Airline orders are at ‘unprecedented levels’ with low cost carriers expanding their fleet more than others.
In Europe, EasyJet, Ryanair and Norwegian Air Shuttle have placed orders in the past two years totalling hundreds of aircraft, extending to 2021 for fulfilment, reports the Financial Times.
Airlines have managed their seat capacity carefully to counter any downward pressure on ticket prices, KPMG said in a report, but the number of new aircraft due to come into service means there will be greater competition between airlines.
“Airlines around the globe are replacing their fleet at unprecedented levels,” said James Stamp, global head of aviation at KPMG.
“Much of the order activity by legacy airlines is driven by the desire to cut operating costs. With fuel costs continuing to be at record levels and a new aircraft generation on the market which is up to 20 per cent more fuel efficient, this trend should not come as a surprise.”
Airbus and Boeing have record levels of aircraft on order – at the end of last year Airbus had unfulfilled orders for 5,559 aircraft and Boeing had 5,080.
Low-cost carriers have continued to outperform other airlines in terms of share price, the research also found.
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The results of the January survey show that a majority of respondents expect to see improvements in profitability.
“The positive outlook has been broadly stable since the April 2013 survey, and in January 2014 over 70% of respondents were expecting profits to improve over the coming 12 months,” Iata said.
A majority (72%) of respondents expect passenger travel to expand over the year ahead, but at a slightly slower pace than the last survey in October (83%).
Airlines took on more staff in the last quarter of 2013, consistent with an improvement in financial performance. This trend is expected to continue in the year ahead.
Sourced from Travel Weekly
A third of that demand – 900 aircraft – will be replacements but 66% is expected to be driven by rapid fleet expansion in the region, the manufacturer says.
Long-range, twin-aisle aircraft, such as the 777 and 787 Dreamliner, will continue to dominate order books in the Gulf region, reflecting the global network priorities and emerging alliances and partnerships of the region’s carriers.
Boeing Commercial Airplanes marketing vice president Randy Tinseth said: “The Gulf region benefits from a unique geographic position that enables one-stop connectivity between Europe, Africa, Asia and Australasia.
“Additionally, over the last decade, we’ve seen a rise in low-cost carriers that have benefitted from a large youthful population, large migrant workforce and trends toward market liberalisation.”
Twin-aisle aircraft will account for more than half of the region’s new deliveries over the next two decades against 24% globally.
Single-aisle aircraft will make up 47% of regional deliveries through to 2032, while large aircraft will account for 10% of forecast demand.
Globally, Boeing has forecast a long-term demand for 35,280 new aircraft, valued at $4.8 trillion. These new aircraft will replace older, less efficient types.
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The new Aeroflot subsidiary, whose name has yet to be unveiled, plans to eventually serve international destinations including Kiev, Yerevan, Istanbul and Barcelona with a fleet that will comprise 40 aircraft starting with Boeing 737s, according to the daily newspaper Vedomosti.
The budget Aeroflot would likely be based at Domodedovo in the south of Moscow as opposed the airline’s main hub at Sheremetyevo airport, the AFP news agency reported.
Russia’s third biggest airline, UTair, is also planning to set up its own low-cost carrier, pointing to a clear market demand.
“People consider more and more that their time is precious and they are going to want less and less to spend two or three days to get anywhere,” chief executive Andrei Martirossov toldVedomosti.
But setting up a budget airline is still dependent on changes to Russia’s aviation regulations which are stricter than in Europe.
Russian law also forbids the hiring of foreign pilots, a major problem in a country whose aviation boom had led to a pilot shortage and consequent high salaries.
Aeroflot chief executive Vitaly Saveliev called it a “paradox” that Russian authorities have allowed Wizz Air and easyJet to fly into the country but has not levelled the regulatory playing field so Russian companies can use the same business model.
“As long as the law does not change, absolutely nothing is going to fly. We are not going to take the risk,” he said. “Aeroflot is not going to invest $100 million in a project which is not going to make us money.”
The Russian authorities appear to have understood the necessity of acting after president Vladimir Putin gave his agreement in principle to the creation of a low-cost airline last October. But changes have been slow to come, according to the AFP report.
Sourced from Travel Weekly
We compare charges for items including checked luggage, sporting equipment, credit card use, and seat reservations, at 12 major airlines.
By Oliver Smith
In their efforts to keep headline fares down, airlines continue to increase their baggage charges and booking fees.
