IATA Airlines International October/November 2016 by Redactive Media Group

A I R L I N E S I N T E R N AT I O N A L O C T- N O V 2 0 1 6 - I S S U E 6 4

INTERNATIONAL ISSUE 64 OCT-NOV 2016

FIT FOR PURPOSE How changing airport terminal design will focus on the passenger experience

CEO INTERVIEWS: WestJet, Kenya Airways, InselAir

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BREXIT: What it means for air transport in the UK

DOCUMENTS: Verifying a passengerâ&#x20AC;&#x2122;s paperwork

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Airlines International

CONTENTS COMMENT

SPECIAL REPORT

24 The shape of things to come What can airlines expect from future passenger terminals and how much of a say will they have in their creation?

9 Alexandre de Juniac Aviation is in the business of freedom

AGENDA

FEATURES

12 IATA and Industry Update Beneﬁts of aviation; lithium batteries; cargo updates; ATC strikes

36 Seizing the Brexit opportunity Air transport will become more important than ever to the United Kingdom following its decision to opt out of Europe. But

CEO INTERVIEWS 18 Use your best judgement

what exactly lies in store for the aviation value chain?

Gregg Saretsky, President and CEO of WestJet describes why the carrier’s unique brand and culture are the foundation for continued proﬁtability 30

30 Leave nothing to chance Mbuvi Ngunze, CEO, Kenya Airways, explains the need for deliberate policies to help boost African aviation and diversity within the industry

Editorial Editor Graham Newton Sub editor Vanessa Townsend Senior designer Andrew Stanford Picture editor Claire Echavarry Production Production manager Jane Easterman +44 (0)20 7880 6248 jane.easterman@redactive.co.uk Publishing director Aaron Nicholls

DATA 48-49 Aviation’s environmental efforts

38 Breaking Out InselAir President and CEO Albert Kluyver on the speed of innovation in the industry and the need to break free of the commodity shackles

IATA Corporate Communications Vice President Anthony Concil Creative Direction Richard McCausland Assistant Director Chris Goater www.iata.org

44 Travel trouble Airlines continue to be ﬁned for boarding passengers without the correct documentation despite a much-improved performance in the last few years

SOAPBOX 50 Barbara Kracht Airlines must be prepared when it comes to crisis communications

Advertising Business development manager Nigel Collard +44 (0)20 7324 2763 nigel.collard@redactive.co.uk We welcome feedback, content ideas. Subscription and distribution requests should be made to: airlinesint@iata.org

Follow IATA on Twitter @IATA and join our LinkedIn group Published by Redactive Media Group, 17 Britton Street, London EC1M 5TP, UK +44 (0)20 7880 6200 www.redactive.co.uk

Printed by Precision Colour Printing Airlines International ISSN 1360-6387 The opinions expressed in this publication are those of the individual authors or advertisers and do not necessarily reflect those of Redactive, IATA or its members. The mention of specific companies or products in articles or advertisements contained herein does not imply that they are endorsed or recommended by IATA or Redactive. The paper in this magazine is elemental chlorine free (ECF), manufactured within ISO 4001 environmental management standards and is sourced from sustainable managed forests. All of this publication’s content is subject to copyright, design rights and trademarks of Airlines International and third parties.

INTERNATIONAL ISSUE 64 OCT-NOV 2016

FIT FOR PURPOSE How changing airport terminal design will focus on the passenger experience

CEO INTERVIEWS: WestJet, Kenya Airways, InselAir

BREXIT: What it means for air transport in the UK

DOCUMENTS: Verifying a passenger’s paperwork

Airlines International is available free for iPad and Android devices Download from the Apple and Google Play stores OCT-NOV 2016

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Comment • Alexandre de Juniac • Director General and CEO, IATA

My main objective as IATA DG and CEO is to help the business of freedom succeed by adding value to the industry.

THE BUSINESS OF FREEDOM

viation is a truly unique and amazing industry. This year 3.8 billion travelers and over 50 million tonnes of cargo will be transported safely by air. That activity will generate $2.7 trillion in economic activity. And it will provide employment to some 63 million people. Indisputably, aviation makes our world a better place. As I settle into my role as IATA’s DG and CEO, I am mindful of just how important aviation is. For Tony Tyler, my predecessor, the rallying cry was that aviation is a force for good. I have a complementary view about which I am also passionate. For me, aviation is the business of freedom. The jobs and opportunities created by aviation are vital to modern life. The benefits of friendships built across oceans, business concluded between continents or ideas exchanged across borders are immeasurable. Bridging vast distances with speed helps people build better lives. The business of freedom is powerful. I intend to tell the story of the business of freedom to all who will listen—especially our friends in government. In doing so, I will also remind them of three important points. First, the industry’s success cannot be taken for granted. Second, governments are critical partners—not spectators—for the industry’s future well-being. And finally, global standards are at the core of the economic and social value that aviation creates. By nature, I am a positive person. For me, IATA’s long “to do” list—battling excessive taxes, working with governments to replace onerous rules with smarter regulation, finding solutions to infrastructure constraints, improving the customer experience, modernizing

global standards, implementing sustainability measures and much more—means that this is a job full of great possibilities. Those possibilities will not be realized by IATA alone. Partnerships for change are absolutely essential. So are speed and innovation. The pace of technology-driven change has never been so fast. And our customers have never had so much information at their ﬁngertips. Meeting their evolving expectations—particularly for personalized products and experiences—will not be easy. My main objective as IATA DG and CEO is to help the business of freedom succeed by adding value to the industry. Part of that will be fulﬁlled by continuing our well-established agenda under the guidance of our Board of Governors. That’s why these themes will sound familiar. But continuity alone will not secure the future—for our association or for the industry. Innovation with speed must also be in the picture. In less than two decades our industry will double in size. While addressing the problems of the day, the business of freedom will require us to plan and work together with our partners and with completely open minds, for a potentially very different future… not that far from now! •

Alexandre de Juniac

OCT-NOV 2016

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The Big Picture

Many airlines helped to bring disabled athletes to the Paralympics in Rio.

E L B I S R S E O C F Y L C A AVE BOD TR ERY V E AIRLINES INTERNATIONAL

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Airlines International

irlines do their best to make air travel as comfortable and as seamless as possible for every passenger, including those with disabilities. Flying passengers with reduced mobility (PRMs) and other disabilities is fully supported by IATA and it is important PRMs have access to the services otherwise available to the general public. Governments also recognize how important air travel is for everybody and regulate accessibility accordingly. Most airlines offer extensive services to ensure this is the case. It includes special wheelchairs that fit in aircraft aisles, for example, passenger transfer kits that helps the passenger into their seat, and the ability to stow foldaway wheelchairs in the cabin, usually on a first-come first-served basis. And it’s not just physical disability for which airlines cater. Already, many airlines websites and applications provide access for blind people with the requisite technology. Most recently, airlines proved pivotal in making the Paralympics a success. Lufthansa, for example, was the official airline of the German National

IMAGE: GETTY

Paralympic Committee (DBS). Flight LH506 took 148 athletes, along with 94 guides, trainers, doctors and advisers, directly from Frankfurt to Brazil. “Flying the Paralympic team to the games in Brazil is a matter close to our hearts,” says Carsten Spohr, Chief Executive Officer of Deutsche Lufthansa AG. “As the airline of sport, Lufthansa has been promoting popular and professional-level sport for decades.” Lufthansa has been a partner of the German Olympic Sports Confederation (DOSB) for many years, which includes transporting the German team to the Olympic Games as well as services for the Paralympians. The airline is a national sponsor of the Deutsche Sporthilfe foundation and also cooperates with the German Football Association (DFB) and FC Bayern Munich. Similarly, British Airways was the official airline partner of Team GB and ParalympicsGB. Troy Warfield, British Airways’ Director of Customer Experience, noted that it was an “honor to fly the nation’s heroes and their precious medal haul.” Meanwhile, All Nippon Airways has already begun to prepare for the Tokyo 2020 Olympic and Paralympic Games. “In 2020, many people are expected to visit Japan,” says Osamu Shinobe, President of CEO of ANA. “An ANA flight might be the first “Japan” that visitors experience. In various situations, such as at the airport and in-flight, we will keep striving to provide exceptional service both in terms of hospitality services and fundamental facilities to people from all around the world, regardless of culture, language, nationality, gender, and disability. It is also our hope that our activities will become a bridge between Japan and the rest of the world.” • OCT-NOV 2016

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Agenda

Upcoming events... AVSEC 25-27 October Kuala Lumpur, Malaysia

AGENDA

Aviation Fuel Forum 8-10 November Hanoi, Vietnam

Aviation benefits go from strength to strength The latest Air Transport Action Group (ATAG) report, Aviation: Benefits Beyond Borders, reveals aviation supports 62.7 million jobs and generates $2.7 trillion in gross domestic product (GDP) worldwide. In the next 20 years, the report forecasts that global aviation-supported jobs will increase to over 99 million and GDP to $5.9 trillion. The highest forecast growth will be in regions with fast-developing aviation sectors, such as Africa, the Middle East and Asia-Pacific. These figures support the United Nation’s 2030 Agenda for Sustainable Development. “We found that air transport in some way supports 14 of the 17 Sustainable Development Goals, from decent work and economic growth to quality education and reduced inequalities,” said ATAG Executive Director, Michael Gill. “By continuing to grow in a sustainable manner, aviation can strive to be a force for good for many years to come.” The report, Aviation: Benefits Beyond Borders, covers the global aviation sector, with regional and some national analysis. It is available for download at www.aviationbenefits.org. •

aviation supports

62.7 million $2.7 trillion jobs and generates

in gross domestic product (GDP) worldwide

The highest forecast growth will be in regions with fast-developing aviation sectors, such as Africa, the Middle East and Asia-Pacific

