June 08, 2011
Weekly Issue: 020611
Contents:
Commentary by Bob Booth
Flight Control Waves
Waves from Europe
Waves from the Pacific
Waves from the Americas
Financial Waves
Cargo Waves
Tourism Waves
Fuel Waves by Larry Weaver
Commentary
by
Bob Booth
Another busy week as traffic
demand improves
As
airlines continue to expand in the region, with April traffic up 16.5% in the
month, with Europe and Latin America leading with 29.3% and 25.9%
growth respectively – the region is back with strong growth. Code sharing is
also growing as TAP, Virgin Atlantic Delta all sign new agreements. And new
service is launched through out the world. Cargo demand is up with new all
cargo services expanding with new airlines and existing carriers show an
interest in growing their presence in the region.
See the
headlines below for articles which we believe highlight the increased demand in
the world for air cargo services.
Read all about it in t he
headlines below. And stay tuned for more expansion and growth across the board.
TAP Portugal and South African Airways launch new code share agreement
Air Europa
to launch nonstop flights between Madrid and Mexico City
Virgin Australia signs code share with Singapore Airlines
Delta Air Lines starts code share
with China Eastern
Aeromexico launching nonstop service between Mexico and Guatemala
IATA reports international
passenger traffic grew 16.5% in April
Qatar Airways and Emirates turning their bases into global cargo hubs
ACG Air Cargo
Germany adds Johannesburg in South Africa
Federal Express to start direct
cargo service to Colombia
China Southern Airlines to launch a cargo airline this year
UPS has significantly expanded its express network throughout Latin America
The Dominican Republic received 1.6 million tourists through April 2011
Delta Air Lines to launch flights
from Atlanta to Tegucigalpa and San Pedro Sula
TAP Portugal to add Lisbon nonstop to Porto Alegre, Brazil
Flight Control Waves
Air Transport Market Analysis - April 2011
Released 02 June 2011 (Key points
from our full report on air transport markets in April)
·
From this month we cover domestic markets as well
as international, including all airlines;
·
Markets improved in April but not by enough to
offset the squeeze on profits from high jet fuel prices;
·
International air travel rebounded sharply in April
to reach a new high, 7% above the pre-recession peak in early 2008;
·
Compared to April last year, international air
travel was up 16.5% after demand shock in Japan and MENA left travel growth
down at 3.7% in March;
·
However, much of this dramatic improvement is due
to the comparison with April last year, when travel collapsed due to airspace
closure related to the ash cloud;
·
On domestic markets the Japanese market is down
over 30% due to the impact of the earthquake and tsunami;
·
The weakness of the large US
domestic market, with a 1.2% decline during the month, follows the
sharp rise in jet fuel costs;
·
India and Brazil stand
out with very strong growth in domestic markets, in contrast to the
Chinese market which has slowed, partly due to tighter economic policies;
·
Air freight also improved in April but growth has
been disappointing in recent months, with FTKs just 5.4%
higher in international markets in April;
·
However, there were promising signs of renewed
growth in air freight in a number of regions, boosted by the solid
expansion in world trade;
·
Passenger load factors rebounded in April, having
fallen sharply in February and March but are still 2% point below the
level reached earlier last year;
·
The rebound in seat utilization will have improved
unit revenues at the start of the second quarter, but jet kerosene prices
rose $6 a barrel during April;
·
A further rebound in demand and revenues is
critical for airlines to avoid a substantial further squeeze on profits in this
high fuel cost environment;
·
The impact of recent demand shocks is easing
and, with world trade and business confidence still high, a second half
upturn in air travel and freight is expected;
·
However, the other key to maintaining profitability
will be asset utilization and that may be more difficult to sustain.
Waves from Europe
British Airways launches new daily
nonstop between San Diego and London
The new
daily nonstop service was launched on June 1, 2011. As the only airline flying
direct from London to San Diego, the new service opens up more
convenient options for travelers between the UK and the US. Adding San Diego opens offers greater access for
European holiday makers as well as greater access for Southern Californians business travelers to the UK and Europe. Viva British Airways – stay tuned.
