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.

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.

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.

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.

United Airlines Airbus A350-1000 configuration released

In a recent twitter post, airplane seat manufacturer i.e. Zodiac BE Aerospace officially revealed the configuration of United Airlines Airbus A350-1000 configuration which is as follows:

Total - 337 seats split across 3 cabin classes i.e. 60 business class + 91 Premium Economy + 186 economy class

These planes are expected to initially replace UA's aging B744s which accommodate 374 passengers in a 4 class layout. It is not known as yet which routes will be operated by this aircraft initially but to the naked eye, it is best to be used on the long haul trans-pacific flights as the cost savings versus a B744 are significant.

Qantas suspends Melbourne-Dubai flights

Australia's Qantas Airlines has officially confirmed that it will be adjusting its long haul network to Europe and Southeast Asia from the start of the IATA Summer 2018 season in the below mentioned manner:

1. Daily MEL-DXB-LHR A380 flights will be suspended and replaced with daily B789 operated MEL-PER-LHR services

2. The A380 used for MEL-DXB-LHR will instead be used to upgrade MEL-HKG to a daily A380 operation which is currently being operated by a daily B744

In turn this results in a massive capacity drop at London for QF who go from double daily A380 to daily A380 + daily B789 which carriers such as QR/EY will appreciate it means less competition on DXB-MEL + LHR-DXB + LHR-SYD/MEL

Source:

https://www.flightglobal.com/news/articles/qantas-to-adjust-long-haul-network-with-advent-of-p-436631/

Dhaka increased by Qatar Airways

Qatar Airways has officially announced that it has increased its presence in the Dhaka marketplace as a result of an expanded bilateral accord that Qatar has signed with Bangladesh.

The new accord would allow QR to operate 28 flights per week as a result of which Doha-Chittagong was announced on 24APR as a new route to be launched in 2018.

As far as DOH-DAC is concerned, frequencies are increased from double to triple daily nonstop using an A330 exclusively (mix of A332s and A333s).

The new daily flight is a morning departure from DOH designed to connect with its second daily JFK-DOH + daily PHL-DOH service conveniently. The schedule of the triple daily operation is as follows:

Dep DOH 0900/1700/2145 Arr DAC 1650/0050/0535

Dep DAC 0210/0755/1955 Arr DOH 0515/1100/2300

Demand from DAC to the Middle East in 2016 was as follows:

JED 440,000

RUH 390,000
DOH 265,000
DXB 220,000
MCT 215,000
DMM 200,000
KWI 200,000
AUH 140,000
BAH 125,000
AMM 70,000
BEY 65,000
MED 65,000

Etihad reduces Melbourne and suspends Venice

Etihad Airways has officially announced that as part of its Right Size Right Shape strategy, it shall be reducing capacity to Melbourne from the on set of the IATA Winter 2017 season.

Currently, EY operates a double daily nonstop AUH-MEL service using an A380 + B77W each respectively. However effective 30OCT, capacity is reduced by -24% as it will be utilizing a daily B789 + daily B77W each respectively on this route.

In addition to the above, it has confirmed the suspension of its AUH-VCE (Venice) from 29OCT17 onwards as it is likely to be converted into a summer seasonal service or suspended outright (which is better as there is no real need to fly there for EY)

Qatar Airways announces San Francisco + more new routes

At the on-going Arabian Travel Mart today, Qatar Airways has officially announced a new round of 12 destinations that will be added to its route network in 2018.

They are as follows:

• San Francisco
• Chittagong
• Lisbon
• Accra
• Cardiff
• Abidjan
• Malaga
• Kiev
• Prague
• Mombasa
• Pattaya
• Mykonos (Greece)

Alitalia announces Rome-Maldives nonstop

Alitalia has officially announced that it shall be launching new nonstop flights to MLE-Male, Maldives effective 31OCT17 as the carrier looks to take advantage of the rising demand from Europe to the Indian Ocean island.

AZ has scheduled 3 weekly nonstop flights to be operated using an A332 using the below mentioned schedule:

Days - TUE/FRI/SAT

AZ 776 Dep FCO 2145 Arr MLE 1105+1
AZ 777 Dep MLE 1310 Arr FCO 1930

Demand from EU to MLE in 2016 was as follows:

LON - 165,000

FRA - 101,000

MUC - 68,000

CDG - 61,000

DME - 59,000

MXP - 46,000

ZRH - 40,000

FCO - 37,000

VIE - 25,000

MAD - 18,000

CPH - 14,000

DUS - 14,000

ARN - 13,000

GVA - 12,000

Jet Airways announces Europe expansion plan

India's Jet Airways has officially disclosed plans to expand its European footprint with its 2 major partners i.e. KLM and Air France who will provide value able feed for these new services.

9W revealed that from the on set of the IATA W17 season, it shall be launching new daily nonstop flights to Amsterdam from Bangalore using an A333 which will conveniently connect to its Amsterdam-Toronto service in both directions. This new route will be code shared with KLM and BLR pax will easily be able to connect to a multiple of EU/UK + North American destinations using the Dutch carrier for the onward segment. In 2016, the total P2P market demand between BLR and AMS was 34,000 passengers and this route is expected to be favored by high yielding business class passengers going to Europe and North America in particular.

