Industry Monitor. Issue 181. 04/03/2016 Page 1 © EUROCONTROL 2016

European flights increased by 1.5% in January 2016 compared with January 2015. Still preliminary data for February show average daily flights up 3% on February 2015.

IATA reported that European scheduled passenger traffic (RPK) increased by 5% in 2015 (vs. 2014). Capacity was up by 3.8% and the total passenger load factors reached a record annual high of 82.6%.

Oil prices remained at €30 per barrel in February. EIA reported that Brent crude oil prices averaged €48 per barrel in 2015 compared with an average of €91 per barrel in 2014.

EUROCONTROL statistics and forecasts 1

Other statistics and forecasts 3

Passenger airlines 3

Financial results of airlines 7

Airports 7

Oil 8

Economy 8

Fares 8

EUROCONTROL statistics and forecasts

European flights (ESRA – EUROCONTROL Statistical Reference Area) increased by 1.5% in January 2016 compared with January 2015. Still preliminary data for February show average daily flights up 3% on February 2015 (Figure 1). The traditional scheduled and low-cost segments were the only drivers of growth in January 2016 with an increase of 2% and 3.3% respectively. The charter segment continued to be impacted by the bankruptcy of Transaero Airlines (Russia) in October 2015, but also by a few airlines changing their business model, and declined by 15.3%. The business aviation and all-cargo segments decreased by 5.8% and 1.9% respectively in January 2016. Ten states contributed to the growth of local traffic (excluding overflights) in Europe in January and saw UK and Turkey as the top contributors each with circa 160 extra flights per day. Spain was in the top 3 and added 150 flights per day to the network. Denmark, Ireland and Canary Islands contributed each to 50 extra daily flights. Portugal, Poland, the Netherlands and Italy completed the list and added a combined total of 130 daily flights in January 2016. France removed 50 daily flights from the network which led to a 2% decrease in the state’s local traffic and was partly due to industrial action on 26 January. As was the case all months last year, Norway continued to remove flights from the network with 44 fewer daily flights in January 2016 (Figure 2). Comprehensive statistics on flights are available from the STATFOR dashboard (EUROCONTROL, February).

Industry Monitor The EUROCONTROL bulletin on air transport trends

Issue N°181. 04/03/2016

Industry Monitor. Issue 181. 04/03/2016 Page 2 © EUROCONTROL 2016

The United States were the main extra-European partner with a daily average of 700 flights on flows between Europe and the United States, an increase of 5% in January 2016. Traffic flows between Europe and the Middle-East (mainly United Arab Emirates, Israel Qatar and Saudi Arabia) increased by 8% in January 2016 with the biggest progression on the flows between Europe and Qatar (+17% compared with January 2015). Extra-European traffic to and from the Russian Federation continued to decline and was down by 22% in January 2016 to an average of 490 daily flights. Traffic flows between European states and Egypt decreased by 26% down to 140 flights per day on average in January 2016 (EUROCONTROL, February).

Figure 1: Monthly European Traffic and Forecast (based on the Sep15 updated forecast).

Figure 2: Main changes to traffic on the European network in January 2016.

Industry Monitor. Issue 181. 04/03/2016 Page 3 © EUROCONTROL 2016

Based on preliminary data from airlines for delays from all causes, 38% of flights were delayed on departure (>= 5 minutes) in January 2016, an increase of 1.6 percentage points when compared with the same month in 2015. The average all-causes delay per flight in January 2016 increased to 10.6 minutes from 10.3 minutes in January 2015 (Figure 3). The implementation of a new ATM system in Brest Area Control Centre (ACC) generated significant en-route ATFM delays with additional effects on Madrid, Paris, Seville and Canarias ACCs. Adverse weather conditions impacted operations at Schiphol, Zurich, Berlin Tegel, London Heathrow, Oslo, Istanbul Atatürk and Sabiha Gökçen airports. (EUROCONTROL, February).

Other statistics and forecasts

IATA reported that European scheduled passenger traffic (RPK) increased by 5% in 2015 (vs. 2014). Capacity (ASK) was up by 3.8% and the total passenger load factors reached a record high annual of 82.6%. However, traffic growth slowed during the last months of 2015 and was impacted by industrial action at Lufthansa and the failure of Transaero Airlines (IATA, 5 February). ACI reported that overall passenger counts at European airports saw an increase of 5.2% in 2015 compared with 2014. Total aircraft movements climbed 2.2% (ACI, 5 February).

Passenger airlines

Capacity, costs and jobs

It is reported that Meridiana is in the process of cutting 900 jobs as part of the partnership agreement with Qatar Airways which would see the latter take a 49% stake in the Sardinian-based carrier (La Stampa, 18 February & Meridiana, 4 February).

