Archive (Q3 2015): SYD-FRA (+domestic +connecting) Detailed city-pair analysis

The Sydney-Frankfurt city pair is 16400km apart and is currently only offered through 6th-freedom operations since 2013 (Gcmap.com, 2105)/ (Bitre.gov.au, 2015)/(Australian-Business-Traveller, 2015). With GDS-affiliated information, flights are offered by numerous global airlines/operators, naturally with (Tourism-AU, 2015)/ (Drum@worldairlinenews.com, 2015)/ (Centreforaviation.com):

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  • All traffic connecting through 6th-freedom hubs located within Asia and the Middle-East
  • 1 or more stopovers in those regions (with some high-stopover trips stopping in Australia, Europe and North America).
  • Both home operators carrying O/D traffic places codeshares and interline opportunities on third-party carriers (such as LH with SQ/TG, QF with EK, and AB/VA with EY).
  • Typical one-stop operations associated to the SYD-FRA city pair is shown to the right. Other fares (subject to seasonality, competition and other market performances brings UA, CI and AC on-board)
  • Two-stop operators include the following (in order of typical economy-class fare charges)

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Information above (Tourism Australia, 2015), indicates seasonality in revenue-passengers between Australian-German city-pairs (assuming similar nature between SYD-FRA segments-volumes). Strong seasonality is depicted through price-desensitivity in the high-yield country-pairs. This is mainly due to:

  • Weak pricing-power by competing carriers and low presence of LCCs (Schofield@aviationweek.com, 2015)
  • High-operating costs power given distances and aircraft-economics today (Australian-Business-Traveller, 2015)
  • Weak “visiting-friends-and-relatives”, holiday and leisure market, flat-line on business/education/employment market, and volatile tourism between countries (macroeconomic-variables) (Austrade.gov.au, 2015).

Inconsistency in volumes between Australia and Germany is facilitated by fleet/aircraft flexibility of third-party non-LCC operators, fare/revenue-management and flexibilities induced by legacy-carriers with hubs, spokes. This is clearly identified in GDS-fare offerings/pricings/structuring (Management School, Lancaster University LA1 4YX-UK, 2015), and volumes-management by high-service carriers.

 

HISTORY, MACROECONOMICS & TRENDS – port, hub-carriers, GDP, CPI, cost-impacts, (EU)

Currency/Exchange: The softening Australian-Dollar had impact-negligible inputs on exciting volumes and proportionality of traffic between SYD-FRA given a weak-Euro. CPI tended for cyclical-moderation while GDP grew strongly in Germany, in sharp contrast to Australia.  (Xe.com, 2015)/(Austrade.gov.au, 2015).

Cost-Variables:  Weaker oil prices lowered BESF and BELF for many carriers (only to strengthen airline-competition), while taxation, union culture and non-facilitative macroeconomic conditions hampers prospects of regained-traction of 4th-freedom itineraries between SYD-FRA. Passenger-capacity on intermediaries-carriers between “SYD-xxx” and “xxx-FRA” has only strengthened, and is set to continue so (Iata.org, 2015)

Regulations: Strong regulatory culture between both origins/destinations. This includes regulatory disproval for 34 EY/AB service-codeshares (Reuters UK, 2015), and strict regulations in intermediaries injecting capacity into FRA/SYD ports.

 

COMPETITION NATURE –business/leisure market (price, income, frequency, timings, seasons, demographics, products (+value drivers: features, functionality, benefits /advantage, differentiation)), market segmentation/targeting, brand equity/scale, customer-equity, distribution. COMpettive,  impacts. Market intelligence (leaders, challengers, follower, niche), brand, value-points.

FRA-SYD city-pairs elect broad competitive-spheres with strengthening shares by intermediary operators. Given low price-elasticity and high-reservation/yield market (mentioned-above), the segments are of fierce competition by premium global carriers on value-drivers, products/in-flight amenities, schedules/connectivity, loyalty-programs, impromptu itinerary-alterations/flexibility. Premium carriers also play fiercely on price, as suggested by fare-structures of operating-carriers.

Carriers serving SYD-FRA generally provide price-proportionate services in accordance to value-catchments mentioned above. General-analysis of operators will be divided into groups with northern-summer schedules (Info.flightmapper.net, 2015)/ (Info.flightmapper.net, 2015):

Qantas-Emirates

  • EK (14w-A388 SYD-DXB-SYD + 21w-77W/A388 FRA-DXB-FRA + (7w-77W SYD-BKK-DXB-BKK-SYD + QF Asian/DXB ops-codeshare))
  • QF (7w-A388 SYD-DXB-SYD + (EK DXB/FRA/BKK codeshares)).
  • QF/EK premium product-offerings on long-haul services features (A380s), with inferior products on shorter segments (77Ws/A330s/ QF-737s) (Qantas.com.au, 2015)/ (Whirlpool.net.au, 2012)/(Seatguru.com, 2015). Market leader with strong interlinked brand-equity, customer-equity and volume.
  • Diversified fare-structure, with correlation on value points such as number of stopovers and layover-time (service-gaps) at DXB and fare conditions. Typical low-yield itineraries feature additional stopovers at BKK/PER/SIN/BNE/HKG/MEL. (Skyscanner.com.au, 2015).

