Analysis Reports

Moves by Chinese and other governments this year have reduced many of the hurdles that were preventing a recovery in travel to and from China.

Airlines are now responding by resuming more of their pre-pandemic flights to mainland China. This has already meant that China’s international capacity has increased in recent months, and now airlines are signalling that more ambitious steps are forthcoming.

Many routes to China were restarted in Jan-Mar-2023, and even greater increases are due to occur in Apr-2023. This should accelerate the capacity rebound dramatically.

Part one of this analysis examined the complex series of measures undertaken by the Chinese government and other countries to reopen international flows to China, and where more steps are needed.

Part two highlights several examples of how airlines are boosting their China routes.

London’s Heathrow Airport is a microcosm of the global primary gateway/hub airport economy, sitting in the middle of the world on the meridian that dictates time zones everywhere else and representing (for now) the world’s premier financial market. That helps explain why London has five other commercial airports and the largest air passenger throughput of any city, anywhere.

But Heathrow’s glory days seemed well behind it when the COVID-19 pandemic made a greater impact than it did on many of its peer airports in Europe, aggravated by poor ‘post-COVID’ planning.

Yet Heathrow dragged itself off the ropes to record a 218% increase in passengers and 140% increase in revenues in 2022, and with positive results across the financial spectrum.

Now, with Britain in an economic mess, the world teetering on the edge of financial collapse, political pressures to ‘level up’ the rest of England, no certainty on the airport's third runway, and an unholy row over how much it can charge airlines that “can charge what they want” – Heathrow continues to live in what that (allegedly Chinese; actually American) saying described as “interesting times”.

The recovery in air travel to and from China is picking up pace in the early months of 2023 as more COVID-19-related restrictions are eased and airlines respond by ramping up services in this market.

The Chinese government raised hopes for reopening international travel in Dec-2022 when it announced its intention to remove a range of entry restrictions. However, there were still specific steps required to implement the changes for many categories of international travellers.

More hurdles emerged in Jan-2023, when several other countries imposed new entry requirements on travellers from China due to concerns about an uptick in COVID-19 infections. This prompted severe criticism from Chinese authorities.

There has been further progress in these areas over the past month. Many of the overseas governments have now removed their restrictions on travel from China. And the Chinese government itself has taken some of the additional steps needed to fulfil its reopening goals.

Airlines are announcing schedule changes to increase their Chinese capacity, and this trend will likely increase in the coming months.

Beirut has almost become the ‘forgotten man’ among Middle East airports. While Dubai, Doha and Abu Dhabi in particular have prospered, Rafic (also Rafik) Hariri International Airport has languished through years of civil war, political upheaval, corruption, financial crises, and the COVID-19 pandemic.

Just when everyone thought it was safe to come out from behind the kanaba (sofa), there was a huge accidental explosion that wiped out half of the city.

And yet, within recent memory Beirut was the Middle East’s playground for the idle rich, the Monte Carlo of the Arab World; it had an airline and airport to match, the latter hosting as many private jets as commercial flights.

Perhaps it is that image, and the prospect that it might one day be restored, that has prompted Ireland’s daa International to bid for, and be granted, the opportunity to manage the Terminal 2 that is to be built there. One day it might venture to invest in the terminal, or the entire airport, as it has done elsewhere – but if so, it could be entering a minefield.

Colombia’s aviation market has endured constant upheaval during the first three months of 2023, ranging from the ultra-low cost operator Viva Air suspending operations, to JetSMART abandoning plans to purchase Ultra Air just days after expressing an interest in acquiring Colombia’s second ultra-low cost carrier.

JetSMART has decided to forge its own path in Colombia, and Ultra Air has encountered its own challenges in the market. 

And now, nearly a year after tabling plans to buy Viva, Avianca has gained conditional approval for the transaction. But Viva’s value is now somewhat diminished since it ceased operations, and Avianca has to factor that into its calculus going forward. 

The market volatility in Colombia appears to be continuing for the short term and as a result, predicting the ultimate composition of the country’s aviation market remains up for conjecture. 

This report presents the ranking of Europe's top 20 airline groups by passenger numbers in 2022 – the first such ranking compiled by CAPA since 2019. After the disruption caused by COVID-19, the rankings largely resumed their pre-pandemic order in 2022.

