CAPA LCCs in North Asia Summit

Civil Aviation Authority of the Philippines, Director General, Captain Jim C. Sydiongco

CAPA – Centre for Aviation, Chairman Emeritus, Peter Harbison
Cebu Pacific Air, Chief Executive Adviser, Mike Szucs

Eastar Jet, CEO/President, Jong-Gu Choi

New distribution models and IATA NDC specifically have been the topic of conversation for a number of years now, but have largely been seen as the domain of the full service airlines. However, the standard is not limited to this airline model or to IATA members, so why should low cost carriers care about these developments in the industry? 

Travelport, Senior Commercial Director, Sue Carter

Cebu Pacific Chief Executive Adviser Mike Szucs discusses the group’s recent aircraft order with Airbus and plans for accelerating growth. Cebu Pacific plans to grow at its main Manila base, where there are no available additional slots, by up-gauging to larger density aircraft. The group has opted for new maximum configurations for A330-900s (460 seats), A321neos (240 seats) and A320neos (194 seats). The group also plans to grow at secondary airports, including Mactan-Cebu and Clark, as it expands its fleet. It aims to start operating ATR 72s at Sangley, an air base outside Manila that is soon opening to commercial traffic.

Taoyuan International Airport Director Chungli Yu discusses the airport’s rapid LCC growth and expectations for further LCC growth. Taipei’s main airport has benefitted from growing outbound and inbound demand – with Taiwan emerging as a popular tourist destination and Taiwanese residents’ appetite for travel increasing, stimulated by low fares within Asia. Taoyuan passenger traffic has more than doubled over the last decade and the LCC share of traffic has grown over this period from 2% to 20%.

• What are the challenges and opportunities facing LCCs in North Asia?
• Gaining slots at the right times, at the right price. Is this impossible at the world’s key airports?
• Low cost terminals - are airports and airport designers really listening?
• Access to markets: what bilaterals are constrained? Are we past the high water mark of market liberalisation?
• Aircraft and engines – what’s next? 

Moderator: CAPA - Centre for Aviation, Chairman Emeritus, Peter Harbison

Panel:

• Cebu Pacific Air, Chief Executive Adviser, Mike Szucs
• Eastar Jet, CEO/President, Jong-Gu Choi
• Spring Airlines, President, Zhijie Wang

• Overview of the regulations in the Philippines
• Importance of regional airports
• Philippines-North Asia market continues to grow, led by LCCs 

Moderator: Cebu Pacific Air, Board Adviser, Garry Kingshott

Panel:

• Cebgo, President and CEO, Alexander Lao
• Civil Aeronautics Board, Deputy Executive Director, Atty. Alexander Paul Rivera
• Civil Aviation Authority of the Philippines, Director General, Captain Jim C. Sydiongco
• Mactan-Cebu International Airport Authority, General Manager and CEO, Atty. Steve Y. Dicdican
• Philippines AirAsia, Head, Government Affairs & Policy, Desiree Bandal 

Part of the growing success of LCCs around the world is their ability to tap into key technologies to access their customer base and improve processes.

• How can LCCs leverage on technology to improve business performance and operational efficiency?
• What new airport technologies are available for LCCs to improve business efficiencies? 

Moderator: Aviation Cooperation Program, Program Director, Sandeep Bahl

Panel: 

• Collins Aerospace, Sales Director, APAC, Stephen Robinson
• Kiwi.com, Head of Airline Partnerships, Marco van Ieperen
• SITA, Vice President & General Manager, Sanjeev Kumar
• Spring Airlines, Deputy General Manager IT, Xiaowei Qu

The future traveller is being driven by the information age and has therefore forced airlines to constantly look for new and exciting ways to provide innovations in flight deck, cabin, airport and communication technologies. Setting themselves apart is key to success for any supplier, especially when the passenger’s decision making process becoming more and more focused on deliverables rather than just cost.

• What is driving passenger behaviours?
• What new and exciting ways exist for LCCs to communicate and market to new travellers?
• How LCCs can help passengers stay connected while on board? 

There are a range of tools available to airlines which could influence traveller behaviours, including:

• Distribution capabilities and passenger retailing;
• In-flight connectivity solutions
• Cabin interiors; and
• Many more 

Moderator: CAPA – Centre for Aviation, Chief Analyst, Brendan Sobie

Panel:

• Air Black Box Company, Founder, Timothy O’Neil-Dunne
• Eznis Airways, CEO, Tamir Tumurbaatar
• Skyscanner, Commercial Director, Gavin Harris

New generation aircraft offer game-changing economics and range for LCCs. In the narrowbody space, several LCCs are now operating or have on order new generation narrowbody aircraft on long haul routes.

The introduction of long haul narrowbodies (A321neoLRs) in Japan in 2020 by carriers such as Peach and Jetstar Japan will drive interesting changes to the region.

• What examples of implementation of new aircraft types has been successful for LCCs around the world? 
• What opportunities still exist for LCCs to tap into new aircraft types? 
• Can LCCs compete with full service carriers? 
• What new technology will assist LCCs in further growth?

Moderator: The Chinese University of Hong Kong, Assistant Professor, Jae Woon (June) Lee
Panel: 

• Airbus, SVP Sales Japan, Jean-Pierre Stainnack 
• Boeing Commercial Airplanes, Executive Director Market Analysis, Wendy Sowers
• Embraer, Marketing Director, Adam Young 
• T'way Air, Senior Vice President, Hyung Yi Kim

Airports increasing working in a highly collaborative fashion with LCCs to win and retain air services. How are LCCs different to say attracting a full service carrier or a carrier from a key growth market like China or India.

• What lessons can be learned from airlines and airports who have succeeded in this? 
• How can airports service the evolving needs of LCCs?

Moderator: ASM, Senior Vice President, Tony Griffins

Panel:

• Mactan-Cebu International Airport Authority, General Manager and CEO, Atty. Steve Y. Dicdican 
• Philippines AirAsia, Head, Government Affairs & Policy, Desiree Bandal
• Taoyuan International Airport, Director Corporate Development, Chungli Yu

As with the funding of any business, those providing any type of funding to LCCs will consider the business model/management, the quality of the corporate credit and any underlying assets to be financed. In each of these areas, financiers look at a wide range of factors.
In many ways, LCCs are no different from full service airlines in this respect. The LCC business model is now well established throughout the world and low cost operators are among some of the biggest airlines globally.

Nevertheless, it is still regarded to some extent as a newer model, and financiers will typically take a more rigorous approach when considering the provision of funds to start-up and younger airlines. Even where the model is not really very new, low cost operators often pursue higher growth rates, and this can also be a source of additional risk.

Perhaps because many low cost airlines typically have shorter track records and are less well capitalised, the share of the world LCC fleet that is leased is higher than for the total fleet of all airlines. In particular, LCCs make significant use of sale and leasebacks.

• Features need to be considered in funding new and established LCCs? 
• Which funding models are most attractive to LCCs? 
• What roles have the OEMs played in LCC expansion? 
• Are markets large enough to support all the new orders?

Moderator: Korn Ferry, Senior Client Partner, Torbjorn Karlsson
Panel:

• Boeing Commercial Airplanes, Executive Director Market Analysis, Wendy Sowers
• Development Bank of Japan, Head of EMEA, Asia Pacific and Investment, Yu Kimura
• DVB Bank SE, SVP, Deputy Head Aviation Finance APAC, Christopher Turner