CAPA Asia Aviation & Corporate Travel Summit

Group Chief Executive, His Excellency Mr. Akbar Al Baker

London School of Economics, Dr Alexander Grous

Keynote Q&A with BOC Aviation, CEO & MD, Robert Martin and CAPA – Centre for Aviation, Executive Chairman, Peter Harbison

Dubai Airports, CEO, Paul Griffiths

Keynote Q&A with Dubai Airports, CEO, Paul Griffiths and CAPA – Centre for Aviation, Executive Chairman, Peter Harbison

Air Seoul was resolute in its need to enter Korea’s competitive LCC market in order to help parent owner Asiana Airlines. Air Seoul gives Korea’s #2 airline a low cost presence in the country’s largest market. With the slogan “It’s mint time”, Air Seoul is a visually distinct departure from Asiana’s traditional experience yet Air Seoul continues the legacy of Asiana’s network and aims to bring smaller and competitive destinations to profitability.

In an era where demand for air travel continues to grow, and where competition in the dynamic aviation is getting fierce, airports and airlines must rethink tomorrow’s travel and cooperate to provide travellers with more pleasant, seamless experience. In this session, panels will talk about how airports, airlines and their partners work together to push boundaries to revolutionise the passenger experience of the future.

Moderator: US-India Aviation Cooperation Program, Program Director, Sandeep Bahl
Panel:

• Changi Airport Group, VP, T4 Programme Management Office, Poh Li San
• Kansai Airports, Co-CEO, Emmanuel Menanteau
• Scoot, Head of Sales and Distribution, Trevor Spinks
• SITA, President, Asia Pacific, Sumesh Patel

• The digital retail revolution
  Have the days of having to choose between a direct or third party distribution strategy come to an end? With the emergence of platforms like voice and bots, online marketplaces have evolved and the point at which the relationship with the traveller switches hands has become less clear. Do airlines really believe that a new meta-led world will be better than the world they live in today. In this discussion, airlines will back up their rhetoric with facts, detail and solid client value proposition.
• 
  Can the evolving distribution landscape save premium yields?
  Millions of dollars and countless hours go into product and service differentiation. Yet when most passengers book, the only information available is airline name, flight times and costs. Many airlines are not earning the yield premium they deserve and have invested in. Can the New Distribution Capability, and other technological/distribution changes, successfully enrich the booking experience and boost yields?

Moderator: Expedia Group, VP Transport Partner Services, James Marshall
Panel:

• IATA, Director NDC Program, Yanik Hoyles
• Lufthansa Group Airlines, VP Asia Pacific, Dieter Vranckx
• RouteHappy, CCO, Jonathan Savitch
• Skyscanner, Senior Director, Strategic Partnerships, Hugh Aitken
• Travelport, VP Asia Pacific & Global Sales Strategy, Air Commerce, Damian Hickey

• What market positions are the LCCs aiming at – what strategies are in the future?
• How fast will they expand? – how sustainable are the massive order books of Asia’s LCCs?
• What are their main challenges? – market access; human resources for growth; other LCCs
• How will the large number of aircraft on order be used?
• Some companies are looking to leverage their existing brand, distribution network and technical capability to create a lower cost platform within a full service group. For dedicated self-styled low cost, long haul airlines, what more do they need to do?

Moderator: Dubai Aerospace Enterprise, Senior Advisor, Bertrand Grabowski
Panel:

• AirAsia X, CEO, Benyamin Ismail
• Bluebox Aviation Systems, CEO, Kevin Clark
• Inmarsat Aviation, VP Asia Pacific, Otto Gergye
• Jetstar Asia Airways, CEO, Barathan Pasupathi

• How will Asia’s airline market evolve over the next decade?
• Operationally
• In distribution matters
• Do Asia’s network airlines have a sustainable future?
• What are the key components in new survival strategies for the network airlines – what do they have to do to survive and flourish?

