Market analysis of new routes launched vs.

routes cancelledWorld Low Cost Airlines Congress - London

17 September 2012

Ralph AnkerEditor

anna.aeroralph.anker@anna.aero

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Overview of presentation - I

• How do 31 of the world’s leading LCCs compare in terms of starting (and stopping) routes:– Between August 2011 and August 2012

• Taking a closer look at:– Asia: AirAsia (3), Cebu Pacific, GoAir, IndiGo, Jetstar, Lion Air,

Spicejet, Tiger Airways– Europe: easyJet, germanwings, Jet2.com, Monarch, Norwegian,

Pegasus, Ryanair, Transavia.com, Vueling, Wizz Air– Middle East: Air Arabia, flydubai– North America: Allegiant Air, JetBlue, Southwest, Spirit Airlines,

WestJet– South America: GOL, Interjet, vivaaerobus, Volaris

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Overview of presentation - II

• Figures distorted by:– Airline code changes (easyJet Switzerland)– Permanent airport closures: Bucharest Baneasa– Temporary airport closures in S11: Venice Treviso– New airport: Warsaw Modlin

• Seasonality issues: LCCs v Legacy carriers in Europe• Growing head-to-head competition

– With legacy carrier– With other LCCs

• Summary

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Source: Diio Mi analysis of Innovata data

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LCC route launches - I

• Ryanair (300 involving 127 airports, average WF=3.5)– New bases in Budapest (Feb 12), Palma de Mallorca, Billund,

Karlsruhe-Baden, Wroclaw, Paphos (all summer 2012)– Most new routes from Budapest (30), Venice Treviso* (29), Palma

(25), Girona (21), Manchester (21), Barcelona (16)

• easyJet (140, average WF=5.2)– New bases at Nice (8), Toulouse (7) and London Southend (9)– Swiss operations now under U2 code (BSL 31, GVA 40)

• Wizz Air (71, average WF=3.9)– Moved flights from Bucharest BBU to Bucharest OTP (23)– Moved flights from Warsaw WAW to Warsaw Modlin WMI (20)– Expansion at Budapest after Malev’s demise (11)– Resumed flights at Venice Treviso

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LCC route launches - II

• Vueling (55, average WF=4.4)– Expanded Barcelona base considerably (29)– Growth at Palma (8) and Bilbao (7)

• Norwegian (47, average WF=2.9)– General expansion at Oslo (12), Oslo Torp (9), Copenhagen (8),

Stockholm Arlanda (5) and Trondheim (5)

• SpiceJet (46, average WF=7.6)– Acquisition of Q400s to launch raft of ‘thinner’ routes (30)

• Southwest (29, average WF=12.6)– Started own services from AirTran’s base at Atlanta (11)– Expansion in Denver (7) and Milwaukee (5)

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LCC route launches - III

• Allegiant Air (28, average WF=2.3)– Expansion at Orlando Sanford (11), Oakland (6), Phoenix-Mesa (4)– Launch of flights to Hawaii

• germanwings (28, average WF=4.5)– Expansion at Cologne/Bonn (12), Stuttgart (8)– Service to Pristina from six airports (incl. FRA, DUS, MUC)

• Spirit Airlines (28, average WF=9.0)– New base at Dallas/Fort Worth (13)– Expansion in Chicago O’Hare (7) and Las Vegas (6)

• Jet2.com (25, average WF=2.2)– Expansion at Glasgow (7), Newcastle (5), Leeds/Bradord (4),

Manchester (3), East Midlands (3)

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Source: Diio Mi analysis of Innovata data

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LCCs not averse to dropping routes

• All airlines spend lots of time and effort promoting new routes …

BUT

• … if they don’t ‘perform’ LCCs in particular are not averse to terminating routes, even if they have only been operating a few weeks.

• Analysis of 31 LCCs for routes dropped in the last 12 months– Can you guess who comes top of the rankings?

