Singapore Airlines (SIA), under CEO Goh Choon Phong, has been transformed from a carrier focused on the premium segment to an airline group with a range of brands for different market segments. No longer content to be reliant on the slow-growing premium business, the group aims to tap into all market segments with its portfolio: SIA mainline (premium), SilkAir (premium short-haul), Tiger Airways (low-cost short-haul) and Scoot (low-cost medium-haul). Tiger and Scoot plan to add aircraft next year, as does SilkAir. In terms of route expansion, China will be a key focus for the group in 2013. It may also look to strengthen relations with Star Alliance partner Air China as another means of accessing China.
Africa's first low-cost carrier, Fastjet, achieved a load factor of 78% on Nov. 28—not bad for its first day of operations. But the jury is still out as to whether the low-cost model will work in Africa, or if the lack of infrastructure and liberalization as well as political opposition will prevent it from becoming as successful as it is in most other parts of the world. Fastjet plans to operate up to 15 aircraft by the end of 2013 and wants to expand beyond its initial base in Tanzania, at least to neighboring Kenya. But the real breakthrough will come if the airline becomes established in the south and west of Africa.
Ethiopian Airlines, based in one of the world's poorest countries, has had an impressive track record in recent years. It joined the Star Alliance and became the first African airline to take delivery of the Boeing 787. Now, with its 787 fleet growing, Ethiopian has to make the next transformation—upgrading its onboard product to industry-standard levels. The airline aims to build a long-haul network between Africa and Asia, so it must compete not only with the onboard products of Asian airlines, but also with those of the big three Persian Gulf carriers. In its efforts to quadruple sales by 2025, Ethiopian also has to further develop its African network and its Togo-based affiliate, ASKY Airlines.
The coming year will be pivotal for South African Airways as it looks to establish its future direction. The airline is in a leadership crisis once again, following the departure of CEO Siza Mzimela in late 2012. South Africa's government has also had to inject a further 5 billion rand ($576 million) into the airline to keep it afloat. The carrier now has to find a new CEO who can craft a strategy that will turn it into a sustainable business again. SAA has to determine where it can grow and how it can participate in the expected development of air transport in the continent. It is looking again at joint ventures in other African countries such as Ghana, although previous efforts have failed.
Qatar Airways prides itself on its five-star service levels, although until now that description would not have applied to its main hub airport. The terminals at Doha are nice, but with no contact gates available, all passengers have to be bused across the airport, sometimes with multiple stops. That will all soon change when the New Doha International Airport (NDIA) opens in 2013. The exact opening date has not yet been made public, following delays in the completion of lounges in the terminal. But once NDIA is ready, Qatar Airways will for the first time have a home base that is designed for connecting traffic.
Etihad Airways has bought shareholdings in Air Berlin, Aer Lingus, Air Seychelles and Virgin Australia, and if CEO James Hogan has his way, this is only the beginning. Etihad appears to be preparing to pursue more acquisitions in Europe and possibly one in India, which would make it an even more serious player in the international long-haul market. At the same time, Etihad will have to prove in 2013 that its current investments are paying off. While Virgin Australia—which is also partly owned by Singapore Airlines and Air New Zealand—looks good, there are major questions about whether its riskiest investment, Air Berlin, can be turned around.
Vueling's impressive performance over the past few years could turn out to be a blessing and a curse. The airline is doing so well that International Airlines Group, which is already a shareholder, plans to fully acquire the carrier in 2013. The question is whether that will be a major advantage or impact the business model and reduce Vueling's ability to grow in its niche. Vueling has been one of the most creative low-cost carriers with CEO Alex Cruz at the helm, and it is going against traditional LCC behavior by opening up to connecting traffic and cooperating with legacy carriers. So far it all looks good, but major challenges are still ahead.
Only a year or so after the merger of Iberia and British Airways, the International Airlines Group (IAG) is already in crisis mode. This time, all attention is on Iberia, which has to implement a draconian cost-savings and capacity-reduction program. This will see the airline withdraw from essentially all European routes that are not needed as feeders for its long-haul network to Latin America. Iberia is also axing 20% of its workforce, and IAG says still more drastic plans are in the cupboard if agreements cannot be reached quickly with unions. As the examples of SAS Scandinavian Airlines and others show, unions have few options to oppose such restructuring moves in tough times.
Germanwings is taking over all Lufthansa short-haul flights except the feeder network into Frankfurt and Munich on Jan. 1. Lufthansa—Germanwings' parent—has finally concluded that it cannot operate short-haul flights profitably while competing against low-cost carriers. The move to allow Germanwings to grow has been long overdue, many observers believe, but internal group politics and concerns over brand dilution had kept Lufthansa from going ahead with it. Now, within a short space of time, Germanwings has to integrate 35 more narrowbody aircraft as well as cabin crew and pilots, and take over dozens of routes. In 2013, it will become clear how the transition is progressing.