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Airports market intelligence with schedules and fleets data

Commercial strategy

Airports build robust market intelligence with schedules and fleets data

August 6, 2020

With the slow recovery of demand in the airline industry, business at airports is deeply impacted. This is perhaps even […]

With the slow recovery of demand in the airline industry, business at airports is deeply impacted. This is perhaps even truer for large hub airports where capacity may be greater than what’s needed right now. However, retail and commerce areas within airport businesses often play an important role in building up airport revenue streams.

Cities around the world have already positioned airports as destinations. As a business, airports have a wider offering beyond facilitating transportation. They are a hub for business and entertainment.

“Airport operators should think hard about how to leverage their existing resources to dig more for potential revenues. Large airport facilities (like in China) would need to catch up with those matured airport management organizations to improve the capability of managing the ”soft” side of the business, or service,” said Joanna Lu, Head of Consultancy Asia, Ascend by Cirium.

How can airports navigate the current fluctuations in supply and demand? As things change, some of the insights previously used on a regular basis may not be useful right now.

As aviation markets around the world gradually emerge into a new normal, post-COVID-19, what is becoming increasingly apparent is that each market is unique and is recovering in its own way. Recovery trends of one country cannot be simply applied to another, owing to the myriad factors influencing it. Traveler confidence, airport (and indeed, the ecosystem) preparedness, market profiles, travel bubbles, quarantine/health/visa regulations, emergence of new hot spots, and varying degrees of bilateral trust are some of the factors influencing both market demand and supply.

A sample of Australia, Malaysia, Japan and Vietnam markets using Cirium data pulled in June 2020, gives a look at distinct markets taking shape. By combining key metrics and mixing datasets from the Cirium Core, aviation development managers can develop different business insights. Are airports studying them all to stay ahead of the curve?

  1. Monitoring market-level or airport-level capacity share
  2. Building granularity into market analyses
  3. Re-setting baseline (and expectations) as markets recover
  4. Examining changes within airline alliances
  5. Tracking for rapid changes hinting at new trends

1. Monitor market-level or airport-level capacity share, by airline

The first casualty of the pandemic in Asia Pacific, Virgin Australia, announced its sale to Bain Capital, while Qantas Group disclosed a three-year strategy to guide recovery and navigate in a new world.

Both carriers, including subsidiaries, had been adjusting forward capacity through June 2020, to align market supply better with expected demand. Whether an airport team is focused on aviation development or operational planning, it is possible to pull both macro-trends or micro-changes from industry data within the Cirium Core.

Putting insights into action

Knowing what the changes are, and when they are published by an airline, enables resource planners and market researchers to derive insights and make informed decisions.

  • Airport lounge operators can see where and when to plan appropriate staffing levels
  • Airport retail concessionaires can better plan their supply chain and inventory levels

As seen in the chart above, smaller regional players have gained share in July 2020. This trend presents an opportunity for airports to work closely with these carriers to seize the low-hanging fruit in the market at this difficult time.

  • Advertise offerings to passenger profiles traveling on these services
  • Look for near-term route development opportunities to bring some traffic back to your airport
    Example: With Qantas grounding 100 aircraft for the next twelve months, there might be limited scope for high-profile route development engagements. This may be a time to focus on the quick wins

2. Build more granularity into market analysis

Look at active fleet by airline type.

Despite relatively few COVID-19 cases in Australia and early government action, the sluggish domestic aviation recovery is largely due to states taking their own measures and precautions. Domestic capacity for July, typically a strong month for travel, remains ~75% down YoY, based on the schedules published for Jul-20 the week of 29-Jun. More recently, Melbourne has been locked down for six weeks due to rising cases.

In line with the state-specific regulations, regional and charter airlines with predominantly intra-state services have a large proportion of their commercial passenger fleet in service, while the larger players offering wider domestic and international connectivity have much of their fleet in storage. This picture will change once states open their borders for wider inter-state travel.

Airline fleet status for Asia region June 2020 Cirium data

Putting your insights into action:

  • Knowing which airlines and fleet are in-service will help you shape your near-term tactics
  • Airport operations planners, ground handlers and engineering maintenance providers can plan gates/ramp/terminal maintenance, staffing needs, supplies of equipment and parts in an agile manner
  • Air Service Development teams can tailor realistic business cases based on the in-service fleet, and government regulations, as factors such as aircraft range can be taken into consideration

3. Re-set the baseline (and expectations) as markets recover

Malaysia’s COVID-19 response was led by health officials and, as a result, the country has seen far fewer positive cases than other comparable nations. The response was coordinated centrally, as a result of which the impact on aviation was felt across the board.

