Tuesday, May 5, 2009

Emirates A 380 impact in Toronto

Dear All,

Many weeks ago, in the comments section of my weekly airline news email, I had mentioned that with Emirates bringing the A 380 into the Toronto market, major ramifications are in store for many airlines but mostly for Jet Airways. In this report, I will explain in detail as to why I feel 9W (Jet Airways) in particular to lose than any other carrier with not only EK bringing the A 380 to YYZ but also Turkish Airlines (TK) starting new flights and Etihad Airways (EY) increasing capacity on the AUH-YYZ sector with the B 77W replacing their A 346.

Please note that these observations and theories are of my own. Do feel free to write back with your feed back and 'constructive' criticism.

Synopsis on EK in YYZ:

Emirates has officially announced that due to its Dubai-JFK route seeing dismal loads and yields on it’s A 380 operated flights in particular, it will be taking the giant whale jet of this route and placing it on more higher demand sectors such as 3 weekly DXB-YYZ + daily DXB-BKK. By doing so, EK is increasing capacity on the Toronto route from 1074 seats per week to 1467 which is 397 more or 37%. EK’s A 380 seat 14 in first class, 76 in business class and 399 in economy. This will be effective from June 1st 2009. To/from YYZ, EK’s main passenger base hails from LHE, ISB, KHI, DEL, BOM, DAC, CMB and South India. They also get a high volume of O&D passengers on the YYZ-DXB-YYZ route i.e. 7500 passengers approximately in 2008 which is a 30% market share.

When EK made this announcement, it shocked everyone and upset many especially its direct competitors who were wondering if it’s easier to jump off a cliff rather than compete head on against EK’s A 380 to the Indian Subcontinent region from Toronto. Currently, EK’s loads to/from YYZ, average over 83% and what is most impressive is their load factor in the high yielding premium cabin. Not only that even though their fares from YYZ to any where in the Middle East, Far East and Indian Subcontinent region are approximately $ 100-150 more expensive than 9W, EY, AF, KL and BA, they still get passengers on board their flights who do not mind paying a small premium to experience their on board product.

Toronto Summer 2009 capacity increases:

For the IATA Summer 09 season, 3 airlines in particular have announced major expansion plans for their respective flights to Toronto. Already EK’s expansion has been highlighted above; the other 2 airlines are Etihad Airways and Turkish Airlines. With regards to the former, capacity is being increased from a 3 weekly 286 seater Airbus A 340-600 to a 378 seater Boeing 777-300ER. This means that capacity has been lifted by 92 seats per flight or 276 seats per week i.e. a 32% increase in capacity. Like EK, EY’s main target markets are passengers bound to India, Pakistan and Bangladesh from YYZ. But unlike EK, EY does not attract as much the high yield paying passenger in economy or business class which is due to the fact that they are still a relatively new airline which doesn’t have the brand recognition in Canada that EK has due to the latter’s longevity in existence. The B 77W’s that EY fly to Toronto seat 28 in business class and 350 in economy.

As for Turkish Airlines, the state of Turkey and Canada have recently signed a new air bilateral agreement that would allow TK to operate 3 weekly nonstop flights to Toronto from Istanbul for which the carrier has revealed its intentions to start flights from this June onwards. It is expected that TK will operate a nonstop flight using an Airbus A 330-200 which will seat approximately 220 passengers in a 2 class configuration. However, due to TK’s IST hub having an excellent geographical positioning on the world map, its target market from Toronto will be varied. Its focus primarily will be the large O&D market segment that exists between IST and YYZ and secondary will be 6th freedom traffic bound to AMM, BEY, CAI, DAM, THR, JED, RUH, DXB, KHI, BOM, DEL, ALA, TAS, GYD and KRT for which excellent connections are possible via its IST hub in both directions. The transit time in IST in each direction to these above mentioned cities ranges between 2-5 hours maximum in both directions.

So in retrospect effective June 1st 2009 onwards, a combined total of 1329 seats are being added by these 3 carriers combined per week which is nearly as much capacity that 9W offers out of Toronto on a weekly basis!

