Yearbook 2014 Final PDF

WORLD AVIATION
Yearbook 2014
Global overview - Petrol and partnerships
Analysis - Air travel correlation with GDP growth
10 regional data & analysis
Key data of each regions selected airlines
Contents
Introduction.......................................................... p3 Africa overview..................................................... p67
Selected airlines key data..................................... p71
Main feature: Of petrol and partnerships.......... p4 South African Airways
Analysis: Air travel correlation Ethiopian Airlines
with GDP growth................................................. p9 Kenya Airways
Southeast Asia overview....................................... p14 Eastern Europe overview...................................... p74

Selected airlines key data..................................... p23 Selected airlines key data..................................... p77
Lion Air Turkish Airlines
Garuda Indonesia Aeroflot
AirAsia Pegasus Airlines
Singapore Airlines Western Europe overview...................................... p80
Thai Airways Selected airlines key data..................................... p85
South Asia overview.............................................. p28 Ryanair
Selected airlines key data..................................... p33 easyJet
IndiGo Lufthansa
SpiceJet British Airways
Air India Air France
Jet Airways KLM Royal Dutch Airlines
South Pacific overview.......................................... p37 North America overview....................................... p91
Selected airlines key data..................................... p42 Selected airlines key data..................................... p96
Qantas Airways Delta Air Lines
Virgin Australia Southwest Airlines
Air New Zealand United Airlines
American Airlines
North Asia overview.............................................. p45
jetBlue
China Southern Airlines Latin America overview........................................ p101
China Eastern Airlines Selected airlines key data..................................... p107
All Nippon Airways GOL
Korean Air TAM Airlines
Japan Airlines LAN Airlines
Cathay Pacific Aeromexico
Middle East overview............................................ p57
Saudia
Qatar Airways
Emirates
Etihad Airways
Except where otherwise noted, content on this site is licensed under a Creative Commons Attribution-
Pg 2 | CAPA World Aviation Yearbook 2014 NonCommercial-NoDerivs 3.0 Unported License. 2014 CAPA Centre for Aviation
Introduction A
S 2014 UNFOLDS, THE TALE EMERGES OF
TWO ECONOMIC WORLDS, again on diverging
paths; slow growth in Europe and North America
brings out and accentuates the conservative voices
among those keen to preserve the status quo or merely to
postpone the inevitable.
At the same time as Chinas economy slows from its
previously high levels, casting a shadow over most of Asia,
there are signs of improvement in the mature markets. Yet
one thing that is not slowing in Asia and the Middle East
is the process of change, structural and in terms of market
access, as new airlines and airline types push regulatory
frontiers.
In Asia, the rapid evolution and diversification of low cost
operations is the most notable and probably most exportable
change.
Despite some asynchrony between capacity and demand,
which has prompted several SE Asian airlines to delay
deliveries of new aircraft, the growing influence of long haul
low cost airlines increasingly networking their operations in
ways similar to classic full service network airlines cannot
be ignored and will almost certainly spread across the world.
At the same time, legacy airlines, many of them burdened
by higher cost bases and often unproductive work practices,
are actively seeking ways of restructuring and redefining their
roles in a new world.
Aside from the essential steps to reduce costs, this
increasingly involves adoption of subsidiaries operating with a
different, low cost, model.
Amid this change, the US, still the worlds biggest market
by value and protected from outside competition has been
able to generate profits previously unheard of. Delta, the
worlds largest airline, alone recorded a profit of over USD2.5
billion for the past year.
Recent consolidation (enhanced massively by the
introduction of baggage and rebooking charges) has enabled
this standout performance; and the projections are for
continued financial performance on this scale. The difference
in the US market though is that traffic growth is minimal and
that market experimentation is limited to the smaller hybrid
airlines.
Emerging economies meanwhile are achieving varying
levels of growth as their economic growth stalls, dampened as
the US slows its previous monetary expansiveness.
CAPAs 2014 Global Aviation Outlook incorporates these
factors in its region by region assessment of coming months.
It also records the growing pre-eminence of partnership
strategies, also on many levels and varied types. And,
inevitably, recounts the always important issue of fuel prices,
with their uncertain impact on the industry.
Pg 3 | CAPA World Aviation Yearbook 2014
GLOBAL analysis reports:
Source: CAPA Centre for Aviation
Airline consolidation: could Europe follow North Americas path to improved margins?
Protecting the fortress and the double-edged dangers of protectionism
Airlines in Transition: Hybridisation and operating dual brands
Airline ownership & control. Why might Europe uphold something its officials call stupid?

Of petrol and
The airline industry, perhaps more than any other, is
horrendously susceptible to external challenges, where
managements have little or no control over outcomes. Fuel prices
are the most notable economic terrorists, now accounting for nearly
partnerships
four tenths of all airline costs yet unpredictable and totally
unmanageable.
Add to that a massively disruptive combination of industry
factors that are reshaping the way airlines do business again
mostly outside the ability of most airline managements to control
and it becomes clear why most airlines have such a devil of a job to
make decent profits, or even any profits at all. The disruptive forces
are driving airlines towards makeshift partnerships, necessary but
still made cumbersome by the overhang of nationalistic regulation.
The year 2014 and beyond looks likely to be consumed by these
two drivers. For a few, it will be abundant with opportunity; for
the majority it could represent some of the biggest challenges they
have ever experienced.
There is another factor that unavoidably influences the

course of airline profitability: the state of the economy. Here
the news is, barely audibly as yet, getting better. Signs of
economic recovery in northern Europe and some easing of
pain in the US are welcoming more travellers back into the
sky. Better economic conditions do not necessarily correlate
with improved profitability; the industrys competitive
foundations can mean simply that better demand is met by
greater competition. It can also mean upward pressure on oil
prices as consumption increases.
Nonetheless, the good news is certainly that things are
starting, in a still-fragile way, to look as if demand will
continue to strengthen in 2014. There are still worries:
Chinas uncertain outlook for one; and the continuing
widespread instability in the Middle East, further aggravated
by Russian land grabs, also with potential implications for
fuel supplies.
The external impacts:
1. Fuel prices
Improbably, through a year of perhaps the greatest, most
diverse series of upheavals in that most sensitive region of the
world, the Middle East, oil prices have refused to skyrocket.
In fact, after showing some easing in the earlier part of 2013,
BRENT CRUDE PRICES MAR-2004-2014 prices have shown signs of becoming less benign.
SOURCE: NASDAQ.COM
This is not a good sign and, with President Putins Russia
CB*1 : 108.55 Vol: 677419
160.00 showing signs of using energy as a lever against anyone who
150.00 gets in its way, many of the seeds are there for the sort of
140.00
speculative bubble that occurred in mid-2008, when prices
130.00
soared to around USD140 a barrel (with a much higher
120.00
108.55
aviation fuel margin).
100.00
Further increases push airlines to the limits in achieving
90.00 profitability and it is indeed a valuable indicator of the
80.00 efficiencies achieved that they were no more profitable
70.00 when oil prices hovered around USD35 in the early part of
60.00 this century. For an airline with a USD10 billion operating
50.00 revenue, the rough implication is that, with prices at USD105
1,000,000
40.00 a barrel, they will be spending USD300 million annually
500,000
30.00
more on fuel than they did back then. It would have been a
20.00
tidy profit in retrospect, but a very large additional burden to
accommodate today.
Where fuel prices will go this year is anybodys guess
and despite the array of expert opinions, that is all it will be.
Airlines will continue hedging and, at a high price, buying no
Pg 5 | CAPA World Aviation Yearbook 2014 more than short term certainty of how much they will pay in
Where fuel prices will go this year is fuel costs. There is nowhere to hide.
However, the consensus is that prices are unlikely to fall
anybodys guess and despite the substantially, if at all. The tar sands/US exporter scenario is on
array of expert opinions, that is all it one side, reducing reliance on imports and with the US (and
others) eventually becoming net exporters; against this is a
will be. destabilised Middle East.
If a hoped for drop in price were to occur, a newly
invigorated industry would enjoy at least a short burst of
good news. A substantial drop in prices would (i) breathe
life into inefficient models that were striving to achieve cost
reductions and (ii) change the equation significantly for
LCCs short, and in particular, long haul.
The Middle East turmoil has ensured a floor under prices
in recent months. Contrarily though, the surprising lack of an
extreme impact so far may actually suggest that there is more
pricing stability than we had come to expect at least on the
supply side (rightly or wrongly a lot of the pressure in the
2008 fuel spike was put down to speculation and/or emotion,
rather than a real supply shortage). The conundrum is
that demand has however also been suppressed by slower
economies - and an uptick will increase consumption levels.
Somehow things rarely seem to turn out as airlines hope.
2. (Re) defining the shape of the industry

With most variables outside their control, airlines have
few levers to pull when seeking to improve effectiveness
and efficiency. The most evident are reducing staff costs and
improving productivity and hopefully both. But the scope
for cost reduction in this way is severely limited where fuel
costs fill nearly half of the windscreen.
Every airline in the world is seeking annual (ex-fuel) unit
cost reductions and if they are not they can be assured that
their competitors are. It creates a major source of pain and
often resembles running at top speed merely to stay in the
same place.
But the real area for concern for many airlines, and where
cost reductions may be squeezed into becoming a mere
sideshow, is in how the shape of the industry is changing.
Low cost airlines have remodelled short haul operations
across the world; long haul low cost is becoming an extensive
reality in the Asian region (and soon the North Atlantic); the
Gulf carriers are reshaping much of the longhaul and hub
strategies of full service airlines.
Partnerships are increasingly looked to as the final resort
for airlines under pressure. Nothing less would explain
the enormous about face by airlines like Air France in
accommodating a relationship with Etihad, or even Qantas
with Emirates.
Amid this turbulence and under severe stress in short and
long haul modes, network and point to point airlines alike
have had to begin contemplating compromises that just a year
or two earlier would have been unthinkable.
That airlines are having to move Global alliances have filled a very valuable need and
continue to work very effectively for many airlines, but
quickly has been a factor both of as others around them realign into more egocentric
immediate internal need and of partnerships, the pressure intensifies to adopt more specific
partnering models.
a shrinking number of options That airlines are having to move quickly has been a factor
as competitors soak up the few both of immediate internal need and of a shrinking number
of options as competitors soak up the few partnership options
partnership options available. available. The dance is becoming more furious and, in
essentially bilateral relationships, only so many partners are
available.
Pg 6 | CAPA World Aviation Yearbook 2014 For many this has required innovative approaches
Over the past two years we reached previously not part of their armoury. And they have had to be
adopted in very quick time.
a tipping point. Technology and Deciding on a radical new direction which can sometimes
social pressures have shifted the mean casting adrift a large part of longstanding (even core)
activities or existing partners is hard enough, requiring
fulcrum. wholly new skills. Negotiating a major partnership on the run
while continuing business as normal in these circumstances
is another enormous ask, again where there are no roadmaps
and, typically a mountain of pushback from vested interests
whose status quo is threatened.
Actually then to implement them, again with all the other
day to day requirements to be met, is even more high risk and
diversionary from the main game.
Only the US majors are relatively immune from these
trends. Comfortably ensconced in a protected domestic
market bigger than any other in the world, refreshed by
shedding weight in Chapter 11 bankruptcies and now
merged into large dominant entities, they are enjoying almost
unheard of profitability at home.
Internationally, in the key market of the North Atlantic
the big three US carriers are also enjoying the protection
of antitrust immunised partnerships with their European
alliance peers. This combination undoubtedly creates a
benign environment, at least for the short term. Whether this
creates a level of complacency and lack of innovation that
will come back to haunt them is a story still untold. Delta
has dipped a toe in the water with its acquisition of 49%
of Virgin Atlantic, but for the largest airlines in the world
to be otherwise absent from the new worlds close bilateral
partnerships must be a strategic flaw.
In short, in 2014 disruption of the established framework
of the industry will accelerate. For any 70 year old system
which has remained virtually unchanged there must be a
time when old age catches up. In one respect, safety, there
has been massive progress, to the extent that major accidents
are extremely rare. But commercially, although changes are
occurring, they have been mostly around the margins until
last year. Over the past two years we reached a tipping point.
Technology and social pressures have shifted the fulcrum.
The key commercial features of the industry in a nutshell
are (1) market access in its broadest sense, partly proscribed
by bilateral agreements and (2) sales and distribution,
dominated by intermediaries, with (still) a minority of direct
sales.
In this latter area issues have also been bubbling under the
surface for several years, with google and other large online
forces prowling the boundaries of sales and distribution.
Sooner or later and probably quite soon a revolution
will unfold there too; already there is much activity in the
undergrowth.
Albeit with the spectre of high fuel prices in the
background, trends are accelerating towards more
longhaul growth and competition, as new aircraft types are
delivered and as industry fundamentals change thanks to
liberalisation, cross border joint ventures, equity alliances and,
increasingly, to the effects of partnering.
This new environment embraces not only the Gulf airlines,
but also how Chinas airlines start to become more important
in point to point carriage and, increasingly, in sixth freedom
transfer operations.
Very shortly, they will also become designers of the future
partnership system; even if they dont aggressively pursue
expansion internationally with their own metal, the attraction
Pg 7 | CAPA World Aviation Yearbook 2014 of the Chinese market to outsiders is pressing foreign airlines
The platform has been laid for this to court the few available Chinese partners that are available.
Here again there is at least for the time being a limited
evolution and its balance has now number of dance partners.
tilted. Other features in the mix are contributing to the upheaval.
Long haul low cost, previously the domain of Southeast
Asia is surfacing on the North Atlantic. This previously
derided concept of long haul low cost involves adopting
a range of new measures (like seeking out more efficient
crewing approaches, as well as using aircraft like 787s
accompanied by the essential underlying low cost mentality)
Will it work on the North Atlantic (yes!) and who else will
follow Norwegian, Air Canada rouge and WestJet?
The arrival of this previously Asian phenomenon on the
North Atlantic surely contains the seeds of something much
bigger. After all it used to work 40 years ago, with Laker
Airways and so-called charter airlines between the UK and
North America.
This will further increase pressure on the global alliances
on longhaul, including on the closed JVs, especially if fuel
prices were to fall. And the impact will not be limited to the
North Atlantic, nor just to the global alliances; all longhaul
airlines will feel the heat. But members of global alliances
will continue to see the need to compromise with and often
partner with the Gulf airlines.
Hybridisation is accelerating as both LCCs and full service
airlines look to adopt low cost models with full service
profiles. As a result, the dual brand concept is now becoming
popular in Europe as well, but the main full service airlines
are still having to undergo the upheaval of restructuring to
kill costs and increase efficiencies.
LCCs around the world are expanding most notably
in Asia; in SE Asia they now account for 60% of all intra-
regional seats. The nebulous spectre of excess capacity is
being raised as massive order books convert to deliveries, but
deferrals now seemingly more acceptable to manufacturers
may hold this risk in check.
The movement is slowly moving northwards. China has
announced it will allow new domestic LCCs to establish
there and as others expand in the region there is the platform
for a very large growth surge. The northern markets of
China, Japan, Korea and Taiwan are becoming much more
connected.
The resulting traffic volume in 2014 will not transform
the world, but the changes will provide the foundation for a
whole new wave of low priced growth and, accompanying
it, a cycle of further liberalisation.
In Europe the large LCCs, easyJet and Ryanair are
significantly profitable, despite sluggish economic growth
there; Mexico is lively and turbulent, with 61% of its
domestic market capacity on LCCs; India (72% of seats) and
the Philippines (92%) markets are dominated by LCCs.
2014 holds no promise of being more boring than the

previous year. Fuel price rises may silently erode the best
laid plans, but there is much greater certainty that forging
partnerships will occupy a lot more time at airline board
meetings. The platform has been laid for this evolution and
its balance has now tilted.

Analysis: C
APAS EXTENSIVE COUNTRY RANKINGS
DATABASE provides rich pickings for analysis of
the relationship between the wealth of a country
and the penetration of air travel in that country.
Not surprisingly, our analysis confirms that the two are
closely correlated. Countries with higher GDP per capita
The air travel correlation tend to have higher numbers of airline seats per capita.
Establishing a correlation does not indicate the direction of
with GDP growth; causality, which works in both directions. Economic wealth
drives air travel, but air travel also helps to drive economic
Pinpointing the countries

wealth. However, the correlation is not perfect and levels of
penetration can be affected by geographical, political, fiscal
and infrastructural factors. This leads to some countries
where regulatory having a significantly higher or lower number of airline seats
per capita than might be expected simply from their level of
intervention are most likely GDP per capita.

Who are the out-performers, in terms of the penetration of
air travel, and who are the under-performers? What are the
to make a difference. characteristics of each group? How do the main regions of
the world compare?
And what role can governments play? - in some cases, they
can potentially make a significant difference.
The penetration of air travel is correlated with

GDP per capita
CAPAs databases include data from OAG on seat capacity
by country, together with population and GDP data from the
International Monetary Fund. We can use this to calculate
GDP per capita and airline seats per capita for the 177
countries for which all the necessary data is available. A
scatter plot showing airline seats per capita (for the week
of 9-Jun-2014) against GDP per capita is presented in the
graph on the left.
The chart demonstrates a number of points. First, there
is a vast discrepancy in the level of penetration of air travel
(measured by airline seats per head of population) across the
countries of the world. Setting aside countries for which we
have insufficient data to perform our calculations, the least
penetrated nation is the Democratic Republic of Congo,
with just 377 weekly seats per million of population, and the
highest is Qatar, with 618,362 seats per million people.
AIRLINE SEATS PER CAPITA (VERTICAL AXIS) VERSUS GDP PER CAPITA The most fundamental point highlighted by the chart
(HORIZONTAL AXIS) BY COUNTRY below is that, in general, a higher level of GDP per head of
SOURCE: CAPA CENTRE FOR AVIATION, OAG (SEAT DATA FOR WEEK OF 9-JUN-2014),
population is associated with a higher level of penetration of
INTERNATIONAL MONETARY FUND air travel (the correlation is quite strong, as indicated by the R
squared value of 0.7). That said, there is also a huge range of
different levels of penetration even within a narrow band of
GDP per capita, and so there are also other factors affecting
the propensity to fly.
The density of the chart in the bottom left corner
highlights that there are a large number of countries with
below average levels of wealth and of air travel penetration.
Only 34% of the countries on the chart have GDP per capita
above the global mean, but these countries account for 70%
of the total number of seats. Only 45% of the countries have
more airline seats per capita than the global mean, but they
account for 70% of total seats.
The disproportionate impact of the wealthier and higher
penetrated countries drags up the global averages, but many
of the worlds nations are still playing catch-up when it comes
to air travel.

AIRLINE SEATS PER CAPITA (VERTICAL AXIS, LOGARITHMIC SCALE) Increasing wealth has a bigger impact on raising
VERSUS GDP PER CAPITA (HORIZONTAL AXIS) BY COUNTRY
SOURCE: CAPA CENTRE FOR AVIATION, OAG (SEAT DATA FOR WEEK OF 9-JUN-2014),
air travel in poorer countries
INTERNATIONAL MONETARY FUND
The trend line that gives the best fit to the data points in
the above scatter plot is very slightly concave: it does not
rise in a straight line, but it gently flattens as it moves to the
right across the chart. This suggests that increasing wealth
(measured by GDP per capita) has a bigger impact on raising
the penetration of air travel in poorer countries than it does
in richer countries.
The chart below shows the same data as the previous chart,
but uses a logarithmic scale on the vertical axis (which shows
seats per capita). This not only accentuates the flattening of
the trend line as GDP per capita rises, but also stretches out
the lower end of the scale for seats per capita making it easier
to distinguish the separate data points in this crowded part
of the chart. We have also added some labels to selected data
points, indicating which country they represent.
Other factors also have an impact
Countries that are below the trend line on the above chart
have the potential to increase their rates of air travel in two
ways.
First, as for all countries, the number of airline seats per
head in these countries should increase as GDP per head
grows. For those that are also below the global average for
GDP per head, this potential is particularly strong.
Second, the countries below the trend line have the
potential to increase air penetration to catch up with other
countries of a similar wealth, but who already have higher
rates of air travel.
This process of catch up might be achieved in a variety of
ways, including regulatory change (including liberalisation
of market access), infrastructure development and taxation
policy. On the other hand, geographical and other structural
factors may mean that this potential is greater for some
countries than it is for others.
The BRIC emerging economies are under-pene-

trated by air travel
Note that all of the so-called BRIC countries (Brazil,
Russia, India and China) sit below the trend line in the chart
above (and they also have a level of airline seats per capita
that is below the global mean).
Among the four, India would seem to have the greatest
potential to improve the penetration of air travel, but needs
reform and further development on issues such as fuel tax and
infrastructure if this potential is to be realised.
For Brazil, the development of airport infrastructure may
benefit from recent privatisations and the stimulus of the
2014 Football World Cup and the 2016 Olympics and the
airline industry is continuing to develop distribution channels
that are adapted to the Brazilian market. Infrastructure
development has also been (and continues to be) an
important theme in both Russia and China, where recent
regulatory and legal changes should stimulate the growth
of the LCC sector and give a further boost to air travel
penetration.
The MINT grouping is more diverse
Pg 10 | CAPA World Aviation Yearbook 2014 Moving on from the BRIC countries, the more recently
identified group of MINT countries (Mexico, Indonesia,
Nigeria and Turkey) are more diverse in terms of their
aviation markets. Whereas all the BRIC countries are among
the worlds largest airline markets by total number of seats
(only Russia is outside the top 10 and it ranks 13th), among
the MINTs only Indonesia and Turkey are at a similar rank
(they are 11th and 12th respectively; Mexico is 20th and
Nigeria 56th).
Unlike the BRICs, which are all below trend line on
our chart, the MINTs include two countries, Turkey and
Indonesia, that sit above the line. These two already have
more airline seats per head than might be expected purely
from their levels of GDP per head.
In the case of Turkey, this reflects the success of its national
carrier, Turkish Airlines, in attracting global connecting traffic
through its Istanbul hub. Indonesias position, only slightly
above the trend line, probably reflects the geographical
imperative of aviation as a means of transport in the
archipelago and the success of the LCC sector in tapping into
demand.
Mexico occupies a similar position on the chart to that of
Brazil, while Nigerias is not too far from Indias.
AIRLINE SEATS PER CAPITA (VERTICAL AXIS, LOGARITHMIC SCALE) Island nations and city states are the out-
VERSUS GDP PER CAPITA (HORIZONTAL AXIS) BY COUNTRY: THE OUT- performers
PERFORMERS
SOURCE: CAPA CENTRE FOR AVIATION, OAG (SEAT DATA FOR WEEK OF 9-JUN-2014), Next, we reproduce the same chart, but this time we label
INTERNATIONAL MONETARY FUND the out-performers - those countries at the upper frontier
of the scatter plot that also have a level of air seats per head
that is above the global mean. These nations have the highest
level of airline seats per head for their level of GDP per head.
These out-performers fall into two categories: island nations
and what might be termed city states.
The islands, which include Maldives, Bahamas, Cyprus,
Malta and Iceland, rely on air travel (and often inbound
tourism) for their links with the rest of the world and this
has given rise to a much more developed aviation market
than would otherwise be expected in equivalently wealthy
countries.
The city states include true city states Hong Kong and
Singapore and also Gulf nations Bahrain, UAE and Qatar.
In these countries, aviation markets have been stimulated by
government policy in addition to demographic features such
as large expatriate populations.
AIRLINE SEATS PER CAPITA (VERTICAL AXIS, LOGARITHMIC SCALE)
VERSUS GDP PER CAPITA (HORIZONTAL AXIS) BY COUNTRY: THE UNDER- The under-performers
PERFORMERS
SOURCE: CAPA CENTRE FOR AVIATION, OAG (SEAT DATA FOR WEEK OF 9-JUN-2014), The under-performers highlighted in our next chart (see
INTERNATIONAL MONETARY FUND graph on left) form the lower frontier of our scatter plot. They
can also be divided into two sub-groups.
The first consists of countries that have above average levels
of airline seats per capita, but that nevertheless have a lower
level than might be expected from their GDP per capita (in
other words, they are below the trend line on the chart).
This group includes some of the worlds biggest aviation
markets, such as the US, Germany, France and Japan.
Comparison with other countries that are similarly wealthy
suggests that they could be even bigger if they could move
up closer to the trend line. On the other hand, the position
of the line is perhaps artificially dragged upwards by the
presence of the islands and city states of the out-performer
group, where the penetration of air travel is boosted by the
geographic and political features mentioned earlier.
The more serious under-performers are those countries
that have a below average number of airline seats per capita
and also sit below the trend line on the scatter plot. These
include land-locked African countries the Democratic
Republic of Congo, Chad, Lesotho and Swaziland, as well as
Turkmenistan, Slovakia and Slovenia.
Their under-performance may be a function of a number
of different factors, such as the political backdrop, a lack of
infrastructure, or being served indirectly by the airlines of
neighbouring countries. On paper, at least, this group has the
greatest potential to increase the penetration of air travel.
AIRLINE SEATS PER CAPITA (VERTICAL AXIS) VERSUS GDP PER CAPITA Regional differences: Middle East outperforms;
(HORIZONTAL AXIS) BY REGION North America underperforms
SOURCE: CAPA CENTRE FOR AVIATION, OAG (SEAT DATA FOR WEEK OF 9-JUN-2014)
By aggregating the data for the countries of each major
world region, we present a final scatter plot of airline seats
per capita against GDP per capita by region (see below). This
highlights a number of points.
First, Africa is substantially under-penetrated by air travel,
with only just more than one fifth of the global average
number of airline seats per head of population. This is broadly
consistent with the continents level of GDP per capita.
African countries occupy the lowest 11 places in the world
ranking of airline seats per capita.
Second, although Asia Pacific is the largest world region
in terms of the total number of seats, it is still a small market
relative to the size of its population, with only 56% of the
global average number of airline seats per head. Asia Pacific
is a very diverse region, with both developed and emerging
markets. It includes Maldives (the country ranked number
three in the world by seats per capita) and Bangladesh
(ranked 171 on this measure).
Third, Latin America is not far from the world average on
both GDP per capita and airline seats per capita, but is still
a little behind on both measures. Its aviation markets have
potential to benefit both from GDP growth and from the
additional boost to penetration levels that could result from
infrastructure development and regulatory reform.
Fourth, the Middle East as a region is outperforming
strongly in terms of airline seats per capita compared with
GDP per capita. It is only slightly wealthier than average
(GDP per capita 7% above the global mean), but has 68%
more seats per head than the world average. This reflects
government policy and the success of the super connector
airlines in the Gulf.
Fifth, Europe is a modest out-performer, with a higher
level of air travel penetration than might be expected from its
level of GDP per capita (particularly Western Europe). This
reflects the liberalised internal market of the European Union
(its aviation market and other markets, including that for
labour), relatively well developed aviation infrastructure and
the consequent development of the LCC sector.
Sixth, North America is underperforming in terms of
airline seats per capita against GDP per capita, when
compared with other regions. It has more than five times
the global mean level of GDP per capita, but less than four
times the global mean number of airline seats per capita. This
probably reflects the diminishing power of GDP alone to
stimulate penetration of air travel as aviation markets mature.
As we have seen earlier, there are island nations and city
states with similar levels of wealth to that of North America,
but where the number of airline seats per capita is much
higher, but they benefit from additional geographical and
policy stimuli.
Governments do have a large role to play
This report provides a glimpse of what can be gleaned from

analysing CAPAs country ranking database. It confirms the
correlation between the number of airline seats per head and
GDP per head, both at the country level and at the regional
level. Countries such as island nations have geographical
advantages that boost aviation markets.
While nations cannot do much about their geographical
location, their governments can play a large part in achieving
higher levels of penetration of air travel, or in holding it back.
Air travel in countries such as the Gulf states of Qatar and
the United Arab Emirates has been increased by government
policy and the consequent strategic growth of their national
airlines. This has led to the Middle East regions strong
outperformance in terms of airline seats per capita compared
with its GDP per capita.
Europe also achieves a higher level of air travel per head
than might be expected from its level of GDP per head, in no
small part due to its liberalised internal market.
By contrast, a number of countries underperform
significantly compared with their GDP per head. In such
cases, as in countries like India governments can often do
much to improve the penetration of air travel through their
stance on factors such as improved regulation, market access,
taxation and infrastructure.
In very mature markets, such as North America, it seems
that the very high levels of penetration of air travel are less
susceptible to further stimulation from growth in GDP per
head.
Perhaps the final frontier for governments in such cases
is to open up their domestic markets to global competitors.
This is something the incumbent airlines will mostly
resist strongly, but equally it is important to recognise that
regulators do have the power to unlock further growth
through regulatory intervention.
See related reports:
Indias Civil Aviation Agenda: CAPA proposals for the

new administration to restart the industry
Airline ownership & control. Why might Europe uphold

something its officials call stupid?
World airline industry in cyclical upswing - but in search

of USD125 billion annually in financing

SOUTHEAST ASIA analysis reports:
Southeast Asia low-cost airline fleet to expand by almost 20% in 2014. Are more deferrals needed?
Garuda adjusts 777-300ER route plans to focus on Japan while dropping Australia-London one-stops
Garuda & Citilink 1Q losses widen. Potential Singapore Airlines investment poses intriguing option
AirAsia further slows fleet expansion as 1Q profit falls - with the potential to accelerate later
AirAsia drives rapid growth at Malaysias Johor Bahrus Senai Airport, further encircling Changi
AirAsia X drives 43% transit traffic at Kuala Lumpurs KLIA. Can Singapore follow the same recipe?
AirAsia India to launch on 12-Jun-2014. The LCCs greatest test or its most lucrative opportunity?
Myanmar international aviation outlook: after two years of rapid expansion, growth starts to slow
Cebu Pacific Air profits drop; PAL, Philippines AirAsia remain in the red. But outlook is improving
Singapore Airlines incurs 4QFY2014 operating loss, adds premium economy as latest strategic response
Singapore Airlines seeks to expand its partnership portfolio further following a spate of new deals
Tigerair restructures after recording a FY2014 loss. A Singapore Airlines takeover seems sensible
SilkAir 737 MAX fleet to open up network options while boosting Boeings narrowbody presence in Asia
Nok Air and Thai AirAsia profits fall in 1Q but continue rapid growth in response to new competition

Southeast
SOUTHEAST ASIA HAS EMERGED AS ONE OF THE
WORLDS FASTEST GROWTH MARKETS. Low-cost
carriers have been at the forefront of growth and now account
for nearly 60% of traffic within the region. Several have
Asia
massive orders, with significant numbers still arriving in 2014
despite some deferrals. A dominant theme of the competitive
environment is the rapid escalation of the market share battle
between the big LCC groups particularly AirAsia and Lion
Air, plus to a lesser extent Tigerair, Jetstar and the emerging
TOP 10 AIRLINES WITHIN SOUTHEAST ASIA VietJet.
SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014 The regions LCCs have been ambitiously adding capacity,
putting pressure on yields and load factors. Southeast Asias
RANKING CARRIER NAME SEATS full service groups have also been focusing on regional
1 Lion Air 1,053,478 growth, both within Southeast Asia and the wider Asia
Pacific market. While demand is relatively robust, there
2 Garuda Indonesia 473,450
are signs of overcapacity throughout including in most
3 AirAsia 470,520 domestic and short-haul international markets, as well as in
4 Vietnam Airlines 358,595 some medium-haul markets, particularly Southeast Asia-
5 Malaysia Airlines 347,038 Australia.
2014 is shaping up to be a challenging year for the
6 Cebu Pacific Air 323,967
Southeast Asian aviation market. The region will again
7 Thai AirAsia 226,800 have some of the worlds highest growth rates but lacks
8 Thai Airways 217,782 the capacity discipline and rational behaviour exhibited by
9 Indonesia AirAsia 200,700
airlines in other regions.
The short-haul market has become challenging, with the
10 Sriwijaya Air 183,210 rate of capacity growth far outstripping demand. There is
a risky element of strategic growth here too a process
CAPACITY BY CARRIER TO/FROM/WITHIN SOUTHEAST ASIA that airline CFOs usually abhor as airlines jostle to secure
SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014 scarce airport slots and to establish first (or second) mover
advantage. The result is to jeopardise short-term profitability.
Lion Air 1,058,000
Garuda Indonesia 557,922 Singapore

