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

1 November, 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.


European aviation's recovery climbs to a new high at winter's onset

Europe's capacity recovery has regained momentum in the first week of the winter season.

After 12 weeks at 33% to 35% below 2019 levels, total seat numbers in the week of 25-Oct-2021 are down by 24.6% versus the equivalent week of 2019. This is the highest percentage of 2019 capacity since pre-COVID.

Moreover, Europe is now up from fourth to third in the regional capacity recovery ranking. Below Europe are Asia Pacific, where seat capacity is down by 39.4%, the Middle East, down by 36.9%, and Africa, down by 27.4%. Latin America, down by 22.8%; and North America, down by 14.3%, are ahead of Europe in the capacity recovery.

The most recent ACI Europe preliminary airport passenger data indicate that traffic was 35% below 2019 levels in the week of 17-Oct-2021, when capacity was down 33%. This was before this week's upward step in the capacity trend, and followed several weeks when passenger traffic was approximately 39% below 2019.

TO READ ON, VISIT: European aviation's recovery climbs to a new high at winter's onset


Asia-Pacific tourism ready to grow as more borders open. Part 1

A growing number of countries in the Asia-Pacific region are looking to reopen their borders to international travel as rising vaccination levels give their governments more confidence in easing restrictions.

This is a particularly welcome development, since the Asia-Pacific region has been far slower to open up than Europe or North America. Asian countries were initially more successful in combatting the pandemic than those in other regions, but then Europe and North America moved ahead due to their faster vaccination programs.

The Asia-Pacific countries in question are taking different approaches to relaxing border rules and some are moving more aggressively than others. Quarantine periods are being eliminated or drastically reduced.

Other aspects common to most of these initiatives are that pre-departure COVID-19 testing is still required, and travellers must be fully vaccinated. Testing after arrival is also stipulated in most cases.

Among those that have recently made - or are planning - changes to their entry restrictions are Fiji, India, Indonesia, Singapore, Thailand and Vietnam.

Australia is also taking important steps, although initially for outbound travel only. Such moves are allowing airlines to resume or increase flights in these markets, which is an important step towards rebuilding international demand.

Fiji and Thailand are covered in part one of this report, with the others in part two.

TO READ ON, VISIT: Asia-Pacific tourism ready to grow as more borders open. Part 1


Asia-Pacific tourism ready to grow as more borders open. Part 2

In this second part of a two-part update CAPA examines more Asia-Pacific markets that are making - or planning - moves to open borders to international travel.

A common element is that testing is required, both pre-departure and post-arrival in many cases. Full vaccination is also generally required.

Part one of this analysis covered Thailand and Fiji.

TO READ ON, VISIT: Asia-Pacific tourism ready to grow as more borders open. Part 2


European airlines: intra-Eur, N Atlantic to boost 2022 & reduce losses

According to IATA's Oct-2021 airline industry financial forecast, European airlines will benefit from the two fastest recovering international passenger markets in 2022.

Intra-Europe RPKs are forecast at 75% of 2019 volumes next year, with North Atlantic RPKs at 65% - both ahead of all other main international regions.

The intra-Europe recovery is good news especially for Europe's leading ultra-LCCs Wizz Air and Ryanair. The North Atlantic reopening to European travellers is positive for IAG, Lufthansa Group and Air France-KLM (in that order).

Nevertheless, costs have continued to run at higher percentages of 2019 levels than revenue has. Cutting capacity is easier than cutting cost - particularly labour - and losses are forecast for Europe's airline industry into 2022, albeit at narrower levels. Only the more domestic-focused North American airline industry is expected to return to profit in 2022 (North Atlantic reopening is an additional boost).

TO READ ON, VISIT: European airlines: intra-Eur, N Atlantic to boost 2022 & reduce losses


CAPA Live: Two US ULCCs emerged from COVID, stronger, more confident airlines

As the airline industry continues to count the cost of the COVID catastrophe, two ultra-low-cost operators in the US have detailed how they have emerged not only in good shape, but in better shape than before the pandemic.

