Estudio crisis aviación

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Table of Contents

1. Executive Summary ......................................................................................... 3

2. Crisis Analysis Chart – 1979-2011 ...................................................................... 4

3. Crisis Analysis Chart – 2000-2011 ..................................................................... 4

4. Crisis Analysis ................................................................................................ 5

4.1 WTC Attack US - Sep 2001 – Analysis ................................................................ 5

4.2 SARS in China 2003-2005 – Analysis ................................................................. 6

4.3 Swine Flu Mexico-Apr 2009 – Analysis ................................................................ 8

4.4 Icelandic Volcanic eruption event: April 2010 - Analysis ........................................ 8

4.5 Quake, Tsunami and nuclear plant explosion Japan-March 2011 – Analysis .......... 9

5. Fuel prices impact on world capacity – Analysis .................................................. 11

6. The impact of financial crises on global capacity – Analysis .................................. 12

7. Conclusion .................................................................................................... 13

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1. Executive Summary

Over the past 30 years there have been may events of differing magnitude that have

impacted air travel. This report evaluates those major events that have occurred at a

country, regional and global level in the aim to understand and predict the impact on air

travel capacity of future events.

Each event can be categorised according to its magnitude based on a High, Medium and

Low rating and for each category the impact on capacity can be identified.

Event scale Classification Recovery period

Low Singular localised event – Earthquake, tropical storms

up to 3 months (Country)

Medium Multiple event – widespread virus, extreme natural disaster

3-12 months (Regional)

High Global event – global financial shocks, WTC attacks

12-36 months (Globally)

For a localised event, the recovery in capacity is relatively quick seeing recovery with 3

months as the impact is felt mainly on the national carrier or major carriers into that

country/city. Other non-domicile carriers may reduce capacity or frequency of operations

for a short while whilst the recovery takes place, but demand quickly recovers and capacity

returns to pre-event levels.

For the regionalised events such as SARS and the March 2011 Japanese Earthquake and

following Tsunami are categorised as a medium level event and see a recovery in capacity

between 3 to 12 months. These events impact not only the domicile carriers operating to

and within the country, but also the non-domicile as demand to travel to that region

declines for a sustained period of time.

For the major global events such as financial shocks and the World Trade Centre attacks in

September 2001 have a much wider reaching impact. These high impact events impact all

major carriers due to sharp reduction in air travel demand and thus capacity is drastically

reduced in order to maintain profitability. Due to the global nature of the event, demand

takes much longer to recover and capacity takes between 12 and 36 months to recover

back to pre-event levels.

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Quake, Tsunami and nuclear plant explosion Japan-March 2011

Volcanic Ash Iceland-Apr 2010

Sw ine Flu Mexico-Apr 2009

Earthquake China-May 2008

Second SARS China-Jan 2005

SARS China-Jan 2004

First SARS alerts Hong Kong-March 2003

WTC Attack US-Sep 2001

Drought India-May 2000

Flood North Korea-Aug 1995

Cyclone and Flooding Bangladesh-Apr 1991

Earthquake Iran-Jun 1990

Earthquake Armenia-Dec 1988

Volcanic Eruption Columbia-Nov 1985

Volcanic Eruption US-May 1980

0

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350

400

Jan-79 Jun-81 Dec-83 May-86 Nov-88 Apr-91 Oct-93 Apr-96 Sep-98 Mar-01 Aug-03 Feb-06 Jul-08 Jan-11

