ERA Monthly Market Analysis May 2016
Introduction For the production of these statistics in the following report, ERA has teamed up with partners Seabury and Innovata to provide a comprehensive analysis of ERA s members performance. The analysis performed by Seabury, is based on schedule data that has been provided by Innovata and gives a comprehensive overview of the sector. This report examines the performance of ERA members carriers (and in some cases the wider European regional airline network) who report schedule data to Innovata as well as market dynamics and outlook for the Winter 2014 and Summer 2015 schedules. Seabury is a leading global advisory and professional services firm, which provides information covering the aviation, air cargo and maritime industries with a depth of analytics to support rapid decision making. www.seaburygroup.com info@seaburygroup.com Innovata specialises in travel content management and distribution solutions. The firm maintains and markets an industry standard flight schedules database with over 800 participating airlines. 2
Summary Seating capacity increased by 8% in May compared to May 2015, mainly driven by an increase in average seats per departure Regional airlines continue to have a lower capacity share relative to LCCs and Large FSCs in 2016 vs. previous year ERA carriers and regional airlines have both seen an increase in capacity on monopolistic routes for Winter 2016 vs. Winter 2015 (based on currently loaded schedules, subject to change) 3
Part 1: ERA Performance
Deployed capacity May s seat capacity for ERA carriers is up by 8% compared to the corresponding month in 2015 Total seats Year-on-Year % Note: Intra-European market operated by ERA members only. 5
Total movements ERA movements in May increased by 2% compared to the same month of the previous year Total movements Year-on-Year % Note: Intra-European market operated by ERA members only. 6
Stage length The downward trend of the average stage length in early 2016 has flattened Average stage length in kilometres (km) Year-on-Year % Note: Intra-European market operated by ERA members only. 7
Sector duration Average sector duration remains relatively flat at 1 hour 14 minutes Average duration in hours Year-on-Year % Note: Intra-European market operated by ERA members only. 8
Aircraft seating capacity Average seats per departure in May increased significantly vs. corresponding month last year Average number of seats per flight Year-on-Year % Note: Intra-European market operated by ERA members only; cargo flights excluded. 9
Route count The number of unique routes operated by ERA carriers in May continues to be above 2015 levels Route count Year-on-Year % Note: Intra-European market operated by ERA members only; routes counted bi-directionally. 10
Part 2: Market Dynamics
Regional carrier focus continues to be on shorter, thinner routes Regional carriers higher frequency profile differentiates them from competitor models Regionals capacity share in 2016 Note: Intra-European market operated by European airlines only. 12
Seasonality profile of Regionals appears stable Seats on international regional routes continue to be lower than in the previous year Total seats Year-on-Year % change Note: Intra-European market operated by European airlines only. 13
Regionals relative share of seats is being diluted Regional carriers seat share in May remains below 2015 values at around 8% of total capacity Capacity share in % Note: Intra-European market operated by European airlines only. 14
Smaller aircraft gauge deployed by regionals and ERA carriers May average gauge is in line with the current regional s trend Average number of seats per aircraft Note: Intra-European market operated by European airlines only; cargo flights excluded. 15
Growth outlook in ERA s member countries Forecasts of real GDP growth continue to predict strongest growth in Eastern Europe in the period 2015-2023 GDP CAGR (2015 2023) Note: CAGR based on 2015-23 period except for Malta, Albania, Belarus (2015-17); Iceland, Moldova, Bosnia and Hercegovina, Luxembourg and Macedonia (2015-20) Source: EIU GDP forecast of 2015-2023. 16
Part 3: Summer 2016 Outlook
Note Please note that Summer 2016 schedules have only been partially loaded by most airlines. The following slides therefore should be considered with caution due to the preliminary nature of the data on which they are based. 18
Intra-European domestic market Regional carriers show the highest domestic capacity increase, up 7% vs. S15, mainly driven by expansion on current routes Domestic capacity % changes (Summer 2015 vs. Summer 2016) INDICATIVE Seats Summer 2016 29m 48m 63m 12m 15m 0m 5m 171m Note: Intra-European market operated by European airlines only. Further publication of operations is anticipated so these figures are subject to change. 19
Intra-European international market Regional carriers show highest overall decrease in capacity on international routes with 5% vs. S15 INDICATIVE International capacity % changes (Summer 2015 vs. Summer 2016) Seats Summer 2016 20m 187m 114m 46m 38m 17m 7m 431m Note: Intra-European market operated by European airlines only. Further publication of operations is anticipated so these figures are subject to change. 20
