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ARMENIA SEES ALMOST 25% CAPACITY REDUCTION FROM ARMAVIA SUSPENSION
CAPA, Centre For Aviation
April 10 2013
CAPA > Aviation Analysis > Armenia sees almost 25% capacity reduction
from Armavia suspension
10th April, 2013
CAPA Armavia suspended operations on 01-Apr-2013 after filing for
bankruptcy amid mounting debts. The Armenian national carrier was,
until then, the largest carrier operating from Armenia with services
across Eastern and Central Europe and into the Middle East.
The loss of Armavia has resulted in capacity to/from the country
reducing by about 23%, according to CAPA and Innovata data. But
already three carriers from Western Europe have agreed to increase
capacity to Yerevan in the wake of Armavia's suspension of operations.
A number of Eastern carriers also plan to launch services to the
country as part of their summer 2013 programmes.
Armavia's financial issues were apparent in late 2012 with Yerevan
Zvartnots International Airport temporarily suspending the servicing
of the airline's aircraft twice within one week in late Oct-2012 due
to unpaid debts of USD3.3 million. This was above the agreed debt
level of USD1 million.
Large debts to both Armenian and Russian organisations In Nov-2012
the airport's deputy director Pavel Manukya said the airport was
considering completely banning the airline from the airport and was
planning to file a lawsuit against the airline. At around the same
time, the airline was reportedly considering offers from various
parties interested in purchasing the airline.
Armavia recently had a new shareholder enter into the company, however
this shareholder was not disclosed despite Yerevan Zvartnots requesting
the new shareholder's name to be revealed.
Armavia's liquidity issues saw the Armenian Government state its
tender with Armavia may be terminated. The government planned to
announce a decision on the future of its tender agreement with Armavia
on 22-Apr-2013.
Russian Federal Air Transport Agency (Rosaviatsia) confirmed the
suspension of operations by Armavia on 01-Apr-2013 and stated
the airline's debt to Russian organisations to be RUB54.2 million
(USD1.8 million), including USD290,000 for Russian air navigation
services and almost RUB44.3 million (USD1.4 million) to Moscow Vnukovo
International Airport.
The airline also reportedly had debts to fuel suppliers. Meanwhile,
Sukhoi reportedly stated plans to sue the airline for over USD1.385
million in relation to a debt for the unfulfilled terms of an agreement
for SSJ100 aircraft. Armavia's total debt (including debts to both
Armenian and Russian organisations) is yet to be disclosed but may
increase if Sukhoi's lawsuit is successful.
Armenia: a purely international aviation market Armenia's aviation
market is purely international, with no domestic air transportation
networks. The majority of air traffic to the nation is to Yerevan
Zvartnots International Airport, handling about 97% of total traffic,
with the remaining 3% of traffic handled by Gyoumri Leninakan Airport.
Gyoumri Leninakan Airport currently features one airline, Russia's VIM
Airlines, which operates three times weekly Moscow Domodedovo-Gyoumri
Leninakan service using Boeing 757-200 equipment. About 1,300 seats
per week are offered on the route.
Up until Armavia's bankruptcy, Armavia was the largest carrier
operating from Armenia and was based at Yerevan Zvartnots International
Airport. Armavia operated a network of 18 destinations, with its main
market being Eastern and Central Europe. According to Innovata data,
Eastern and Central Europe accounted for about 95% of Armavia's total
capacity while the Middle East accounted for the remaining 5%. The
airline operated around 10,200 seats on its European network and only
about 500 weekly seats across its Middle Eastern network.
The airline's network was operated using a fleet of seven aircraft
including one A320, three Boeing 737-500s and three Bombardier CRJ200LR
aircraft. In late 2012 the airline also operated a SSJ100 aircraft
however this was returned to Sukhoi due to a dispute between the
airline and manufacturer over maintenance costs.
Russia was Armavia's main market, with seven of its top 10 destinations
being Russian. Its top two, Moscow Vnukovo and Moscow Domodedovo, made
up 65% of the airline's total capacity offered per week (about 7,000
seats out of a total of almost 11,000 seats per week). Yerevan-Moscow
Vnukovo service made up 48% of the airline's total capacity alone.