Mill

ions

CapacityEvents

Drought India-May 2000

WTC Attack US-Sep 2001

First SARS alerts Hong Kong-March 2003

SARS China-Jan 2004

Second SARS China-Jan 2005Earthquake China-May 2008

Sw ine Flu Mexico-Apr 2009

Volcanic Ash Iceland-Apr 2010

Quake, Tsunami and nuclear plant explosion Japan-March 2011

0

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100

150

200

250

300

350

400

Jan-00

Jul-00

Feb-01

Aug-01

Mar-02

Sep-02

Apr-03

Nov-03

May-04

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Jun-05

Jan-06

Jul-06

Feb-07

Sep-07

Mar-08

Oct-08

Apr-09

Nov-09

May-10

Dec-10

Mill

ions

CapacityEvents

2. Crisis Analysis Chart – 1979-2011

World capacity 1979-2011 Source: OAG Schedules iNet

The annual trend in world capacity is steadily increasing at 3.1% per year. The growth in

the past 20 years was only impacted in 2001 by the World Trade Centre (WTC) event in

the US. Over the past 10 years, world capacity steadily grew at an average of 2.6% per

year.

3. Crisis Analysis Chart – 2000-2011


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4. Crisis Analysis

Events Event scale Recovery period

Volcanic Eruption US-May 1980 Low up to 3 months Volcanic Eruption Columbia-Nov 1985 Low up to 3 months Earthquake Armenia-Dec 1988 Low up to 3 months Earthquake Iran-Jun 1990 Low up to 3 months Cyclone and Flooding Bangladesh-Apr 1991 Low up to 3 months Flood North Korea-Aug 1995 Low up to 3 months Drought India-May 2000 Low up to 3 months WTC Attack US-Sep 2001 High 12-36 months First SARS alerts Hong Kong-March 2003 Medium 3-12 months SARS China-Jan 2004 Medium 3-12 months Second SARS China-Jan 2005 Medium 3-12 months Earthquake China-May 2008 Low up to 3 months Swine Flu Mexico-Apr 2009 Low up to 3 months Volcanic Ash Iceland-Apr 2010 Low up to 3 months Quake, Tsunami and nuclear plant explosion Japan-March 2011 Medium 3-12 months

4.1 WTC Attack US - Sep 2001 – Analysis Jan-Sep 2000 capacity 2,208m seats Jan-Sep 2001 capacity 2,275m seats Y-o-Y 3% Pre-event trend 5%

World – Y-o-Y capacity 2000 vs. 2001 Source: OAG Schedules iNet

Pre-WTC attack trend:

200

210

220

230

240

250

260

270

280

Feb-01 Mar-01 Apr-01 May-01 Jun-01 Jul-01 Aug-01

Millions

World - capacity Feb – Aug 2001 Source: OAG Schedules iNet

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Post-WTC attack trend:

0

50

100

150

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250

300

Aug-01

Oct-01

Dec-01

Feb-02

Apr-02

Jun-02

Aug-02

Oct-02

Dec-02

Feb-03

Apr-03

Jun-03

Aug-03

Oct-03

Dec-03

Feb-04

Apr-04

Jun-04

Millions Pre-event Recovery

World capacity Aug 2001 – Jul 2004 Source: OAG Schedules iNet

Pre-event capacity Aug-01 258m

Post event capacity Sep-01 248m

difference -10m seats

World capacity Aug 2001 – Sep 2001 Source: OAG Schedules iNet

The events of September 11th 2001 had a huge impact on global capacity which took 3

years for capacity to recover.

4.2 SARS in China 2003-2005 – Analysis Pre-SARS trend

China

02468101214161820

Jan-02

Feb-02

Mar-02

Apr-02

May-02

Jun-02

Jul-02

Aug-02

Sep-02

Oct-02

Nov-02

Dec-02

Jan-03

Feb-03

Millions

China capacity 2002-2003 Source: OAG Schedules iNet

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World

0

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300

Jan-02

Feb-02

Mar-02

Apr-02

May-02

Jun-02

Jul-02

Aug-02

Sep-02

Oct-02

Nov-02

Dec-02

Jan-03

Feb-03

Millions

World capacity 2002-2003 Source: OAG Schedules iNet Post-SARS trend

China

05101520253035

Mar-03

Jun-03

Sep-03

Dec-03

Mar-04

Jun-04

Sep-04

Dec-04

Mar-05

Jun-05

Sep-05

Dec-05

Mar-06

Jun-06

Sep-06

Dec-06

Millions

China capacity 2003-2006 Source: OAG Schedules iNet

World

050100150200250300350

Mar-03

Jun-03

Sep-03

Dec-03

Mar-04

Jun-04

Sep-04

Dec-04

Mar-05

Jun-05

Sep-05

Dec-05

Mar-06

Jun-06

Sep-06

Dec-06

Millions


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First SARS alerts Hong Kong-March 2003 SARS China-Jan 2004 Second SARS China-Jan 2005