TAP Portugal and South African Airways launch new code share agreement
The new
agreement between the two carriers includes a connection in London.
Through the new agreement SAA’s code is added to flights between Lisbon and London by TAP which provides its customers to fly between Lisbon and European destinations, while TAP will place its code on flights
operated by SAA to South Africa. Viva code sharing – stay tuned.
Air Europa
to launch nonstop flights between Madrid and Mexico City
The new
nonstop service will begin on July 2 with four weekly flights. The service will
be operated with Airbus A330-200 aircraft. The new service will be operated
with code sharing with Aeromexico flights. The new flights will be the second Air Europa service
to Mexico, in addition to its existing
service to Cancun. Viva Air Europa - stay tuned.
Waves from the Pacific
Cathay Pacific Airways launch first service from Abu Dhabi to Hong Kong
The airline
celebrated on Thursday the launch of the new four-times-weekly service
between Abu Dhabi and Hong Kong with a traditional Chinese lion dance at Abu
Dhabi International Airport. Viva Cathay
Pacific Airways – stay tuned.
Virgin Australia signs code share with Singapore Airlines
The
Australian airline will place its code on flights operated by the Singapore airline in order to access to 70
new destinations operated by Singapore while
the latter will place its code on domestic flights operated by the Australian
airline. The agreement is still subject to approval by Australian government,
will begin on August 1, 2011. Viva code sharing – way to go – stay tuned.
Waves from the Americas
Boeing states Latin America has some of the
most profitable airlines
Randy Tinseth,
Boeing’s vice
president of marketing announced during a recent visit to Santiago, Chile: that Latin America has some of the most profitable
carriers in the world. He stated: “Some
of the world’s most profitable airlines are in Latin America, during the last 10
years we have seen a vigorous growth as the airlines in the region have added
new and more efficient aircraft to their fleets.” He credited the market’s economic
growth along with alliance consolidation and other major impacts in the region.
Viva Latin American airlines – stay
tuned.
Delta Air Lines starts code share
with China Eastern
The code
share agreement was launched on June 1.Customers of Delta Air Lines (NYSE: DAL)
will enjoy convenient connecting service to more than 20 cities throughout
China under a new code sharing agreement between Delta and China Eastern, one
of China's largest international airlines. Delta
flight numbers have been added to 49 China Eastern flights operated domestic flights in China as well as trans-Pacific flights
connecting Shanghai with Los Angeles and New York. China Eastern code will be added on 38 Delta operated flights US domestic flights as well as trans-Pacific
service connecting Detroit and Atlanta to Shanghai. Viva code sharing – stay tuned.
Panama has replaced Chile as Latin America’s leading recipient of FDI
Panama’s
Foreign Direct Investment as a percent of its GDP, according to a Latin Business Chronicle analysis of new
data from the UN the United Nations Economic Commission for Latin America and
the Caribbean (ECLAC) and GDP data from the International Monetary Fund (IMF). Business
is finding that tiny Panama has become much easier to locate
on a world map. With breakneck economic growth, a $5.25-billion expansion of
its famous canal and a capital city skyline unlike any in Central America, Panama has made a quick transformation
from a military-run backwater to an outstanding economic performer that is the
envy of its regional peers. Panama attracted $2.36 billion in FDI in
2010, continuing a trend that has had the seen the country of 3.4 million
people average above $2 billion per year in FDI since 2006. Last year’s FDI
figure was the equivalent of 8.8 percent of Panama’s $26.8 billion economy. That was
a higher rate than any other country in the region, including Chile, according to the Latin Business Chronicle analysis. Viva Panama – stay tuned.