IMAGE: SHUTTERSTOCK

Clamp down on rogue lithium battery shippers Together with leaders of the lithium battery supply chain, IATA has demanded stricter enforcement of international regulations regarding the transport of lithium batteries. In a joint letter to Ministers isters ters of Trade, Industry and Transport, and Directors o off Civil Aviation in the world’s largest lithium

battery manufacturing and export countries, IATA, PRBA, the US Rechargeable Battery Association, RECHARGE, the European Advanced Rechargeable and Lithium Battery Association, the Global Shippers Forum (GSF), an and nd the International Air Cargo o Association A (TIACA) hav have ve called for lithium b battery safety regulations tto be enforced at the

point of origin, including the initial shipper and the battery manufacturer. The letter also called for implementation of cooperative enforcement initiatives between jurisdictions to address situations where lithium batteries are manufactured in one country and driven over a border to be flown from another. The global associations also called for significant fines and custodial sentences to be imposed on those who contravene the regulations. A lack of enforcement is increasing pressure on airlines and regulators to unilaterally ban all forms of lithium battery shipments from aircraft, adding to the cost of global supply chains and consumer goods. •

AIRLINES INTERNATIONAL

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Airlines International

www.iata.org/events 139th Slot Conference 8-11 November Atlanta, US

e-Cargo Conference – Asia 9-10 November Bangkok, Thailand

Aviation Day Brazil 1 December Brasilia, Brazil

Legal Symposium 21-23 February Washington DC, United States

Cargo-XML standard wins approval

ICAO on Cusp of Historic Carbon Agreement

regulations, is due to begin within the next few months. The US-CBP is working to reduce the considerable number of Electronic Data Interchange (EDI)

more efficient. In addition, it will facilitate growth in trade, ensure cargo security, and foster participation in global commerce through advance electronic data submission for air cargo shipments. “Having support for Cargo-XML from the US-CBP, one of the world’s largest federal law enforcement agencies, will positively contribute towards the industry achieving its objective—the global adoption of a standard air cargo messaging system,” said Nick Careen, IATA Senior Vice President for Airport, Passenger, Cargo and Security. The US-CBP’s utilization of the new standards, developed from international

message formats currently supported to process international import, export cargo and cargo release information. IATA is assisting in this effort by permitting the US-CBP to publish to the minimal data file specifications for the IATA Cargo-XML messages. By adopting a common messaging standard—IATA’s Cargo-XML—for all air cargo shipments, the industry can be confident that the information being provided to the US-CBP is technically correct. The new messaging standard will also make it easier for US-CBP agents to identify freight that contravenes US legislation. •

and commitment to sustainability by joining.” IATA member airlines passed resolutions at their AGM in 2013 and again in 2016, calling on governments to implement a global market-based measure (GMBM) to help manage aviation’s carbon footprint. The GMBM must focus on real emissions reductions (not revenue raising for governments), take into consideration differing circumstances of airlines based on maturity of markets, and not distort competition. A GMBM must be implemented as part of the package of measures in the industry’s four-pillar strategy on climate change, and is a critical gap-ﬁller until improvements in technology, operations and infrastructure can fully realize the industry’s sustainability goals. •

IMAGE: GETTY

IATA will focus on ensuring global interoperability

US-CBP will use IATA’s Cargo-XML to increase its data efficiency

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IATA’s Cargo-XML messaging standard will be utilized by the US Customs and Border Protection Agency (US-CBP) to collect advance cross-border data on US export shipments. The new data format will make electronic communication between the US-CBP’s Automated Commercial Environment (ACE) system, airlines and other air cargo stakeholders simpler and

As Airlines International went to print, negotiations were continuing at ICAO to agree a Carbon Offset and Reduction Scheme for International Aviation (CORSIA) to keep aviation at the head of industries responsibly managing their climate change impact. “We have a pragmatic compromise in the current CORSIA proposal,” said Alexandre de Juniac, IATA’s Director General and CEO. “With some 60 states already committed for the voluntary period, momentum is building. We still need more states to demonstrate their leadership

IATA joins EUROCAE IATA has become a full member of the European Organization for Civil Aviation Equipment (EUROCAE). Since 1963, EUROCAE has developed performance speciﬁcations to facilitate the standardization of aviation technologies. It is a non-proﬁt international organization comprising manufacturers, service providers, airlines, airports, aviation authorities, and other stakeholders. IATA’s involvement will ensure global interoperability for aircraft systems, and increased efficiency across the aviation value chain. Reduced ground system fragmentation

and reductions in the cost of modernizing infrastructure are also on the agenda. IATA is also a member of EUROCAE North American counterpart, RTCA, Inc. This reﬂects the importance it attaches to stronger links between standardization efforts in North America and Europe. “EUROCAE’s work plays a crucial role in creating a stronger aviation system and we look forward to working with them in our shared objective to create a safer, more secure, and sustainable air transport industry,” said Rafael Schvartzman, IATA European Regional Vice President. • OCT-NOV 2016

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Agenda

Cuba reconnects to the United States

transformative product for airlines, passengers, and businesses. IATA has been working with the Cuban authorities and its member Cubana de Aviación, primarily on the airport side. Both ECASA, the Cuban airport operator, and Cubana have been trained in slot handling for the two busiest airports, Havana and Varadero. IATA has also

JetBlue 387 touches down in Cuba

offered to provide advice on the infrastructure side as Cuba’s airports expand and modernize. An imminent license from the US

IMAGE: GETTY

After more than 50 years without a regular air service between the two countries, Cuba and the United States have once again been connected by commercial aviation. JetBlue 387 had the honor of being the ﬁrst ﬂight, serving Santa Clara from Fort Lauderdale. By the end of the year, Houston, Los Angeles, New York, and Miami will also be connected with the Caribbean island. A federal affidavit is clickable on airline websites while Cuban visas are available at US airports. The short-hop from the southeastern United States is likely to be a

Government’s Office of Foreign Assets Control (OFAC) will allow the association to become even more engaged in helping Cuba fulﬁl its potential.•

IMAGE: GETTY

IATA and FIATA collaborate on new cargo program

Forwarders and airlines will jointly manage future rules

IATA and the International Federation of Freight Forwarders Associations (FIATA) have agreed to implement the IATA-FIATA Air Cargo Program (IFACP) to replace the existing IATA Cargo Agency Program. The new program moves decisionmaking on the rules governing the airline-forwarder relationship away from an airline-led conference to a governance body—the IATA-FIATA Governance Board (IFGB)—jointly managed by forwarders and airlines, reﬂecting today’s market conditions. “The IFACP also provides a framework to ensure that industry standards are relevant, pragmatic, and ﬁt for purpose,” said Aleks Popovich,

IATA, Senior Vice President, Financial and Distribution Services. “These standards cover the endorsement of freight forwarders and more broadly the safe, secure, and efficient transportation of air cargo shipments.” The phased rollout of IFACP will begin in early 2017 in Canada. It is anticipated that full global rollout will be completed by end of 2018. There is no immediate impact on the current IATA Cargo Agents as the current participants of the IATA Cargo Agency/Intermediary Program will be provided with a new IATAFIATA Air Cargo Program Agreement when the program implementation process begins in their country.•

AIRLINES INTERNATIONAL

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HOST CLOSER TO PREMIUM GUESTS Norbert Kettner, Managing Director, Vienna Tourist Board

Having hosted over 14.3 million overnight stays in 2015, Vienna is not only considered to be an international magnet for tourism, art and culture, but also a global player in its capacity as a conference location. Almost 80 % of Viennaâ&#x20AC;&#x2122;s conference visitors arrive by plane. It is for this reason that Vienna Airport is a key strategic partner for the Vienna Tourist Board, as both are hospitable, global, smart and premium.

viennaairport.com/closerto

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Agenda

IATA and BIAL improve airport processes IATA has signed a Memorandum of Understanding (MoU) with Bangalore International Airport Limited (BIAL). The agreement will enhance cooperation in various areas of airport operations, including security, passenger experience, cargo, airport development, consulting, and training. As part of the deal, IATA and BIAL plan trials of new technologies and processes at Bangalore International Airport. “This will place Bangalore International Airport in the forefront of airport operations,” said Conrad Clifford, IATA’s Regional Vice President for Asia Paciﬁc. “These trials will ensure that

rolling out the implementation to other Indian airports.” The IATA Fast Travel initiative, Passenger Facilitation program, and Smart Security are among the initiatives being considered as part of the MoU. “An important objective of the MoU is to promote the efficient development of civil aviation in India to meet growing demand,” Clifford continued. “By 2035, India’s passenger traffic is forecast to exceed 400 million passengers, more than double that of today. The industry will support 19 million jobs and $172 billion of India’s GDP. But for this potential to become reality, India’s airports

global best practice solutions can be appropriately adapted to the Indian environment, and will provide guidance for

need to have the necessary infrastructure capacity while implementing efficient processes that embrace the latest technologies.”•

