Low Cost Air Carriers 2014

special report:low-cost carriers2014

June 2014

flightglobal.com/airlines | Airline Business | 23

SPECIAL REPORT LOW-COST CARRIERS

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The latest Airline Business low-cost carrier survey shows traffic and profits up again as the sector continues to grow rapidly in size, value and scope. But the model dynamics vary across the regions, between those looking to break through in Central America, the rapid spread into new markets in Asia and courting of more up-market passengers in Europe

CONTENTS

24 Low-cost line-up A graphic breakdown of the biggest players in the sector

26 Getting down to business Europe’s LCCs are stepping into the mainstream to target higher-yielding traffic

32 Asia-Pacific LCCs spread wings Asian budget airline growth continues apace with at least 10 new launches near

35 Centre ground LCC airline growth comes to Central America

36 Traffic and financial data Annual survey of the leading budget sector operators

39 Ratings boost Why Ryanair looks in good shape for bond issue

40 Low-fare inventories Analysis of how the low-cost fleets are distributed globally

June 2014

All our special reports are available online at : flightglobal.com/airlines

flightglobal.com/airlines24 | Airline Business |

LOW-COST CARRIERS SNAPSHOT

June 2014

LOW-COST LINE-UPTraffic and profitability among the fast-developing budget sector continued to grow apace in 2013, as the latest annual Airline Business low-cost carrier survey shows passengers for the 75 biggest players topping 800 million and profits among leading operators jumping 50% as the model continues to spread in geography and scope

Based on net profits for most recent financial year

TOP 10 BY REVENUE

Norwegian $2.6bn

Jetstar $3.4bn

EasyJet $6.6bn

Southwest $17.7bn

JetBlue $5.4bn

Ryanair $6.8bn

Gol $4.1bn

WestJet $3.5bn

Azul $2.4bn*

Vueling $1.9bn

Based on operating revenue for most recent financial year *Airline Business estimate

9.9% Passengers carried among the leading 75 low-cost carriers again grew nearly 10% in 2013 and reached 801 million. While Southwest, Ryanair and EasyJet remain the biggest by a distance, there are now more than 20 airlines in the sector that fly over 10 million passengers annually

TOP 10 BY NET PROFIT

Air Arabia $119m

JetBlue $168m

Spring $119m

$754mSouthwest

EasyJet

WestJet $260m

Ryanair $702m

Spirit $177m

Indigo $144m

AirAsia $115m

$621m

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$5.7bnOperating profits for nearly 40 airlines in the sector reached almost $6 billion in 2013, up on the $4 billion the same carriers made in 2012. Collective net profits for low-cost players stood just shy of $3 billion, an increase of nearly $1 billion

$84bnNet revenues for nearly 50 low-cost carriers totalled $83.8 billion in the last financial year as strong growth continued. More than 20 low-cost operators now generate sales of at least $1 billion annually, reflecting how the model is maturing across the different regions

Europe31.2%

North America27.5%

Asia-Pacific29.4%

Middle East2.2%

South America9%

Africa0.6%

Source: Airline Business low-cost carrier traffic survey

2013 LOW-COST CARRIER PASSENGERS SHARE BY REGION

801mTotal passengers

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passenger volumes as the company resumes growth, but are unlikely to drive up yields.

“The real change needed to push pricing – a fundamental shift into primary airports and higher frequencies – is actually happening relatively slowly. On a multi-year basis, we would assume that both unit costs and unit revenues remain relatively stable, and it is Ryanair’s top-line growth that continues to drive returns for shareholders,” he says. “So it’s an evolution, not a revolution.”

Given the timing of the roll-out of consumer friendly products, it would be easy to view the shift in Ryanair approach as a knee-jerk reac-tion to its autumn profit warnings – although it remains one of the world’s most profitable

European low-cost carriers’ tacit moves to target higher yielding traffic are increasingly apparent and have even seen budget model champion Ryanair reinventing itself as it eyes more growth at the expense of network rivals

LOW-COST CARRIERS EUROPE

GETTING DOWN TO BUSINESS

REPORTGRAHAM DUNN LONDON

But the transition should not be over-stated. Mainstream airports remain a small part of its network and its recent announcement of a base at Warsaw’s Modlin airport shows it has not lost its appetite for European secondary air-ports. Similarly, its decision to axe Lisbon-Faro in April, just three days after the route launched, shows its ruthless streak remains.

COSTING BUSINESS Neither has it abandoned its hard line on costs. Its adherence to an ultra-low-cost business model remains and should be helped by last off the line Boeing 737 orders, and the BBB+ credit ratings from Standard & Poor and Fitch should help keep finance costs in check.

“Ryanair’s strategic ‘transformation’, focused on improving customer service, con-tinues to attract headlines – as was clearly the intention. However, as often with Ryanair, we think the story is somewhat exaggerated,” says Oliver Sleath, European airlines analyst at Bar-clays. “Ryanair’s change in strategy is mostly about soft improvements that do not impact the cost base, which should help support

Ryanair target to lift passenger numbers to 112 million over

the next five years

40%

June 2014

The lines between low-cost carriers and their network rivals have blurred so much over recent years as to make segmenting operators by type almost academic.

Yet in Europe, while mainline operators have unbundled fares and stripped away ser-vices, and low-cost carriers have ended the boarding scrum and packaged up extra frills for a price, there has always been one con-stant: Ryanair.

Lowest cost, with fares and a service cul-ture to match, the budget giant has come to embody the low-cost model – the heir appar-ent to Southwest Airlines. So the evolution over the last year, which has seen Ryanair’s various dalliances with customer service evolve into a fully-fledged campaign to be liked is on the one hand pretty seismic.

Booking restrictions have been eased, the website and mobile site revamped, its market-ing edge softened, customers engaged and a new proposition explicitly developed for business travellers. It has even begun creeping into more mainstream airports.


“It’s all about point-to-point,” says Barclays’ Sleath on where the LCCs may target network carriers. “It is harder for low-cost carriers to compete in a transfer hub that is feeding long-haul – look at Frankfurt or Munich. But there are only a few fortress hubs like that, and plenty of other markets under-penetrated by LCCs where legacies are still flying pure point-to-point. Gatwick is a good example of what happens –10 years ago BA had 50% short-haul share, EasyJet 15%. Now it’s the reverse.”

All of which goes to explain the gentle shift up-market by all LCCs, not just Ryanair. These carriers are positioning themselves as viable alternatives – both in frequency and product – if the national carriers continue to retrench. And in many cases, they hope their presence will hasten this retrenchment.

Unlike its low-cost rivals, Ryanair – the European champion of the ultra-low-cost model – has more ground to make up in terms of positioning itself to fill the void. For exam-ple while EasyJet and Vueling have always served primary airports, much of Ryanair’s network comprises secondary airports.