In addition to the above, 9W too announced plans to launch new 5 weekly nonstop flights from Chennai (MAA) to Paris using an A333 effective 30OCT. This new service will be code shared with Air France who will provide onward support to North America and Europe/UK. In 2016, the P2P market demand between MAA and CDG was 105,000 passengers which is quite impressive but low yielding as its mainly VFR and French tourists visiting the city of Pondicherry.   

The flight schedule of these new services are as follows:

Days - Daily
Aircraft - A333 (293 seats - 34J flat beds + 259Y)

9W 236 Dep BLR 0225 Arr AMS 0835
9W 235 Dep AMS 1050 Arr BLR 0040+1

Days - 1/4/5/6/7
Aircraft - A333 (293 seats - 34J flat beds + 259Y)

9W 128 Dep MAA 0145 Arr CDG 0810
9W 127 Dep CDG 1010 Arr MAA 0015+1

Norwegian announces London-Singapore nonstop

Norwegian Airlines has officially announced that it will be increasing its presence out of London Gatwick with a new long haul nonstop service to Singapore.

DY will launch the new route effective 28SEP operated 4 times per week using a 344 seater B789 which shall be further increased to 5 weekly from the on set of the IATA W17 season. 

Source: http://www.channelnewsasia.com/news/business/budget-airline-norwegian-announces-plans-for-singapore-london/3691986.html

London-Singapore is a huge P2P market segment with 570,000 pax flying in 2016.

Qatar Airways increases Bali frequencies

Qatar Airways has officially announced that it shall be increasing its presence in the popular Bali-DPS market segment effective 07MAY17.

Currently, QR operates double daily nonstop flights on the DOH-DPS route catering largely to EU/UK passengers. However from 1st May onwards, frequencies shall be raised to triple daily nonstop using an A333 + B77W + B788 each respectively.

The new daily service is scheduled as follows:

QR 964 Dep DOH 1745 Arr DPS 0810+1 788

QR 965 Dep DPS 0930 Arr DOH 1405 788

Dhaka flights suspended by Oman Air

Oman Air has officially announced another round of major capacity reductions as it looks to reduce its losses and redeploy its aircraft on more popular routes. The carrier revealed the following:

DAC - all daily flights suspended effective 01JUN. 

This has come as a big surprise considering the large P2P traffic that already exists between MCT and DAC which numbered over 200,000 pax in 2016. WY currently operates a daily B738 between MCT and DAC as well as a daily B738 to CGP (Chittagong). Flights to CGP remain un-touched as its another huge P2P market out of MCT with over 150,000 passengers flying last year. 

In addition to suspending DAC, WY also revealed the following effective 01MAY:

DOH - frequencies reduced from 4 to 3 daily flights 

AUH - frequencies reduced from 4 to 2 daily flights only

All of the above changes are now published and visible on Sabre GDS system.

Emirates reduces USA flights

As a result of a big drop in bookings to USA on its flights, Emirates has officially announced a huge cut back in frequencies to 5 of its online destinations which are effective from May 2017:

BOS - frequencies reduced from double daily to single daily B77W

SEA - frequencies reduced from double daily to single daily B77W

LAX - frequencies reduced from double daily A380 + B77W combo to daily A380 only

FLL - frequencies reduced from daily to 5 weekly B77Ls

MCO - frequencies reduced from daily to 5 weekly B77Ws

Sri Lankan Airlines reveals A321NEO configuration

Sri Lankan Airlines has officially released information about its soon to be delivered Airbus A321NEOs with regards to its cabin layout and initial routes that it intends to operate. In total, UL ordered 6 A321NEOs a couple of years ago.  

To begin with, the configuration will be for 188 seats in a 2 class layout seating 12 business + 176 economy class passengers each respectively. As far as which routes it intends to operate the aircraft with initially, those are Abu Dhabi, Delhi, Hyderabad, Kochi and Singapore.

Qatar Airways increases Larnaca services

Qatar Airways has officially announced that it shall be boosting its presence in Cyprus by increasing frequencies to LCA-Larnaca effective 04MAY17.

QR has been gradually increasing its services on this route ever since Etihad suspended its own AUH-LCA 3 weekly flights on 31OCT16. Initially in W16, QR boosted LCA from daily to 10 weekly using an A320 and this shall be further increased to 12 weekly nonstop flights using the same aircraft type from 04MAY.  

Brussels-Bangkok increased by Thai Airways

Thai Airways has officially announced that it shall be increasing its services on the Brussels-Bangkok sector effective 25MAR18 (on set of IATA S18 season) as the carrier looks to increase its presence in this high yielding EU market segment.

Frequencies will be raised from 4 to 5 weekly nonstop using their new A350-900 exclusively offering 321 seats in total i.e. 32J + 289Y.

The top SE-Asian markets in 2016 to/from BRU were as follows:

BKK - 115,000

PEK - 68,000

NRT - 62,000

HKG - 30,000

MNL - 29,000

HKT - 28,000

PVG - 27,000

DPS - 26,000

SIN - 24,000

CGK - 16,000

KUL - 15,000

ICN - 15,000

SGN - 13,000

HAN - 10,000