Capacity on the North Atlantic is up for the fourth consecutive year, driven by new services to some unlikely destinations
Carriers have no trouble these days finding new transatlantic gateways. Eight airports that did not have any transatlantic services a year ago find themselves with gateway status this summer. Among the winners are Bucharest in Romania, Knock in Ireland, Liverpool in the UK, Pisa in Italy, Rzeszow in Poland and Hartford in the US state of Connecticut. Some doubt these airports can sustain transatlantic service, but if the success of recent years is any indication, they will have no trouble retaining their gateway status.
Not a single airport has lost transatlantic gateway status this year, including the four airports which became new gateways in 2006, and US carriers have not deleted a single European spoke. "Adding a completely new gateway tends to be a riskier way to increase capacity," says Craig Jenks, president of Airline/Aircraft Projects, whose consultancy tracks transatlantic capacity changes. "But almost all such new gateways added since 2002 have survived."
Europe-USA capacity has now increased four consecutive summers, driven primarily by new hub-to-spoke services in 2006 and 2007 and new hub-to-hub services in 2004 and 2005. This year capacity is up 8.5%, the biggest gain since 1999, with 48 new routes, 40 of which are hub-to-spoke or point-to-point (see chart p72).
Carriers say that, based on forward bookings, demand is buoyant and transatlantic capacity will continue expanding. "What we're seeing so far is very, very good," says Delta Air Lines vice-president network planning, Bob Cortelyou. "There is plenty of demand out there. We're looking at other opportunities and at more secondary cities like Bucharest and Pisa."
Adds US Airways senior vice-president of schedule planning and alliances, Andrew Nocella: "It's meeting our profit target. We're pleased with it enough to continue growing it."
Demand from Europe is soaring partly because of the weakening US dollar. But Cortelyou says US demand has not dropped due to the weak dollar and a record number of Americans are expected to travel to Europe this summer. "People are very interested in travelling and want to go," he says.
Delta in recent years has been focusing on adding markets which do not have service from any US carrier and Cortelyou says, despite criticism over some of its choices, it "has picked them right". The search this year has taken Delta to Eastern Europe. Delta for years has been the largest US carrier to Europe, but until 2006 it only served one eastern destination: Moscow.
Last year it added Budapest and Kiev and this summer it is adding Bucharest, Prague and Vienna. "We're the first US carrier to serve a lot of these markets. That's a great position going forward as Delta will be the major brand in Central and Eastern Europe," says Cortelyou.
Prague Airport marketing specialist for route development, Jiri Vyskoc, says the new Delta service makes up for the loss of a service to New York Newark by fellow SkyTeam member CSA. "The US market has a lot of potential," he says. "We're looking for more US airlines." But he adds Prague is not within the range of Boeing 757s, which makes it harder to attract US carriers. Delta has a large 767 fleet, which it is using for all its Eastern European services, and Cortelyou says it has taken advantage of the fact that most of its competitors have been forced to make do with 757s.
In anticipation of adding more transatlantic destinations next year, Delta will reconfigure five more 767-400s, giving it 13 transatlantic 767-400s and only eight domestic versions of this type. Delta since last year has been using all 60 of its 767-300s for transatlantic missions. "The 767s give us the flexibility to add services to that part of the world. There are only so many markets you can fly to with 757s," Cortelyou says.
Continental pioneered the concept of using 757s across the Atlantic, first using the aircraft in 1997 to open Newark-Lisbon. It has since steadily added 757 routes from Newark - including Barcelona, Cologne and Copenhagen in 2006 - and more than tripled its transatlantic network to 29 destinations. "Today our largest transatlantic fleet is the 757," says Continental vice-president Peter Garia, adding the aircraft has been the key to its model of launching service to smaller European markets.
But Continental now appears to be running out of new destinations within the range of its 757s. This year its only new destination, Athens, will be operated with 767s and it is instead using additional 757s to add frequency to five existing European destinations, including two traditionally served with widebodies - London and Paris.
"757s were initially used to inaugurate new gateways. No one could complain, as these airports had no prior transatlantic service," Jenks says. "Allocating 757s, newly refurbished, to London and Paris shows they do not expect any negative customer reaction."
US Airways also is running out of new 757 transatlantic routes. "There are a few more 757 opportunities in Europe. The majority of our opportunities require incremental widebody aircraft," says Nocella.