“I think the old Ryanair model of stimulat-ing new demand on very thin routes is prov-ing harder to come by,” observes Sleath. “Western Europe is approaching a level of saturation. There are only so many people who want to fly to the middle of nowhere.”

He notes that in some cases, the airline has in part moved from a city’s secondary to pri-mary airport because some of its pricing advan-tage has been lost when low-cost rivals began operating from the primary airport. “The num-ber of primary airports they serve has been very steadily picking up over the last five years, as other LCCs have shown up in the main air-port and Ryanair found it had to discount more aggressively at the secondary airport,” says

LCCs. This added weight to the view that the European market is getting full and that after more than a decade of stimulating air travel through low fares, the well is running dry.

Ryanair evidently does not believe its growth is going to stop. After deliveries com-pleted on its landmark Boeing order, it could have opted to keep its capacity levels tight and increase its returns by churning its net-work in favour of the more profitable routes. Instead it has ordered 180 new Boeing nar-rowbodies to support its target of lifting pas-senger numbers by 40% over the next five years to 112 million.

The thinking of LCCs seems to echo this view. Between them, EasyJet, Norwegian, Vueling, Pegasus and Wizz Air have ordered around 600 aircraft over the last 18 months.

In some cases, stimulating new travellers through low-pricing in the emerging markets of Turkey and eastern Europe will drive this growth. But for the likes of EasyJet, Norwe-gian, Ryanair and Vueling, the carriers are working in the familiar short-haul EU market. And a look through recent expansion plans

Growth may be tapering after a decade of stimulating demand via low fares

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“We see a great opportunity because flag carriers are cutting back”

HOWARD MILLARChief financial officer, Ryanair

June 2014

underlines they are largely betting on growing at the expense of the network carriers.

It is not accidental that Ryanair’s new bases at Rome Fiumicino, Athens, Lisbon and Brus-sels National – and interest in Copenhagen – are home to European network carriers which have battled their own or national economic problems. Neither are they alone in seeing the opportunity, as Vueling’s own growth moves at Brussels and Rome illustrates – although this raises the prospect of more intra-LCC competition over the coming years (see P34).

“The fundamentals have not changed for EasyJet, we are still competing with the lega-cies,” says EasyJet chief executive Carolyn McCall. The airline, which operates out of primary airports, sees it particularly well placed to push the pressure on network rivals. “Legacy carriers are taking capacity out of the market and we are the ones putting capacity in. And therefore we are controlling the capacity environment,” she says.

This view is echoed by Ryanair chief finan-cial officer Howard Millar. “We see a great opportunity because the flag carriers are still in cutback mode,” he says.

ROUTE RETREATWhat has given LCCs so much encouragement is the rate at which European network carriers have retreated in short-haul markets. The likes of Ali-talia, Air Berlin and Iberia have all scaled back. For example, Flightglobal’s Innovata schedules data shows the contrasting rate of growth for net-work carriers versus EasyJet and Ryanair on short-haul over the past five years (see table).

Much of this has been driven by the restructuring of network carriers. The carrot for the stick of labour concessions is the pos-sibility of a return to growth. But that growth seems unlikely to be driven by short-haul European routes. Any that is, will be hub-feeders and not point-to-point markets.

“The capacity we have put back is aimed at improving the quality of the network. So the short-haul capacity is designed to ensure we’ve got a good feed into the long-haul network,” explained IAG chief executive Willie Walsh on Iberia’s strategy on rebuilding its network.

INTRA-EUROPEAN CAPACITY EVOLUTION FOR SELECTED CARRIERS BY SEATS: 2010-14

YEAR KLM Brussels Airlines SAS EasyJet Ryanair

2010 19.16m 7.31m 31.12m 49.60m 79.32m2011 19.17m 7.63m 31.54m 54.37m 88.80m2012 20.71m 7.96m 32.57m 56.49m 92.80m2013 21.26m 7.66m 34.20m 65.76m 97.30m2014 21.96m 7.27m 37.08m 68.98m 98.99mData for total seats each year. SOURCE: Innovata, part of Flightglobal


As European low-cost carriers continue to expand increasingly outside their home markets, it is perhaps inevitable that there will be more direct competition between rivals from the sector.

New bases pit Ryanair up against Vueling in Rome Fiumicino and Brussels, and EasyJet in Athens and Lisbon. Norwegian is expanding at EasyJet’s London Gatwick base, and launching at Vueling’s Barcelona home.

While there is increasing overlap Oliver Sleath, European airlines analyst at Barclays, believes the main target of the low-cost carriers is still the legacy carriers.

“I don’t think that it is either Vueling or Ryanair’s intention to go and kill other LCCs, it is to take share off the legacy carriers,” says Sleath. But he adds Ryanair “probably

has the ego and balance sheet and cost base” to get involved in a price war with a rival if needed.

But he notes, for example, that Ryanair has been operating out of Vueling’s Barcelona home for nearly five years. The latter has continued to thrive, while Spanair was ultimately the carrier that fell.

Ryanair finance chief Howard Millar, while also stressing the big opportunity is network carriers continuing to cut back, says given the size of its operation and number of airports across it network, “we’re always going to have spats somewhere”. A couple of years ago, that was Wizz at Budapest, he notes.

He believes Ryanair would feel on “home ground” in any fares war because of its cost base. “Our experience of the low-fare industry is once we are in a fare war, it’s the lowest fare which win by some distance. If it’s a slugging match, it’s the person with the biggest balance sheet and lowest costs that wins,” he says.

Struggling Alitalia is no doubt in the sights of both Ryanair and Vueling in their moves at Rome Fiumicino – an airport where EasyJet is already firmly established.

It is “too early to say” how increased competition between the three LCCs on routes from the Italian capital will hit yields, says EasyJet chief executive Carolyn McCall. She concedes that it could take six to nine months to “shake out” the market.

LOW-COST CARRIERS EUROPE

Sleath. “It’s not a sudden switch, but it is hap-pening more, sometimes out of choice, some-times not. It definitely means taking share more directly off legacy carriers, and they are talking about high frequency routes much more than they did before.”

For example, Ryanair chief executive Michael O’Leary, in announcing new routes to primary airports and extra flights on others from London Stansted this winter, says it is part of a push to attract more business traffic away from its competitors.

“By significantly building out schedules so that we can not just improve the customer ser-vice but can go after business traffic,” he says. Ryanair CFO Millar says primary airports are likely to account for between 40-50% of its future growth, much of that driven from its new long-term deal at Stansted.

MERGING MODELSAll this may sound familiar to EasyJet. Its LCC rival has for a while been a very different ani-mal, and has already taken several of the steps that Ryanair is now embarking on. The airline notes that 12 million – around a fifth of its passengers – during the 12 months to March 2014 were travelling on business.

