MARCH
2014 IN THIS ISSUE: PAGE 3
Feature Articles PAGE 5
Regional Reports PAGE 11
Aviation News PAGE 15
Traffic Updates PAGE 20
InterVISTAS News
Foreword
HELLO AND WELCOME TO THE MARCH 2014 EDITION OF THE AVIATION INTELLIGENCE REPORT.
This month, Majidah Hashim discusses airport sustainability and the “green revolution” undertaken by the industry to act upon climate change. Wei Jin provides an analysis of the 2013 year-end market capitalizations for major airlines around the world.
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Ian Kincaid updates us Gatwick Airport’s plan for a second runway,
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Debra Ward provides us with the latest news on Canada’s free trade deal with South Korea,
Our Regional Reports include:
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Doris Mak discusses the capacity constraints at Dubai International Airport in light of Emirates’ rapid fleet growth, and
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In our aviation traffic section, David Dague provides a March 2014 update on worldwide airline seat capacity.
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Steve Martin reviews the White House’s budget for U.S. aviation funding,
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Kenneth Currie discusses Embraer’s 2013 financial results,
Deborah Meehan President and CEO InterVISTAS Consulting Group
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We hope you enjoy this edition of AIR. Best Regards,
Vic Prins Director, Business Line Aviation Royal HaskoningDHV
Rik Krabbendam Managing Director NACO
POWERING AIRPORT SUSTAINABILITY
In April 2008, the aviation industry came together in Geneva in a monumental show of solidarity to sign what has come to be known today as the ‘Aviation Industry Commitment to Action on Climate Change.’ Signatories comprised of international and regional industry organisations, aircraft manufacturers, engine manufacturers, airlines, airports and air traffic control providers. Within this commitment, the industry made a pact to gear
And so, the aviation industry came together to take a stand in support of sustainability. At the Copenhagen Conference of Parties (COP) 15 in 2009, aviation became the only industry to announce ambitious environmental targets, and it laid out its plan on how it was going to do so for the world to see. This move effectively, albeit momentarily, improved the image of airports and their prospects for growth – but now airports, in living up to their end of the pact, need to make good on their promises. It was not that airports were not already doing a lot of good, but the biggest challenge stood in finding a suitable method to communicate these efforts to the world. It was not until 2011, when the Global Reporting Initiative (GRI) launched the Airport Operators Sector Supplement (AOSS), that airports found a framework that not only gave them a set of indicators to measure their environmental performance with, but also gave them a basis of comparability to see where they stood. Working with GRI, NACO was the consultant from the start to the completion of the AOSS process.
towards a pathway to carbon-neutral growth and a carbon-free future, but also called out to governments and other friends within the industry to do the same. A series of events could be said to have triggered this pact, most notable of which was the increasingly aggressive protests held against London Heathrow Airport and its expansion plans. With an established precedence, similar sentiments from environmental groups threatened to obstruct growth not just for the UK airports, but airports worldwide. In Europe, the extension of the European Union Emissions Trading Scheme (EU-ETS) onto airlines threatened to reshape the already delicate balance of air traffic movements globally.
The AOSS, however, is not an environmental reporting framework. It is a sustainability reporting framework. This means that besides environmental performance, it gives equal attention to measuring economic and social impact performance, and presents a global picture of an airport’s worth. Fuelled by stakeholder pressure, or simply the desire to inform the world of the great contribution of airports, the number of airport sustainability reports in circulation increased exponentially and continues to do so today. In 2012, the Air Transport Action Group (ATAG), responsible for bringing the aviation industry together to sign the 2008 climate change commitment in Geneva, brought the industry
Feature Feature
The ‘green revolution’ in the aviation industry has evolved to take on the more holistic (and far more economically favourable) approach of sustainability. What started as presumably the flavour of the day has now become the order of days yet to come.
Majidah Hashim Project Manager, Airport Sustainability The Hague, Netherlands together once again. This time, they signed a declaration ‘Towards Sustainable Aviation,’ and once again called out to governments and others to join in this endeavour. This constant trail blazing has been a conscious and careful move on the side of the industry. ATAG calculates the global economic impact of aviation in 2010 alone to have been in excess of $2.2 trillion. According to current statistics from ATAG and Airbus, air traffic is set to double in the next 15 to 20 years. In fact, according to IHS Global Insight, OAG and Airbus, since 2008 passenger traffic had constantly outperformed world GDP and continues to do so today. Clearly, there is a lot at stake. NACO’s airport sustainability ‘fitness’ program, designed in collaboration with InterVISTAS, the Netherlands’ National Aerospace Laboratory (NLR) and Royal Haskoning DHV, intends to ensure that airports stand the best possible chance of profiting economically, socially and environmentally from the inevitable robust growth of the aviation industry. It assists airports in cultivating strong and valuedriven management strategies, and institutes productive and long-term relationships with their stakeholders. What started out as the ‘fashion statement’ of the decade (green was the new black, wasn’t it?) has interestingly transformed to reveal one of the most powerful business approaches for the next century. As the forerunners of airport sustainability, NACO is committed to the development of innovative and finely tuned sustainability solutions for airports worldwide. We are, after all, part of the aviation industry too.
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Feature
YEAR END AIRLINE MARKET CAPITALISATION FOR 2013
Wei Jin Senior Analyst, Air Service Development Vancouver, Canada 2013 saw a fourth consecutive year of positive profit margin for the aviation industry. According to IATA estimates, global airlines earned 1.8% profit in 2013, doubling the 2012 industry results. Continued profitability along with a bull market has driven airline market capitalisations to record highs. In the U.S., 2013 marked the return of American Airlines from bankruptcy protection to end the year valued at $8.5 billion. Delta Air Lines, fueled by record profits, jumped 132% in market cap from $10.1 billion to $23.5 billion. United, Southwest, Alaska and JetBlue all saw significant market cap increases ranging from 50% to 77%.
