Catch up on CAPA’s exclusive Market Analysis pieces – Wizz Air, North Atlantic Aviation Market, MRO Matrix and more

16 April, 2018

Each week, CAPA – Centre for Aviation, produces informative, thought provoking and detailed market analysis of the aviation industry. With supporting data included in every analysis, CAPA provides unrivalled and unparalleled intelligence.

Wizz Air adds competition for Aegean Airlines in Greece

The Greek economy has lost more than a quarter of its value over the past decade, most of this in the first five years. Yet aviation, that most economically sensitive of sectors, has enjoyed a kind of gravity-defying growth. After initially only suffering a 10% fall in air passenger numbers over the first five years, traffic has grown by 57% since 2012. Greece has remained attractive to inbound tourism, which has driven the growth.

Aegean Airlines Group is the only significant home grown operator, but the Greek market has attracted strong competition from foreign airlines, in particular from LCCs. Ryanair and easyJet are the next two biggest operators in Greece. Wizz Air, previously only very small in Greece and absent from Athens, has launched seven new routes from the capital in Mar-2018, and this will rise to nine by May-2018.

Aegean has maintained healthy profitability in recent years in spite of the challenges posed by Greece's weak economy and strong LCC competition. Its capacity growth paused last year, to the benefit of unit revenue, but it will be mindful of the consequent loss of market share. Aegean's recent A320neo family order indicates its confidence for the future. Greece's return to economic growth in 2017 provides optimism that traffic growth should continue to be healthy.

To read on, visit Wizz Air adds competition for Aegean Airlines in Greece

North Atlantic aviation market: LCCs grow market share

LCC seat share on the North Atlantic has grown from almost nothing five years ago to 8% in summer 2018, higher than in any long haul market from Europe (LCCs have 1.0% on Europe-Asia Pacific, 1.7% on Europe-sub Saharan Africa, and 3.4% on Europe-Latin America).

The dominance of immunised joint ventures involving the leading legacy airlines is being eroded, in no small measure due to LCC expansion. In particular, low cost narrowbody growth is now outpacing LCC widebody expansion in this market.

Led by Norwegian, LCCs have exploited EU-US market liberalisation and new generation aircraft (although Canada's WestJet mainly uses older Boeing 767s). WOW air's Icelandic connecting model has also contributed. New entrant Primera Air, an all-narrowbody operator, is following Norwegian in launching trans-Atlantic routes from the UK and France, outside its Nordic home markets.

History shows that the North Atlantic can be challenging for low cost airlines. Today, aircraft technology and the liberalisation of traffic rights have transformed the market and North Atlantic LCCs now appear to have a strong tailwind.

To read on, visit North Atlantic aviation market: LCCs grow market share

CAPA launches new MRO Matrix with unique features

CAPA - Centre for Aviation is pleased to present our new MRO contracts and capabilities live online database - the CAPA MRO Matrix. This will be presented in full for the first time at MRO Americas, 10/12-Apr-2018.

For those familiar with similar systems, it has every functionality for third party MRO market intelligence, but also has numerous positive surprises that are unique to the CAPA Matrix.

The MRO Matrix acts as a repository of well-known and little-known contracts between airlines/lessors and providers as well as subcontracts between MRO companies themselves - making it a very handy business development and competitor analysis tool. Clearly, every contract proves a capability for the provider, but CAPA also collects separate updates on capabilities and, taken together, these are presented in the raw data or in a much more user friendly way than other systems.

To read on, visit CAPA launches new MRO Matrix with unique features

Germany aviation market: airberlin goes, LCCs grow, Lufthansa thrives

The CEO of visitBerlin, Burkhard Kieker, has said that easyJet is the German capital's "new home carrier". The collapse of airberlin and the subsequent acquisition of much of the bankrupt airline's Berlin capacity by the British low cost airline has changed the aviation landscape in the city.

Moreover, Ryanair, which entered Lufthansa's Frankfurt stronghold in 2017, is now the second largest operator in Germany, behind Lufthansa Group. On both domestic and international markets, LCC seat share is bigger in Germany than at any previous time.

Nevertheless, Lufthansa Group appears to be flourishing in spite of the low cost onslaught. The distributed nature of the German aviation market, with no single dominant airport or city, has been one factor in helping Lufthansa to defend itself.

Another crucial factor has been the successful development of its own (fairly) low cost airline, Eurowings. Not a true low cost carrier judged by its unit cost level, Eurowings has nevertheless been instrumental in helping Lufthansa Group to defend and grow its seat share in Germany.

To read on, visit Germany aviation market: airberlin goes, LCCs grow, Lufthansa thrives

Airline alliances, LCC subsidiaries: Scoot may join SIA-Lufthansa JV

As full service airline groups rapidly expand into the long haul low cost sector, questions on whether to include LCC subsidiaries in intercontinental JVs naturally emerge. Scoot’s upcoming launch of service to Berlin adds urgency to bringing Scoot into the JV that Singapore Airlines and Lufthansa launched in 2017.

The Singapore Airlines-Lufthansa JV currently includes SIA's full service regional subsidiary SilkAir but excludes the LCC subsidiary Scoot. SIA and Lufthansa are now working to add Scoot to the JV, a sensible move as it will enable Scoot to start cooperating rather than competing against Lufthansa.

SIA began codesharing with the Lufthansa LCC subsidiary Eurowings in 2017 but Lufthansa does not yet codeshare with Scoot. There is also no relationship yet between Scoot and Eurowings, which has been expanding in Berlin – opening up the possibility of Scoot using Eurowings to feed its new Berlin-Singapore flights.

To read on, visit Airline alliances, LCC subsidiaries: Scoot may join SIA-Lufthansa JV

Gulf-EU open skies: US dispute, fifth freedom and EU negotiations

After a global wave of political conservatism and growing interest in aviation protectionism, is open skies dead? CAPA's Airline Leader summit on 17 and 18 May 2018 in Dublin will host an evening dinner debate on the outlook of open skies in Europe.

The EC is undertaking contentious negotiations with countries that include the UAE and Qatar. Antagonism towards these aviation hubs has occurred at the same time as European airlines' American counterparts have also taken aim at the Gulf hubs.

Yet in 2018 the State of Qatar has reached an agreement with the US to end the debate.

Might this signal Qatar and the EU will also reach an agreement? The US was mostly concerned about fifth freedom, while the EU is focused on the more abstract term of "fair competition". New EU law includes mention of fair competition and generating EU airline jobs. But to the advantage of foreign airlines, the law also mandates the EC to be aware of the overall benefit aviation brings to everyday consumers.

To read on, visit Gulf-EU open skies: US dispute, fifth freedom and EU negotiations