Wednesday, May 24, 2017

Cebu Pacific suspends Kuwait, Riyadh and Doha flights

Cebu Pacific, the low cost carrier based out of the Philippines has officially announced that due to high losses and the ill conceived ultra low fares that they were charging passengers to fly them from the GCC to MNL v.v., they shall be suspending flights to 3 huge Middle Eastern markets effective June 2017.

Kuwait which is currently operated 4 times per week will be cut off from 14JUN. Over the past year, 244,000 passengers flew between KWI and MNL.

Doha which is currently operated 3 times per week will be suspended effective 02JUL and it had a P2P demand of 230,000 pax over the past year.

Riyadh which is currently operated 3 times per week will be suspended effective 03JUL and it had a P2P demand of 440,000 pax over the past year.

Link:

http://gulfbusiness.com/cebu-pacific-suspends-flights-manila-doha-riyadh-kuwait/

Comments:

This is what happens when airlines such as 5J think that they can sustain selling US$ 200-250 round trip fares all taxes inclusive between KWI and MNL for a flight that takes almost 10 hours to operate !


Thursday, May 18, 2017

Emirates increases Shanghai capacity

Emirates has officially announced that it shall be increasing its capacity on the popular Shanghai route effective 01JUL17 as demand from Europe and GCC has grown for its flights.

Currently, EK operates a daily B77W + daily A380 however from 01JUL17 all flights shall be exclusively flown by the A380.

In 2016, the P2P market demand between PVG and DXB was 189,000 passengers and now Chinese citizens get visa on arrival in UAE for tourist and business purposes which in turn shall stimulate demand even further.

EK 304/305 which departs DXB at 0940am is the flight getting upgraded from B77W to A380.

The top 10 markets feeding EK's PVG flights are DXB, GRU, BCN, MXP, CDG, LIS, FCO, MRU, CAI and IKA.


Tuesday, May 16, 2017

KLM announces Mumbai

After a gap of 16 years, KLM has finally announced that it shall be returning to India's financial center with new nonstop flights to Mumbai from Amsterdam effective 29OCT17.

KL will operate this service 3 times per week nonstop using a B789 as part of a JV with 9W-Jet Airways who also currently operate a daily BOM-AMS flight using a B77W.

P2P demand between AMS and India in 2016 was as follows:

DEL - 91,000
BOM - 76,000
BLR - 33,000
MAA - 18,000
HYD - 10,000

Saturday, May 13, 2017

Singapore Airlines unveils A359LR configuration

Singapore Airlines has had its Airbus A350 ULR configuration disclosed to the media. SQ has on order 7 variants of this type on order which shall be used to operate nonstop from SIN to Newark (EWR) and LAX (Los Angeles) on a daily basis each respectively.

In total these 7 planes will have 162 seats only with 68 flat bed business class seats + 94 premium economy (2-4-2). 

Round trip business class fares for this new service is expected to be priced at US$8000 + taxes. 

Source: https://twitter.com/A350_Production/status/863016113877155840

Friday, May 12, 2017

Emirates increases Brisbane to triple daily

Emirates has officially announced that it will be boosting its presence in the Brisbane market place by adding a second daily nonstop service from its Dubai hub effective 01DEC17.

Currently, EK operates a daily A380 as DXB-BNE-AKL v.v. + a daily B77W as DXB SIN BNE 

The new second daily nonstop flight will be flown using a B772LR using the below schedule:

EK 430 Dep DXB 2200 Arr BNE 1815+1
EK 431 Dep BNE 2225 Arr DXB 0700+1

P2P Market demand in 2016 between EU/GCC to/from BNE was as follows:

LON (LGW + LHR combined) - 185,000
DXB - 67,000
MAN - 42,000
BHX - 11,000
DUB - 29,000
GLA - 11,000
EDI - 6,000
CDG - 38,000
BRU - 4,000
MAD - 9,000
BCN - 11,000
FRA - 22,000
MUC - 12,000
DUS - 8,000
AMS - 27,000
CPH - 12,000
ZRH - 17,000
MXP - 12,000
ATH - 10,000
FCO - 26,000
DME - 3,000
WAW - 4,000
IKA - 4,000
AUH - 16,000
SIN - 195,000
BKK - 88,000

Delta orders 30 more A321s

Delta Airlines has officially announced that it has placed another incremental order worth over US$3 billion with Airbus for 30 Airbus A321-200s. This makes DL one of the largest A321 customers with a total of 112 aircraft on order.

In addition to the above, DL also revealed that it will be taking delivery on schedule its first 5 A359s however the remaining initial batch of 10 aircraft are being deferred for 3 years. 

