Industry Monitor The EUROCONTROL bulletin on air transport trends Issue N°153. 28/06/13 European flights decreased by 0.7% in May, in EUROCONTROL statistics and forecasts 1 line with the forecast. Preliminary data for June Other statistics and forecasts 2 show 0.9% fewer flights than in June 2012. Passenger airlines 3 Updated IATA forecast expects European airlines Airports 6 to post profit of €1.2 billion in 2013, twice as high as forecast in the March survey. Environment 7 Aircraft manufacturing 7 ICAO Global Air Transport Outlook to 2030 foresees scheduled passenger traffic (RPKs) in Regulation 8 Europe to grow by 4.4% a year up to 2030 to circa Oil 8 4 trillion and cargo traffic to grow at 4.3% Fares 8 annually up to 2030 as the world economy recovers from the current financial crisis Oil prices marginally lower at €78 per barrel in June. EUROCONTROL statistics and forecasts Traffic in Europe decreased by 0.7% in May on the same month of last year. Traffic was in line with the forecast and similar to 2010 and 2012 levels and also well above 2009 level (Figure 1). Charter and Low-Cost flights grew by 1.6% and 1.4% respectively, while the main, traditional scheduled segment declined by 0.9%, with bigger declines for business aviation, down 2.2% and all-cargo, down 5.5% compared with May 2012. (EUROCONTROL, June). Based on preliminary data from airlines for delay from all causes, 34% of flights were delayed on departure in May, which is an increase of 1 percentage point compared with May 2012. May 2013 saw a decrease from 8.1 to 7.7 minutes in the average delay per flight from all- causes. Analysing the delay reasons shows that reactionary delays decreased by 0.2 minute per flight to 3.4 minutes per flight. Airline-related delays increased by 0.2 minute to 2.5 minutes per flight. ATFCM en-route delays reduced by 0.1 minute per flight to 0.3 minute. (Figure 2) (EUROCONTROL, June). Industry Monitor. Issue 153. 28/06/13 Page 1 © EUROCONTROL 2013 Figure 1: Monthly European Traffic and Forecast. Other statistics and forecasts IATA reported an increase of 2% in demand in April 2013 for scheduled passenger traffic in Europe compared with the same month last year. The load factor was 79.4% in April (IATA, 30 May). ACI reported that European airports saw a 0.6% increase in passenger traffic in April 2013 compared with April 2012 whereas cargo traffic decreased by 2%. Total aircraft movements were down by 0.4% on April 2012 (ACI, 3 June). Both IATA and ACI results are blurred by the movement of Easter. IATA has upgraded its outlook for 2013 and now expects European carriers to post profit of €1.2 billion in 2013, twice as high as forecast in the March survey (IM150). Economic conditions remain weak, but consolidation of the North Atlantic market and within Europe along with the impact of lower fuel prices help improve financial performance. Jet fuel is expected to average €83 per barrel, slightly below the €86 average per barrel in 2012, due to increasing oil supply from North America. The load factor is expected to average a record high of 80.3% in 2013 (IATA, 3 June). In its Global Air Transport Outlook to 2030, ICAO foresees scheduled passenger traffic in Europe, measured in terms of revenue passenger kilometres (RPKs) to grow by 4.4% a year up to 2030 to circa 4 trillion whereas cargo traffic in term of freight tonne kilometres (FTKs) is expected to grow at 4.3% annually up to 2030 as the world economy recovers from the current financial crisis (ICAO, June). Industry Monitor. Issue 153. 28/06/13 Page 2 © EUROCONTROL 2013 Breakdown of average delay per flight Percentage of flights delayed on departure Figure 2: Delay Statistics (all causes, airline-reported delay – preliminary data for May 2013). Passenger airlines Capacity, costs and jobs TUI Travel committed to purchase 60 Boeing 737 MAX aircraft with an option to buy a further 90. Deliveries will occur between January 2018 and March 2023 (TUI Travel plc, 31 May). Start-up flag carrier of Lithuania, Air Lituanica is to start operations on 30 June with flights from Vilnius to Brussels, Amsterdam and Berlin. The new airline will launch operations with one E170 jet leased from Estonian Air with Estonian flight numbers and will add one E175 jet leased from a subsidiary of Embraer (Air Lituanica, June & Estonian Air, 4 June). Alitalia reportedly signed an agreement with unions to cut CEO and board members salaries by 20%, executives’ salaries by 10% and to reduce working hours of 2,200 ground staff with a view to launching a new strategic plan (Reuters, 6 June). SAS launched a new service concept, SAS Go and SAS Plus to replace its Business, Economy Extra and Economy system. SAS Go prices are equivalent to the old Economy tickets whereas SAS Plus prices are around 30% lower than the old flexible products (SAS, 5 June). Meridiana has regained its full operating license after its financial situation improved. In January, the airline was granted a provisional license which had no impact on its operations (IM148) (ENAC, 3 June). Ukraine International Airlines continues to benefit from the failure of Aerosvit last January (IM148) and posted a net profit for the first time in three years along with passenger numbers up 33% in 2012 (Ukraine International Airlines, June). Industry Monitor. Issue 153. 