05NOV edition

Turkish Airlines has officially announced that it has been bilaterally awarded seven additional frequencies to Pakistan from November 2013 onwards and as a result shall be taking full advantage in the following manner:

LHE – new 3 weekly nonstop flights to be launched effective 27NOV using a B738

KHI – frequencies increased from 4 weekly to daily effective 23DEC using a B738

ISB – frequencies increased from 3 to 4 weekly effective 25NOV using a B738

In addition to the above, TK too confirmed that its services to IAH-Houston shall be increased to daily nonstop effective 30MAR14 using a B773ER.

Egypt Air’s management has officially announced that the carrier will be placing a major order with Boeing and Airbus next year for a total of 60 new aircraft i.e. 17 to replace current fleet and 43 to be used for growth. Management has informed the media that it is considering the Airbus A380/A350 alongside the B77X/787 for the wide bodied fleet mix. The carrier wants to take full advantage of the geographical location of its Cairo hub and be a key player in the EU-Asia, EU-Africa and North America-Asia/Africa market segments. To begin its expansion plans, all the new aircraft that would be ordered shall be leased rather than purchased outright for financial ease, two new long haul routes were officially announced for 2014 which were Hong Kong and Jakarta (to be operated via KUL).

Source: http://www.bloomberg.com/news/2013-10-10/egypt-air-identifies-60-plane-requirement-to-revamp-aging-fleet.html

Analysis:

The aircraft that MS are looking to replace include 7 A332s + 4 B772As + 3 A342s + 3 AB6Fs. Its flagship long haul product is available currently only on board its new A333s and B773ERs. MS doesn’t need anything bigger than a B77W in the future. The A380 too has no business being in the MS fleet even for service to JED because it is operated 4-5 times daily by the airline from CAI hence better suited for this aircraft type.

As far as MS’s medium/long haul fleet is concerned, the fleet should be like this:

B77W – should remain for long haul and high density medium haul routes. In order to best utilize this asset to its fullest potential, it should be configured in 2 layouts i.e. one for long haul which is the current 49J + 298Y and one for high density routes requiring less premium seats. Over here, the configuration proposed is 21J + 379Y giving it 400 seats i.e. 17% more capacity at the same operational cost. The high density configuration is ideally suited for MS’s services to KWI, JED, RUH, DXB, BKK as well Hajj/Umrah flights to Saudi Arabia. There is no need what so ever for MS to drain its finances by investing in the more expensive B779X when the B77W (B773ER) is perfectly suited for its route network.   

B 789 - for medium density long/medium haul routes (A359 one feels is too big in a 2 class configuration for this market segment for MS)...280 seats in a 2 class config i.e. 24J + 256Y

A321-200NEO - for high density short haul routes in the MENA region and Africa (within 6.5 hours flying distance)...170 seats in a 2 class config i.e. 12J + 158Y

CS300 - for high frequency regional/domestic routes plus low density short/medium haul routes within a 6 hour flying radius of CAI. Configuration proposed is 12J + 115Y so 127 seats in total. The cost savings (over a 15 year period) of operating + purchasing + retraining the CS300 should outweigh the commonality positives gained by having an A320/A321NEO fleet !

Qatar Airways has officially announced many capacity changes to its route network for the current IATA W13 season of which the main highlights are as follows:

CMB – effective 01JAN14, capacity increased from triple daily A321s to daily B773ER + double daily A321

DWC and SHJ – effective 01MAR14, new double daily flights to be launched to both airports using an A320

HGH – new 4 weekly nonstop flights to be launched using an A332 effective 20DEC

BRU – capacity increased from daily A332 to daily B787

TXL – capacity increased from 4 weekly A320 to 4 weekly A332

In addition to the above, QR also revealed that it will be launching new 4 weekly nonstop flights to MIA-Miami, USA effective 10JUN14. All flights will be operated using a Boeing 777-200LR using the same schedule as its current JFK, ORD and IAD bound services.

Cathay Pacific has officially announced that it shall be significantly increasing capacity to Chicago (ORD) and Los Angeles (LAX) from the on set of the IATA S14 season in the following manner:

ORD – frequencies increased from daily to 10 weekly nonstop flights using a B773ER

LAX – frequencies increased from triple daily to 4 times daily with all flights operated with a B773ER

In addition to the above as part of the on going cost reduction measures being implemented by the airline, it will be reducing capacity to both JNB and SFO from IATA W14 season as follows:

JNB – capacity reduced from daily B744 to B773ER

SFO – all double daily flights to be exclusively operated using a B773ER

The significant operational cost savings of the B773ER being used instead of the B744 + the extra cargo revenue uplift were key aspects for CX to make this decision.

Emirates has officially announced that it has been granted additional bilateral access to the highly lucrative Luanda (Angola) market by being the only 2^nd long haul carrier allowed to operate more than 3 times per week to the country. Effective 01DEC13, EK will be operating a daily nonstop service between DXB and LAD using a B773ER with its current standardized schedule.

