Jetrader - Winter 2015 - (Page 40)

Trend Watching: Comparison of the US and EU regional markets and their respective development in the past 10 years O By Thomas Jaeger, ch-aviation GmbH Over the last 10 years, regional airlines in Europe and the U.S. have seen many ups and downs. Changing factors include the rise of low cost carriers (LCCs), new high-speed rail services in Europe, industry consolidation, increasing costs (jet fuel > 100 USD per barrel for the majority of the last few years) and new legislation (EU Emissions Trading System, environmental taxes in various EU countries and new pilot rest and minimum flight hour rules in the U.S.). In response, many existing regional carriers introduced a new generation of aircraft (large regional jets and turboprops) into their fleets. Some were only able to do so as scope clauses of their mainline partners were relaxed. The total market's general trend (not just regional aircraft) shows that while the number of flights in Europe has remained relatively stable according to OAG data (3.1 percent growth between 2005 and 2015), available weekly seat capacity has increased by a much faster 29.7 percent. This increase has been achieved by upgauging, with the average capacity per flight increasing from 112 seats in 2005 to 140 in 2015. Meanwhile, industry consolidation in the U.S. was a key driver in weekly flights decreasing by 19 percent in the same 10-year timeframe. While capacity has shrunk as well, it is down only 6.3 percent. Analysis of weekly capacity offered by U.S. regional carriers shows the trend toward higher capacity aircraft between 2005 and 2015. U.S. Regional Carrier Weekly Capacity by Aircraft Size Aircraft Size 2005 2015 Smaller than 19 seats (turboprops, pistons and bizjets) 76,648 85,222 11% 19-seat turboprops 133,827 15,447 -88% < 50 seat jets 129,790 1,472 -99% < 50 seat turboprops 545,269 127,969 -77% 50-69 seat jets 2,572,342 1,447,150 % Change -44% 50-69 seat turboprops 43,668 49,600 14% 70-89 seat jets 545,238 1,245,514 128% 70+ seat turboprops 122,662 248,938 103% 90-120 seat jets 242,130 895,507 270% Grand Total 4,411,574 4,116,819 -7% Changes in scope clauses with legacy carrier unions combined with consolidation has led to regional jets (RJs) with fewer than 50 seats gradually being replaced in the last few years, although the pace may be moderating given low fuel costs. Larger RJs have benefitted with the number of available seats up over 100 percent entirely and to more than 100 percent growth for 70-seat RJs, turboprops and larger RJs. The modest 11 percent growth of seats flown by aircraft with less than 19 seats likely stems from an increased usage of nine-seat aircraft on subsidized essential air services (EAS) routes in the U.S. previously served with larger 19-seat aircraft. The same development is observed when reviewing the weekly capacity offered by European regional carriers in 2005 versus 2015. European Regional Carrier Weekly Capacity by Aircraft Size Aircraft Size 2005 2015 < 19 seats 15,846 2,714 (turboprops, pistons and bizjets) 19-seat turboprops 36,030 18,002 < 50 seat jets 23,303 9,470 < 50 seat turboprops 175,864 134,593 50-69 seat jets 502,676 87,134 50-69 seat turboprops 522,953 128,842 70-89 seat jets 131,424 238,939 70+ seat turboprops 659,214 895,751 90-120 seat jets 928,143 1,300,449 2,995,453 2,815,894 Grand Total % Change -83% -50% -59% -23% -83% -75% 82% 36% 40% -6% While overall, European regional aircraft capacity has only been reduced by 6 percent, the only growing segments have been aircraft with 70 seats or more (both RJs and turboprops). Change in Europe was less driven by scope clause considerations but more by economies of scale in general. Comparing the types of European regional airlines and their respective weekly capacities between 2005 and 2015 shows that only three business models now have a higher capacity than 10 years ago (franchise, in-house operations of regional aircraft by mainline carriers and virtual carriers). 40 The official publication of the International Society of Transport Aircraft Trading

Table of Contents for the Digital Edition of Jetrader - Winter 2015

A Message from the President
Q&A: John Grant, Senior Analyst, OAG
ISTAT Europe: A High-Flying Success
The ISTAT Quarterback
State of the Regions: Asia & Middle East
Old Guys Rule
ISTAT Foundation Sponsors Herb Kelleher Trophy
Trend Watching
Aviation History
Aircraft Appraisals
ISTAT Foundation
Advertiser Index

Jetrader - Winter 2015