Last month Ryanair’s designated “peak period” began, meaning the cost to check in a 20kg suitcase rose from £25 to £35. Since last year Thomson’s checked baggage fee has increased from £15 to £22, and easyJet’s from £14.50 to £18.
Charges for carrying an item of overweight hand baggage have soared too, from £30 to £50 on Monarch, and from £30 to £40 on Flybe, while booking fees rose for those travelling with Ryanair, Aer Lingus and easyJet.
Ahead of the summer holidays, to help passengers compare charges for “extras” such as these, Telegraph Travel – with help from the Civil Aviation Authority – has produced the following tables, detailing fees at 12 major airlines operating short-haul flights from Britain.
Ryanair has outdone its rivals in the a number of categories, with the highest charges for checked luggage (up to £45 on selected routes) and excess baggage (£20 per kilo, although BA’s one-off fee of £40 could be costlier if you’re just a pound or two over). Its £17 per person admin fee to claim back government tax on a cancelled flight is also worth mentioning. Considering it only flies short-haul, the tax paid will never amount to more than £17.
Other notable charges include Thomson’s and Flybe’s hefty excess baggage charges (£13-18 and £15 per kilo, respectively), Thomas Cook’s industry leading charge for sports equipment (up to £70 for some items), and its charge of up to £70 for overweight hand luggage. Aer Lingus’s £8 security surcharge on flights to the US is novel, as is Norwegian’s staggering £160 name change fee on long-haul services (even more than Ryanair’s exorbitant £110 charge).
If you believe any of these charges are wrong or out-of-date, please email email@example.com, and we will update the table.
|Hold luggage (per flight)||Excess||Sports/musical equipment||Hand luggage||Excess hand luggage||Other|
|Aer Lingus||£12-20 for 20kg||£6 per kg||£25||free, 55x40x24, 10kg||Hold luggage fee applies||Hand luggage allowance less on regional flights|
|Bmi Regional||Included, upto 20kg in economy||£10 per kg||As part of baggage allowance, or £30||free, 55x40x23||Hold luggage fee applies|
|British Airways||Included, upto 23kg in economy||£40 one-off charge (max 32kg)||As part of baggage allowance, or £20||free, 56x45x25||Hold luggage fee applies||Second item 45x36x20 may be carried on board|
|easyJet||£8-£18 for 20kg||£7-£11||£35 per flight||free, 56x45x25||£25-£40||Hand luggage larger than 50x40x20 may be put in the hold, at no extra charge|
|Flybe||£13.99-£14.99 (max 20kg)||£15 per kg||£30||free, 55x40x23, 10kg||£40||Checked baggage included on premium fares|
|Jet2.com||From £8 for 22kg||£12 per kg||£25||free, 56x45x25, 10kg||Hold luggage fee applies|
|Monarch||£9.99-£21.99 for 20kg||£10 up to 3kg; £10 per kg after||£25||free, 56x40x25, 10kg||£50|
|Norwegian||£15-42 for 20kg||£7 per kg||£20-40||free, 55x40x23, 10kg||Hold luggage fee applies||Checked baggage included on premium fares|
|Ryanair||£15-45 for 15-20kg||£20 per kg||£50||free, 55x40x20, 10kg||£60|
|Thomas Cook||£17-26 for 20kg||£8 per kg||£25-70||free, 55x40x20, 5kg||£50-70||Checked baggage included on package holidays|
|Thomson||£15-25 for 20kg||£13-18 per kg||Charged as excess baggage||free, 55x40x20, 5kg||Hold luggage fee applies||Checked baggage included on package holidays|
|Wizz Air||£13-30||£9 per kg||£34||free up to 42x32x25, 10kg, £8-17 up to 56x45x25, 10kg||Hold luggage fee applies|
|Admin fee||Credit card fee||Reserved seating (per flight)||Name change fee (per person, per flight)||Infant fee||Cancellation fee (per person, per flight)||Other|
|Aer Lingus||£7 per person per flight||n/a||£5-14||£80||£19||£13.50||Security surcharge of £8 on flights to US|
|Bmi regional||n/a||£4.50 per passenger||n/a||n/a||10% of adult fare||£25||Admin fee of £8 for telephone bookings|
|British Airways||n/a||£4.50 per passenger||£10-£25||free online||10% of adult fare||£15|
|easyJet||£10 per booking||2.5% of transaction||£3-£12||£40||£20||£30|
|Flybe||n/a||3% (minimum £5)||£6.50-£15||£40||12% of adult fare||£25|
|Jet2.com||£6 per person per flight (online); or £10 at airport||2.5%||£7||£35||£20||All flights non-refundable|
|Monarch||n/a||2% (minimum £5)||£3.99-£7.99||£100 name change; £35 flight change||£20||£35|
|Norwegian||n/a||£4||£5-25||£25 (£160 on long-haul flights)||10% of adult fare, plus taxes||£160||£11 per person per flight charge for telephone bookings|
|Ryanair||£7 admin + £7 check-in (both per person per flight)||2%||£10||£110 name change; £30-60 flight change||£30||All flights non-refundable, £17 per person admin fee to claim back tax||£70 per person boarding card re-issue fee|