By 2035, India’s passenger traffic is forecast to exceed

400 million passengers

ATC strikes hit Europe Blockchain shows industry potential Air traffic controller strikes have caused 1 million minutes’ delay across Europe this year. IATA has called for governments to take steps to ensure service continuity in the face of industrial action. “The current frequency of disputes is totally unacceptable,” said IATA’s European Regional Vice President, Rafael Schvartzman. “Every hour wasted impacts European productivity as

businesses are disrupted. The time has come for European governments to work together to ensure the essential service of air traffic control is able to continue even during strikes. “A starting point would be for each country to develop its own national airspace strategy, in consultation with airlines, which contains provisions for ensuring service continuity during periods of industrial action.” •

IATA is investigating the

the appearance of new

potential of Blockchain, a

business models.

technology that is having an

IATA is studying the

impact on many industries.

potential application of

“In its most basic form,

transport industry objectives.

of a given asset in a “block”

The assumption is that it

and historical transactions in a

would enable innovative and

“chain”, across a wide network

customer-centric products,

of computers,” says Juan Ivan

for example, as well as

Martin, Head of Innovation,

promote lean, seamless

IATA Financial and

end-to-end industry

Distribution Services. “With

processes. The global nature of

this digital medium, money,

the latter would assist with

stocks, bonds, and so forth can

the push for smarter

be moved, stored and managed

regulations. Security and

securely and privately.”

conﬁdentiality are also listed

Blockchain has the potential

IMAGE: PA

to disrupt a number of

Strikes have badly affected European businesses and passengers

Blockchain to support air

Blockchain records ownership

among Blockchain’s attributes. “Blockchain is an exciting

industries, as it generates by

new technology with the

design trust without a third

potential to reduce cost,

party. This is a paradigm shift

increase security, automate

that is creating opportunities

processes and accelerate

for disintermediation and

ﬂows,” Martin adds. •

AIRLINES INTERNATIONAL

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Airlines International

Advancing safety management through collaboration stakeholder, we have all experienced many of the same issues. But one thing we have learned is that aviation safety management will only be effective if we are united in our approach. We need to have a common understanding on how to work effectively together in the interest of safety.” A conference under the theme ‘A Decade in Review and the Vision Forward,’ will help to foster this collaborative approach. The event will be hosted by GCAA UAE and Etihad Airways, and will take place in Abu Dhabi, 25-27 October. The conference will discuss ICAO Annex 19 amendments and the move toward a performance-based, rather than

IMAGE: ISTOCK

Abu Dhabi is the setting for October’s conference

With a wide spectrum of successes and lessons learned from a decade of applying safety management requirements, the aviation industry is preparing for the future. This is particularly pertinent given that air traffic is projected to double within the next 20 years. This expansion must be carefully managed and emerging safety risks

need to be addressed proactively. “Over the past decade we have all had our challenges and successes in our respective disciplines with implementing State Safety Program and Safety Management System programs,” said Gilberto Lopez-Meyer, IATA Senior Vice-President, Safety and Flight Operations. “Be it a State, airline operator, airport, manufacturer, or any other

prescriptive approach to safety management. Annex 19 stresses the concept of overall safety performance in all aviation domains. It encourages the collection, sharing, and protection of safety data and safety information, as well as a positive safety culture. Full details of the conference can be found at: www.iata.org/events •

Dealing with Venezuelan blocked funds IATA has ﬁled a request for antitrust immunity with the US Department of Transportation to allow airlines to discuss options to maintain connectivity to Venezuela in light of the Venezuelan government’s continuing refusal to release $3.8 billion in airline funds. “The economic situation in Venezuela is grave,” said Alexandre de Juniac, IATA’s Director General and CEO. “And it will be made worse if airlines cannot maintain connectivity as the blocked funds issue drags on. Despite years of effort by IATA and its members to resolve the issue, there has been little action by the Venezuelan government. We are now asking the US government to approve antitrust immunity for discussions among airlines focused on maintaining connectivity while the blocked funds crisis persists.” Venezuela’s refusal to allow repatriation of airline revenues contravenes its obligations

under international agreements. Many bilaterals include provisions that require the timely repatriation of revenues to the home country of the air carrier. Since 2003, Venezuela has operated a currency control system that prevents foreign airlines from repatriating their funds

There is

$3.8 billion in airline revenue tied up in Venezuela

without government approval. By 2013, approvals to repatriate funds from Venezuela were not keeping pace with the amount of funds requiring repatriation and signiﬁcant airline revenue accumulated in the country. In 2015, only one request to repatriate funds was approved and there has been only one approval to date in 2016. “Carriers have been forced to cut back services in light of blocked funds issues,” de Juniac added. “That, unfortunately, limits the important role that aviation could play in reviving Venezuela’s economy. “To be clear, we are not planning to do anything that is anti-competitive,” he continued. “On the contrary, we are seeking to agree a global approach to allow our member airlines to keep Venezuela connected to the world and do business normally in a country that is not meeting its international obligations.”• OCT-NOV 2016

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In this interview • Principles • Expansion • Culture

USE YOUR BEST JUDGEMENT Gregg Saretsky, President and CEO of WestJet, tells Graham Newton how the carrier’s unique brand and culture are the foundation for continued profitability

How is the airline performing and what are the major challenges for WestJet? The airline celebrated its 20th birthday in February 2016. At the operating level it has been profitable for each of those 20 years while it has had 45 consecutive quarters of bottom line profitability. We are flying a record number of guests and we’re extending our reach all the time. Closer to home, our regional affi liate, WestJet Encore, has three years of operation under its belt, flying Q400s. It is also growing rapidly. The business is founded on two principles. First, there is a real desire to liberate our guests from the high cost of travel. And second, we want to do that on the back of a brand that is friendly and caring. The major challenge is the Canadian economy, which is fueled by the energy sector and is struggling. When the oil price goes down, so does the Canadian dollar. That means many of our costs gets more expensive, such as new aircraft and overhauls, because we pay for those things in US dollars.

AIRLINES INTERNATIONAL

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CEO interview

Gregg Saretsky: proud to be flying a record number of guests and extending WestJetâ&#x20AC;&#x2122;s reach all the time

OCT-NOV 2016

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CEO interview

We’re trying to navigate away from the softness in the market by starting new nonstop services on routes that nobody else is ﬂying.

Fluctuating oil prices affect WestJet’s costs

IMAGE: GETTY

Is your international expansion working as planned? We are introducing low fares across the Atlantic. It’s a very different business model for this market. There is a low base fare and then our guests have the opportunity to purchase ancillary products to tailor their journey. None of the incumbents does it in quite the same way. We know that people like what we are doing because, for example, our London-Gatwick service is heavily subscribed. The international routes are ﬂown on Boeing 767s. This ﬂeet will probably be expanded before we eventually move into the next generation of Boeing or Airbus widebodies. Can you continue to keep control of your costs as you expand?

Will the brand and company culture also withstand your rapid expansion? The WestJet culture and brand is absolutely critical. When it comes down to it, all airlines ﬂy the same aircraft and the business models are not really that different. So it is all about the brand. At WestJet, we CARE–which we say stands for “create a remarkable experience.” There is an owner’s mindset at the company and we have a number of projects that promote that concept. Most importantly, there is a share purchase plan. Employees can invest up to 20% of their pay in company shares and the company matches their commitment. They have to hold on to the shares for at least 12 months and after that they can trade them as normal. Many of our early employees have been made millionaires through the scheme. We are union-free because our staff view themselves as owners and don’t need a middleman to manage their relationship with our

When the oil price goes down, so does the Canadian dollar. That means many of our costs gets more expensive. leaders. Our people are engaged and empowered and I’m fond of reminding them there is only one rule: use your best judgement. When your people are completely invested in the company, it is very hard for your competitors to match your performance. Our guests know they are going to get a great experience. How important will customer-facing technology be to your passenger experience? Our focus now is on mobility. Some 80% of our guests fly with such mobile devices as smartphones and tablets. There is a high adoption rate for our mobile products and we actively encourage our guests to use them. They can make changes to their flights, book hotels and rental cars, and much else besides. And the icing on the cake is WestJet Connect, which we are in the process of rolling out across our fleet. There is 500 hours of free content accessible via Wi-Fi nodes on our aircraft, including six live TV channels. So our guests were able to watch the Olympics infl ight and can catch live broadcasts of their favorite sports and entertainment events.

IMAGE: ALAMY

WestJet is all about being as efficient and as productive as possible. The airline has invested heavily in self-service options. Guests book online, check-in online, self-tag their bags. We have put the power of travel into their hands. But, of course, we have staff ready and able to help should anyone require it. We also concentrate on a single fleet type. So WestJet Encore has its own operating certificate and flies Q400s. WestJet fl ies 737s on short-haul and 767s across the Atlantic. Cost control is about becoming experts in very specific areas and it’s built into our DNA.

