Industry Monitor. The EUROCONTROL bulletin on air transport trends. EUROCONTROL statistics and forecasts. Issue N /06/11

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1 Issue N /06/11 Industry Monitor The EUROCONTROL bulletin on air transport trends European flights increased by 4.5% on May 2010; the underlying trend being closer to 2%. IATA cut by 50% its 2011 airline industry profit forecast due to impact of high oil prices and recent events in Japan, Middle East and North Africa. KLM became the first European airline in the world to operate a passenger flight on biofuel. Oil prices in June up to $119/barrel. EUROCONTROL statistics and forecasts 1 Other statistics and forecasts 2 Passenger airlines 2 Aircraft manufacturing 5 Regulation 7 Environment 8 Fares 9 Oil 9 EUROCONTROL statistics and forecasts European flights increased by 4.5%, the average daily traffic is above the monthly forecast for May 2011 and is explained by two main factors: the growth in May was inflated by the ash crisis and strikes in 2010 and the lack of holidays in May As a result, the underlying trend is closer to 2%, at the high end of the revised forecast published in May (Figure 1). Based on preliminary data for delay from all causes, 36% of flights were delayed on departure in May; this was a 5 percentage point improvement on May Airline-related delays were the main contributor to primary departure delay, this proportion seeing a 5 percentage point increase with a 53% share of delay minutes in comparison to May 2010 (Figure 2). Industry Monitor. Issue /06/11 Page 1 EUROCONTROL 2011

2 Figure 1: European Traffic. Other statistics and forecasts Boeing, Embraer and Bombardier released their 2011 market outlook over the next 20 years. Boeing forecasts a demand for 33,500 new aircraft between 2011 and 2030 of which 7,550 are destined for Europe, for a regional traffic growth in revenue per passenger kilometres of 5.1% per year (Boeing, 16 June) Embraer forecasts a demand for 31,435 new aircraft between 2011 and 2030 (29,135 between 2010 and 2029) of which 6,950 units are meant for Europe, for a regional traffic growth in revenue per passenger kilometres of 4.4% per year (Embraer, 20 June). Bombardier forecasts 24,000 business jet deliveries between 2011 and 2030 of which 4,100 are for Europe and 13,100 commercial aircraft deliveries of which 2,250 units are for Europe. (Bombardier, June) More detail in Aircraft manufacturing section. IATA cut by 50% its 2011 airline industry profit forecast as high oil prices and natural disasters in Japan, unrest in the Middle-East and North Africa weigh on the industry s recovery (IATA, 6 June). Passenger airlines Troubled Cimber has agreed a preliminary financing deal with Cyprus-based Mansvell Enterprises Ltd., which already owns two Swedish regional airlines. The aim is to create a strong Nordic airline (Cimber Sterling, 16 June). Industry Monitor. Issue /06/11 Page 2 EUROCONTROL 2011

3 Primary delay distribution for May 2011 Percentage of flights delayed on departure Figure 2: Delay Statistics (all causes delay preliminary data for May 2011). airberlin posted a bigger than expected loss in 2011Q1 as a result of the political unrest in North Africa. Tunisia and Egypt were fast-growing leisure destinations, but tourists are still reluctant to book these two countries, preferring Spain, Greece or Turkey instead (airberlin CEO speech at AGM, 7 June). easyjet plans to increase its Manchester fleet over the coming years. This expansion has already commenced with the arrival of its sixth aircraft (27 May), and the seventh aircraft is due to arrive in Manchester for the 2012 summer season. The airline plans to commence services from Manchester to Madrid, Berlin and Belfast from this autumn. (easyjet, 3 June). Aeroflot completed its first passenger flight of new Sukhoi Superjet 100 (SSJ100) regional jet and became the second operator flying a SSJ100 after Armavia (Armenian carrier) in April. Latest order for SSJ100 was signed at Le Bourget Air Show with Blue Panorama Airlines (Italy) (Sukhoi, 16 & 22 June). Routes Monarch Airlines will introduce new scheduled services from Gatwick and Manchester to destinations in Turkey and its first ever summer scheduled flights to Egypt in summer 2012 (Monarch, 7 June). Iberia increased capacity on its routes between Madrid and Russia (St Petersburg, Moscow) to a total of 18 flights per week during summer (Iberia, 2 June). Air Europa has commenced flights between Madrid and Mexico City, competing with Iberia and Aeromexico on the route and will begin serving Amsterdam, Milan Malpensa and Geneva on 1 November (Air Europa, 7 & 17 June). Industry Monitor. Issue /06/11 Page 3 EUROCONTROL 2011