EK's Summer 2009 special A 380 seat sale fares effect on the market?

Few weeks ago, EK released into the market its special seat sale fares for the shoulder (June 1-17) and high season (June 18-Aug 31) which has really bamboozled the market due to its attractiveness. Their fare in the peak summer season from Toronto to DXB, THR, BOM, DEL, HYD, MAA, BLR, CPT and JNB ranges between CAD$ 1460 to $ 1590 all taxes inclusive and that too in one of their highest inventories such as W and E classes. Finding seats in this inventory class should not be a big problem and passengers will be willing to pay to fly EK to experience the A 380 more now with such a great deal on offer. There are other airlines who have come out with cheaper fares to India in particular in June-July but in their lowest inventory which is very hard to get hence rendering it virtually useless as time flies by.

Jet Airways market demographic in Toronto:

9W in YYZ is heavily dependant on passengers bound to BOM and DEL filling up their flights from YYZ. They also get a decent amount of 5th freedom traffic on the YYZ-BRU-YYZ sector and also a good chunk of the market bound to MAA. However, their market share to key interior points in India such as AMD, COK, TRV, BLR, HYD, ATQ, CCU is limited compared to EK in particular. With EY’s new summer schedule having all Indian cities connect within a 2-3 hour transit at AUH to/from YYZ, whatever market share 9W had to these cities will further evaporate as EY will provide a hassle free direct option for these passengers who don’t like to go via BOM/DEL/MAA to these cities as it involves clearing customs/immigrations and sometimes a change of terminal.

What about Air India as a threat to 9W?

According to various media releases in India and across the world, AI is expected to re-route its Toronto flights from October 26th via Frankfurt on a daily basis from Amritsar using the same Boeing 777-200ER. This would allow AI to offer YYZ based passengers for the first time ever, hassle free one stop options via FRA to DEL, BOM, AMD and ATQ thus further encroaching into 9W’s market share of BOM/DEL.

It is also worth pointing out that AI will be using their new Boeing 777-300ER on the DEL-FRA and BOM-FRA sectors which will definitely give them a lot of positive PR with the passengers that fly it as the in-flight product in all cabin classes on board is very good. Until this change comes about officially on the GDS, AI’s main market to/from YYZ is bound to ATQ and they also get reasonable 5th freedom + interline traffic on the YYZ-LHR-YYZ sector.

In Toronto, there are thousands of passengers who would prefer flying Air India than any other airline to DEL/BOM/AMD from YYZ due to their nationalistic pride of flying the state flag carrier and getting a feeling of “home” on board which is also why PIA is successful in YYZ especially after introducing its B 777s on this sector.

Could all of this lead to 9W possibly being forced to suspend Toronto?

After reviewing the above mentioned points, it is safe to say that 9W is largely dependant upon traffic bound to BOM and DEL from Toronto to fill its direct flights and any airline that adds flights or capacity to YYZ from the Middle East and Indian Subcontinent region will want a larger slice of the pie. What this means is that they will aggressively go after the BOM and DEL passengers thus further eroding 9Ws market share and also the revenue yield that it is been to able to generate thus far.

More competition, means a bitter fare war + lower yield in low season especially and market share diluted on the core route. We are already seeing definite signs of that happening on the YYZ-DEL/BOM-YYZ sector currently with net fares for May being $ 680 + tax on 9W and AF followed by KLM at $ 730. In the summer peak season when you usually expect net fares to BOM/DEL to be $ 1500 + taxes, it is this year $ 960 + taxes on 9W and LH where as AF is $ 805 + taxes followed by EY at $ 900 + taxes.

All these factors combined could result in 9W having no choice but to suspend YYZ bound flights within a year’s time because the route may not be commercially and financially viable to operate particularly in this lean economic time. One other key factor that everyone should consider is 9W’s access to “capital funding” and its company portfolio of being a “privately owned company”. What the latter means and refers to is that due to it not being controlled by the state of India, it stands to gain nothing from a government bail out in a time of crisis nor will the state inject some capital into the carrier to keep it afloat.