Ryanair stepped up the business friendly initiatives last winter, shortly after issuing profit warnings amid a weakening demand environment. Ryanair’s Millar says that while this probably did “spur us on” to make changes, this was something it was already looking at.

“We had been looking at what some of our competitors had been doing in customer ser-vice experience,” he says. “ But I give credit to EasyJet. We were watching quite closely how they were performing and what struck us….was their load factor was improving and their average fares was improving, for not that much difference in their product.

“Yes they had a better website, yes they were perceived as being warmer and cuddlier, while we were seen to be more aggressive in terms of how we dealt with passengers.”

He says the feedback from its own passen-gers showed the interest in things like allo-cated seating. “I think the low-fares industry has evolved, there has been another evolu-tion. It is not just good enough to have low fares, you have to have something else.”

While he acknowledges this probably hap-pened 18 months ago and that carriers like EasyJet had reacted to this change earlier, Millar sees Ryanair still strongly positioned. “We can catch up and catch up very quickly,” he says.

“They are still a different model,” says

BUDGET BATTLEGROUNDS

Ryanair fights EasyJet in Athens and Lisbon

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Read more on Ryanair’s network development moves at:flightglobal.com/RyanairRoutes

tion is O’Leary himself. EasyJet now has some distance from the airline’s vocal founder and shareholder Stelios Haji-Ioan-nou, who was so synonymous with its low-cost breakthrough. Likewise, the equally high-profile O’Leary has come to embody Ryanair, both good and bad.

Back in 2010, O’Leary was talking of com-pleting three last challenges – breaking up the Dublin and BAA monopolies and a new air-craft order – before stepping down. Much of the work has now been done. So how significant is O’Leary to the airline’s future development?

“I think the public face O’Leary is less nec-essary than it was,” says Sleath. “The focus is shifting towards [chief marketing officer] Kenny Jacobs, and there will be less need for PR stunts. But the smart-minded, hard-nosed business-man O’Leary – I think that is still quite integral. He works very hard and he’s really held the team together; up until Michael Cawley’s departure there had been very few senior management changes.” ■

McCall of suggestions that there is a merging of Ryanair’s model with its own. “They still adhere to being ultra low-cost and their predominant network is secondary and tertiary. We are low-cost and a primary, network strategy. And we’ll have to see whether they develop that and what that does to their ultra low-cost model, which has always been part of their competitive advan-tage as they see it,” she says.

What is clear is the journey for Ryanair, if it intends to travel that far, will be a lengthy one. EasyJet’s transition has been steady one over a period of different management teams. McCall still sees plenty of ground for EasyJet to cover. “We have the product, the contracts with TMCs, the GDS, the sales teams, we now need to consolidate what we are doing and grow and develop, rather than trying to do more.

“I think we will continue to have a low-cost operating model and we will continue to improve everything that we do,” she says. “There is still so much we can do better. We have a big engineering contract coming up in 2015. There’s automation in airports, there are loads of stuff we can do both to improve the passenger experience and our own efficiency.”

Also looming large in the Ryanair evolu-


LOW-COST CARRIERS ASIA

June 2014

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ASIA’S LOW-COSTS SPREAD WINGSThe budget sector continues to grow strongly in the Asia-Pacific, with at least 10 new players working towards launch. Flightglobal’s Mavis Toh examines this dynamic market, where new arrivals are mainly affecting markets in Greater China, Thailand, Japan and India, while consolidation in the Philippines could also occur in South Korea

■ Chennai-based AirAsia India has received its AOC and could start operations in the second quarter of this year.

INDIA

Passengers carried by Lion Air in 2013, the largest Asia-Pacific low-cost carrier

34m

Total passengers carried in 2013 by Asia-Pacific low-cost airlines

236m


■ Asiana Airlines is mulling whether to launch a new low-cost carrier in a market already crowded with budget operators.

SOUTH KOREA

■ Spring Airlines Japan has received its AOC and plans to launch in June.

JAPAN

■ Juneyao Airlines has received approval to set up its new Guangzhou-based low-cost unit Jiuyuan Airlines.

■ Hainan Airlines and China Eastern Airlines plan to convert their respective subsidiaries, West Air and China United Airlines, into low-cost operations.

CHINA

■ TransAsia Airways wants to launch Taiwan’s first budget carrier with V Air in September.

■ China Airlines has partnered with Tigerair to form Tigerair Taiwan.

TAIWAN

■ Qantas, China Eastern Airlines and Hong Kong conglomerate Shun Tak Holdings are still awaiting approval for an AOC for Jetstar Hong Kong.

HONG KONG

■ Thai AirAsia X will begin operations using A330s in June.

■ Nok Air and Scoot joint venture, NokScoot, aims to launch in the second half using 777-200s.

■ Thai VietJet Air, a joint venture between Thai carrier Kan Air and low-cost operator VietJet Air, is on track for launch this summer.

It follows the launch of Thai Lion Air last December.

THAILAND

Number of South Korean LCCs flying before possible launch of Asiana unit

5

flightglobal.com/airlines34 | Airline Business | June 2014

CHINAThe low-cost market in China is expected to boom after the Civil Aviation Administration of China’s policy shift promoting the develop-ment of home-grown LCCs. This is in response to a growing number of foreign budget operators flying into the country.

LCCs account for a less than 5% market share in China – far below the 80% share budget operators in Europe and the USA have on routes under 3h.

Shanghai-based Juneyao Airlines has received regulatory approval to set up its new low-cost unit, Jiuyuan Airlines. The carrier plans to start domestic services from its base in Guangzhou using Airbus A320s, before launching regional services.

Full-service carriers Hainan Airlines and China Eastern Airlines are working to convert their respective subsidiaries – West Air and China United Airlines – into low-cost opera-tions. Hainan and its partners have pledged to invest CNY2 billion ($320 million) in West Air, in a move to enhance its market competi-tiveness. West Air is based in Chongqing, while China United operates out of Beijing.

China Southern Airlines, meanwhile, says it is paying “a lot of attention” to develop-ments in the LCC sector, and is evaluating whether to jump on the bandwagon.

The country’s only low-cost operator, Spring Airlines – which has for years faced difficulties in getting approval for aircraft pur-chases – expects the policy changes to move the carrier forward in its fleet expansion plans. The carrier has also issued a prospec-tus as it gears up for a launch on the Shanghai Stock Exchange.

TAIWANAfter years of mulling over whether to enter the low-cost market, two Taiwanese carriers have decided to take the plunge at the same time. With domestic travel well covered by Taiwan’s high-speed rail network, the LCCs will have to focus on regional routes. Although there is a strong demand for cross-straits flights, there is also a cap on the num-ber of such weekly services, which could prove challenging for LCCs to secure slots.

