In this week’s edition, our global team of experts deliver you a wealth of insightful commentary on the latest news and trends affecting the commercial aviation industry, including:
- Japan vacillates over AirAsia Japan relaunch, despite strong economic benefits;
- For Cuba, further US airline capacity cuts are likely, as USA trade relations cool;
- IAG's LEVEL starts four Barcelona routes to Americas; eyes Paris & Rome bases, Asia destinations;
- Vietnam Airlines upgauges and, where possible, adds frequency to drive growth, with N Asia focus;
Japan vacillates over AirAsia Japan relaunch, despite strong economic benefits
Two years after the AirAsia Group announced its intention to re-enter the local Japanese market, the venture has been unable to launch. AirAsia Japan Mk II was announced in Jul-2015 and in Oct-2015 it received its AOC. A Mar/Apr-2016 launch was envisaged, but AirAsia Japan has yet to secure final approval. A 2017 launch appears unlikely while some of the 'powers that be' lobby against the airline ever launching.
AirAsia Japan needs to overcome resistance in the often exclusive Japanese environment still smarting from AirAsia Japan MK I – a JV between AirAsia and ANA that was dissolved. Local mindset needs to be more pro-competition: there appears room in Japan for another strong LCC. Japan has aggressive tourism targets that AirAsia Japan can help meet. AirAsia Japan's proposed base is at Nagoya, which does not have a home LCC and is preparing for a LCC terminal. Competitors are making a launch difficult, and Jetstar Japan has established a base at Nagoya.
For Cuba, further US airline capacity cuts are likely, as USA trade relations cool
On the grounds that the thawing of relations between USA and Cuba introduced by the previous US government was enriching the Cuban military and the intelligence services that contribute so much to oppression on the island, US President Donald Trump has reversed the legislation that had begun to open the Caribbean island to arrivals from the USA.
The decision of the Barack Obama administration to thaw relations between USA and Cuba was seen as a landmark ruling opening the island up to 110 daily commercial flights from the US. But despite the strong interest from US airlines for the traffic rights, particularly into Havana, the anticipated demand has not materialised and five airlines have already suspended or cut routes into Cuba citing high costs and weak bookings.
Despite this, traffic levels between the two countries over the first six months of 2017 have grown to record levels, putting a strain on the country's ageing tourist infrastructure.
IAG's LEVEL starts four Barcelona routes to Americas; eyes Paris & Rome bases, Asia destinations
IAG's new long haul low cost airline LEVEL took to the air on 1-Jun-2017 with a Los Angeles service. This was followed by Oakland, Punta Cana and, on 17-Jun-2017, Buenos Aires. Launched in response to Norwegian's plans to start intercontinental routes from Barcelona, Level just pipped its rival to the post to become Spain's first long haul low cost airline service.
At the launch of LEVEL's first flight, IAG said that its new brand's sales were "well ahead of our expectations in all markets". According to IAG, LEVEL is expanding the market by attracting passengers that are flying long haul for the first time. Looking ahead, IAG plans to take LEVEL into other European cities, with Rome and Paris the favourites for its next base. It is also considering adding destinations in Asia.
Beyond the more analytical considerations of network design and competitor response, there is another less tangible factor that will be vital to LEVEL's long term success. This relates to the new airline's corporate culture. Initially operated and staffed by Iberia, the transition to Level's planned status as a fully autonomous airline within IAG will be crucial.
Vietnam Airlines upgauges and, where possible, adds frequency to drive growth, with N Asia focus
Vietnam Airlines is planning more than double digit capacity growth in 2017 and beyond. The airline expects growth to slow in Vietnam’s domestic market, which has doubled in size over the last three years, but it is eager to pursue opportunities in the international market.
In North Asia Vietnam Airlines will expand by upgauging flights from A321s to 787s or A350s, particularly in markets where slot constraints preclude additional frequencies. Vietnam Airlines also plans to expand in Europe by adding frequencies to its four existing destinations, and is preparing to launch services to the US by 2019.
Vietnam Airlines plans to continue operating narrowbody aircraft regionally within Southeast Asia but is able to add short haul capacity by introducing higher capacity A321s. Vietnam Airlines has increased capacity on 10 of its A321ceos by cutting the business class cabin in half, and is planning an even higher density configuration for its A321neos, which will be delivered from 2018.