Source: capstats.com
10 Year Increases by Country
103% 104%142%
171%
228%
317% 321%363% 370%
400%2005 ‐ 2014
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?
Profit‐Less Europe?
European Airports:“43% Loss Making”
European Airlines: “Profitability Well Below Industry Average”
The Re‐Regulation of Europe
1994 Aviation Guidelines
2005 Guidelines
2009 Directive on Airport Charges
1990 Market Liberalisation
2014 Guidelines
The 2014 Guidelines1. 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
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?
€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
‐€150
‐€100
‐€50
€‐
€50
€100
€150
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Finnair Profitability
EUR ‘M
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
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