The Singapore market in particular is experiencing
AirAsia 543,240
overcapacity, putting pressure on yields, load factors and
Malaysia Airlines 524,369 profitability. Rapid expansion by Singapores largest low-
Thai Airways 493,138
cost carrier, Tigerair, has been the main driver of the current
capacity situation. Tigerair Singapores ASKs were up 24%
Singapore Airlines 473,605
in CY2013 as it added four aircraft, bringing its feet to 25
Vietnam Airlines 407,767 A320s. The carrier added two more aircraft in early 2014
but further fleet expansion has sensibly been put on hold as
Cebu Pacific Air 377,201
the Tigerair Group has cancelled nine A320 orders and is
Thai AirAsia 281,520 planning to sub-lease eight A320s.
Other 3,969,379
The capacity added into the Singapore market during
0M 1M 2M 3M 4M 5M
2013 was clearly too much and it will take time to be fully
absorbed even with further growth being halted. In the
quarter ending 31-Dec-2013, Tigerair Singapores average
SOUTHEAST ASIA TOP 10 AIRPORTS
SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014 fares were down 16% while yields were down 11% and load
factor slipped a shocking 11.6ppts to 73.4%. The outlook for
RANKING AIRPORT NAME SEATS 2014 is now slightly brighter as it is no longer adding several
1 Jakarta Soekarno-Hatta International Airport 1,308,360 aircraft but the carrier continues to grapple with falling yields
and load factors.
2 Kuala Lumpur International Airport 809,696
Singapores other local LCC, Jetstar Asia, has not been
3 Singapore Changi Airport 649,644 expanding at the same speed, with ASKs up by only about 5%
4 Manila Ninoy Aquino International Airport 555,351 in 2H2013. The Jetstar Asia fleet, including aircraft operated
5 Bangkok Suvarnabhumi International Airport 536,412
by subsidiary Valuair, expanded by only one aircraft in 2013
to 19 A320s. Jetstar Asia will not add any aircraft in 2014 as
6 Bangkok Don Mueang Int'l Airport 466,704 the Qantas Group has announced the suspension of further
7 Surabaya Juanda Airport 444,575 growth at Jetstar Asia. But Jetstar Asia will still be impacted
8 Ho Chi Minh City Tan Son Nhat Airport 438,579
9 Denpasar Bali Ngurah Rai Airport 317,205
10 Hanoi Noi Bai Airport 307,400
Continued red ink may start to test
the holding power of a couple of
Pg 15 | CAPA World Aviation Yearbook 2014 airlines.
SOUTHEAST ASIA FLEET as the Singapore short-haul market continues to suffer
SOURCE: CAPA FLEET DATABASE | MAY-2014
from overcapacity despite the recent adjustments, leading to
continued pressure on yields and profits.
2000
Singapore Airlines (SIA) full service regional subsidiary
SilkAir has also been growing rapidly, with ASKs up by about
1,590 1,586
14% in CY2013. The carrier plans more double-digit capacity
1500
growth in 2014 as it is expanding its fleet by four aircraft.
SilkAir began 2014 with 24 A320 family aircraft and will
end the year with 20 A320s and eight 737-800s. SilkAir, in
1000
Feb-2014, took the first of at least 54 737s, which will enable
the carrier to double its fleet by 2021 and continue growing
capacity at an annual double-digit rate.
500 It is not just the LCCs that are hurting from the
228 competition. SilkAir yields were down 10% in 4Q2014 as
load factor also slipped by 5.3ppts to 70%.
0
In service In storage On order
Parent company SIA has been pursuing much slower
growth, with mainline ASKs up by only about 2% in
CY2013. Similar low single-digit growth is expected for
SOUTHEAST ASIA BREAKDOWN FOR AIRCRAFT IN SERVICE 2014. SIAs yields have been down slightly in recent quarters
SOURCE: CAPA FLEET DATABASE | MAY-2014 (about 2% to 3%) as the carrier has had to lower fares to
stimulate demand and maintain its load factor.
2.0% The SIA Group is focusing expansion almost entirely on
8.7% Asia Pacific, using SilkAir, new medium/long-haul LCC
subsidiary Scoot and SIA mainline. Scoot added two 777s
in 2013, giving it a fleet of six aircraft, but will take a hiatus
13.8% from expanding in 2014. The carrier will add one aircraft this
year, a 787-9 in 4Q2014, but has dropped its initial plan to
use it as a growth aircraft and has instead decided to use its
51.9% first 787 to replace one of its 777-200s.
While demand for services within Asia Pacific continues to
grow, capacity has been added too quickly, particularly in the
23.5% Singapore-Indonesia and Singapore-Australia markets. Scoot
serves three Australian routes and has significantly reduced
capacity to Australia by cutting frequencies and combining
Narrowbody Jet Widebody Jet Turboprop Small Commercial Turboprop some Sydney and Gold Coast flights. Qantas has also decided
Regional Jet to drop its Perth-Singapore service. More adjustments are
likely.
As Singapore has a population of only about 5 million and
SOUTHEAST ASIA CAPACITY SEATS SHARE BY ALLIANCE is a relatively mature aviation market compared with other
SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014
ASEAN countries, there is perhaps limited opportunity for
additional stimulation in the local market. Transit traffic
10.6%
remains a large and very important component, but with
other hubs in Southeast Asia also seeing capacity growth
outstripping local demand, competition for transit passengers
14.2% has become more intense.
Passenger traffic at Singapore Changi was up only 5% in
2013, marking the first time in four years that double-digit
growth was not achieved. Passenger growth is expected to dip
further in 2014, to between 3% and 5%.
Asia traffic for Changi, which was up 7% in 2013, will
59.7% again lead the way in 2014 but at the expense of yields.
15.5%
Capacity is growing at a rate far exceeding supply, putting
pressure on yields and profitability. It will be a challenging
year for all five of Singapores passenger carriers.
Malaysia
Unaligned SkyTeam Star Alliance oneworld Malaysias rapid growth from 2013 is unlikely to be
sustained. The country was one of Asias fastest growing
markets in 2013, driven by the launch of Lion Air Group
subsidiary Malindo and rapid expansion by the countrys
three main existing carriers. 2014 will see more rapid
expansion not at the torrid speed from 2013 but at a rate
which will likely exceed demand, putting further pressure on
Pg 16 | CAPA World Aviation Yearbook 2014 yields and profitability.
SOUTHEAST ASIA PROJECTED DELIVERY DATES FOR AIRCRAFT ON Passenger traffic at Malaysia Airports grew by 18% in 2013
ORDER to 80 million, including a 17% increase in international traffic
and a 20% increase in domestic traffic. Malaysia Airports
manages all but one of Malaysias main airports.
300
250
Malaysia Airlines (MAS) was the fastest growing
Southeast Asian flag carrier in 2013, with passenger figures
200
up 29% to 17 million. MAS increased ASKs by 17%,
driven primarily by expansion of its domestic and regional
150 international operation. The carrier was able to grow RPKs
by 27%, pushing up load factor by 6.3ppt to 81%. But MAS
100 adopted an aggressive pricing strategy, significantly increasing
the number of tickets sold at low LCC-like fares as it
50
responded to the launch of Malindo and intense competition
from AirAsia and foreign carriers. It does not have the cost
0
base to allow this sort of pricing over an extended period.
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
72 CARAVAN A320 A330 A350 A380 737 777 787
MAS incurred a USD360 million loss in 2013 as yields
DHC6 CRJ SSJ ARJ21 tumbled by 13%, including by 16% in 4Q2013.
This is a dangerous strategy, despite being cossetted by its
government. MAS outlook for 2014 is relatively bleak as
SOUTHEAST ASIA MOST POPULAR AIRCRAFT TYPES IN SERVICE yields and profits remain under pressure. Capacity levels will
increase further, with a focus on the regional international
market. While the rate of capacity growth will be slower than
17.5%
the 17% figure from 2013, it is expected to again be double
29.3% digits (approximately 10% to 12%). Competition is too
intense to expect an improvement in yields and the MH370
2.6% incident makes an already challenging situation even more
difficult.
4.2%
LCC capacity in Malaysia continues to grow rapidly,
putting pressure on all carriers. In 2013, Malaysias LCC fleet
grew by more than 30% from 73 to 99 as 26 aircraft were
8.1%
added, including 11 aircraft at Malindo, eight at AirAsia
and seven at AirAsia X. Malindo, which launched services
in Mar-2013, is expected to add about eight aircraft in 2014.
8.4%
Most of its expansion will be in the international market,
21.4% starting with several South Asia routes that were launched
8.6% in 1Q2014, followed in the second half by the anticipated
launch of services to North Asia.
A320 737 A330 72 777 CARAVAN 747 Other
Growth at Malaysia AirAsia and AirAsia X is expected to
be similar to 2013 levels, when Malaysia AirAsia recorded
an 11% increase in ASKs while AirAsia X ASKs were up
LCC CAPACITY SHARE (% OF TOTAL SEATS) FOR WITHIN SOUTHEAST by 19%. But yields will continue to be under pressure. At
ASIA: 2011 TO 2014* Malaysia AirAsia, the average fare was down 18% and
SOURCE: CAPA - CENTRE FOR AVIATION AND OAG
*Year to Month indicated revenue per ASK was down 10% in 4Q2013. At AirAsia X,
80
revenue per ASK was down 15% in 4Q2013, including a 22%
drop on routes in which AirAsia X and competitors both
added capacity. This is an indication of the stiff competition
60 57.8%58.9%
in the Malaysian market and the broader Southeast Asia
52.0% market.
AirAsia X is only planning to add three aircraft in the
40 Malaysian market in 2014 (as four of its seven additional
30.9% 30.7%
32.4%
A330s are allocated to Indonesia and Thailand) while
23.2%
26.8%
Malaysia AirAsia plans to grow its feet by only four aircraft.
20 18.1% While these numbers are significantly down compared with
13.6%
9.8% 2013, both carriers added several aircraft in late 2013, which
3.3%
4.6% 4.0%
will result in large capacity increases on a full-year basis
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Jan- for 2014. As group AirAsia has significantly slowed down
May
2014 expansion in 2014 by deciding to sell 12 of its oldest A320s
and deferring seven deliveries. But this did not lead to a
significant adjustment in its Malaysia capacity plans as most
of the aircraft that have been removed from the initial fleet
plan for 2014 had been intended for Indonesia and India.
Competition between the AirAsia, MAS and Lion groups
will further intensify in 2014 as Malindo expands into new
Pg 17 | CAPA World Aviation Yearbook 2014 international markets. MAS will likely struggle as current
Capacity is growing at a rate far fare levels are unsustainable given its higher cost structure.
Malindo is unlikely to meet its goal in the short to medium
exceeding supply, putting pressure term of reaching break-even. Both AirAsia carriers are
on yields and profitability. It will attempting to cut costs and increase transit traffic in 2014 as
part of a bid to improve profitability despite the challenging
be a challenging year for all five of market conditions. AirAsia has a strong position in its home
Singapores passenger carriers. market but faces some of its biggest challenges in recent
years.
Thailand
In Thailand, three new carriers will launch despite
challenging market conditions. Competition between the
AirAsia and Lion groups has also increased in the local
market. Thai Lion launched services in late 2013 with a fleet
of two aircraft and is planning to add at least eight aircraft in
2014. Three other LCCs are planning to launch services in
2014 Thai AirAsia X, Thai VietJet and NokScoot giving
Thailand seven LCCs, which is more than any country except
the US, which has eight.
The timing for the launches is far from ideal as yet another
political crisis, including frequent protests in Bangkok, has
significantly impacted demand in late 2013 and 1Q2014,
with worrying signs that it will not go away quickly. In the
past, the Thai market has recovered rapidly once restored
to stability. But there is a dangerous amount of new
capacity being added which will put pressure on yields and
profitability even under a more stable environment.
Thailands two main LCCs, Nok Air and Thai AirAsia, are
expanding as fast as Thai Lion. Thai AirAsia plans to add six
more A320s in 2014, giving it a fleet of 41 aircraft. It added
eight A320s in 2013 as ASKs were up 23%. Of the four
AirAsia short-haul franchises in Southeast Asia, Thai AirAsia
is growing the fastest as only two aircraft have been removed
from the original fleet plan for 2014, which envisioned eight
additional aircraft. AirAsias decision not to pursue a more
significant slowdown of growth in Thailand is somewhat
surprising given the unfavourable market conditions and is
an example of strategic growth as new competitors enter the
market.
Nok plans to add four aircraft in 2014, growing its feet to
20 aircraft (excluding small turboprops, which were dropped
entirely in early 2014 as they were operated by another carrier
that Nok has severed ties with). Overall, capacity at Nok is
expected to increase by more than 20%, representing only
a slight slowdown to 2013 when the level was up by 46%.
Both Nok and Thai AirAsia have remained profitable with
net profit margins of about 10% in 2013. But yields have
been dropping in recent quarters and market conditions
will deteriorate further in 2014 as more capacity floods the
market despite the unstable political environment. Revenue
per ASK was down by 6% at Nok in 2013 and by 2% at Thai
AirAsia. Thai AirAsia revenue per ASK was down 10% in
4Q2013, with the carriers average fare slipping 13%.
New Thai Airways regional unit Thai Smile, which
launched services in 2012, has also been expanding rapidly,
adding six A320s in 2013. Thai Smile plans to add another
seven A320s in 2014 for a total of 17 aircraft. Thai Smiles
ASKs more than tripled in 2013, albeit on a very low base,
PASSENGER TRAFFIC GROWTH AT MALAYSIA
18%
while group ASKs were up 8% year-on-year. Similar high
AIRPORTS IN 2013 single-digit capacity growth at the group is expected again in
2014. While Thai Smile will expand rapidly, there will only be
modest growth at Thai Airways. The carrier plans to shrink its
mainline fleet by six aircraft in 2014, as 13 aircraft are slated
Pg 18 | CAPA World Aviation Yearbook 2014 to be phased out five A300s, five A330s and three 737-400s
while seven aircraft are delivered, including the carriers
first four 787-8s and three additional 777-300ERs. Thais
mainline ASKs were up 8% in 2013 but there are signs of
overcapacity as passenger yield was down 2% and load factor
slipped 2.5ppts including 5.3ppts in 4Q2013.
Independent regional carrier Bangkok Airways, with its
more conservative and focused strategy, is also in expansion
mode and plans to add five A320 family aircraft in 2014 for
a total of 22. The carrier already added two A320s at the end
of 2013 along with two A319s earlier in the year. Bangkok
Airways also operates eight ATR 72-500s, which it will start
replacing in 2H2014 with recently ordered new-generation
ATR 72-600s. But growth in the turboprop fleet is not part
of the carriers fleet plan.
Thai VietJet, meanwhile, plans to launch services by the
end of 2014 with an initial focus on the domestic market.
The combination of Thai VietJets entry along with rapid
Market conditions in expansion from Nok, Thai AirAsia, Bangkok Airways and
Indonesia have not
Thai Smile poses a huge risk of overcapacity in Thailands
been helped by a sharp
devaluation of the domestic and short-haul international market.
Indonesian Rupiah in late Thailands medium/long-haul market is also poised to
2013, leading to a sudden become significantly more competitive in 2014 as new
surge in costs, challenging widebody LCCs Thai AirAsia X and NokScoot are launched.
profitability. Thai AirAsia X plans to launch services in 2Q2014 with
an initial fleet of two A330s while NokScoot aims to begin
operations in 2H2014 with an initial fleet of two 777-200s.
With Thailand becoming the first market to have two local
medium/long-haul LCCs, overcapacity in some markets such
as Thailand-Japan is possible over the medium to long term.
But this is not a big concern for 2014 as the two new
carriers will start small and there is a lot of room for LCCs
to penetrate Thailands medium/long-haul market compared
with the more mature and much more competitive short-haul
market, where 2014 could prove to be a bloodbath.
Indonesia
Indonesia will also experience more growth despite a
challenging environment. Market conditions in Indonesia
have not been helped by a sharp devaluation of the
Indonesian rupiah in late 2013, leading to a sudden surge in
costs, challenging profitability. So far two Indonesian carriers,
Indonesia AirAsia and Tigerair Mandala, have responded
by slowing down expansion and cutting domestic capacity.
But the main domestic players continue to expand at an
aggressive rate.
Indonesia AirAsia has suspended fleet expansion and is
now planning to keep its fleet stable at 30 A320s in 2014.
The carrier originally planned to add six aircraft and the
adjustment in Indonesia is one of the main drivers of AirAsia
Groups decision to seek delivery deferrals and the sale of
some existing aircraft. Indonesia AirAsia added eight A320s
in 2013 for a total of 30, driving a 33% increase in ASKs.
Indonesia AirAsia still plans to pursue international
expansion in 2014 but this will come at the expense of its
domestic operation. The carrier plans to decrease the portion
of its capacity allocated to the domestic market from 40%
to only 30%. Indonesia AirAsia is already a relatively small
domestic player, with about a 5% share of the market, while it
is Indonesias largest international carrier.
Tigerair Mandala has suspended 11 of its 19 routes since
the beginning of 2014 and has reduced its fleet from nine
A320s to only four aircraft. The carrier initially planned to
add three aircraft in 2014 for a total of 12 A320s. Tigerair
Pg 19 | CAPA World Aviation Yearbook 2014 Mandala hopes to restore some capacity later in the year but
AirAsia has a strong position in its this hinges on an improvement in market conditions and the
potential sale to new owners.
home market but faces some of its Even if Tigerair Mandala does not recover and exits the
biggest challenges in recent years. market, the impact will not be significant given its relatively
small size. The void left when much larger Indonesian carrier
Batavia exited in early 2013 was quickly filled by other
Indonesian carriers. Existing carriers should also be able to
fill most of the void left by Indonesian government-owned
regional carrier Merpati, which suspended operations in early
Feb-2014. Indonesias two main airline groups, Lion and
Garuda, have rapidly expanded regional aircraft operations
and continue to quickly grow their narrowbody fleets.
Garuda mainline ASKs were up 15% in 2013, including
16% domestic and 14% international growth, as the fleet
expanded by 15 aircraft. Double-digit growth is expected in
2014 as the Garuda mainline fleet grows by about another 20
aircraft.
A large portion of the fleet growth is at Garudas new
regional sub-brand Explore, which operates the carriers
new CRJ1000 and ATR 72 fleets. Garuda took its first five
CRJ1000s in 2012, added seven more in 2013 and will take
four more in 2014. Garuda took its first two ATR 72-600s in
late 2013 and will add six of the type in 2014.
Garudas new 777-300ER fleet will also grow from four to
seven aircraft in 2014. Garuda began operating 777-300ERs
in mid-2013 and in early Jun-2014 began using the type
to operate non-stop fights to Amsterdam. But Garuda has
dropped previous plans to also launch non-stop services to
London and will instead only serve Gatwick as a tag to its
Amsterdam service, which previously was operated as a one-
stop via Abu Dhabi using A330-200s.
Garuda budget subsidiary, Citilink, meanwhile plans to add
eight A320s for a total of 32. Capacity levels will also increase
as the carrier increases utilisation of its A320 fleet. Some of
the additional capacity will be allocated to the international
market as Citilink plans to expand into the international
market in 2014, initially with services to Malaysia, Singapore
and Australia.
Citilink added 10 A320s in 2013, driving year-on-year
ASK growth of 75%. Citilink has been facing some of the
same challenges as smaller Tigerair Mandala, incurring an
operating loss of USD60 million in 2013 while Garuda
mainline remained in the black.
Current market conditions are particularly challenging
for budget carriers in the domestic market. Yet Citilink
and domestic market leader Lion Air continue to expand
rapidly. The Lion group is privately held but claims to have
grown LCC passenger traffic by 15% 2013 to 32.9 million
(this includes Lion Air and Wings Air but excludes new
full-service subsidiary Batik Air, which carried 800,000
passengers in its first year of operations). The Lion group
plans to add 50 to 52 aircraft in 2014 with approximately 15
aircraft allocated to its affiliates in Malaysia and Thailand,
leaving 35 to 37 aircraft for Indonesia. This includes 15 to
17 737NGs for Lion, about 10 ATR 72s for Wings and 10
The situation in the Philippine- aircraft (four 737s and six A320s) for Batik. But these figures
Middle East market looks are subject to change as the year unfolds; Lion has a very
flexible feet strategy and only finalises allocations among its
particularly ugly for 2014. five carriers a few months prior to delivery.
While Indonesia AirAsia is taking a hiatus from fleet
expansion, new sister carrier Indonesia AirAsia X plans
to launch services in 2H2014 with an initial fleet of two
A330-300s. Indonesia AirAsia is less impacted by the rupiah
Pg 20 | CAPA World Aviation Yearbook 2014 devaluation given the carrier has a much larger portion
of foreign passengers than its competitors. AirAsia has a
small and shrinking domestic operation in Indonesia but is
already the countrys largest international player, a position
the group aims to cement by launching the countrys first
medium/long-haul LCC. As is the case with Thailand, there
are opportunities to penetrate Indonesias medium/long-haul
market, while a bloodbath could emerge in the short-haul
market particularly domestically.
Philippines
In the Philippines, domestic market rationality returns,
but potential overcapacity looms in international markets.
Conditions in the domestic market are relatively more
favourable, thanks to consolidation.
Philippines AirAsia and Zest Air merged in early 2013.
Both carriers integrated their operations in 2H2013 and
now both operate under the AirAsia brand. The two carriers
began 2014 with a combined fleet of 17 A320s but the group
has decided not to pursue any feet growth in the Philippines
this year, keeping the fleet stable at about 17 aircraft. As with
Indonesia, AirAsia plans to reduce domestic capacity in the
Philippines while growing its international operation.
Market leader Cebu Pacific announced in Jan-2014 the
acquisition of Tigerair Philippines, which will leave two
LCC players (AirAsia and Cebu Pacific) compared with five
(AirAsia, AirPhil Express, Cebu Pacific Tigerair, Zest) at the
beginning of 2013.
Conditions in the Philippines domestic market are relatively more AirPhil adopted the full service regional model after it
favourable, thanks to consolidation. was rebranded PAL Express in early 2013. The transition
resulted in the PAL group having one rather than two brands
on domestic trunk routes, resulting in a significant cut in
domestic capacity for the PAL group and flat growth for the
overall Philippine domestic market in 2013. The additional
consolidation with AirAsia/Zest and Cebu Pacific/Tigerair
results in an improved outlook for 2014, ending a period of
irrational competition and overcapacity in the Philippine
domestic market.
Cebu Pacific plans to expand its fleet in 2014 by only four
aircraft one A320 and three A330s for a total of 52.
But the carrier aims to move four of its A320s over to new
subsidiary Tigerair Philippines, which had operated five
A320 family aircraft that are in the process of being returned
to Tigerair Philippines. With the Tigerair Philippines
fleet leaving the Philippines, the overall LCC fleet in the
Philippines will shrink slightly and end 2014 at just under
70 aircraft. Cebu Pacific, which grew domestic ASKs by 8%
in 2013, plans to increase domestic ASKs by 9% in 2014,
excluding Tigerair Philippines.
While domestic market conditions have improved,
overcapacity has now surfaced in the Philippines
international market. The situation in the Philippine-Middle
East market looks particularly ugly for 2014. Cebu Pacific
launched services to Dubai in Oct-2013 and its new long-
haul unit is planning to add four to five new destinations in
the Middle East in 2014, as well as one in Australia, as it
expands its A330-300 fleet from two to five aircraft. PAL
and PAL Express, meanwhile, launched services to five
destinations in the Middle East in 2H2013 and plan to add
at least a couple more in 2014.
Overcapacity is also possible in the Philippines-Japan
market, as several Philippine carriers rush to add capacity
following a new air services agreement between the two
countries. Competition is also intensifying in the regional
Pg 21 | CAPA World Aviation Yearbook 2014 international market within Southeast Asia a common
trend driven by rapid and at times overambitious expansion
of budget carriers, as well as growth by full service regional
subsidiaries.
Southeast Asias five smaller markets

Vietnam, Myanmar, Cambodia, Laos and Brunei,
Southeast Asias smaller markets, have similar challenges. All
five markets face potential overcapacity in 2014.
Myanmar is another frontier market
with tremendous potential. But the In Vietnam, competition from LCC VietJet Air is putting
domestic market is over-served and too pressure on Vietnam Airlines and the flag carriers budget
fragmented. subsidiary Jetstar Pacific. VietJet Air plans to double its fleet
in 2014 from 10 to 20 A320s. There are huge opportunities for
growth in Vietnam but overcapacity is a risk for the domestic
market and on some short-haul international routes.
Myanmar is another frontier market with tremendous
potential. But the domestic market is over-served and too
fragmented, with seven carriers and a few more planning
to launch in 2014. Foreign carriers dominate Myanmars
international market, which has doubled in size since Aung
San Suu Kyis National League for Democracy won landmark
elections in early 2012. But Myanmar now faces overcapacity
and below average load factors as airlines have rushed too fast
in the wake of the market opening up.
Cambodia and Laos are smaller markets with growing
demand but have similar challenges due to rapid growth by
local carriers and several new services from foreign carriers.
Brunei, Southeast Asias smallest market, is more stable and
Royal Brunei could be the only flag carrier which experiences
an improvement in profitability in 2014 as it transitions its
entire long-haul operation to 787s by the end of the year.
But Royal Brunei is not about to become profitable anytime
soon. A majority of Southeast Asias main flag carriers and
LCC groups were profitable in 2013 but will likely see profits
fall in 2014 as stiff competition puts pressure on yields.
The overall fundamentals of the Southeast Asian market are
excellent as the regions GDP and middle class continue to
grow at healthy rates. There can be no doubt that the upside
for economic and air traffic are extreme. But coordinating
capacity expansion with such high rates of change is
extraordinarily difficult. The tendency to add excessive levels
of capacity in individual markets is further encouraged by
strategic goals, where emerging LCC groups are vying for
pan-Asian pre-eminence, while also making sure that they
and the full service airlines will be able to secure slots for
future expansion at limited-space airports.
In many markets, the expansion has predictably been too
fast, leading often to irrational competition. Even with the
fleet and capacity adjustments implemented in 1H2014,
some consolidation is possible in 2H2014, particularly among
the smaller and weaker carriers. But the predominant trend
will be aggressive competition between all types of carriers.
And potentially a lot of red ink as the battle for dominance
continues.

Southeast Asia
LION AIR PROJECTED DELIVERY DATES FOR AIRCRAFT ON ORDER*
Selected Airlines 80
1. Lion Air
60
40
20
0
Lion Air is an Indonesian hybrid airline based at Jakarta-Soekarno-Hatta
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
International Airport. Commencing operations in 2000 and based in Jakarta,
Lion Air is the largest privately-owned airline in Indonesia. The carrier A320 72 737 787
operates a network of scheduled passenger services throughout South East *For group, not individual carrier. Excludes new aircraft that are coming from leasing
Asia and the Middle East. companies.
LION AIR STAGE LENGTHS

LION AIR FLEET SUMMARY AS AT MAY-2014 SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014
SOURCE: CAPA FLEET DATABASE
3000
AIRCRAFT IN SERVICE IN STORAGE ON ORDER
Airbus A320-200 0 0 60
2500
Airbus A320-
0 0 109
200NEO
No. of Weekly Frequencies
2000
Airbus A321-200NEO 0 0 65
ATR 72-212A(72- 1500
0 0 25
600)
1000
Boeing 737-300 0 2 0
Boeing 737-400 0 8 0 500
Boeing 737-800 26 0 17
0
Boeing 737-9 0 0 201
Boeing 737-900ER 68 0 79 -500
0 2 4 6 8 10
Boeing 747-400 2 0 0 Flight Time (Hours)
Boeing 787-8 0 0 5
Boeing/McDonnell
Douglas MD-82
0 1 0 LION AIR TOP 10 INTERNATIONAL ROUTES BY SEATS
Boeing/McDonnell
0 1 0
Douglas MD-90-30 SIN - CGK 17,892 seats
Total: 96 12 561
CGK - KUL 8,946 seats
PEN - KNO 5,964 seats
CGK - JED 4,522 seats
SIN - SGN 2,982 seats
PEN - MES 2,646 seats
KUL - BDO 2,646 seats
SZB - HDY 576 seats
KNO - HDY 432 seats
0k 2.5k 5k 7.5k 10k 12.5k 15k 17.5k 20k 22.5k

Southeast Asia
GARUDA INDONESIA PROJECTED DELIVERY DATES FOR AIRCRAFT ON
ORDER*
2. Garuda
30
Indonesia
20
10
14
15
16
17
18
20
20
20
20
20
Garuda Indonesia is the national airline of Indonesia, based at Jakartas A320 A330 72 737 777 CRJ
Soekarno-Hatta International Airport. The carrier operates an extensive *Excludes new aircraft that are coming from leasing companies
domestic and regional network of services throughout Asia, Australia and
the Middle East. In Jun-2010, Garuda resumed services to Europe (initially
Amsterdam via Dubai) after an extended EU imposed ban. GARUDA INDONESIA STAGE LENGTHS
Garuda has undergone a thorough restructuring in what it labelled The SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014
Quantum Leap, which involved a dramatic redesign of the airlines strategic
1750
direction, network, brand and fleet. The airline launched an IPO in 2011 which
was substantially under-subscribed at the relatively aggressive pricing 1500
sought. In Apr-2012, the government announced that talks were under way
for a consortium of local investors to absorb the overhang, still held by the 1250
underwriters.
Garuda Indonesia stated that in line with the airlines efforts to develop 1000
and strengthen its network, especially in the domestic market, it is

750
launching a new sub-brand Explore along with the introduction of the
ATR 72-600 aircraft into the fleet. In addition to the sub-brand Explore, 500
Garuda Indonesia is also introducing the brand Explore Jet to operate its
Bombardier CRJ1000 NextGen fleet, serving the airlines network in both 250
eastern and western Indonesia.

Garuda Indonesia is the 20th member of the SkyTeam alliance. 0
-250
0 2 4 6 8 10 12
Flight Time (Hours)
GARUDA INDONESIA FLEET SUMMARY AS AT MAY-2014
AIRCRAFT IN SERVICE IN STORAGE ON ORDER GARUDA INDONESIA TOP 10 INTERNATIONAL ROUTES BY SEATS
Airbus A320-200 0 0 15 SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014
Airbus A320-
0 0 10 CGK - SIN 21,922 seats
200NEO
CGK - JED 7,536 seats
Airbus A330-200 11 0 0
CGK - HKG 6,799 seats
Airbus A330-300 6 0 0
CGK - BKK 5,460 seats
Airbus A330-300E 1 0 17
CGK - PVG 4,396 seats
ATR 72-212A(72-
3 0 22
600) CGK - NRT 4,396 seats
Boeing 737-300 3 0 0 DPS - SIN 4,368 seats
Boeing 737-500 3 2 0 CGK - KUL 4,368 seats
Boeing 737-800 67 0 10 CGK - PEK 4,032 seats
Boeing 747-400 2 0 0 DPS - MEL 4,032 seats
Boeing 777-300ER 4 0 6 0k 5k 10k 15k 20k 25k 30k
Bombardier CL-600-
13 0 5
2E25(CRJ1000NG)
Total: 113 2 85

Southeast Asia
AIRASIA PROJECTED DELIVERY DATES FOR AIRCRAFT ON ORDER*
3. AirAsia
40
30
20
10
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
A320
AirAsia is a low cost carrier based at Kuala Lumpur International Airport, *For group, not individual carrier. Excludes new aircraft that are coming from leasing
Malaysia. The carrier, which was formed out of Tune Air in 2002, is led by companies.
CEO Tony Fernandes and pioneered the cross-border joint venture in Asia,
establishing Thai and Indonesian units with bases in Bangkok and Jakarta. AIRASIA STAGE LENGTHS
The airline has also partnered with other airlines and investors to create SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014
ventures in Japan and the Philippines. AirAsias extensive domestic and
1500
regional network includes services within Malaysia and to China, Southeast
Asia and the Subcontinent.
1250
1000
AIRASIA FLEET SUMMARY AS AT MAY-2014
750

Airbus A320-200 76 0 67 500
Airbus A320-
0 0 264
200NEO 250
Total: 76 0 331
0
-250
0 1 2 3 4 5
Flight Time (Hours)
AIRASIA TOP 10 INTERNATIONAL ROUTES BY SEATS

KUL - SIN 25,920 seats
KUL - DMK 17,640 seats
KUL - SGN 12,600 seats
KUL - HKT 10,080 seats
SIN - PEN 10,080 seats
KUL - HKG 10,080 seats
KUL - TRZ 7,560 seats
KUL - DPS 7,560 seats
KUL - KNO 7,560 seats
CAN - KUL 7,560 seats
0k 5k 10k 15k 20k 25k 30k 35k

Southeast Asia
SINGAPORE AIRLINES PROJECTED DELIVERY DATES FOR AIRCRAFT ON
ORDER*
4. Singapore
20
15
Airlines 10
14
15
16
17
18
19
20
21
20
20
20
20
20
20
20
20
A330 A350 A380 777 787
*Excludes new aircraft that are coming from leasing companies
Based at Singapore Changi Airport, Singapore Airlines is the national SINGAPORE AIRLINES STAGE LENGTHS
carrier of Singapore. Using a fleet of wide-body Boeing and Airbus aircraft, SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014
including the A380 of which Singapore Airlines was the launch customer,
300
Singapore Airlines operates an extensive network across Asia, North
America, Australasia, Europe, Africa and the Middle East. Singapore Airlines
250
joined the Star Alliance on 01-Apr-2000.
200
SINGAPORE AIRLINES FLEET SUMMARY AS AT MAY-2014

SOURCE: CAPA FLEET DATABASE 150

100
Airbus A330-300E 27 0 10
Airbus A340-500 0 3 0 50
Airbus A350-
0 0 70
900XWB 0
Airbus A380-800 19 0 5
-50
Boeing 777-200ER 29 2 0 0 5 10 15
Flight Time (Hours)
Boeing 777-300 7 0 0
Boeing 777-300ER 22 0 5
Boeing 787-10 0 0 30 SINGAPORE AIRLINES TOP 10 INTERNATIONAL ROUTES BY SEATS
Total: 104 5 120
SIN - CGK 39,552 seats
SIN - HKG 32,816 seats
SIN - PVG 21,578 seats
SIN - SYD 21,224 seats
SIN - BKK 20,328 seats
SIN - LHR 19,244 seats
SIN - MEL 18,760 seats
SIN - DPS 16,464 seats
SIN - MNL 16,338 seats
SIN - PER 16,212 seats
0k 5k 10k 15k 20k 25k 30k 35k 40k 45k 50k

Southeast Asia
THAI AIRWAYS PROJECTED DELIVERY DATES FOR AIRCRAFT ON ORDER*
5. Thai Airways
8
14
15
16
17
18
20
20
20
20
20
Based at Bangkoks Suvarnabhumi Airport with secondary hubs in
Phuket and Chiang Mai, Thai Airways is the national airline of Thailand and A350 777 787
majority-owned by the Thai Ministry of Finance. Using a fleet of narrow and *Excludes new aircraft that are coming from leasing companies
wide-body Airbus and Boeing aircraft, Thai Airways operates an extensive
network of domestic and regional services throughout Thailand and Asia and
international services to Europe, North America, Australia and New Zealand. THAI AIRWAYS STAGE LENGTHS
Thai Airways is a founding member of Star Alliance. SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014
600
THAI AIRWAYS FLEET SUMMARY AS AT MAY-2014 500

AIRCRAFT IN SERVICE IN STORAGE ON ORDER 400
Airbus A300B4-
5 5 0
600R 300
Airbus A330-300 8 3 0
200
Airbus A330-300E 15 0 0
Airbus A330-300X 1 0 0 100
Airbus A340-500 0 3 0
0
Airbus A340-600 6 0 0
Airbus A350- -100
0 0 10 0 2 4 6 8 10 12 14
900XWB Flight Time (Hours)
Airbus A380-800 6 0 0
ATR 72-201 0 2 0
THAI AIRWAYS TOP 10 INTERNATIONAL ROUTES BY SEATS
Boeing 737-400 5 0 0 SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014
Boeing 747-400 12 4 0
BKK - HKG 23,590 seats
Boeing 747-
2 0 0
400(BCF) BKK - NRT 15,554 seats
Boeing 777-200 8 0 0 BKK - SIN 14,798 seats
Boeing 777-200ER 6 0 0 BKK - ICN 12,334 seats
Boeing 777-300 6 0 0 BKK - KIX 12,194 seats
Boeing 777-300ER 9 0 5 BKK - RGN 12,096 seats
Boeing 787-8 0 0 6 BKK - KUL 10,872 seats
Boeing 787-9 0 0 2 BKK - HND 10,528 seats
Total: 89 17 23 BKK - FRA 9,768 seats
BKK - PVG 9,324 seats
0k 5k 10k 15k 20k 25k 30k

SOUTH ASIA analysis reports:
Air India finally to enter the Star Alliance. Lufthansa now looks to escalate Gulf carrier rhetoric
CAPA India Aviation Outlook FY2015: Losses accumulate but AirAsia India, Tata-SIA undeterred
Indias airlines lost USD1.65 billion in FY2013. CAPA India Aviation Outlook 2013/14: Part 4
SriLankan Airlines raises global profile and expands oneworld presence in South Asia