TransAsia Airways intends to launch V Air – Taiwan's first budget carrier – in September. V Air will operate services to Northeast and Southeast Asia.

Meanwhile, flag carrier China Airlines has partnered with Singapore-based Tigerair to form Tigerair Taiwan. The carrier plans to grow to a fleet of 12 jets by 2017, and is gear-ing towards a September/October launch. It

will start off with services to countries with open skies agreement with Taiwan, including Japan, Korea, Malaysia, Thailand, Singapore and Macau.

HONG KONGIn Hong Kong, Qantas, China Eastern Airlines and Hong Kong conglomerate Shun Tak Hold-ings are awaiting approval from the local gov-ernment for an AOC for their planned LCC Jetstar Hong Kong – an application for which was put in last year.

The airline’s launch has been met with opposition right from the start, with Cathay Pacific, Hong Kong Express and Hong Kong Airlines arguing that the new venture does not meet regulatory requirements, as control will come from Australia. The carrier has at least six Airbus A320s in storage in Toulouse.

With Jetstar Hong Kong’s progress halted, Hong Kong Airlines’ sister carrier Hong Kong Express safely remains the first and only LCC in the territory.

THAILANDThe Thai market will see jostling for position this year, with the expected entrance of three new LCCs.

In the long-haul low-cost market, Thai AirAsia X will begin operations using A330s in June, with services to Seoul Incheon. This will be followed by Tokyo Narita and Osaka Kansai later this year. Hot on its heels will be NokScoot – planned to launch in the second half of 2014, using Boeing 777-200s. The Nok Air and Scoot joint venture says it will oper-ate long- and medium-haul services from Don Mueang International airport.

On short-haul, Thai VietJet Air – a joint venture between Thai regional carrier Kan Air and Vietnamese low-cost operator VietJet Air – remains on track for launch in summer 2014. The airline plans to start with domestic services before expanding internationally out of Bangkok’s Suvarnabhumi airport.

The entrance of these players follows that of Thai Lion Air in December 2013.

JAPANSpring Airlines Japan has received its air operator’s certificate from the Japanese authorities, and will launch on 27 June. The carrier – a joint venture between Spring Air-lines and unnamed Japanese partners – will start with a fleet of three 737s on services from Tokyo Narita to Hiroshima, Saga and Taka-matsu. The carrier will join Peach Aviation, Jetstar Japan and Vanilla Air as the fourth low-cost carrier in the Japanese domestic market.

SOUTH KOREAIn South Korea, Asiana Airlines is consider-ing whether to launch a new LCC in a market already crowded with budget operators.

The Star Alliance carrier says it is open to adopting a multi-brand strategy, and that the new LCC is likely to be based in Seoul to cap-ture traffic to and from the nation's capital. Asiana already has a 46% stake in another Korean budget operator, Air Busan.

There are currently five home-grown budget players in South Korea: Jin Air, Air Busan, Jeju Air, T’way and Eastar Jet. The Korean domestic market is already dominated by LCCs, and also well served by an efficient high-speed rail network.

New Korean operators are therefore seen as likely to set their sights on capturing a slice of the international market.

INDIAAirAsia India in May secured its air operator’s permit, clearing the last major hurdle for the Chennai-based carrier to start operations. It comes after the country’s directorate general of civil aviation rejected arguments from vari-ous parties objecting to the airline’s launch.

The low-cost joint venture between AirA-sia, Tata Sons and Telestra Tradeplace – to be based in Chennai – could start operations in the second quarter of 2014, as it has already taken delivery of its first of 10 A320s.

In July, Singapore Airlines and its Indian partner Tata Sons are also expected to launch a full-service operation based in New Delhi. SIA has long held ambitions of playing a greater role in India, and is now poised to challenge flag carrier Air India in the full-ser-vice market.

Venturing into India could be risky, how-ever, as airlines have to contend with the high levels of taxation on jet fuel, spare parts and maintenance. Other challenges include deal-ing with New Delhi’s bureaucracy and archaic regulations. ■

LOW-COST CARRIERS ASIA

Number of jets Tigerair Taiwan plans to operate by 2017 after

launching this autumn

12

A complete collection of our special reports is available online at:flightglobal.com/airlines


Central America is shaping up as a potential budget airline battleground, with as many as three start-ups planning debuts – but regulatory hurdles and the ever-alert market incumbents could yet stand in the way of progress

LOW-COST CARRIERS LATIN AMERICA

CENTRE GROUND

REPORTDAVID KNIBB VANCOUVER

VivaColombia is tipped for fast expansion

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Latin America has lagged behind other regions in terms of low-cost carrier penetration, but the business model is now spreading from Bra-zil, Colombia and Mexico to other

countries – especially in Central America. El Salvador-based Veca Airlines has

secured its air operator’s certificate (AOC) and plans to launch services before 28 June, start-ing with two leased Airbus A319s configured for single-class service. Initial routes will include the capital cities of neighbouring nations. “There is a big need for new entrants in Central America,” says chief executive Edgar Hasbun.

Veca – a Spanish acronym for “economical Central American flights” – is privately held by a group of Salvadorian entrepreneurs and affil-iate companies of energy group Alba Petroleos. Alba funded a market analysis last year to determine if a new low-cost entrant was feasi-ble, and did not invest until it saw the results of that study. It appears Veca will be the first low-

cost operator based in Central America.Another potential low-cost entrant is Ticos

Air, which plans to base itself in Costa Rica. The airline’s operational start date is less cer-tain, however.

UNSPECIFIED DELAYSTicos had hoped to secure all approvals in time to launch flights last December, but that process was delayed for unspecified reasons. Local reports suggest that sole proprietor Gino Renzi – a former hotel manager and television executive who openly admits his lack of avia-tion experience – is seeking other investors after the death of his initial partner.

VivaColombia has also been tipped with potential interest in El Salvador. The carrier is on a fast expansion track – only two years after its launch, it already gained approval for international flights, which will start later this year to Panama City and Lima, Peru, and ear-lier this year was reported to be holding dis-

cussions with aviation officials in El Salvador. If so, the carrier will become one of several foreign budget carriers – such as Mexico’s Interjet – that fly in and out of the region.

Turboprop operator Transportes Aereos Guatemalans is adding low-cost flights from Guatemala to El Salvador. Depending on pas-senger response, TAG says it could extend its network into other parts of Central America.

The region is ripe for low-cost operators. Central American aviation policies and proce-dures are more closely integrated – and as lib-eral as any others in Latin America. Intra-region stage lengths are short, and potential new entrants face a better reception than in Venezuela, Argentina or Bolivia, where gov-ernments favour their own airlines.

