Analysis Reports
We employ a global team of highly-experienced analysts who deliver a wealth of commentary about the aviation and travel industry. Our analysts don’t just report the news, they look at the big picture to help you understand how the latest news, issues and trends will affect your business. CAPA’s commitment to independence and integrity means every report is filled with accurate data and actionable insights to help you stay ahead of the game.
Malaysia Airlines has made a strong financial and operational recovery from the COVID-19 crisis, allowing the airline to turn its focus to customer and fleet investments. The company appears poised to achieve its long-awaited return to net profitability this year.
While this is partly due to the booming demand environment that is lifting many airlines, Malaysia Airlines’ restructuring efforts have undoubtedly made it more financially robust for the longer term.
Malaysia Airlines is due to begin receiving Boeing 737 MAX aircraft this year – despite delivery delays – and intends to start a selection campaign to cover the next stage of its narrowbody replacement needs.
On the widebody side, Malaysia Airlines is due to receive its first A330neos next year. In the shorter term, it is looking to boost its widebody fleet with more leased aircraft.
Taking in new aircraft will update both the fleet and cabin product. In the meantime, other improvements to aircraft cabins and services are under way or planned, as the airline enhances its customer experience proposition to compete better in the full service and premium sectors.
The privatisation of airports caught on rapidly in Latin America two and a half decades ago – initially in Mexico and Argentina, latterly in Brazil – and is to be found in many other countries in the region now. One exception was Paraguay, the small state sandwiched between Bolivia, Argentina, Brazil and Uruguay.
Paraguay has a mindset of its own, and that has manifested in this industry in an avoidance of privatisation activity, but that was not always the case. A PPP (Public-Private Partnership) deal was to have been struck in 2015 for the Asunción Airport, which serves the capital, but it was suspended following several legal glitches of the kind that are commonplace in that part of the world.
Ultimately, the civil aviation authority decreed that a new terminal at the airport would be self-funded instead – but that was never going to happen. So in 2023 a partnership deal is back on the cards and both the newly elected president and the defeated challenger are in favour of it.
The question now is whether previously interested parties (there were quite a few) can be enticed back, and if the regional leader can be attracted this time as well. On the surface the airport does not seem to have that much going for it...but that surface is there to be scratched beneath.
Speaking to CAPA TV on the sidelines of the IATA AGM in Istanbul in early Jun-2023, Finnair CEO Topi Manner described the lessons his airline had taken from the COVID-19 pandemic:
"I think the most lasting impact has been that we are a culturally stronger airline and I think the whole industry is culturally stronger. In our case, our operating model has changed quite a bit. We are faster, we are more nimble, we are more resilient."
However, Finnair's strategic focus on Europe-Asia was hit by the "double crisis" of COVID-19 and the closure of Russian airspace, so – "we have been needing to do pretty creative things".
Yet according to Mr Manner: "1Q 2023 was positive for us in terms of operating profit, so it was a good start for the year… the summer season looks to be very busy and therefore I'm looking forward to having a good year."
Asia Pacific airlines have a collective 4,430 commercial aircraft on order, accounting for almost 40% of identified outstanding orders globally.
Of this figure, nearly 2500 aircraft orders are concentrated with 10 airlines.
Almost 95% of the unfilled orders with these 10 airlines are for narrowbodies, with particularly large backlogs in place with short haul operators in Southeast Asia and South Asia.
Across the wider region, narrowbodies account for approximately 80% of orders. Narrowbody ordering is being supported by LCC growth and rapidly expanding regional connectivity to accommodate the travel demands of the region’s expanding middle class.
Berlin Brandenburg Airport: first positive EBITDA since opening, but passenger numbers still low
The story of Berlin Brandenburg Airport’s long drawn-out construction, which took the best part of a decade, is well documented.
To add insult to injury, when the airport finally did open in Oct-2020 it was right in the middle of the first COVID-19 waves, with hardly any passengers and a terminal mothballed.
Now it has reported a small profit (as measured by EBITDA) for 2022 and is starting to look to the future. Passenger numbers were close to 19 million in 2022, and a further increase of 10-15% is anticipated for 2023.
Stabilising the company was, rightly, the first priority, but the management ought now to turn its attention to the traffic mix, which simply doesn’t square with expectations at what is the capital city of the premier economy in Europe and the fourth in the world.
Jeddah Airport to undertake massive expansion; becomes a regional gateway if targets achieved
There are many changes taking place in Saudi Arabia in a world where its natural assets are not going to be as much in demand as they once were.
