December 28, 2011
Weekly Issue 041211
Contents:
Commentary by Bob Booth
Flight Control Waves
Waves from the Pacific
Waves from the Americas
Financial Waves
Cargo Waves
Tourism Waves
Commentary
by Bob
Booth
The really big news this week is
the launching of two equity/alliances
Following
up on the December 14 issue of Air Waves, when we focused on Delta Airlines and GOL’s announcement of a long term exclusive alliance which included the
US airline investing $100 million in the Brazilian airline, and will have a
seat on the latter’s Board of Directors, and owns 3% of GOL. We covered all the major benefits of the alliance in the
December issue, but it seemed appropriate to mention it along with the big news
this week. Which basically has Etihad Airways becoming the single largest shareholder in airberlin, with
29% of the German airline’s shares. And the next big one is all about IAG acquiring bmi’s mainline business from Lufthansa
- which does not include bmi regional and bmibaby which remain with the original owner.
Read all about it in today’s issue which begins below with news headlines which
we believe are important. These items include Singapore Airlines and JetBlue offering
new connections worldwide; Japan
Airlines and WestJet sign a code share agreement. And the announcement
of Frederick Jacobsen’s launching of
a new ultra low cost domestic airline in Colombia, Viva Colombia in May of 2012 – with a great impact on domestic and
regional tourist. Other news worth highlighting is Copa launching nonstop flight s between Panama and Chicago; Brazil’s Azul Airlines launching service to Punta del Este, Uruguay during 2012; United Airlines expanding its presence in Mexico. Financial traffic data as
reported by Panama’s Tocumen
airport which grew 14% in October; Chile reporting passenger traffic grew
8.6% in November; and Transaero reported it carried 7.8 million
passengers in the 11 months of the year, for a27.5% increase year-over-year. While it is not what I consider good news is
the report under “Trends to watch
develop in 2011” which is all about airline’s suspending service around the
region – which in my opinion can have a positive effect on new airlines (i.e. Viva Colombia) in the region. Especially low cost airlines and regional carriers which are ready
to grow and expand. And finally a
word about MIA’s cargo activity which reported a 4.55% increase in freight
handled during the month of November – I believe MIA is the largest air cargo
hub in the world.
Finally I
want to thank all of our sources for ‘Air Waves’ news. We couldn’t handle the
job without you. So read all about this week’s waves in the business and stay tuned. And a
Happy and prosperous new year to all of you.
Etihad Airways becomes largest single shareholder in airberlin
Following the announcement on November 4, 2011, IAG to acquire bmi
Singapore Airlines and JetBlue to offer new connections
worldwide
Japan Airlines and WestJet signed a code sharing
agreement
Viva Colombia to launch startup in May of 2012 with domestic low cost flights
Copa Launched nonstop flights between Chicago and Panama
United Airlines to open new
destinations in Mexico during 2012
Panama’s Tocumen Airport reports tourist
flow increased 14% in October
Azul Lineas Aereas
plans to serve Punta del Este
in 2012
Chile reports passenger traffic grew 8.6% in November
Trends to watch develop in 2011
Transaero reports it carried more than 7.8 million passengers through November
Miami-Dade Aviation Department
reports November freight at MIA
Flight Control Waves
Cargo eChartbook - Q4
2011 Released 22 December 2011
(Key points from our fourth quarter report on the air freight industry and
markets):
- The
business environment for air cargo has continued to decline in the last
quarter of 2011;
- Air
cargo growth rates started to fall in the middle of 2011, the last quarter
has been no different, with all major routes declining further;
- Banks
have started to reign in their lending propensity as lack of debt
resolution in the Eurozone continues; as is to
be expected, governments made further cuts to expenditures, despite
suboptimal growth levels;
- Although
there is no obvious inventory overhang, pessimistic expectations are
driving the need for air freight down, with purchasing managers confidence
index indicating no growth prospects;
- Cargo
rates have continued their decline in an unsupportive economic climate.
Downward pressures on revenues have persisted, with some regions suffering
more than others. The revenue outlook looks weak;
- Jet
fuel prices have stayed high over the last several months, despite the
weak economic climate;
- Freighter
aircraft are being reduced, but the increase in twin aisle aircrafts in
more than offsetting that reduction, keeping cargo capacity high; large
deliveries planned for 2012 will exacerbate that condition;
- With
competition from declining sea freight rates and flat trade indicators,
there is no sign of growth; lower competitor rates are supporting
substitution away air freight, but business expectations are also driving
the shift;
- Although
about 50% of airlines are meeting and exceeding their cost of capital, the
results are passenger and seasonality driven, as heads of cargo indicate a
much less confident outlook.
