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

8 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.


US airlines chase premium leisure demand to subsitute business travel

US airlines have been pleasantly surprised over the resilience of their premium products during the COVID-19 crisis even as the recovery in business travel has been pushed back due to the spread of the 'delta variant' of the coronavirus.

And now, some of those operators have reached the conclusion that a structural shift could be under way as leisure travellers who are, in some cases, flush with cash continue to find more refined product offerings attractive.

That shift is leading airlines to believe that even if business travel does not fully recover, their long term prospects for profitability remain robust. But obviously the big questions are whether this trend is indeed a permanent change ushered in by the pandemic and just how large it is.

TO READ ON, VISIT: US airlines chase premium leisure demand to subsitute business travel


Australasian airlines revamp long haul fleet plans

The COVID-19 pandemic has caused a series of dramatic shifts in fleet strategies for Australasia's airlines. While the initial focus was on shrinking operations and deferring growth, airlines are now looking ahead and revising their fleet plans to ensure that they are well suited to the post-pandemic recovery phase.

Major changes have been most evident in international fleet strategies, as the airlines prepare for a slow resumption of overseas travel while also positioning themselves to take advantage of new opportunities.

A clearer picture has emerged of how Qantas and Air New Zealand intend to develop their long haul fleets, although Virgin Australia's widebody plans remain on hold.

TO READ ON, VISIT: Australasian airlines revamp long haul fleet plans


Italia Trasporto Aero (ITA): new culture vital to shed Alitalia legacy

The first flight of Europe's newest airline took off from Milan Linate at 6.20am on 15-Oct-2021, bound for Bari.

The domestic Italian service was the first flight of Italia Trasporto Aero (ITA), successor to Alitalia as Italy's national airline. After more than three years in special administration Alitalia's last flight was on 14-Oct-2021, although its ground operations continue to provide handling and maintenance services.

ITA's main hub is Rome Fiumicino, with Milan Linate an additional business travel hub and Milan Malpensa offering some long haul destinations over time. Starting with 52 aircraft, versus Alitalia's 83, ITA aims to grow its fleet to 105 by 2025.

The new airline is wholly owned by the Italian state and it is also seeking investment from a major airline. As only the fourth biggest operator in Italy (with just 8% of seats, while Ryanair has 39%, Wizz Air and easyJet 9% each), a strategic partner for ITA could be important.

If ITA is to escape Alitalia's legacy of consistent losses, however, it must adopt a new, more efficient and flexible culture. There is no other way to compete with LCCs.

TO READ ON, VISIT: Italia Trasporto Aero (ITA): new culture vital to shed Alitalia legacy


Airlines jockey for position in changing Brazilian market

As the Brazilian aviation market continues to recover from the COVID-19 pandemic, market dynamics are changing.

LATAM Airlines Group is working to exit Chapter 11 bankruptcy protection, a new entrant (Itapemirim Airlines) has launched operations, and Azul is attempting to push consolidation in the market.

Although it will take some time for the market to rebound fully, growth will bounce back, and Brazil's airlines are working to ensure that they have competitive levers to pull once passenger levels begin to grow.

But as with other regions of the world, the recovery is likely to be bumpy.

TO READ ON, VISIT: Airlines jockey for position in changing Brazilian market


How foreign airlines have kept Australia open through the pandemic

The reopening of Australia's international border on 01-Nov-2021 caps an unprecedented and tumultuous period in Australia's aviation history.

The imposition of entry bans and mandatory hotel quarantine for arriving passengers came into effect in late Mar-2020, creating arguably the most challenging international operating environment, commercially and logistically, for airlines serving Australia.

TO READ ON, VISIT: How foreign airlines have kept Australia open through the pandemic


ICAO in need of reforms to enhance its relevance - now is opportune

The International Civil Aviation Organisation, ICAO, continues to function fairly effectively in pursuance of the 1944 Chicago Convention which created it, even as the world, and notably air transport, have developed dramatically.

But while taking on additional responsibilities, the organisation remains entrenched in the architecture of a now seventy-seven-year-old treaty, and some of its traditional activities have been retained despite new global realities, notably on the economic regulation of international air transport in the context of a liberalised world. Consequently, ICAO is in danger of losing focus on its core mission of safety, security and air navigation planning.

A new Secretary General was installed in Aug-2021 at a time when there is a need to rethink the role and structure of international air transport in a post-COVID era, along with increasing criticism of the sector in relation to its contribution and response to climate change.

This makes for an opportune time for a fundamental review of ICAO's responsibilities and effectiveness. This analysis proposes remedial action on some key issues.