4 Figure 3: Main carriers traffic statistics. Alliances & Codeshare ANA has received approval from the Japanese government for antitrust immunity to launch a joint venture with Lufthansa on routes between Japan and Europe. The two airlines aim to start to jointly managing their Japan-Europe operations from winter 2011 (ANA, Lufthansa, 1 June). The U.S. DOT formally approved an antitrust immunity request from Delta Airlines and Virgin Australia, allowing the carriers to form a trans-pacific alliance (Delta Air Lines, 10 June). airberlin and British Airways will enteri into a codeshare agreement on more than 40 European destinations, effective 5 July. airberlin also expanded its codeshare with American Airlines to include Berlin to New York route (airberlin, 15 June and 20 June). Cyprus Airways and Virgin Atlantic signed a codeshare agreement, covering routes between the UK, the USA and Cyprus, effective 25 July. However, this is still subject to receiving the relevant government approvals (Cyprus Airways, 8 June). Singapore Airlines signed a codeshare agreement with Brussels Airlines. Effective 24 June, Singapore Airlines customers can fly from Brussels to Singapore and beyond via Barcelona, London and Milan (Singapore Airlines, 21 June). Industry Monitor. Issue /06/11 Page 4 EUROCONTROL 2011

5 Figure 4: Main carriers load factors. Traffic statistics: May update Figure 3 and Figure 4 compare May 2011 figures with May 2010 figures. Passenger capacity is measured in available seat kilometres (ASK) and traffic is measured in revenue passenger kilometres (RPK). Aircraft manufacturing At Paris Air Show 1,177 aircraft were ordered of which 941 for Airbus, 141 for Boeing, 42 for Embraer, 23 for ATR, 20 for Sukhoi and 10 for Bombardier. Only 6% of these new orders were destined for operation by European airlines (aircraft manufacturers, June). Airbus delivered 217 aircraft (170 single aisle, 39 long range and 8 A380) and recorded 97 net orders by May 2011 (Airbus, 9 June). Boeing delivered a total of 180 aircraft ( s, 7 767s and s) through May 2011 and 147 net orders through June (Boeing, June). In their current market outlook , Boeing and Embraer forecast the aircraft demand follows(the forecasts of 2010 release are mentioned between brackets): Boeing Regional Jets: 1,980 (up from 1,920), Single-Aisles: 23,370 (up from 21,160), Twin-Aisles: 7,330 (up from 7,100), Large: 820 (up from 720), The world fleet will more than double from 19,410 aircraft at the end of 2010 to 39,530 aircraft in 2030 (Boeing, 16 June). Industry Monitor. Issue /06/11 Page 5 EUROCONTROL 2011

6 Figure 5: Carbon prices. Embraer Turboprops (30+ seats): 2,440 (up from 2,260) Small Jets ( seats): 7,225 (up from 6,875) Narrow- and Wide-Bodies Jets (120+ seats): 21,770 (up from 20,000) The world fleet is expected to increase from 19,120 in 2010 to 36,910 in 2030 (up from 33,5120 by 2029) (Embraer, 20 June). COMAC (Commercial Aircraft Corporation of China) signed a memorandum of understanding with Ryanair to cooperate on the development of the C919 narrowbody which should be available from 2018 onwards (Ryanair, 21 June). Airbus confirmed delays in delivering its A350XWB; the aircraft is available in three versions; the A is delayed from 2014 to 2016 whereas the largest version A will now enter into service by mid No change on the A which will be delivered in late 2013 (Airbus COO at Paris Air Show Press Conference, 19 June). Airports ACI reported an increase of 27% in passenger traffic at European airports in April compared to the same month a year ago, although this number is distorted due to the volcanic ash cloud, the adjusted growth estimate is an increase of 4.9% on April 2010 (ACI, 9 June). Amsterdam Airport Schiphol decided that as of 1 November 2011, the current level of airport charges will be maintained based on the recovery in traffic and transport. Take-off and landing fees will be increased for relatively noisy aircraft and reduced for relatively quiet ones. Effective April 2012, the airport charges will be raised by approximately 4% (Schiphol Group, 31 May). Industry Monitor. Issue /06/11 Page 6 EUROCONTROL 2011

7 Figure 6: Brent and Kerosene prices. easyjet announced that it will be operating from London Southend Airport from April 2012 with 70 flights per week and a choice of around ten different European destinations (easyjet, 16 June). AENA Aeropuertos has put its plan for the concession of Madrid Barajas and Barcelona El Prat out to public consultation as it seeks to complete the two airports privatisation by the end of 2011 (AENA, 22 June). Cargo Qatar Airways has finalised its strategic equity and commercial partnership with Cargolux to acquire 35% of the European cargo airline, ending the Luxembourg State s temporary participation in the company (Cargolux, 9 June). Regulation The UK government decided to drop its plan to replace the Air Passenger Duty (APD) with a per plane duty (IM 128) on the 17 th of June closed its consultation regarding proposals for the APD future structure. Although British Airways welcomed the news, easyjet is firmly against it. The APD has already risen by 140% since 2007 on short haul flights. (British Airways,16 June & easyjet, 17 June). Industry Monitor. Issue /06/11 Page 7 EUROCONTROL 2011