In Canada, both WestJet and Air Canada posted positive results, propelling increases in both airlines’ valuations. WestJet’s market cap increased by 37% while Air Canada, having turned a profit in 2012 for the first time since 2007, saw its valuation increase by 338%. As the Eurozone crisis steadily improves, so have European airline financials. LCC leaders Ryanair and Easyjet increased their market cap by 35% and 96% respectively. Airline conglomerate International Airlines Group (IAG), the holding company for British Airways, Iberia and Vueling, saw its valuation increase by 120%.
Asia-Pacific carriers however posted less than stellar results in 2013. Singapore Airlines experienced a 7% decrease in its valuation. Meanwhile, Qantas’ continued struggles resulted in a 39% drop in its market cap. Cathay Pacific recovered from a disappointing 2012 to boost its market cap by 26%.
Source: IATA Financial Forecast March 2014; YCharts.com; London Stock Exchange Historical Market Cap; www.xe.com
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UNITED STATES REPORT Regional Reports
White House Releases Budget Request for FY 2015
The Obama Administration released its proposed budget for Fiscal Year 2015, and the proposals broadly supported aviation interests.
Steve Martin Senior Vice President Washington D.C.
Federal Aviation Administration Highlights
Transportation Security Administration Highlights
Customs and Border Protection Highlights
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Total funding decreased by roughly $600 million – much of which comes from the Grants to Airports (AIP) program.
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The total budget contemplates a reduction in full-time staff of approximately 2,500, to 54,180.
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AIP is lowered to $2.9 billion, offset in part by eliminating passenger and cargo entitlement funding for large hub airports. Federal grants will focus on smaller commercial and general aviation airports that do not have access to additional revenue or other outside sources of capital. The Budget also proposes to allow all commercial service airports to increase the non-Federal Passenger Facility Charge, thereby giving airports greater flexibility to generate their own revenue.
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TSA claims that over 35 percent of the traveling public use expedited screening through TSA Pre-Check lanes or other Risk-Based Security programs. TSA believes this will improve the customer experience while enhancing the efficiency and effectiveness of its screening operations. In 2015, risk-based security will yield over $100 million in staffing efficiencies.
The Budget proposes an historic level of 25,775 CBP officers, including the 2,000 new CBP officers funded through 2014 appropriations as well as 2,000 additional officers through proposed increases to user fees.
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The DHS Budget in Brief shows that staffing (FTEs) assigned to inspections and trade facilitation at Ports of Entry is actually expected to decline by nearly 350 positions from FY 2014 into FY 2015.
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CBP proposed to fund an increase in personnel by raising three user fees associated with CBP processing: the Immigration User Fee (IUF), the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) user fee, and Express Consignment Courier Facilities (ECCF) user fee.
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The Operations account is funded at $9.8 billion, which is $100 million above the FY 2014 level.
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Essential Air Service program budgeted at $155 million, a slight increase from FY 2014.
FAA Funding Levels and Request (in billions)
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The decreased budget request under Air Cargo reflects a shift of $30 million needed in the canine program to a different budget line. Other resources requested for cargo screening are requested to increase by approximately $14 million. The budget includes an additional $5 million to expand the Air Cargo Advanced Screening (ACAS) program from pilot to operational status.
Aviation Security Funding Levels and Request (in billions)
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CBP proposes an increase of $2.00 to the IUF, bringing the new fee amount to $9.00. Under the Immigration and Nationality Act, each sea passenger arriving in the United States is charged a $7.00 fee if his or her journey originated from a place outside of United States, other than certain, exempt regions. CBP proposes lifting the exemption for passengers traveling from those regions so that the same fee will be applied to all sea passengers.
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Regional Reports
UNITED STATES REPORT continued
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The additional revenue collected from these increases will fund up to 1,205 new CBPOs, which will reduce wait times at air and sea POEs, especially as cruise volumes continue to grow as projected in future years.
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The additional revenue raised from these fee increases will allow CBP to recover more costs associated with customsrelated inspections, and reduce wait times by supporting the hiring of up to 795 new CBPOs.
Funding Levels and Request (in billions) ■■
In addition, the Budget includes a proposal to increase COBRA fees and the ECCF fee. COBRA created a series of user fees for air and sea passengers, commercial trucks, railroad cars, private aircraft and vessels, commercial vessels, dutiable mail packages, broker permits, barges and bulk carriers from Canada and Mexico, cruise vessel passengers, and ferry vessel passengers. This proposal would increase the current commercial aircraft and vessel passenger fee by $2.00, bringing the new fee amount to $7.50, and increase other COBRA fees by a proportional amount. The ECCF fee (established under the Trade Act of 2002) was created to reimburse CBP for inspection costs related to express consignment and the proposal would increase the current fee by $0.36.
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Travel Promotion Fee The Budget supports a proposal to permanently extend authorization of a travel promotion surcharge and reallocate the revenue collected to support BrandUSA and CBP. The Travel Promotion Act of 2009 imposed a $10 surcharge onto the existing Electronic System for Travel Authorization user fee that travelers from visa waiver countries pay before arriving in the U.S. A legislative proposal would extend the authorization and reallocate the revenue from the surcharge
with 80 percent directed to BrandUSA and 20 percent to CBP. For FY 2016, total revenue for the $10 surcharge is estimated to be $142.0 million, of which $114 million will support BrandUSA and $28.0 million will be provided to CBP to add up to 125 new officers to reduce wait times for travelers entering the United States.
