Issue 51 Monday 11th November 2019 www.anker-report.com Contents CEE growing twice as fast as western 1 CEE growing twice as fast as western Europe; Wizz Air, Ryanair and LOT have 40% of market. Europe; Wizz Air & Ryanair lead way 2 IAG acquisition of Air Europa would give it over 60% of capacity at The ANKER Report was in Warsaw last week presenting at the Wizz Air and Ryanair are leading CEE22 airlines CEE Aviation Conference. This article features a number of Since 2004 scheduled seat capacity across the CEE22 region has Madrid and almost 65% of seats slides from that presentation. The full presentation can be between Madrid and S America. grown every year except 2009. In 2015, 2016, 2017 and 2018 downloaded as a separate pdf from The ANKER Report website. capacity grew by more than 10%, but growth has slowed in 3 Focus on: Baltics, Denmark and The analysis focussed on the CEE22 countries which were 2019 to around 6%, partly as a result of the grounding of the Germany. defined as Albania, Armenia, Belarus, Bosnia & Herzegovina, Boeing MAX fleet. LOT Polish Airlines has 15 of the type while 4 European route launch news and Bulgaria, Croatia, Czech Republic, Estonia, Georgia, Hungary, Ryanair was supposed to have started taking delivery of the analysis at the start of the W19/20 Kosovo, Latvia, Lithuania, Moldova, Montenegro, North type earlier in the year. season covering 40 airlines and Macedonia, Poland, Romania, Serbia, Slovakia, Slovenia, and Wizz Air and Ryanair are the biggest carriers in the region and almost 250 new services. Ukraine. Armenia and Georgia are not normally considered part have seen their joint share of the market grow from less than of the CEE but have been included here as both have recently 2% in 2004, to 12% in 2008, 21% in 2012, 26% in 2015 and 31% attracted Ryanair services for the first time. The CEE23 are Welcome in 2019. LOT is the leading legacy carrier with 8.7% of capacity defined as the CEE22 plus Russia. in 2019. These three carriers account for 40% of CEE22 seats. The first two weeks of the W19/20 season has seen the launch of almost 250 new routes across Europe involving some 40 airlines. Unsurprisingly the leading airlines for new services are Europe’s (U)LCCs; primarily Ryanair, Wizz Air, easyJet and Lauda. The former two carriers are also the leading players in Central & Eastern Europe (CEE) where they have a combined market share of well over 30%. That region is in the spotlight in this issue. Elsewhere, we take a closer look at the implications of IAG potentially taking control of Air Europa, notably at Almost 200 million passengers in the CEE22 Wizz Air ranks either first or second in 11 of the CEE22 markets Madrid and also in the Europe to South Whereas passenger numbers increased by just over 6% across while Ryanair is top in Lithuania and Slovakia, and second in America market. Finally, we catch up all of Europe in 2018, the growth rate across the CEE22 was three other countries and third in another three. with traffic and capacity trends for around 13%. Only Serbia (+5.6%) and Moldova (+3.1%) saw Market could almost treble in size to 550 million passengers September in the Baltic nations, passenger growth below the European average. At the top of Using a simple propensity to travel (PPT) indicator which the growth rankings, Ukraine and Georgia both recorded air Denmark and Germany. divides total airport passengers by a country’s population, passenger increases of just under 25% last year. reveals that Latvia (thanks to airBaltic’s hub), Montenegro and Ralph Anker In addition, Russia’s top 40 airports handled almost 190 million Croatia (both with strong inbound tourism demand) are [email protected] passengers and saw growth of just over 11%. For comparison, performing well above average. Plotting the PPT against GDP the leading individual countries in Europe last year were the UK per capita highlights which countries have the greatest (295 million air passengers), Spain (264 million), Germany (245 potential for air travel demand growth. million), Turkey (210 million), France (194 million) and Italy Calculating PPT values for countries in western Europe shows (185 million). that a value of three is currently easily achieved by most Poland was the biggest CEE22 market with its airports handling countries. Applying this figure to the CEE22 countries (and just under 46 million passengers, with Romania next on just higher values for specific markets like Croatia and Latvia) shows over 22 million, closely followed by Ukraine (almost 21 million). that the CEE22 countries could be handling 550 million The busiest airports in the CEE22 were Warsaw WAW (17.8 passengers rather than the 200 million they currently