CAPA World Aviation Summit & Awards for Excellence

Martin Gauss is the CEO and Chairman of the Executive Board of airBaltic since November 2011. Under his leadership, airBaltic has successfully carried out a robust turnaround plan and achieved a strong growth path. With the early decision of ordering up to 80 Airbus A220 Gauss has built a foundation for the airline’s global success story. Martin Gauss is an experienced CEO who has worked in the aviation industry in different countries for more than 30 years. He still holds a Captain's license on Airbus A220.

Jiri Marek, CEO, Air Serbia, interviewed on the sidelines of the CAPA World Aviation Summit 2022.

Wolfgang Raebiger, COO, Eurowings Discover, interviewed on the sidelines of the CAPA World Aviation Summit.

Birgir Jonsson, CEO, Play Airlines, interviewed on the sidelines of the CAPA World Aviation Summit.

Marcel de Nooijer, CEO, Transavia, interviewed on the sidelines of the CAPA World Aviation Summit.

After an encouraging first two decades of the 21st Century that had provided a fertile environment to support the growth of air travel, nobody was prepared for the rollercoaster ride that the initial years of the 2020s have offered. It was the proverbial calm before the storm. But this was not like any storm encountered previously.

As the coronavirus crisis evolved from a small news story into a global pandemic, air travel came to a near standstill. The calm climb of the previous decades came to an immediate stop and an industry collapsed into freefall. This was a vertical drop. And it didn’t stop, wiping years of growth in a matter of days.

It suddenly became all about survival. Costs were quickly jettisoned as businesses restructured in preparation for recovery. That path has become complicated by a mutating virus and cautious governments, but an increasingly vaccinated population and strong pent-up demand is already delivering growth in most geographic markets.

As sentiment to travel rises, the industry is growing again. Global domestic air capacity is already nearing pre-pandemic levels and peaking above 2019 levels in some markets. International air travel is following behind as travel restrictions have been slowly lifted, but where restrictions remain continue to blunt performance.

But just as some confidence was starting to return, Russia’s invasion of Ukraine and the rising cost of fuel has impacted a recovery path that will also be influenced by technological developments and sustainability considerations.

Willie Walsh, director general of International Air Transport Association (IATA), highlighted at the airline body’s 2022 AGM, that the air transport industry is constantly facing headwinds. It is clear that the latest decade has concentrated these into a smaller window of time than would have been wanted.

• How strong are these headwinds and do airlines now have a more positive outlook than 12 months earlier?

• As COVID-19 has moved from pandemic to endemic status are airlines seeing any permanent changes to the industry?

• What is the outlook for 2023 and beyond?

As the COVID-19 pandemic has subsided and become an endemic disease it is having less of an influence over global air travel. But airlines are still having to trim flight schedules as supply chain constraints become the bigger concern than virus transmission.

The most acute problem has been a shortage of labour. From pilot shortages at airlines to the slow accreditation of ground staff at airports, these issues are having a significant impact on planning for the future – within the industry and by consumers.

Europe and North America are not yet back to 100% of pre-COVID-19 traffic levels, but airport and aerospace delays in the regions are at or approaching pre-pandemic levels. Airlines have even ceased taking bookings to ease a crisis that has seen schedules culled, yet still long delays at immigration and a rise in miss-placed baggage.

The global pandemic has exposed many problems in airline and airport operational departments and remains a major management challenge. Put simply, the return of travellers has proved more difficult for the industry than anyone thought it would be.

• What are the problems and how are airlines adjusting?

• Is this all an over-reaction to accepted challenges ramping up operations after the industry’s biggest ever crisis?

• Are these operational issues forcing some airlines to make alternative strategic decisions?

Airlines are having to take a much more pro-active stance with their sustainability drives. With cries of ‘greenwashing’ over previous offset schemes they need to be transparent in their communications and honest in their activity.

It has been said that the least-emitting flight “is one that doesn’t happen at all”. While we will see substitution to other forms of travel for short-haul (especially short-distance domestic travel) that is not a practical solution in a world where long-haul travel has proliferated.

As such climate scientists say that to get climate change under control, airlines need to reduce their emissions and consumers will become increasingly demanding as the subject of sustainability dominates the headlines.