Delta launched new
service between Atlanta and Shanghai
Beginning June 5, the flight will operate twice weekly on
269-seat Boeing 777 aircraft, featuring full flat-bed seats in Business Elite,
as well as Delta's new Economy Comfort class, which offers additional legroom
and early boarding. "By resuming service between Atlanta and Shanghai, we're continuing our strategy of
connecting the world's most important business markets," said Vinay Dube, Delta's senior vice
president – Asia Pacific. "Nonstop service between these key global cities
will mean more opportunities for economic development and job growth in Delta's
hometown of Atlanta as well as in Shanghai."Delta first launched service between Atlanta and Shanghai in 2008, but later suspended the
service amid the economic slowdown. Way
to go Delta – stay tuned.
Aeromexico launching nonstop service between Mexico and Guatemala
The
Mexican ‘legacy airline” is launching a daily nonstop flight between Mexico City and Guatemala on July 4. The new service is operated
with NG B737 aircraft and will provide connecting services for both Guatemala based traffic as well as for
Mexican visiting Guatemala’s main tourist attractions such
as Antigua, Tikal. The flights fill the vacancy
left by Mexicana which stopped operating in August last
year due to its financial crisis. Viva Aeromexico –
stay tuned.
Financial Waves
Delta Ai Lines reports 2.2%
increase in May traffic year-over-year
The
airline reports its system traffic in May increased 2.2% on 2.2% capacity
increase, keeping its load factor flat from the same month last year at
83.9%. While domestic traffic as
measured on RPMs remained at 1.9%, international
traffic was up 2.6% with the Pacific and Latin America leading the growth with 5.5% and
4.2% growth respectively. Domestic load
factor was up 1.3% to 85.1%, while international dropped 2 point s to 82.2%. Cargo ton miles were up 2.1%. Stay tuned.
ALTA reports its member airlines
carried 11.5 million passengers in April
The Latin
American and Caribbean Air Transport Association (ALTA) reported its member airlines carried 11.5
million passengers in April , up 10.2% year-over=year. In addition to the
passenger growth, traffic measured in RPKs grew 12.6%
on capacity (ASK) growth pf 3.3%, moving the load factor up 6.1 points to 74.6%
Year-to-date passengers grew 5.4% to 46 million in the four months. During the period, RPKs
rose 6.6% as capacity increased 2.4% moving the load factor up 3 points to
75.6%.Viva ALTA, you’re where the action
is – stay tuned.
Air France-KLM report annual operating income of
$174 million
The joint
venture group announced that growth in tourism and cost reduction in the fiscal
year 2010/2011 generated $174 million in operating income. Revenues for the
year grew 12.55 to 23.6 billion euros – The fiscal year ended in March 2011 –
net income for the year was 624 million euros. Viva Air France-KLM. Stay tuned.
LAN Chile achieves historic results in 2010 despite the global crisis
The
Chilean-based “model airline” closed 2010 with profit of $420 million – an
increase of 81.6% compared to the previous year with an operating margin of
14%. It increased its total passengers carried by 11.1%. The airline has been
profitable for the past 16 or 17 years. Viva
LAN Chile – stay tuned.
Alaska Air Group reports May
traffic increased 11.7%
The group
reported its subsidiaries Alaska
Airlines and Horizon Air reported
an 11.7% increase in traffic as measured in RPMs on a
7.4% increase in capacity (ASKs) moving the load
factor for the group up 3.3 points to 84.7%. Year-to-date traffic was up 9.1%
on a 4.4% increase in capacity for the group, moving the consolidated load
factor up 4.5 points to 76.3%. Viva Alaska Air Group – way to
go! Stay tuned.
Kenya Airways reports profits in the 2nd half of its fiscal year
The
African airline reported strong earnings in its second half of its fiscal year,
from October 2010 to March 2011 Net income was $24 million with an operating
margin of 8%. Revenues were up 20% in the six month period on 9% increased
capacity. The Kenya based airline just leased three
more E190s to expand its network in Africa. It is also planning for B787-8 deliveries for
long haul expansion. It currently operates 10 b777s and B767s. viva Kenya Airways – keep up the good work. Stay tuned.
