2019 – 05
airlines.iata.org
AIRLINES.
CHANGING FACES Positive moves at Air New Zealand has put diversity and inclusion in focus
2019 – 05
CEO Interviews Volaris, Finnair | IATA Opinion Looking at flags of convenience | Fair and balanced Ghim Lay-Yeo on gender equality in aviation | NEXTT supplement Building an industry of the future
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22/10/2019 08:26
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Airlines.
Contents 2019 – 05
Comment
24 Sense and sensibility
9 Alexandre de Juniac, Director General
Collaboration is vital on the path toward a sustainable air transport industry
29
Topi Manner, Finnair CEO, believes airlines must harness their collective hard and soft skills to grow sustainably
Dossier
19 IATA Opinion: Douglas Lavin, Vice President, Member and External Relations
29 Bringing value to the business
Flags of convenience act harms aviation
Air New Zealand is boldly plotting a path toward a more diverse organization
Digest
Features
12 IATA and industry update
35 Seeing is believing
Environment in focus, ICAO Assembly makes progress, IATA launches BSP in Myanmar, Trade wars affecting cargo
How women in aviation can offer support to one another in the quest for gender balance throughout the industry
16 Data: In numbers
NEXTT special
36
World Air Transport Statistics 2019
7
36 Taking the NEXTT step
How airlines and airports are using technology and processes of the future
CEO Interviews 20 Exciting times ahead
Volaris CEO, Enrique Beltranena on the quest for cleaner aviation, leading by example, and embracing innovation
IATA Corporate Communications Vice President Anthony Concil Creative Direction Richard McCausland Assistant Director Chris Goater www.iata.org Editorial Editor Graham Newton Head of content production DeeDee Doke Assistant editor Patrick Appleton Senior designer Gary Hill Picture editor Claire Echavarry Production Production manager Jane Easterman +44 (0)20 7880 6248 jane.easterman@redactive.co.uk Publishing director Aaron Nicholls
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60 Seconds with... 46 Enrique Saiz, CEO of Wamos Air
24
Advertising Business development manager Nigel Collard +44 (0)20 7324 2763 nigel.collard@redactive.co.uk
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2019 – 05 Airlines
21/10/2019 16:09
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Comment: Director General and CEO, IATA
A path of collaboration Aviation is aware of its commitment to tackling climate change, but others must support our efforts and work together for a sustainable air transport industry
ILLUSTRATION: SAM KERR
R
ecent months have seen enormous numbers of people marching on the streets calling for action on the climate crisis. It is encouraging to see growing and passionate awareness of this critical issue. Civil society is speaking loudly. And the message they are delivering to governments is that they want climate action. That message is familiar to aviation. It has been over a decade since the industry united to agree targets to reduce our carbon footprint. Our first commitment was to improve fuel efficiency by 1.5% annually to 2020. From 2020 we committed to carbon-neutral growth, and by 2050 we committed to cut our net emissions in half compared to 2005. This commitment was cutting edge— aligning with the Paris climate agreement five years later. Many targets have been set in the face of the climate challenge. Aviation is the rare case where they are being met. The carbon footprint of the average journey today is half what it was three decades ago. With the help of the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) emissions from international flights will be capped at 2020 levels. And we are scoping the path to our 2050 goal with a key focus on sustainable aviation fuels. We can be proud of our achievements and future ambition. In doing so, must also acknowledge the vital role of governments. Our efforts will only be successful if they are supported by government policies. That’s why our industry has been on its own climate action march for well over a decade. The most recent chapter in that story was the outcome of the 40th ICAO Assembly as governments reaffirmed their support airlines.iata.org
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for CORSIA. And they agreed to start looking at a long-term goal—which should help us in our mission to halve emissions. Aviation is a responsible industry that is working to ensure long-term sustainability. That fact is not known broadlyenough, which enables some to mis-characterize aviation as a villain and call for a dramatic reduction in flying—irrespective of the heavy social and economic costs that would bring. All industries must be accountable for the carbon we emit. Aviation has a good technical and policy track record. But outside of aviation circles, awareness of what aviation is doing on sustainability is thin. Addressing the climate crisis is not a communications problem, but to ensure that governments take the right measures to make aviation sustainable, awareness is critical. Building that awareness needs effective communications that goes beyond to the general public. Aviation has a solid record of achievement and is on the right course to sustainability. People need to be aware of this so that the public marching for climate action can focus governments on supporting real solutions for aviation like sustainable fuels. Over the next months, IATA will roll out tools and resources to help the industry add this critical dimension to our sustainably efforts.
9
Alexandre de Juniac: Director General and CEO, IATA 2019 – 05 Airlines
21/10/2019 16:09
10
75 years of the Chicago Convention: The convention was established in the depths of war, because people understood the key role aviation would play in connecting the world. That wisdom still rings true, as we have a vital role in 15 of the UN’s 17 Sustainable Development Goals. And the economic impact of trade wars is making it clear that we are more prosperous when borders are open to people and to trade.
The Big Picture
Airlines 2019 – 05
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Digest Flying isn’t the enemy, says de Juniac amid emissions criticism International Air Transport Association (IATA) Director General and CEO Alexandre de Juniac has said “carbon is the enemy, not flying” as aviation continues to receive criticism surrounding emissions levels. Research has shown that the average journey by air emits 50% less carbon than it did in 1990, and IATA’s longterm goal is to cut total emissions to half of 2005 levels by 2050. However, some States continue to pursue aviation carbon tax policies that IATA’s Director General said does little to tackle emissions and inhibits the industry’s growth, affecting both consumers and the wider economy. Calling on governments to work together with aviation to combat carbon emissions, de Juniac said:
governments piling on additional carbon pricing instruments.” IATA also submitted a working paper that called on governments to reaffirm the importance of CORSIA at ICAO’s Assembly and enter the program before it becomes mandatory in 2027, while sticking to the principle that aviation’s international emissions should be accounted for only once. The working paper was developed in cooperation with Airports Council International (ACI), the Civil Air Navigation Services Organisation (CANSO), the International Business Aviation Council (IBAC) and the International Coordinating Council of Aerospace Industries Associations (ICCAIA), and coordinated by the Air Transport Action Group (ATAG).
IMAGES: ISTOCK/ALAMY
12
“Flying is not the enemy. The enemy is carbon. Connecting people globally is a great achievement that makes our world a better place, and long before this week’s demonstrations we have been working to cut carbon.” IATA’s Director General and CEO said that the implementation of the Carbon Offset and Reduction Scheme for International Aviation (CORSIA) requires a more cohesive approach from ICAO member states that signed the agreement in 2016. “The whole aviation industry welcomed this significant commitment as part of the overall approach to meaningfully mitigate the industry’s climate change impact,” de Juniac said. “Unfortunately, there is a real risk that CORSIA will be undermined by
Airlines 2019 – 05
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airlines.iata.org
21/10/2019 08:38
Digest
“If your operation starts to get stretched and you can’t fulfil basic KPIs of running a decent company then you have to wonder, have we gone too far?” Anko van der Werff, CEO, Avianca
Avianca CEO at WFS: Don’t outgrow your capabilities Airlines and their partners must focus on sustainable and profitable growth instead of increasing route and fleet size without thinking of the impact on business operations. Speaking at the World Financial Symposium in Miami, Avianca CEO Anko van der Werff said airline finance departments should ensure that the network and fleet planners do their homework before adding aircraft, routes and destinations. “Airlines have never needed good finance departments as much as they do now,” said Van der Werff. The Avianca CEO said that in any industry, every decision either creates or destroys value and the air transport industry is no different. Van der Werff pointed out that “growth for the sake of growth” is afflicting the airline industry. He
urged caution and said that when airlines feel optimistic about capturing a market, it is often assumed that external factors—political, environmental, economic—will remain equal. He said that for airlines, being aware of macro-economics and the domestic political situation is vital, and added that his airline, which had a recent bailout plan accepted, has scaled back operations to focus on quality over quantity. “If you see that your operation starts to get stretched and you can’t fulfil basic KPIs of running a decent company then you have to wonder, have we gone too far?” he said. Van der Werff also addressed the capacity concerns in the industry and called on States and airports to understand the knock-on effect for airlines, but also economies in general.
airlines.iata.org
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At the next Assembly, the ICAO Council will report back on options for the adoption of a long-term aspirational goal for reducing carbon emissions from international aviation. Meanwhile, the Assembly passed a resolution that reaffirmed its support for the successful implementation of CORSIA. It is the first time in history that ICAO’s 193 member states have agreed to look at a long-term goal for governments to cut emissions from air travel.
October to December 2019
Airline Industry Retailing Symposium 29 - 31 October Bangkok, Thailand IATA AirPharma Conference 29 - 31 October Amsterdam, Netherlands IATA Air Cargo Operations Conference 29 - 31 October Amsterdam, Netherlands
13
IATA Drones Innovation Weekend 9 - 10 November Montreal, Canada Aviation Fuel Forum 12 - 14 November New Orleans, USA
AIRLINES ENCOURAGED BY PROGRESS AT ICAO ASSEMBLY Support for the air transport industry’s sustainability programs at the 40th Assembly of the International Civil Aviation Organization (ICAO) has been welcomed by airlines. The environmental issue was top of the agenda during the gathering of governments and industry stakeholders in Montreal. Discussions between states ended with two positive key outcomes that IATA said will help airlines “take the next step” in further cutting carbon emissions.
