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Jet2.com: seats at new Stansted base in summer 2017 exceed the entire network growth in summer 2016

Jet2.com has provided details of the routes that it plans to operate at the new London Stansted base that had been already announced by the LCC's parent Dart Group. From the start of the summer 2017 schedule Jet2.com will serve 21 European leisure destinations from Stansted. This will continue the airline's strong dependence on the summer season.

Jet2.com's move into Stansted will it bring it into head-to-head competition with Europe's biggest and lowest cost LCC – Ryanair. That much was clear from the moment that the Dart Group announced the establishment of the base at Stansted, and it was highlighted in a previous CAPA analysis.

The route details allow greater analysis of the competitive landscape that Jet2.com will face. By entering the London market it will not only be locking horns with Ryanair, but it will also be facing city pair competition from almost every other significant LCC and charter airline that operates from the UK. The new seat capacity that Jet2.com will deploy from its first base in the south of England will be more than its network-wide seat growth in summer 2016, making this a highly significant move for the airline.

See related report: Jet2.com steps on Ryanair's toes as it starts its first Southern England base at Stansted

21 new routes from Stansted: seat numbers equate to 13% of Jet2.com's summer 2016 capacity

The 21 new routes from London Stansted announced by Jet2.com will be operated by six new Boeing 737-800s in all-economy 189-seat configuration. The airline will serve the routes with frequencies varying between twice weekly (Fuerteventura, Girona, Kos, Madeira, Paphos, Pula and Zakinthos) and daily (Alicante, Faro, Ibiza, Malaga and Palma de Mallorca).

Across the summer 2017 schedule the new Stansted routes will account for more than 800,000 seats (according to the airline). By comparison with the approximately six million seats deployed by Jet2.com in summer 2016, the Stansted operation represents more than 13% of the airline's capacity.

To put this further into perspective, its total network growth in summer 2016 compared with summer 2015 was around 750,000 seats – an increase of 14% year-on-year. In summer 2016 it launched 19 new routes from six of its seven bases.

The airline has not yet announced its full schedule for summer 2017, and so it is not possible to determine to what extent the new Stansted routes will be replacing capacity that is reduced elsewhere.

Nevertheless, the scale of its planned operation at Stansted is bigger than the net increase in its entire operation in summer 2016. This highlights the significance to Jet2.com of its new routes at Stansted.

Jet2.com looks set to have a 5% share of summer seats at Stansted

Jet2.com's Stansted capacity of more than 800,000 seats is equivalent to around 5% of the total of 17.6 million at the airport in summer 2016 (source: Airport Coordination Limited). The leading airline at Stansted, Ryanair, has 80% of seats this summer; followed by easyJet, which has 11% of seats, then Thomas Cook Airlines and Thomson Airways (both operating 2% of seats).

Jet2.com's plans look set to make it the number three airline at Stansted, albeit a long way behind the leader Ryanair and even a fair way behind the number two airline easyJet. However, in point-to-point markets an airline's market position on each of its routes is more important than its overall position at the airport.

Jet2.com will be number one or number two on 17 of its 21 Stansted routes

Full details of Jet2.com's seat capacity for summer 2017 have not yet been filed with OAG, but its seat numbers on its routes from Stansted can be estimated from the announced frequencies that it will operate on each route using a 189-seat configuration.

To analyse Jet2.com's market position by seats on each route, its capacity can then be compared with that of existing airlines on the routes (using summer 2016 data, since most have also not yet filed summer 2017 schedules with OAG).

When considered on an airport-to-airport basis, Jet2.com will be the biggest, or equal biggest, airline by seats on five of its 21 new routes. These will include one monopoly (Stansted to Madeira).

It will be number two out of only two airlines on a further 11 airport pairs and number two out of three on one route. It will be third on four routes. Only two of its new airport pairs will have four airlines operating.

Overall Jet2.com's competitive position from Stansted looks reasonable on the basis of airport-to-airport routes, in that most of its routes do not have more than one competitor.

