Routes News Magazine, Issue 1, 2014 by routesnewsmagazine

routesnews ISSUE 1 VOL. 10, 2014

The world air service development magazine

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Geared for growth:

Transaero’s Olga Pleshakova

ANALYSIS:

Latin America consolidation

FEATURE:

Big data in route planning

INVESTOR FOCUS:

Vantage Airport Group

routes-news.com Airport:

Interview:

One2one:

Special report:

News:

Quito’s new gateway

ALTA’s Eduardo Iglesias

Aeromar’s Fabricio Cojuc Wolfowitz

El Salvador’s aviation market

Etihad’s Air Europa deal & Dublin sees double

EDITORIAL Lucy Siebert, Acting Editor +61 432 770 828 lucy.siebert@routes-news.com Joe Bates, Group Editor +44 (0)208 831 7507 joe@aviationmedia.aero

SALES Rebecca Randall, Group Advertising Director +44 (0)208 831 7513 rebecca.randall@routes-news.com David McCauley, Advertising Manager +44 (0)208 831 7515 david.mccauley@routes-news.com

PRODUCTION Elaine Harris, Design & Production Manager elaine.harris@routes-news.com Andrew Montgomery, Creative Director andrew.montgomery@routes-news.com Mark Draper mark@aviationmedia.aero Website Jose Cuenca jose@aviationmedia.aero Erica Cooper erica@aviationmedia.aero

CONTRIBUTORS Buddy Anslinger Martin Ferguson

PUBLISHER Jonathan Lee +44 (0)208 831 7563 jonathan@aviationmedia.aero Published by Aviation Business Media Ltd Sovereign House, 26-30 London Road, Twickenham, TW1 3RW, UK T: +44 (0)208 831 7500 F: +44 (0)208 831 7501 The opinions and views expressed in Routes News are those of the authors and do not necessarily reflect any policy or position of UBM Information Ltd or Aviation Business Media.

Printed in the UK by The Magazine Printing Company using only paper from FSC/PEFC suppliers www.magprint.co.uk

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Foreword Routes News editor, Lucy Siebert, looks forward to the first key industry event of the year, Routes Americas. From the start of Routes Americas, there is less than four months until the football World Cup kicks off between Brazil and Croatia in Curitiba in the state of Paraná. It has been well documented that the cost of projects associated with the World Cup has prompted many large-scale protests across Brazil. However, with the matches being broadcast to more than 200 countries across the globe, the value of being on the TV (and desktop and mobile) screens of more than a third of the world’s population is almost unquantifiable. It is a once in a lifetime opportunity for Brazil and the entire Latin American region. Indeed, the whole of South and Central America will be aiming to mirror South Africa and Southern Africa’s recent tourism growth, which has been partly driven by the 2010 World Cup. Our Routes Americas host, El Salvador, will be hoping to benefit from increased travel demand to Latin America. In many ways, El Salvador is the opposite of Brazil – it is the smallest country in Central America and prides itself in its diversity within such a small landmass. Find out more about its aviation landscape on P26.

Despite its compactness, the country is also one of the region’s most densely populated and is a base for the highly successful Avianca following its merger with TACA. This is just one Latin American airline merger in the spotlight in this edition’s analysis by Buddy Anslinger (P18). We also find out how route planners are taking advantage of big data in their route forecasting (P22), and speak to Transaero’s CEO, Olga Pleshakova, ahead of Russia hosting the Winter Olympics in Sochi (P14).

Acting Editor Lucy Siebert

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lucy.siebert@routes-news.com @LucySiebert and @routesnews facebook.com/routesnews

R™ is a registered Trade Mark of UBM Information Ltd and is used under licence. © Copyright 2014. The content of this publication is the copyright of UBM Information Ltd and shall not be copied or stored in digital format without the written permission of the Copyright holder. Content is correct at time of printing. UBM Information Ltd shall not be liable for any errors or omissions contained herein.

ROUTES NEWS 1, 2014

Contents

14 6 World news 9 Cargo news 11 On the move 13 Airline one2one

Fabricio Cojuc Wolfowitz is the executive vice president, chief planning & commercial officer at Aeromar, based in Mexico City.

14 Future focus

Transaero had a record-breaking year in 2013 – Justin Burns spoke with CEO, Olga Pleshakova, in Moscow to find out more about her plans for this year.

18 Regional reach

The rise of LATAM, Avianca and Copa has heralded a new dynamic phase in Latin American aviation. Buddy Anslinger takes a closer look.