TO READ ON, VISIT: ICAO in need of reforms to enhance its relevance - now is opportune


CAPA Live: JetBlue CEO Robin Hayes - offsets a bridging strategy, not long term

Talking at the CAPA Live on 13-Oct-2021, JetBlue CEO Robin Hayes spoke with Korn Ferry's Senior Client Partner Michael Bell.

Some of the key quotes from the session included: "The most confusing thing for people is just the amount of restrictions or paperwork or testing that needs to happen. And every country is different"; "had you said to me in a normal year, could you make that sort of change in the time you did, I'd have said you're crazy. But like so many things with COVID, we kind of learned we could do things we didn't think we could do"; "one of the biggest frustrations that we had as JetBlue is our inability to grow further in the congested New York market. And then COVID came and the opportunity to do the partnership with American Airlines came along"; and "So we are all agreed on the goal of 2050 for carbon neutrality. And I wouldn't be surprised if that comes forward again further. The question is what is the path?"

TO READ ON, VISIT: CAPA Live: JetBlue CEO Robin Hayes - offsets a bridging strategy, not long term


CAPA Live: IndiGo CEO Ronojoy Dutta - 40% international by 2025

Talking at the CAPA Live on 13-Oct-2021, IndiGo Airways CEO & Whole Time Director spoke with CAPA's chairman emeritus Peter Harbison.

Some of the key quotes from the session included: "my next push is to get Saudi and Thailand to open because those are important market for us"; "while the deliveries are coming, the returns are also there. So the total fleet count is not going up by huge numbers yet"; "I'm very bullish on international and the reason I'm bullish is we have a fantastic geography"; and "sustainable aviation fuel clearly is lot of technological breakthroughs need to happen from fuel manufacturers. We're working with the Petroleum Institute of India in terms of doing some test pilot projects".

TO READ ON, VISIT: CAPA Live: IndiGo CEO Ronojoy Dutta - 40% international by 2025


Airports: South Africa's ACSA records only its second loss in 28 years

South Africa's state-owned airport operator ACSA started cutting its coat according to its cloth several years ago and has avoided getting into the parlous state experienced by South African Airways.

Even so, the impact of the coronavirus pandemic has been severe, and cost-cutting has had to be ramped up higher still as huge losses were incurred in 2020.

There is some light at the end of the tunnel. Although the pandemic hasn't gone away, infections are currently low and domestic travel has increased. Not so much international travel though, where capacity is moribund. But even there, South Africa is regarded as not so risky by other governments right now.

The strategic plan to get back on track has been in place for some time and involves continuous cost cutting and focusing on the 'core business' of nine airports. That means international operations have to take a back seat, and some of the investments have been sold already.

ACSA has been criticised for some of the ways in which it operates the country's airports. Its - perhaps temporary - financial woes could encourage private operators to wonder if they could do a better job.

TO READ ON, VISIT: Airports: South Africa's ACSA records only its second loss in 28 years


More indecision in Portugal on 'the future airport solution in Lisbon'

The location of a new, second, airport to serve the Portuguese capital, Lisbon, has been discussed for a quarter of a century, perhaps even longer, and the potential location has changed on several occasions.

What is known for sure is that there is a glaring need for one.

The existing airport cannot be expanded much more as it is constrained within suburban areas. The owner has invested as far as it can within these constraints and is promising more cash, but the 'solution' was to be the conversion of a military base, Montijo.

But that project is suspended pending an environmental examination, which is going on forever. Now a strategic study will look again at whether a location at Alcochete would be more appropriate - one that has previously been disregarded.

TO READ ON, VISIT: More indecision in Portugal on 'the future airport solution in Lisbon'


Another new airport for Africa with European involvement: Burkina Faso

CAPA has frequently reported on the difficulties many African governments face in trying to attract foreign investors and operators to their airports. The tide had started to turn with the deal to develop a new airport in Rwanda, which belatedly involved Qatar Airways.

Now of all places, Ouagadougou, the capital of the poor, landlocked country of Burkina Faso, will get a new airport. It will be partially financed and managed by two European organisations, the Meridiam fund and Marseille Provence Airport, which collectively have the experience to make it work and have committed to introduce European standard ESG principles to their management.

What exactly is in it for them isn't entirely clear. Tourists aren't going to be headed to Ouagadougou in droves any time soon.

But the country is rich in minerals and metals, especially gold, and with world economies teetering, access to gold again becomes highly desirable.

TO READ ON, VISIT: Another new airport for Africa with European involvement: Burkina Faso


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: easyJet achieves 97% reduction in CO2 emissions at Bristol Airport aircraft turnarounds; Ryanair launches electric handling at 11 major European airports; Emirates to recycle retired A380 & sell repurposed components in partnership with UAE companies; Manchester Airport signs direct SAF supply agreement with Fulcrum BioEnergy; ElectricAir operates first electric aircraft Cook Strait crossing.

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