South Asia A
S THE INDIAN NATIONAL ELECTION
completes a major shift to a new BJP government,
with market-changing airline partnerships in train
and major new entrants arriving, the year ahead
promises to be no less eventful than any over the past decade.
The new government will have to address deep structural
TOP 10 AIRLINES WITHIN SOUTH ASIA shortcomings in the sector. Airlines continue to bleed while
SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014 the competitive environment intensifies with the appearance
of new entrants. Creative strategies are going to be needed;
RANKING CARRIER NAME SEATS equally there are massive strides to be made in improving
1 IndiGo 587,700 infrastructure to accommodate the inevitable high traffic
2 SpiceJet 345,060
growth levels.
Indias airlines posted combined losses of around USD1.7
3 Air India 338,832 billion in the year ended 31-Mar-2014. Air India again
4 Jet Airways 306,244 incurred the largest loss at close to half of the total. Jet
5 GoAir 167,220 Airways and SpiceJet both reported record full-year losses.
GoAir was earlier expected to end the year with a
6 JetLite 83,606
breakeven result or a modest profit but is also likely to have
7 Pakistan International Airlines 50,058 gone into the red. IndiGo will be the only carrier to report
8 SriLankan Airlines 45,880 full-year profitability, but this too will be significantly lower
9 Maldivian 23,368 than CAPAs earlier estimates. Nevertheless, as the only
consistently profitable airline in India, the time may be
10 Buddha Air 22,538 approaching to leverage this achievement and an IPO is
possible in FY2015.
CAPACITY BY CARRIER TO/FROM/WITHIN SOUTH ASIA Start-up carriers will place downward pressure on yields
SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014 and risks will peak for some carriers in FY2015. Indias
incumbent carriers can expect no respite on the competitive
IndiGo 616,500
front in FY2015, with several new carriers expected to launch
Air India 454,452 operations. AirAsia Indias entry into the market on 12-
Jun-2014 sparked a round of heavy discounting with fares
Jet Airways 428,180
on some routes falling to below USD10 one-way including
SpiceJet 357,888 taxes and surcharges. Apart from AirAsia India, Tata-SIA
Emirates 176,508
is expected to commence services in 3Q2014, and a further
two to three start-ups are reportedly awaiting licences to
GoAir 175,860
commence national and regional operations. The introduction
Pakistan International Airlines 115,562 of additional capacity when load factors are already soft, and
SriLankan Airlines 102,081
the consequent downward pressure on yields, is likely to hurt
all carriers. Continued red ink may start to test the holding
Qatar Airways 85,914
power of a couple of airlines.
Other 1,166,129 Downsizing by SpiceJet and freezing by Jet and Air India
0k 250k 500k 750k 1,000k 1,250k 1,500k on domestic routes will help in moderating capacity growth.
Fortunately the incumbent carriers are planning only modest
SOUTH ASIA TOP 10 AIRPORTS capacity increases this year. Jet Airways and Air India are
SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014 likely to freeze their domestic operations at close to current
levels for the near term. GoAir will take one more aircraft
RANKING AIRPORT NAME SEATS in mid-2014 and then does not have any aircraft scheduled
1 Delhi Indira Gandhi International Airport 746,672 for delivery until the first of its A320neos start to arrive in
2 Mumbai Airport 653,098
2016, although it has been evaluating leasing some aircraft to
support growth in the interim.
Bangalore Bengaluru (Kempegowda) Interna- And SpiceJet is conducting a detailed review of its
3 296,368
tional Airport
operations which has already resulted in a short-term
4 Chennai Airport 261,696 reduction of its domestic narrowbody operations. Question
5 Kolkata Netaji Subhas Chandra Airport 260,857 marks continue over its long-term plans in the regional
6 Hyderabad Rajiv Gandhi International Airport 212,984
segment, which has to date faced significant operational
and reliability issues. Domestic growth will be driven by
7 Ahmedabad Airport 100,064 IndiGo which is expected to deploy six additional aircraft,
8 Pune Lohegaon Airport 90,182 and AirAsia India, Air Costa and Tata-SIA which combined
9 Goa International Airport 85,998 could induct 18-20 aircraft. This is dependent upon the rate at
which AirAsia decides to expand which is currently uncertain.
10 Kochi Airport 80,823

airlines.
SOUTH ASIA FLEET
In FY2015, the high-cost operating environment and
the continued weakness in the economy would suggest that
800
700 domestic traffic growth will be moderate, in the range of

6-8%, albeit slightly higher than the 5.2% achieved last year.
584
600
However, there is considerable uncertainty about the
500
500 potential impact of the new market entrants. If fares wars
are sustained, traffic growth could be stimulated above this
400 underlying rate; although this would be at the expense of
airline balance sheets. Domestic traffic performance could
300
therefore be volatile from month to month. But there may be
200 signs of a more sustained recovery from 3Q2015 onwards as
economic confidence has increased following the election of
100
63 the new government in May-2014.
0 International traffic on the other hand has been a strong
and steady performer over the last decade, even during
periods where domestic traffic has dropped into negative
SOUTH ASIA BREAKDOWN FOR AIRCRAFT IN SERVICE territory. In FY2015 growth of around 10% is expected and
SOURCE: CAPA FLEET DATABASE | MAY-2014 may approach 15% if the 5 year/20 aircraft rule is lifted and as
a number of bilaterals are relaxed.
2.1%
8.7% Indian airlines are expected to post combined losses of
USD1.3-1.4 bn in FY2015. Losses could track further
upwards as some airlines have substantial major maintenance
14.6% checks scheduled this year, the cost of which will be higher
than the reserves currently held by lessors.
These profitability projections are subject to significant
external factors. We have assumed oil at an average of
USD110/barrel for the year (and this may be impacted by
58.9% instability in the Middle East) and an exchange rate in the
15.8% range of INR58-60 to the US Dollar. It also assumes that
pricing discipline will by and large be maintained. Extended
periods of aggressive discounting could lead to further
Narrowbody Jet Widebody Jet Turboprop Small Commercial Turboprop
deterioration in financial performance.
Regional Jet Airline cash balances are in some cases at dangerous levels.
As at the end of FY2014 CAPA estimates that Indian carriers
combined had INR32.5 billion (USD585 million) of cash
SOUTH ASIA CAPACITY SEATS SHARE BY ALLIANCE on hand. With annual industry turnover in excess of USD10
billion this represents the equivalent of less than three weeks
revenue. And since almost 80% of the cash balances were
3.1% accounted for by just two carriers IndiGo and Jet Airways
8.4% the situation at some airlines is even more precarious.
One carriers cash balances are understood to have at times
dropped to the equivalent of less than one days revenue with
operations being sustained by borrowing from travel agents
17.5% against future ticket revenue.
Indian carriers, other than IndiGo, are likely to require
capital infusions of USD1.6 billion in FY2015 just to
stabilise their operations, let alone for investment in aircraft.
Air India accounts for more than half of this requirement.
Inability to access sufficient funds when required may impact
the operational integrity and customer proposition of some
71.0% carriers.
Foreign investors may take a wait-and-see approach for
now, with no new transactions likely until at least 3QFY2015.
Unaligned Star Alliance oneworld SkyTeam
Further foreign airline investment transactions involving
existing Indian carriers consequently appear unlikely in the
short term given recent losses and in light of the increasing
intensity of competition in the market. SpiceJet has reportedly
signed a terms sheet with a UAE-based investor, however
the ongoing challenges in the market may make it difficult to
close this deal.
GoAir, which has also been in the market for some time, is
similarly expected to face challenges in securing an investor in
Pg 30 | CAPA World Aviation Yearbook 2014 the near term.
SOUTH ASIA PROJECTED DELIVERY DATES FOR AIRCRAFT ON ORDER IndiGo remains the leading bright spot in Indian aviation,
with a potential IPO in 3Q2015 likely to attract significant
60
interest. IndiGo has successfully established itself as a
sustainably profitable airline, albeit its result in FY2014 was
below earlier expectations. The time may be approaching to
40
leverage this achievement and an IPO is likely in FY2015,
possibly in the third quarter. If it proceeds it is expected to be
20
the largest ever aviation IPO in India. CAPA estimates that
IndiGo could raise USD350-400 million from the flotation.
The offer is likely to preceded by a strong statement about
0 its future growth prospects with IndiGo expected to place
14
15
16
17
18
19
20
21
22
23
24
25
another large order for 200-250 aircraft at Farnborough in
20
20
20
20
20
20
20
20
20
20
20
20
A320 A330 A350 777 787 737 YUN7 Jul-2014 to meets its equipment requirements post-2025. The
carrier has a current fleet of 79 aircraft with an order book of
186.
SOUTH ASIA MOST POPULAR AIRCRAFT TYPES IN SERVICE For some carriers, the financing of aircraft already on
order may be challenging. Given the ongoing difficulties in
the operating environment and with the failed Kingfisher
20.0% experience still fresh, some banks and lessors remain
concerned about the level of risk in the Indian market,
31.2%
especially as the provisions of the Cape Town Convention are
yet to be formally incorporated into the Indian Civil Aviation
3.1% Regulations.
Air Indias entry into Star Alliance is a positive
4.3% development however the new government must take
a serious look at the national carriers future. Air India
4.3% has made significant improvements across operational,
commercial and financial metrics over the last two years and
5.7% this is reflected in the decision by Star Alliance to formally
induct the carrier as a member on 11-Jul-2014.
However funding and ownership issues need to be
5.8%
25.7% addressed. Realistic capital requirements are likely to exceed
earlier budgetary commitments. The Governments fiscal
A320 737 DHC6 777 72 DHC8 A330 Other
deficit means it is already facing challenges in honouring
the funding that it has committed to the national carrier.
Under its proposed turnaround plan, Air India is expected to
LCC CAPACITY SHARE (% OF TOTAL SEATS) FOR WITHIN SOUTH ASIA: require a further USD3.9 billion of funding before returning
2011 TO 2014* to profitability. With the internal and external operating
*Year to Month indicated environments having become even more challenging since the
turnaround plan was developed, these estimates are likely to
80 be conservative.
As a result, a practical and dispassionate approach requires
62.3% that all options be on the table, including privatisation.
60 57.0%
58.7%
The new government is expected to outline a clearer long
47.3%
50.0% 50.0% term bilateral policy. In FY2014, Jet Airways, Etihad and
42.8% Emirates were the primary beneficiaries of bilateral largesse
38.6%
40
in terms of new access rights. Bilateral agreements with
Singapore and Dubai have also been renegotiated to permit
22.7% carriers to operate A380 equipment, previously barred from
20
Indian skies. The India-Germany bilateral is expected to be
5.8%
similarly updated.
0.1% 0.9% Additional Indian entitlements granted to Gulf carriers
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Jan-
May
are likely to be utilised to feed their rapidly expanding US
2014 networks. And with the US pre-clearance facility in Abu
Dhabi expected to be joined by a similar one in Dubai next
year, and probably Doha thereafter, the Gulf carriers will
offer a very competitive and convenient product on India-
US routes. This is expected to hurt Air India as well as those
European airlines which are heavily dependent on US traffic
to support their India services.
Indias airport privatisation programme had stalled in the
lead up to the elections, and the sector is now awaiting an
indication from the government on how it plans to proceed.
Pg 31 | CAPA World Aviation Yearbook 2014 The Airports Authority of India planned to award PPP
INDIAN DOMESTIC & INTERNATIONAL PASSENGERS FY2005 TO FY2014 concessions for 15 of its most profitable airports, starting
(ESTIMATED) with Chennai, Kolkata, Ahmedabad, Guwahati, Jaipur
SOURCE: CAPA CENTRE FOR AVIATION, AIRPORTS AUTHORITY OF INDIA and Lucknow. However the tender process for these first
six airports has been stuck since Oct-2013 due to a lack of
preparedness with respect to the concession agreement and
the approved tariff structure.
The most significant greenfield airport project in India
is that for the second airport in Mumbai. Request for
Qualification documents for the repeatedly-delayed Navi
Mumbai Airport project were finally issued on 5-Feb-2014,
although a Request for Proposal document is not expected to
be sent to short-listed parties until at least Sep-2014.
Meanwhile the project continues to face a number of
challenges. These relate to land acquisition, the need for
complex preparatory earthworks at the proposed site and the
absence of convenient surface connectivity between Greater
Mumbai (home to the majority of the residents in the
Mumbai Metropolitan Region) and the airport. Meanwhile
ANNUAL EQUITY INFUSIONS IN AIR INDIA APPROVED BY GOVERNMENT cost estimates continue to be revised upwards as the
TO FY21 complexities of the project become more apparent.
SOURCE: CAPA CENTRE FOR AVIATION The new government is however expected to provide a
strong push to encourage the development of 50-100 low-
cost airports designed to increase regional connectivity to Tier
III towns. This is expected to be supported by a new regional
airline policy consisting of a package of incentives and
concessions to address the viability challenges that airlines
seeking to address this segment of the market have faced.
Indias regulatory uncertainty remains both a key concern
and disincentive to serious investors. The unpredictability and
lack of transparency in Indias regulatory framework remains
the greatest strategic challenge in the market. For example, on
the issue of new airline licences, there are no defined criteria
for whether, how and when applications will be assessed;
the process seems to differ depending upon the applicant.
The arbitrary nature of the timing and process of regulatory
approvals makes planning virtually impossible for start-up
airlines. And the economic regulation of airports is still
subject to some uncertainty.
Indian aviation will require billions of dollars of investment
over the next decade. But serious investors will be deterred
until India is able to develop a more structured and
predictable framework.
Indias newly-elected government has come to power
with a burden of expectation that it will revive the economy.
The administration has the opportunity to take some quick
and decisive steps to assist the aviation industry. Foremost
amongst these is a reduction in sales tax on fuel. This will
inspire confidence and signal intent while solutions to deeper-
D rooted problems are developed. If the government is prepared
US CAPITAL INFUSIONS REQUIRED BY INDIAN CARRIERS
1.6lion OVER THE NEXT 12-18 MONTHS
to finally take aviation seriously, it has the ability to take
decisions that will transform the performance the sector to
bil the benefit of the entire Indian economy.

South Asia
INDIGO PROJECTED DELIVERY DATES FOR AIRCRAFT ON ORDER*
25
1. IndiGo 20
15
10
14
15
16
17
18
19
20
21
22
23
24
25
20
20
20
20
20
20
20
20
20
20
20
20
Commencing operations in 2006, IndiGo is a low-cost carrier based in
Gurgaon, India. The carrier, which is owned by Rahul Bhatias InterGlobe A320
Enterprises, operates an extensive domestic network and international *Excludes new aircraft that are coming from leasing companies
services to Bangkok, Dubai, Kathmandu, Muscat and Singapore.
INDIGO STAGE LENGTHS

INDIGO FLEET SUMMARY AS AT MAY-2014

1250
Airbus A320-200 78 0 16
Airbus A320-
0 0 150 1000
200NEO
Airbus A321-200 0 0 20 750
Total: 78 0 186
500
250
-250
0 1 2 3 4 5
Flight Time (Hours)
INDIGO TOP 10 INTERNATIONAL ROUTES BY SEATS

DEL - BKK 5,040 seats
DEL - KTM 2,520 seats
BKK - CCU 2,520 seats
BOM - MCT 2,520 seats
MAA - SIN 2,520 seats
DXB - BOM 2,520 seats
DXB - DEL 2,520 seats
DXB - TRV 2,520 seats
DXB - MAA 2,520 seats
DXB - COK 1,800 seats
0k 1k 2k 3k 4k 5k 6k 7k

South Asia
SPICEJET PROJECTED DELIVERY DATES FOR AIRCRAFT ON ORDER*
10
2. SpiceJet 8
0
SpiceJet is an Indian low cost carrier based at Indira Gandhi International
14
15
16
17
18
19
20
21
22
20
20
20
20
20
20
20
20
20
Airport, New Delhi. SpiceJet one of Indias largest airlines, serving domestic
destinations across India. The airline commenced international operations 737
in Oct-2010 and now provide services to Afghanistan, Maldives, Nepal, Oman, *Excludes new aircraft that are coming from leasing companies
Saudi Arabia, Sri Lanka and the UAE.
SPICEJET STAGE LENGTHS

SPICEJET FLEET SUMMARY AS AT MAY-2014
1000

Boeing 737-8 0 0 42 800
Boeing 737-800 34 1 12
Boeing 737-900ER 6 0 0 600
Bombardier DHC-
15 0 0
8Q-402(NG) 400
Total: 55 1 54
200
-200
0 1 2 3 4 5
Flight Time (Hours)
SPICEJET TOP 10 INTERNATIONAL ROUTES BY SEATS

DXB - DEL 2,688 seats
AMD - DXB 2,688 seats
DXB - COK 2,304 seats
PNQ - SHJ 1,536 seats
DEL - KBL 1,152 seats
AMD - MCT 1,152 seats
CMB - IXM 1,092 seats
CMB - MAA 1,092 seats
MLE - COK 1,092 seats
0k 1k 2k 3k 4k 5k 6k

South Asia
AIR INDIA PROJECTED DELIVERY DATES FOR AIRCRAFT ON ORDER*
Selected Airlines 5
3. Air India
4
0
Air India is the state-owned national carrier of India with its main hubs
14
15
16
17
18
20
20
20
20
20
at Delhi and Mumbai airports. It established an international LCC subsidiary,
Air India Express, in 2005 and merged with Indian Airlines in Aug-2007. Its 777 787
network covers domestic and regional destinations, as well as international *Excludes new aircraft that are coming from leasing companies
services to Asia, the Middle East, Europe, and North America.
AIR INDIA STAGE LENGTHS

AIR INDIA FLEET SUMMARY AS AT MAY-2014
1000

Airbus A319-100 21 1 0 800
Airbus A320-200 17 7 0
Airbus A321-200 20 0 0 600
Airbus A330-200 2 0 0
Boeing 747-400 5 0 0 400
Boeing 777-200LR 2 2 0
200
Boeing 777-300ER 12 0 3
Boeing 787-8 13 0 14
0
Total: 92 10 17
-200
0 5 10 15
Flight Time (Hours)
AIR INDIA TOP 10 INTERNATIONAL ROUTES BY SEATS

DEL - LHR 8,372 seats
DEL - ORD 4,788 seats
BOM - EWR 4,788 seats
DEL - JFK 4,788 seats
RUH - BOM 4,788 seats
CCJ - JED 4,230 seats
DEL - SIN 3,584 seats
DEL - FRA 3,584 seats
DEL - HKG 3,584 seats
0k 2k 4k 6k 8k 10k 12k

South Asia
JET AIRWAYS PROJECTED DELIVERY DATES FOR AIRCRAFT ON ORDER*
10
4. Jet Airways 8
0
Based in Mumbai, Jet Airways is one of the largest airlines in India with
14
15
16
17
18
20
20
20
20
20
hubs at Mumbai, Delhi, Chennai and Brussels airports. The carrier operates
an extensive domestic and regional network within the subcontinent as well A330 737 787
as services to Europe, the Middle East, Southeast Asia and North America. *Excludes new aircraft that are coming from leasing companies
JET AIRWAYS FLEET SUMMARY AS AT MAY-2014 JET AIRWAYS STAGE LENGTHS

SOURCE: CAPA FLEET DATABASE SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014
Airbus A330-200 2 0 5
Airbus A330-300 4 0 0 1250
ATR 72-212A(72-
13 0 0
1000
500)
ATR 72-212A(72-
1 0 0 750
600)
Boeing 737 MAX 0 0 50 500
Boeing 737-700 5 0 0
250
Boeing 737-800 54 0 6
Boeing 737-900 2 0 0 0
Boeing 737-900ER 2 0 0
-250
Boeing 777-300ER 5 0 0 0 2 4 6 8 10 12
Flight Time (Hours)
Boeing 787-9 0 0 10
Total: 88 0 71
JET AIRWAYS TOP 10 INTERNATIONAL ROUTES BY SEATS
BOM - LHR 8,736 seats
BOM - DXB 7,300 seats
BOM - BKK 4,368 seats
DEL - LHR 4,368 seats
BOM - KTM 4,128 seats
BOM - KWI 4,088 seats
BOM - AUH 4,088 seats
SIN - BOM 4,088 seats
SIN - MAA 4,088 seats
SIN - DEL 4,088 seats
0k 2k 4k 6k 8k 10k 12k

SOUTH PACIFIC analysis reports:
As many as 10 Southeast Asian LCCs are poised to enter Australia, further pressuring incumbents
The Qantas-Virgin Australia capacity/fare war is not over: WA decreases offset east coast growth
Qantas responds to deterioration: cuts 5,000 jobs & 50 aircraft but changes are overdue
Qantas pressing need to solve the Asian network dilemma, now its European restructure is in place
Qantas-Jetstar and SIA-Scoot dual-brand strategies challenged by SE Asia-Australia over-capacity
Virgin Australia: an important crossroad in our industrys history and 1H2014 loss as expected
Air New Zealand 2014 outlook: Long-haul expansion resumes as 787-9s and 777-300ERs are delivered
Air New Zealand enters its 75th year after posting largest profits and establishing growth platform

South
AUSTRALIA-NEW ZEALAND AVIATION effectively
embraces a single market. But the contrast between
performance of their respective airlines over the past year
could scarcely be starker.
Pacific
Qantas and Virgin Australia are headed for their worst
annual losses ever in the FY2014; yet Air New Zealand is on
track to make its best profit yet.
A common theme is, however, towards stronger and closer
international partnerships, often involving equity.
The coming year promises more of the same, with
TOP 10 AIRLINES WITHIN SOUTH PACIFIC the turbulence that has characterised the competitive
SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014 environment continuing to provide challenges to each of
them.
RANKING CARRIER NAME SEATS Air New Zealands reward for finding a better balance
1 Qantas Airways 674,590 was a record first half (six months to 31-Dec-2013) result of
NZD180 million (USD151 million) before tax, representing
2 Virgin Australia 489,263
a 7.7% margin, exiting from loss-making routes, higher
3 Jetstar Airways 325,431 trans-Tasman load factors than competitors, and a more
4 Air New Zealand 303,716 streamlined fleet. Air NZ increased profitability on flat
5 Tigerair Australia 90,360 revenue despite decreased capacity.
Unlike the much disputed Australian domestic market, Air
6 Regional Express 44,574 New Zealand thoroughly dominates its home territory, where
7 Air Niugini 44,540 it generates the great bulk of its revenue.
8 Air Tahiti 25,570 It also holds a net advantage on the very large but highly
competitive market between Australia-New Zealand, where
9 Fiji Airways 22,292
its lower cost base and higher average load factors position it
10 Airlines PNG 14,940 well.
At the same time, the carrier also enjoys a 25% equity
CAPACITY BY CARRIER TO/FROM/WITHIN SOUTH PACIFIC share in Virgin Australia, securing an indirect stake in the
much larger business market across the Tasman Sea. Air New
Qantas Airways
Zealand is projecting a full-year profit, to 30-Jun-2014, of
763,564
over NZD300 (USD254) million.
Virgin Australia 513,468 Alliances are proving critical to Air NZ, unsurprising for
Jetstar Airways 367,404 an end-of-line carrier, and have largely been enabled by the
New Zealand governments willingness to approve Air NZs
Air New Zealand 304,055
alliance applications. Its recently announced alliance with
Emirates 90,734 Singapore Airlines supports its economics to Singapore as
Tigerair Australia 84,960
well as onward connections to Europe and augurs well for an
emerging Asian strategy too.
Singapore Airlines 84,814
These partnerships and ultimately long-haul growth
Air Niugini 49,428 come after a period of not growing the network as Air NZ
optimised its long-haul network following losses associated
United Airlines 49,104
with the global financial crisis.
Other 589,739 Air NZ is planning an average 5% capacity growth per
0k 200k 400k 600k 800k 1,000k annum over the next five years, including an aggressive
8% in the near future. This hinges heavily on New Zealand
SOUTH PACIFIC TOP 10 AIRPORTS as a tourism destination, and a 6% visitor increase in 2013
is supportive of that objective. The listed airline remains
RANKING AIRPORT NAME SEATS 73% government owned, after renationalisation in 2001
designed to ensure the countrys tourism industry would be
1 Sydney Kingsford Smith Airport 736,254
effectively served. This reflects both the relative commercial
2 Melbourne Tullamarine Airport 623,636 unattractiveness to other airlines of long-haul operations to
3 Brisbane Airport 514,050 New Zealand, but also attractive corollary that the airline is
4 Auckland International Airport 309,116 often able to fly under the radar where other airlines are
unable to mount sustainable operations into the relatively
5 Perth Airport 244,619
small and price sensitive market.
6 Adelaide Airport 174,904 Although its domestic market looks like remaining largely
7 Christchurch International Airport 136,262 intact, there are some potential threats internationally on its
8 Wellington International Airport 134,480
9 Gold Coast Airport 116,390
10 Cairns Airport 101,738
SOUTH PACIFIC FLEET main non-stop route, to the US: United has announced a new
non-stop 787 service between Los Angeles-Melbourne, a
1200 market which Air NZ has exploited successfully via its home
Auckland base; and rumours continue that Qantas oneworld
1000 partner American will commence New Zealand operations.
878 There has been nothing under the radar about the
800 Australian market in recent times. A 46% increase in foreign
airline capacity over the past four years bears testimony to
600 that. It has been a very attractive market, with high levels
of outbound travel, something that has continued to push
400
Qantas international position into substantial losses.
The international market is not going to get any less
221 difficult; CAPA has identified as many as 10 new Asian
200
airlines that will be entering the market or adding extra
41
capacity over the next two years. These are mostly short-haul
0
operators, but they also include long-haul low-cost airlines
such as AirAsia X and its Indonesian identity, Indonesia
SOUTH PACIFIC FLEET BREAKDOWN FOR AIRCRAFT IN SERVICE AirAsia X. Although they are unlikely to attack long-haul
SOURCE: CAPA FLEET DATABASE | MAY-2014 markets like Europe, they will make one-stop access to a
burgeoning Asian market a highly attractive option to any
10.1% network that Qantas can develop.
But it was a surge of both domestic and international
13.0% 33.3% capacity that largely contributed to Qantas underlying
PBT loss of AUD252 (USD226) million in the first half,
traditionally the stronger period. With a political bunfight
continuing over whether or not to end the outdated
ownership and labour protection provisions of the 20 year old
13.4% Qantas Sale Act, management announced 5000 full-time jobs
were to be eliminated over the next three years and 50 aircraft
orders and existing fleet to be cut or deferred.
This is a larger restructure than previous momentous
30.2% changes, reflecting a situation where negative conditions are
not just heightened but, according to CEO Alan Joyce, the
Narrowbody Jet Turboprop Widebody Jet Small Commercial Turboprop
Regional Jet worst the company has seen in its history.
SOUTH PACIFIC CAPACITY SEATS SHARE BY ALLIANCE

As many as 10 new Asian airlines
will be entering the market or
3.7%
adding extra capacity over the next
17.2% two years.
The conditions have also galvanised Qantas to make
overdue changes. After bringing needed efficiency to its front
line employees, Qantas was left with a bloated back office.
48.8%
Overall, Qantas staff are paid considerably more than at
Virgin Australia but are less productive.
There are capacity adjustments and, for now at least, a single
route cancellation (Singapore-Perth) to the international
30.3% network; more is required, but while staff are being cut,
there needs to be greater synchrony with airline operations if
efficiencies are not to be further eroded. A380 orders will be
Unaligned oneworld Star Alliance SkyTeam
deferred again. Ironically they may well end up with partner
Emirates.
Likewise for Jetstars last three 787s that it will defer; the
LCC subsidiary is focusing on short-haul flying, wise as more
efficient long-haul LCC capacity ramps up.
Jetstar remains intact including growth at Jetstar Japan
and continuing to work to launch Jetstar Hong Kong, but
Singapore based Jetstar Asia will suspend growth for the
time being. The highly profitable Qantas Loyalty programme
also remains part of the group, overall smart moves that may
Pg 39 | CAPA World Aviation Yearbook 2014 not be welcome to unions (and some investors). Qantas will
SOUTH PACIFIC PROJECTED DELIVERY DATES FOR AIRCRAFT ON ORDER receive AUD112 million from an agreement with Brisbane
40
airport to sell and lease back its terminal, something that is
under consideration for Melbourne and Sydney too.
In Apr-2013, Qantass massive step towards rationalising its
30 international operations involved virtualising them through
an extensive partnership with former enemy Emirates; this
was a first step towards emulating the near-ideal virtual model
20
that Virgin Australia has developed through its equity and
operating partnerships with Air New Zealand, Etihad (20%)
and Singapore Airlines (20%), as well as a metal neutral JV
10
with Delta on American routes.
Meanwhile, at home, Virgin Australia has become not
0
just a virtual but a truly lethal competitor, eating away at the
larger carriers market share, attracting an increasing share of
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
corporate travellers and generally forcing a higher cost Qantas
72 DHC6 DHC8 A320 737 777 787
into a discount war that has sapped the previous profitability
of the domestic market.
SOUTH PACIFIC MOST POPULAR AIRCRAFT TYPES IN SERVICE With the purchase of 60% of Tigerair Australia (and a large
SOURCE: CAPA FLEET DATABASE | MAY-2014 part of the remainder owned by partner Singapore Airlines),
Virgin can now also lay claim in the domestic market to
19.4% a similar two-brand model to that of Qantas-Jetstar. The
resurgent Tigerair will ensure that leisure-oriented capacity
34.3% continues to increase significantly this year, while Virgin still
has more to say in the wider market share battle conversation.
The blame for Qantas woes are inevitably being laid
at the current managements door; but even if partially
14.1% justified, the main problem is the same one that plagues most
legacy airlines around the world, in this case compounded
by the end-of-the-line phenomenon that makes long-
haul international service less sustainable almost in direct
4.6% proportion to the rate at which liberalisation is occurring. It
4.8% 11.7% can also be argued that previous managements should have
5.0% taken bolder steps to cut unit costs. Whatever the cause, the
6.2%
simple fact is that Qantas must change radically if it is to
737 DHC8 A320 SAAB340 100 A330 72 Other survive as a viable full service airline.
The remainder of 2014 looks like more of the same. Qantas
will be in downsize mode, but forced at the same time to
LCC CAPACITY SHARE (% OF TOTAL SEATS) FOR WITHIN SOUTH PACIFIC: grow domestic capacity, so long as it continues to adhere to
2011 TO 2014* a strategy of maintaining its 65% share effectively meaning
*Year to Month indicated
that it must add two seats (or one ASK) for every one that
Virgin-Tigerair does. The capacity and therefore yield-
50 reducing battle appears likely to continue, now against the
background of a softening economy and slackening leisure
40 39.0% 39.4% demand. Temporarily at least Qantas has said it will not
37.4%
35.0% expand capacity in the Sep-2014 quarter, as national budget
30.2%
31.1% 31.5% concerns have greatly dampened consumer confidence. This
30 28.1%
leisure demand is likely although not certain - to pick
22.6% up once the initial shock passes through the system, but by
19.5%20.2%
20 signalling its intentions there may be at least a brief lull in
14.9%
expansion.
10
9.3% Virgin Australia, even with its strong equity backers (and
3.8%
debt guarantors), cannot look to continue being loss-making
forever although it has now made clear to Qantas that it
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Jan-
May
can no longer be bullied into submission, so long as Virgin
2014
The strategic bottom line for the

Australian and New Zealand
airlines alike is thus in establishing
deep and enduring airline
Pg 40 | CAPA World Aviation Yearbook 2014 partnerships.
has its big brothers standing behind it. There is a poker game
% INCREASE IN FOREIGN AIRLINE CAPACITY OVER THE being played out now, with hands greatly more equal than
46 PAST FOUR YEARS IN THE AUSTRALIAN MARKET previously. This may occasion a reshaping of strategies.
For Qantas, recreating the mythical level playing field with
Virgin now means removal of the restrictions in the Sale Act,
perhaps allowing it to establish a similar ownership structure
to Virgin Australias. This decision rests in the flaky hands of
politicians and even if the changes are made, they are unlikely
to make a major difference to Qantas until late in the year, at
the earliest. But it is a near certainty that the current media
noise will have been picked up at other airline managements;
it will not be surprising if Qantas becomes the target of some
interested buyers.
Air NZ remains committed to Virgin in the long term,
which must add pressure for Virgin to exit the red. The
CEOs of Air NZ and Singapore Airlines are taking a seat on
Virgins board, alongside Etihad. One outcome is that Air NZ
might be able to demonstrate the benefit of having exposure
to each part of the common market.
Aside from the perilous financial one, the strategic bottom
line for the Australian and New Zealand airlines alike is thus
in establishing deep and enduring airline partnerships, as
soundly and quickly as possible. Virgin Australia is furthest
along this route and is leveraging the benefits very effectively.
Always exciting and full of new surprises, the market is
unlikely to disappoint in 2014.
As noted above, there is also an ever present danger in the
Australian market of further entry by Asian LCCs such as
Lion Air. This has the potential to continue to encourage the
incumbents to cover as much of the field as possible, implying
that capacity growth must continue, even if it does endanger
profitability.

