Issue N°140. 07/05/12 Industry Monitor The EUROCONTROL bulletin on air transport trends European flights decreased by 2.7% in March. The charter segment continued to recover from EUROCONTROL statistics and forecasts 1 the Egyptian and Tunisian disruptions last year Other statistics and forecasts 2 and was up 11%. Passenger airlines 2 IATA reported an increase of 8.8% in demand in Environment 6 March 2012 for passenger traffic in Europe Oil 7 whereas freight traffic was down 2.2% on March 2011. Airports 7 Aircraft Manufacturing 8 Delta is the first airline to buy an oil refinery in an attempt to cut fuel costs by €230 million a Regulation 8 year. Cargo 9 Oil prices down to 91€/barrel in April. Fares 9 EUROCONTROL statistics and forecasts European flights decreased by 2.7% in March on the same month of 2011, with the underlying trend slightly higher, as the figure was affected by significant strike days in Cyprus, France, Germany, Portugal and Spain (see Figure 1). The charter segment continued to recover from the Egyptian and Tunisian disruptions last year and was up 11% in March, business aviation was up 0.7% whereas traditional scheduled, low-cost and all-cargo were down -3.4%, -2% and -8% respectively (EUROCONTROL, April). Based on preliminary data for delay from all causes, 31% of flights were delayed on departure in March, a 1 percentage point decrease and a return to the low levels observed in 2011. Analysis of delay causes contributing to the average delay per flight shows a notable increase in reactionary delay, with this cause experiencing a 48% share of total delay minutes for all- causes and an increase in its contribution to the average delay per flight of 3.8 minutes, up from 3.5 minutes in March 2011. Airline related delays remained at a stable level in comparison to March 2011(see Figure 2) (EUROCONTROL, April). Industry Monitor. Issue 140. 07/05/12 Page 1 © EUROCONTROL 2012 Figure 1: European Traffic. Other statistics and forecasts IATA reported an increase of 8.8% in demand in March 2012 for passenger traffic in Europe whereas freight traffic was down 2.2% on March 2011 (IATA, 2 May). ACI reported that European airports saw a 3.1% increase in passenger traffic in February 2012 compared with the same month last year whereas total cargo traffic remained negative, at -1.6%. Total aircraft movements were down by 1.1% on February 2011 (ACI, 4 April). Passenger airlines Air France presented an update on its ‘Transform 2015’ business plan aiming to reduce its controllable costs by 20% to restore competitiveness. The objective is to return to break-even for point to point service in 2013 and for the entire short- and medium-haul business in 2014. The first steps include developing its Transavia subsidiary and to regroup its regional offices (Air France, 2 April). IAG completed the acquisition of BMI further regulatory approval received by the European Commission (IM139) pending IAG is committed to 7 daily slot pairs to be used between Heathrow and Edinburgh and/or Aberdeen, 5 daily slot pairs to be used between Heathrow and Nice, Cairo, Riyadh, Moscow, Edinburgh and/or Aberdeen and 2 daily slot pairs to be leased to Transaero for flights to Moscow. IAG is to receive a significant price reduction since Lufthansa failed to sell BMIbaby and BMI Regional. British Airways opened consultations with unions as plans to integrate BMI into its operations at Heathrow could result in cutting 1,200 jobs at BMI (IAG, 20 April). Industry Monitor. Issue 140. 07/05/12 Page 2 © EUROCONTROL 2012 Breakdown of average delay per flight Percentage of flights delayed on departure Figure 2: Delay Statistics (all causes delay – preliminary data for March 2012). Corsairfly (TUI) is rebranded to Corsair International with a new corporate identity, from charter to scheduled airline and new destinations to concentrate on flights from Orly to the Carribean and French-speaking African countries. Corsair International is to renew its fleet entirely between 2012 and 2013 (Corsair, 27 March). It is reported that Serbian government agreed to sell a 50% stake in Jat Airways to a consortium of 3 business men before Parliamentary elections on 6 May (Air Serbia, 3 April). Thomas Cook Group confirmed that it is in advanced discussions with its banking group to extend its financing arrangements resulting from a strategic review agreed last November (IM136) (Thomas Cook Group plc, 9 April). It is reported that Transaero Airlines obtained financing to buy 4 A380s which makes the airline the launch customer for the A380 in Russia, CIS and Eastern Europe (Reuters, 12 April). French and Russian aviation authorities are in talks to designate a second airline from each country to compete on the Orly – Moscow and Nice – Moscow routes with 7-weekly frequencies on both routes. It is reported that Aigle Azur (France) would be the second airline for Orly – Moscow route whereas S7 airlines and Transaero would be in competition for Russia (DGAC, 30 March & Kommersant newspaper). IAG Group reportedly confirmed its interest in state-owned TAP to expand its network in South America and Africa. The Portuguese government needs to sell TAP by the end of 2012 (Reuters, 17 April). Industry Monitor. Issue 140. 