CAPA Low Cost Long Haul Global Summit

Seville, Spain
4-5 Oct 2018

WEDNESDAY 3 October 2018

17:30 Registration
18:00 -
Welcome Reception at the Barceló Sevilla Renacimiento
Hosted by AENA and Turismo de la Provincia

THURSDAY 4 October 2018

08:00 Registration, Networking & Coffee
09:00 Chairman's Welcome 
CAPA - Centre for Aviation , Executive Chairman, Peter Harbison
09:05 Host Welcome
CAPA Outlook for the growth and development of Low Cost Long Haul Carriers
CAPA - Centre for Aviation , Executive Chairman, Peter Harbison [Download Presentation]
Keynote and Q&A: Building the Airline Business Model of the Future
LEVEL, CEO, Vincent Hodder [Download Presentation]
Panel: Can the full service carrier and low cost long haul model exist in the market side by side?
While LCCs are still a relatively young force they have massively disrupted air travel and the way all airlines now think about serving the public. With a nimble strategy offering point to point connectivity, industry innovations, ancillary focused activities and modern digitalisation and technological practices, they have become the new ‘normal’ in the industry, causing major headaches for the full service carriers on short haul markets. Whether low cost carriers will create a similar transformative effect in the long haul sector remains to be seen. No less than 19 LCCs have launched widebody services in the last six years, while further disruption is on the cards in the long haul narrowbody space. The new generation single aisle Boeing 737 MAX and Airbus A320neo aircraft families have brought long, thin routes into the realm of operational and financial viability for LCCs, in turn stimulating new traffic between secondary city pairs and allowing passengers to bypass traditional hubs. Yet the low cost long haul model doesn’t have the same inherent cost advantages as the short haul model, which potentially narrows the cost gap between LCCs and FSCs, and growth has come at the expense of profits for many LHLCCs. The prospects for independent low cost long haul carriers aren’t particularly promising either; it’s rare for secondary point to point markets to be large enough to operate sustainably without additional feed.Still, low cost long haul airline growth shows no signs of abating. As the average passenger profile moves towards the price sensitive end of the spectrum, outstripping growth in premium markets, it becomes harder for higher cost airlines to sustain previous expansion rates without deploying radical strategies to address the low cost long haul onslaught. 