American Airlines has officially announced that it will be undertaking significant long haul expansion out of its primary DFW-Dallas hub to Asia from June 2014 onwards. AA revealed two new long haul routes i.e. daily DFW-PVG (Shanghai) effective 11JUN14 using a B772ER + daily DFW-HKG effective 01JUN14 using a B773ER. As far as its JFK-HND (Tokyo Handea) flights are concerned, AA announced that the current daily nonstop service using a B772ER will be discontinued effective 30NOV13 as the airline seeks to better deploy its assets elsewhere. 

Etihad Airways has officially announced many capacity changes across its medium and long haul network for the current IATA W13 and following S14 seasons of which the main highlights are as follows:

JKT – frequencies increased from daily to double daily B773ERs

CMB – frequencies increased from daily to double daily A320s

LAX – new daily nonstop flights to be launched effective 01JUN14 using a B772LR. This is a new aircraft type obtained by EY via purchasing 5 of them from Air India last month. These B77Ls shall be reconfigured to EY’s specifications which are 8F/40J/189Y.

PER – new nonstop flights from AUH shall be launched in 2014 in collaboration with Virgin Australia

The Iraqi Government has officially announced that it is placed an order on behalf of Iraqi Airways for 5 new Bombardier CS 300s as the carrier looks to expand its regional network in the Middle East region. These five jets are part of an exchange order i.e. replacing 5 CRJ 900ERs which were originally purchased by the carrier many years ago. The price paid for each CS300 was US$ 40 million which is a 44% discount from the published US$ 72 million official price tag as stated by the Government themselves.

Korean Air has officially announced that it has placed a new US$ 4 billion order with Boeing for the purchase of additional wide body jets. These include 5 B747-800Is + 1 B787-900 + 6 B777-300ERs. In total, this brings the KE B748 passenger fleet count to ten units.

Finnair has officially announced few capacity changes to its long haul route network for the upcoming IATA S14 season of which the main highlights are as follows:

DEL – frequencies reduced from 6 to 3 weekly using an A333

YYZ – capacity increased from 3 weekly B757s to 3 weekly A333s

Austrian Airlines has officially announced that it shall be majorly expanding its presence in USA from the onset of the IATA S14 season of which the main highlights are as follows:

EWR – new 5 weekly nonstop flights to be launched using a B763ER

ORD – frequencies increased from 5 weekly to daily nonstop using a B763ER

IAD – capacity increased from daily B763ER to daily B772ER

Air Europa of Spain has officially announced that it has purchased 8 additional Boeing 787-800s as the carrier looks to embark on a rapid expansion drive into Latin America, North America and Asia using this particular fleet. This brings the total number of B788s ordered by the airline to 16.

20SEP edition

Website: http://airline-news.blogspot.com

Lufthansa has officially announced that they have placed the largest ever order by a legacy European airline (in terms of $ value) as the German carrier finally revealed its highly anticipated wide body aircraft replacement order. LH signed up for 34 Boeing 777-900Xs + 25 Airbus A350-900s worth a combined total of US$ 19 billion.

The B779s will be replacing LH’s entire fleet of B744s and A346s by 2020 where as the A359s will be replacing its A343 fleet from 2016 onwards and the A333s during the next decade. The initial routes identified by LH for these aircraft are as follows:

A 359 – FRA/YVR and FRA/SSG

B 779 – FRA/BKK (2 class high density)

B 779 – MUC/PVG and FRA/PVG (3 class)

Philippine Airlines has officially announced that it will be launching new nonstop flights to LHR-London Heathrow from its Manila hub effective 04NOV13 onwards as the carrier looks to embark on a major EU expansion as its ban has been lifted after a security/safety audit being passed. PR will be operating 5 weekly nonstop services to LHR using a B777-300ER which are expected to go daily from June 2014. Flights will be arriving into LHR at 1415 and departing back at 1705. In other EU related news, PAL confirmed that it has secured obtaining bilateral rights to fly double daily flights into Italy effective Summer 2014 i.e. daily to Rome and Milan each respectively. These two cities are expected to be operated as a triangular service 4 times per week as MNL-FCO-MXP-MNL using a B777-300ER.

With regards to its fleet expansion drive, PAL’s Chairman revealed that the carrier will be dry leasing 10 additional aircraft to cater for robust North American and European expansion. Four B773ERs + 6 A343s shall be dry leased into the fleet next year and to cater for replacements from 2020 onwards, the carrier shall be obtaining 10 A350-900s + 10 B777-900Xs.

Emirates has officially announced that it shall be launching 3 new destinations from Dec13 onwards as the carrier continues to aggressively expand its route network in under served niche markets. The main highlights are as follows:

TPE – new daily nonstop flights to be launched from FEB14 using a B773ER

KBL – new daily nonstop flights to be launched from DEC13 using an A345

BOS – new daily nonstop flights to be launched from MAR14 using a B772LR

Qatar Airways has officially announced today details of its route network expansion plans for the upcoming IATA W13 season of which the main highlights are as follows:

JKT - frequencies increased from 11 weekly to double daily using a B773ER

ISB - frequencies increased from 4 weekly to daily (3 weekly A320 + 4 weekly A332)

RGN - frequencies increased from 3 weekly to daily nonstop using an A319LR
DXB - frequencies increased from 11 to 13 daily flights
BAH - frequencies increased from 6 to 7 daily flights
DME - frequencies increased from 10 to 12 weekly
BEG/SOF/ESB/OTP - all shall receive an extra weekly service

Delta Airlines announced that it has placed a major order with Airbus totaling US$ 6 billion for the purchase of 40 new jets from the European manufacturer. The breakdown of the order was as follows:

10 A330-300IGWs of which majority shall be based at SEA for trans-pacific nonstop flying seating 293 pax in a 3 class layout i.e. 34J + 32P + 227Y.

