Part 6b – Southern Europe
This is the continuing series of posts to review the status (initially) of the International markets as at the end of 2017 (latest data available), I now have 4 full years of data compiled from the T-100 and as we know the data is only as accurate as that provided by the airlines each month. I remove diverts and one off's as much as possible so as to focus on the regular routes. I am classifying Summer Season as May to September inclusive in this post.
***Due to the size and complexity of the Europe list, I am breaking this up into 4 parts (Northern Europe, Western Europe, Southern Europe and an overall view at the end).
Next up Southern Europe and for the purposes of this exercise it will include the following routes (Spain, Portugal, Azores and Italy)
The Southern European market has been shaken up a bit over the past couple of years. Historically held between IB (Spain), AZ (Italy) and S4 (Portugal via Azores), this period saw 2 new entrants with TP creating a non-stop LIS route, and UX arriving with their seasonal flight from MAD, however that sadly only lasted 1 season and didn’t return for 2018. 2018 will see Level from BCN added to this market along with IB themselves going year round for the first time.
As a result of the additions, the market grew by around 69% from 384K seats to 650K in 2017 and with the new entrants bringing 330’s, that grew the average seat count from 242 to 256.
The good news is that even with that capacity increase, the pax count grew by 72% over the same period frpm 307k to 530K and the average pax from 194 to 208, which converts to an 81.5% load up from 80.2% in 2014. So the market has grown overall, a lot of which will be attributable to the success of the new TP LIS route, more of that in a moment.
The consistent equipment on these routes is the A330, with all of the airlines primarily using variations of it with the exception of S4. AZ use the 332, they have thrown a 772 on random occasions, but not enough to cause a ripple in the numbers. IB use the 333, but have had a smattering 346’s and 343’s, others used maybe errors in reporting. S4 use their aging A310’s, but in 2018 are switching out to 321’s 2016 saw a bunch of 332’s and 2017 343’s, a lot of which I am suspecting were subs. TP and UX were exclusively 332’s.
AZ’s financial woes are well documented, but it hasn’t stopped folks flying with them pax traffic grew 8% over the 4 years from 107k to 116k with almost identical capacity of 137k, which would should be enough growth to at least maintain the bottom line assuming ticket prices didn’t fall through the floor during the same period. Average loads as a result improved from 79% to 84% for the year. Summer loads improved to 88.3% in 2017 with both August and a little more surprisingly September breaking the 90% barrier and not a 60% load in sight.
The question on this route right now is will AZ be the one to ultimately carry it through, definitely have the feeling that if AZ do go down, someone will replace it.
S4 had this market to themselves, but as their focus was on driving people to the Azores, they only flew it once a week. And for 14 and 15, given the limited capacity, they flew around 15,000 people on the route. And maintained around 82-84% loads. Which in itself wasn’t bad. However you got the feeling TP were looking for an option, and in 2016 they finally weighed in with daily service on a 332, that in itself made a statement of intent and it turned out just perfectly for them. Putting 100k seats into a market, you better have done your homework and it was clear that TP did just that, pulling in 85K pax for an 85% average load factor with the first 4 months averaging 89% for the late part of the summer. S4 added more capacity and went to 24k seats but only boosted their pax numbers 1k or so to drop to 69% loads. The writing was on the wall, or so we thought. They came back for 17 dropped the capacity back to 18k and pulled in 15k pax for a 79% factor. Now did they make any money doing out up against TP, we will never know. TP themselves now had a full year under their belt with 147k pax on 171K seats for another impressive 86.1% average load, only 2 months for the entire year with less than 80% loads, and even those were pretty close to it. So long may this continue, I don’t see additional frequencies on TP, just not enough room at E or C for that matter. But if these loads continue, it might be worth considering down the road.
I’m not going to spend much time on UX as that was one and done and it didn’t do terribly well for them only achieving 71% on a summer seasonal, their highest was 80%, just goes to show, BOS is a market that you need time and a niche to make work and UX didn’t have either of them.
Over to the incumbent IB who have recently decided to take the route year round, they have grown the route significantly over the past 4 years from 90k seats in 2014 to 131K in 2017 or roughly 45%, some of that increase is attributable to going from an 8 month season to 10 month. And even with UX taking 15k pax in 2017, IB’s pax counts have followed with a 46% increase from 70k to 102k in 2017, which converts to an uptick of about 0.6% in loads to almost 78% year-round. This is a consistent route rather than a stellar performer with 81% in 2017 up from around 79% in 2014, it will be interesting to see them take this route year-round as their fall loads have been all over the shop but have varied from 48% to mid 60’s. Clearly IAG are doubling down on this route by expanding its timing, so they must have something up their sleeve, but this is a curious one. What will also be something to consider is IAG/IB airline Level is starting BCN in 2018 and what potential impact will that have albeit it’s not a daily service.
And now we turn our attention to the Azorean part of our analysis, good ole S4 plying PDL for the past few years with a mix of aircraft that would make your head spin, but primarily the trusty 310, but others coming in as those were being phased out. PDL is a route that S4 is doubling down on in 2017, having shifted a significant increase in capacity to possibly counteract the entry of TP on to LIS. Seats have grown from 93k to 139k over the 4 years, roughly 50%, and while pax counts have increased, it’s not all been perfect as only a 43% increase from 77k to 111k, which has dropped loads from 83% down to 79.5%. Their loads are rather consistent with an 83% summer season, but TP does seem to be impacting as that’s down nearly 3% against 2016. Thankfully the Azorean community in MA will continue to support these flights, but their connections and yields to LIS have to be facing significant challenges and alarmingly bodies in seats dropped from 214 to 181 from 16 to 17.
TER is a route that has seen an uptick from seasonal to over 1 weekly since 2014 with over 300% increase in flights and seats from 7k to 40k during that time. But again, I think the impact of TP can be felt here, as pax went from 6k to 23k, while a big increase did not match the capacity and avg pax moved down by 13 from 182 to 169 and a 7.5% reduction in loads from 81.5% to 74%, hard to say too much more on a 1 weekly flight to be honest.
The Southern European market has seen some growth as shown above with TP clearly taking the honors on that front, It’s nice to see IB increasing it’s presence and of course Level has arrived in 18, otherwise it’s a bit of a mixed bag out there, super seasonal and AZ is still at risk, we’ll see what happens there in time I guess.
Data Source: BTS T-100 International Segment Report (All Carriers)
Data File used for information located here: https://drive.google.com/open?id=0B61t8 ... Vp3SE8zaUE
That feeling when you sit at the end of a runway, brakes are released and the raw power takes over. Now that is a thing of beauty and it never gets old.