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Analysis Reports
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.
KKR and Skip Infrastructure Fund acquire 75% stake in Queensland Airports; billionaires take control
CAPA - Centre for Aviation anticipated an explosion of M&A activity arising out of the sale of Sydney airport a couple of years ago, both in Australia and internationally.
That didn't happen for a variety of reasons, but in the last 12 months since late 2023 there has been some movement in on-sales of lease equity in Australia (not new sales, because all the airports that matter there have long been privatised).
It has culminated in a transaction at the end of Sep-2024 that resulted in three of the four shareholders in Queensland Airports Ltd (QAL) - which has four facilities in northeastern Australia, including the principal one at Gold Coast - selling their combined 75% share to an (unnamed) consortium of the US private equity firm KKR and the Australian tech financier Skip Capital, which KKR needs on board to satisfy local ownership regulations.
It is KKR's first acquisition in this sector, although it has occasionally tried in the past.
A big driver on the sell side is the overexposure of many of Australia's funds to airports, with some investors committed to several funds putting their money into the same assets; this coupled with nervousness about the failure of the air transport market to get back to pre-COVID levels, as it has been able to do so elsewhere.
That hasn't stopped KKR leaping in blindly, its hand held perhaps by the Skip CEO, who has deal-making experience - at least with airports, though that isn't the same as running them.
It is a strange and surely unforeseen outcome of the privatisation exercise that began in 1997 that a clutch of four small airports, most of them remote, and which together host fewer than 10mppa, should now be owned by two billionaire families and a US private equity firm.
However, it is all part of a sea change in the sector, which is likely to see further activity; also in the northeast of the country, and also out west in Perth, where the action has now shifted.
Even before officially taking office in Dec-2023, Argentina's President Javier Milei expressed his desire to privatise some of the country's government-owned entities, including its flag carrier Aerolineas Argentinas.
Now Mr Milei is moving to speed up the process, but it's unclear if he'll be successful in his efforts, as the airline's unions demand higher pay and the country's legislators need to put their stamp of approval on the process.
More broadly, potential acquirers of Aerolineas Argentinas would need to conduct a careful risk-reward analysis.
Any acquisition would be rife with labour strife, and there is a distinct possibility that Argentina's political winds could quickly shift.
However, the airline is the largest operator in an emerging market, with significant opportunities to grow and stimulate traffic.
A proposed investment deal between Qatar Airways and Virgin Australia could have collateral network benefits for both airlines, thanks to a planned fleet move that would increase their access to important international markets.
Qatar Airways has confirmed that it plans to acquire a 25% stake in Virgin Australia. An investment of about that much had been rumoured for months, but another part of the agreement was more surprising, and provides additional insight into the expected advantages.
The airlines unveiled plans for Virgin Australia to wet-lease widebody aircraft to operate multiple routes to Doha under their partnership.
While details of the fleet arrangement are yet to be defined, it offers the opportunity for Qatar Airways to increase feed into its network from lucrative Australian markets, and boosts Virgin Australia's access to a major hub for onward international connections.
The proposed deal between the airlines sheds more light on Virgin Australia's intended ownership structure, as well as a shift in strategy regarding international operations.
From a political perspective, there will be lots of scrutiny on the regulatory response to the proposal, given that competition in Australia's international market has been a hot topic recently.
Russia's government has forecast that the nation's airlines will handle 6.9% fewer passengers in 2024 compared with 2023. The forecast total of 98.1 million passengers for 2024 would be 23.4% below the traffic handled by Russia's airlines in 2019.
Russia led the rest of Europe in the initial recovery from the COVID-19 pandemic and showed signs of returning to its old dynamism. Total passenger traffic had expanded by 2.6 times in the decade up to 2019.
However, the situation was altered by the invasion of Ukraine in late Feb-2022.
Since then, the Russian market has lagged Europe in its capacity recovery, with Western sanctions weighing on international traffic and capacity in particular.
The government of Russia is not expecting its airlines to catch up any time soon. Looking ahead to 2027 it forecasts that Russian airlines will carry 98.8 million passengers - barely changed from 2024's figure.
Lufthansa has criticised Germany for its "excessive government levies", which make the country "unattractive" for aviation.
Further, Ryanair has blamed Germany's lagging air traffic recovery on "high access costs (air traffic tax, security fees, air traffic control fees) and airport charges".
Airline seat capacity in Germany is scheduled to reach only 87% of 2019 levels in 2024, compared with 102% for Europe as a whole. Germany is the only one of Europe's five biggest markets not to exceed 2019 capacity levels in 2024.