26 22 Knowledge is power

Network planners rely on tried and tested datasets to analyse growth potential. But Martin Ferguson asks if big data will bring valuable new intelligence to airlines.

36 Events essentials 38 V iew from the top

Eduardo Iglesias, executive director, The Latin American and Caribbean Air Transport Association (ALTA).

26 Spotlight on El Salvador

Richard Maslen takes a closer look at the transformation of the aviation market in one of Central America’s rapidly changing destinations.

29 Biting into the Big Apple The Vantage Airport Group is bidding in one of the biggest airport privatisation projects in the USA – CEO, George Casey, spoke with Lucy Siebert.

33 New era for Quito

Ecuador’s new international airport is opening the door to more tourism and trade, writes Routes News.

All the latest news, views and developments from the global network planning community online. Read the digital edition or download the free app.

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ONLINE POLL RESULT Our poll, which attracted 350 votes, asked which emerging economies would be most exciting from a route development perspective in 2014.

5% 26%

10% 10%

19% Indonesia India China Brazil

22%

South Africa Colombia Russia

Go to www.routes-news.com to vote in our latest survey.

ROUTES NEWS 1, 2014

World news

Etihad aims to captain Americas Etihad has continued its expansion into the Americas by signing new agreements with Air Europa and JetBlue, as well as revealing plans to increase services to New York to double daily. Spain’s Air Europa operates a comprehensive network from Madrid to South America, as well as its European services. Under the plan, the Spanish carrier will start a three-times weekly A330operated flight from Madrid to Abu Dhabi at the end of 2014, subject to regulatory approvals. Etihad will place its code on the new Madrid services, as well as some other European flights. From this summer, both airlines plan to expand their codeshare destinations to include cities in Spain and South America. Juan José Hidalgo, Air Europa’s president and CEO, said: “As one of the most important operators to the American continent, especially Central and South America via our hub in Madrid, for Air Europa the agreement between the two airlines is a step forward in a global market.”

Georgetown in Guyana; Fort Lauderdale in Florida; and Montréal in Canada are set to receive flights from Panama’s Copa from this summer. Montréal will become Copa’s second Canadian city in June when it starts four weekly flights; while Fort Lauderdale will get four weekly flights and Georgetown will receive twice-weekly services from July. AirAsia X will increase its frequency from Kuala Lumpur to Seoul to double daily by December. Initially, it will operate 11 flights a week from July 2, before going double daily by the end of the year. AirAsia X launched

ROUTES NEWS 1, 2014

Front, from left: Alvaro Middelmann, advisor to the chairman of Air Europa, and Kevin Knight, Etihad’s chief strategy and planning officer, sign the codeshare agreement.

Meanwhile, Etihad will up its daily services to New York to two a day from March 1, in addition to new Dallas/Fort Worth flights later in the year. The additional New York service will be supported through a new codeshare signed with JetBlue. The agreement, which is subject to government approval, will see Etihad

services to Korea in 2010 and has carried more than half a million passengers on the route. Fastjet is in discussions with the Zambian government about establishing an operation in Lusaka. The airline said it was in “active discussions” and was applying for an Air Services Licence and Air Operator’s Certificate. The operation would be a Zambian-registered company, in which FastJet PLC would have a “substantial stake”. Ryanair plans to establish new bases in Greece at Athens and Thessaloniki in

place its code on JetBlue-operated flights at New York JFK and Washington Dulles. Initially Etihad will codeshare on 40 JetBlue flights in the US and hopes to expand the agreement to include JetBlue flights from New York and some destinations in the Dominican Republic, Jamaica and Colombia, subject to approval.

April. The airline plans to base two aircraft at Athens and one at Thessaloniki, operating a total of nine new routes. The six new routes from Athens will be Chania, London, Milan, Paphos, Rhodes and Thessaloniki. From Thessaloniki, new routes will be Athens, Pisa and Warsaw. Marseille Provence, host of this year’s Routes Europe event, is set to welcome a new charter from South Korea from April. The three direct flights will be operated by the Hanjin Travel Group and its South Korean tour operator subsidiary, Kaltour.

American Airlines has revealed that 17 destinations at Washington Reagan National Airport and three at New York’s LaGuardia will be axed from its network. However, it will add 10 new services at the New York gateway. The airline was required under a settlement with the Department of Justice to divest a number of slots at the two airports. Under the plan it will divest 52 slot pairs at Washington Reagan and 17 slots at LaGuardia. Jet Airways will launch a new daily service from Mumbai to Paris from May. The French capital becomes Jet’s 21st international destination.

