Kuwait Airways expansion outlined

Kuwait Airways has officially revealed a major expansion plan of its medium haul route network from June 2015 onwards as the carrier looks to increase aircraft utilization as well as expand with additional deliveries of new A320s in particular. The main highlights are as follows:

MUC - new 3 weekly nonstop flights effective 16JUL using an A343 with below schedule

Days 2/4/6

KU 173 Dep KWI 0745 Arr MUC 1255
KU 174 Dep MUC 1425 Arr KWI 2100

COK – frequencies increased from daily to double daily using an A320 for both flights with below schedule

KU 351 Dep KWI 2045 Arr COK 0430+1

KU 352 Dep COK 0550 Arr KWI 0815

KU 349 Dep KWI 2230 Arr COK 0615+1

KU 350 Dep COK 0715 Arr KWI 0940

IST - new daily nonstop flights effective 13JUL using an A320 with below schedule

KU 153 Dep KWI 2250 Arr IST 0310+1
KU 154 Dep IST 0415 Arr KWI 0800

BLR - new 3 weekly nonstop flights effective 01SEP using an A320

Days 2/4/7

KU 353 Dep KWI 2100 Arr BLR 0430+1
KU 354 Dep BLR 0530 Arr KWI 0755

AMD -  new 3 weekly nonstop flights effective 01SEP using an A320

Days 2/3/6

KU 345 Dep KWI 2245 Arr AMD 0505+1
KU 346 Dep AMD 0605 Arr KWI 0730

VIE - new 3 weekly nonstop flights effective 21JUL using an A320

Days 2/4/7

KU 177 Dep KWI 0120 Arr VIE 0605
KU 178 Dep VIE 1040 Arr KWI 1700

Analysis:

It is very pleasing to see KU once again growing its medium haul route network which has remained stagnant in terms of growth for over a decade now. However there are many concerns regarding the above expansion plan:

1. Munich has an O&D of 34,000 pax per annum with a majority flying in the summer. However like its competitors i.e. QR/EY/EK, KU too is a network carrier relying on more transit traffic out of Europe rather than O&D. Taking this into account, the schedule of KU 173/174 is guaranteed to fail because it only connects BKK + MNL in both directions via KWI and those flights are already full year round hence getting access to seats on BKK-MNL will be very tough. Operating a gas guzzling A343 too on a new route with such a schedule is also an extremely risky proposition due to the high operational costs involved.

2. The same applies to VIE which has an O&D demand of 16,000 pax per annum to/from KWI + sees summer seasonal demand primarily. The schedule for VIE too does not offer convenient connections via KWI in both directions to ANY destination on KU's network. Instead, KWI-VIE-KWI should be re-timed to be as below

KU 177 Dep KWI 0900 Arr VIE 1345
KU 178 Dep VIE 1440 Arr KWI 2100 

The above proposed schedule at least allows in both directions India, Pakistan and BKK/MNL/KUL/CGK to be connected in both directions via KWI thus capable of supplying additional feeder traffic.

3. KWI-IST though has a large O&D traffic demand year round i.e. 130,000 pax in 2014 but so does DXB/DOH/AUH/BAH in greater or equal numbers. None of these carriers including TK are dependent on O&D traffic mainly on this route and rely a lot on connecting traffic bound to Asia. KU's schedule for IST only connects DXB, BAH and JED in both directions via KWI in addition the timings proposed are very un-attractive for O&D traffic as with a 0300am arrival into IST it means an extra night's hotel needs to be paid for ! The main direct competition is TK four daily + daily Jazeera (SAW). Once again to ensure good year round S/F, the best schedule for KU at IST would have been below

KU 153 Dep KWI 0950 Arr IST 1410

KU 154 Dep IST 1510 Arr KWI 1855

If slots at IST for these timings cannot be secured then slots at SAW should be obtained. The above proposed schedule allows all of KU's Asia routes to be connected in both directions via KWI to Istanbul !

4. With regards to its India bound expansion to AMD and BLR, it has and does not have merit. To begin with, KU needs to first consolidate its India bound services especially on routes that it does not fly daily i.e. MAA + COK + TRV as these three routes see massive year round O&D demand to KWI + GCC

KWI-MAA - 240,000 pax

KWI-COK - 185,000 pax

KWI-TRV - 80,000 pax

KWI-MAA is flown by KU only four times per week nonstop using an A300-600R (AB6) which is a shock because it has higher O&D demand to KWI versus BOM + DEL ! The first thing that needs to be done is make MAA-KWI daily nonstop followed by COK and then consider expanding other services. BLR is a poor choice of a new Indian route as demand to GCC is not as high as CCJ nor HYD which should have been given higher preference! 

