I ndustry Monitor

T he EUROCONTROL bulletin transport trends Issue N°201. 20/03/2018

 European flights increased by 3.4% in February EUROCONTROL Statistics and Forecasts 2 2018 compared with February 2017 and were at the low end of the forecast. Severe weather Other Statistics and Forecasts 4 disruptions resulted in numerous flight cancellations throughout the month. Passenger 4 Preliminary data for March show average daily flights up 3% on March 2017. Financial results of airlines in 2017 8  New seven-year forecast (2018-2024) predicts 12.4 million IFR flight movements in Europe in Airports 9 2024; this is 17% more than in 2017. The flight growth rate for 2018 is forecast to be 3.3%. Cargo 10  Oil prices were down to €54 per barrel in February from €56 per barrel in January. Regulation 10

Oil 11

Fares 11

Industry Monitor. Issue 201. 19/03/2018 Page 1 © EUROCONTROL 2018 Document Confidentiality Classification: White

+3.4%

Figure 1: Monthly European Traffic and Forecast (based on the 7-year forecast Feb 2018).

EUROCONTROL Statistics and Forecasts

European flights (ECAC – European Civil Aviation Conference area) increased by 3.4% in February 2018 compared with February 2017 and were at the low end of the new forecast updated in February 2018. Preliminary data for March show average daily flights up 3% on March 2017 (Figure 1).

In February 2018, the traditional scheduled segment remained the main driver of growth with 565 extra flights per day, an increase of 4.2% year on year. For the seventh month in a row, the charter segment had the fastest growth and surged to 19.7% increase. The all- cargo and business aviation segments recorded growth rates of 3.4% and 2.8% respectively. The low-cost segment posted a small increase of 1.1% as it continued to suffer from the failures of Monarch and along with ’s decision to fly 25 fewer aircraft this winter.

The aircraft operators which added the most flights to the network on a daily basis in February 2018 (vs. February 2017) were (+145 flights), easyJet UK (+99 flights), (+87 flights), (+75 flights), Ryanair (+62 flights) and (+55 flights).

Main contributors to traffic in Europe in February 2018

Severe weather conditions (snowstorms) in UK, Ireland and across Western Europe throughout the month led to multiple flight cancellations. As result, only seven countries each added daily more than 50 flights to the European traffic growth (excluding overflights) in February 2018 (vs. February 2017). Spain was the top contributor bringing 157 extra daily flights to the network, followed by Turkey which added 149 flights per day owing to a dynamic domestic flow along with its continued improving flow from and to the Russian Federation. Poland was the third contributor with 113 extra daily flights owing to strong increases on its flows from and to Ukraine and from and to Israel (Figure 2). On the other hand, UK impacted by snowstorms recorded 42 fewer daily flights while it added 244 daily flights in February last year. France hit by adverse weather and industrial action affecting its domestic flow mainly saw 31 fewer flights per day.

Industry Monitor. Issue 201. 20/03/2018 Page 2 © EUROCONTROL 2018 Document Confidentiality Classification: White

Figure 2: Main changes to traffic on the European network in February 2018.

Forecast of IFR Flight movements (2018 – 2024)

The new EUROCONTROL Seven-Year Forecast of Flight Movements and Service Units 2018 – 2024 is for 12.4 million IFR flight movements in Europe in 2024; this is 17% more than in 2017. Over the seven-year period we predict an average of 2.3% annual growth.

For 2018, despite the expected appreciation of the euro and the rise in oil prices, the uncertainty surrounding the economic outlook has diminished over the past year and growth will continue. The IFR movements forecast is in line with this sustained positive outlook of the economy in Europe. As a result, the growth rate of IFR flight movements is forecast to be +3.3% (±1.3pp) to reach 10.96 million. This is in line with the high-growth scenario of the February 2017 forecast (Figure 3).

For 2019, the growth of IFR movements is expected to stand at 2.6%, reaching 11.2 million (±250 thousands), a revision upwards compared to the February 2017 forecast.

From 2020 onwards, economic growth is forecast to slow down as it is still subject to uncertainties, such as the Brexit negotiations. This, and the increase of aircraft sizes and load factors will also reduce the flight growth rate (compared to the rate of passenger growth). Consequently, after a few years of annual growth over 2%, European flight growth is expected to progressively slow down to 1.6% per year by 2024.

