Industry Monitor

The EUROCONTROL bulletin on air transport trends

Issue N°160. 28/02/2014

European traffic increased by 2.2% in January EUROCONTROL statistics and forecasts 1 and was similar to the 2010 level. Preliminary data for February show a 2.5% increase in Other statistics and forecasts 2 traffic on February 2013. Passenger airlines 2 IATA reported that European scheduled Airports 6 passenger traffic (RPK) increased by 3.8% in Oil 7 2013 compared with 2012. Capacity was up Fares 7 2.7% and the total passenger load factor was 80.2%. Regulation 8 Oil prices were slightly up to €79.4 per barrel in

February.

EUROCONTROL statistics and forecasts

European traffic increased by 2.2% in January compared with January 2013 and was similar to the 2010 level. Low-cost traffic was the strongest of the market segments in January, with 6.6% growth on January last year. The Charter and traditional scheduled segments showed moderate growth and were up by 1.6% and 1.2% respectively. All-cargo and business aviation were down by 1.4% and 0.5% respectively. Preliminary data for February show a 2.5% increase in traffic on February 2013 (Figure 1). (EUROCONTROL, January).

Based on preliminary data from airlines for delay from all causes, 32% of flights were delayed on departure in January (the best January performance in the last five years); this was a decrease of 6 percentage points when compared to the same month in 2013, when significant weather delays were recorded. The average delay per movement in January 2014 decreased from 11.2 minutes to 7.5 minutes. Further analysis of the delay reasons shows that Reactionary delay fell by 1.6 percentage points. Airline and Weather delays also decreased; these by 0.5 and 1 respectively. ATFCM en-route delay as reported by airlines remained at 0.2 minute per flight (Figure 2). (EUROCONTROL, January).

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Figure 1: Monthly European Traffic and Forecast (based on the September 2013 update).

Other statistics and forecasts

IATA reported that European scheduled passenger traffic (RPK) increased by 3.8% in 2013 compared with 2012. Capacity was up 2.7% and the total passenger load factor was 80.2% (IATA, 6 February).

ACI reported that overall passenger counts at European airports saw an increase of 2.3% in 2013 compared with 2012. Total aircraft movements were down by 1.2% in 2013. Cargo tonnage was up 0.8% on 2012 (ACI, 6 February).

Passenger airlines

Norwegian was granted an air operator’s certificate and operating license by the Irish Aviation Authority for its Irish subsidiary, Norwegian Air International thereby relocating the administration of its long-haul operations to Dublin (Norwegian, 12 February).

Binter Canarias, the inter-Canary islands airline, has placed a firm order for six ATR72-600 aircraft to replace its existing fleet of 17 ATR72-200 and ATR72-500 aircraft (ATR, 11 February).

SunExpress, Lufthansa and Turkish Airlines’ subsidiary has signed an order for 50 aircraft, 25 B737-800NG aircraft and 15 B737-8 MAX aircraft. Most of SunExpress’s current fleet of 62 Boeing aircraft is leased but the airline plans to expand in Turkey and Europe with its own fleet. The new aircraft will be delivered between 2015 and 2021 (SunExpress, 19 February).

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Figure 2: Delay Statistics (all causes, airline-reported delay – preliminary data for January 2014).

The Slovenian government is reportedly to sell Adria Airways and its hub Ljubljana airport by the end of 2014 with a view to cutting its public debt. The airline recently reported an operating profit of €0.5 million in 2013 (Reuters, 17 February & Adria Airways, 14 February).

Regional airline Flybe has raised €180 million from investors to return to profit by developing new routes and improving IT. It is also reported that Flybe is planning to phase out its fleet of 14 Embraer E195 aircraft from its UK scheduled operations and is seeking 16 additional aircraft to shift to a turboprop-focused fleet (Flybe, 20 February and ATW, 21 February).

Ukraine International Air has decreased by circa 12% its frequencies on certain routes from 24 February to 29 March as a result of political unrest in the country (UIA, 24 February).

Austrian Airlines Group plans to recruit 280 new flight attendants in 2014 for its new B777 aircraft (Austrian Airlines, 25 February).

Industrial action by airport security staff on 21 February at Frankfurt led to the cancellation of around 100 flights of which 35 Lufthansa flights (Lufthansa, February).

