eurocypria the chartered airline of cyprus challenges eleftherios ioannou executive chairman
TRANSCRIPT
Global Tourism has shown robust growth over time, despite a number of negative
external shocks
• Challenges
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684 686 706 694
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0
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1,000
1990 1995 2000 2001 2002 2003 2004 2005 2006 2007 2008
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Inte
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CAGR 1990-20084.2%
International Tourist Arrivals (millions), 1990-2008
Sep 11SARS, 2nd Gulf War
Financial crisis
Source: World Tourism Organisation &
Europe is the largest tourism region in the world with 53% of total arrivals in 2008, but it
is growing more slowly than other regions
266315
396 393 404 407 424 442 459 480 489.4
439
540
922898
687 686 706 694764
806842
0
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1990 1995 2000 2001 2002 2003 2004 2005 2006 2007 2008
Inte
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al T
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Europe
World
CAGR 1990-20084.3%
CAGR 1990-20083.5%
European Tourist Arrivals (millions), 1990-2008
Source: World Tourism Organisation &
International Tourist Arrivals to Europe by Sub-regions, (millions), 1990 – 2008
32 40 46 46 50 53 55 56 57
109 112140 136 139 143 150 155 153
3260
70 79 86 88 91 93 100
94
103
141 147150 158
165 176 180
0
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1990 1995 2000 2003 2004 2005 2006 2007 2008
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Southern/MediterraneanEurope
Central/ EasternEurope
Western Europe
Northern Europe
Within Europe, the Southern/Mediterranean region attracts the most tourist arrivals, and
also, along with CE Europe, shows the fastest growth
Source: World Tourism Organisation &
Spain34.6%
Italy30.8%
Greece10.1%
Portugal9.4%
Other1.2%
Croatia1.5%
Malta1.1%
Cyprus2.1%Israel
2.2%Turkey
7.0%
Spain34.0%
Italy29.3%
Greece9.3%
Portugal8.6%
Israel1.7%
Malta0.9%
Slovenia0.8%
Croatia4.1%
Turkey6.8%
Andorra2.1%
Cyprus1.9%
Other0.5%
1990
2000
2005
Total: 103 million
Total: 141 million
Total: 150 million
Source: UNWTO &
Croatia and Turkey have grown share
Traditionally, the Western Mediterranean has been the main destination of European leisure travel; there
are however some signs that other countries are increasing their share
Markets, particularly in Eastern Europe, show significant growth potential
Country2006 Total
Passengers, 000s Population, 000s Propensity to FlyIreland 27,558 4,339 6.35Denmark 22,966 5,476 4.19Switzerland 31,829 7,591 4.19United Kingdom 211,229 60,587 3.49Spain 150,599 45,201 3.33Netherlands 48,583 16,409 2.96Greece 32,762 11,147 2.94Sweden 25,855 9,183 2.82Finland 13,443 5,305 2.53Austria 20,825 8,328 2.50Portugal 22,027 10,623 2.07Germany 154,146 82,210 1.88Belgium 19,155 10,585 1.81France 113,183 64,473 1.76Italy 95,914 59,338 1.62Czech Republic 12,171 10,349 1.18Estonia 1,533 1,341 1.14Latvia 2,488 2,270 1.10Hungary 8,246 10,053 0.82Slovenia 1,327 2,024 0.66Lithuania 1,799 3,366 0.53Slovakia 2,124 5,399 0.39Poland 13,738 38,116 0.36Russia 37,657 142,499 0.26Romania 4,722 21,438 0.22
The Propensity to Fly, calculated as the number of air passengers per member of population, provides a rough indication of the level of maturity
The mature economies of Western Europe tend to have relatively high propensities to fly, although this number does also include inbound travel and may be artificially high for countries with small populations or a significant tourism market
Newer EU member states and other countries in Eastern Europe exhibit much lower propensities to fly, suggesting that a period of catch-up is ahead. This will be driven by rising incomes; the link between income and air travel is well documented.
