Industry Monitor. Issue 179. 23/12/2015 Page 1 © EUROCONTROL 2015

European flights increased by 1.7% in November 2015 compared with November 2014 and were close to the baseline forecast. Preliminary data for December 2015 show an increase of 3% in flights on December last year. The overall flight growth for 2015 as a whole is estimated at 1.5%.

IATA forecasts European airlines to post profit for 2015 of €6.4 billion vs. €5.4 billion in its June 2015 forecast. Upward revision attributed to low oil prices and faster than expected recovery of the European economy.

Oil prices at their lowest since 2009, fell to a monthly average of €37 per barrel in December so far.

EUROCONTROL statistics and forecasts 1

Other statistics and forecasts 3

Passenger airlines 4

Airports 7

Cargo 7

Regulation 8

Oil 8

Fares 8

EUROCONTROL statistics and forecasts

European flights (ESRA – EUROCONTROL Statistical Reference Area) increased by 1.7% in November 2015 compared with November 2015 and were close to the baseline forecast. Preliminary data for December 2015 show an increase of 3% in flights on December last year (Figure 1). The overall growth for 2015 as a whole is estimated at 1.5%. Industrial action by cabin crew at Lufthansa affected Frankfurt, Hamburg, Munich and Düsseldorf airports. Lufthansa Group reported that 4,700 flights were cancelled during the strike from 6 to 13 November. With the start of the winter schedules, the low-cost, traditional scheduled and all-cargo segments recorded respective growth rates of 3%, 1.7% and 1% in November 2015 compared with November 2014 which were slightly weaker than October 2015. The two other market segments (charter and business aviation) declined by circa 3% each in November 2015 compared with November 2014. Thirteen states contributed significantly to local traffic growth (excluding overflights) in the European network in November 2015 compared with November 2014: Spain continental (+181 flights/day) was the biggest contributor thanks to strong growth in internals and arrival/departure flows followed by Turkey (+169 flights/day), UK (+133 flights/day) and Denmark (+63 flights/day). The other states each adding more than 25 daily flights to the network were Belgium, Luxembourg, Portugal, Ireland, Sweden, Poland and the Netherlands (Figure 2).

Industry Monitor The EUROCONTROL bulletin on air transport trends

Issue N°179. 23/12/2015

Industry Monitor. Issue 179. 23/12/2015 Page 2 © EUROCONTROL 2015

Germany’s local traffic suffered from the impact of Lufthansa industrial action with 107 fewer daily flights in November; Austria was affected too, though to a lesser extent (-26 flights/day). Ukraine also registered a reduction in its local traffic with 25 few flights per day, mostly due to the ban of direct flights between Ukraine and Russia from 25 October 2015 onwards. Norway saw a reduction in its local traffic for the eleventh consecutive month having 19 fewer flights per day in November 2015 compared with November 2014. Comprehensive statistics on flights are available from the STATFOR dashboard1. Following the Metrojet Flight 9268 crash in Egypt's Sinai Peninsula on 31 October, flows between Russian Federation and Egypt declined by 49% in November 2015 compared with November 2014. However, at European level, the traffic flows between European States and Egypt declined by less than 3% in November 2015 compared with November 2014 (EUROCONTROL, December).

1www.eurocontrol.int/statfor/sid

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

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

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Based on preliminary data from airlines for delays from all causes, 34% of flights were delayed on departure (>= 5 minutes) in November 2015, an increase of 2 percentage points on November 2014. The average all-causes delay per flight in November 2015 increased to 9.1 minutes per flight (Figure 3). Low visibility, strong winds affected North West European airports, generated significant airport weather delays. Istanbul Atatürk and Sabiha Gökçen airports continued to suffer from airport capacity delays in November (EUROCONTROL, December).

Other statistics and forecasts

IATA reported that European scheduled passenger traffic (RPK) was up 6.7% in October 2015 (vs. October 2014). Capacity rose by 4.2% and the total passenger load factor surged to 83.8%, up 1.9 percentage point on October last year (IATA, 3 December). ACI reported that overall passenger counts at European airports were up by 5.7% in October 2015 (vs. October 2014) with overall aircraft movements growing by 1.6% (ACI, 8 December). IATA published its revised profit outlook for airlines in 2015-2016 and now expects European airlines to post profit for 2015 of €6.4 billion ($6.9 billion) vs. €5.4 billion ($5.8 billion) in its June 2015 forecast. This upward revision is attributed to low oil prices, faster than expected recovery of the European economy and a strong demand for passenger travel. In 2016 European airlines are expected to report €7.9 billion ($8.5 billion) profit (IATA, 10 December).