LATIN AMERICA REPORT Regional Reports Kenneith Currie Executive Vice President, Finance and Privatization San Francisco, USA Embraer Posts Strong Results for 2013 but Provides Conservative Guidance for 2014
Brazil’s Embraer SA has guided investors to expect earnings in 2014 that are similar to earnings expectations in 2013. In 2013, Embraer actually exceeded its profitability expectations as a result of a spate of aircraft deliveries at the end of the year. Embraer’s fourth-quarter 2013 profit more than doubled that of 2012 to $265 million, and beat an average forecast of $213 million in a Reuters survey of analysts. Earnings before interest, taxes, depreciation, and amortization (“EBITDA”) rose 75% to $544 million, beating an outlook of $361 million. Actual EBITDA in 2013 was 16.1% of revenue, which was above Embraer’s EBITDA margin guidance of 13-14%. Including depreciation and amortization, actual 2013 EBIT was 11.4% of revenue, which was well above its EBIT margin forecast between 9% and 9.5%. The decision to provide conservative guidance
for 2014 despite exceeding expectations for last year reflects the pricing pressure likely to weigh on Embraer’s regional jet division. Major contracts with U.S. carriers last year replenished the order backlog for Embraer’s commercial aircraft, but probably brought steep discounts associated with big deals, according to analysts. Embraer’s delivery expectations for commercial jets in 2014 increased slightly to 92-97 aircraft, in comparison to delivering 90 of the 90-95 commercial jets forecasted to be delivered in 2013. Embraer nearly exceeded its 2013 guidance for executive jet deliveries, but held the same forecasts for 2014. It plans to deliver 80-90 light aircraft and 25-30 big private jets, which signals caution over a delicate executive aviation recovery. Vinci Airports Seeks to Expand Vinci SA (DG), Europe’s biggest infrastructure
and facilities builder, is seeking airport concessions in Peru and Chile to tap growing airline traffic as construction markets in France and central Europe struggle to expand.
“We want to develop Vinci Airports to capture the dynamism of the global airline traffic, which is growing faster than GDP everywhere in the world and should double by 2030,” Vinci Chief Executive Officer Xavier Huillard said at a press conference in Paris on February 6, 2014. The company is bidding to build and operate Cuzco’s new Chincheros airport in Peru, and to manage the expansion of the passenger terminal at Santiago de Chile’s airport, the CEO said. It’s also interested in airports in Asia and regional platforms in countries such as Greece and Brazil. In the future, Vinci has interest in acquiring operating rights and stakes in airports in St. Petersburg, Russia, and the Japanese cities of Fukuoka and Sendai, as owners of these facilities seek funds to maintain and expand hubs while investors search assets promising long-term returns. To counter a slowdown in European construction, Vinci bought Portuguese airport operator ANA-Aeroportos de Portugal SA in 2013 for approximately 3.1 billion euros and raised its stake in Aeroports de Paris to 8%.
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Regional Reports
EUROPE REPORT
Ian Kincaid Vice President, Economic Analysis London, UK Gatwick Airport prepares to submit plans for a second runway to the U.K. government’s Airports Commission
In December 2013, both Heathrow and Gatwick were selected by the U.K. government’s Airports Commission as suitable locations for an additional runway. The move looks to address the issue of constrained airport capacity in the southeast of England. As a result of this selection, both airports are preparing detailed report plans for submission in May of this year. At the Future of Aviation forum in Epsom, U.K., on March 13th, Gatwick CEO Stewart Wingate advised delegates that preliminary cost estimates for the new runway fall between approximately $9 billion and $16 billion CAD, although the airport is assuming a cost of around $12 billion CAD. No public funding is expected to be needed for the project, as Wingate advised that the airport would be able to raise the cash through private equity funding. Gatwick is currently examining three options for an additional runway, with each option offering varying levels of spacing between the existing and potential runway.
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EU lawmakers have rejected a deal which aimed to exempt foreign flights from emission charges
At the beginning of March, Parliamentary negotiators achieved a deal with EU member states that restricts the European Commission’s initial emissions proposal. The restriction now confines emissions charges to EU airspace, which specifically only covers intra-EU flights. The deal was reached amidst pressure from certain member states – including Germany, UK and France – that a trade war could potentially erupt if it were not passed. In mid-March, the European Parliament’s environmental committee narrowly voted against a deal that would exempt long-haul
flights from paying for carbon emissions until 2016. This move reflects the committee’s refusal to bow against international pressures. A plenary session is scheduled on April 3, which will see the European Parliament decide on whether foreign airlines should pay for their carbon emissions. Failure to reach a deal would see the expiration of the ‘stop the clock’ initiative, which has temporarily granted foreign airlines exemption from paying for their carbon emissions.
CANADA REPORT Regional Reports Debra Ward Executive Consultant Ottawa, Canada
Monitoring of Wi-Fi in airport did not invade online activities: Watchdog
Canada signs free-trade deal with South Korea
Stephen Harper has signed the long-awaited free trade agreement with South Korea, on an official trip to Seoul during the week of March 10th. Ten years in negotiation, this is Canada’s first free-trade agreement with an Asian country and is seen as a foothold into that lucrative market. The agreement is well timed, with an uptick in South Korean travel to Canada, which at 144,583 travellers in 2013, increased by 3.3% from 2012. In 2012, the strongest growth from Korea was in business (+10.7%) and leisure (+24.6%), placing Canadian tourism and business travel in a strong position to capitalize on the new agreement. Canada’s north to get new connections this summer
Canadian North will run direct flights between Iqaluit, NU and Halifax, NS, with a connection to St. John’s NL, for three months, starting in June. If successful, the flight may be extended past the summer season. Air Canada’s Calin Rovinescu to chair IATA Board of Governors
Calin Rovinescu, Air Canada’s president & CEO will be assuming the position of Chair of the IATA Board in June 2014. Calin has been the focus of positive media attention, with kudos for his turnaround of the carrier, and was named the Globe and Mail’s CEO of the Year for 2013.
The controversial action taken by the Communications Security Establishment Canada (CSEC) to track passenger Wi-Fi at an undisclosed Canadian airport was given a clean bill of health by the watchdog organization which monitors CSEC activities. The activity came to light in a document leaked by Edward Snowden. In its finding the oversight agency said “This activity is used by CSEC to understand global communications networks. We concluded that this CSEC activity does not involve ‘mass surveillance’ or tracking of Canadians or persons in Canada; no CSEC activity was directed at Canadians or persons in Canada”.
Canada’s two northern carriers are expanding their network with new routes. Yukonbased Air North has launched a twice per week service between Yellowknife, NWT and Whitehorse, YK originating in Ottawa, eliminating the need for the two northern capitals to connect via Vancouver.
