Issue N° 121 . 20/07/10

Industry Monitor The EUROCONTROL bulletin on air transport trends

• European air traffic increased by 2.7% in EUROCONTROL Statistics and Forecasts 1 June 10 Other Statistics and Forecasts 1 • IATA recorded strong rebound in premium Passenger Airlines 2 travel in May 10 Aircraft Manufacturing 6 • Boeing revised upwards its demand forecast Airports (and Environment) 6 to nearly 31 thousand new aircraft over the Regulation 7 next 20 years Fares 8 • revised downwards its demand Oil 8 forecast to just over 29 thousand new aircraft over the next 20 years • The EU cleared transatlantic joint venture between , and • Oil prices stable around $75 per barrel

EUROCONTROL Statistics and Forecasts European flights increased by 2.7% in June on the same month of last year (see Figure 1). In June, Low-Cost and Business Aviation segments have been contributing to the renewed growth with increases by 11% and 7% (respectively) compared to June 09, see Figure 5 (EUROCONTROL, July).

Preliminary data shows that the average delay per delayed flight (for departures and from all causes) increased to just over 29 min in June up from 27 min in June 09 (see Figure 2). The large increase in ATFCM en-route delays is notably due high delays in France caused by industrial action and seasonal weather (thunderstorms) affecting Spain and Germany. In June, 47% of flights were delayed on departure (>5 min), a 6 percentage point increase compared to June 09 (EUROCONTROL, July).

Other Statistics and Forecasts According to IATA , premium traffic rebounded sharply in May to 19% (compared to May 09). The “Within Europe” region also showed an unexpected high growth rate (23%) in premium travel, year-on-year. For the first 5 months of the year, premium travel average growth rate (10.5%) was higher than economy travel one (5.5%). The growth in both classes is driven by business travellers more than holidaymakers (IATA, 15 July).

© EUROCONTROL 2010 Figure 1. European Traffic. (Source: EUROCONTROL/STATFOR)

Boeing and Embraer released their 2010 market outlook over the next 20 years. For the record, the forecasts of 2009 release are mentioned between (brackets):

Boeing forecasts a demand for 30,900 new aircraft between 2010 and 2029 (29,000 between 2009 and 2028) of which: • Regional Jets: 1,920 (down from 2,100), • Single-Aisles: 21,160 (up from 19,460), • Twin-Aisles: 7,100 (up from 6,700), • Large: 720 (down from 740), • In Europe: 7,190 units (down from 7,330 units), for a traffic growth in revenue per passenger kilometres of 4.4% per year. The world fleet is expected to increase from 18,890 in 2009 to 36,300 by 2029 (up from 35,600 by 2028) (Boeing, 15 July).

Embraer forecasts a demand for 29,135 new aircraft between 2010 and 2029 (30,750 between 2009 and 2028) of which: • Turboprops (30+ seats): 2,260 (down from 3,050), • Small Jets (30-120 seats): 6,875 (up from 6,750), • Narrow-and Wide-bodies Jets (120+ seats): 20,000 (down from 20,950), • In Europe: 6,485 units (down from 7,140 units), for a traffic growth in revenue per passenger kilometres of 4.2% per year, The world fleet is expected to increase from 18,285 in 2009 to 33,510 by 2029 (down from 40,800 by 2028) (Embraer, 16 July).

Passenger Airlines We regret to inform you that a mistake has slipped into the last issue (IM120): on 8 th of June, had 48 A380s on order (on top of which the 32 orders announced in the bulletin) and owned 10 A380s.

Emirates , in chase for expansion (see above!), ordered 30 B777-300s which brings the number of B777 current orders up to 48 whereas the Gulf carrier already has 53 of this type in service (Emirates, 19 July).

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Departure Delay Causes – All causes of delay (based on the Total Delay in Minutes from 1 minute onwards)

Primary Delay Distribution for June 2010 Preliminary data Reactionary Delay 47% = Primary Delay 53% = Share of Primary & Reactionary Delay - June 2010 2010 June - Delay & Reactionary of Primary Share

Figure 2. Delays (Source EUROCONTROL/CODA)

As part of the Climb 2011 restructuring programme, plans to change the cabin seats configurations to increase seat capacity by the end of the year. Subsidiary Austrian will apply the same strategy in summer 11 (Lufthansa, 28 June).

