Jetrader - September/October 2011 - 19

The shorter-haul routes within Europe were suffering structural decline as the new generation of business passengers, now more costconscious, increasingly “chose” to travel in economy class.
from $96 to $110 a barrel for the year, an indubitable heavy burden on the airlines’ P&L. Nearing the end of the second quarter, jet fuel settled at $131 per barrel (up 49.9 percent since the same period last year). IATA’s new fuel price average for 2011 was set at a monstrous $127.4 per barrel, having a total impact of +$60 billion on the 2011 fuel bill. However, despite these negative factors, the International Monetary Fund actually raised their expectations for world economic growth over the same period as the IATA revisions. Should this ring true, given the known strong correlation, the demand for air transport should recover at a rate in the region of ﬁve to six percent during the latter half of 2011. Upon entering the second quarter, however, it became increasingly apparent that the European recovery was running out of steam. European Union economies, consumer conﬁdence and, subsequently, air transport continued to lag, though there was some strong trafﬁc growth evident in international markets for long-haul routes. Indeed, those within the Eurozone offering short-haul destinations were suffering the most. The long-haul business had achieved stability, with signiﬁcant strengthening witnessed in the premium markets. As the ﬁnancial markets and the economy improved, and trade flows from core European economies slowly strengthened, business travel across the Atlantic thrived. The shorter-haul routes within Europe were suffering structural decline as the new generation of business passengers, now more cost-conscious, increasingly “chose” to travel in economy class.

Eurocontrol is expecting European air trafﬁc to grow by 4.3 percent throughout 2011, followed by an annual average growth of 3.2 percent between 2010 and 2014. However, even within the Eurozone, regional variations are clearly evident. Highest trafﬁc growth, in excess of six percent, is expected to beneﬁt the emerging markets in the east of the continent, and that rate gradually decreases from east to west, with the majority of the EUROCONTROL Statistical Reference Area (Western Europe) states looking to enjoy more modest growth of two to three percent.

operators. Twenty seven aircraft were deferred from their schedule in 2011 to a later date—none by European carriers.

Passenger & Airline Trends
Undeniably, the European Network and FSCs (Full Service Carriers) are under constant threat and attack from the region’s Low Cost Carriers (LCCs) or Low Fare Airlines. The European Low Fares Airline Association (ELFAA) announced a 6.1 percent year-on-year increase in passenger numbers for 2010, a strong exhibit that these LCCs are “well on track” to becoming the dominant force in intra-Europe scheduled trafﬁc. ELFAA members’ load factor increased by 0.3 percent to 82.3 percent, further emphasizing their high overall and environmental efﬁciency. ELFAA’s nine members (easyJet, Flybe, Jet2.com, Norwegian, Ryanair, SverigeFlyg, transavia.com, Vueling and Wizz Air) carried more than 170 million passengers last year and account for more than 35 percent of scheduled intra-European trafﬁc. More than 4,000 daily ﬂights are provided by a ﬂeet of approximately 730 aircraft of an average age of 5.3 years (less than half the age of the European jet ﬂeet). Indeed, in some European countries, LCCs dominate the market, e.g. in Spain and Poland, which has put considerable pressure on the established network and ﬂag carriers. European LCCs do face their own obstacles and threats however; as with all air operators, fuel is the key element of danger. The second is saturation. Being spoiled with records of double-digit growth for several years is not sustainable, and for those carriers operating in established markets the real challenge is in ﬁnding new routes and allocating new capacity. That said, at present, there are still a few markets that are underserved and overpriced. France comes immediately to mind, being underserved and offering noteworthy opportunities for exploitation. Further opportunity comes in the face of consolidation, especially amongst some second-tier FSCs and indeed amongst some LCCs. Also worth noting is the path toward extinction of the stand-alone charter carrier. We have seen massive airline groups form and grow in Europe over the past couple of years, and this trend is expected to Jetrader 19

Aircraft Figures
According to ASCEND, at the end of May 2011, the world’s western-built jet ﬂeet stood at 23,287 aircraft, with 2,625 aircraft in storage (11.3 percent) averaging an age of 13 years. The world ﬂeet is dominated by Boeing, which accounts for approximately 45 percent of in-service aircraft. Airbus is quite a distant second, with just more than one-quarter of the world’s aircraft. The European-operated ﬂeet (approximately 25 percent of the world ﬂeet, following North America with about 36 percent) totalled 5,880 aircraft with 485 in storage (8.2 percent) averaging an age of 11 years. Again Boeing dominates the European ﬂ eet with 39 percent of the aircraft, though Airbus for the region is very close behind at 37 percent. The total global backlog stood at 7,412 aircraft with a total value approaching $500 billion. Of these jets, 1,544 aircraft are destined for European operators. A sum of 467 aircraft was delivered to operators worldwide—195 were delivered within Europe. Airbus’s net order total for the ﬁrst ﬁve months of 2011 is at 97 airframes, from a gross ﬁgure of 176. Airbus delivered 217 aircraft to 31 May, including eight A380s, 39x A330s and 170x A320family aircraft. The total puts it ahead of 2010, when also by the end of May, Airbus achieved 206 deliveries. Boeing’s gross orders to the end of May reached 182 aircraft, with a net total of 133. The North American OEM also recorded 180 deliveries for the period. A total of 141 aircraft were cancelled so far in 2011, though impressively only four of those aircraft were destined for European

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Jetrader - September/October 2011

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