Traffic

airBaltic and Estonian Air continue to counter LCC growth threat from Ryanair and others

The Baltic States of Estonia, Latvia and Lithuania are seeing rapid low-cost carrier growth, especially in their key market of Scandinavia. The very small or non-existent domestic markets in the Baltic nations means the local carriers are reliant almost entirely on international operations, where they must compete against foreign carriers. Like the rest of Europe, the most pronounced competition comes from LCCs.

Estonian Air and airBaltic are the key carriers of the region but foreign budget carriers such as Ryanair, Wizz Jet and Flybe are increasing their presence in the Baltic market in order to tap into the burgeoning traffic volumes.

Oman Airports reports strong 2011, positive outlook for 2012

Despite the impact of the Arab Spring, Oman Airports Management Company (OAMC) has been able to report record passenger numbers at Muscat and Salalah airports during 2011. Combined traffic at the two airports was better than 7 million, up 12.7% from the 6.2 million passengers handled in 2011.

Hangzhou, China’s ninth largest airport, targeting 52 million pax by 2015

China Hangzhou Xiaoshan Airport, China’s ninth largest airport by passenger numbers, is preparing for strong growth as it capitalises on its prominent position in the Yangtze River Delta Economic Zone. The airport is progressing on its wide-ranging expansion efforts that will see the opening of a third terminal in the last quarter of 2012, providing a much-needed capacity boost at the airport.

The airport has ambitious plans to triple annual passenger levels from 17.5 million in 2011 to 52 million by 2015, while cargo volumes are also expected to triple, to 1.0 million tonnes. To put this in perspective, the nation’s second largest airport in 2011, Guangzhou Baiyuan, handled only 45 million passengers in the year. In terms of cargo, the nation’s two largest cargo airports in 2011, Shanghai Pudong and Guangzhou handled 3.1 million and 1.2 million tonnes of cargo respectively in 2011. 

Brazil moves swiftly (at last) to award airport concessions

With the 2014 World Cup looming, less than two and half years away, and the Government having faced mounting criticism from many quarters as to its tardiness in resolving infrastructure issues, Brazil's National Civil Aviation Agency (ANAC) moved swiftly this week to conclude the concession auction for three major airports, two in Sao Paulo and one in Brasilia. Together they handle 30% of Brazil’s passenger traffic. While some of the participants are not exactly household names, it is interesting to note that one of them is South Africa's ACSA, which helped host the previous World Cup tournament.

NAV CANADA lines up more collective agreements with workers

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.

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

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.

FAA gets another short-term funding extension

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.

Asia Pacific airlines' "ambitious fleet plans" threaten excess capacity, lower load factors in 2012

Asia Pacific airlines are coming off a difficult 2011, thanks to stubbornly high fuel prices and weaker yields in a challenging global economic environment. But not all the problems are necessarily external. Overcapacity is looming as a threat in 2012 as the region's full service airlines gear up for a period of growth and change in the coming decade. Balancing capacity and demand in choppy and unpredictable economic times is not easy and the coming year looks like being one in which at least temporary oversupply is very likely.

Record aircraft delivery levels are being maintained even as traffic growth slows. The upshot of that combination of factors is lower load factors and reduced yields, made more notable as the finance sector - a key user of premium services - is undergoing sometimes savage staff cutbacks. That in turn implies damage to airlines' bottom lines in what is now an intensely competitive market, with low cost airlines, Gulf carriers and Chinese airlines each vying for larger shares of markets which were historically the territory of the region's flag carriers.

Forced out of Iran and Iraq, Gulf Air looks to Saudi market

Bahrain’s national carrier Gulf Air has extended its suspension of flights to Iran and Iraq, citing the “ongoing security situation” as prompting the decision. Gulf Air was forced to terminate services to Iran, Iraq and Lebanon in mid Mar-2011, due to security and political considerations relating to the Arab Spring uprising, which spread across much of North Africa and the Middle East over late 2010 and the first half of 2011.

The suspension for destinations in Iraq will continue to 31-Jan-2012 inclusive, while the suspension of services to Iran will stretch until and including 31-Mar-2012. At the time of the suspensions, Iran and Iraq were two of Gulf Air’s largest markets. The carrier operated four routes to Iran – Tehran, Mashad, Esfahan and Shiraz – and four to Iraq – Baghdad, Najaf, Erbil and Basra.

South Korea improving airspace access to Japan and China

South Korea’s Ministry of Land, Transport and Maritime Affairs (MLTM) has unveiled a number of airspace enhancements that will improve flights and access to some of its most important neighbours. The moves are part of Korea’s attempts to enhance liberalisation and cooperation with selected Northeast Asian nations, seeking to enhance the competitiveness and environmental performance of its local carriers and improve the convenience of operation for all stakeholders.

In Sep-2011, South Korea and Japan reached a MoU to enhance cooperation between their aeronautical authorities. Their air traffic control centres agreed to expand their operating hours for flights over the Sea of Japan (known as the East Sea in South Korea), which were previously limited to night-time only operations.

Changes - and perhaps conflict - ahead for Austrian Airlines as it seeks a return to profitability

Austrian Airlines is facing a testing period after posting operating losses of well over EUR100 million (USD129 million) over the past two years. The carrier, under the leadership of new CEO Jaan Albrecht, is aiming to return to profitability in 2012 but significant changes will have to occur for this to become a reality. Austrian has stated that it suffers from multiple historical structural disadvantages, forcing it to implement a restructuring programme to stabilise the carrier and ensure its future “once and for all”. But rumblings from staff suggest this might not be plain sailing.

Cost reductions reaching EUR200 million (USD255 million) in 2012 are going to be key factors in the airline’s mission to return to the black. This year will also see continued uncertainty in the airline’s focus markets, with the crisis in the Eurozone and increased expenses resulting from the European Union’s Emissions Trading Scheme likely to affect plans at the carrier.

Rebuilding Libya's aviation industry crucial to economic recovery

Even before the NATO air strikes, the United Nations sanctions and the European Union ban, Libya’s aviation industry had little hope. The country, ruled by Muammar Gaddafi under an iron fist for the last 40 years, placed little focus on its airlines and airports, while countries in the nearby Middle East flourished and started to develop some of the largest hubs in the world. The Middle East/North African region has become increasingly important but it seems Libya was left behind, and when major unrest broke out in Feb-2011, the industry’s problems widened significantly. Now Libya has been “liberalised” and Gaddafi killed, it must begin the slow process of rebuilding an industry whose foundations were not strong to begin with. International airlines have resumed services, investment firms are showing interest in relaunching airport renovation projects, the country’s two national carriers have relaunched operations and are set to resume talks on their merger, and tourism operators are becoming optimistic about future bookings.

Inspired by the Tunisian and Egyptian revolutions, the unrest in Libya is part of the greater Arab Spring, which has seen the leaders of Egypt, Tunisia and now Libya overthrown. Aviation in these countries during the unrest was unstable, however, Tunisair and EgyptAir have successfully restored operations to full capacity. In Feb-2011, Cairo International Airport recorded 530,000 passengers – a 54% drop from Feb-2010. The airport is now operating at near-2010 capacity, and in Jul-2011 and Sep-2011, passenger traffic surpassed 2009 levels. Libya’s Monastir Habib Bourguiba International Airport and Enfidha Zine El Abidine Ben Ali Airport, both operated by TAV Holdings, have been recording consistent traffic decreases of between 30% and 50% each month.