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COMPETITION BETWEEN AIRPORTS FOR LONG-HAUL TRAFFIC FROM EUROPE. Dr Nigel Dennis Senior Research Fellow Transport Studies Group University of Westminster dennisn@westminster.ac.uk. DEFINITIONS AND SCOPE. Europe = EU 25 plus Canary Islands, Madeira, Azores, Switzerland, Norway, Iceland

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competition between airports for long haul traffic from europe

COMPETITION BETWEEN AIRPORTS FOR LONG-HAUL TRAFFICFROM EUROPE

Dr Nigel Dennis

Senior Research Fellow

Transport Studies Group

University of Westminster

dennisn@westminster.ac.uk

slide2

DEFINITIONS AND SCOPE

  • Europe = EU 25 plus Canary Islands, Madeira, Azores,
  • Switzerland, Norway, Iceland
  • Long-haul (AEA) = Atlantic, sub-Saharan Africa, Asia,
  • Australasia – excludes North Africa and Middle East
  • Around 5000 long-haul flights per week from Europe
  • (750 per day)
  • Carrying 1 million passengers per week
  • Focus on non-stop scheduled services
  • (charter flights not significant in most markets)
  • Code-shared services only counted once
slide3

LONG-HAUL SERVICES BY EUROPEAN AIRPORT

All airlines – July 2004

Airport Non-stop Weekly % hub airline

destinations frequencies or code-share

London Heathrow 71 1125 40

Paris CDG 78 806 62

Frankfurt 81 671 69

Amsterdam 60 480 67

Madrid 30 276 54

London Gatwick 32 244 21

Rome Fiumicino 34 165 44

Zurich 25 164 70

Milan Malpensa 35 153 75

Munich 33 136 76

Manchester 18 108 19

Paris Orly 11 107 41

39 others 790

(less than 100 freq each)

TOTAL 5225

Source: Compiled from OAG data

slide4

TREND TO CONCENTRATION

  • Overseas airlines focus on large origin/destination markets
  • e.g. London, Paris, Rome, Manchester
  • Medium sized markets are hubs dominated by local airline
  • e.g. Zurich, Milan, Munich, Vienna
  • Cut-backs in long-haul service:
  • e.g. London Gatwick, Zurich, Paris Orly,
  • Brussels, Copenhagen
  • Elimination of long-haul service:
  • e.g. Lyon, Basel/Mulhouse, Hamburg,
  • Berlin, Barcelona
slide5

LONG-HAUL SERVICES BY EUROPEAN HUB

Hub airline and code-share partners – July 2004

European airline Non-stop Weekly % non-operated

and hub airport destinations frequencies code-share

Air France (CDG) 65 503 18

Lufthansa (FRA) 43 462 31

British Airways (LHR) 46 445 5

KLM (AMS) 42 321 25

Iberia (MAD) 20 150 14

Alitalia (MXP) 17 115 20

Swiss (ZRH) 18 115 24

Lufthansa (MUC) 18 103 35

TAP (LIS) 14 75 8

Alitalia (FCO) 13 72 42

Austrian (VIE) 14 71 28

SAS (CPH) 8 55 0

British Airways (LGW) 8 51 0

Source: Compiled from OAG data

slide6

EUROPEAN AIRLINES’ LONG-HAUL TRAFFIC 2002 (1)

Airline Revenue Passenger % change from 2001

Km (billion)

British Airways 76 - 4

Air France 73 + 4

Lufthansa 66 + 3

KLM 45 - 2

Virgin Atlantic 27 - 3

Iberia 22 0

Alitalia 14 - 27

Swiss 13 - 39

SAS 10 +22

Austrian 9 - 5

TAP 6 +13

Finnair 3 +25

LOT 3 + 1

Olympic 3 - 18

Source: AEA

slide7

EUROPEAN AIRLINES’ LONG-HAUL TRAFFIC 2002 (2)

Airline Passenger % of passengers

load factor (%) in premium cabins

British Airways 75 15

Air France 81 14

Lufthansa 83 20

KLM 82 10

Virgin Atlantic 81 7

Iberia 77 11

Alitalia 78 9

Swiss 80 16

SAS 86 13

Austrian 78 7

TAP 75 9

Finnair 81 7

LOT 86 3

Olympic 76 9

Source: AEA

slide8

MAJOR LONG-HAUL DESTINATIONS FROM EUROPE

by number of flights – July 2004

Destination Flights in first week of July 2004

New York JFK 463

New York Newark 277

Chicago O’Hare 262

Toronto 207

Atlanta 168

Washington Dulles 168

Bangkok 161

Tokyo Narita 160

Boston 138

Singapore 136

Los Angeles 125

Philadelphia 112

Montreal Dorval 104

Sao Paulo 104

Hong Kong 100

Source: Compiled from OAG data

alliances who s who
ALLIANCES: WHO'S WHO

Star Oneworld SkyTeam ‘Wings’