Yerevan Zvartnots International Airport main gateway into Armenia
Yerevan Zvartnots International Airport served 25 airlines (including
Armavia) at the time of Armavia's bankruptcy with 34 passenger
destinations (30 to Europe, three to the Middle East and one to
Asia-Pacific). Eastern and Central Europe is Armenia's main market,
with around 85% of total capacity (about 39,000 seats) attributed to
the region. This is followed by Western Europe, the Middle East and
Central Asia with around 8%, 7% and less than 1%, respectively. The
majority of airline traffic to and from Armenia is full service,
as LCCs account for about 3% of capacity in the market.
Armavia was the leading carrier in its home market but not by a large
margin. Based on schedules originally filed for the week commencing
1-Apr-2013, Armavia accounted for 23% of capacity in Armenia.
Post-Armavia, the four Russian carriers of S7 Airlines, Aeroflot,
Donavia and UTair Aviation have become the leading four carriers in
the Armenian market. A fifth Russian carrier, Transaero Airlines,
also makes the top 10 list of airlines into Armenia based on weekly
seats offered in the market.
Western and Eastern European airlines increasing frequencies to
Yerevan Yerevan Zvartnots Airport reportedly reached an agreement
with Alitalia, Austrian Airlines and CSA Czech Airlines to
increase frequencies to Yerevan on 04-Apr-2013. The increases
will reportedly see Alitalia operate three times weekly service
and Austrian Airlines and CSA Czech Airlines each operate daily
service. According to Innovata, Alitalia currently operates twice
weekly Rome Fiumicino-Yerevan service, Austrian Airlines five times
weekly Vienna-Yerevan service and CSA Czech Airlines five times weekly
Prague-Yerevan service. The increases will see Austrian Airlines and
CSA Czech Airlines further strengthen their positions in the Armenian
market, where they ranked as the sixth and eighth largest carriers
when Armavia was still in the market.
Eastern carriers are planning new routes to Yerevan in the coming
months including Aeroflot, NordStar and Ukraine International
Airlines (UIA). Aeroflot plans to launch Sochi-Yerevan service
while NordStar plans to launch weekly Krasnoyarsk-Yerevan service
on 01-May-2013 using Boeing 737-800 equipment. UIA plans to launch
services from Kiev Boryspil, Odessa and Donetsk to Yerevan in Apr-2013,
Jun-2013 and Jul-2013 respectively. Kiev Boryspil-Yerevan service was
previously operated by Aerosvit until it suspended operations in late
Dec-2013/early Jan-2013.
European low-cost carriers may also identify opportunities in the
market with Armavia's exit. UAE low-cost carrier flydubai was already
the seventh largest carrier in the Armenian market prior to Armavia's
suspension of operations. It is currently the only budget carrier
operating in the country.
The same issues for low-cost carriers operating in Eastern countries
remain though, including high airport charges and competition rules
which often can make it difficult for low-cost carriers to establish
themselves in different Eastern markets.
No other Armenian airline able to take Armavia's place There are no
other Armenian carriers able to take Armavia's place at this point in
time. While Armenia's General Department of Civil Aviation has issued
11 Air Operator's Certificates (AOC) to airlines including Armavia,
the majority of these airlines are small charter and cargo operators
such as Air Armenia, Vertir Airlines and Veteran Avia. The only
Armenian scheduled passenger service operator currently is Atlantis
European Airways. Atlantis operates leisure services and currently
operates scheduled four times weekly Yerevan-Prague service with its
sole A320 aircraft in addition to charter services.