The EUROCONTROL Seven-Year Forecast of Flight Movements and Service Units (2018 – 2024) document will be published and advertised by the end of March (EUROCONTROL, March).

Industry Monitor. Issue 201. 20/03/2018 Page 3 © EUROCONTROL 2018 Document Confidentiality Classification: White

Figure 3: Flight forecast detail for 2018 in Europe.

All-causes delays in January 2018

Based on data from airlines for delays from all causes, the average departure delay per flight in January 2018 (vs. January 2017) decreased by 1.6 minutes to 10.9 minutes due to the decrease of reactionary and weather delays (Figure 4). The percentage of delayed flights on departure (>=5 minutes) was 38.6%, a decrease of 4 percentage points when compared with the same month in 2017. Strong winds severely disrupted operations at Amsterdam Schiphol and London Heathrow on 3 and 18 January. Oslo Gardermoen and to a lesser extent, Istanbul Atatürk, London Stansted, Madrid Barajas, Frankfurt, Porto, Zurich and Stockholm Arlanda airports were also impacted by seasonal weather (EUROCONTROL, March).

Other Statistics and Forecasts

IATA reported that European scheduled passenger traffic (RPK) increased by 6% in January 2018 compared with January 2017. Capacity (ASK) was up 5% and total passenger load factors rose 0.5 percentage point to 80.8% (IATA, 8 March).

ACI reported that overall passenger counts at European airports saw an increase of 7.4% in February 2018 (vs. February 2017). Total aircraft movements were up by 4.3% (ACI, 12 March).

Passenger airlines

Traffic Statistics: February 2018

Figure 5 and Figure 6 compare February 2018 figures with February 2017 figures for most of the main European carriers. In addition to the number of passengers (PAX), passenger capacity is measured in available seat kilometers (ASK), traffic is measured in revenue passenger kilometers (RPK) and load factor as a percentage (%).

Industry Monitor. Issue 201. 20/03/2018 Page 4 © EUROCONTROL 2018 Document Confidentiality Classification: White

Breakdown of all-causes delay per flight

Figure 4: Delay statistics (all-causes, airline reported delay – January 2018).

Capacity, costs and jobs

Sardinian Meridiana has been rebranded Air following ’ acquisition of a 49% stake in the company in October 2017. operates a fleet of 11 family aircraft (B737NG and B767-300) which will be phased out and replaced with three Boeing B737 MAX 8 aircraft and five A330-200 aircraft in the course of this year. Air Italy will launch new domestic routes from Milan Malpensa to Rome, Naples, Palermo, Catania and Lamezia Terme for connections to new long-haul routes from Milan to New York, Miami and Bangkok (Air Italy, February).

Laudamotion (IM200), the new name for Niki (former Air Berlin’s subsidiary) will relaunch on 25 March in partnership with (Thomas Cook Group’s subsidiary) and will operate flights from Düsseldorf, Frankfurt, Stuttgart and Basel to Palma de Mallorca, Ibiza and Malaga along with nine destinations from Zurich. Condor will take over sales and marketing of three aircraft from Laudamontion (Condor, 5 March).

Joon, ’s millennials’ airline launched in December last year plans to serve 14 destinations in 2018 with a fleet of 15 Airbus family aircraft. Based in Paris CDG, will serve eight medium-haul routes to Barcelona, Berlin, Istanbul, Naples, Oslo, Porto and Rome along with six long-haul routes to Brazil (Fortaleza), Seychelles (Mahé), India (Mumbai), Egypt (Cairo) and Iran (Tehran) (Air France, 28 February).

Irish regional Aer Southeast will start operations in the course of 2018 from Waterford to London Luton, Birmingham and Manchester with one Saab 340 aircraft (Air Southeast, 23 February).

Eurowings will increase by 30% its passenger capacity from its base at Düsseldorf and add 14 aircraft to its fleet of currently 26 aircraft. In addition, the airline will also close its long- haul base at Cologne/Bonn and move its three -200 aircraft to Düsseldorf and operate up to 140 long-haul routes per month when its receives four additional A330 aircraft by winter 2018. Cologne/Bonn airport will continue to expand with three additional short- and medium-haul aircraft to reach a fleet of 19 units (, February).