The configuration disclosed for DL's A359s are as follows:

306 seats in total i.e. 32J + 48W + 226Y

Thursday, May 11, 2017

Emirates announces $340 million net profit

The Emirates Group has announced its 2016-2017 Full Year financial results today of which the main highlights are as follows:

1. EK made a net profit of $340M

2. DNATA made a net profit of $330M

3. Total Emirates Group net profit was $670M i.e. -70% versus previous year

The full detailed financial report and press release can be read via these 2 links

https://www.emirates.com/media-centre/ek-newsroom-emirates-group-announces-2016-17-results#

https://cdn.ek.aero/downloads/ek/pdfs/report/annual_report_2017.pdf



Tuesday, May 9, 2017

Air India announces Dallas, Stockholm and Los Angeles


Air India's CEO today officially announced major plans concerning its long haul expansion strategy for 2017 of which the main highlights are as follows:
  • ​DEL-LAX 3 weekly nonstop flights to be launched effective 01SEP17 using a B77L
  • DEL-ARN 3 weekly nonstop flights to be launched effective 15AUG using a B788
  • Dallas will be launched in Q4 2017 along with Tel Aviv and Nairobi
  • DEL-IAD confirmed to start as 3 weekly nonstop effective 07JUL17 using a B77W

PAL suspends Abu Dhabi-Manila services


Philippine Airlines has officially confirmed that as part of a broader code share arrangement with Etihad Airways, it shall be suspending its own MNL-AUH services effective 07JUL17.



Currently, PAL operates 3 times per week on the MNL-AUH-MNL sector using an A333. Over the past 12 months, over 200,000 pax flew P2P between AUH and MNL.


Etihad will continue to operate its own 17 weekly flights between AUH and MNL using a 412 seater B77W for all the services. 

Monday, May 8, 2017

What markets are viable if Alitalia fails?

Over the past week, there have been numerous media reports of Alitalia entering into "administration" or "bankruptcy protection" in Italy whilst the local Government looks to supply it with a $600 million loan to keep it afloat until November 2016 only. The Italian Government has categorically stated that it has already invested nearly $8 billion into the ailing carrier since the past decade and the public appetite for another bailout is totally non-favorable.

Mentioned below are the top medium/long haul markets to/from Rome + Milan in 2016 that AZ's competitors can take advantage of (by operating higher or year round frequencies) if the carrier goes bust. The route segments highlighted in green especially are the ones to be considered.

ITALY-NORTH AMERICA 2016 DEMAND
Route
FCO
MXP/LIN
Difference
BOS
94,000
40,000
54,000
DFW
38,000
17,000
21,000
EWR
93,000
90,000
3,000
IAD
81,000
20,000
61,000
JFK
274,000
550,000
(276,000)
LAS
20,000
23,000
(3,000)
LAX
150,000
91,000
59,000
MCO
29,000
15,000
14,000
MIA
100,000
118,000
(18,000)
ORD
124,000
52,000
72,000
PHL
70,000
11,000
59,000
SEA
27,000
12,000
15,000
SFO
101,000
72,000
29,000
YUL
108,000
22,000
86,000
YYZ
155,000
40,000
115,000
TOTAL
1,464,000
1,173,000
291,000


ITALY-MAIN WORLD CITIES 2016 DEMAND
Route
FCO
MXP/LIN
Difference
BKK
126,000
160,000
(34,000)
IKA
55,000
83,000
(28,000)
CMB
69,000
75,000
(6,000)
DEL
84,000
146,000
(62,000)
DXB
239,000
210,000
29,000
EZE
175,000
60,000
115,000
GIG
55,000
35,000
20,000
GRU
110,000
105,000
5,000
HKG
93,000
120,000
(27,000)
ICN
316,000
101,000
215,000
MNL
77,000
85,000
(8,000)
NRT/HND
195,000
208,000
(13,000)
PEK
99,000
115,000
(16,000)
PVG
91,000
160,000
(69,000)
TLV
311,000
275,000
36,000
TOTAL
2,095,000
1,938,000
157,000

With regards to the USA-Italy market segment:

1. American Airlines or United should consider making ORD-FCO a year round service with at least a 4 weekly B763ER operated service during the winter season

2. LAX-Italy I have not highlighted as its a ultra long haul service totaling 13 hours each way hence extremely high risk since the yields are not that great. It could however sustain a summer seasonal service only.

3. MIA-Italy should be operated year round by AA with a B787. Currently AA only flies a daily year round B763ER between MIA and MXP but with such a large MIA hub operation already in place, it can be able to sustain along side with MIA-MXP a 4 weekly year round MIA-FCO service.