US Airways only has 10 767 and nine Airbus A330 widebodies. It began using three 757s last year for European routes and this year has converted another four for transatlantic missions. With only 26 transatlantic-capable aircraft, it will serve 19 European destinations this summer, which puts it ahead of American, United and Northwest. "We've done a lot with a little," Nocella says. "We are so pleased with it we're looking to grow next year by another two to three destinations."
US Airways aims to acquire more 767s or A330s before next summer but Nocella says some of its 40 remaining domestic 757s can also be converted for transatlantic operations. "We have the ability to go down that path if we identify more opportunities," he says
American only uses 757s on two routes, Boston-Manchester and Chicago-Shannon, but is also evaluating using more of its 141 757s across the Atlantic. Northwest has just become the fourth US carrier with transatlantic 757 operations. It is using 757s to open three new routes and add capacity on three routes also served with A330s. One of the new routes, Hartford-Amsterdam, is the first example of a 757 being used to connect a European hub with a US spoke. "It's an interesting development," says Amsterdam Airport manager aviation marketing Marcel Lekkerkerk. "If it goes well it can serve as a template for other services to the northeast USA."
Even Delta plans to begin using 757s across the Atlantic next summer, leaving United as the only US carrier sticking exclusively to widebodies. Cortelyou says Delta will base 13 newly-acquired 757s at New York and use them on a mix of new and existing European routes.
Scottish budget carrier Flyglobespan also has become a new transatlantic 757 operator and the second from Europe after Icelandair. Flyglobespan chief executive Tom Dalrymple says 757s are an ideal aircraft to open new routes because containers are not needed to load bags, allowing them to be turned around quicker than widebodies. "The desire to increase the 757 fleet for that one reason is compelling," he says. "The 757 is the only animal that suits the Atlantic perfectly from the UK."
Flyglobespan is using its first 757 to open a new daily service from Liverpool to Newark, with stops three times per week in Knock. It will also use an even smaller narrowbody, the 737-700, to operate daily from Glasgow to Boston, with stops two days per week in Knock. Flyglobespan is the first airline to operate 737s over the Atlantic, excluding aircraft in all-business class configuration, and the first to offer a pure no-frills service where passengers pay extra for meals, beverages and head sets.
Flyglobespan, which entered the Europe-US market last year, is joined this year by another low-cost player, Zoom Airlines. Zoom is launching a London Gatwick-New York service and chairman Hugh Boyle says it is looking to add several other major US cities.
The other two new players in the Europe-US market this year are from the opposite end of the spectrum. L'Avion and Silverjet are new all-premium carriers, serving New York from Paris and London. They are joined by Eos and Maxjet, two all-premium carriers which launched services last year and are adding capacity this summer.
"Four is a party. There's enough there to call it a phenomenon," Jenks says. "Flyglobespan and Zoom may or may not be a new no-frills trend. But if one can combine the two trends, they start to look like segmentation. Neither tries to put everyone in one airplane, which is what everyone else does."
Two Middle Eastern carriers, Emirates and Qatar, have also entered the Europe-US market with Emirates operating Hamburg-New York and Qatar Geneva-Newark. "We saw a great opportunity to operate this route and we couldn't resist," says Emirates executive vice-president Ghaith Al Ghaith, adding that if more transatlantic opportunities come up it may pursue them, "but the jury is still out".
India's Jet Airways will also launch a Brussels-Newark service in August as part of a plan to establish a hub in Brussels to link several Indian and North American cities. "This is extraordinary," Jenks says. "Pan Am and TWA used to operate this way with European hubs at Frankfurt and Paris. With Jet, Emirates and Qatar, are we seeing a bounce back to risky fifth freedoms? Maybe."
New non-stop services have also contributed to an increase in India-USA and Middle East-USA capacity (excluded from the chart). Delta has joined American in the India-USA market and Continental and Air India are now planning to launch non-stops. In the non-stop Middle East market, Delta has launched Dubai-Atlanta and by year-end Qatar will launch Doha-Washington and Emirates Dubai-Houston. "When we talk about transatlantic it's not just about Europe," says Cortelyou.
Read more about Flyglobespan's unique transatlantic strategy online at: www.flightglobal.com/Flyglobespan