30 A321-200s which will seat 190 passengers in a 3 class configuration i.e. 20J + 22P + 148Y

Etihad Airways has officially announced capacity increases to its Indian subcontinent route network for the upcoming IATA W13 season of which the main highlights are as follows:

DEL – frequencies increased from daily to double daily i.e. daily A332 + daily A320

BOM – frequencies increased from daily to double daily i.e. daily A346 + daily A320. Both the additional 

DEL and BOM services depart AUH at 1530 and arrive back by 2355

MAA – capacity increased from daily A320 to daily A321 (174 seater)

KTM – frequencies increased from daily to double daily using an A320 for both flights

China Southern Airlines has revealed that due to the ever growing popularity of its nonstop Guangzhou (CAN) – London Heathrow service, it shall be increasing its presence on this route effective 27OCT13 onwards. The current 5 weekly nonstop flights operated by a B787-800 shall be increased to a daily nonstop service using the same aircraft type offering quick connections in both directions via CAN to Australia in particular.

Ethiopian Airlines has officially announced that it is extremely pleased with the performance economics that the Boeing 787-800 has brought to the airline and has attributed this as a key aspect to their strong financial performance in 2013. As a result, ET decided to place an order for 8 additional B788s bringing the total number of units ordered to 13 by the East African airline! As far as its route network for the IATA W13 season is concerned, ET announced many changes to its medium and long haul network of which the main highlights are as follows:

SIN – new 3 weekly flights to be launched via BKK using a B763ER effective 17DEC13

COO/ABJ – frequencies and capacity increased from 3 weekly B738s to 4 weekly B757s

BKO/DKR – capacity increased from 4 weekly B757s to 4 weekly B763ERs

HKG – all 3 weekly flights to be operated nonstop using a B763ER instead of via BKK

DEL/HGH – frequencies reduced from 5 to 4 weekly

NIM/OUA – new 4 weekly service using a B757

Alitalia has officially announced that it shall be launching adjusting its services to NRT-Tokyo for the Summer 2014 season of which the main highlights are as follows:

VCE – new nonstop VCE/NRT nonstop flights to be launched using a B772ER

MXP – frequencies increased from 4 to 5 weekly nonstop using a B772ER

FCO – frequencies reduced from 10 weekly to daily nonstop using a B772ER

Air India has officially announced that if it does not hear any positive feedback from Star Alliance by the end of September 2013, it will stall all further attempts to join this alliance group and instead focus its resources to joining One World instead. The carrier is very keen to be part of a large alliance group which would enable it to realize higher yields, revenue and feeder service on board its long haul and domestic route network in particular.

Comments:

Finally AI is thinking sensibly as One World is ideal for them (I am looking at this from their perspective only) as they can code share with:

AA on all their India-USA flights
BA on all their UK-India flights
QF on their new daily DEL-MEL/SYD flights
CX on all their HKG-India flights
JL on all their NRT-India flights
QR on all their DOH-India flights + via DOH to Africa/Europe/Middle East

India-UK is the biggest market in Europe for which a BA-AI JV partnership would be a serious threat to all the direct and in-direct carriers. On the Aussie route, AI/QF can code share on domestic Australia and trans-tasman to boost feed. On the trans-pacific front, AI via HKG or NRT can code share to YVR, LAX and SFO with JL/CX rather than spend reckless amounts of money operating its own services.

British Airways has revealed major expansion plans for its long haul route network for the IATA S14 season as the carrier looks to take opportunities in niche markets that can generate good S/F and yields at the same time. The main highlights are as follows:

AUS – new daily nonstop flights to be operated using a B787

ACC – frequencies increased from daily to 10 weekly nonstop i.e. daily B744 + 3 weekly B763ER

SEA – frequencies increased from 10 to 11 weekly nonstop using a B744

TLV – frequencies reduced from triple daily to double daily

EBB – frequencies increased from 3 to 4 weekly

ICN – frequencies increased from 6 weekly to daily

JNB – frequencies reduced from 17 weekly to double daily

How to restructure PIA

PIA this year have floated a tender 3 times already for the dry lease of 10 narrow bodied A320/A321 or B738s but on all 3 occasions, it has been messed up through some form of outside interference.

Their B747 fleet after completion of Hajj 2013 operations shall be permanently grounded where as their A310s are now configured in a 227 seater all Y class cabin only. FRA and AMS have already been suspended with LBA next in line. I will not be surprised if both CPH and OSL too follow suit and mainland Europe is just left wit MXP and CDG which is operated 3 times per week using a B777 as ISB-MXP-CDG-ISB.