MARKET POTENTIALGrupo TACA, which dominated Central America along with Panama’s Copa, merged into Avianca four years ago and has disap-peared. This produced some rationalisation, such as closing TACA’s old hub in Costa Rica in favour of one Central American hub in San Salvador. How much these changes have cre-ated a vacuum is unclear, but the start-ups think there is enough market potential.

Both Veca and Ticos like to boast that they have hired a number of former TACA staff laid off after the merger with Avianca. Tico’s Renzi also appeals to national pride in a com-ment about Copa and Avianca, pointing out that the choices of Costa Ricans are limited to airlines from Panama and Colombia.

Copa and Avianca might dispute it, but Veca’s Hasbun contends that “air travel in Cen-tral America is currently very expensive”. When Alba funded last year’s market analysis into a potential budget airline, project advisor Jose Luis Merino remarked: “El Salvador needs to open up the world with opportunities for cheap flights. It is sometimes cheaper to go to Spain than to fly to Costa Rica or Panama.”

Any new Central America entrant knows it cannot ignore Copa and Avianca. Veca’s strat-egy will not be to compete for the same traffic with these incumbents, says Hasbun, but to stimulate demand with lower fares. Veca’s goal, he explains, is to “create a new market”.

“We see no problem with new entrants, pro-vided they comply with regulations and enter the market on equal terms,” says Avianca.

Copa’s senior vice-president commercial planning, Joe Mohan, sounds less sanguine. “Low prices are not the focus of Copa,” he admits to local media reporters, but any new competitor changes the market balance. Even experienced airlines must work, Mohan stresses, to maintain their on-time perfor-mance and service standards. ■

LEADING LATIN AMERICAN CARRIERS 2013

Airline Country Pax Change

Gol Brazil 36.3m -0.6%Azul Brazil 13.3m 31.5%Volaris Mexico 8.9m 20.7%Interjet Mexico 8.4m 15.9%VivaAerobus Mexico 3.8m 3.9%VivaColombia Colombia 1.8m 229.0%SOURCE: Airline Business low-cost carrier survey

Read more on the Latin American market and its related MRO business in the CCMA daily:flightglobal.com/CCMA14


LOW-COST CARRIERS OVERVIEW

LOW-COST CARRIER TRAFFICDATA COMPILED BY SILVA ISHAK FLIGHTGLOBAL DATA RESEARCH TEAM

June 2014

The evolving budget sector operators continued to outpace industry growth in 2013 as passenger numbers jumped another 10%. While the LCC giants grew relatively modestly, there was no shortage of more expansive airlines

P assenger growth for low-cost carriers has risen by nearly 10% over the past 12 months, as the model continues to

spread within mature and emerging markets.This year’s Airline Business low-cost car-

rier survey shows the leading 75 airlines, operating within the increasingly diverse sec-tor, carried just over 800 million in 2013.

The established operators Southwest,

Ryanair and EasyJet,which carried 275 million passengers between them last year, had rela-tively moderate growth – indeed Southwest passenger numbers fell fractionally.

But there was double-digit growth for a host of other low-cost carriers, notably the likes of Lion Air, AirAsia and Indigo in Asia-Pacifc and expanding European opeators Norwegian, Pegasus and Vueling.

While Gol continued to pull back capacity last year, another Brazilian carrier Azul grows apace – not just in size, but in future also into long-haul markets. Other Latin carriers, like Interjet and Volaris of Mexico also grew fast.

The leading 75 LCCs operate a combined fleet of 3,572 aircraft. Interestingly, after a fur-ther flurry order activity, they have all but the same amount of aircraft on order. ■

TOP 75 LOW-COST CARRIERS BY PASSENGER NUMBER: 2013

Rank Carrier Country Passengers Traffic Capacity Load factors Fleet Source2013 2012 (m) Change % RPK Change % change % Percent Change Current Orders

1 1 Southwest Airlines USA 133.2 -0.6 168,078 1.5 1.7 80.0 -0.2 676 302 includes AirTran2 2 Ryanair Ireland 81.7 3.0 83.0 0.8 298 1803 3 EasyJet UK 60.8 4.1 67,573 3.6 2.8 91.0 0.7 199 1454 4 Gol Brazil 36.3 -7.3 34,684 -4.7 -4.3 69.9 -0.3 132 835 5 Lion Air Indonesia 34.1 10.4 99 5246 6 JetBlue Airways USA 30.5 5.2 57,660 6.8 6.9 83.7 -0.1 196 1347 7 AirAsia Malaysia 21.9 11.0 25,333 11.4 11.3 80.2 0.1 78 3238 8 Norwegian Norway 20.7 17.1 26,881 32.1 32.4 78.3 -0.2 87 2609 10 IndiGo India 19.2 21.7 22,856 20.4 22.6 79.3 -1.4 78 186 DGCA10 9 WestJet Canada 18.5 6.1 31,522 7.3 8.6 81.7 -1.0 105 9011 12 Vueling Airlines Spain 17.2 16.3 17,109 24.9 21.9 79.6 1.9 82 6412 11 Jetstar Australia 16.8 9.0 28,673 10.7 10.8 79.1 -0.1 73 9412 13 Pegasus Airlines Turkey 16.8 23.9 16,231 27.8 22.7 80.5 3.2 42 7714 14 Cebu Pacific Air Philippines 14.4 8.3 12,927 12.1 14.3 79.8 -1.6 50 4415 15 Wizz Air Hungary 13.5 11.6 86.1 0.4 46 6616 19 Azul Brazil 13.3 31.5 11,615 32.7 31.1 80.2 1.0 92 2317 16 SpiceJet India 12.8 16.0 13,458 18.6 19.2 73.7 -0.4 55 59 DGCA18 18 Spirit Airlines USA 12.4 19.1 19,310 24.2 22.2 86.6 1.4 57 11419 17 Frontier Airlines USA 10.7 -0.3 15,861 -6.9 -8.7 90.7 1.8 54 80 US DOT20 21 Thai AirAsia Thailand 10.5 26.5 10,829 25.7 23.4 83.6 1.5 3721 20 Spring Airlines Est China 10.0 10.0 40 5 AB estimate22 22 Germanwings Germany 9.2 18.0 8,137 15.7 13.2 81.5 1.8 71 ICAO23 23 Volaris Mexico 8.9 20.7 14,486 17.4 17.9 82.6 -0.3 47 6424 24 Interjet Mexico 8.4 15.9 8,337 20.9 20.1 74.7 0.5 48 5325 28 Indonesia AirAsia Indonesia 7.9 34.3 9,293 32.5 32.6 76.6 0.0 30 426 32 Anadolu Jet Turkey 7.7 44.7 2827 25 Allegiant Air USA 7.2 3.6 11,471 9.4 8.8 87.5 0.5 7028 33 FlyDubai UAE 6.8 38.1 34 10129 26 Skymark Airlines Japan 6.7 -0.1 68.0 -1.3 33 1430 29 Transavia Airlines Netherlands 6.5 11.4 12,254 8.9 7.4 83.5 1.2 36 231 27 Virgin America USA 6.3 1.8 15,791 -1.0 -2.2 80.2 1.0 53 4032 30 Monarch Scheduled UK 6.1 13.1 12,989 12.6 14.8 86.0 -1.7 32 31 Air Arabia UAE 6.1 15.1 12,400 15.1 17.9 80.0 -2.0 32 1934 37 Nok Air Thailand 5.9 41.6 3,567 45.3 45.7 84.0 -0.2 19 435 43 Citilink Indonesia 5.3 86.8 4,198 87.5 74.8 77.0 5.3 25 5636 35 Tigerair Singapore 5.1 15.4 9,326 16.3 25.5 78.1 -6.2 26 10 Tiger Singapore only 36 36 GoAir India 5.1 22.0 4,902 23.5 23.2 75.8 0.2 19 73 DGCA38 39 Jeju Air South Korea 4.6 19.9 15 739 34 PAL Express Philippines 4.5 -3.4 20


