Embed Size (px)
Citation preview
International Air Transport – Outlook, The p ,Alliances , Strategies and the Privatization
of TAPof TAP
July 2011LISLIS
Some fundamentals
The airline business plays a key economic role for any country particularly for trade and tourismany country, particularly for trade and tourism
The airline business is highly competitive and has shown low overall profitability- which has benefited customers
New business models (e.g. regional airlines, low cost airlines) have expanded the business
A new age including global airline business models beckons – but there are many hurdles ahead, and bec o s but t e e a e a y u d es a ead, a doutcomes are debatable
Increasing Global Airline Liberalisation
3
SOURCE: www.aviationeconomics.com
Means of airline co-operationC i l
BenefitsJoint
V
CapitalMerger
Global Branded Alli
Venture
FFP
Marketing Alliance
Alliance
Code ShareCoordination
Interlineagreement
Intensity
EUROPEAN MERGERS - AND THEN THERE WERE THREE
5
Global Branded Alliances
6
ALLIANCES
7
Global Branded Alliances – 75% of the industry
8
Atlantic Joint Ventures - ATISTAR ALLIANCE – LH/UA/CO/SK SkyTeam - AF/KL/DL/NW
oneworld – BA/IB/AA
9
Atlantic Joint Ventures – Significant hub control
Consolidation – next steps
Immunised Joint Ventures (JV’s) on PacificAA-JL and UA-NH started April 2011AA JL and UA NH started April 2011Long standing DL- KE, DL-China? (but no open skies yet)
EU-Far East/Pacific Immunised JVsLong standing AF- KE. Long-standing BA-QFLH-NH proposedAF-China?, BA-JL ?
USA has signed 102 open skies agreements (more than half way there)Chi R i I di t t diChina, Russia, India outstanding
Truly global virtual JV networks?but still nation-based regulation...but still nation-based regulation.
THE EVOLVING LCC MODEL
Original Southwest model Point-to-point, short sector length, high frequency, no frills –p , g , g q y,
attract business away from cars and buses.
European extension (1 – e.g. Ryanair) Single aircraft type, high utilisation, secondary
airport destinations, emphasis on low cost above all, create traffic by fares stimulation. “We fly and the traffic will come”.y y (2 – e.g. easyJet/JetBlue). Single aircraft type, more primary
airports, undercut the legacy carriers to attract the business traveller “We fly to where people want to go but cheaply”traveller. We fly to where people want to go – but cheaply
Asian extension 24 hour operations telephone ticketing for non CC holders24 hour operations, telephone ticketing for non CC holders All developing ancillary revenues
12
Competition and fragmentation – the LCC
In US and Europe LCC expansion slowing p g
Southwest expanding into traditional markets
Ryanair moving into easyJetmarkets
easyJet moving up-market into easyJet moving up market into traditional markets
airberlin joins IATA, oneworldllialliance
norwegian to start long haul (w 787s)
13
787s)
New competition - super-hubsEmirates
Gulf carriers developing 6th
freedom hubs Attacking established traffic flows
Europe-Far East, Europe-Africa, Kangaroo routeUS ME Af i A i
EtihadQatarUS-ME, Africa, AsiaAsia-Africa
European Airlines not currently an attractive investment
• Stagnant economies• Intense CompetitionIntense Competition• Fuel Price prospects uncertain• Current results weak
Financial results by Airline Region of registration (USDm)
500
-500
0N.
AmericaAsia
PacificEurope Latin
America2010Q12011Q1
-1500
-1000America Pacific America 2011Q1
-2000
Background on TAP markets
Brazil and Africa Markets showBrazil and Africa Markets show high growth potential for 2010-2014 (c.7%+ p.a.)
TAP has a powerful European position on certain country marketsmarkets
TP has 42% of Angola- Europe Seats and 30% of Brazil-
Europe SeatsEurope Seats
Outstanding Issues- LAN and TAM Merger?
Market Attributes of TAP
• Profitable in 2010• Solid respected brand in markets operatedSolid, respected brand in markets operated• Hub location on West of Europe• Support from STAR marketpp• New LIS Airport• Profitable Brazil and Africa Routes• BUT• Intense European Competition from LCC and other• Lacks critical mass compared with three EUR majors
Future OptionsGo it alone (e.g. Aer
Lingus) butLingus) but in Alliance
Alliance Takeover
‘Non aligned’ Takeover
(e.g. Lufthansa)
gowner (e.g.
Qatar) )Qatar)
ASCEND - OFFICES & GLOBAL EXPERIENCE
Hong Kong New YorkLondonHong Kong New YorkLondon
Ascend Asia Ascend USAAscend – Head Office Ascend LondonAscend Asia
35/F Central Plaza,
18 Harbour Road,
Wanchai
Ascend USA441 Lexington Avenue
Suite 702,
New York,
Ascend – Head Office
Cardinal Point,
Newall Road,
Heathrow Airport
Ascend London
10 Fenchurch Avenue,
City of London,
EC3M 7Wanchai
Hong Kong
Tel +852 2813 6366
asia@ascendworldwide com
NY 10017
Tel +1 212 286 1692
Heathrow Airport
London, TW6 2AS
Tel +44 (0)20 8564 6700
uk@ascendworldwide com
EC3M 7
Tel +44 (0)20 8564 6700
uk@ascendworldwide com
21
The information contained in our databases and used in this presentation has been assembled from many sources, and whilst the utmost care has been taken to ensure accuracy, the information is supplied on the understanding that no legal liability whatsoever shall attach to Ascend, its subsidiaries, their officers, or employees in respect of any error or omission that may have occurred.
