Issue N 123. 27/10/10 Industry Monitor The EUROCONTROL bulletin on air transport trends European air traffic increased by 3.2% in September, but growth hampered by numerous national strikes IATA expects a strong positive airlines performance in 2010 in all regions but Europe Many carriers announced capacity increases for winter ICAO States agreed on first global deal to reduce aviation s emissions from 2020 Oil prices stable around $80 per barrel EUROCONTROL Statistics and Forecasts 1 Other Statistics and Forecasts 1 Passenger Airlines 2 Cargo 5 Aircraft Manufacturing 5 Airports 6 Environment 6 Regulation 7 Fares 7 Oil 7 EUROCONTROL Statistics and Forecasts European flights increased by 3.2% in September on 12 months before (see Figure 1). Traffic would have been slightly ahead of forecast, but due to several national strikes in some European States, more than 6,500 flights were cancelled 1 which cut growth by more than 0.5% (EUROCONTROL, October). Preliminary data shows average delay per delayed flight (for departures and from all causes) increased by 29% on September 09 to 31 min (Figure 2). The percentage of flights delayed on departure (>5 min) amounted to 45% in September, a 10 percentage points (pp) increase compared to 2009. As for last months, the most important change comes from ATFCM delays whose share of all delays increased by 11 pp to 38% in September (compared to same month last year). Several industrial actions contributed to this increase, amongst other things (EUROCONTROL, October). Other Statistics and Forecasts According to IATA, global airlines are expected to make $8.9 billion profits in 2010, a value more than trebled compared to what the June forecast was. Despite the upwards revision Europe is still the only region where airlines are expected to make losses ($1.3 billion) due to insufficient capacity cuts, weak economies and ash plume. The forecast is for $5.3 billion global net profit for 2011 (IATA, 21 September and 18 October). 1 Estimation based on 4 identified days of strike: 7, 23, 28 and 29 September. Industry Monitor. Issue 123. 27/10/10 Page 1 EUROCONTROL 2010
Figure 1. European Traffic. (Source: EUROCONTROL/STATFOR) TUI Travel PLC recorded a strong trading trend for winter 10/11. Top 3 booking volumes for winter are from the Nordic States, Belgium and France which increased by 32%, 15% and 13% respectively on bookings during the same period last year (TUI Travel, 21 October). An Amadeus-sponsored study based on a sample of 150 global airlines (excluding all-cargo ones) estimated the total ancillary revenues to amount to 18.4 billion in 2010. Though ancillary revenues account for less than 5% of the operating revenues in the studied sample, Amadeus believes the ancillary revenues activity could rocket if all airlines catch up the ancillary revenues champions (e.g. Allegiant, Flybe, Ryanair) which manage to generate the highest activity from ancillary revenues (Ideaworks Company, 14 October). Passenger Airlines Martinair will stop its passenger services as per the end of 2011, concentrating on freight alone (Martinair, 23 September). Cimber Sterling received approval for a loan partly backed by government guarantees so as to secure its financial situation (Cimber Sterling, 1 October). Turkish Airlines, still expanding, took delivery of first: A330-300 (out of 10) to be based in Istanbul for medium-and long-haul operations, A330-200F (out of 2) for increasing cargo offer to Shanghai and Hong Kong, B777-300ER (out of 12) and expects 4 others by then end of 2010 (Airbus, 29 September and Turkish, 15 October). Netjets and Embraer signed a purchase agreement for 125 Phenom 300s (and 50 firm and 75 optional) with scheduled delivery to start in 2013. The private aviation s company currently operates a fleet of 800 aircraft including 13 different fractions of aircraft types but no Embraers yet (Netjets, 18 October). Industry Monitor. Issue 123. 27/10/10 Page 2 EUROCONTROL 2010
