Cathay Pacific needs larger government policy shifts to spur recovery
The Hong Kong government is continuing to take incremental steps to ease entry requirements for travellers, which is allowing Cathay Pacific to raise capacity gradually.
However, the airline stresses that far more policy moves are still needed before it can undertake a significant capacity recovery. The latest actions by the government have reduced quarantine requirements and removed some punitive route suspension rules.
Cathay Pacific has welcomed such steps, but it has also issued its most vociferous call yet for the government to produce a road map for the removal of remaining restrictions.
There are two strands to the problem: entry restrictions deter travellers and make it difficult for Cathay Pacific to fill planes and generate revenue; operational restrictions stretch Cathay Pacific's staff resources and limit its ability to add more capacity.
Until both facets are addressed, Cathay Pacific's recovery rate will remain anaemic.
TO READ ON, VISIT: Cathay Pacific needs larger government policy shifts to spur recovery
Latin America: recovery well under way, but familiar challenges remain
The recovery of air travel across Latin America is well under way.
In fact, for the week commencing 22-Aug-2022 capacity is down just 2.3% on the same week in 2019, according to OAG schedules and CAPA seat configurations. That is the best performance of any region since before the COVID-19 pandemic.
Latin operators are offsetting some of the cost of fuel by pushing fares higher, and they are fortifying their fleets against fierce competition. Consolidation of airlines is viewed as a 'positive development' for the region.
However, speaking at the CAPA Latin America Aviation & LCCs Summit, CAPA senior analyst Lori Ranson noted that some familiar challenges remain - fuel prices, uncertainty with new governments in Peru, Chile and Colombia, and the upcoming election in Brazil. Taxation seems like it is a never-ending threat, and currency fluctuations remain a challenge.
TO READ ON, VISIT: Latin America: recovery well under way, but familiar challenges remain
Europe's aviation capacity close to 89% of 2019 levels - a new high
Europe's capacity recovery as a percentage of 2019 levels has broken from its narrow 13-week range of 86%-87%, reaching almost 89%. This is the closest to 2019 levels in the COVID-19 pandemic era.
Europe's total seat capacity is at 88.6% in the week commencing 22-Aug-2022, which is a shortfall of 11.4% against the equivalent week in 2019.
Europe remains fourth in the regional ranking, above Asia Pacific, where capacity is down 22.8% versus 2019, and the Middle East, where capacity is down 14.2%. Africa capacity is down 11.0%, North America 8.5%, and Latin America is down 2.3% (the best performance of any region since before the pandemic).
Not only has this week's capacity recovery reached a new high for Europe, but projected capacity for 4Q2022 has increased, rising from 86% to 88% over the past two weeks (to week of 22-Aug-2022).
In addition, data from the CAPA Fleet Database show that Europe's passenger jet fleet in service is almost back to pre-COVID levels, led by LCCs, and with legacy airlines not far behind.
TO READ ON, VISIT: Europe's aviation capacity close to 89% of 2019 levels - a new high
Thai Airways is seeing a slow recovery after border reopenings - part one
The removal of most COVID-19 border restrictions in Thailand has spurred a significant boost in demand and capacity for Thai Airways - although this does not alter the fact that the path back to full recovery of international traffic will be a long one.
The Thai government implemented a phased withdrawal of COVID-19 entry restrictions, culminating in the almost complete reopening from 1-Jul-2022.
Rule change milestones have caused immediate bumps in international capacity for Thai Airways. However, these policy changes have yet to spark the kind of sustained growth rates the airline needs.
Tourism is important to Thailand, as it was one of the major leisure destinations before the pandemic.
This means that the removal of restrictions in other countries is also crucial to restoring tourist flows. China is a particularly vital market for Thailand, and uncertainty regarding its COVID-19 border restrictions is a headache for Thailand's airlines and tourism industry.
TO READ ON, VISIT: Thai Airways is seeing a slow recovery after border reopenings - part one
Norse Atlantic, JetBlue revive London Gatwick-North Atlantic airline market
Norse Atlantic has launched a daily London Gatwick-New York JFK service. The long haul low cost operator is competing with British Airways and JetBlue on the route, and with British Airways, American Airlines, Virgin Atlantic, Delta Air Lines and United Airlines on other London-New York airport pairs.
The start-up's Gatwick launch was followed in the same week by two US routes from Berlin, after four previous US route launches from its Oslo base.
Norse Atlantic is the North Atlantic's only all-economy class widebody low cost operator, a niche Norwegian vacated in 2020 when it retrenched around its short haul network after six years of unprofitable long haul operations. Coincidentally, seat capacity between London Gatwick and North America is now the same as it was before Norwegian's 2014 entry prompted rapid growth.
Following the entry of JetBlue in Sep-2021, Norse Atlantic brings the total number of Gatwick-North America airlines to six, which is two more than in Aug-2014. This signals that this market may be poised for a renewed period of growth.
TO READ ON, VISIT: Norse Atlantic, JetBlue revive London Gatwick-North Atlantic airline market
AENA wins another group of Brazilian airports in the latest concession round
The Brazilian airport concession procedure, now a decade old, staggered into its seventh iteration with São Paulo's Congonhas Airport, the country's second busiest, finally included. But that inclusion was with 10 other much smaller ones; what was described by one Brazilian analyst as a 'Frankenstein's Monster.'
That didn't stop AENA lodging an uncontested bid 230% over the asking price - mainly for an airport it will be very difficult to expand.
Separately, a very small 'North Block' of two airports found a concessionaire at a smaller premium, around 120%, while two/GA business airports in São Paulo and Rio de Janeiro went at base price.