8 A European Commission study on the EU s slot regulations asserts that reviewing rules on allocating slots for landing and takeoff at the EU s busiest airports could result in more than 5 billion in economic benefits over the period and up to 28 million more passengers could travel each year with more efficient use of European airport slots. The EC will present this autumn a policy package on airports, including a review of the current slot rules (EUROPA, 30 May). The Commission for Aviation Regulation plans to cut the Aviation Terminal Services Charges that the Irish Aviation Authority (IAA) may levy on airlines for aircraft arriving and departing from Cork, Dublin and Shannon airports between 2012 and 2015, based on the IAA having not used revenue collected from airlines in previous years to fund investment and the authority s day-to-day spending had exceeded targets despite a drop in passenger traffic (Commission for Aviation Regulation, 27 May). The European Commission welcomed Ireland's decision to remove the discriminatory aspects of its air travel tax, levied on air passenger travel (IM130). The Commission had expressed its concerns that the tax breached EU law by charging passengers on flights to other Member States more than passengers on domestic flights. As Ireland now levies the same charge regardless of destination, the Commission has decided to close its infringement procedure (EUROPA, 16 June). Environment As the implementation of Emissions Trading Scheme (ETS) in Europe draws nearer, protests from non-european countries are increasing: o The Air Transport Association of America (ATA) s legal challenge is due to be heard by the European Court of Justice on 5 July (ATA, 16 June); o The Civil Aviation Administration of China (CAAC) begun talks with the European Commission calling for the carbon emission cap to be adjusted for developing countries (CAAC, June); o The Latin America and Caribbean Air Transport Association, is calling on governments, its members and its industry partners, to reject the inclusion of international aviation in the ETS, which it considers an illegal, flawed and unjust attempt to force the aviation industry to concede to unilateral and biased measures to the benefit of European carriers. (ALTA, 6 June); o IATA is calling for the development of a global emissions trading mechanism through ICAO and recently encouraged Russia to join the growing chorus of countries against the EU ETS (IATA, 20 June). European Commission President said the EU is not considering changing its law obliging airlines flying to Europe to join its emission trade scheme and reiterated the EU s willingness to discuss the measures. EU law allows the exemption of airlines from countries that are making equivalent efforts to curb emissions from aviation (EC President at press conference, 8 June). On 29 June KLM became the first airline in the world to operate a passenger flight using a 50/50 blend of kerosene and biofuel derived from cooking oil in both engines of a B aircraft operated between Amsterdam and Charles De Gaulle. The airline scheduled 200 biofuel flights to begin in September, pending final approval by ASTM, the international standards agency (KLM, 29 June). Industry Monitor. Issue /06/11 Page 8 EUROCONTROL 2011

9 Leading German research institutes, biofuel producers and companies in the aviation sector (Lufthansa, Condor, Air Berlin, Munich Airport, MTU Aero Engines, Rolls-Royce Germany, EADS) founded the Aviation Initiative for Renewable Energy in Germany (AIREG). The aim is to promote the use of regenerative energy sources in aviation in Germany and create a sound basis for political decision-making with regard to the introduction of climate-friendly aviation fuels (Lufthansa, 8 June). The price of carbon contracts for 2014 went down to around 16/tonne in recent weeks (Figure 5). Fares Deflated ticket prices in Europe decreased by 3.5% in May year-on-year, based on preliminary values (Eurostat, 27 June). Oil Oil prices went up and closed at around $119 per barrel on 17 June (Brent). Converted price indices for Kerosene and Brent up to June are shown in (Figure 6) European Organisation for the Safety of Air Navigation (EUROCONTROL) This document is published by EUROCONTROL for information purposes. It may be copied in whole or in part, provided that EUROCONTROL is mentioned as the source and it is not used for commercial purposes (i.e. for financial gain). The information in this document may not be modified without prior written permission from EUROCONTROL. STATFOR, the EUROCONTROL Statistics and Forecast Service statfor.info@eurocontrol.int The EUROCONTROL Statistics and Forecast Service (STATFOR) Industry is ISO Monitor. 9001:2008 Issue certified /06/11 Page 9 EUROCONTROL 2011