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Regional Reports
ASIA-PACIFIC REPORT
Doris Mak Director, Special Projects Vancouver, Canada
Dubai International Airport may not be able to keep up with Emirates Airline growth
The rapid fleet expansion underway at Emirates airline could pose a problem for Dubai International Airport in the near future. The gulf hub airport authority has reacted in recent years to this growth by expanding its first and second terminals, but it may not be enough. During a visit to Boston celebrating the launch of a new Emirates flight, the carrier’s CEO Tim Clark announced: “Dubai International, as it stands, won’t be able to accommodate all of our aircraft.” The airline received 45 new aircraft in 2013, many of which were Airbus A380’s, and expect to receive another 22 of the widebodies this year. As well, in late 2013, Emirates ordered another 50 A380s, the airline’s flagship aircraft. Furthermore, the order book also includes 150 Boeing 777X planes, described by Clark as: “the largest order in aerospace history.” Some industry observers suggest Emirates may move their operations to the new Al Maktoum Airport at Dubai World Central (DWC). Mr. Clark suggests the decision is up to the authorities. He notes: “Others are going [to DWC]. I believe that flydubai will operate from there. I think others will do that. The Government of Dubai will build a world-class field there. It will accommodate all or some.
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And as we get closer to the time they will decide what’s going to happen. But having said that, don’t forget that they have said quite clearly that Dubai International Airport today will remain open.”
Thai flag carrier signs up with Airbus’ Smarter Fuel Efficiency (SFE) system
Indian budget carrier SpiceJet signs a deal for 42 737 MAX aircraft
In an effort to optimize fuel consumption, Thailand’s flag carrier, Thai Airways International, signed up with the Airbus SFE system. Captain Montree Jumrieng, Executive Vice President, Technical Department, comments: “Smarter Fuel Efficiency will serve the objective of efficiently monitoring fuel consumption and maximizing the utilization and reliability of our fleet.”
On March 12th, SpiceJet announced the purchase of 42 737 MAX commercial aircraft from Boeing. The carrier hopes the deal, worth $4.4 billion USD at list prices, will improve its current financial performance. Deliveries for the jets are expected to begin in 2018, with payments starting shortly before. The new jet orders may boost investor interest in the airline. A possible sale of a stake of the carrier will now be open to both local and foreign investors, in light of India’s recent relaxation of the rules on investment by foreign airlines. SpiceJet has recently been struggling with high fuel costs and a weakened rupee, resulting in significant losses. It hopes to parlay the new plane order, as well as a fresh injection of capital, into improved financial results.
The SFE system was developed through a partnership between Airbus and IBM, and offers a fleet-data management system for commercial carriers. Specifically, SFE works by aggregating data from the entire carrier’s fleet, and with this information the program will perform advanced analytics and apply asset optimization techniques. The deal also includes Thai signing up for Airbus Smarter Mobility solution. It is a product developed by the IBM-Airbus partnership, and it will provide streamlined technical documentation and other information to mobile devices used by inspectors and technicians.
Aviation News
ASIA-PACIFIC UPDATE
Boeing and Airbus Release Forecasts for the Indian Aviation Market Aircraft manufacturers Boeing and Airbus have released their forecasts for the Indian aviation market. Airbus predicts that India will need 1,290 passenger aircraft between now and 2032, while Boeing forecasts India’s demand to total 1,600 new aircraft over approximately the same time frame. Dr. Kiran Rao, Airbus EVP Strategy and Marketing suggests: “By 2032, the number of Indian cities with more than a million passengers every month will have grown to 13 from today’s two. This exponential growth will continue to drive the need for larger aircraft like the A380 to operate in the country.”
China Southern Receives its First of Ten Boeing 777-300ER Aircraft At the end of February, China Southern took delivery of its first of ten extended range Boeing 777-300 aircraft. The carrier will operate the new plane on a route connecting passengers between southern China and the east coast of the United States. Zhang Zifang, Chief Operating Officer at China Southern Airlines, says: “The 777-300ER’s long-haul capability is a perfect fit for our network expansion plan as it will enable us to serve our existing long-range markets more efficiently and open new routes in the future.
The 777-300ER will support the development of Guangzhou as our main international hub and will be a vital part of our ‘Canton Route’ services.”
Cathay Pacific Posts Strong 2013 Results and Further Expands International Reach Cathay Pacific’s fleet renewal program appears to be paying off for the carrier as it posted a net profit of $2.62 billion HK in 2013, a 203.9% jump from the previous year. In 2013, 5 Boeing 747-400s were decommissioned while the airline took delivery of 5 A330-300s, 9 777-300ERs and 5 747-8F freighters. Looking ahead, Cathay will expand its North American and European network as it targets multiple secondary destinations.
MRO Specialist SR Technics Enters Asian Maintenance Market Swiss MRO specialist SR Technics has entered the Southeast Asian maintenance market this year, and offers straight component repairs with possible plans to expand into more detailed MRO aspects. The firm will start with a parts number catalogue of 60 items in March, with plans to grow to 300 by the end of the year. Felix Amman, Senior Vice President of component services at SR suggests: “We are always looking globally at the possibility of heavy maintenance operations in other regions.”
CANADA UPDATE
New President/CEO at the Halifax International Airport Authority On March 13th, Joyce Carter was named the new President and Chief Executive Officer of Halifax International Airport Authority (HIAA). Peter McDonough, Chair of HIAA’s Board of Directors comments: “Joyce has exceptional senior management experience and an outstanding record of achievement. Since joining HIAA in 1999, Joyce has been an integral part of our airport community and HIAA’s growth and development. Halifax Stanfield International Airport is a major economic engine for our municipality and province, and it is vital that HIAA’s senior leadership team brings the skills and experience that will see that critical role maintained and enhanced. We are confident that Joyce will continue to provide effective leadership both at the airport and in our community.”