Thus, Armenia will be relying heavily upon foreign carriers to maintain
links between the country and the rest of Europe. While Alitalia,
Austrian Airlines and CSA Czech Airlines have already responded with
some frequency increases, there is still a significant gap left by
Armavia's suspension of operations. The increased frequencies and new
routes by Eastern carriers as part of their summer 2013 programmes
will also help fill the capacity gaps left by Armavia.
http://centreforaviation.com/analysis/armenia-sees-almost-25-capacity-reduction-from-armavia-suspension-104422
CAPA, Centre For Aviation
April 10 2013
CAPA > Aviation Analysis > Armenia sees almost 25% capacity reduction
from Armavia suspension
10th April, 2013
CAPA Armavia suspended operations on 01-Apr-2013 after filing for
bankruptcy amid mounting debts. The Armenian national carrier was,
until then, the largest carrier operating from Armenia with services
across Eastern and Central Europe and into the Middle East.
The loss of Armavia has resulted in capacity to/from the country
reducing by about 23%, according to CAPA and Innovata data. But
already three carriers from Western Europe have agreed to increase
capacity to Yerevan in the wake of Armavia's suspension of operations.
A number of Eastern carriers also plan to launch services to the
country as part of their summer 2013 programmes.
Armavia's financial issues were apparent in late 2012 with Yerevan
Zvartnots International Airport temporarily suspending the servicing
of the airline's aircraft twice within one week in late Oct-2012 due
to unpaid debts of USD3.3 million. This was above the agreed debt
level of USD1 million.
Large debts to both Armenian and Russian organisations In Nov-2012
the airport's deputy director Pavel Manukya said the airport was
considering completely banning the airline from the airport and was
planning to file a lawsuit against the airline. At around the same
time, the airline was reportedly considering offers from various
parties interested in purchasing the airline.
Armavia recently had a new shareholder enter into the company, however
this shareholder was not disclosed despite Yerevan Zvartnots requesting
the new shareholder's name to be revealed.
Armavia's liquidity issues saw the Armenian Government state its
tender with Armavia may be terminated. The government planned to
announce a decision on the future of its tender agreement with Armavia
on 22-Apr-2013.
Russian Federal Air Transport Agency (Rosaviatsia) confirmed the
suspension of operations by Armavia on 01-Apr-2013 and stated
the airline's debt to Russian organisations to be RUB54.2 million
(USD1.8 million), including USD290,000 for Russian air navigation
services and almost RUB44.3 million (USD1.4 million) to Moscow Vnukovo
International Airport.
The airline also reportedly had debts to fuel suppliers. Meanwhile,
Sukhoi reportedly stated plans to sue the airline for over USD1.385
million in relation to a debt for the unfulfilled terms of an agreement
for SSJ100 aircraft. Armavia's total debt (including debts to both
Armenian and Russian organisations) is yet to be disclosed but may
increase if Sukhoi's lawsuit is successful.
Armenia: a purely international aviation market Armenia's aviation
market is purely international, with no domestic air transportation
networks. The majority of air traffic to the nation is to Yerevan
Zvartnots International Airport, handling about 97% of total traffic,
with the remaining 3% of traffic handled by Gyoumri Leninakan Airport.
Gyoumri Leninakan Airport currently features one airline, Russia's VIM
Airlines, which operates three times weekly Moscow Domodedovo-Gyoumri
Leninakan service using Boeing 757-200 equipment. About 1,300 seats
per week are offered on the route.
Up until Armavia's bankruptcy, Armavia was the largest carrier
operating from Armenia and was based at Yerevan Zvartnots International
Airport. Armavia operated a network of 18 destinations, with its main
market being Eastern and Central Europe. According to Innovata data,
Eastern and Central Europe accounted for about 95% of Armavia's total
capacity while the Middle East accounted for the remaining 5%. The
airline operated around 10,200 seats on its European network and only
about 500 weekly seats across its Middle Eastern network.
The airline's network was operated using a fleet of seven aircraft
including one A320, three Boeing 737-500s and three Bombardier CRJ200LR
aircraft. In late 2012 the airline also operated a SSJ100 aircraft
however this was returned to Sukhoi due to a dispute between the
airline and manufacturer over maintenance costs.
Russia was Armavia's main market, with seven of its top 10 destinations
being Russian. Its top two, Moscow Vnukovo and Moscow Domodedovo, made
up 65% of the airline's total capacity offered per week (about 7,000
seats out of a total of almost 11,000 seats per week). Yerevan-Moscow
Vnukovo service made up 48% of the airline's total capacity alone.