5. Frequency increase of KWI-COK flights from daily to double daily from April 2015 using an A320 though a good move, from a scheduling, sales and aircraft utilization perspective, it looks very weird as explained below:

KU 351 Dep KWI 2045 Arr COK 0430+1

KU 352 Dep COK 0550 Arr KWI 0815

KU 349 Dep KWI 2230 Arr COK 0615+1

KU 350 Dep COK 0715 Arr KWI 0940

You cannot have two KWI-COK-COK flights departing within 1:45 hours of each other as it is not a business route unlike KWI-DXB for example. This is purely a VFR/labor market segment route and in order to better utilize the A320, the schedule I would suggest is nicely spread out and more convenient for both O&D + transit traffic:

KU 351 Dep KWI 2045 Arr COK 0430+1
KU 352 Dep COK 0515 Arr KWI 0750
KU 349 Dep KWI 0845 Arr COK 1630
KU 350 Dep COK 1715 Arr KWI 1940

With my above proposed schedule, you can use one dedicated A320 to operate both KWI-COK-KWI on a daily basis each respectively. You have a nice spread of morning + evening departure timings as with the 0845 KWI departure it will allow KU in the future to create a new Indian subcontinent departure hub wave bank between 0830-1000. In addition, if KU has a spare A320 at night, it should instead look at either increasing KWI-MAA from 4 weekly to daily or launching new 4 weekly KWI-HYD nonstop flights as last year 60,000 passengers alone flew KWI-HYD-KWI + increase KWI-LHE-KWI from 3 to 5 weekly A320s.

14JAN edition

A321NEO LR Range Map

Airbus has today officially announced the launch of its latest aircraft model i.e. the A321NEO LR (Long Range) which it says will be the only true replacement of the Boeing 757-200. The A321LR is certified to fly 4,000NM nonstop with 206 passengers in a two class configuration thus enabling trans-atlantic flights as far as Chicago-Germany to be operated direct. The delivery year has been stated as 2019 along with the launch customer being the leasing company ALC (based out of LAX) who signed a MOU for 30 units. The manufacturer will be aggressively marketing this aircraft to airlines such as AA, UA, EI (Aer Lingus), DL and BA who have B757s along side A321s for medium haul services of which the former (B757) require replacing by 2020 due to aging issues.

I have created a map above showcasing what routes can be flown nonstop with a -10% penalty range i.e. 3,600NM versus the stated 4,000NM by Airbus as its always best to plan safe with a bit of buffer in hand.  

Analysis:

This aircraft has the potential to be a real game changer especially if Boeing acts stubborn and does not push through its intended plan of producing a comprehensive B757 replacement aircraft to be delivered from 2022 latest.

From the above diagram, one can clearly see the aircraft flying range potential the A321NEO LR provides to airlines. Companies such as B6-Jetblue can now seriously plan on developing FLL-Fort Lauderdale as an effective LATAM hub (like how AA has done with MIA) and fly nonstop to anywhere in Brazil, Peru and even up to Chile with this aircraft type. From its primary JFK hub, it can easily use this aircraft to operate nonstop to as far as Lima, Bogota and anywhere in Central America.

Qatar Airways can take advantage of the A321LR’s range by configuring it in a premium dual class layout with 12J (flat bed seats) + 162Y and operate it with no issues to secondary markets in Europe that do not require a daily wide body service in the next decade + to those markets that would be double/triple daily in due course. The Eastern European cities + Switzerland, Ireland and many African cities fit into this category nicely along with secondary cities in China.

For AA/UA, it can easily operate nonstop from EW/JFK to any Western Europe airport nonstop where as from their ORD hub it can fly up to Southern Spain and Western Germany. Where UA needs to expand aggressively is in the LATAM market segment where it is considerably weak especially out of the Eastern U.S. versus AA/DL. It has the perfect O&D hub for this i.e. EWR to where there is massive demand to Colombia, Peru, Venezuela and Central America. Amongst, the U.S. carriers, the number of B757-200s currently in service are AA (75), UA (77), DL (124) !

For Turkish Airlines this aircraft type is a no brainer to replace its ten B739ERs being currently used on its medium haul flights to Central/West/East Africa + Karachi. TK last week converted 12 A320NEO options to the larger A321NEO and would be wise to request it to be for the NEO LR version. In total TK has 72 A321NEOs on order with Airbus going into the next decade. For TK the A321NEO LR can easily fly nonstop to Ahmedabad, Amritsar, Accra and Kinshasa from its IST mega hub.