Air Canada Rouge Launches Service Between Montréal and Las Vegas On March 13th, Air Canada launched its daily year-round service from Montréal to Las Vegas. Double daily service will be provided on Thursdays, Fridays and Sundays. Between March 13th and 28th, the service was operated by an Airbus A319, after which Rouge will be using a Boeing 767-300ER.
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Aviation News
EUROPE UPDATE Hamilton and Cargojet Partner to Provide a New Air Cargo Logistics Facility On March 12th, the John C. Munro Hamilton International Airport, alongside Cargojet, announced a new $12 million CAD joint Air Cargo Logistics Facility. With construction slated to begin in spring 2014, the facility will span approximately 77,000 square feet, half of which will be occupied by Cargojet. President and CEO of Hamilton International Airport, Frank Scremin, noted: “Cargojet is a long-time partner of the Airport and we are extremely excited to announce Cargojet as the anchor in the Air Cargo Logistic Facility. There is a significant opportunity to further develop air cargo services at Hamilton International; having secured the proper infrastructure and a partnership with Cargojet, Canada’s Cargo Airline, puts us in a great position to realize this.”
WestJet Records Second Best February in the Carrier’s History On March 7th, WestJet revealed a February 2014 load factor of 84.6 per cent, which ranks second highest ever in the airline’s history. WestJet President and CEO Gregg Saretsky commented by saying: “We are pleased with the strong traffic growth, achieving our second-highest February load factor in WestJet’s history, and welcoming more guests into our network, as we celebrated WestJet’s 18th birthday in February.”
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Air Canada Posts February Traffic Results On March 7th, Air Canada announced a system-wide growth in traffic of 3.8 percent on a capacity increase if 4.9 percent. Calin Rovinescu, President and CEO of Air Canada, said: “Despite severe winter weather conditions at our main hub in Toronto and across much of North America, Air Canada generated greater traffic for the month of February in all markets the airline serves, led by increased traffic in the U.S. transborder market.”
WestJet Announces New Daily Service Between Toronto and Phoenix At the beginning of March, WestJet announced a new, daily service between Phoenix and Toronto starting on October 26, 2014. Travellers can book same-day connections to and from Halifax, Moncton, Montreal and Ottawa. WestJet’s Chris Avery, Vice-President, Network Planning, Alliances and Corporate Development, notes: “We are always looking for new and better ways to provide Canadians with in-demand destination choices. After this winter of record storms and low temperatures, more Canadians than ever are looking for non-stop routes to sunny U.S. destinations like Phoenix to meet the demand for sunshine and tee times.”
Charter Flights to Begin Between China and the United Kingdom Birmingham Airport will be the first UK airport outside of London to provide direct charter flights to China, and the first to offer UK package tours. The UK Secretary of State noted: “This is great news for Birmingham and Britain. China is a vital trade and tourism partner for us and opening up this new route will encourage even more Chinese visitors to fly to our country and experience more of what our great nation has to offer outside of the capital – from tourist attractions to shopping, and culture to heritage. The new route will provide great investment and job opportunities for business in Birmingham and the Midlands.”
Norwegian CEO Comments on Plan B for Expansion to the U.S. Bjorn Kjos, Chief Executive of Norwegian Air Shuttle, has indicated what the low cost carrier’s plans will be should a U.S. foreigncarrier permit not be sold to the airline. If the U.S. Transportation Department opted not to grant NAS with a permit, the low-cost carrier would likely choose to buy another airline that already has the permit in its possession.
Aviation News
has suggested Peter Gerber, who has been responsible for Lufthansa’s human resources, IT and services, to take Garnadt’s place. IAG Cargo to Expand Cargo Capacity on Indian Routes IAG’s move to increase capacity on services between London Heathrow and India’s Hyderabad and Chennai airports are in response to a continually growing Indian pharmaceutical industry. Starting March 31st, the airline group will place a Boeing 787 on the route, offering increased capacity over the previously used 767. The head of pharmaceuticals and life sciences at IAG Cargo stated: “The pharma market has been one of the major Indian success stories of the past decade. Our Constant Climate product provides a hugely beneficial service to businesses operating out of this market, helping them to get their medications to market fit for use.”
Head of Cargo at Lufthansa Moves to the Passenger Side Effective May 1st, Karl Ulrich of Lufthansa will shift his responsibilities from the carrier’s cargo arm, to the passenger division. Wolfgang Mayrhuber, chairman of the supervisory board of Deutsche Lufthansa AG noted: “We are delighted to have obtained Karl Ulrich Garnadt for the executive board of the Lufthansa Group, as he is a very experienced aviation manager with extensive knowledge of the group. He makes an ideal addition to the Executive Board team.” The supervisory board
LATIN AMERICA UPDATE
transfers, shopping, check-in and security and immigration through to departure at the gate when compared to its South American counterparts.
MIDDLE EAST/AFRICA UPDATE
Air Canada Suspends Caracas Service In light of a declining economy and civil unrest, Air Canada posted on its website on March 19th that it can no longer ensure the safety of its operation in Venezuela. The carrier ceased operations to the country on March 18th, and refunded passenger tickets for Caracas flights purchased after that date. President Nicolas Maduro warned that any airline reducing or suspending flights in and out of Venezuela will be subject to severe measures. Despite this, Avianca chose to cease operations from San Jose, Costa Rica to Caracas by early April. The Columbian flag carrier will also reduce frequencies from Lima and Bogota and the Venezuelan capital.
Lima Achieves Top Spot Amongst South American Airports Lima’s International Airport again received top spot as best airport in South America at the Skytrax World Airport Awards. The awards are based on 12.85 million survey questionnaires during the 2013 and 2014 survey period. Lima International Airport ranked highly in indicators such as: arrivals,
DHL Express Grows in Africa with the Addition of Planes and Facilities Charles Brewer, managing director of DHL Express Sub-Saharan Africa, said a number of new facilities are planned in Ethiopia, Kenya, Nigeria, South Africa, Ghana and Angola. Furthermore, DHL Express SSA will add new planes to the West Africa region operations, including a Boeing 737. Brewer notes: “The introduction of these new facilities and planes reflect the continuation of our strategy for 2014. This allows us to serve our customers better, who in turn, can process, sell or assemble their products faster and more securely.”