The A321-200 is the ideal replacement aircraft for the A310 for them to be used on the high density PAK-Middle East routes. This aircraft type can also be used to replace the A310 on their BKK-HKG services as the A321 can easily perform the 4.5 hour flight from PAK to BKK nonstop in both directions without a payload problem. The only route where it might face a hurdle is the 2 weekly ISB-PEK-NRT flight as PEK-ISB is a 6 hour 15 minute flight which can only be done with an A321-200 that has 1ACT (additional fuel tank) and not the standard model.

All being said though, it might not be a bad idea to completely shut down PIA write off the bad debts and start afresh with the B777s and ATRs being the only aircraft type of the current fleet being transferred over. The new PIA would have to get rid of the old dinosaurs of the current upper management team whose bad decisions have plagued this airline such the turn of the century. The long haul route network should focus only on UK, JFK, BKK and EY or EK via UAE and the Far East can be served via BKK with a code share with TG.

The core route network should encompass exploiting the higher yielding and higher volume PAK-Middle East market segment with A321s and B777s (mainly to JED/RUH and DXB only). The B777s configuration too needs to be changed to reflect reality i.e. having a J class cabin with 35 seats is fruitless for a non-premium branded airline like PK. It should maximum have 24 J class seats (all flat beds) on board its B772 and B773 fleet. The B773s though should have a 3-4-3 configuration in Y class (but not the B772 as they will be used on the longer flights primarily) in order to have great economies of scale especially on the higher volume PAK-Saudi flights + ISB/LHE-LHR/MAN.

JFK needs to be routed via SNN i.e. PAK-SNN-JFK-PAK so that the pax can clear U.S. immigration/customs easily at SNN and not have to endure the horror at JFK.

The restructured fleet of the new airline would look like this:

6 ATR 42-500s (from current fleet) seating 50 pax

4 B777-200ERs
2 B777-200LRs
*both of the above would be from the current fleet and should be able to seat 320 passengers (24J + 296Y)

6 B777-300ERs (3 active and 5 are an additional order placed over a year ago but I dont feel a need for there to be 8 in the fleet so 2 would be canceled)
*these shall be transferred from the existing fleet and should be configured to seat 434 passengers (24J + 410Y with a 3-4-3 arrangement) which in turn will be used on flights to RUH, JED, DXB and MAN exclusively !

12 A321-200s (with 1ACT preferably) seating 186 pax (12J + 174Y)

5 A319s seating 122 pax (8J + 114Y)

Total desired fleet strength is 35 aircraft which is ideal !

The 6 B77Ws I would use in the following manner:

1 aircraft for 4 weekly LHE-JED + 3 weekly LHE-RUH
1 aircraft for 4 weekly ISB-RUH + 3 weekly ISB-JED
1 aircraft for daily KHI-JED-KHI-DAC-KHI same plane service
1 aircraft for daily ISB-MAN
1 aircraft for 4 weekly LHE-MAN + 3 weekly ISB-BHX
1 aircraft for daily ISB-DXB + daily LHE-DXB

The 2 B77Ls would exclusively perform:

1 aircraft for 3 weekly KHI-LHE-YYZ-LHE-KHI
1 aircraft for 4 weekly KHI-LHE-SNN-JFK-LHE-KHI

The 4 B772ERs would perform:

1 SPARE aircraft to cover for the B77Ls and B77W
1 for daily PEW-DXB + 4 weekly PEW-RUH
1 for 3 weekly KHI-LHR + 4 weekly ISB-LHR
1 for 3 weekly LHE-LHR + half aircraft spare as cover

The 12 A321s would perform:

1 aircraft for 4 daily KHI-LHE-KHI
1 aircraft for 4 daily KHI-ISB-KHI
1 aircraft for double daily KHI-PEW-LHE-PEW-KHI
1 aircraft for 6 weekly PEW-AUH + 3 weekly PEW-DMM + 3 weekly PEW-JED
1 aircraft for 4 weekly LHE-KWI + 3 weekly LHE-DMM
1 aircraft for daily LHE-MCT + daily LHE-BKK
1 aircraft for daily KHI-BKK-KUL (to be timed the same as LHE-BKK so that pax from both KHI + LHE can connect via BKK to KUL hence making BKK a small scissors hub)
1 aircraft for double daily KHI-DXB + daily KHI-MCT
1 aircraft for daily ISB-AUH + daily LHE-AUH
1 aircraft for 3 weekly ISB-DMM + 4 weekly ISB-MCT
0.5 aircraft for daily LHE-DOH
1.5 aircraft as SPARE back up in case of AOG/maintenance for A321s and A319s

The 5 A319s would perform:

1 aircraft for daily KHI-MUX-DXB-MUX-KHI + daily KHI-UET
1 aircraft for daily KHI-SKT-DXB-SKT-KHI + 3 weekly KHI-DEL
1 aircraft for 3 weekly KHI-MED + 4 weekly KHI-BOM + 4 weekly KHI-DMM
1 aircraft for daily ISB-UET + double daily ISB-PEW + 5 weekly ISB-BKK (which would connect to BKK-KUL) +
1 aircraft for an additional daily flight each from KHI to LHE and ISB respectively + half an aircraft to act as SPARE back up

The above plan may not bring PIA back into profit mode, but it shall definitely bring a level of commercial efficiency, respectability, lower losses, higher yields and higher revenues versus the current cauldron that it is stuck in !