Waves from Europe
Etihad Airways becomes largest single shareholder in airberlin
Etihad Airways announced
last week an increased stake in Europe’s sixth largest airline, airberlin, and is now airberlin’s largest shareholder, with 29% of the
airline’s shares. Under this partnership, the airlines’ extensive networks and
frequent flyer programs combine to offer travelers access to 239 destinations
across 77 countries. Together the airlines serve more than 40 million
passengers a year – operating 233 aircraft and employing 18,000 people. airberlin CEO Hartmut Mehdorn, stated during the meeting with Etihad CEO, James Hogam where the strategic move was
announced last week: “The strategic
partnership with Etihad Airways opens up enormous
opportunities for the future of our company. This applies especially to future
market development and the realization of synergies. One of the key components
of the new partnership is the launch of airberlin’s services
to Abu Dhabi which will become our new gateway to Asia and Australia. The agreement will also dramatically improve the global connectivity
of our customers in Germany, Switzerland, Austria, and throughout the GCC and Middle East. James Hogan said the deal was one of the most
important in Etihad Airways’ history. He went on to state:
“The new partnership expands our network
reach, give us access to 33 million passengers and provides us with real
opportunities for global growth. Through airberlin we gain immediate access
to a broad and complementary European market, with out standing connectivity
options for customers of both airlines. Our partnership strategy has been
integral to our success over the past eight years, and the returns we have seen
from this strategy have confirmed value. We now have a portfolio of 34 quality airline
partners, but this is our first equity investment in another airline. It is our
sign of our confidence in airberlin’s management
and in the carrier’s potential to grow with us.” Finally will have two seats
on the board of Directors of the airberlin PlC. And
both airlines will implement an extensive code share agreement, with Etihad code sharing on 36 of airberlin’s 171 destinations and airberlin code sharing on 24 of Etihad Airways 82 passenger destinations, and plan further expansion of
the pool of code share routes. For more
information, contact Chris Maggio at Quinn & Co.
email: cmaggio@quinnandco.com. Viva Etihad and airberlin!! A great alliance partnership. One to
watch. Stay tuned.
Following the announcement on November 4, 2011, IAG to acquire bmi
This week
the International Airline Group (IAG) has
reached a binding agreement to purchase British
Midland Limited (bmi) from Lufthansa. The CEO of IAG,
Willie Walsh, stated: “Buying bmi’s mainline business gives IAG a unique opportunity to grow at
Heathrow, one of our key hub airports. Using the slot portfolio more
efficiently provides the option to launch new long haul routes to key trading
nations while supporting our broad domestic and short haul network. This deal
is good news for the UK as we maintain a
comprehensive domestic schedule including Belfast. Our plans to
expand our long haul network would guarantee growth by making Britain better able to compete on a global scale. It will also help maximize
Heathrow’s position as a world class hub airport. Customers will benefit from
access to new destinations, more convenient schedules, enhanced frequent flyer
benefits and greater investment than had been possible for loss-making bmi. Given the scale of bmi’s losses, there is an urgent need to
restructure the business. Unfortunately, this will mean some job losses but we
will secure a number of high quality jobs here in the UK and create similar
new jobs in the future. IAG’s purchase of bmi will protect more jobs than if the airline had been closed and had
its Heathrow slots sold off. There will be restructuring costs spread over
three years but these will be significantly lower in total than bmi’s current
annual losses. Bmi regional and bmibaby are not part of our plans and Lufthansa
has the option to sell them before completion.” Viva IAG and bmi – way to go – another one to watch. Stay tuned.
Waves from the
Pacific
The Shanghai Pudong airport will have five runways in the
next few years
According
to a press report, the Shanghai Pudong airport has
approved the plan to build two additional runways with sufficient length to
handle the largest aircraft in the business, the Airbus A380, which can only
land in fifty airports around the world. In total, shanghai will have seven
airports, including two at Hongqiao which serves
domestic and regional flights. The two additional runways at Pudong will have a cost of $408 million, and has been
approved by China’s Civil Aviation
Administration. With five runways, Pudong could become the third busiest airport in the world
with an estimated 650,000 yearly flights between China, Europe and North America. Which is when China has set as its
objective for Shanghai to become one
of the world’s transportation hubs for transportation, commerce and finance. Viva Shanghai – China – way to go- stay tuned.
Japan Airlines and WestJet signed a code sharing
agreement
The
agreement signed earlier in December adds four Canadian cities to Japan Airlines (JAL) international
network. The agreement will place the JAL code on WestJet operated flights between Vancouver and six Canadian cities – Calgary, Edmonton, Kelowna, Montreal, Toronto and Winnipeg from December
15, 2011.
