IATA Director General & CEO, Giovanni Bisignani, cautioned that overcapacity is a risk in 2010, with 1,400 commercial aircraft expected to be delivered in 2010 (Dow Jones, 25-Mar-2010). Airbus and Boeing intend to lift production rates from late-2010 and mid-2011, respectively. Bisignani reaffirmed that oil prices are expected to average USD79 per barrel - USD17 per barrel higher than in 2009, and oil uncertainty remains a “wild card” for the industry.
IATA warns of overcapacity and oil as risks
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Brazil’s largest domestic airline, Gol, is maintaining a cautious outlook for 2017 as concerns about capacity additions by Azul and Avianca Brazil create an overhang for a recovery in the country’s domestic market. Gol and its main competitor LATAM Airlines Brazil have maintained a rational supply during the last couple of years, but forward looking schedules for 2017 show double digit ASK growth for Azul and Avianca Brazil year-on-year in early May-2017.
Gol made progress in unit revenue and yield recovery in 2016, but remains concerned about the effects of competitive capacity growth on fares, and ultimately yields. The airline is forecasting slower yield growth in 2017, and is warning a lack of industry capacity discipline could create additional yield pressure. Gol plans to keep its own system capacity in check for 2017, with projections of flat growth to a 2% decrease as its fleet shrinks, before growing in 2018 when the airline takes first deliveries of its 737 Max jets.
Although the corporate market within Brazil remains in tenuous shape, Gol believes it has expanded its share among business travellers – driven in part by network changes it adopted in 2016 to make schedules more attractive to corporate customers. However, the size of Brazil’s corporate travel market remains stagnant, and predicting expansion of business travel remains difficult.