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Setting the scene: The European market CONNECT – Vilnius Monday 14 March 2016 Ralph Anker Chief Analyst anna.aero [email protected] What’s coming up … • Developments in Europe 2014-2016 • Passenger demand by country 2015 • European trends in S16 • Baltic states and airBaltic • LCC trends • easyJet, Ryanair and Wizz Air • Exchange rates • GDP forecasts • Conclusions 2 Developments in Europe 2014 • Legacy carriers still struggling for profitability • Etihad’s involvement in European carriers – Aer Lingus, Air Serbia, airberlin, Alitalia (pending) • Ryanair opens new bases including Athens (ATH), Brussels (BRU), Lisbon (LIS) and Rome (FCO) • easyJet opens new bases in Hamburg and Naples • Vueling grows outside of Spain (turns 10 on 1 July) • Norwegian’s long-haul expansion with 787s • germanwings completing Lufthansa network transfer • Wizz Air up to 20 bases (10th birthday celebrated) • Turkish Airlines still growing at IST – Growing secondary hub at SAW (taking on Pegasus) 3 Developments in Europe 2015 • Cheap fuel!!! • Many legacy carriers still struggling for profitability • Alitalia rescue by Etihad Airways approved • Lufthansa/germanwings/Eurowings evolution • IAG trying to acquire Aer Lingus • Gone: Cyprus Airways, eurolot, Air Lituanica, Estonian Air • Mixed response to growth of MEB3 carriers • Ryanair new bases in Berlin SXF, Bratislava, Copenhagen and Ponta Delgado • easyJet new bases in Amsterdam, Porto • Wizz Air new bases in Debrecan, Kosice, Lublin • Turkish Airlines still growing – over 240 routes 4 Developments in Europe 2016 • Fuel even cheaper!!! • Many European legacy carriers making money, but … – IAG doing very well, now including Aer Lingus • Ryanair’s new bases in Belfast, Bucharest, Corfu, Hamburg, Ibiza, Milan MXP, Nuremberg, Santiago de Compostela, Timisoara • easyJet’s new bases in Barcelona and Venice • Transavia’s new base in Munich • Wizz Air’s new base in Iasi • Formation of A4E “alliance” against aviation taxation • Still no decision on London runway … • … Berlin’s “new” airport still not open 5 6 All countries: +5.0% to 1.9 billion to +5.0% countries: All European airport traffic 2015 Change in total annual passengers across all airports 35% 30% 26.3% 25.6% 25% 20% 19.2% 16.1% 15.3% 15% 13.5% 12.8% 12.7% 12.5% 11.7% 11.7% 11.3% 10.9% 10.7% 10.3% 9.3% 9.0% 10% 8.6% 7.9% 7.5% 7.4% 7.3% 7.1% 7.0% 6.6% 6.1% 5.9% 5.5% 4.3% 4.2% 3.8% 5% 3.7% 3.5% 3.5% 3.4% 3.1% 2.0% 1.6% 1.5% 1.3% -9.0% -1.3% -10.1% 0% -1.0% -5% -10% -15% UK Italy Malta Spain Latvia Serbia Russia France Poland Turkey Greece Cyprus Austria Ireland Kosovo Croatia Finland Iceland Estonia Albania Norway Ukraine Georgia Sweden Belgium Moldova Bulgaria Portugal Armenia Slovakia Hungary Slovenia Romania Gibraltar Germany Denmark Lithuania Macedonia Bos & Herz & Bos Czech Rep. Czech Switzerland Montenegro Netherlands Luxembourg FIGUST countries 2015 Country Airport pax % vly >1m* UK 254.7m +5.5% 20 (-1) Germany 216.5m +3.8% 17 (+1) Spain 207.4m +5.9% 20 (+1) Turkey 181.4m +9.3% 17 (+2) France** 170.6m +3.5% 17 (+1) Italy 156.8m +4.3% 23 *Number of airports with more than 1 million annual passengers **Includes Basel-Mulhouse (BSL) airport. Source: UK CAA, ADV, Aena, www.aeroport.fr, Assaeroporti, DHMI 7 Top 15 intra-European international pairs Change in monthly one-way seat capacity Jun16 v Jun15 (Monthly one-way seat capacity in June 2016 - millions) -10% -5% 0% 5% 10% 15% 20% UK - Spain (2.446m) 19.0% Germany - Spain (1.559m) 9.4% Germany - Italy (0.892m) 10.1% Germany - Turkey (0.810m) -6.8% UK - Italy (0.797m) 12.6% UK - Germany (0.784m) 1.8% UK - France (0.694m) 13.8% Spain - Italy (0.676m) 6.3% Spain - France (0.658m) 6.6% UK - Ireland (0.637m) 10.4% France - Italy (0.625m) 5.6% UK - Netherlands (0.537m) 7.8% UK - Greece (0.528m) 9.5% Germany - France (0.469m) 5.2% Germany - Greece (0.444m) 6.5% 8 Top 14 European domestic markets Change in monthly seat capacity (Jun16 v Jun15) (Monthly seats in June 2016) -20% -15% -10% -5% 0% 5% 10% 15% 20% Turkey (5.317m) 6.2% Spain (3.789m) 1.6% Italy (3.456m) -0.7% Germany (3.217m) 13.0% France (2.918m) 0.8% Russia (2.744m) -18.7% United Kingdom (2.167m) 0.5% Norway (2.050m) -4.1% Greece (1.032m) 13.9% Sweden (0.948m) 10.9% Portugal (0.519m) 16.4% Finland (0.291m) -2.7% Denmark (0.206m) -9.6% Poland (0.206m) -0.5% 9 10 Total all carriers: +4.7% carriers: all Total Top 50 Airlines at European airports Change in monthly seat capacity Source: OAG Schedules Analyser for June 2016 and June 2015 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% -5% -10% -15% S7 LOT SAS KLM HOP! UTair Flybe Iberia TUIfly SWISS Alitalia Finnair Condor Vueling easyJet Volotea Ryanair Aeroflot Jetairfly WizzAir Wideroe Onur Air Onur airberlin Emirates Jet2.com Lufthansa Air France Air Air Europa Air Eurowings Aer Lingus Aer Ukraine IA Ukraine Norwegian SunExpress SmartWings Ural Airlines Ural TAP Portugal TAP Transavia TO Transavia Transavia HV Transavia Delta Air Lines Air Delta United Airlines United British Airways British Aegean Airlines Aegean Turkish Airlines Turkish Pegasus Airlines Pegasus Austrian Airlines Austrian Airlines Brussels Monarch Airlines Monarch American Airlines American Thomson Airways Thomson Thomas Cook Airlines Thomas Baltic airport traffic 2001-2015 Annual passengers (millions) 12 Palanga (PLQ) 11 0.75 Kaunas (KUN) 2.17 10 0.72 0.69 Tallinn (TLL) 0.83 2.02 9 0.87 1.96 Vilnius (VNO) 2.21 1.91 8 3.33 Riga (RIX) 0.41 0.81 2.95 1.81 7 1.38 2.66 0.39 0.46 1.71 2.20 1.73 1.35 6 1.37 2.04 5 1.54 1.30 5.11 5.16 1.72 4.77 4.79 4.81 1.40 4.66 4 1.45 4.07 3.69 3 1.00 1.28 3.16 2 2.49 0.72 0.96 0.57 0.61 1.87 0.72 1 0.64 0.58 1.06 0.62 0.63 0.71 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 11 Baltic airport seasonality Monthly passengers in 2015 600,000 550,000 500,000 450,000 400,000 350,000 300,000 250,000 200,000 150,000 Riga 100,000 Vilnius 50,000 Tallinn 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 12 Top 15 airlines from Baltic airports in 2015 Departing seats (% change versus 2014) 0 500,000 1,000,000 1,500,000 2,000,000 2,500,000 airBaltic (-0.8%) 2,249,330 Ryanair (+11.1%) 1,507,842 Wizz Air (+39.8%) 819,360 Estonian Air (-9.0%) 425,846 Lufthansa (-4.1%) 405,472 Aeroflot (+51.3%) 312,637 Finnair (+11.3%) 286,280 SAS (+42.0%) 231,922 Norwegian (+18.6%) 228,184 Turkish Airlines (+19.5%) 150,823 LOT Polish Airlines (+7.6%) 