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CAPA-ACTE Global Summit 2016

Amsterdam, Netherlands
26-28 Oct 2016
Recorded at CAPA-ACTE Global Summit 2016, 26-28 Oct 2016

KLM CEO Update

KLM CEO Pieter Elbers discusses the airline's growth in Tehran and Latin America, fleet changes with 787s and Fokker replacements, and his outlook for 2017.
Panel Moderator: Rigas Doganis Featuring Senior Executives from Global Airlines and the Aviation Industry

Qatar Airways CEO H.E. Akbar Al Baker discusses aeropolitical matters with the EU and US airlines, deployment plans for 787-9s and 737s, and opportunities with its investments in IAG and LATAM. Qatar Airways would like to see oneworld partner American Airlines focus on Qatar instead of Etihad, and even possibly have an American-IAG-Qatar JV.

Qatar Airways, Group Chief Executive, His Excellency Akbar Al Baker
Aeroflot's Giorgio Callegari, Deputy General Director for Strategy and Alliances, discusses the airline's traffic growth in the face of difficult current market conditions, its fleet plans and the performance of LCC subsidiary Pobeda. He also considers the merits of bilateral partnerships versus SkyTeam alliance membership.
Wizz Air founder and CEO, Jozsef Varadi explains decision to buy A321 aircraft and notes the growth of business travellers with the airline. He discusses how Wizz Air competes in Central/Eastern Europe with flag carriers and other LCCs, including Ryanair and welcomes the development of regional airports.
WOW air founder and CEO Skuli Mogensen talks about the airline's trans-Atlantic connecting strategy and growth plans and shares his thoughts on the future of long haul low cost. He also calls for infrastructure development at Reykjavik.
Sabre, VP Marketing & Solutions Management, Pramod Jain
AirAsia Group CEO Tony Fernandes discusses the performance of the group’s new A320neo fleet and plans for accelerating fleet growth in 2017. He also provides his opinion on the new passenger facility charges for Kuala Lumpur International Airport’s Terminal 2, where AirAsia has its main hub, and Malaysia Airlines’ new commercial strategy. Mr Fernandes expects the group’s affiliates in India, Indonesia and the Philippines will become profitable by the end of 2016. A new affiliate in Japan meanwhile is planning to commence operations in early 2017.
Aeroflot, Deputy General Director, Strategy & Alliances, Giorgio Callegari [Download Presentation]
Thai AirAsia CEO Tassapon Bijleveld discusses fleet and network expansion plans. The LCC is focusing mainly on growth opportunities in China and India, including from secondary bases. Thai AirAsia currently operates 50 aircraft spread across six bases and took delivery of its first A320neo at the end of Oct-2016.
Report on study undertaken by London School of Economics London School of Economics, EGC Director, Prof. Graham Floater
This award is given to the executive who has had the greatest individual influence on the aviation industry, demonstrating outstanding strategic thinking and innovative direction for the growth of their business and the industry. Mr Fernandes accepted the Airline Chief Executive of the Year award from Mr Harbison. The judging panel selected Mr Fernandes for his decision to re-engage and adopt a more hands-on management style after a few years of focusing more on interests outside the AirAsia Group. Financial results have improved significantly in 2016 following an extremely challenging 2015. “AirAsia is back at the front of the pack in the challenging Asian market and Tony has once again shown why he is one of the industry’s leading executives,” Mr Harbison said. “After formulating and implementing the now-widespread cross-border joint venture concept, the AirAsia group led the way in expanding its network through connectivity between its AirAsia (short haul) and (long haul) AirAsia X brands. The original short haul operations in Malaysia and Thailand are again among the most profitable airlines in Asia while losses in Indonesia and Philippines have been reduced following restructurings and are expected to be profitable again in 2H2016. Long haul LCC AirAsia X is also back in the black following a restructuring.” CAPA noted the AirAsia Group’s outlook also has been boosted with new capital raised from the issuance of new shares to Tony. With Tony back in the driver seat, new opportunities are now being pursued in North Asia including expansion in China and the upcoming relaunch of an affiliate in Japan. AirAsia also has launched a new aircraft leasing business which is expected to be spun off, raising more capital and reducing group leverage.
