The EUROCONTROL bulletin on air transport trends

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1 Industry Monitor The EUROCONTROL bulletin on air transport trends Issue N /10/2015 European flights grew by 2% in August compared with the same month last year and were in line with the baseline forecast. Preliminary data for September show a 2.5% increase in flights compared with September last year. AEA reported record-breaking passenger load factors reaching 83% in July and August. Oil prices remained low at 43 per barrel in September. EUROCONTROL statistics and forecasts 1 Other statistics and forecasts 3 Passenger airlines 4 Airports 7 Aircraft manufacturing 8 Oil 8 Fares 8 EUROCONTROL statistics and forecasts European flights (ESRA EUROCONTROL Statistical Reference Area) grew by 2% in August 2015 compared with August 2014 and were in line with the baseline forecast. In August 2015, traffic hit the highest ever number for August with an average of 30,600 flights per day. Moreover Friday 28 August recorded the highest number of flights in 2015 with 33,066 flights. Preliminary data for September 2015 show a 2.5% increase in flights compared with September last year (Figure 1). The low-cost segment maintained its dominant position with a growth rate of 6% and was followed by the traditional scheduled segment which grew 2.1% in August 2015 (vs. August 2014). The business aviation segment moved from an increase of 1.5% in July to a decrease of 1% in August. The all-cargo segment remained stable with a decrease of 0.2% on August last year. Charter was the weakest market segment in August, with a fall of 15% compared with the year-ago period and mainly due to a fall of 10% in traffic to/from Russia and Tunisia. In addition, circa 4% of the charter segment decrease was also attributed to a number of aircraft operators filing a different flight type in 2015 compared with last year. With circa 300 additional flights per day, Turkey had the highest increase in local traffic (excluding overflights) on the European network in August 2015 (vs. August 2014) and was followed by Spain, UK and Germany (like in July). Then France became the top five contributor adding 150 daily flights in August. This strength of the busiest European states in local traffic growth was complemented by Greece, Portugal, Poland, Switzerland and Ireland. Norway, on the other hand reduced its contribution to the network by 48 daily flights in August 2015 (vs. August 2014) (Figure 2). Full detailed statistics on flights are available from the STATFOR dashboard 1 (EUROCONTROL, September). 1 Industry Monitor. Issue /10/2015 Page 1 EUROCONTROL 2015

2 Figure 1: Monthly European Traffic and Forecast (Feb15). Figure 2: Main changes to traffic on the European network in August. The events in Ukraine which have led to significant decreases in the country s local traffic since February 2014 started to fade away. Traffic levels in August 2015 were similar to the ones in August last year. Based on preliminary data from airlines for delays from all causes, 46% of flights were delayed on departure (>= 5 minutes) in August 2015, this was an increase of 2 percentage points on the same month in High airport capacity delays at Istanbul Atatürk and Sabiha Gökcen airports which were recorded since June 2015 continued in August. The average delay per movement in August 2015 increased from 12.2 minutes to 13.2 minutes. Further analysis of the delay reasons shows that reactionary delay increased by 0.8 minute where airline delays fell by 0.3 minute per flight (Figure3) (EUROCONTROL, September). Industry Monitor. Issue /10/2015 Page 2 EUROCONTROL 2015

3 Breakdown of all-causes delay per flight Percentage of flights delayed on departure Figure 3: Delay statistics (all-causes, airline-reported delay preliminary data for August 2015). Figure 4: Passenger load factors in Europe. Other statistics and forecasts ACI reported that overall passenger counts at European airports were up 6.7% in July 2015 (vs. July 2014) with overall aircraft movements growing by 2.6% (ACI Europe, 7 September). IATA reported that European scheduled passenger traffic (RPK) increased by 6.7% in July 2015 compared with July Capacity rose by 4.4% and the total passenger load factor was up 2 percentage points to record-high 86.7% (IATA, 4 September). For the first half of 2015, the load factors of AEA carriers remained in line with the 2014 (record-breaking) ones on Europe cross-border flows (Figure 4). Then, July and August load factors showed a noticeable improvement on 2014 levels, reaching 83% each month (AEA, September). Industry Monitor. Issue /10/2015 Page 3 EUROCONTROL 2015