Austrian will raise the daily number of waves from 6 to 7 at Vienna airport from winter 10/11 to increase connectivity: the potential number of weekly connections with the Austrian carrier at the hub airport will increase by 1.5% to around 20,300 (Austrian, 8 July). bmi plans to reduce seat capacity by 22% in Europe in 2010 (compared to 2009) and to improve aircraft utilisation. The airline also decided to reduce its UK domestic operations for more profitable routes and to increase codeshare with Lufthansa and Star alliance partners (bmi, 28 June).

Subisdiary AnadoluJet will operate all domestic and international return flights nd from Sabiha Gökcen airport from the 2 August (Turkish Airlines, 6 July).

Norwegian plans to increase seat capacity to 28% in 2010 (compared to 2009) mainly from introducing larger aircraft in its fleet. The budget carrier accelerates the removal of B733 and will have unitary fleet of 63 B738s by the end of 2012 targeting reductions in unit costs and emissions (Norwegian, 13 July).

Alitalia received its first (out of 2) A330-200 to be introduced into service during summer for intercontinental routes from Milan Malpensa. The aircraft will have 224 passenger seats organised in three classes (business, premium economy, economy). The carrier plans to redesign its B777’s fleet with the same interior after it has just finished modernising its short- to medium-haul fleet (, 15 July).

Regional carrier Flybe ordered up to 140 E175 (35 firm and 105 options) for first delivery in September 2011. The new 88-seat E175s will complete the current carrier’s fleet of 74 aircraft, exclusively made of E195 and Q400. Flybe , recently co-operating with (see codeshare section), aims at becoming a leading airline in European regional’s network (Flybe, 20 July).

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Figure 3. Main carriers traffic statistics. (Source: Company reports)

Capacity, costs and jobs Air France reportedly plans 4,400 job cuts by the end of March 2013, an 8% workforce reduction compared to March 10 through voluntary redundancies, recruitment freezing and not replacing retiring staff (La Tribune, 5 July).

For winter 10/11, Ryanair will remove 2 aircraft from the 14 based in (in 2009), cutting by 15% the number of weekly flights compared to winter 09/10 (Ryanair, 8 July).

New routes, codeshare KLM will add three flights per week between Amsterdam and Tokyo Narita from November, which will increase the total number of weekly flights on this route to 10 (KLM, 8 July).

Ryanair will increase by 10 the number of routes from Leeds Bradford for winter 10/11 (compared to winter 09/10) amongst which Barcelona, Weeze, Gdansk and Fuerteventura (Ryanair, 6 July).

Turkish Airlines launched new operations from Istanbul to: • Podgorica (Montenegro), three services per week ; • Accra (Ghana), four services per week (Turkish Airlines, 8 and 13 July).

Finnair strengthens its position in Asia with: • opening a daily service to Singapore from the end of May 11, • increasing the daily service to Hong Kong to 12 flights a week from June 11 (, 7 and 15 July)

Easyjet will launch 8 new routes for winter 10/11 from UK airports: • London Gatwick to Gothenburg and Zagreb, • Bristol and Liverpool to Lyon, • Manchester to Amsterdam, Gothenburg and Hamburg, • Edinburgh to Basel (, 1 and 7 July)

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Figure 4. Main carriers load factors. (Source: Company reports) Jet2 announced new services from Newcastle to Krakow, Toulouse, Alicante and Faro in next summer’s schedule as well as a twice weekly service to Prague from November this year (Jet2, 9 and 15 July).

Air France and UK regional Flybe are to offer code-shares services, increasing the network connections between France and UK. This cooperation agreement, to take effect by the end of October, will add to Air France’s network 45 UK-French links and 17 Flybe’s domestic routes (Air France, 13 July).

Alliances, Mergers Aegean officially became the 28 th member of the Star Alliance after last year’s approval, providing alliance’s members access to Greek destinations (Aegean, 30 June).

