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Greek Airlines Embrace New Jets and Domestic Competition
Following a blockbuster year of aircraft deliveries in 2019, 2020 was positioned to be a record-shattering year for Airbus. As with most other aviation-related businesses, the year has not gone as projected. The aircraft manufacturer has delivered 341 jets as of Nov. 15, down 40% from the same period last year.
Despite a severe downturn in deliveries, one European country will see 10% growth in its commercial aircraft fleet by the end of 2020 thanks to the addition of new Airbus A320neo jets. While airlines await a vaccine and hopeful subsequent return to travel normalcy, Greece’s two largest airlines are in the middle of taking on new next-generation aircraft and rebranding themselves.
A popular choice for many tourists able to access the country, the airlines benefitted from the slight surge in demand brought by Greece’s low infection rate this past summer. As the season progressed, Greece’s two largest airlines — Aegean Airlines and SKY Express — were able to collectively recover 58% of their 2019 schedules at their Athens hub by August 2020, according to Cirium.
Following a promising upward trend in passenger movements during summer 2020, Greece entered a second nation-wide lockdown in early November due to an alarming rise in COVID-19 cases. This delivered a big blow to airlines with Aegean and SKY Express once again having to cut schedules. Compared to last month’s 800,000 seats offered, the two airlines are expected to significantly reduce the number of flights they operate this month as strict restrictions come online through the end of November and demand diminishes.
Airlines around the world have experienced similar turbulence in their home countries, but there’s an interesting aspect to both the Aegean and SKY Express story. Both airlines saw record growth over the previous five years as Greece bounced back from the aftermath of the 2009 financial crisis. The two airlines aimed to make 2020 a pivotal year of growth, and while one has slowed its plans, the other is flying forward at full speed. AirlineGeeks caught up with executives at both airlines to learn more about their recent and upcoming aircraft deliveries during a time when many jets remain grounded.
For five consecutive years, SKY Express has received the “Fastest Growing Airline” award from Athens International Airport. With its roots in the island of Crete and a small fleet of ATR propellor jets, SKY Express has quickly grown its domestic network over the past few years, inking interline agreements with Air France-KLM, Qatar Airways and others along the way.
“Having been recognized as the fastest-growing airline in Greece multiple times, it was about time that SKY express ventured out and expanded its network and fleet,” SKY Express General Director George Liapis said.
Liapis, the chief executive of the airline, assumed the role at a crucial point in May 2020 when SKY Express was operating just over 50% of its May 2019 schedule.
In October, the airline announced a firm order of four A320neo jets from Airbus as well its intentions to lease two additional A320neos from Aviation Capital Group. The first aircraft, SX-IOG, will mark the first jet aircraft in the SKY Express fleet since 2010 and is expected to arrive in Athens in mid-November. The airline briefly flew one McDonnell Douglas MD-83 between 2008 and 2010. The delivery of the second A320neo, SX-TEC, is also expected in the next few weeks.
“The momentum from our successful handling of the COVID crisis has led to this decision at this time,” Liapis said.
As airlines around the world slim down fleets and cut back schedules, SKY Express is taking this opportunity to expand and prepare itself for the days when demand returns.
“Due to its geographic characteristics, domestic travel and commuting is essential in Greece. Therefore, the demand will always be there, albeit diminished due to the pandemic,” Liapis added.
The A320neo will debut on the airline’s new flagship domestic route between its Athens and Thessaloniki hubs on Dec. 14. The airline does not currently connect the two cities directly. Already a crowded route with six daily flights onboard Olympic Air, Aegean’s domestic subsidiary SKY Express is hoping to attract customers with slightly lower prices on its five daily flights between Greece’s two largest cities.
On the route, the airline is also competing with Thessaloniki-based Ellinair, though on a smaller scale. During its first full month of flying Athens to Thessaloniki, SKY Express will offer 44% of the available seats, up from zero in January 2020.
The airline’s five daily flights between the two Greek cities will also assist the route to reach pre-pandemic seat offerings. Comparing January 2021 with January 2020, there will only be 2.5% fewer seats flown on the route everyday.
With the new aircraft, Sky Express is also embracing a new livery and promoting the slogan “Greece is Bliss” on its aircraft. It is unclear if the airline’s current ATR fleet will be repainted with the new livery and brand message.
