The hub reviews a ‘challenging’ 2010

As we approach the end of 2010, the year The Hub was launched, we take a look back at some of the major route development stories of the year:

January to March: Rising Optimism

The Aviation industry was glad to see the back of 2009, with Giovanni Bisignani (Director General & CEO, IATA) stating that “2009 goes into the history books as the worst year the industry has ever seen”. It appeared 2010 could only be better, but not without its ups and downs.

Despite the overall poor performance of the industry in 2009, the year started with renewed optimism the open skies decision between the US and Japan at the end of 2009 meant that the US carriers were able to apply for slots at the at one of the world’s most restricted airports, Haneda Airport. There were a number of new bases announced early in the year such as Germanwing’s new base in Hanover and Ryanair opening Kaunas and Malta, and in Africa Togolese carrier ASKY (owned by Ethiopian Airlines) started its new venture in Lome.

Tiger announced its IPO ($177 million) which was to be a success and at the other end of the year Flybe complete its IPO successfully raising $93 million.

There were few start-up airlines emerging in 2010, such as Varsity Express, which was later to end in controversy, and others that made the news include Enter Air, Norwegian Express, Goldfield Ghanian Airways, Haibao Airlines, Haier Air, onetime Airlines, Nesma Airlines, Whitejets and Vision Airlines. Many of these have not got off the drawing board, so will they resurrect their plans in 2011?

For the Routes event, 2010 was set to be a year of firsts, with the forum coming for the first time to; North America (World Routes in Vancouver), South America (Routes Americas in Lima), Australia (Routes Asia in Adelaide), France, (Routes Europe in Toulouse), Southern Africa (Routes Africa in Swaziland) and Ukraine (Routes CIS in Kharkov).

April to June: Dark Skies & Consolidation

The second quarter of 2010 saw the industry’s optimism dampened by one of the world’s most freak acts of nature, the eruption of the Eyjafjallajökull volcano. The subsequent ash cloud caused widespread closures across European airports leaving carriers no option but to park up aircraft, just as many were beginning to show signs of improving performance. The financial implication of days of aircraft inactivity ran into billions, for example Ryanair stated that the ash cloud cost them €27.9 million. In some ways, this natural event proved as much of a challenge to the industry as the fall out post 9/11.

The Routes events were not unaffected by the ash cloud, despite the organising team flying out to Adelaide (Routes Asia) the day before the eruption occurred, they, like so many of the European delegates attending the event, were delayed returning home. It also hit delegates travelling to Toulouse (Routes Europe) with people being stuck in Munich, Gatwick and many other European airports. Despite this the event still delivered a record turnout.

Two of the four Routes events held in the second quarter of 2010 had a football link with Routes Africa being held in Swaziland, just before World Cup fever hit neighbouring South Africa and Routes CIS was held in Kharkov in the Ukraine, one of the locations for the European Championships in 2012.

Perhaps, the largest theme of 2010 for the aviation industry has been consolidation, with United and Continental agreeing to create the world’s largest airline (Continental and United Mega Merger), whilst Latin American giants LAN and TAM also creating the largest airline in Latin America, LATAM Airlines Group. Avianca and Group TACA merged (The Evolution of TACA) to bring 13 carriers under one holding company and the Aegean and Olympic merger is still awaiting ratification by the European Commission, which is scheduled for February 2011.

The consolidation also led to a battle between the Alliances, not only in Latin America with LATAM still undecided, but also in Asia. Both oneworld and SkyTeam battled it out in the early part of the year to attract struggling carrier JAL (The Battle Continues for JAL), Delta Air Lines led the SkyTeam bid to lure JAL from oneworld to SkyTeam. However, the second largest operator in Japan eventually decided to remain with oneworld. The oneworld alliance, which has now moved to New York under the stewardship of Bruce Ashby, had a busy year attracting Kingfisher Airlines, the third largest airline in India (oneworld Catches Kingfisher), S7, giving it access to the key Moscow market and Air Berlin.

SkyTeam also has been active with its strategy of adding regional operators such as Tarom (Tarom Celebrates SkyTeam Entry) and Vietnam Airlines, whilst China Eastern is set to join in 2011.