  • Can the economics that make short haul low cost viable translate to the long haul sector? 
  • How crucial is fuel efficient aircraft in making low cost long haul sustainable? 
  • Does the viability of the low cost long haul model depend on continued downward pressure on fuel prices? What happens when this high-proportion input cost (inevitably) rises? 
  • Can independent low cost long haul carriers operate sustainably without short haul feed from a sister carrier? 
  • Do LCCs need to change their product and pricing structure to operate in the long haul market? 
  • Can FSCs survive the competitive threat of low cost long haul carriers? 
  • As the two models continue to adopt features of the other, will there be any true distinction between a pure full service carrier and a pure LCC?
Moderator: Cranfield University, Visiting Professor, Peter Morrell
  • Avolon, Head of Strategy, Dick Forsberg
  • flyadeal, CEO, Con Korfiatis
  • IAG, Head of Strategy and Development, Alistair Hartley
  • SMBC Aviation Capital, Head of Strategic and Market Analysis, Shane Matthews
CAPA Membership Presentation
CAPA - Centre for Aviation, Chief Financial Analyst, Jonathan Wober [Download Presentation]
Coffee Break & Networking 
Hosted by CarTrawler
Networking long haul operations: combining with short haul partners at each end
Low cost long haul operators are establishing partnerships with short haul low cost airlines as a means of expanding their network breadth and supporting their growth aspirations, as recently demonstrated by Norwegian’s tie up with easyJet. For long haul operators, connecting traffic is critical in scaling sustainably, especially as very few long haul destinations generate enough demand to justify year round capacity, while their partners benefit from additional traffic growth in short haul markets. Legacy carriers, who have long ceded competitive ground to short haul LCCs, could see history repeating itself as long haul-short haul LCC partnerships gain more momentum and disrupt full service carriers’ long haul networks. 
  • How do long haul-short haul LCC partnerships enable growth and scale? 
  • Is partnering with a short haul LCC the best way for low cost long haul operators to expand their network? 
  • Are these new partnership arrangements set to disrupt network carriers’ long haul operations? 
  • How seamless are self connecting platforms and virtual interlining? What role can airports play in enabling connectivity?
  • In which markets do long haul-short haul LCC partnerships proliferate? 
  • Can long haul low cost carrier operate as stand alone entities without short haul partners?
Moderator: Skylight Aviation, Senior Advisor and former easyJet Group Strategy & Network Director, Cath Lynn
  • easyJet, Regional Director, Javier Gandara
  • Kiwi.com, CEO, Oliver Dlouhy
  • London Stansted Airport, CCO, Aboudy Nasser
  • Norwegian Air, EVP Strategic Development, Tore Østby
Don’t beat them, join them: LCC alliances, long haul and short haul LCC and LCC-FSC partnerships 
As full service airline groups rapidly expand into the long haul low cost sector, questions on whether to include LCC subsidiaries in intercontinental JVs naturally emerge. Including an LCC subsidiary in a JV is still rare, but becoming more common. For example, Air Canada LCC subsidiary rouge and IAG’s new long haul low cost subsidiary LEVEL are now included under their respective transatlantic JVs. Asia-Pacific JVs are yet to include any LCCs, although the addition of Scoot to the Lufthansa-Singapore Airlines JV is in the works, which would simplify the Singapore flag’s current separate partnerships with both Lufthansa and Scoot. While joining a parent’s existing JV seems like a natural strategic evolution for low cost subsidiaries, independent LCCs need to consider other options if they want to expand their market presence, whether that be forming codeshares with fellow LCCs or with full service carriers, or as famously demonstrated in 2016 by the Value and U-Fly alliances, forging their own groupings to sell joint itineraries and generate cross-bookings. Meanwhile, other creative regulatory solutions exist. In Asia, the cross border JV model has allowed the region’s major LCC groups – AirAsia, Jetstar, Lion Air, and to a lesser extent VietJet – to accommodate foreign ownership restrictions by taking branded minority stakes in local airlines. Similar strategies are being pursued in the Middle East with Air Arabia, in Latin America, through the Viva group and in Africa with fastjet/Fly540.With an array of different partnership mechanisms available, airlines need to consider whether they are prepared to create additional complexity and cost before embarking on this road. 
  • What are the regulatory tools available for LCCs and are they being properly exploited? 
  • Why are LCCs willing to stray from the purity of the business model and forge partnerships with other airlines? What are the cost/complexity implications of doing so? 
  • Are codeshare arrangements with other LCCs the most effective way for low cost long haul operators to combat aggressive price matching tactics carried out by full service incumbents? 
  • How do partnerships enable greater network breadth? 
  • Is there any value in establishing LCC alliances when LCCs could form their own interlines and codeshares instead? Are there any significant cost and revenue benefits in forming a grouping? 
  • Are cross border JVs effectively circumnavigating current ownership and traffic rights restrictions? Do cross border JVs help airlines achieve scale? 
  • Are geographical borders becoming irrelevant or do nationalist and protectionist sentiments still exist? What kind of local partners are airlines looking for? 
Moderator: European Aviation Club, Chairman, Rigas Doganis
  • Air Black Box, Co Founder, Timothy O'Neil-Dunne
  • London Gatwick Airport, Head of Airline Relations, Stephen King
  • Mango Aviation, Managing Partner, Andrew Cowen
  • Scoot Tigerair, CCO, Vinod Kannan
Keynote: As the mobile travel marketplace evolves what are the lessons for long haul low cost airlines
Skyscanner, Senior Director, Commercial, Hugh Aitken
13:05 Lunch Break & Networking
Hosted by Sevilla Futbol Club 

