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We employ a global team of highly-experienced analysts who deliver a wealth of commentary about the aviation and travel industry. Our analysts don’t just report the news, they look at the big picture to help you understand how the latest news, issues and trends will affect your business. CAPA’s commitment to independence and integrity means every report is filled with accurate data and actionable insights to help you stay ahead of the game.
HK Express has soared well beyond pre-pandemic capacity, and more growth is in the pipeline
The Hong Kong-based LCC HK Express is expanding its role within the Cathay Pacific Group as it plans further fleet and network growth, with a particular emphasis on the mainland China market.
The Cathay Pacific Group has been growing its LCC subsidiary faster than the full service carrier during the pandemic recovery phase - although from a much smaller base. This has meant that HK Express' capacity has risen well above its 2019 levels.
More expansion is coming, as the group intends to use HK Express to increase the breadth of its network on the mainland. This will help with the LCC's aim of raising the share of mainland capacity within its overall operations.
Network growth will be backed by aircraft additions. The HK Express fleet is set to increase significantly in 2024 and in 2025, thanks to its existing Airbus narrowbody orders and others that will be allocated from the group's order book.
This regular CAPA - Centre for Aviation report provides a summary of major developments in the aircraft interiors sector, supported by data from the CAPA - Centre for Aviation Aircraft Interiors Database and CAPA - Centre for Aviation News.
This edition covers May-2024 and Jun-2024 and features:
- Region Focus: Middle East;
-
Highlights from the 2024 Airline Interiors Expo: IFEC transformation continues gaining ground and new narrowbody standards;
- Latest global interior updates.
The number of news articles on the CAPA - Centre for Aviation website mentioning the word 'strike' rose sharply in 1H2024.
Historically, the number of 'strike' articles broadly follows the rise and fall of airline profit margins. It is a signal of labour's confidence in claiming a greater share of aviation's profits.
Typically, the count is highest in July and remains high in August and September, coinciding with the northern summer, when demand for air travel - and global airline profits - hit a seasonal peak. The next three months will go a long way to determining the 2024 annual total, but an increase on 2023 looks very likely, and IATA is also forecasting a modest increase in airline profits this year.
However, the number of strike-related articles is not back to pre-pandemic levels for years with similar margins.
Aviation labour has regained some confidence - albeit a more cautious confidence than in the past.
Two of America's higher profile airlines - Southwest Airlines and JetBlue Airways - have arguably been struggling to define themselves in an environment where ultra-low cost operators are stumbling and passenger preference for a more premium experience shows no sign of weakening.
Activist investors have set their sights on Southwest and JetBlue in 2024.
Southwest's largest shareholder, which is now Elliott Investment, has lashed out at management's lack of vision. The legendary airline investor Carl Icahn has not been as vocal since taking a nearly 10% stake in JetBlue and gaining two seats on the airline's board, but that could change over time.
Southwest is attempting to thwart Elliott's efforts to upend its management by adopting a "Poison Pill," the latest development in the airline's struggle to preserve its identity in a changing US market place.
The growth in the number of airports that are (wholly or partly) owned and operated by the private sector and the rise of the Airport Group concept go hand-in-hand, broadly speaking.
The top private sector-managed airports represented almost one third of global revenues in 2022; 27 Airport Groups accounted for 29% of global airport passenger traffic and 23% of global air cargo volumes in 2019, which was the immediate pre-pandemic year.
Each has been driven by the other in a virtuous circle, the groups needing the access to capital for infrastructure that the private sector facilitates and the private sector then seeking to grow the groups by further acquisition to satisfy shareholder demand, as is its wont.
That is not to say that all these airport groups are privately owned but the majority are, one way or another.
Two reports - one commissioned by ACI, the other from a US Think Tank - point to a continuing and growing rise in the importance of this Airport Group operating model, and how it can add value, especially to the smallest members.
Neither of them takes into account public (passenger) opinion, and that might be completely different - of course. Nor do group-owned airports automatically win 'Best Airport' accolades at industry events.
But there are more than ever of them, and the leaders among them are setting global benchmarks for operational excellence.
The following report draws on information and data provided by The Reason Foundation and Airports Council International with additional text and comment provided by CAPA - Centre for Aviation. The original ACI report does contain some data that was sourced from CAPA.
City Airlines takes off as Lufthansa Group focuses growth on more cost-efficient platforms
Lufthansa City Airlines' inaugural service launched on 26-Jun-2024 with an Airbus A320neo flight from Munich to Birmingham. The new regional airline of the Lufthansa Group has identified nine destinations from Munich for 2024 and a further 14 potential destinations for 2025.
Group CEO Carsten Spohr has said Lufthansa City Airlines will replace its near namesake, Lufthansa CityLine, in operating short and medium haul services to feed the mainline hubs at Munich and, later, at Frankfurt.