Percentage of flights delayed on departure

Breakdown of all-causes delay per flight

Figure 3: Delay statistics (all-causes, airline-reported delay – preliminary data for January 2016).

Industry Monitor. Issue 181. 04/03/2016 Page 4 © EUROCONTROL 2016

Ryanair has reportedly announced it will close two bases in Italy, at Pescara and Alghero (Sardinia) thereby cutting 16 routes from its network from October onwards. The decision comes after a 40% increase in passenger taxes that the Italian authorities have introduced in January (IM180) (Reuters, 2 February). Cyprus low-cost Cobalt will reportedly start operations at the end of March with flights from Larnaca to Western Europe, Russia, the Middle East and Africa. The start-up also plans to fly long-haul destinations by 2017 (CyprusBusinessMail, 8 February). The Latvian government has finalised an agreement with a German investor for the sale of a 20% stake in Air Baltic. The deal provides for fresh capital to be invested in the airline’s fleet modernisation and its new Horizon 2021 business plan (Air Baltic, 4 February). Ukrainian start-up Anda Air will reportedly launch charter operations this summer with a fleet of three Boeing B737 aircraft to holiday destinations in Turkey, Egypt, Montenegro, Croatia, Albania and Greece (ch-aviation, 13 February). Airlines for Europe (A4E) association launched in January with Europe’s five largest airline groups (IM180) added low-cost Norwegian and Finnair (A4E, 25 February).

Failures

Air Mediterranée went into liquidation and ceased operations on 15 February. The French airline operated charter and scheduled services throughout Western Europe, the Mediterranean, North and West Africa (Air Méditerranée, February).

Traffic statistics: January update

Figure 4 and Figure 5 compare January 2016 figures with January 2015 figures. In addition to the number of passengers (PAX), passenger capacity is measured in available seat kilometres (ASK) and traffic is measured in revenue passenger kilometres (RPK).

Figure 4: Main carriers’ traffic statistics.

Industry Monitor. Issue 181. 04/03/2016 Page 5 © EUROCONTROL 2016

Routes, Alliances, Codeshares

Aeroflot’s low-cost subsidiary, Pobeda will launch flights to Munich Memmingen and Zurich, effective 3 March. The carrier will also reportedly start flights to Larnaca and Paphos during Summer 2016 (Pobeda, February). Ryanair will open a new base at Bucharest, with 3 aircraft and two new routes to Athens and Timisoara bringing to 10 the number of routes served from the Romanian capital, effective October (Ryanair, 16 February). Ryanair plans to open a new base at Nuremberg from next November with one based aircraft and five new routes to Budapest, Malta, Manchester, Milan Bergamo and Rome Ciampino (Ryanair, 9 February). Ryanair will have eight bases in Germany with the opening of Hamburg and new routes to Brussels, Dublin, Gran Canaria, London Stansted, Manchester, Milan Bergamo and Sofia with two based aircraft from 1 November onwards (Ryanair, 10 February). Air France-KLM’s subsidiary, Transavia will operate 19 destinations from Munich when it launches its new base in March with four Boeing B737-800 aircraft. Munich is the carrier’s first base outside France and the Netherlands (IM178) (Transavia, February). Norwegian will establish a base in Rome Fiumicino with two Boeing B737 aircraft and seven routes to Oslo, Copenhagen, Stockholm, Helsinki, Bergen, Gothenburg and London Gatwick, effective 27 March (Norwegian, 9 February). Norwegian will launch four new long-haul routes from Paris CDG to New York JFK, Los Angeles and Fort Lauderdale as from 29 July. The low-cost carrier already operates five short-haul flights from Paris Orly to Oslo, Bergen, Stockholm, Copenhagen, and Helsinki (Norwegian, 9 February). Wizz Air will set up a base at Kutaisi airport in Georgia with one Airbus A320 aircraft and seven new routes to Berlin Schönefeld, Munich Memmingen, Milan Bergamo, Dortmund, Larnaca, Sofia and Thessaloniki (Wizz Air, 17 February).

Figure 5: Main carriers’ load factors.