Events
IATA 145th Slot Conference 12 - 15 November Brisbane, Australia Wings of Change - Europe 19 - 20 November Berlin, Germany “Sustainability is critical to earning aviation’s license to grow and spread its many economic and social benefits. Decarbonizing the sector is a major challenge,” said Alexandre de Juniac, IATA’s Director General and CEO. A number of other decisions in line with IATA
policy were made at the Assembly, including a request for the ICAO Council to help develop a disability-inclusive air transport system, a call for more states to ratify the 2014 Montreal Protocol to deal with unruly passengers, and an endorsement of IATA’s One ID project.
Airline Cost Conference 27 - 28 November Madrid, Spain IOSA Workshop for Airlines 4 - 5 December Madrid, Spain
2019 – 05 Airlines
21/10/2019 08:38
Digest
NORDSTAR JOINS IATA Russian regional airline NordStar has become the latest member of IATA, the 10th Russian airline to do so. Founded in 2009, NordStar serves more than 50 destinations across Russia, Europe and Asia.
Asia-Pacific capacity issue ‘requires collaboration’
14
MYANMAR TO IMPLEMENT IATA’S BSP IATA has launched its Billing and Settlement Plan (BSP) in Myanmar. The program is designed to ease the reporting of ticket sales and payments for travel agents relating to the settlement of their sales to airlines. Prior to the implementation of the BSP, agents had to interact directly with each of the respective airlines to report and remit their ticket sales, which IATA said was both “inefficient and time-consuming.” Founded in 1971, IATA BSPs exist in 180 markets around the world, serving around 400 participating airlines. IATA says BSPs provide an on-time settlement rate of 99.997%. In 2018, IATA’s BSPs processed $248.8 billion. During the initial implementation phase, five airlines and 12 travel agents have signed up, with more expected to join in the months ahead. According to IATA analysis, air travel in Myanmar is expected to grow by an average of 8% annually in the next 20 years. The global average of expected growth in air travel is 3.9%. By 2038, IATA expects Myanmar to be an air travel market of 37 million passengers, close to five times the current figures.
Airlines 2019 – 05
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Aviation must approach the problem of capacity constraints in Asia-Pacific in a unified way, an International Air Transport Association (IAT A) official has said. IATA’s forecast expects the region to grow at a pace of 4.8% over the next 20 years, resulting in an additional 2.3 billion passenger journeys by 2037. Speaking to Airlines., IATA’s Regional Vice President for Asia-Pacific Conrad Clifford called on States to collaborate with IATA and the International Civil Aviation Organization (ICAO) to facilitate the rise in passengers. “Aviation capacity constraints is a critical issue in Asia Pacific,” said Clifford. “It is key for States to work together with IATA and ICAO to develop robust plans. “ICAO has guidance material and
technical assistance while IATA can provide the global best practices and airline requirements from the perspective of airport and airspace users.” The issue of improved co-operation was a leading theme in ICAO Council President Dr. Olumiwuya’s opening address at the 56th Conference of Directors General of Civil Aviation, Asia and Pacific Region in late August. Aliu stressed the importance of “invaluable industry inputs” in helping to tackle the latest challenges in civil aviation, including issues such as human resourcing, which is critical for States facing capacity constraints. Clifford agreed and urged States to follow ICAO’s Standards and Recommended Practices to grow air transport safely and sustainably.
US-CHINA TRADE WARS CONTINUE TO AFFECT CARGO Freight demand fell again in August, according to the latest figures from IATA. Air cargo demand, measured in freight tonne kilometers (FTKs), contracted by 3.9% in August 2019, compared to the same period in 2018. This marks the 10th consecutive month of year-on-year decline in freight volumes, the longest period since the global financial crisis in 2008. Freight capacity, measured in available freight tonne kilometers (AFTKs), rose by 2% year-onyear in August 2019. Capacity growth has now outstripped demand growth for the 16th consecutive month. Air cargo continues to face strong headwinds from the intensifying trade war between the US and China, as well as weakness in some of the key economic indicators and rising political
uncertainties worldwide. Global trade volumes are 1% lower than a year ago. In the regional markets, Africa and Latin America were the only regions to record growth compared to year-on-year figures. Asia-Pacific and the Middle East in particular suffered sharp declines in freight volumes. FREIGHT DEMAND
3.9% decrease
FREIGHT CAPACITY
2% Increase
airlines.iata.org
21/10/2019 08:38
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IATA.OCT19.017.indd 17
Together for better aviation
08/10/2019 09:20
Data
In numbers T H E W O R L D A I R T R A N S P O R T S T AT I S T I C S 2 0 1 9 www.iata.org/WATS
“Airlines are connecting more people and places than ever before.
8.4%
6.4%
6.4%
7.5%
7.3%
6.0%
5.9%
9.2%
Depreciation and amortization
User charges
Station expenses
Passenger services
Ticketing, sales and promotion
General and administrative
Other expenses
6.3% Flight equipment rentals
Flight equipment maintenance
0.1% Flight equipment insurance
2.2%
25.4% Aircraft fuel and oil
Other operating Expenses
8.8% Flight crew salaries and expenses
Breakdown of airline costs
The freedom to fly is more accessible than ever, and our world is a more prosperous place as a result” Alexandre de Juniac, IATA Director General and CEO
16
8,329,776,0 Passenger kilometers f lown in 2018 Record efficiency was achieved with 81.9% of available seats being filled.
Preliminary fuel efficiency data for total system:
Year
Litres per 100 RTK
Per RTK
Litres per 100 ATK
Per ATK
2017
34.50
2.22%
23.13
0.31%
2018
34.22
0.81%
22.92
0.89%
Airlines 2019 – 05
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81..9 % 81
Preliminary fuel efficiency data for total system-wide services (in litres per 100 revenue tonne kilometers) indicates an efficiency improvement of 0.81% in 2018, compared to 2017: from 34.50 to 34.22. Measured in available tonne kilometers, efficiency for the same period also improved.
Overall achieved load factor rose in 2018, enabling airlines to maintain a solid gap above the level required for financial breakeven. This was driven mainly by the record passenger load factor performance of 81.9% achieved for the year. airlines.iata.org
22/10/2019 10:30
Data (Source: IATA)
City-pair connections, 2018: Source: IATA, ICAO, Boeing , SRS Analyser In 2018, airlines continued to increase their city-pair routes served globally. Almost 22,000 city pairs are now connected by airlines with regular services. This is an increase of 1,300 over the number of city-pairs in 2017. Number of unique city pairs 22,000
US$/RTK (2014 prices) 1.6 1.5
20,000 1.4 18,000
1.3 1.2
16,000 1.1 14,000 1.0 0.9
12,000
0.8
Unique city pairs Real transport cost
10,000
8,000 2000
Although China’s domestic market added more passenger journeys in 2018, the domestic US market continues to be the world’s largest single market, with almost 590 million passenger journeys undertaken in 2018.
0.7
Share of Revenue Passenger –Kilometers by airline type
0.6 2002
2004
2006
2008
2010
2012
2014
2016
2018
107,394,029
Traditional legacy Low-cost Leisure
Atlanta is the world’s busiest airport, handling 107 million passengers in 2018
17
00,000 Top 5 airlines by rankings: The world’s airlines safely carried 4.3 billion passengers last year. Cargo airlines also carried nearly 64 million tonnes of freight, equivalent to $6.67 trillion, more than a third of world trade by value. Passenger (by scheduled passenger kilometers, millions) Rank Airline
Cargo (by scheduled freight tonne kilometers, millions)
PAX km flown
Rank Airline
Passengers carried (by scheduled passengers carried, thousands) FTK
Rank Airline
PAX carried
1
American Airlines
330,577
1
Federal Express
17,499
1
Southwest Airlines
163,606
2
Delta Air Lines
330,034
2
Emirates
12,713
2
Delta Air Lines
152,217
3
United Airlines
329,562
3
Qatar Airways
12,695
3
American Airlines
148,181
4
Emirates
302,298
4
United Parcel Service
12,459
4
Ryanair
136,719
5
Southwest Airlines
214,561
5
Cathay Pacific Airways
11,284
5
United Airlines
113,215
airlines.iata.org
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2019 – 05 Airlines
22/10/2019 10:30
Advertising Feature: Hexaware
Eswaran Venkatachalam, Senior Vice President and Global Head of Travel, Transportation, Hospitality, and Logistics Vertical at Hexaware
Embracing digital transformation to enrich the customer experience
Hexaware’s Eswaran Venkatachalam has 25+ years of consulting experience, including 15 years of travel industry experience. He explains how airlines and others in the aviation industry can best use technology to give consumers exactly what they expect in today’s world
18
Does good customer service depend on technology? Yes. Technology is an integral part of customer service in the travel industry. Especially given the increasing expectation from customers on user experience and value proposition, it is imperative for the travel industry to leverage technological innovation. Customer service is about being “connected and engaged”; this is enabled seamlessly through technology, which helps agents service the customer more efficiently, besides enhancing the customer’s self-service capabilities. What do you think are the main challenges for airlines trying to embrace digital transformation? Airlines need to transform their infrastructure and applications to embrace the digital transformation journey. This will be a crucial challenge, as they have to transform their existing technology and streamline their processes for on-demand scale-up, to facilitate rich omni-channel experiences for customers, and to create a single source of truth for ease of data maintenance. Airlines have a huge wealth of information, requiring them to unlock its potential through a digital platform to monetize the data. Carriers have to equip themselves to meet the expectations of customers who are
Airlines 2019 – 05
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becoming more reliant on digital technology and are demanding intuitive and smart communication with airlines. Do airlines have the right skills and experience to take on digital transformation work alone? Airlines must transform their current states to meet the market’s demand intuitively by utilizing the myriad of new technologies emerging daily. Though some airlines have the capabilities of doing so, partnering with IT solution and service providers will bring industry best practices and expertise to fulfill the time-to-market expectation. Carriers must also address the demanding needs of having solution architects and full-stack developers to accelerate the digital transformation journey. Airlines will look for service providers to bring the talents from a scalability perspective. What areas of the customer experience will be most affected by artificial intelligence? Artificial intelligence (AI) is emerging as one of many core disruptive technologies in the aviation industry. By allowing the industry to understand key issues while enabling an opportunity to increase revenue, AI software facilitates on-demand customer support,
enhances self-service capabilities, and increases operational efficiency. The impact of this technology is evident through AI ChatBots and AI CheckBots. The former, often called “virtual travel agents”, are emerging as assistant toolkits by acting on various items such as flight searches, ticket booking, and flight updates. AI CheckBots, meanwhile, are emerging as a way to optimize boarding assistance to complete the check-in process. The probability of flight delays and lost connections based on factors like the destination airport’s weather conditions are provided by predictive analytics that enables airlines and airports to proactively plan passenger services and recovery. In terms of the overall digital transformation, what do you think are the most exciting areas being worked on where we will see the biggest changes? As the travel industry is increasingly competitive and complex, the next generation of customers demand newer technologies and advanced self-service capabilities. It is becoming increasingly important for airlines to know their customer, offer relevant services to them, and build value in their propositions. Digital transformation for better customer experience will trigger a sea change in the coming era.
