Industry Monitor

The EUROCONTROL bulletin on air transport trends

Issue N°172. 30/04/2015

 European flights increased by 1.3% in March EUROCONTROL statistics and forecasts 1 2015 year-on-year and remained at the low end of the forecast. Preliminary data for April show Other statistics and forecasts 2 an increase of 1.4% in flights on April 2014.  Oil prices increased to €57 per barrel in April Passenger airlines 3 from €53 per barrel in March and were at their highest since last December. Airports 6

Regulation 7

Aircraft manufacturing 7

Oil 8

Fares 8

EUROCONTROL statistics and forecasts

European flights (ESRA – EUROCONTROL Statistical Reference Area) increased by 1.3% in March 2015 year-on-year and remained at the low end of the forecast. Preliminary data for April show an increase of 1.4% in flights on April 2014 (Figure 1).

The low-cost segment maintained its dominance of growth with a rate around 8% since the beginning of 2015 whereas the all-cargo segment recovered from -1.1% in January to +1.5% in March. Charter was the weakest of the market segments and was down 8.8% on March last year and was followed by business aviation and traditional scheduled, both segments were down 0.9% and 0.2% respectively on March 2014.

With circa 230 extra daily flights, UK was the main contributor to growth of local traffic (excluding overflights) and was followed by Turkey and Spain each adding 140 and 120 daily flights respectively to the European network. Germany was back among the top contributors and added 70 daily followed by Italy and Greece, both countries adding each 70 flights per day. Portugal, Poland, Ireland, Belgium/Luxembourg and Romania were the other countries adding more than 25 flights per day to the network. At the other end of the scale, the 8-day strike at Norwegian Air Shuttle in March resulted in circa 110 fewer daily flights for Norway (vs. March 2014). The overall traffic decrease in Ukraine was 74%1.(EUROCONTROL, April).

1 More statistics on flights are available in STATFOR Interactive Dashboard Industry Monitor. Issue 172. 30/04/2015 Page 1 © EUROCONTROL 2015

Figure 1: Monthly European Traffic and Forecast.

Based on preliminary data from airlines for delays from all causes 35% of flights were delayed on departure (>= 5 minutes) in March 2015, this was an increase of 7 percentage points when compared with the same month in 2014. The average all-causes delay per movement in March 2015 increased from 6.8 minutes to 9 minutes. Further analysis of the delay reasons shows that reactionary and airline delay increased respectively by 1 and 0.5 minute per flight (Figure 2) (EUROCONTROL, April).

Other statistics and forecasts

IATA reported that European scheduled passenger traffic (RPK) was up 4.4% in February 2015 (vs. February 2014). Capacity rose by 2.8% and the total passenger load factor was 77.4% (up one percentage point on February 2014) (IATA, 2 April).

ACI reported that overall passenger counts at European airports were up 6.2% in February 2015 (vs. February 2014) with overall aircraft movements up 1.4% (ACI, 8 April).

Industry Monitor. Issue 172. 30/04/2015 Page 2 © EUROCONTROL 2015

Breakdown of all-causes delay per flight Percentage of flights delayed on departure

Figure 2: Delay statistics (all-causes, airline-reported delay – preliminary data for March 2015).

Passenger airlines

Capacity, costs and jobs

Wizz Air has implemented free allocated seating in its booking process thereby following other low-cost airlines like Ryanair and easyJet (Wizz Air, 2 April).

Swiss Federal Office of Civil Aviation (FOCA) has approved Etihad’s purchase of a 33% stake in Darwin Airline, rebranded Etihad Regional. FOCA’s decision follows the adoption of a new business model reducing Darwin’s dependence on Etihad. Darwin will therefore also operate flights in Europe on behalf of Alitalia and airberlin (Etihad Regional, 2 April).

Czech government has sold a 34% stake of Czech Airlines to Travel Service and is left with a minority stake of 2.3%; Korean Air already owns 44% of the flag carrier. Travel Service operates charter and scheduled flights under the brand name SmartWings (Czech Airlines, 31 March).