21AUG edition

Cathay Pacific has officially announced that it shall be launching 2 new routes i.e. one medium haul and one long haul to further expand its global network catering to markets that are in particular seeing ever growing demand from mainland China. The new medium haul route announced is MLE-Male in the Maldives which shall be launched effective 27OCT13 operated 4 times per week nonstop using an A333. MLE over the past year has seen over 200,000 tourists arriving from mainland China alone and the market demand for this destination is also rapidly growing from South Korea, Hong Kong and Japan alike. CX's MLE announcement of MLE comes on the back of its main HKG based competitor i.e. Hong Kong Airlines also announcing that its own MLE services have been reinstated 4 times per week since July.

With regards to the new long haul route, CX announced EWR-Newark in USA which shall be flown on a daily basis nonstop using a 2 class configured Boeing 777-300ER. In turn, this will make CX service the New York area market with 5 daily flights i.e. daily EWR + daily HKG-YVR-JFK + 3 daily HKG-JFK nonstop all operated with B773ERs. CX also revealed some other long haul capacity changes to its network for the upcoming IATA W13 season of which the main highlights are as follows:

CDG - frequencies reduced from double daily to 11 weekly i.e. daily B773ER + 4 weekly A343

FRA - capacity reduced from daily B744 to daily B773ER

JNB - capacity reduced from daily B744 to 3 weekly B773ER + 4 weekly B744s

Air Canada has officially announced that it has adjusted its original order with Boeing for 37 Boeing 787-800s to be divided between both the -800 and the more popular larger -900 models. The new breakdown is 22 B789s + 15 B788s. The B789s provide the airline with the right capacity to perfectly replace its A333s on European services as well as replace the B763ER in the future on certain YVR-Asia flights. The attractive economics of this aircraft type also give the option to AC in allowing it to open new long haul routes from Canada that do not require the additional capacity of the B773ER such as Montreal-Beijing and Montreal-Casablanca in particular.   

Emirates has officially announced many changes to its IATA W13 schedule of which the main highlights are as follows:

AMS - frequencies increased from daily to double daily i.e. daily A380 + daily B772LR effective 02DEC

BKK - frequencies increased from 5 to 6 daily nonstop flights

SKT - new 4 weekly flights to be launched effective 05NOV using an A332

KBP - new daily nonstop flights using an A340-500 to be launched effective 16JAN14

BCN - effective 01FEB, capacity increased from daily B773ER to daily A380

MRU - effective 16DEC, capacity increased from double daily B773s to daily A380 + daily B773

Qatar Airways has officially revealed few capacity changes to its medium haul route network of which the main highlights are as follows:

NBO - frequencies increased from double daily to 18 weekly nonstop flights all operated with an A320 effective 01SEP13

DME - frequencies increased from 10 to 12 weekly nonstop flights using a mixture of A320s and A321s

JKT - frequencies increased from 11 weekly to double daily nonstop flights i.e. daily B773ER + 3 weekly A330s

Malaysia Airlines has officially announced that it will be increasing its presence in Austral-Asia during the upcoming IATA W13 season as the carrier looks to take advantage of the growing O&D + transfer traffic demand from these markets and focus its expansion primarily within a 7-8 hour flying radius of its main KUL hub. The main highlights are as follows:

JED - frequencies increased from 5 weekly to double daily nonstop flights effective 28JAN14 using a B772ER for all flights

MEL - frequencies increased from double daily to triple daily effective 21NOV i.e. double daily A333 + daily B772ER

BLR - frequencies increased from 10 to 11 weekly nonstop flights using a B738

DEL - frequencies increased from 12 weekly to double daily i.e. daily A333 + daily B738

AKL - frequencies increased from 6 weekly to daily nonstop flights using a B772ER

COK - new daily nonstop flights to be launched effective 27OCT13 using a B738

Turkish Airlines has officially announced that it will be launching new nonstop flights to BOS-Boston, USA effective 12MAY14. Flights shall be operated on a daily basis from IST using an A330-200 offering excellent connections in both directions to Middle East, Africa and Indian Subcontinent. TK will henceforth become the first airline from the Middle East region to operate into BOS. In addition to BOS, TK too revealed that it will be launching 2 new African destinations from 12DEC13 onwards i.e. Kano-Nigeria and N'Djamena which will be operated 4 times per week using a B737-800 in a triangular routing manner.

With regards to its fleet, TK confirmed that it has placed an order for 3 additional A333s + 5 additional B773ERs as the carrier is betting heavily for its long haul route network to grow rapidly over the next three years. Some of the A333s by 2015 will be replacing the A321s on selected flights to mainland European airports which have slot restrictions.

United Airlines has revealed that due to lower demand stemming from the U.S. forces pull out from Iraq in particular, it has seen reduced demand for its services to Kuwait and Bahrain in particular and as a result has decided to reduce its presence in these two markets from September onwards. Currently, UAL operates a daily IAD-KWI-BAH service using a B772ER. These shall be reduced to 4 times per week only using the same aircraft type.

