Part 6a – Northern Europe
This is the continuing series of posts to review the status (initially) of the International markets as at the end of 2017 (latest data available), I now have 4 full years of data compiled from the T-100 and as we know the data is only as accurate as that provided by the airlines each month. I remove diverts and one off's as much as possible so as to focus on the regular routes. I am classifying Summer Season as May to September inclusive in this post.
***Due to the size and complexity of the Europe list, I am breaking this up into 4 parts (Northern Europe, Western Europe, Southern Europe and an overall view at the end).
First up Northern Europe and for the purposes of this exercise it will include the following routes (UK, Ireland, Iceland, Norway and Denmark)
Overall
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This combined market is the largest from BOS, primarily due to the inclusion of LHR and DUB the top 2 international routes in 2017. The market has seen the 2nd biggest growth from 2014 to 2017 of over 30% in both capacity and passengers, which is a huge uplift and accounted for 1.9m (or over ½ of the total pax counted as part of the Europe number). With WW starting KEF, DL starting DUB, DY starting OSL/CPH/LGW and VS/MT starting MAN a significant choice in routes has emerged, as you will see the routes have seen a little bit of mixed success and 2018 holds interesting times, but for now, let’s explore the parameters of this enormous growth.
In summary, Seats during the period grew from 1.8m to 2.3m but due to the aircraft mix average seats dropped from 251 to 249 and average pax ticked up slightly to 202 from 201, but that really doesn’t tell you the whole story of this market, so here we go.
Equipment:
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BA, with all their capacity fluctuations, you see all manner of equipment, from the 214 seat 788 , 789’s , 225 seat 772’s, 290 seat 744’s, 297 seat 773’s all the way up to the 469 seat 388. However they structure it so their average seat count actually dropped from 281 to 274 over time. Next up DL who used the 752 on their DUB runs and primarily 763’s on their LHR runs. DY in 2016 used mostly 788’s, but in 2017 used pretty much all 344 seat 789’s. EI are fun, they have no idea how to report, I do hope their new masters tell them to get it together. They basically report everything as a 332 for both DUB and SNN, well we all know that is crap, so I fix the SNN ones to 177 seat 752’s (which is actually true) and for 15 and 16, they got supplemented by Omni 762 and 763’s. For DUB, we know that they use primarily the 332’s in reality, but do have a smattering of 333’s every so often due to capacity and operational reasons, but it’s almost impossible to split that information from the T-100’s sadly. FI up next, started life as sole B752’s, however 2016 saw 753’s and 763’s turn up and in 2017 almost 40% of the flights were 763’s, more on that later. MT use 332’s from MAN and VS use 333’s from MAN and a mix of 333’s and 789’s on their LHR runs. SK were using the Privatair 737 daily, but in 2017 switched to a lower frequency 332/343 mix. Lastly WW bring their 220 seat 321’s from KEF, with a couple of 350 seat 332’s every so often.
BOS-CPH (SK/DY)
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This has been an interesting route to watch develop, started from 2 completely different angles and alas DY ultimately making the decision to pull their version in favor of supporting their LGW service, but another route started in March 2016 by both airlines.
SK Went first bringing the Privatair 737-700 with 81 seats daily intended to be year round and in May DY followed but with their 1 weekly 788 with 291 seats as a summer seasonal, from a standing start, suddenly 54,000 seats available during 2016, with 40k to SK and 14K to DY, it translated into 12k for DY for 245 per flight and a 84% load. SK on the other hand managed 30K for a 73% load.
2017 was a bit of a watershed for this route, SK ultimately decided to switch out the 737-700 later in the year for a 266 seat 332 but 3 times a week instead of daily. Ultimately it didn’t do a whole lot (more in a moment). For 2018, DY bailed and we thought SK may have given up after the 18 summer season, but they have continued the route for Summer 19 as a seasonal, which ultimately might work in their favor.