One of the biggest movers in this area is sustainable aviation fuels. There’s momentum growing in this field, but there are still unresolved issues about scaling up, getting costs at least competitive with standard fuels, getting governments to support R&D, production and infrastructure.

• Are things scaling up fast enough to reach airlines stated goals?

• What policies and incentives need to be put in place to help the ramp-up of SAF use?

• Are SAFs as environmentally friendly as they’re advertised? What are the guarantees that airlines have that their SAFs are truly “sustainable”?

Challenges on the path to recovery and sustainability requirements aside, domestic air travel is now on par with pre-pandemic levels and international recovery is on a positive path.

Regional variation remains with Latin America leading the way and reaching 2019 levels during 3Q 2022, followed by North America, Africa and the Middle East. In Europe the recovery has plateaued and now entering seasonal autumnal decline, while Asia Pacific remains the laggard, due mainly to slow border reopenings and strong anti-COVID restrictions in major markets such as Japan and China.

Summer 2022 has certainly seen more of a focus on international recovery and a familiarity returning to airline networks. Now lessons must be learned for the future to build a shock proof international travel network.

COVID-19 and previous pandemics such as Swine flu and SARS, have shown how vulnerable global air transport is being to disrupted by health crises. While the industry – and the wider world – may not have been adequately prepared for the pandemic, history warns us that it won’t be the last time such an issue arrives.

Repeated studies by the aviation sector, global health organisations and experts have shown that shutting down air travel actually had little positive public health impact.

• How does the aviation sector partner with governments, NGOs and trans-national organisations to build a system that is resilient to future pandemics?

• What processes need to be put in place to ensure global connectivity and mobility can be maintained in the event of a future health crisis?

• Never let a good crisis go to waste. Has the pandemic provided the hard stop required to reset the air transport industry?

Innovation has always been at the heart of the air transport industry and with COVID-19 restricting passenger movements, airlines quickly looked to alternative revenue streams to stay afloat. The obvious and most common solution was to carry freight, which required minimal human intervention and, with no passengers on board, meant minimal risk of spreading the virus.

Some operators were already prepared for this carrying bellyhold cargo onboard their aircraft, some had more established freight operations and divisions, while others quickly adapted (by passenger-to-freight conversions), or improvised by carrying cargo in the main cabins of passenger aircraft and the arrival of so called ‘preighters’.

Global air cargo traffic comfortably exceeded constrained capacity throughout 2021, while capacity shortages benefitted cargo yield and load factor. Demand has softened more recently, but Jun-2022 CTKs were still +0.8% up on Jun-2019 (while RPKs were -29.2%).

The resilience of cargo traffic, coupled with strong yield growth, resulted in a +37% increase in world airline cargo revenue: from USD101 million in 2019 to USD139 million in 2020. IATA estimated that cargo revenue jumped by a further +47% in 2021 to reach USD204 million – more than double the 2019 number.

Air cargo increased its share of airline revenue from 12% in 2019 to 40% in 2021. IATA forecasts that this will ease back to 24% in 2022, but air cargo could well emerge from the pandemic with its position structurally enhanced.

The air cargo sector is edging back to a kind of post-pandemic structural normality, both in terms of total capacity and the balanced duopoly between freighter and belly capacity (with no preighter deployment).

• What is the outlook for air cargo from the easing of COVID-19 restrictions in China and smoother global supply chains?

• What impact will high inflation and rising interest rates have on air cargo?.

• Will airlines look more positively on the role of cargo in their operations?

Passenger expectations have created a competitive aviation landscape where experiences have become key to winning customers. The lure of low fares and brands has been broken as travellers demand more – from the best in-flight experience to the comforts of a private suite.

In the past, a low fare or brand familiarity could almost guarantee loyalty. That is no longer the case and customers are increasingly willing to pay more for the services that are most meaningful for them.

Businesses that are slow to adjust to those expectations face the prospect of customers leaving. That’s why a great customer experience ranks highly as a brand differentiator, and paying a premium isn’t seen as a deal breaker.

COVID-19 accelerated the industry trends towards digitalisation, self service and customer expectations of being ‘always online’. It also revealed that the pain points around the air travel experience are yet to be relieved.

If anything the pandemic has resulted in more frustration for passengers rather than less, as they have had to deal with onerous COVID-19 health requirements, additional layers of checks, confusing mazes of new regulations and changes to physical travel processes.

