ANALYSIS OF THE EU AIR TRANSPORT INDUSTRY Final Report 2004 Contract no: TREN/05/MD/S07.52077 By Cranfield University CONTENTS GLOSSARY...........................................................................................................................................................6 1. AIR TRANSPORT INDUSTRY OVERVIEW ..................................................................................12 2. REGULATORY DEVELOPMENTS .................................................................................................18 3. CAPACITY ...........................................................................................................................................24 4. AIR TRAFFIC ......................................................................................................................................36 5. AIRLINE FINANCIAL PERFORMANCE .......................................................................................54 6. AIRPORTS............................................................................................................................................86 7. AIR TRAFFIC CONTROL ...............................................................................................................104 8. THE ENVIRONMENT......................................................................................................................114 9. CONSUMER ISSUES ........................................................................................................................118 10 AIRLINE ALLIANCES.....................................................................................................................126 11. AIRLINE DISTRIBUTION...............................................................................................................132 12. AIRCRAFT AND MANUFACTURERS..........................................................................................138 13 PUBLIC SERVICE OBLIGATIONS (PSO)....................................................................................144 Analysis of the EU Air Transport Industry, 2004 2 Tables Table 1: Financial results: European airlines...............................................................................................14 Table 2: Low-cost carriers’ route selection, ex-London (2004)...................................................................33 Table 3: Scheduled services of AEA members, 2004 ...................................................................................39 Table 4: Scheduled services of AEA members, 2004 vs 2003......................................................................40 Table 5: Europe’s passenger charter airlines in 2004..................................................................................46 Table 6: Europe’s charter airlines’ demand in 2004, and change over 2003.............................................47 Table 7: Air freight traffic carried by AEA carriers, 2004 vs 2003............................................................51 Table 8: Labour costs and productivity: 29 European airlines ..................................................................55 Table 9: Financial results: Network carriers................................................................................................57 Table 10: Labour costs and productivity: 4 LCCs ....................................................................................60 Table 11: Labour costs and productivity: 6 charter airlines....................................................................60 Table 12: Financial results: LCCs ..............................................................................................................62 Table 13: Financial results: Charter ..........................................................................................................72 Table 14: Charter airline subsidiaries of Europe’s largest tour operators .............................................74 Table 15: Financial performance of First Choice......................................................................................74 Table 16: Split of First Choice passengers by length of haul....................................................................75 Table 17: Financial performance of MyTravel..........................................................................................75 Table 18: Financial performance of TUI’s tourism division ....................................................................76 Table 19: Financial performance of Thomas Cook Group.......................................................................76 Table 20: Financial performance of Kuoni Group....................................................................................76 Table 21: Financial results: regional airlines.............................................................................................77 Table 22: Financial results: US airlines (ATA members).........................................................................80 Table 23: Financial results: Asia/Pacific airlines (AAPA members) .......................................................81 Table 24: Average aviation fuel price trends*...........................................................................................81 Table 25: FY2004/05 fuel needs hedged at YE2003/04: Largest non-US carriers................................82 Table 26: Fuel surcharges announced by major airlines in 2004............................................................83 Table 27: Cash flow summary for major EU airlines, 2004 ....................................................................84 Table 28: Top twenty EEA airport operators and top two from accession states ..................................90 Table 29: Share ownership structure 2004 ................................................................................................91 Table 30: Interests in other airports, 2004.................................................................................................92 Table 31: Arrival punctuality by AEA airline...........................................................................................99 Table 32: Departure punctuality by AEA airline....................................................................................100 Table 33: AEA departure punctuality by major European airport ......................................................101 Table 34: Primary causes of departure delays, 2004 vs 2003 .................................................................112 Table 35: Average ATFM delay in minutes, 1997 to 2004......................................................................112 Table 36: Fuel consumption for major EU airlines, 2004 vs 2003 .........................................................115 Table 37: Change in tonnages of pollutants emitted: major EU airlines, 2004 v 2003.........................115 Table 38: Scheduled passengers ex-UK airports by purpose of travel ..................................................118 Table 39: Passenger services results by class of service (2002) ..............................................................118 Table 40: Business travel behaviour and attitudes..................................................................................119 Table 41: Annual spend on business travel per capita............................................................................122 Table 42: Paid holiday in major European countries (2004)..................................................................123 Table 43: Leisure trips by length of stay - average annual % growth (2000 - 2004)............................123 Table 44: Airline alliances commenced by EU airlines in 2004..............................................................128 Table 45: Airlines' changing relationships with TMCs ..........................................................................135 Table 46: Jet airliner orders and deliveries .............................................................................................140 Table 47: Regional jet airliner orders and deliveries..............................................................................141 Table 48: Turboprop airliner orders and deliveries ...............................................................................142 Table 49: Number of domestic PSOs imposed (includes Norway).........................................................145 Table 50: PSO lifted and imposed during 2004 .......................................................................................145 Table 51: Average subsidy per passenger and traffic volumes in 2000 .................................................146 Analysis of the EU Air Transport Industry, 2004 3 Figures Figure 1: Number of city-pair routes between and within states, June 2004 ........................................24 Figure 2: Proportion of European routes operated by multiple carriers, June 2004 ...........................25 Figure 3: Evolution of %ge of European routes served by single carriers, 1994-2004.........................25 Figure 4: Seats provided by low-cost carriers, June 2003 and June 2004..............................................31 Figure 5: Ryanair route selection (2004) – Ex- London ..........................................................................32 Figure 6: EasyJet route selection (2004) ...................................................................................................33 Figure 7: Change in RPK and RTK on scheduled