This award is given to the airline that has been the biggest standout strategically during the year, has had the greatest impact on the development of the airline industry, established itself as a leader, and provided a benchmark for others to follow. Qatar Airways Group CEO Akbar Al Baker accepted the award from CAPA Executive Chairman Peter Harbison. Qatar was selected for its innovative strategy in a dynamic region, becoming the first major Gulf carrier to join a global alliance. Over the last year Qatar has continued to make bold moves, acquiring an equity stake in LATAM and following up its earlier equity stake in IAG by pursuing a joint venture with British Airways. “Qatar Airways has been a standout with its ambitious growth and bold partnership strategy,” Mr Harbison said. “Qatar’s equity stake and tie up with IAG is a major strategic development, shaking up the industry and prompting others to relook at partnership options.” CAPA noted that Qatar also has continued to rapidly expand its network and fleet. It was the launch customer for the A350 and one of the first operators of the 787. Qatar’s expansion in the Asia Pacific region was recognised last year by CAPA with the 2015 Asia Pacific Airline of the Year award. Qatar has quadrupled in size over the last decade and is now profitable. Qatar has a fleet of almost 200 aircraft with nearly another 300 aircraft on order. It is also now among the world’s largest cargo airlines.
This award is given to the low cost airline that has been the biggest standout strategically, established itself as a leader, been most innovative, and provided a benchmark for others to follow. Wizz Air CEO Jozsef Varadi accepted the award from Mr Harbison. Wizz Air was selected by the judging panel for its consistent strong performance and rapid growth in a challenging region. Capacity was up 20% in the last fiscal year. Wizz Air is now the market leader in Hungary, Romania and Macedonia and has a strong presence throughout Central/Eastern Europe including in Poland, Bulgaria, Lithuania and Latvia. “Wizz Air has been a standout in Europe for several years and particularly since its 2015 IPO,” Mr Harbison said. “Wizz Air has been profitable for seven consecutive years, has the highest ancillary revenues per passengers in Europe and has among the lowest unit costs in Europe.” CAPA noted that Wizz Air’s market share in Central/Eastern Europe is now approaching 45%, an impressive achievement given the competitive landscape and large number of countries in the region. Wizz has doubled its passenger traffic over the last five years and now serves more than 100 destinations with a fleet of over 70 aircraft.
This award is given to the airline, airport or supplier responsible for the most powerful innovation in the industry over the past 12 months. Air Black Box Group Product Manager Timothy O'Neil-Dunne accepted the award from Mr Harbison along with Nok Air CEO Patee Sarasin. Thailand’s Nok Air and Singapore Airlines Group subsidiary Scootare co-founders and shareholders in Air Black Box Asia Pacific, a joint venture with Vaultpad Ventures. Air Black Box was selected by the judging panel for inventing and quickly implementing a revolutionary booking system that enables LCCs to connect and interline without the traditional complexities or cost. Air Black Box’s Air Connection Engine is the technology behind the Value Alliance and U-FLY Alliance – which became in early 2016 the world’s first two LCC alliances. “The Air Connection Engine has provided a new innovative solution for a fast growing and important segment of the industry – LCC connectivity,” Mr Harbison said. “Previously LCCs seeking to interline or cross-sell had limited options. Thanks to Air Black Box there is now a solution which allows like-minded LCCs to partner by offering joint itineraries and, most significantly, do so with the ability to sell ancillaries on flights operated by the partner.” CAPA noted that the technology can align disparate airline products and do not require airlines to change their product or technology to partner with another airline. Implementing tie-ups between LCCs – or between an LCC and network carriers – can now be done in just days, giving airlines an opportunity to quickly expand their virtual networks.
