ANALYSIS OF THE EU AIR TRANSPORT INDUSTRY Final Report 2005 Contract no: TREN/05/MD/S07.52077 by Cranfield University Department of Air Transport Analysis of the EU Air Transport Industry, 2005 1 CONTENTS 1 AIR TRANSPORT INDUSTRY OVERVIEW......................................................................................11 2 REGULATORY DEVELOPMENTS.....................................................................................................19 3 CAPACITY ............................................................................................................................................25 4. AIR TRAFFIC........................................................................................................................................36 5. AIRLINE FINANCIAL PERFORMANCE............................................................................................54 6. AIRPORTS.............................................................................................................................................85 7 AIR TRAFFIC CONTROL ..................................................................................................................102 8. THE ENVIRONMENT ........................................................................................................................110 9 CONSUMER ISSUES..........................................................................................................................117 10 AIRLINE ALLIANCES .......................................................................................................................124 11 AIRLINE DISTRIBUTION .................................................................................................................131 12 AIRCRAFT AND MANUFACTURERS.............................................................................................137 13 PUBLIC SERVICE OBLIGATION (PSO) ..........................................................................................142 Analysis of the EU Air Transport Industry, 2005 2 Tables Table 1 Financial results: European airlines 2005 vs 2004 ..............................................................................................13 Table 2 Labour costs and productivity: 16 major European network airlines ..................................................................16 Table 3 Changes to domestic networks between June 2004 and June 2005.....................................................................26 Table 4 Losses to the Finnish domestic network..............................................................................................................26 Table 5 Changes to international intra-European networks, 2004-2005...........................................................................27 Table 6 easyJet and Ryanair London airport networks, 2001 - 2005................................................................................31 Table 7 Total passenger traffic of AEA members, 2005 ..................................................................................................40 Table 8 Scheduled passenger services of AEA members, 2005 vs 2004..........................................................................41 Table 9 Europe’s passenger charter airlines in 2005 ........................................................................................................45 Table 10 Europe’s charter airlines’ demand in 2005, and change over 2004 .....................................................................46 Table 11 Air freight traffic carried by AEA carriers, 2005 vs 2004...................................................................................50 Table 12 Growth of world air cargo traffic by regional, 2005 vs 2004 ..............................................................................52 Table 13 Total revenue (US$) per RTK - selected European network airlines ..................................................................55 Table 14 Labour costs and productivity: 16 European airlines, 2004 vs 2005 ...................................................................56 Table 15 Financial results: major European network carriers ............................................................................................58 Table 16 Labour costs and productivity: LCC and charter airlines ....................................................................................62 Table 17 Financial results: European LCC and charter airlines, 2004 and 2005................................................................64 Table 18 Charter airline subsidiaries of Europe’s largest tour operators............................................................................71 Table 19 Financial performance of First Choice ................................................................................................................71 Table 20 Split of First Choice passengers by length of haul ..............................................................................................71 Table 21 Financial performance of MyTravel....................................................................................................................72 Table 22 Financial performance of TUI’s tourism division ...............................................................................................72 Table 23 Financial performance of Thomas Cook Group ..................................................................................................73 Table 24 Financial performance of Kuoni Group...............................................................................................................73 Table 25 Financial results: Air Nostrum and Portugalia ....................................................................................................73 Table 26 Top-twenty European regionals in terms of revenue (USD million) 2005..........................................................74 Table 27 Financial results: US airlines (ATA members) ...................................................................................................77 Table 28 Financial results: Asia/Pacific airlines (AAPA members)...................................................................................78 Table 29 Average aviation fuel price trends.......................................................................................................................80 Table 30 FY2005/06 fuel needs hedged at YE2004/05: European airlines.......................................................................81 Table 31 Fuel surcharges announced by major EU airlines in 2005 (€).............................................................................81 Table 32 Cash flow summary for major EU airlines, 2005/06...........................................................................................82 Table 33 Top twenty EEA airport operators and top two from accession states, 2005 ......................................................89 Table 34 Share ownership structure for major European airports, 2005 ............................................................................90 Table 35 Interests in other airports by major European airport, 2005 ................................................................................91 Table 36 Departure punctuality: overall performance for ERA regional airlines...............................................................98 Table 37 Departure punctuality for ten largest ERA regional airlines................................................................................99 Table 38 AEA departure delay rates on intra-European services .....................................................................................100 Table 39 Primary cause of departure delays, 2003 - 2005.......................................................................................108 Table 40 UK air transport CO2 emissions in 2050, as a percentage of 2000 UK total emissions baseline ......................112 Table 41 Global air transport CO2 emissions 2050, as % of 1992 total global emissions baseline..................................112 Table 42 Air transport emissions in a carbon-constrained world, as % of total emissions in 2050..................................112 Table 43 Fuel consumption for major EU airlines, 2005 vs 2004 ....................................................................................114 Table 44 Change in pollutants emitted for major EU airlines, 2004 v 2005.....................................................................114 Table 45 Scheduled passengers from major UK airports by purpose of travel and country.............................................117 Table 46 Business traveller behaviour and attitudes ........................................................................................................119 Table 47 Alliance Group Market Shares, 2005 ................................................................................................................124 Table 48 Unaligned carriers market share, 2005..............................................................................................................125 Table 49 Weekly global operations..................................................................................................................................126 Table 50 Trend in airline alliance formation....................................................................................................................126 Table 51 Airline alliances (code shares)