South Pacific
QANTAS AIRWAYS PROJECTED DELIVERY DATES FOR AIRCRAFT ON ORDER*
Selected Airlines 4
1. Qantas Airways
3
14
15
16
17
18
19
20
21
22
23
20
20
20
20
20
20
20
20
20
20
737
Qantas Airways is operated as part of the publicly listed Qantas Group. It *Excludes new aircraft that are coming from leasing companies
is the national airline of Australia with major hubs in Sydney and Melbourne
and secondary hubs in Perth and Brisbane. Using a large fleet of narrow
and wide-body Airbus, Boeing and Bombardier aircraft, Qantas operates QANTAS AIRWAYS STAGE LENGTHS
an extensive domestic and regional network within Australia as well as SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014
international services to New Zealand, North America, Asia, South Africa and
2500
Europe. Qantas is a founding member of the oneworld alliance.
2000
QANTAS AIRWAYS FLEET SUMMARY AS AT MAY-2014


1000
Airbus A320-200 0 7 0
Airbus A330-200 10 0 0
500
Airbus A330-300 10 0 0
Airbus A380-800 12 0 8
0
Boeing 737-400 0 5 0
Boeing 737-800 62 0 5 -500
0 5 10 15
Boeing 747-400ER 6 0 0
Boeing 767-300ER 13 3 0 QANTAS AIRWAYS TOP 10 INTERNATIONAL ROUTES BY SEATS
Total: 121 24 13
DXB - LHR 12,584 seats
LAX - SYD 11,802 seats
AKL - SYD 10,752 seats
SIN - SYD 8,766 seats
DXB - SYD 6,776 seats
MEL - DXB 6,776 seats
LAX - MEL 6,776 seats
AKL - MEL 6,720 seats
HKG - SYD 6,276 seats
NRT - SYD 5,026 seats
0k 2.5k 5k 7.5k 10k 12.5k 15k 17.5k

South Pacific
VIRGIN AUSTRALIA PROJECTED DELIVERY DATES FOR AIRCRAFT ON
ORDER*
14
2. Virgin Australia
12
10
14
15
16
17
18
19
20
21
20
20
20
20
20
20
20
20
Brisbane-based Virgin Australia is Australias second-largest airline and
one of the rare airlines successfully to have made a full transformation from 737
LCC to full service airline. Virgin Australia commenced operations in 2000 as *Excludes new aircraft that are coming from leasing companies
Virgin Blue, wholly owned by the Virgin Group, the countrys first surviving
true LCC, but has since moved away from that market. Under the leadership
of new CEO, John Borghetti, the airline rebranded in May-2011. Virgin Australia VIRGIN AUSTRALIA STAGE LENGTHS
now operates a full service model, targeting higher-yielding corporate traffic, SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014
while seeking to maintain its core leisure market share and low-cost base.
2000
1750
VIRGIN AUSTRALIA FLEET SUMMARY AS AT MAY-2014

Airbus A330-200 7 0 0
1000
Boeing 737-700 2 0 0
750
Boeing 737-8 0 0 32
Boeing 737-800 62 0 23 500
Boeing 777-300ER 5 0 0 250
Embraer
17 1 0 0
ERJ190-100IGW(AR)
Total: 93 1 55 -250
0 5 10 15
Flight Time (Hours)
VIRGIN AUSTRALIA TOP 10 INTERNATIONAL ROUTES BY SEATS

BNE - WLG 4,654 seats
BNE - AKL 4,654 seats
SYD - LAX 4,332 seats
BNE - DPS 3,580 seats
DPS - MEL 3,580 seats
PER - DPS 3,222 seats
SYD - DPS 3,222 seats
BNE - LAX 2,888 seats
SYD - NAN 2,864 seats
AKL - OOL 2,506 seats
0k 1k 2k 3k 4k 5k 6k

South Pacific
AIR NEW ZEALAND PROJECTED DELIVERY DATES FOR AIRCRAFT ON
ORDER*
3. Air New Zealand

8
0
The national carrier of New Zealand, Air New Zealand is based in Auckland
14
15
16
17
18
19
20
21
20
20
20
20
20
20
20
20
and uses a fleet of narrow and wide-body Airbus and Boeing aircraft. Air New
Zealand operates a domestic and regional network within New Zealand and A320 777 787
the Pacific and international services to Australia, Asia, North America and *Excludes new aircraft that are coming from leasing companies
Europe. Air New Zealand is member of the Star Alliance.
AIR NEW ZEALAND STAGE LENGTHS

AIR NEW ZEALAND FLEET SUMMARY AS AT MAY-2014
2000

Airbus A320-200 22 0 5
1500
Boeing 737-300 7 0 0
Boeing 747-400 2 0 0
1000
Boeing 767-300ER 5 0 0
Boeing 777-200ER 8 0 0
500
Boeing 777-300ER 5 0 2
Boeing 787-9 0 0 10
Total: 49 0 17 0
-500
0 5 10 15
Flight Time (Hours)
AIR NEW ZEALAND TOP 10 INTERNATIONAL ROUTES BY SEATS

AKL - SYD 12,580 seats
LAX - AKL 9,240 seats
AKL - MEL 7,726 seats
AKL - BNE 6,028 seats
SFO - AKL 4,706 seats
LAX - LHR 4,648 seats
AKL - HKG 4,256 seats
AKL - RAR 3,846 seats
AKL - NRT 3,664 seats
AKL - NAN 3,632 seats
0k 2.5k 5k 7.5k 10k 12.5k 15k 17.5k

NORTH ASIA analysis reports:
North Asian aviation 2014 outlook: cracks in the wall of inertia - but it is yet to fall
North Asias airlines add capacity in 2014 as underdogs play catch up and short haul focus increases
13 Chinese airlines could each have a fleet of over 100 aircraft by 2020
Chinas reforms match frugality with low-cost airline innovation as a new script unfolds
Chinese airlines pioneer new international strategies: JVs to overcome internal limitations
China Southern Airlines to move long-haul focus from growth to sustainability and partnerships
Cathay Pacific annual results: after a lost year, Cathay sees itself back on track - but to where?
Cathay Pacific and Singapore Airlines cautiously welcome new hubs as Qatar & Turkish enter the fray
New runways for Tokyo Haneda and Narita airports would allow Japan to catch up to other Asian hubs
All Nippon Airways expects stronger 2014 performance due to efficiency and more international flying
JAL 2013 profit dented by yen depreciation and retrofit costs, but still an enviable 13% margin
Skymark Airlines will need significant strategic changes to avoid heavy A380 operating losses
Japans expanding LCCs drive growth but need cultivating; Spring Airlines and AirAsia re-entry loom
Asiana Airlines losses continue in 1Q2014 as capacity growth drags down yields despite fuel savings
Korean Air returns to profit in 1Q2014 on the back of yield recovery and cost discipline
Jin Air may become a long-haul low cost operator in 2014/15 and take the lead in Koreas LCC market
TransAsia Airways, growing at 20%+, now needs to ensure sustainability among strong competition
TransAsia names LCC V Air and Wei Hang. Cuddly bear becomes the dual brands low price image
China Airlines and TransAsia to start LCC subsidiaries as low-cost carrier fever spreads to Taiwan

North Asia
NORTH ASIA IS HOME TO MANY OF THE WORLDS
MOST VISIBLE airlines based on size (China Southern),
market capitalisation (Air China), profitability ( Japan
Airlines) and prestige (Cathay Pacific).
The regions airlines face an encouraging 2014, and are
certainly likely to fare much better than European peers.
The singular uniting theme for long-haul North Asian full
TOP 10 AIRLINES WITHIN NORTH ASIA service carriers is the strong market to North America, where
corporate and premium travel is improving, while competitors
RANKING CARRIER NAME SEATS are fewer than on European routes.
China inevitably has become the cornerstone of the market
1 China Southern Airlines 1,847,660
and what happens in that massive economy will shape the
2 China Eastern Airlines 1,751,022 region both in terms of growth and in the reshaping of the
3 All Nippon Airways 1,282,288 airline industry.
4 Air China 1,251,122
Elsewhere the characterisation is more nuanced. Exchange
rates are sharply impacting Japan, where the yen is down
5 Japan Airlines 843,384 about 17%, while helping Chinese carriers with the
6 Hainan Airlines 635,514 appreciating yuan. Regional tensions continue to plague
7 Shenzhen Airlines 610,903 bilateral markets such as Japan-Korea and China-Japan.
In a region where LCC penetration is still very low (but
8 Xiamen Airlines 588,162
growing), there is increasing sensitivity about unprofitable
9 Sichuan Airlines 474,362 short-haul routes: Asiana (with a recently appointed CEO,
10 Shandong Airlines 430,218 formerly with subsidiary LCC Air Busan) will introduce a
new single-class configuration, while Taiwans China Airlines
and TransAsia plan new LCC subsidiaries, adding more dual-
CAPACITY BY CARRIER TO/FROM/WITHIN NORTH ASIA brand strategies to the region. Except in Japan, liberalisation
has occurred more slowly in the still-largely protectionist
China Southern Airlines 1,977,515 North Asia.
2014 will be a reflective, even possibly pivotal, year
China Eastern Airlines 1,792,228
for liberalisation within the region. Jetstar Hong Kong
Air China 1,409,056 continues to press for an operating licence while AirAsia is
All Nippon Airways 1,395,615
exploring Korea and again Japan for subsidiaries. Foreigners
fear Taiwans newfound pro-LCC attitude will embrace
Japan Airlines 976,020
only existing Taiwanese airlines subsidiaries. And China,
Hainan Airlines 631,316 concerned that airline growth may not reach previous
levels, has recently adopted a pro-LCC policy that supports
Korean Air 624,928
establishment of private low-cost operations, to speed things
Xiamen Airlines 607,516 along.
Shenzhen Airlines 554,957
In Northeast Asia many factors are taken for granted.
Economies are growing, despite occasional slowdowns. The
Other 8,006,897
middle class, and therefore travelling potential, continues to
0M 2M 4M 6M 8M 10M
increase exponentially. There are literally hundreds of millions
of Chinese achieving the economic ability and desire to
NORTH ASIA TOP 10 AIRPORTS travel abroad in waves never before experienced.
SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014 Thus a distinct, and relatively new, uniting factor is the
improving strength of the North American market. Demand,
RANKING AIRPORT NAME SEATS including from the corporate and premium sectors, is high.
1 Beijing Capital International Airport 1,809,010 Competitors are fewer than to Europe, and some of the
2 Tokyo Haneda Airport 1,721,660 biggest carriers benefit from two broad joint ventures, those
between ANA and United, as well as between JAL and
3 Guangzhou Baiyun Airport 1,090,674
American Airlines.
4 Shanghai Pudong Airport 987,739 Southeast Asian carriers are beyond the reach of profitable
5 Shanghai Hongqiao Airport 978,839 non-stop services to North America. Operating limitations
6 Kunming Airport 822,726
from the need for an extra stop as well as constrained bilateral
fifth freedom rights continue to limit Southeast Asian
7 Shenzhen Airport 821,250 capacity to North America. These features help immunise
8 Hong Kong International Airport 816,009 their northern neighbours from added competition.
9 Chengdu Airport 801,207 Southeast Asian carriers have a stronger presence in
the financially weaker long-haul markets of Europe, with
10 Xian Airport 763,179
increasing pressure from Gulf carriers and a generally
crowded marketplace; even Norwegian is entering with
its long-haul 787 operation. Meanwhile, North Asian
carriers are fortunate to enjoy closer alignment with a well-
Pg 46 | CAPA World Aviation Yearbook 2014 performing market. Additionally, Europe is open for many
NORTH ASIA FLEET within A330 range, making the market more accessible.
Despite existing over-capacity and yield pressure, nearly
5k every major carrier in the Northeast Asia-North America
market will grow capacity during 2014, many American
4k
Airlines, ANA, EVA Air at double-digit rates.
3,529 Every Northeast Asian carrier with widebody aircraft will
fly to North America, except domestic Japanese carriers Air
3k Do and Skymark, as well as regionally focused Hong Kong
Airlines, TransAsia and Mongolias MIAT. Skymark, which
suffered delays on its first A330s for domestic all-premium
2k
service, planned to have A380s for a New York JFK service
1,122 in late 2014, but interior problems have pushed this back to
1k 2015. Sichuan Airlines made North America (Vancouver) its
first long-haul destination. Xiamen Airlines may also follow
140 suit when its 787s are operating.
0k
The result is the addition of more than 60% new capacity
on China-US routes between Sep-2011 and Sep-2014, the
bulk of it coming from Chinese carriers, notably Air China
NORTH ASIA BREAKDOWN FOR AIRCRAFT IN SERVICE
SOURCE: CAPA FLEET DATABASE | MAY-2014 and China Eastern.
For the Northeast Asia region as a whole to the US,
2.9% 0.9% the increase over this period is a more modest, but still
4.9% significant, 28%, from 241,000 weekly seats to 310,000,
according to OAG data.
Europe-bound travel from China shows a relatively
substantial 51% increase over the 2011 to Sep-2014 period.
Much of the growth has come from Air China and KLM.
27.4% Europe-Japan growth has predictably been much more
limited, up only 17% over the three-year period to 69,000
seats weekly later this year again with KLM conspicuous
for its expansion.
But in short-haul, Northeast Asia lags in the liberalisation
63.9% that has characterised Southeast Asia in becoming such a
vibrant and dynamic market. This mainly impacts low-cost,
but also full service carriers: as a sign of the versatility and
experimentation in the south, the low-cost Lion Air Group
in 2013 launched hybrid full service carrier Malindo Airways
Narrowbody Jet Widebody Jet Regional Jet Turboprop in Malaysia. The LCC penetration for travel within Southeast
Small Commercial Turboprop Asia (58%) for the full year of 2013 was six times that for
travel within Northeast Asia (9%).
The advancement of LCCs in North Asia has been limited,
NORTH ASIA CAPACITY SEATS SHARE BY ALLIANCE to the benefit of incumbents, unlike Southeast Asia where
SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014 LCCs, with low unit cost and higher frequency, have made
many short-haul routes unprofitable for full service airlines.
11.3% That challenge has generally been met by full service carriers
crafting strategies to complement their existing business
with low-cost subsidiaries rather than see their markets
31.9% irreversibly lost.
Northeast Asia had one liberalisation push at the end
of the last decade as Japan undertook significant reforms
partially prompted by JALs bankruptcy, coinciding with
25.9% the long awaited Tokyo big bang, as both Narita and
Haneda added new capacity, in part to overcome sagging
tourist flows. One outcome was a long overdue change of
regulatory direction, allowing the launch of three LCCs, all
in partnership with an existing Japanese carrier: Jetstar Japan
with JAL, as well as AirAsia Japan (now Vanilla Air) and
Peach Aviation with ANA. Jetstar Japan and Peach had only
30.9% minority interests from the full service airline, together with
other third party investors.
SkyTeam Unaligned Star Alliance oneworld The granting of a licence to Chinese LCC Spring Airlines,
in partnership with Japanese companies to establish locally,
is further evidence of liberalisation progressing steadily,
as are the numerous open skies agreements and expanded
Pg 47 | CAPA World Aviation Yearbook 2014 bilaterals Japan has signed that benefit the country, adding
NORTH ASIA PROJECTED DELIVERY DATES FOR AIRCRAFT ON ORDER to short-haul competition and tourism. By contrast the
rest of Northeast Asia continues with conservative bilateral
300 strategies.
Jetstar Hong Kong could finally secure approval against
250
local opposition in 2014, after being announced in Mar-
2012. More speculative is AirAsia Korea, which has not yet
200
prevailed in that protected market. AirAsia plans to return to
150
Japan in 2015 with a base at Nagoya.
Taiwan has finally encouraged the development of local
100 LCCs about a dozen foreign LCCs already serve Taiwan
and in Dec-2013 TransAsia and then China Airlines
50 announced they would launch an LCC; in China Airlines
case, in partnership with Tigerair. The market remains
0
potentially lucrative to foreign LCC groups, but they are
14
15
16
17
18
19
20
21
22
23
24
sceptical whether Taiwans appearance of an open door to
20
20
20
20
20
20
20
20
20
20
20
A320 A330 A350 A380 737 747 777 787 C919
ARJ21 AN148 AN158 MRJ CRJ CSERIES YUN7 72 LCCs is applicable to those not partnering with a local
carrier.
Imbalances between attitude and actions are also a concern
NORTH ASIA MOST POPULAR AIRCRAFT TYPES IN SERVICE
SOURCE: CAPA FLEET DATABASE | MAY-2014 in China, which in late 2013 formally announced it must
encourage private capital in aviation as well as the fostering of
new carriers and in particular LCCs. But with airlines being
11.5%
seen by Beijing as serving national interests, and the general
2.3% can-do attitude of China, the country is unlikely to cede
3.7% 32.8% valuable territory to foreign companies looking to establish
local joint ventures. Government-led reforms in Chinas
4.8%
sector are, however, ushering in a number of worthwhile
changes and new carriers, both private and LCCs.
7.8% As is typically the case, there is much to be gained from
liberalisation, but the influence of incumbents and nationalist
sentiments still inhibit change.
Four more dual-brand LCC/full service strategies will
8.0% be introduced in 2014. Short-haul services are starting
to experience the impact of incremental LCC operations.
29.1%
Asiana is, for example, trialling an all-economy A320
configuration for thin short-haul services to Japan. This raises
737 A320 A330 777 747 767 E190 Other the proposition that if moving from a dual-brand to single-
class aircraft is good for a route, further concentration on
cost-cutting is even better. The answer for four carriers has
LCC CAPACITY SHARE (% OF TOTAL SEATS) FOR WITHIN NORTH ASIA: been to establish dual-brand strategies.
2011 TO 2014* China Eastern will have an LCC in the form of China
SOURCE: CAPA - CENTRE FOR AVIATION AND OAG United Airlines, Juneyao with Jiu Yuan, China Airlines with
Tigerair Taiwan and finally (for now) TransAsia with its own
14 planned LCC subsidiary. China Southern is also exploring a
LCC with subsid Chongqing Airlines.
12
11.2% This will represent nearly a doubling in the number of
10 9.5% 9.3%
dual-brand strategies in North Asia. Although prevalent
in Southeast Asia, in the north they have previously been
8 confined to Asiana with Air Busan, Korean Air with Jin Air,
6.8%
5.9%
ANA with Peach and (now) Vanilla Air, JAL with Jetstar
6
Japan and Hong Kong Airlines with HK Express.
4
3.9% The range of integration at these existing dual-brand
2.7% 2.7% strategies varies considerably. Peach is adamant ANA is an
2 1.8%
interested, not controlling, shareholder. JAL and Jetstar Japan
0.8%
0.4% 0.4% 0.3% 0.6% take a strategic approach where each gives and takes. HK
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Jan-
May
Express is largely maintaining independence.
2014 The small footprint of Air Busan and Jin Air shows
however that they are deployed only where necessary while
minimising full service cannibalisation even if they could
make more profit than their full service parents. This may
change if Air Busan does proceed with a planned IPO in
2015. Long haul operations from Korean LCCs will also add
to the dynamics of the market.
The new dual-brand strategies will likely be even more
Pg 48 | CAPA World Aviation Yearbook 2014 diverse: China Eastern and Juneyao are planning for their
CHINA TO UNITED STATES, SEATS PER WEEK, ONE WAY, 19-SEP-2011 TO LCC to operate well outside of their home base. Route
31-AUG-2014 overlap will be minimal. The LCCs will effectively be a new
type of carrier to put in a competitors backyard. The question
80k for the medium and long term is how much future overlap
is permitted and if the carriers can or need to adopt a more
comprehensive dual-brand strategy where the LCC flies
60k alongside most of the full service carriers routes.
LCC units in Taiwan will have to be more integrated, if
Seats per week
40k
only because geography confines them to a realistic operating
base of Taipei. China Airlines is mindful of the necessity of
short-haul connections for its long-haul network, but is also
20k well aware of many leisure point-to-point routes an LCC
could take over today. Segmentation will be challenging at
TransAsia, which operates only regional services and carries
0k
Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14
mainly point-to-point traffic. Its small size 11 jet aircraft
is a further challenge to have scale. There is no easy solution.
United Airlines Air China China Eastern Airlines American Airlines
Delta Air Lines China Southern Airlines Hainan Airlines Hawaiian Airlines Either overlap will be large or opportunities will be missed.
Spring Airlines Both could use their LCCs on leisure-oriented secondary
city pairings between Taiwan and mainland China, where
existing full service carriers are challenged for profitability.
CHINA TO WESTERN EUROPE, SEATS PER WEEK, ONE WAY, 19-SEP-2011 TO Such considerations make it easy for EVA Air to say an LCC
31-AUG-2014 is not appropriate and it will not pursue one.
SOURCE: CAPA - CENTRE FOR AVIATION AND OAG These will prove to be interesting case studies to the
dual-brand strategy textbook yet to be written. Further
125k
contributions will be made from additional dual-brand
strategies that are surely on their way, especially in China.
100k
Exchange rate changes close doors and open windows
but not at the same time. Exchange rates can be both friend
Seats per week
75k
and foe. The appreciating Chinese yuan has greatly benefited
Chinese airlines net profits, even making many overlook
50k
under-performing operating results. The declining Japanese
yen is so far a negative story for most carriers. Japan is an
25k
outbound market: 2012, the most recent full year for which
statistics are available, saw 8.4 million foreign visitors to
0k
Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 Japan, while 18.5 million Japanese travelled overseas.
Air China Lufthansa Air France China Eastern Airlines One argument is that if a weakening yen means fewer
China Southern Airlines KLM Royal Dutch Airlines Finnair British Airways
SWISS SAS Hainan Airlines Virgin Atlantic Airways Austrian Airlines
Japanese are travelling, more foreigners can visit Japan. That
Alitalia reflects the old adage of a door closing but window opening.
Unfortunately these do not happen simultaneously; there
is usually a lag. The yens depreciation is likely here for the
JAPAN TO UNITED STATES, SEATS PER WEEK, ONE WAY, 19-SEP-2011 TO medium to long term, but Japan has years in some cases
31-AUG-2014 possibly a decade ahead of it to recolour its reputation as an
SOURCE:CAPA - CENTRE FOR AVIATION AND OAG expensive destination. Further, even three years after the great
east Japan earthquake and resulting tsunami and nuclear
150k power plant issues, some still perceive Japan to be unsafe.
The pressure is greatest on Japanese carriers. The Japanese
125k
market has been strongly loyal to them, often paying fares
100k considerably even ridiculously higher than foreign peers
because ANA and JAL are Japanese and offer Japanese
Seats per week
75k service. Any growth in foreign visitors compensating for

declining Japanese tourists will not share the same affinity for
50k ANA and JAL.
ANA and JAL are further pinched as the depreciating yen
25k
arrives just as they seek a larger international profile; ANA
0k expects to have more international than domestic ASKs after
Jan-12 Jul-12 Jan-13 Jul-13 Jan-14 Jul-14 2015. Foreign carriers recognise the situation was too good
Delta Air Lines Japan Airlines United Airlines All Nippon Airways and enjoyed the benefits of the high yen while they could
American Airlines Hawaiian Airlines China Airlines Singapore Airlines
Korean Air Malaysia Airlines but now the inevitable reality returns.
ANA and JALs key long-haul market, to the US has, in
contrast to the China-US growth, been very muted, with only
around a 10% increase in the three years from 2011 to Sep-
2014. The pair of metal neutral JVs ANA-UA and JAL-AA
will almost certainly ensure that yields are protected in this
Pg 49 | CAPA World Aviation Yearbook 2014 way (and, hopefully, also financial returns). This gives comfort
as ANA and JAL plan more North American growth,
especially with the 787 to mid-size cities.
Within the region, tensions are confined but continue to
raise concerns. The China-Japan market suffered significant
decreases in Sep-2012 after Japan nationalised the disputed
islands of Senkaku/Diaoyu. 1Q2014 seat capacity is still
down 4.5% compared with pre-crisis levels in 2012.
But this does not reflect weaker load factors that airlines
have experienced. JNTO data shows Japanese passengers to
China declined 21% in the first 10 months of 2013. Oct-
2013 registered 8.6% growth compared with Oct-2012, but
this was after a 27% decrease in Oct-2012 compared with
Oct-2011.
Japan and Korea, meanwhile, have their own territorial
dispute over the Takeshima/Dokdo islands, with tensions
further inflamed by other factors, including the visit by
Japanese prime minister Shinzo Abe to the Yasukuni war
shrine. Seat capacity in 1Q2014 was down 4.3% compared
with pre-crisis 1Q2013 levels.
Japanese passengers to Korea were down 24% in the first
10 months of 2013 compared with 2012. Passenger numbers
were even down in Oct-2013, whereas Japanese passengers
to China in Oct-2013 recorded a slight year-on-year gain.
Korean passengers were up 27% in the first 10 months of
2013, but the growth was not enough to offset declines in
The outlook for 2014 is positive and fresh Japanese passengers.
opportunities remain. The total Japan-Korea market saw 4.7 million visitors in
the first 10 months of 2012 but only 4.4 million in the same
period in 2013. Depending how ongoing relations evolve
the Yasukuni shrine visit has flamed feelings and is still recent
the Japan-Korea market could rebound in 2014, much
faster than the Japan-China market.
Strong growth by Korean passengers has translated to some
better performance by JAL on Japan-Korea routes than on
Japan-China routes, but this is probably at the expense of
yield. Earlier in 2013, Asiana experienced deteriorating yields
to Japan. Other carriers in the market did not disclose yields
but likely had performances similar to Asianas.
These two political conflicts are the main ones involving
North Asian countries, but they are not alone. A smaller
conflict between China and the Philippines emerged in 2012
as well, and there are numerous historical differences that
could, very potentially, turn into another conflict. But most
countries seem eager to limit the extent of such issues, seeing
them as non-sequiturs that cause harm.
The outlook for 2014 is positive and fresh opportunities
remain. A level of robustness is necessary for an industry
characterised by volatility. Upsets in 2014 are, unfortunately,
likely. The crises of 2013, such as a bird flu scare in eastern
China and ongoing territorial issues, were handled well.
There are still lingering impacts but a way forward can be
seen. Unfortunately, it is now clouded for some by the
declining yen and aggressive new competitors, some in the
form of LCCs that carriers have previously not had much
direct exposure to.
The outlook for North Asian markets is positive in 2014,
yet it is not as strong as it could be. 2014 may prove another
year of missed opportunities. The stuttering spread of
liberalisation may not be sufficient to allow the potential to
be recognised. But the potential remains, implying that once
the chains are released, the pace of change will be that much
greater.

North Asia
CHINA SOUTHERN AIRLINES PROJECTED DELIVERY DATES FOR AIRCRAFT
ON ORDER*
25
1. China Southern 20
Airlines
15
10
14
15
16
17
18
19
20
20
20
20
20
20
A320 A330 737 777 787 C919
Established in 1988, China Southern Airlines is the largest airline in *Excludes new aircraft that are coming from leasing companies
China and has hubs in Guangzhou and Beijing. The carrier operates an
extensive domestic network within China, as well as international services
to the Middle East, Asia, Africa, Europe, North America and Australia. China CHINA SOUTHERN AIRLINES STAGE LENGTHS
Southern has been a member of the SkyTeam alliance since 2007. China SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014
Southern Cargo is the cargo subsidiary of China Southern Airlines. The cargo
4k
subsidiary joined the SkyTeam Cargo alliance in November 2010.
3k
CHINA SOUTHERN AIRLINES FLEET SUMMARY AS AT MAY-2014
AIRCRAFT IN SERVICE IN STORAGE ON ORDER 2k
Airbus A319-100 40 0 0
Airbus A320-200 111 0 8 1k
Airbus A321-200 65 0 13
Airbus A330-200 16 0 0
0k
Airbus A330-300E 10 0 11
Airbus A330-300X 3 0 0
-1k
Airbus A380-800 5 0 0 0 5 10 15
Flight Time (Hours)
Boeing 737-300 8 10 0
Boeing 737-700 33 0 0
Boeing 737-800 106 0 16 CHINA SOUTHERN AIRLINES TOP 10 INTERNATIONAL ROUTES BY SEATS
Boeing 747-400F 0 2 0
Boeing 757-200 14 0 0 ICN - DLC 7,518 seats
Boeing 777-200 4 0 0 CAN - BKK 7,485 seats
Boeing 777-200ER 4 0 0 CAN - SYD 7,434 seats
Boeing 777-300ER 1 0 9 CAN - LAX 7,084 seats
Boeing 777F 8 0 4 CAN - SGN 6,436 seats
Boeing 787-8 9 0 1 CAN - MEL 5,740 seats
Comac C919 0 0 5 CAN - ICN 5,012 seats
Embraer EMB-145LI 0 6 0 CAN - KIX 5,012 seats
Embraer ERJ190- ICN - SHE 4,904 seats

20 0 0
100LR
CAN - DXB 4,592 seats
Total: 457 18 67 0k 1k 2k 3k 4k 5k 6k 7k 8k 9k 10k

North Asia
CHINA EASTERN AIRLINES PROJECTED DELIVERY DATES FOR AIRCRAFT ON
ORDER*
2. China Eastern
30
Airlines
20
10
14
15
16
17
18
19
20
20
20
20
20
20
20
20
A320 A330 737 777 C919
Shanghai-based China Eastern Airlines is one of Chinas big three state- *Excludes new aircraft that are coming from leasing companies
owned airlines, with hubs at Shanghais Pudong and Hongqiao airports, as
well as Kunming Airport in southwest China. The airline operates a fleet of
Airbus, Boeing, Embraer and Bombardier aircraft to support an extensive CHINA EASTERN AIRLINES STAGE LENGTHS
network, serving over 350 domestic routes and 40 international destinations, SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014
including cities in Australia, Europe, Korea, Japan, North America and
5k
Southeast Asia. China Eastern merged with Shanghai Airlines in 2010 and
joined China Southern in the SkyTeam Alliance in Jun-2011.
4k
CHINA EASTERN AIRLINES FLEET SUMMARY AS AT MAY-2014


3k

Airbus A300B4- 2k
6 1 0
600R
Airbus A319-100 25 0 5 1k
Airbus A320-200 146 0 14

Airbus A321-200 34 0 11 0k
Airbus A330-200 24 0 9
Airbus A330-300E 6 0 3 -1k
0 5 10 15
Airbus A330-300X 6 0 0 Flight Time (Hours)
Airbus A340-300X 0 2 0
Airbus A340-600 5 0 0 CHINA EASTERN AIRLINES TOP 10 INTERNATIONAL ROUTES BY SEATS
Boeing 737-300 16 0 0
Boeing 737-700 42 0 7 HKG - PVG 17,580 seats
Boeing 737-800 34 0 51 PVG - SIN 11,386 seats
Boeing 777-300ER 0 0 20 PVG - ICN 10,746 seats
Bombardier CL-600-
0 5 0 PVG - KIX 9,490 seats
2B19(CRJ200ER)
PVG - NRT 8,688 seats
Comac C919 0 0 5
PVG - CJU 6,888 seats
Embraer EMB-145LI 6 4 0
PVG - TPE 6,864 seats
Total: 350 12 125
TAO - ICN 6,594 seats
PVG - NGO 6,594 seats
PVG - FUK 6,462 seats
0k 2.5k 5k 7.5k 10k 12.5k 15k 17.5k 20k 22.5k

North Asia
ALL NIPPON AIRWAYS PROJECTED DELIVERY DATES FOR AIRCRAFT ON
ORDER*
3. All Nippon
15
Airways
10
14
15
16
17
18
19
20
21
22
20
20
20
20
20
20
20
20
20
A320 737 777 787 MRJ
Founded in 1952, Tokyo-based All Nippon Airways (ANA) is a major *Excludes new aircraft that are coming from leasing companies
Japanese airline with hubs at Tokyo/Narita, Tokyo/Haneda, Kansai and Osaka
airports. ANA operates an extensive domestic and international network,
with scheduled service to over 50 domestic destinations and 25 international ALL NIPPON AIRWAYS STAGE LENGTHS
destinations across Europe, South Asia, East Asia and North America. In SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014
addition to its mainline operations, ANA also controls several subsidiary
4k
passenger carriers, including its regional airline, Air Nippon, charter carrier,
Air Japan, and LCC Air Next.
3k
ALL NIPPON AIRWAYS FLEET SUMMARY AS AT MAY-2014

SOURCE: CAPA FLEET DATABASE 2k

Airbus A320-200 15 1 3 1k
Airbus A320-
0 0 7
200NEO
0k
Boeing 737-500 0 1 0
Boeing 737-700 12 0 0 -1k
0 5 10 15
Flight Time (Hours)
Boeing 737-700ER 2 0 0
Boeing 737-800 25 0 6
Boeing 747-400D 0 4 0 ALL NIPPON AIRWAYS TOP 10 INTERNATIONAL ROUTES BY SEATS
Boeing 767-300 21 9 0
Boeing 767-300ER 26 0 0 HND - GMP 12,852 seats
Boeing
7 0 0 NRT - PVG 11,466 seats
767-300ER(BCF)
NRT - ORD 7,576 seats
Boeing 767-300F 3 0 0
NRT - JFK 7,390 seats
Boeing 777-200 16 0 0
HND - BKK 7,302 seats
Boeing 777-200ER 12 0 0
HND - FRA 6,804 seats
Boeing 777-300 7 0 0
HND - SIN 6,776 seats
Boeing 777-300ER 19 0 3
HND - TSA 6,748 seats
Boeing 787-8 27 0 9
NRT - PEK 6,720 seats
Boeing 787-9 0 0 30
NRT - HKG 6,720 seats
Mitsubishi MRJ90 0 0 15
0k 2.5k 5k 7.5k 10k 12.5k 15k 17.5k
Total: 192 15 96

North Asia
KOREAN AIR PROJECTED DELIVERY DATES FOR AIRCRAFT ON ORDER*
4. Korean Air
20
15
10
0
Established in 1962, Korean Air is the largest airline and flag carrier of
14
15
16
17
18
19
20
20
20
20
20
20
20
20
South Korea. From its base at Seoul Incheon International Airport, Korean Air
serves extensive domestic and international networks. The carriers cargo A330 A380 737 747 777 787 CSERIES
division, Korean Air Cargo, is the third largest cargo airline in the world *Excludes new aircraft that are coming from leasing companies
and it also wholly owns a low cost airline subsidiary, Jin Air. Korean Air is a
founding partner airline of the SkyTeam alliance.
KOREAN AIR STAGE LENGTHS
KOREAN AIR FLEET SUMMARY AS AT MAY-2014

1250
Airbus A300B4-
0 3 0
600R
1000
Airbus A330-200 3 0 0
Airbus A330-200(H- 750
5 0 0
GW)
Airbus A330-300 5 0 0 500
Airbus A330-300X 10 0 6
250
Airbus A380-800 8 0 2
Boeing 737-800 19 0 6 0
Boeing 737-900 16 0 0
-250
Boeing 737-900ER 6 0 0 0 5 10 15
Flight Time (Hours)
Boeing 747-400 14 0 0
Boeing 747-
0 2 0
400(BCF) KOREAN AIR TOP 10 INTERNATIONAL ROUTES BY SEATS
Boeing 747-400ERF 8 0 0
Boeing 747-400F 9 0 0 ICN - HKG 17,488 seats
Boeing 747-8 0 0 10 ICN - LAX 13,142 seats
Boeing 747-8F 5 0 2 ICN - BKK 12,951 seats
Boeing 777-200ER 18 0 0 HND - GMP 12,868 seats
Boeing 777-300 4 0 0 ICN - NRT 12,546 seats
Boeing 777-300ER 12 0 12 ICN - PVG 11,556 seats
Boeing 777F 4 0 1 ICN - FUK 10,396 seats
Boeing 787-8 0 0 1 ICN - JFK 9,772 seats
Boeing 787-9 0 0 10 ICN - MNL 9,464 seats
Bombardier CS300 0 0 10 ICN - KIX 9,256 seats
Total: 146 5 60 0k 2.5k 5k 7.5k 10k 12.5k 15k 17.5k 20k 22.5k

North Asia
JAPAN AIRLINES PROJECTED DELIVERY DATES FOR AIRCRAFT ON ORDER*
12
5. Japan Airlines 10
14
15
16
17
18
19
20
21
22
23
20
20
20
20
20
20
20
20
20
20
Based in Tokyo, Japan Airlines (JAL) is one of Japans two major flag A350 787
carriers with hubs at Tokyos Narita International Airport, Tokyo International *Excludes new aircraft that are coming from leasing companies
Airport, Nagoyas Chubu Centrair International Airport and Osakas Kansai
International Airport. Operating a large fleet of Boeing narrow and wide-
body aircraft, JAL has an extensive domestic network with regional and JAPAN AIRLINES STAGE LENGTHS
international services to Europe, Canada, the United States, South America SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014
and Australia. JAL is a member of the oneworld alliance. JAL exited
3000
court-administered restructuring in late Mar-2011, after repaying all of the
reorganisation debts owed in a one-time payment on 28-Mar-2011.
2500
JAPAN AIRLINES FLEET SUMMARY AS AT MAY-2014 2000

