Issues facing regional airlines and smaller markets
Tampere Aviation Forum
Simon McNamara Director General European Regions Airline Association (ERA)
www.eraa.org twitter.com/eraaorg Contents
• What is a regional airline • The role of regionals in remoter regions • Market developments affecting the business • Attracting air services to smaller markets • Future challenges for the business
www.eraa.org twitter.com/eraaorg What is a regional airline?
www.eraa.org twitter.com/eraaorg What we do
Founded in 1980, ERA is a European airline trade association representing European air operators: 52 airline members 22 Airports 115 manufacturers and support industry
The only European airline trade association which
represents and brings together the entirewww.eraa.org aviation community twitter.com/eraaorg
Wideroe
Air Greenland
Air Iceland
Atlantic Airways Nordic Regional Airlines Oy bmi regional Amapola Titan Braathens Aviation Nordica BAE Corporate Air Travel Jota Aviation West Atlantic Cargo DAT DOT Cimber Avion Express Stobart Air Eastern Airways Jet Time Belavia CityJet KLM Cityhopper ASL Airlines Ireland Denim Air Avanti Air Flybe. VLM Hahn Air Air Urga Blue Islands HOP! Luxair Aurigny Air Services ASL Airlines FranceSky Work Airlines ASL Airlines Hungary Adria Airways Carpatair ASL AirlinesSwitzerland Trade Air Etihad Regional Blue Air Montenegro Mistral Air Sata Air Borajet Acores PGA Express Astra Airlines Air Nostrum www.eraa.org twitter.com/eraaorg Binter Sky Express Who flies short haul anyway?
www.eraa.org twitter.com/eraaorg Source: ATR Characteristics of regional airlines
Business models Independent Wholly owned subsidiary Franchise Capacity Purchase Agreements/Wet Lease/ACMI
www.eraa.org twitter.com/eraaorg ERA in numbers
www.eraa.org twitter.com/eraaorg The market size
www.eraa.org twitter.com/eraaorg Where do regionals fit in?
www.eraa.org twitter.com/eraaorg GDP per inhabitant
Conclusion • Workers migrate to higher GDP concentrations • Higher GDP concentrations need air links to allow migration
KEY: Darker blue = higher GDP per capita Lighter green = lower GDP per capita www.eraa.org twitter.com/eraaorg Source: Eurostat 2014 yearbook. Data for 2011 Population density
Conclusion • Higher population densities require transport links • Links are needed between high and low density
KEY: Darker brown = higher population density populations Lighter brown = lower population density www.eraa.org twitter.com/eraaorg Source: Eurostat 2014 yearbook. Data for 2012 Employment rate
Conclusion • Workers migrate to where jobs are • Workers need air links to move to where jobs and business is
KEY: Darker brown = higher employment rates Lighter brown = lower employment rates www.eraa.org twitter.com/eraaorg Source: Eurostat 2014 yearbook. Data for 2012 Density of rail networks
Conclusion • Where no competing or complimentary mode exists, air transport becomes more and more vital
KEY: Darker green = higher density of rail networks Lighter green = lower density of rail networks www.eraa.org twitter.com/eraaorg Source: Eurostat 2014 yearbook. Data for 2012 Where do regionals fit in
• Regionals several key markets Feeding major hubs (especially from the regions) Feeding secondary hubs Linking lower volume point to point services Providing essential services where no other mode can compete Ensuring Europe’s remoter regions stay connected
www.eraa.org twitter.com/eraaorg How do ERA members fulfil this need?
www.eraa.org twitter.com/eraaorg ERA’s network
www.eraa.org twitter.com/eraaorg The Finnish Network
www.eraa.org twitter.com/eraaorg Linking remoter regions
www.eraa.org twitter.com/eraaorg Linking remoter regions
www.eraa.org twitter.com/eraaorg Linking remoter regions
www.eraa.org twitter.com/eraaorg Linking remoter regions
www.eraa.org twitter.com/eraaorg Feeding primary hubs
www.eraa.org twitter.com/eraaorg Connecting Europe’s secondary capitals
www.eraa.org twitter.com/eraaorg Connecting Europe’s secondary capitals
www.eraa.org twitter.com/eraaorg Market developments affecting the business
www.eraa.org twitter.com/eraaorg Key market developments
Consolidation Competition
www.eraa.org twitter.com/eraaorg Consolidation
www.eraa.org twitter.com/eraaorg Attracting air services to smaller markets
www.eraa.org twitter.com/eraaorg Key factors
• The market for travel – business, leisure, social • The size of the market • Alternative means of transport/communication • The cost of travel • Competition (by air) • The use of Public Service Obligations • The ease of operation
www.eraa.org twitter.com/eraaorg The future of the industry
• Continued strong competition in the sector • Pressure on costs will continue to be strong • Price will remain a strong driver for competition • Consolidation will continue • Regional services will feel the pressure
www.eraa.org twitter.com/eraaorg The future of the industry
A major regional airline CEO’s outlook on the future of the industry:
“The air traffic market in Europe is moving to a situation dominated by a mix of 3-4 legacy carriers, 3-4 low cost carriers and a variety of regional airlines exploiting specific niche markets” www.eraa.org twitter.com/eraaorg Conclusion
• Remoter regions still rely heavily on air transport • European demographics, employment and GDP spread mean air transport will continue to play an important role transporting people from the ‘regions’ to the ‘core’ • Regional carriers play an important role in supporting the movement of people now and in the future • As an industry regional aviation should be encouraged and supported • But in a competitive and consolidating market actually attracting air services is hard!
www.eraa.org twitter.com/eraaorg www.eraa.org twitter.com/eraaorg