Tom Shearer from IC Aviation Market analysis : Global and European Developments

2. 10 Year Jet Fuel Prices
Source: www.indexmundi.com

3. Fuel Costs by Airline
28%
39%>>
>>
>> 45%

4. Source: capstats.com
10 Year Increases by Country
103% 104%
142%
171%
228%
317% 321%
363% 370%
400%2005 ‐ 2014

5. 13 New Countries
?

7. Success of M.E. Carriers?
Profitable growth
strategies
1. NEW!
• New companies
• New aircraft
• New airports
Market forces:
competition,
fuel, economy
2. STATE SUBSIDIES?
• Hard to prove
• Will it impact?

8. Source: CAPA – Centre for Aviation
Cost & Efficiency – M.E. Carriers

9. Projected Passenger Growth
Source: ACI Europe

10. Profit‐Less Europe?
European Airports:
“43% Loss
Making”
European Airlines:
“Profitability Well
Below Industry
Average”

11. Old Airport Revenue Model

12. New Airport Revenue Model

13. Old Airline Revenue Model

14. New Airline Revenue Model

15. The Re‐Regulation of Europe
1994 Aviation Guidelines
2005 Guidelines
2009 Directive on Airport Charges
1990 Market Liberalisation
2014 Guidelines

16. The 2014 Guidelines
1. Investment Aid
 Depending on the size of the airport, certain amount of aid permitted
 If possible to show that projected return is more than investment required: no illegal
state aid exists
2. Operational Aid
 Only permissible for airports <3m p.p.a.
 Ex‐ante 10 year business plan is required to show cost coverage
3. Start Up Aid to Airlines
 Must link an airport with <3mppa to another EU airport
 50% contribution towards marketing costs, for 24 months

17. The 2014 Guidelines ‐ ?
1. What happens after the 10 year transitional period?
2. Will all unprofitable airports be forced to close or will
further transitional periods be granted?
3. Does the Commission believe that in 10 years, some 150
loss making airports will suddenly be self‐sustaining?
4. How can airports accurately predict what will happen in 10
years?
5. Why is investment in non‐aeronautical revenue still not
permitted?

18. Finnish Market
60%
3%5%
6%
13%

19.  €83m net loss in 2014, revenue – 5%
 Drop in revenue due to Asian revenue decline
 Asia = 44% of passenger revenue in 2014
 Increasing competition on Nordic – Asia market
 Cost savings will impact 2015 performance
 Flybe sale significant development
Finnair

20. ‐€150
‐€100
‐€50
€‐
€50
€100
€150
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Finnair Profitability
EUR ‘M

21. 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
1 500
1 550
1 600
1 650
1 700
1 750
1 800
Finnair Op. Costs (ex‐fuel)
EUR ‘M

22. SAS Op. Costs (ex‐fuel)
EUR ‘M
2 500
3 000
3 500
4 000
4 500
5 000
5 500
6 000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

23. €6.37
Unit Costs Comparison*
€11
*Cost Per Available Seat Kilometre ‐ EUR Cents
‐42%

24. Thank You!
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www.ic‐aviation.com