Industry Monitor the EUROCONTROL Bulletin on Air Transport Trends
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Issue N° 117. 29/03/10 Industry Monitor The EUROCONTROL bulletin on air transport trends • European air traffic decreased by 0.7% in EUROCONTROL Statistics and Forecasts 1 February Other Statistics and Forecasts 1 • FAA expects US IFR traffic to decrease by Passenger Airlines 2 1.6% in 2010 Cargo 6 Financial Results of Airlines 6 • Iberia to transfer its short-haul flights to a new airline to be launched in 2011 Regulation 7 Economy 8 • Lufthansa to begin operating A380 in Fares 8 June Oil 8 • Major European airlines to report lower profits except for Air Berlin • IATA expects global airline losses to be below $3 billion in 2010 • Oil prices now up to around $80 per barrel EUROCONTROL Statistics and Forecasts European traffic declined in February by 0.7% on the same month of last year, an unexpected decrease attributed to French ATC and the Lufthansa strikes (see Figure 1). Preliminary data shows that the average delay per delayed flight (for departures) increased to 35.6 min in February up from 30.1 min in February 09 (see Figure 2). Other Statistics and Forecasts FAA has released its forecasts for 2010-2030. IFR flights handled by the FAA are forecast to decrease to 39.4 million (-1.6%) in 2010 and to grow at an average annual rate of 2.5% for the next 20 years until 2030 (FAA, 9 March). © EUROCONTROL 2010 Source : STATFOR Interactive Dashboard Figure 1 Passenger Airlines Following a second unsuccessful privatisation attempt Malév has been re-nationalised. The Hungarian State acquired 95% of the shares in the loss-making airline, leaving the remainder to the former majority company AirBridge which is owned by a Russian bank. The nationalisation should enable Malév to continue its operations but a drastic restructuring plan is to be implemented to restore financial stability by 2012 (Malév, 27 February). Iberia is refocusing on the long-haul market and is to create a new airline to operate its short- haul flights from a lower cost-base. The Spanish carrier will gradually transfer its short-haul routes to the subsidiary to be launched in 2011 and start operations with 10 aircraft (Iberia, 25 February). Lufthansa will start its first A380 commercial service from June but the route has not been yet officially disclosed (Lufthansa, 11 March). As part of its restructuring plan, Austrian Airlines is implementing a cost-cutting programme and a new market strategy for its summer schedule. The Lufthansa owned airline is to replace all 50-seater aircraft by larger aircraft to reduce unit costs, increase the number of frequencies on key connections (from Vienna to London, Brussels, Zurich and Prague) and launch low- price offers on specific routes (Austrian Airlines, 19 March). Turkish Airlines has decided to lease 3 B737-700s to be delivered in March and April (Turkish Airlines, 25 February and 5 March). Turkish Airlines is expanding its fleet size as the carrier has finalised an agreement with Boeing for the order of 10 737-800s and 10 737-900ERs (Boeing, 8 March). Industry Monitor. Issue 117. 29/03/10 Page 2 © EUROCONTROL 2010 Departure Delay Causes – All causes of delay (based on the Total Delay in Minutes from 1 minute onwards) Primary Delay Distribution for February 2010 Preliminary data Reactionary Delay 45% = February 2010 Primary Figure 2 Delay 55% = Share of Reactionary Primary & Delay Source : CODA Air Berlin is taking measures to reduce its net liabilities and is about to conclude deals with leasing companies to sell 12 aircraft (7 B737s, 1 A319 and 4 A320s) to leasing companies. The German carrier has also agreed with Boeing to downsize its order books in: • cancelling 10 firm orders (out of 25) and 5 options (out of 10) of B787 aircraft, • deferring 9 B737 deliveries from 2010-2011 to November 2015, (Air Berlin, 16 and 25 March). UK-based TUI Travel PLC has seen a significant recovery in demand for leisure holidays for all seasons. Top 3 UK booking volumes for summer holidays are to the Nordic States, France and the UK which increased by 23%, 21% and 13% respectively on the beginning of February (TUI Travel, 24 March). Capacity, Costs and Jobs Airlines adjust their summer schedule offerings: • Lufthansa will operate around the same number of weekly flights (around 12,900) as in summer 09 but will increase its seat capacity by 3.6% thanks to fleet re- dimensioning (smaller fleet and replacement of aircraft with some larger-type aircraft, e.g. the A380) (Lufthansa, 11 March), • Air France-KLM schedule will also remain almost unchanged (-0.3%) on summer 09 and seat capacity will be slightly reduced by 0.9% (Air France-KLM, 3 March), • Alitalia will increase seat capacity by 5.5% (year-over-year) and will operate around 2,500 weekly flights compared with summer 09 (Alitalia, 18 February) Cabin crew finally voted in favour of the Aer Lingus cost-cutting programme, following clarification of the proposal to be implemented. The Irish carrier aims to save €97 million by means of pay cuts, voluntary redundancies and changes in working practices (Aer Lingus, 26 March). Industry Monitor. Issue 117. 