Ecuador Aviation: liberalising and courting LCCs
Growth among Ecuador's airlines has slowed during the last few years based on seat deployment as the country dipped into a recession during 2016. Even as it returned to positive economic growth in 2017, Ecuador's growth prospects remain below historical levels for 2018 and 2019.
Ecuador's largest airline state-owned TAME has also cut its seat supply during the last few years, and more recently has undertaken a restructuring with loans from the government as it pledges to bolster revenue and slash costs.
Low cost airline penetration in Ecuador remains low. JetBlue offers service from Fort Lauderdale to the country's largest airport, Quito, and Spirit in Mar-2018 launched flights form Fort Lauderdale to the country's second largest airport, Guayaquil. Even as Ecuador holds promise for passenger stimulation, expansion of air travel could remain tempered until its economic growth returns to more normal levels.
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Garuda Indonesia: outlook improves following fleet deferrals
Garuda Indonesia is taking a nearly two-year holiday from adding aircraft, as part of an attempt to restore profitability. Deliveries of 10 737 MAX 8s have been deferred and Garuda is trying to cancel its remaining nine commitments for ATR 72-600s.
Garuda is focussing on increasing utilsation, which will enable the airline to pursue further capacity growth without expanding the fleet. Garuda particularly believes it can squeeze out more from its A330s, ATR 72s and CRJ1000s, which are now utilised below industry norms.
Garuda plans to pursue modest domestic capacity growth and much faster international expansion. China and India are the main target markets as inbound demand surges.
But even with the new moderation in strategy, many challenges remain for the Indonesian flag carrier.
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Air cargo booms: 747 freighters needed, but conversions unlikely
As air freight recovers rapidly, consideration is being given to satisfying capacity lift - just as airlines retire their passenger 747-400s.
Delta and United are two of the more recent airlines to retire their 747s, while Qantas is the latest to announce that it will accelerate 747 retirement. Even British Airways, which will operate the 747 into the 2020s, plans some retirements this decade.
It has been suggested that these passenger 747-400s could become freighters. While air frames are lowering in value, conversion costs remain significant, and the great age of the 747-400s provides fewer years for costs to be amortised. The larger concern is the ongoing inefficiency and cost disadvantage of a converted 747 compared to a 747 built as a freighter. These are general costs and not related to converted 747s being unable to have a swing nose door, which is required for only a minority of freight.
Although converting 747s may not be ideal, the pool of available freighters is small: CAPA's Fleet Database logs only 13 747-400 freighters (non-conversions) that are in storage, and some of these are already being prepared to resume service.
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LATAM studies a low cost operation to meet market conditions
Latin America's largest operator, LATAM Airlines Group, is neither confirming nor denying its intent to launch a stand-alone low cost airline; but the company is seeking an operational licence in case the creations of a dedicated low cost operation is necessary to compete more effectively with upstart and aspiring low cost and ultra low cost airlines in the region.
During the last couple of years, LATAM has launched a tiered fare structure to compete more effectively with low cost airlines as discounters continue to grow their respective passenger shares in most of LATAM's domestic markets in Latin America.
Most of LATAM's full service airline counterparts in the Americas, particularly the US, have opted to stick to fare segmentation as their preferred defence against ULCC growth. But the US is a much more mature market, and differing market dynamics in Latin America may warrant an alternative approach.
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Spirit Airlines matures: new strategy with WiFi, image change
The largest US ULCC, Spirit Airlines, was a forerunner in product unbundling, introducing the first checked bag charges in the country during 2007. Spirit's moves propelled the US industry into offering more à la carte pricing and a focus on generating significant ancillary revenue. In the ensuing years, Spirit pushed the boundaries of product unbundling, reflected in its charge for printed boarding passes at the airport.
But in late 2017, as the basic economy fares introduced by American, Delta and United were rolled out in full force, Spirit opted to create a bundled fare product, which was a major driver of the airline's non-ticket revenue improvement in 1Q2018. Spirit is working to develop an e-commerce strategy to become a retailer, and the bundled fare options are one pillar of Spirit's merchandising evolution.
Spirit has also opted to join the ranks of most US airlines and offer WiFi to its passengers, which will result in the airline becoming the first US ULCC to offer inflight connectivity. This move marks a pivot by Spirit to shore up customer sentiment for the company as the airline works to change its image in the US marketplace.
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Manchester airport: new routes boost 'Northern Powerhouse'
Two airlines have announced they will launch new services to and from Manchester Airport UK (MAN) towards the end of 2018 - Jet Airways of India and Ethiopian Airlines.
The attraction of these airlines to the airport can be marked down as a success not only for Manchester Airport but also for the 'Northern Powerhouse' concept, which seeks to reposition the North of England and its 15 million population as a serious economic competitor to London and the Southeast.
Attracting foreign airlines from outside Europe has taken on greater importance since the UK's decision to leave the European Union, which takes effect from Mar-2019.
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Ethiopian, Air Mauritius leverage Changi hub to Africa
Singapore Changi Airport reported a 20% increase in Africa traffic for 2017, to 240,000 passengers. While Africa accounts for less than 4% of Changi's total passenger traffic, it is a strategically important market that Singapore has been trying to grow over the past several years.
After several years of lobbying, Ethiopian Airlines launched nonstop services to Singapore in 2017, resulting in shorter one-stop connections on dozens of Singapore-Africa city pairs. Air Mauritius launched nonstop services to Singapore in 2016, following an unusual agreement between the two countries to create a bridge for Asia-Africa traffic.
Changi Airport has since worked closely with Air Mauritius and Ethiopian Airlines in growing their Singapore services. Both airlines are now using Singapore as a hub for the region, which is necessary for the long term viability of Africa-Singapore routes, given the relatively small size of the local market.
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