Unfortunately for 9W, its direct competitors on this route i.e. EK/EY/TK/AI enjoys this form of immunity, protection and financial clout that it does not possess as it’s not a government controlled entity. Eventually, 9W’s creditors will be pressurizing the airline to get its act together by initiating a thorough restructuring of its international route network by suspending or reducing flights to cities that suffer losses of a size able magnitude.


The bottom line is this, to/from YYZ to India, 9W offers nothing unique for its passengers apart from its brand name recognition and good in-flight product/service. It is like everyone else offering “one stop” flight options to BOM/DEL/MAA. It must look at diversifying its passenger portfolio base by targetting passengers bound to SIN, KUL and BKK more aggressively from YYZ via BRU/INDIA as the connections on offer are very good. On the YYZ-BRU/BKK/SIN/KUL-BRU-YYZ sector, 9W's inability to attract passengers stems largely from its "pricing structure" on this sector which is higher than the competition by $ 200-400 even though the distance flown is virtually the same. They should look at how successful EY in particular has been in the past 2 years getting passengers from YYZ bound to BKK/SIN/KUL. Diversification allows them to be less dependent on one main market segment to fill up the flight and only through playing with a variety of "cards" does it have a good chance here! This is why EK has been so successful in YYZ more than any other Arab or Indian sub continent airline!



PS: Once again, I would like to state the above mentioned view points are of my own and no one else's. Your feedback is always welcome and appreciated :)

Qatar Airways

Qatar Airways
has revealed MASSIVE and I mean MASSIVE changes for its Summer 2010 schedule on the GDS system and I will start off with the most important changes: ***All of the below mentioned changes come into effect from March 29th 2010***

LHE - frequencies increased from 4 weekly to daily flights i.e. 2 weekly A 346s + 3 weekly A 332s + 2 weekly A 333s.

- frequencies increased from 4 weekly to daily flights i.e. 5 weekly A 333s + 2 weekly A 332s.

- frequencies increased from 2 weekly to daily flights using an A 332 exclusively.

- frequencies increased from daily to 13 weekly flights i.e. daily B 773ER + 6 weekly A 320.

DEL - frequencies increased from daily to 10 weekly flights i.e. daily B 772LR + 3 weekly A 321.

- frequencies increased from 4 weekly to daily nonstop flights using a 2 class A 332.

- capacity increased from daily A 332 to daily B 773ER.

capacity adjusted to daily B 772LR + 4 weekly B 773ER + 3 weekly A 332.

- frequencies increased to double daily flights i.e. daily A 321 + daily A 320.

CMN - frequencies increased to daily nonstop terminator flights using an A 333 four times a week + 3 weekly A 332.

MAD - frequencies increased from 4 weekly to daily nonstop flights using a 2 class configured A 333.

- frequencies from 3 to 5 weekly flights i.e. 3 weekly A 321s + 2 weekly A 320s

- capacity increased from daily A 332 to daily B 773ER.

SIN/DPS - capacity increased from daily A 333 to daily B 773ER.

- frequencies increased from 10 weekly flights to double daily nonstop using an A 320.

- frequencies and capacity increased to daily nonstop terminator flights using an A 320.

- capacity increased from 5 weekly A 319s to 5 weekly two class configured A 332s.

- frequencies increased from daily to 11 weekly nonstop flights using a mixture of A 321s and A 320s.

- frequencies increased from daily to 10 weekly nonstop flights using an A 332.


It is truly unbelievable to see how they suddenly got rights to fly daily to all 3 major cities in Northern Pakistan. For years Emirates and Gulf Air have been trying yet they could not pull it off but QR has. One wonders who their lobbyist is within the Pakistan Govt because that contact seems to be in value able! With QR using the A 346 to LHE and A 333s to ISB, it will have a better in-flight product in all cabin classes compared to its nearest rivals on the Northern Pakistan-Middle East routes as well as beyond to EU/USA/UK. Also as a result of this expansion to this region, their flight loads and yield to JFK, IAD and IAH will increase substantially as there is a huge market from LHE/ISB in particular to LHR/MAN/JFK/IAH/IAD.

