Friday, April 26, 2013

26APR edition

Abu Dhabi and India have signed a radically liberalized new bilateral accord giving each other the right to increase capacity from the current 13,000 seats per week to over 50,000 in three gradual stages by 2015. This is as a result of the 24% investment that Abu Dhabi’s Etihad Airways made into Jet Airways of which the latter will establish a new scissors hub at Abu Dhabi airport feeding into Etihad’s vast European/MENA and North American network from all across India. As far as the 5th freedom rights beyond AUH are concerned, 9W revealed that it is interested in operating new flights to Najaf, Cairo, Beirut and Amman via AUH in the future using Boeing 737-800s/900ERs.


Etihad must be laughing all the way to the bank with this bilateral announcement  as from AUH they will get 100% of the allocation. Taking this into account, one would advise EY to increase its order of 7 A321s to at least 10 as it will require such aircraft to operate double daily services to the high demand markets of COK, DEL, BOM, TRV, MAA and CCJ in particular due to its better operating economics versus the smaller A320s. To operate a double daily A321 service into these Indian cities, EY would require a minimum of 6 A321s dedicated for India and use the remaining 4 for other network routes such as KHI, PEW, CAI, CMB, the newly added LHE/ISB flights, JED, BEY, RUH and KRT.

However what will be interesting to see is how the Indian carriers will utilize the extra 12,000 seats given to them incrementally annually till 2015 as there is no way Spice Jet, Air India Express and Indigo will allow Jet Airways to take the lion’s share as these 3 carriers too have future expansion plans from all across India into AUH built into their forecasts. If 9W really want to feed EY, they should initially focus on supporting EY with flights from Indian cities not operated by EY but can supply it with good feeder traffic beyond the AUH hub. These include CCU, PNQ, GOI, ATQ, LKO and JAI.    

The state of Qatar and Ethiopia have officially announced that the two countries have officially signed a newbilateral accord allowing for the national carriers of both countries to launch services. The bilateral permits for daily frequencies from each side. QR has been lobbying for many years to operate to ADD due to the large demand from the country for its prime GCC home market.


In order to ensure that QR reaps the maximum benefit, they need to launch ADD with a split schedule so that all the major markets beyond the GCC region are covered adequately with quick connections via DOH in both directions. Therefore the flight scheduling options should be as follows:

4 weekly day time services

*This will ensure good 2 way connections to GCC, ISC and certain SE Asian destinations.

QR XXX Dep DOH 0950 Arr ADD 1330
QR XXX Dep ADD 1430 Arr DOH 1805

3 weekly overnight services

*This will ensure good 2 way connections to GCC, North America and Europe

QR XXX Dep DOH 2140 Arr ADD 0120+1
QR XXX Dep ADD 0220 Arr DOH 0555

If daily operations are not allowed and only 4 weekly are, then each of the above should be flown twice a week as the main focus will be O&D + GCC bound traffic which is connected very well via DOH with the proposed schedule.

Also regardless if 4 or daily frequencies are allowed, QR needs to utilize for 2 weekly flights at least an A330 (preferably on daytime services) as the yield and cargo revenue to/from ADD is very lucrative all across QR's network. Plus with the big market sizes on offer, it can easily fill an A330 year round on this medium haul route at 80-85% in the passenger cabin.
ADD-GCC market sizes in 2012 were HUGE and very high yielding at the same time. There is only EK, ET and 3 weekly GF A320s to contend with as the SV flights mainly target KSA bound pax only.

Emirates has officially announced that it will be launching a new nonstop service to ARN-Stockholm effective 04SEP13 as the carrier looks to further expand its presence in the economically stable Scandinavian region. EK will be deploying the 350 seater Boeing 777-300ER from the on set to operate this new service with the below mentioned schedule:

EK 157 Dep DXB 0715 Arr ARN 1200
EK 158 Dep ARN 1355 Arr DXB 2255

The above schedule connects very well with its 5-6am arrival hub wave bank from SE Asia, India, GCC, Australia and certain African points where as the arrival from ARN into DXB connects nicely to the 0200-0330 departure hub wave bank to all over Australia, SE Asia and ISC region. The top markets that EK will be targeting to feed its ARN bound flights are BKK, DXB, DEL, BOM, PEK, IKA, HKG, Iraq, PVG, NRT and MNL.

EK too revealed that it shall be increasing its services to New York-JFK with the addition of a third daily frequency operated via Milan on a daily basis with 5th freedom traffic rights. A Boeing 777-300ER shall be used to operate the new service effective 01OCT13. The new flight departs DXB at 0905 and arrives back by 2230 the following evening.