Industry Monitor. Issue 181. 04/03/2016 Page 6 © EUROCONTROL 2016

Vueling will start operations from London Luton to Zurich, Amsterdam and Barcelona from June onwards. IAG’s low-cost subsidiary already operates from Gatwick and Heathrow (Vueling, 3 February). easyJet has opened a new base in Barcelona with three Airbus A320 aircraft and will launch two new destinations to Naples and Bordeaux to the 16 routes that the airline already operates from the Catalonian airport (easyJet, 3 February). Icelandair will serve Paris Orly from Keflavik with the start of the summer schedule. The carrier already operates the Paris CDG-Keflavik route (Icelandair, 3 February). Transavia France took delivery of its first Boeing B737-800NG aircraft out of five units to be delivered in 2016. These five aircraft will enable the low-cost carrier to launch seven new routes from Paris Orly to Dubrovnik, Vienna, Split, London Luton, Edinburg, Verona and Corfou along with four new routes from Lyon to Faro, Lisbon, Valencia and Agadir and one route from Nantes to Faro (Air France KLM, February). Low-cost Blue Air will reportedly launch charter operations in June from Timisoara to five holiday destinations in Heraklion, Rhodes, Zakinthos, Antalya and Bodrum (Romania Insider, 5 February). British Airways will start scheduled service from London Stansted to Ibiza, Palma de Mallorca, Malaga and Faro. These flights will be operated by the carrier’s subsidiary BA City Flyer with a fleet of Embraer E190 aircraft, effective 28 May (London Stansted Airport, 9 February). bmi regional extends its network in Europe with the launch of three routes from Munich to Milan Bergamo, Norrköping and Rostock in code-share flights with Lufthansa (bmi regional, 17 February). Azerbaijan Airlines plans to create a low-cost subsidiary, Azaljet and launch operations on 28 March 2016 (Azerbaijan Airlines, 19 February).

Figure 6: Financial results of airlines

Industry Monitor. Issue 181. 04/03/2016 Page 7 © EUROCONTROL 2016

Financial results of airlines All six main European airlines reported in this bulletin returned to profitability in 2015 (Figure 6) thanks to lower oil prices and record high passenger load factors. [Operating results were not available for airberlin, Alitalia, Lufthansa Group and Ryanair at the time of publication]. IAG reported a 65% increase of its operating profit for 2015 (vs. 2014), excluding Aer Lingus which joined the Group in August last year. British Airways made a profit of €1.8 billion (up 41% on 2014), Iberia quadrupled its profit to €247 million and Vueling reported €160 million profit (up 14% on 2014). Air France-KLM Group reported a strong improvement of its operating results despite the negative impact of the November terrorist attacks in Paris which were estimated at €120 million. Like-for-like, the Group’s operating results increased by €698 million when corrected for the September 2014 strikes and the negative impact of currency exchange fluctuations (source: Company reports).

Airports

Moscow’s fourth airport, Ramenskoye will open on 15 March and is expected to handle up to 60,000 passengers during its first months of operations. The Russian government plans to shift charter and low-cost traffic from Sheremetyevo, Domodedovo and Vnukovo to the new airport in future (Gazeta.ru news, February). London City has been up for sale in August 2015 and was sold to a consortium on 26 February; the transaction is expected to close on 10 March (Global Infrastructure Partner, 26 February).

Figure 7: Brent and kerosene prices.

Industry Monitor. Issue 181. 04/03/2016 Page 8 © EUROCONTROL 2016

Oil

Oil prices remained at €30 per barrel in February. Converted indices for Kerosene and Brent are shown in Figure 7. EIA reported that Brent crude oil prices averaged €48 ($52) per barrel in 2015 compared with an average of €91 ($99) per barrel in 2014 (EIA, 9 February).

Economy Eurostat estimated that GDP increased by 1.6% in the euro area and by 1.9% in the EU28 in 2015 as a whole. In its Winter 2016 Economic Forecast, the European Commission expects GDP to increase to 1.7% in 2016 in the euro area and to 1.9% in the EU28. Growth in 2017 is forecast to climb to 1.9% in 2017 in the euro area and to 2% in the EU28 (EUROPA, 4 February).

Fares Deflated ticket prices in Europe decreased by 1.5% in January year-on-year, based on preliminary values. This is below the trend of 1.3% (12-month trailing average) shown in Figure 8 (Eurostat, 29 February). Note: to eliminate the influence of inflation on euro figures, the ticket price is deflated with a price index. The STATFOR deflated ticket prices are estimated in 2015 constant euros.

Figure 8: Deflated ticket prices in Europe.

Industry Monitor. Issue 181. 04/03/2016 Page 9 © EUROCONTROL 2016

© 2016 European Organisation for the Safety of Air Navigation (EUROCONTROL) This document is published by EUROCONTROL for information purposes. It may be copied in whole or in part, provided that EUROCONTROL is mentioned as the source and it is not used for commercial purposes (i.e. for financial gain). The information in this document may not be modified without prior written permission from EUROCONTROL. STATFOR, the EUROCONTROL Statistics and Forecast Service statfor.info@eurocontrol.int www.eurocontrol.int/statfor