November 5, 2024
Ailevon Pacific Aviation Consulting
Ailevon Pacific Aviation Consulting is an international aviation consulting firm specializing in Air Service Development
Air Service Development Insights, Data, Analysis & Commentary from a fresh perspective
Forecasting the outcome to new air service starts, is fraught with challenges.? With an untested new city pair, how responsive is your market to new service?? Is the carrier commencing services, popular or known to your catchment market.? Does their business model or service offering match consumer expectations?? Is the share of the market that the new carrier is likely to obtain, of a size significant enough to ensure service success?? How do other carriers react, from new direct non-stop services starting, from a price point of view?? Do they drop fares on transit itineraries or not change at all?? Do competing carriers see a resulting share shift, or a halo effect as all existing carriers offering transit itineraries also see resulting benefits – especially as service may not be daily, or operate at schedule preference times?
These are some of the many questions asked, and can be considered in building a compelling business case for service, or to add new frequencies from existing carriers.? In this month’s edition, we look at a recent business case, having passed the one-year anniversary of service commencement.? In extracts on how the service is performing now, compared to what was forecast in the business case.
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DATA Insight: CBR-NAN with FJ – a one-year anniversary review
Fiji Airways (FJ) commenced regular scheduled services to Canberra (CBR) from its hub in Nadi (NAN) in July 2023.? With the one year anniversary milestone achieved, it’s useful to always look back on what was forecast from the business case, and compare that to forecast (achieved) outcomes.? Below we look at the changing market dynamics on this newly established city pair.
Prior to service commencement, Virgin Australia (VA) dominated the market from CBR-NAN.? One year before service started, QF had assumed that market leading position, with FJ incrementally also growing its presence.? One year after the inaugural NAN-CBR flight, FJ has secured 68% of the market.? Interestingly, even though both VA and Qantas (QF) have relinquished market share, both carriers have actually had an increase in passenger volumes – increasing the volume of pax carried by each airline over 2023, and QF increasing volumes on 2019.? A halo effect from new service, raising the destinations profile, and also the direct offering perhaps not always offering the day of departure or time preference, to which the existing carriers also benefit.?
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In any business case, a forecast assists clients and the partner airline being presented the case for service, to understand what potentially the market outcome from service commencing could be.? Ailevon Pacific has a trove of examples of market stimulation reaching back over a decade, and during COVID undertook a month’s long study into over 1,000 new service starts to understand market stimulation.
The business case presented included a forecast stimulation rate based on five recent and similar air service commencements.? These same new service starts also allowed a market share assessment to be included, ensuring an accurate approximation of the true market forecast could be as accurate as possible.? The final stimulation rate was higher than that of 2019 (as the decision to commence the new service was taken before the final market size was known in 2023), ensuring forecasts were exceeded.? And led to the ongoing sustainability of the FJ service to CBR.?
Post project reviews are integral to ensuring best practice is followed in future business cases that are developed and to testing the accuracy of the forecasts prepared.? Certainly, the outlook is equally as confident, as scheduled seats are up 9% for the coming 12 months, on that for the proceeding period ending October.
2025 RoundTable: NEWCASTLE, NSW, AUSTRALIA – formal announcement soon!
A formal announcement including key partner stakeholders will be made in the coming weeks, for what will be an exciting and vibrant RoundTable in the Greater Hunter’s Newcastle city, 18-20 June 2025.? Look out for details on accommodation, venue locations and of course our airline speakers, which already include Air New Zealand, Fiji Airways, VietJet and Virgin Australia.
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