Domestic recovery seems to be well underway, with latest published schedules for June 2020 being at its highest point in recent months. Kuala Lumpur, being the only hub in Malaysia, lies within the state that has the highest COVID-19 count in the country. This may be one of the reasons why the share of domestic flights touching the primary airport (Kuala Lumpur) has fallen versus pre-pandemic levels.

  • Rolling monthly activity shows us that while domestic carriers have been removing future flights from their schedules approx. 3-4 weeks in advance, it is interesting to note the month of Jul-20 started off at a much higher base (~130% higher) than Jun-20 did
  • AirAsia has been gradually inching up its share of the market in this recovery, reinstating services quicker than its competitors

Year on Year ASK comparison Cirium Data June 2020

Putting insights into action:

Finding a new baseline could mean starting with a different view of the data. As Cirium continues to see increased segmentation between domestic traffic and international, all operators are having to establish new ways to benchmark what to expect from the market.

  • Secondary airports should watch for new non-stop services
  • As nonstop services between secondary airports are occupying a larger portion of the pie compared to pre-COVID-19, travelers may get accustomed to bypassing the hub. This might be a “new normal” in the Malaysian domestic market
  • Map out markets that may be facing similar constraints or recovery trends as your own
  • Derive insights and construct proposals that support airport goals

4. Examine changes within airline alliances

How do airline partnerships impact traffic at your airport?

Japan Airlines and Malaysia Airlines, both part of the Oneworld Alliance, recently announced a close partnership on flights between Japan – Malaysia and beyond. This will go beyond just codeshares, and look at network, schedules, connectivity and enhanced frequent flyer program.

Synergies enable airlines to spread risk, especially during turbulent times.

  • A cooperation will enable both airlines to offer better frequencies and consistent schedules together as the industry recovers, thus carrying more passenger to/through the origin/destination airports
  • In the longer run, such a cooperation will have a large positive impact on local and, particularly, connecting traffic through the hubs, Kuala Lumpur and Tokyo Narita in this case

5. Track for rapid changes

Build a way to monitor the pace of change.

One of the few countries in Asia which, according to reports, handled COVID-19 extremely well, Vietnam’s domestic market has rebounded, and even exceeded, pre-COVID levels. From 88% of its installed fleet base being in storage in Mar-20, to only 12% being in storage in Jul-20, Vietnam’s airlines are taking to the skies with renewed vigor. Despite such success in controlling the virus, on July 28, 2020, Vietnam’s regulator suspended all flights to/from Da Nang and locked down the city due to a sudden detection of positive cases.

Of particular interest is the rapid growth in domestic services to Vietnam’s numerous leisure destinations. On the one hand, it demonstrates flyers’ confidence in a safe experience while, on the other, it shows that Vietnam’s local airlines are deploying their former international capacity to the domestic market. The recovery has come in good time for the country’s airlines as July is typically a peak month for travel in Vietnam.

Year on Year Seat Growth - Vietnam Cirium data June 2020

Putting insights into action:

This shifting trend could be of concern to airports outside of Vietnam looking to re-gain the international services from Vietnamese carriers once flights can resume. Given the capacity constraints in Vietnam’s key airports, it is a genuine risk that airlines may decide to maintain their domestic services to preserve valuable slots and market presence.

  • Set up ways to monitor growth as industry recovers
  • It is highly beneficial for airport-related service providers to know what the new normal is, to help adjust resource planning. This gains in importance especially for unexpected rapid increases such as this
  • Given the growth in leisure markets in Vietnam, the tourism and hospitality industry would also do well to monitor market capacity as it is a leading indicator of expected tourists, directly influencing hotel room occupancy and the tourism economy

With the focus on domestic recovery, given the uncertainty in international travel demand, the average distances of planned sectors are much lower than pre-pandemic.

Lower average planned distance by airline Cirium Core

“Data-driven decisions and market analysis are key now more than ever, together with tools to track schedule changes, capacity analyses, broader trends and expected market share,” said Cirium Solution Consultant Kanishka Chatterjee. “Airports, and all stakeholders in the airport ecosystem, find valuable data means better planning for resources, in preparation for increased activity and passenger flow at airports.”

As aviation recovers from COVID-19, some airlines will be more conservative than others in reinstating former routes, before considering launching new services. This new normal presents a new beginning, a fresh start, for both airlines and airports to seize a first mover advantage, and keep a constant dialogue going as demand evolves. Given the regulations around health and safety as the industry recovers from the pandemic, it is absolutely critical for all stakeholders to be on the same page and be well-prepared to aid in a sustainable recovery. Data-driven decision making can be at the heart of this alignment.

Cirium is here to help.

Many of the insights in this summary are courtesy of Kanishka Chatterjee, Cirium Solutions Consultant

For further information, connect with the Cirium team or read more about the benefits of using Cirium SRS Analyser and Cirium Fleets Analyser.

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