For more information or to download our app for Android or iOS, visit: hexaware.com/industries/ travel-and-transportation/
airlines.iata.org
21/10/2019 08:39
IATA Opinion: Douglas Lavin
False f lag operation Douglas Lavin, IATA’s Vice President, Member and External Relations, argues that the US Fair and Open Skies Act is based on false logic rather than false flags
ILLUSTRATION: SAM KERR
T
his summer, the Fair and Open Skies Act was introduced in the US House of Representatives. Among other things, this proposed law would prevent entry into the US market of so-called flag of convenience carriers. Many in Congress, normally strong supporters of Open Skies, seek to pass this unilateral and wholly unjustified barrier to the US market. The bill was introduced following an unsuccessful effort by the Air Lines Pilots Association (ALPA) and other US labor organizations to persuade successive US administrations to deny an application by Norwegian Air International (NAI) to serve the US from Europe on the grounds that Norwegian was operating as a flag of convenience carrier. A “flag of convenience” almost always referred to the practice in the maritime industry of registering a ship in a country other than that of the ship’s owners and flying the flag of that state of registry. The practice began in the 1920s, when ships owned by US companies that wished to serve alcohol to their passengers during Prohibition were registered in Panama, and has grown since then as ship owners register in other countries to avoid taxes or labor, safety, and/or environmental regulations. Today, after several accidents and environmental incidents, these flag of convenience ships are often subject to special inspections by various ports before being allowed to dock. Proponents of adding a new flag of convenience prohibition to the US aviation market argue that it is necessary to ensure that commercial aviation does not go the way of commercial shipping. Airlines must not be permitted to “forum shop” to avoid standards that are taken for granted in the US, they say. airlines.iata.org
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However, there are major differences between the legal and regulatory environments governing the maritime and aviation industries. Under the principle of Freedom of the Seas, countries can establish their own laws and regulations on the safety and security of vessels registered under their flags. This has allowed some countries to offer less stringent regulatory environments to foreign shipowners. Not so in the case of commercial aviation, where the Chicago Convention and the International Civil Aviation Organization (ICAO) promote the highest possible degree of safety and uniformity in civil aviation regulations, standards, and recommended practices. A host of international inspection regimes, including ICAO’s Universal Safety Oversight Audit Programme, the International Aviation Safety Assessments of the US Federal Aviation Agency (FAA), and others provide routine auditing of states’ capability for safety oversight. Moreover, every country has the right under bilateral agreements that govern international flights to insist that foreign airlines meet rigorous standards, which the US determines by thoroughly inspecting a foreign carrier’s operations. Countries can also factor in labor considerations, as was done in the US-EU Open Skies Agreement. Commercial aviation is the safest mode of transportation in the world, in large part because governments came together to establish global standards. At the same time, Open Skies agreements have produced competition that has benefitted consumers and economies alike. Let’s not use irrelevant and loaded terms to establish illogical and damaging barriers to a seamless global commercial aviation system.
19
2019 – 05 Airlines
21/10/2019 08:39
CEO Interview
Exciting times ahead Enrique Beltranena, President and CEO of Volaris, says that new technologies, clean aviation, and meritocracy remain the dream despite the challenges for low-cost operators INTERVIEW BY: GRAHAM NEWTON
20
A
irport costs in Mexico continue to affect the market, but for low-cost carriers the impact is amplified. For airlines to succeed and flourish, all stakeholders in the aviation value chain must recognise the benefits of air transport to local economies and communities, as Volaris CEO Enrique Beltranena explains. What do you see as the main challenges and opportunities in the Mexican and Central American markets?
Looking at the main challenges facing the aviation industry in the region, I would single out operating costs. In our main market Mexico, we are faced with a combination of high airport Airlines 2019 – 05
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costs and above average fuel prices, caused by inefficiencies. Furthermore, the lack of clarity on the future development of airports for the capital city are issues that permanently occupy us. In Central America, governments still do not understand the importance of keeping their respective aviation regulators up to date. This can lead to issues with the US authorities, creating a lack of supervision, and out-of-date regulations. An underfunded regulator cannot properly perform the necessary oversight, potentially leading to a downgrade by the US Federal Aviation Administration. This represents a real obstacle to the proper growth of the industry in the region. Last, but not least, I would add that the concessionaries running some of the airports in the region pass on costs to air operators indiscriminately. A perfect example is Costa Rica. This situation can increase costs up to 400%. How is the confusion over the new Mexico City Airport affecting your plans?
Volaris never had the opportunity to establish an equitable and competitive treatment at Mexico City’s existing International Airport. As a result, although we carry more passengers in total—and in the domestic market, we are 40% above our next competitor—we represent only 14% of the total seat capacity from the airport. Our growth and development plans for the next five years were never fundamentally made with the metropolitan area in mind. Secondary airports like Toluca cannot be considered as an alternative airlines.iata.org
21/10/2019 08:40
CEO Interview
“By offering modern aircraft, the highest level of safety, and a high degree of punctuality, low cost carriers can be successful” airlines.iata.org
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21
2019 – 05 Airlines
21/10/2019 08:40
CEO Interview
Does the government understand the value of aviation?
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I believe there are governments that understand it and others that don’t. Needless to say, the understanding of the role that low-cost airlines play in a country’s economic development is even more lacking. Today, over half of the air traffic in Mexico is operated by low-cost airlines. At the same time, the country continues to generate an annual bus traffic of over three billion passengers. As disposable incomes rise and air travel continues to become more affordable, we see an enormous growth potential for an airline like Volaris, which has the third lowest cost structure of publicly-listed airlines in the world. We consider that 50% of the market growth in the last 10 years can be attributed to Volaris. We need to do more to increase the awareness of the role aviation can play in economic development to ensure that governments or regulators do not take actions which could hamper our development. Joint ventures have become popular. Is partnership the only way forward for airlines?
Not in all cases. If you are trying to expand your network reach, then collaboration can be a form of achieving this. In our case, I could only see this with an airline that has similar characteristics to ours. Otherwise, the model would cease to be successful in terms of growth and in responding to changes in market trends. Mexico has seen the demise of 11 airline Airlines 2019 – 05
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brands over the past few years as these airlines haven’t adapted to market realities. The low-cost airlines around the world are participating in the growth of aviation, but are largely staying away from forming partnerships, as this could harm the business model.
2005
due to their high costs, so we had to develop an aviation strategy outside of Mexico City. The current lack of clarity surrounding the development of airports in Mexico City is impacting airlines’ long-term investment in new aircraft. Our fleet planning for 2019–2026 was made without taking major changes to the airport situation in the capital city into account. We need an urgent decision by the government on how the airport situation will develop so we can plan our fleet accordingly.
Volaris was founded as Vuela Airlines in 2005 as Mexico’s first low-cost carrier. The airline began operations in 2006, with its inaugural scheduled flight taking place on March 13 from Toluca to Tijuana.
Can the low-cost model be combined with a great passenger experience?
I believe that a passenger’s experience is driven by expectations. Low-cost airlines will most likely never be able to meet the expectations of a consumer looking for a full-service product, since we fill a specific niche in the market. However, by offering modern aircraft, the highest level of safety, a high degree of punctuality and clearly communicating our service offer to the customer, we can be successful. And Volaris is the proof of that. I don’t think we can ever fully satisfy everyone, but by offering a clearly explained product at a price which is usually below what people expect, we surpass the needs of our clientele. In a market like Mexico, for a family to be able to travel, they need to have access to fares like ours. In addition, it is essential to offer additional “a la carte” services. How important is technology to your future operations and is there a technology that particularly excites you?