1500
Airbus A350-
0 0 13 1000
1000XWB
Airbus A350-
0 0 18 500
900XWB
Boeing 737-800 11 0 0 0
Boeing 767-300 17 0 0
-500
Boeing 767-300ER 32 0 0 0 5 10 15
Flight Time (Hours)
Boeing 777-200 15 0 0
Boeing 777-200ER 11 0 0
Boeing 777-300 7 0 0 JAPAN AIRLINES TOP 10 INTERNATIONAL ROUTES BY SEATS
Boeing 777-300ER 13 0 0
Boeing 787-8 15 0 10 GMP - HND 10,332 seats
Boeing 787-9 0 0 20 NRT - PVG 10,332 seats
Total: 121 0 61 NRT - HNL 10,032 seats
HND - SIN 8,022 seats
BKK - HND 8,022 seats
HND - TSA 6,888 seats
NRT - MNL 6,888 seats
JFK - NRT 6,244 seats
NRT - PEK 5,600 seats
KIX - TPE 5,600 seats
0k 2k 4k 6k 8k 10k 12k 14k

North Asia
CATHAY PACIFIC PROJECTED DELIVERY DATES FOR AIRCRAFT ON ORDER*
6. Cathay Pacific
15
10
0
As the national carrier of Hong Kong SAR and based at Hong Kong
14
15
16
17
18
19
20
21
22
23
24
20
20
20
20
20
20
20
20
20
20
20
International Airport, Cathay Pacific is majority-owned by logistics
corporation Swire Pacific with significant shareholdings from Air China A330 A350 747 777
parent CNAC. Using a fleet which includes widebody Boeing and Airbus *Excludes new aircraft that are coming from leasing companies
aircraft, Cathay Pacifics extensive network consists of services throughout
Asia, Europe, North America, Canada, Australia and New Zealand. Cathay
Pacific is a founding member of the oneworld alliance and wholly-owns CATHAY PACIFIC STAGE LENGTHS
short-haul operator Dragonair. SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014
400
CATHAY PACIFIC FLEET SUMMARY AS AT MAY-2014 350

300
250
Airbus A330-300 11 0 0
Airbus A330-300E 15 0 7 200
Airbus A330-300X 11 0 0 150
Airbus A340-300X 11 0 0
100
Airbus A350-
0 0 26
1000XWB 50
Airbus A350-
0 0 22 0
900XWB
-50
Boeing 747-400 11 4 0 0 5 10 15
Flight Time (Hours)
Boeing 747-
0 1 0
400(BCF)
Boeing 747-400ERF 6 0 0 CATHAY PACIFIC TOP 10 INTERNATIONAL ROUTES BY SEATS
Boeing 747-400F 3 3 0 SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014
Boeing 747-8F 13 0 1
HKG - TPE 73,205 seats
Boeing 777-200 5 0 0
HKG - SIN 36,000 seats
Boeing 777-300 12 0 0
HKG - BKK 32,209 seats
Boeing 777-300ER 39 0 14
HKG - ICN 24,330 seats
Boeing 777-9X 0 0 21
HKG - MNL 23,937 seats
Total: 137 8 91
HKG - NRT 18,785 seats
KIX - HKG 18,468 seats
HKG - LHR 18,112 seats
HKG - KUL 15,740 seats
HKG - SYD 13,988 seats
0k 10k 20k 30k 40k 50k 60k 70k 80k 90k

MIDDLE EAST analysis reports:
Arab Air Carriers show that not all are created equal, but the rest of the world can learn from them
Etihad Residence highlights the UAE airline ascension in first class travel, while others cut back
Dubai International Airport: The worlds biggest in 1Q2014, but runway works reduce full year 2014
Emirates increases competition with Etihad and Qatar as it adds Chicago to its US network
flydubai has its second consecutive annual profit as network continues to overlap with Emirates
Air Arabia lags flydubai in the battle for Middle East LCC supremacy, but opportunities abound
Qatar Airways all-business London service. An attempt more likely to succeed than others were
Saudi Arabia aviation: an evolving market is about to undergo another rapid transition in 2014

Middle
THE MIDDLE EAST CONTINUES TO DEFY global
trends, witnessing growth in demand and an expansion of
capacity at rates not seen in any other global market. Airlines
in the region will continue to outstrip global expansion in
East
passengers and capacity in 2014, cashing in on regional and
global economic growth, improving international passenger
traffic flows and increasing aircraft production. The main
battlefront will move to the US as protectionist reaction
grows.
At the forefront of the regions phenomenal success are the
TOP 10 AIRLINES WITHIN MIDDLE EAST
Gulf sixth-freedom carriers, chiefly Emirates, Etihad Airways
and Qatar Airways. All three continue to exploit their natural
RANKING CARRIER NAME SEATS geographic advantage, which puts more than two thirds of
1 Saudia 399,279 the worlds population within an eight-hour flight from
Dubai. Accompanied by supportive ownership and regulatory
2 Qatar Airways 160,436
regimes, they are growing local markets and applying new
3 Emirates 137,170 aircraft technology and service standards to generate global
4 Iraqi Airways 122,224 success.
5 flydubai 119,259 The past two years have been about much more than their
intrinsic strengths however. From being outsiders to the
6 flynas 95,700 European established airlines, all three were admitted if not
7 Gulf Air 89,408 welcomed with open arms into the inner sanctums of the
8 Iran Aseman Airlines 85,757 leaders of the global alliances, Star Alliance excepted. This has
shifted the course of alliance and partnership thinking, as well
9 Iran Air 72,681
as deepening their impact on global aviation.
10 Air Arabia 67,240 Even SkyTeam leader Air France, the most virulent
opponent of the Gulf airlines, was eased into an increasingly
CAPACITY BY CARRIER TO/FROM/WITHIN MIDDLE EAST cosy partnership with Etihad. Emirates meanwhile joined
with oneworlds Qantas also a former staunch critic and
Qatar actually moved into the oneworld alliance, once its
Emirates 966,302
competitors agreed to the compromise. Basically the position
Saudia 600,273 arrived at applied the fine principle of si non cecidit, iunge.
Qatar Airways 556,353
Between them the three handled approximately 70 million
passengers in 2013 and are targeting double-digit passenger
Etihad Airways 332,706
growth for 2014, as they continue to add aircraft and
flydubai 171,612 destinations. As their network power increases, each is now
targeting the Americas, as well as thickening routes in their
Air Arabia 156,784
longer standing markets in Africa, Asia and Europe.
Gulf Air 137,262 But there are differences that are much more than nuances,
Iraqi Airways 137,210
each pursuing quite different business strategies. Emirates,
the Middle Easts largest airline, favours organic growth for
flynas 135,324
its fleet and network, augmenting this with local partnerships,
Other 2,186,336 but only in codeshares.
0k 500k 1,000k 1,500k 2,000k 2,500k 3,000k Etihad Airways is building its unique and possibly
industry-altering equity alliance, which has now stretched
MIDDLE EAST TOP 10 AIRPORTS to seven airlines, with Alitalia also in the pipeline for 2014.
SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014 Even Malaysia Airlines has been rumoured as a potential
target for part acquisition. The carrier has created a massive
RANKING AIRPORT NAME SEATS virtual network and fleet, aligning its schedules, fleet planning
1 Dubai Intl Airport 471,488 and marketing (and even frequent flyer programmes) with
2 Riyadh King Khaled Intl Airport 344,894
partners to achieve mutually beneficial goals. Etihad will look
to continue to expand its portfolio of codeshare and equity
3 Jeddah King Abdulaziz Intl Airport 331,416 partners until revenue from such agreements reaches about
4 Doha Intl Airport 246,592 25% of total income.
5 Tehran Mehrabad Airport 212,910 Qatar Airways joined oneworld in late 2013, with strong
support from IAG/British Airways, the only one of the
6 Kuwait Intl Airport 171,812
Big Three to so far enter a global alliance. The carriers
7 Bahrain Intl Airport 160,567 membership in oneworld gives it access to more than 1000
8 Dammam King Fahd Intl Airport 137,446
9 Abu Dhabi Intl Airport 109,739
10 Amman Queen Alia Intl Airport 104,187
Despite the amount of capacity
arriving in the region, growth has
Pg 58 | CAPA World Aviation Yearbook 2014 not been haphazard.
MIDDLE EAST FLEET destinations and will funnel many oneworld passengers
through Qatar Airways Doha hub. Its presence is another
1500 example of how the Middle Easts airlines have been
increasingly drawn into the global alliance network.
1250 1,211 The Big Three carriers are not doing all of the Middle
Easts heavy lifting alone though. National airlines and
1000 956 smaller privately owned carriers are also expanding, if not
in quite the same spectacular fashion. These airlines, such
750 as Gulf Air and Oman Air, are covering the fast expanding
intra-Middle East and intra-Arabian markets, but they are
500
also expanding in the long-haul segment.
Carriers such as Middle East Airlines, Saudia and Royal
250
Jordanian Airlines are maintaining their anchor roles as
109 national airlines, but are also expanding and using their
0
alliance partnerships to generate traffic and revenue, the first
two in SkyTeam and Royal Jordanian in oneworld.
In addition to the full service airlines in the Middle East,
MIDDLE EAST FLEET BREAKDOWN FOR AIRCRAFT IN SERVICE the regions small low-cost carrier segment continues to
SOURCE: CAPA FLEET DATABASE | MAY-2014 stand out in terms of growth and also profits. Although the
sector remains under-developed by global standards, regional
1.6% LCCs are already evolving and hybridising, introducing
4.8% business-class cabins, new services and even taking on the
low-cost long-haul market for the first time.
9.2%
According to IATA, growth in passenger traffic for airlines
in the Middle East was 12.1% for 2013 better than double
the global average. Growth was strong in both business and
leisure travel to regions such as Europe. Meanwhile, the
overall growth in international passenger traffic returned to
48.0% its long-term historical trend above 5% as global economies
and business confidence continued to recover, oil prices eased
marginally and airlines conservatively added capacity.
Growth for Middle East carriers in 2013 reflected not only
36.4% the recovery in international markets, but also the strong
performance of lynchpin regional economies such as the
UAE and Saudi Arabia. With a young population, increasing
propensity to travel, ongoing regional liberalisation and
Widebody Jet Narrowbody Jet Regional Jet Turboprop expanding tourism opportunities, regional traffic growth is
Small Commercial Turboprop proving just as an important component of the Middle Easts
expansion as long-haul routes are.
Long-term expansion is clearly in the pipeline. Airlines in
MIDDLE EAST CAPACITY SEATS SHARE BY ALLIANCE the region have a remarkable 960 aircraft on order, including
more than 600 widebodies, equivalent to 25% of the global
8.1% backlog, or twice as many as on order in North America.
Aircraft order books are unsurprisingly dominated by
Emirates, Etihad and Qatar, with 615 mostly widebody
aircraft on order between them. Low-cost carriers account
14.9% for better than 140 of the 330 narrowbodies on order in the
region, indicating the segment will continue to expand in
importance.
Despite the amount of capacity arriving in the region,
growth has not been haphazard. Airlines in the Middle East
have generally matched capacity to demand. Regional ASKs
14.9% expanded 12.4% in 2013, marginally higher than RPKs, and
62.1%
load factors remained near all-time highs, at about 77%.
Regional yields remain below global averages, but consistent
profitability is emerging as a trend in the Middle East,
particularly as more privately owned airlines join the market.
Unaligned SkyTeam oneworld Star Alliance
Accompanying this, regional governments continue to
prioritise aviation, seeing the industry as a catalyst for local
development and diversification, delivering trade, tourism and
technological and economic growth.
Airline growth has also gone hand-in-hand with
infrastructure development in the region. Airport
Pg 59 | CAPA World Aviation Yearbook 2014 infrastructure investment in the GCC nations alone over
MIDDLE EAST PROJECTED DELIVERY DATES FOR AIRCRAFT ON ORDER the past 10 years has exceeded USD35 billion and this
investment only continues to grow to accommodate more
200 traffic. IATA estimates another USD40 billion is being
invested in aviation infrastructure by what it describes as
far sighted Gulf-region governments, which will allow
150
the airlines to sustain their double-digit traffic growth.
Infrastructure development is being concentrated at the
100
largest airports in the region, including Dubai, Doha, Jeddah,
Riyadh, Abu Dhabi, Muscat, Kuwait, Damman and Manama.
Dubai International is already on track to overtake London
50 Heathrow as the worlds largest airport for international
passenger traffic by 2016, even with the dilutionary effect
that the opening of the nearby Al-Maktoum International
0 Airport to passenger traffic late in 2013 will cause. Dubai
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
is undergoing an expansion that will see USD7.8 billion
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
CRJ 737 777 787 A320 A330 A350 A380 invested to increase its capacity from 60 million to 90
million passengers per annum by 2018. Meanwhile, London
Heathrow faces capacity constraints and a drawn-out
MIDDLE EAST MOST POPULAR AIRCRAFT TYPES IN SERVICE
Government controlled airports

25.4% 22.5%
have been less willing to move to
take advantage of non-aeronautical
sources of revenue, keeping fees and
charges above global averages.
3.9%
4.1%
20.2% commission on the future of its development, with final
recommendations not due until summer 2015.
5.8%
Despite the positives, invisible infrastructure and
8.1% regulatory barriers and inefficiency are hindering growth.
10.0% Not everything is smooth sailing for the airlines of the
A320 777 A330 737 A300 MD-80 A380 Other Gulf. While airport infrastructure has seen unmatched
levels of development (regional governments may indeed be
overinvesting in airport capacity), airspace congestion is a
LCC CAPACITY SHARE (% OF TOTAL SEATS) FOR WITHIN MIDDLE EAST: point of increasing concern. Airlines, airports, government
2011 TO 2014* and other stakeholders have been urging for years that action
*Year to Month indicated be taken to remedy bottlenecks that have started to emerge in
regional airspace, the invisible infrastructure.
20 Gulf-region ANSPs have already moved to introduce new
air corridors and are working to reduce restrictions on civil
15.9%15.8% aviation movement through military zones and introducing
15
13.3%
better techniques and technologies to improve the capacity
11.6% 11.3%
and quality of air transport management. This may not be
enough though, merely spreading the bottlenecks beyond
10
8.3%
the Gulf to neighbouring countries. More radical ideas, such
7.4% as the establishment of a pan-Middle East or pan-Arabian
5.6% air traffic control body similar to EUROCONTROL, have
5
3.5% already been proposed to ensure that airspace does not
1.9% throttle growth.
0.1%
0.9%
Also reining in growth potential is the heavy-handed
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Jan-
May
approach to regulation across most of the Middle East.
2014 A few markets such as the UAE, Kuwait and increasingly
Saudi Arabia and Jordan, are encouraging deregulation and
commercialisation, but overall Middle Eastern governments
exercise tight control on bilateral air traffic rights, capacity
allocation, airport tariffs and fares, seeking to protect usually
inefficient and unwieldy flag carriers.
The region has a higher than average degree of government
ownership of airports and airlines. The privatisation of several
major national airlines has been completed or is ongoing,
Pg 60 | CAPA World Aviation Yearbook 2014 but the processes have been long and drawn out, with
MIDDLE EAST AND GLOBAL INTERNATIONAL RPK GROWTH APR-2011 TO considerable social and political dissatisfaction associated
DEC-2013 with any restructuring or downsizing. Regional governments
SOURCE: CAPA CENTRE FOR AVIATION AND IATA continue to prop up loss making carriers, although subsidies
are slowly being reduced or phased out all together for many
25%
state-owned airlines.
20%
Government controlled airports have been less willing
to move to take advantage of non-aeronautical sources of
15% revenue, keeping fees and charges above global averages.
Unlike Europe or Asia, there are few secondary or privately
10% operated airports in the Middle East to provide alternatives
to the major hub airports.
5% With such high levels of growth, skills needs are escalating
dramatically and training too remains a concern, across the
0% industry as well as at public institutions, to ensure that the
region not only has the operational skills but also sufficient
11
12
1
11
Fe 1
12
2
12
2
2
13
3
13
13
3
3
r-1
t-1
c-1
r-1
t-1
c-1
r-1
t-1
c-1
n-
g-
g-
b-
n-
b-
n-
g-
Oc
Ap
De
Au
Ju
Oc
Oc
Ap
Ap
De
De
Au
Ju
Fe
Au
Ju
national oversight and safety regulatory competence to

Middle East International accompany its expansion.
These constraints have created particularly high barriers to
entry for new airlines and foreign investment in the Middle
MIDDLE EAST CARRIERS CAPACITY (ASKS) AND PASSENGER DEMAND East airline sector is almost non-existent. Privately owned
(RPKS) GROWTH MAY-2011 TO JAN-2014 LCCs have found the Middle East environment particularly
SOURCE: CAPA CENTRE FOR AVIATION AND IATA
difficult, with several failures in the past few years. Of the
25% four LCCs in the region, flydubai is state owned and Air
Arabia was established by the Sharjah government, although
20%
it has since moved to public ownership.
Further industry deregulation will continue, but the pace
15%
will be slow. The talk is not always matched by the walk.
10% Saudi Arabia, as an example, has approved two new airline
operating licences for this year, but is not yet willing to fully
5% open its domestic market to large-scale competition. Opening
up the market to deregulation is expected to produce vigorous
0% competition, resulting in expansion of the regional market,
with better and lower cost services.
1
1
11
Ja 1
12
Ma 2
2
2
12
2
13
Ma 3
3
3
13
3
14
y-1
l-1
v-1
r-1
y-1
l-1
v-1
r-1
y-1
l-1
v-1
p-
n-
p-
n-
n-
p-
Ju
The Middle Easts aviation transport market will continue

No
Ju
Ju
Ma
Se
Ma
Ma
No
No
Ja
Se
Se
Ja
ASKs RPKs to grow and to evolve, but increasingly the region is turning
into one of haves and have-nots. With massive investment
from interested governments, the region is assured a prime
position as a new centre of gravity for aviation. In the short
space of a decade, regional passenger traffic has more than
doubled, but power has been increasingly concentrated in
the hands of a few, fast growing carriers. The smaller airlines
of the region are adapting to the changing circumstances,
and there are signs of a new maturity emerging in regional
governments concerning their national airlines. The massive
subsidisation of loss-making state-owned airlines appears to
be drawing to a close, as the smaller national carriers privatise
or rationalise and restructure their operations.
The pace of deregulation remains slow and there is little
momentum to accelerate the change. Private carriers continue
to flourish in the limited spaces made available, but private
start-ups remain scarce in a region that should be welcoming
them.
The new global battlefront of the three major long-haul
Gulf carriers will move to the US in 2014. Now that much of
the venom has been removed from the attacks by European
airlines and replaced by partnerships, this year the heart
of the confrontation looks likely to migrate to the US. The
1% GROWTH IN PASSENGER TRAFFIC FOR AIRLINES IN While airport infrastructure has seen
12. THE MIDDLE EAST IN 2013 unmatched levels of development,
airspace congestion is a point of
Pg 61 | CAPA World Aviation Yearbook 2014 increasing concern.
GLOBAL WIDEBODY ORDERS BY REGION reaction of the major US airlines and the trade association
Airlines for America (A4A) to the Gulf airlines recent and
proposed increases in capacity and routes have been very
similar to those of the European carriers prior to the de facto
reconciliations of the past two years that is, protectionist,
accompanied by good doses of misleading information.
Delta in particular has adopted the crusade to resist further
incursions in every way possible.
Even though the US airlines are less impacted in terms of
hub challenges than their European counterparts, the steep
difference in international inflight standards of the US majors
as compared with Emirates, Etihad and Qatar, still makes the
threat to the status quo a real one.
The perceived threat is greatest where it raises the
competitive bar on North Atlantic routes, where the now-
powerful trio of antitrust immunised partnerships has
provided a platform for more rational competitive behaviour,
allowing at least a temporary profitability to emerge.
This is where Etihads initiatives in particular have drawn
the most ferocious fire. Spurious but no less ferocious
arguments against allowing preclearance in Abu Dhabi
(followed by Dubai) have been rejected by US authorities
(the risk was of diversion of Indian traffic via the Gulf, rather
than through the US carriers European partners hubs). But
the strongest opposition has been against initiatives to use
such liberal measures espoused in the first place by US
negotiators as third country codeshares and others.
That aside, there seems little reason why the expansion of
the Gulf carriers should slow in any way in 2014.

Middle East
SAUDIA PROJECTED DELIVERY DATES FOR AIRCRAFT ON ORDER*
Selected Airlines
12
10
1. Saudia 8
14
15
16
20
20
20
777 787
Based in Jeddah, Saudia is the national airline of Saudi Arabia and is
wholly owned by the Kingdom of Saudi Arabia. The airline operates a network *Excludes new aircraft that are coming from leasing companies
of domestic and regional services within Saudi Arabia and the Middle East as
well as Asia, Europe and North America from its main base at Jeddah-King
Abdulaziz International Airport. SAUDIA STAGE LENGTHS
Previously named Saudi Arabian Airlines, the carrier formally joined SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014
the SkyTeam alliance on 29-May-2012, becoming the alliances 16th global
2000
member and first member from the Middle East. Saudi Arabian also used the
occasion to re-brand, adopting its old name of Saudia.
Saudia has its own cargo division, Saudi Airlines Cargo, which services 1500
over 20 destinations with a dedicated cargo fleet.
1000
SAUDIA FLEET SUMMARY AS AT MAY-2014
500
Airbus A320-200 35 0 0
Airbus A321-200 15 0 0 0
Airbus A330-300 2 0 0
Airbus A330-300E 12 0 0 -500
0 5 10 15
Boeing 747-200F 0 1 0 Flight Time (Hours)
Boeing 747-300 0 8 0
Boeing 747-400 5 0 0
Boeing 747-8F 2 0 0 SAUDIA TOP 10 INTERNATIONAL ROUTES BY SEATS
Boeing 777-200ER 23 0 0
Boeing 777-300ER 12 0 8 JED - CAI 16,520 seats
Boeing 787-9 0 0 8 DXB - RUH 16,368 seats
Boeing/McDonnell JED - DXB

4 0 0 10,166 seats
Douglas MD-11F
CAI - RUH 6,444 seats
Embraer ERJ170-
15 0 0
100LR JED - CMN 5,782 seats
Total: 125 9 16 RUH - LHR 5,670 seats
RUH - MNL 5,629 seats
JED - CGK 5,301 seats
JED - LHR 5,214 seats
JED - KHI 5,130 seats
0k 2.5k 5k 7.5k 10k 12.5k 15k 17.5k 20k

Middle East
QATAR AIRWAYS PROJECTED DELIVERY DATES FOR AIRCRAFT ON ORDER*
Selected Airlines
60
50
2. Qatar Airways 40
30
20
10
14
15
16
17
18
19
20
21
22
20
20
20
20
20
20
20
20
20
Founded in 1993 and re-launched in 1997, Qatar Airways, based in Doha, A320 A330 A350 A380 777 787
is the national flag carrier, wholly owned by the Qatari government. Qatar
Airways is one of the Middle Easts big three network airlines, with *Excludes new aircraft that are coming from leasing companies
aggressive fleet and route network expansion plans. The carrier operates an
extensive network of regional services in Asia and the Middle East together
with international services to Australia, Europe, Africa and North America. QATAR AIRWAYS STAGE LENGTHS
Qatar Airways joined the oneworld global alliance on 30-Oct-2013. SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014
700
QATAR AIRWAYS FLEET SUMMARY AS AT MAY-2014 600

500

Airbus A319-100LR 2 0 0 400
Airbus A320-200 31 0 1
300
Airbus A320-
0 0 35
200NEO 200
Airbus A321-200 10 0 0
100
Airbus A330-200 16 0 0 0
Airbus A330-200F 3 0 5
-100
0 5 10 15
Airbus A330-300 13 0 0 Flight Time (Hours)
Airbus A340-600(H-
4 0 0
GW)
Airbus A350- QATAR AIRWAYS TOP 10 INTERNATIONAL ROUTES BY SEATS
0 0 37 SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014
1000XWB
Airbus A350-
0 0 43 DOH - LHR 20,797 seats
900XWB
DOH - DXB 20,679 seats
Airbus A380-800 0 0 10
DOH - KWI 19,080 seats
Boeing 777-200LR 9 0 0
Boeing 777-300ER 25 0 2 DOH - BKK 18,760 seats
Boeing 777F 6 0 2 DOH - BAH 15,156 seats
Boeing 787-8 13 0 17 DOH - CDG 13,258 seats
Total: 132 0 166 DOH - DMM 13,218 seats
DOH - AUH 12,622 seats
DOH - KUL 12,136 seats
DOH - MCT 11,010 seats
0k 5k 10k 15k 20k 25k

Middle East
EMIRATES PROJECTED DELIVERY DATES FOR AIRCRAFT ON ORDER*
Selected Airlines
60
50
3. Emirates 40
30
20
10
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
Founded in 1985, Emirates Airline is the national carrier of the emirate A350 A380 777
of Dubai, United Arab Emirates, and is based at Dubai International Airport.
The worlds largest airline as measured by international passengers carried, *Excludes new aircraft that are coming from leasing companies
Emirates is among the fastest-growing airlines in the world, pursuing an
aggressive expansion strategy across all continents. The airline operates
a large fleet of all-widebody Boeing and Airbus aircraft and is the largest EMIRATES STAGE LENGTHS
customer for the Airbus A380. Emirates provides an extensive network of SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014
services within the Middle East as well as to Africa, East Asia, South Asia,
500
Australasia, North America, Europe and South America. Emirates SkyCargo is
the air freight division of Emirates serving over 40 destinations.
400
EMIRATES FLEET SUMMARY AS AT MAY-2014


200
Airbus A330-200 21 0 0
Airbus A340-300X 4 0 0
100
Airbus A340-500 9 0 0
Airbus A350-
0 0 20 0
1000XWB
Airbus A350-
0 0 50 -100
900XWB 0 5 10 15
Flight Time (Hours)
Airbus A380-800 47 0 93
Boeing 777-200 3 0 0
Boeing 777-200ER 6 0 0 EMIRATES TOP 10 INTERNATIONAL ROUTES BY SEATS
Boeing 777-200LR 10 0 0
Boeing 777-300 12 0 0 DXB - LHR 35,210 seats
Boeing 777-300ER 94 0 58
DXB - BKK 26,306 seats
Boeing 777F 10 0 3
DXB - KWI 24,424 seats
Total: 216 0 224
DXB - BOM 22,026 seats
DXB - JED 21,126 seats
DXB - KHI 20,720 seats
DXB - CDG 18,524 seats
DXB - SIN 17,402 seats
DXB - LGW 17,402 seats
DXB - MAN 17,402 seats
0k 5k 10k 15k 20k 25k 30k 35k 40k 45k

Middle East
ETIHAD AIRWAYS PROJECTED DELIVERY DATES FOR AIRCRAFT ON ORDER*
Selected Airlines
35
30
4. Etihad Airways
25
20
15
10
14
15
16
17
18
19
20
21
22
23
24
25
20
20
20
20
20
20
20
20
20
20
20
20
Founded in 2003, Etihad Airways is the national carrier of the emirate of A320 A330 A350 A380 787
Abu Dhabi, United Arab Emirates, and is based at Abu Dhabi International
Airport. Operating a fleet of narrow and wide-body Airbus and Boeing *Excludes new aircraft that are coming from leasing companies
aircraft, Etihad operates a rapidly expanding network of services within
the Middle East and to Europe, Asia, North America, Canada and Australia.
In addition to its core activity of passenger transportation, Etihad earns ETIHAD AIRWAYS STAGE LENGTHS
significant revenue from its cargo operation, Etihad Crystal Cargo. Etihad SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014
Airways forms part of the Etihad Aviation Group.
250
200
ETIHAD AIRWAYS FLEET SUMMARY AS AT MAY-2014
150
Airbus A319-100 2 0 0
100
Airbus A320-200 22 0 3
50
Airbus A321-200 1 0 7
0
Airbus A330-200 22 0 1
Airbus A330-200F 3 0 2 -50
0 5 10 15
Airbus A330-300E 6 0 0 Flight Time (Hours)
Airbus A340-500 4 0 0
Airbus A340-600(HGW) 7 0 0
ETIHAD AIRWAYS TOP 10 INTERNATIONAL ROUTES BY SEATS
Airbus A350-1000XWB 0 0 22 SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014
Airbus A350-900XWB 0 0 40
AUH - BKK 15,498 seats
Airbus A380-800 0 0 10
AUH - LHR 14,008 seats
Boeing 777-200LR 4 0 0
AUH - JED 11,692 seats
Boeing 777-300ER 20 0 0
AUH - MNL 10,332 seats
Boeing 777-8X 0 0 8
AUH - JFK 10,332 seats
Boeing 777-9X 0 0 17
AUH - BAH 8,810 seats
Boeing 777F 3 0 1
AUH - CGK 8,764 seats
Boeing 787-10 0 0 30
AUH - MAN 8,540 seats
Boeing 787-9 0 0 41
8,176 seats
Total: 94 0 218 AUH - CDG
AUH - KWI 7,616 seats
0k 2.5k 5k 7.5k 10k 12.5k 15k 17.5k 20k

AFRICA analysis reports:
Africas ailing national airlines survive on USD2.5 billion of government subsidy. Not sound policy
EgyptAir plans further restructuring as losses mount. But outlook may brighten as Egypt stabilises
Kenya Airways to focus on Asia, with new Beijing and Shanghai routes, as 787s and more 777s arrive
Air Austral makes a remarkable return to profit, now with strong market positions on most routes
Air Seychelles returns to Paris while expanding partnerships and achieving second year of profits
South African Airways seeks UAE stop on Beijing & Mumbai with support from Emirates or Etihad
South African Airways premium economy product to be part of its long-haul restructuring: SAA Part 2
South African Airways pursues more growth in Africa including potential Ghana JV: SAA Part 3
Zambia provides fastjet with easier affiliate option than South Africa, Ghana, Kenya or Nigeria

Africa
IT IS TEMPTING TO REPEAT THE TRUISMS that
Africa continues to offer extraordinary potential upside.
With many of the worlds fastest growing economies and
weak surface transport infrastructure, aviation is an obvious
opportunity to support and accelerate that growth. Yet
unhelpful government interference and poor planning
continues to slow the promised expansion, leaving service
TOP 10 AIRLINES WITHIN AFRICA levels mostly weak and prices generally high.
There are however some bright spots as well as glimmers
RANKING CARRIER NAME SEATS of optimism: Ethiopian continues to expand with new fleet
1 South African Airways 218,946 generations, with five 787s in service, eight more to come
and talk of negotiations for another 10 777Xs; South African
2 Ethiopian Airlines 119,207 Airways is full of hope that its new turnaround plan will
3 Kenya Airways 97,882 succeed (although it has a long way to go); Kenya Airways,
4 Arik Air 91,678 accepting its first 787 in Apr-2014, is recovering well from
last years catastrophic fire at its Nairobi Airport hub; and
5 EgyptAir 91,496
would-be pan African LCC fastjet appears to be establishing
6 Comair (South Africa) 76,220 a viable foothold although it remains a fragile existence.
7 Royal Air Maroc 74,375 The other of the biggest four African flag carriers,
8 Mango 56,484 EgyptAir, is inevitably suffering the effects of continuing
uncertainty in its home country, although its governments
9 Aero 54,268
protective policies ensure that the carrier retains a two thirds
10 Air Algerie 52,431 market share at its Cairo Airport base, but overall Egyptian
airport traffic numbers were down 20% in Feb-2014, a
casualty of the tourism downturn and airlines cutting services.
CAPACITY BY CARRIER TO/FROM/WITHIN AFRICA Long-haul operations are being squeezed by new
SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014 services by the Gulf carriers, at least on eastbound and
some European routes, making life increasingly difficult for
EgyptAir 271,293
airlines drawing regional traffic through their home hubs
South African Airways 266,526 for long-haul onward carriage. As the Gulf carriers increase
Royal Air Maroc 194,383
the number of their spokes into their own hubs, airlines
such as Ethiopian and Kenya Airways lose their connectivity
Ethiopian Airlines 186,559
advantages.
Air Algerie 135,064 South African Airways (SAA) problems are different.
Kenya Airways 123,752
Unable to be a major collection hub due to its geographic
position, it has sought to develop a more regional presence.
British Airways 107,866
It has instead chosen to partner with Etihad. This strategy
Emirates 107,564 may well be adopted by others. Kenya Airways, part of the
SkyTeam alliance and a close partner of KLM, is increasingly
Air France 104,763
drawing closer to Etihad too. A reciprocal codeshare
Other 1,863,483 agreement giving access to each others networks and paving
0k 500k 1,000k 1,500k 2,000k 2,500k the way for greater collaboration and cost savings, was
established in Feb-2014.
Under its new strategic plan, adopted in late-2013,
AFRICA TOP 10 AIRPORTS SAA will increase operations within Africa while cutting
unprofitable long-haul routes and potentially handing more
RANKING AIRPORT NAME SEATS domestic routes to low-cost subsidiary Mango. SAA could
also start operating alongside new partner Etihad on the
1 Johannesburg Oliver R Tambo Intl Airport 374,012 Johannesburg-Abu Dhabi route, using the capacity freed
2 Cape Town International Airport 168,999 up from axing highly unprofitable long-haul services, as it
3 Lagos Murtala Muhammed Airport 144,767 increases its reliance on partnerships to provide a stronger
network beyond Africa.
4 Nairobi Jomo Kenyatta International Airport 120,113
However, the airlines new management is making further
5 Durban King Shaka Int'l Airport 107,221 noises to government about the need to address its weak
6 Cairo International Airport 102,352 balance sheet, a product of extended carelessness by its
7 Addis Ababa Bole Airport 100,279 shareholder, accompanied by constant meddling. Part of
the new programme provides for a ZAR5 billion (USD468
8 Abuja Nnamdi Azikiwe International Airport 96,554
million) government loan guarantee, but management says
9 Casablanca Mohammed V Airport 83,069
10 Accra Kotoka Airport 66,568
Long-haul operations are being
squeezed by new services by the Gulf
Pg 68 | CAPA World Aviation Yearbook 2014 carriers.
AFRICA FLEET the airline does not have a sufficient capital base to take on
new debt. According to CAPAs Fleet Database, SAA has a
1750
relatively modest 16 A320-200s on order.
The airlines new plan embraces principles, albeit tending
1500
towards motherhood, that would seem appropriate for others
1,282
1250
in the region to note. These include:
1000 Support the countrys development agenda, achieve

and maintain commercial sustainability and foster
750 performance excellence;
Create an integrated airline group, SAA Group
500
Holdings, incorporating SAA, Mango and SA Express
under a single holding company structure to improve
250 191
143 asset utilisation, operational efficiency and capital
0
allocation;
Implement a new network, alliance and fleet strategy to
develop SAA as a full-service premium carrier, Mango
as a LCC and SA Express as a regional feeder airline.
AFRICA BREAKDOWN FOR AIRCRAFT IN SERVICE This plan will allow the group to meet current and
projected demand, produce capacity through alliances
12.3% and implement integrated fleet planning;
Develop a Whole of State Aviation Framework to
ensure consolidated policy approach to aviation in South
Africa to maximise the growth potential of its airlines.
13.2% 37.6%
However, the major hurdle that most governments will

have to overcome is the clearly unsustainable economic
condition of many airlines, with few original ideas to extract
them from this condition.
17.1% Africas unenviable record of government interference
in the continents aviation system is demonstrated by the
19.8%
Narrowbody Jet Turboprop Small Commercial Turboprop Regional Jet
(Nigeria) is an airline graveyard due
Widebody Jet
to the governments misconceived
protectionist policies.
AFRICA CAPACITY SEATS SHARE BY ALLIANCE
fact that no less than nine carriers are surviving only with
8.5% significant support of their respective governments through
a variety of financial support mechanisms collectively worth
11.0% about USD2.5 billion.
In most cases this support serves only to distort any
prospect of a level playing field, preventing privately owned
carriers from competing effectively. Nigeria was even
planning to take this a stage further as state support of
private carriers is being undermined by a desire to relaunch
54.4% a government owned national flag carrier, Nigeria One. The
recent sacking, by President Goodluck Hanson, of high
profile Minister of Aviation Stella Oduah in Feb-2014,
26.2% followed by the replacement of all senior management of the
main civil aviation bodies in Mar-2014, hardly augurs well
for a good short-term outlook for that major countrys airline
system.
Unaligned Star Alliance SkyTeam oneworld Nigeria is a market that on economic and population
fundamentals should support a booming aviation industry.
But instead it is an airline graveyard due to the governments
misconceived protectionist policies. The combination of
interference and hostile attitudes towards private carriers
looks set to jeopardise prospects indefinitely.
In other cases, such as Uganda, new state-owned airlines
are planned to compete with successful privately owned
Pg 69 | CAPA World Aviation Yearbook 2014 operators in markets that often lack sufficient demand to
AFRICA PROJECTED DELIVERY DATES FOR AIRCRAFT ON ORDER support them both. Whatever the motives and many
of them are questionable at best the outcome is sadly
80
predictable.
While SAA has represented Africas most extensive
60
turnaround effort, Royal Air Maroc (RAM) at the opposite
end of the continent has been the most expensive to tax
payers in recent years. The flag carrier received a USD193
40 million bailout in 2011 and has access to a further USD900
million of on-going funding until 2016 as it repositions itself
to compete with an influx of LCC competition from Europe,
in particular Ryanair, resulting from Moroccos open skies
20
agreement with the EU aimed at boosting tourist arrivals by