07/05/12 Page 3 © EUROCONTROL 2012 Figure 3: Main carriers’ traffic statistics. Struggling Cyprus Airways is looking for investors to inject €45 million in the carrier although no specific proposal was submitted by any prospective investor (Cyprus Airways, 9 April). Finnair reached an agreement to outsource its engine and components services to Swiss SR Technics and would therefore cut 280 jobs. The airline is targeting €140 million of cost cuts by 2014 (AFP, 11 April). Through its project ‘Direct4U’, Lufthansa is reportedly planning to move by the end of this year, all its short- and medium-haul flights that do not depart from the airline’s main hubs in Munich and Frankfurt, to its subsidiary Germanwings. The airline said it will cut 3,500 administrative jobs further to worse than expected Q112 results (Der Spiegel & Lufthansa, 3 May). Delta is the first airline to buy an oil refinery in an attempt to cut fuel costs by €230 million a year. Production at the refinery would cover 80% of the airline’s fuel needs in the US (Delta, 30 April). Routes, Alliances, Codeshares Vueling launched 6 new routes from Barcelona to Lyon, Marseille, Strasbourg, Cardiff, Almeria and San Sebastian and resumed flights to Nice (Vueling, April). TUI Russia and Kolavia formed a joint venture to launch Russian charter Metrojet which is to offer service from Russia to Turkey, Egypt and Spain, effective 1 May (TUI Russia & CIS, 20 April). Industry Monitor. Issue 140. 07/05/12 Page 4 © EUROCONTROL 2012 Figure 4: Main carriers’ load factors. Ministries of Transport of Russia and Belarus ended a dispute over the number of frequencies on the Moscow-Minsk route which resulted in stopping flights between the two countries last March and reached an agreement for five daily frequencies for each country’s carriers (Baku Today, 9 April). Turkish Airlines reportedly intended to pull out of its 49% stake in Bosnia’s flag carrier BH Airlines due to a lack of cooperation from Bosnia’s government (Reuters, 17 April). Italian Antitrust Authority ended the monopoly on the Fiumicino – Linate route created by Alitalia-AirOne in 2008. Alitalia will have to give up some slots to allow competitors to operate daily services on the route; easyJet declared its interest in slots. Alitalia is to appeal the antitrust ruling arguing that the Rome-Milan high-speed rail constituted competition for the airline (AGCM Air Transport Antitrust Italy, 17 April). Etihad bought a 3% stake in Aer Lingus and both carriers are also in talks about a codeshare agreement (Etihad, 1 May). OLT Express Poland announced it will open a large number of European routes from four airports (Gdansk, Lodz, Rzesow and Warsaw) when the winter season starts. The airline operates 6 A320s with 6 more expected to join the fleet by October and plans for 8 A319s (OLT 19, 20, 23-25 April). SATA International resumed flights from Heathrow, Gatwick and Manchester to the Azores (SATA, April). easyJet launched its winter schedule with 259 routes including 9 new routes to Tel Aviv, Tallinn, Turin, Amsterdam, Geneva, Venice, Isle of Man and Copenhagen across its UK network. The airline launched its 11th base at London Southend on 2 April with 70 flights per week and 12 destinations across Europe (easyJet, 30 Mar, 2 & 20 Apr). Industry Monitor. Issue 140. 07/05/12 Page 5 © EUROCONTROL 2012 Figure 5: Carbon prices. Ryanair is to drop eight routes from Edinburgh to Bratislava, Bremen, Frankfurt, Fuerteventura, Gothenburg, Kaunas, Lodz and Poznan, starting October, on top of already announced five route cuts from its summer schedule. The airline could not come to an agreement with BAA over charges and warned of deeper cuts to its winter schedule if BAA failed to agree an extension to a five-year base agreement, which expires in October 2012, on more competitive terms (Ryanair, 12 April). Failures US regional airline, Pinnacle Airlines filed for Chapter 11 Bankruptcy Protection and seeks to cut costs and restructure certain agreements with major airlines. Pinnacle provides regional flights for Delta Airlines, United and US Airways (Pinnacle Airlines, 1 April). Cimber Sterling filed for bankruptcy and stopped flights after its owners had removed financial support (Cimber Sterling, 3 May). Traffic statistics: March update Figure 3 and Figure 4 compare March 2012 figures with March 2011 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).