|Thomson||n/a||2.5% (minimum £4.95)||£12 (£7 for children)||% of original fare, plus £50 for name change; £30 flight change||10% of adult fare||All flights non-refundable|
|Thomas Cook||n/a||2%||£5 (£3 for children)||£20, except for spelling errors spotting with 48 hours of booking||10% of adult fare||All flights non-refundable||£10 priority check-in|
|Wizz Air||£6 per person per flight||n/a||£3-14||£38 name change; £26 flight change||£21||£51||£9 airport check-in fee|
By Phil Davies,
Governments are being urged to take a more relaxed view on global airline mergers because consolidation is seen as a key driver of profits.
The call came in an Iata study supported by analysis from McKinsey showing that returns on capital invested in airlines have improved in recent years, but are still far below what investors would normally expect to earn.
Director general and chief executive Tony Tyler (pictured) said: “The airline industry has created tremendous value for its customers and the wider economies we serve.
“Aviation supports some 57 million jobs globally and we make possible $2.2 trillion worth of economic activity. By value, over 35% of the goods traded internationally are transported by air.
“But in the 2004-2011 period, investors would have earned $17 billion more annually by taking their capital and investing it in bonds and equities of similar risk.
“Unless we find ways to improve returns for our investors it may prove difficult to attract the $4-5 trillion of capital we need to serve the expansion in connectivity over the next two decades, the vast majority of which will support the growth of developing economies.”
He said that airlines “face a hyper-fragmented industry structure owing to government policies that discourage cross-border consolidation. There is plenty of room for some fresh thinking on all accounts”.
The biggest cost for airlines is fuel and companies in this sector benefited from an estimated $16-48 billion of their annual net profits generated by air transport.
The most profitable part of the rest of the value chain is in distribution, with the computer reservation systems businesses of the three global distribution system companies generating an average return on invested capital (ROIC) of 20%, followed by freight forwarders with an ROIC of 15%, according to the research.
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But the operator says it wants to increase the differential between the fare types so customers recognise the value in Vantage fares and the two types can be offered together throughout the selling process.
Work on how this might be achieved comes after agents complained some customers were angered by Cunard Getaway fares released in March five months before departure.
These were offering a £700 per couple saving which agents complained undermined the benefits of Vantage fares which they had persuaded customers to buy.
Although the operator has included a price promise with its Vantage fares under which it will make up any difference if they have to be reduced no such offer is made if the deal is a Getaway fare.
Speaking to Travel Weekly at the keel laying of P&O Cruises’ new ship in Italy last week, managing director Carol Marlow said deliberations were still at an early stage.
“It’s all about differential between the two fares and how much people value those differences,” she said.
“We are looking at the positioning of the two prices and whether there is demand for a Getaway earlier in the process more like an airline with a fully flexible fare and a more restricted fare.”
Marlow said that P&O Cruises has had to reduce its Vantage fares this year on a number of occasions and customers were able to take advantage of the price promise.
Meanwhile, Marlow said she was optimistic that the line’s as yet unnamed new superliner would be hitting the market at the right time as the economic upturn takes hold.
“There is a certain optimism out there even now. How great if this ship can add to that sense of optimism and encourage people to be positive and move on.
“We are looking at this ship as being a vehicle for us bringing in a whole host of new cruisers. This is the biggest and best ship built for Britain. We are seeing this as the next generation of new ships.”
The new vessel, which is the same class of ship as Princess Cruises new Royal Princess, will enter service in 2015, but will go on sale in around a year’s time.
Sourced from Travel News