Back to the numbers. 17 was pretty rough, especially on SK, DY had their longer 2nd season with 21,000 seats with more flights and a capacity increase as they switched up to the 344 seat 789, unfortunately their 50% increase in capacity (flight and seat combo) only managed a 38% increase in pax to 16,500, butts on seats increased from 245 to 267, but loads overall slipped back to 77.7%, not terrible, but not what DY needs for sure. SK on the other hand had a bit of a disaster, which I am sure led to their decision to switch to seasonal, up to 66k seats available following a full year of operation and the late season switch to the 332 for a 64% increase in capacity, led to 41K folks plying the route for only a 38% increase and a horrific 61.6% load average for the year. Only June made it about 80%, a summer season of 70% average and September – December never got above 50%, the writing was on the wall for the 18 winter season. The 18 summer season must have survived ok if they decided to come back for 19, but I will be honest, this one is most definitely at risk of being cancelled in my opinion if SK find a better use of the equipment.
BOS-DUB (EI/DL)
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EI have capacity issues, that has been written about time and time again, they only have just enough 330’s to run their schedule and ideally they could use some additional capacity on their BOS run. They have grown their seats by over 10% from 2014 to 2017 up to an impressive 413K, by mixing in their bigger 333’s with their 332’s (although you can’t really see that from the detail files to go any further. They are now transporting an additional 44k pax at 352K for a whopping 265 per flight and a full year average 85.2% up from 82.6% 4 years previously. Their summer season peaked at 94.1% in June, which is basically a sold out position for the month and it averaged 89.8%. Clearly plenty of people want to fly to and connect via DUB. This is important, because this year DL weighed in with their new 752 service as a seasonal and while the overall loads were not earth shattering averaging 75.3%, what it really proved was the need for additional capacity, so while EI only grew 6k pax between 16 and 17, DL added 37K pax on 50K seats… it will be interesting to see what happens in 18 with this one, that’s for sure.
BOS-KEF (FI/WW)
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The fish battle of the Northern Atlantic as these two protagonists go head to head and while each have eeked out a market, on balance I am going to say the current winner is FI. This market has almost doubled in 4 years from 222k seats in 2014 with just FI and 413k combined in 2017. 2017 increased 20k seats, which was the lowest because both carriers somewhat reached the capacity that they can on this route without another big push and neither of them appear to be interested in that. FI has the numbers because they have the multiple frequencies over WW’s slightly bigger planes but lower frequency, however WW suffered in 17 with a 2.9% increase in pax but on an 8.5% capacity increase, this dropped their overall loading to 79.2% from 83.6% on 127K pax. FI increased seats by 2.8%, but only increased pax by 1.5% to 214K, which dropped their load by 1% to 84.7%, maybe signs of bleeding on to other routes is starting to show through, it’s not huge yet, but the capacity shifts made by FI late last year suggest that outside of their rebanking at KEF, that they might not see the growth in BOS they once did. Interestingly their summer loads were similar with 86% for FI and 85.2% for WW , the difference is the low season where the numbers drop more for WW, because maybe their type of traveler doesn’t like the cold weather in Boston? I suspect this is a case of “so long and thanks for all the fish”, not that they are going anywhere they won’t (I’ve just always wanted to use that reference in a sentence), but I think the growth will stagnate for a while.
BOS-LGW (DY)
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Talking of fish, if there was ever a case for walking into BA’s head office and hitting their route planning guys over the head with a wet, slightly going off Trout, this is it. What a miss by the BA folks. Their fixation, some would say quite rightly given their passenger focus on LHR has let DY take this route by storm, there’s no other way to describe it and the fact that DY has kicked out OSL and CPH to be able to make room for this to go daily ultimately, tells you a lot. Route started in March 2016 and really took off so to speak right out of the gate, even with the 291 seat 788 on the route running 4-5 weekly. Not 1 month managed less than 80% loads and the summer months were basically sold out at nearly 92% loads 104k seats translated into 94K pax or 283 on each and every flight and 90.5% for the 9 months. Quite incredible. So you think well, where can you go from there. As a start put a 344 seat on the route with a 789 and see what happens. You would imagine the load factor would go down, given a 50+ seat increase, nope, went up to 91.6% with 148K seats for 136K at a whopping 314 per flight. Summer months were up to 94.9%, not a seat in the house. Say what you want about DY’s financial position on their long haul, but I believe if there is one route making money for them, it’s this one. BA…you got beat by DY, plain and simple on this one.