For LCCs based in Asia such as the Air Asia franchises in KUL, India, CGK and BKK, this aircraft is ideal from a low capital risk perspective in operating 6 hour nonstop flights versus the costlier A333s which would be much harder to fill year round consistently. Indigo of India can easily use the A321LR to open new medium haul markets from its Delhi hub to places as far as away as Seoul, Beijing, Guangzhou to the East and Jeddah to the West where high demand exists.    

Looking at the above opportunities that exist in the marketplace (along with many other un-named ones), it is imperative for Boeing to seriously consider launching the planned Boeing 797 program which would be of two variants i.e. -200 (220 seater) and a -300 (270 seater) variant for the replacements of the B752/B753s worldwide. The flying range should be 8 hours maximum with the seating capacity mentioned in order for it to be an attractive proposition for airline customers. 

South African Airways has officially announced that it will be launching new daily nonstop services to AUH-Abu Dhabi, UAE effective 29MAR as the carrier will be entering into a broad based code share partnership beyond AUH with Etihad to Asia and GCC. The schedule of the new flight allows good connections via AUH in both directions to India, PAK, SE Asia and GCC.

Frequency - daily
Aircraft - A332

SA 278 Dep JNB 1015 Arr AUH 2025
SA 279 Dep AUH 0205 Arr JNB 0815

In addition, due to weakening performance, SAA too confirmed that it will be reducing its services to BOM-Mumbai effective 01FEB15 from the current 6 weekly nonstop to 3 only using an A332. The airline has been hurt badly (yields wise) on this route by one stop competition hailing from EK, EY, ET and KQ primarily.

Media reports emanating out of Hong Kong have suggested that Cathay Pacific is looking to add two additional long haul destinations in 2015 as it looks to take advantage of niche markets that provide good O&D + onward feed potential. The two routes identified are Barcelona and Mexico City effective November 2015. No indication has been provided regarding frequencies per week nor which aircraft type would be used to operate.

Source: http://www.businesstraveller.asia/asia-pacific/news/cathay-adds-barcelona,-mexico-city,-reduces-chi

CX also officially disclosed that it will be reducing its services to ORD-Chicago from the on set of the IATA S15 season from the current 10 weekly to daily nonstop using a B77W.

Comments:

Launching BCN is a well thought out move, as demand to Asia from this city over the past three years has rapidly grown in particular to China, Seoul and Japan so CX is well positioned to take advantage of that + there is good amount of O&D traffic to the HKG hub. In addition, BCN is a mini hub for its fellow One World partner i.e. Iberia so CX can code share via BCN to Latin America + Europe to gain additional feeder traffic. Comparing demand between BCN and MAD to SE Asia in 2014 is as follows:

HKG - 59K vs 35K
NRT - 130K vs 90K
HND - 26K vs 16K
PVG - 79K vs 85K
PEK - 51K vs 55K
ICN - 90K vs 101K
MNL - 23K vs 29K
SYD - 22K vs 16K
MEL - 19K vs 17K
BKK - 40K vs 70K
SIN - 45K vs 12K
KUL - 10K vs 11K
SGN - 4K vs 5K
CAN - 11K vs 14K
HAN - 3K vs 5K

Total is 612,000 versus 561,000 in favor of BCN + more importantly HKG O&D traffic (the highest form of yield) is far greater for BCN along with the fact that cargo demand to/from BCN is higher than MAD to/from Asia. Therefore seeing how they launched MAN-HKG with 4 weekly flights initially, one can for see the same being adopted for HKG-BCN initially. But in all fairness, both BCN and MAD can easily be sustained by CX four to five times per week using a B77W or A359 in the future.

Lufthansa has officially confirmed that it will be launching a new long haul budget airline geared specifically towards leisure and low yielding VFR markets where demand for premium travel is minimal and yields marginal when operating with legacy carrier associated costs. The new carrier will be named "Jump" and shall have a fleet consisting of 14 A343s sourced from within the airline itself. These A343s will seat 298 pax in a three class layout i.e. 18J + 19W + 261Y. The initial destinations for this new venture are Tampa (5 weekly), Cancun (2 weekly), Male (2 weekly) and Mauritius (2 weekly). Others mentioned but not yet released for sale are Chennai and Bangkok.