Meanwhile, the biggest pain points post-pandemic – flight delays, cancellations, lost baggage, security and immigration queues – continue to haunt the industry.

How airlines and airports navigate not only the new layers of expectations and requirements the pandemic has imposed on them, but continue to work to relieve pain points around the passenger journey will be key to their success.

• How can airlines and airports ‘build back better’ to deliver a better travel experience and meet traveller expectations?

• How are airlines and airports adapting their offer to meet changing traveller habits and needs?

• What innovations are the top priority and how has the pandemic helped the digital transition?

COVID-19 threw the airline industry into disarray, with a high number of market exits. That number would have been much higher had it not been for state-sponsored aid packages, but many in the industry are continuing to tread water and face a battle for survival. 

In several regions, airlines availed themselves of large government bailouts or took on large amounts of debt to avoid going under during the height of the COVID-19 pandemic. The result is the industry now has a heavy debt burden that will take years to unwind. In addition, government has stepped back into the industry.

The airline industry is today saddled with hundreds of billions of additional COVID-related debt. Simply servicing that additional debt will cost more than the industry has on average generated annually in profits.

Much of that debt falls due from 2023 onwards, and unless trading conditions are strong at that stage, real embarrassment is possible, particularly where debt is backed by aircraft assets.

As a result, 2023 to 2025 will be the critical period for the survival of traditional models and airlines. Given the dimensions of the COVID crisis it is remarkable that so few airlines have fallen by the wayside. But that cannot persist indefinitely.

• Have we not yet witnessed the worst of the COVID crisis on airlines?

• How active will governments be in controlling airlines in the future?

• Has COVID been a prelude to a perfect storm and airline debt crisis?

For the surviving airlines, partnership and alliances appear as an increasingly attractive option. Before the pandemic many had started to question the value of alliances. Now they are providing an important safety net for carriers enabling them to serve strong, profitable markets and allow partners to support wider connectivity.

Mergers and consolidation have accelerated as a result. JetBlue’s acquisition of Spirit Airlines from under the nose of Frontier Airlines – and the premium it paid – could be the start of a trend as airlines seek to solidify their market penetration.

The expansion of partnership has not just been within the industry though – it is also looking at expanding collaboration with other transport providers, technology partners, environmental organisations and more.

The global pandemic has significantly accelerated the pace at which companies are bringing new ideas to market, including massively expediting some processes and applying pressure on industry ecosystems to deliver services in new ways.

• How should companies use partnerships to build business resiliency?

• Can strategic joint ventures bridge the supply and demand gap?

• Will the COVID pandemic break down the Mergers & Acquisitions wall or actually make it stronger?

Regarded as the pre-eminent awards for strategic excellence in aviation, CAPA's Aviation Awards for Excellence reward airlines and airports that are not only successful but have also provided industry leadership in adjusting to a new environment. At a time of industry upheaval, our winners are adopting strategies that offer new directions for others to take up. The CAPA Awards for Excellence are not driven by customer surveys or sponsorship. They are independently researched by an independent international panel of judges. CAPA's panel of judges review nominations for all categories, but not all categories are awarded each year. Awards are only made if the judges determine there is a suitable winner.

This is awarded to the airline that has been the biggest standout strategically during the year, has had the greatest impact on the development of the airline industry, has established itself as a leader, and provided a benchmark for others to follow.

Regarded as the pre-eminent awards for strategic excellence in aviation, CAPA's Aviation Awards for Excellence reward airlines and airports that are not only successful but have also provided industry leadership in adjusting to a new environment. At a time of industry upheaval, our winners are adopting strategies that offer new directions for others to take up. The CAPA Awards for Excellence are not driven by customer surveys or sponsorship. They are independently researched by an independent international panel of judges. CAPA's panel of judges review nominations for all categories, but not all categories are awarded each year. Awards are only made if the judges determine there is a suitable winner.

This is awarded to the low cost or hybrid airline that has been the biggest standout strategically, has established itself as a leader, has been most innovative, and provided a benchmark for others to follow.