Aer Lingus is to launch its two-year CORE programme focusing on (1) cost and business optimisation to achieve a €30 million cost reduction, (2) enhancing revenues by focusing on merchandising, retail revenue and business-to-customer distribution systems and (3) further improvements in staff engagement, training, flexibility and productivity (Aer Lingus, 24 February).

German tour operators, Thomas Cook and TUI Travel have started evacuating tourists from Sharm el-Sheikh as a consequence of the recent terrorist attack in the Sinai region and also canceled all flights to Sharm El-Sheikh until 14 March (Thomas Cook & TUI Travel, 27 February).

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Note: IAG monthly pro-forma including Vueling in the baseline. Figure 3: Main carriers’ traffic statistics.

Start-up Air Croatia will launch operations in June from Stockholm Arlanda and Gothenburg to Split, Pula, Zagreb and Dubrovnik (Air Croatia, February).

French start-up Dreamjet reportedly plans to launch business class only flights later this year between Paris and New York with a Boeing B757-200 aircraft (ch-aviation, 22 February).

Start-up Air Andorra is planning to launch five daily flights from La Seu d’Urgell to Barcelona in Summer 2014 with one ATR42-300 aircraft and three smaller business jets. The airline seeks to attract Russian and Israeli tourists to the Pyrenees and Andorran ski stations. Additional routes to Toulouse, Lisbon, Palma de Mallorca, Ibiza and Madrid have also been announced (Air Andorra and ch-aviation, 22 February).

German start-up Rhein-Neckar Air will offer twice-daily flights from Manheim to Berlin Tegel with two Dornier 328-110 aircraft, effective 10 March (Rhein-Neckar Air, February).

Failures

Romanian regional airline Carpatair filed for insolvency protection on 23 January but maintains operations on the Chisinau – Venice route only. All other routes are suspended until the end of March (Carpatair, February).

Routes, Alliances, Codeshares

Etihad and Alitalia have entered the final phase of a due diligence process about a possible investment by Etihad in Alitalia. Etihad is reportedly in talks to acquire up to 49% of Alitalia (Alitalia, 2 February).

Brussels Airlines expands its network with the launch of nine destinations to Ajaccio, Bastia, Figari, Athens, Bari, Cagliari, Malta, Montpellier and Seville in Summer 2014 and the addition of two A319 aircraft to its fleet (Brussels Airlines, 30 January).

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Note: IAG monthly pro-forma including Vueling in the baseline.

Figure 4: Main carriers’ load factors.

Air Corsica is reportedly planning to launch nine new routes in Summer 2014; from Bastia to Lyon, Nantes, St Etienne, Clermont-Ferrand and Toulon; from Ajaccio to Liège, Perpignan and Toulon; from Calvi to Perpignan (routesonline, 13 February).

Croatian start-up Adriatic Skyways entered into a partnership with Denim Air to promote and develop airline traffic from the Balkan region. Operations are to start in Summer 2014 under Denim Air’s air operator’s certificate on behalf of Adriatic Skyways with a Fokker 50 and Fokker 100 aircraft (Adriatic Skyways, February).

Air One will launch new routes in Summer 2014 as follows: From its two bases in Sicily: (1) Catania to Lyon, Paris CDG and (2) Palermo to Moscow Sheremetyevo, St Petersburg, Paris CDG and Verona. From Venice to Moscow Sheremetyevo and Ibiza.

The airline will also open a new base in Verona with one aircraft based (Alitalia, 13 February).

Air France-KLM has strengthened its position in Brazil and South America by acquiring a 1.5% equity stake in low-cost GOL but also expanding its codeshare agreement with the airline as of Summer 2014 (Air France-KLM, 19 February).

Adria Airways and Air Serbia have signed a codeshare agreement on the Ljubljana – Belgrade route with a frequency of seven flights a week. Both airlines are to expand their cooperation during Summer 2014 (Adria Airways, 6 February).

Low-cost Transavia France will launch new destinations from Paris Orly in summer 2014 to Tel Aviv, Casablanca, Athens, Faro, Istanbul Sabiha Gökcen, Malaga, Barcelona, Pisa, Prague, Budapest and will increase its fleet by two aircraft to 11 B737-800 aircraft (Transavia, February).

Air Armenia will launch its first Western Europe destinations from Yerevan to Paris CDG and Athens in Summer 2014. The airline’s current route network only includes destinations in Russia (Air Armenia, February).