Although the Chinese trend is closely aligned to the global trend, the Chinese trend is more

exposed to external shocks due to the impact of the Chinese economy on a global scale.

SARS had an impact on both, regional and global capacity. The recovery after the first

SARS alerts in 2003 took 4 months, the subsequent SARS events in 2004 and 2005

recovery was much faster at 1 month.

4.3 Swine Flu Mexico-Apr 2009 – Analysis

Mexico

Swine Flu Apr 2009

012345678

Jan-08

Mar-08

May-08

Jul-08

Sep-08

Nov-08

Jan-09

Mar-09

May-09

Jul-09

Sep-09

Nov-09

Jan-10

Mar-10

May-10

Jul-10

Sep-10

Nov-10

Jan-11

Mar-11

Mill

ions

Mexico - capacity 2008-2011 Source: OAG Schedules iNet The Mexican Swine Flu event had little impact on global capacity, but this event did impact

capacity in Mexico. It took almost 8 months to recover.

4.4 Icelandic Volcanic eruption event: April 2010 - Analysis

Europe

Volcanic Ash Apr 2010

0

20

40

60

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100

120

Jan-09

Mar-09

May-09

Jul-09

Sep-09

Nov-09

Jan-10

Mar-10

May-10

Jul-10

Sep-10

Nov-10

Jan-11

Mar-11

Milli

ons

Europe vs. Iceland capacity 2009-2011 Source: OAG Schedules iNet

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Europe Iceland April 2009 86m seats 14m seats

April 2010 90m seats 15m seats April 2011 93m seats 16m seats

The Icelandic volcanic ash eruption had little impact on global capacity and little impact is

visible in the regional capacity.

4.5 Quake, Tsunami and nuclear plant explosion Japan-March 2011 – Analysis

Pre-event trend

Japan

14

15

16

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18

19

Jan-09

Mar-09

May-09

Jul-09

Sep-09

Nov-09

Jan-10

Mar-10

May-10

Jul-10

Sep-10

Nov-10

Jan-11

Mar-11

Millions

Japan capacity 2009-2011 Source: OAG Schedules iNet

World

050100150200250300350400

Jan-09

Mar-09

May-09

Jul-09

Sep-09

Nov-09

Jan-10

Mar-10

May-10

Jul-10

Sep-10

Nov-10

Jan-11

Mar-11

Millions


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Post-event trend

Japan

14

15

16

17

18Jan-11

Feb-11

Mar-11

Apr-11

May-11

Jun-11

Jul-11

Aug-11

Sep-11

Millions

Japan capacity Jan 2011- Apr 2011 Source: OAG Schedules iNet

World

050100150200250300350400

Jan-11

Feb-11

Mar-11

Apr-11

May-11

Jun-11

Jul-11

Aug-11

Sep-11

Millions

World capacity Jan 2011- Apr 2011 Source: OAG Schedules iNet

The 9.0 magnitude earthquake and following tsunami that struck Japan on 11th March

2011 caused widespread disruption leading to a reduction in capacity to the region. It has

disrupted Japan's export-led economy causing difficulties for many of the country's largest

exporters, such as carmakers and electronics companies.

We have classified the Japanese earthquake as a medium level event, whereby we are

expecting a recovery 3-12 months post the event.