UNITED AMERICAN DELTA NORTHWEST

US Airways Continental

Air Canada

LUFTHANSA BRITISH AIRW AIR FRANCE KLM

SAS Iberia Alitalia Malev

TAP+ Aer Lingus- Aeroflot+

Austrian Finnair CSA Czech

bmi

LOT Polish

SINGAPORE QANTAS KOREAN MALAYSIAN

All Nippon Cathay Pacific China Southern+

Thai

Air New Zealand

SAA KENYA AIRW

VARIG LAN CHILE AEROMEXICO

Share of

global RPK

26% 18% 13%} 25% {12%

+ joining - leaving

Southwest and JAL are only non-aligned carriers in World Top 20Source: IATA, AEA, OAG and press reports (subject to continual change!)

increased inter hub links

SUMMER 04

PRE-ALLIANCE

daily freq

daily freq

Amsterdam-Detroit (KL/NW)

0

4

Frankfurt-Chicago (LH/UA)

2

4

Frankfurt-Denver (LH/UA)

0

1

Zurich-Dallas (LX/AA)

0

1

Vienna-Osaka (OS/NH)

0

1

INCREASED INTER-HUB LINKS
misfit services are withdrawn
MISFIT SERVICES ARE WITHDRAWN
  • LOST ROUTESCopenhagen-Hong KongFrankfurt-NairobiFrankfurt-Minneapolis
  • LOST CARRIERSZurich-Washington (United)Frankfurt-Washington (Delta)Amsterdam-Bangkok (Thai)
slide13

LONG-HAUL PRODUCT VARIATIONS

  • Use of smaller aircraft (Boeing 757) on thin routes
  • Continental
  • American (all economy class on Manchester-Boston)
  • ‘Executive’ jets (A319LR/737-700X) – all premium class
  • Lufthansa/Privatair
  • Air France ‘Dedicate’
  • bmi British Midland investigating A319s with
  • conventional two-class cabin from Manchester
  • On conventional aircraft
  • 2, 3 or 4 cabins?
  • Insufficient demand for separate First Class
  • Virgin Premium Economy
  • BA World Traveller Plus
  • New Large Aircraft (A380)
  • Ultra long-range mid sized aircraft (A340-500, 7E7)
slide16

AIRBUS A380 ORDERS

Virgin Atlantic 6

Air France 10

Lufthansa 15

Emirates 43

Etihad 4

Qatar 2

Thai 6

Singapore 10

Malaysia 6

Korean 5

Qantas 12

Source: Compiled from Flight International data

use of new large aircraft a380
USE OF NEW LARGE AIRCRAFT (A380)

Airbus forecast of top 10 A380 airports globally in 2019

with number of aircraft operating

Tokyo Narita 116 London Heathrow 96 Hong Kong 83 Los Angeles 74 Singapore 56 New York JFK 50 Bangkok 47 Dubai 43 Taipei 38 Sydney 35

Source: Airbus

long haul low cost airlines 1
LONG-HAUL LOW-COST AIRLINES (1)
  • Less scope to increase utilisation
  • Difficult to match the marginal cost

of economy class seats in a mixed

configuration aircraft of major carriers

  • Some ‘frills’ must be retained
  • Hub feed is crucial for long-haul

operations; there are few dense routes

  • Secondary airport strategy more difficult
slide20

LONG-HAUL LOW-COST AIRLINES (2)

  • Cargo cannot be ignored
  • Less scope for labour savings
  • Bilateral agreements present barrier
  • to entry
  • Some former charter airlines operate
  • low frequency services e.g. LTU (Dusseldorf-Orlando) Martinair (Amsterdam-Barbados)
slide21

CONCLUSIONS

  • Long-haul travel is becoming more concentrated; SN Brussels, SAS
  • and Olympic have largely withdrawn; Swiss and Alitalia may follow
  • Collapse in service from base airports such as Brussels and
  • secondary centres such as Gatwick and Geneva
  • Only London can support many services without feeder traffic;
  • Frankfurt and Paris (and Amsterdam?) will prosper as hubs
  • Elsewhere: niche ethnic markets plus links to key overseas hubs
  • If profitability of low-cost short-haul services diminishes then
  • may entice e.g. easyJet to start long-haul from Stansted and
  • become more of a network carrier (c.f. Peoplexpress)
  • If no new runways at Heathrow and Frankfurt then overflow will
  • trickle down elsewhere
competition between airports for long haul traffic from europe22

COMPETITION BETWEEN AIRPORTS FOR LONG-HAUL TRAFFICFROM EUROPE

Dr Nigel Dennis

Senior Research Fellow

Transport Studies Group

University of Westminster

dennisn@westminster.ac.uk