Travel & Tourism
89 total articles
There are few countries where an outright charter carrier is the de facto national flag carrier.
But that is the case in Lithuania where a succession of failed scheduled carriers contrasts with a relatively new airline that sells seats exclusively to tour operators, in several countries across continents, is expanding almost exponentially, has one of the lowest CASKs in Europe, isn't highly leveraged, and is profitable.
That is far from the only surprising thing about Lithuania though, a country that is privatising its airports without really privatising them and which, is only just beginning to wake up to its tourism potential.
Part 1 of this report on Greece reviewed the status of these key industries, which account together for over a fifth of the country's GDP and in many ways represent one of the key areas of hope for Greek employment and economic growth.
The other part of the equation is the ownership of the country's airports, still mostly in government ownership.
On 11-Jul-2015, the European Union delivered a new bailout offer to the Greek government; this included a requirement to sell down a range of government owned infrastructure, including its airports. This offer is still subject to ratification on both sides, but if finally agreed should stimulate considerable interest from investors.
As Part 1 described, passenger growth at several of these airports has been impressive over the past two years, generating some hopes for strong valuations. The Greek air travel market comprised 38.6 million passengers in 2014, an increase of 15% over 2013, as new airline capacity was added, largely by Aegean and Ryanair.
Greece aviation and tourism - Part 1: potentially major forces in supporting economic re-development
Greece has long been a tourism magnet for sun-hungry northern Europeans, quite aside from its remarkable historic attractions. Now, as the country's tottering economy seeks to recover from its near-Grexit experience - and to help stave off the almost inevitable next round of brinkmanship in a few months - aviation and tourism are core to employment and wider economic prospects.
In 2014, travel and tourism was expected to account for one in every five jobs in Greece, as well as accounting for 20% of the country's GDP. Clearly the health of this industry is a vital ingredient in any recovery. Moreover, around 15% of inward investment is in this sector.
The apparent inability of Greece to repay either its debts - or the debts it took on to service its original debts - makes predictions difficult. One substantial fear is that social unrest might upset the stability necessary for essential investment and the tourist trade.
As reported in CAPA's Airport Privatisation Review in Jan-2015, privatisation of some of the remaining primary airports by concession in Brazil is ready to commence now that a restructuring of state operator Infraero is under way. At that time the government was preparing concessions for another three airports, in Manaus, Porto Alegre and Salvador. Vague announcements from the government also indicated there might be more to come as well, but not in 2015. Then Manaus was declared ineligible for privatisation along with Sao Paulo Congonhas and Rio de Janeiro Santos Dumont airports so they can continue to provide some backbone for Infraero.
The general air of confusion has continued. The government may be clear about its objectives but public pronouncements lack clarity. A formal announcement was to have been made on 14-May-2015 but has been postponed until early Jun-2015 because the government needs more time to deliver the next concession packages. It appears the originally identified three airports have lost one but have also been extended to a possible four with the addition of Florianopolis and Fortaleza. There has also been a hint of a couple of surprises concerning Infraero’s future contribution and about Fraport’s potential role in it.
Part 2 of this report on the impact of airports in the national economy addresses the massive losses - of jobs and GDP - if Europe's airport capacity is not increased in line with demand. For example, while EUROCONTROL projects 1.5 billion departures by 2035, capacity constraints at airports mean that there will be unfulfilled damand of nearly 225 million departures.
The complacency of assumptions that the status quo will be preserved is undermined by changes in the global aviation balance, so that other issues such as archaic ATM procedures, aviation taxes and the often high cost of operating, will also potentially cause extensive damage to long term competitiveness.
Then there are the multiple concerns being raised by regional governments and local economies; as major airports expand they can create magnets which challenge the roles of smaller airports. Nonetheless, the ACI report concludes that decisive action to support airport expansion will be needed if Europe is to get the full benefit of its own Aviation Mega Cities.
In Jan-2015 Airports Council International Europe (ACI Europe) released a new study on the Economic Impact of European airports. It is billed as the first economic impact study to consider the direct, indirect, induced and catalytic economic impacts of airports across Europe. The study is published as the European Commission conducts a review of aviation policy and prepares a new Aviation Package.
The objective of the study was to demonstrate that airports and their associated aviation partners are not just providing a service to other industries and the travelling public but that they are in fact a key driver and facilitator of economic growth and prosperity in today’s globalised world. The study and ACI document are considered within the context of a real life impassioned debate taking place in the UK right now concerning the relative value of regional airports, and of air connectivity, to trade.