Industry Monitor. Issue 201. 20/03/2018 Page 5 © EUROCONTROL 2018 Document Confidentiality Classification: White

Figure 5: Main carriers’ traffic statistics.

Air France-KLM plans to increase ’s passenger capacity by circa 7% in 2018 based on the strong performance of both subsidiaries in 2017 (Transavia NL capacity was up 9.6% and Transavia France capacity was up 12.1% on 2016). Transavia France will receive four additional Boeing B737 aircraft in the course of 2018 bringing its fleet to 33 aircraft. It is reported that Air France-KLM would consider developing Transavia France beyond the agreed limit of 40 aircraft by 2020 in order to face low-cost competition on routes from French provincial cities to Europe. The cap of 40 aircraft was agreed between Air France-KLM and labour unions when Transavia France was restructured in 2015 (Air France-KLM and ch-aviation, 16 & 19 February).

Norwegian will take delivery of 12 Boeing B737 MAX aircraft in 2018 out of the 104 units it still has on order. The new deliveries will allow the airline to further expand its medium-haul route network (Norwegian, 21 February).

Turkish Airlines has signed an order for 30 Boeing B787-9 aircraft (of which 5 options) and 30 Airbus A350-900 aircraft (of which 5 options). The carrier ordered more A350 aircraft and fewer Boeing B787 aircraft than previously agreed in September last year when it committed to 40 B787-9 aircraft. Deliveries will start in 2019 and be spread until 2024. (Turkish Airlines, 9 March).

Thomas Cook UK has resumed flights to Tunisia in February after three years of suspension following the terrorist attack perpetrated on tourists in June 2015 (Thomas Cook Group, February).

Industry Monitor. Issue 201. 20/03/2018 Page 6 © EUROCONTROL 2018 Document Confidentiality Classification: White

Figure 6: Main carriers’ load factors.

Routes, Alliances, Codeshares

Ryanair will base two additional Boeing B737-800 aircraft at Palma de Mallorca and operate four new routes to Berlin Tegel, Düsseldorf, Nuremberg and Stuttgart during the summer season (Ryanair, 26 February).

Air Malta will launch its summer schedule with 13 new routes from Malta to London Southend, Frankfurt, Vienna, Cagliari, Catania, Malaga, Lisbon, Venice, Comiso, Casablanca, Tunis and also from London Southend to Catania and to Cagliari. The airline will lease one additional aircraft to operate a total fleet of 10 -320 aircraft (, 21 February).

IAG Group long-haul low-cost will start operations on four new routes from a new base at Paris Orly to Guadeloupe, Montreal, Newark and Martinique from July onwards with two Airbus A330-200 aircraft. The airline currently serves Buenos Aires, Oakland, Punta Cana, Los Angeles and Boston from its Barcelona base with two A330-200 aircraft with the addition of a third A330 aircraft in the summer. All flights from Barcelona are currently operated by while the new routes from Orly will be operated by IAG’s subsidiary OpenSkies (IAG & LEVEL, February).

Wizz Air will operate five Airbus A321 aircraft from currently three at its Vienna base by March 2019 and will then launch 9 new routes from Vienna to Nice, Reykjavik, Catania, Milan, Lisbon, Madrid, Malmö, Skvasta (Sweden) and Kharkiv (Wizz Air, 2 March).

Industry Monitor. Issue 201. 20/03/2018 Page 7 © EUROCONTROL 2018 Document Confidentiality Classification: White

9 months to 31Dec17 9 months to 31Dec17

Figure 7: Financial results of airlines in 2017.

Financial results of airlines in 2017

Figure 7 compares the financial results for year 2017 with year 2016 for the top ten European airlines (based on 2016 flight shares).

Norwegian was the only airline to post losses in operating results which were attributed to increased fuel prices, the cost of replacing aircraft and route development.

Turkish carriers Pegasus and Turkish Airlines hit by political unrest and terrorist attacks in 2016 which resulted in travel advice to Turkey have recovered in 2017 (mainly due to the resumption of traffic from the Russian Federation and Ukraine) and went back to the positive.