WestJet pioneered low-cost flying in Canada
when it started in 1996 and has since then grown to become the country’s second
largest airline, operating to 71 cities in North America and the Caribbean with
a modern fleet of 96 Boeing Next Generation 737 aircraft. The latest agreement
with WestJet will expand the total number of
Canadian cities in JAL’s network
from three to seven, enabling customers to connect smoothly between JAL’s daily Narita-Vancouver flight and
Calgary, Edmonton, Kelowna and Winnipeg, in addition
to Montreal, Ottawa and Toronto. Viva
code sharing – what about WestJet code on JAL’S
flights? One to watch – stay tuned.
Waves from the Americas
American Airlines launches new
flights from the Dominican Republic
The
founder of oneworld, increased service between the Dominican Republic earlier this month as it added
flights between Miami and Santo Domingo and Punta Cana. It also added a larger aircraft to provide
more capacity between New York and Santo Domingo. It added service between Miami and Santo Domingo on December 2. With this
additional frequency, American now
offers four daily flights between Miami and Santo Domingo, it has also added a third daily
flight between Miami and Punta Canada during the summer season. The
airline operates B757 and B767 aircraft of the route to Santo Domingo and B737 on the Punta Cana route. Viva
American Airlines – way to go – stay tuned.
Viva Colombia to launch startup in May of 2012 with domestic low cost flights
According
to our good friend, Frederick Jacobsen –
president of the new Colombian low cost airline, Viva Colombia will launch its domestic service in May of 2012 with
the lowest airline fares and will serve new destinations within the country. He
stated: “The new airline will be launched from its base in Antioquia’s airport in Rio Negro with five aircraft until it completes its
planned flee t of 20 aircraft.” The airline has been authorized to serve 32
domestic routes which will keep growing – including direct flights to the Atlantic Coast as well as intermediate
destinations like Ibague, Pereira, Manizales, Armenia, Neiva and Villavicensio.
He also stated that his model for the airline is Ryan Airlines that serves Europe with direct low cost flights. He also stated that Viva Colombia will be a tourism ally
since it will permit many Colombians to take advantage of the airline’s low
fares and direct service. He went on to say: ”They
will fall in love and will fly frequently.” Viva Colombia, Frederick, congratulations and good luck! Stay tuned.
Copa Launched nonstop flights between Chicago and Panama
The
Panama-based “model airline” launched new daily nonstop flights between Chicago and Panama last week. Pedro Heilbron, CEO of Copa Airlines, stated during the inaugural ceremony on December 20: “We are connecting two tourism and business
destinations and at the same time opening a hub to more than 50 Latin American destinations”. Rosemarie S. Andolino, Director of
Aviation for the municipality welcomed the airline at O’Hare airport with the
following statement: “these daily flights
will help to increase tourism business and economic opportunities between the
cities of Chicago and Panama, in addition to connectivity with all of Latin America.’ In addition to the Chicago-Panama
flight, Copa also operates nonstop flights between Panama and Miami, New York, Los Angeles, Washington and Orlando. Way to go, Pedro, viva Copa Airlines and Panama: the hub of the America. Stay tuned.
United Airlines to open new
destinations in Mexico during 2012
The
subsidiary of United Continental
Holdings, celebrated 45 years of service to Mexico with a total of 30 routes, more
than any other US airline. It plans to grow even
more during 2012 with new Mexican destinations. The
airline has been a pioneer in opening new routes between the US and Mexico,
serving Aguascalientes, Durango, Leon, Puebla, Queretaro, Tampico, Toluca, Torreon among a host of others. In a statement the airline
has explained the strategy has been possible due to the Mexican government’s
efforts to decentralize the International Airport of Mexico (AICM) with new
routes to cities like Puebla, Queretaro and Toluca. The airline stated: “United
was the first airline to respond
to the government’s action and our presence in the region which promotes local
business thanks to our daily service which provide greater connectivity for
business and pleasure travelers...” Viva
United Airlines and United Continental Holdings. Stay tuned.
Volaris adds 34th aircraft and celebrates having carried 20
million passengers
The
Mexican low cost airline has added its 34th aircraft, an Airbus A320 which joins its modern
fleet of 24 A319 and ten A320s, with one of the youngest fleets in the Americas, with an average age of 4.2
years. Enrique Beltranena,
CEO of the airline commented: “We are
pleased with the arrival of our 34th aircraft during the same month when
we met our goal of carrying 20 million
passengers. This confirms that our attractive prices and excellent service
continue to be the preference of millions of Mexicans that travel for pleasure,
business or to visit fiends and families.” Viva
Volaris and congratulations Enrique – way to go –
stay tuned.