This award is given to the regional airline that has been the biggest standout strategically, has established itself as a leader and demonstrated innovation in the regional aviation sector. This award is intended to recognize smaller airlines or airline groups with annual passenger traffic of less than 10 million. Icelandair CEO Birkir Holm Gudnason accepted the award from TravelportSenior VP & MD Air Commerce Group Derek Sharp. Icelandair was selected by the judging panel for its strong performance in a small market that has experienced intensifying LCC competition. Icelandair has grown rapidly and has one of the highest operating margins among legacy airline groups. “Icelandair has achieved remarkable results and growth in the face of strong and growing LCC competition,” Mr Harbison said. “Its innovative connecting traffic strategy, which focuses on sixth freedom traffic between Europe and North America, has driven growth along with its promotion of Iceland as a tourist destination.” CAPA noted that Icelandair Group’s passenger traffic was up 16% in 2015 while its net profit improved by over 60%. Such growth and profitability levels are unusual for a small European full service airline. The group, which includes domestic turboprop operator Air Icelandand charter/wet lease operator Loftleidir, has annual passenger traffic of nearly 4 million. The parent airline has a fleet of 30 aircraft consisting almost entirely of single aisle aircraft.
This award is given to the airline that has had the most impressive turnaround while establishing an innovative strategic direction for their business and the industry. Iberia CEO Luis Gallego received the award from Mr Harbison. Iberia recorded its first positive operating result in 2014 since the global financial crisis and in 2015 confirmed its turnaround with its operating profit increasing almost fivefold. Iberia’s operating margin was up 4ppts in 2015 to 5.2%, its best showing since 2005. “Iberia’s turnaround in the challenging Spanish market has been remarkable,” Mr Harbison said. “Iberia has achieved major labour productivity improvements, quite an accomplishment in Europe, and unit cost reductions. Strategically the establishment and expansion of Iberia Express has demonstrated that it is possible for legacy European airlines to combine an LCC cost base with a full service brand.” CAPA noted that the significant improvement in profitability has come while Iberia has resumed expansion, with double digit capacitygrowth in 2015. Iberia was the biggest contributor to ASK growth at parent IAG in 2015.
Get to the heart of today’s complex aviation issues with the expertise and vision that only these industry leaders can provide. These leaders will make sense of key issues that are affecting the aviation & travel industry and particularly corporate travel managers. Their fast-paced discussion brings you the latest on the issues that you need to be on top of, such as Disintermediation, Middle East carriers, Legacy Hubs, Open Skies, Bilaterals, Point to point, content availability, and more. Moderator: CAPA - Centre for Aviation, Executive Chairman, Peter Harbison Panel Members:
  • AirAsia, Group Chief Executive, Tony Fernandes
  • Qatar Airways, Group Chief Executive, Akbar Al Baker
  • WTTC, President & CEO, David Scowsill
The United Kingdom’s withdrawal from the European Union threatens significant changes to international aviation regulation, border control, immigration, non-resident work rules, and regulation governing issues that could ultimately determine traffic flows, airfares and impact travellers. Even duty of care is affected. Short term implications, like plunging global markets, reflect the uncertainty and speculation that fill the void of fact. This international dialogue will be based on the best analytical data available, and provide an industry-wide forum to suggest new paths, new policies, and better solutions to the current tangle of politics and economics. Discover the extent of your “Brexit” exposure, while exploring ways to soften the impact. Moderator: European Aviation Club, Chairman, Rigas Doganis [Download presentation] Panel Members:
  • Airline Investments Ltd, Group CEO, Peter Simpson
  • CityJet, Executive Chairman, Patrick Byrne
  • Lufthansa, VP EU Affairs, Prof Dr Regula Dettling-Ott
  • Airline Investments Ltd, CCO, Jochen Schnadt
International aviation has always been limited by bilateral controls and ownership restrictions. Mostly they have no logical role in today’s system, but vested interests and the complexity of negotiating thousands of bilateral agreements mean inertia remains the driving force. This panel reviews who, if anyone, really wants a liberal marketplace, how it could be achieved and considers possible ways the industry might be better governed.
  • The EU has been active in seeking parallel agreements; how successful have these been and do they offer a model for use elsewhere?
  • Can ASEAN open skies achieve EU-style openness?
  • Is GATS a longer term answer?
  • Is there a serious prospect of multilateralism – either by route group like the North Atlantic, or regionally?
  • Or have we, as some suggest, passed the zenith of liberalism and are now returning to the dark ages? 