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Source: Diio Mi analysis of Innovata data

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LCC routes dropped S12 v S11 - I

• Ryanair (154 involving 96 airports)– Venice VCE routes went back to Venice TSF (28) [runway works]– Major cutbacks in Spain: Alicante (18), Reus (14), Seville (9),

Girona (8), Malaga (5) – airport charges issue– Cuts to Morocco: Marrakech (8), Fez (3)– Reductions at Dublin (7), Liverpool (7), Stockholm Skavsta (7)

• Pegasus (65)– airberlin takes over many routes to Germany

• Wizz Air (52)– move from Warsaw WAW to Warsaw Modlin WMI (18)– move from Bucharest BBU to Bucharest OTP (20)– Move from Venice VCE back to Venice TSF (5)– So only 9 routes actually dropped …

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LCC routes dropped S12 v S11 - II

• Allegiant Air (32)– Cuts at Orlando Sanford (6), Las Vegas (5), Phoenix-Mesa (5), Los

Angeles (4), Long Beach (4)

• Southwest (32 spread across 24 airports)– Cuts evenly distributed across network: Philadelphia (5),

Albuquerque (4), Orlando (4), Phoenix (4) lose most routes

• easyJet (24)– Worst effected airports: Madrid (5), London Gatwick (3), London

Stansted (3), Manchester (3)– Madrid base to close soon

• Vueling (20)– Cuts in Madrid (9) as Iberia Express launches– Reductions in Toulouse (4), Ciudad Real (2)

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LCC routes dropped S12 v S11 - III

• germanwings (19)– Dropped routes from Berlin SXF (10 – passed to LH assuming BBI

was opening!), Cologne/Bonn (6), Hannover (2), Stuttgart (1)

• Norwegian (18)– Dropped routes from Oslo Rygge (6), Oslo (3), Stockholm (3)– Dropped six routes to Morocco

• GOL (16)• Transavia.com (16)

– Dropped routes from Amsterdam (6), Eindhoven (3)– Average weekly frequency of dropped routes just 1.5

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Source: Diio Mi analysis of Innovata data

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Growing seasonality issues

• “Ryanair grounds 80 planes in winter” headlines last year

• Fuel prices forcing airlines to consider seasonality issues more closely

• LCCs even more vulnerable to seasonality because of general focus on leisure market (at least in Europe)

• How are airlines reacting?

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Source: Diio Mi analysis of SRS Analyser data

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Source: Diio Mi analysis of SRS Analyser data

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LCC routes competition

• High proportion of new LCC services in Asia on existing routes

• In Europe Ryanair, Wizz Air tend to start ‘new’ routes, Monarch and Jet2.com tend to compete on existing– easyJet and Vueling at between 50-55% competition– Norwegian and germanwings at between 35-40% competition

• Variation in US from Spirit Airlines (80% competition), to JetBlue (65%), Southwest (50%) and Allegiant Air (<10%)

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LCCs attacking flag-carriers

• Spirit Airlines taking on American Airlines at DFW, ORD

• Southwest taking on Delta in Atlanta

• Interjet taking on Aeromexico at Mexico CIty

• easyJet competing with Air France, Iberia, TAP Portugal across Europe

• Norwegian taking on SAS, Blue1, airBaltic in Scandinavia

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LCCs now fighting each other?

• Ryanair taking on Wizz Air at Budapest and Warsaw Modlin– Five new routes from Cork in November all versus Wizz Air

• Monarch’s new East Midlands services compete with Ryanair and Jet2.com, new Gatwick routes all compete with easyJet

• Vueling and easyJet competing in France

• Indian LCCs competing against each other

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Summary

• LCCs the main driver of new routes in Western/Central Europe, India– Major contributor in US, Mexico, Brazil– Relatively small impact in Africa, China, Russia

• LCCs not afraid to abandon underperforming routes

• Seasonality is a growing concern due to fuel prices

• More overlap not only with legacy carriers but also increasingly with other LCCs

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Thank you!

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