Lufthansa Group recorded best ever results with adjusted EBIT up 70% compared with 2016. Among the Group’s network airlines, profits (vs. 2016) were the following: Lufthansa €1.6 billion (€1.1 billion), SWISS €542 million (€405 mio), €94 million (€58 mio). Point-to-point airlines, Eurowings and posted profit of €94 million from €104 million losses in 2016 (source: company reports).

Industry Monitor. Issue 201. 20/03/2018 Page 8 © EUROCONTROL 2018 Document Confidentiality Classification: White

Airports

Stansted plans to increase by eight million the number of passengers it is allowed to serve i.e. from the current limit of 35 million -which will be reached within five years- to 43 million passengers per year over the next decade. Stansted has hence submitted an application planning to the Uttlesford District Council for a determination deadline set for 18 July 2018 following public consultation (Stansted Airport, 23 February).

Passenger traffic and commercial aircraft movements at top five European airports (based on the number of flights) in February 2018 (growth on Feb 2017) were as follows:

The top 5 departure airports for traditional scheduled flights in February 2018 (growth on Feb 2017) with main airline share of total departures were as follows:

The top 5 departure airports for low-cost flights in February 2018 (growth on Feb 2017) with main airline share of total departures were as follows:

The top 5 airport pairs for charter (non-scheduled commercial) flights in February 2018 (growth on Feb 2017 with main airline share of the flow were as follows (average daily flights in both directions):

Industry Monitor. Issue 201. 20/03/2018 Page 9 © EUROCONTROL 2018 Document Confidentiality Classification: White

Figure 8: Brent and Kerosene prices.

Cargo

The top 5 departure airports for all-cargo flights in February 2018 (growth on Feb 2017) with main carrier share of total departures were as follows:

Regulation

The European Aviation Safety Agency (EASA) has released its first formal Opinion on safe and secure operations for small unmanned aircraft systems (UAS) up to 25kg within the view of building a regulatory framework that governs the use of drones in the European airspace. EASA stated that this regulation will enable the free circulation of drones and a level playing field within the EU, while also respecting the privacy and security of EU citizens. The European Commission forecasts that by 2035 the drone sector in Europe will directly employ over 100K people and reach an economic impact in services of more than €10 billion per year. The Opinion will serve as a basis for the European Commission to adopt concrete regulatory proposals later this year (EASA, 22 February).

The Spanish government will reportedly reduce route charges that airlines pay to use the Spanish airspace by 3% in 2018 and by 12% in 2019. This reduction will enable airlines to save €25 million in 2018 and circa €130 million in 2019. The Spanish Air Navigation Service Provider, ENAIRE controlled 2 million flights in 2017, up 7% compared with 2016 (Air Transport World, 7 March)

Industry Monitor. Issue 201. 20/03/2018 Page 10 © EUROCONTROL 2018 Document Confidentiality Classification: White

Figure 9: Deflated ticket prices in Europe.

Oil

Oil prices were down to a monthly average of €54 per barrel in February 2018 from €56 per barrel in January 2018. Converted indices for Kerosene and Brent are shown in Figure 8.

Fares

Ticket prices in Europe increased by 3.4% in February 2018 vs. February 2017 as shown in Figure 9 (Eurostat, 16 March).

Note: to eliminate the influence of inflation on euro figures, the ticket price is deflated with a price index. The STATFOR deflated ticket prices are estimated in 2015 constant euros. A detailed explanation of the mechanism can be found here.

© 2018 European Organisation for the Safety of Air Navigation (EUROCONTROL)

This document is published by EUROCONTROL for information purposes. It may be copied in whole or in part, provided that EUROCONTROL is mentioned as the source and it is not used for commercial purposes (i.e. for financial gain). The information in this document may not be modified without prior written permission from EUROCONTROL.

STATFOR, the EUROCONTROL Statistics and Forecast Service [email protected] www.eurocontrol.int/statforIndustry Monitor. Issue 201. 20 /03/2018 Page 11 © EUROCONTROL 2018

Document ConfidentialityThe EUROCONTROL Classification: White Statistics and Forecast Service (STATFOR)

isis ISOISO 9001:20089001:2015 certifiedcertified..