TOP 75 LOW-COST CARRIERS BY PASSENGER NUMBER: 2013

Rank Carrier Country Passengers Traffic Capacity Load factors Fleet Source2013 2012 (m) Change% RPK Change% change% Percent Change Current Orders

40 40 VivaAerobus Mexico 3.8 3.9 21 5241 41 Jetstar Asia Singapore 3.6 9.7 5,897 -8.6 -8.0 79.0 -0.5 1742 42 Flynas Saudi Arabia 3.5 22.3 4,591 9.8 8.9 70.4 0.6 24 2743 66 Vietjet Air Vietnam 3.4 307.4 11 64 Launched Dec 1144 38 JetKonnect India 3.3 -14.5 2,862 -16.3 -13.8 72.7 -2.2 23 DGCA44 45 Air Busan South Korea 3.3 21.3 1244 46 West Air (China)Est China 3.3 22.6 13 AB estimate47 47 AirAsia X Malaysia 3.2 22.5 15,857 16.6 19.0 82.1 -1.7 16 4747 50 Iberia Express Spain 3.2 46.5 22, 86.8 12.3 15 ICAO, launched May 1249 51 Tigerair Australia Australia 3.1 48.4 3,615 46.2 36.8 87.3 5.6 13 650 44 KululaEst South Africa 3.0 7.1 11 AB estimate51 49 Jin Air South Korea 2.8 18.3 1151 61 PeachEst Japan 2.8 117.1 12 5 AB estimate53 48 Air India ExpressEst India 2.3 -4.2 18 AB estimate54 55 T'way South Korea 2.2 18.3 754 75 AirAsia Philippines Philippines 2.2 615.2 2,425 617.5 551.9 67.5 6.2 1 3 Inc Asia Zest (May-Dec 13)56 52 Air OneEst Italy 2.1 5.0 9 AB estimate56 69 Tigerair Mandala Indonesia 2.1 199.3 2,913 232.5 202.7 76.0 6.8 9 Mandala relaunch Apr 1258 56 FireFly Malaysia 2.0 17.6 14 859 54 Jetstar Pacific Airlines Vietnam 1.9 1.3 1,856 3.3 2.8 90.9 0.4 759 57 Sun Country Airlines USA 1.9 14.9 4,009 16.0 14.6 71.2 0.9 17 2 US DOT61 53 Air Do Japan 1.8 -8.3 1,641 -7.2 -3.5 70.7 -2.8 1361 58 Mango South Africa 1.8 14.1 1,979 17.5 10.5 82.6 5.0 961 70 VivaColombia Colombia 1.8 229.2 838 229.0 5 Launched May 1264 62 Star Flyer Japan 1.7 46.3 1,553 42.9 43.1 65.7 -0.1 10 165 64 Jetstar Japan Japan 1.6 54.0 1,516 27.9 41.9 72.1 -7.9 18 4 Dec 12 v Jun 13 year-end66 74 Tigerair Philippines Philippines 1.4 265.0 1,323 236.6 170.5 78.9 15.5 467 60 Solaseed AirEst Japan 1.4 6.7 13 AB estimate68 59 Blue AirEst Romania 1.3 -6.3 8 AB estimate69 63 Jazeera Airways Kuwait 1.1 1.0 8 170 65 Blu-ExpressEst Italy 1.0 0.0 5 AB estimate70 72 ScootEst Singapore 1.0 100.0 6 20 AB estimate72 67 Sverigeflyg Sweden 0.8 9.7 72.0 -1.0 72 68 Smartwings Czech Republic 0.8 11.1 4 AB estimate

72 71 Wizz Air Ukraine Ukraine 0.8 43.7 1,250 36.9 39.9 85.0 -0.2 3 AB estimate (partial)

75 73 Mihin Lanka Sri Lanka 0.5 26.2 1,486 28.4 28.7 74.9 -0.2 3 4 ICAOTOTALS 801.4m 9.9 3,572 3,544

NOTES: Southwest Airlines 2012 and 2013 includes AirTran; Solaseed formerly Skynet Asia Airways. EstEstimates based on historical, capacity and fleet data, and partial data where available, used for indicative purposes where published figures unavailable. Figures primarily for scheduled traffic and calendar year. SOURCE: Company replies/records; fleet data: Flightglobal’s Ascend Online database

2013 TOP 10: THE AMERICAS

Rank Airline Pax (m) Change

1 Southwest Airlines 133.2 -0.6 2 Gol 36.3 -7.3 3 JetBlue Airways 30.5 5.2 4 WestJet 18.5 6.1 5 Azul 13.3 31.5 6 Spirit Airlines 12.4 19.1 7 Frontier Airlines 10.7 -0.3 8 Volaris 8.9 20.7 9 Interjet 8.4 15.9 10 Allegiant Air 7.2 3.6

2013 TOP 10: EUROPE


1 Ryanair 81.7 3.0 2 EasyJet 60.8 4.1 3 Norwegian 20.7 17.1 4 Vueling Airlines 17.2 16.3 5 Pegasus Airlines 16.8 23.9 6 Wizz Air 13.5 11.6 7 Germanwings 9.2 18.0 8 Anadolu Jet 7.7 44.7 9 Transavia Airlines 6.5 11.4 10 Monarch Scheduled 6.1 13.1