Volaris is the perfect example of what is happening in the world with technology. We provide traditional air transport through huge advances in the digital world. Everything about technology excites me. It is important to understand that digitalization cannot depend on a single technology. We were founded in the digital age and depend on hundreds of applications along with big data, which have made us very efficient and customerfacing, facilitating the travel experience. In the field of operations and maintenance, the technology of new engines excites me a lot, although we still need to place emphasis on models which further curb the level of emissions. airlines.iata.org
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CEO Interview
that still do not separate garbage, for example, and in the management of chemicals there is still much to be done. Every day of my life I work on something that can help the environment. I push very hard for transformation, but I don’t think anyone in the industry can say that today we are where we want to be. This year we sponsored the filming of a documentary called ‘Serpiente Emplumada’ (Feathered Serpent), which seeks to educate people about the importance of conserving the region’s rain forests, a source of water and oxygen for our communities. I dream of clean aviation, and I believe positively that at Volaris we are the leaders in this matter in Mexico.
What is the airline doing to further diversity?
Volaris has been diverse since our founding. We recognized from the beginning that we had a monumental challenge in terms of having the best person in each position. I surround myself with smart people, and I help them work as a team. That’s my recipe for success and I don’t discriminate against people, supporting meritocracy in every way. For me, the key to a successful executive is emotional intelligence coupled with having intelligent and well-trained people. If I act along those lines, the company as a whole acts like it. I insist all the time on treating people with enormous appreciation and affection, even within an exemplary productivity environment. As we have grown, we have found great talent and have incorporated women across the organization. However, what I will never agree on is quota systems for people as the company must be a clear example of meritocracy.
IMAGES: GETTY/ISTOCK
Is the environment a major issue in Mexico and how can the industry do more to mitigate its environmental impact?
There is much to be done on the environmental issue. Obviously, we have to focus from the big to the small because there is so much to do. Replacing the fleet with one that burns less fuel, produces lower carbon emissions, lower nitrogen emissions and a smaller noise footprint has been our strategy. By 2022, we will have more than 50% of the fleet replaced with Airbus Neo aircraft. This brings us closer to our goal of reducing our environmental footprint. And we are working on the requirements for ISO14000 certification and have been certified to the standard for many years. There is no end of things to do. It is at times quite a challenge for us to get our suppliers to arrive at reasonable costs for recycling or to be willing to reuse, but we are motivating them. By the end of 2019, Volaris will only use recyclable or reusable on-board service items. But the proper management of waste at airports remains a major issue. There are some airlines.iata.org
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2022
50% By 2022, we will have more than 50% of the fleet replaced with Airbus Neo aircraft. This brings us closer to our goal of reducing our carbon footprint
What skills and attributes does a modern airline leader need?
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Surround yourself with the best people in every sense, coordinate them, and make them work as a team. Spend long hours supporting the details and understand that we manage four different generations with their own styles. For each of these styles, we need to adapt and understand the methods to increase productivity. We must put technology at the top of the strategy, negotiate all the costs so that they go down... and down... and even further down. And we must motivate and set the example with many hours dedicated to thinking about the business. Our strategy is to be the lowest unit cost company in the world. I don’t know any other way, unfortunately. If you could change one thing about the industry tomorrow, what would it be and why?
I am not complacent at all in my life and I feel that I can improve in many ways. In relation to the industry, the most profound change will occur when all its actors work in an environment of equality, where it is not only the airports and the manufacturers who enrich themselves, but all the components of the aviation value chain, especially the airlines that carry the greatest weight of the business. 2019 – 05 Airlines
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CEO Interview
80%
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Up to 80% of our landings at Helsinki are fuel and noise-saving continuous descent landings, which supports our sustainability targets
Airlines 2019 – 05
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airlines.iata.org
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CEO Interview
Sense and sensibility Topi Manner, CEO of Finnair discusses the hard and soft skills required to make a modern airline safe, sustainable, and successful INTERVIEW BY: GRAHAM NEWTON
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D
ue to its geographical location, Finland is a key point of travel between Asia and Europe. At the state-owned carrier, Finnair, understanding this unique value proposition and building around it with strong alliances, increased digitalization and a commitment to sustainability has the airline in a strong position, as CEO Topi Manner explains. Is the airline’s strategy still based on providing services to Asia?
Providing the shortest connections between Europe and Asia is at the heart of our strategy and is reflected in the recent growth of our Asian network. We are adding our fifth Japanese destination, Sapporo, to the network in December 2019, and in March 2020, we start operating the only non-stop connection from Europe to Busan, the second largest city in South Korea. We are also increasing our weekly frequencies to Beijing to 10, with three weekly flights to the new Daxing International Airport starting in November 2019. Geography works in our favor, as the shortest route between many European cities and the megacities of Asia goes through airlines.iata.org
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Helsinki. This enables efficient 24-hour fleet rotation and crew rotation, and convenient timetables for our customers. Is oneworld still important to you and how will alliances develop?
Alliances continue to have an important role in our strategy. oneworld extends our network and enables us to provide a better offering for our customers. Also important are the joint businesses we have with our oneworld partners on Atlantic traffic as well as on traffic between Europe and Japan. Similarily, Finnair and LATAM Airlines Group implemented recently a new codeshare agreement on flights between Finnair’s hub in Helsinki and LATAM’s hubs in São Paulo, Brazil, and in Santiago, Chile, via five European gateways: London, Paris, Madrid, Barcelona, and Milan. But collaboration comes in many forms and shapes and does not have to be limited to alliances. We have recently announced codeshares with China Southern and Juneyao in China, and these new codeshares provide enhanced connections to our customers from our Shanghai and Guangzhou destinations onwards. 2019 – 05 Airlines
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CEO Interview
How important is partnering with digital companies as you strive for sustainable, profitable growth?
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In the digital world, small can be beautiful, as it makes us agile, and while we have a strong in-house digital team, collaboration gives us scale. Our collaboration with Alipay is a good example of this: Finnair was the first airline in the world to offer Alipay mobile payment onboard, and the introduction of this popular payment method was very well received by our Chinese customers. Collaborations with digital platforms such as Fliggy in China extend our reach and make our offering more widely available. We are also partnering with digital players in introducing artificial intelligence (AI) to different parts of our operations. We have AI solutions in use at our customer services to speed up the responses and in our flight operations to predict the impacts of weather in our operations, for example.
2020 In March 2020, Finnair will operate the only non-stop connection from Europe to Busan, South Korea’s second city. We are also increasing our weekly frequencies to Beijing to 10. Geography works in our favor, as the shortest route between many European cities and the megacities of Asia goes through Helsinki. Airlines 2019 – 05
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Why is company culture so important to Finnair and what benefits do you see?
A great customer experience requires a great people experience. Customer service is creative work and it requires a good atmosphere. It is absolutely essential to have a company culture that supports the company strategy. I find that a common set of values and an open and honest continuous dialogue within the organization is key to achieving strategic goals. It is also important every now and then to take the pulse of the company culture, as it evolves as the company goes through different phases. You cannot take culture for granted. Are you happy with the infrastructure in Helsinki, both on the ground and in the air?
The expansion of Helsinki Airport supports our growing traffic, and we work closely together with Finavia and other partners to ensure that the customer experience at the airport is as smooth as possible during the renovation and expansion, and that we avoid creating bottlenecks for transit customers. Transfer customers bring over 50% of our revenues, so a smooth transfer experience is vital for us. We are also expanding our own facilities. Our renewed business class lounge and the new Platinum Wing on the non-Shengen side of Helsinki airport offer more space and new services for our customers. The uncongested airspace in Helsinki, meanwhile, allows us to fly fuel-efficiently. Up to 80% of our landings at Helsinki are fuel and noise-saving continuous descent landings, which supports our sustainability targets. What do you see as the main challenges ahead for aviation?
Globally, the climate challenge is something we all must do more about. There are no easy answers, but we must use the entire toolkit that is available; technology, which will be the largest part of the solution, infrastructure improvements like more efficient airspace use, operative measures such as reducing aircraft weight, market-based airlines.iata.org
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CEO Interview
methods such as the Carbon Offsetting Reduction Scheme for International Aviation (CORSIA), as well as sustainable aviation fuels. It is also important to see and understand the links between challenges, whether it is aviation emissions, fuel prices, airspace or fair competition. Pulling on one string has a ramification on another. Aviation leaders, such as IATA and ICAO, are at the forefront in ensuring that we identify comprehensive solutions that can strengthen sustainable business on all fronts. Can European congestion be solved?
The congestion and inefficiencies in European airspace are key challenges that we must address. It would benefit travelers, airlines, and, most importantly, it would greatly help in meeting industry targets for CO2 reduction. The fragmented airspace currently hinders airlines from flying the shortest possible routes and from using fuel-saving flight methods, such as continuous descent landings. Stakeholders have recently signed a Single European Sky declaration to show commitment, which is one step forward. But more open-minded collaboration is needed to get there. The solutions for more environmentally-friendly European skies are in the hands of European Union (EU) institutions and the EU member states. A more efficient use of airspace would save 10% of CO2 emissions from European aviation. We cannot afford not to reach this target.