29/03/10 Page 3 © EUROCONTROL 2010 Source : Company reports Figure 3 SAS has finally reached agreement with cabin crew and pilot unions on savings of €50 million in annual costs, by means of salary cuts, pay freezes, reduced allowances and reduced pensions. A total of €800 million are to be saved through the Core SAS programme since its implementation in 2009 (SAS, 12 March). Failures On March 1, the Slovakian CAA has reportedly suspended the AOC of financially-troubled Air Slovakia , a British-owned charter carrier based in Bratislava. The airline has until the end of March to prove its financial soundness to the authorities in order to regain its licence (sme, 1 March). Scotland’s Highland Airways Ltd cancelled all flights on 25 March, after being place into voluntary administration because of its financial problems (Highland Airways, 25 March). Routes and Codeshares After the winter break, Iberia will resume its summer-timetable service between Madrid and Washington from with 3 non-stop flights per week and one additional frequency during the summer months (Iberia, 24 February). In May, Ryanair will open 6 new routes in Greece (to Kos, Rhodes and Volos) from Italian and German cities. The budget airline will also open its 41st base in Malta with one aircraft based there and the addition of 6 new routes to the 13 existing ones (Ryanair, 25 February and 4 March). Air Berlin will increase its service between Germany and Israel to 9 scheduled flights per week during the summer timetable with direct flights to Tel-Aviv from Berlin, Munich, Cologne and Dusseldorf (Air Berlin, 5 March). AnadoluJet , the low-cost subsidiary of Turkish Airlines, will start operating several European routes from Ankara, including Copenhagen, Frankfurt, Dusseldorf, Vienna, Amsterdam, Brussels, London and Paris in June (Turkish Airlines, 24 March). Industry Monitor. Issue 117. 29/03/10 Page 4 © EUROCONTROL 2010 Source : Company reports Figure 4 Amongst the new routes proposed for the summer, Alitalia will introduce 2 services to the US from June (Milan Malpensa to Miami and Rome Fumiciano to Los Angeles), as well as services from Rome to Malaga (daily) and to Vienna (twice-daily) from April (Alitalia, February). For its summer schedule, bmi is to take the lead of the London Heathrow-Berlin Tegel service previously shared with parent company Lufthansa (bmi, 16 March). Lufthansa is to restart service to Iraq after a 20-year disruption, launching 4 weekly flights between Frankfurt and Erbil from the end of April (Lufthansa, 24 March). The Star Alliance members Turkish Airlines and Swiss International Air are to offer code- share services from April between Istanbul and 3 Swiss destinations: Geneva, Zurich and Basel (Turkish Airlines, 19 March). SkyTeam Alliance members Air France-KLM and Aeroflot will extend their existing code-share agreement beyond the Paris and Moscow hubs adding 6 Russian and 4 European destinations (Air France-KLM, 23 March). Traffic Statistics: February update Of the major European airlines monitored by this bulletin, all carriers 1 except Air France-KLM recorded positive growth in passenger business in February (see Figure 3). The Franco-Dutch carrier’s activity has been hampered by a French ATC strike and bad weather conditions. The increase in load factors has been across the board, with the exception of budget airlines easyJet and Ryanair (see Figure 4). 1 No passenger data for Iberia. Industry Monitor. Issue 117. 29/03/10 Page 5 © EUROCONTROL 2010 Operating Profit of Airlines in 2009 (ending 31 Dec. 09) 1500 2008 1000 2009 * only 9 months to 31Dec. 500 0 Million Euros Million -500 -1000 Air Berlin Iberia Lufthansa SAS Group Alitalia Air France- British (EBIT) Group KLM* Airways* Figure 5 Source : Company reports Cargo Lufthansa Cargo and Austrian Airlines Cargo have agreed to merge their global activities from July. Both companies will route their traffic through a single hub: Vienna. Freight handling and distribution activities will also be integrated in Austria. Outside of Europe, Lufthansa Cargo infrastructures will be used (Lufthansa, 24 February). Following the recent upturn in cargo activity, Lufthansa Cargo will suspend part-time working arrangements (set in place a year ago) in April and May and might definitively abandon them from September if the economic recovery continues (Lufthansa, 18 March). Japan Airlines will stop all-freighter flights from November and will continue to engage in cargo business activity by carrying freight on passenger’s flights only (JAL, 25 March). Financial Results of Airlines IATA has revised upwards its global airlines net losses estimate for 2009 from $11 billion to $9.4 billion, with the Europe region still being the most affected ($3.8 billion).