely to use the pandemic as a catalyst, if not an excuse, towards ensuring that what future infrastructure there is will be as green as the grass in the Bois de Boulogne.

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It may seem like a lot longer, but it has been about a year since the initial surge in COVID-19 cases caused Asia-Pacific airline capacity to crash, in Mar-2020. 

Since then the airline industry has been through a downturn as deep as any it has ever experienced.

As the prospect of recovery looms closer, now is a good time to look ahead at some of the questions facing the region’s airlines.

Most Asia-Pacific airlines have been pursuing aircraft delivery delays in response to the COVID-19 crisis. Although several airlines acted quickly and secured deferrals relatively early in the pandemic, some important negotiations have occurred more recently. These latest arrangements highlight the differing approaches to deferrals being taken by the region’s airlines.  

Korean Air and Singapore Airlines are recent examples of airlines making substantial deferrals to push back spending commitments while also preserving their long term fleet renewal strategies.

The major Japanese airlines, however, are only making minimal postponements. The independent LCCs are generally trying to spread out their vast numbers of deliveries while some, such as IndiGo, are taking their aircraft as scheduled.

Few Asia-Pacific airlines will come through the pandemic without some degree of aircraft order deferments. In many cases these negotiations are key aspects of broader airline restructuring efforts.

Deferrals represent one of the main tools airlines have available for pausing growth and reducing fleet costs, along with early retirements, lease returns and order cancellations. Postponing rather than terminating orders is obviously preferable to manufacturers, particularly since Asia-Pacific airlines account for more of their order backlogs than any other region. Allowing delays also helps ensure customer survival.

It has long been the case that Istanbul’s airports have regarded themselves as in competition with those in the Gulf – especially for Europe-Asia transit traffic – rather than with those in Europe. And Istanbul’s new airport does have some geographical and operational advantages in that respect, as did its predecessor.

Now, as the country plots its way out of lockdown and with the main tourist season looming, that battle looks to recommence.

Istanbul Airport’s CEO is bullish about future prospects, no doubt taking his cue from the Prime Minister, but both the airport and the state airline will have to overcome the challenge from a rejuvenated Qatar Airways and Doha Airport, which have almost flourished during the pandemic.