Gregg Saretsky 2013: Awarded Top New CEO by Canadian Business Magazine 2010: WestJet President and CEO 2009: Executive Vice President, Opera 2009: Joins WestJet as Vice President, WestJet Vacations 1998: Joined Alaska Airlines as Senior Vice President, Marketing and Planning 1985: Joined Canadian Airlines

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Do you agree with the common perception that air traffic management in Canada is excellent while airports, though good, are too expensive? That is correct. NAV CANADA is held up globally as a role model. There has been no increase in its fees for the better part of a decade and because it is a not-for-profit organization, we are actually going to get some money back. Canadian airports are another story. The taxes and fees are among the highest in the world. Yes, we have some beautiful facilities but our guests are paying up to C$40 per person. In the United States, the passenger facility charge is $4.50. Canada is therefore nearly ten times more expensive. And because 80% of the Canadian population lives near the US border, many of them drive across the border and fly from US airports. We have to fi x this so we can grow in Canada. We want people to spend money on Canadian restaurants, Canadian taxis and Canadian hotels. So high taxes and fees hurt more than just air travel in Canada. 22

Will an agreement at the ICAO Assembly on a global scheme for managing emissions ensure carbon-neutral growth from 2020? I’m optimistic that there will be an agreement at ICAO. It is important for the Assembly to come up with a holistic approach for aviation. As WestJet expands internationally, we are very aware of the damaging patchwork quilt of measures that currently exists to manage carbon emissions. But the ICAO agreement is only the start. The industry must not stop doing everything it can to reduce carbon emissions. We are investing heavily in new aircraft and will take our ﬁrst Boeing 737 MAX in summer 2017. In fact, since 2000, WestJet has spent $3.8 billion on new aircraft and our fuel burn per passenger has decreased significantly in that time. With security necessarily becoming tighter, can the industry continue to process ever increasing passenger numbers at checkpoints? The focus is understandably on the security checkpoint. But processing a growing number of passengers at checkpoints is only part of the challenge. Eliminating crowds at checkpoints also eliminates the security threat posed from terrorists who may be attracted to them.

IMAGE: GETTY

Broadband connectivity is available through this system for a fee.

Canadian airport taxes are among the highest globally

So it is important to speed up the security checkpoint for two reasons. It will create a better experience for the passenger and it will minimize the risk associated with crowds. I think we can achieve a balance between robust security and faster throughput. We are already seeing important steps forward in trusted traveler programs, new technology and industry initiatives, such as Smart Security and one-stop security. If there is one thing you could change about the industry tomorrow, what would it be and why? Taxes and fees! They make low fares look high. The best low-cost carriers (LCCs) in the United States don’t ﬂy to Canada. Not because they can’t, but because high taxes and fees ruin their model. The US LCCs prefer to poach Canadian traffic at US border airports where Canadians can avoid these high taxes and fees. Even globally, the cost of infrastructure and the way that cost is structured must change.

Why have you decided to join IATA and what are the association’s strengths and weaknesses? IATA has a large membership of like-minded companies that are cooperating for the beneﬁt of all. As mentioned, WestJet is 20 years old and we are now in a position to look at the programs and initiatives IATA are bringing to the table. It is the right time for us to be part of the collective. Also, we subscribed to a number of IATA services and being a member will reduce the cost of using those services compared with ad-hoc purchases. So it was a straightforward business decision too. If there is one thing IATA could improve on, it is giving voice to the low fare business model. There should be more LCC members. It is surprising that Southwest is not a member, for example. Globally, the business model may be relatively new but to be truly representative of the modern aviation industry, IATA must give greater voice to LCCs. •

Our focus now is on mobility. Some 80% of our guests fly with such mobile devices as smartphones and tablets.

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In this report • Supersize terminals • Automated services • Connectivity

THE SHAPE OF THINGS TO COME IMAGE: ISTOCK

What can airlines expect from the passenger terminals in future and how much of a say will they have in their creation? Joe Bates investigates

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uch supersize terminals as Beijing Capital’s Terminal 3, Hong Kong’s Terminal 1 and Incheon International Airport’s Terminal 1 seem to have set the tone for the airports of tomorrow in terms of bigger and better. It certainly cannot be disputed that as commercial aviation has become more popular and aircraft have become bigger, so have passenger terminals. The trend continues today with the opening of Doha’s Hamad International Airport and planned 2017/18 openings of New Istanbul Airport and Beijing Daxing International Airport, the latter set to have a 700,000m2 Terminal 1 with a 5km-long façade from day one. Many others have plans to supersize. Indeed, so big are today’s passenger complexes compared with the past that Beijing Capital International

Airport’s gigantic 986,000m2 Terminal 3 is more than seven times larger than the world’s ﬁrst iconic terminal, the former TWA Flight Center at New York’s John F Kennedy International.

Attractive, functional, and efficient The aviation industry is constantly evolving, however, and the adoption of new technology over the next 20 or 30 years will change even the face of these airport terminal behemoths. Many of the passenger facilities we take for granted today may no longer be necessary. American Airlines agrees that times are changing and that the design of the passenger facilities will have to be more ﬂexible, sustainable, and more experience-focused than ever before.

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Beijing Capital International's imposing Terminal 3

IMAGE: GETTY

Greater attention must be paid to often overlooked airside facilities such as holdrooms, which today, for the most part, are bland and dull. The carrier’s Managing Director Government and Airport Affairs, Rhett Workman, is also adamant that airport operators must work in collaboration with the world’s airlines to avoid creating facilities that are inefficient, overly expensive and difficult to maintain going forward. He says: “We just want facilities that are attractive, functional, efficient and work for us from an employee and customer perspective—Taj Mahal-type buildings with waterfalls aren't the number one priority as they are expensive to build and maintain. “The design of passenger terminals also needs to be ﬂexible so that facilities can easily be reconﬁgured to adapt to change,” he continues. “As we all know, the aviation industry is not static and change is constant. For these reasons, it is very important for us to have a seat at the table from day one when new facilities are being planned, designed, and constructed.” Workman—who until recently was chairman of the IATA Airport Working Group which looks into global best practices at airports—adds: “We work hard to involve ourselves in the airport planning process as nobody wants to see millions of dollars spent on facilities that are inadequate for our cur-

rent and future needs.” “If airport X in city Z tells us that they are building a new terminal, that’s great. If it is needed, we will support it. However, American serves over 330 airports across the globe. We have a lot of experience and we know what our customers want, so we would like to bring that knowledge to the table during the planning and design process.” In terms of passenger facilities going forward, Workman says that American expects that new technology and changing passenger habits will impact heavily on what the future brings. Technology over the next several years will rapidly change how passengers experience airports. He reports that American is working hard with its airport partners to create facilities for today’s passengers. Check-in areas will get smaller as passengers essentially bypass them, and holdrooms will become much more interesting and exciting places than they are today. “They need to be, as this is where passengers traditionally spend most of their time at airports,” notes Workman. “We are already beginning to make changes where we can by installing new restaurant/lounge-style seating, each of which is equipped with an iPad, power ports, and a credit card swipe that allows customers to come in and order food and shopping and have them delivered to the gate. “We are doing this in collaboration with

food and beverage operator, OTG, and it is already transforming the passenger experience and how people use airports.”

Game changing new technology The traditional airport Departures Hall is another area ripe for improvement. It is unlikely they will be necessary in their current format in a decade’s time, let alone in 30 years. The increased adoption of self-service technology, utilizing kiosks at the airport and mobile technology, is having a transformative effect on airport terminal design. IATA has played a leading role in this process through its Fast Travel program, creating the standards which provides selfservice options in six areas (see panel on page 28) giving more choice and control to passengers, and lower costs for the industry. The ability to check-in and print bag tags at home means that things are already beginning to change. Indeed, easyJet recently installed the world’s biggest bag-drop area at Gatwick. Meanwhile, planned self-service terminals at Singapore Changi and Québec City Jean Lesage International Airport, to name but a few, means that traditional check-in desks could shortly begin to disappear altogether. Explaining Québec’s decision, its Vice President of IT, Marc-André Bédard, notes: “The initiative will help increase the airport’s

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capacity and is being driven by our desire to offer better services to passengers who want to go through the airport quickly and easily. Other advantages of self-service technology include greater efficiency, more space, and more ﬂexibility. “For us, future terminal facilities should be fully automated and passengers would be able to go through the airport process in a simple and efficient manner using a single biometric identity token that would be valid at every airport they go through,” he continues. “This will bring the passenger experience to another level. Fluidity, speed, and simplicity have to be the essence of it.” Chris Hope, easyJet’s head at Gatwick, also insists that meeting passenger expectations was the primary motivation behind its decision to support the airport’s decision to invest £36 million on 48 self-service bag drop machines across a 5,000m2 area. “The new self-service kiosks provide a glimpse into the design of future check-in halls and enable our customers ﬂying from London Gatwick to have unique use of the most innovative state-of-the-art facilities,” he enthuses. Unisys’ VP of transportation for North America, Terry Hartmann, agrees that IT will play a huge role in the future. He believes new passenger facilities will be radically different to the US airports of the 1960s. “They will be green; convey a sense of space; offer calm and tranquility; have unobtrusive security screening; be a fun place to go,

The introduction of virtual reality and gaming technologies are just two of the things Smith says Stantec are discussing with airports that want to create new airport experiences. with a variety of shops and retail offerings and quality dining; boast reception lobbies that are spacious; have self-bag drop and roving assistants; be terrorist and cyber secure; and, above all, fully support the mobile passenger experience with seamless Wi-Fi and wayﬁ nding.”