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Dublin double-header Ireland’s capital is set to receive double daily flights from both Emirates and Etihad. The Dubai carrier was first out of the blocks with an announcement, revealing it would up the route to twice daily from September. Emirates launched its first Dublin service just two years ago and more than 440,000 passengers have travelled on the route. It plans to operate B777300ERs on both daily rotations. Just days later, Etihad said it too would up its Abu Dhabi–Dublin flights from 10 weekly to double daily from July 15, a 40% frequency increase, providing 8,988 extra seats a week.

Etihad will operate a B777-300ER and an A330-200 on the route. While the Irish economy contracted during the economic crisis, many young Irish people opted to live and work overseas. According to Routesonline, there are 80,000 Irish people working in Australia – a key market for both Emirates, with its Qantas partnership, and Etihad, with its Virgin Australia stake. Routesonline reveals that 120,000 people travelled between Ireland and the UAE in the year ending November 2013, half of which travelled via Dubai. This was a 30% increase versus the previous 12 months.

TO RUSSIA WITH LOVE

Emirates is taking its Moscow service to double daily with an A380.

ON TOUR

The UNWTO is forecasting 4% growth for international tourist arrivals this year.

ECONOMIC GIANTS

Air China has applied to operate from Beijing to Washington Dulles from June, according to an application with the US Department of Transportation.

Asian partners Singapore Airlines has entered into a new alliance with Air New Zealand that could eventually boost the airlines’ capacity between New Zealand and Singapore by 30%. Under the agreement, Singapore Airlines plans to fly a daily A380 service between Singapore and Auckland, replacing its existing daily service operated by a B777-300ER. Air New Zealand plans to operate a daily B777-200ER service to Singapore from as early as December 2014, taking over five flights currently operated by Singapore Airlines and adding two more weekly flights, increasing the frequency to daily. The deal also includes a codeshare agreement that would allow Air New Zealand passengers to travel on

codeshare flights with Singapore Airlines to destinations in South East Asia, Europe and Africa. Tourism New Zealand chief executive, Kevin Bowler, welcomed the announcement. “There is a lot of airline capacity into Singapore from Europe and across Asia, but until now, there has been a lack of onward capacity between Singapore and New Zealand, affecting our ability to grow visitors through Singapore,” he said. “This announcement is a real boost for our new investments in emerging markets like India and Indonesia, with a lot more capacity and great connections from multiple cities right across Asia,” he added.

Take off

or not HELLO & GOODBYE

Jet Airways is looking for a new CEO after Gary Toomey quit, after less than four months in the hot seat.

SNOW STORMS

Severe winter storms ground thousands of flights across North America.

ALL SHOOK UP

An earthquake in Wellington, New Zealand, caused part of the Lord of the Rings installation at the airport to collapse. More South East Asians will be experiencing New Zealand’s landscapes with Singapore’s A380 service.

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ROUTES NEWS 1, 2014

Cargo news

IAG Cargo will buy capacity on Qatar Airways freighters from Hong Kong to London.

Qatar teams up with IAG IAG Cargo has axed its deal with Global Supply Systems, in favour of a new long-term commercial agreement with Qatar Airways that will see it purchase capacity on the Gulf carrier’s air cargo freighters. The airline said it was ending its agreement with Global Supply Systems at the end of April. This had seen it lease three B747-8 aircraft from the supplier. Instead, from May 1, Qatar Airways will operate five B777F flights a week between Hong Kong and London, on behalf of IAG Cargo. Qatar Airways is a partner with IAG through its oneworld alliance membership. Willie Walsh, CEO of IAG, said the Qatar deal was an “important step” and would enhance its relationship with the Doha-based airline.

The cargo industry must tackle a skills shortage in air cargo managers, says The International Air Cargo Association (TIACA). A two-year research project with IATA and the International Federation of Freight Forwarder

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“It allows us to continue delivering significant capacity for our customers through the important gateway of Hong Kong. This agreement ensures our customers in Hong Kong will see a smooth transition from the current arrangements to the Qatar Airways flights,” Walsh said in a statement. “IAG Cargo’s customers will now benefit from increased bellyhold capacity as well as the deployment of freighter services on capacity-constrained routes,” he added. Qatar Airways Cargo is expanding with new aircraft and freighter routes, as well as a new facility at Hamad International Airport in Doha. Qatar believes this will facilitate the handling of 1.4 million tonnes of cargo annually.

