Airline Weekly - February 29, 2016
Short URL:
 
Bookmark and Share
Recently Viewed
(none yet)

Airline Weekly - February 29, 2016

A Galaxy Far, Far Away: Australia isn’t close to much. But Sydney, for one, is booming with inbound tourists

$50.00 - 12 pages
The document is delivered immediately, online, DRM-free, personalized, PDF format

Cover Story

A Galaxy Far, Far Away: Australia isn’t close to much. But Sydney, for one, is booming with inbound tourists

If you’re on your way to Sydney from abroad, you’re probably in a longhaul widebody aircraft. Because unless you’re coming from New Zealand, Indonesia, Papua New Guinea or an island in the South Pacific, Australia’s largest city is a long, long way away.

It’s distance—perhaps more than anything—that shapes Australia’s international airline market, which lies a world away from most of the earth’s major economic and population centers. But good news for Sydney: The world is shrinking, thanks to new-generation longhaul airplanes that make flying to distant places far more economical than in the past. Add to this the new reality of cheap fuel, which helps longhaul airlines disproportionately, and it’s no wonder that Sydney’s airline market is flourishing.

Last year, sure enough, was a record year for Kingsford Smith Airport, Sydney’s only major airport with scheduled air service. It welcomed 40m passengers, roughly equal to the number handled by Toronto’s main airport last year, and grew about 3% from 2014’s levels. Growth was a bit higher for international travel—up 4% y/y—and gained momentum as the year progressed, with international traffic volumes up 7% in the final quarter of the year. And that’s despite large capacity reductions by Malaysia Airlines and AirAsia X from Kuala Lumpur, as well as the outright suspension of Sydney flights by two airlines: Virgin Atlantic and Aerolineas Argentinas. This year is off to an even better start, with total airport traffic up 8% in January, including 10% growth for international travel.

January volumes were, to be sure, boosted by the earlier occurrence of Lunar New Year in 2016, which resulted in a 39% y/y surge in Chinese passengers using Sydney’s airport. But a surge in Chinese passengers isn’t only a calendar quirk. On the contrary, huge growth in Chinese nationals flying to Sydney was a major trend throughout all of 2015, rising 18% for the year. China might no longer need as many of Australia’s minerals for its slowing economy, but it’s slowing economy hasn’t stopped it—at least not so far—from sending more and more tourists.

Chinese airlines, inward looking even throughout their economy’s boom years, are now expanding intercontinentally... (378 of 1,512 words)

Also Inside this Issue:

Oh, the perils and despair of being a European legacy carrier: labor strife, Gulf carrier harassment, Asian overexposure, shorthaul headaches, slothful home economies, cargo losses…. Wait, what is that you say? IAG faces none of this?

These are good times for British Airways, Iberia, Aer Lingus and Vueling, which together constitute a combined force that enjoyed strong profits last year, even without much help from cheaper fuel. IAG’s member airlines certainly did have their share of labor strife in years past, but with great cost savings now to show for it. On the revenue side, meanwhile, an outsized presence in the U.S. is a plus.

The story is equally happy for Qantas. Several years ago, it dissolved a joint venture with British Airways in favor of Emirates, one of many gusty moves to reinvigorate a broken longhaul business. Those moves worked, and Qantas is now earning more money than ever.

U.S. carriers, of course, are to an even more extreme degree earning more money than ever. How is it, then, that a U.S. airline filed for bankruptcy? The victim was Republic, a carrier flying in a more troubled corner of the industry. As a provider of regional flights to the Big Three, its success depends on low costs and reliability, the latter so tattered due to a pilot shortage that bankruptcy became necessary.

It’s becoming necessary for Emirates to look beyond the beaten path for new markets—it’s now going to Myanmar. And Azul found it necessary to give some A330s to TAP Portugal, which will use them to amplify its U.S. presence.

This week, a big aircraft conference assembles in Phoenix.

About Airline Weekly

Airline Weekly is a subscriber-supported publication, paid for by readers who want a more interesting, more valuable read about the airline business. Each Monday, Airline Weekly reports who's flying where, new marketing approaches, fleet, finance and key airline and airport data. And, most importantly, Airline Weekly readers enjoy a critical context, insightful analysis and new ideas found nowhere else.

Sample Issue

Here's a sample issue of Airline Weekly.

Guarantee

If not completely satisfied, let us know and we will refund the purchase price.

Tags

airline weekly   sydney  

;