Nevertheless, its most common competitor will be Ryanair (on 13 of the 21 routes), which is a lower cost operator and can profitably offer lower fares. Jet2.com increasingly offers flights as part of a package holiday and will be hoping that this will help to shield it from the fiercer price-driven competitive dynamics of seat-only sales.

However, as noted by CAPA in the above-referenced report, Ryanair is looking to increase its own sales of integrated leisure products through its website and app, in partnership with travel suppliers.

Jet2.com new routes for summer 2017 from London Stansted: airport pair competition

 

Destination

Jet2.com weekly frequency

Jet2.com rank on airport pair by seats*

Competitors on airport pair ranked by seats*

1

Alicante

7

2

Ryanair, Jet2.com

2

Faro

7

2

Ryanair, Jet2.com

3

Ibiza

7

2

easyJet, Jet2.com

4

Palma de Mallorca

7

2

Ryanair, Jet2.com

5

Malaga

7

3

Ryanair, easyJet, Jet2.com, BA

6

Tenerife Sur

6

2

Ryanair, Jet2.com

7

Lanzarote

4

3

Ryanair, Thomas Cook, Jet2.com, Thomson

8

Reus

4

1

Jet2.com, Ryanair

9

Dubrovnik

3

2

easyJet, Jet2.com

10

Gran Canaria

3

2

Thomson, Jet2.com

11

Heraklion

3

1

Jet2.com, Thomson

12

Larnaca

3

2

Cobalt Air, Jet2.com

13

Menorca

3

2

Thomas Cook, Jet2.com, Thomson

14

Rhodes

3

1=

Jet2.com, Ryanair

15

Fuerteventura

2

3

Ryanair, Thomas Cook, Jet2.com, Thomson

16

Girona Costa Brava

2

2

Ryanair, Jet2.com

17

Kos

2

2

Ryanair, Jet2.com

18

Madeira

2

1

(Monopoly)

Jet2.com

19

Paphos

2

3

Ryanair, Thomson, Jet2.com

20

Pula

2

1=

Jet2.com, Ryanair

21

Zakinthos

2

2

Thomas Cook, Jet2.com

Jet2.com's competitors (especially Ryanair) offer lower fares from Stansted

Jet2.com has announced starting prices for one-way tickets on its Stansted routes: GBP39 for 11 of the routes (mainly the shorter ones) and GBP70 for the remaining 10 (mainly longer routes). In addition to these low starting fares, Jet2.com's Stansted launch programme has 50,000 seats (around 6% of the total for the summer 2017 schedule) for only GBP30.

A search for the lowest fares currently offered by Jet2.com on its website (booking page), for flights in the launch month (Apr-2017, or in some cases, May-2017), showed that GBP30 fares were still available for many of these routes as at 27-Sep-2017, although in two cases they were more than GBP100 (see table below).

Across all of its Stansted routes the average of the lowest fares currently offered by Jet2.com in its launch month was GBP46.

The lowest fares for flights at the weekend (generally Saturdays where available, otherwise Fridays or Sundays) in the launch month were often much higher, but the GBP30 fare was still available for some. The average of the lowest fares offered by Jet2.com at the weekend was GBP73 as at 27-Sep-2016.

Currently available prices on all of the routes during the week and at weekends varied significantly, and there were many more three-digit fares than there were at the special launch price.

The table below also provides a comparison with the lowest fares currently offered by Jet2.com for Apr-2017 (or May-2017), and its lead competitor on each route (where available).

For flights in Apr-2017, in most cases Jet2.com's lowest fares are higher than the lowest currently available fares of its main competitor. For the routes where prices are currently available, average competitor lowest fares were GBP37 in Apr-2017, rising to GBP57 at the weekend.

The average discount offered by the competitors' lowest fare compared with Jet2.com's lowest fare is around 20% (for both weekday and weekend flights).

