Industry Monitor. Issue 174. 01/07/2015 (updated as at 15/07/2015) Page 1 © EUROCONTROL 2015

European flights increased by 0.7% in May 2015 compared with May 2014 and were above the low forecast. Preliminary data for June show a 1.2% increase in flights on June last year.

Updated IATA forecast expects European airlines to post profit for 2015 of €5.2 billion vs. €3.6 billion in its December 2014 forecast and thereby doubling profit from last year.

Oil prices remained stable at €57 per barrel in June.

EUROCONTROL statistics and forecasts 1

Other statistics and forecasts 3

Passenger airlines 3

Airports 6

Aircraft manufacturing 7

Oil 8

Fares 8

EUROCONTROL statistics and forecasts

European flights (ESRA – EUROCONTROL Statistical Reference Area) increased by 0.7% in May 2015 compared with the same month a year ago and was above the low forecast. Preliminary data for June show a 1.2% increase in flights on June last year (Figure 1). The low-cost segment remained the main driver of growth and was up 4.2% in May 2015 compared with May last year. Traditional scheduled slid to an increase of 0.5% from an increase of 1% in April. All other segments decreased in May, with charter down by 12.2% and business aviation and all-cargo down by 2.1% and 1.9% respectively. The majority of states have seen their local traffic (excluding overflights) growing in May (vs. May 2014). Nine states added more than 25 local daily flights to the European network. Turkey was the top contributor to growth with 158 extra daily flights thanks to a dynamic domestic flow in May. Spain was next and added 126 daily flights to the network. The remaining seven states (Italy, Poland, Germany, Greece, the Netherlands, UK, Belgium/Luxembourg) added altogether circa 300 daily flights. Two states are still lagging behind: Norway saw 114 fewer daily flights whereas Ukraine removed 51 daily flights in May 2015 (vs. May 2014) Figure 2. Full detailed statistics on flights are available from the STATFOR dashboard1 (EUROCONTROL, June).

1 STATFOR Interactive Dashboard (SID)

Industry Monitor The EUROCONTROL bulletin on air transport trends

Issue N°174. 01/07/2015

Industry Monitor. Issue 174. 01/07/2015 (updated as at 15/07/2015) Page 2 © EUROCONTROL 2015

Based on preliminary data from airlines for delays from all causes 39% of flights were delayed on departure (>= 5 minutes) in May 2015, this was an increase of 3 percentage points when compared to the same month in 2014. An electrical power failure on 27 May at Belgocontrol led to around 100 cancellations at Brussels-Zaventem airport. The industrial action by TAP/Air Portugal pilots between 1 and 10 May 2015, resulted in approximately 1,000 flights being cancelled. A fire in terminal 3 at Rome/Fiumicino airport overnight on 6/7 May, caused a 20% capacity reduction for the remainder of the month. Strong winds and thunderstorms impacted Istanbul Atatürk, London Heathrow, Amsterdam Schiphol and Zurich. The average all-causes delay per movement in May 2015 increased from 8.9 minutes to 10.2 minutes. Further analysis of the delay reasons shows that Reactionary and Airline delay increased respectively by 0.5 and 0.2 minutes per flight in May 2015. (Figure3) (EUROCONTROL, June).

Figure 1: Monthly European Traffic and Forecast.

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

Industry Monitor. Issue 174. 01/07/2015 (updated as at 15/07/2015) Page 3 © EUROCONTROL 2015

Other statistics and forecasts

IATA revised upwards profit outlook for airlines in 2015 and forecasts that European airlines will post profit of €5.2 billion ($5.8 billion) as opposed to €3.6 billion ($4 billion) in its December 2014 forecast and thereby doubling profit from last year. The main drivers are lower oil prices and record load factors. Global airlines raised their 2015 industry profit by 47% to €26 billion ($29 billion) compared with the previous forecast (IATA, 8 June).

IATA reported that European scheduled passenger traffic (RPK) increased by 3.5% in April 2015 compared with a year-ago period. Capacity (ASK) was up 5% and the total passenger load factor was 79.6% (IATA, 4 June). ACI reported that overall passenger counts at European airports increased by 3.2% in April 2015 compared with April last year with overall aircraft movement at airports growing by 2.4% (ACI, 4 June).