2013 TOP 10: ASIA-PACIFIC


1 Lion Air 34.1 10.4 2 AirAsia 21.9 11.0 3 IndiGo 19.2 21.7 4 Jetstar 16.8 9.0 5 Cebu Pacific Air 14.4 8.3 6 SpiceJet 12.8 16.0 7 Thai AirAsia 10.5 26.5 8 Spring Airlines 10.0 10.0 9 Indonesia AirAsia 7.9 34.3 10 Skymark Airlines 6.7 -0.1


LOW-COST CARRIERS OVERVIEW

DATA COMPILED BY SILVA ISHAK FLIGHTGLOBAL DATA RESEARCH TEAM

June 2014

Profitability improved in the budget sector in 2013, jumping around 50% to nearly $6 billion among leading carriers

2013 FINANCIAL RESULTS FOR SELECTED LOW-COST CARRIERS

Airline Country Revenue Change Operating Result Operating margin (%) Net result Period$m (%) 2013 2012 2013 2012 2013 2012 end

Southwest Airlines USA 17,699 3.6 1278.0 623.0 7.2 3.6 754.0 421.0 Dec 13Ryanair Ireland 6,763 7.5 884.3 924.9 13.1 14.7 702.0 733.1 Mar 14EasyJet UK 6,644 8.9 775.5 524.1 11.7 8.6 621.1 403.7 Sep 13JetBlue Airways USA 5,441 9.2 428.0 376.0 7.9 7.5 168.0 128.0 Dec 13Gol Brazil 4,107 -0.7 122.0 -462.2 3.0 -11.2 -332.3 -772.1 Dec 13WestJet Canada 3,539 3.1 386.1 376.1 10.9 11.0 259.7 242.6 Dec 13Jetstar Australia 3,353 5.0 140.7 210.6 4.2 6.6 Jun 13 Group revenuesNorwegian Norway 2,634 18.5 163.9 69.7 6.2 3.1 53.9 78.9 Dec 13Azul Est Brazil 2,400 14.0 -40.6 -1.9 -195.9 Dec 13 AB estimateVueling Airlines Spain 1,876 31.9 182.1 46.4 9.7 3.3 36.6 Dec 13IndiGo India 1,736 45.9 182.3 13.0 10.5 1.1 144.4 26.6 Mar 13AirAsia Malaysia 1,685 2.2 321.8 334.0 19.1 20.3 114.7 256.8 Dec 13Spirit Airlines USA 1,654 25.5 282.3 174.0 17.1 13.2 176.9 108.5 Dec 13Lion Air Est Indonesia 1,600 23.1 Dec 13 AB estimatePegasus Airlines Turkey 1,481 18.6 131.5 107.6 8.9 8.6 45.8 70.5 Dec 13Virgin America USA 1,425 6.9 80.9 -31.7 5.7 -2.4 10.1 -145.4 Dec 13Wizz Air Hungary 1,392 19.0 332.0 157.0 112.4 34.1 Mar 14Frontier Airlines USA 1,349 -5.9 51.4 29.4 3.8 2.1 77.0 4.7 Dec 13 US DOTGermanwings Est Germany 1,250 21.1 Dec 13 AB estimateSpring Airlines China 1,075 12.9 70.4 49.1 6.5 5.2 119.2 99.1 Dec 13SpiceJet India 1,058 -0.7 -142.4 -16.2 -13.5 -1.5 -164.8 -35.1 Mar 14Volaris Mexico 1,011 13.6 24.6 28.8 2.4 3.2 20.6 15.5 Dec 13FlyDubai UAE 1,007 33.2 60.7 41.4 Dec 13Allegiant Air USA 996 9.6 154.7 132.3 15.5 14.6 91.8 78.4 Dec 13Cebu Pacific Air Philippines 962 6.8 56.7 63.2 5.9 7.0 12.0 84.9 Dec 13Interjet Mexico 900 14.2 78.9 10.0 38.1 Dec 13Air Arabia UAE 867 12.5 93.5 89.1 10.8 11.6 118.5 115.7 Dec 13Skymark Airlines Japan 856 -17.1 -24.9 56.1 -2.9 5.4 -18.4 45.4 Mar 14Thai AirAsia Thailand 773 21.5 73.6 65.0 9.5 10.2 63.5 58.3 Dec 13AirAsia X Malaysia 733 14.2 11.2 15.9 1.5 2.5 -27.4 11.0 Dec 13Anadolu Jet Est Turkey 600 33.3 Dec 13 AB estimateTigerair Singapore 582 -16.6 -41.3 5.9 -7.1 0.8 -176.8 -36.6 Mar 14 Group revenuesLucky Air China 567 8.2 16.7 44.0 Dec 13Indonesia AirAsia Indonesia 554 17.9 -11.9 41.8 -2.1 8.9 -35.4 20.4 Dec 13Sun Country Airlines USA 410 13.6 3.2 15.9 0.8 4.4 2.4 14.8 Dec 13Jeju Air South Korea 394 13.9 3.5 Dec 13Solaseed Air Japan 368 -0.6 23.4 8.3 6.3 2.2 13.2 6.8 Mar 13Nok Air Thailand 367 38.0 35.6 16.8 9.7 6.3 34.5 16.3 Dec 13Star Flyer Japan 334 10.6 -30.8 0.4 -9.2 0.1 -30.8 3.5 Mar 14Citilink Indonesia 273 -60.2 -31.5 -22.1 -43.2 -48.5 -28.4 Dec 13Jin Air South Korea 259 17.2 6.5 12.9 2.5 5.8 8.7 Dec 13Air Busan South Korea 254 4.7 1.9 Dec 13Jazeera Airways Kuwait 231 3.1 72.6 66.1 31.4 29.5 58.7 49.8 Dec 13Mango South Africa 162 4.3 2.7 4.6 Mar 13T'way South Korea 152 3.7 Dec 13

LOW-COST CARRIER FINANCIALS

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Ryanair’s BBB+ score from S&P and Fitch puts it in good stead for a €500m bond issue

LOW-COST CARRIERS FINANCE

RATINGS BOOST

REPORTLAURA MUELLER LONDON

Financiers are never slow to knock on Ryanair’s door when it needs aircraft funding

Rex

Fea

ture

s

Ryanair’s growth in passenger numbers, projected by S&P

2-3%

It was only a matter of time before Ryanair, which has built its airline empire on low costs, would make a move for the capital markets to access some of the cheapest funding going these days.

In March, Standard & Poor’s granted the car-rier a “BBB+” rating, which is three notches above junk, making it “the highest-rated airline in the world”, says Howard Millar, Ryanair’s finance chief. Fitch followed with a similar rat-ing in mid-May, describing Ryanair’s capacity to meet financial commitments as “solid”.

Better ratings will allow the budget carrier to “achieve lower cost financing”, ensuring the carrier has “the lowest costs and the low-est fares in Europe”, Millar indicates.