Departure Delay Causes All causes of delay (based on the Total Delay in Minutes from 1 minute onwards) Primary Delay Distribution for September 2010 Preliminary data Share of Primary & Reactionary Delay - September 2010 Primary Delay = 54% Reactionary Delay = 46% Figure 2. Delays (Source EUROCONTROL/CODA) LOT reportedly postponed its privatisation process not sure whether it will be a public offering or sell to a private partner--though plans to have the sale complete by Q311. The flagship air carrier s ownership is currently shared between the Polish Government (68%), a regional fund (25%) and the staff (7%) (flightglobal, 18 October). Pegasus Airlines reportedly postponed the launching of its initial public offering to Q111, as many other Turkish companies do due to the uncertainty about Turkey s future and the fear of the double dip recession (Hürriyet daily news, 19 October). As part of the forthcoming massive privatisation s program in Russia, the government reportedly aims at selling stakes in Moscow's Sheremetyevo airport and possibly flagship carrier Aeroflot by 2015 (Russian Times, 21 October). Failures Hamburg International filed bankrupt on 19 October and suspended all operations. The German charter, founded in 1998, employs more than 300 staff which salaries will be secured for up to three months is now looking for an investor (Hamburg International, 20 October). Codeshare Star Alliance partners TAP and Continental offer joint service between a number of Portuguese and US cities from 11 October in order to extend their respective network (TAP, 8 October). Capacity, costs and jobs Easyjet will open its 20 th base in Lisbon (1 st in Portugal) next winter and plans to add up to 10 new routes to the 15 already served ones (easyjet, 18 October). Industry Monitor. Issue 123. 27/10/10 Page 3 EUROCONTROL 2010
Figure 3. Main carriers traffic statistics. (Source: Company reports) The winter timetable, running from 31 October, will see: Lufthansa to add 3.5% in terms of flights per week on winter 09/10. Fleet renewal (larger aircraft) will enable the German carrier to increase seat capacity by 9.1% year-on year (Lufthansa, 18 October), Swiss to add 4.7% in terms of flights per week on last winter, with expanding services from Zurich and Geneva (Swiss, 7 October), Air France to increase capacity (ASK) by 1.7% (compared to winter 09/10), with adding 2.5% on long-hauls (notable increase to Asia and Africa) and removing 1% on medium ones (Air France, 22 October), British Airways to add around 3% seat capacity in the winter, which corresponds to the reinstatement of the capacity tactically cancelled during last winter (BA, 30 July), SAS to add 1 A340 compared to last winter s operating fleet (SAS, 13 October), TAP to increase operations by 7% compared to last winter, expanding service on 20 of its existing routes (TAP, 12 October), Norwegian plans to increase capacity (ASK) by 20% in 2011, mainly from a fleet increase (addition of larger aircraft B738s). The aircraft capacity will be augmented in Finland, Sweden and Norway. After entering the Finnish market in April (IM116), the budget carrier will open a base in Helsinki where 3 aircraft will be stationed to serve 2 domestic destinations (Oulu and Rovaniemi and 11 international ones (e.g. Barcelona, Rome, London Gatwick) from next year (Norwegian, 5 and 20 October). After being charged by French authorities with illegal working practices, Ryanair will close its only French base in Marseille, removing its 4 aircraft based at MP2. The Irish carrier will consequently stop serving 13 of the 23 routes from/to the airport from 11 January (Ryanair, 13 October). CityFlyer took delivery of 11 E-jets ordered in December 2008 and converted two E190 options to be delivered in spring 2011 which will increase the London City airline s capacity by 20%. The British Airways subsidiary will launch a twice-daily service to Stockholm Arlanda from London City from 9 January (British Airways, 19 October). Industry Monitor. Issue 123. 27/10/10 Page 4 EUROCONTROL 2010