0
1 million annually.
This conflict of objectives perhaps encapsulates many of the
14
15
16
17
18
19
20
21
20
20
20
20
20
20
20
20
DHC8 A320 A330 A350 A380 737 777 747 787 72 problems that African governments have in their attitudes
42 YUN7 DHC6 SSJ
towards maintaining a viable airline industry.
Despite this, private money has shown it is willing to
AFRICA MOST POPULAR AIRCRAFT TYPES IN SERVICE address some of the potential opportunities in the continent.
SOURCE: CAPA FLEET DATABASE | MAY-2014 Low-cost intra-African operations would be a massive boon
to regional economic development, but the one genuine
LCC model, Tanzania based fastjet, is running into severe
23.6% headwinds as it seeks to expand into other countries. Plans to
grow in Zambia and South Africa are under way and a recent
GBP1 million injection of funds offered some short-term
relief; it may need more if it is to weather the stiff opposition
45.7%
it is meeting in the air and on the ground, but the positive
news is that things are improving.
9.8%
4.9%
4.4%
4.1%
3.6% 4.0%
737 A320 DHC8 B1900 CARAVAN 72 CRJ Other
LCC CAPACITY SHARE (% OF TOTAL SEATS) FOR WITHIN AFRICA: 2011 TO

2014*
12 11.7% 11.8%
10.8%
10.3% 10.5%
9.9%
10
9.1%
8
6.9%
4
3.1% 3.3%
2.6%
2 1.7%
0.6%
0.3%
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Jan-
May
2014

Africa Selected Airlines
SOUTH AFRICAN AIRWAYS PROJECTED DELIVERY DATES FOR AIRCRAFT ON
ORDER*
1. South African
8
Airways
6
14
15
16
20
20
20
With hubs at Johannesburg and Cape Town, South African Airways (SAA) A320
is the flag carrier of South Africa and ranks among the largest airlines on
the African continent. The carrier is wholly-owned by the South African
government and operates an extensive network of services throughout
Africa and international services to North America, South America, Asia, SOUTH AFRICAN AIRWAYS STAGE LENGTHS
Australia and Europe. SAA became a member of the Star Alliance in 2006. SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014
1250
SOUTH AFRICAN AIRWAYS FLEET SUMMARY AS AT MAY-2014


Airbus A319-100 11 0 0 750
Airbus A320-200 6 0 16
500
Airbus A330-200 6 0 0
Airbus A340-200 0 1 0
250
Airbus A340-300E 6 0 0
Airbus A340-300X 2 0 0
0
Airbus A340-600 9 0 0
Boeing 737-300(F) 2 0 0
-250
0 5 10 15
Total: 54 1 16
SOUTH AFRICAN AIRWAYS TOP 10 INTERNATIONAL ROUTES BY SEATS

JNB - LUN 6,797 seats
JNB - LHR 6,720 seats
JNB - WDH 6,640 seats
JNB - HRE 6,268 seats
JNB - GBE 6,070 seats
JNB - GRU 5,832 seats
JNB - JFK 4,438 seats
JNB - FRA 4,438 seats
JNB - MUC 4,120 seats
JNB - LAD 4,120 seats
0k 1k 2k 3k 4k 5k 6k 7k 8k 9k

ETHIOPIAN AIRLINES PROJECTED DELIVERY DATES FOR AIRCRAFT ON
ORDER*
2. Ethiopian
16
14
Airlines
12
10
14
15
16
17
18
19
20
20
20
20
20
20
Addis Ababa-based Ethiopian Airlines is the national airline of Ethiopia. A350 737 777 787
One of the leading airlines on the African continent, Ethiopian Airlines serves
more than 60 international destinations across Africa, Asia, Europe, The
Middle East, and North America, as well as operating an extensive domestic
and international cargo network. Ethiopian Airlines became a member of Star ETHIOPIAN AIRLINES STAGE LENGTHS
Alliance in Dec-2011. SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014
250
ETHIOPIAN AIRLINES FLEET SUMMARY AS AT MAY-2014


Airbus A350- 150

0 0 12
900XWB
Boeing 737-400(F) 1 0 0 100
Boeing 737-700 7 0 0
Boeing 737-800 9 0 4 50
Boeing 757-200 3 3 0
0
Boeing
1 0 0
757-200(ETOPS)
Boeing 757-200(F) -50
1 0 0 0 5 10 15
(ETOPS) Flight Time (Hours)
Boeing 757-200PF 1 0 0
Boeing 767-200 0 1 0
ETHIOPIAN AIRLINES TOP 10 INTERNATIONAL ROUTES BY SEATS
Boeing 767-300ER 12 0 0 SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014
Boeing 777-200LR 6 0 0
ADD - DXB 10,458 seats
Boeing 777-300ER 2 0 2
ADD - CAN 5,586 seats
Boeing 777F 2 0 4
ADD - NBO 5,460 seats
Boeing 787-8 5 0 8
Boeing/McDonnell ADD - LOS 4,494 seats
1 0 0
Douglas MD-11(F) ADD - PEK 4,494 seats
Boeing/McDonnell
1 0 0 ADD - ABV 4,494 seats
Douglas MD-11ER(F)
JNB - ADD 4,494 seats
Bombardier DHC-
7 0 0
8Q-402(NG) ADD - EBB 4,165 seats
de Havilland of ADD - PVG 3,870 seats

3 0 0
Canada DHC-6-300
ADD - JRO 3,850 seats
Total: 62 4 30 0k 2k 4k 6k 8k 10k 12k 14k

KENYA AIRWAYS PROJECTED DELIVERY DATES FOR AIRCRAFT ON ORDER*
3. Kenya Airways
8
The Pride of Africa

2
Kenya Airways is the national airline of Kenya. The carrier is based at

Jomo Kenyatta International
The Pride Airport, Nairobi, and operates an extensive
of Africa
network of regional services within Kenya and Africa as well as flights 0
14
15
16
17
18
19
20
21
to Asia, the Middle East and Europe. Kenya Airways became a member of
20
20
20
20
20
20
20
20
SkyTeam in Jun-2010. 777 787
KENYA AIRWAYS FLEET SUMMARY AS AT MAY-2014 KENYA AIRWAYS STAGE LENGTHS

SOURCE: CAPA FLEET DATABASE SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014

600
Boeing 737-300 4 0 0
Boeing 737-300(F) 2 0 0 500
Boeing 737-700 4 0 0
400
Boeing 737-800 4 0 0
Boeing
1 0 0 300
737-800(ETOPS)
Boeing 767-300ER 6 0 0 200
Boeing 777-200ER 4 0 0
100
Boeing 777-300ER 2 0 1
Boeing 787-8 1 0 8
0
Embraer ERJ170-
3 0 0
100LR -100
0 2 4 6 8 10 12
Embraer ERJ170- Flight Time (Hours)
1 0 0
100STD
Embraer
14 1 0
ERJ190-100IGW(AR) KENYA AIRWAYS TOP 10 INTERNATIONAL ROUTES BY SEATS
Total: 62 4 30
NBO - DAR 6,720 seats
NBO - EBB 6,576 seats
NBO - JNB 6,568 seats
NBO - BOM 5,098 seats
NBO - AMS 4,508 seats
NBO - LHR 4,508 seats
NBO - KGL 3,144 seats
NBO - BJM 3,096 seats
NBO - BKK 3,024 seats
NBO - JUB 3,024 seats
0k 1k 2k 3k 4k 5k 6k 7k 8k 9k

EASTERN EUROPE analysis reports:
Wizz Air: London share listing planned after three-fold profit increase for the ultra-LCC
Russias low air travel penetration augurs well for the aviation market - and for Aeroflot
Aeroflot SWOT analysis. Russias national champion is well positioned to confront new challenges
Dobrolet nears take-off, but can Aeroflots LCC subsidiary achieve the required cost structure?
Massive capacity expansion is planned for Istanbul airports, with competing private interests
Turkish Airlines: capacity and network growth stay strong in 2013; profit growth is more challenging
Turkish Airlines suffers bigger 1Q losses, but continues to focus on profit, profit, profit
Pegasus Airlines must not let worsening quarterly profitability become a new trend
Ukraine International Airlines to cut fleet by 25% but network expansion continues

Eastern I
N GENERAL, EASTERN EUROPE TENDS TO
OUTPACE THE WESTERN PART OF the continent,
with Turkey and Russia preeminent among the major
leaders.
Europe
Turkey, home to high growth LCC Pegasus Airlines and
Europes fastest growing FSC Turkish Airlines, saw the
highest growth in the number of flights in 2013 and will be
looking to retain its quasi-Gulf expansion status in 2014.
Istanbul Ataturk was the only airport in Europes top 10 to
experience an increase in the number of flights. Both leading
TOP 10 AIRLINES WITHIN EASTERN EUROPE Turkish carriers plan to continue double digit growth in 2014.
SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014 The strength of demand in Eastern Europe is also evident
RANKING CARRIER NAME SEATS in Russia, for example, where IATA says domestic RPKs grew
by 9.6% in 2013. The relatively low penetration of air travel in
1 Turkish Airlines 656,451 Eastern and Central Europe, compared with Western Europe,
2 Aeroflot 490,281 should ensure that its growth remains superior to that of the
3 Pegasus Airlines 357,264 West for some time to come. For Russia this should be the
case as Aeroflots new LCC subsidiary enters the market and
4 S7 Airlines 211,097
the Government moves to reduce regulatory constraints on
5 Aegean Airlines 153,988 the sector.
6 UTair Aviation 128,738 Eurocontrol expects countries in Eastern Europe once
7 Transaero Airlines 123,937
again to enjoy the continents highest growth, led by Armenia
(12%), Moldova (11.0%), Georgia (9.6%), Belarus (7.0%),
8 Onur Air 79,098 Ukraine (6.4%) and Turkey (6.1%).
9 Ural Airlines 65,078
10 Atlasjet 59,334
CAPACITY BY CARRIER TO/FROM/WITHIN EASTERN EUROPE EASTERN EUROPE FLEET

SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014 SOURCE: CAPA FLEET DATABASE | WEEK STARTING 05-MAY-2014
Turkish Airlines 1,287,410 3000
Aeroflot 760,454
2500
2,355
Pegasus Airlines 465,777
Ryanair 367,038 2000
Wizz Air 329,040

1500
Lufthansa 281,960
S7 Airlines 255,531 1000

800
Transaero Airlines 223,485
500
Aegean Airlines 222,364
229
Other 3,411,046 0
0k 500k 1,000k 1,500k 2,000k 2,500k 3,000k 3,500k 4,000k 4,500k
EASTERN EUROPE BREAKDOWN FOR AIRCRAFT IN SERVICE

EASTERN EUROPE TOP 10 AIRPORTS SOURCE: CAPA FLEET DATABASE | WEEK STARTING 05-MAY-2014
RANKING AIRPORT NAME SEATS 4.0%

1 Istanbul Ataturk Airport 621,998 10.3%
2 Moscow Domodedovo Airport 425,683

3 Moscow Sheremetyevo Airport 419,887
4 Istanbul Sabiha Gokcen Airport 381,822 11.0%
5 Ankara Esenboga Airport 225,853

6 Athens International Airport 214,457
7 Moscow Vnukovo Airport 211,589 56.6%
8 Saint Petersburg Pulkovo Airport 197,542

9 Izmir Adnan Menderes Airport 164,819 18.0%
10 Antalya Airport 152,343
Narrowbody Jet Turboprop Regional Jet Widebody Jet

Pg 75 | CAPA World Aviation Yearbook 2014 Small Commercial Turboprop
EASTERN EUROPE CAPACITY SEATS SHARE BY ALLIANCE EASTERN EUROPE MOST POPULAR AIRCRAFT TYPES IN SERVICE
SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014 SOURCE: CAPA FLEET DATABASE | MAY-2014
6.7%
25.1%
14.8% 35.3%
48.7%
2.5% 21.9%
29.8% 3.2%
3.5%
3.9% 4.5%
Unaligned Star Alliance SkyTeam oneworld A320 737 AN24 AN26 TU154 CRJ A330 Other
EASTERN EUROPE PROJECTED DELIVERY DATES FOR AIRCRAFT ON LCC CAPACITY SHARE (% OF TOTAL SEATS) FOR WITHIN EASTERN
ORDER EUROPE: 2011 TO 2014*
SOURCE: CAPA FLEET DATABASE | MAY-2014 SOURCE: CAPA - CENTRE FOR AVIATION AND OAG
*Year to Month indicated; Excluding Russia
200 20
16.1%
150 15.3%
15
11.5%
100
10
7.1% 7.0%
6.7%
50
5.3% 5.1%
5
2.9% 2.8%
1.6%
0 0.9%
0.6%
14
15
16
17
18
19
20
21
22
23
24
25
0
20
20
20
20
20
20
20
20
20
20
20
20
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Jan-
A320 A330 A350 A380 CRJ CSERIES AN148 TU204 May
737 777 787 747 SSJ E190 E195 42 MS21 YUN7 2014

Eastern Europe
TURKISH AIRLINES PROJECTED DELIVERY DATES FOR AIRCRAFT ON
ORDER*
50
1. Turkish Airlines 40
30
20
10
Based at Istanbuls Ataturk International Airport, with secondary hubs at 0
14
15
16
17
18
19
20
21
Esenboga International Airport and Adnan Menderes International Airport,
20
20
20
20
20
20
20
20
Turkish Airlines (THY) is the national airline of Turkey and the countrys A320 A330 737 777
largest carrier. The carrier operates a network of domestic and regional

services throughout Turkey and the Middle East and international services
to Europe, Africa, North America, South America and Asia. Turkish Airlines
is a member of the Star Alliance. Turkish Cargo, the airlines freight division, TURKISH AIRLINES STAGE LENGTHS
serves over 30 destinations. SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014
2500
TURKISH AIRLINES FLEET SUMMARY AS AT MAY-2014


1500
Airbus A310-200 0 1 0
Airbus A310-300(F) 2 1 0
1000
Airbus A319-100 14 0 0
Airbus A320-200 30 0 0 500
Airbus A320-
0 0 4
200NEO 0
Airbus A321-200 43 0 25
Airbus A321-200NEO 0 0 60 -500
0 5 10 15 20
Airbus A330-200 11 0 0 Flight Time (Hours)
Airbus A330-200F 5 0 0
Airbus A330-300E 15 0 15 TURKISH AIRLINES TOP 10 INTERNATIONAL ROUTES BY SEATS
Airbus A340-300 4 0 0
Airbus A340-300X 3 0 0 IST - TLV 17,466 seats
Boeing 737-700 3 0 0 IST - LHR 15,642 seats
Boeing 737-8 0 0 40 IST - JFK 12,808 seats
Boeing 737-800 61 0 24 IST - CDG 12,612 seats
Boeing 737-9 0 0 10 IST - ECN 11,906 seats
Boeing 737-900ER 10 0 5 IST - FRA 11,838 seats
Boeing 777-300ER 15 0 20 IST - DUS 11,566 seats
Total: 216 2 203 IST - AMS 11,154 seats
IST - BRU 10,802 seats
IST - IKA 10,337 seats
0k 2.5k 5k 7.5k 10k 12.5k 15k 17.5k 20k 22.5k

Eastern Europe
AEROFLOT PROJECTED DELIVERY DATES FOR AIRCRAFT ON ORDER*
Selected Airlines
40
2. Aeroflot
30
20
10
14
15
16
17
18
19
20
20
20
20
20
20
20
20
Aeroflot is the national airline of Russia with its main base at Moscow A320 A350 737 777 787 SSJ
Sheremetyevo International Airport. Formerly wholly-state owned, the airline
has been partially privatised and continues to be the dominant carrier in the *Excludes new aircraft that are coming from leasing companies
country, accounting for about 20% of the Russian passenger market. The
Russian Government continues to hold 51.17% of the airlines equity. Legal
entities and individuals own the rest. Aeroflot operates an extensive network AEROFLOT STAGE LENGTHS
of domestic services within Russia, as well as international services to SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014
Europe, Asia, the Middle East and North America. Aeroflot is Russias largest
1500
air carrier; it accounts for over 42% of international scheduled and 13.7% of
domestic traffic in Russia (with its subsidiaries, around 20%). Aeroflot is a
1250
member of SkyTeam.
Aeroflot has been a leading voice behind consolidation in the Russian
1000
airline industry, and has supported the Governments plan to address the
fragmentation of the airline industry that has been a central feature since
750
the fall of the Soviet Union. Aeroflot has taken over management control
of four Russian airlines including Rossiya, Orenair, Vladivostok Avia and SAT
500
Airlines.
250
AEROFLOT FLEET SUMMARY AS AT MAY-2014


-250
Airbus A319-100 9 0 0 0 5 10
Flight Time (Hours)
Airbus A320-200 63 0 10
Airbus A321-200 26 0 4
Airbus A330-200 5 0 0
AEROFLOT TOP 10 INTERNATIONAL ROUTES BY SEATS
Airbus A330-300E 17 0 0
SVO - SIP 11,128 seats
Airbus A350-
0 0 8
800XWB SVO - CDG 10,500 seats
Airbus A350-
0 0 14 SVO - KBP 9,932 seats
900XWB
SVO - JFK 9,856 seats
Boeing 737-700 0 0 10
SVO - PEK 9,856 seats
Boeing 737-800 4 0 30
SVO - EVN 9,324 seats
Boeing 737-900ER 0 0 6
SVO - LHR 9,116 seats
Boeing 767-300ER 2 0 0
SVO - PVG 9,052 seats
Boeing 777-300ER 8 0 8
SVO - TLV 8,534 seats
Boeing 787-8 0 0 22
SVO - PRG 8,220 seats
Boeing/McDonnell
2 0 0 0k 2k 4k 6k 8k 10k 12k 14k
Douglas MD-11(F)
Ilyushin IL-96-300 0 6 0
Sukhoi RRJ-95B 11 3 12
Total: 147 9 124

Eastern Europe
PEGASUS AIRLINES PROJECTED DELIVERY DATES FOR AIRCRAFT ON
ORDER*
Selected Airlines
20
3. Pegasus Airlines
15
10
15
16
17
18
19
20
21
22
20
20
20
20
20
20
20
20
Istanbul-based Pegasus Airlines is a privately-owned low-cost airline A320 737
based at Istanbul Sabiha Gken International Airport. Using a fleet of
narrow-body Boeing 737 and A320 family aircraft, Pegasus operates an *Excludes new aircraft that are coming from leasing companies
extensive network of domestic and regional services throughout Turkey,
Europe and the Middle East.
PEGASUS AIRLINES STAGE LENGTHS
PEGASUS AIRLINES TFLEET SUMMARY AS AT MAY-2014 1250

Airbus A320-200 4 0 0
Airbus A320- 750

0 0 57
200NEO
Airbus A321-200NEO 0 0 18 500
Boeing 737-400 1 0 0
Boeing 737-800 47 0 2 250
Total: 52 0 77
0
-250
0 2 4 6
Flight Time (Hours)
PEGASUS AIRLINES TOP 10 INTERNATIONAL ROUTES BY SEATS

SAW - ECN 14,553 seats
SAW - TLV 7,938 seats
SAW - STN 5,670 seats
ESB - ECN 5,481 seats
SAW - ORY 5,292 seats
SAW - CGN 5,292 seats
SAW - AMS 5,292 seats
ECN - ADA 5,292 seats
SAW - CPH 4,140 seats
AYT - ECN 3,780 seats
0k 2.5k 5k 7.5k 10k 12.5k 15k 17.5k

WESTERN EUROPE analysis reports:
European airline restructuring: survival strategies for 2014
Airline consolidation: could Europe follow North Americas path to improved margins?
Ryanair reports a rare fall in annual profit, but aims for rapid rebound and goes in search of yield
EasyJet narrows its winter losses as it attracts more business travellers
Lufthansas 1Q2014 losses narrow, but its new CEO has a busy agenda, with helpful partners scarce
Lufthansa pilot strike highlights labour issues for Europes legacy carriers. Its time to wake up
British Airways adjusts its post-Qantas JSA Asian network and partnerships; Qatar Airways to be next
British Airways and bmi: two years after integration, BA has grown some services, reduced others
IAGs 1Q losses narrow. Discipline over capacity, capital and costs provides momentum
Virgin Atlantic Airways sees more than a little red, but things were much simpler 30 years ago
Iberia: six successive years of losses. Now will 2014 finally see a return to profit?
Air France-KLM: 1Q losses narrow, but needs more cargo restructuring. Will financial targets slip?
KLM looks to grow partnerships in Asia, which are becoming larger targets than North Americas
Transavia France to add destinations, but Air France-KLMs LCC vision remains relatively limited
SAS yield decline outweighs cost cuts to give wider losses in 2Q. Market share versus profitability?
Norwegian Air Shuttles record 1Q loss: fighter pilot, lawyer, novelist needed?

Western
EUROPE CONTINUES TO BE A DIVIDED
CONTINENT, with Western Europe being home to most
of the bigger airlines, while Eastern Europe enjoys the more
rapid growth in air traffic. On short/medium-haul, the LCC
Europe
business model continues to demonstrate its superiority over
FSCs, although the sharpness of the dividing lines has been
blurred by the Big Three legacy groups strategic moves in the
LCC segment.
Losing share within the continent, their long-haul
TOP 10 AIRLINES WITHIN WESTERN EUROPE profitability is underpinned by Atlantic joint ventures with
SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014 North American partners, a model now also pursued by
Virgin Atlantic. Gulf carrier competition continues to affect
RANKING CARRIER NAME SEATS their long-haul operations to the East, although a discernable
1 Ryanair 1,757,700 shift in attitudes may see further new developments in this
direction in 2014.
2 easyJet 1,310,448
Another, different, geographic dividing line defines the
3 Lufthansa 1,032,375 economic outlook too, as northern Europe shows signs of
4 SAS 690,747 improvement, prompting hopes of increased business and
5 Air France 686,860 discretionary travel.
Overall RPK growth for European airlines, legacy and
6 British Airways 618,974 LCC combined, slowed to 3.8% in 2013, from 5.3% in 2012,
7 airberlin 562,324 according to IATA. This is forecast to rise to 4.7% in 2014,
8 Norwegian Air Shuttle 562,096 which is below IATAs world RPK growth forecast of 6.0%
for 2014 (versus 5.2% achieved in 2013).
9 Vueling Airlines 471,636
The increased emphasis by full service carriers on long-
10 KLM Royal Dutch Airlines 402,543 haul relative to short-haul meant that growth in AEA
passenger-km, up 2.7%, was again higher than growth in
CAPACITY BY CARRIER TO/FROM/WITHIN WESTERN EUROPE AEA passenger numbers, up 1.6% in 2013. Indeed, long-
SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014 haul passenger numbers were up by 3.5%, while short-haul
traffic grew by only 1%. AEA average load factor reached an
Qantas Airways 763,564 all-time high of 79.9%, up 0.7 ppts against 2012. Members
Virgin Australia 513,468
of the European Low Fares Airline Association saw
passenger numbers grow by 6.3% (adjusting for changes in
Jetstar Airways 367,404
membership) and load factor gain 1.2 ppts to 83.5% in 2013
Air New Zealand 304,055 (12 months to Jun-2013).
Emirates 90,734
Statistics from Eurocontrol show that traffic picked up
during the course of the year, with 1Q2013 experiencing
Tigerair Australia 84,960 5% fewer flights than a year earlier, but equalling and then
Singapore Airlines 84,814 exceeding the prior year in the summer and autumn. Overall,
however, 2013 saw the total number of flights in European air
Air Niugini 49,428
space fall by 0.8% compared with 2012. By contrast with the
United Airlines 49,104 growth in most countries in Eastern Europe, Spain, Germany,
Other 589,739
Italy and France saw a significant reduction in the number of
0k 200k 400k 600k 800k 1,000k
flights in 2013.
Eurocontrol forecasts an increase of 1.4% in the number of
flights in 2014, reversing two years of declines, with Eastern
WESTERN EUROPE TOP 10 AIRPORTS Europe again outpacing the West. Growth in the number
of flights is forecast to be more muted in the major Western
RANKING AIRPORT NAME SEATS countries of France (2.0%), Germany, (1.7%), UK (1.3%),
Italy (0.9%) and Spain (a decline of 0.6%).
1 Barcelona El Prat Airport 809,602
In 2013, positive growth in passenger traffic in spite
2 London Heathrow Airport 808,704 of a fall in the number of flights was the result of higher
3 Frankfurt Airport 772,052 load factors and larger average numbers of seats per aircraft.
4 Amsterdam Airport Schiphol 757,709 If these trends continue in 2014, then passenger growth
should again outpace the growth in flights and should also
5 Adolfo Suarez Madrid Barajas Airport 741,534
be stronger than in 2013, as forecast by IATA. In addition,
6 Paris Charles De Gaulle Airport 731,579 growth in passenger traffic should reflect the relative strength
7 Rome Fiumicino Airport 656,188 of East versus West as identified by Eurocontrol.
8 Munich Airport 638,030
9 London Gatwick Airport 606,719
10 Oslo Airport 579,691
WESTERN EUROPE FLEET In the freight markets, Europes airlines carried 1.8% more
freight tonne-kms in 2013 than in 2012, according to IATA
6k data, reversing the 2.9% decline of 2012 and growing slightly
faster than the world average of 1.4% in 2013.
5k Europe played its part in making 2013 a record year for
4,350 aircraft orders, with a number of leading airline groups
4k placing long-awaited orders. Ryanair placed an order for
175 new Boeing 737-800s, easyJet for 135 Airbus A320s
3k (of which 100 were for the neo), Lufthansa for 100 A320
family aircraft and 59 widebodies (34 Boeing 777-9Xs and
2k
24 Airbus A350-900s). Even IAG, until recently very reticent
1,318 to add to the groups fleet, committed to 98 firm orders (30
1k
A320 and 32 A320neos for Vueling, 18 converted Boeing
787 options and 18 A350s for BA) and a further 158 options
210
0k
on Airbus narrowbodies.
Europes fastest growing FSC, Turkish Airlines, placed
orders in 2013 for up to 117 Airbus narrowbodies (including
35 options over A321neo aircraft) and up to 95 Boeing
WESTERN EUROPE BREAKDOWN FOR AIRCRAFT IN SERVICE narrowbodies (including 25 options over 737 MAX8s). It
aims to grow its fleet to 436 aircraft in 2021 from 232 at
the end of 2013, with most of the planned growth coming
3.3% from the short/medium-haul fleet. A significant order for
10.4% widebodies is expected, but not in 2014 as THY continues
to focus primarily on the more than 40% of worldwide
international traffic that is within narrowbody range of its
Istanbul hub.
10.6%
The LCCs faster growth relative to the FSCs looks set to
continue in 2014. Ryanair will take delivery of the first of its
175 new aircraft in Sep-2014 and plans seat growth of about
3% this year, slightly slower than the 5% planned by easyJet.
55.8% While this planned growth by the big two European LCCs
is in a similar range to that envisioned by some of the leading
19.8% FSCs, the likes of Norwegian Air Shuttle, Vueling, Wizz Air
and Pegasus are seeking double digit growth. Turkish Airlines
remains the notable exception to the generalisation that FSC
growth is relatively slow, as it continues to pursue LCC-like
Narrowbody Jet Widebody Jet Turboprop Regional Jet double digit capacity growth.
Small Commercial Turboprop Ryanair will have additional reasons to regard 2014 as an
important year, during which it will take its first delivery
under the new Boeing order, and decide whether or not to
WESTERN EUROPE CAPACITY SEATS SHARE BY ALLIANCE press the button on an anticipated 737MAX order. For years
the icon for believers in the purist LCC model, Ryanair
will be a somewhat changed beast by the end of the year.
14.6%
Allocated seating; a new user-friendly website; a less penal
approach to passengers who need to check in bags or reprint
their boarding pass at the airport; new distribution channels
including a dedicated mobile app and GDS partners; and a
greater presence in primary airports all of these should be
14.7% in place in the coming months.
47.3%
For Norwegian, 2014 will be the first full calendar year of
long-haul operations and a test of whether its long-haul low-
cost model can become firmly established, particularly on the
North Atlantic as it launches new US routes from London
Gatwick this summer. It will have 12 out of its 14 long-haul
routes operating to the US.
23.3% Norwegians long-haul adventure is just one example
of how the business models of Europes LCCs and FSCs
Unaligned Star Alliance oneworld SkyTeam are continuing to move towards common ground in 2014.
Vueling has long been known for additional product features
and easyJets push to attract business passengers is now three
or four years old.
Moreover, the Big Three legacy flag carrier groups will
further evolve their LCC subsidiaries. Air France-KLMs
Pg 82 | CAPA World Aviation Yearbook 2014 Transavia France subsidiary is to add new routes and aircraft;
WESTERN EUROPE PROJECTED DELIVERY DATES FOR AIRCRAFT ON Lufthansas Germanwings will add Duesseldorf to the list
ORDER of German airports converted to its brand from the parent
company in point to point non-hub flying; and IAG will
250 experience its first full year of owning Vueling, which will
open bases at Rome Fiumicino, Palermo and Brussels on a
200 stand-alone basis.
Russias national carrier, Aeroflot, is to join the Big
150 Three in establishing a LCC subsidiary with the launch
of Dobrolet. Although there are currently no domestic
100
LCCs in Russia, and LCCs account for only 4% of seats
on international routes to/from the country, Russia looks
50
set to be a growth market for LCCs, with flydubai, easyJet
and Wizz Air already operating there and Ryanair having
0
obtained rights.
Although Europes airlines are generally on an improving
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
A320 A330 A350 A380 72 777 747 737 787 E175 trend in terms of financial results, this hides wide disparities
CRJ CSERIES
in margins and balance sheet strength. Almost every FSC
in the region is in the middle of an on-going restructuring
programme to reduce their cost base. In addition, some are
WESTERN EUROPE MOST POPULAR AIRCRAFT TYPES IN SERVICE using their geographical location to pursue a niche network
SOURCE: CAPA FLEET DATABASE | MAY-2014 strategy, for example Finnair to Asia, TAP Portugal and Air
Europa to Latin America and Icelandair to North America.
The Lufthansa Group, Air France-KLM and IAGs Iberia
29.4% are notable examples of those that are battling to secure a
30.7%
more stable platform for future profitability.
For airlines such as SAS, Alitalia, LOT Polish Airlines,
Virgin Atlantic and flybe, the restructuring battle is still (to a
greater or lesser degree) one of survival; profit improvement
measures may not be enough. SAS has made progress
with its cost reduction, but clearly feels that an additional
3.1%
liquidity cushion is necessary, suggesting that its restructuring
programme may not deliver fully on its targets.
3.1%
Virgin Atlantics future looks more secure now that it is
4.0% developing a joint venture on the Atlantic with its 49% owner
4.0% 21.3% Delta. However, to date, Delta has not provided fresh funds
4.5% and its restructuring programme remains very important to
restoring profits and shoring up its balance sheet.
A320 737 A330 777 747 DHC8 A340 Other
Gulf-based Etihad has begun to play an increasingly
important role in Europe now. Alitalia now looks set to
receive an investment from Etihad, which has said that it is in
LCC CAPACITY SHARE (% OF TOTAL SEATS) FOR WITHIN WESTERN the final stages of due diligence.
EUROPE: 2011 TO 2014* Other European carriers airberlin, Darwin Airline
SOURCE: CAPA - CENTRE FOR AVIATION AND OAG (now Etihad Regional) and Air Serbia have already
received investment from Etihad, whose Equity Alliance,
50 supplemented by bilateral codeshares, continues to extend the
Abu Dhabi carriers reach into Europe and beyond. (Etihad
40 38.3% 38.5% 37.8%38.3%
also has a stake in Aer Lingus, but the Irish carrier did not
37.1%
33.8%
receive new funds, nor was it in financial distress.)
32.9%
29.6%
2013 saw significant shifts in the attitudes of the major
30
24.6%
European legacy carriers towards their competitors from the
21.6% Gulf, as well as some changes in the strategic stance of the
20 19.1%
Gulf carriers towards global partnerships. Qatar Airways
15.0%
joined oneworld (sponsored by British Airways) and Air
10 9.1% France-KLM started to codeshare with Etihad.
5.4% Lufthansa and Emirates, who entered into a JV
agreement with Qantas, both hinted that they may be
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Jan-
May
open to some form of partnership with one another in the
2014 future. Lufthansa remains the only one of the Big Three in
Europe not to have embraced one of the Gulf Three carriers;
meanwhile pressure to address its strategic options towards
the Middle East and Asia Pacific is growing following the
end of Lufthansas codeshare with Star Alliance partner
Turkish Airlines.
Pg 83 | CAPA World Aviation Yearbook 2014 The AEAs last estimate for its members aggregate
Europe remains the least profitable EBIT figure was close to break-even in 2013. For Europe
as a whole, IATA predicts a net margin of 1.3% for 2014,
of the worlds major aviation compared with 0.2% in 2013. This includes the LCCs, who
regions. are not members of AEA, and who look set to outpace the
legacy carriers on both traffic growth and profits.
Nevertheless, even with the contribution of the LCCs to
regional profitability, Europe remains the least profitable of
the worlds major aviation regions (among all the regions,
only Africa has lower margins than Europe).
For many of Europes legacy carriers, 2014 could be the
year of reckoning for their restructuring programmes, either
providing the much needed platform for future financial
health, or leaving little alternative to closure or seeking
acquisition.
Almost every FSC in the region is in the middle of an on-

going restructuring programme to reduce their cost base.