handle. million), ahead of Prague (16.8 million), Budapest (14.9 million), However, how long it may take them Bucharest (13.8 million) and Kiev KBP (12.6 million). to reach this figure is less clear. continues on page 10 The ANKER Report Issue 51: Monday 11 November 2019 1 IAG acquisition of Air Europa would give it over 60% of capacity at Madrid and almost 65% of seats between Madrid and South America The news that IAG has agreed a deal with Air Europa to buy the Spanish carrier for one billion Euros came as something of a surprise to the industry. Two of Spain’s largest airlines, Iberia and Vueling, are already part of IAG, leading to some concerns about dominance in certain key markets. #2 carrier in Madrid Passenger statistics for 2018 show that Air Europa was the second biggest airline in Madrid after Grupo Iberia. Handling almost 8.7 million passengers gave it a 15% share of the airport’s total traffic. Grupo Iberia had 42% with Vueling having just 2.3% and British Airways around 1%. As a result, IAG could be heading for a market share of over 60% at Spain’s busiest airport, if the Air Europa deal is finalized. Analysis of Cirium Data and Analytics figures for 2019 shows that while Madrid is by far Air Europa’s leading airport with almost six million departing seats, it also offers 1.3 million departing seats this year from Palma de Mallorca and around 650,000 from both Barcelona and Tenerife TFN. However, the airline ranked only seventh in Palma de Mallorca in 2018. South American routes lead the way by ASKs Analysis of Air Europa’s routes from Madrid in 2019 reveals that nine of the top 10 routes by ASKs are to destinations in South America, with Miami the other Iberia and Air Europa are the two biggest carriers at IAG would have 26% of Europe - South America seats route. However, no single country dominates as the 11 Madrid for flights to South America. Iberia has 37% of Looking at which airlines currently offer the most seats South American routes in the top 15 are spread across seats, while Air Europa has a further 27% of seats in 11 countries; Argentina (Buenos Aires), Bolivia (Santa between Europe and South America, Iberia is still the 2019. Combined the two airlines would account for clear leader with almost 14%, ahead of TAP Portugal, Cruz), Brazil (Sao Paulo), Colombia (Bogota), Cuba almost 65% of seats between Madrid and South (Havana), Dominican Republic (Santo Domingo), Ecuador LATAM Airlines and Air France, who each have around America, with Avianca the next biggest airline at 12%. 11% of the market. Air Europa is in fifth place with just (Quito), Mexico (Cancun), Paraguay (Asuncion), Peru Madrid is #1 airport in Europe for South America under 9%, while British Airways lies in tenth place with (Lima) and Uruguay (Montevideo). just under 4%. As a result, IAG carriers would then have Air Europa has launched two new routes to South Just 16 airports across Europe offered non-stop service to a destination in South America in 2019. Madrid around 26% of the market, assuming the Air Europa America in 2019; Iguazu Falls in Argentina (weekly since acquisition gains EU approval. August), and Medellin in Colombia which was launched accounted for almost one-third of all seats, well ahead of in June with 3-weekly service. The same month also saw Lisbon (13%), Paris CDG (11%) and Amsterdam (10%). This would make it the leading airline group between the carrier launch 5-weekly service to Panama City in Europe’s busiest airport, London LHR, ranked just Europe and South America, ahead of Air France-KLM seventh with just under 6% of all seats between Europe which currently has just under 20%. Lufthansa Group has Central America. and South America. just 7% of seats in this market. The ANKER Report Issue 51: Monday 11 November 2019 2 Baltics: Three of the four main Baltic airports reported with dominant Copenhagen registering growth of less in the country all recording modest growth. Dortmund growth of at least 9% in September, with Riga in Latvia than 1%. SAS’s capacity is up 4% compared with (+18%) and Stuttgart (+7%) both had good months. seeing an 11% improvement in passengers. airBaltic September 2018 while Norwegian has reduced seats by However, Berlin SXF, Bremen and Nuremberg all saw continues to grow in the region, while Ryanair and Wizz almost 6%. Ryanair seats are up almost 11%. passenger numbers drop by around 10% as a Air have both reduced capacity slightly versus Sep 2018. Germany: Traffic was down marginally across all German consequence of Germania’s collapse earlier in the year. Denmark: Demand was stable in September in Denmark airports in September, despite the four biggest airports SunExpress and Wizz Air both grew by 20% or more.