Moreover, as is typically the case for new routes, Jet2.com's lowest prices in the launch month are below its average fares. In the year ended Mar-2016 Jet2.com achieved average ticket revenue per passenger of GBP91. The equivalent figure for Ryanair, its main rival at Stansted, was GBP34 – a discount of 62%.

Adding ancillaries to obtain figures for total passenger revenue per passenger: Ryanair's figure of GBP45 was 63% lower than Jet2.com's GBP123.

Jet2.com new routes for summer 2017 from London Stansted: airport pair competition

 

Destination

Lead competitor on airport pair

Jet2.com advertised starting price (one way) GBP

Jet2.com lowest price Apr-2017

Jet2.com lowest Saturday price Apr-2017

Lead competitor lowest price Apr-2017

Lead competitor lowest Saturday price Apr-2017

1

Alicante

Ryanair

39

30

68

31

50

2

Faro

Ryanair

39

30

100

20

45

3

Ibiza

easyJet

39

30^

55*^

n/a

n/a

4

Palma de Mallorca

Ryanair

39

30

78

20

47

5

Malaga

Ryanair

39

30

82*

20

50

6

Tenerife Sur

Ryanair

70

30

30

23

40

7

Lanzarote

Ryanair

70

30

30**

23

70*

8

Reus

Ryanair

39

30

36*

39

46

9

Dubrovnik

easyJet

39

30^

30^

n/a

n/a

10

Gran Canaria

Thomson

70

30

63

335

n/a

11

Heraklion

Thomson

70

30^

30^

n/a

n/a

12

Larnaca

Cobalt Air

70

30

n/a

n/a

n/a

13

Menorca

Thomas Cook

39

30^

90^

60^

80^

14

Rhodes

Ryanair

39

30^

252**^

49

49

15

Fuerteventura

Ryanair

70

30

30*

23

70

16

Girona Costa Brava

Ryanair

39

125

125*

39

46

17

Kos

Ryanair

70

45^

n/a

n/a

n/a

18

Madeira

-

70

93

93*

-

-

19

Paphos

Ryanair

70

30

83

40

70

20

Pula

Ryanair

39

30^

30^

20

20**

21

Zakinthos

Thomas Cook

70

192^

n/a

117^

117^

On a city pair basis, all of Jet2.com's Stansted routes are highly competitive

Jet2.com's move into London Stansted represents not only entry into the biggest base of Europe's largest LCC (Ryanair), but also entry into the world's largest airport system based in one city (London).

Although each London airport has some claim to different emphases in their geographical catchment areas, they all compete with one another for passengers across the region, particularly in the low fares segment.

As a result, Jet2.com's routes must also be viewed on a city pair basis. Looked at this way, its new routes from London are highly competitive.

Jet2.com will only be the lead operator on London to Reus (but even on this route it will not be the leader if the destination city definition is broadened to include the neighbouring Barcelona).

All but two of the routes will be operated by four or more airlines, and 13 of them will feature seven or more. Jet2.com will be ranked outside the top three airlines by seats on 18 of its 21 routes on a city pair basis.

Jet2.com's routes from Stansted are all to popular tourist destinations. They are served from London by almost all of the leading LCCs and charter airlines that operate from the UK: Ryanair, easyJet, Monarch, Thomas Cook Airlines, Thomson Airways, Norwegian. Many are also served by British Airways. Most of these competitors also offer integrated holiday products (i.e. flights plus hotels and other related services) – either in conjunction with partners or within their own businesses.