July – September: Low Cost Growth & Mexicana Collapse

2010 has been an interesting year for the low-cost sector across the globe and the second half of the year saw some intriguing developments as carriers searched for new markets. Ryanair started services from Barcelona’s primary airport El Prat and it ended the year requesting a large number of additional slots at London Gatwick for 2011. Ryanair also announced Tallinn (Ryanair Enters Baltic Battle), its first base in the Baltics, and its first services to Greece. Wizzair also created a base in the Baltics in the Lithuanian capital of Vilnius and entered the Balkans announcing a new base in the Serbian capital of Belgrade. EasyJet had a relatively conservative year focusing on “joining the dots”, but announcing some new destinations such as Croatia, Turkey and Greece (Zagreb, Antalya, Chania, Kos and Zakynthos). Whilst there was strong interest in Tel Aviv with a number of low-costs starting services such as Cimber Sterling and Germanwings.

However, the low-cost airlines pursuit of new markets was not only confined to Europe with Indigo and Spicejet beginning their first international services from India in 2010 and next year will be an interesting year for both carriers. Meanwhile, the most established low cost carrier of all Southwest Airlines announced it was acquiring AirTran allowing it to begin international flying in 2011.

The third quarter of 2010, also saw the first operations by Air Arabia’s new franchise Air Arabia Egypt. AirArabia continued its franchising operation across the Middle East and Africa establishing not only a new brand in Egypt but Morocco as well.

The Mexican low cost carriers, Volaris and VivaAerobus, also reacted quickly to take advantage of the demise of Mexicana (Low Cost Carriers Battle to Fill Mexicana Void) which went into administration at the end of August. Mexicana’s fate was a reflection of the Mexican aviation market that had struggled to recover from the Swine-flu pandemic and also losing its category one FAA status.

The optimism showed by the low cost carriers was reflected at the Farnborough Air Show where a total of over $28 billion of aircraft orders were placed (Farnborough Air Show Orders Top 28 Billion), the highlight of these was Emirates’ order for 32 x A380 aircraft! (Emirates Supersize Order)

The third quarter of 2010 also saw the final approval for the anti-trust immunity for transatlantic operations for BA, Iberia and American Airlines.

World Routes, the annual gathering of the world’s route development community took place in September in Vancouver. Delegates from airports, airlines and tourism authorities turned out in record numbers. There was airport talk about the new Dubai Al Maktoum International Airport (opening in June) and the new terminal three at Delhi Indira Gandhi International (July), as well as the new terminal at Dublin Airport (November). But perhaps more importantly many airlines were announcing new air services, a select few below;

• US Airways’ routes to Madrid and Dublin from their Charlotte hub;
• Vietnam Airline’s Adelaide to Ho Chi Minh City route;
• Air Asia X’s new route from Kuala Lumpur to Tokyo Haneda;
• Air France’s thrice weekly service to Orlando and five-times weekly service to Lima;
• British Airways’ five-times weekly service to Tokyo Haneda as well as direct services to Buenos Aires and services to Cancun and San Diego;
• Allegiant’s new service between Youngstown-Warren Regional Airport in Ohio and St Petersburg-Clearwater International Airport in Florida;
• Hainan Airline’s Beijing to Cairo route;
• Transaero’s new routes to Rio de Janeiro and Port Louis, Mauritius;
• JetBlue’s new route between San Juan and Tampa Bay;
• Winair’s route between Tortola and Dominica;
• Continental Airlines’ route from Newark Liberty International to Provindenciales, Turks and Caicos Islands;
• WestJet’s new routes to Orlando from St John’s and Greater Moncton.

October – December: Taxation, Austerity... any signs of optimism?

The final quarter of 2010 was anticipated to end strongly, but the introduction of new government taxes in Europe’s two largest markets, the UK and Germany, caused further concern for airlines. Ryanair cut a quarter of flights from Frankfurt Hahn as a reaction to the German tax announced in September. The carrier also closed its Marseille base blaming income tax and social insurance payments imposed by the French government. Finally, in October Austria unveiled a new “green tax”. These taxes have created further pressure on an already struggling aviation industry.

On a positive note, there were some interesting new bases being announced in the final quarter of the year with easyJet announcing a new base in Lisbon (easyJet to Establish Lisbon Base) and Norwegian in Helsinki. Norwegian also announced the lease of two 787s for their long haul ambitions. Vueling also ended the year strongly with the announcement of two new bases in Toulouse and Amsterdam.

Towards the end of 2010, IATA has been reporting a recovery in demand, but there are regional differences in the strength of the recovery. Asia, Africa, Middle East and Latin America are experiencing strong levels of growth, whilst the recovery in the mature markets of Europe and the USA continues to stutter. The austerity measures by many governments have slowed the recovery in 2010 and have dampened the forecasts for 2011, but there is still room for optimism that 2011 will improve on 2010, just like 2010 was an improvement on 2009. Well it couldn’t get any worse, despite the efforts of Mount Eyjafjallajökull… for which the year of 2010 will be remembered for!