Supporting the investment grade rating is the carrier’s return on capital, which has aver-aged roughly 13% during the past six years, S&P notes in its rating analysis.

Ryanair’s passenger numbers – which S&P believes will grow 2-3% this year and 1-2% in 2015 based on the carrier’s “increasing route offering and improving economic conditions” – also figure in the rating analysis.

The carrier’s “operating efficiency”, which is driven by a “keen focus on costs”, is another key ingredient supporting the BBB+ rating, says S&P. This allows the carrier to operate at “significantly lower cost per passenger and cost per available seat-mile than its peers”.

CUSTOMER RATINGSHowever, one aspect that did not go unno-ticed was Ryanair’s “reputation of less-friendly customer service”.

S&P says this could “slow down passenger volume growth”, especially during good eco-nomic conditions when people are willing to spend more money on flights. The ratings agency acknowledges Ryanair is “taking meas-ures” to become a more customer-friendly ser-vice. “We will continue to monitor how this will affect demand in the near future.”

While a corporate rating makes perfect sense for Ryanair, as it opens new doors in the world of financing, it was by no means an essential move. As Europe’s largest carrier by passenger numbers, and a ferocious buyer of new aircraft, backed by a solid balance sheet,

Ryanair, unlike many carriers, can call the shots in the aviation finance market.

When word gets out that Ryanair needs funding, financiers and the US Export-Import Bank come running with offers of support, even before the ink on a formal funding request can dry. The opposite is true for many of Ryanair’s competitors – which find themselves, cap in hand, at the mercy of the banks and the export credit agencies, willing to accept whatever financing is dealt.

Ryanair issued a $194 million Ex-Im-backed pre-funded bond in September 2012, smashing all previous records with the lowest spread for such a financing at that time.

The bond priced at mid-swaps plus 65 basis points for a coupon of 1.741%. The transaction was “over three times oversub-scribed”, says Citi, which along with BNP Paribas acted as bookrunners on the deal.

No doubt Ryanair could have happily car-ried on issuing similar financings, and possi-bly at even cheaper pricing in today’s ultra-

competitive finance markets, but the carrier is looking to move into another space altogether.Market sources suggest Ryanair is eager to tap the bond market without the help of an export credit agency – a move that is made easier with the help of a credit rating.

BOND ISSUE Ryanair is looking at a €500 million ($680 mil-lion) bond issue in early summer, before it starts taking delivery of 175 new Boeing 737-800s in September. The additional rating from Fitch now clears the way for the airline to raise capi-tal in this manner.

Then treasurer, Jim Dempsey, said in January that Ryanair was looking at the enhanced equipment trust certificate (EETC) market to fund aircraft. He said the carrier was “toying” with the idea, but noted a problem with these financings is that they are US-dollar dependent.

“Our business is based in euros… so we would like to see the development of a euro-based EETC, or a local currency-based EETC, to eliminate the currency risk,” he said.

Dempsey acknowledged the carrier is inter-ested in pursuing the capital markets “in the next couple of years” to take advantage of the “favourable” interest-rate environment.

However, with an interest rate hike on the cards, the carrier, with its firm focus on cost cut-ting, undoubtedly knew it was wise to get the rating under its belt sooner rather than later. ■


LOW-COST CARRIERS AIRCRAFT MARKETS

June 2014

ANALYSIS BY FLIGHTGLOBAL INSIGHT

LOW-FARE INVENTORIESUsing Flightglobal’s Ascend Online database, we break out the sector’s fleet and orderbook by category and region, and examine the competitive landscape in the engine market where Pratt & Whitney is moving in on CFM’s domination

Total Fleet: 3,301

Fleet

SOURCE: Flightglobal Insight analysis using Ascend Onlinedatabase (April 2014)

LOW-COST CARRIER A320/737 SHARE

A320neo 737NG

A320ceo

1,507

1,582

212

577 1,533

743533

737 Classic

737 Max

Total Backlog: 3,386

Backlog

LOW-COST CARRIER FLEET BREAKDOWN BY AIRCRAFT CATEGORY

Fleet

SOURCE: Flightglobal Insight analysis using Ascend Online database (April 2014)

0

200

400

600

800

1,000

1,200

1,400

AfricaMiddle EastLatin AmericaEuropeAsia-PacificNorth America

1,248

1,036991

349

10038

Mainline Total: 3,489

Total Fleet: 3,762Turboprop Total: 101

Regional Jet Total: 172

LOW-COST CARRIER A320/737 FLEET BREAKDOWN

Fleet


0

200

400

600

800

1,000

1,200

AfricaMiddle EastLatin AmericaAsia-PacificEuropeNorth America

A320ceo Total: 1,507

Total Fleet: 3,301

737 Classic Total: 212

737NG Total: 1,582

1,059

949916

249

9731

LOW-COST CARRIER A320/737 ORDER BACKLOG

Backlog


0

200

400

600

800

1,000

1,200

1,400

1,600

Middle EastLatin AmericaNorth AmericaEuropeAsia-Pacific

A320ceo Total: 577

A320neo Total: 1,533

Total Backlog: 3,386737 Max Total: 743

737NG Total: 533

1,479

783 742

240142


Nor

weg

ian

June 2014

LOW-COST CARRIER A320/737 ENGINEMANUFACTURER MARKET SHARE

Total Fleet: 3,301

International Aero Engines

CFM International

2,693 605

Fleet


Pratt & WhitneyUndisclosed


2,102

493207

584

Backlog

3

LOW-COST CARRIER A320 ENGINEMANUFACTURER MARKET SHARE

Fleet

Total Fleet: 1,507


902605


826

207

493

584

Backlog

International Aero Engines

CFM International

Pratt & WhitneyUndisclosed

NORTH AMERICA TOP DOG IN FLEET RANKINGAnalysis by Flightglobal Insight shows that the global fleet of low-cost airlines comprises over 3,760 aircraft. North America’s carriers account for a third, with 1,248 aircraft in service. Although Asia-Pacific trails in the current fleet stakes, with 1,036 aircraft, it is geared for the strongest growth. Its airlines have almost 1,500 orders, which represents 44% of the total backlog of 3,386 aircraft.

The Airbus A320 and Boeing 737 families account for the bulk of the low-cost fleet and CFM International dominates the engine market with an 82% share. However, its share of the backlog is smaller, at 62%.

Flightglobal has adjusted the airline criteria this year to reflect the changing landscape in the low-cost arena. The most significant change is the exclusion of Air Berlin, which causes a reduction in European data compared with earlier surveys.

Flightglobal InsightQuadrant House, The Quadrant, Sutton, Surrey, SM2 5AS, UKTel: +44 20 8652 8724 Email: [email protected] Web: www.flightglobal.com/insight

Low Cost Air Carriers 2014

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