Associations (FIATA) found that managers need to be better trained in leadership and team-building, as well as market and financial analysis techniques. LAN Cargo will invest $23.9 million in a new aircraft

maintenance facility at Miami International Airport. The project includes the construction of a new hangar, along with parking aprons and taxiways. LAN Cargo and its associated companies handle more freight at MIA than any other airline.

Better times ahead? Cargo volumes are expected to pick up over the next 12 months, at stronger growth rates than those seen since mid-2010. This is according to IATA’s Airline Business Confidence Index, which surveys airline chief financial officers (CFOs) and heads of cargo on a quarterly basis. According to the report, cargo leaders think that transport volumes will grow over the next year, with input costs and yields remaining stable. The survey noted: “More than 66% of respondents expect an increase in demand over the next 12 months. This is the biggest expected rate of increase since mid-2010, a very strong year for cargo.” Cargo yields, however, are expected to be unchanged in 2014, despite expectations of stronger volume growth. Most respondents feel that there will be an improvement in profitability, with 70% of respondents expecting profits to improve over the coming 12 months. The survey revealed: “More than 55% of respondents indicated an improvement, but the proportion of respondents experiencing a fall in Q4 profits rose to 25%, compared with 20% in the October survey when asked about Q3 results.”

Delta Cargo has opened a new 3,000sq ft refrigerated storage unit at Detroit-Wayne County International Airport that will offer in-transit cooling and specialised handling for temperaturesensitive products.

ROUTES NEWS 1, 2014

On the

move Aviation consultancy ASM has made a number of new appointments. Mike St Laurent, previously with Air Canada, has joined as a senior consultant. Keith Green, formerly with South African Airways and David Field, previously with at King Abdulaziz International Airport in Jeddah are also joining the company. Meanwhile, Yulia Crane has been promoted to senior consultant, after being with the consultancy since 2006.

William ‘Bill’ Swelbar began his new role as executive vice president of InterVISTAS in December. He will continue in his research role at MIT’s International Center for Air Transportation, as well as keeping his seat on Hawaiian Holdings’ board of directors. Meanwhile, David Dague has joined InterVISTAS as vice president airline strategies at airports. Dague joins from ICF SH&E, where he worked for the past 24 years. Bo Wu has been appointed as PATA’s regional director – China. He replaces Kate Chang, who served in the position for eight years and is taking on the role of chairman of the PATA China Chapter. Prior to joining PATA, Wu was executive director of the State of Hawaii office in Beijing.

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Mario Hardy has started as chief operations officer of the Pacific Asia Travel Association (PATA). Chairman of the PATA Foundation since June 2012, Hardy previously worked as vice president – Asia Pacific at UBM Aviation (OAG).

Christian Berg has started in his role as CEO of Hans Christian Andersen airport, a regional gateway in Denmark. Berg’s former roles have included director of business development and airline affairs at Swedavia and director of sales for SAS and Air Greenland. Katie Jones has joined Sixel Consulting Group as marketing and community outreach consultant. She was previously spokeswoman and social media editor at San Diego International Airport. OAG’s commercial director, Mark Clarkson, is moving to Singapore to head up the data company’s sales in Asia-Pacific. He will be based in Singapore for two years. Robin Hayes has been promoted to president of JetBlue Airways. He was previously executive vice president – chief commercial officer for the airline. Prior to the appointment, JetBlue’s CEO, Dave Barger, held the title of both president and CEO.

Monarch Airlines has appointed Andrew Swaffield as its new managing director. Swaffield joins the Monarch Group from International Airlines Group, where he was managing director of Avios. He will take over the reins from Iain Rawlinson, executive chairman of The Monarch Group, on April 1.

Gordon Bevan has joined Christchurch International Airport as airline business development manager. He was previously vice president consulting, Asia Pacific, at consultancy ASM, based in Wellington, New Zealand. Athar Husain Khan has been selected as the first CEO of the Association of European Airlines (AEA). He joined the association in 2007 as general manager infrastructure, before also taking on responsibility for environment and policy. Etihad Airways has announced key new appointments within its commercial division. Adam Phillips will return to Abu Dhabi as VP commercial strategy and planning; Craig Thomas has moved to Bangkok as vice president Asia Pacific North and the Indian Subcontinent; and Alan Glover has moved from manager corporate sales in Dublin to Australia as manager sales Victoria.