As far as the other worldwide markets are concerned:

1. It is really surprising to note that ICN-FCO demand is higher than FCO-JFK considering the huge Italian emigrant community residing in NYC

2. TG can increase BKK-MXP from the current 3 to 5 weekly using an A359 along with BKK-FCO too from 4 to 5 weekly

3. AI can sustain a 5th weekly DEL-MXP nonstop service using a B788

4. With AZ out their daily nonstop MXP-NRT + FCO-NRT service would leave a huge void which JAL or ANA can fulfil by operating a 4 weekly service of their own using a B787.



Sunday, May 7, 2017

PIA suspends all India flights

PIA has officially confirmed that due to poor performance, it shall be suspending its services to Mumbai and Delhi in the following manner:

KHI/BOM - all flights suspended effective 11MAY

KHI/DEL - all flights suspended effective 15MAY

LHE/DEL - all flights suspended effective 07JUN

This means that the fastest way for Karachi passengers to fly to BOM and DEL is on Oman Air via Muscat followed by Emirates via Dubai. Oman Air though offers the shortest flight time (including transit at MCT) in both directions. In 2016 the market demand was as follows:

KHI-BOM 19,000 pax
KHI-DEL 11,000 pax

With Oman Air from KHI, you depart KHI at 2330 and land into BOM at 0600 with a 1 hour transit at MCT. On the return sector, you depart BOM at 1615 and land into KHI at 2245 with a 2 hour transit in MCT only.

Thursday, May 4, 2017

Oman Air looking to order 15 more wide body aircraft

Oman Air has officially announced that it will be placing a major wide body order for 15 aircraft in 2018 as part of a long term strategy to replace its 10 A330s as well as to cater for incremental growth.

In addition, WY also revealed that it made a net loss of US$337 million in 2016 which was 50% higher than the loss made in 2015 as yields dropped plus fuel and other expenses rose.

New routes being studied by the airline were revealed to be Hong Kong, Seoul, Peshawar and Johannesburg.

News link:  
http://www.thenational.ae/business/aviation/oman-air-to-buy-15-dreamliners-or-a350s

Analysis:

Currently, WY's wide body fleet includes the below mentioned aircraft

4 B788s - 267 seats
4 A332s - 216 seats
6 A333s - 289 seats
2 B789s - 288 seats + another 13 yet to be delivered
Total (with planned delivery of 13 B789s) is 29 aircraft

Out of the 15 aircraft going to be ordered, 10 will be used to replace their A330 fleet whilst the remaining 5 are ear marked for network expansion. This brings the total wide body fleet count to 34 aircraft.

As far as which aircraft should be chosen, it is a no brainer that the B787-9 is the best aircraft suited for WY's long term requirements and not the A350-900 for the below mentioned reasons:

1. WY already has 6 B787s in its fleet with pilots, engineers and cabin crew certified on this plane type.

2. The A359 is a more expensive aircraft to purchase and operate versus a B789 plus it has approximately 15% more passenger capacity only which is not required by WY.

3. Another fleet type mix into the frame will only lead to higher costs, complexities and headaches for crew planning.

4. Why would WY want to have a dual wide body fleet mix of A350s and B787s when their B789s has the right capacity for all its high demand routes i.e. 288 seats plus it has the capability of flying all of them nonstop without payload issues including any potential future nonstop service to New York, Toronto or Australia.

5. If WY wants more capacity for its leisure/VFR routes such as MNL BKK CGK DAC INDIA JED which don't require 30 business class seats, it can easily reconfigure few of their B789s into a high density layout to have 18 business class (flat beds) + 294 economy class to seat 312 passengers.

What can be done with this new order is as follows:

1. WY should have its future wide body fleet revolving around the B787-9 (789) only which will in turn lead to synergies and mega cost savings across the airline.

2. As part of an incremental order for 15 B789s, it should request Boeing to buy back the 4 B788s as the future re-sale value of this aircraft type is not looking that promising versus the more popular B789! There is also no point having a 267 seater B788 flying along side a 288 seater B789 offering only 8% more seats.

3. In this manner, the total wide body fleet count will number 30 B789s which is more than enough to meet its long term needs versus the original intention of 34 as having more wide body planes flying long haul for a GCC carrier like WY will only increase 'net losses' since fuel prices wont remain $50-$55 forever.

4. The 30 B789s can be subdivided into two configurations i.e. 20 units with 288 seats (which it currently has i.e. 30J-258Y) and the remaining 10 to be in a higher density configuration with 312 seats (18J-294Y) to serve specific high volume routes in Asia.  

5. Therefore if the above gets taken into consideration, the 2020-2030 WY fleet will consist of just two airplane types only i.e. B789 + B737MAXs which is the right way to move forward.