HOP! Air France has taken over Air France’s short-haul operations (domestic and European flights) from Paris Orly, including La Navette flights to Bordeaux, Marseille, Nice and Toulouse. With this new division, the Air France Group plans to return to profitability in 2017 (Air France, 2 April).

Start-up Sea Air (Croatia) will reportedly start operations on 18 May with flights from Osijek to Munich, Frankfurt and Vienna with a fleet of B737-500 and MD82 aircraft (EX-YU Aviation news, April).

Start-up Air Croatia which launched operations on 2 April has temporarily suspended all services due to a financial issue preventing it from paying for the wet-lease ATR42 aircraft from Denim Air. The airline should resume flights on 2 June (Air Croatia & ch-aviation, 23 April).

Industry Monitor. Issue 172. 30/04/2015 Page 3 © EUROCONTROL 2015

Figure 3: Main carriers’ traffic statistics.

It is reported that start-up Cobalt Air would become Cyprus unofficial airline since the bankruptcy of Cyprus Airways earlier this year and is planning flights to and from Europe with a fleet of A320 aircraft. The airline could launch operations by the end of the year subject to the delivery of its Air Operator’s Certificate by Cyprus Civil Aviation (Phileleftheros News, 27 April)

Spanish start-up Léon Air launched operations with one SAAB 340 aircraft linking Burgos to Barcelona. The airline will expand operations in summer with four additional routes from Burgos to Alicante, Malaga, Palma de Mallorca and Menorca (Léon Air, April).

TAP pilots union (SPAC) called a ten-day strike starting 1 May in a dispute regarding payments for seniority along with pilots’ right to shares from the planned privatisation of the airline. Portuguese government plans to sell 66% of the airline with the remaining shares to be sold one year after privatisation completion (TAP, 28 April).

IAG airlines British Airways, Iberia and Iberia Express have joined the European Low Fares Airline Association (ELFAA) after resigning the Association of European Airlines (AEA) earlier this month. ELFAA has now 12 members among which Ryanair and easyJet (ELFAA, 24 April).

The UK Competition and Markets’ Authority (CMA) has insisted that Ryanair cuts its stake in Aer Lingus to 5% from 29.8% despite a potential takeover bid by British Airways. In 2013 CMA ruled that Ryanair’s stake in Aer Lingus could prevent another airline from taking over Aer Lingus, a ruling which Ryanair had appealed (CMA, 17 April).

Routes, Alliances, Codeshares

Wizz Air will open its sixth base in Poland with one A320 aircraft based in Lublin, effective 14 September. The airline will launch three new routes from Lublin to Brussels Charleroi, Doncaster Sheffield and Glasgow (Wizz Air, 1 April).

Industry Monitor. Issue 172. 30/04/2015 Page 4 © EUROCONTROL 2015

Figure 4: Main carriers’ load factors.

Danish Primera Air is launching new routes from Reykjavik to Spain (Almeria, Barcelona, Malaga and Tenerife South), Greece (Chania) and Turkey (Bodrum), effective for the summer season (Primera Air Scandinavia, April).

Croatia Airlines and LOT Polish Airlines signed a codeshare agreement for service between Zagreb and Warsaw but also via Warsaw to Frankfurt, Munich, Vienna and Zagreb and via Zagreb to Dubrovnik and Frankfurt (Croatia Airlines, April). easyJet has opened a new base at Schiphol Amsterdam and plans to base four aircraft from October 2015 onwards. The airline will operate ten destinations from Amsterdam to Corfu, Dubrovnik, Hamburg, Ibiza, Nice, Toulouse, Olbia, Palermo, Venice and Milan Linate (easyJet, 31 March). easyJet has launched five new destinations from Bristol to Lanzarote, Gibraltar, Porto, Bilbao and the Isle of Man (easyJet, 17 April).