Mike St Laurent

Mario Hardy

Andrew Swaffield

Raphael Kuuchi will take up the role of VP for Africa for the International Air Transport Association (IATA) in February, succeeding Mike Higgins, who is now regional head of airport, cargo and passenger services for Europe. Kuuchi joins IATA from the African Airlines Association (AFRAA), where he was director of commercial, corporate and industry affairs. Jiri Vyskoc has been appointed director of aviation business at Prague Airport. He steps into the role previously held by Stanislav Zeman, who has moved to national carrier Czech Airlines, where he is executive manager of sales.

ROUTES NEWS 1, 2014

Airline one2one

Fabricio Cojuc Wolfowitz is the executive vice president, chief planning & commercial officer at Aeromar, based in Mexico City. What has Aeromar achieved in the Mexican market? Of the Mexican airlines in service, Aeromar holds the oldest Air Operator’s Certificate (AOC). It is a testament to the resiliency of a smaller company which, despite the many crises the country and its airline industry has endured over the decades, is now in its 27th year of uninterrupted operations. Today we are a stand-alone carrier operating our own extensive network.

Do you plan to expand in the US? Absolutely. Our US incursion began in 2013 with the addition of untapped Mexico City–McAllen (March), Mexico City–Austin (October) and San Luis Potosí–McAllen (November) services. Results have been better than initially expected, and we are seriously looking at adding a new Texas gateway by mid2014, while also adding frequency to existing Austin and McAllen services.

our fleet to 19 regional aircraft (16 ATRs and three CRJs). We expect to remain at or near this fleet size in 2014. In 2015 and 2016, our oldest ATR 42s will be due for replacement and it is likely we will substitute them with new ATR 72-600s. We might also add a couple more CRJ200s along the way, depending on how traffic evolves.

What are your plans for the network in 2014?

How has the Mexican airline market performed in the past year?

Given the recent implementation of strict slot controls at Mexico City airport, our main objective is to execute a consistent schedule that ensures our nearly 100 daily operations are not affected by the new policies. We are also aiming to add at least a couple of new destinations during the first half of 2014 and to increase frequencies in our main markets.

If you look at the demand numbers for the market as a whole, the growth in RPMs is impressive and reaching record numbers. However, yields have taken a toll as capacity increases have forced most airlines to implement aggressive discount pricing strategies. For us, passenger growth was moderate; however, our revenue metrics have kept improving and this is by far our key performance indicator.

I figured out I wanted to be involved in the airline industry when I was about 10 years old. I was exposed to travelling, airports and aircraft from a very early age through my father’s frequent travels. As a kid, I started to read the big OAG and ABC books my father used to bring home, on loan from a friend’s travel agency, and as a teenager, I used to get the pocket editions as birthday presents.

How has your route network changed?

What are the biggest challenges in the Mexican airline market?

What is the best thing about working in the industry?

Aeromar has become a sustainable, commercially independent airline, after many years of operating as a capacity provider and feeder for larger partner carriers. In the past, network and capacity deployment was mainly dictated by the needs of partners – today, our network has become more concentrated around the Mexico City hub, with a focus on building frequency in existing markets and expanding selectively.

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Oversupply – there is too much metal coming in over the next few years and this will take a toll on profitability industrywide, as I don’t believe demand can keep up with the pace of capacity increases.

What are your future fleet plans? In 2013 we took delivery of three aircraft – two new ATR 72-600s leased from ALC and we purchased one CRJ-200, bringing

Why did you first get into the aviation industry?

The most interesting thing is the fragility of the status quo – the amount of variables that come into play and that can affect the business. This means you constantly have to be on your toes. When you think you have seen it all, there is always a new hurdle that comes along to test you.

If you didn’t work in aviation, what would you be doing? Looking for a job in aviation!

ROUTES NEWS 1, 2014

Future focus Transaero had a record-breaking year in 2013 – Justin Burns spoke with CEO, Olga Pleshakova, in Moscow to find out more about her plans for this year.

now blankets Moscow when Routes News meets Transaero CEO, Olga Pleshakova, in her stylish new top floor office, complete with panoramic city views. The temperature was -15˚C in the Russian capital, but although the big freeze was setting in, business is certainly not frozen at the country’s first private airline. Russia’s second biggest carrier saw quite a year in 2013, handling 12.5 million passengers – a rise of 21% on the previous year. The company has been growing at a faster rate than the average for the Russian aviation market for several years. The liberalisation of routes from Russia, which started three years ago, has opened up a wealth of opportunities for

ROUTES NEWS 1, 2014

Transaero, allowing it to expand its route network. It now operates 200 routes. Pleshakova says eight years ago Transaero adopted a strategy aimed at growing the route network and fleet and diversifying its services and products. She says the realisation of this strategy was symbolised by the acquisition of a Boeing 747 aircraft. “We have nearly completed our route network domestically and internationally, and further development will see an increase in the frequency of flights.” She welcomes the further opening up of the market for international routes, which she says were previously “monopolised”. “Transaero’s fleet provides for flexible adjustment to the market changes. As the market grows, we grow,” she adds.