Source: ACI, UN Population data, SH&E analysis
The segment mix of leisure travel in Europe is also changing, with independent holidays
increasing in popularity
19.5 19.819 19 18.9
2223
2526 27
0
5
10
15
20
25
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2003 2004 2005 2006 2007
Ho
liday
s (M
illio
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Package Holidays
Independent Holidays
Source: International Passenger Survey/Mintel &
Example: UK Overseas Holidays
Other trends within this picture include growing numbers of activity holidays, skiing, long-haul packages, which are not detailed in the International Passenger Survey
The growth in individual (seat only) travel has had a significant impact on the
traditional charter market
30 33 34 36 39 36 33 34 36 38 37 36 36 36 33 30 29
43 4348 46
51 59 6775
8189
101 107 105115
131148
162
0
50
100
150
200
1990 1992 1994 1996 1998 2000 2002 2004 2006
Pas
sen
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s (m
illio
ns)
Scheduled
Non-scheduled
Source: DGAC Spain &
Passengers at Spanish airports (1990-2006)• In Spain the charter
market peaked in 1994 and has declined by 25% in 12 years
• In the same period the total market has trebled, with scheduled carriers growing four fold.
• Much of the scheduled growth since 2002 has been with Low Cost Carriers
There are four main airline types competing for European leisure travellers
The boundaries between the models are however increasingly blurred, as traditional charter airlines offer scheduled ‘low-cost’ services (e.g. Monarch), low cost carriers such as Air Berlin also operate in the charter and long-haul markets, and integrated tour operators move into flight-only sales on their charter flights
Scheduled network carriers
Integrated tour operators
Independent charter carriers
Low cost carriers
Source:
Low Cost carriers have been the most significant development in the competitive
environment, increasing capacity, stimulating leisure demand, and driving down prices
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European LCC Routes, August 2008
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European LCC Routes, August 2000
327 Routes
750,000 Weekly Departing seats
2,542 Routes
5,412,000 Weekly Departing seats
Source: OAG Schedules, SH&E Analysis
In Eastern/Southern Europe, LCCs are less well established, but
competition is increasing
These carriers typically serve significant migrant worker and VFR segments, particularly between the home market and the UK.
Country of origin
LCCs Fleet size
Poland Central Wings 11
Czech Republic
Smart Wings 2
Slovakia SkyEurope 15
Austria InterSky 4
Hungary WizzAir 16
Romania Blue Air 6
Bulgaria WizzAir Bulgaria 1
LCC Operators and Fleet size, August 2008
Bankrupt
Closed down
Source:
In Cyprus, non-scheduled services still account for 46% of passengers; this is an increase on
last year, when the proportion was 42%
Passengers at Cyprus airports, 2007
Paphos is the smaller of Cyprus’s
two commercial airports and in 2007 served around 1.7
million terminal passengers, of
whom around 75% were travelling on
non-scheduled services
Larnaca is Cyprus’s main airport, with around 5.3 million terminal passengers in 2007. Of these, around 35% were carried on non-scheduled services.
Source:
The increasing competition on short-haul routes is pushing low cost carriers towards the longer sectors most often served by charter carriers
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f Aug
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eats
Saturated, competitive markets
Increasing network development on longer sectors
e.g. UK to Canaries, Bulgaria, Madeira, Cyprus, Finland, Greece
easyJet’s average length of haul
surpassed 1000km in 2006
Average length of haul, easyJet, 2000-2006
Chart below shows Ryanair and easyJet’s capacity by sector length, illustrating a inclusion of longer sector
lengths in addition to established short-haul routes
Saturated, competitive markets
• Orange line shows easyJet• Blue line is Ryanair Source:
0%
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2005 2006 2007 2008 2009
Charter LCC Traditional
UK - Cyprus passengers (2005-2008)
Scheduled Airlines have been hit harder than Chartered Airlines from
LCC activities
Source:
While Cyprus is currently beyond the reach of most Western European LCCs, some from the
UK and from Eastern Europe have already started service
• Blue Air flies twice a week between Bucharest and Larnaca
• Flyglobespan operates scheduled services once a week between Aberdeen and Paphos, once a week between Edinburgh and Paphos, and twice a week between Glasgow and Paphos
• easyJet, having taken over GB airways and its existing routes, operates twice a day between London Gatwick and Paphos, and once a day between Manchester and Paphos
• Jet2.com flies twice a week between Leeds Bradford and Paphos
• Before their demise, SkyEurope used to fly five times a week between Vienna and Larnaca
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Overview of LCC services to Cyprus
1000km3000km 2000km4000km
Recently easyJet and Jet2 have announced scheduled services from the UKSource:
Eurocypria with 6 aircraft flies to 74 destinations and carries 850.000 passengers covering 25.040 Flight Hours