CAPA Americas Aviation Summit

Houston, United States of America
16-17 Apr 2018

Day 2: 17 April 2018

08:00 Registration
09:00 Chairman's Welcome
09:05 Airline Keynote & Q&A
Indigo Partners, Managing Partner, William Franke
09:30 The ULCCs are coming! A future force in the Americas
Unlike Asia and Europe, US, Canada and Latin American LCC activity has been relatively muted in recent years. Although it was the home of the breed, the US has slipped well behind as airline bankruptcies and consolidation allowed the US majors to reduce costs significantly and to dominate the market more actively. Technically, the US has a high level of LCC activity, but much of that consists of Southwest’s presence; the once market leader of LCCs now occupies a cost base very similar to its major full service rivals. Aside from Mexico, (where two thirds of domestic seats and a quarter of international are on LCCs), and Brazil (almost 60% of domestic operations), Latin America overall has relatively low LCC penetration. That is all now about to change across the region. Canada has new LCC entrants and both major airlines have established lower cost subsidiaries. To the south, countries like Chile, Colombia and even Argentina are now experiencing a tidal shift as ULCC groups spread across borders. But in many areas of Latin America particularly, despite the elements already being in place for effective market stimulation, a lack of adequate airport infrastructure and prohibitively high costs constitute barriers to entry faced by LCCs. The reappearance of “ULCCs” in the US has sufficiently worried the majors to provoke them to adopt various price matching competitive strategies. And ultra-low cost groups like Indigo Partners/Frontier/Spirit are challenging the status quo, as is JetBlue in a hybridised fashion. With many medium sized airports anxious for a return of services, opportunities abound. For the time being the LCCs and ULCCs are attacking the lower hanging fruit, but there are many opportunities that are not being fully exploited at present.
  • How fertile is the ground for expansion of ULCCs in the Americas and what are the constraints?
  • What key lessons can US majors learn from legacy carriers in other markets who have launched LCC brands? Can the same principles be applied in the Americas?
  • There are opportunities in all markets both for hybridised LCCs and ultra low cost operations; which is the better place to be?
  • How viable is the future for long haul low cost operations as new aircraft types and new airlines challenge the status quo?
  • Is Latin America too expensive and too regulated to support the growth of LCCs? What needs to be done to stimulate the market?

Moderator: Waltzing Matilda Aviation, Chief Executive Officer, John Thomas

  • Indigo Partners, Managing Partner, William Franke
  • Interjet, Chief Commercial Officer, Julio Gamero
  • Irelandia Aviation, Member of Advisory Board, Tony Davis
  • Spirit Airlines, Senior Vice President & Chief Commercial Officer, Matt Klein
10:15 Keynote: Changing landscape of airline distribution
Travelport, Senior Commercial Director, Air Commerce, Craig Banks [Download Presentation]
10:35 Remarks: Leading Airline Operations into the Digital Age
Fisher College of Business,
Executive-in-Residence, Nawal Taneja
10:45 Panel: Embracing digital disruption in airline distribution
Most airlines appreciate that technology is radically changing marketing and distribution models, yet the structure of airlines remains focused on the business of flying metal. How should airlines prepare for this brave new world in which ambitious technology upstarts and intermediaries - constantly interrupted by the informed consumer - retain their (sometimes limited) control over distribution? Airline management teams will need to undergo the requisite paradigm shift and innovate their marketing and distribution strategies to position their companies as retailers in the digital realm.
  • Data is power - why airlines should start behaving like tech companies
  • With the harnessing of big data, how important are online consumer channels like Amazon, Facebook, Alibaba, Airbnb becoming?
  • What kinds of low cost automated distribution channels should airlines invest in?
  • What is the future role for the GDSs?

Moderator: Fisher College of Business, Executive-in-Residence, Nawal Taneja

  • Caravelo, Commercial Director, Jonathan Newman
  • IATA, Regional Director, Financial & Distribution Services, The Americas, Alicia Lines
  • Skyscanner, Senior Director, Global Strategic Partnerships, Hugh Aitken
  • Travelport, Director, Air Commerce, Toby Kubis
11:30 Coffee Break & Networking
12:00 The Great Debate: Is there a future for open skies agreements?
When the US government first began promoting Open Skies agreements, the concept met considerable opposition from the US' foreign counterparts. Back then, most of the US major domestic airline incumbents also opposed the relaxation, fearing inroads into their dominance of domestic US market access and reducing their one-on-one power. Open skies not only relaxed pricing and capacity controls, but also made it possible to serve many more points behind the previously restricted number of international gateways; in doing so it reduced the proportion of beyond-gateway domestic connections on US airlines. Another by product was to enable much more extensive sixth freedom operations internationally.The airline and international travel world has been transformed by US leadership in this area. Many other governments, as well as the European Union have since largely embraced the benefits open skies have delivered. FedEx for example has a Middle East distribution hub in Dubai, where regulatory access is virtually unconstrained. And US airlines have available to a wide array of open skies markets with fifth (and sometimes seventh) freedom rights, although, outside North Asia, the rights are rarely exercised. US policy has also permitted the formation of metal neutral JVs where open skies agreements exist, notably across the North Atlantic and in the US-Japan market.But there are signs that we may have passed the zenith of international liberalism in aviation. Several international hub carriers, and most vocally the Big 3 US airlines, have expressed concerns about the lack of a "level playing field", generally considered code for favouring more restrictive market access regimes; fifth freedom operations are one target of these concerns.In a broad atmosphere of economic nationalism and an uncertain Administration long term attitude to strenuous lobbying efforts from the Big 3, open skies may be challenged. In Europe, the EU has adopted a relatively liberal stance, although there is far from unanimity among the bigger powers. France, Germany and Italy are actively more protective than the UK, which has typically led the liberalisation charge. As the UK exits the EU and its future role remains unclear, it is quite possible that the EU's position will change. It is suggested for example that the current EU-Gulf states multilateral discussions are intended simply to prevent any further bilateral access rights to the Gulf carriers while the lengthy multilateral talks are in train.
  • What is a level playing field?
  • Could US airlines take greater advantage of the market access opportunities they have available under existing agreements?
  • Is the US Big 3's campaign against the Gulf Carriers likely to encourage other, foreign, airlines to adopt less liberal stances?
  • What impact is President Trump’s move to impose trade tariffs likely to have on aviation, if any?
  • As China becomes a major market, is an open skies agreement likely - or necessary, to secure JV authority?
  • Is there a global trend to rolling back open skies?

Moderator: Baker McKenzie, Partner, Kenneth Quinn

  • Delta Air Lines, Managing Director, Government Affairs, Robert Letteney
  • FedEx Express, Managing Director, Regulatory Affairs, Nancy Sparks
  • U.S. Department of Transportation, Director, Office of International Aviation, Brian Hedberg
12:55 Summit Wrap
13:00 Lunch and Networking