IMAGES: ISTOCK
Tell us about “Push for Change” and whether you think aviation can win the public relations battle on the environment, particularly in light of the flight shame campaign?
In the Nordics, the discussion around aviation’s CO2 footprint is very active, and it provides us an opportunity to say more about what we as an airline are doing, and also what customers can do. As an industry, we must all do more to solve the climate challenge. We launched a CO2 offsetting and sustainable aviation fuel service airlines.iata.org
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1923 Founded in 1923 as Aero O/Y, Finnair operated its first flight in 1924 from Helsinki to Tallinn
83 130+ 6 aircraft make up the Finnair fleet
130+ destinations served by Finnair across three continents
Finnair is the sixth oldest airline that has operated continuously
for our customers at the beginning of 2019 to provide our customers an easy way to be a part of this work. Via our website, customers can either offset the CO2 emissions of their flights through a certified CO2 reduction initiative, or purchase sustainable aviation fuel and thus reduce the emissions from their flights. The initiative has been well received, and in August, we flew two sustainable aviation fuel flights with a 12% blend from San Francisco to Helsinki, supported by our customers’ fuel purchases. At the same time, we continue to decrease our environmental footprint. Fuel efficient flight methods, decreasing the aircraft weight and investment into new technology are all important in this, and we place a strong focus on these. The real battle is with finding zero emission energy sources, but we cannot ignore any of the smaller steps either. CORSIA plays a key role and I sincerely hope it is given all the support it deserves.
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Do governments do enough to support aviation considering the benefits of the industry in terms of jobs and economic growth?
Aviation creates both social and economic good and funds its own infrastructure. Governments can support aviation by ensuring a stable and predictable operating environment, which is needed to ensure profitable operations that enable investment in the future. To solve the global climate challenge, we also need action from governments, the industry, and the international community that have a real and tangible impact on CO2 emissions. For example, creating a healthy sustainable aviation fuel market requires collaboration that shares the costs of the fuel between the different players. What skills or attributes do you need as a modern airline leader?
The airline industry combines both sides of the brain in a fascinating way. This is about sense and sensibility. Listening is key, as is building a team that delivers. 2019 – 05 Airlines
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08/10/2019 09:21
Dossier: Diversity
Dossier
Bringing value to the business
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DeeDee Doke examines how diversity and inclusion initiatives at Air New Zealand are setting the pace for the industry WORDS: DEEDEE DOKE
Every organization faces specific diversity and inclusion (D&I) trends resulting from the country or region in which it is based. Air New Zealand, for example, must account for the country’s rich and complex culture of New Zealand, the national business and equality conditions, and the greater understanding of the benefits of inclusion. airlines.iata.org
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The New Zealand flag carrier has tackled D&I head on and won IATA’s inaugural Diversity & Inclusion Team Award, presented at the 75th AGM in South Korea. Jane Hoskisson, IATA’s Director of Learning and Development and a member of the judging panel, says Air New Zealand’s entry stood out for “the tangible adherence to setting aggressive
targets” in improving its D&I culture and increasing the number of women and indigenous people in leadership roles. Other airlines delivering strong entries in the team award category were Air Baltic and Icelandair, adds Hoskisson. In a hard-hitting speech as he accepted the award, Air New Zealand’s now former CEO Christopher Luxon challenged all IATA member airlines to join in the fight 2019 – 05 Airlines
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Dossier: Diversity
Alexandre de Juniac, IATA Director General and CEO
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“Aviation is the business of freedom. An example of that is the freedom for 2.7 million women and men to develop exciting careers within this industry, but women are under-represented at senior levels and in some professions within airlines”
to embed D&I in their organizations and cultures (see box for more). “Let me put a challenge to everyone in this room, because there’s a big elephant in this room,” he said, “which is that if we are really honest with ourselves and we say it as it is, the diversity track record from IATA and the global aviation industry is pretty abysmal. “And yet,” he continued, “if we don’t want to come back in 12 months’ time and have another embarrassing lip service conversation about it, we actually have to do some action between now and when we regroup in Amsterdam in 12 months’ time.” Not only has Air New Zealand set aggressive targets for the future, the airline has already achieved significant milestones in the drive to boost its employee diversity & inclusiveness throughout the business. For instance, the airline increased the number of women in its 80-member senior leadership team from 16% in 2013 to 43% in 2019. It aims to increase that percentage further to 50% in 2020. With 7.4% of its pilots now women, Air New Zealand already exceeds the 5% global average and has plans to raise its
figure even higher. A Women in Leadership program and the creation of career specialty networks for women (digital, engineering and maintenance, pilots) within the airline also contributed to its win of the IATA award. Air New Zealand’s commitment to gender equality has also been recognized by the Gender Tick Accreditation, a New Zealand-specific validation that looks across five key indicators in a company: gender inclusive culture; flexibility and leave; career development; gender pay equality; and ensuring a safe workplace. “For too long, women have led the charge advocating for gender equality, and I think it’s time for powerful, decent men who have the influence to step up alongside women and advance the case for gender equality,” Luxon noted in his acceptance speech at the IATA AGM. Maori heritage
To build and strengthen all its D&I components, the airline has introduced seven different networks (see panel) to support a variety of segments in the workforce. One key component will be greater
Christopher Luxon, former Air New Zealand CEO
“It’s time for powerful, Discussion on… Improving gender balance in aviation decent men who have that a sea-change requires strong million women and men to develop exciting careers the influence to step Recognizing advocates across the air transport sector, IATA has within this industry, but women are underlaunched a new industry-wide initiative to improve represented at senior levels and in some up alongside women gender balance in aviation. professions within airlines,” said IATA Director The 25by2025 campaign is a voluntary General and CEO Alexandre de Juniac. and advance the case commitment by IATA member airlines to “advance “Airlines understand the value that a diverse and for gender equality” gender diversity in the airline industry” over the gender-balanced workforce delivers. The next six years. Central tenets are aimed at increasing the number of women in senior roles and under-represented jobs by either 25% against the current metrics, or to a minimum of 25% by 2025, as well as reporting annually on key diversity metrics. “Aviation is the business of freedom. An example of that is the freedom for 2.7
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25by2025 Campaign provides a global context and encouragement for the many initiatives our members are taking to address gender imbalance. “Our work will not be done in 2025, in fact, this is only the beginning. Our ultimate aim is of course for a 50-50 gender split with equal opportunities for everyone in every part of our industry.”
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Dossier
43%
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Air New Zealand increased the number of women in its 80-member senior leadership team from 16% in 2013 to 43% in 2019 awareness of the indigenous Maori heritage and also the Pasifika, or Pacific Island, descendants of migrants to New Zealand. Recognizing that awareness and inclusion must start at the top, senior leaders take part in “deeply immersive cultural fluency workshops” that coach senior leaders in learning Maori protocols and culture. The overnight workshops take place in a marae, a Maori meeting house where important social and ceremonial forums are held. Maori people view the marae as “their place to stand and belong”. Air New Zealand’s branding uses a Maori symbol known as the Koru. Its basic meaning is a coil or loop while it is also associated with “new life, new beginnings, hope perfection, the spirit of rejuvenation, and peace”. “The overnight stay in the marae teaches cultural fluency in our brand, and the airlines.iata.org
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More than 35% of New Zealanders under 30 have tattoos. And for New Zealanders of Maori heritage, tattoos are of special, even sacred, significance as they may mark their genealogy and heritage
35%
essence of the Koru is a core competency for not only our leaders but all Air New Zealanders,” explains the airline’s Diversity and Inclusion Manager Sarah Archer. Tattoos
The airline’s latest move to embrace the diversity of its workforce came in June 2019 when the company announced that from 1 September, it would end a ban on staff having visible tattoos. Air New Zealand said its move to end the ban followed five months of research
with customers and staff. More than 35% of New Zealanders under 30 have tattoos. And for New Zealanders of Maori heritage, tattoos are of special, even sacred, significance as they may mark their genealogy and heritage. “We want to liberate all our staff, including uniform wearers such as cabin crew, pilots and airport customer service teams who will, for the first time, be able to have non-offensive tattoos visible when wearing their uniforms,” says Luxon. 2019 – 05 Airlines
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Dossier: Diversity
Employee networks Air New Zealand views employee networks as a key enabler to help deliver diversity and inclusion objectives. Seven such networks are currently in place:
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The Kiwi Asia Network (KASIA) welcomes all Air New Zealanders who are interested in or connected to Asia. The Manu Network celebrates Polynesian cultures within New Zealand. Network members do not have to be of Maori or Pacific Island descent. The Pride Network is designed to support employees of all sexual orientations. The Returned and Services Network brings together and supports Air New Zealand employees that are returned and/ or ex-service people. The Women’s Network organizes events, coaching and mentoring for women throughout the business. Women are added to the network when they join the company. The Young Professionals’ Network for under-30s helps early-stage employees develop skills and grow their career within the airline. The Disability Network supports employees who are faced with disability, either their own or that of a loved one.
Lessons learned
Key lessons learned in developing Air New Zealand’s D&I approach include the importance of data and benchmarking its progress. “We are committed to reporting our progress in our annual reports and our annual Air New Zealand Sustainability report to be kept accountable externally on the goals and targets we have set,” says Archer. “As well as setting and keeping accountable to our goals, it’s also important to adjust those goals to avoid becoming complacent and to always strive for true, meaningful, inclusive diversity.” The airline admits it has been difficult to increase diversity in an industry in which many roles have traditionally been male-dominated. “However, our hope is that our example will encourage more organizations to embrace diversity and see its genuine value to their business proposition,” Archer adds. “We sincerely hope we are up against strong competition in D&I at the next IATA AGM.”