Other smart moves by them were to increase MAD to daily before EK/EY firmly establish themselves in that market segment. Though I dont know if there is that much added demand to warrant using a daily A 333 on this flight rather than an A 332! The increase in capacity to CAI from an A 332 to a B 773ER is definitely warranted and with the right pricing structure in place for destinations in Far East Asia, loads should pick up in time.

The increases to CAI/ATH/FCO/IST have also been brought about due to QR expecting its up coming SYD and MEL flights to provide a lot of feeder traffic to these cities and it is expected that AMM too is going to be increased to 12 weekly nonstop flights from Summer 2010.

However, with the above mentioned expansion, there are also few things that I do not agree with and would like to see them rectified. They are as follows:

1. Flight timings for the additional DOH-DEL-DOH and DOH-BOM-DOH flights are very peculiar.

For DEL it is:

QR 234 Dep DOH 0205 Arr DEL 0805
QR 235 Dep DEL 0910 Arr DOH 1110

For BOM it is:

QR 202 Dep DOH 1600 Arr BOM 2145

QR 203 Dep BOM 2245 Arr DOH 2359

With regards to the new DEL flights, what is the point of having QR 235 arrive just 5 hours after QR 233? I figured it out that one of the main reasons for the new DOH-DEL-DOH flights is to provide extra feed to RUH and JED bound flights but at what cost? The plan that QR needs to follow is to effectively build a second "hub wave" at DOH to the ISC region to feed the early morning GCC-DOH + EU/UK/Africa-DOH flights. Therefore keeping that in mind, it would be best if both the new DOH-DEL-DOH and DOH-BOM-DOH flights be rescheduled as follows:

QR 234 Dep DOH 1030 Arr DEL 1630
QR 235 Dep DEL 1830 Arr DOH 2030

QR 202 Dep DOH 1100 Arr BOM 1645
QR 203 Dep BOM 1845 Arr DOH 2000

This would allow perfect connections in both directions to all GCC bound flights via DOH as well as to Europe with a 4 hour transit at DOH airport.

I also do not agree with the capacity increase to KIX-Osaka from a 250 seater A 332 to a 335 seater B 773ER on a daily basis. Some say its because QR is getting high loads on these flights, but does that warrant an increase of 32% in capacity i.e. 85 more seats on a daily basis just because EK is sending a daily B 773ER to KIX?! The A 332 is the ideal aircraft to serve DOH-KIX on a daily basis and it should remain that way until new flights to more African and Brazilian destinations are flown to ;)

Concluding, the biggest surprise has obviously been the daily flying rights awarded to QR for Northern Pakistan which is going to have a huge impact on PIA-ED-EK-GF-WY-KU-EY-SV respective market share into this lucurative market segment. Their increases to other destinations are also justified in some cases and some not, but there is one year left to rectify some problems for the better ment of the airline's bottom line!

Qatar Airways has revealed on the GDS major changes to its European network for the winter 09-10 IATA season with increase in frequencies to selected destinations. The main highlights are as follows:

CDG - frequencies increased from 11 times per week to double i.e.
4 weekly A 333s + 4 weekly A 332s + 6 weekly A 346s. All CDG bound flights will have a 3 class cabin configuration of F-J-Y.

- frequencies increased from 4 to 5 flights per week i.e. 3 weekly A 332s + 2 weekly A 333s. The extra flight is an early morning arrival into ZRH.

- frequencies increased from 4 to 5 flights per week using an A 319LR.

Etihad Airways

Etihad Airways has revealed on the GDS that it will be increasing capacity to JFK-New York City effective immediately and will further increase it from the on set from the IATA Winter 09-10 season. For the on going summer season, EY will be using the larger A 346 twice a week nonstop to JFK along side the A 345 five times a week. However, from Oct 26th 09 onwards, all daily flights to JFK will be flown using the 286 seater Airbus A 340-600.


Smart move! FYI, I had suggested this aircraft capacity upgrade 3 months ago in my airline news email when the AUH hub timings were being restructured as now all their Indian sub-continent + GCC destinations + BKK connect nicely via AUH in both directions to JFK with the exception of KTM.