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 November 2015).

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Passenger airlines

Capacity, costs and jobs

Air France-KLM reported that the Paris attacks on 13 November which significantly impacted traffic to and from Paris resulted in a €50 million loss in revenues. However, the Group now expects a progressive recovery after the end of December 2015 (Air France-KLM, 8 December). Finnair plans to recruit 100 pilots and 300 cabin crew in 2016 to meet its strategy to expand its long-haul traffic following the delivery of its first Airbus A350 aircraft out of a total of 19 units ordered (IM177). The airline seeks to double its traffic between Asia and Europe by 2020 from the 2010 level (Finnair, 4 December). In the process of replacing its fleet of Fokker 70 aircraft, KLM Cityhopper has received its thirtieth Embraer E190 aircraft in December. The regional airline will welcome its first E175 aircraft in March 2016 out of a total of 15 units to be delivered by 2018. With a total of 45 Embraer aircraft, KLM will have the single-largest Embraer fleet in Europe (KLM, 18 December). Swedish Braathens Regional has converted four ATR72-600 aircraft into firm orders, bringing to 10 the number of units ordered in 2015. The new ATR72-600 aircraft will replace Braathens’ fleet of Saab 2000 and ATR72-500 aircraft (ATR, 14 December).

Figure 4: Main carriers’ traffic statistics.

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Estonian Nordic Aviation Group started operations on 8 November in cooperation with Adria Airways, after the collapse of Estonian Air (IM178). The Group has also signed a charter flight contract with the biggest Estonian ski tour operator for flights to Milan Bergamo, Salzburg and Geneva from mid-February 2016. Nordic Aviation plans to have its first aircraft with Estonian crew in early 2016 and to introduce the full brand of the new airline in summer 2016 (Nordic Aviation, 9 & 11 December). Cypriot start-up Tus Airways has received its air transport licence and plans to launch scheduled operations in January 2016 from Larnaca to Tel Aviv, Haifa, Beirut, Amman, Heraklion and Rhodes with a fleet of two SAAB 340B aircraft. The airline will also operate charter flights to Eilat and Aqaba during winter 2016 and to the Greek islands during summer 2016 (Tus Airways, December). Turkish Airlines has signed a firm order for 20 additional Airbus A321neo aircraft to complement the 72 A321neo units it has already on order (Airbus, 1 December). IAG Group has converted options for 15 Airbus A320neo into a firm order. The aircraft will be delivered in 2021 and 2022 and used by any airline in the Group for fleet replacement (IAG Group, 21 December).

Traffic statistics: November update

Figure 4 and Figure 5 compare November 2015 figures with November 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). In the wake of the terrorist attacks on 13 November in Paris, Air France-KLM reported that passenger load factor to and from Paris was down 0.9 percentage points for the period 14-30 November when it was up 2.7 percentage points during the period 1 to 13 November compared with November 2014 (Air France-KLM, 8 December).

Figure 5: Main carriers’ load factors.

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Routes, Alliances, Codeshares