Air Vallée (Italy) will launch four domestic services on the Brindisi-Catania, Bari-Naples, Naples-Ancona and Brindisi-Zante routes with one Fokker 50 aircraft (Air Vallée, 28 April).

Failures

Kharkiv Airlines, Ukraine, has reportedly suspended operations. The airline started charter operations in June 2013 with flights from Kiev, Kharkiv and Lviv to Antalya, Sharm-El- Sheikh and Hurghada (ch-aviation, 31 March).

Wizz Air Ukraine ceased operations on 20 April due to the continuing instability in Ukraine. Routes from Kiev to Germany (Cologne, Dortmund, Munich and Hamburg), Budapest, Vilnius, Katowice, Larnaca and Luton have been transferred to Wizz Air Hungary whereas all other routes from Kiev to Moscow, Kutaisi, Barcelona, Valencia Milan Bergamo, Naples, Venice along with the three Italian destinations from Lviv have been suspended (Wizz Air, April).

Industry Monitor. Issue 172. 30/04/2015 Page 5 © EUROCONTROL 2015

Figure 5: Brent and kerosene prices.

Traffic statistics: March update

Figure 3 and Figure 4 compare March 2015 figures with March 2014 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

Passenger traffic and aircraft movements during the first quarter of 2015 at top five European airports in numbers of departures compared with the same period a year ago were as follows (growth on 1Q2014):

Passenger traffic Aircraft movements 1. London Heathrow 16.3 million (+2%) 112K (-0.4%) 2. Paris CDG 14.1 million (+2.2%) 107K (-1.1%) 3. Frankfurt 12.5 million (+2.7%) 105K (-2.2%) 4. Istanbul Atatürk 13.1 million (+6%) 100K (+5.2%) 5. Amsterdam Schiphol 11.5 million (+3.5%) 97K (+2.5%)

Construction of Frankfurt airport Terminal 3 will begin in late 2015 and will be operational in 2022. Studies forecast that the number of passengers at Frankfurt will grow between 68 and 73 million passengers by 2021 whereas the current terminal capacity is 64 million passengers per year (Fraport, 15 April).

Figure 6: Deflated ticket prices in Europe.

Regulation

British Airways, Iberia and airberlin have reportedly put an end to their membership of the Association of European Airlines (AEA) based on diverging views on the common representation of interests of the major European airlines. All three airlines promote the liberalisation of aviation markets whereas Air France-KLM and Lufthansa complained that state subsidies received by Gulf carriers create distortions in the commercial aviation market (Reuters, 16 & 21 April).

New rates of Air Passenger Duty (APD) came into effect on 1 April in the UK. Distance bands have been reduced from four to two thereby reducing APD for flights over 4,000 miles from London. The standard rate is £13 for a return flight below 2,000 miles and £71 for all other distances. APD rates for premium classes will be £26 and £142 (UK Government, April).

Aircraft manufacturing

Airbus reported 101 commercial net orders during the first quarter of 2015 and delivered 134 aircraft among which one A350 aircraft and four A380 aircraft (Airbus, April).

Boeing reported 110 commercial net orders during the first quarter of 2015 and delivered 110 aircraft of which 121 B737 family aircraft (Boeing, April).

Embraer reported 22 commercial net orders during the first quarter of 2015 and delivered 20 E175 aircraft (Embraer, 16 April).

Oil

Oil prices increased to €57 per barrel in April from €53 per barrel in March and were at their highest since last December due to the conflict in Yemen and concerns about a possible disruption of supplies from the Middle East. Converted indices for Kerosene and Brent are shown in Figure 5.

Fares

Deflated ticket prices in Europe increased by 2.1% in March year-on-year, based on preliminary values. This is above the trend (12-month trailing average) shown in Figure 6 (Eurostat, 16 April).

This document is published by EUROCONTROL for information purposes. It may be copied in whole or in part, provided that EUROCONTROL is mentioned as the source and it is not used for commercial purposes (i.e. for financial gain). The information in this document may not be modified without prior written permission from EUROCONTROL.

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