Jet2.com new routes for summer 2017 from London Stansted: city pair competition

Destination

Jet2.com rank on city pair by seats*

Total number of airlines on city pair

Competitors on city pair ranked by seats*

Alicante

5

8

easyJet, Monarch, Ryanair, BA, Jet2.com, Monarch, Norwegian, Thomson

Faro

5

8

easyJet, Monarch, Ryanair, BA, Jet2.com, Monarch, Thomson, Norwegian

Ibiza

5

9

easyJet, BA, Ryanair, Thomas Cook, Jet2.com, Monarch, Monarch, Thomson, Norwegian

Palma de Mallorca

7

7

easyJet, Monarch, Thomas Cook, Thomson, Ryanair, BA, Jet2.com, Norwegian, Iberia

Malaga

6

9

easyJet, BA, Monarch, Ryanair, Thomson, Jet2.com, Norwegian

Tenerife Sur

7

9

Thomas Cook, Monarch, Thomson, easyJet, Ryanair, BA, Jet2.com, Norwegian, Iberia

Lanzarote

6

8

Thomas Cook, Monarch, easyJet, Ryanair, Thomson, Jet2.com, BA, Norwegian

Reus

1

3

Jet2.com, Thomson, Ryanair

Dubrovnik

4

7

easyJet, BA, Monarch, Jet2.com, Monarch, Thomson, Norwegian

Gran Canaria

6

9

Thomson, Thomas Cook, Ryanair, easyJet, Iberia, Jet2.com, Monarch, Norwegian, Monarch

Heraklion

6

6

easyJet, Thomson, BA, Thomas Cook, Aegean, Jet2.com

Larnaca

8

10

BA, Thomas Cook, Cobalt, easyJet, Monarch, Aegean, Thomson, Jet2.com, Blue Air, Norwegian

Menorca

5

5

easyJet, Thomas Cook, Monarch, Thomson, Jet2.com

Rhodes

4

7

Thomas Cook, Thomson, easyJet, Jet2.com, Ryanair, BA, Monarch

Fuerteventura

5

7

Thomas Cook, Ryanair, Thomson, easyJet, Jet2.com, Monarch, Norwegian, BA

Girona Costa Brava

3

3

Ryanair, Thomson, Jet2.com

Kos

4

4

Thomson, Thomas Cook, easyJet, Jet2.com

Madeira

4

4

easyJet, Monarch, BA, Thomson, Jet2.com

Paphos

7

7

easyJet, Thomson, Thomas Cook, Ryanair, BA, Monarch, Jet2.com

Pula

2

5

easyJet, Jet2.com, Ryanair, Norwegian, Thomson

Zakinthos

4

4

Thomas Cook, easyJet, Thomson, Jet2.com

Jet2.com's Stansted base is a bold move

Jet2.com's move into Stansted marks a very significant step for the airline and its parent company, Dart Group. Although it does not have a dominant share of seats at its other UK bases, it is frequently the leading airline on its most important routes from those airports. In addition, it is also the leading airline on most of the new routes that have driven its growth in summer 2016.

See related report: Jet2.com: growth mainly in Spain and Manchester. Overcapacity an issue, and competition strong

By contrast, most of its 21 new Stansted routes are fiercely competitive on a city pair basis, yet it will put more new seat capacity into this one airport than its net capacity growth in summer 2016 across all its other bases.

Jet2.com's sister company Jet2holidays provides 40% of its passengers, insulating the airline to some extent from pure price-based competition for seat-only sale, but almost every competitor on its routes from London also offers integrated holiday products in some shape or form.

It is also worth mentioning that Jet2.com will launch 15 new routes from another new base at Birmingham in summer 2017, adding to the challenges facing its management.

Jet2.com is one of Europe's most seasonal airlines, with a wider gap between its summer and winter capacity than most. Its new routes from Stansted look to be mainly summer sun routes, and will do little to change this seasonality.

Stansted will be one of the first places where Jet2.com deploys significant numbers of its brand-new Boeing 737-800s (it has taken delivery of the first in Sep-2017 and 29 more are to join its fleet by 2018). By contrast with its previous strategy of buying and operating old aircraft that are close to being fully depreciated, it might be expected that its new Boeings will need a more even year-round deployment.

See related report: Jet2.com: LCC airline's summer may be cooled by new Boeings, despite parent group's profit leap

Based on the sheer scale of Jet2.com's move into Stansted, on the level of competition that it will bring, and on the continued emphasis it will place on the summer schedule – this is certainly a bold move.

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