Passenger airlines

Capacity, costs and jobs

Wizz Air has signed an agreement to buy 110 Airbus A321neo aircraft and purchase rights for an additional 90 A321neo aircraft. Deliveries will start in 2019. The low-cost airline currently operates a fleet of 61 A320 aircraft (Wizz Air, 18 June). easyJet has revised its strategy for the Italian market and will close its Roma Fiumicino base in April 2016 and focus on its bases at Milano Malpensa and Napoli along with the opening of a new base in Venezia with four A320 aircraft (easyJet, 18 June). Spanish low-cost Volotea will open a new base in Verona, effective 3 November with two B717-200 aircraft for flights to Bari, Catania, Palermo and new routes from Verona to Cagliari, Napoli, Tirana and Chisinau (Volotea, June).

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 May 2015).

Industry Monitor. Issue 174. 01/07/2015 (updated as at 15/07/2015) Page 4 © EUROCONTROL 2015

Spanish start-up Air Horizont has suspended the launch of scheduled operations, due to start in April (IM171), from Zaragoza to Alicante, Munich, Rome Fiumicino and Sevilla citing delays in acquiring its AOC. The airline will focus on charter flights only (Air Horizont). LOT has unveiled its strategic plan for the period 2016-2020 which focuses on the following main elements:

- Develop its long-haul network, - Operate as a hub and spoke carrier from Warsaw, - Carry 10 million passengers/year (vs 5 million now), - Increase aircraft movements/year to 100,000 (vs. 68,000 now), - Increase its network to 80 destinations (vs. 49 now)

LOT (22 June). Braathens Aviation signed a contract for the purchase of five ATR72-600 aircraft with options for 10 additional units, deliveries will start at the end of 2015. The new aircraft will support the carrier’s expansion from Stockholm Bromma and complete the current fleet of five ATR72-500 aircraft (ATR, 16 June). For the first time since 2004, Iberia plans to recruit 120 pilots over the next two years. Agreements between the airlines and Sepla (the pilots union) signed last year brought improvements in cockpit costs and productivity, while changing entry-level conditions for new pilots, aligning them with those of Vueling and Iberia Express. Iberia operates a fleet of 91 Airbus family aircraft; its low-cost subsidiary Iberia Express operates 19 A320 aircraft (Iberia, 3 June).

It is reported that Ryanair has applied for landing and take-off slots at Paris Orly to launch flights to Porto and Madrid with the start of the winter schedule (La Tribune, 23 June).

The Portuguese government has sold a 61% stake in TAP to Atlantic Gateway consortium, the owner of low-cost Azul Brazilian airlines and US JetBlue (IM173). The deal includes the purchase of 53 new aircraft for TAP; 14 A330 aircraft and 39 A321 aircraft and the opening of 10 new routes to the United States, including Washington, Boston and Chicago along with up to 10 new routes to Brazil (TAP, 24 June).

Figure 4: Main carriers’ traffic statistics.

Industry Monitor. Issue 174. 01/07/2015 (updated as at 15/07/2015) Page 5 © EUROCONTROL 2015

Binter Canarias has signed an agreement for the purchase of six ATR72-600 aircraft in addition to its previous order for six units in February 2014. Deliveries will start this year until 2017 (ATR, 17 June) VLM has closed its base in Liège six weeks after its opening and ended operations to Avignon, Bologna, Nice and Venezia (VLM, June). Qatar Airways would reportedly consider acquiring a stake in Meridiana on condition that the deal includes the granting of additional landing slots at Torino, Venezia and Pisa to Qatar Airways (Corriere Della Sera, 28 May). Austrian Airlines will purchase 17 used Embraer E195 aircraft from Lufthansa CityLine to replace its current fleet of Fokker 70 and 100 aircraft. The first aircraft will be delivered in August for training purposes whereas the first commercial flight will take place in January 2016 (Austrian Airlines, 3 June).

Routes, Alliances, Codeshares

LOT will launch three long-haul destinations to Bangkok, Seoul and Tokyo as from 2016 along with circa 12 destinations in Europe including new routes to Venice, Cluj and Ljubljana and the reopening of routes to Barcelona, Athens, Nice, Zurich, Beirut, Belgrade, Düsseldorf, Yerevan, Chisinau, Zagreb and domestic Gdansk-Krakow. These connections were suspended since July last year as part of the airline’s restructuring plan to return to profitability (LOT, 22 June).

Air Serbia and LOT have signed a codeshare agreement whereby the latter will add its code to Air Serbia’s flights from Belgrade to Podgorica, Tivat and its Etihad-operated flights to Abu Dhabi. In return Air Serbia will place its code on LOT’s flights from Warsaw to Vilnius, Tallinn and Riga (Air Serbia, 9 June).