143,285 Avies (+6.0%) 131,717 Ukraine Int'l Airlines (+63.3%) 96,985 Air Lituanica (-54.9%) 77,916 Brussels Airlines (+79.4%) 55,827 13 Top 15 country markets from Baltic airports Departing scheduled seats in 2015 (000s) (% change versus 2014) 0 100 200 300 400 500 600 700 800 900 1,000 UK (+10.9%) 954 Germany (+10.5%) 947 Russia (-4.2%) 594 Norway (+8.9%) 577 Finland (+1.4%) 438 Denmark (+5.9%) 374 Sweden (+25.9%) 350 Latvia (+4.0%) 336 Italy (-1.3%) 314 Estonia (-8.6%) 254 Netherlands (+7.6%) 227 Belgium (+37.1%) 218 France (+13.4%) 212 Lithuania (-19.2%) 210 Spain (+15.5%) 201 14 Top 15 airBaltic routes in S16 by ASKs Weekly one-way ASKs in August 2016 (millions) [Weekly departures - from RIX unless stated otherwise] 0.0 0.5 1.0 1.5 2.0 2.5 3.0 London (LGW) [12] 2.76 Moscow (SVO) [24] 2.68 Paris (CDG) [10] 2.20 Amsterdam (AMS) [12] 2.12 Munich (MUC) [12] 1.86 Tbilisi (TBS) [5] 1.54 Vienna (VIE) [12] 1.41 Berlin (TXL) [12] 1.38 Zurich (ZRH) [7] 1.28 Tel Aviv (TLV) [3] 1.18 TLL - Amsterdam (AMS) [7] 1.17 Barcelona (BCN) [4] 1.17 Milan (MXP) [6] 1.15 Oslo (OSL) [19] 1.15 Copenhagen (CPH) [19] 0.99 15 LCCs still growing in 2015 … pax up 17% to 101.4 million pax up 7% to 69.9 million pax up 21% to 26.3 million* pax up 1% to 25.8 million pax up 13% to 22.3 million pax up 22% to 19.2 million * anna.aero estimate Other carriers: Lufthansa Group (107.7m) [includes Austrian, SWISS, germanwings] Air France/KLM (89.8m) IAG (BA/Iberia/Vueling) (88.3m) Turkish Airlines (61.2m) Aeroflot (39.4m), airberlin & SAS (both 30.2m) 16 European LCCs Average weekly route frequency in summer (2006-2016) 12 easyJet (U2) 11 10 Vueling (VY) 9 Eurowings (4U/EW) 8 Ryanair (FR) 7 6 Transavia (HV/TO) 5 Jet2.com (LS) 4 Norwegian 3 (DY/D8) 2 Wizz Air (W6) 1 Volotea (V7) 0 S06 S07 S08 S09 S10 S11 S12 S13 S14 S15 S16 17 LCCs - % of new routes with competition In 2013, 2014 and 2015 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 52% Norwegian 53% 50% 2013 42% easyJet 51% 2014 47% 56% 2015 Vueling 57% 46% 9% Ryanair 27% 39% 29% Volotea 36% 36% 10% Wizz Air 11% 12% 79% Spirit Airlines 90% 85% 29% Southwest Airlines 48% 29% 7% Allegiant Air 8% 10% 18 PELOCO5 head-to-head competition in S16 Number of competing airport pairs 0 5 10 15 20 25 30 35 40 45 50 55 Ryanair v Vueling 55 Ryanair v easyJet 42 easyJet v Vueling 34 Ryanair v Norwegian 23 easyJet v Norwegian 22 Ryanair v Wizz Air 17 Vueling v Norwegian 11 Vueling v Wizz Air 7 easyJet v Wizz Air 2 Norwegian v Wizz Air 1 19 Smaller markets: Gibraltar (+34%), Morocco (-42%), Egypt (-73%) Recently withdrawn from Russia, Tunisia 20 New country market: Montenegro (Tivat); Tivat only new destination Smaller markets: Romania (+120%), Bulgaria (+115%), Finland (-76%) 30 country markets in total (same as in S15) 21 Increased from 184 to 187 airports (10 new, 7 dropped) Biggest new airports: AMS, BFS, MXP (all 28 flights per week) 22 Where's Wizz Air growing in S16? Leading country markets (Aug16 v Aug15) (Monthly departing seats in August 2016) -5% 0% 5% 10% 15% 20% 25% 30% 35% 40% Poland (384k) 12.0% UK (362k) 27.6% Romania (317k) 37.4% Hungary (214k) 18.6% Italy (201k) 14.9% Germany (134k) 13.5% Bulgaria (102k) 11.2% Sweden (97k) 14.1% Spain (86k)