A scope clause in Lufthansa's agreement with pilots means that CityLine's deployment of narrowbodies will end in 2026. Its ageing regional jets are too old and too small to meet requirements. Moreover, Lufthansa wants to transfer CityLine crew to City Airlines on new terms to boost productivity and cost-effectiveness.
Lufthansa City Airlines is the latest in a line of alternative growth platforms for the group in recent years, following others including Germanwings, Eurowings, Discover Airlines and Air Dolomiti (and ITA Airways, once Lufthansa's acquisition is cleared).
Finland considers reducing state airport ownership, inviting stock market float and/or privatisation
The five Nordic countries tend to regard airports as state property. There are few examples of wholly or partly privatised airports in any of them, and none at all in three of them.
Two years ago CAPA - Centre for Aviation reported that Sweden was examining the benefits of partially privatising some of its larger airports, including Stockholm Arlanda, but nothing seems to have come of that so far.
Now it is the turn of Finland, where the government has agreed in principle to reduce its share holding in Finavia, the operator there, among several other state entities.
The government indicates that it has a clear mandate on state ownership and will not let its holding fall below that level. On the other hand, it could go down to 50.01%, offering plenty of opportunity for investors even if there is a complementary float on the Stock Exchange - as it appears there would be.
Those investors would appreciate solid passenger growth across the portfolio before the pandemic, but would not be so happy about continuing losses occasioned mainly by restrictions on airspace in neighbouring Russia.
That portfolio is a mixed one too, with most of the traffic centred on Helsinki-Vantaa Airport and very low numbers at some of the remoter facilities.
Mexico and Brazil learned how to deal with that impediment by selecting anchor airports in the concession process to which others were attached, but Finland is a micro market by comparison. Only one airport - Helsinki Vantaa - could be considered an 'anchor'.
Just how this will play out is yet to be revealed.
It could be that it turns out to be another good intention that is never realised.
Or Finland could be the first Nordic country to concession out its airports, with the private sector having a sizeable holding.
Strong international demand gives South Korean airlines a good platform for next phase of growth
South Korea's international passenger traffic has almost recovered to pre-pandemic levels and exceeds them in some key markets, while there are also promising signs in sectors that have been lagging.
The rate of the country's capacity growth slowed in the first half of this year, as most aircraft were returned to service and the majority of routes resumed. Unsurprisingly, the main markets that have yet to fully recover are between South Korea and China and Japan.
As with many other Asia-Pacific airlines, South Korean airlines are seeing increasing competition and rising costs. This spurred a more cautious approach to growth, which has helped boost international load factors to higher levels.
Weakness in Japan and China demand has been partially offset by surging demand on flights to places such as the US and Western Europe.
Looking ahead, there appears to be growing confidence in the China market. Korean Air has revealed plans to resume more routes in its China network, significantly lifting its capacity there.
This indicates that demand is rising enough to warrant more services. It is also adding more Japanese flights, although to a lesser extent than in China.
Meanwhile, some of South Korea's secondary airlines are also eyeing growth prospects, boosted by the likelihood of gaining valuable routes given up by Korean Air in order to win approval for its Asiana takeover.
Abra's latest partnership with Volotea is a refreshing take on creating a competitive global network
After GOL and Avianca unveiled plans to establish Abra a couple of years ago, it appeared that Abra was attempting to build a powerful South American airline group.
And while that likely remains a major goal for the airline, recent moves by Abra indicate the company is working to create a more globally focused airline group to further enhance its network reach - evidenced by Abra and Volotea now working to establish a joint venture.
It shows a certain nimbleness by each company, and in the case of Abra, reflects its approach to thinking outside the norms of traditional airline tie-ups.
Air passenger traffic in Latin America and the Caribbean grew by 7.4% in Apr-2024, totalling 38.8 million travellers, which was an increase of 2.7 million compared to Apr-2023, according to data from the region's aviation body ALTA.
Notably, in the international market there was a 10% growth, with 18.3 million passengers total.
Mexico, Brazil, Colombia, the Dominican Republic, and Panama were the five busiest countries by international passenger numbers. The extra-regional international segment grew by 8.3%, reaching almost 14 million passengers, and that was 1.06 million more than in Apr-2023.
The Caribbean accounts for just a small share of this total, but is a region where air connectivity plays a vital economic and social role.
Data from CAPA - Centre for Aviation and OAG shows that annual Caribbean seat capacity rose 17.4% in 2023, to a figure slightly below its pre-COVID level of 2019. In 2024 regional capacity has tracked ahead of both 2019 and 2023 levels every week.
But while the landscape is looking much healthier, airlines in the region still face a volatile mix of small island populations, high taxation, and both economic and political issues.
CAPA - Centre for Aviation asked interCaribbean, CEO, Trevor Sadler to share his views on regional connectivity in the Caribbean.