vv701
Topic Author
Posts: 5895
Joined: Fri Aug 19, 2005 10:54 am

Extraordinary Growth LHR-HAJ-LHR

Sun Jun 02, 2013 11:01 pm

I was more than a little surprised late last October when BA replaced the three-times-daily bmi Regional 49 seat ERJ 145 LHR-HAJ-LHR service formerly operated on behalf of BD with a three-times-daily A 319 service. Moreover these flights were rarely operated by BA’s smallest aircraft, their original 132 seat 319s, were usually operated by the former BD 144 seat A 319s and occasionally operated by BA’s 162 seat A 320s. This gave a very significant 194 per cent increase in offered capacity.

So I looked at the passenger numbers flying between LHR and HAJ as published on the CAA web site. I compared the first three months of 2012, the last three complete months that this service was operated for BD under the BD brand, with the first three months of this year, the third to sixth months when it was operated under the BA brand with 319s or 320s.

I was again more than a little surprised by the absolute growth in passenger numbers. Equally surprising to me was the continuing rapid increase in the growth rate in consecutive months.

In the first three months of 2013 passenger numbers more than doubled (+109 per cent) compared to the same period in 2012. In January to March 2013 they totalled 37,222, up from 17,812 in the same period in 2012.

The passenger growth in January was 92 per cent (up from 5,669 passengers in 2012 to 10,860 in 2013).

In February growth accelerated to 107 per cent (up from 5,464 to 11,300 passengers).

In March it grew still more rapidly by 126 per cent (up from 6,679 to 15.062).

Recognising the sluggishness of both the British and German economies these figures are difficult to explain. All I can say is that with an almost trebling of capacity BA certainly took a very positive view of this route. With the monthly passenger growth still rising rapidly towards this capacity growth it is an approach that, depending on yields, could well pay off relatively soon.
 
Viscount724
Posts: 19316
Joined: Thu Oct 12, 2006 7:32 pm

RE: Extraordinary Growth LHR-HAJ-LHR

Sun Jun 02, 2013 11:11 pm

Quoting VV701 (Thread starter):
I compared the first three months of 2012, the last three complete months that this service was operated for BD under the BD brand, with the first three months of this year,

HAJ is a big trade fair market. There may have been more big events during the 1st quarter this year. Also, Easter was in March this year and April last year which often distorts 1st quarter traffic comparisons.
 
vv701
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RE: Extraordinary Growth LHR-HAJ-LHR

Mon Jun 03, 2013 2:16 am

Quoting Viscount724 (Reply 1):
HAJ is a big trade fair market.

I do not think that a variation in the trade fair calendar can explain the daily increase in offered capacity of 194 per cent on the LHR-HAJ route that occurred on a single day, 28 October 2012 or what I see as the subsequent extraordinary growth in passenger numbers. Recognise that individual trade fairs almost invariably occur at the same time each year. This is necessary because there are, for example, 13 Trade Fairs and Exhibitions in Hannover during the first three months of the year. So shuffling the dates would be a nightmare for the organisers, the exhibitors and the visitors. Hence the first major Hannover show of the year, Domotex, starts on the second Saturday of January. So it was held from 14 to 17 January in 2012, from 12 to 15 January in 2013 and will be from 11 to 14 January 2014.

Admittedly the Hannover Fair itself tends to move more than one day because it is held after Easter . It took place from 23 to 27 April last year. This year it was held from 8 to 12 April. Next year it will be from 7 to 11 April. But I think you will agree that such small variations in the calendar of events cannot possibly contribute significantly to a more than doubling in passenger numbers in a 12 month period.

Quoting Viscount724 (Reply 1):
Easter was in March this year and April last year which often distorts 1st quarter traffic comparisons.

If we are looking at the first quarters of 2012 and 2013 there is another factor. Last year there was an extra day and therefore three additional flights between 1 January and 31 March as 2012 was a leap year. Everything else being equal February 2013 passenger figures should therefore have fallen by 3.5 per cent, not risen by 107 per cent . Again I cannot see how the calendar impact on such extraordinary passenger growth figures can be more than very minor. In no way can a change in the dates of Easter result in any significant proportion of the 126 per cent growth in March passenger numbers. The numerical growth in that month was 8,983 passengers, equivalent to more than 62 aircraft operating with 100 per cent load factors!

If we were to go down this route nearly all comparisons would need heavily qualifying. Many factors impact the calendar. They range from Olympic Games to Royal Jubilees, from European Champions League matches to Royal Weddings. Just think how an all British Champions League final in Moscow in May 2008 and an all German Champions League final in London in May this year must have impacted passenger numbers between LHR and DME and LHR and LGW and both DUS and MUC respectively. See here for example:

Champions League Final - LH A380 To LGW. (by TC957 May 15 2013 in Civil Aviation)?threadid=5764412&searchid=5764510&s=champions+league#ID5764510
 
factsonly
Posts: 2730
Joined: Mon Aug 06, 2012 3:08 pm

RE: Extraordinary Growth LHR-HAJ-LHR

Mon Jun 03, 2013 7:00 am

Quoting VV701 (Thread starter):
So I looked at the passenger numbers flying between LHR and HAJ as published on the CAA web site. I compared the first three months of 2012, the last three complete months that this service was operated for BD under the BD brand, with the first three months of this year, the third to sixth months when it was operated under the BA brand with 319s or 320s.