Air New Zealand’s Diversity & Inclusion targets
female membership of Air New Zealand’s Senior Leadership Team by 2020 Maori and Pasifika employees in Air New Zealand’s leadership roles by 2022
50%
20%
Achieve New Zealand’s Accessibility Tick to support with accessibility needs
Recognizing that awareness and inclusion must start at the top, senior leaders take part in “deeply immersive cultural fluency workshops” that coach senior leaders in Maori culture Airlines 2019 – 05
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Dossier
A call to action: Christopher Luxon
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In a hard-hitting speech at the IATA Diversity Awards in Seoul during the AGM, since-departed Air New Zealand CEO Christopher Luxon called for the aviation industry to be better when it comes to promoting diversity. Read some of the most prominent points from his speech below:
of teams or senior leadership within our airlines can do when we get back to our homes. We can build out a really strong women’s network within our organizations so that the voice of women is really captured and played back to us as the leaders so we know how to improve.”
A case for business:
Improving the pay gap:
“When you look at the research, companies that have a top quartile ethnic diversity leadership group have a 33% more likely chance of delivering a higher than average market share. When you look at top quartile gender diversity companies, they deliver up to 38% more than the average market share across the piece.”
“There are some real big programs around development and management that we can do together; there’s certainly a lot we can do around pay. We can have a 0% pay equity gap, so women are paid the same as men for doing the same job. It’s a basic construct but we kind of need to start there and get that done right.”
Actions speak louder than words:
Speaking for everyone:
“I think there are some really practical actions that each and every one of us as airline CEOs or executive members
“I’d say the last thing we can do, certainly as CEOs and as men in the aviation industry, is probably to make
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a panel pledge not to speak at places where panels we are on are not gender diverse, that it doesn’t have a woman sitting on that panel.”
An issue of social importance: “This is not a women’s issue—this is actually an issue that has huge economic and social importance to our economy and our society because if women can’t succeed in our corporate life and in our boardrooms, they won’t succeed elsewhere in society.”
Stand up and be counted: “For too long, women have led the charge advocating and driving hard-won achievements around gender equality and I think it’s time for powerful, decent men who have the influence to actually step up alongside women—not doing it for them, but stepping up alongside them—to help advance the case for gender equality.”
38% “When you look at top quartile gender diversity companies, they deliver up to 38% more than the average market share across the piece” 2019 – 05 Airlines
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08/10/2019 09:23
Diversity
A
n airline executive invited to speak at a conference arrives at the event’s registration desk, but the organizers have trouble locating the speaker’s name tag. They eventually find it, filed under a different name. The executive, a senior vicepresident at a global airline, is a woman. The organizers had assumed her husband was the speaker. Such an experience is not unusual for the airline industry’s senior female executives, who are significantly outnumbered by their male counterparts. Gender biases faced by female leaders are among the multitude of factors contributing to the lack of female airline CEOs, based on in-depth research I carried out on the topic at the University of Warwick. Locked out from the start
Earlier in 2019, I interviewed 18 executives in the airline industry, including 12 women at C-suite or vice-president level. With a diversity of airline industry experience—ranging from less than five years to more than 30—my interviewees shared their insights into why female leaders are so poorly represented at airlines. Despite women constituting a substantial portion of air transportation workers—United States and European Union government statistics show that women make up more than 40% of employees in the sector—female airline CEOs are few and far between. Only three airlines out of the world's top 100 carriers are led by women, including Air France’s Anne Rigail who was appointed in 2018. The male-dominated top tier of the airline industry, coupled with the sector’s tendency to look within when airlines.iata.org
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while another had doubtful looks cast her way during meetings with aircraft suppliers. A turning tide
Seeing is believing Vice-President of Corporate Communications at the oneworld alliance, Ghim-Lay Yeo, says women in aviation need to offer each other support in their aspirations hiring leaders, make it difficult for women to gain traction in moving into senior roles. The industry’s traditional preference for leaders with airline operational experience also places women at a disadvantage as they are vastly outnumbered to begin with in areas like flight and technical operations. With airlines’ leadership ranks being overwhelmingly male, female leaders sometimes find themselves in awkward and upsetting situations. One senior executive had her promotion questioned on stage at an investors’ conference,
The relentless 24/7 operating nature of the airline industry works against women when it comes to hiring and promoting. Airlines perceive women, particularly working mothers, as less willing to accommodate the around-the-clock demands. While female CEOs remain the exception at airlines, the majority of my interviewees expressed optimism that the tide is turning, albeit very slowly. High-profile appointments like Rigail’s promotion give them hope, and a heightened awareness of the issue is the beginning of meaningful discussions. To advance more women into leadership roles in airlines, the industry can begin with a few steps. Firstly, ensure a diverse slate of candidates when hiring. Secondly, women in the industry need to form stronger ties among themselves. Unlike the longtime male executives in the airline sector, many of the female leaders I interviewed did not have relationships with one another and in some cases, did not know who their peers were. Strengthening networks among women in the industry will provide female leaders the support they need and more crucially, encourage other women to aspire to leadership roles. Research has shown that exposure to successful female leaders can empower leadership behavior in women, and counter gender stereotypes. Seeing is the first step to believing.
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Ghim-Lay Yeo’s MBA thesis on the lack of female CEOs in the airline industry, which was awarded a distinction grade, was supervised by Associate Professor Maja Korica at Warwick Business School
2019 – 05 Airlines
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NEXTT Special
NEXTT
WORKING TOGETHER FOR THE FUTURE OF TRAVEL
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Forewords: NEXTT Special
A brave new world Anne Carnall, IATA NEXTT Program Manager The movement of people and cargo is the very fabric of air transport, but the world is changing. And aviation must adapt to suit. Aside from a few visionaries, most people could have scarcely believed 25 years ago that in the very near future people could check-in for a flight hours in advance on their mobile device. Now, travellers demand it. It is this kind of change and its swift adoption by the masses that drives us to be better as an industry, and IATA’s New Experience in Travel and
Technologies (NEXTT) is at the forefront of advocating for a stronger, more connected air transport industry. Developed in conjunction with Airports Council International (ACI), NEXTT is a program that will never truly be finished as innovation never stops. It is the strategic vision of an industry on the cusp of a digital revolution, sitting above a vast array of projects at a wide number of locations across the world. With such a project, of course there are challenges. Issues such as biometric identification in the ONE ID project could, if hastily introduced, be open to fraudulent activity. IATA and its partners are working to ensure that when rolled out
for real, the product is a robust one that offers a better passenger experience and reduces the capacity constraints felt at airports in many parts of the world. Technology is key to the success of the NEXTT program, but just as important is that our partners throughout the aviation value chain recognise that this is the start of our industry’s digital revolution. I urge aviation stakeholders to understand the value NEXTT can offer the air transport sector, as we enter a period of untold change. Change is never easy, but I believe that the airline industry is capable of a digital change that will improve travel for all – both in an experiential and economical way.
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Traveling into the future together Nina Brooks, ACI World Director, Security, Facilitation and IT NEXTT defines a vision for the future of air transport, particularly on the ground at the airport. By identifying and driving innovation to increase efficiency and improve the passenger experience, aviation will be able to get the most out of resources and infrastructure. The air transport sector needs to deal both with ageing populations and millennial expectations, as well as a more mobile global population. We need to consider trends such as Smart Cities, multi-modal airlines.iata.org
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transportation connections and energy efficient solutions. NEXTT will help to make the most of the technologies that provide opportunities to innovate to address these challenges. With passenger numbers forecast to double over the next 20 years and service expectations continuing to rise and evolve, new ways need to be found to generate capacity and meet customer expectations. An initiative like NEXTT has no finite timeline; as the program evolves, so too will technology. ACI and industry partners will keep learning as the initiative grows. It is in this realm that the input of aviation stakeholders will be key to the success of the program.