Egypt Air has disclosed that it will be launching new services to CGK-Jakarta, Indonesia effective 02DEC13 as the carrier looks to take advantage of its CAI geographical hub location to tap into the growing Indonesia-Saudi Arabia and Europe bound market segments. GA revealed that the new flights shall be operated 4 times per week via Kuala Lumpur using an A330-200 and as a result of which the daily CAI-BKK-KUL service using an A333 shall terminate in BKK itself. Other changes for the W13 season revealed by MS are as follows:

BOM - frequencies increased from 4 to 5 weekly nonstop flights using a B738 (this is one of the world's longest B737 operated flights nonstop)

YYZ - frequencies reduced from 4 to 3 weekly nonstop flights using a B773ER

08JUL edition

Air India has officially announced that it will be launching new daily services to Australia effective 29AUG13 from its Delhi hub. Flights shall be routed as 3 weekly DEL-MEL-SYD-DEL + 4 weekly DEL-SYD-MEL-DEL all operated with a 256 seater Boeing 787-800. The triangular services are operated to ensure a daily presence exists in both key market segments and for each to have a minimum 3 weekly nonstop service to India in either direction. All flights depart DEL at 1300 and arrive back the next day at 1800 local time.


Alitalia officially announced that it will be embarking on a new long term corporate plan designed to help it achieve an "operating profit in 2014" and a "net profit from 2016" onwards as the carrier looks at identifying ways to help it achieve these set goals.

Details of the new plan can be read here:

http://corporate.alitalia.com/en/media/press-releases/03-07-2013.html

Analysis:

With regards to the new long haul markets identified, their demand levels over the past year (stats from MarketIS and Shepherd System) were as follows:

VCE/NRT - 33,000

MXP/AUH - 32,000; this is obviously a partnership arrangement with Etihad similar to their FCO-AUH deal
MXP/PVG - 125,000
MXP/KIX - 24,000

FCO/ICN - 120,000; Sky Team hub to hub service should do well. What will happen here is that KE operates 3 weekly B744s on this route, so one would expect AZ to operate the remaining 4 days a week using a B777 !

FCO/NBO - 15,000
FCO/SFO - 53,000
FCO/JNB - 31,000
FCO/SCL (Santiago) - 21,000

Now as one can see from the above market size levels, there are 2 routes that are no brainers i.e. PVG-MXP + ICN-FCO and one which is good to provide feeder traffic at low cost beyond another airline's hub i.e. MXP-AUH which EY/9W will code share on and then they will feed it with GCC, ISC and SE Asia pax.

However, the choices which are not commercially justifiable include JNB, SCL and NBO for the following reasons:

1. JNB is not a Sky Team hub and low yielding for VFR traffic as the premium market demand between South Africa and Italy is marginal. The market size demand level is not high enough to even warrant a 3 weekly A332 nonstop service. It is best code sharing via CDG/AMS on AF/KL to South Africa. In addition, FCO-JNB is a long haul flight averaging 10 hours in flying time + in order to ensure good connections via FCO in both directions to Europe, the aircraft would also have a long ground time at JNB airport thus the aircraft utilization mixed with the low yield market characteristics of this route does not make it viable.

2. NBO maybe a Sky Team focus airport which can in turn result in KQ feeding it with pax bound to Central/East/South Africa via its hub but if an airline such as KQ could not itself make FCO work on its own over the past few years coupled with the fact that the O&D demand between Italy and Kenya is very low + what is even lower yielding would be the 6th freedom transfer traffic between EU/UK/USA and NBO. Another issue with FCO-NBO is that since its a 7 hour flight, it cannot be operated with AZ's A320/A321 fleet in order to reduce costs hence only an A332 needs to be utilized and unfortunately both these aircraft are too big to service this route and too expensive to justify a daily or even 4 weekly service !

3. SCL is a One World hub airport and not Sky Team. The flying time from FCO would be approximately 11:45 hours to service a market segment of 21,000 pax? In addition, transfer traffic volume potential via FCO to Eastern/Central Europe is also not that high. Once again, the return on investment on utilizing an expensive B777 on this sector is not commercially justifiable.

Instead, to replace these 3 above mentioned routes, AZ should seriously think about the following:

a) FCO/PEK - market size 101,000 + another 80,000 bound to other parts of Italy + huge feeder traffic potential available via FCO to Europe and North Africa. Good mix of high yielding business class and leisure/VFR traffic to be obtained here. Currently, only Air China operates this route nonstop on a daily basis using an A332 with a flying time of 10 hours 15 minutes which means for AZ a daily A 332 is perfectly well suited too. In case anyone is wondering why CAN-FCO is not being advocated in spite of it being a Sky Team hub of CZ, its due to the O&D market size between FCO and CAN being only 9,000 pax over the past year !

b) MXP/HKG - this market segment is very high yielding and has exploded in terms of demand levels since Cathay Pacific launched its services here 2 years ago. Market size is 102,000 and the O&D yield here is 35% higher than FCO/HKG ! Kindly note that before CX launched daily MXP-HKG services using a B77W, the annual market size demand on this route was only 36,000 pax which means over the past 2 years, it has grown by over 200% primarily due to CX creating this market stimulation ! For MXP-HKG, I would propose a daily B777-200ER operated service as it has a larger J class cabin (30 vs 20 on A332) and can carry more cargo in the belly. In addition to the O&D demand, it can carry transfer traffic via code share or on its own operated service to Europe out of MXP.

