Industry Monitor

The EUROCONTROL bulletin on air transport trends

Issue N°151. 30/04/13

 European flights decreased by 5.6% in March, lying on the low-side of the forecast range. EUROCONTROL statistics and forecasts 1 Preliminary data for April show traffic levels just Other statistics and forecasts 2 below April 2012, back on forecast. Passenger airlines 2  European Parliament voted against a measure to Cargo 6 backload 900 million EU ETS allowances. Prices Airports 6 of the permits fell to €2.5, their lowest on record. Environment 7  Oil prices dropped to €80 per barrel in April. Aircraft manufacturing 7 Regulation 8 Oil 8 Fares 8

EUROCONTROL statistics and forecasts

Traffic in Europe decreased by 5.6% in March compared with March 2012 and was the lowest level for March since 2004. Easter, an extra week of the winter schedule along with Iberia and Lufthansa strikes contributed to the decline in traffic (Figure 1). Except Charter which was up 2.6% on March last year, all market segments were affected by the Easter shutdown, when there are more passengers but fewer flights. All-Cargo was down by -7.5%, Business Aviation by -7.3%, Traditional Scheduled by -5.7% and Low-Cost by -3.2%. Preliminary data for April show traffic levels just below April 2012 and back on forecast (EUROCONTROL, April).

Based on preliminary data from airlines for delay from all causes, 39% of flights were delayed on departure in March; an increase of 9% compared with March 2012. March 2013 saw an increase from 7.7 to 10.5 minutes in all-causes delay. Analysing the delay reasons shows that reactionary delays increased by 0.9 minutes per flight to 4.4 minutes per flight. Airline-related delays also increased by 0.8 minutes to 3.2 minutes per flight. Weather delays jumped from 0.2 to 1 minute per flight (Figure 2) (EUROCONTROL, April).

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Figure 1: Monthly European Traffic and Forecast.

Other statistics and forecasts

IATA reported an increase of 0.8% in demand for passenger traffic in Europe in February 2013 compared with the same month last year. The load factor rose to 76.5%, reflecting a decrease of -2% in capacity (IATA, 3 April).

ACI reported that European airports saw a decrease of -0.2% in passenger traffic in February compared with the same month last year whereas total cargo traffic decreased significantly by -6.5%. Total aircraft movements in Europe were down by -5.4% on February 2012. If adjusted for the extra leap year day in February 2012, European passenger growth was +3.3%, total aircraft movements were down -2% and total cargo traffic was -1% (ACI, 4 April).

Passenger airlines

Capacity, costs and jobs

The Cypriot government reportedly decided that troubled state-owned Cyprus Airways will continue operations at least throughout the summer season provided that measures to restructure the airline are accepted by staff. The plan includes a redundancy package for 490 staff and a fleet reduction from 10 to six aircraft. In the meantime, Cyprus Airways continues to look for a strategic investor (Cyprus News Agency, 29 April).

State-owned Tarom is to enter into a restructuring plan to restore profitability by 2015. The plan aims at reducing staff by 10%, renewing and standardising its fleet to two types of aircraft, one for regional operations and one for its medium-haul network (Tarom CEO at press conference, April).

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Breakdown of average delay per flight

Percentage of flights delayed on departure

Figure 2: Delay Statistics (all causes, airline-reported delay – preliminary data for March 2013).

IAG placed an order for 18 A350-1000s and converted into a firm order its option for 18 B787 aircraft. These are meant to replace 30 B747-400 aircraft of British Airways’ fleet between 2017 and 2023 (IAG, 3 &18 April).

Turkish Airlines committed to order 70 B737 family aircraft (40 B737-8 MAX, 10 B737-9 MAX and 20 NextGen B737-800 aircraft) to be delivered between 2016 and 2021 with options for additional 25 B737-800s. Las month, the airline ordered 117 A320 family aircraft for its short- and medium-haul routes (IM150) (Boeing, 9 April).

Vueling accepted IAG’s takeover bid to increase its stake from 46% to 91% into the low-cost carrier. Vueling will not be integrated into Iberia but will continue to operate as a standalone brand (IAG, 23 April).