Emirates to Add Oslo Service Gulf carrier Emirates will expand its European presence with the addition of a new daily service to Oslo, Norway. The route will be operated with a Boeing 777-300ER, equipped with a three cabin class configuration. Tim Clark, President Emirates Airline, states: “Norway’s resilient economy is built on strong foundations including its dynamic oil, gas, fishing, telecom and maritime sectors. We InterVISTAS | aviation intelligence report 13
Aviation News believe that Emirates’ new Oslo service will stimulate further growth via trade, tourism and investment flows into the country, by providing critical air transport links with emerging markets in the Middle East, Far East, West Asia and Africa. We also look forward to introducing new audiences to Oslo and drawing visitors from a host of points across the global network including the UAE and destinations further East such as India, Pakistan, Thailand, China and Vietnam.”
impacted to a lesser extent. Gert-Jan Janse, Head of Seabury Cargo Advisory, pointed out: “Mode shift has eroded a significant portion of air freight growth and is expected to continue to do so, albeit at a moderate rate. Annual global air freight volumes would be 15.2 million tonnes higher if air freight had retained its 3.1% market share, and over the past 13 year, 5.4 million tonnes have shifted from air to ocean – an average annual loss of more than 400,000 tonnes per year.”
Emirates Wins Award at the Annual Air Cargo Excellence Awards Ceremony On March 10th, the annual Air Cargo Excellence Awards were held in Los Angeles. Emirates Sky Cargo received the Diamond award for air carriers carrying over one million tonnes. Divisional senior vice president of cargo at Emirates states: “We’re proud to win this prestigious award. We want to thank all the freight forwarders who voted for us. Most importantly, I thank all of our staff who have done an excellent job.”
U.S. Senate Preparing to Oppose Norwegian Approval Approximately 38 Democratic and Republican senators are siding with Airlines 4 America and the AFL-CIO’s Transportation Trades Department’s calls to raise doubts over Norwegian Air Services’ application for a foreign carrier permit. The group suggests that the application violates ‘the spirit’ of the E.U.U.S. “Open Skies” agreement.
UNITED STATES UPDATE
Seabury-IATA Report Finds Modal Shift Impacting Air Freight Annual Growth A report drafted by Seabury and IATA finds that a modal shift to ocean freight has cost the air freight industry 2 percentage points of annual growth since 2000. Further research indicates that goods affected most by this shift include perishables and raw materials, while fashion, high-tech and machinery have been 14 aviation intelligence report | InterVISTAS
FAA Sees Marginal Growth for 2014, Followed by a Four-Year Boom The FAA expects carriers to slightly boost capacity and traffic in 2014, after which they will experience a steady period of growth all the way through to 2034. Specifically, system capacity for U.S. carriers is forecast to increase 1.5% this year, following a 0.8% jump in 2013. The remainder of the 20-year forecast calls for an annual average growth rate of 2.7%.
Hersman to Leave The NTSB After 10 Years of Service Deborah Hersman is stepping down from her chairman position with the NTSB to become president of the National Safety Council. She was initially appointed to the safety board in 2004 as a replacement for John Goglia. After recently being renominated to the safety board in August, Deborah’s focus has been twofold including both general aviation and charter safety. She states: “I look back at the hundreds of investigations and recommendations that have been issued during my tenure at the NTSB, and I have seen the landscape of transportation.”
SkyWest Takes Delivery of First E175 SkyWest, a regional North American airline, took delivery of its first of 40 Embraer 175s. This year, the carrier expects to place 21 E175s into service to support United Airlines. The new aircraft are expected to start flying on the Chicago O’Hare-Ronald Reagan Washington National Airport route on May 17th, and on O’Hare-Boston two days after. During the following month, SkyWest will add E175s onto the routes between New York and LaGuardia, as well as Chicago and Atlanta.
Aviation Traffic
WORLD WIDE SCHEDULED CAPACITY CHANGES
David Dague Vice President, Airline Strategies at Airports Boston, USA
March 2013 vs. March 2014 ■■ ■■ ■■
Weekly capacity grew 6.5% from the prior year Not surprisingly, the Middle East and Asian airports had the highest growth rates at 12.4% and 12.2% respectively The Canadian airports increased 3.3%. United States airports continue to the lag the rest of the world with a 1.1% change from the prior year, ranking last among the 11 regions.
