CAPA

Mexico City ponders a second airport, again

Wed, 08 Feb 2012 00:05:00 GMT

Mexico City International Airport’s Director General Hector Velazquez, speaking at an event last week in Mexico organised by IATA and Latin American airline association ALTA, stated that in his opinion it is necessary to construct a second airport in Mexico City as current operations at the existing one are "saturated". The original proposal dates back to the late 1990s but ran into political difficulties.

The scale of Mexican aviation is considerable. It has the second largest share of available airline seat capacity in Latin America, after Brazil. But the Mexican industry has not growing nearly as fast as Brazil or other major emerging markets. In fact the Mexican market has shrunk in size in recent years.

Domestic passenger traffic in Mexico has decreased by 8% over the last four years from 27.6 million passengers in 2008 to 25.5 million passengers in 2011 while international traffic has dropped during this period by 1% from 25.7 million passengers in 2008 to 25.3 million passengers in 2011. As the most popular airport in Mexico, Mexico City International was still able to grow its traffic between 2008 and 2011 but only by a paltry 0.6% from 26.2 million passengers in 2008 to 26.4 million passengers in 2011.

In selecting Gold Coast over China as its second destination, Scoot again goes with low risk option

Tue, 07 Feb 2012 07:10:00 GMT

New Singapore Airlines (SIA) low-cost long-haul carrier Scoot announced today Gold Coast as its second destination after Sydney and confirmed its intention to launch services in Jun-2012. Scoot has decided to launch with two routes to Australia because the process of securing authorisations for China, which Scoot has said will also be served within its first year, is longer and more unpredictable. Gold Coast was selected over two other Australian airports on Scoot’s short list, Adelaide and Brisbane, because of Gold Coast’s excellent track record of success with LCCs, including Asia’s two existing low-cost long-haul carriers – AirAsia X and Jetstar. Gold Coast is also the largest airport in Australia currently lacking a link with Singapore.

Gold Coast is the fifth largest international airport in Australia behind Sydney, Melbourne, Brisbane and Perth (see Background information). Among Australia’s top airports it has by far the highest LCC penetration rate. Currently LCCs account for 98% of total capacity (seats) at Gold Coast, including 90% of international capacity and nearly 100% of domestic capacity.

Chinese carrier pax traffic to exceed 300 million in FY2012 as double-digit pax growth returns

Mon, 06 Feb 2012 00:46:00 GMT

China’s aviation market is poised for a memorable year in 2012, as Beijing likely eclipses Atlanta as the world’s busiest airport (expected in 2H2012) and double-digit traffic growth rates return. Chinese carriers are expected to report a 10% increase in passenger traffic this year to 320 million passengers, according to industry regulator, the CAAC, following growth of 9.2% in 2011.

Some 21 airports in China handled more than 10 million passengers in 2011, five more than 2010 – and more are expected to join the ‘10 million+ club’ in 2012. Eight Chinese airports handled more than 20 million passengers last year. 10 years ago, Beijing was the only Mainland Chinese airport handling over 20 million passengers (with 24.2 million passengers in 2001), while Guangzhou Baiyun and Shanghai Hongqiao (both with 13.8 million passengers) were the only two other airports in China with over 15 million annual passengers.

After Malev's grounding, Hungary could become large LCC market with Wizz Air and Ryanair moving in

Sun, 05 Feb 2012 06:16:00 GMT

Low-cost carriers, in particular Wizz Air and Ryanair, stand to benefit the most from the 03-Feb-2012 suspension of services at Hungarian flag carrier Malev. Budapest-based Wizz Air was already the second largest carrier in the Hungarian market and has now become the country’s largest carrier. Ryanair, which only late last month unveiled plans to resume service to Budapest, will become within a few months the second largest carrier in Hungary in the post-Malev era.

Lufthansa, as the largest remaining legacy carrier in the Hungarian market, is also poised to benefit from Malev’s grounding. Malev had accounted for a 47% share of capacity (seats) in its home market. Most of this share will be absorbed by LCCs although total traffic at Budapest Liszt Ferenc International Airport, which is owned by a private consortium led by Germany’s Hochtief, will likely decrease as its status as a transit hub is lost. Malev had been pushing to raise Budapest’s profile as an international hub, focusing on east-west connections. Malev's collapse saw oneworld overnight drop from the leading alliance in Hungary to the third largest after Star Alliance and SkyTeam.