IATA reports international
passenger traffic grew 16.5% in April
The highest
growth region in April was Europe with a 29.3% growth, “Due
mainly to the significant number of flights cancelled in April 2010 as a result
of the volcano ash”. Leading the rest of the world is Latin America with 25.95 growth.
Middle
East
grew 12.1%, North
America
11.9%, Asia Pacific 5.1% and Africa just 1.2%. Viva Latin America – stay tuned.
Cargo Waves
Qatar Airways and Emirates turning their bases into global cargo hubs
The two airlines will extend the
contest to the $68-billion air-freight market by turning their bases into
global cargo hubs. Emirates, the world's
biggest airline by international passenger traffic, aims to add as many as 18
cargo planes in Dubai, while Doha-based Qatar Air is converting 15 passenger
jets to freighters and buying 33% of Cargolux Airlines International, Europe's
biggest freight-only carrier. The plans are sounding alarm bells at companies
already under pressure as Emirates builds a fleet of 90 superjumbos and Qatar
awaits delivery of 200 jets worth $35 billion as part of a bid to persuade
travelers to fly via the Gulf instead of London, Paris and Frankfurt. SkyTeam
Cargo, which includes the freight arm of Air France-KLM
Group, is concerned about the expansion. Viva
Qatar and Emirates – stay tuned.
ACG Air Cargo
Germany adds Johannesburg in South Africa
The new service
launched last week with a 747-400F. The new service is operated twice
weekly to the OR Tambo International
Airport, the main gateway of South
Africa’s economic and financial center. Viva
ACG Air Cargo Germany – stay tuned.
Federal Express to start direct
cargo service to Colombia
While the
subsidiary of Fedex Corp has served Colombia since 1993 through
an agreement with a service provider, Juan
N. Centro, president of the Latin American and Caribbean division of federal Express announced this week
that the airline’s decision to provide direct service will mean the airline
will oversee its operation with its own employees and will have more access to
points in Colombia. The expansion in expected to create 200 jobs in Colombia over the next two years. Juan Centro stated this week: “Colombia has shown steady economic growth over the past five years, and we are
eager to meet the demands of the business community by expanding our
international operations there.” Viva Federal Express – stay tuned.
China Southern Airlines to launch a cargo airline this year
The
Guangzhou-based Chinese airline has announced it plans to launch an all cargo
carrier this year. Specifics were not available but it is anticipated the
operating base will be Shanghai, the largest and most lucrative
cargo market in China.
Last year the airline shifted its cargo base from CAN to Shanghai where it operates a freighter fleet
of seven aircraft, two B747Fs and five B777Fs. It has reached an agreement with
Boeing to buy six 777 freighters for the new venture... Viva China Southern – stay tuned.
UPS has significantly expanded its express network throughout Latin America
With
Latin American economies showing solid growth, UPS is expanding its presence
throughout the region. Effective in May 2011
it has increased its cargo capacity by more than 50% on 19 weekly flights into Central and South
America, replacing B757 narrow body aircraft with a new B767 wide body
freighter. The flights originate from the carrier’s hub in Miami and operate to Quito and Guayaquil (Ecuador), Bogota (Colombia), Panama, Guatemala and Managuay
(Nicaragua). Romaine Seguin, president of UPS Americas Region stated in a press interview recently: “UPS has been one of the largest cargo
carriers in the Americas for more than a decade so when our customers asked for more capacity,
we responded with the larger aircraft.” The company has 20 B767 on order. Viva UPS – Stay tuned.
Tourism Waves
The Dominican Republic received 1.6 million tourists through April 2011
According
to the Central Bank statistics in the first four months of 2011, a total of 1.6
million visitors came to the country by air, for 5.2% increase year-over-year.