Back to front Many of the world’s leading airport architects believe that the disappearance of grandiose Departure Halls will be one of the ﬁrst noticeable big changes to happen in airport design. Ben Lao, Managing Director at Ben Lao and Associates, says: “The technology-driven transformation of the airport check-in process means that it is time to re-think the philosophy of concentrating so much on the

front-end of the terminal and focus more on making concourses less conﬁning and more inspiring places.” He suggests that future passenger facilities will have double-deck concourses and enlarged holdrooms, and also believes that space-intensive procedures and processes, such as baggage handling, might be handled in separate buildings. This would free up huge areas for other activities or simply mean that terminals can become smaller. “Resizing the terminal lobby footprint for the outbound function and relocating the baggage sorting areas will reduce the overall passenger terminal building by as much as 20%, if not more,” he adds. “Furthermore, scanning luggage away from the terminal will heighten the safety index of those who at one point or another occupy the building.” Another architect, Stantec’s Executive Vice President, Stanis Smith, also believes that passenger terminals will contain very different facilities than they do today with more airside space needed for facilitating and entertaining passengers and less landside for processing travelers. “Technology is enabling the processing functions within an airport terminal to be completed more efficiently using less space,” he says. “This is arguably the single biggest paradigm shift in airport design to have happened in decades and means that the era of the grand check-in hall is over.” He adds that technology will also decrease the space needs for customs and immigration

PASSENGER EXPERIENCE DEPARTURE 01 Pre-travel

02 Ticket insurance

03 Check-in

04 Document scanning

05 Authorisation to proceed

06 Baggage processing

Document check 08 Security access

09 Security screening

10 Flight re-booking

07 Immigration and control

ARRIVAL 11 Boarding

FLIGHT

12 Immigration entry control

13 Baggage collection

14 Customs

Transfer

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In this report • Supersize terminals • Automated services • Connectivity

be treated as transient spaces rather than ceremonial ones.” He points to the recent relocation of the entire pre-security retail/food and beverage program in Toronto Pearson’s Terminal 3 to post security as an example of what he believes is the shape of things to come. The introduction of virtual reality and gaming technologies are just two of the things Smith says Stantec are discussing with airports that want to create

The six areas covered by IATA’s Fast Travel program are: O Check-in:

offering self-service check-in at the location, on the web or via a smartphone O Bags ready-to-go: self-tagging and fast baggage drop-off O Document check: automatic verification of documents O Flight rebooking: giving passengers self-service options in case of disruption O Self-boarding: self-scan of the booking token at the gate O Bag recovery: a self-service option for mishandled bag claims The industry target is for 40% Fast Travel penetration by the end of 2016. At the end of September, 34.5% had been achieved. The program vision is for 80% of passengers worldwide to be offered a complete suite of products by 2020.

Self-service technology is transforming the way passengers utilize airports

IMAGE: GETTY

processes, as automated passport readers become commonplace. However, he doesn’t necessarily think that terminals will become smaller, instead believing that airside areas will become bigger as gateways concentrate on enhancing the post security airport experience. “Over the past few years, many airlines have increased the number of seats on their aircraft, and have increased their load factors. Low-cost carriers in particular have reduced on-board services. All of this has put pressure on terminals to provide more space for passengers who are waiting for their ﬂ ights, and has increased the need for airports to provide better and more comprehensive service offerings, particularly food, beverage, and retail,” says Smith. “The terminal of the future will therefore celebrate the passenger experience functions ﬁ rst, and while it will also provide appropriate accommodation for the passenger processing functions, those will

new airport experiences.

The future is now Arguably, the passenger terminal of the future is being built today at Dubai World Central–Al Maktoum International Airport (DWC). According to operator Dubai Airports, it will be developed as 12 medium-size terminals on one site rather than as one giant hub ultimately capable of accommodating 200 million passengers. Under its blueprint, DWC will comprise 12 nodes, built across the airport’s vast 140km2 site. Each of the nodes will be

Airlines that achieved the Fast Travel Platinum Award O Alaska

Airlines 96% 90% O Air New Zealand 89% O SAS

O Hawaiian

Airlines 89% Regional Aviation

O Braathens

AB 88% Airways 87% O Air Canada 82% O QANTAS 82% O Saudi Airlines 81% O Qatar

(Percentage of airline passengers having access to Fast Travel products)

equipped to handle 20 million passengers per annum and act as identical, self-contained, independent facilities, effectively creating 12 different airports. Dubai Airports CEO, Paul Griffiths, says that this format will make DWC one of the most “customer centric” airports on the planet. Nobody will have to walk more than 400 meters to a connecting fl ight. “In my view, we are heading in the wrong direction by building ever-bigger terminal buildings because bigger is not necessarily better,” says Griffiths. “It inevitably means longer walking distances, less intimate experiences, and greater difficulties for customers making connections. And, let’s face it, there’s hardly any statistic that’s more important at a connecting hub than the ability for passengers to conveniently and easily connect between fl ights. “We will be creating something that is manageable, navigable, and easy to use at Dubai World Central and it is all being enabled by technology,” he adds. With a maximum 8km distance between hubs, Griffiths says the onus will be on Dubai Airports and the airlines to ensure that inbound passengers enjoy swift and hassle-free journeys through DWC by assessing operations on a daily basis and directing fl ights to the best connecting nodes for the bulk of its passengers. He adds that airports have to learn to treat every customer as an individual, and every individual differently, as no people are the same. “All travelers have different needs, and IT will prove key in helping airports achieve greater personalization,” he concludes. •

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27/09/2016 11:15

In this interview • Infrastructure • Visa restrictions • Diversity

IMAGE: REUTERS

There is no question that we need to improve the infrastructure in Kenya and in Africa generally.

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LEAVE NOTHING TO CHANCE Mbuvi Ngunze, CEO, Kenya Airways, explains the need for deliberate policies to help boost African aviation and diversity within the industry. Graham Newton reports 31

How is the airline performing and what are your expectations for the year? The airline’s performance is improving but we’re coming from a very tough environment over the past few years. There was a perfect storm in terms of the outside challenges we faced, such as poor economic conditions, but we must also admit to our own commercial weaknesses. I’m sure 2016 will be a turnaround year for the airline. We will still be operating at a loss and there are still challenges, such as the strong US dollar, which affects our cost base. But our development will be clear to see. The airline has a good strategy in place and we should see that beginning to bear fruit in 2016 and improving the airline further in 2017. How important is SkyTeam to the airline’s business? It is crucial. We ﬂy into a number of SkyTeam hubs and we leverage the SkyTeam network. It is certainly boosting our passenger numbers, which are at a record high, and that is giving more people the chance to experience our product. About 10%-15% of our passengers come through our SkyTeam partner.

What do you see as the major challenges to Kenya Airways’ growth? There is no question that we need to improve the infrastructure in Kenya and in Africa generally. That means more investment in, and better management of, both airports and airspace. If you take Nairobi as an example, we are only just beginning to see the semblance of a proper terminal structure after the ﬁ re Jomo Kenyatta International Airport suffered in 2013. Finally, we are getting a hub that we are able to sell. As for Africa as a whole, there needs to be much more investment on the ground and in the sky to improve efficiency. The continent is an expensive place to do business. And that will make it tough for any African carriers to achieve sustainable proﬁtability. How are you looking to expand your network? Today, 60% of our revenue is generated in Africa. We will keep that focus. As an African carrier, clearly the continent is going to be the source of most of our revenue going forward. We need to make sure we can connect Africa through our hub and leverage that connectivity to places that we serve OCT-NOV 2016

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IMAGE: GETTY

Nairobi’s Jomo Kenyatta International Airport was badly damaged by fire in 2013

internationally, especially SkyTeam hubs and other destinations served by our SkyTeam partners.

The aviation fuel price in Africa is generally at least double the world average.

Do the visa restrictions in Africa affect your decisions? I would love to see an Africa that operates visa-free. Most countries are many decades on from independence but we still have visa restrictions in place across most of Africa, despite governments saying they want the free movement of people. For me, this is a priority. Removing visa requirements would stimulate the movement of people and goods in Africa and boost economies.

How important is cargo to your operations? We had been a bellyhold-only cargo carrier for a long time. Then, a couple of years ago, we decided to convert two Boeing 737s into freighters. We want to help feed and de-feed Nairobi, which is the second largest cargo hub in Africa by volume. People are using us to feed into the region. And we are looking at how we can do

more further afield. Air cargo is a challenging market however, and we want to work with partners rather than get into it too much by ourselves. We have been part of the e-freight initiative. We desperately need to simplify, reduce the cost and make cargo processes more transparent. So e-freight will definitely contribute to a stronger cargo sector.

Governments cite security concerns but these should be handled by the security organizations. It should not be used as an excuse to unnecessarily restrict freedom of movement. The point is that you cannot make the most of connectivity if you do not have visafree regimes. Being visa-free and loosening the many restrictive regulations would encourage African carriers to partner more. That would make a big difference because many African routes are very thin. In turn, we could then look at the aircraft we ﬂy and gain further efficiencies in that way. What else can the African governments do to allow aviation’s benefi ts to take effect? There are a number of areas where governments can assist the industry and so develop their own economies. Take fuel taxes and fuel policy. The aviation fuel price in Africa is generally at least double the world average. Also, ground handling is often a monopoly and so costs are high. And we have talked about the infrastructure. Governments need to understand the effect their aviation policies have on the beneﬁts of the industry, including GDP and job growth. Even in Kenya, there is a misalignment between government policy and aviation growth and that is holding back our ability to develop. The way Singapore has

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grown shows what a positive aviation policy can do for a country. There must be a more systematic approach to air transport policy.

