Analysis of the European Air Transport Industry 2001
Total Page:16
File Type:pdf, Size:1020Kb
DG TREN – ANALYSIS OF THE EUROPEAN AIR TRANSPORT INDUSTRY 2001 Final Report Contract Number: B2-7040B-S07.17962. July 2003 2001 ANALYSIS OF THE EUROPEAN AIR TRANSPORT INDUSTRY Contents Glossary Section 1 Key Developments in the European Air Transport Industry in 2001 Section 2 Capacity and Traffic Section 3 The Airline Sector Section 4 The Airport Sector Section 5 The Cargo Sector Section 6 Other Sectors Section 7 Consumer and Competition Issues Page 2 Final Report July 2003 2001 ANALYSIS OF THE EUROPEAN AIR TRANSPORT INDUSTRY Glossary Glossary Terms used for Statistical Analysis ASK – Available Seat Kilometres ASK is a measure of airline passenger capacity. It is calculated by multiplying the number of passenger seats available for sale on each flight stage by the stage distance. Example: An airline operates one scheduled international flight per day, of length 1,000 kilometres. The aircraft has 50 seats. Total scheduled ASKs offered in a year = 18,250,000 (1,000 x 50 x 365). ATK – Available Tonne Kilometres ATK is a measure of airline overall capacity. It is calculated by multiplying the number of tonnes of capacity available for the carriage of revenue load (passengers, baggage, freight and mail) on each flight stage. Available Seats The number of available seats is a measure of airline passenger capacity and is the number of seats on an aircraft multiplied by the frequency. Frequency Frequency is a measure of airline capacity, and relates to the number of scheduled departure flights operated within one week. City pair analysis looks at flights in both directions. Passengers – Revenue Passengers The number of passengers carried is a measure of airline volume, and are generally taken to mean passengers for whom the carrier receives commercial remuneration. RPK - Revenue Passenger Kilometres RPK is a measure of airline passenger volume. It is calculated by multiplying the number of revenue passengers carried on each flight stage by the flight stage distance. RTK - Revenue Tonne Kilometres RTK is a measure of overall airline volume. It is calculated by multiplying the number of tonnes of revenue load (passengers, baggage, freight and mail) by the flight stage distance. Yield Yield is a measure of unit income. For example, passenger yield is calculated by dividing passenger revenue by volume, usually RPKs or number of passengers. Page 3 Final Report July 2003 2001 ANALYSIS OF THE EUROPEAN AIR TRANSPORT INDUSTRY Glossary Key Data Sources AEA – Association of European Airlines AEA is an industry body comprising of around 30 full service European scheduled airlines (includes most of the major European full service airlines). American Express American Express produces the European Corporate Travel Index, which provides information and analysis of business travel costs and trends. European air fares from 51 Western European cities to ten geographical regions are monitored on a quarterly basis, representing 439 city-pairs or segments. Airclaims Airclaims Limited is part of the Airclaims Group of companies, which has three different areas of business - surveying and loss adjusting services to the aviation and space insurance markets; consultancy and aircraft appraisal services; and aviation information products. The Airclaims CASE database provides comprehensive data on fleets, individual aircraft, deliveries, orders and other aircraft data. IATA – International Air Transport Association IATA is an industry association containing approximately 280 airlines. Flights by these airlines comprise more than 95 percent of all international scheduled air traffic. OAG OAG is a leading independent source of flight schedule information, operating the world’s most comprehensive and up-to-date schedules database. The company collects and distributes schedules data from over 930 airlines. All OAG analysis used in this report is based upon weekly non stop unrestricted operating passenger flights. The exception is destination analysis, which examines both non stop and stopping flights. Page 4 Final Report July 2003 2001 ANALYSIS OF THE EUROPEAN AIR TRANSPORT INDUSTRY Glossary Regional Definitions This study incorporates data from a variety of different sources, where geographical and industry regions can differ. Domestic Refers to all scheduled flights within a country Europe Unless otherwise specified, Europe is taken to mean the geographical area of Europe. European Union Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain, Sweden, United Kingdom EEA – European Economic Area EEA includes all countries in the European Union and Norway, Iceland and Liechtenstein. EEA and Switzerland This is the primary region for the purposes of this report. European