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:
- EVA Air stagnating since removal of Chairman Chang. North America cuts, China Airlines growing
- LATAM Airlines Brazil still has aims to create a hub in Brazil’s northeast, but instability remains
- Alitalia: Lufthansa, easyJet the only declared bidders, but only for part of Italy's flag carrier
- Azul Airlines aims to avoid crowded markets during its South American expansion
EVA Air stagnating since removal of Chairman Chang. North America cuts, China Airlines growing
EVA Air lost its chairman and some members of senior management, after an ownership sibling dispute which resulted in chairman Chang Kuo-wei being removed in Mar-2016.
Since then, EVA Air has stagnated. Planned destinations have not emerged (one has been cut), while expansion is being revised downwards and a new North American scheduling bank is being reduced when it should have created growth. After the Delta-Korean Air JV, EVA Air is the largest trans-Pacific operator without a significant partnership.
China Airlines is trying new initiatives – reopening London and evaluating other European points, targeting Kangaroo Route traffic and expanding into the MRO business – that may not be right, but present change.
Mr Chang plans to establish a rival to EVA Air, StarLux Airlines, in what has become a revenge drama captivating Taiwan. Besides the start-up's long term prospects being limited, a far better outcome for everyone – and Taiwan – would be for siblings to let Mr Chang return to EVA Air.
It is difficult to see Mr Chang ever achieving more success than would await him back at EVA Air.
LATAM Airlines Brazil still has aims to create a hub in Brazil’s northeast, but instability remains
Brazil’s recession has forced the country’s airlines to adjust their capacity and network strategies in the short term as economic growth contracted in 2015 and 2016. LATAM Airlines Brazil during 2015 declared plans to establish a hub in the country’s northeast to create efficient connections between South American and Europe, but economic weakness forced the airline to put those plans on hold.
But LATAM remains steadfast in its belief that a northeastern hub is necessary for efficient trans-Atlantic connections, and it aims to move forward with those plans once demand in Brazil stabilises.
LATAM is joining other airlines operating in Brazil in concluding that generally, traffic is recovering at a slow pace, with corporate business taking some time to reach levels recorded prior to the country’s recession.
Alitalia: Lufthansa, easyJet the only declared bidders, but only for part of Italy's flag carrier
The 16-Oct-2016 deadline for binding offers for Alitalia yielded seven bids for the bankrupt airline's administrators to consider. The only bidders that have publicly announced their interest are Lufthansa and easyJet, the same two airlines that also recently bid for parts of the Air Berlin Group.
As with Air Berlin, they have each only bid for parts of Alitalia, rather than the whole company (which would be the preference of the administrators and the Italian government). The completion of any sale to the successful bidder had been scheduled for 5-Nov-2017, but has been delayed until Apr-2018 following an Italian cabinet meeting.
Ryanair, which is the biggest airline in Italy, withdrew from the bidding process to concentrate on its recent operational problems. EasyJet is the next biggest LCC after Ryanair in Italy, and Lufthansa is the next biggest FSC after Alitalia. This gives both airline bidders an opportunity to use their bids for parts of Alitalia to challenge Ryanair's leadership in Italy.
However, as all previous owners of the Italian national airline know to their cost, cultural change, restructuring and the end of political interference will be minimum requirements for a successful and sustainable operation.
Azul Airlines aims to avoid crowded markets during its South American expansion
Brazilian airline Azul has maintained a positive outlook during 2017 as the economic recovery in Brazil slowly takes off and international traffic shows signs of strength. The airline is encouraged by trends on Brazil’s domestic routes, concluding that capacity adjustments have created a right-sized market. Overall, the air traffic recovery in Brazil may be slower than anticipated, but Azul's assessment is that it is moving at a steady pace.
Taking advantage of favourable international traffic trends, Azul is adding flights from Belém to Fort Lauderdale and Belo Horizonte to Orlando in Dec-2017, followed by the launch of service from Recife to Fort Lauderdale in 2018. Azul is also adding service from Recife to Córdoba and Rosario, Argentina in 2018, as it selectively adds regional routes in South America.
The airline’s strategy for expansion in South America is to look for opportunities where it can attain a viable competitive position, which means Azul is not looking to expand into already crowded markets.