Girls need to be educated to take more of an interest in science subjects

IMAGE: ALAMY

Can more be done for African safety? You can always do more but African carriers have done a lot of work already. They deserve a lot of credit because they have invested heavily in safety improvements and we all understand that safety is our license to operate. The African Airlines Association (AFRAA) is also playing its part and its regulations have been changed so that any carrier wishing to join has to be on the IATA Operational Safety Audit (IOSA) registration list. Carriers are also cooperating more on safety issues. Kenya Airways works with other carriers to help them get IOSA registration and to improve their safety generally. But again, governments must play their part in the regulations they pass and enforce, and the aircraft they allow to be registered and used. Even so, it is a positive story and the improvement in the African safety record speaks for itself. Diversity within the industry has become a hot topic. What is the airline doing in this respect? Aviation is a diverse industry and Kenya Airways is certainly a diverse organization. We have about a 50-50 mix between men and women. But this mix doesn’t apply across all departments. We need more female engineers, for

SPLIT OF MALE AND FEMALE PILOTS 450 male pilots 50 female pilots Female 11%

Male 89%

We need more female engineers, for example, and we are studying how we can attract them. It is an opportunity to think about how we are presenting the industry to potential recruits.

example, and we are studying how we can attract them. It is an opportunity to think about how we are presenting the industry to potential recruits. It is also about education and trying to convince more girls to take an interest in science subjects. We have not done a bad job when it comes to pilots. Out of some 450 pilots, about 50 are female. And the ﬁ rst female 787 pilot worldwide was trained at Kenya Airways. So we are doing well, but it is something on which you have to have a deliberate policy. We shouldn’t be leaving it to chance. Tell us about the industry initiative to prevent illegal trade in wildlife and your decision to take a lead role? First, I want my children and my grandchildren to have something left to enjoy. But

also, if I think about the future and why people will come to Africa, aside from the beaches and the weather, wildlife is the crucial factor. So it is important to be involved for those two reasons. We owe it to future generations to protect what we have today. So we all need to contribute and ask how we can work together. The fact is that there is illegal wildlife trafficking in many areas of Africa. And if we can do something as an industry then we must do it. We should be at the forefront. Of course, we are not the enforcers, but we can do a lot in terms of awareness. Kenya Airways markets extensively to its passengers and we make sure our staff are knowledgeable. We cooperate with the wildlife authorities and the police, and we lobby through international organizations. IATA is important to us because it helps the airline to lobby on many of the issues I have mentioned. The cost of doing business in Africa is one example and improving connectivity and the potential for partnership across the continent is another. It is also working to free blocked funds, which is important to African carriers when proﬁt margins are so tight. In short, IATA is driving the maturity of the African industry through its efforts. •

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27/09/2016 11:18

In the feature • Brexit • Air transport agreements • Airport expansion

SEIZING THE

BREXIT OPPORTUNITY Air transport will become more important than ever to the United Kingdom following its decision to opt out of the European Union. But what exactly lies in store for the aviation value chain? 36

he United Kingdom’s vote to leave the European Union—so-called Brexit—has highlighted the value of air connectivity. Now, more than ever, “the world needs to see that Britain is a truly global nation,” says John Holland-Kaye, Chief Executive of Heathrow Airport. “We need to stand confident on the world stage, showing what we have to offer to far flung corners of the globe.” The nature of future air services arrangements between the United Kingdom and Europe will be central to the success of such a policy. As it stands, a completely open market exists with UK carriers able to operate as they see fit within Europe. A key question is whether the Brexit negotiations will allow this state of play to continue. If not, a separate bilateral arrangement between the UK and the EU may be necessary. Moreover, new agreements with such other major aviation markets as the United States and Canada—covered at the moment by EU-level policy—would also be needed. T he EU h as seven comprehensive, multilateral, air transport agreements in place with Third Countries. And it has already started working on EU-wide bilaterals with China and the ASEAN states. Re-negotiating all these agreements as an individual country would involve a host of factors and could have far-reaching effects on UK carriers as well as

carriers that rely heavily on the UK market like Ryanair. The end result could push up prices and pull down the shutter on airline connectivity. An alternative to new bilateral arrangements would be UK membership of the European Common Aviation Area (ECAA). This extends beyond EU borders to countries such as Norway and Iceland. In total, it covers 36 countries and 500 million people. While the United Kingdom would have no problem in meeting ECAA requirements, membership does require a broad acceptance of EU policy and close economic cooperation. A potential spanner in the works is the forthcoming new EU Aviation Strategy. Accepting it would be essential to joining ECAA but only EU countries are allowed input into its ﬁnal form. Should the United Kingdom authorities feel there is a misalignment with its

The biggest export through Heathrow by volume is high quality salmon, worth £280 million to the Scottish economy

own aviation policy, there is little recourse but to refrain from joining ECAA. In short, given that the United Kingdom has voted to leave Europe, how likely is it to accept EU aviation laws and broader EU policy over which it has no inﬂuence? The timing must also be a consideration. Legal uncertainty—which may dampen the expansion of air services—will doubtless result if arrangements are not concluded before the United Kingdom leaves the EU. Brexit predictions The airline response to date has been a mixed bag. IAG is reported as saying Brexit is not expected to have a long-term impact on its business, while easyJet noted that there had been “no noticeable change in passenger booking behavior” in the aftermath of the referendum. Delta Air Lines, on the other hand, said in a statement: “With the additional foreign currency pressure from the steep drop in the British pou nd a nd the econom ic uncertainty from Brexit, Delta has decided to reduce six points of US-UK capacity from its winter schedule.”

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Brexit

It’s not just exports either. Holland-Kaye cites the example of Jacobite Cruises, which has been running tourist cruises on Loch Ness in Scotland for 40 years. It has increased passenger numbers 12% since British Airways reinstated the Inverness route to Heathrow earlier in 2016. Engine of Brexit growth If this utopia of trading greatness is to be built on air travel, airport expansion becomes critical. The debate rumbles on, but should a UK Government ﬁnd the political will to push a project through, it’s a straight shootout between Heathrow and Gatwick. Both sides are ﬁghting their corner furiously. A report by the Centre for Economic and Business Research (Cebr) has been hailed by Heathrow as it notes that an expanded Heathrow Airport will be an “engine of Brexit growth, driving opportunity up and down the United Kingdom.” “If we are to succeed outside of the European Union, every choice the government makes

IMAGE: SHUTTERSTOCK

Whatever happens, the full effects of Brexit will take time to materialize. Preliminary estimates, however, suggest that the number of UK air passengers could be 3%-5% lower by 2020, driven by the fall in the sterling exchange rate and the expected slowdown in economic activity relative to a no-Brexit scenario. The scale of any impact on passenger demand will, of course, depend on the shape of future arrangements between the United Kingdom and the EU as well as other trading partners. Regular connectivity Meanwhile, Heathrow’s Holland-Kaye has used Brexit to call once again for Heathrow expansion. “Our next Prime Minister can send the strongest possible signal that Brexit Britain is open for business and confident

in its future by expanding Heathrow,” he says. He believes that Brexit success will rely on a rebalance of the UK economy toward exports and the entire United Kingdom having the ability to trade globally. “You may be surprised to learn that the biggest export through Heathrow by volume is high quality salmon, worth £280 million to the Scottish economy,” he reveals. “Regular connections from Heathrow mean fresh salmon can get from the farm in Scotland to the seafood market in Tokyo within 24 hours. Think how much more could we export, with more ﬂights from Scottish cities to Heathrow, connecting to 40 new long-haul destinations.” Similarly, Miller Manufacturing, based in the UK’s northeast, export their specialist construction equipment via Heathrow to Australia, China, India, and the Middle East. Six ﬂights a day connect Newcastle to Heathrow and from there to every corner of the world.

must aim to deliver a stronger, more competitive economy and seek to encourage growth in the regions, as well as in London,” says Vicky Pryce, Cebr’s Chief Economic Adviser. “On both those measures, this report shows Heathrow’s future will be crucial in reducing the uncertainties of a post-Brexit world.” Using the Government’s own independent Airports Commission ﬁgures, the Cebr report also found that Heathrow expansion could boost the UK economy by as much as £24,500 of GDP per family. By 2030, a third runway could provide enough additional tax revenue to allow the government to hire 68,000 police officers or over 76,000 secondary school teachers. Alternatively, the extra revenue by 2060 could be used for a 2.5% cut in value-added tax. Gatwick is arguing its case strongly. Following the Brexit vote, Stewart Wingate, Gatwick CEO, said: “It is now clearer than ever that only Gatwick can deliver the new runway Britain needs, to provide the direct connections to North America, South America, Europe, the Middle East, and Asia that we all want, because only Gatwick can balance the economy and the environment. “In these uncertain times that means Gatwick can give the country certainty of delivery,” he added. “And Britain cannot afford yet more delay.” He believes that the airport, situated to the south of London, would help improve the United Kingdom’s international competitive position by offering the fastest possible improvement to its trading links at a time when it is most necessary. •

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In this interview • Strategy • Business use • Connections

