Fuel price collapse triggers hopes that 2009 might not be so bad after all; Ryanair still likely to start more new routes than anyone else

Image: Eurovision
OK we’re a little bit guilty of trying to talk up the market, but with no global sporting event such as the Olympics or the World Cup taking place this year, the Eurovision Song Contest was the best thing we could find. However, with 43 countries participating there’s no doubt it will cause a spike in traffic to Moscow in May and deliver Russia’s impacted airlines with some much-needed relief. anna.aero predicts Eurovision will be won by the UK following Lord Andrew Lloyd Webber’s agreement to compose the British entry.

This time last year anna.aero looked ahead to see what 2008 might have in store for airline network planners. We were in good company with most world leaders and chief executives in that we were clueless about fuel prices (a $150-$50 spectrum) – a huge worry last year but now almost a distant memory. We also didn’t expect our wiser and clever masters in the banks to go bust and take with them some of anna.aero’s favourite clichés about the solidness of “the banker’s view”. At that time it also seemed likely that Boeing’s 787 Dreamliner would be carrying fee-paying passengers by now. So what do we see as some of the key issues that might impact route planner’s thoughts in 2009?

Image: Delta Ribbon Cutting
Delta’s new service to Bonaire in the Netherlands Antilles (great for scuba diving) illustrates refreshing resilience and optimism.

US airlines surprisingly upbeat

Having significantly cut back domestic capacity for this winter US airlines are now quite upbeat about 2009 as fuel prices have plummeted reducing unit costs. With reduced capacity having the potential to drive up yields US airlines may have an unexpectedly healthy 2009, as long as the price of fuel remains at or below current levels.

Demise of more niche airlines?

2008 saw the collapse and disappearance of many smaller airlines across the globe. Arguably the largest airline to disappear was Copenhagen-based Sterling which operated over 20 aircraft. However, according to Copenhagen airport the number of new flights being offered by the likes of Cimber, easyJet, Norwegian and Transavia means that Sterling’s capacity has been more than replaced.

Smaller, less well capitalized airlines are most vulnerable when times are tough. In the last quarter of 2008 Mexico alone lost three airlines, Russia saw several airline implode (from which will rise a new entity called Rosavia – much to the consternation of Aeroflot). Meanwhile consolidation is continuing in India.

Just prior to launching Kingfisher’s highly competitive service from Mumbai to Heathrow we sent our beloved publisher Paul J. Hogan to interview UB Chairman Dr Vijay Mallya. “He only wanted to talk about his F1 racing team” complained Hogan who failed to come back with any copy we could use on anna.aero

Image: Paul J. Hogan and Dr Vijay Mallaya
Just prior to launching Kingfisher’s highly competitive service from Mumbai to Heathrow we sent our beloved publisher Paul J. Hogan to interview UB Chairman Dr Vijay Mallya. “He only wanted to talk about his F1 racing team” complained Hogan who failed to come back with any copy we could use on anna.aero

Airline entrepreneurs still starting airlines in 2009

Image: Australia AirAzul in Brazil may have launched right at the end of 2008 but its progress will be watched with great interest in the months ahead. Other new airlines taking to the skies shortly include Enerjet (Canada), FlyDubai, V Australia and Wataniya (Kuwait). None of these carriers it will be noticed are based in either Europe or the USA.

Image: Pound vs EuroExchange rate instabilities

As countries adopt different economic measures to mitigate the impact of the credit crunch one unexpected impact has been on currency exchange rates. In particular the UK has seen the value of sterling collapse by over 20% against the Euro. With most UK regional airports being primarily exporters of air travel, cash-starved British holidaymakers will now find their European destinations considerably more expensive than last year even if air fares (paid in Pounds) are still relatively good value. An indicator of this is that UK seaside resorts are expecting a good year. Good for them (but not us).

Airport Exchange: Bernard Berger
Heavyweight champion: Bernard Berger, Ryanair’s director of new route development is already on pole to be this year’s new route supremo. Expect to see some announcements at some big European capital city airports where Ryanair does not traditionally operate (now that really is a great anna.aero tip).

Ryanair; New Routes Champion in 2009 as well?

Having started around 230 new routes last year Ryanair is odds-on to retain its title as New Routes Champion. Its nearest rival easyJet started around 90 routes. According to anna.aero’s database of planned new routes Ryanair will launch 40 new routes in the coming months while Wizz Air (26), easyJet (22) and Jet2.com (21) will also be keeping their marketing and promotions staff busy.

It’s an ‘odd’ year, so no major sporting events

With no global sporting event such as the Olympics or the World Cup to look forward to this year events that may provide spikes (or troughs) in demand are likely to be limited to regional and local sporting events and the usual basket of freak weather conditions (already happening across Europe this week), although this is a blessing for skiing which we all love.


Comments

  1. Rob says:

    No major sports events but Valentines day is on a Saturday this year so there should be revenue maximisation going on for the Valentines weekend flights

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