c) FCO/HND - the current demand between Tokyo and Rome alone is 190,000 passengers with only AZ operating a daily nonstop service using a B772ER. Along with this they also operate a daily MXP-NRT service using the same aircraft type and the annual demand for this route is 108,000 passengers. One option that should be considered by AZ here to increase their dominant monopolistic position is to launch a new daily service to HND with the B777. Currently, AZ's flights from Japan arrive into both MXP and FCO at 1800-1900 which limits the number of onward connections via their hubs to Europe + for some the arrival time early evening might be un-attractive. The yields of both FCO-NRT and MXP-NRT are identical and in order to offer another flexible schedule option + provide feed from Japan for its EU bound flights, AZ needs to consider the below mentioned schedule:

AZ XXX Dep FCO 2300 Arr HND 1810
AZ XXX Dep HND 0030 Arr FCO 0615


Emirates has officially announced that it shall be launching a new long haul route to West Africa namely to the city of Conakry (CKY) in Guinea effective 28OCT13. Flights shall be operated 4 times per week with a tag on to DKR-Dakar, Senegal using an A340-300. The routing will be triangular service i.e. DXB-CKY-DKR-DXB as EK looks at ways to help boost its current DKR operations. In other news, EK too revealed some further capacity changes to its long haul network for the upcoming IATA W13 season of which the main highlights are as follows:

WAW - capacity increased from daily A332 to daily B773

VIE - capacity increased to 13 weekly B773s from daily A345 + daily B773

KUL - capacity increased to triple daily B773s + daily A380


United Airlines has officially announced that it has placed a further order with Boeing for 5 additional B787 models as the carrier looks to rapidly accelerate getting these aircraft into its fleet to replace its aging B767s and early bird B772As to realize the mega operational cost saving benefits that the B787 brings to the table. In total, UA's 65 B787 order is henceforth split as being 21 B787-800s + 24 B787-900s and 20 B787-100Xs.


Air China has announced capacity reduction changes for its Germany bound flights for the upcoming IATA W13 season where demand levels tend to be light. On its core PEK-FRA route, frequencies reduced from double daily to 11 weekly flights all operated with B773s where as PVG-FRA gets reduced from daily to 6 weekly nonstop using an A332.  


Malaysia Airlines has revealed that it will be launching 2 new medium haul routes to expand its regional network offering less risk and higher yields versus experimenting with new routes to Europe or Africa. MH confirmed that the cities of Kochi in India + Darwin in Australia will be inaugurated effective 27OCT13 flown nonstop from its KUL hub along with frequencies to AKL (Auckland) being increased in the following manner:

COK - new daily nonstop flights using a B738

DRW - new 5 weekly nonstop flights using a B738

AKL - frequencies increased from 6 weekly to daily nonstop using a B772ER


Eva Air of Taiwan has officially announced its long term fleet plan that will see the carrier through to 2025 across its regional and long haul route network. The main highlights are as follows:

i. Regional narrow body network will be exclusively operated by Airbus A321-200s of which an additional 10 shall be ordered bringing the total expected A321 fleet size to 14 aircraft

ii. Eleven A332s + three A333s to be replaced exclusively by the Boeing 787-100X of which an order shall be placed in due course. The B787-100X will also be used on long haul flights to Europe, Australia and North America along side high density regional services to the ASEAN region.

iii. Size of freighter fleet to be reduced i.e. 9 B744Fs + 6 MD11Fs to be all replaced eventually by only 11 B777-200LR freighters!

iv. Long haul and high demand regional routes to be exclusively operated by the Boeing 777-300ER of which an additional 9 units shall be ordered to the 15 already in service. Airline is showing keen interest in Boeing's 777-900X program for growth in the next decade.

Source: http://www.taipeitimes.com/News/biz/archives/2013/06/19/2003565118


Korean Air has officially revealed few changes to its long haul route network for the IATA W13 season of which the main highlights are as follows:

CDG - capacity reduced from daily B744 to daily B773ER

SVO - frequencies increased from 4 to 5 weekly nonstop using a B772ER

MXP/FCO - capacity reduced from 3 weekly B744s to 3 weekly B772ERs
HKT - capacity increased to daily B744 nonstop service


Philippine Airlines has finally officially released information regarding its highly anticipated launch of new nonstop flights to DXB-Dubai, UAE from its Manila hub. Services will be launched effective 01OCT13 using an all economy class configured A333 operated daily with a 1815 arrival time into DXB and a departure at 1945. As a result of this, planned services to Doha are for the time being pushed back to be launched in IATA Summer 2014 season.


British Airways has revealed few capacity changes to its long haul route network for the upcoming IATA W13 season of which the main highlights are as follows:

BOM - capacity increased to double daily B744s
PEK - frequencies increased from 6 weekly B744s to daily nonstop using a B772ER
ORD - capacity increased from double daily B772ERs to daily B744 + daily B772ER

FNA/ROB - frequencies increased from 3 to 4 weekly flights using a B763ER

PVG - frequencies increased from 6 weekly B772ERs to daily nonstop i.e. 2 weekly B773ERs + 5 weekly B772ERs

new Alitalia corporate strategy review

Alitalia today officially announced that it will be embarking on a new long term corporate plan designed to help it achieve an "operating profit in 2014" and a "net profit from 2016" onwards as the carrier looks at identifying ways to help it achieve these set goals. 