BREAKING

OUT

InselAir President and CEO Albert Kluyver talks to Perry Flint about the speed of innovation in the industry and the need to break free of the commodity shackles

You were an investment banker, so how did you get involved in running an airline? In 2004, the Curaçao government was pushing for the private sector to take over the airline and the staff were asking for the same thing. I was doing a lot of merger and acquisition work at the time so the government advised the people working for the airline to see if they could get my company to put a deal together. We were not the only group trying to set up private airline at that time but we were the only one that succeeded. A few years later, Aruba was in the same situation and we were able to start there too. There are two different operating licenses for Curaçao and Aruba, but we are branded as one airline. We market our services in multiple markets in the Pan-

American region, so operating as one brand makes sense. And it also saves on the marketing costs too. Can you tell us about your fleet plans and interline strategy? InselAir has expanded and established a relevant foothold in the region. Together with our current strategy, this attracted the interest of key stakeholders to join us in the planned expansion. Right now, we are open and engaged in negotiations for a strategic partner to help us to renew and upgrade our fleet. The main aim is to increase the airline’s reach in South America and North America. We fly Fokker 50s, Fokker 70s and MD 80s, but we need to serve longer destinations in South America and improve connectivity. At the moment, our longest fl ights are

about three hours, to places like Quito, Manaus, and Miami. In terms of interlines, we have agreements with almost all airlines that ﬂy into Curaçao and we are certainly open to more partnerships. There is a growing demand from our network of 25 destinations for long-haul connections. So it works for both partners as well as for our passengers. Amsterdam is the biggest part of this aspect of our business. Is InselAir a leisure or business carrier? Despite the impression many people have, InselAir isn’t just about tourism. In fact, most of our routes have business travelers. There are consultants, lawyers, IT personnel and so forth that are working for companies with a regional reach and use us to connect with the islands and with South America.

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CEO interview

Albert Kluyver sees so much potential in the regions InselAir operates in

OCT-NOV 2016

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CEO interview

IMAGE: GETTY

InselAir isn’t just about tourism – business travelers are on most routes

In addition to business travel, in Curaçao there are lots of people from South America and from the other Caribbean islands, so there are a lot of people visiting families and friends going back and forth. Are there unique challenges for airlines in the Caribbean? The unique challenge has to be the extremely high cost in taxes and distribution relative to the price of the ticket. The region is not big, but there are a lot of islands. What that means is that even a 10-minute trip can be an international service and so the taxes are the same as if we were doing a 10-hour fl ight. Up to 60% of a ticket price can be taken up by taxes and distribution costs. It is too much. We need to fi nd a solution. Intra-Caribbean traffic is the only major market where air traffic has declined in the last 10 years. The only reason for the decline is the high price of a ticket. You connect to South America where you must compete with larger airlines. How difficult is that? We fly a lot to South America, so our business model is a little different than other Caribbean airlines. In fact, our focus is on South

Despite the impression many people have, InselAir isn’t just about tourism. In fact, most of our routes have business travelers. America and connecting that with North America as much as it is on connecting the Caribbean islands. Historically, a lot of South America traffic connects through our islands because, geographically, we are on their doorstep. That gives us a good platform and a unique competitive advantage. In any case, we are happy to compete. We have added Antigua and Barbados to our expansion plans and we are always improving our connectivity. It makes sense for many South American travelers to ﬂy with us and connect to other places in the region and to North America too. You even connect Cuba and the United States? Yes, that was something we felt we had to do. It wasn’t easy to get but eventually we managed to get some 7th freedom rights. We freed up

some capacity and we used that for a charter program connecting Cuba with the United States. Even though the United States is now starting scheduled services, there is still business there for InselAir and we will look at scheduled services. But we will also look at using some of the capacity elsewhere too. What does New Distribution Capability (NDC) mean for InselAir? NDC means we will get information about our customers that we simply didn’t have before. As mentioned, InselAir isn’t just about the leisure traveler, but we are a carrier that ﬂ ies into a lot of tourist destinations. A lot of those tourists want to book their full trip and not just an air fare. The ticket price is only part of a complete package. People want to know what they are going to spend and what they are going to experience. NDC enables us to fulﬁl these requirements through all channels. Before, this was a manual process. Now, we can sell the complete package electronically and have it settled electronically. It saves people paying for a rental car separately, for example. I actually wanted to do this 10 years ago and so we took the opportunity to participate in NDC immediately. I asked IATA to join

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21-23 February, 2017 LEGAL SYMPOSIUM

WASHINGTON DC

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CEO interview

the pilot program and fortunately that request was granted even though we are a small airline. But because we are a small airline the changes are easier to implement and as of October we will have a direct channel available that we can use commercially. Do governments understand the value of aviation? There are some taxes being cut. But the basic premise is that what tourists spend in a country is far more than a government gets in aviation taxes. Caribbean governments have to see the economic value of getting people into their country. If that happens, it would demonstrate understanding. We have developed a lot of new connections and our experience shows that traffic grows quickly. Because when people have the opportunity they choose mobility and that boosts the economy, locally and regionally.

IMAGE: GETTY

loyalty programs give airlines part of that information, but it is not enough. That lack of knowledge about our customers pushed airlines in a corner and made us a commodity. And that is why the industry had low returns for so long. I’m happy that initiatives like NDC that are being pushed by IATA are changing that, but it cannot happen fast enough. EDIFACT had been going for how many decades? And to be honest, XML, which the NDC standard is based on, has been around since the 1990s. There is a big role for IATA to play to ensure the industry acts quickly.

Does the industry need to help itself by

Finally, what is the single biggest challenge for InselAir right now? It has to be strategizing for the future. The region that we operate in has proven to have a lot of potential and demand is growing in many of our markets. At the moment, we are at a crossroads and starting a new phase in terms of the equipment and the routes we ﬂy

innovating faster? Absolutely. When I started the airline, I was astonished that we could not get the history of the passenger or make connections to other products. That is something the banking industry had been doing for a long time. Airlines need that insight and it was not there. Some

while being open for discussions with potential strategic partners. Of course, governments, and the host of taxes, are a challenge. But there is nowhere in the world that couldn’t beneﬁt from better government policy so that is not a challenge unique to InselAir. •

Are the blocked funds in Venezuela affecting your airline? Of course. But we have to work with Venezuela to solve the problem. It is not so much their unwillingness to free the funds that we have to combat. Obviously, there are many challenges for the country at the moment and so we have to work with them and not against them.

The main aim is to increase the airline’s reach in South America. We fly Fokker 50s and Fokker 70s at the moment but we need to serve longer destinations in South America and improve connectivity

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In association with

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IIn n tthis h hiss fe feature a re • Costs Co s • Legislation isl s • Software ware

TRAVEL TROUBLE Joe Bates discovers that airlines continue to clock up fines for boarding passengers without the correct documentation despite a much-improved performance in the last few years

AIRLINES INTERNATIONAL

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Document verification

f you thought that passengers traveling with the incorrect documentation was a minor issue for the world’s carriers, think again. The 60,000 travelers turned back at destination or transfer points by immigration authorities each year cost the world’s airlines a substantial amount of money in fi nes and associated costs. Fines average out at $3,500 per passenger, and airlines then have to fly the incorrectly documented traveler back to their country of origin at their own expense, potentially taking a seat on a fight that they could have sold to a fare-paying passenger. IATA’s research indicates that one in every 25,000 international passengers boards a fl ight with the incorrect documentation, resulting in a fi ne for the airline. This might not sound a lot, but for a relatively small air-

Mitigating circumstances Globally, ﬁ nes are going up. One European country recently introduced a €10,000 penalty, while South Africa has announced its intention to introduce a ﬁ ne. The United States alone will collect a minimum of $2.3 million in airline fines this year if Customs and Border Protection (CBP) decides to impose

the current maximum penalty of $4,300 for each of the 545 violations to date in its 2016 fiscal year. The total does not include the number of passengers that arrive with fake or forged passports, as it generally does not hold the airlines responsible for passengers traveling with fraudulently obtained travel documents. Kenneth Sava, Director of the CBP’s Trusted Traveler Programs (Global Entry, SENTRI and NEXUS), admits: “Checking travel documents is a requirement that airlines take very seriously, and are motivated to do so as every fi ne impacts on their bottom line and profit margins.”

He points out, however, that the CBP looks at each case individually, and 545 violations does not necessarily mean 545 fi nes. “We certainly take into account an airline’s previous performance and initiatives in conjunction with CBP that improve staff training,” he says. “In such mitigating circumstances, fi nes could be automatically downgraded to a lower level and, even if a penalty is initiated, in 50% of cases it could be for a lesser amount than the maximum fi ne.” This could be significant, as the CBP’s maximum fi ne before mitigation is due to be raised to $5,340 later this year.

Advance passenger information Advance Passenger Information (API) requirements imposed by many countries have actually helped the airlines in the document checking process. Alan Murray-Hayden, IATA’s Assistant Director of Timatic, is quick to point out, however, that the system doesn’t automatically mean that the passenger has a valid visa. He uses the example of the US’s ESTA system, noting that for it to be valid the holder has to have a biometric passport, have a return ticket, and be staying for less than 90 days. “Some basic checks are still necessary, as it remains the responsibility of airlines to verify that all is in order at the airport, prior to travel,” says Murray-Hayden. He points out that governments making use of interactive API systems will give an airline permission to board a passenger based on the API data the airline submits during check-in. But they can still hold an airline responsible if that passenger’s travel documents, including a valid visa if required, are not entirely in order upon arrival.