During the four month period North America represented 58.8% of the arrivals, followed by Europe with 29.25 and South America with 8.4%. According to the
Central Bank statistics the growth in tourism arrivals is the result of
successful tourism marketing and promotion by the government and private
sector. Way to go Dominican Republic – tourism drives the economy – stay tuned.
Delta Air Lines to launch flights
from Atlanta to Tegucigalpa and San Pedro Sulfa
The US ‘legacy airline’ is adding non
stop daily flights between Atlanta and Tegucigalpa and San Pedro Sula. It is also adding a second daily
flight between Atlanta and the city of Guatemala. The airline, which participates
in the principal transatlantic alliance with Air France KLM and Alitalia, serves 346 destinations in 64 countries – and the
new service to Honduras and Guatemala will provide world wide
connections to and from its Atlanta hub. Viva Delta Air Lines – its all about tourism – stay tuned.
TAP Portugal to add Lisbon nonstop to Porto Alegre, Brazil
The new,
four times weekly service will begin on June 12. becoming
the fourth nonstop destination served by the Portuguese airline in Brazil. The capital of Brazil’s Rio Grande do Sul
state, plans to become a major hub in the region since it is one of the
country’s most visited tourism destinations. The Portuguese airline, to be
privatized some time this year, announced the launching of the nonstop service
as part of its plan to maximize its value in the market for the planned sale. Viva TAP Portugal – stay tuned.
Fuel Waves
by
Larry Weaver
As
this is being written, news is filtering in on the actions taken by OPEC at
their meeting in Vienna
today. OPEC got past two of their “stumbling blocks” with the Transitional
National Council of Libya being persuaded not to send a delegate allowing Omran Abukraa, a longtime ally of
Col. Moammar Qaddafi to be seated as the Libyan
representative. There were noisy protests and the OPEC representative from Qatar,
who has recognized the TNC, delayed his appearance to the meeting apparently as
a protest. Meanwhile, Mohammad Aliabadi, better known
as the head of Iran's
National Olympic Committee and a close ally of Iran
President Mahmoud Ahmadinejad
and with apparently no experience in petroleum assumed the Chairmanship of the
meeting as Iran's
representative.
Then
there was the “in-fighting”. Saudi
Arabia and some others pushed
for an increase in the OPEC output while Iran
and Iraq –
on the same side for a change – as well as Ecuador
and Venezuela
were pushing for no-change. as the group headed into
what appeared to be its most uncertain meeting in years. Initial news is that
the “:status quo” will remain with OPEC not increasing
their quotas. This does not mean that they will adhere to the quotas or will
back-off the current overproduction of approximately 1.4 million bpd.– except for those such as Iran
and Venezuela
which, for technical reasons, are unable to even meet their existing quotas.
This might – at least partially – explain why they were against the increase in
quotas.
Oil
prices leading up to the OPEC meeting have been fairly stagnant, with Brent
crude trading between $114 to $117 per bbl during the end of May and the first
week of June. Brent crude for July delivery fell $1.36 to settle at $114.48 per
bbl, the lowest closing price in two weeks. U.S. July WTI fell $1.21 per bbls to settle just under $100 per bbl, also
the lowest close in two weeks, with trade volumes about 30 percent
below the 30-day moving average.
Larry Weaver is an Aviation Fuel
consultant headquartered in Tampa, Florida with over forty
years experience in aviation fuels. He is the founder and President of Dellem, LLC. Prior to starting Dellem,
he was employed in the Aviation Sales Department of Texaco Inc, and was Manager
of Texaco Aviation's Worldwide Operations. In this capacity he was responsible
for aviation fuel quality control and wrote the Texaco international Quality
Control Manual. He has provided training and consulting in quality control and
product handling to Petroleos de Venezuela, the
National Science Foundation and his expertise to various other private
companies. Dellem has provided worldwide Fuel
Acquisition and Management services to airlines for over thirty years and has
managed in excess of 25 million gallons of fuel per month for Dellem's clients. Contact: lweaver@dellem.com or airwaves@avnewsinc.com Att: Larry Weaver