Olga Pleshakova

Transaero Airlines recently adopted a new strategy aimed at boosting its operations and finances. “We’ll pursue the strategy to enhance efficiency of our business,” Pleshakova says. Meanwhile, the airline launched a new product in January called Discount Class on certain flights from Moscow Domodedovo to various cities in Western Europe, Tel Aviv, and across Russia.

Russian market

According to Transaero, the Russian aviation market is growing rapidly. In the first 11 months of 2013, the market grew by 14% (international by 18% and domestic by 10%) – significantly higher than the world growth average of 4.6%.

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CEO interview

We have nearly completed our route network domestically and internationally, and further development will see an increase in the frequency of flights

And the airline says in 2012, 74 million passengers flew from Russia’s airports, and for 2013, this was expected to total 82 million, up more than 10%. With Russians travelling in record numbers, more of them are also looking to fly to more medium- and long-haul destinations. According to Pleshakova, the most popular leisure destinations on the airline’s route map include Thailand, the UAE and countries in Latin America, as well as Turkey, Greece and Spain. The demand from Russians living in cities outside of Moscow for direct and cheaper travel to international destinations, as well as the increasing wealth of Russians, has also prompted Transaero to expand the number of regional Russian airports it serves with international flights. Today, it offers international flights from 20 regional Russian airports. Pleshakova says: “While Moscow will continue to be the main hub to fly from

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Russia in the future, regional flights will continue to strengthen. Furthermore, she adds: “We see the trend of increasing mobility in southern and eastern regions of Russia, so Transaero is increasing the frequency of flights to these parts.”

21%

passenger growth in 2013 compared with 2012

Route network

As a result of the liberalisation of the bilateral air services, Transaero has become the second designated carrier from Russia to key European cities such as Rome, some other Italian cities, Istanbul and Paris. It is also the largest Russian carrier to Turkey, where it can now sell flights on the open market to Antalya, after previously only being allowed to fly charter flights for 20 years.

It sees Latin America as a region of great potential for future development. It started flying scheduled services to Havana in Cuba in December 2013. Previously, it was only able to operate charters to the Cuban holiday resort of Varadero. “We are ready to open up new destinations in the future. Latin America is a big interest to Russians and has huge potential,” Pleshakova says. In the Caribbean, it has launched flights to Montego-Bay in Jamaica, in addition to services to Punta Cana in the Dominican Republic and Cancun in Mexico, making it the largest Russian airline flying to the region. As for North America, Transaero flies to New York, Miami, Los Angeles and Toronto, catering to a large Russian diaspora in the US and Canada, as well as demand from business travellers. “We see the positive signs on these routes and are pleased to see the passenger growth on them,” Pleshakova adds.

ROUTES NEWS 1, 2014

CEO interview UAE and China

Another focus for the carrier is the Middle East and it now operates direct scheduled services to Dubai from six Russian cities. Of course, it doesn’t have it all its own way on routes to the Gulf – the big three of Emirates, Qatar and Etihad all operate direct from their bases to Russia. Pleshakova says this competition has had a positive impact on business, as it has stimulated the market and Transaero’s UAE business grew by 12% in 2013. As for the Chinese market, she says passenger traffic is growing fast to Hong Kong and Beijing. Indeed, frequency to Hong Kong will be increased later this year, but Pleshakova adds the airline currently has no plans to introduce any new Chinese routes.