IMAGE: ISTOCK

line handling around 10 million international passengers per annum, this would mean around 400 ﬁ nes yearly. Incorrectly documented passengers obviously cost airlines in terms of ﬁ nes but the expense doesn’t stop there. There is the time check-in staff spend carrying out document checks, for example, with airlines typically carrying out more in-depth checks on around 10% of their international travelers. Passengers unable to use self-service kiosks to check in at airports because of queries about their documentation add to the debits in the red column. Alan Murray-Hayden, IATA’s Assistant Director of Timatic—IATA’s own software solution, which automatically provides travel documentation advice to airlines upon the swipe of a passport—notes that even a low-end cost estimate of 50 cents per passenger, based on 1.5 billion international passengers globally per year, amounts to some $750 million annually, “which is considerable.”

OCT-NOV 2016

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In this feature • Costs • Legislation • Software

Sava reveals that between 2005 and 2009 the CBP was averaging around 2,300 cases annually. He attributes the decline in numbers to the increased use and development of technology during the booking, security screening, and boarding processes. “We are so much better equipped to check documents today than in the past, and the number of violations are low when you consider that we welcome tens of millions of international visitors every year,” adds Sava. Verification challenges While airlines are obligated under most countries’ legislation to ensure passengers are properly documented, this does not extend to forensic examinations using hi-tech methodology. Further, airlines argue that States are best placed to vet passenger data against security watchlists. The airline document check is normally limited to a visual examination to identify possible fraud and to ensure that a visa or other travel entitlement is present in the passport if required.

IMAGE: GETTY

The 60,000 travelers turned back at destination or transfer points by immigration authorities each year cost the world’s airlines a substantial amount of money in fines and associated costs. SITA’s Head of Portfolio Management for Government Solutions, Sean Farrell, says even the presence of a visa can be misleading, however. “It might be only for single use, and the passenger could have already used it,” he says. “Actually checking whether a passenger has a visa, and whether it has expired, is often very difficult for airlines. “Further complications surround the expiry dates of travel documents, with some countries requiring at least six months left on the document or longer,” he continues. “The United States, for example, recently changed its rules and now requires all visitors from visa waiver countries to have an e-passport.”

adds Murray-Hayden. “The rules are entirely dependent on your nationality, and this is very common.”

IATA’s Murray-Hayden confirms that not having a visa or invalid visas, passports not being valid for long enough, and not having a return or onward ticket are the

Solutions On some routes, it has become increasingly common for an airline to introduce an additional check at the boarding gate to try and ensure that nobody slips through the net. To help the airlines further, IATA has developed its own software solution, Timatic, which automatically provides travel documentation advice to airlines upon the swipe of a passport. There is little doubt, though, that governments continue to view this as an airline’s responsibility. CPB’s Sava says airlines are perfectly capable of checking the validity of passports. “Having said that, let me be clear in saying that we do not expect them to be experts in identifying fraudulent documents,” he notes.

three most common reasons for being refused entry to a country, and account for 95% of all airline ﬁ nes. “Let’s just take the example of the Netherlands,” he suggests. “An Irish passport needs to be valid on arrival. An Australian, on the other hand, needs to have a passport that is valid for three months beyond the period of intended stay. “However, German and French citizens can travel to the Netherlands with an expired passport of up to one year and an Austrian with an expired passport of up to ﬁve years,”

“So, if a passenger appears to have valid documents but they turn out to be counterfeit or obtained by fraud, there would generally not be a penalty against the carrier.” He notes that CBP provides regular document veriﬁcation training for airline staff and sends offi cers to a number of “key departure points” outside the US each year, in a bid to give airlines as much help and assistance as it can with regards to checking travel documents. For more information on Timatic, go to www.timaticweb.com •

SINGLE ENTRY ONLY VISA

Never-ending journey One of the worse cases of an inadequately documented traveler involved a citizen from an African country who flew to the United States from Mexico without a valid visa, and then couldn’t be returned to Mexico because his visa for that country was for single entry only. The predicament meant that the airline had to work out how they could get the passenger back to his home country without having to apply for or get any transit visas. The solution was seven different flights to seven different countries across the globe, and a huge travel bill for the airline.

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Airlines International Data

AIR TRANSPORT AND THE CARBON CHALLENGE Industry carbon targets

1.5% Fuel efficient improvement per passenger to 2020

50%

Cap net emissions with carbon neutral growth from 2020

Cut in net emissions by 2050 (compared to 2005)

CO2 emissions from commercial aviation (millions of tonnes)

5,500

800 700

651

658

675

669

634

665

685

693

709

739

781

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

500

2005

600

alternative fuel flights by end of 2016

400 300 200 100 0

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Data

Cost to offset? ICAO projections of the cost of the global offsetting scheme to industry and percentage of industry revenues1 -0.2%

2025

-0.25%

$1.5bn $2.2bn

-0.7% -0.25%

2030

-0.4%

$6.2bn TOTAL COST TO INDUSTRY

$2.9bn $4.3bn

$12.4bn

-1.1% TOTAL COST TO INDUSTRY -0.4%

2035

$5.3bn

$23.9bn

-1.8%

Low

Offsets Low estimate

Offsets High estimate

Casa Blanca ¼ Madrid 737-800

$51

$131

$1,656

$278

Frankfurt ¼ Addis Ababa 787-800

$578

$1,497

$18,920

$3,172

Mexico ¼ Buenos Aires A350-900

$910

$2,357

$29,799

$4,996

Dubai ¼ Sydney A380

$2,542

$6,585

$83,248

$13,957

Fuel Cost, summer 2016 price

Fuel fluctuation (Cost of $10/barrel increase)

$8.9bn

-0.7%

Carbon price1 Assumption [$/tonne]

Sample flights2 (2030, operator growing at average industry growth rate)

Current Price, CDM -$0.45

2025+2030

2035

$10

$12

Medium

$15

$20

High

$33

$40

Sources: 1. ICAO, ‘less optimistic’ CO2 forecast: http://bit.ly/2cXiPQG 2. IATA Working Paper for ICAO Assembly: http://bit.ly/2csMGR4

50% cut in co2 per seat km since 1990

Source: Air Transport Action Group

Emissions reduction roadmap

Flying smarter Sustainable alternative fuels Economic measures

Carbon-neutral growth

More efficient aircraft

io act

CO2 indexed to equal 100 in 2005

100

0 2005

2010

2020

2030

2040

2050

OCT-NOV 2016

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Soapbox

AN ESSENTIAL INVESTMENT FOR AIRLINES Airlines must be prepared when it comes to crisis communications

Barbara Kracht is a consultancy partner at BHK Crisis Communications

IMAGE: LUIS OLIVAS

ir travel is the safest means of transportation and accidents are extremely rare. But because an accident generates huge worldwide coverage and interest, its impact on a company’s reputation is enormous. Responding correctly in a crisis includes the way an airline addresses the consequences from a logistical and human point of view, but also—and this is crucial—the way it communicates about it. Having an Emergency Response Plan—provided it is properly executed—goes a long way towards protecting a company’s reputation and ensuring its survival, whatever the causes of the accident. But there are no formal requirements with regards to crisis communications. This very important part in handling the crisis is left to the discretion of the company. If unprepared, an airline’s communications will potentially be completely drowned by the media tsunami that is going to fall upon them and the whole company. Many may believe that, as an easy solution, crisis communications can be subcontracted to an external agency. This approach refl ects a total ignorance of reality. The public, the media, and all stakeholders will require an immediate and continuous response from the company itself. An external agency can certainly provide long-term support, but is in no way a substitute for direct communication from the company. Also, it will most certainly not be readily available, nor even present at the required location(s) from the beginning. The fact is that the airline has to swim alone for at least the fi rst 24 hours. Airlines need to be prepared to swiftly and continuously feed social media channels. Twitter, Facebook, and the like have revolutionised global communications. The golden hour organizations used to have, until the fi rst press statement was to be released, is long gone! An

airline must be present on Twitter—which has become the prime communication channel from which the conventional media take their quotations—as soon as it hears about the ﬁ rst rumours. Then it has to continue to regularly update the various social media communication channels if it is not to be overtaken by all the other commentators. And airlines need to know how to do all this in advance. The CEO and other executives will also need to address the media at several locations, above all if the accident occurs far away from the home base. Their messages need to be well prepared and coordinated. And so does their appearance, as the circumstances are going to be totally different from a normal press conference. And it is vital that communications with all other stakeholders, including employees, is not neglected. All this communication needs to be thoroughly coordinated. At a time when budgets are tight, it is not an obvious business case to invest in what is considered a remote risk. Yet, when the improbable strikes, a company’s survival will greatly depend on its level of preparedness to face and manage the post-accident crisis in communications terms. Full crisis communications preparedness is simply a must in today’s highly interconnected cyber-world for the airline to manage and survive the risks resulting from an accident crisis. It is an indispensable investment. • IATA’s Crisis Communications and Social Media Guidelines are available free on www.iata.org For airlines looking for assistance with their crisis communications planning, IATA Crisis Communications Services can help with solutions best adapted to the needs of each company. For more information please contact Kate Markhivda: markhvidak@iata.org

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