Etihad + European/ME partners:

  • EY (11w-A388/77W SYD-AUH-SYD + 14w-A332/A333/A346/77L/77W FRA-AUH-FRA + VA-3w-77W SYD-AUH-SYD + (VA BNE/PER codeshares & KL/AB/JU/AY/AF/AZ/A3/ME’s AMS/(DUS/TXL)/BEG/(HEL/TXL)/CDG/(MXP/FCO)/ATH/BEY))
  • Strong-premium stance (product/price) driven by homogenous-scheduling. Market follower with strong growing brand and marketing. Low-yield management and volumes between Australia-Europe driven through partners (Seatguru.com, 2015).
  • Mostly high-end fare-structure, with low-yeild fares offset to partner-codeshares. Revenue-management proportionate to number of Australian-doemstic stopovers (MEL/BNE/PER), and partner-stopovers within Europe/Middle-East. Price-undercut for Air-Berlin given utile-management and passenger-inconvenience of domestic-connections at TXL/DUS (Skyscanner.com.au, 2015).

South-East Asian Airlines:

  • TG(14w-744 SYD-BKK-SYD + 7w-A388 FRA-BKK-FRA + (LH FRA-BKK + OZ VIE-BKK codeshare))
  • SQ (31w-A388/77W/773/772/A333 SYD-SIN-SYD + 14w-A388/77W FRA-SIN-FRA + (LH FRA-SIN + AY HEL-SIN + SK CPH-SIN codeshares))
  • MH (21w-A333 SYD-KUL-SYD + 4w-772 FRA-KUL-FRA + (KL AMS-KUL + QR DOH-KUL + UL KUL-CMB codeshares)).
  • Malaysia Airlines to end Frankfurt-services, with leverage on KL/QR
  • A costly premium-stance offered by most carriers, given strong business/capacity-consolidation and long-haul partner services (Centreforaviation.com). Lufthansa thrives in this setting, giving high frequencies/product/services from FRA. Singapore-Airlines capitalizes on this route, with onward 6th-freedom services to JFK, while Thai slimmed and retained capacity with fewer services on-board A380s. TG&SQ known for excellent products/amenities/customer-service.
  • Pricing set high (with MH out of market), with seasonal fare-baskets for domestic-interlines for capacity/revenue management (Skyscanner.com.au, 2015) Qatar also places codeshares on MH/CX services for onward services to DOH/FRA (mid-price range) (Skyscanner.com.au, 2015).

North-Asian Airlines:

  • CA (5w-A332 SYD-PEK-SYD + 12w-77W/744 FRA-PEK-FRA + (LH FRA-PEK codeshares))
  • CZ (14w-A332/A333 SYD-CAN-SYD + 3w-A332 FRA-CAN-FRA + (AF CDG-CAN + KL AMS-CAN codeshares))
  • MU (7w-A332 SYD-PVG-SYD + 7w-A332 FRA-PVG-FRA)
  • JL (7w-772 SYD-NRT-SYD + 7w-77W FRA-NRT-FRA)
  • CX (26w-A333/77W SYD-HKG-SYD + 7w-77W FRA-HKG-FRA + (AY HEL-HKG + AB DUS-HKG + QF DOH-HKG + QF SYD-HKG codeshares))
  • KE (7w-A333/772/744 SYD-ICN-SYD + 7w-77W FRA-ICN-FRA + (AF CDG-ICN + KL AMS-ICN codeshares))
  • OZ (7W-772 SYD-ICN-SYD + 7w-744 ICN-FRA-ICN)
  • North-Asian carriers offer diverse product-offerings with modest-capacity/low frequency to FRA (mostly filled by O/D Korean/German traffic). (Skyscanner.com.au, 2015)/(Seatguru.com, 2015). Oneworld members (JL/CX) offer strong connectivity/transparency with Air-Berlin, BA and Finnair, and Star-Alliance members (CA/OZ) with LH.

Market share and direction of carrier-operations between SYD-FRA is depicted in historical-comparison of traffic carriers of volumes between Australia and Germany (assuming variables-consistency) from 2008-2013 (Tourism Australia, 2015)/ (European-aviation liberalization: A-view-from-afar, 2015), which suggests:

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  • Qantas/Emirates will continue to grow market share
  • Singapore Airlines will hold/contract with business-refinement/consolidation (Centreforaviation.com, 2015).
  • Etihad set to grow with new A380 services to SYD, and strong AUH-FRA performance
  • Malaysia to terminate Frankfurt, and consolidate only to O/D traffic between KUL-SYD
  • CX to grow, with new services to DUS and strong-profits (South-China-Morning-Post, 2015)
  • Trajectories of other-market shares is contingent upon commercially refined-focus on capturing the market segment. With given infrastructure, perceptions of prospective growth from Chinese/Japanese/Korean-carriers (centreofaviation.com, 2015), entry of Air-India and complacency for QR entering Sydney given current-infrastructure, market share of “other” carriers is set to hold.