4 Figure 5: Main carriers traffic statistics. Passenger airlines Traffic statistics: August update Figure 5 and Figure 6 compare August 2015 figures with August 2014 figures. In addition to the number of passengers (PAX), passenger capacity is measured in available seat kilometres (ASK) and traffic is measured in revenue passenger kilometres (RPK). Capacity, costs and jobs Lufthansa pilots went on a two-day strike (8-9 Sep) which led to the cancellation of circa 1,000 flights. This was the 13th strike wave in 18 months concerning an ongoing dispute over pay and early retirement benefits, but also over Lufthansa s cost-cutting programme to better compete with its low-cost competitors in Europe. The pilots' union Vereinigung Cockpit wants to prevent Lufthansa from developing its Austria-based low-cost subsidiary, Eurowings and hiring pilots of non-german contracts (Lufthansa, 8 September). Lufthansa Group will cut its management positions by 15% and boost annual profit by 500 million by 2019 when it completes the reorganization of its management structure into three operating units: 1) Lufthansa Group Mainline (SWISS, Austrian, Brussels Airlines and Lufthansa), 2) Eurowings Group (focusing on the development of its low cost Germanwings and Eurowings brands) and 3) Aviation companies (Lufthansa Technik and Lufthansa Cargo) (Lufthansa Group, 16 September). Russian government approved the acquisition of a 75% stake in Transaero Airlines by Russia s flag carrier, Aeroflot to create one of the world s largest air transport groups. (Transaero Airlines, 1 September). Vueling plans to hire up to 200 pilots to meet market growth demand in Summer 2016 (Vueling, 10 September). Industry Monitor. Issue /10/2015 Page 4 EUROCONTROL 2015

5 Figure 6: Main carriers load factors. UK low cost Jet2.com has placed a firm order for 27 Boeing B NG to be delivered between 2016 and 2018 (Boeing, 3 September). easyjet will stop its service from Gatwick to Moscow Domodedovo at the end of March 2016 due to lack of demand. In March 2015 the airline already halved the number of flights on that route. Flights to Moscow were launched in March 2013 from both Gatwick and Manchester (easyjet, 11 September). Start-up 24Airways, Italy is reportedly planning to launch domestic and European flights from its hub at Milan Malpensa (ch-aviation, 9 September). It is reported that Air France-KLM low-cost subsidiary, Transavia Holland is in talk with Dutch pilots union VNV to open a base in Munich in 2016 with four Boeing B aircraft. The news comes one year after Air France-KLM Group withdrew its project to create Transavia Europe (IM166) (La Tribune, 16 September). It is reported that Air France was not able to reach an agreement with pilots trade unions over the implementation of its Perform 2020 restructuring plan which entails changes to working conditions for no salary increases to improve productivity. Consequently Air France said that it could cut its long-haul routes by 10% and proceed with redundancies (AFP, 30 September). It is reported that Aeroflot and Transaero will be banned from flying to Ukraine as from 25 October. Earlier in September, the Ukrainian government already imposed sanctions against 25 Russian airlines. Russian Ministry of Transport will introduce reciprocal measures against Ukrainian airlines from the start of the winter season (BBC, 25 September and Kyivpost, 29 September). Routes, Alliances, Codeshares Ryanair will open a new base in Milan Malpensa with one aircraft and four routes to London Stansted Bucharest, Comiso and Sevilla, effective 1 December. The airline will also open Santiago de Compostela, its twelfth base in Spain in summer 2016 (Ryanair, 2 & 15 September). Industry Monitor. Issue /10/2015 Page 5 EUROCONTROL 2015