World Wide Scheduled Capacity Changes the Past 12 Months
World Wide Scheduled Capacity Changes by Continent
InterVISTAS | aviation intelligence report 15
Aviation Traffic
World Wide Scheduled Capacity Changes by Top 5 Airlines
16 aviation intelligence report | InterVISTAS
Aviation Traffic
AIRPORT TRAFFIC: SELECTED CANADIAN AIRPORTS
2013
Summary of Total Year-Over-Year Passenger Traffic Performance at Selected Canadian Airports Toronto
Vancouver
Montréal
Calgary
Edmonton
Ottawa
Winnipeg
Halifax
Victoria
Kelowna
Saskatoon
Regina
January
+0.6%
-1.6%
+0.4%
+3.7%
+3.6%
-5.2%
-2.1%
-0.5%
-0.1%
+0.6%
+3.9%
+5.3%
February
-9.5%
-1.8%
-1.8%
+2.2%
+2.4%
-7.2%
-4.4%
-8.2%
-0.4%
-0.5%
+2.8%
+0.9%
March
+3.7%
-0.9%
+2.3%
+6.0%
+3.8%
-2.6%
-1.2%
-0.6%
+2.6%
+0.2%
+5.3%
+5.3%
1st Quarter
-1.7%
-1.4%
+0.3%
+4.0%
3.3%
-5.0%
-2.6%
-3.1%
0.7%
0.1%
4.0%
3.8%
April
+2.0%
-1.5%
-0.5%
+3.4%
+2.9%
-2.2%
-4.4%
-4.3%
+0.9%
+0.4%
+4.5%
+4.8%
May
+5.8%
+0.4%
+3.8%
+5.4%
+4.5%
-2.3%
-0.8%
-3.1%
+3.4%
+6.1%
+4.5%
+2.4%
June
+4.1%
+4.3%
+1.7%
+1.9%
+5.5%
-4.0%
-1.1%
+1.0%
+10.1%
+6.2%
+1.1%
-0.6%
2nd Quarter
+4.0%
+1.0%
+1.7%
+3.6%
+4.3%
-2.8%
-2.1%
-2.1%
+4.8%
+4.2%
+3.4%
+2.2%
July
+2.2%
+3.7%
+3.5%
+3.9%
+5.1%
-0.2%
-0.9%
+1.0%
+1.3%
+5.3%
+5.2%
+5.5% +6.1%
August
+3.6%
+5.9%
+6.2%
+6.6%
+5.2%
-0.6%
-0.8%
-1.4%
+3.7%
+5.5%
+5.9%
September
+3.6%
+3.1%
+1.2%
+4.9%
+5.4%
-1.1%
-2.0%
-1.0%
+3.3%
+5.2%
+1.8%
-1.2%
3rd Quarter
+9.6%
+4.3%
+3.8%
+5.2%
+5.2%
-0.6%
-1.2%
-0.5%
+2.8%
+5.3%
+4.3%
+3.6%
October
+4.2%
+2.2%
+1.6%
+4.8%
+3.2%
-1.3%
-2.0%
+2.2%
+1.8%
+6.0%
+6.6%
-0.2%
November
+3.2%
+2.6%
+1.7%
+6.2%
+3.5%
-1.5%
-3.4%
+1.3%
+5.9%
+5.3%
+6.1%
+6.6%
December
+6.2%
+7.1%
n/a
+8.0%
+9.9%
+1.6%
+4.7%
+6.3%
+7.1%
+7.1%
+8.8%
+6.3%
4th
+4.6%
+4.0%
n/a
+6.4%
+5.6%
-0.4%
-0.2%
+3.2%
+4.8%
+6.2%
+7.2%
+4.3%
Full Year
+4.3%
+2.1%
n/a
+4.8%
+4.6%
-2.3%
-1.5%
-0.7%
+3.3%
+3.9%
+4.7%
+3.5%
AIRPORT TRAFFIC: SELECTED U.S. & INTERNATIONAL AIRPORTS Summary of Total Year-Over-Year Passenger Traffic Performance at Selected Canadian Airports
2013
United States
International
Atlanta
Chicago
Los Angeles
Dallas
Denver
New York JFK
London Heathrow
Paris CDG
Frankfurt
Beijing
Tokyo Narita
Mexico City
February
-0.9%
-5.7%
0.4%
2.9%
-1.6%
-5.2%
1.0%
-1.6%
0.2%
7.3%
8.4%
2.2% 2.7%
March
-0.1%
-3.4%
5.6%
2.5%
0.0%
-0.3%
3.9%
n/a
-1.1%
7.6%
9.7%
1st Quarter
0.7%
-2.8%
3.2%
4.0%
0.5%
0.1%
1.8%
n/a
-2.0%
4.8%
8.2%
4.2%
April
-0.8%
+5.6%
+3.8%
+5.6%
-2.6%
-7.5%
-0.7%
-3.1%
-2.2%
+2.5%
+6.1%
+4.4%
May
-5.6%
+0.7%
+5.6%
+1.5%
-1.4%
-0.1%
+4.7%
+2.5%
+0.4%
+3.4%
+5.4%
+7.3%
June
-3.5%
-1.2%
+6.5%
+3.7%
-2.1%
-1.0%
+4.6%
0.0%
+3.1%
+1.4%
+9.2%
+8.6%
2nd Quarter
-3.3%
+1.7%
+5.3%
+3.6%
-2.0%
-2.9%
+2.9%
-0.6%
+0.4%
+2.4%
+6.9%
+6.8%
July
-3.2%
+1.1%
+4.5%
+4.3%
-2.6%
-1.4%
+5.5%
-0.5%
+5.0%
-2.7%
+7.6%
+8.3%
August
-2.2%
+1.2%
+3.9%
+3.9%
-5.0%
-0.8%
+7.7%
+3.8%
+3.6%
+0.6%
+7.7%
+8.2%
September
-1.0%
+1.7%
+5.0%
+3.8%
-0.7%
-2.3%
+3.4%
+1.0%
+3.6%
+1.7%
+7.6%
+8.6%
3rd Quarter
-2.2%
+1.3%
+4.4%
+4.0%
-2.9%
-1.5%
+5.5%
+1.4%
+4.1%
-0.2%
+7.6%
+8.4%
October
-2.2%
+4.2%
+6.2%
+4.7%
-0.6%
+6.2%
+4.6%
+3.4%
+3.5%
+4.5%
+11.1%
+7.1%
November
-4.8%
+1.6%
+2.3%
-1.1%
-3.5%
-3.4%
+0.6%
-0.1%
+3.5%
+0.9%
+7.9%
+8.3%
December
+5.6%
+8.1%
+9.3%
-0.5%
+4.8%
n/a
+2.8%
+3.5%
+2.9%
+0.2%
+7.6%
+8.4%
4th Quarter
-0.6%
+4.6%
+6.0%
+1.1%
+0.2%
n/a
+2.7%
+2.3%
+3.3%
+2.0%
+8.9%
+8.0%
Full Year Yea
-1.4%
+1.2%
+4.8%
+3.1%
-1.1%
n/a
+3.4%
+0.7%
+1.7%
+2.1%
+7.9%
+6.9%
January
+3.1%
+0.6%
+3.3%
6.8%
+3.1%
+5.4%
+5.4%
+5.4%
+5.4%
-0.3%
+6.2%
+7.7%
Source: Airport Passenger Traffic Statistics.