Western Europe
RYANAIR PROJECTED DELIVERY DATES FOR AIRCRAFT ON ORDER*
1. Ryanair
60
40
20
0
Ryanair is Europes largest airline, the largest low-cost carrier, and one of
14
15
16
17
18
19
20
20
20
20
20
20
the worlds largest airlines as measured by international passengers carried.
Ryanair has its largest base at London Stansted Airport, and second-largest 737
base at Dublin Airport. Ryanair currently operates a network covering *Excludes new aircraft that are coming from leasing companies
over 40 bases and 1,100 routes (with over 1,300 daily departures) across 26
countries, connecting some 155 destinations. Ryanair operates a fleet of over
250 B737-800 aircraft, with a large order backlog and employs more than RYANAIR STAGE LENGTHS
8,000 people. SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014
4000
RYANAIR FLEET SUMMARY AS AT MAY-2014 3500

3000

2500
Boeing 737-800 297 0 180
2000
Total: 297 0 180
1500
1000
500
-500
0 2 4 6
Flight Time (Hours)
RYANAIR TOP 10 INTERNATIONAL ROUTES BY SEATS

STN - DUB 20,790 seats
DUB - LGW 11,718 seats
DUB - MAN 11,340 seats
STN - CIA 10,962 seats
DUB - BHX 10,584 seats
STN - BCN 10,584 seats
STN - MAD 10,584 seats
STN - BGY 10,584 seats
DUB - EDI 9,450 seats
DUB - LPL 9,072 seats
0k 5k 10k 15k 20k 25k

Western Europe
EASYJET PROJECTED DELIVERY DATES FOR AIRCRAFT ON ORDER*
25
2. easyJet 20
15
10
0
Based at London Luton Airport, with its busiest base at London Gatwick
14
15
16
17
18
19
20
21
22
20
20
20
20
20
20
20
20
20
Airport, easyJet was founded by Sir Stelios Haji-Ioannou and is listed on the
London Stock Exchange. The carrier has experienced rapid growth since its A320
establishment in 1995, having expanded due to a combination of acquisitions *Excludes new aircraft that are coming from leasing companies
and base openings triggered by consumer demand for low-cost air travel.
Using a fleet of Airbus and Boeing narrow-body aircraft, easyJet operates an
extensive network throughout Europe as well as to northern Africa and Israel EASYJET STAGE LENGTHS
supported by over 15 hubs spread throughout Europe. SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014
4k
EASYJET FLEET SUMMARY AS AT MAY-2014

SOURCE: CAPA FLEET DATABASE 3k

Airbus A319-100 140 0 0
2k
Airbus A320-200 60 0 46
Airbus A320-
0 0 100 1k
200NEO
Total: 200 0 146
0k
-1k
0 2 4 6
Flight Time (Hours)
EASYJET TOP 10 INTERNATIONAL ROUTES BY SEATS

MXP - CDG 15,528 seats
GVA - LGW 14,640 seats
AMS - LGW 14,232 seats
BCN - LGW 13,680 seats
FCO - ORY 11,616 seats
AGP - LGW 11,376 seats
MXP - LGW 11,352 seats
NCE - LGW 11,280 seats
MAD - LGW 10,128 seats
FCO - LGW 10,032 seats
0k 2.5k 5k 7.5k 10k 12.5k 15k 17.5k 20k

Western Europe
LUFTHANSA PROJECTED DELIVERY DATES FOR AIRCRAFT ON ORDER*
3. Lufthansa
30
20
10
0
With its headquarters in Cologne and primary hubs at Frankfurt and
14
15
16
17
18
19
20
21
22
23
24
25
20
20
20
20
20
20
20
20
20
20
20
20
Munich airports and secondary hubs in Berlin, Dusseldorf, Hamburg, Stuttgart
and Milan, Lufthansa is one of the largest airlines in Europe. Operating a A320 A350 A380 747 777
large fleet of narrow and wide-body Airbus, Boeing and Embraer aircraft, *Excludes new aircraft that are coming from leasing companies
Lufthansa operates an extensive network of regional services within
Germany and Europe as well as Asia, the Middle East, North America, South
America and Africa. A publicly listed company, Lufthansa is a founding LUFTHANSA STAGE LENGTHS
member of Star Alliance. SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014
6k
LUFTHANSA FLEET SUMMARY AS AT MAY-2014 5k

Airbus A319-100 32 0 0
3k
Airbus A320-200 60 0 33
Airbus A320-
0 0 64 2k
200NEO
Airbus A321-100 20 0 0 1k
Airbus A321-200 42 0 2
0k
Airbus A330-300E 9 0 0 -1k
0 5 10 15
Airbus A330-300X 10 0 0 Flight Time (Hours)
Airbus A340-300 2 1 0
Airbus A340-300X 18 0 0 LUFTHANSA TOP 10 INTERNATIONAL ROUTES BY SEATS
Airbus A340-600 12 0 0
Airbus A340-600(H-
12 0 0 FRA - LHR 27,086 seats
GW)
FRA - CDG 22,720 seats
Airbus A350-
0 0 25
900XWB FRA - BCN 21,652 seats
Airbus A380-800 11 0 3 FRA - VIE 19,600 seats
Boeing 737-300 9 2 0 MUC - LHR 18,108 seats
Boeing 737-500 9 6 0 FRA - FCO 16,672 seats
Boeing 747-400 18 2 0 BRU - FRA 15,182 seats
Boeing 747-400M 1 1 0 FRA - PRG 14,648 seats
Boeing 747-8 13 0 6 FRA - AMS 13,748 seats
Boeing 777-9X 0 0 20 FRA - VCE 13,684 seats
Total: 278 12 193 0k 5k 10k 15k 20k 25k 30k 35k

Western Europe
BRITISH AIRWAYS PROJECTED DELIVERY DATES FOR AIRCRAFT ON ORDER*
10
4. British Airways 8
0
British Airways (BA) is the national carrier of the United Kingdom, a
14
15
16
17
18
19
20
21
22
20
20
20
20
20
20
20
20
20
subsidiary of publicly-listed International Consolidated Airlines Group (IAG),
and is based at London Heathrow Airport with a secondary base at London A350 A380 777 787
Gatwick Airport. Using a fleet of wide and narrow-bodied Airbus and Boeing *Excludes new aircraft that are coming from leasing companies
aircraft, BAs extensive network, including that of franchise partners Sun
Air (Turkey) and Comair (South Africa), includes services to Europe, North
America, Latin America, Canada, Africa, Asia and Australia. BA is a founding BRITISH AIRWAYS STAGE LENGTHS
member of the oneworld alliance. SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014
2500
BRITISH AIRWAYS FLEET SUMMARY AS AT MAY-2014


1500
Airbus A318-100 2 0 0
Airbus A319-100 44 0 0
1000
Airbus A320-200 53 0 0
Airbus A321-200 18 0 0 500
Airbus A350-
0 0 18
1000XWB 0
Airbus A380-800 5 0 7
Boeing 737-400 13 2 0 -500
0 5 10 15
Boeing 767-300ER 18 3 0
Boeing 777-200 3 0 0 BRITISH AIRWAYS TOP 10 INTERNATIONAL ROUTES BY SEATS
Boeing 777-200ER 43 0 0
Boeing 777-300ER 10 0 2 LHR - JFK 37,514 seats
Boeing 787-10 0 0 12 LHR - MAD 22,016 seats
Boeing 787-8 4 0 4 LHR - FCO 17,208 seats
Boeing 787-9 0 0 22 LHR - AMS 16,780 seats
Total: 260 12 65 16,232 seats

LHR - BOS
LHR - BCN 15,452 seats
LHR - GVA 14,840 seats
LHR - TXL 14,556 seats
LHR - NCE 14,020 seats
LHR - CDG 13,720 seats
0k 5k 10k 15k 20k 25k 30k 35k 40k 45k 50k

Western Europe
AIR FRANCE PROJECTED DELIVERY DATES FOR AIRCRAFT ON ORDER*
5. Air France
15
10
0
A subsidiary of the Air France-KLM Group and based in Paris, Air France is
14
15
16
17
18
19
20
21
22
20
20
20
20
20
20
20
20
20
the national airline of France. The airline merged with Dutch flag carrier KLM
in 2004, forming one of the worlds largest airline groups. The airline is based A320 A350 A380 777 787
at Paris Charles de Gaulle Airport, with smaller hubs at Paris-Orly, Lyon and *Excludes new aircraft that are coming from leasing companies
Nice airport. Air France operates an extensive global network, serving almost
200 destinations across North America, South America, Asia and Africa. Air
France is a founding member of SkyTeam. AIR FRANCE STAGE LENGTHS
4k
AIR FRANCE FLEET SUMMARY AS AT MAY-2014

Airbus A300B4-200 0 1 0
Airbus A318-100 18 0 0 2k
Airbus A319-100 39 0 0
Airbus A319-100LR 2 0 0 1k
Airbus A320-200 44 3 3
Airbus A321-100 5 0 0
0k
Airbus A321-200 20 0 0
Airbus A330-200 15 0 0
-1k
0 5 10 15
Airbus A340-300 3 0 0
Flight Time (Hours)
Airbus A340-300X 10 0 0
Airbus A350-
0 0 25 AIR FRANCE TOP 10 INTERNATIONAL ROUTES BY SEATS
900XWB
Airbus A380-800 9 0 3
Boeing 747-400 6 0 0 CDG - JFK 21,764 seats
Boeing 747-400ERF 2 1 0 CDG - LHR 18,938 seats
Boeing 747-400M 1 0 0 CDG - BCN 17,338 seats
Boeing 777-200ER 25 0 0 CDG - GVA 16,612 seats
Boeing 777-300ER 37 0 5 CDG - FCO 15,766 seats
Boeing 777F 2 0 0 CDG - MAD 15,440 seats
Boeing 787-9 0 0 37 CDG - AMS 13,592 seats
Total: 238 5 73 CDG - TXL 13,264 seats
CDG - LIN 12,002 seats
CDG - MUC 11,866 seats
0k 5k 10k 15k 20k 25k 30k

Western Europe
KLM ROYAL DUTCH AIRLINES PROJECTED DELIVERY DATES FOR AIRCRAFT
ON ORDER*
Selected Airlines 2
6. KLM Royal Dutch

Airlines
1
14
15
16
20
20
20
777
Based in Amsterdam, KLM is the national airline of the Netherlands. Part of *Excludes new aircraft that are coming from leasing companies
the Air France-KLM Group, KLM operates an extensive network which includes
services within Europe and to Asia, Africa, North America, Central and South
America and the Middle East. KLM is a founding member of the SkyTeam KLM ROYAL DUTCH AIRLINES STAGE LENGTHS
alliance. SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014
2500
KLM ROYAL DUTCH AIRLINES FLEET SUMMARY AS AT MAY-2014

2000

1500
Airbus A330-200 12 0 0
Airbus A330-300 4 0 0
1000
Boeing 737-700 18 0 0
Boeing 737-800 25 0 0 500
Boeing 737-900 5 0 0
Boeing 747-400 5 0 0 0
Boeing 747-400ERF 3 0 0
-500
Boeing 747-400M 17 0 0 0 5 10 15
Flight Time (Hours)
Boeing 777-200ER 15 0 0
Boeing 777-300ER 8 0 3
Boeing/McDonnell KLM ROYAL DUTCH AIRLINES TOP 10 INTERNATIONAL ROUTES BY SEATS
5 2 0 SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014
Douglas MD-11
Total: 117 2 3 AMS - LHR 19,086 seats
AMS - CDG 13,780 seats
AMS - JFK 13,232 seats
AMS - BCN 12,776 seats
AMS - TXL 12,024 seats
AMS - MAN 11,964 seats
AMS - MAD 11,900 seats
AMS - FCO 11,900 seats
AMS - CPH 11,796 seats
AMS - ARN 11,656 seats
0k 2.5k 5k 7.5k 10k 12.5k 15k 17.5k 20k 22.5k 25k

NORTH AMERICA analysis reports:
US airlines mostly post encouraging 1Q2014 results; but its a long and winding road to stability
Dallas/Fort Worth airport secures Shanghai and Hong Kong services, seeks Beijing and maybe Istanbul
North American hybrid airlines offer a range of possibilities as consolidation takes hold: Part 2
Delta Air Lines 2014 network strategy entails bypassing Tokyo and leveraging partnerships
Allegiant Airs strong fundamentals remain intact even as costs continue to rise; US ULCCs Part 1
Delta Air Lines continues to work towards achieving investment-grade with strong 1Q2014 results
Delta Air Lines loss at Dallas Love Field is Seattles gain, but Alaska Air still feels more pain
JetBlue Airways hybrid model remains enigmatic as cost creep outpaces revenue production
Southwest Airlines continues work to drive network strength in the US market
Southwest Airlines paradox - strong fundamentals confronted by a challenged business model
Spirit Airlines joins the dots in 2014, with also some new growth in Kansas City; US ULCCs Part 3
United Airlines: time to deliver as sceptics look for improved fortunes in 2Q2014
Air Canada eyes healthy demand in the summer season after racking up losses in 1Q2014
WestJet continues attempts to recoup its revenue slide as new international service debuts
Porter Airlines plans remain in limbo as its competitors work to sustain their long-term viability

North
DESPITE RECENT STRONG RETURNS, SIGNS OF
COST AND CAPACITY CREEP ARE POLLUTING THE
NORTH AMERICAN INDUSTRY.
Most North American airlines entered 2014 on relatively
America
sound footing, buoyed by solid FY2013 profits, a stabilising
US economy and lower fuel prices, albeit still in the USD90
to USD100 per barrel range. Carriers executing the spectrum
of business models full service, hybrid and ultra low-
cost are busy building out their strategies in the hopes
that a foundation is laid for the industry to thrive, rather
TOP 10 AIRLINES WITHIN NORTH AMERICA
SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014 than merely survive. The only clouds on the horizon are
proposed increases in capacity and upward cost pressures.
RANKING CARRIER NAME SEATS With nearly three years of profitability on record, discussions
1 Delta Air Lines 3,549,840 among management teams at North American carriers are
gravitating toward shareholder returns, something largely
2 Southwest Airlines 3,283,031
unheard of during the previous decade. In 2013, Delta
3 United Airlines 2,674,725 returned USD350 million in cash to shareholders, and targets
4 American Airlines 2,145,360 total returns of USD700 million by May-2014. Alaska Air
5 US Airways 2,005,329 Group issued its first dividend in 21 years during 2013
while Canadian hybrid carrier WestJet increased its 1Q2014
6 Air Canada 737,596
quarterly shareholder dividend by 20%.
7 Alaska Airlines 650,044 Despite the foundations North American airlines have laid
8 JetBlue Airways 619,280 in order to sustain profitability, capacity and costs have been
9 WestJet 449,032 growing at the majority of carriers during 2014.
But those airlines are taking great care to emphasise the
10 Spirit Airlines 278,993
capacity uptick is largely driven by migration to larger-gauge
jets rather than a return to the days of airlines dumping
CAPACITY BY CARRIER TO/FROM/WITHIN NORTH AMERICA irrational supply into the market place. At the moment
SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014 revenue momentum seems strong enough to offset the unit
cost pressure that both low-cost and full service carriers face
Delta Air Lines 3,928,824
this year, but if conditions soften, airlines may have to temper
United Airlines 3,357,796 capacity growth to protect their profits.
Even as weakness in the emerging markets created some
Southwest Airlines 3,292,146
jitters in early 2014, the three large US network carriers
American Airlines 2,692,052 were bullish regarding demand, particularly in the domestic
US Airways 2,179,842
market. Delta, United and American (including results for
US Airways) increased domestic yields during 4Q2013 by
Air Canada 910,820 9%, 6% and 4%, respectively. Each carrier seemed encouraged
JetBlue Airways 735,220
by positive demand trends heading into 2014, and for the
moment have no plans to revise their capacity guidance for
Alaska Airlines 685,083
the full year.
WestJet 474,587 Of the three major US carriers, the new American has
the largest planned capacity increase for 2014 of 3.5%.
Other 3,965,852
The carrier estimates 2.6ppt of the planned increase results
0M 1M 2M 3M 4M 5M
from the operation of higher density aircraft that American
believes is P&L positive given the incremental revenue from
NORTH AMERICA TOP 10 AIRPORTS higher density aircraft goes straight to its bottom line. United
plans it first consolidated capacity increase in three years
RANKING AIRPORT NAME SEATS during 2014 of 1% to 2%. Similar to American, the carrier
states the rise is driven by aircraft upgauging as it takes
1 Hartsfield-Jackson Atlanta International Airport 1,955,191 delivery of higher density narrowbodies and regional jets,
2 Chicago O'Hare International Airport 1,369,723 and the addition of slimeline seats to existing aircraft. Delta
3 Dallas/Fort Worth International Airport 1,280,940 expects flat to 2% capacity growth during 2013 again driven
by a years-long scheme to replace 50 seat jets with higher-
4 Los Angeles International Airport 1,211,229
density aircraft.
5 Denver International Airport 1,127,587 In 2014, Delta aims to continue sharpening its competitive
6 Charlotte Douglas International Airport 974,009 edge against its full service peers. The airlines major
7 Las Vegas McCarran International Airport 941,795 initiatives include turning the corner to profitability in New
8 Phoenix Sky Harbor International Airport 923,904
9 San Francisco International Airport 879,182 The threat of ULCC entry remains
10 Minneapolis St Paul International Airport 747,291
as yields increase and the majors
Pg 92 | CAPA World Aviation Yearbook 2014 reduce hub coverage.
NORTH AMERICA FLEET York at its hubs in JFK and LaGuardia, bolstering its own
branded feed at its Asian gateway in Seattle and reversing
12k
losses at the Trainer oil refinery it purchased in 2012. High
hopes for Trainer were steadily dampened throughout the
10k course of 2013 as the business bled USD116 million for the
8,401 full year.
8k Obviously Americans largest task in 2014 will be the
integration with US Airways; that includes network
6k optimisation, crafting a blueprint for migration of technology
platforms and navigating the often thorny task of combining
4k
labour groups. Plans are already under way to rebank the
Miami hub during late 2014 followed by similar changes in
2,272 Dallas/Fort Worth and Chicago OHare. These are not small
2k
challenges and with so much in flux at American during
547
2014, any predictions of the carriers performance are best
0k
In service In storage On order shelved until 2015 at the earliest. However, it does appear
that American aims to study lessons learned from previous
mergers in order to avoid pitfalls experienced by other
NORTH AMERICA FLEET BREAKDOWN FOR AIRCRAFT IN SERVICE carriers. The proof always lies in execution, and American in
2014 faces considerable scrutiny as the integration progresses.
7.1%
Uniteds shareholders are welcoming its declaration that
2013 was the year it left integration challenges behind.
13.3% But those investors are also justified in harbouring some
scepticism given the carrier still needs to deliver on USD1.2
billion merger synergies it promised four years ago when it
43.7% tabled plans to merge with Continental. There are signs of
positive momentum as United achieved its stated return on
13.6%
invested capital (ROIC) goal of 10% during 2013.
But challenges in 2014 include a unit cost creep of 1% to
2% and delivering a unit revenue performance that mirrors its
peers. United has improved its passenger unit revenue metrics
22.3% relative to its peers after running at a deficit for most of 2012
and some of 2013. American, Delta and United all recorded
Narrowbody Jet
Turboprop
Regional Jet Widebody Jet Small Commercial Turboprop
FY2013 passenger unit revenue growth of roughly 3%,
which bodes well for Uniteds recent revamp of its revenue
management system.
NORTH AMERICA CAPACITY SEATS SHARE BY ALLIANCE The one-time US low-cost pioneer Southwest Airlines
SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014 expects a 2% to 3% jump in unit costs excluding fuel during
FY2014, which is in line with estimates provided by major
19.6% airlines Delta and United. Southwest concludes much of the
cost pressure it faces during 2014 stems from integration with
AirTran, which it expects to complete this year. Notably, the
34.2%
carriers estimates do not include any projections from new
labour contracts. Southwest is in the midst of negotiations
with all its organised labour groups, and cracks are emerging
in its historical favourable relations, illustrated by the carriers
suspicions of a work slow-down in Jan-2014 by some
22.0% employees at Chicago Midway.
On a broader scale Southwest remains outside of any of
the three emerging business models, something the carrier
believes helps to preserve its renegade image. But with a
narrower cost gap versus its legacy peers and fewer amenities
24.2% than hybrid carriers, Southwest finds itself at a crossroads
in terms of its evolution. No one is questioning its still-loyal
Unaligned oneworld Star Alliance SkyTeam
following, but with the US reaching full-scale maturity,
Southwest needs a sure-fire strategy to sustain its leading
position in the market.
The threat of ULCC entry remains as yields increase
and the majors reduce hub coverage. As consolidation has
reduced competition, established ultra low-cost carrier Spirit
Airlines refocussed its attention back into the domestic
market and a reformulated Frontier Airlines was quick to step
into the hole being left at Cleveland as United vacates its hub
Pg 93 | CAPA World Aviation Yearbook 2014 there.
NORTH AMERICA PROJECTED DELIVERY DATES FOR AIRCRAFT ON ORDER Spirit Airlines too expects some cost pressure in 2014
SOURCE: CAPA FLEET DATABASE | MAY-2014 driven by new US pilot duty and rest time regulations and
350 its average 22% growth rate during the next couple of years.
However, its projected 4Q2013 unit costs excluding fuel and
300
special items were in the USD5.98 cent to USD6.03 cent
250 range, well below Southwest and all other US carriers.
Spirit also expected 3% unit revenue growth year-on-year
200
in the quarter, which shows positive demand among its
150
targeted passenger base of customers that normally can not
afford air travel except for Spirits low fares.
100 The three US hybrid carriers Alaska, Hawaiian and
50
JetBlue also enjoyed profitability during 2013. All of
those airlines continued their trend of higher than average
0 capacity growth during 2013, with Alaska and JetBlue each
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
recording an approximate 7% year-on-year increase in supply.
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
767
E190
737
E175
777
MRJ
787 A320 A330 A350 DHC8 CRJ
Hawaiians roughly 14% jump in capacity was mainly driven
by its long-haul growth largely centered in Asia.
Alaska and JetBlues higher than average capacity growth
NORTH AMERICA MOST POPULAR AIRCRAFT TYPES IN SERVICE did not pressure each carriers profits in 2013. Alaskas net
SOURCE: CAPA FLEET DATABASE | MAY-2014 income jumped 61% to USD508 million while JetBlue
increased 31% to USD168 million. Both carriers also expect
18.7% unit costs to rise in FY2014 a 1% rise at Alaska and a 3%
to 5% increase at JetBlue. Alaskas increase appears driven
35.2% by one-time items such as IT and marketing spend, while a
rise in pilot wages accounts for a large portion of JetBlues
increase.
11.8% JetBlue believes it can achieve a 7% return goal in 2014
after falling short of ROIC targets in 2012 and 2013. While
Alaskas robust balance sheet allows the carrier to discuss
concrete shareholder returns, JetBlue is in the midst of paring
down its debt. JetBlue is a much younger company than
4.9% 11.4%
Alaska, but as investors get a whiff of sustained profitability,
5.0% their appetite for at least a blueprint of shareholder return is
6.2% 6.7%
growing.
737 CRJ A320 757 EMB145 CARAVAN MD-80 Other The major cloud hanging over Alaska during 2014 is its
diminishing relationship with Delta at Alaskas Seattle hub.
By Sep-2014 Delta will compete with Alaska head-on in
LCC CAPACITY SHARE (% OF TOTAL SEATS) FOR WITHIN NORTH numerous domestic markets from Seattle to feed its long-haul
AMERICA: 2011 TO 2014* trans-Pacific flights, and is opting to operate those services
SOURCE: CAPA - CENTRE FOR AVIATION AND OAG with its own metal rather than tap a long-standing codeshare
with Alaska. Executives at Alaska believe the carrier can
40 withstand the added competitive pressure from Delta; but
backfilling the annual USD200 million-plus revenue the
Delta codeshare fetches for Alaska is a daunting task for the
29.7% 30.1% 30.1%30.3%
30
27.1%
28.5% 28.0% 28.7% carrier.
26.0%
24.0%
24.9% Hawaiians stated goals for 2014 are maturing the
19.8%
21.9%
approximately 10 long-haul markets it has introduced since
20
17.6% 2010. Most are to date delivering a negative burden. By
4Q2014 Hawaiian estimates new markets should account for
only 8% of its international capacity deployment, compared
10
with 30% during 4Q2012. The carrier also expects to drop its
capacity growth to 5% in 2014 versus a 14% hike in supply
during 2013. In the medium term Hawaiian declared it will
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Jan-
May
generate positive free cash flow during 2016 after taking
2014 delivery of all 22 A330 widebodies it has on order.
Canadas two major airlines, Air Canada and WestJet, also
enter 2014 on reasonably sound footing, which is key as each
carriers new business enterprise Air Canadas long-haul
low-cost carrier Air Canada rouge and WestJets regional
subsidiary Encore log a full year of operations in 2014.
Since Encores launch in mid-2013, WestJet has
announced the new airline has performed better than
expectations, and estimates roughly 50% to 60% of Encores
Pg 94 | CAPA World Aviation Yearbook 2014 passengers connect to its mainline services, which should
ultimately be a positive force for the carriers revenue growth.
THE LARGEST CAPACITY INCREASE FOR 2014,
.5%
WestJet is also warning of cost pressure in 2014, having
3 PLANNED BY THE NEW AMERICAN revised its full year unit cost guidance upwards to a 1.5% to
2.5% rise versus previous estimates of flat to 1% growth.
Air Canada plans a hefty 9% to 11% rise in its capacity
during 2014, with international growth representing the
bulk of its expanding supply. The carrier is adding six Boeing
787-8s to its mainline operations in 2014, while rouge should
end the year with six 767s. Air Canada is also operating
five higher-density, 458-seat Boeing 777-300ERs this year
to markets featuring a higher level of economy passengers,
including Hong Kong and Paris.
The establishment of rouge and Air Canadas operation
of higher density aircraft are factors cited in the airlines
ambitious goals of slashing its unit costs by 15% in the
medium term.
After a tumultuous previous couple of years, Air Canada
entered 2014 with a strengthening balance sheet and falling
debt levels, which improves its ability to compete with
WestJet, who is feeling out the potential for trans-Atlantic
service with new seasonal narrowbody service from Toronto
to Dublin via St Johns beginning in Jun-2014. If WestJet
turns a favourable performance in its foray into true long-
haul markets, rouge faces a formidable competitor on its
lower-yielding trans-Atlantic services.
Mastery was the buzzword of choice for executives at
Hawaiian Airlines as they outlined the carriers goals for
2014. Perhaps that sentiment is appropriate for the North
American market as a whole this year as each of the regions
carriers needs to accomplish pivotal tasks to prove their
respective business models of choice have staying power
throughout the unpredictable rises and falls of a business
cycle.
Airlines operating in North America deserve some credit
for their accomplishments during the last few years to create
a rational airline industry. But it is still too early to declare a
complete and successful turnaround in the North American
market.
For the short term, the main challenge for airlines will be
to master sustainability amid rising costs and a still fragile
demand recovery.

North America
DELTA AIR LINES PROJECTED DELIVERY DATES FOR AIRCRAFT ON ORDER*
Selected Airlines
50
40
1. Delta Air Lines 30
20
Based in Atlanta, Delta Air Lines

merged with Northwest Airlines in Oct- 10
2008 to form one of the largest airlines in the world. Operating an extensive
fleet of Boeing and Airbus aircraft, Deltas network includes extensive 0
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
domestic services within the United States as well as international services
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
to Central and South America, the Middle East, Asia, Australia, Africa and
A320 A330 737 787 CRJ
Europe. The airlines main hub is Hartsfield-Jackson Atlanta International
Airport, which ranks among the worlds busiest - largely due to Deltas *Excludes new aircraft that are coming from leasing companies
dominant presence at the facility. Delta also has hubs in New York, Detroit,
Minneapolis, Memphis and Salt Lake City in the USA and international hubs at
Amsterdam, Tokyo and Paris. Delta is a founding member of SkyTeam. DELTA AIR LINES STAGE LENGTHS
DELTA AIR LINES FLEET SUMMARY AS AT MAY-2014 15k

12.5k
Airbus A319-100 57 0 0
10k
Airbus A320-200 69 0 0
Airbus A321-200 0 0 30
7.5k
Airbus A330-200 11 0 0
Airbus A330-300 0 0 10 5k
Airbus A330-300E 21 0 0
Boeing 717-200 27 0 0 2.5k
Boeing 737-700 10 0 0
0k
Boeing 737-800 73 0 0
Boeing 737-900ER 20 0 80
-2.5k
0 5 10 15
Boeing 747-400 16 0 0
Flight Time (Hours)
Boeing 757-200 96 31 0
Boeing 757-200(ETOPS) 36 0 0
Boeing 757-300 16 0 0 DELTA AIR LINES TOP 10 INTERNATIONAL ROUTES BY SEATS
Boeing 767-300 15 6 0
Boeing 767-300ER 58 2 0
AMS - DTW 15,312 seats
Boeing 767-400ER 21 0 0
ATL - CUN 12,666 seats
Boeing 777-200ER 8 0 0
MSP - AMS 12,030 seats
Boeing 777-200LR 10 0 0
Boeing 787-8 0 0 18 SJU - JFK 11,183 seats
Boeing/McDonnell Douglas DC-9-51 0 31 0 ATL - SJU 11,013 seats
Boeing/McDonnell Douglas MD-82 1 8 0

LHR - JFK 9,744 seats
ATL - MEX 9,688 seats
ATL - LHR 9,604 seats
STI - JFK 8,320 seats
Boeing/McDonnell Douglas MD-90-30 65 2 0
Bombardier CL-600-2B19(CRJ100LR) 1 0 0 ATL - AMS 7,997 seats
Bombardier CL-600-2B19(CRJ200ER) 4 1 0 0k 2.5k 5k 7.5k 10k 12.5k 15k 17.5k 20k
Bombardier CL-600-2B19(CRJ200LR) 2 1 0
Bombardier CL-600-2D24(CRJ900ERNG) 0 0 17
Total: 754 86 155

North America
SOUTHWEST AIRLINES PROJECTED DELIVERY DATES FOR AIRCRAFT ON
ORDER*
2. Southwest
40
30
Airlines 20
10
14
15
16
17
18
19
20
21
22
23
24
25
26
27
20
20
20
20
20
20
20
20
20
20
20
20
20
20
737

Southwest Airlines is an American low-cost carrier headquartered in
Dallas, Texas. The archetype low-cost airline that inspired the low-cost
movement around the world, Southwest is ranked amongst the largest SOUTHWEST AIRLINES STAGE LENGTHS
airlines in the world as measured by passengers carried. Southwest is one SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014
of the worlds most consistently profitable airlines, adhering closely to its
10k
low-cost tradition but differentiating itself through well-regarded customer
service and free baggage checks. Southwest remains one of the most
influential airlines in the world, with an enormous fleet of Boeing 737NG 8k
aircraft which operate over 3500 services each day to over 70 destinations
across the United States. 6k
SOUTHWEST AIRLINES FLEET SUMMARY AS AT MAY-2014 4k

Boeing 737-300 122 11 0

Boeing 737-500 15 2 0 0k
Boeing 737-7 0 0 30
Boeing 737-700 398 2 56 -2k
0 2 4 6
Boeing Flight Time (Hours)

0 2 0
737-700(ETOPS)
Boeing 737-8 0 0 170
SOUTHWEST AIRLINES INTERNATIONAL ROUTES BY SEATS
Boeing 737-800 56 1 47 SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014
Total: 591 18 303
SJU - MCO 6,454 seats
SJU - BWI 4,452 seats
SJU - FLL 4,004 seats
SJU - TPA 2,386 seats
SJU - ATL 2,288 seats
0k 1k 2k 3k 4k 5k 6k 7k 8k

North America
UNITED AIRLINES PROJECTED DELIVERY DATES FOR AIRCRAFT ON ORDER*
Selected Airlines
60
50
3. United Airlines 40
30
20
10
Based at Chicago OHare, with secondary hubs in Denver, Houston, 0
14
15
16
17
18
19
20
21
22
23
24
25
Newark, Cleveland, LAX, San Francisco and Washington Dulles, United Airlines
20
20
20
20
20
20
20
20
20
20
20
20
is one of the worlds largest airlines. Using a large fleet of narrow and
A320 A350 737 787
wide-body Airbus and Boeing aircraft, United Airlines operates an extensive
domestic and regional network of services within North America as well as *Excludes new aircraft that are coming from leasing companies
international services to Central America, South America, Asia, Australia,
Europe and Africa. United Airlines is a founding member of the Star Alliance
and announced a merger with Continental Airlines in May-2010. UNITED AIRLINES STAGE LENGTHS
UNITED AIRLINES FLEET SUMMARY AS AT MAY-2014 12.5k

Airbus A319-100 55 0 10
Airbus A320-200 97 0 8 7.5k
Airbus A350-1000XWB 0 0 35
5k
Boeing 737-500 0 3 0
Boeing 737-700 34 0 0
2.5k
Boeing 737-700(ETOPS) 2 0 0
Boeing 737-800 99 0 0
0k
Boeing
31 0 0
737-800(ETOPS)
-2.5k
Boeing 737-9 0 0 100 0 5 10 15
Flight Time (Hours)
Boeing 737-900 12 0 0
Boeing 737-900ER 89 0 50
Boeing 747-400 24 0 0 UNITED AIRLINES TOP 10 INTERNATIONAL ROUTES BY SEATS