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Figure 5: Brent and kerosene prices.

It is reported that LOT is to cancel services between Gdansk-Frankfurt, Krakow-Vienna, Wroclaw-Frankfurt and Wroclaw-Munich as the airline consolidates its operations to Warsaw (routesonline, 19 February). germanwings will launch four new routes from Berlin Tegel to Barcelona, Zagreb from 4 July, Paris CDG and Moscow Vnukovo from 31 August (germanwings, February).

Air France and Air Malta will start codesharing from 30 March on flights Malta and Paris CDG and Paris Orly and between Malta and Lyon (Air France, 10 February).

Traffic statistics: January update

Figure 3 and Figure 4 compare January 2014 figures with January 2013 figures. In addition to the number of passengers (PAX), passenger capacity is measured in available seat kilometres (ASK) and traffic is measured in revenue passenger kilometres (RPK).

Airports

Aéroports de Paris (ADP) reported 2013 EBITDA up 4.7% compared with 2012. The forecast for 2014 is for a 2% growth in traffic and EBITDA greater than traffic growth (Aéroports de Paris, 19 February).

Heathrow reported 2013 adjusted EBITDA up 23.1% compared with 2012. The Davies Airports Commission has selected three locations for a new runway in the SE of England, including two designs for a third runway at Heathrow and a second runway at Gatwick (Heathrow, 24 February).

Figure 6: Deflated ticket price in Europe (source: Eurostat).

Passenger traffic in January 2014 at the top five European airports in numbers of departures compared with the same period a year ago were as follows:

(Growth on January 2013*) 1. Paris CDG 4.6 million (+5.3%) 2. Frankfurt 4.0 million (+3.4%) 3. London Heathrow 5.4 million (+3.8%) 4. Amsterdam 3.6 million (+6.7%) 5. Istanbul Atatürk 4.1 million (+15.1%)

*Northern Europe was affected by heavy snowfalls from 18 to 20 January 2013.

A Turkish court has reportedly ordered the suspension of Istanbul’s third airport construction for at least ten month until further investigations are made into its environmental impact. Construction of the airport was first scheduled to commence in May 2014 and to be completed by 2019 (Reuters, 11 February).

Oil

Oil prices were slightly up to €79.4 per barrel in February. Converted indices for Kerosene and Brent are shown in Figure 5.

Fares Deflated ticket prices in Europe decreased by 0.8% in January year-on-year, based on preliminary values. This is below the trend (12-month trailing average) shown in Figure 6 (Eurostat, 24 February).

Regulation

EC and the Association of Southeast Asian Nations (ASEAN) adopted a Joint Declaration paving the way to an open skies agreement. Negotiations on an EU-ASEAN comprehensive air transport agreement are pending the authorisation from the Council of Transport Ministers of the European Union (EUROPA, 12 February).

EC adopted new guidelines for state aid to airports and airlines with a view to ensure good regional connectivity and to minimise competition distortion in the single market. Only regional airports with fewer than three million passengers a year will be allowed state subsidies for a transitional period of 10 years. Start-up aid to airlines to launch a new route must remain limited in time (EUROPA, 20 February).

Under the new guidelines for state aid for airports and airlines, EC concluded that no state aid was involved in the following four cases:

Public interventions at Berlin Schönefeld did not confer any undue economic advantage to the airport or to the airlines operating at the airport; Agreements between Aarhus airport and Ryanair giving discount on airport charges and marketing incentives increased the operating profits of the airport; Airport charges discounts and investment aid for Marseille Provence airport increased the operating profit of the airport and were in favour of the development of air traffic Investment aid for Czech airport of Ostrava will help attract regular traffic, in particular long-haul cargo traffic, without unduly distorting competition in the Single Market

(EUROPA, 20 February)

EC opened an in-depth investigation to ascertain whether extended state aid to support the five-year restructuring plan of Cyprus Airways is suitable to ensure the airline’s long-term viability and complies with EU state aid rules (EUROPA, 4 February).

EC opened an in-depth investigation to verify whether state aid to support the five-year restructuring plan of Estonian Air is suitable to ensure the airline’s long-term viability and complies with EU state aid rules (EUROPA, 4 February).

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STATFOR, the EUROCONTROL Statistics and Forecast Service [email protected] www.eurocontrol.int/statfor

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