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

6 September, 2021

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.

North Atlantic: US airlines enjoy access bias; BA awaits RASK return

An OAG Blog post of 19-Aug-2021 contained some useful insights about the top 10 airlines by North Atlantic revenue in the summer before the coronavirus pandemic.

British Airways was the number one revenue generator across the Atlantic in Jul-2019 and Aug-2019, although data from CAPA/OAG show that it was only fourth by ASKs behind the big three US operators Delta, United and American. This is a reminder of BA's strongly superior average unit revenue, resulting from its premium cabin mix.

Comparison with capacity data for Jul-2021 and Aug-2021 show ASKs down versus 2019 levels for all but one of the top 10 North Atlantic airlines.

The cut is deepest for Virgin Atlantic, BA and Aer Lingus, but ASKs are up for Turkish Airlines. The revenue impact is likely to be worse than the ASK impact, especially for European airlines. Load factors are down for all, but US airlines derive more of their revenue on US points of sale. Moreover, US-originating traffic is allowed into Europe, but not vice versa.

British Airways will be yearning for a return to the pre-pandemic normality of its superior unit revenue.

TO READ ON, VISIT: North Atlantic: US airlines enjoy access bias; BA awaits RASK return

HK Express, Greater Bay Airlines address HKG's low cost demand

While the Hong Kong market has historically been dominated by the full service business model, locally based carriers in the low cost or hybrid category are likely to have increasing influence in coming years.

Cathay Pacific plans to grow its HK Express LCC subsidiary, and the start-up Greater Bay Airlines (GBA) will partially compete in this segment with a "value carrier" model. The relatively low penetration of LCCs in Hong Kong should give opportunities for both approaches.

It is still unclear precisely what GBA's model will look like, but it appears to be aiming between full service and LCC. The airline is moving closer to beginning service, and although it will initially have a small fleet and network, it has larger growth aspirations.

The Cathay group also has ambitions for HK Express. Cathay was a later convert to the dual business model approach than some of its major competitors, but now views HK Express as a vital part of its strategy to attract a broader section of demand. The parent has fleet expansion plans for HKE, which may be very important to the group in the post-pandemic market.

TO READ ON, VISIT: HK Express, Greater Bay Airlines address HKG's low cost demand

Turkey aviation: #2 in Europe. Turkish, Pegasus focus on low costs

Turkey is now second only to Spain among the nations of Europe ranked by airline seats in the week of 16-Aug-2021 - Europe's #2 aviation market by seats.

Turkey's domestic-led recovery has taken it to 84% of 2019 seat capacity, much higher than the average of 66% for all of Europe.

Both of Turkey's leading airlines are at even higher percentages of 2019 seat numbers. The ultra-LCC Pegasus Airlines is back to 100%, and the national flag carrier Turkish Airlines is at 91%. In both cases, the passenger traffic recovery is behind capacity, but still ahead of Europe overall.

Pegasus' advantage stems from a greater exposure to the domestic market (although both benefit from Turkey's large domestic market), while Turkish Airlines has a greater exposure to the still depressed market for long haul connecting traffic.

Nevertheless, Turkish Airlines is also now making greater use of its low cost brand AnadoluJet. In a recovery led by short/medium haul, point-to-point routes, and with a strong cost-focused competitor in Pegasus, this looks like a sensible move.

TO READ ON, VISIT: Turkey aviation: #2 in Europe. Turkish, Pegasus focus on low costs

Algeria to allow private airline for the first time - domestic only

Algeria appears likely to allow the first privately backed airline in the country, a potential first step on a journey that could result in Algeria following Morocco and adopting a more liberalised approach to business and emerging as a stronger travel and tourism market in North Africa.

Algeria is nestled in the Maghreb region of North Africa and is the largest country by area across the whole of Africa. Many empires have left legacies, and it is one of the largest economies on the continent thanks to its energy exports.

A French colony for over 130 years through the 19th and 20th centuries, Algeria maintains important links to that country, but other than that its air travel policy has generally remained restrictive.

Unlike in Morocco to its west, which has benefitted from an open skies agreement with Europe, Algeria's aviation sector continues to be dominated by the state-owned airline Air Algérie and Tassili Airlines, formed as a joint venture between Sonatrach Petroleum Corporation and Air Algérie, but now fully controlled by Sonatrach, a fully government-owned company.

While international airlines have been permitted entry into Algeria, the LCCs that have helped Morocco grow its international arrivals and boost its tourism industry remain exempt.

Algeria has ambitions, like its neighbour, to improve tourism infrastructure, especially on its Mediterranean coast to the north, but tourism still contributes very little to an economy dominated by the oil industry, and continues to be influenced by a lack of adequate hotel accommodation, the threat of terrorism, and antiquated visa requirements.

TO READ ON, VISIT: Algeria to allow private airline for the first time - domestic only

SPECIAL REPORTS: Aviation Sustainability and the Environment

This regular weekly CAPA report features a summary of recent aviation sustainability and environment news, selected from the 300+ news alerts published daily by CAPA. This week's issue includes: oneworld alliance outlines path to net zero emissions by 2050; Denver International Airport announces five year sustainability initiatives plan; Charles M Schulz - Sonoma County Airport joins Good Traveller Programme; New European Partnership for Clean Aviation to launch in late 2021; Mitsubishi Power to participate in commercial scale SAF consortium in Japan.

TO READ ON, VISIT: SPECIAL REPORTS: Aviation Sustainability and the Environment