Protected by their lean structures, and supported by resurgent demand for domestic leisure travel, Allegiant and Sun Country are both soaring with lower debt, inexpensively-acquired fleets, and network growth opportunities.

Their Chief Financial Officers, Greg Anderson at Allegiant, and Dave Davis at Sun Country, have each outlined to October's CAPA Live Summit their competitive strategies, growth opportunities, and reasons for financial gains, when many other airlines are struggling to survive. They were in conversation with Anup Mysore, Governor, Oxford Brookes University and former MD of Citi.

TO READ ON, VISIT: CAPA Live: Two US ULCCs emerged from COVID, stronger, more confident airlines


CAPA Live: BOC Aviation MD & CEO Robert Martin - 'we're going to start seeing a significant pickup in business travel'

Talking at the CAPA Live on 13-Oct-2021, BOC Aviation MD & CEO Robert Martin spoke with CAPA's chairman emeritus Peter Harbison. Some of his key comments included: "The flow through the airports, particularly in Southeast Asia, it's still well into single digits as a percentage of 2019. Not all Asians are alike when it comes to travelling."; "I suspect IATA's numbers are understated for Asia, Europe for next year. Clearly on the financial side, this is going to impact people's cash flows, and people will use whatever aircraft they were planning to use on those routes."; "there's less impetus for business travel when they're working from home. I think that's going to change come November and December this year, and we're going to start seeing a significant pickup in business travel."; "if a passenger has a choice, their strong preference is to fly point to point. And as we come out of the downturn, this is going to be one of the challenges for those airlines that rely on hubbing traffic through a single hub."

TO READ ON, VISIT: CAPA Live: BOC Aviation MD & CEO Robert Martin - 'we're going to start seeing a significant pickup in business travel'


US airports: Seattle attempts to locate site for second airport

Few mid-sized US cities have more than one commercial airport competing for business outside the bigger main conurbations (New York, Chicago, Los Angeles etc.).

In some cases the addition of a new one, even as merely a reliever, supporting perhaps only low cost carriers or even freight, might be justified. That has been the debate (a long one already) at Seattle, where six potential sites, five general aviation facilities and one airport already partly developed, are again under consideration.

The partly developed one, which is also managed by a firm specialising in airport PPPs, looks to be the favourite, but political, economic and crucially environmental considerations will also come into play, and there is always a slight possibility that one or more airlines will resist the strategy altogether. As happened at Atlanta, where the developer at the Paine Field site near Seattle was also the intended developer in Georgia.

TO READ ON, VISIT: US airports: Seattle attempts to locate site for second airport


Hahn Airport insolvent: one-off, or warning for low cost airports?

Frankfurt Hahn airport is one of those European misnomers which go back to the days when Ryanair influenced airport names by reference to the nearest big city.

Despite being further from the city it is named for than probably any other, it grew to become one of the largest on the Irish airline's network.

But its ownership changed on several occasions between the public and private sectors as it struggled, despite attracting cargo airlines, to break even. Most recently China's HNA Group has been in charge, but HNA has had severe financial problems of its own - to say the least.

Now Hahn airport has filed for bankruptcy and the race is on to save it again. This time the prospects are gloomy.

TO READ ON, VISIT: Hahn Airport insolvent: one-off, or warning for low cost airports?


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: Major aerospace OEMs CTOs issue joint statement reaffirming sustainability commitments; IATA issues SAF industry development recommendations to Latin American and Caribbean governments; Pegasus Airlines commits to net zero carbon emissions by 2050; ZerioAvia and Alaska Airlines partner to develop hydrogen-electric propulsion for regional aircraft; London Heathrow Airport launches SAF purchasing carbon offsetting scheme; CAPA-Envest publish Airline Sustainability Benchmarking Report.

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