RAK Airways lines up Kathmandu and Bangkok under 2012 expansion

Fri, 03 Feb 2012 04:54:00 GMT

RAK Airways’ expansion is rolling on, with the carrier announcing plans to serve Kathmandu from 15-Feb-2012. Kathmandu will become the carrier’s 11th new route added since it re-launched its operations in Oct-2010 after a 12-month suspension of operations.

The carrier will see competition on services between the UAE and Nepal from Flydubai, Air Arabia and Etihad Airways and Nepal Airlines. RAK will face competition from UAE-based carriers that already have well-established operations to Kathmandu. Air Arabia has operated to Kathmandu since Nov-2006, Etihad Airways launched its operations in Oct-2007 and Flydubai debuted in Dec-2009.

New Cebu Pacific long-haul operation could push out Philippine Airlines but may require hybrid model

Thu, 02 Feb 2012 09:39:00 GMT

The new plan from leading low-cost Filipino carrier Cebu Pacific to offer long-haul services from 3Q2013 represents not just the fourth low-cost long-haul operation in Asia, but the first time such a carrier has potential to force a full-service rival – Philippine Airlines (PAL) – out of business.

Cebu Pacific will benefit from the Philippines’ extremely price sensitive market that has seen LCCs achieve a staggering 80% share of the domestic market and a fast-growing share of the regional international market. Demand for low-cost long-haul services will come primarily from the large visiting friends and relative (VFR) and migrant worker market. But Cebu’s new low-cost long-haul operation will also benefit from growing tourism and potentially the ability to transfer passengers over a geographically convenient hub if Cebu decides to stray from its original point-to-point model.

While PAL is the nation’s sole long-haul carrier, its lack of global alliance membership, relatively small domestic operation and higher cost base create low barriers for entry. National sentiment for Asia’s oldest airline may run high, but as seen in the Philippines’ domestic market, passengers vote with wallets.

Norwegian's orders make it a candidate for first LCC to join a global alliance - or a Gulf carrier

Thu, 02 Feb 2012 06:30:00 GMT

In a distorted and fast changing airline world where partnerships and mergers are key to future survival, Nordic LCC, Norwegian is fast making itself one of the most attractive unattached propositions in the market.

Norwegian’s steady move towards becoming a long-haul Boeing 787 operator, alongside a growing European short-haul distribution system, promises to make it a serious low-cost network airline. The carrier’s recent deal to lock in access to a large fleet of 222 fuel-efficient short-haul aircraft over the second half of the decade (and at opportunistic prices) will transform a successful local LCC into a global force.

The order announcement therefore does a lot more than promise a bigger airline. Its potentially strong position now propels it into a new sphere where it becomes a candidate to be the first LCC member of one of the big three global alliances – until now the exclusive realm of legacy network airlines.

Melbourne asks for a third airport while Sydney still struggles for a second

Wed, 01 Feb 2012 05:27:00 GMT

Australia’s two largest cities are in a quandary over the need for additional airports. Melbourne, which already has a privately operated secondary domestic airport in addition to the main international one, needs another according to the Victorian Chamber of Commerce (VCC). Meanwhile, the Federal Transport Minister declared he was pessimistic about the likelihood of a second airport in Sydney, a project that has rumbled on for decades without getting anywhere remotely close to resolution.

Acquisition of Blue Panorama and Wind Jet ensures Alitalia will keep ahead of Ryanair in Italy

Tue, 31 Jan 2012 23:30:00 GMT

Alitalia is poised to bolster its position in its home market through the planned acquisition of smaller Italian carriers Wind Jet and Blue Panorama. If the recently announced deals are completed, Alitalia stands to increase its total market share to about 27%, cementing its position as Italy’s leading passenger carrier.

The acquisitions will also result in increased low-cost competition in Italy as Alitalia expands its presence in the budget sector through the new subsidiary companies.

Alitalia stated there are potential synergies with Blue Panorama and Wind Jet, with the airlines having complementary networks, markets and products. Alitalia will be submitting its plan to Italy’s Antitrust Authority for approval prior to the acquisitions being presented to the governing bodies of the three airlines.

NAV CANADA lines up more collective agreements with workers

Tue, 31 Jan 2012 22:46:00 GMT

The world of air traffic management often seems typified by a breakdown in the relationship between air navigation service providers (ANSP) and the staff that work for them. Over the last few months, air traffic services personnel in Cyprus, Germany, Portugal, Greece, Libya, Nigeria, Colombia and the Bahamas have all threatened or conducted strike action, disrupting flights and the travel plans of thousands.

