Industry Intelligence - catch up on CAPA’s exclusive market analysis insights

31 August, 2020

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. Here's some of the reports published over the past week.

US aviation: no government movement on temperature checks

Some airlines in the US have been pushing for the government to institute temperature checks as part of the passenger screening process, but regulators have not shown a huge interest in adopting the procedure.

As a result, some airlines are conducting their own tests to demonstrate how effective temperature checks are in allaying passenger concerns about flying.

The lack of movement to create widespread temperature checks across the US aviation system reflects the challenges that US airlines face in working to convince the public that it is safe to travel by air. As the timing for a vaccine remains highly uncertain, airlines could be forced to bolster their message about the safety of flight without support from the government.

TO READ ON, VISIT: US aviation: no government movement on temperature checks

Aeroflot chief calls for 'LCC airports' in Russia - are they needed?

CAPA has regularly reported on the phenomenon of the low cost airport and terminal, and when its 2007 and 2009 reports on the subject were published it was a phenomenon; there were examples of the type springing up on most continents - some of them as basic as garden sheds, while others were 'Taj Mahals' (to use an analogy beloved of some airline executives).

But latterly those airports and terminals are not as popular as they were. Much new thinking seems to be directed towards how best to handle full service, low cost and hybrid models within the same terminal building, and infrastructure adaptation is more typically that of a pier rather than an entire terminal; let alone an airport.

Against that background, the call by a senior airline executive for new minimalistic airports to be constructed in Russia, where low-cost penetration remains moderate at best, may indicate that this is where Aeroflot sees the future heading, as business travel slows.

TO READ ON, VISIT: Aeroflot chief calls for 'LCC airports' in Russia - are they needed?

Alaska Air Group prepares for prolonged uncertainty

Alaska Air Group is joining airlines worldwide in its efforts to rework its business as the COVID-19 pandemic continues in place over much of the globe, and demand patterns are even more unpredictable than ever.

For now, the company appears to be sticking to its previous guidance that its capacity will fall approximately 50% year-on-year in 3Q2020. Whether Alaska's plans to be 35% smaller year-on-year in Oct-2020 will come about is yet to be revealed, or if it will need to refine its capacity plans in light of continued uncertainty in demand.

The company has rationally concluded that the key to unlocking the underlying desire by the general public to travel is cooperation through behaviours, such as mask wearing and improvements to deliver faster testing methods. The airline believes that type of collective social responsibility could be one element of driving an increase in demand.

TO READ ON, VISIT: Alaska Air Group prepares for prolonged uncertainty

Europe low cost airlines: Transavia is now free to play catch up

In Nov-2019 an agreement between Air France and its pilots removed the previous 40 aircraft cap on the fleet of Transavia France. In a further step towards expanding Air France-KLM's low cost brand, Air France's main pilot union, SNPL, has agreed to Transavia France operations in domestic France.

The Transavia brand includes both a French and a Dutch arm (respectively subsidiaries of Air France and KLM), reporting as one segment in Air France-KLM's group results. It has a genuinely LCC level of unit cost, but has lacked scale as a result of the pilot agreements that previously constrained its growth.

Air France-KLM's narrowbody LCC fleet is 40 short of Lufthansa Group's and 70 fewer than IAG's. The narrowbody LCC fleets of all three are much smaller than Ryanair's and easyJet's, but closer in size to Wizz Air, Norwegian and

As European aviation slowly emerges from the COVID-19 crisis, efficient short haul operations are likely to prove crucial. Air France-KLM has much ground to gain on rivals, but at least it no longer has to compete with one hand tied behind its back.

TO READ ON, VISIT: Europe low cost airlines: Transavia is now free to play catch up

Canada's airlines wait for travel restrictions to ease

Canadian airlines and airports have welcomed the new government flight plan for navigating the COVID-19 pandemic, but the country's travel restrictions remain intact, and there is no indication about when a change will occur.

That means the status quo for airlines will continue, and it appears that Canada's two largest operators have joined most US airlines in reducing capacity in the autumn as the pandemic continues to generate uncertainty about a sustained improvement in demand.

As it examines ways to eventually lift those restrictions, the government of Canada is also following ICAO's work on public health corridors, and exploring ways in which contact tracing could be more actively used in air travel.

TO READ ON, VISIT: Canada's airlines wait for travel restrictions to ease

Airports in India: more airports privatised and 100s more to be built

India began an airport privatisation programme by concession back in 2006, but progress since then has been slow, with a second tranche delayed several years ago and some dissatisfaction expressed by one or two of the original investors. One has pulled out altogether, but has since emerged again for the new Delhi airport transaction.

Suddenly there is a flurry of activity, with the Cabinet discussing a renewed and immediate concession programme on six airports and talk (again) of hundreds of airports being built, and of them being privatised as well, perhaps right from the start.

What would the potential investors be looking for as the concession on the six airports is about to get under way?

TO READ ON, VISIT: Airports in India: more airports privatised and 100s more to be built