British Airways has  officially announced that it will be increasing its services to Seattle, USA effective 27OCT13 as the carrier looks to defend and increase its market share on this key route before Delta Airlines launches its own new SEA-LHR services. Frequencies by BA shall be upgraded from daily to 10 weekly nonstop flights using a B744 daily + 3 weekly B772ERs. The new flights depart LHR at 0920 and arrive back the next day at 0730 thus offering excellent connections via the LHR hub to India, Europe, Middle East and Africa. In addition to SEA, BA too revealed that from the onset of the IATA Summer 2014 schedule, it will be adjusting capacity to LAX-Los Angeles, USA by operating double daily A380 nonstop services instead of triple daily B747-400 operated flights as a double daily A380 will offer more or less the same seating capacity per day but the cost of operating 2 flights versus 3 is significantly lower hence the logic for the move.

In other BA related news, the airline revealed that it has placed a historical debut order with Airbus to supply it with long haul jets. An order for 36 Airbus A350-1000Xs was placed by the British flag carrier (the largest of the A350 family) and this aircraft type has been officially designated to replace the 52 strong Boeing 747-400 fleet. BA ordered 18 firm + 18 options of the A351s and is expected over the course of this decade to gradually exercise these options.

Qatar Airways has revealed on the GDS system that it will be suspending all flights to NCE-Nice, France currently operated 3 times per week using an A330 via Milan. The suspension comes into effect from 31MAY13. By offering a sub-standard 3 weekly two stop product for its NCE passengers versus a more convenient daily one stop option offered by EK, TK, LH, KLM, AF etc, QR was bound to fail along with the fact that the Boeing 787 groundings didn’t make life easier too for the carrier from a scheduling perspective.

Etihad Airways has officially announced that it shall be launching 2 new destinations this summer as it targets emerging markets that can act as good feeder destinations for its wide body operated Austral-Asia bound flights. The main highlights are as follows:

BEG – new daily nonstop service to be operated using an A320 effective 15JUN. This service is in line with EY purchasing a 49% stake in JAT Airways who in turn will code share on this new route as well as beyond via AUH to Australia and SE Asia. EY in return will code share with JAT via BEG to all across Russia and Europe.

SAH – new 4 weekly nonstop flights to be launched using an A320 and to be operated as all overnight services only departing AUH at 2245 and arriving back by 0650 thus targeting primarily GCC and Europe bound traffic.

Cathay Pacific has officially announced that it will be increasing capacity to Toronto, Los Angeles, Bangkok, New York JFK and Seoul this year in order to be ultra aggressive against ever expanding long haul competition especially from PAL and the Taiwanese carriers. The main highlights are as follows:

LAX – frequencies increased from 20 weekly to triple daily and maintained in W13; all operated with B773ERs

YYZ – frequencies increased from daily to 10 weekly in W13; all operated with B773ERs

BKK – frequencies increased from 6 to 7 times daily

ICN – frequencies increased from 4 to 5 daily flights

JFK – frequencies increased from 18 weekly to triple daily; all operated with B773ERs

UAE and Nepal have officially announced that their respective civil aviation authorities have struck a deal to further liberalize air traffic between the two countries. Currently 42 flights per week are allowed between the two states overall, but this has now been increased to 70 flights per week for each country’s designated carriers combined. The biggest UAE presence in KTM is of Fly Dubai who operate a double daily 189 seater B738 service on the DXB-KTM route. Emirates surprisingly does not fly to KTM though it can easily fill up a double daily operated Airbus A330-200 service into the airport with its GCC, KSA and European network alone.

Turkish Airlines has officially announced that it has placed a major order with Boeing for 95 Boeing 737s worth US4 9.4 billion at list prices of which the breakdown is as follows:

40 Boeing 737-800MAXs + 10 Boeing 737-900MAXs + 20 Boeing 737-800Xs + 25 options on the B738MAX version

Hawaiian Airlines has officially announced that it will be suspending all services to Manila effective 31JUL. HA currently operates 4 weekly A332s on the HNL-MNL sector but experiences high S/F at very low yield margins hence an unprofitable service to carry on. In its place, HA confirmed that it shall be launching new nonstop service to China i.e. Beijing effective April 16th 2014 three times per week from its HNL base using an A330-200. The new service is expected to produce $81 million in annual visitor spending and $8.47 million in tax revenue for Hawaii, according to the Hawaii Tourism Authority.

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