Gulf Air reveals B789 configuration


Gulf Air
has officially revealed details of its cabin layout of its soon to be delivered brand new Boeing 787-9s which are as follows:

1. A total of 282 seats will be installed on board across 2 cabin classes i.e. 26 business + 256 economy

2. First batch of 10 B789s will be delivered between 2018-20 i.e. 5 in 2018 + 2 in 2019 and 3 in 2020. The remaining 6 are scheduled to be delivered in 2023-24.

The first route for these planes is expected to be BAH-LHR-BAH as that is the tradition considering that these planes will also have a brand new business class seat product. By 2020 it is expected that the 10 delivered B789s would have fully replaced the current 6 A332s with the incremental aircraft used to expand capacity in high demand markets.

In addition to the above, it has been noted (as per the news link below) that GF changed its A321NEO order slightly i.e. out of the 17 A321NEOs ordered, 8 of these will be the LR version which means they are going to be ear marked to expand Europe capacity along with having flat bed business class seats (which all their current 6 A321s + 4 A320s have)

Source: https://www.ch-aviation.com/portal/news/55557-gulf-air-confirms-maiden-b787-9-due-in-early-2q18

Comments:

This is a well thought out configuration as the number of seats i.e. 282 adequately caters for growth across all its currently operated A332 routes into the 2020-30 decade period. GF's A332s seat 214 pax in a 2 class layout so the B789s with 282 represent a 32% increase in pax capacity as well as the capability to uplift an additional 3-4 tons of cargo in the belly. It shall definitely come in handy during peak travel periods across the network as well as for high demand religious season flights to JED/NJF.

Tuesday, May 2, 2017

Canada's Westjet orders 20 Boeing 787-9s

Canada's second largest airline i.e. WestJet today placed its largest ever commercially valued order with Boeing for 20 wide body aircraft as the airline has decided to aggressively go forward with this project.

A total of 20 Boeing 787-9s have been ordered by WS as 10 being firm and the remaining 10 as options.

Comments:

In my March 2016 newsletter, I had written the following as at that time WS released their intentions of studying long haul expansion.

In my opinion, if WS is really serious about the long term investment it needs to make for its wide body jet operations then it should adopt the below mentioned strategy:

Note - Published purchase price of B789 is US$ 265M where as A339 costs US$ 288M and A359 US$ 308M; however actual final purchase price is usually 50% discounted !

1. Purchase 10 jets to realize synergies and obtain a decent discounted offer from either Boeing or Airbus

2. Base 5 jets out of
YYZ and YVR respectively for Asia (YVR base) and Europe (YYZ) operations

3. It would be best to buy a modern aircraft with the latest flight avionics hence opt for the B789 as its future re-sale value + on board seating capacity is better suited for
WS rather than the larger A359.

4. The B789 should be easily capable of having 361 seats on board in a dual class configuration (28 premium economy 2-3-2 + 333 economy) offering very good operating costs per seat unit on flights under 10 hours of flying time even if price of oil increases to $60-70 per barrel.

5. It should only look at routes within a 10 hour flying radius nonstop of
YYZ and YVR with the 361 seater B789. Anything longer than that and the profitability margins become extremely challenging even at $50 oil price! Another reason why I said 10 hours max is because the same aircraft can be flown back to hub base within a 24 hour day period including ground time. FYI block time of a B787-9 with flying speed at 490 knots from YVR to Asia is as follows:
YVR/ICN - 9 hours 35 minutes YVR/PEK - 9 hours 55 minutes (getting desired slot timings will be a big challenge) YVR/NRT - 8 hours 50 minutes YVR/PVG - 10 hours 30 minutes (getting desired slot timings will be a big challenge) YVR/HKG - 11 hours 50 minutes (hence a no go route) YVR/MNL - 12 hours 10 minutes (hence a no go route) YVR/TPE - 11 hours 5 minutes (hence a no go route) YVR/LGW - 9 hours

6. In the winter season when volume based demand from
YYZ to Europe evaporates the aircraft based out of YYZ should be operating to London + selected U.S. , Caribbean destinations only such as Barbados, HNL, LAS, LAX and Florida. Or in order to take advantage of the "Chinese new year season + winter holidays" (between DEC-FEB), it can re-allocate 2 of the YYZ based aircraft to YVR to boost YVR-Asia frequencies.

7. For the
YVR long haul hub to be effective, WS first must have a strong bank of U.S. bound flights to generate transfer traffic volume to feed YVR-Asia.

8.
WS needs to have strong interline / code sharing agreements in Asia and Europe especially LGW in order to get incremental revenue generating opportunities.