Figure 4. Main carriers load factors. (Source: Company reports) Traffic Statistics: September update Figure 3 and Figure 4 compare September 10 figures with September 09 ones. Passenger capacity is measured in available seat kilometres (ASK) and traffic is measured in revenue passenger kilometres (RPK). Except for Air France-KLM which slightly reduced its capacity, all carriers followed in this bulletin (for which data is available) have improved their traffic statistics in September (company reports, October). Cargo TNT Airways will lease 3 B777 from mid-2011 to operate long haul routes between Europe and Asia. The Belgium cargo operator will reportedly replace 10 B737-300 freighters currently operating in the European network with 11 B737-400 Special converted freighters with larger capacity from Q112 (TNT, 15 October and flightglobal, 26 October) Aircraft Manufacturing Following flight-test discoveries; Boeing re-scheduled its 747-8 freighter s first delivery to mid- 2011, a 6-month delay on previous postponement (IM116). The manufacturer also confirmed the first 787 delivery to be delayed (IM121) to first quarter of next year (Boeing, 1 and 20 October). During Q310, Boeing reported 124 commercial deliveries (a 10% increase on Q309) and recorded 221 net commercial aircraft orders (against 79 in Q309) demonstrating the recovery of commercial markets (Boeing, 20 October). Bombardier is expanding its family of large business aircraft with two new aircraft: Global 7000 and Global 8000. The ultra long range jets will notably be able to serve non-stop (respectively) London-Singapore with 10 passengers from 2016 and Hong Kong-New York with 8 passengers from 2017 (Bombardier, 16 October). Industry Monitor. Issue 123. 27/10/10 Page 5 EUROCONTROL 2010
Figure 5. Carbon prices. (Source: Point Carbon) Despite a slowdown in cancellations of its business aviation orders, Dassault posted a negative order book (-1) for the first 9 months of 2010. At the same time, sales have nevertheless increased by 36% (compared to the same period last year) but the French manufacturer expects the business aviation market to stagnate in the short-term because of the significant number of second-hand aircraft currently for sale (Dassault, 14 October). Airports BAA recorded a 7.6% increase at Heathrow in September (year-on-year) with passenger number to amount 6.2 million. The UK airport company which currently owns 6 UK airports and Naples agreed to sell its share in the latter for 150 million to an Italian fund. The sale, subject to regulatory approvals, should be completed by the end of 2010. BAA, aiming at refocusing on UK airports and especially on Heathrow, placed a bond of 500 million and a maturity of 7 years to fund its long-term investment plans (BAA, 1, 5 and 11 October). Gatwick airport has been granted permission to commercially operate the A380, enabling competition with Heathrow on superjumbo s routes. The GIP airport, investing 1 billion to develop its infrastructure (e.g. rail links improvement, modernisation of facilities), aims at boosting its annual passenger count to 40 million by 2018, a 20% increase on 2009 figure (Gatwick Airport, 18 October). Environment ICAO member States agreed a comprehensive resolution to reduce the impact of aviation emissions on climate change including: a global target of 2 per cent annual fuel efficiency improvement up to 2050, a global framework for the development of sustainable alternative fuels for aviation; and, a target of 2013 for a CO 2 standard for aircraft engines The agreement also calls for the development of a global framework on market-based measures which the EU is handling in part by adding airlines to its emissions trading system in less than 15 months (ICAO, 8 October and Europa, 9 October). Industry Monitor. Issue 123. 27/10/10 Page 6 EUROCONTROL 2010
Figure 6. Brent and Kerosene prices. (Source: Commodity prices EIA/IATA, Prices and exchange rates - EUROSTAT) Regulation The EU and Vietnam signed a horizontal agreement to remove nationality restrictions from the current bilateral aviation agreements. Any EU airline will be able to operate a flight between the EU where a bilateral agreement exists--and Vietnam (Europa, 4 October). Fares Deflated ticket prices in Europe slightly increased by 0.6% in September year-on-year (Eurostat, October). Oil Oil prices closed at around $83 per barrel on 25 October (Brent). Oil prices remained quite stable between $70 and $85 over the last 12 months, contrasting with the upswings observed in the precedent years (Financial Times, 13 October). Converted price indices for Kerosene and Brent up to September are shown in Figure 6 (Brent and WTI cushing). 2010 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 www.eurocontrol.int/statfor The EUROCONTROL Statistics and Forecast Service (STATFOR) is ISO 9001:2008 certified. Industry Monitor. Issue 123. 27/10/10 Page 7 EUROCONTROL 2010