The new jets will feature 186 seats in an all-economy cabin, a major capacity boost from the five 48-seat ATR-42s and five 70-seat ATR-72s the airline currently flies. Given the current fleet, SKY Express currently has 590 seats available across 10 aircraft. This will soon increase to 2,078 seats across 16 aircraft, a 350% increase in the airline’s size measured by seats available once all six A320neos have been delivered next spring.
“For the time being, the new routes planned to be launched are within Greece, where we will operate full-economy aircraft,” Liapis said.
The first few rows of each A320neo are expected to boast extra legroom to accommodate a future European business class product for international flights. Regional competitor Aegean Airlines flies A320neos configured with 180 seats.
Already eager to expand SKY Express’s reach during the pandemic, Liapis also plans to begin flying the airline’s first international flights in spring 2021, as soon as conditions permit it. He did not mention any specific destinations but said that the airline is currently working to secure slots outside of Greece.
With the current conditions of the European aviation scene, these new jets will mark a profound change in Greece’s aviation landscape. Liapis and his team are confident that the A320neo is entering the SKY Express fleet at the right time.
“Given the height of our investment, it was paramount that other aircraft were evaluated prior to our decision. What factored in our final call was this particular aircraft’s augmented efficiency, larger and more ergonomic interior spaces and, of course, its, even more, reduced environmental footprint,” Liapis said.
He continued by adding, “These are the competitive advantages which convinced us that, in combination with the CFM 1A Leap engines, the Airbus A320neo was the unanimous choice for us.”
Unlike SKY Express, Aegean Airlines inked a deal with Airbus for new jets long before the onset of the COVID-19 crisis. The airline received its first A320neo decked out with a new exterior look and cabin in late 2019. An additional four A320neos have since joined the fleet this year as originally planned.
The airline also took delivery in early October of the largest aircraft —measured by seat capacity — that it has ever operated. SX-NAA, a 220-seat A321neo, is currently the largest commercial jet registered in Greece.
“For the moment, the new aircraft are to be utilized in routes where even during the pandemic the increased capacity they offer can be deployed,” Aegean Airlines Corporate Affairs Manager Marina Spyridaki said regarding the new A321neo.
As of Nov. 10, the airline’s single A321neo had exclusively flown between Athens and London Heathrow.
“We anticipate the A321neos to be an exceptional tool in our effort to support our vision for continuously developing our service offering to our passengers and for the ongoing strengthening of our competitiveness for the post-COVID-19 period that is to come,” Spyridaki added.
During the month of October, nearly 20% of all Aegean and Olympic seats available were operated on an Airbus A320neo aircraft. With an industry recovery poised to take longer than initially thought, the airline’s main focus is increasing its flexibility and adjusting its capabilities during a period of low predictability.
“We are looking at every possible scenario of how to best reallocate our network and our fleet in order to find ways to gradually mitigate the effects of this really destructive crisis in times where visibility continues to be low,” Spyridaki said. “We will continue our efforts to improve Aegean’s cash shielding, reduce our total costs and adjust both our product and network to the new continuing changing circumstances.”
Unlike SKY Express, Aegean is taking a conservative approach to new jets. While the order for 36 A320neo and 10 A321neo airplanes remains unchanged, the airline has plans to defer future aircraft deliveries. Aegean is expected to receive three more A321neos by April 2021, fulfilling approximately 20% of the airline’s order.
Beyond those jets, the airline has already deferred 11 A320neo jets originally scheduled for delivery between 2021 and 2022 to a 2023-2025 window. By adjusting its delivery schedule, Aegean will see a total of 15 A320neo jets on property by the end of 2022. The 11 deferrals are expected to reduce Aegean’s capital expenditures through the end of 2021 by $91 million.
Additionally, the airline is looking at the possibility to terminate or allow the expiration of up to 26 older A320s from the Aegean fleet and two Olympic Air Dash 8s by the end of 2022. As of Nov. 15, 21% of Aegean’s fleet and 17% of Olympic Air’s fleet have not flown in the past 20 days. Since March, two A320s have exited the fleet.
New Jets, New Competition
Greece is a notorious battleground for low-cost competition during the busy summer months. Aside from the international competition, SKY Express and Olympic Air now compete on 19 domestic routes from their Athens hubs. With an expanding SKY Express footprint, competition is expected to heat up at a unique time while the industry recovers from the Covid-19 crisis.
While the Aegean Group is much larger than SKY Express, both airlines are preparing for the next decade of competition with two different and distinct strategies. For now, it’s clear that the Greek aviation landscape is evolving at a time few would have expected.
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