BOS-LHR (VS/DL and BA)
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LHR is one of, if not the biggest O&D market out there, it’s also by far the biggest international route that BOS has, with over 1m seats flying back and forth each year. However with the introduction of all manner of routes, LGW/MAN/KEF and capacity increases on DUB/CDG/AMS along with the Mid East airlines, there has been a lot of pressure on the LHR market as a whole and it has shown in the numbers. Over the past 4 years, that said average loads have held on the route, with all 3 adjusting capacities to match the reduction in pax numbers. Still running 800K pax between international airports from a place the size of BOS just shows what an impressive operation this is overall. I will deal with each player in turn.
BA – The #1 player on the route by far accounting for some 68% of the seats on the route in 2017 and 70% of the pax, but this is a complex management story, in 2014, BA ran 748k seats, but by 2017 had dropped to 686K, about an 8% drop and their pax count has dropped about the same from 612k to 562k, but they have managed it through by shifting their capacity around a lot their seat count average however only dropped from 281 to 274, even bringing in the 469 seat Whale in 2017, which had an interesting impact as that was their best supported flight with an 86.9% average with over 400 on each flight. What have suffered in return are their 744 and 789 flights, some of that will be timing on the 789 flights as they tend to show at quieter times of the year, but the 744 is interesting dropping over 33 a flight from 268 to 235 average for pax. Unfortunately the numbers I have, do not tell you individual flights, so we can’t see how bad the morning flight is for example. The summer months hold up well with the high 80’s in terms of loads, Jan/Feb struggle. Feb in particular struggles to break 70% loads. BA aren’t going anywhere, that’s for sure, it’s such an important route, but I do see much more rationalization in the route structure down the road, as it does make sense. I have to think they can make more money by adjusting their capacity further. It will be very interesting to see what 2018 brings.
DL – DL in 2017 finally have figured out this route. Some of it was taking off the 764 and replacing it with the 763 reducing the seat count from 190 to 163. A hit up front with less J, but much fewer empty seats flying back and forth. So long the butt of a.net jokes about the terrible loads they were getting on the route, 2017 turned into a respectable 75% load factor for the year. While they reduced seats by about 5% from 145k in 2016 to 138k in 2017, pax count went up massively by 23% from 84K to 103K no 40% loads in 2017 unlike prior years. Jan and Feb are still horrible and summer was a decent 84%, in comparison 2016 was 61.5%, 2015 67.9% and 2014 was 76.3%. So on balance DL must be much happier overall with this one, assuming the yields are holding with the higher pax numbers and lower cost base from the aircraft.
VS – I love VS, always have, always will, although if I could change my a.net username to B64ever right now, I would, but I disgress. These guys are caught between a rock and a hard place on this route, but they are never going to let it go. Certainly the weakest now of the 3 carriers on the route, they have cut capacity on the route, particularly between 2016 and 17 when it dropped by 17% from 217k down to 179K and even though that capacity drop reduced the average number of seats too, it didn’t hold back the drop in pax which ended up at 13.7% and set the average for 2017 at 197, first time under 200. Those adjustments held up the load factor, up by 3% to 74.1%, but when your summer barely scrapes 80%, you have to ask, is VS right for this route, or is this a case of their masters DL wagging the dog and making them do it to keep their slot. And let’s not forget we are going to get the morning flight coming next year too, which is really going to mix things up a bit.
BOS- MAN (MT/VS)
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You have to remember I was born and raised in England, so I get super excited when flights to my homeland airports get added. Nobody was more bummed than me when PF couldn’t even get BHX running, because my parents live not 45 minutes from that airport, it would have been awesome. So I have to resign myself for getting excited about MAN and for 2018 STN.