Moderator: Crucial Perspective, CEO, Corrine Png

Panel:

• Aeroflot, Director General, Director Strategy & Alliances, Giorgio Callegari
• Association of Asia Pacific Airlines, Director General, Andrew Herdman
• Embraer, VP, Asia Pacific, Cesar Pereira
• Vietnam Airlines, EVP, Le Hong Ha

AirAsia Berhad, also known as AirAsia Malaysia, was selected for its consistent industry leading financial performance and innovative expansion from secondary bases.

AirAsia Malaysias had a record 87% annual passenger load factor in 2016, representing a 6ppt improvement compared to 2015. Passenger traffic was up 9% to 26.4 million and, most impressively, yield was up despite intense competition, bucking an overall industry trend of declining yields. AirAsia Malaysia generated a pre-tax profit of more than USD500 million in 2016 with an industry leading 31% profit margin.

IATA Director New Distribution Capability Program Yanik Hoyles clears up some of the complexities of the NDC and explores the airlines involvement. Mr Hoyles also explores the role of key organisations throughout the value change and the need for support from all from the programme to be successful.

GoQuo CEO Ron Ramanan discusses the organisations position in the market and expansion plans. Mr Ramanan also explores the offering for clients, airline distribution strategies and payments.

AirAsia X CEO Benjyamin Ismail discusses the long haul low cost airline’s plans for expanding the network and fleet in 2018. AirAsia X Malaysia intends to add two to three second hand A330-300ceos in 2018 and take delivery of its first A330-900neo towards the end of the year. The airline, which recently celebrated its tenth anniversary, plans to expand its network in China and India in 2018 and aims to take over from sister short haul airline AirAsia the Kuala Lumpur-Male route and potentially some Kuala Lumpur-Hong Kong flights. AirAsia X Malaysia is capping a busy year of expansion in 2017 by launching flights to Jeju in South Korea on 12-Dec-2017.

Sabre Travel Network Asia Pacific VP Rakesh Narayanan discusses key strategic plans for Sabre in order to help airlines to promote and position themselves better to its vast network of agents. Mr Narayanan also discusses NDC, airline distribution and LCCs impact on the market.

Sunshine Coast Airport enjoyed record passenger movements in 2016/17, handling one million passengers for the first time. This included a record 296,000 international arrivals for the year ending Jun-2017, up 11.6% year-on-year. For the full year ending Jul-2017, the airport topped the list of airport growth in Australia, with a 10.4% increase.

After the owners, Sunshine Coast Council, concluded a commercial agreement in Feb-2017 with Palisade Investment Partners who will operate, invest and develop the airport under a 99 year lease, the airport is shortly commencing construction of a new 2450m runway and upgrade existing terminal and apron facilities. “Sunshine Coast has leapt into a position where it has the potential for a substantial expansion which promises to provide an immense benefit for tourism and for the economy of the surrounding region,’ said Mr Harbison.

Perth Airport ranks fourth largest in Australia on all parameters and 172nd in the world in terms of capacity and – an indication of its remoteness and therefore the importance of connectivity – a much higher 92nd when measured in ASKs. The city’s closeness to Asia and isolation from the rest of Australia’s major cities makes for a highly internationally focused airport.

“The fact that it currently has two widely separated terminals for domestic and international has made it that bit harder for the airport to capitalise in any way on its relatively high mix of flights for onward connections, however management has clearly had the foresight required to plan for future development,” said Mr Harbison.

The airport reported that it plans to expand its infrastructure over the next seven to 10 years using AUD2.5 billion, CEO Kevin Brown confirming the expanded airport “will help unlock the full economic potential of WA”.

Foreign airlines have been disproportionately present in Vietnam, Indonesia and the Philippines. But now airlines from those countries are increasing in number, size and scope. Full service airlines are changing and improving their product, there are new airlines and operators are enlarging their presence and extending their reach. From a greater presence in short haul markets to non-stop North American services, what other growth is available? What are the impacts to the airlines that have relied on the VIP markets?

