OAG FACTS January 2011: EXECUTIVE SUMMARY
| Global Analysis OAG (www.oag.com), the global leader in aviation intelligence, reports in its monthly Frequency and Capacity Trend Statistics (FACTS) report, that global capacity has grown 25% since 2001, while the number of services operated increased 8%, resulting in the average capacity per movement increasing to just over 125 seats; a 16% increase since 2001. The FACTS report provides data for the last ten years, and is updated monthly. The mainstay of the decade’s expansion will be the development of low-cost airlines fragmenting the hub system, as well as the Middle Eastern hub carriers rapidly working to develop new transfer markets between Europe, Africa and Asia. Low cost scheduled airlines now account for 23% of all capacity, compared to only 8% of seats in 2001. In the last decade, capacity growth in this market segment has been steady with a 1.5% increase in market share per year. Expectations are that this segment will continue to grow in coming years with new entrants, and as currently regulated market environments open to this sector. India, China, Japan, Russia and most of Africa remain relatively immature LCC markets. Respective market share by major scheduled airline segment 
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Since 2001, the emergent market regions have been the major drivers of capacity growth. Huge aircraft orders have translated into increased schedules in these markets. Of the major markets, large growth has been recorded in Indonesia, where domestic capacity has grown 336% since January 2001, and 41% in the last year, as a mix of new carriers and low cost airlines respond to the growing demand for air travel across the country. Another domestic growth market and current industry ‘hot-spot’ is Vietnam where domestic capacity has increased 31%, year-over-year, and a staggering 455% since January 2001. In absolute size, however, the market remains small with 1.3 million seats a month, but is clearly one to watch in the next few years, especially with Vietnam Airlines’ SkyTeam membership and the delivery of 63 aircraft. The Airport Picture An impressive list of 19 major airports reported scheduled capacity growth of over 20%, year-over-year for January 2011. Given the overall growth in domestic capacity in Indonesia, the 28% growth in capacity at the capital city airport supports the wider market picture and reflects the continuing expansion of carriers such as Garuda. Scheduled capacity growth in Moscow is very positive; Domodedovo leads the way with a 21% increase in capacity, or a total of 2.4 million seats in January; by means of comparison this equates to 78,176 seats a day in January 2011, compared to only 9,916 a day in January 2001. Quite clearly the rebranding of the airport, alliance presence and range of locally based airlines are all contributing to these levels of spectacular capacity growth at the airport. The change in power balance between Sheremeteyvo and Domodedovo is dramatic and a classic lesson in airport marketing and competition; in the last decade Domodedovo Airport has seen its scheduled capacity share of the Moscow market rise from a mere 16% in January 2001, to 45% in January 2011, securing a market leader position. Domodedovo, during the last decade, has embraced the concept of airport marketing to airlines with a mix of clear branding, consistent messaging to target audiences, and above all, an open mind to supporting their customers. It also shows the importance of the alliances to competing airports. The clustering-effect of alliances in multi-airport cities means that Domodedovo is now a major Star Alliance spoke airport, with OneWorld also concentrating services at the airport. They clearly see this as a competitive stance against SkyTeam’s Sheremetyevo Airport investment. |
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| Regional Summary At a regional market level, large growth occurred in China (excluding Hong Kong and Macao) where domestic capacity increased by 240% since January 2001, and in the last year by 8%. Quite interestingly the average aircraft capacity in the Chinese domestic market has remained unchanged at around the 150 seat mark, reflecting a market where frequency of operation, rather than size of aircraft, has been the major catalyst of market development. The A320 and B737-800 remain the standard aircraft for most routes in China and we note that there is little role for the regional jet in China. The development of the three major hub airports in the Middle East; Dubai, Abu Dhabi and Doha; is also something of note, in comparison to the last decade. Capacity to and from the Middle East has risen 161% since January 2001. Year-over-year capacity to and from the region has increased 12% through a combination of increasing hub capacity, and more importantly, the emergence of new low cost airlines in the region. Most Middle Eastern countries can now boast a low cost airline in addition to the national hub carrier. Africa, long regarded as one of the slowest regional markets, is also reporting very strong year-over- year growth. The number of available seats to and from the region has risen 32% during in the last two years, and although it is still a relatively small market it’s beginning to demonstrate potential for sustainable growth in the coming years. Up-gauging and re-fleeting have played a part in the trend with B777 and A330 deliveries throughout the continent. By means of contrast to these growth markets, the capacity in North America has declined 20% since January 2001; with average capacity per aircraft staying constant during that time, with an average 92 seats per movement. In real terms, the number of scheduled daily services within North America has reduced from 32,740 a day in January 2001, to 26,094 in January 2011, a reduction of 20%. “Emergent markets are rapidly catching up with established regions in terms of size. One significant example is the strong and continued growth within the Chinese market; with future expectations of growth in demand, it is likely that this market will be larger than the total North American market within the decade,” said Peter von Moltke, CEO, UBM Aviation, parent company of OAG. |
Atlanta continues to be the largest airport in the world in terms of monthly scheduled capacity with nearly nine million seats available in January. This is 10% larger than its closest rival, Beijing, for that accolade. A change in ranking is anticipated in the third and fourth largest airports, London Heathrow and Haneda, with the Japanese airport claiming third place at some point in 2011, as Haneda develops its international network. The capacity gap between these two airports in January is 42,593, which at the current average capacity per movement at Haneda, means an additional six flights a day will move the airport above London Heathrow. Ironically some of that required capacity growth will come in the form of a new British Airways service from Heathrow to Haneda commencing in March 2011. Airline Alliances In 2010, Star Alliance was the global leader accounting for 49% of all scheduled seats offered via the alliance structures, compared to the Skyteam alliance with a 29% share, and Oneworld with a 22% share. During the last year, Star has expanded with five new members joining the alliance, the most notable of which was TAM, which is six times larger than any of the other new members last year. We anticipate, with interest, the SkyTeam figures for this time next year, when the membership will include China Eastern (including offshoot, Shanghai Airlines), Vietnam Airlines, Garuda, Taiwan’s China Air Lines, Aerolineas Argentinas, and Tarom. Additional carriers are expected to join the alliance in 2011. OneWorld seems to be taking a more measured approach to membership, with Air Berlin and S7 (Siberia Airlines) joining the ranks during 2011. The struggle for the LAN/TAM account may also be resolved in 2011, as the dynamic South American economies continue to grow strongly, and when combined with the recent US-Brazilian open skies agreement, suggests a further period of positive capacity development for the airline alliances. In summary, January’s data suggests a recovery of capacity in many markets and optimism as we enter 2011. |
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