In 2022 Ryanair Group extended its lead as Europe's biggest airline group by passenger numbers. Its 160 million passengers in the calendar year were 58% more than Lufthansa Group's 102 million. In 2019 Ryanair had been only 5% bigger than Lufthansa Group.

The 2022 top six were ranked the same as in 2019, although Wizz Air displaced Aeroflot Group in seventh place. SunExpress and Volotea made the 2022 top 20, whereas Finnair and LOT Polish lost the top 20 positions they had held in 2019.

Pre-pandemic rankings were largely resumed, but in most cases passenger numbers were not. Only five of the top 20 groups carried more passengers in 2022 than in 2019; four of these were LCCs.

Groupe ADP, as a recent investor into India’s GMR Airports as well as Turkey’s TAV Airports (which was an investor earlier), had already forged a reputation as a major player across a wide area from Europe to India and into Southeast Asia.

Now it has struck a deal by which a new airport holding company will be set up, effecting a merger between GMR Airports Infrastructure Ltd and GMR Airports Ltd, and one that will permit Groupe ADP to become a shareholder in a company listed on Indian Stock Exchanges.

It opens the door to Groupe ADP to become more active in bidding for airport assets under concession in forthcoming tranches in India, and also possibly elsewhere throughout Southeast Asia, which is its intention.

Historically, a downturn in air cargo business has presaged one in the passenger segment. CAPA wrote about such a possibility again, in Jun-2022, based on statistics published at the time.

So far it hasn’t happened. Indeed, the reverse is true, with sustained COVID-19 recovery in the passenger segment in most parts of the world.

But IATA figures for Jan-2023 point to a continuing soft underbelly in the cargo business, with demand continuing to fall in most regions and capacity also falling in half of them. No region has anything to shout about, except perhaps Latin America, where both demand and supply have increased – but that amounts to little in the overall scheme of things.

The underlying issue globally is the uncertainty brought about by an amalgam of negative factors that rarely occur at the same time, like a flock of black swans landing on the global runway and refusing to move. Accordingly, we have entered an era where forecasting the future is subject to so many variables that guesswork carries the same degree of credibility.

Canadian ultra-low cost carrier Flair and aircraft leasing management company Airborne are embroiled in a public dispute over Airborne’s decision to seize four Boeing narrowbody aircraft from the airline. Airborne seized the Boeing aircraft – one 737-800 and three 737-8s – from Flair on 11-Mar-2023.

It is a highly unusual situation, and creates challenges for Flair as it scrambles to find aircraft to operate its planned schedule for the summer season in the Northern Hemisphere. Flair is examining ways to get alternative sources of capacity. Its CEO Stephen Jones said, “...but this is pretty short notice, and so it is more likely that we will need to trim some of the schedule to fit the available capacity”.

Previously, Flair has said that it was planning to bolster capacity by 50% during the northern summer of 2023 and grow its fleet to 27 aircraft.    

The controversy has resulted in Flair suing Airborne and the leasing company’s lessor partners, and the situation could be a setback for Flair as it works to reach its short term and long term ambitions. 

The ‘go-to’ airports in Europe for those seeking information on the changing fortunes of air transport are most often the ‘FLAP’ airports (Frankfurt, London Heathrow, Amsterdam and Paris Charles de Gaulle). But there is value in examining the two Rome airports, which are in common ownership.

The larger, Fiumicino, caters to domestic, international and intercontinental flights but has never reached its potential, given the population it serves and the size of Italy’s GDP. The smaller, Ciampino, the original Rome airport, now exists primarily to service Ryanair.

The protracted failure of Alitalia and the slow transfer to ITA (Italia Trasporto Aereo S.p.A.) as the flag carrier is one of the main reasons that Rome is not a more significant aviation city. But Aeroporti di Roma (AdR) is investing for a much bigger future, with Fiumicino extended, to be able to handle 100 mppa by 2046, at a cost of more than EUR8 billion.

In the short term the financial statement for FY2022 for AdR is better than might have been expected, given how badly hit Italy was by the first wave of COVID-19 in 2020.