82 million

passengers estimated to have flown in Russia in 2013

Codeshares and partnership agreements

While Transaero remains outside of an airline alliance grouping, it has forged seven codeshare agreements and more than 80 partnerships with a variety of airlines. These include a commercial agreement with low-cost carrier easyJet, which allows Transaero’s passengers to purchase tickets on easyJet’s budget flights from Moscow Domodedovo to Gatwick. Pleshakova says this was aimed at providing passengers with “more choice and more opportunities”. She adds easyJet’s services from London to Moscow have stimulated the overall market and she expects Ryanair to follow suit soon – giving a further injection to the market. “Any competition in the market stimulates growth and since easyJet started, general passenger traffic has increased,” Pleshakova says. She adds she is “satisfied” with the development of relations and

ROUTES NEWS 1, 2014

Transaero network wide capacity 2005-2013 Year

Departures

% change

Scheduled seats

% change

2013

61,467

19.5

11,825,544

18.5

2012

51,434

29.4

9,978,099

29.7

2011

39,753

21.0

7,695,183

22.0

2010

32,845

26.6

6,305,288

37.7

2009

25,937

23.2

4,579,629

22.3

2008

21,045

21.9

3,744,628

33.3

2007

17,270

42.2

2,810,004

55.2

2006

12,149

20.4

1,810,237

32.0

2005

10,092

-3.2

1,371,293

-3.7

Source: OAG Schedules Analyser.

co-operation with Singapore Airlines, China Airlines, JetBlue Airways, Austrian Airlines and Virgin Atlantic, among others.

alliances, such as Emirates. “It’s high time to set up an alliance with others who are not part of any,” Pleshakova jokes.

Alliance ambitions?

Fleet for the future

Commentators have been asking for years whether Transaero would ever become part of an alliance. Several years ago, the carrier had preliminary discussions with representatives of one alliance. However, that plan foresaw Transaero being a feeder for international airlines and was rejected by the airline’s management. Pleshakova says it was the right move to pursue its own development strategy, which has so far proved to be successful. Pleshakova says that if it received a proposal to join a grouping, it would have to carefully consider it, taking into account the position Transaero holds in the Russian market. “We see the growth of transit passengers within these signed commercial agreements. We are ready to consider any proposal from any airline. Transaero is open to any co-operation. If any airline is ready to consider an opportunity for partnership, we are also ready.” She adds there are other successful examples of airlines remaining outside of

Transaero’s fleet has grown in recent years and it plans on expanding its current 98 aircraft. Pleshakova says the plan is to grow the fleet to 150 by 2020. In 2012, it placed orders for four Airbus A380s, which are due for delivery from 2015. And it also has orders for four 747-800 intercontinental aircraft – the first of which it is due to receive in 2015 – and it has firm orders for 12 B737-800s for delivery from 2015 and eight A320neos. Pleshakova says it is planning to significantly renew its fleet over the next five years, and will withdraw its current B737 Classic aircraft and replace them with new 737 Next Generation aircraft. She exclusively tells Routes News, Transaero is in talks with Boeing and Airbus to increase orders for wide-body aircraft. As for the future, the CEO, who as a child wanted to be a history teacher but instead chose to study at the Moscow Aviation Institute, says her focus is to enhance business efficiency, while providing more diversified services to passengers.

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Regional reach The rise of LATAM, Avianca and Copa has heralded a new dynamic phase in Latin American aviation. Buddy Anslinger takes a closer look.

onsolidation in Latin America is still playing out, but it has already had positive and negative effects for passengers, nations, airports, and airlines themselves. Avianca and LATAM are two of the oldest airlines in the world still flying. Avianca’s launch in 1919 heralded a new day for transportation in the Andean region, while LAN-Chile’s birth 10 years later brought dramatic changes in the southern cone. South America’s geography, specifically the Andean mountain range, meant that aviation was far more necessary than in many other parts of the world. As a result, numerous airlines were started in each Central and South American country. However, many were driven by politics rather than profits. Due to small home country market sizes, Central America saw the benefits of cross-border consolidation before other countries did. The national airlines

that comprised TACA, including Aviateca from Guatemala, LACSA from Costa Rica, NICA from Nicaragua, and Isleña from Honduras, began co-branded co-operation as early as the 1990s. They also had an alliance with Panama’s Copa Airlines from 1992-1998, until Continental Airlines purchased 49% of Copa and steered it towards an independent course. TACA also moved in a different direction, expanding in the region before merging with Colombia’s Avianca in 2009.

33% LATA’s intra-South American market share in 2013

LAN-Chile honed its business in its home country and developed strong regional routes and long-haul services. However, Chile’s 17 million citizens and

its extreme southern location held back the airline’s ambitions, while its location meant there were no natural flow markets to facilitate growth. Starting in the early 2000s, LAN, with its name altered to reflect its pan-American route intentions, began to invest in and build airlines in Peru, Ecuador, Argentina, and Colombia. With the exception of Colombia, LAN invested in airlines in countries whose own national carriers had suffered dramatically or completely ceased flying. Bogotá and Colombia are the second largest aviation market in South America, and while Avianca is a formidable competitor, LAN couldn’t bypass the opportunity there. Then, in 2012, LAN undertook its most bold investment in its merger with TAM Airlines. Brazil is the largest aviation market on the continent, and LAN’s ambitions included working with one of Brazil’s main airlines, heralding the arrival of the brand name LATAM.