Singapore Airlines and JetBlue to offer new connections
worldwide
Last
week, the two airlines announced the launch of a new interline agreement that
will offer customers new travel options from JetBlue destinations in the Unit ed States to Europe, Singapore and
beyond. Singapore Airlines offers
the convenience of all-business class service daily from Newark to it s hub in Changi International Airport in Singapore – the world’s longest nonstop
commercial flight – with connections throughout Southeast Asia. In addition, the airline also
operates daily from New York/JFK to Singapore, via Frankfurt. Beginning January
16, 2012,
Singapore Airlines will deploy the
A380 super-jumbo on its daily service t o JetBlue’s home at the New York/JFK. At Singapore Changi Airport, customers have access to an
extensive network of flight connections to destinations including Bali, Bangkok, Jakarta, Ho Chi Minh
City, Kuala Lumpur and Manila among many others. JetBlue is the largest domestic airline at New
York/JFK, offering more than 150 daily flights. It offers nonstop service to
dozens of top destinations including Boston, Chicago, Fort Lauderdale, Houston, Los Angeles, San Francisco, Seattle and Washington DC and from Newark to Boston, Orlando and Fort Lauderdale. Viva the alliance – hope to see an equity involvement at some point in
the future. Stay tuned.
Trends to watch develop in 2011
According
to Travel Market Report, smaller US cities continued to loose air
service during 2011. If the trend continues and you can’t fly there from here,
you might have to drive. At least 27 city airports have lost service from Delta, United and other mainline
carriers over the past two years, and more cuts are planned, according to Forecast International. In order to
save fuel and cut costs, carriers are parking of scrapping hundreds of jets and
turboprop aircraft with fewer than 50 seats. A Bombardier 50-seat CRJ-200 burns 10 gallons of fuel to fly each
passenger 50 miles. That compares to just 7.5 gallons for a 160 seat MD-90 to
fly that same passenger 500 miles. Even less fuel is used by larger, more fuel efficient
models. Business travelers headed for smaller cities wit h short runways and
outdated electronics may have no choice but to drive several hours from the
nearest larger airport. One to watch!
Stay tuned.
Financial Waves
Transaero reports it carried more than 7.8 million passengers through November
The
airline reported it carried 7,856,185 passengers during the eleven months, for
a 27.5% increase year-over-year. It also reported 45,055.10 tons of cargo
during the same period for a 27.6% increase year-over-year. It also reported
that RPKs (traffic) was also up 26.7%. The airline’s passenger
traffic on domestic and international routes has increased by 30% and 26.8%
respectively. Viva Transaero
– way to go – stay tuned.
Chile reports passenger traffic grew 8.6% in November
The
Chilean Civil Aviation Authority reports the airlines carried 1,144,797
passengers in November for an increase of 8.6% over the same month last year. International
passenger traffic in the month reached 484,928 for an increase of 5.3%. In the
eleven months 5,405,084 international passengers were transported, a growth of
17.6% year-over-year. Domestic traffic during the eleven months reached 659,868
passengers for a growth of 11.2% over the same period in 2010.Total domestic
and international passengers during the eleven months reached 11,777,246 for a
growth of 18%. Viva Chile passenger traffic – way to go. Stay tuned.
Cargo Waves
Miami-Dade Aviation Department
reports November freight at MIA
In
November Miami Airport (MIA) reported an increase of 4.55% in total freight
handled at the airport; with year-to date increase of 0.38%. Total freight
handled in the 11 months reached 1,817,172.82 short tons of cargo, while
November was 189,900.50 tons. The following chart is for the top five airlines
in the period and November.
Airline rank November
2011 % chg YTD % chg
1. United Parcel Service 17,661 18.80% 171,947 7.23%
2. LAN Airlines 16,297 11.09% 159,062 14.31%
3. Tradewinds
Airlines 14,114 184.47% 150,757 1,796%
4. Tampa Cargo 12,164 -4.7% 117,245 -15.23%
5. ABX Air 12,145 23.81% 113,548 39.34%
Total all carriers 180,900 4.56% 1,817,172 0.385
Viva MIA air cargo. Stay tuned.
Tourism Waves
Panama’s Tocumen Airport reports tourist
flow increased 14% in October
According
to the airport, it recorded 1.5 million arrivals in the ten months through
October, with a 14% growth year-over-year. The airport also reports that 1.2
million visitors were tourists, for an increase of 11.4% year-over-year. And
tourists spent $1,561 million – 14% more than in 2010. Viva Panama – it’s the real hub for tourists. Stay tuned.
Azul Lineas Aereas
plans to serve Punta del Este
in 2012
The
Brazilian airline plans to add international service by the end of 2012. Its
first international flight announced this week will be Punta del Este, Uruguay. Trey Urbahn, Vice President of planning
for the Brazilian airline, stated: “Buenos Aires already has good
service (with other carriers) so we are considering other destinations, like Cordoba, Mendoza and Bariloche, in addition to Montevideo and Santiago (Chile). The idea is to launch new flights during the 2012 season with
fights from our base in Viracopos, Campinas.” Viva Azul
Airlines – way to go and one to watch – stay tuned.