Moderator: John R. Byerly, Consultant, John Byerly Panel Members: 
  • AACO, Secretary General, Abdul Wahab Teffaha
  • Aeroflot, Deputy General Director, Strategy & Alliances, Giorgio Callegari
  • Delta, Managing Director, Legal & Regulatory, Julie Oettinger
  • European Commission, Deputy Director General MOVE, Matthew Baldwin
  • US FAA, Former Deputy Administrator & Chief NextGen Officer, Mike Whitaker
China is already reshaping tourism goals of many destination countries, with up to 50% year on year increases in some cases. But China will also reshape the way the industry works – for example with multiple interest tourism and travel equity acquisitions. As China’s airlines proliferate and new gateways open up, there will be surprises; and many opportunities.
  • One belt one road connectivity  aviation could play a big enabling role, but what will be the headwinds?
Moderator: CAPA - Centre for Aviation, Senior Analyst, Will Horton Panel Members:
  • ForwardKeys, CMO, Laurens van den Oever
  • Institute for Aviation Research, President, Dr Zheng Lei
  • JG Aviation Consultants, Director, John Grant
  • Thai AirAsia, CEO, Tassapon Bijleveld
  • Vancouver Airport Authority, VP Operations & Maintenance, Steve Hankinson
Over the next ten years, long haul international markets will change dramatically. On 26-28 October 2016, the CAPA-ACTE Global Summit addressed the industry ‘Game-Changers’. How will airline partnerships, joint ventures, new airlines and disruptive entrants and technologies completely alter the competitive dynamic by 2025?
The combined impact of the Gulf carriers and LCCs has forced established hub carriers to review their models and find new ways of competing. There is more. China’s massive array of potential gateways and constant flow of new entrants (CAPA has identified 17 Chinese airlines which will operate widebodies by 2020), and the introduction of smaller long haul widebody aircraft capable of serving non-hubs, are all adding new layers to these changes. Low cost operations are mutating, with connectivity, business traveller friendliness, and long haul LCC operations added to the mix. These are exciting developments for travellers, airports, local economies - and for airlines themselves. The certainty is, in this melting pot, innovation will be prominent.
  • What do the LCCs have in store next?
  • How will route networks change - they increasingly imitate the classic network operators?
  • How significant will the impact of long haul LCCs become?
  • Will business travellers and corporates find LCCs more attractive in future?
Moderator: CAPA - Centre for Aviation, Executive Chairman, Peter Harbison  Panel Members:
  • AirAsia, Group Chief Executive, Tony Fernandes
  • Ryanair, Chief Commercial Officer, David O'Brien
  • Wizz Air, Founder & CEO, Jozsef Varadi
  • WOW Air, Founder & CEO, Skuli Mogensen
By its very nature, the travel industry never stands still. Traveller behaviour, technological changes and improved data availability and accessibility are shaping and driving all market players. The corporate accommodations sector has traditionally been showing a slower evolutionary pace than the airline industry, but this view is not valid anymore. Customised and personalised traveller experience, new distribution and booking opportunities, the emergence of dynamic pricing models and the expectations of a new generation are pushing the industry forward. This and more will be highlighted in this Big Picture view of the key changes shaping the future of corporate travel as it affects industry buyers and suppliers.
It is only when we look back at the state of distribution 10 years ago that we can guess at the scale of the challenge in preparing for 2025. Features to expect include new products, new consumer behaviour, a range of new airlines and partnerships. In fact all of today’s parameters are likely to change, to greater or lesser extent. For major established organisations to prepare and adapt offers massive challenges.
  • How have things changed in aviation and travel over the past ten years in terms of the distribution and value chain?
  • What are the industry changes that are likely to drive innovation in technology, in search and
  • How will technological change and consumer expectations disrupt aviation and travel over the next ten years?
Moderator: SAP Mobile Services, Senior Director Value Services, Johnny Thorsen Panel Members:
  • CarTrawler, CTO, Bobby Healy
  • London School of Economics, EGC Director, Graham Floater
  • Skyscanner, Chief Commercial Officer, Frank Skivington
  • Uber, General Counsel, Jim Callaghan