The European Commission on Thursday adopted new guidelines for limiting state aid to regional airports and airlines, a move the EC claims will reduce competitive distortion by discouraging overcapacity at small, unprofitable facilities.
Low-cost carriers (LCCs) have succeeded in Southeast Asia more than in perhaps any other part of the world. Whereas LCCs carry around 26 percent of global traffic, in countries such as Indonesia, Malaysia, Thailand and the Philippines that figure has exceeded 50 percent. With China’s skies being opened to LCCs the expansion in the Asia Pacific region is set to carry on.
New relationships are changing the Asia Pacific’s airline landscape as it enters a new stage of maturity with once-fierce opponents forming partnerships for reciprocal gains. Overcapacity in fleet numbers has fueled competition and compelled budget carriers to look at cooperation initiatives despite the budget airline industry’s penchant to avoid complexity.
World airlines collected $27 billion in revenue from products and services other than ticket sales last year, according to the latest annual report by research company IdeaWorks. The total came from data from 53 airlines that disclose ancillary revenue activity.
U.S. airlines have managed to stay profitable during a period of recession and spiking fuel prices, but small- and medium-sized airports have paid the price in reduced domestic air service, according to a Massachusetts Institute of Technology (MIT) study.
Irish low-fare carrier Ryanair on Tuesday committed to buying 175 new Boeing 737-800NGs worth nearly $15.6 billion at current list prices. The deal, still subject to confirmation, supports Ryanair’s plan to expand the size of its uniform fleet of 737-800s from 305 to some 400 airplanes and serve more than 100 million passengers per year across Europe by the end of the delivery stream in 2018.
Both in terms of actual cost structures and customer perception, the line between low-cost carriers (LCCs) and so-called legacy airlines has blurred, according to a new report from accountancy group KPMG. The company’s 2013 Airline Disclosures Handbook, published on March 12, showed that the cost gap between LCCs and legacy operators dropped by more than 30 percent between 2006 and 2011, falling from 3.6 U.S. cents to 2.5 cents per available seat kilometer (ASK).
Malaysia’s AirAsia has unveiled plans to launch a new domestic airline in India by the fourth quarter of 2013. Under the terms of a deal announced on February 21, the largest low-fare carrier in Asia will hold a 49-percent stake–the maximum holding permitted by the Indian government for a foreign investor–in the new airline. AirAsia is partnering with major Indian industrial groups Tata (to carry a 30-percent stake) and Telestra Tradeplace (21 percent).
Policy-making paralysis over much-needed reforms and liquidity concerns raised by the grounding of Kingfisher Airlines has deterred investors, vendors, lessors and suppliers from doing business in India’s air transport sector, according to delegates attending last month’s Asia-Pacific Airlines Association Assembly of Presidents in Kuala Lumpur. Association calculations show that average profits among Indian airlines amount to just $1 per passenger.
The European Commission’s August 29 decision to launch a full probe into Ryanair’s proposed takeover of Aer Lingus appears to mean that all bets are off in terms of the long-term ownership of the Irish flag carrier. Under stock market rules, Ryanair’s bid for a majority stake in Aer Lingus automatically expired with the move by regulators, who believe the resulting merger would prove anti-competitive.
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