Boeing 757-200 54 6 0
Boeing IAH - CUN 15,518 seats
54 0 0
757-200(ETOPS)
EWR - LHR 14,878 seats
Boeing 757-300 11 0 0
IAH - MEX 11,572 seats
Boeing
10 0 0
757-300(ETOPS) SFO - NRT 10,472 seats
Boeing 767-200ER 0 1 0 SFO - FRA 10,472 seats
Boeing 767-300ER 35 0 0 IAD - LHR 10,052 seats
Boeing 767-400ER 16 0 0 GUM - NRT 9,856 seats
Boeing ORD - FRA 9,044 seats

19 0 0
777-200(ETOPS)
IAH - LHR 8,923 seats
Boeing 777-200ER 55 0 0
ORD - LHR 8,736 seats
Boeing 787-10 0 0 20
0k 2.5k 5k 7.5k 10k 12.5k 15k 17.5k 20k
Boeing 787-8 10 0 11
Boeing 787-9 0 0 24
Total: 707 10 258

North America
AMERICAN AIRLINES PROJECTED DELIVERY DATES FOR AIRCRAFT ON
ORDER*
4. American Airlines
60
40
20
A subsidiary of AMR Corporation, American Airlines (AA) is based at

0
Dallas Fort Worth with hubs in Chicago, Miami and New York. AAs extensive
14
15
16
17
18
19
20
21
22
23
24
25
20
20
20
20
20
20
20
20
20
20
20
20
network includes domestic and regional services within North America and
international services to Europe, Asia, Central America and South America. A320 737 777 787
AA is a founding member of the oneworld alliance. The carrier filed for *Excludes new aircraft that are coming from leasing companies
bankruptcy protection on 29-Nov-2011. As part of its restructuring plan, the
carrier unveiled a new livery and branding in Jan-2013.
AMR Corporation and US Airways Group announced the completion of their AMERICAN AIRLINES STAGE LENGTHS
merger to officially form American Airlines Group on 09-Dec-2013 while AMR SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014
emerged from restructuring with full recovery to American creditors.
7k
6k
AMERICAN AIRLINES FLEET SUMMARY AS AT MAY-2014
5k

4k
Airbus A319-100 17 0 7
Airbus A321-200 15 0 67 3k
Airbus A321-200NEO 0 0 100

2k
Boeing 737-8 0 0 100
1k
Boeing 737-800 233 0 73
Boeing 757-200 57 23 0 0k
Boeing
29 0 0
757-200(ETOPS) -1k
0 5 10 15
Boeing 767-200ER 3 10 0 Flight Time (Hours)
Boeing 767-300ER 58 0 0
Boeing 777-200ER 47 0 0 AMERICAN AIRLINES TOP 10 INTERNATIONAL ROUTES BY SEATS

Boeing 777-300ER 12 0 8
Boeing 787-8 0 0 12 MIA - SJU 14,336 seats
Boeing 787-9 0 0 30 LHR - ORD 13,643 seats
Boeing/McDonnell
89 11 0 MIA - GRU 13,468 seats
Douglas MD-82
JFK - LHR 13,020 seats
Boeing/McDonnell
71 6 0
Douglas MD-83 MIA - CUN 12,786 seats
Embraer E175STD 0 0 60 DFW - CUN 11,798 seats
Total: 631 50 457 DFW - LHR 11,592 seats
DFW - MEX 9,800 seats
MIA - CCS 9,366 seats
MIA - SDQ 9,099 seats
0k 2.5k 5k 7.5k 10k 12.5k 15k 17.5k

North America
JETBLUE PROJECTED DELIVERY DATES FOR AIRCRAFT ON ORDER*
5. jetBlue
30
20
10
14
15
16
17
18
19
20
21
22
20
20
20
20
20
20
20
20
20
jetBlue is a low-cost carrier based at New York JFK International Airport,
with secondary bases at Boston Logan, Fort Lauderdale-Hollywood, Orlando A320 E190
International, Washington Dulles and Long Beach airports. Using a fleet of *Excludes new aircraft that are coming from leasing companies
Airbus A320 and Embraer E-190 aircraft, jetBlue has an extensive network
that serves destinations in the United States, the Caribbean, and Central and
South America. JETBLUE STAGE LENGTHS
1750
JETBLUE FLEET SUMMARY AS AT MAY-2014
1500
Airbus A320-200 130 0 3 1250
Airbus A320-200NEO 0 0 30 1000
Airbus A321-200 6 0 47
750
Embraer ERJ190-100IG- 500
60 0 23
W(AR)
250
Total: 196 0 133
-250
0 2 4 6
Flight Time (Hours)
JETBLUE TOP 10 INTERNATIONAL ROUTES BY SEATS

JFK - SDQ 10,760 seats
JFK - STI 10,740 seats
SJU - JFK 10,500 seats
SJU - MCO 9,100 seats
SJU - FLL 7,000 seats
SJU - SDQ 6,300 seats
SJU - TPA 5,700 seats
SJU - BOS 5,700 seats
NAS - FLL 5,600 seats
JFK - PUJ 4,760 seats
0k 2k 4k 6k 8k 10k 12k 14k

LATIN AMERICA analysis reports:
Gol presses forward with international expansion as it records losses in 1Q2014
Profitability eludes Brazils Gol for a third consecutive year and a turnaround still looks distant
Avianca Brazil slows domestic growth. Perhaps time to expand into the international market
LATAM Airlines Groups merger pains are aggravated by currency woes across multiple markets
LAN Airlines cuts Chile domestic capacity, as World Cup traffic slump adds another hurdle for LATAM
Aviancas strength in growth markets helps lift its 2013 financial performance

Latin W
ITH THE FIRST WAVE OF AIRLINE
CONSOLIDATION COMPLETE, LATIN
AMERICAN aviation enters a new phase in
2014.
America
As the worlds eyes turned to Brazil and the World Cup,
the majority of Latin Americas airlines believe the year holds
promise as air travel growth within the region has yet to reach
its full potential. Even though Latin Americas two largest
markets began the year on tenuous grounds, Latin Americas
large airlines have built fairly sound business models and
TOP 10 AIRLINES WITHIN LATIN AMERICA seem prepared to exhibit capacity discipline if market
conditions worsen.
RANKING CARRIER NAME SEATS Now that the two major mergers between Star Alliances
Avianca-TACA and LAN-TAM (the latter of which is in
1 Gol 967,336
oneworld) have officially closed, the stage is set for Latin
2 TAM Airlines 815,604 America to exhibit a new equilibrium that should help the
3 LAN Airlines 601,120 region profitably reach its growth potential.
4 Avianca 516,916 But Latin American carriers entered 2014 with far from
identical outlooks depending on their respective countriesof
5 Azul 444,900
origin. In many cases, externalities, notably economic
6 Aeromexico 330,887 conditions, are creating great uncertainty, with Argentina and
7 COPA 247,272 Venezuela heading the list of problem countries.
8 Aerolineas Argentinas 221,340 Airlines in the regions largest markets, Brazil and Mexico,
are however hoping for improved economic conditions to
9 Interjet 221,076
bolster softness in demand created by fiscal uncertainty at
10 Volaris 208,704 home.
Brazils major airlines were adopting a cautious view of
CAPACITY BY CARRIER TO/FROM/WITHIN LATIN AMERICA the FIFA World Cup beginning as currency depreciation,
SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014 infrastructure challenges and pricing caps threatened to create
a non-event for carriers.
Gol 1,032,024
Mexicos largest carriers also hope for a rebound in the
TAM Airlines 900,964 domestic market during 2014 after slowing economic growth
LAN Airlines
in 2013 created softness in demand and eroded pricing
648,699
traction. After low-cost rival Volaris completed a successful
Avianca 597,082 initial public offering, both VivaAerobus and Interjet made
Azul 519,225 rumblings of completing IPOs during 2014, but VivaAerobus
at the last minute cancelled its public debut, citing market
Aeromexico 431,345
volatility.
American Airlines 385,305 Colombia shows continued promise during 2014, unlike
COPA 297,310
Brazil and Mexico, whose slowing domestic air travel growth
reflected the tenuous states of each countrys economy
Aerolineas Argentinas 255,314
during 2013. Colombia, in contrast, recorded a 14% jump in
Other 3,182,101 domestic passengers during 2013 to 21.5 million. For the first
0k 500k 1,000k 1,500k 2,000k 2,500k 3,000k 3,500k 4,000k two months of 2014, domestic passenger growth in Colombia
was roughly 12%.
Colombia in particular has a changing set of competitive
LATIN AMERICA TOP 10 AIRPORTS dynamics in 2014 as upstart low-cost carrier VivaColombia
opens a base in Bogota and enters key trunk routes served by
RANKING AIRPORT NAME SEATS larger carriers Avianca and LAN Colombia.
1 Sao Paulo Guarulhos International Airport 724,512 At the same time Avianca Holdings (which includes
all of TACAs operations) faces stiffer competition in the
2 Mexico City Juarez International Airport 654,682
Colombian market. It has reached a steady-state market share
3 Bogota El Dorado International Airport 530,363 of 15% in Peru and is tempering its growth within Ecuador,
4 Sao Paulo Congonhas Airport 442,348 citing softened domestic demand. Artificial barriers erected
5 Brasilia International Airport 405,113
by the Argentinian government continue to protect money
losing, state-owned Aerolineas Argentinas, which is opting to
6 Lima Jorge Chavez International Airport 335,407 expand in its safe home market and near-international routes.
7 Rio de Janeiro Galeo International Airport 331,650 Brazil, however, remains the regions largest market, still
8 Santiago International Airport 320,284 with enormous upside. But there is pause for breath. Brazils
economy reached a zenith shortly after it campaigned
9 Buenos Aires Aeroparque Jorge Newbery Airport 255,972
successfully in 2009 to host this years World Cup and the
10 Rio de Janeiro Santos Dumont Airport 254,381 2016 summer Olympics. The countrys GDP growth had
soared in 2010 to 7.5%, but by 2012 sagged to 0.9% and
Pg 102 | CAPA World Aviation Yearbook 2014 increased to a tepid 2.5% in 2013. As Brazils dimming
economic prospects began to suppress domestic demand, the
LATIN AMERICA FLEET countrys airlines found themselves in a state of over-supply.
2500
During CY2013 ASKs in Brazils domestic market actually
fell 3% as traffic grew a mere 1.4%, according to regulator
2,049 ANAC hardly the stuff that emerging market dreams
2000 are made of. This is in contrast to the 3% capacity growth
in CY2012 and a nearly 7% increase in traffic. Prospects
1500
for Brazil looked more promising at the start of 2014, as
domestic traffic increased 8.7% year-on-year during the first
four months of the year.
1000 Loss making Gol was the first carrier to spring into action
623
to slash supply in 2012, and continued to decrease its ASK
500
growth by 6.4% during the first nine months of 2013. While
237
the carrier still continues to post top-line losses, it has
recently recorded some positive margin improvement and is
0
stepping up efforts to clean up its balance sheet and improve
its leverage ratios.
TAM initiated its domestic ASK reductions later than
LATIN AMERICA BREAKDOWN FOR AIRCRAFT IN SERVICE
SOURCE: CAPA FLEET DATABASE | MAY-2014 Gol, evidenced by TAMs FY2012 capacity reduction of just
1% compared with 5% for Gol. During 2013 Gols overall
7.5% domestic capacity grew 5% while TAM, now part of the
behemoth LATAM Airlines Group, cut Brazilian ASKs by
14.2% 8%.
TAMs parent, LATAM Airlines Group, has officially
declared its operations within Brazil have rebounded,
47.5% evidenced by its 19% improvement in unit revenues in
3Q2013. LATAM is leveraging its scale to eliminate TAMs
14.2% currency challenges in the Brazilian market the BRL fell
13% against the USD in 3Q2013 by mid-2014. LATAM
is reducing its BRL exposure by moving TAMs debt and
aircraft obligations to LATAMs balance sheet, which is
16.6% denominated in USD.
Gol has no large umbrella parent company to protect it
Narrowbody Jet
Widebody Jet
Small Commercial Turboprop Regional Jet Turboprop from the sagging currency; but at the end of 9M2013 Gol
estimated it had hedged 70% of foreign exchange exposure
for the following three months. Additionally, Gol believes it
LATIN AMERICA CAPACITY SEATS SHARE BY ALLIANCE can begin to improve load factors during 2014 after opting
SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014 to trade loads for yields during a large portion of 2013. Gol
CEO Paulo Kakinoff has stressed opportunities are available
12.8% to sustain yields while boosting loads as the carrier declares it
is strengthening its focus on corporate customers.
Even as Brazils largest airlines opted to rationalise supply,
the carriers fastest growing airlines continued their rapid
growth. Azul grew its capacity 31% and traffic by 32% in
15.4% CY2013 and Avianca Brazil also boosted its supply by 31%
45.2%
while enjoying traffic growth of 35%.
Azul aims to access the public markets during 2014 after
shelving plans for an IPO in 2013. It is an interesting move
given projected GDP growth for Brazil of just 2.5% this year,
an underwhelming forecast for an emerging market. The
carrier has already outlined a BRL20 million hit (USD8.3
million) from capping its fares during the World Cup, which
26.7% doesnt bode well for a market where domestic demand is
languishing. Avinaca Brazil has also publicly declared it
Unaligned oneworld Star Alliance SkyTeam would cap fares during the tournament.
Brazils two largest carriers have yet to commit to fare
limits, presumably because corporate demand could be
crimped during the event as business travellers may eschew
the festivities. Pressure is also mounting on airports in cities
hosting the World Cup to ensure their readiness for the
tournament, but doubts are growing over Brazils ability to
update its infrastructure in time for footballs premier event.
Mexicos airlines are hoping for an economic rebound
to improve their yields. They too face a level of uncertainty
Pg 103 | CAPA World Aviation Yearbook 2014 heading into 2014 as the countrys GDP growth rate fell to
under 2% in 2013. Growth in Mexicos domestic air travel
LATIN AMERICA PROJECTED DELIVERY DATES FOR AIRCRAFT ON ORDER market slowed to 7% during 2013, versus double-digit 10%
growth in 2012. Weakened demand resulted in soft yields for
100 the countrys publicly traded airlines Aeromexico and Volaris
during 2013 as each carrier worked to maintain its respective
75
load factor. Weakness in pricing traction continued into early
2014 as Volaris average fare sank 21% during 1Q2014 and
50
Aeromexico recorded a 13% decline in yields during the first
three months of 2014.
25
Some of Aeromexicos softness in yields was deliberate
as the carrier is attempting to bolster loads in the Mexican
0
domestic market after losing market share to Volaris and
Interjet, and to a lesser degree VivaAerobus, during the last
14
15
16
17
18
19
20
21
22
23
24
20
20
20
20
20
20
20
20
20
20
20
E190 E195 737 777 787 72 A320 A330 A350 few years. Those carriers worked furiously to seize on gaps left
AN158 SSJ
by now defunct carriers, most notably Mexicana.
Grupo Aeromexico, which includes Aeromexico Connect,
essentially sustained its leading market share during CY2013,
LATIN AMERICA MOST POPULAR AIRCRAFT TYPES IN SERVICE accounting for 36% of the domestic market compared
with 37% the year prior. Interjet retained its 24% share
year-on-year in 2013 while Volaris grew its share 3ppt to
23.5% 23%. VivaAerobus kept its share consistent at roughly 12%
from CY2012 to CY2013. For the 12M ending Mar-2014,
Aermexicos share remained at 37% while Interjet and Volaris
36.5%
maintained their 24% and 23% respective shares. VivAerobus
also maintained its 12% share during that period.
But it appears VivaAerobus has ambitions to increase its
stature in the Mexican market after placing an order for 52
Airbus narrowbodies during late 2013. Some of the aircraft
are pegged to replace its current fleet of 19 older Boeing
737-300 classics, but the higher-density Airbus narrowbodies
20.4% 12 current generation A320s and 40 A320neos could also
3.2% result in VivaAerobus tripling its capacity by 2021 when it
3.2% completes deliveries of the new jets.
3.2% 5.9% VivaAerobus, Volaris, Interjet and Aeromexico are basing
4.2%
their business models in varying degrees on capturing bus
A320 737 E190 72 767 CARAVAN 42 Other traffic as discretionary income among Mexicos middle class
grows. Mexicos four largest carriers now have approximately
LCC CAPACITY SHARE (% OF TOTAL SEATS) FOR WITHIN LATIN AMERICA: 228 aircraft on order, compared with a cumulative total of
2011 TO 2014* 281 aircraft for Gol and LATAM Airlines Group.
SOURCE: CAPA - CENTRE FOR AVIATION AND OAG While Mexicos market shows promise, the immediate
*Year to Month indicated goal for 2014 is building and sustaining demand as the
50 Mexican economy ended 2013 on shaky ground. And carrier
confidence in a complete rebound during 2014 is tenuous at
40
best, evidenced by VivaAerobus cancelled IPO.
34.4%33.9%
VivaColombia will take on Avianca and LAN in 2014 with
29.9%
31.8% 31.6% a new base in Bogota. If conditions in the Mexican market
30 28.3%
worsen, VivaAerobus has the flexibility to perhaps transfer
21.7%
some of its incoming aircraft to sister carrier VivaColombia,
20 17.6% which emerged as Colombias first full-fledged low-
14.3% cost carrier in 2012. Both carriers are partially owned by
10
9.6% investment firm Irelandia, which is headed by Ryanair
7.2% 7.8%
5.7% founder Declan Ryan. After operating below the radar during
3.2%
2013, VivaColombia is now working to establish a base in the
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Jan- countrys largest market, Bogota, upping competition with
May
2014 Colombias largest and second-largest carriers Avianca and
LAN Colombia. The airline introduces its first international
route on 1-Aug-2014 when it introduces flights to Panama
City (operating to Panama Pacific International airport) from
Bogota and Medellin.
Mr Ryan has tabled ambitious goals for VivaColombia,
estimating the carrier could operate a fleet of 50 aircraft (it
presently operates five A320 narrowbodies). Conditions in
Colombia might warrant Mr Ryans ambition with 14%
passenger growth in the country in 2013, Colombia seems
Pg 104 | CAPA World Aviation Yearbook 2014 ripe for the type of traffic stimulation ushered in by the Viva
groups pure-play low-cost carrier philosophy.
Aviancas response to VivaColombias entry into major
74 %
CHILEAN DOMESTIC MARKET SHARE BELONGING Colombian trunk routes should be interesting as Aviancas
TO LAN market share during 2Q2013 fell to 55% from 60% the year
prior. While Avianca reported in mid-2013 that Colombia
was one of the groups most profitable markets, the company
could experience yield erosion within Colombia in 2014 as it
might find itself matching VivaColombias fares in order to
sustain passenger loyalty.
Avianca also appears to be capping its domestic share in
Peru at 15%. TACA began targeting Perus domestic market
in 2010 and rapidly built up share to its current levels, but it
appears Avianca has no further expansion plans after recently
declaring it would not expand its fleet in Perus capital and
largest market Lima.
The company has also downgraded its hub in San Jose,
Costa Rica (a legacy TACA hub) to a focus city, which
benefits Panamas Copa and US carriers Delta and JetBlue.
In late 2013, Copa emerged as San Joses largest carrier after
adding a ninth daily flight to its strong hub in Panama City.
Copa, with the help of a supportive government, has built
Panama City into a powerful hub that connects to both
strategic Latin American markets and numerous routes in
North America.
After the consolidation shake-out in Latin America that
created Avianca Holdings and LATAM Airlines Holdings,
Copas fate as a stand-alone carrier was called into question.
But with the power of its hub in Panama City and a strong
financial performance it has recorded operating margins
above 17% since 2004 Copa is proving that under the
right conditions independent carriers can still thrive in Latin
America. It plans ASK growth of 10% during 2014 as new
service to Fort Lauderdale, Georgetown and Montreal debuts
in 2014.
Meanwhile, Avianca has also curtailed its growth within
Ecuador after concluding that the elimination of a fuel
subsidy and the opening of a new airport farther away from
Quitos city centre weakened demand within the country.
Aviancas rivals in the domestic Peruvian and Ecuadorean
markets, LAN Peru and LAN Ecuador ,continue their
unabated growth within those markets.
Peru and Ecuador were LATAM Airlines Groups fastest
growing markets in 3Q2013 as ASKs within those regions
increased 18% and 35%, respectively, year-on-year.
Argentinas government continues to hold tight to its
protectionist ideals, ensuring a rocky road for its airlines.
LAN Argentina faces a much different scenario. Its growth in
the domestic market remains hampered by the governments
protection of renationalised flag carrier Aerolineas
Argentinas. The latest affront occurred in 2013 when
Argentinas government attempted to evict LAN Argentina
from its maintenance base, which would have resulted in the
carrier exiting the domestic market.
In response to increasing domestic demand and the
governments constant thwarting of growing competition
within Argentina, Aerolineas, now embraced within
SkyTeam, has ordered 26 Boeing 737-800s. Presently
Aerolineas has 50 aircraft in operation, including Airbus
After operating below the radar during 2013, VivaColombia in 2014 is working to A330/A340 widebodies and Embraer 190s operated by its
establish a base in the countrys largest market, Bogota. subsidiary Austral.
Even as Aerolineas benefits from favourable protection
from Argentinas government, the carrier has lost roughly
USD2 billion since it was renationalised in 2008, and its
profitability targets have consistently been missed. Although
Pg 105 | CAPA World Aviation Yearbook 2014 the airline has made improvements in re-fleeting and grown
both revenues and passengers carried since the government
reassumed control, it is time for Argentinas government
+ to loosen the tight reins it holds on domestic air travel
17% COPAS OPERATING MARGIN SINCE 2004 and infuse real competition into the marketplace. But the
government has bigger things on its mind as the economy
teeters towards another potential collapse.
In the financial disaster stakes, post-Chavez Venezuela is
causing considerable pain to several airlines among them
Copa and American as tiered devaluation is imposed by
the government. Repatriating funds at well below official
exchange rates is a painful exercise for foreign airlines; Copa
reportedly has USD300-400 million tied up in the country,
while American is USD700 million in the same straits. Like
Argentina, Venezuela is a strong supporter of protectionist
strategies; while these are not necessarily the root of the
problem for airlines, it may be more than coincidence that
the countries share other serious shortcomings. Most airlines
serving Venezuela have significantly cut their operations to
the country beginning in Jul-2014 American Airlines is
cutting its weekly flights from the US to Venezuela from 48
to 10. Copa Airlines in May-2014 began cutting its seats on
offer to Venezuela by 40%.
The outlook for Chile is more upbeat. Chile has been the
fastest growing market in Latin America in recent years,
quietly outperforming much larger Brazil and Mexico, despite
being one of the largest markets in the world lacking LCCs.
Passenger traffic in Chile grew by 8% in 2013 to 16.5 million,
driven by a 14% increase in domestic traffic to 9.5 million as
international traffic grew by only 2% to 7 million.
More rapid domestic growth is expected in 2014 as Chiles
Outside the two largest markets, economy remains robust, with expected GDP growth of
Brazil and Mexico, a main theme about 4%. LAN will again be the main beneficiary as the
carrier has a dominating 74% share of the Chilean domestic
throughout Latin America has been market. LATAM also flew 66% of passengers in Chiles
the strong growth in the domestic international market in 2013. Chiles second carrier, Sky
Airline, has been growing rapidly but is still very small,
markets. accounting for only a 22% share of the domestic market and a
5% share of the domestic market in 2013.
As one of Latin Americas last remaining independent
full service carriers, Sky is a potential takeover target for one
of the regions groups, particularly Avianca. But LATAMs
domination of its home market makes it very challenging for
a competing group or new entrant, despite Chiles generally
favourable economic conditions and a stable political
environment.
Outside the two largest markets Brazil and Mexico, a
main theme throughout Latin America has been the strong
growth in the domestic markets. The 14% domestic growth
for 2013 in Chile, where domestic growth was in the 18% to
19% range in 2010 to 2012, was matched in Colombia and
surpassed in Peru. Colombia reported 14% domestic growth
in 2013 to 21.5 million while Peru recorded 15% growth to
8.3 million.
Argentina also had double digit domestic growth in
2013 of 12% to 12.5 million as Aerolineas focused capacity
expansion on the domestic market. Only Colombia had
14%
international growth (14%) that kept up with domestic
DOMESTIC GROWTH FOR 2013 IN CHILE AND COLOMBIA growth. Peru reported 11% international growth while Chile
recorded international growth of only 2% and Argentina
experienced a 3% drop in international passenger traffic.
These are encouraging features for the region; not only
is there substantial upside internationally, but the major
domestic markets are showing considerable resilience as
national economies gain scale and maturity.
Latin America
GOL PROJECTED DELIVERY DATES FOR AIRCRAFT ON ORDER*
Selected Airlines
20
1. GOL
15
10
14
15
16
17
18
19
20
21
22
23
24
20
20
20
20
20
20
20
20
20
20
20
737
Listed on the New York Stock Exchange, GOL Linhas Areas Inteligentes
(Gol) is based in Sao Paulo, Brazil. The LCC has smaller hubs in Sao Paulos *Excludes new aircraft that are coming from leasing companies
Congonhas International Airport, Rio de Janiero International Airport and
Brasilia International Airport. Gol is a major player in South America, with
over 40% of the Brazilian domestic market. Gol operates a fleet of Boeing GOL STAGE LENGTHS
737NG aircraft supporting an extensive domestic network within Brazil SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014
and services to 61 destinations in ten countries across Central and South
3500
America.
3000
GOL FLEET SUMMARY AS AT MAY-2014

2000
Boeing 737-700 30 0 0
1500
Boeing
5 0 0
737-700(ETOPS)
1000
Boeing 737-8 0 0 60
Boeing 737-800 100 0 23 500
Boeing 767-200ER 0 1 0 0
Total: 135 1 83
-500
0 2 4 6
Flight Time (Hours)
GOL TOP 10 INTERNATIONAL ROUTES BY SEATS

GRU - AEP 7,728 seats
EZE - GRU 4,416 seats
CCS - GRU 4,048 seats
GRU - MVD 3,680 seats
EZE - POA 3,312 seats
CCS - PUJ 2,944 seats
GRU - COR 2,576 seats
GRU - VVI 2,576 seats
MVD - POA 2,576 seats
EZE - FLN 2,576 seats
0k 1k 2k 3k 4k 5k 6k 7k 8k 9k 10k

Latin America
TAM AIRLINES PROJECTED DELIVERY DATES FOR AIRCRAFT ON ORDER*
Selected Airlines
30
25
2. TAM Airlines 20
15
10
14
15
16
17
18
19
20
21
22
20
20
20
20
20
20
20
20
20
Based at Sao Paolo-Guarulhos International Airport, TAM Airlines is listed A320 A350 777
on the New York and Sao Paulo Stock Exchanges, and is the national airline
and largest carrier in Brazil. TAM has an estimated 50% of the domestic *Excludes new aircraft that are coming from leasing companies
market share and 75% of the international market share. Using a fleet
of narrow and wide-body Airbus and Boeing aircraft, TAM operates an
extensive network of domestic and regional services within South America TAM AIRLINES STAGE LENGTHS
and international services to North America and Europe. TAM ended its SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014
membership of Star Alliance on 30-Mar-2014, joining oneworld on the
2500
following day.
2000
TAM AIRLINES FLEET SUMMARY AS AT MAY-2014
1500
Airbus A319-100 26 0 0
1000
Airbus A320-200 91 0 0
Airbus A320-
0 0 18 500
200NEO
Airbus A321-200 12 0 36
0
Airbus A330-200 8 5 0
Airbus A340-500 1 1 0
-500
0 5 10
Airbus A350- Flight Time (Hours)
0 0 27
900XWB
Boeing 767-300ER 8 0 0
Boeing 777-300ER 10 0 2 TAM AIRLINES TOP 10 INTERNATIONAL ROUTES BY SEATS
Total: 156 6 83
SCL - GRU 11,278 seats
MIA - GRU 10,498 seats
GRU - JFK 7,964 seats
GRU - AEP 7,308 seats
EZE - GRU 5,210 seats
GRU - MCO 5,129 seats
GRU - CDG 5,068 seats
GRU - FRA 5,068 seats
GRU - LHR 5,068 seats
GRU - MVD 4,524 seats
0k 2k 4k 6k 8k 10k 12k 14k

Latin America
LAN AIRLINES PROJECTED DELIVERY DATES FOR AIRCRAFT ON ORDER*
Selected Airlines
40
3. LAN Airlines
30
20
10
14
15
16
17
18
19
20
21
22
20
20
20
20
20
20
20
20
20
Based in Santiago, LAN Airlines is the national airline of Chile. One of the A320 787
largest airlines in Latin America, LAN Airlines uses a fleet of Boeing and
Airbus narrow and wide-body aircraft and operates an extensive network *Excludes new aircraft that are coming from leasing companies
within Central and South America as well as Australia, the Pacific, North
America and Europe. LAN is a prominent player in South American aviation.
It is one of the most consistently profitable airlines in the industry, and has LAN AIRLINES STAGE LENGTHS
subsidiaries in Argentina, Peru, Ecuador and a cargo subsidiary. LAN is a SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014
member of the oneworld alliance.
1750
1500
LAN AIRLINES FLEET SUMMARY AS AT MAY-2014

Airbus A319-100 5 0 0
750
Airbus A320-200 43 1 22
Airbus A320- 500
0 0 20
200NEO
250
Airbus A321-200 0 0 18
Airbus A340-300X 3 1 0 0
Boeing 767-300ER 31 0 0
-250
0 5 10 15
Boeing 787-9 0 0 10
Total: 87 2 87
LAN AIRLINES TOP 10 INTERNATIONAL ROUTES BY SEATS
SCL - LIM 20,668 seats
EZE - SCL 14,800 seats
EZE - LIM 9,070 seats
SCL - AEP 7,056 seats
SCL - MDZ 6,672 seats
SCL - GRU 6,352 seats
LIM - MIA 6,188 seats
LIM - LAX 6,188 seats
SCL - MIA 5,746 seats
SCL - MVD 4,762 seats
0k 5k 10k 15k 20k 25k

Latin America
AEROMEXICO PROJECTED DELIVERY DATES FOR AIRCRAFT ON ORDER*
Selected Airlines
12
10
4. Aeromexico 8
14
15
16
17
18
19
20
21
22
23
20
20
20
20
20
20
20
20
20
20
Wholly-owned by Grupo Financiero Banamex, Aeromexico is based in 737 787
Mexico City and operates an extensive regional network within Central and
South America, as well as to Asia, North America and Europe. Aeromexico, *Excludes new aircraft that are coming from leasing companies
together with subsidiaries Aeromexico Connect (regional division) and
Aeromexico Travel (charter division), are the largest domestic airline in
Mexico and, until Mexicanas apparent demise in Aug-2010, was the second- AEROMEXICO STAGE LENGTHS
largest international airline behind Mexicana. Aeromexico is a founding SOURCE: CAPA - CENTRE FOR AVIATION AND OAG | MAY-2014
member of SkyTeam.
2500
2000
AEROMEXICO FLEET SUMMARY AS AT MAY-2014
1500
Boeing 737-700 26 0 0
1000
Boeing 737-8 0 0 60
Boeing 737-800 20 0 1
500
Boeing 767-200ER 2 1 0
Boeing 767-300ER 3 0 0 0
Boeing 777-200ER 4 0 0
Boeing 787-8 5 0 4 -500
0 5 10 15
Total: 60 1 71
AEROMEXICO TOP 10 INTERNATIONAL ROUTES BY SEATS

MEX - LAX 9,795 seats
MEX - JFK 9,674 seats
MEX - MIA 5,910 seats
MEX - ORD 5,790 seats
MEX - LAS 5,640 seats
MEX - IAH 5,610 seats
MEX - MAD 5,044 seats
MEX - LIM 4,596 seats
LAX - GDL 4,200 seats
MEX - EZE 4,058 seats
0k 2k 4k 6k 8k 10k 12k

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WORLD AVIATION

Southeast Asia overview....................................... p14 Eastern Europe overview...................................... p74

Protecting the fortress and the double-edged dangers of protectionism

Airlines in Transition: Hybridisation and operating dual brands

Pg 4 | CAPA World Aviation Yearbook 2014

There is another factor that unavoidably influences the

The external impacts:

2. (Re) defining the shape of the industry

2014 holds no promise of being more boring than the

Pg 8 | CAPA World Aviation Yearbook 2014

Pinpointing the countries

intervention are most likely GDP per capita.

The penetration of air travel is correlated with

Pg 9 | CAPA World Aviation Yearbook 2014

Other factors also have an impact

The BRIC emerging economies are under-pene-

The MINT grouping is more diverse

Governments do have a large role to play

This report provides a glimpse of what can be gleaned from

See related reports:

Indias Civil Aviation Agenda: CAPA proposals for the

Airline ownership & control. Why might Europe uphold

World airline industry in cyclical upswing - but in search

Pg 13 | CAPA World Aviation Yearbook 2014

Pg 14 | CAPA World Aviation Yearbook 2014

Garuda Indonesia 557,922 Singapore

Southeast Asias five smaller markets

Pg 22 | CAPA World Aviation Yearbook 2014

LION AIR STAGE LENGTHS

PEN - KNO 5,964 seats

CGK - JED 4,522 seats

SIN - SGN 2,982 seats

PEN - MES 2,646 seats

KUL - BDO 2,646 seats

SZB - HDY 576 seats

KNO - HDY 432 seats

0k 2.5k 5k 7.5k 10k 12.5k 15k 17.5k 20k 22.5k

Pg 23 | CAPA World Aviation Yearbook 2014

and strengthen its network, especially in the domestic market, it is

eastern and western Indonesia.

Boeing 737-300 3 0 0 DPS - SIN 4,368 seats

Boeing 737-500 3 2 0 CGK - KUL 4,368 seats

Boeing 737-800 67 0 10 CGK - PEK 4,032 seats

Boeing 747-400 2 0 0 DPS - MEL 4,032 seats

Boeing 777-300ER 4 0 6 0k 5k 10k 15k 20k 25k 30k

Pg 24 | CAPA World Aviation Yearbook 2014

AIRCRAFT IN SERVICE IN STORAGE ON ORDER

AIRASIA TOP 10 INTERNATIONAL ROUTES BY SEATS

KUL - SIN 25,920 seats

KUL - DMK 17,640 seats

KUL - SGN 12,600 seats

KUL - HKT 10,080 seats

SIN - PEN 10,080 seats

KUL - HKG 10,080 seats

KUL - TRZ 7,560 seats

KUL - DPS 7,560 seats

KUL - KNO 7,560 seats

CAN - KUL 7,560 seats

0k 5k 10k 15k 20k 25k 30k 35k

Pg 25 | CAPA World Aviation Yearbook 2014

*Excludes new aircraft that are coming from leasing companies

SINGAPORE AIRLINES FLEET SUMMARY AS AT MAY-2014

AIRCRAFT IN SERVICE IN STORAGE ON ORDER