Delta Airlines

Delta Airlines has confirmed that due to passenger demand and excess baggage issues, it will be increasing capacity to Lagos, Nigeria from July 2nd 09. Currently, daily nonstop flights are flown using a B 767-300ER but this will be changed to the larger Boeing 777-200ER. The B 772ER being used for LOS is coming from the suspended ATL-KWI flight.

Gulf Air

Gulf Air has revealed on the GDS major capacity changes network wide for the IATA Winter 09-10 season due to it not renewing the lease on its 4 Boeing 777-300ERs as well as integrating more used Airbus A 330-200s into its fleet. The main highlights are as follows:

FRA - frequencies reduced from 11 to 9 flights per week i.e. daily A 343 + 2 weekly A 332.

LHE - capacity reduced from 3 weekly A 343s to 3 weekly A 332s.

BKK - capacity reduced from daily B 773ER + daily A 332 to double daily A 332.

ISB - capacity reduced from 2 weekly A 343s to 2 weekly A 332s.

PEW - capacity increased to 2 weekly A 332s.

KUL - capacity reduced from daily B 773ER to 6 weekly A 343s + weekly A 332.

MNL - frequencies reduced from 12 to 10 weekly nonstop flights using an A 343 exclusively.

Air France

Air France has revealed on the GDS that it will be reducing its flights to YUL-Montreal for the Winter 09-10 season due to lower than anticipated demand. Originally, it was supposed to be a triple daily service but that has now been reduced to 19 times per week i.e. daily B 772ER + daily A 343 + 5 weekly A 332. AF too announced further details with regards to the deployment of its A 380s which are as follows:

NRT - frequencies reduced to double daily nonstop flights i.e. daily A 380 + daily B 773ER. The third daily flight will be instead flown nonstop to HND-Tokyo Haneda airport.

IAD - in summer 2010, frequencies will be reduced to double daily instead of triple daily by using an A 380 daily + B 772ER daily.

JNB - frequencies will be reduced from December onwards from double daily to daily A 380 + 3 weekly B 773ER. The A 380 will be used on the night time departure from CDG where as the B 773ER will be used on the day light CDG-JNB service.

Jet Airways India

Jet Airways of India has revealed on the GDS that it will be launching new daily nonstop flights to Riyadh and Jeddah from its Mumbai hub effective June 14th 09. Both flights will be flown nonstop using a Boeing 737-800. The flight timings are as follows:

9W 524 Dep BOM 1930 - Arr RUH 2105
9W 523 Dep RUH 2205 - Arr BOM 0430+1

9W 522 Dep BOM 1900 - Arr JED 2130
W 521 Dep JED 2230 - Arr BOM 0610+1


An excellent move by 9W to finally tap the lucurative India-Saudia market. But one cannot understand why a B 738 is being used especially on the BOM-JED route?! The A 332 is the ideal aircraft (capacity wise) to meet the demands of the passenger and cargo market segments on this route as there is high density demand year round considering that 9W will connect via BOM passengers bound to DEL, MAA, HYD, COK, TRV, CCU and BLR.

Cebu Pacific

Cebu Pacific, a low cost airlines from the Philippines has revealed that its pending order for 10 Airbus A 320-200s might be converted into 4 or 5 larger Airbus A 330-300Es as the carrier plans to expand its operations into the long haul market. It has applied for rights to serve Dubai, Abu Dhabi, Kuwait, Sydney and Melbourne from next year.


Can someone please tell Cebu Pacific that an A 333 cannot fly with a full payload of pax + cargo from MNL to DXB/AUH/KWI. With regards to Australia, it initially wants to use the A 320s to SYD and MEL from MNL with a tech stop at Darwin airport. If it really wants to expand long haul with a low cost all economy class product, then it should instead purchase 4-5 A 332s configured to seat 350 pax in an all economy class layout which has the capability to easily fly MNL-DXB/AUH/KWI nonstop with a full payload as well as MNL-Saudi Arabia nonstop in both directions which the A 333 cannot do!