6 Figure 7: Brent and Kerosene prices. Ryanair will launch four new routes from its London bases in its summer 2016 schedule; from Stansted to Milan Malpensa, Verona and Sofia and from Luton to Vilnius (Ryanair, 2 September). Ryanair will launch new routes from Rome Fiumicino to Alicante, Malta and Kos in Summer 2016 (routesonline, 20 September). French regional Atlas Atlantique Airlines (AAA) will launch operations from Paris-Vatry to five destinations in Maghreb (Algeria: Alger, Oran, Tlemcen and Morocco: Casablanca, Oujda) from October onwards (AAA, September). Low-cost Norwegian will launch transatlantic flights from Cork to Boston (from May 2016) and New York (from May 2017) using a Boeing B-737NG aircraft. Norwegian already operates long-haul routes from Gatwick to five U.S. destinations (Norwegian, 25 September). germanwings will switch its Moscow services from Vnukovo to Domodedovo airport, effective 25 October. Lufthansa s low-cost subsidiary flies to the Russian capital from Berlin Tegel and Cologne/Bonn (germanwings, September). Vueling will open a base at Paris Charles De Gaulle in May 2016 with two Airbus A320 aircraft and eight new routes from the airport to Copenhagen, Vienna, Prague, Venice, Bari, Naples, Fuerteventura and Tangier. In total 13 destinations will be served from the airport. The airline will be the second low-cost carrier based at Charles De Gaulle; easyjet being present since February 2008 (Vueling, 22 September). Vueling will link the Balearic Islands to Italy with the opening of three new routes from Mahon to Bologna, Milan Malpensa and Verona in Summer 2016 (Vueling, September). Failures Greenland Express will not resume operations this year. The virtual airline operating flights between Greenland and Denmark already suspended flights in September 2014, three months after launching operations (IM164) (Greenland Express, September). Skygreece Airlines suspended operations on 27 August and filed for bankruptcy protection. The airline operated one Boeing B aircraft and linked Greece to North America (Skygreece, September). Industry Monitor. Issue /10/2015 Page 6 EUROCONTROL 2015

7 Figure 8: Deflated ticket prices in Europe. Little Red, Virgin Atlantic subsidiary ceased operations on 26 September. The airline operated domestic flights from Aberdeen, Edinburgh and Manchester to Heathrow and was meant to feed into Virgin s international network at Heathrow, but the demand was too weak and actually point-to-point passengers rather than connecting traffic (Virgin Atlantic, September). Airports In August the busiest European airports in terms of flight movements were as follows: (source: Rank Airport Aug 2015 Average Daily Movements Growth on Aug Paris Charles De Gaulle 1, % 2 Amsterdam 1, % 3 Frankfurt 1, % 4 Istanbul Atatürk 1, % 5 London Heathrow 1, % 6 Munich 1, % 7 Madrid 1, % 8 Rome Fiumicino 1, % 9 Barcelona % 10 London Gatwick % IATA, airlines and air transport representatives in France have filed a complaint to EC against the French government to protest against the increase of airport charges at Charles De Gaulle and Orly airports during the period The French government has ignored the conclusions of the independent Airport Consultative Commission which recommended using terminal retail activities of both Paris airports to decrease airport charges to airlines over the period (IATA, BAR, CSTA, SCARA, 2 September). Local German authorities issued on 21 September an order to immediately suspend construction works in Berlin Brandenburg main terminal due to excessive loads in the building s roof structure. The latest date for the long-delayed opening of the airport was 2017 (FBB, 21 September). Industry Monitor. Issue /10/2015 Page 7 EUROCONTROL 2015

8 Aircraft manufacturing Airbus has opened its first U.S. Manufacturing facility in Alabama for assembly of A319, A320 and A321 aircraft family (Airbus, 14 September). Boeing agreed with COMAC (Commercial Aircraft Corporation of China) to set up a factory in China for the completion, paint and delivery of its B-737 aircraft to Chinese customers. Alongside this news, the U.S. manufacturer also announced having reached a deal with CASC (China Aviation Supplies Holding Company) for the purchase of 300 aircraft (250 B- 737 aircraft + 50 wide-body aircraft) for Chinese airlines and leasing companies (Boeing, 23 September). Oil Oil prices remained low at 43 per barrel in September. Converted indices for Kerosene and Brent are shown in Figure 7. Fares Deflated ticket prices in Europe increased by 1% in August year-on-year, based on preliminary values. This is just below the trend of 1.2% (12-month trailing average) shown in Figure 8 (Eurostat, 16 August). Note: to eliminate the influence of inflation on euro figures, the ticket price is deflated with a price index. The STATFOR deflated ticket prices are estimated in 2005 constant euros 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 Industry Monitor. Issue /10/2015 Page 8 EUROCONTROL 2015