Details of the new plan can be read here:

http://corporate.alitalia.com/en/media/press-releases/03-07-2013.html

Analysis:

With regards to the new long haul markets identified, their demand levels over the past year were as follows:

VCE/NRT - 33,000

MXP/AUH - 32,000...this is obviously a partnership arrangement with Etihad similar to their FCO-AUH deal
MXP/PVG - 125,000
MXP/KIX - 24,000

FCO/ICN - 120,000...Sky Team hub to hub service should do well. What will happen here is that KE operates 3 weekly B744s on this route, so I expect AZ to operate the remaining 4 days a week using a B777 !


FCO/NBO - 15,000
FCO/SFO - 53,000
FCO/JNB - 31,000
FCO/SCL - 21,000


Now as one can see from the above market size levels, there are 2 routes that are no brainers i.e. PVG-MXP + ICN-FCO and one which is good to provide feeder traffic at low cost beyond another airline's hub i.e. MXP-AUH which EY/9W will code share on and then they will feed it with GCC, ISC and SE Asia pax.

However the choices which I dont agree with at all are JNB, SCL and NBO for the following reasons:

1. JNB is not a Sky Team hub and exceptionally low yielding. The market size demand level is not high enough to even warrant a 3 weekly A332 nonstop service. It is best code sharing via CDG on AF to South Africa. Plus FCO-JNB is a long haul flight averaging 10 hours in flying time + in order to ensure good connections via FCO in both directions to Europe, the aircraft would also have a long ground time at JNB airport thus the aircraft utilization mixed with the low yield market characteristics of this route does not make it viable.

2. NBO maybe a Sky Team hub which can in turn result in KQ feeding it with pax bound to Central/East/South Africa via its hub but if an airline such as KQ could not itself make FCO work on its own over the past few years coupled with the fact that the O&D demand between Italy and Kenya is very low + what is even lower would be the 6th freedom transfer traffic between EU/UK/USA and NBO. Another issue with FCO-NBO is that since its a 7 hour flight, it cannot be operated with AZ's A320/A321 fleet in order to reduce costs hence only a B767 or an A332 needs to be utilized and unfortunately both these aircraft are too big to service this route and too expensive to justify a daily or even 4 weekly service !

3. SCL is a One World hub and not Sky Team. The flying time from FCO would be approximately 11:45 hours to service a market segment of 21,000 pax? In addition, transfer traffic volume potential via FCO to Eastern/Central Europe is also not that high. Once again, the return on investment on utilizing an expensive B777 on this sector is unjustified.

Instead, if I was in charge here, to replace these 3 above mentioned routes, I would launch the following for AZ:

a) FCO/PEK - market size 101,000 + another 80,000 bound to other parts of Italy + huge feeder traffic potential available via FCO to Europe and North Africa. Good mix of high yielding business class and leisure/VFR traffic to be obtained here. Currently, only Air China operates this route nonstop on a daily basis using an A332 with a flying time of 10 hours 15 minutes which means for AZ a daily A 332 is perfectly well suited too. In case anyone is wondering why I'm not advocating CAN-FCO as its a Sky Team hub of CZ, its due to the O&D market size between FCO and CAN being only 9,000 pax over the past year !

b) MXP/HKG - this market segment is very high yielding and has exploded in terms of demand levels since Cathay Pacific launched its services here 2 years ago. Market size is 102,000 and the O&D yield here is 35% higher than FCO/HKG ! Kindly note that before CX launched daily MXP-HKG services using a B77W, the annual market size demand on this route was only 38,000 pax which means over the past 2 years, it has grown by over 200% primarily due to CX creating this market stimulation ! For MXP-HKG, I would propose a daily B777-200ER operated service as it has a larger J class cabin (30 vs 20 on A332) and can carry more cargo in the belly. In addition to the O&D demand, it can carry transfer traffic via code share or on its own operated service to Europe out of MXP.

c) FCO/HND - the current demand between Tokyo and Rome alone is 190,000 passengers with only AZ operating a daily nonstop service using a B772ER. Along with this they also operate a daily MXP-NRT service using the same aircraft type and the annual demand for this route is 108,000 passengers. One option that should be considered by AZ here to increase their dominant monopolistic position is to launch a new daily service to HND with the B777. Currently, AZ's flights from Japan arrive into both MXP and FCO at 1800-1900 which limits the number of onward connections via their hubs to Europe + for some the arrival time early evening might be un-attractive. The yields of both FCO-NRT and MXP-NRT are identical and in order to offer another flexible schedule option + provide feed from Japan for its EU bound flights, AZ needs to consider the below mentioned schedule:

AZ XXX Dep FCO 2300 Arr HND 1810
AZ XXX Dep HND 0030 Arr FCO 0615

Now with regards to the 6 additional aircraft, if my 3 route recommendations were taken into account, it would have to be B772ERs only but from the original AZ plan it looks like it would be possibly an equal split of 3 A332s + 3 B777s !