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California Energy CrisisHurricane Katarina US

Gulf War 2003Gulf War 1990 Banking Crisis

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Apr-90

Jun-91

Sep-92

Dec-93

Mar-95

May-96

Aug-97

Nov-98

Feb-00

May-01

Jul-02

Oct-03

Jan-05

Apr-06

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Sep-08

Dec-09

Mar-11

Jet f

uel -

U

S D

olla

rs p

er G

allo

n

Fuel pricesEvents

5. Fuel prices impact on world capacity – Analysis Jet fuel prices Jan 1990-Apr 2011 Source: http://www.eia.doe.gov

World capacity Jan 1990-Apr 2011 Source: OAG Schedules iNet

The Jet fuel price has been dramatically impacted over the last decade by geopolitical

disruptions and fluctuating world oil prices. Today refiners must deal with low marketing

and transport profit margins, and the increasing capital and operating costs of

environmental compliance1. Jet fuel is a major influencing factor accounting for

approximately 30% of some airlines costs.2 This high fuel price over the past 10 years

although having an influencing impact on capacity growth, whereby the average growth

rate has softened from 3.1% over the last 30 years to 2.6% over the past 10 years, has

had no significant impact on global capacity.

1 http://www.eia.doe.gov 2 http://www.iairgroup.com

California Energy Crisis

Gulf War 1990 Gulf War 2003 Banking CrisisHurricane Katarina US

0

50

100

150

200

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300

350

400

Apr-90

Jun-91

Sep-92

Dec-93

Mar-95

May-96

Aug-97

Nov-98

Feb-00

May-01

Jul-02

Oct-03

Jan-05

Apr-06

Jul-07

Sep-08

Dec-09

Mar-11

Mill

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CapacityEvents

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6. The impact of financial crises on global capacity – Analysis

World GDP Growth Source: http://data.worldbank.org

Over the past 13 years, the Asian Financial Crisis in 1997, the WTC Attack in 2001 and the

Banking Crisis in 2008/09 have had a significant impact on the global GDP. Of these

events, only the events of September 11th 2001 and the recent banking crisis have had a

significant impact on global capacity, impacting the capacity trend for approximately 2

years. The Asian financial crisis of 1998 although had a regional impact, did not

significantly affect the global capacity growth due to it’s more localised influence.


Financial and energy Events Event scale Recovery

period

Gulf War 1990 Low up to 3 months Asian Financial Crisis 1997 Low up to 3 months California Energy Crisis 2000 Low up to 3 months WTC Attack US 2001 High 12-36 months Gulf War 2003 Low up to 3 months Hurricane Katarina US 2005 Low up to 3 months Banking Crisis 2009 High 12-36 months

Asian Financial Crisis Banking CrisisWTC Attack US 2001

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

1991 1992 1993 1994 1995 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2008 2009 2010

Billi

ons

CapacityEvents

Asian Financial CrisisBanking Crisis

WTC Attack US 2001

-2.0%

-0.9%

0.2%

1.3%

2.4%

3.5%

4.6%

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Wo

rld

GD

P G

row

th

GDPEvents

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7. Conclusion

Event scale Classification Recovery period

Low Singular localised event – Earthquake, tropical storms

up to 3 months (Country)

Medium Multiple event – widespread virus, extreme natural disaster

3-12 months (Regional)

High Global event – global financial shocks

12-36 months (Globally)

Global capacity growth is very resilient and regionalised events such as natural disasters,

conflicts and fuel price spikes which have a minimal impact on capacity. Only wider global

events such as major financial shocks and the events of September 11th 2001 have had a

significant enough impact on the global airline industry to stem the growth for a significant

period of time. But even this is short lived and global capacity growth soon recovers.

Fuel price shocks have historically had little impact on global capacity, with the shocks

being absorbed through airlines hedging practices, but due to its increasing price, fuel has

now become one of the largest costs items for airlines and will continue to add increasing

pressure to air capacity growth over the coming years.

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Estudio crisis aviación