28/06/13 Page 3 © EUROCONTROL 2013 Note: IAG monthly pro-forma including Vueling in the baseline. Figure 3: Main carriers’ traffic statistics. airberlin and pilots union Cockpit avoided planned strikes after reaching an agreement regarding wage negotiations. Cockpit asked for its pilots to be compensated similarly to how they are at competing airlines such as Germanwings, TUIfly and Condor (Cockpit & airberlin, 20 June). It is reported that Aeroflot may base its planned low-cost subsidiary at either Moscow Sheremetyevo or Moscow Vnukovo with a fleet of eight A320 or B737 aircraft. The launch of the still unnamed low-cost carrier could take place in April-May 2014 (The Moscow Times, 31 May). easyJet and the owner of Stansted, Manchester Airports Group signed an agreement aiming at boosting the carrier’s traffic to 6 million passengers by 2018, from 2.8 million today. easyJet has based a fourth aircraft at Stansted and launched three new destinations to Berlin, Krakow and Newquay (easyJet, 20 June). UK-based start-up carrier Odyssey Airlines reportedly plans to start an all-business class service from London City airport to New York JFK and other destinations in Europe. Bombardier confirmed that the new carrier ordered 10 CS100 aircraft (Bombardier, 17 June). Ryanair placed a firm order for 175 new B737-800 aircraft bringing its fleet to 400 aircraft in operation by 2019 and allowing the carrier to grow by circa 5% per year over the next five years (Ryanair, 19 June). Lufthansa has firmed up a previous Supervisory Board decision to acquire 100 A320 family aircraft (35 A320neo, 35 A321neo and 30 A320ceo with sharklets) (Airbus, 17 June). Air France-KLM finalised an order for 25 next-generation A350-900 wide-bodied aircraft, with an option for a further 25 A350-900 aircraft. The first A350-900 will enter into service with Air France in 2018 (Air France-KLM, 19 June). Subject to shareholder approval, easyJet is to order 35 current generation A320 aircraft for delivery between 2015 and 2017 and place a new order for 100 A320neo aircraft for delivery between 2017 and 2022. 85 of 135 ordered aircraft are meant to replace ageing aircraft. The airline also has options to purchase 100 additional A320neos (easyJet, 18 June). Industry Monitor. Issue 153. 28/06/13 Page 4 © EUROCONTROL 2013 Note: IAG monthly pro-forma including Vueling in the baseline. Figure 4: Main carriers’ load factors. Routes, Alliances, Codeshares Ryanair introduced domestic services in Greece with the launch of its first flight between Chania (Crete) and Thessaloniki (Ryanair, 4 June). S7 Airlines and Iberia expanded their codeshare agreement with flights from Moscow to La Palma, Lanzarote, Fuerteventura and Gran Canaria (S7, 6 June). Czech Airlines resumed long-haul operations and signed a code-share agreement with part- owner Korean Air on the Prague – Seoul route (Czech Airlines, June). Volotea continues its strategy to operate a lot of routes with a few aircraft and added 11 new routes in France and Italy with its B717 fleet which will increase to 15 aircraft (from 13) in 2013 (Volotea, June). Jet Airways signed a codeshare agreement with Air France/KLM. The agreement will enhance connectivity from Paris and Amsterdam to Indian domestic destinations beyond Bangalore, Delhi and Mumbai (Air France, 17 June). Etihad reportedly signed an Initial Memorandum of Understanding with JAT about an equity investment in the Serbian loss-making national carrier (IM149). On 15 June Etihad started to codeshare with JAT on the Abu Dhabi – Belgrade route (Etihad 15 June & Reuters 17 June). Delta Air Lines acquired a 49% stake in Virgin Atlantic. Both airlines will start codesharing with Virgin Atlantic placing its code on 91 Delta routes (trans-atlantic and domestic US routes) and Delta will place its code on 17 Virgin Atlantic routes, including Little Red domestic UK, effective 3 July (Delta Air Lines, 24 June). Industry Monitor. Issue 153. 28/06/13 Page 5 © EUROCONTROL 2013 Figure 5: Carbon prices. Failures Turkish charter Sky Airlines filed for bankruptcy on 4 June and ceased all operations (Sky Airlines, June). Traffic statistics: May update Figure 3 and Figure 4 compare May 2013 figures with May 2012 figures.