Regarded as the pre-eminent awards for strategic excellence in aviation, CAPA's Aviation Awards for Excellence reward airlines and airports that are not only successful but have also provided industry leadership in adjusting to a new environment. At a time of industry upheaval, our winners are adopting strategies that offer new directions for others to take up. The CAPA Awards for Excellence are not driven by customer surveys or sponsorship. They are independently researched by an independent international panel of judges. CAPA's panel of judges review nominations for all categories, but not all categories are awarded each year. Awards are only made if the judges determine there is a suitable winner.

This is awarded to the regional airline that has been the biggest standout strategically, has established itself as a leader and demonstrated innovation in the regional aviation sector. (Note that this award is not limited to operators of regional aircraft; it is intended to recognise smaller airlines – fewer than 10 million annual passengers – that either do not operate any long haul services, or only operate limited long haul services.)

Regarded as the pre-eminent awards for strategic excellence in aviation, CAPA's Aviation Awards for Excellence reward airlines and airports that are not only successful but have also provided industry leadership in adjusting to a new environment. At a time of industry upheaval, our winners are adopting strategies that offer new directions for others to take up. The CAPA Awards for Excellence are not driven by customer surveys or sponsorship. They are independently researched by an independent international panel of judges. CAPA's panel of judges review nominations for all categories, but not all categories are awarded each year. Awards are only made if the judges determine there is a suitable winner.

This is awarded to the airline start-up that has been the most innovative and had the greatest impact on the industry.

Regarded as the pre-eminent awards for strategic excellence in aviation, CAPA's Aviation Awards for Excellence reward airlines and airports that are not only successful but have also provided industry leadership in adjusting to a new environment. At a time of industry upheaval, our winners are adopting strategies that offer new directions for others to take up. The CAPA Awards for Excellence are not driven by customer surveys or sponsorship. They are independently researched by an independent international panel of judges. CAPA's panel of judges review nominations for all categories, but not all categories are awarded each year. Awards are only made if the judges determine there is a suitable winner.

This is awarded to the airport with over 30 million annual passengers that has been the biggest standout strategically, has established itself as a leader and done the most to advance the progress of the aviation industry.

Regarded as the pre-eminent awards for strategic excellence in aviation, CAPA's Aviation Awards for Excellence reward airlines and airports that are not only successful but have also provided industry leadership in adjusting to a new environment. At a time of industry upheaval, our winners are adopting strategies that offer new directions for others to take up. The CAPA Awards for Excellence are not driven by customer surveys or sponsorship. They are independently researched by an independent international panel of judges. CAPA's panel of judges review nominations for all categories, but not all categories are awarded each year. Awards are only made if the judges determine there is a suitable winner.

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.

Regarded as the pre-eminent awards for strategic excellence in aviation, CAPA's Aviation Awards for Excellence reward airlines and airports that are not only successful but have also provided industry leadership in adjusting to a new environment. At a time of industry upheaval, our winners are adopting strategies that offer new directions for others to take up. The CAPA Awards for Excellence are not driven by customer surveys or sponsorship. They are independently researched by an independent international panel of judges. CAPA's panel of judges review nominations for all categories, but not all categories are awarded each year. Awards are only made if the judges determine there is a suitable winner.

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.

Regarded as the pre-eminent awards for strategic excellence in aviation, CAPA's Aviation Awards for Excellence reward airlines and airports that are not only successful but have also provided industry leadership in adjusting to a new environment. At a time of industry upheaval, our winners are adopting strategies that offer new directions for others to take up.

The CAPA Awards for Excellence are not driven by customer surveys or sponsorship. They are independently researched by an independent international panel of judges. CAPA's panel of judges review nominations for all categories, but not all categories are awarded each year. Awards are only made if the judges determine there is a suitable winner.

Regarded as the pre-eminent awards for strategic excellence in aviation, CAPA's Aviation Awards for Excellence reward airlines and airports that are not only successful but have also provided industry leadership in adjusting to a new environment. At a time of industry upheaval, our winners are adopting strategies that offer new directions for others to take up. The CAPA Awards for Excellence are not driven by customer surveys or sponsorship. They are independently researched by an independent international panel of judges. CAPA's panel of judges review nominations for all categories, but not all categories are awarded each year. Awards are only made if the judges determine there is a suitable winner.

This award recognises the airline, airport or supplier responsible for the most powerful innovation in the industry over the past year. The innovation could be customer-facing, B2B, efficiency-related or a new marketing product – must have been a new standout and established the company as a market leader in the product or process.