CAPA Airlines In Transition Summit

Dublin, Ireland
10-11 Mar 2016
DAY 2 – FRIDAY 11 MARCH 2016
09:00 Chairman's welcome

Session 3: AIRLINES, AIRPORTS AND THE ENVIRONMENT: What kind of future does the aviation industry have in next decade’s economy?
Introduction: What did the Dec-2015 Paris talkfest mean for aviation?
Airlines are in the cross hairs of many environmental groups, even if they only produce a tenth of the emissions of cows and sheep. Some airlines have sought to exploit relatively minor moves towards using non-fossil fuels, but are there competitive advantages to be won by adopting certain courses of action? Despite improvements, the gains from more efficient aircraft and engines will not be sufficient.
Using newer, more fuel efficient aircraft and operating with greater seating density and at higher load factors are ways of lowering unit emissions. But in the absence of real breakthroughs in use of alternative fuels, will the only options be slower growth, more capacity coordination and similar travel-negative options?
Airports too are centres of massive aviation emissions, both on airport and on the approaches.
  • In short, what are the strategies necessary for airlines to transition to a new future?
  • How much of the duty to change should fall on the airlines – or the airports – or ANS providers – or OEMs – or governments; and is this burden being accurately addressed?
  • How effective are the measures currently being taken in areas such as alternative fuels, access to airports, ATC?
Keynote Presentation: SUN, Strong Universal Network, Founder, Geoffrey Lipman
09:25 Can airlines and airports realistically continue to project high growth unless there are substantial breakthroughs in alternative fuels? 
At institutional level IATA has played an important role in helping ICAO governments move towards a programme for emission reductions.
But developing alternatives to fossil fuels is one part of a long term sustainability strategy, which will take many years to bear fruit. Meanwhile there is no shortage of publicity moves by individual airlines and by airports, with varying long term utility.
Meanwhile tabloid opposition to airline and airport growth – especially in Europe – continues to mount. Even where greater operational efficiencies are achieved, the increase in carbon emissions will potentially outstrip non-aviation improvements.
And, while the future existence of airports and airlines is inextricably linked, there is only limited cooperation between them in seeking substantial emission reductions. (As for many ANS providers, cooperation would appear a bridge too far.)
  • Will aviation growth hit a wall in 2020 unless alternative fuels are in prospect?
  • What steps are available for coordinating airline and airport efforts?
  • Why don’t they cooperate more actively? 
  • Are there effective options for significant emission reductions?
  • Are airlines consistent in their operating requirements?
  • Are airports consistent in their operating requirements?
  • Where are improvements possible?
Moderator: CAPA - Centre for Aviation, Chief Financial Analyst, Jonathan Wober
Panel Members:
  • Air China, VP & GM North America, Zhihang Chi
  • daa, Head of Health, Safety, Sustainability and Environment, Mary Kerins
  • GE Global Growth Organization, European Government Affairs & Policy Leader, Aviation, Christian Haenen
  • IATA, Director General & CEO, Tony Tyler
10:05 The Future of Travel: An Interview with:
IATA, Director General & CEO, Tony Tyler
Travelport, CEO, Gordon Wilson
10:35 CAPA Airline Boardroom Live. Strategy Session 2: How can FSCs regain their short haul markets from LCCs? [Download presentation]
A reformulated Board will be presented with an executive summary report of Session 1 of the meeting and, incorporating that, be asked to address a set of different matters, which for the sake of convenience we have described as high level.

Part 2. High level decisions
1. Distribution Strategy

  • Distribution strategy 
  • Reorganising sales channels 
  • Improving merchandising opportunities  
2. Establishing new business models
  • Convert short haul operations into low cost 
  • Create an entirely new low cost subsidiary 
  • Buy an existing LCC
  • Codeshare or JV with an existing LCC 
  • Focus on long haul, cut back short haul 
3. Leveraging Partnerships 
  • Use bilateral or global alliances 
  • Establishing JVs, immunised and otherwise 
  • Use equity investments to maximise network and value added 
  • Optimise codeshares and FFP linkages 
Moderator: European Aviation Club, Chairman, Rigas Doganis
Panel Members:
  • Aer Lingus, Chief Executive Officer, Stephen Kavanagh
  • Amadeus, VP Distribution Marketing, Decius Valmorbida
  • Comair, Chief Executive Officer, Erik Venter
  • McKinsey & Company, Associate Partner, Riccardo Boin
  • Star Alliance, Chief Executive Officer, Mark Schwab 
11:30 COFFEE

Ensuring that brand converts to dollars is no simple task

[Download presentation]

As much as any industry, airlines rely on branding to sell their product.
Establishing a powerful brand is perceived to be vital to generating sales. This is particularly so in foreign markets, where local airlines dominate distribution and frequent flyer/loyalty programmes.
Advertising inflight product through traditional media is still a significant activity, but in a changing world, airlines are being forced to look to new directions for market positioning.
The industry is threatened with being commoditised, so it is logical that companies would seek to differentiate through branding (among other things).
Social and digital marketing have become de rigeur for marketing departments and “engagement” with customers is apparently a must-do.
So long as big data is still more a discussion than a reality for airlines, digital and other modes will continue to compete for strategic attention in marketing and sales divisions.
But market research suggests that brand may be little more than a distraction, particularly where social media is involved. Similarly, the impact of FFPs on customer loyalty may be greatly exaggerated.
The vast bulk of buyers are in fact infrequent travellers and are much more interested in price than product – or brand. So, for example, American Airlines president Scott Kirby said recently that 9 out of 10 of American’s passengers fly on the airline only once a year or less. For them, he believed, “travel is clearly a commodity”. Brand was pretty much irrelevant.
He also said that the commoditised passenger pool represented 50% of its revenue; stated alternatively, the other 10% represented up to 50% of revenue.
The obvious message is that there is no single way of optimising travel on an airline. But where best to allocate resources?

  • How relevant/necessary is a good brand – especially for marketing offshore?
  • How best to market to corporates, who offer a disproportionate income stream
  • How effective are loyalty programmes in generating “loyalty” (as opposed to being revenue earners in their own right)?
  • Is social media worth the candle?
Presentation: Brand Vista, CEO, Andrew Stothert

Moderator: MW Travel Consultancy, Principal, Martin Warner
Panel Members:
  • airBaltic, Chief Operating Officer, Martin Sedlacky
  • Boxever, Co-Founder & Chief Executive Officer, David O'Flanagan
  • Brand Vista, CEO, Andrew Stothert
  • CityJet, Chairman, Patrick Byrne
  • PrivatAir, Chief Executive Officer, Antonio Gomes de Menezes
  • SAP Mobile Services, Senior Director, Value Services, Johnny Thorsen
13:20 LUNCH and end of conference