The technology is advancing all the time, but it is only one part of NEXTT. it’s really not technology that is the challenge; the issues around privacy, data ownership, data standards and flexible adaptive regulation are equally important areas for focus. Global practices and standards are required to support the harmonization and interoperability of frameworks, processes, data models, and protocols. There are many parties involved, including IATA, ACI, airports, airlines, governments, service and technology providers. Co-operation will be the driving force behind realization of NEXTT and the future of travel. 2019 – 05 Airlines
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NEXTT Special: Into the future
NEXTT generation of travel Automation and innovation will play a key role in enhancing the passenger experience in future W O R D S : P AT R I C K A P P L E T O N
38 ost recently in 2019, successive editions of the annual IATA Global Passenger Survey (GPS) have shown that people traveling by air want a quicker, less intrusive and even partially-automated service at the airport. A joint program between the International Air Transport Association (IATA) and Airports Council International (ACI) is working to make that request a reality. From off-airport check-in right through to boarding the plane, the New Experience Travel Technologies (NEXTT) program has all the elements of the air transport industry covered, including cargo. According to its creators, NEXTT is designed “to develop a common vision to enhance the on-ground transport experience, guide industry investments and help governments improve the regulatory framework”. “Passenger have told us that they are
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looking to technology to improve their travel experience. That is what we are trying to deliver in cooperation with airports,” says Nick Careen, IATA Senior Vice President, Airport Passenger Cargo & Security. “NEXTT is an integrated vision for the future of and ongoing aspects of air travel. It was to address that we are quite a siloed industry in terms of operation or location and we wanted to make sure that we best use new technology and alternative processes and in a scalable and interoperable way,” adds Anne Carnall, IATA’s NEXTT Program Manager. “Therefore, having an industry consensus on what we want to achieve helps us look across different aspects and different technologies and see how they might need to operate in future.” Initially, NEXTT began life as a project with a technology focus, Carnall says. As the initiative has progressed, that focus has broadened and now looks at business
and cultural change as well as how airports and airlines can develop their operations to achieve additional efficiencies and ultimately increase the capacity. Carnall is keen to point out that the NEXTT vision should not be driven by a monopolistic technology framework. “IATA is not mandating that a specific provider is used globally, so it is important that as a vision it is more focused on describing what the outcome is,” she says. ACI’s NEXTT Development Manager Nina Brooks points out that NEXTT does not have formal governance or working groups, but rather relies on the project structures contributing to and upholding the long-term vision of the initiative. “In ACI’s Smart Security, we have a management group comprising airports, airlines and governments, who drive development. Smart Security contributes directly to the NEXTT vision,” says Brooks. Trends such as augmented reality,
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Into the future: NEXTT Special
“With passenger numbers forecast to double over the next 20 years and service expectations continuing to evolve, new ways need to be found to generate capacity and make better use of infrastructure” Nina Brooks, NEXTT Development Manager, ACI
39 drones, robotics and automated systems, big data and the Internet of Things (IoT) are revolutionizing air freight facilities, but it is at passenger level where NEXTT is expected to make its greatest impact. ONE ID is a NEXTT initiative aimed at offering a secure, seamless and efficient journey using a trusted digital identity, implementing biometric recognition technology at various touchpoints, and sharing a single set of passenger identity information among authorized stakeholders in accordance with data privacy rules. Biometric capture is close to becoming a reality, but Carnall warns that issues surrounding privacy and data standards are a bigger concern. “Global practices and standards are required to support the harmonization and interoperability of frameworks, processes, data models, and data interchange protocols,” she says. “There are many parties involved, including technology providers, airports, and governments.”
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Initially designed to run for three years, the NEXTT program does not have a finite end point due to the central mantra of innovation that underpins the initiative. As digitalization progresses across the globe at a rapid rate, airlines, airports and the wider air transport industry must keep pace if the sector is to thrive. “We fully expect the vision to keep evolving, and we will keep learning and sharing as we move through the initiative,” says Brooks. “Not all innovations or technologies will be suitable for all operations either, so it’s difficult to define ‘fully implemented’. However, if we consider widescale uptake of a concept as implementation, then we would expect to see this wave of evolution based on current ideas and technologies come to fruition in the next 10-15 years.” Connecting airports to city centers is a key tenet of the initiative, with the hope that in the near future there will be locations for cargo drop-off/pick-up and
Connecting airports to city centers is a key tenet of the initiative, guided by the creation of locations for cargo drop-off/ pick-up and spaces where commercial passengers can do the same for personal baggage
2019 – 05 Airlines
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NEXTT Special: Into the future
IMAGES: ISTOCK/GETTY
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spaces where commercial passengers can do the same for personal baggage. Allowing passengers to commence their journey from secure entry gates within a city is also a desire of those invested in the program, to improve upon the passenger experience and offer a greater level of seamless travel. Airports working together with IATA and ACI on NEXXT technologies include Dubai, (London) Heathrow, (Amsterdam) Schiphol, Bangalore and Shenzhen. “Big data and new technologies will completely change the way an airport operates in the future,” says Henk Jan Gerzee, Chief Digital Officer, Schiphol Group. “This has an impact on all of us and that is why working and innovating together is essential.” It is hoped that in time, the benefits will also aid an enhanced air freight industry by driving a safe, secure, profitable and sustainable air cargo supply chain through the development of ONE Order. “It was really important that we put all aspects of infrastructure side by side and you start to see the parallels,” explains Carnall. “Potential new ways of working in future—should cargo facilities be handling baggage? We are far away from that, but it has triggered questions.” On the passenger side, biometric identification is aimed at achieving a fully interoperable and coordinated system between airports, airlines and governments using validated passenger information. Another advantage of NEXTT includes pre-travel disruption notifications to help passengers manage their journeys if affected by delays, in turn relaxing pressures on an airport that could otherwise become overcrowded. “With passenger numbers forecast to double over the next 20 years and service Airlines 2019 – 05
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Case study… Fast Travel in China NEXTT initiatives are plentiful and they continue to develop day-by-day, but Carnall warns that it is a “slow road” to digitalization. A positive example is a Fast Travel initiative piloted in China in early 2019, where there is a strong demand for self-service processing among international passengers.
Working with China’s Civil Aviation Administration, IATA Beijing trialed the process with Shanghai Pudong Airport (PVG) and Cathay Pacific Airways (CX) Pudong Station. With a QR Code EBP (mobile, personal ID or biometrics in the future) obtained from off-site check-in, Cathay Pacific
expectations continuing to rise and evolve, new ways need to be found to generate capacity and make better use of facilities and infrastructure,” says Brooks. “We need to deal both with ageing populations and millennial expectations, as well as a more mobile global population. We need to consider trends such as Smart Cities, multi-modal transportation connections and energy efficient solutions. NEXTT will help to make the most of the technologies that provide opportunities to innovate to address these challenges.” An overriding theme is the need for collaboration. “Industry can’t achieve this alone,” Careen warns. “Government support is essential to create the correct regulatory environment so the industry can fully transform.” Carnall adds that it’s clear to see that as an industry, “we are all trying to achieve the same thing”. Returning to an earlier point, Carnall explains that the technologies and processes within the program can be adapted and applied at different points within the industry, with minor tweaks to serve that particular domain. “You can start to see where one solution that has been developed initially for passengers can be very swiftly applied
passengers were able to complete the border control, security check and boarding procedures at the Pudong T2 terminal in just 10 minutes, saving up to a third of the processing time. For business travelers without checked baggage or operating on a time sensitive schedule, this was even quicker.
in cargo or as you see with elements of aircraft turnaround—how data usage or changes in processes will affect a wider array of stakeholders than those implementing or trialling a new proof of concept or way of working,” she says. For airports and airlines, the aircraft journey is also an area where NEXTT can revolutionize the travel experience for operators. Airport collaborative decision making (A-CDM) and information exchange platforms allow for an integrated approach toward harnessing the power of operational data. With contribution from multiple sources, stakeholders are able to work from a single Airport Operations Plan, incorporating both arrival and departures flows. This approach also has a sustainability element to it, with enhanced taxiing systems (electric landing gear drives or remotely controlled tugs) avoiding jet fuel burn, noise and pollution whilst the aircraft moves on the ground. Working together is vital and in that respect, IATA, the ACI, and a number of airports and carriers have recognized the importance of NEXTT and taking aviation into the future. Now, they hope others will follow, at all levels of the industry value chain. airlines.iata.org
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08/10/2019 09:24
Advertising Feature: Narita Airport
Akihiko Tamura, President & CEO, Narita International Airport Corporation
Ready to lead passengers into the future
Using a new biometric identification process, Tokyo Narita aims to show how travel processes can become agile and improve the customer experience
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The OneID biometric identity initiative is one of air transport’s key recent developments and is becoming increasingly accelerated in our industry. Especially, facial recognition technologies are becoming more and more advanced with walkthrough capability, and have become popular identification tools in our everyday lives in Japan as well. Next year is the Tokyo Olympic and Paralympic Games, and airports in the Tokyo Metropolitan Area will be required to smoothly, comfortably and efficiently welcome athletes, delegates and spectators from all around the world, and to support safe and efficient event operations. At the same time, vigorously growing travel demands in the Asia-Pacific region are placing pressure on us to deal with capacity constraints. Narita and Haneda, the Tokyo Metropolitan airports, will expand their capacity by 40,000 annual slots each in 2020, and are scheduled to increase capacity to a total of 1 million annual slots by 2030. Narita Airport will further expand its capacity to 500,000, a 67% increase, by constructing a new third runway sometime in the next ten years. Travel faster IATA’s Fast Travel initiatives have represented one of the biggest challenges in the industry. Narita Airport has been working closely with
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IATA and airlines to implement solutions such as Self Check-in Kiosks, Self Bag-Drops and Smart Security, which will realize stricter security check and more efficient flow. We are not only providing equipment and facilities but also working towards development of operational standards such as the SOPs and PFM (the Passenger Flow Management system), together with airlines and government authorities. However, technological advancement will not stop to wait for our progress. In our industry, the OneID solution using facial recognition technology has already been introduced in several international airports around the world, such as “Happy flow” in Aruba and T4 in Changi Airport, along with Heathrow, Atlanta and Sydney. Why should Narita Airport not be able to take the lead with the OneID solution by introducing it together with Japanese biometric technologies that have already been used in many of those leading airports? In response, Narita Airport has decided to launch a OneID project called “Face Express” with walkthrough capability which will become available around spring 2020, in anticipation of the Tokyo Olympic Games. We are now working with airlines, NEC and Collins Aerospace for necessary equipment deployment and coordination. One of the tough challenges in our OneID project is how to overcome privacy protection issues. We are closely working with
dedicated legal professionals, the Japanese government and IATA to solve this challenge. We also need to consider the EU’s GDPR. Once our OneID project is successfully in service, we will be happy to contribute to the development of OneID’s global standards in cooperation with other airports. A vision of the future Our OneID project will be able to improve the
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Advertising Feature: Narita Airport
efficiency and safety of operations. Simultaneously, it will also provide a great advantage in terms of the terminal capacities while Narita Airport undergoes further expansion for the future. Another important effect of OneID is improving the customer experience by reducing the waiting time for each process and maximizing customers’ free time for shopping or relaxing before their flights. As
IATA mentioned, OneID will create the opportunity for an “end-to-end passenger experience that is seamless, efficient and secure,” and we share the same vision for offering these services to our customers. Looking to the future, the scope of OneID is not limited to airport processes but can be extended beyond the airport boundary. OneID is potentially applicable to hotels, car rental, ground transportation, and music
concerts and events, and passengers will enjoy the advantage of safe and secure payment all the way through their journeys. I believe that aviation is one of the biggest growth industries and will take on a more important role for enhancing economic growth, peace and security in the world. We will continue to closely work with IATA and airlines to improve safety, security and travel experiences for passengers.
