|OK, so it was not great. Here’s what we “looked forward” to in January. We didn’t predict that the banks would go bust and that this would be very bad for business, but neither did any of our wise leaders. A lot of routes got dropped – check out our unique downloadable Route Recycle Bin – we currently have over 670 routes which may be of interest to carriers.|
Back in January we highlighted nine topics that we thought would make 2008 an interesting year for the airline industry. Now seems a good time to go back and see how things panned out.
Transatlantic ‘bloodbath’? – Not yet …
Continental, Northwest and US Airways duly turned up at London Heathrow mostly having simply relocated from London Gatwick. Silverjet joined eos and Maxjet in the footnote of transatlantic aviation history suggesting that to make all-business class flights work you need to be an established airline in the first place, like British Airways who duly launched Open Skies from Paris (and later Amsterdam) and formed an alliance with L’Avion in France. Air France sought revenge by launching Heathrow to Los Angeles flights but these were abandoned at the end of the summer season. Virgin Atlantic remains unhappy about closer ties between British Airways and American Airlines but nobody else seems that bothered. Given their role in the fuel surcharge price fixing ‘scandal’ it seems that public sympathy is proving rather harder to come by than usual for Mr Branson.
European consolidation …
We thought the futures of Alitalia, Iberia and Olympic would be much clearer by the end of 2008. Alitalia has finally been sold to private investors, and there is a mixed bag of suitors lining up for a crack at Olympic, but that won’t be resolved until well into 2009 we suspect. Iberia is leaning towards British Airways in terms of some kind of merger. Air Berlin (or airberlin as it now prefers) did not acquire Condor, or TUIfly for that matter. Vueling looks likely to be merged with clickair to give Iberia a strong interest in the low-cost market while SkyEurope’s position has not improved as it keep delaying loan repayment dates. We did lose Sterling due to the Icelandic banking crisis as well as leisure carriers XL and Zoom.
US consolidation …
Two of the ‘big6′ (Delta and Northwest) finally tied the knot while all US carriers started cutting domestic capacity significantly for the winter season. Even Southwest was not immune to high oil prices and the banking crisis that enveloped the US during the summer. Entrepreneurial Skybus failed while Virgin America grew rapidly though probably not profitably. Allegiant continued to fly under the radar and develop its profitable niche of linking small communities to appealing leisure destinations at low frequency.
Dreamliner doesn’t join the A380
At the beginning of the year it was expected that Boeing’s 787 would be in commercial operation by the end of this year. It has yet to make its maiden test flight. It has not been a good year for Boeing what with losing at least three months of production and annoying a lot of existing and potential customers. Airbus is at least delivering A380s but not at the rate originally envisaged. But Emirates, Qantas and Singapore Airlines have at least got their hands on them.
Middle East momentum slows
While Emirates, Etihad and Qatar Airways all grew significantly all three increased capacity by less than 20% in 2008 and just 15 new routes were actually started. What new routes there were tended not to be in Europe but in China, India, Russia and the US.
Emerging markets matured rapidly
A combination of factors resulted in the Indian domestic market going from 30% growth in 2007 to a significant decline in 2008 as fuel prices and economic reality home hard. Kingfisher absorbed Air Deccan and then signed a partnership agreement with Jet Airways. International traffic at least still showed signs of growth all be it much slower. Mexico’s domestic market also got a reality check as growth disappeared and carriers ran into trouble. Russia also witnessed previously strong growth grinding to a halt as a whole group of local airlines failed.
Long-haul segmentation developments
As mentioned above the emerging all-business class airlines suffered a torrid time. Low-cost long-haul airlines such as Oasis Hong Kong and Zoom also bit the dust during the year though AirAsia X (with deeper pockets) bided its time and is now launching London flights early next year. Gol’s acquisition of the old Varig gave it a number of problems it could have done without.
More HSR routes across Europe
New high-speed rail (HSR) routes in Europe had a measurable effect on air travel demand. Paris to Strasbourg air travel fell by almost 60% while a new HSR link between Madrid and Barcelona saw air passenger numbers drop by around 40%. Even the UK may see some impact in 2009 from completion of a 10-year major upgrade to the west coast mainline rail link between London and Glasgow.
Major sporting/cultural events
Ironically the Olympics caused Chinese air traffic growth to falter during 2008 as travel restrictions were tightened. The Euro 2008 football championships held jointly in Austria and Switzerland didn’t do an awful lot for air travel in those countries as traditional tourists to the region stayed away from the ‘enthusiasm’ of the average football fan.
So what do we think the big issues in 2009 will be? We’ll let you know in the New Year when anna.aero returns after a break.