It is reported that low-cost Pegasus Airlines completed the sale of a 34.5% stake in an initial public offer thereby increasing its capital from €32 million to €44 million. The money will be used to increase the airline’s network and to buy new aircraft. Pegasus bought 75 A320neo aircraft in December last year, with an option for 25 more to replace its B737-800 fleet. (Hürriyet Daily News, 26 April).

Lufthansa cancelled circa 1,700 flights on 22 April due to a cabin crew and ground staff strike over a wage dispute (Lufthansa, 20 April).

Finnair sold its 4.7% share in Norwegian Air Shuttle. The capital gains will be used for the development of Finnair and the implementation of its growth strategy (Finnair, 22 April).

It is reported that Vueling plans to increase its fleet size from 60 A320 family aircraft to 70 in 2013 and considers proposals from Airbus, Boeing and Bombardier (Reuters, 8 April).

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Figure 3: Main carriers’ traffic statistics.

Aer Lingus has wet-leased four A320 aircraft to Virgin Atlantic’s ‘Little Red’ and operates routes on the UK domestic market from Heathrow to Manchester, Aberdeen and Edinburgh on behalf of Virgin Atlantic (Virgin Atlantic, April).

Ryanair extended its reserved seating service from six to eight rows bringing to 45 pre- booked seats available on every flight (Ryanair, 22 April).

Routes, Alliances, Codeshares

Transaero is expanding its network from Moscow Vnukovo, serving 30 routes this summer to the US, France, Italy, Kazakhstan, Uzbekistan and Ukraine (Transaero, 25 March). airberlin and JatAirways (JAT) are planning to enter into a codeshare agreement on routes to the United States and within Europe; starting this summer. On the other hand, Etihad will start daily flights to Belgrade on 15 June and will put its code on 23 of JAT’s European flights whereas JAT will put its code on 21 Etihad’s flights to the Middle East, Far East, Africa and Australia (aiberlin, 19 April & Etihad, 15 April).

Norwegian opened its latest base at London Gatwick and launched 14 new routes to European destinations; the airline will also expand its long-haul network with flights to Fort Lauderdale, New York and Bangkok (Norwegian, 18 April).

Emirates is to launch its first transatlantic flights New York JFK – Milan Malpensa, effective 1 October. The airline will offer connections all over the US thanks to its partnership with JetBlue and across Europe thanks to its partnership with easyJet (Emirates, 8 April).

Transavia France launched new destinations from Orly, Nantes, Lyon and Lille to Boa Vista (Cape Verde), Sal, Essaouira, Malta, Naples, Berlin, Venice with the start of the summer schedule (Transavia, April).

Wizz Air is to become the launch customer for new Dubai World Central Airport and the first European low-cost carrier to fly to Dubai from Budapest, Bucharest, Kiev and Sofia, effective October. Wizz Air will also launch flights to Baku, Kutaisi (Georgia) and Tel Aviv in June (Wizz Air, 3 April).

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Figure 4: Main carriers’ load factors.

SAS and Turkish Airlines signed a codeshare agreement enabling SAS to put its code on flights from Copenhagen, Oslo, Stockholm, Gothenburg, Helsinki, Aalborg and Billund to Istanbul and further to Ankara, Antalya, Bodrum, Dalaman and Izmir whereas Turkish Airlines will add its flight code to over 20 destinations in Scandinavia and Finland (SAS, 17 April).

Low-cost Volotea expanded its network out of Bordeaux and launched five new routes to Ajaccio, Bastia, Toulon, Ibiza and Palermo (Volotea, April).

Ryanair opened six new bases in April (Eindhoven, Krakow, Zadar, Marrakech, Fez, Chania) bringing their total network to 57 (Ryanair, 4 & 26 April).

Failures

Armenia’s national carrier, Armavia ceased operations on 1 April due to ongoing financial problems (Armavia, April).