It is rare for Lufthansa and Ryanair to agree, but both have welcomed Sweden's decision to abolish aviation tax, and have urged Germany to follow suit.
Overseas airlines see strong growth potential in Australia; part two: challenges and opportunities
For many Asia Pacific airlines, the Australian market has been one of the fastest to recover and return to a growth trajectory in recent years.
Part one of this analysis focused on how Thai Airways, Philippine Airlines (PAL) and Air India have all increased their capacity in the Australian market beyond 2019 levels, and that they see the potential for further expansion.
Part two will look at Vietjet, which is in a different category, because unlike the others it did not operate to Australia before the COVID-19 pandemic.
However, it has quickly surpassed these three airlines in terms of weekly flight numbers to Australia.
This part of the analysis will also look at the airlines' interest in the new Western Sydney International Airport, and some of the challenges they see in the Australian market.
Executives from these airlines discussed their Australian operations during the CAPA Airline Leader Summit Asia Pacific in Brisbane on 12-13-Sep-2024.
The return of the low cost terminal as Warsaw’s Chopin Airport seeks ways to ‘divide’ traffic
In the period from the late 1990s to the mid-2010s low cost airports and terminals were popular throughout Europe, and to a lesser degree in Asia Pacific (and nowhere else).
They arose as a direct consequence of the very rapid rise in the number of low cost airlines and the new routes they began to fly, and were demanded by the management of those airlines to keep their costs as low as possible.
Then they began to die out (although many of the original terminals remain today) as a result of the hybrid nature of airlines, who moved towards each other in their operational level expectations - and that was reflected in terminal design.
Now Warsaw's Chopin Airport may get a new budget terminal, the first for quite a while in Europe, to help solve a specific capacity issue. The funny thing is that it had one before now, a building which also saw service as a supermarket and furniture store.
Overseas airlines see strong growth potential in Australia; part one: when the new widebodies arrive
Asia Pacific airlines have ramped up their services to Australia to leverage a boom in international travel demand, and many are targeting further expansion in this market as they look to grow their widebody fleets.
Several overseas-based airlines have already boosted their Australian capacity beyond pre-pandemic (pre-COVID-19) levels. This has strengthened the country's role as one of the most important markets for Asian airlines, helping them offset the slower recovery in other countries, such as China.
Philippine Airlines, Thai Airways, Vietjet and Air India are among those airlines that are bullish about Australia, and senior executives from these airlines discussed this market during the CAPA Airline Leader Summit Australia Pacific held in Brisbane on 12-13-Sept-2024.
They talked about their current presence in the Australian market, where and when additional growth might come, and the potential for overseas airlines to serve the new Western Sydney International Airport.
The executives also outlined some of the constraints that will need to be overcome for this growth to occur, in areas such as bilateral rights, visa processes and aircraft availability.
Part one of this analysis will cover Thai Airways, Philippine Airlines and Air India, and the second part will look at Vietjet, Western Sydney Airport and growth challenges.
Airline seat capacity to/from/within Europe is set to be 101.7% of 2019 levels in 4Q2024, according to data from CAPA - Centre for Aviation/OAG. This will be the third successive quarter above 2019 levels, but the trend has been little more than flat since 2Q2024 when the 100% threshold was first breached.
Intercontinental markets to/from Europe are set to reach 105.6% in 4Q (up from 102.2% in 3Q), with intra-Europe at 100.3% (down from 101.3% in 3Q). Low cost airlines continue to grow their seat share in Europe, recovering more strongly from the COVID-19 pandemic.
The fairly static capacity picture is the result of ongoing supply chain constraints. Logic would suggest that this should be good news for yields. Indeed, air fare inflation was positive once more in both the EU and the UK in Aug-2024, after three months of falling prices. However, it is too early to extrapolate from one month of data.
SWOT Analysis – Corporación América Airports S.A., a powerful force in LatinAm now looking to expand
Corporación América Airports has been around for decades, although it is still better known by the name of the division Aeropuertos Argentina, the first one, which came along when an ailing textile company was looking for, and found, the main chance.
It is fair to say that it is not too well known outside South America, despite having airport assets in Italy and Armenia and pitching for others in Europe at the present time.
Its Argentinean division, and the one in Brazil that looks after the capital's airport there, are the primary drivers of the business.
But latterly it has been looking to expand in Africa, which can be dangerous territory for the uninitiated.
Its financial affairs appear to be in good order, and are strengthening in each reporting period after the COVID-19 pandemic.
A SWOT analysis reveals that it has more strengths than weaknesses, and the opportunities/threats trade-off will mainly be influenced by its attempted excursions into Africa.