For example, there is a concerted attempt to invigorate a tourism business that would not be too distant from the one successfully exploited by Gulf States over decades. That includes much easier entry for individuals and the construction of huge, purpose-built resort cities.
Jeddah, where a huge expansion of its airport is planned, already hosts large-scale religious tourism and has the infrastructure and attractions to offer itself as a proposition for general leisure tourism from a wide-ranging area, once public acceptance is gained of what has previously been considered off-limits in some regions.
There is also the potential to turn it into a hub, but the impression is that the Saudi authorities prefer to attract O&D passengers rather than transfer ones.
There remain, though, many obstacles to overcome to reach the ambitious targets the Saudis are setting, and few of them are under the control of aviation authorities.
An oft-stated goal of AirAsia’s parent company Capital A is to diversify its business beyond its flying operations, and one of its latest efforts in this regard is the development of its MRO business.
Capital A set up Asia Digital Engineering (ADE) as a separate subsidiary, based on the former AirAsia engineering division. This follows AirAsia’s established practice of developing business units and then splitting them off, potentially using them to attract new investment.
The fact that AirAsia does not feature in the brand name is an indication that its aspirations lie beyond the maintenance needs of the group’s fleet. Its blue branding even veers away from the group’s traditional red.
ADE’s ambitions are also underlined by its construction of a massive hangar in Kuala Lumpur, which will make it a major player in the region’s MRO industry.
Down and out in Paris and London: hub airports are in the sights of environmentalists – part two
The main airports of London and Paris count among the most economically significant in the world. It is inevitable that decisions made in the name of the environment will impact on them, but it isn’t always in the ways that might be expected.
Heathrow is already the UK airport which sees the highest level of environmental protest, and a recent manifestation of it came as a result of the decision to award it a third runway, which generated protests and legal action – not so much about noise of emissions from aircraft, but about those from the additional road traffic that would be generated.
Another major change affecting air travel that has been revealed is in France, where the Minister for Transport Clément Beaune has announced the publication of a decree banning domestic air services on routes where there is an alternative method of travel of less than 2.5 hours by train.
While the French government has put that ban on air travel on selected routes, in London, Heathrow Airport will soon become part of a congestion charging scheme that will discriminate heavily against users of older vehicles, whether they are passengers or workers.
In the rush to net zero there are going to be losers as well as winners, and airports will always be at the heart of events.
This is part two of a two-part report.
Down and out in Paris and London: hub airports are in the sights of environmentalists – part one
The main airports of London and Paris count among the most economically significant in the world. It is inevitable that decisions made in the name of the environment will impact on them, but it isn’t always in the ways that might be expected.
Heathrow is already the UK airport which sees the highest level of environmental protest, and a recent manifestation of it came as a result of the decision to award it a third runway, which generated protests and legal action – not so much about noise of emissions from aircraft, but about those from the additional road traffic that would be generated.
Another major change affecting air travel that has been revealed is in France, where the Minister for Transport Clément Beaune has announced the publication of a decree banning domestic air services on routes where there is an alternative method of travel of less than 2.5 hours by train.
This is part one of a two-part report.
While the French government has put that ban on air travel on selected routes, in London, Heathrow Airport will soon become part of a congestion charging scheme that will discriminate heavily against users of older vehicles, whether they are passengers or workers.
In the rush to net zero there are going to be losers as well as winners, and airports will always be at the heart of events.
US airlines continue to remain bullish about demand as a record summer in the Northern Hemisphere is on the horizon.
American Airlines issued updated financial guidance and explained that it had not been operating the same levels of capacity as it was before the COVID-19 pandemic, given the constraints that are affecting all airlines, including pilot staffing shortages, supply chain issues and – particularly in the US – airspace system constraints.
Other US airlines have not updated their financial guidance, but at the end of 1Q2023 United Airlines CEO Scott Kirby told analysts and investors that demand remained strong. And while some macroeconomic pressure could create a certain level of murkiness during 2H2023, at this point the region’s operators do not see any worrying signs of demand deterioration.
Numerous constraints in the industry are also creating a supply-demand imbalance, which bodes well for revenues for operators in North America. But even as fuel prices are dropping, US airlines continue to face some cost pressure – particularly as new pilot contracts come into force. And if demand does soften later in the year, the ability of airlines to offset cost pressures with higher fares could weaken.