LCCs are strengthening operations LCCs are growing the number of flights at all distance ranges INDICATIVE Total movements per sector length 80% of Regional movements in S16 % share (flights) % growth (flights) 21
Competitive overview While ERA carriers continue to exhibit signs of consolidating capacity onto fewer routes relative to previous summer scheduling season, it has not been to the same extent as other regional carriers % changes (Summer 2015 vs. Summer 2016) INDICATIVE Regional / ERA members While regional carriers have cut close to a sixth of their routes, ERA carrier s reduction is more inline with Larger FSCs Average route capacity and gauge change vs last year continue to be inline or higher than LCCs Routes with capacity share 75% Seats with capacity share 75% LCC LCCs have shown the strongest growth across seats and flights LCCs are the only carrier type to be growing the number of unique routes operates over Summer 2016 Large FSC Overall FSC have shown marginal increase in seats and flights on existing routes Unlike other carrier types, Large FSCs are not up-gauging aircraft Note: Intra-European market operated by European airlines only. Further publication of operations is anticipated so these figures are subject to change. 22
Country-to-country seat capacity forecast Top 15 country-to-country flows based on total seat capacity in Summer 2016 INDICATIVE Capacity growth (Summer 2015 vs. Summer 2016) Note: Intra-European market operated by European airlines only; countries are ordered as per total capacity in S16. Further publication of operations is anticipated so these figures are subject to change. 23
Part 4: Winter 2016
Note Please note that Winter 2016 schedules have only been partially loaded by most airlines. The following slides therefore should be considered with caution due to the preliminary nature of the data on which they are based. 25
Intra-European domestic market While regional carriers have ceased routes contributing to 5% of their capacity, up-gauging of their current routes has yielded and overall 3% increased capacity in Winter 2016 vs. 2015 Domestic capacity % changes (Winter 2015 versus Winter 2016) Seats Winter 2016 19m 29m 41m 8m 9m 0m 3m 109m Note: Intra-European market operated by European airlines only. Further publication of operations is anticipated so these figures are subject to change. 26
Intra-European international market Regional carriers international route capacity has increased by 8% vs. last Winter International capacity % changes (Winter 2015 versus Winter 2016) Seats Winter 2016 13m 99m 66m 27m 21m 8m 3m 237m Note: Intra-European market operated by European airlines only. Further publication of operations is anticipated so these figures are subject to change. 27
LCCs are strengthening operations Regional s share of routes by distance remains relatively constant year-on-year Total movements per sector length 81% of Regional movements in W16 % share (flights) % growth (flights) Note: Intra-European market operated by European airlines only. Further publication of operations is anticipated so these figures are subject to change. 28
Competitive overview ERA members show a large decrease in number of unique routes inline with market trends, however their average route frequency and capacity vs. W15 is well under their competitors % changes (W15 vs. W16) Regional / ERA members ERA carriers decline in routes is just slightly more than half of regional carriers ERA members and regional airlines have both seen an increase in capacity on monopolistic routes Routes with capacity share 75% Seats with capacity share 75% LCC Unlike their competitors, LCCs have increased number of seats vs W15 Share on strong monopolistic routes declined compared to last winter Large FSC Large FSCs were the only airline type to down gauge compared to W15 The proportion of seats in monopoly markets only showed minor changes since last winter and is below both Regional carriers and LCCs Note: Intra-European market operated by European airlines only. Further publication of operations is anticipated so these figures are subject to change. 29
Country-to-country seat capacity forecast Top 15 country-to-country flows based on total seat capacity in Winter 2015 Capacity growth (Winter 2015 versus Winter 2016) Note: Intra-European market operated by European airlines only; countries are ordered as per total capacity in W16. Further publication of operations is anticipated so these figures are subject to change. 30
Glossary Regional carrier Large full service carrier (Large FSC) Small full service carrier (Small FSC) Low cost carrier (LCC) Carrier with an average stage length less than 500 km or fleet without narrow-body and wide-body aircraft (turboprops and / or regional jets only) Carrier whose fleet has more than 50 wide-body aircraft or more than 100 aircraft, including at least 1 wide-body Carrier whose fleet contains at least one wide-body aircraft but less than 100 total aircraft Any other carrier operating scheduled services with low-emphasis on its product Domestic market Origin and destination are located inside the same country International market Origin and destination are situated in different countries CAGR Compounded Annual Growth Rate ERA member All current ERA members who report data to Innovata (full list available on request) 31