Though not necessarily the complete answer, it is very likely that fare levels 2012 vs 2013 can explain the markets response to the additional capacity being offered. A difficult task, but you may wish to look at fare levels for both BD & BA.

The phenomena you witness may just be market stimulation through lower fares. A very regular occurrence when FR & EZY enter a market and open up completely new demand for air travel. If BD operated a Emb145 and BA operates A319 than it is likely that BD maintained (mostly) high business type fares to fill its few seats, while BA offers a full pallet of fares including lower tourist fares.

A medium sized city like Hanover is more likely to generate monthly pax figures of 15.000 to London, than the paltry BD figures. So comparatively speaking BA is putting HAJ back on the map where it belongs, after a period of possible underserving by BD.
 
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GCT64
Posts: 1787
Joined: Sun Nov 04, 2007 6:34 pm

RE: Extraordinary Growth LHR-HAJ-LHR

Mon Jun 03, 2013 8:28 am

Quoting VV701 (Thread starter):
Recognising the sluggishness of both the British and German economies these figures are difficult to explain. All I can say is that with an almost trebling of capacity BA certainly took a very positive view of this route.

My reading on this:

BA offers much better connectivity out of LHR than BD did - so it would be interesting to see how much of the growth is coming from Longhaul - LHR - HAJ rather than O&D. Look at the growth on RTM-LHR for example  
The point about fare buckets cf. BD's is probably true, with A319s BA has more room to optimise the revenues and fill the plane.
Finally, I wouldn't describe the British and German economies as sluggish, my company has operations in both countries and, from personal experience they are recently and currently clearly the most economically vibrant big countries in the EU. There is a lot of negative economic PR/media reporting which is not neccessarily justified by the facts or by the experience on the ground.
Flown in: A20N,A21N,A30B,A306,A310,A319,A320,A321,A332,A333,A343,A346,A359,A388,BA11,BU31,(..56 more types..),VC10,WESX
 
757ops
Posts: 144
Joined: Thu Feb 02, 2006 9:32 pm

RE: Extraordinary Growth LHR-HAJ-LHR

Mon Jun 03, 2013 9:58 am

BD used to use A320 on the HAJ route back around 2006 and it was always very busy!
 
vv701
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RE: Extraordinary Growth LHR-HAJ-LHR

Mon Jun 03, 2013 12:54 pm

I would agree that fares are a likely factor. One reason is that the cost per passenger flying between LHR and HAJ is likely to be higher for a full E145 carrying 49 passengers than even a two-thirds full 144 seat 319.

Think of air crew costs. You would need to pay the E145 air crew significantly less than half what you paid the 319 air crew to hope to have similar air crew costs per passenger. Of course the same applies to certain other costs. For example while most airports charge user airlines a per passenger handling charge and also a landing charge dependent on MTOW (which will obviously also vary with the aircraft size and therefore the likely number of passengers), they are also likely to make a charge for parking which, if it varies at all, will vary with the stand size and not the number of arriving or departing passengers.

I also go along with GTC64's transfer passenger idea. Indeed this is the only reasonable explanation I can currently see for such strong and immediate growth. What is more by offering highly competitive fares for flights between HAJ and, for example, North American destinations on those days of the week when North Atlantic passenger numbers are usually lower than average, it is possible to protect the higher yielding LHR-HAJ-LHR O&D business from yield dilution while helping to fill flights both between LHR and HAJ and across the North Atlantic. The only factor against this appears to me to be the concept that LHR is an O&D and not a hub airport. Indeed with traffic between LHR and HAJ having significantly more than doubled after only three months of the operational change one could consider putting forward the proposition that this shows that LHR is more of a hub than an O&D airport.

Quoting 757ops (Reply 5):
BD used to use A320 on the HAJ route back around 2006 and it was always very busy!


In the first three months of 2012 there were 91 days with three return flights in a 49 seat aircraft every day. So BD offered a total of 26,754 seats and carried 17,812 passengers giving a load factor of 66.6 per cent. That is not bad but neither is it very good and is certainly short of operating nearly full larger aircraft.

It is difficult to believe that their passenger numbers declined so quickly from full 320s to two-thirds full aircraft less than one-third their size. Perhaps they did not operate three times a day on this route back then and changed to much smaller aircraft in order to offer improved frequency to try to maximise high yield O&D traffic?
 
KFlyer
Posts: 320
Joined: Mon Mar 19, 2007 1:05 pm

RE: Extraordinary Growth LHR-HAJ-LHR

Mon Jun 03, 2013 3:08 pm

Let me begin by saying that I have no knowledge about this particular market, but I can make a few guesses based on experience...
1. Lower per seat costs with A319 = Fare stimulation
2. Connecting traffic
3. The BA 'brand effect'
4. Product stimulation
5. Pent up demand

I would say it is 65% No. 1, 20% No.2 and 5% each for rest. No.5 purely considering that UK and Germany are in relatively better shape.
The opinions above are solely my own and do not express those of my employers or clients.

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