Air Cargo Germany temporarily ceased operations on 18 April. The carrier has a fleet of four B747-400 used on routes from Hahn and Frankfurt to Africa, Asia and Latin America (Air Cargo Germany, April).

Traffic statistics: March update

Figure 3 and Figure 4 compare March 2013 figures with March 2012 figures. In addition to the number of passengers (PAX), passenger capacity is measured in available seat kilometres (ASK) and traffic is measured in revenue passenger kilometres (RPK).

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Figure 5: Carbon prices.

Cargo

Norwegian Air Shuttle launched Norwegian Cargo to utilize the growing capacity of its route network, over 120 destinations in Europe, North Africa, Middle East, US and Asia (Norwegian, 22 April).

Airports

UK Government approved London Ashford airport expansion project including the creation of a 294m runway extension and a new terminal with the capacity to handle up to 500,000 passengers/year (UK Department for Transport, 10 April).

The London Assembly called for a complete ban on night flights at Heathrow. There are circa 15 flights landing between 11.30pm and 6.00am each night, most of which are flights from the Far East landing at 5.00am. The current night flight restrictions are in force since 2006 and run until October 2014. UK Government is consulting on adopting new rules from October 2014 (London Assembly, 14 April).

New Berlin Brandenburg CEO unveiled an action plan called SPRINT to accelerate the entry into operation of the new airport. The plan involves staff and operational changes and a revised business plan (Berlin Brandenburg, 12 April).

Frankfurt reported a decrease of -2% in passenger traffic and -8% in aircraft movements during 1Q13 compared with 1Q12. Traffic results suffered from weather and strike-related cancellations (Fraport, 11 April).

Figure 6: Brent and kerosene prices.

Paris CDG recorded a decrease of -0.8% in passenger traffic and -5.1% in aircraft movements during 1Q13 compared with the same quarter last year (ADP, 12 April).

Heathrow recorded an increase of 1.8% in passenger traffic and a decrease of -3.7% in aircraft movements during 1Q13 compared with 1Q12 (Heathrow Airport Holdings, April).

Environment

The price of carbon contracts for 2016 shrunk to €3.9/tonne in recent weeks and hit an all- time low of €2.5 on 17 April (Figure 5).

On 16 April, the European Parliament voted against a measure to backload 900 million EU ETS allowances with the immediate effect on prices of the permits falling to their lowest on record (European Parliament, 16 April).

Aircraft manufacturing

The US Federal Aviation Administration (FAA) approved B787 Dreamliner battery system improvements, leading to a return to service and resumption of new production deliveries. All aircraft have been grounded since mid-January due to battery fires (IM148). LOT is to resume its B787 operations on 5 June (Boeing, 19 April).

Boeing delivered 137 commercial aircraft during 1Q13, equal to the same period last year (Boeing, 4 April).

Airbus delivered 144 commercial aircraft during 1Q13, 13 aircraft more than during the same period last year (Airbus, April).

Regulation

Civil Aviation Authorities of Turkey and Russia reportedly signed an agreement to boost cooperation as regards airspace use, code-sharing and increasing the number of flights between both countries. Turkish Airlines is planning to codeshare with UTair, S7 and Ural Airlines (Hürriyet Daily News, 9 April).

Israeli government ratified the open-skies agreement between EU and Israel, leading to strikes by El Al, Arkia and Israir that fear that increased competition with foreign airlines could cost 17,000 jobs. The agreement will go into effect in April 2014 and by Summer 2017, EU airlines will be able to operate direct flights to Israel from the EU and vice-versa, with no restrictions on the number of weekly flights between Israel and the EU (Europolitics, 24 April).

Oil

Oil prices down to €80 per barrel in April. Converted indices for Kerosene and Brent are shown in Figure 6.

Fares

Deflated ticket prices in Europe increased by 6.5% in March year-on-year, based on preliminary values and with Easter contributing to the increase (Eurostat, 16 April).

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/statfor

The EUROCONTROL Statistics and Forecast Service (STATFOR) is ISO 9001:2008 certified. Industry Monitor. Issue 151. 30/04/13 Page 8 © EUROCONTROL 2013