The role of remote regions in the air transport industry
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 • Future challenges for the business
www.eraa.org twitter.com/eraaorg What is a regional airline?
www.eraa.org twitter.com/eraaorg About ERA
• 960,000 flights per year • 45 million passengers per year • 71 minute average sector time • 480km average sector distance • 67 seats average seating capacity • 1,200 point to point routes • 280,000 direct, indirect and induced jobs generated by the industry • The regional industry makes a contribution of €47bn to Europe‟s GDP
www.eraa.org twitter.com/eraaorg Amapola Flyg Atlantic Airways Belavia Avion Express Denim Air ACMI Wideroe DOT Mistral Air HOP! Regional Luxair Eastern Airways Blue 1 Astra Airlines Adria Airways Titan Airways Binter Canarias Stobart Air Sata Air Acores Eurolot CityJet Air Nostrum Sky Work Airlines Blue Islands Braathens Regional PGA Portugalia HOP! Brit Air Trade Air Montenegro Airlines Sky Express Hahn Air Lines Air Contractors Ireland VLM Airlines Farnair Switzerland Air Iceland West Atlantic Cargo Airlines Cimber HOP! Airlinair Welcome Air Aurigny Air Services Avanti Air BMI Regional Estonian Air Air Urga Danish Air Transport Darwin Airline KLM Cityhopper Blue Air Air Andora www.eraa.org Tyrol Air Ambulance Malmo Aviation twitter.com/eraaorg Wideroe
Air Iceland Atlantic Airways
Blue 1 BMI Regional Amapola Titan Braathens Regional Estonian Air
West Atlantic Cargo Airlines DAT DOT Eastern Airways Malmo Avion Express Aer Arann Belavia CityJet KLM Cityhopper Air Contractors Denim Air Eurolot Ireland VLM Avanti Air Blue Islands Hahn Air Urga Aurigny Air Services HOP! Luxair Tyrol Air Ambulence HOP! Brit Air Airlinair Sky Work Welcome Air HOP! Regional Farnair Trade Air Darwin Airilnes Adria Blue Air Montenegro Sata Air Mistral Air Acores Air Andora Astra Airlines PGA Air Nostrum www.eraa.org twitter.com/eraaorg Binter Canarias 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 Characteristics of regional airlines
51 members supporting many different models: 60% offer ACMI services either as their core business or as an add on revenue stream 50% operate services using their own brand and have their own distribution systems 50% operate using another companies brand either as ACMI, franchise or wholly owned subsidiaries
www.eraa.org twitter.com/eraaorg Market Share - flights
www.eraa.org twitter.com/eraaorg Source: Market Share - seats
www.eraa.org twitter.com/eraaorg Source: The regional aircraft market Worldwide in service and in production regional, narrow body & wide body Aircraft in October 2014
2695 1629 1089 750 Turboprop Regional Jet 61-90 Large Regional Jet 91-120 Narrow Body Wide Body 9517
www.eraa.org twitter.com/eraaorg Source: ACAS 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 • Higher population densities need air links to allow
KEY: Darker brown = higher population density movement 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, Source: Eurostat 2014 yearbook. Data for 2012 air transport becomes http://ec.europa.eu/eurostat/statisti more and cal-atlas/gis/viewer/?chapter=02 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 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 Linking remoter regions
www.eraa.org twitter.com/eraaorg Feeding primary hubs
www.eraa.org twitter.com/eraaorg
Connecting Europe‟s capitals
www.eraa.org twitter.com/eraaorg Connecting Europe‟s capitals
www.eraa.org twitter.com/eraaorg How will the model evolve in the future?
www.eraa.org twitter.com/eraaorg The future of the industry
• Continued strong competition in the sector • Yield will remain low • Pressure on costs will continue to be strong • Price will remain a strong driver for competition • The airline sector will remain the weakest financial link in the value chain
www.eraa.org twitter.com/eraaorg
The future of the industry
• Regulatory burdens will continue to complicate the business • Consolidation in airline business models will continue • The “no frills” market will continue to mature and will consolidate • Network carrier consolidation will continue • Regionals will fill the gaps and markets left open 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
www.eraa.org twitter.com/eraaorg www.eraa.org twitter.com/eraaorg