Yerevan Zvartnots International Airport main gateway into Armenia
Yerevan Zvartnots International Airport served 25 airlines (including
Armavia) at the time of Armavia's bankruptcy with 34 passenger
destinations (30 to Europe, three to the Middle East and one to
Asia-Pacific). Eastern and Central Europe is Armenia's main market,
with around 85% of total capacity (about 39,000 seats) attributed to
the region. This is followed by Western Europe, the Middle East and
Central Asia with around 8%, 7% and less than 1%, respectively. The
majority of airline traffic to and from Armenia is full service,
as LCCs account for about 3% of capacity in the market.
Armavia was the leading carrier in its home market but not by a large
margin. Based on schedules originally filed for the week commencing
1-Apr-2013, Armavia accounted for 23% of capacity in Armenia.
Post-Armavia, the four Russian carriers of S7 Airlines, Aeroflot,
Donavia and UTair Aviation have become the leading four carriers in
the Armenian market. A fifth Russian carrier, Transaero Airlines,
also makes the top 10 list of airlines into Armenia based on weekly
seats offered in the market.
Western and Eastern European airlines increasing frequencies to
Yerevan Yerevan Zvartnots Airport reportedly reached an agreement
with Alitalia, Austrian Airlines and CSA Czech Airlines to
increase frequencies to Yerevan on 04-Apr-2013. The increases
will reportedly see Alitalia operate three times weekly service
and Austrian Airlines and CSA Czech Airlines each operate daily
service. According to Innovata, Alitalia currently operates twice
weekly Rome Fiumicino-Yerevan service, Austrian Airlines five times
weekly Vienna-Yerevan service and CSA Czech Airlines five times weekly
Prague-Yerevan service. The increases will see Austrian Airlines and
CSA Czech Airlines further strengthen their positions in the Armenian
market, where they ranked as the sixth and eighth largest carriers
when Armavia was still in the market.
Eastern carriers are planning new routes to Yerevan in the coming
months including Aeroflot, NordStar and Ukraine International
Airlines (UIA). Aeroflot plans to launch Sochi-Yerevan service
while NordStar plans to launch weekly Krasnoyarsk-Yerevan service
on 01-May-2013 using Boeing 737-800 equipment. UIA plans to launch
services from Kiev Boryspil, Odessa and Donetsk to Yerevan in Apr-2013,
Jun-2013 and Jul-2013 respectively. Kiev Boryspil-Yerevan service was
previously operated by Aerosvit until it suspended operations in late
Dec-2013/early Jan-2013.
European low-cost carriers may also identify opportunities in the
market with Armavia's exit. UAE low-cost carrier flydubai was already
the seventh largest carrier in the Armenian market prior to Armavia's
suspension of operations. It is currently the only budget carrier
operating in the country.
The same issues for low-cost carriers operating in Eastern countries
remain though, including high airport charges and competition rules
which often can make it difficult for low-cost carriers to establish
themselves in different Eastern markets.
No other Armenian airline able to take Armavia's place There are no
other Armenian carriers able to take Armavia's place at this point in
time. While Armenia's General Department of Civil Aviation has issued
11 Air Operator's Certificates (AOC) to airlines including Armavia,
the majority of these airlines are small charter and cargo operators
such as Air Armenia, Vertir Airlines and Veteran Avia. The only
Armenian scheduled passenger service operator currently is Atlantis
European Airways. Atlantis operates leisure services and currently
operates scheduled four times weekly Yerevan-Prague service with its
sole A320 aircraft in addition to charter services.
Thus, Armenia will be relying heavily upon foreign carriers to maintain
links between the country and the rest of Europe. While Alitalia,
Austrian Airlines and CSA Czech Airlines have already responded with
some frequency increases, there is still a significant gap left by
Armavia's suspension of operations. The increased frequencies and new
routes by Eastern carriers as part of their summer 2013 programmes
will also help fill the capacity gaps left by Armavia.
http://centreforaviation.com/analysis/armenia-sees-almost-25-capacity-reduction-from-armavia-suspension-104422