Union Candidate Countries 13 countries that have applied to become members of the European Union: Bulgaria, Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Romania, Slovakia, Slovenia, Turkey Intercontinental / Long Haul Refers to all flights operated to/from destinations outside Europe. Western Europe (IATA definition) Andorra, Austria, Belgium, Cyprus, Denmark, Faeroe Islands, Finland, France (excluding overseas territories), Germany, Gibraltar, Greece, Greenland, Iceland, Ireland, Italy, Liechtenstein, Luxembourg, Malta, Monaco, Netherlands, Norway, Portugal (including Azores and Madeira), San Marino, Spain (including Canary Islands), Sweden, Switzerland, Turkey, United Kingdom. Eastern/Central Europe (IATA definition) Albania, Armenia, Azerbaijan, Belarus, Bosnia-Herzegovina, Bulgaria, Croatia, Czech Republic, Estonia, Macedonia, Georgia, Hungary, Latvia, Lithuania, Moldova (Republic of), Poland, Romania, Russian Federation (West of the Urals), Slovakia, Slovenia, Ukraine, Yugoslavia (Serbia and Montenegro). Page 5 Final Report July 2003 Section 1 Key Developments in the European Air Transport Industry in 2001 KEY DEVELOPMENTS IN THE EUROPEAN AIR TRANSPORT INDUSTRY IN 2001 Contents 1.1 Introduction ................................................................................................................... 8 1.2 Performance of European Air Transport Industry to September 2001.................... 9 th 1.3 The aftermath of September 11 ............................................................................... 10 1.3.1 Impact on traffic................................................................................................ 10 1.3.2 Action taken by the industry ............................................................................. 11 1.3.3 Action taken by European governments .......................................................... 12 1.3.4 Impact on profitability ....................................................................................... 13 1.4 Financial failure of airlines......................................................................................... 14 1.4.1 Context ............................................................................................................. 14 1.4.2 Lead up to the financial failure of Swissair and Sabena .................................. 14 th 1.4.3 Collapse following September 11 ................................................................... 15 Page 7 Final Report July 2003 KEY DEVELOPMENTS IN THE EUROPEAN AIR TRANSPORT INDUSTRY IN 2001 1 Section 1 1.1 Introduction The year of 2001 was dominated by the events of September 11th and their aftermath. Any analysis of the European aviation industry will clearly focus heavily on the economic repercussions of this tragic event. Even before September 11th, the European aviation industry had been experiencing something of a downturn. However, the last quarter of the year saw turmoil in the industry. Post September 11th, there was a dramatic slump in demand. Airlines suffered unprecedented losses, and two well established flag carriers went out of business. Other sectors of the business also suffered from the knock-on impacts. 2001 was also the year where low cost airlines truly established themselves as a major force in European air transport. While the traditional carriers struggled to remain in business, the low cost sector continued to expand and report strong financial results. This section of the report introduces some of the key European air transport developments from 2001. More detailed analysis of many of the issues is provided in subsequent sections. Page 8 Final Report July 2003 KEY DEVELOPMENTS IN THE EUROPEAN AIR TRANSPORT INDUSTRY IN 2001 1 Section 1 1.2 Performance of European Air Transport Industry to September 20011 The full service scheduled airline sector had experienced a difficult year even before the events of September 11th. AEA airlines saw first half year losses increase by almost half compared to the previous year. Much of this poor financial performance has been attributed to the slowdown in the global economy experienced in the first half of 2001. Financial results from other air transport sectors were healthier. Although the holiday charter sector saw a decrease in profits, a relatively small percentage fall was recorded. Meanwhile, the low cost sector continued to go from strength to strength, with profits growing by over 150% versus the first half of 2000. Finally, airport financial results as a whole remained fairly steady, recording a small increase. European Aviation Profitability in First Half of 2001 Compared to equivalent period in 2000 ) Source: AEA and Various Annual Reports € 250m € 200m 2000 HY1 2001 HY1 € 150m € 100m re Tax (Average