Montenegro Airlines has signed a cooperation agreement with Thomas Cook UK to cover flights between Podgorica and Paris Charles De Gaulle during the April-September 2016 period (Montenegro Airlines, December). KLM will launch five new routes from Amsterdam to Southampton, Inverness, Dresden, Genoa and Valencia with the start of its Summer 2016 schedule. The carrier also announced to stop service to Cologne/Bonn from February 2016 onwards (KLM, 8 December). Aeroflot’s low-cost subsidiary, Pobeda has started international operations from its Moscow Vnukovo base to Bratislava and Milan Bergamo and will serve Salzburg from January 2016 (Pobeda, December). Transavia France will launch 10 new routes in April 2016 among which six from Paris Orly to Verona, Dubrovnik, Split, Vienna, London Luton and Edinburgh; three routes from Lyon to Faro, Lisbon and Valencia and one route from Nantes to Faro. This network expansion coincides with the next delivery of five Boeing B737-800NG aircraft in 2016 (Transavia, December). Star Alliance will expand its network reach with the launch of a new concept called Connecting Partner Model whereby routes operated by low-cost and hybrid airlines will be able to connect to its network and offer a wider choice of destinations and flights to the customers of its member airlines (Star Alliance, 9 December). Wizz Air will open its sixth Romanian base at Iasi with one Airbus A320 aircraft and five new routes to Bologna, Catania, Larnaca, Rome Ciampino and Tel Aviv, effective 1 July 2016 (Wizz Air, 3 December). Wizz Air has opened a second base in Hungary at Debrecen and launched three new routes to Paris Beauvais, Brussels Charleroi and Malmö (Wizz Air, 16 December). easyJet will launch three new routes from Switzerland during the first half of 2016 being Geneva-Pisa, Zurich-Hamburg and Basel-Figari (routesonline, 14 December).

Figure 6: Brent and kerosene prices (December 2015 data to 20th

of the month).

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Airports Fraport and Greek partner Copelouzos Group Consortium has signed a contract for managing 14 regional airports in Greece from the autumn of 2016. Greece mainland airports include Thessaloniki, Aktio and Kavala along with 11 airports on the Greek islands of Corfu/Kerkyra, Crete/Chania, Kefalonia, Kos, Mitilini, Mykonos, Rhodes, Samos, Santorini, Skiathos and Zakynthos. The 14 airport handled circa 23 million passengers in 2015 (Fraport, 14 December). Aéroports de Paris reported passenger traffic down 1.8% in November 2015 compared with November 2014 following the terrorist attacks on 13 November. Charles De Gaulle saw a decrease of 1.3% whereas Orly was down 2.9% on November last year. During the period 1-13 November, passenger traffic at both airports were growing by 3.6% but decreased by 6% during the second half of the month compared with the same period last year (ADP, 14 December). UK government has postponed until the summer 2016 its decision on whether to build a third runway at Heathrow saying that further research on the environmental impact was needed. Last July, the Airports Commission issued its final report in which it recommended a new third runway at Heathrow (IM174) (UK Government, 10 December).

Cargo Cargolux and its pilot unions have reached an agreement on a new three-year labour contract which provides for 100 new pilot positions and limits the size of Milan-based Cargolux Italia to four aircraft. Luxembourg-based pilots protested against Cargolux plan to reduce cost by transferring part of its operations and aircraft to its Milan-based subsidiary (Cargolux, 1 & 16 December). It is reported that Lufthansa Cargo as part of its C40 cost-cutting programme will proceed to staff redundancies in order to reduce cost by €40 million/year. The carrier also plans to retire two MD-11 freighters leaving its fleet to 12 MD-11F and five B-777F aircraft. The C40 strategy was put in place to face intense competition from the Gulf carriers and from China (Handelsblatt, 4 December).

Figure 7: Deflated ticket prices in Europe.

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Regulation The European Commission has adopted a new Aviation Strategy for Europe focussing on improved connectivity, enhanced competitiveness and effective sustainability (EUROPA, 7 December). The European Union has agreed on a provisional deal on an EU directive regulating the use of Passenger Name Record (PNR) data for the prevention, detection and prosecution of terrorist offences and serious crime. Under the new directive, airlines will be obliged to provide member states’authorities with the PNR data for flights entering or leaving the EU but will also allow member states to collect PNR data concerning selected intra-EU flights. The draft directive will be submitted to a vote by Parliament in early 2016. (European Parliament, 14 December).

Oil

Oil prices were at their lowest since early 2009 and fell to a monthly average of €37 per barrel in December as oil supplies continued to outpace demand. Converted indices for Kerosene and Brent are shown in Figure 6. EIA now forecasts Brent crude oil prices to average €49 ($53) per barrel in 2015 which is €0.9 ($1) lower than last month’s forecast. The 2016 forecast is unchanged at €52 ($56) per barrel (EIA, 8 December).

Fares

Deflated ticket prices in Europe increased by 0.9% in November year-on-year, based on preliminary values. This is below the trend of 1.2% (12-month trailing average) shown in Figure 7 (Eurostat, 16 December). 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