Low-cost Norwegian will launch flights from the United States to the Caribbean Islands, Guadeloupe and Martinique during the winter schedule. The carrier started low-cost long-haul flights two years ago from Europe to the US and now serves 31 direct destinations from the US (Norwegian, 25 June).

Figure 5: Main carriers’ load factors.

Industry Monitor. Issue 174. 01/07/2015 (updated as at 15/07/2015) Page 6 © EUROCONTROL 2015

Aegean Airlines expands its network in France with flights from Bordeaux to Athens and from Toulouse to Athens and Heraklion (Aegean, June). Lufthansa will cease operations from Frankfurt to three Russian destinations, Moscow Vnukovo, Samara and Nizhny Novgorod by early September due to lack of demand as a result of economic sanctions on Russia (Lufthansa flyer, 3 June).

Traffic statistics: May update

Figure 4 and Figure 5 compare May 2015 figures with May 2014 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).

Airports

United States Department of Homeland Security (DHS) plans to negotiate air preclearance facilities with eight new European airports i.e. Brussels, Amsterdam Schiphol, London Heathrow, Manchester, Oslo, Stockholm Arlanda, Madrid Barajas and Istanbul Atatürk. If agreed, immigration and customs inspections for flights to the United States could be completed before departure from these airports rather than upon arrival in the U.S. To date Dublin and Shannon are the only European airports enabling preclearance inspections by US Customs and Border Protection (DHS, 29 May). London Heathrow Terminal 1 closed on 30 June after almost fifty years of operation. Terminal 2 will take the place of Terminal 1 and be expanded. Over nine million passengers a year transited through Terminal 1 which was the largest short-haul terminal in Western Europe (Heathrow, 29 June). The Airports Commission has issued its final report with its recommendations for expanding airport capacity in the UK. The Commission opted for a new third runway at Heathrow. The other two options were a new runway at Gatwick and extending one of the existing runways at Heathrow (UK Government, 1 July).

Figure 6: Brent and kerosene prices.

Industry Monitor. Issue 174. 01/07/2015 (updated as at 15/07/2015) Page 7 © EUROCONTROL 2015

Aircraft manufacturing

At Paris Air Show, 421 aircraft were ordered for Airbus, 124 of which were firm orders. Boeing has announced 331 aircraft orders, 154 of which were firm orders (Airbus 19 June & Boeing, 18 June).

Boeing forecasts a demand for 38,000 new aircraft (+3.5% on last year’s forecast) between 2015 and 2034 of which 7,300 are meant for Europe, for a regional traffic growth in revenue per passenger kilometres of 3.8%.

The global aircraft deliveries are detailed as follows (compared with the 2014 forecast release):

- Regional Jets: 2,500 (=), - Single-Aisles: 26,700 (up from 25,700), - Twin-Aisles: 8,300 (up from 8,000), - Large: 500 (down from 600)

(Boeing, 11 June)

Airbus forecasts a demand for 32,600 new aircraft deliveries between 2015 and 2034 as follows (compared with the 2014 forecast release):

- Single-Aisles: 22,900 (up from 22,000) - Twin-Aisles: 8,100 (up from 7,800) - Very Large Aircraft: 1,600 (up from 1,500)

(Airbus, 15 June)

In its 10-year market forecast (2015-2024), Bombardier predicts 9,000 business jet deliveries of which 1,500 are for Europe whereas its 20-year commercial aircraft market forecast (2015-2034) is for 12,700 commercial aircraft deliveries of which 2,100 are for Europe (Bombardier, 19 May and 14 June).

Embraer has projected a total of 6,400 aircraft deliveries (70-130 seats) between 2015 and 2034 of which 1,200 are for Europe and 21,600 aircraft deliveries (130-210 seats) of which 4,700 units are for Europe (Embraer, 14 June).

Figure 7 Deflated ticket prices in Europe.

Industry Monitor. Issue 174. 01/07/2015 (updated as at 15/07/2015) Page 8 © EUROCONTROL 2015

Oil

Oil prices remained stable at €57 per barrel in June. Converted indices for Kerosene and Brent are shown in Figure 6.

Fares

Deflated ticket prices in Europe increased by 4.3% in May year-on-year, based on preliminary values. This is above the trend (12-month trailing average) shown in Figure 7 (Eurostat, 16 June). 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 2005 constant euros.

© 2015 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