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2019 – 05 Airlines
21/10/2019 08:44
Advertising Feature: Seamless Travel with NEC
Dr. Atsushi Iwata, Vice President, Safer City Solutions Division, NEC Corporation
An age of facial recognition
Biometric services present customer service, efficiency and cost-saving potential for the airline of the future
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The global airline industry is one of the most competitive sectors in the world. Recently, the financial outlook for the sector has darkened in the midst of rising fuel costs, increased competition and the threat of a global trade war. In order to stay ahead, looking to new technologies is increasingly important for airlines, to help preserve margins and ultimately deliver a better customer experience. Vice President of Global Safety for NEC’s Safer City Solutions Division, Dr. Atsushi Iwata, explains that biometric services play a key role in enabling airlines to both ease cost pressures and create a better end-user experience for passengers. With significant experience using biometric technology in the retail and hospitality industries, NEC is currently helping airlines undertake this digital transformation. Recently, for example, a major U.S carrier became one of the first airlines to embrace biometric technology by deploying an NEC system in Atlanta’s Hartsfield-Jackson International Airport, at international Terminal F. “The system offers passengers travelling through the international terminal the opportunity to opt-in to a hassle-free airport experience,” says Dr. Iwata. “If a customer wishes to use face recognition technology, they are able to check-in, drop off luggage, identify themselves at security and board the flight using
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their face as their form of identification.” For efficient processing at each “touch point”, the system leverages the U.S Customs and Border Protection database to identify passengers, explains Dr. Iwata. Hartsfield-Jackson International Airport is the busiest airport in the world, servicing more than 100 million air passengers each year—so a digital transformation using biometric technology was a logical step. A recent study by finder.com found that due to the immense volume of passengers that use the airport, it leads the nation in carrier-caused flight delays at 8.8% of all flights. It also takes second place behind Los Angeles International Airport for major departure delays at 7.8%. NEC’s face recognition helps airlines resolve delay issues by reducing the typical boarding time of an international flight by nine minutes, as passengers no longer need to undergo multiple identification checks of their boarding pass and passport. That’s good news for border control—a 2018 IATA Global Passenger Survey, with 10,400 respondents from 153 countries, found that border control had the second lowest satisfaction rating of 11 elements of the customer journey. It’s even better news for the bank accounts of airlines—the US Federal Aviation Administration estimates that flight delays in the country cost airlines US$28bn per year. It
comes as no surprise that reducing flight delays is a top priority for airlines. Due to the initial success of leveraging biometric technology, more organisations are embracing face recognition services, says Dr. Iwata. NEC has recently partnered with Star Alliance to allow more airlines to easily integrate face recognition technologies into passenger processing services. Star Alliance is the oldest and largest airline partnership programme, consisting of 28 member airlines who offer more than 19,000 daily flights to 1,300 airports in 194 countries. NEC and Star Alliance will soon launch an interoperable platform, enabling Star
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Advertising Feature: Seamless Travel with NEC
Alliance member airlines to implement biometric services for their frequent flyers. The system is set to launch with its first Star Alliance members in early 2020, and once implemented, will allow passengers to easily drop off luggage, enter airport lounges and pass through boarding gates. In some cases, passengers may also be able to clear security using the system. Onboarding passengers to the system is also designed with convenience in mind—a passenger can enroll using their mobile device and will only need to register once for any participating airline. “The service is opt-in and data is stored securely and in accordance with local privacy regulations,” points out Dr. Iwata.
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Opt-in for the service is likely to be popular, too. IATA’s Global Passenger Survey found that millennials want to spend less than 30 seconds dropping their bags off, and 65% of passengers would be willing to share additional personal information to speed up processing at the airport. According to IATA’s Economic Performance Report, consumers are already benefiting from lower travel costs and more routes, and will spend 1% of world GDP on air transport in 2019. This means people are travelling more, so the easier an airline can make it, the better. Dr. Iwata says the face recognition experience being deployed by major airlines
is just the beginning of a broader digital transformation. Airlines will be able to leverage face recognition technology to improve the efficiency of their operations, including using biometric services to identify staff members and allow access to sensitive locations. It will be useful to enhance customer service in-flight, too, enabling flight attendants to identify VIP passengers or passengers with specific needs. “The biometric services currently being used will expand to other services within the airport and eventually even to services outside the airport,” Dr. Iwata adds. “Airlines are in constant need of new products and services to increase revenue and to stay competitive.” As an example, airlines could further expand the use of face recognition technology to allow customers to pay for duty-free purchases, both within the airport and in-flight. Eventually, airlines could also partner with businesses outside the airport building altogether, such as hotels, retail outlets and attractions—offering seamless check-in and payment options. The ultimate goal is to make the entire experience of travelling just as efficient and convenient as the current biometric-enhanced airport experience. As biometric technology continues to mature and scale, airlines will have an increasingly broad and powerful portfolio of products and services to enhance the customer experience and to control costs.
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For more information, please visit www.nec.com
2019 – 05 Airlines
21/10/2019 08:45
60 seconds with...
Enrique Saiz, CEO, Wamos Air
“Flexibility is key due to the speed at which our industry is changing” How difficult is it to combine regular and charter flights and wet lease operations?
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One fourth of our business model is based on flights to the Caribbean, both regular and charter. Although our main business model is focused on Aircraft, Crew, Maintenance and Insurance (ACMI) wet lease operations, we find many synergies with the regular and charter operation. I believe that an airline must have its own identity and the fact that we operate our own flights, carrying our own passengers, gives us a better understanding of our wet lease client needs. This also allows us to offer our wet lease clients maintenance and operation bases, as well as crew availability at some well-known destinations. Is flexibility essential in today’s aviation market?
Flexibility is key to our industry due to the speed at which demand and the industry are changing, more so in wet lease operations, where we perform new operations constantly. We must adapt swiftly to our client needs, either for a punctual operation that must depart in a couple of hours or for a long-term operation anywhere in the world. We must be able to adapt the size and configuration of our fleet to demand in very short periods of time, which is particularly challenging given the typical duration of the aircraft leases. Does Wamos Air have any specific objectives?
Diversification is crucial. We have noticed that several wet lease clients are demanding young aircraft with new interiors to act as a substitute for their own fleet, especially in situations such as the problems experienced by many airlines due to the grounding of B787. But they also need aircraft for extra capacity during peak seasons or when they want to test new routes. Airlines 2019 – 05
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In brief… Wamos As a multi-faceted carrier, the airline’s business model is based on the three pillars of regular, chartered and wet lease operations Operating out of Madrid-Barajas Airport, Wamos Air has a fleet of 13 aircraft, including Airbus 330 and Boeing 747 models Wamos Air was founded in 2003, operating its first flight to Cancun
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destinations across
airlines
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Will travel and tourism be affected by increasing environmental pressure?
Tackling climate change is everybody’s job, and we support all efforts taken globally rather than a local patchwork of measures that are less effective. We are reducing our impact and our wet lease clients’ impact by replacing older aircraft with efficient models to reduce emissions. And we are stopping the use of single use plastics on our flights to the Caribbean. What challenges do you see for aviation in the near future?
The main challenge is the growth in competition. Wet lease was rare and volatile until a few years ago, but many companies have realized that it can work for them, since we can help solve their operational challenges in an efficient way. But the market is becoming competitive. It is necessary to differentiate yourself from your competitors by a client-oriented philosophy, so we definitely need to add value to the wet lease market by offering our clients tailor-made solutions, flexibility, aircraft reliability, and great service. airlines.iata.org
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WE’ RE CREATING A MORE CO NNECTED EVERYTHI NG Collins Aerospace has long been a leader in connected systems and services. Now, we’re creating an even more connected future. We’re linking key touchpoints and partners across the commercial aviation ecosystem – from passengers, airlines and airports to aircraft manufacturers, system suppliers and service providers. This connectivity is empowering the industry to unlock new insights that deliver improved efficiencies for operators and more seamless and rewarding travel experiences for passengers. It’s how we’re developing digital solutions to make big advances – and making connections that redefine aerospace.
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