Moderator: National University of Singapore, Professor of Aviation Law, Alan Tan
Panel:

• CAPA – Centre for Aviation, Chief Analyst and Southeast Asia Chief Representative, Brendan Sobie
• Cebu Pacific, Chief Executive Advisor, Mike Szucs
• Jetstar Pacific, COO, Les Stephens

Singapore Changi Airport was selected for the opening of Terminal 4 and its commitment for further capacity increases over the next decade.

T4 increases Changi’s capacity to 84 million passengers. The airport handled 58.7 million passengers in 2016 as traffic increased by 6% – the largest increase since 2012. Passenger traffic was up another 6% in the first three quarters of 2017 to 46 million, putting Changi on pace to easily break the 60 million mark for the full year.

Changi has started an even bigger project that will boost capacity by another 50 million passengers per year through the construction of a massive fifth terminal and third runway. While other airports in the region are struggling with infrastructure constraints and operating above capacity, Changi is committed to staying ahead of the growth curve and maintaining its position as a premier air hub.

The Philippines has managed to achieve double digit growth in inbound tourism over the past three years, on the back of a concerted campaign. This has included an active and targeted effort to attract new airlines and new air services to the Philippines. In doing so it has managed to maintain a good broad cross section of tourist origins, without relying too heavily on any one market. With two successful international airlines spreading their wings internationally, as well as a growing number of foreign airlines, continuing this form of expansion requires initiative and a positive branding proposition. Under the guidance of the Tourism Administration this strong record looks set to continue into the future.

Vietnam Airlines EVP Le Hong Ha discusses market growth rates for Vietnam and the projected growth rate for Vietnam Airlines. He also talks about the airline’s new joint venture with Air France and its plans for launching services to the US in 2019. Regional growth within Asia Pacific is expected as Vietnam Airlines starts to take delivery of A321neos in 2018 and 787-10s in 2019.

Dubai International Airport will accommodate nearly 90 million passengers in 2017, making it again the world’s largest international airport. Dubai Airports CEO Paul Griffiths discusses plans to double the airport’s throughput to 180 million passengers by 2023 despite site constraints. He also talks about how Dubai International Airport will facilitate increased cooperation between Emirates and flydubai including the challenging objective of co-locating Dubai’s two home carriers in the same terminal. Meanwhile Dubai World Central will increase capacity early next year to 25 million passengers and Dubai Airports is working to attract more airlines to the new facility.

Jetstar Asia has had a busy Nov-2017 with the launch of three new routes – Hat Yai, Okinawa and Clark. CEO Barathan Pasupathi discusses the three new routes and how the airline has been able to expand the network despite not growing its fleet. Jetstar Asia’s fleet has been stuck at 18 A320s since early 2014 and its ASKs have been on the decline the last two years due to heavy maintenance requirements. Jetstar Asia has cut back capacity to some existing destinations and is focusing on profitability rather than growth. Fleet expansion will only resume if there is consolidation or the Southeast Asia market starts behaving more rationally.

In FY2017, Regional Express, Rex, reported a nearly quadrupled operating profit, achieving an AUD17.8 million profit before tax, compared to AUD4.3 million in FY2016. The carrier also forecast double digit profit growth for FY2018. This impressive growth has resulted in a significant share price growth exceeding 30%. In the last two months alone, Rex’s share price increased from AUD1.05 to AUD1.38, the highest result the airline has achieved since Feb-2008.

“Rex has flourished in a difficult domestic operating environment, expanding while improving profitability, a creditable performance,” said Mr Harbison. “Over the years Regional Express secured a solid base and has now used this to expand more widely and strategically.”

Vietnam Airlines was selected for its rapid growth, high level of profitability and successful partial privatisation.