Alitalia joined Air France-KLM and Delta as a member of the transatlantic joint venture for the next 12 years. With the Italian carrier’s addition, the venture gains 20 daily transatlantic flights to 5 US destinations from Rome Fiumicino and Milan Malpensa totalling a daily offer of almost 250 transatlantic flights and 55,000 seats (Alitalia, 5 July).

Traffic Statistics: June update Figure 3 and Figure 4 compare June 10 figures with June 09 ones. Passenger capacity is measured in available seat kilometres (ASK) and traffic is measured in revenue passenger kilometres (RPK). British Airways is still showing decreases in capacity and traffic statistics (industrial action in June). Lufthansa ’s results, much higher than major airlines followed in this bulletin are still distorted owing to effects of past consolidation with Swiss from July 09 onwards and bmi from September 09 (company reports).

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Figure 5. Recent traffic growth in Europe per segments. (Source: EUROCONTROL/STATFOR)

Aircraft Manufacturing The forthcoming Boeing 787 made its first international trip from Seattle to Farnborough (air show). The manufacturer has reportedly communicated that the first Dreamliner delivery could be delayed to early 2011 instead of the initial Q410 announced due to slower flight tests than expected (Boeing, 18 July and Bloomberg, 15 July).

Airbus delivered to Lufthansa and to their 2 nd and 11 th A380 (respectively) bringing to 10 the number of superjumbos delivered from the beginning of the year. The manufacturer still forecasts 20 A380 deliveries for 2010 (Airbus, 16 July).

Embraer delivered 109 commercial and executive jets during H110, a 15% increase compared to the same period last year. The Brazilian manufacturer notably recorded a 110% increase in executive jets deliveries during Q210 (compared to the same period last year), pointing out an increase in executive jet flight volumes in Europe and the US (Embraer, 8 July).

Airports (and Environment)

UK aviation stakeholders have started collaborative actions to reduce CO 2 emissions of grounded aircraft at 15 UK airports amongst which reduction of engine taxiing and usage of fixed electrical ground power (instead of keeping APU running on stationary aircraft). At Heathrow, these measures enable to save 100,000 tonnes of CO 2 per year (compare to the “do-nothing” case) (Airport Operators Association, 30 June).

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Figure 6. Carbon prices. (Source: Point Carbon)

Regulation The Europe’s General Court ruled on the fact that Ryanair cannot take over , in line with the European Commission previous decision (both airlines would hold 80% of Dublin’s traffic which would prevent other European airlines from effective competition). The Court also judged Ryanair does not have to divest its shareholding (29.8%) in Aer Lingus (European General Court, 6 July).

Spain and Libya signed a new bilateral air agreement : any airline from both States will be able to operate services on a route between Spain and Libya, ending the precedent agreement signed in 1979 which was allowing Iberia only to operate Madrid-Tripoli route. The new agreement also allows up to 10 weekly return flights) to be operated between the two States (Spanish Ministry of Transport, 6 July).

The German and Qatari Civil Aviation Authorities updated their current bilateral framework in increasing the number of services to German airports from 21 to 35 flights per week (Qatari Civil Aviation Authority, 7 July).

The German aviation tax (see IM120) would reportedly be introduced in January 11 and could be set at €26 and €13 per passenger for respectively long-hauls and short-hauls. Connecting travellers at German airports would be excluded (Weltonline, 15 July).

The EU did not raise any objection to the merger agreement between British Airways and Iberia (see IM118). The Commission also cleared the joint venture of the two European airlines with their alliance member American Airlines (see IM116) for a 10-year period, given that the parties agreed to allow competitors to operate 49 return flights per week between London and four US destinations (Europa, 14 July).

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Figure 7. Brent and Kerosene prices. (Source: Kerosene prices – EIA, Prices and exchange rates - EUROSTAT)

Fares Deflated ticket prices in Europe increased by 2.1% in June year-on-year, based on preliminary values (Eurostat, July).

Oil Oil prices closed at around $76 per barrel on 19 July (Brent). Converted price indices for Kerosene and Brent up to June are shown in Figure 7 (Brent and WTI cushing).

© 2010 - European Organisation for the Safety of Air Navigation (EUROCONTROL)

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