Delta Airlines has unveiled many changes for its long haul route network for the upcoming IATA S15 season which sees major increases in CDG-Paris capacity in particular. The highlights are as follows:

DTW/CDG - capacity increased from daily A333 to daily B744

SEA/CDG - capacity increased from daily A332 to daily A333

JFK/IST - capacity increased from daily B763ER to daily A333

JFK/ATH - frequencies increased from daily to 11 weekly nonstop

ATL/DUB - capacity increased from B763ER to daily A332

ATL/DUS - capacity increased from daily B763ER to daily B764ER

JFK/AMS - frequencies increased to double daily nonstop using a B763ER

SLC/AMS - new daily nonstop service using a B763ER

China Eastern based out of PVG-Shanghai airport has announced that it will be significantly expanding its North American operations during the IATA S15 season of which the main highlights are as follows:

YYZ - frequencies increased from 3 weekly to daily nonstop using a B77W

LAX - frequencies increased from daily to double daily nonstop i.e. daily B77W + daily A332

YVR - frequencies increased from daily to double daily nonstop using an A332 only

Comments:

MU need to seriously consider flying a daily PVG-DXB service using an A332 keeping in lieu that O&D traffic on this route had 165,000 O&D pax fly it in 2014 with only EK offering double daily nonstop service. Via PVG, they can attract a lot of transfer traffic to mainland China along with international 6th freedom bound to North Asian cities.

British Airways has disclosed many capacity changes to its long haul network for the IATA S15 season of which the main highlights are as follows:

MEX - frequencies increased to daily nonstop flights using a B744

DFW - capacity reduced from daily B744 to daily B77W

TLV - frequencies increased from 17 weekly to triple daily i.e. daily B772ER + double daily A321

MIA - frequencies reduced from 17 weekly to double daily nonstop using an A380 exclusively effective 25OCT

DEN - capacity increased from daily B772ER to daily B744

United Airlines has revealed many capacity changes to its long haul route network for the IATA S15 season of which the main highlights are as follows:

SFO/CTU - frequencies increased from 3 weekly to daily nonstop using a B788

SFO/PVG - frequencies increased from daily to double daily nonstop i.e. daily B772ER + daily B744

LAX/PVG - capacity increased from daily B788 to daily B789

IAD/CDG - frequencies increased from daily to double daily

EWR/VCE - new daily nonstop flights to be launched using a B764ER

ORD/PEK - capacity reduced from daily B744 to daily B772ER

IAH/FRA - capacity increased from daily B788 to daily B772ER

IAH/GRU - capacity reduced from daily B772ER to daily B763ER

LAX/NRT - capacity increased from daily B788 to daily B789

EWR/TXL - capacity increased from daily B757 to daily B763ER

EWR/LIS - capacity increased from daily B757 to daily B763ER

EWR/ZRH - capacity reduced from daily B764ER to daily B763ER

Air China has revealed many capacity changes to its long haul route network for the IATA S15 season of which the main highlights are as follows:

PEK/LAX - frequencies increased from double daily to triple daily using a B77W

PEK/CDG - frequencies increased from daily to double daily nonstop using an A332 + B77W each daily

PEK/SFO - capacity increased from daily B77W to daily B748

PEK/JFK - capacity increased to daily B748 + daily B77W

Etihad Airways has officially announced that it will be launching new services to DAR-Dar Es Salaam, Tanzania effective 01DEC15. Flights will be operated on a daily basis using an A320 with convenient connections available in both directions via AUH to India, UK, JFK and SE Asia in particular. Other capacity changes revealed by the carrier for 2015 are as follows:

MEL - frequencies increased from 10 weekly to double daily nonstop using a B77W effective 01AUG

DFW - frequencies increased from 3 weekly to daily nonstop using a B77L effective 01APR

MAN - capacity increased to double daily B77Ws

DEL - frequencies increased from double daily to triple daily

BOM - frequencies increased from double daily to triple daily

GYD - new 4 weekly nonstop flights using an A320 effective 01OCT

TBS - new 3 weekly nonstop flights using an A320 effective 02OCT

CDG - capacity increased to double daily B77Ws + daily A346

American Airlines has disclosed many changes to its long haul route network for the IATA S15 season of which the main highlights are as follows:

DFW/GIG - all flights suspended

LAX/LHR - frequencies increased from daily to double daily nonstop using a B77W

MIA/FRA - new daily nonstop flights using a B763ER

JFK/BHX - new daily nonstop flights using a B757

JFK/EDI - new daily nonstop flights using a B757