“Vietnam is among the fastest growing markets in the world and is attracting much added competition. Vietnam Airlines has emerged as a successful and fast growing full service airline group despite intensifying competition in its home market,” CAPA executive chairman Peter Harbison said. “The group’s dual brand strategy with Jetstar Pacific and pursuit of strategic partnerships have significantly improved its long term position. These strengths helped the airline achieve a highly successful partial privatisation in early 2017 while maintaining a high level of profitability. This airline is going from strength to strength!”

This is awarded to the airline 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.

Qatar Airways Group Chief Executive Akbar Al Baker has not let his airline lose its shine during one of its most testing years. Qatar Airways has recalibrated its network to function without neighbouring countries. At the same time, the carrier has continued with growth plans and created more expansion.

Mr Harbison said: “Akbar Al Baker has not let Qatar Airways lose its shine during one of its most testing years. Under his guidance, the airline has recalibrated its network to function without access to several neighbouring countries. At the same time, Qatar Airways has continued its expansion plans and created new avenues for growth. He has turned a setback into an opportunity. This is truly a remarkable achievement.”

Association of Asia Pacific Airlines (AAPA) Director General Andrew Herdman talks about market conditions and the profitability of the Asian airline sector. Cargo and passenger traffic in Asia has been growing strongly in 2017 and Mr Herdman is optimistic about the outlook, including continued cargo growth after several challenging years. Meanwhile, the association is pushing for more consultation between government and industry, as well as multilateral cooperation through ICAO, to develop global aviation security standards.

Saudia Arabia’s flyadeal is a brand new LCC, having commenced domestic operations in Sep-2017. The Saudia subsidiary plans to have a fleet of five leased A320s by the end of 2017 and eight leased A320s by the end of 1H2018. CEO Con Korfiatis discusses the airline’s positioning in the Saudi Arabian market and plans for international services, which are expected to commence in 2Q2018. In this extensive interview, Mr Korfiatis also discusses the flyadeal’s RFP for new aircraft, its business model, its relationship with Saudia, the regulatory environment, the expected rate of domestic growth and inbound tourism opportunities.

Aeroflot Deputy General Director for Strategy and Alliances Giorgio Callegari discusses the group’s growth in 2017 and expansion plans for 2018. Mr Callegari also talks about Aeroflot’s partnership strategy, including potential new joint ventures, and opportunities in Southeast Asia. The Aeroflot Group’s market share has declined in 2017 and its portion of transit traffic has dropped as the local market in Russia has grown rapidly. However, Aeroflot is not concerned about market share as it focuses on profitable and sustainable growth of approximately 15% per annum.

Changi Airport opened Terminal 4 on 31-Oct-2017, introducing several new self-service technologies aimed at improving passenger experience and airline operational efficiency. Changi Airport Group’s VP in charge of the T4 programme, Poh Lin San, discusses how customers have so far responded to the new technologies and what sets T4 apart from the airport’s existing three terminals. She also talks about plans for implementing some of the new technologies in T1, T2 and T3 – and eventually in T5 when it opens next decade. T4 has capacity for 16 million passengers per annum, lifting Changi Airports’ total capacity to 82 million. About half of T4’s capacity is now being used by the nine airlines that moved to the terminal in the first phase, including four AirAsia Group carriers. Changi plans to add “a few more airlines” to the T4 mix in 2018.

Cebu Pacific CEO Mike Szucs discusses the airline’s decision to cut long haul flights to the Middle East and redeploy A330s on regional routes as well as the decision to shelve consideration of new generation widebody aircraft to launch long haul flights to North America. The redeployment of the A330s has enabled Cebu Pacific to accelerate growth in the domestic market, where it is starting to regain market share, and in the regional international market. The delivery of seven A321ceos in 2018 will enable Cebu Pacific to continue domestic and regional expansion while also potentially freeing up A330s for a resumption of long haul expansion, starting with the possible launch of Melbourne. A321neos will arrive from the end of 2018 and used on longer regional routes.