Aircraft, engines and operations – enabling new generations of LCLH services 
Change is now in the wind as low cost long haul operators continue to capitalise on the capabilities of new narrowbody aircraft and increasing liberalisation to stimulate competition on markets traditionally dominated by the full service carriers. As a prime example, LCCs, led by Norwegian, have been encroaching on the tightly controlled trans-Atlantic route over the past five years. Their presence continues to grow here and elsewhere, thanks to the development of new, more cost efficient aircraft types such as the 787, and narrowbodies such as the Boeing 737 MAX and A321neo. The better fuel efficiency of the MAX and the A321neo and, in particular, the additional range of the A321neoLR enable new smaller city pairs that are not big enough to sustain widebody operations to become economically viable. Legacy airlines are also taking advantage of new narrowbody equipment to open up or defend existing routes. 
  • What new aircraft production platforms are stirring interest and what opportunities to they open up to LCCs? 
  • Disrupting mature markets or growing new city pairs? Which markets are prime targets for low cost long haul expansion? 
  • How are legacy airlines utilising the new aircraft equipment to defend markets? 
  • What role will widebodies play as long range narrowbodies take on greater significance in long haul markets? What particular features of the new generation equipment will help enable sustainable growth of the low cost long haul growth? 
  • Are operators looking to fly new aircraft to destinations that are far apart, or is the focus more on trying to make the aircraft fit into the existing network? 
  • Are new narrowbodies freeing up older widebodies for deployment on new routes?
Moderator: Avolon, Head of Strategy, Dick Forsberg
  • Airbus, Principal - Market Intelligence & Consulting, Yves Renard
  • Boeing, Senior Managing Director - Marketing, Darren Hulst
  • PlaneConsult, Managing Director, Conor McCarthy
Financing and funding growth: managing risk with large aircraft orders
LCCs, as the newer players in the industry, are competing to meet future growth needs. They can scarcely afford to stand still if they are to assert themselves in the long term – especially as newer models enter. The need to plan for fleet expansion and replacement, as well as making decisions on leasing and purchasing. For larger LCC groups, one notable strategy to offset the risk inherent in large forward orders has been to establish a leasing capability, to absorb any excess capacity as new aircraft are delivered. 

  • Finding the funding – debt and equity – to support LCC expansion. Is the money there? 
  • What special 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? 
  • What is the risk profile of an independent LCC vs a subsidiary? 
  • Should airlines lease or purchase outright from the OEM? 
  • Should LCCs with large order books establish their own leasing companies? 
  • What skills are necessary for an LCC to be successful in this very different venture – while maintaining the airline operation?
Moderator: SMBC Aviation Capital, Head of Strategic and Market Analysis, Shane Matthews
  • Air Lease Corporation, Executive Chairman, Steven Udvar-Hazy
  • BOC Aviation, Managing Director & CEO, Robert Martin
  • DVB Bank, SVP Aviation Financial Consultancy, Albert Muntane Casanova
Coffee Break & Networking
Hosted By Mercado Lonja Del Barranco
Aena, Airline Customer Relations and Airport Marketing, Ignacio Biosca [Download Presentation]
The evolving airport-airline relationship: What do airports and LCCs need from each other?
Whilst geographic position plays a large part in an airline’s decision whether or not to fly to a particular destination, the airport also holds an influential role in the decision making process. LCCs and low cost long haul LCCs in particular have unique requirements compared with their FSC counterparts; so it follows that those airports that are able to offer the right facilities and services for their airline customers stand to gain. But additionally, there is huge untapped potential for airports to share data and co-operate commercially with airlines for mutual benefit; this could prove a key factor in attracting and retaining carriers assessing the viability of a new route. 
  • How do needs vary between full service and low cost airlines? 
  • How can airports help airlines develop a business case for establishing or expanding a new route? 
  • The importance of self connect for low cost long haul traffic. What do airports need to do to enable the smooth transfer of self connecting passengers? 
  • What constitutes the ideal base for a low cost long haul airline?
  • How do airports and airlines view the passenger journey? What kinds of data sharing initiatives exist between airports and airlines, and how much cooperation is there in retail and merchandising?
Moderator: ForwardKeys, CMO, Laurens Van Den Oever [Download Presentation]
  • Aena, Airline Customer Relations and Airport Marketing, Ignacio Biosca
  • Dohop, Commercial Director, Chris Baldwin
  • easyJet, Regional Director, Javier Gandara
  • Halifax International Airport Authority, CCO, Bert van der Stege
  • London Gatwick Airport, Head of Airline Relations, Stephen King
Chairman's Wrap
End of Day 1 Sessions
19:00 Dinner Reception
Hosted by City of Seville and Turespana