With more than 90% of air traffic now accounted for by concessioned airports and only Rio's Santos Dumont airport left of any significance, the eighth round - scheduled for 2023 and packaging Santos Dumont with a reconcession of the city's Galeão international airport brought about by the original concessionaire handing it back - may be the last one.
TO READ ON, VISIT: AENA wins another group of Brazilian airports in the latest concession round
Ferrovial to sell stake in London Heathrow? Part one - French and Saudi interest in 25% ownership
Airport sector M&A activity has been dormant for the most part during the pandemic, but as predicted by CAPA, the Sydney Airport deal that was concluded at the beginning of the year and led to it being delisted has kick-started the sector again - albeit belatedly.
In the past few weeks deals have been concluded by which VINCI Airports has acquired, wholly or partly, more than 20 airports in the mid-Atlantic (Cape Verde) and the Caribbean (Mexico) under concession, and as reported in the last few days by CAPA, IFM Investors through its European subsidiary AGE is pushing for a further increase in its holding of Flughafen Wien.
Now it transpires that negotiations may have taken place between the Spanish infrastructure giant Ferrovial and a consortium of the French insurance firm Ardian and the Saudi Sovereign Wealth Fund for the sale of Ferrovial's 25% stake in (London) Heathrow Airport Holdings, which it has held since BAA was delisted in 2006 and sold to a Ferrovial-headed consortium.
At the moment it is no more than conjecture, but a sale might make sense to Ferrovial.
Ferrovial already has airport interests in the United States, where the propensity for P3 deals to build and operate terminals at major airports is growing. With a construction division that dates back to 1927 it is well placed to both build and manage such infrastructure.
Other players may yet emerge, including some of the other existing investors, or the sale prospect might simply fizzle out.
If it progresses, there is sure to be political and even popular opposition to even more foreign ownership of the UK's major air gateway (the direct UK holding amounts to only 10%) while the Saudi government remains persona non grata to many people in the country.
This is part one of a two-part report.
TO READ ON, VISIT: Ferrovial to sell stake in London Heathrow? Part one - French and Saudi interest in 25% ownership
Ferrovial to sell stake in London Heathrow? Part two - clawing back business under challenges
Airport sector M&A activity has been dormant for the most part during the pandemic, but as predicted by CAPA, the Sydney Airport deal that was concluded at the beginning of the year and led to it being delisted has kick-started the sector again - albeit belatedly.
In the past few weeks deals have been concluded by which VINCI Airports has acquired, wholly or partly, more than 20 airports in the mid-Atlantic (Cape Verde) and the Caribbean (Mexico) under concession, and as reported in the last few days by CAPA, IFM Investors through its European subsidiary AGE is pushing for a further increase in its holding of Flughafen Wien.
Now it transpires that negotiations may have taken place between the Spanish infrastructure giant Ferrovial and a consortium of the French insurance firm Ardian and the Saudi Sovereign Wealth Fund for the sale of Ferrovial's 25% stake in (London) Heathrow Airport Holdings, which it has held since BAA was delisted in 2006 and sold to a Ferrovial-headed consortium.
At the moment it is no more than conjecture, but a sale might make sense to Ferrovial.
Ferrovial already has airport interests in the United States, where the propensity for P3 deals to build and operate terminals at major airports is growing. With a construction division that dates back to 1927 it is well placed to both build and manage such infrastructure.
Other players may yet emerge, including some of the other existing investors, or the sale prospect might simply fizzle out.
If it progresses, there is sure to be political and even popular opposition to even more foreign ownership of the UK's major air gateway (the direct UK holding amounts to only 10%) while the Saudi government remains persona non grata to many people in the country.
This is part two of a two-part report.
TO READ ON, VISIT: Ferrovial to sell stake in London Heathrow? Part two - clawing back business under challenges
IFM moves towards majority control of Flughafen Wien: part two - Vienna Airport main asset
Vienna has always been at the nucleus of power in central Europe, long before the days of the Austro-Hungarian Empire. Today, while not a financial centre, it is the seat of organisations such as the United Nations, OPEC and the Organisation for Security and Co-operation in Europe (OSCE).
Vienna's airport is the most prestigious in central/southeast Europe and its high rate of full service passenger traffic was always going to be attractive to external investors - who include Australia's Industry Funds Management (IFM), whose subsidiary AGE has an almost 40% stake in Flughafen Wien, which has already been increased from the original investment, and that totals three airports.
Now that subsidiary, buoyed no doubt by IFM's success in buying the publicly floated Sydney Airport, seeks to increase its stake to almost 50%, but it will not be at the expense of the city and the province. Instead, it is likely to come from institutional shareholders, Vienna Airport ironically having been one of the first airports to have had its shares floated on a stock exchange. Flughafen Wien has responded by urging those shareholders not to accept the offer.
The purported transaction may also raise questions about IFM's ambitions with regard to its other major investment in Europe, into Manchester Airports Group, where equity ownership is on a similar level to that of Flughafen Wien, but where a different set of circumstances apply.
This is part two of a two-part report.
TO READ ON, VISIT: IFM moves towards majority control of Flughafen Wien: part two - Vienna Airport main asset
SPECIAL REPORT: Aviation Sustainability and the Environment
This regular CAPA report provides a summary of recent aviation sustainability and environment news.
This latest issue features: Icelandair participates in Iceland's first electric aircraft flight; Aemetis, IAG reach SAF supply agreement for Aer Lingus and British Airways services to San Francisco; Harbour Air completes first point to point test flight using all-electric aircraft; Hillsboro Aviation becomes first Oregon FBO to offer sustainable aviation fuel; DOA to undergo USD30m Wetlands Mitigation Development Project near Philadelphia Airport.