InterVISTAS | aviation intelligence report 17
Aviation Traffic
AIRLINE DATA – ASIA PACIFIC Asia-Pacific Airlines Release Traffic Figures for February 2014 Airline
1
Notes: Source:
Traffic (RPKs – millions)
Capacity (ASKs – millions)
Load Factor
9,995
12,473
80.1%
i0.1%
h2.5%
i2.0 pts
7,005
9,121
76.8%
i2.1%
h0.4%
i1.4 pts
4,761
6,993
68.1%
h5.1%
h2.4%
h1.9 pts
8,211
10,021
81.9%
h4.4%
h3.0%
h1.1 pts
1. Results are from January 2014 as February 2014 results were not available at the time of publication. 2.Includes Cathay Pacific and Dragonair Carrier traffic reports
AIRLINE DATA – EUROPE European Airlines Release Traffic Figures for February 2014 Airline
Notes: Source:
Traffic (RPKs – millions)
Capacity (ASKs – millions)
Load Factor
16,220
19,806
81.9%
h2.9%
h1.8%
h1.4 pts
13,144
17,756
74.0%
1
h0.2%
h0.4%
h0.4 pts
13,049
17,320
75.3%
2
h11.4%
h11.2%
h0.1 pts
1. Includes Lufthansa Passenger Airlines, SWISS, and Austrian Airlines. 2. Includes British Airways, Iberia (including Iberia Express), and Vueling. Vueling traffic is currently accounted as non-premium traffic. Carrier traffic reports
18 aviation intelligence report | InterVISTAS
Aviation Traffic
AIRLINE DATA – NORTH AMERICA North American Carriers Release Traffic Figures for February 2014 Airline
Traffic (RPMs – millions)
Capacity (ASMs – millions)
Load Factor
Canada 4,093
5,184
79.0%
h3.8%
h4.9%
h0.8 pts
1,725
2,038
84.6%
h7.3%
h8.2%
i1.5 pts
2,638
3,234
81.6%
h5.2%
h6.3%
h0.8 pts
13,688
17,292
79.2%
h0.3%
h0.9%
h0.5 pts
15,076
19,218
78.4%
h0.5%
h0.8%
h0.3 pts
12,996
16,005
81.2%
h2.4%
h0.3%
h2.1 pts
7,145
9,148
78.1%
h1.2%
h1.7%
h2.3 pts
608
687
88.4%
h10.2%
h11.8%
i1.3 pts
United States
1
2
3 4
Notes:
Source:
1. Consolidated results for United Continental Holdings. 2. Represents the combined traffic results of American and US Airways. For further information regarding the methodology used to produce combined historical results, please see the earnings press release dated January 28, 2014 which can be found at http://www. sec.gov/Archives/edgar/data/4515/000119312514023249/d662869d8k.htm. 3. Results are combined traffic results for Southwest Airlines and AirTran. 4. Total system includes scheduled service, fixed fee contract and non-revenue flying. Carrier traffic reports
InterVISTAS | aviation intelligence report 19
InterVISTAS News
THE INTERVISTAS GROUP CONTINUES TO BE ACTIVE IN DELIVERING A DIVERSE RANGE OF CONSULTING PROJECTS AROUNDTHE WORLD AND SOME OF THE NEW PROJECTS WE ARE WORKING ON ARE LISTED BELOW
PROJECT ANNOUNCEMENTS AND SUCCESSES Air Service Development Services for Ted Stevens Anchorage International Airport (ANC) ■■ Provide air service development services for ANC in Anchorage, Alaska. LIAT Airlines MRO Activity Review ■■ Provide diagnostic review and improvements of their MRO activities. Commercial Business Plan Expansion for Ben Gurion Airport (TLV) in Tel Aviv ■■ Contract extension to provide commercial consultancy services for Israel Airport Authority. The 2011 contract included the retendering of TLV’s dutyfree contract, the commercial development of the new Timna Airport, and the advertising and the development of a commercial business plan for TLV. The scope of the new contract will expand on the current commercial business plan for TLV.
20 aviation intelligence report | InterVISTAS
Speaking Engagements and Events
Mike Tretheway, Chief Economist & Chief Strategic Officer ICAO Air Transport Symposium Montréal, Québec – May 8, 2014 Mike will present Financing Airports.
Koen Brinkman, Director AAAE 2014 National Air Service Conference Indianapolis, Indiana – April 6 - 8, 2014 Koen will present Overview of Peer Airport Structures Across the Pond and discuss how small and medium-sized European Airports are structured in terms of ownership and financials.
Paul Ouimet, Executive, Vice President Destination Marketing Association International (DMAI) CEO Summit Hilton Head, South Carolina April 30 - May 1, 2014 Paul will present ARENA DMO Industry Benchmarking Tool & Annual Report on May 1st.
Rob Beynon Vice President, Planning and Development Economics 2014 Canadian Business Aviation Association Convention Edmonton, Alberta – June 19, 2014 Rob will present “The Economic Role of Canadian Business Aviation”.
IAAE 8th Annual Facility, Operations & Airport Managers Conference Halifax, Nova Scotia – June 2, 2014 Paul will present “Delivering Effective Strategic & Business Plans”. Destination Marketing Association International (DMAI) Annual Meeting Charlottetown, PEI – June 3, 2014 Paul will present The Future of DMOs: Destination Next.
InterVISTAS | aviation intelligence report 21
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InterVISTAS Consulting Group is a management consulting company with extensive expertise in aviation, transportation and tourism. Our exceptional people have successfully delivered projects in over 70 countries around the world. We are committed to working collaboratively with our clients to apply vision and expertise to achieve results. NACO, the Netherlands Airport Consultants, B.V. is one of the world’s leading independent airport consultancy and engineering firms offering integrated, full-service planning and design services. With more than 60 years of experience, they have the expertise that is instrumental in solving the increasing complexity of developing today’s airports. NACO has assisted over 550 airports of all sizes in more than 100 countries with realizing their goals; goals that entail every aspect of airport design and development. Royal HaskoningDHV combine global expertise with local knowledge to deliver a multidisciplinary range of professional engineering, consultancy and project management services in aviation, buildings, energy, industry, infrastructure, maritime, mining, rural areas, urban areas and water.
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