It is unusual then to see an ANSP signing new collective agreements with a minimum of fuss. But that is what NAV CANADA appears to have been able to do, with a round of new collective agreements between the ANSPs and unions since it announced a major new agreement with its air traffic controllers in Aug-2011.

Europe loses four airlines in an unhappy start to 2012

Tue, 31 Jan 2012 05:41:00 GMT

As the economic noose tightens around European airlines, the industry's ranks look set to thin this year. Over late 2011 and the first month of 2012, the industry has witnessed the collapse of four small European carriers as well as the announcement of a merger between Wind Jet and Blue Panorama Airlines by Alitalia. For the time being, it is predominantly smaller, lower capitalised airlines that have failed. The four failed carriers deploy only around 217,000 weekly seats or 0.6% of total European system capacity.

However, the collapses, which follow more than 30 European airline failures over the 2008/09 economic crisis, could in the coming months foreshadow the demise of further carriers or further consolidation, with a number of financially weak carriers operating in the European market. While all but one of the airlines affected so far in 2012 have been based in Continental Europe, there are several weak carriers in Eastern Europe urgently seeking further funding and/or new investors in the near term. Three of the collapsed carriers have been privately owned, but last week's collapse of Spanair shows governments may be willing to let state-supported carriers dither away.

Emerging Africa-Asia market continues to grow with Korean Air service to Nairobi from Seoul

Tue, 31 Jan 2012 02:24:00 GMT

Connections between Africa and Asia will grow from 21-Jun-2012 with Korean Air's seasonal three-times weekly service between Seoul and Nairobi, Kenya. The hub-to-hub flight will link Korean Air's Asian-focused hub to the extensive and growing African hub of fellow SkyTeam carrier Kenya Airways, which plans to serve every African capital city within five years.

The Africa-Asia market will boom this decade, according to Airbus projections that see Africa having the highest percentage growth of traffic to or from Asia. Korean Air's route follows charter services to Nairobi as well as the signing in Dec-2011 of a trade agreement between South Korea and Kenya.

Korean Air will be the only Asian airline to serve East Africa, which geographically and combined with a partner's hub allows for greater traffic feed across Africa. Asian airlines have predominantly focused on serving South Africa while African carriers serve multiple Asian points.

India domestic passenger growth slows to 8% in Dec-2011; 2012 growth to slow from 16.6% in 2011

Mon, 30 Jan 2012 22:44:00 GMT

India’s domestic air passenger growth slowed to 8% in Dec-2011 to less than half the pace of growth experienced in calendar 2011 and down from the 17-22% growth rates seen between Jun-2011 and Oct-2011. While passenger numbers in India’s domestic market have seen growth now for 31 consecutive months, the result for Dec-2011 marks the end of 16 consecutive months of double-digit growth. This single-digit growth in the peak month of Dec-2011 (to 5.63 million passengers) is a sign that slowing economic growth is affecting air travel and reflects impending capacity caution by some of the nation’s largest players.

India’s domestic passenger numbers increased 16.6% to 60.7 million passengers in 2011, averaging out at 5.1 million passengers per month, and up 74% from 2006 levels. The largest stand-alone carrier was IndiGo with a 19.5% market share, with IndiGo also the fastest growing carrier in 2011.

Etihad Airways stake in Air Seychelles gives 'realistic way forward' to the island carrier's future

Mon, 30 Jan 2012 08:28:00 GMT

Etihad Airways's 40% stake in Air Seychelles gives a much-needed second lease of life to Air Seychelles, who says the stake offers a "realistic way forward" for growth, critical as the carrier has scaled back almost its entire network. For Etihad, the opportunity to be a partner in building traffic to the Seychelles, a destination Etihad sees gaining prominence, especially from the alluring Chinese market. Etihad singled out the Seychelles' geographic positioning as a strength in linking the emerging Africa-China market, but it is difficult to see short-term development in that market.

FAA gets another short-term funding extension

Mon, 30 Jan 2012 00:19:00 GMT

The US Federal Aviation Administration (FAA) will continue to exist on short-term funding for at least a few more weeks, but progress on a multi-year funding bill is finally being made. Both houses of the US Congress have now agreed to another stop-gap funding extension, extending funding authority for the agency until 17-Feb-2012.

The extension is the 23rd since the agency’s last multi-year funding bill expired in 2007. It avoids a repeat of last-year’s temporary shut-down of the agency as a shut-down was looming as the existing funding authorisation was due to expire at the end of the month.