 

 

REFERENCES

Gcmap.com,. ‘Great Circle Mapper’. N.p., 2015. Web. 2 May 2015.

Australian Business Traveller, (2012). Qantas axes Frankfurt flights. [online] Available at: http://www.ausbt.com.au/qantas-axes-frankfurt-flights [Accessed 2 May 2015].

Bitre.gov.au, (2015). International Airline Activity—Time Series. [online] Available at: https://www.bitre.gov.au/publications/ongoing/international_airline_activity-time_series.aspx [Accessed 2 May 2015].

entreforaviation.com, (2015). Europe-Australia market changed forever as sixth freedom carriers gain scale and drop prices | CAPA – Centre for Aviation. [online] Available at: http://centreforaviation.com/analysis/europe-australia-market-changed-forever-as-sixth-freedom-carriers-gain-scale-and-drop-prices-78646 [Accessed 2 May 2015].

m, B. (2015). World Airline News. [online] World Airline News. Available at: http://worldairlinenews.com/ [Accessed 2 May 2015].

Management School, Lancaster University, Lancaster LA1 4YX, UK., (2015). Network Capacity Management Under Competition. [online] Available at: http://www3.eng.cam.ac.uk/~hj231/Papers/COAPNetworkCompetition.pdf [Accessed 2 May 2015].

rism-AU, (2015). Aviation-Newsletter. [online] Available at: http://www.tourism.australia.com/documents/TAAV9248_Aviation_Newsletter-MAR-2015.pdf [Accessed 2 May 2015].

Tourism Australia, (2015). Germany Market Profile. [online] Available at: http://www.tourism.australia.com/documents/Markets/MarketProfile_Germany_May14.pdf [Accessed 4 May 2015].

Schofield, (2015). Profits Elusive For Asia’s Long-Haul LCCs | Commercial Aviation content from Aviation Week. [online] Aviationweek.com. Available at: http://aviationweek.com/commercial-aviation/profits-elusive-asia-s-long-haul-lccs [Accessed 4 May 2015].

Austrade.gov.au, (2015). Market profile – Germany – For Australian exporters – Austrade. [online] Available at: http://www.austrade.gov.au/Export/Export-Markets/Countries/Germany/Market-profile#.VUcqoU102Uk [Accessed 4 May 2015].

Iata.org, (2015). IATA – Costs. [online] Available at: https://www.iata.org/publications/economics/market-issues/Pages/costs.aspx [Accessed 4 May 2015].

Reuters UK, (2015). Air Berlin dealt blow as Germany rejects some Etihad codeshare flights. [online] Available at: http://uk.reuters.com/article/2014/10/10/uk-germany-airlines-etihad-air-berlin-idUKKCN0HZ0RL20141010 [Accessed 4 May 2015].

Airlineroute.net, (2015). Airline Route. [online] Available at: http://airlineroute.net/ [Accessed 5 May 2015].

Info.flightmapper.net, (2015). FlightMapper.Net flight search. [online] Available at: http://info.flightmapper.net/search [Accessed 5 May 2015].

Qantas.com.au, (2015). Qantas Product. [online] Available at: http://www.qantas.com.au/agents_us/dyn/usqf/info/qantasproduct [Accessed 5 May 2015].

Skyscanner.com.au, (2015). Skyscanner | Find the cheapest flights fast: save time, save money!. [online] Available at: http://www.skyscanner.com.au/ [Accessed 5 May 2015].

Whirlpool.net.au, (2012). Emirates A380 v 777-300ER – Air Travel – Travel. [online] Available at: http://forums.whirlpool.net.au/archive/1974274 [Accessed 5 May 2015].

Centreforaviation.com, (2015). Singapore Airlines: another year of no traffic/profit growth. Betting the farm on premium economy? | CAPA – Centre for Aviation. [online] Available at: http://centreforaviation.com/analysis/singapore-airlines-another-year-of-no-traffic-or-profit-growth-betting-the-farm-on-premium-economy-208677 [Accessed 5 May 2015].

Centreforaviation.com, (2015). China’s airlines pivot towards Africa, after making inroads in Europe, North America and Australia | CAPA – Centre for Aviation. [online] Available at: http://centreforaviation.com/analysis/chinas-airlines-pivot-towards-africa-after-making-inroads-in–europe-north-america-and-australia-212880 [Accessed 5 May 2015].

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