What surprised me was that it was MT (Thomas Cook) that weighed into the market first. But they had clearly done their homework. Seasonal only 2 weekly was the perfect start for this route and it showed. You see MT in the past was considered a charter airline for package holidays, but they have figured out their niche in the market and are making it work. They have an economy heavy 332 fleet with 322 seats where as most of the majors are running between 234 (DL) and 288 (IB). WW has 350, which is a tight squeeze, but you get my point. Low CASM!
So 2016 summer season ends with 19,000 seats and 16,000 pax for 268 per flight and an 83% load, for those who said MAN wouldn’t work… er no.. there’s a market, it may not be huge, but there’s a market and let’s note that MT does not have a huge US POS because few have heard of them. So 2017 comes along and VS decides to join the fray with their own 2 weekly. MT increase frequency to 3-4 weekly and extend into October more than doubling their seat count to 45k and doing almost the same to their pax count moving up to 37k, sadly a couple less per flight at 266 resulting in an 82.7% load overall, still they’ve proven the market to work.
So what about VS. Well this one is a bit more of a head scratcher, I understand why they entered the market, they have a decent operation out of MAN
BOS- OSL (DY)
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OSL started in 2016 also as a summer seasonal, survived 2017 and died in 2018 as a result of the decision to move LGW to daily (quite rightly in my mind). Although it died, I think it will be back down the road, when the new gates come on line. For a 1-2 weekly, it worked just fine, it just couldn’t cope with the juggernaut success that was LGW. Using the same policy, start with the 788 and eventually switching to the 789, 32,000 seats were added in 2016 which converted to 28,000 pax and a hugely respectable 88.7% for 258 per flight in a first year operation on such a big aircraft (almost CX esque’). 2017 saw a slight increase in flights, but a 32% increase in seats due to moving to the bigger 789. That translated to 35k pax with 283 per flight for a 22% increase, as a result loads dropped to 82.5% on average, but for a 2 day a week operation, not bad and that’s why I think one day it will be back, there is a small market there, so if they can figure out another W pattern with a couple of other routes, it might work.
BOS- SNN (EI)
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I’m not going to include the Omni flights in this one, the data is just too unpredictable and it’s hard to tell whether it’s duplicated with EI or not, my gut says not, but I’ll stick to EI only (even though their reporting is just as crap).
SNN is one of those old shoe routes, it needs to be there, and it fits well when you need it, but nothing really changes. And the pax per flight is very consistent at around the 140 level, although 2017 was lowest at 139. Load averages haven’t changed in 4 years at 78.6%, and EI ran 93k pax on 118k seats using the 752’s with 177 seats and for 17, which seats dropped by 6.5%, pax dropped by less (5.1%), which meant the overall actually increased. SNN is definitely much more of a seasonal route than DUB, partially because DUB is just as much about connections as it is historical O&D between the two cities. Summer numbers were 90% for the route, but the winter months plummet into the 50’s, but EI are using their smallest option right now, once the LR’s show up, I could see this going that way to improve economics. As I said, old shoe route that will continue to bump along, but hey get almost 100K pax a year from an area the size of SNN and it’s surrounds isn’t actually so bad…
The Northern European market is underpinned by DUB and LHR as we know, but I have to believe someone is watching that LGW story and if they can find the slots on both ends (while I know BOS is not slot controlled, we all know gate space is lacking) and is thinking about a move. MAN is a longer term play, but MT are doing fine and VS is doubling down on the market in 19. OSL is gone, and I still fear CPH could follow. BHX never happened (although personally I hope one day it does), but we will have STN coming and KEF will top out and not grow much more. Interesting times for my home market, the fun hasn’t finished yet I am sure.
Data Source: BTS T-100 International Segment Report (All Carriers)
Data File used for information located here:
https://drive.google.com/open?id=0B61t8 ... Vp3SE8zaUE