South American intra-regional market share 19%

Varig VASP

46% 14%

5% 8%

15%

LATAM

Aerolineas Argentinas Avianca Other

32%

Azul Airlines Aerolineas Argentinas 23%

South American seat share

(Week of August 2000)

(Week of August 2013)

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GOL Avianca

12% 13%

LATAM

Other

Source: Innovata Schedules.

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Analysis

Central American intra-regional market share Avianca/TACA

Avianca/TACA Copa Airlines

33% 50%

Other

17%

Copa Airlines

36%

32%

Other

32%

Central American seat share

(Week of August 2000)

(Week of August 2013)

Avianca and LATAM’s investment and growth led to new hubs in countries outside of their home turf. Prior to the 2009 merger, TACA launched a new hub in Lima to move traffic from the large traffic centres in South America to Central America and North America. Meanwhile, LATAM’s airline development in Ecuador, Colombia, and Peru established new hubs for the airline in Quito, Guayaquil, Bogotá, and Lima. These hubs could take advantage of passenger and cargo flows to North America, and their northern location facilitates numerous connections between the southern cone, the Andean region, Central, and North America.

Copa’s ascent

Benefitting from a 1998 re-capitalisation from Continental Airlines, Copa Airlines has grown organically, albeit phenomenally. Its superb location, almost perfectly equidistant between North and South America, and its excellent facilities provided a good launching pad to develop an intra-American hub, which almost no other airline can replicate. Its growth did not mean it rested on its laurels though – in 2005, it invested in Colombia’s third largest airline, AeroRepublica. This allowed Copa to expand into the second largest aviation market in the region. It also allowed Copa to access deeper South American

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markets and complement capacity from its Panama City hub to South and North America. Copa, like Avianca and LATAM, has also leveraged alliance memberships to increase the passenger flow through its hubs.

86% growth in South American passenger traffic since 2006

The rise of hubs

Consolidation has brought a singular, focused strategy across national borders to establish specific cities as hubs and to funnel traffic and resources to ensure those hubs work. Individual countries and cities can rely on the service to continue on an ongoing basis, which makes it easier for corporations to plan business activities and invest in the region. Passenger service levels and dependability have improved due to the reliability of the consolidated airlines. Where previously it was often easier to connect through external hubs like Miami than to fly between two points within Central or South America, now leisure and corporate travel within regions has become more common. Airline consolidation often means a reduction of flights to maximise

Source: Innovata Schedules.

profitability. However, most Central and South American countries have seen a growth in capacity since consolidation. Latin American GDP growth has been hovering between 3%-5% since 2004 (with the exception of the global financial crisis in 2008) and that explains some of the capacity growth, but a great deal should also be attributed to the region’s new orderly hub system. For the most part, all Central American countries have maintained and/or grown their level of capacity over the past 10 years. In fact, overall regional capacity was up 13% in this period, and all capacity is up a staggering 66%. The carrier has developed its hub at San Salvador to include spokes from the other Central American cities and launched flights to South and North America, and the Caribbean, with this feed. Avianca has capitalised on large local markets from each of its countries in Central America to cities outside the region, including large leisure demand to Belize and Costa Rica, and offers a number of non-stops as a result. Copa uses its Panama City hub in a similar fashion.

Capacity growth

South America has seen a similar growth in capacity, with nearly a doubling (91%) of intra-regional capacity and overall capacity in the past 10 years.

ROUTES NEWS 1, 2014

Analysis New LATAM hubs in Lima, Buenos Aires, Guayaquil, Quito, and new Avianca, Copa, and LATAM hubs in Bogotá coupled with robust economies, have made travel to/from and within the region much easier and traffic volumes and capacity have surged. Likewise, the growth of LATAM capacity in Brazil has been fuelled by the Brazilian economy.

Rising fares

Airline rationalisation in the absence of additional capacity can have a downside: higher fares. With fewer airlines competing for traffic, there is less discounting and airfares tend to rise. Although economics would teach us that more capacity should lead to lower fares, if the demand for the incremental seats is equally high, then fares rise as well – as is the case in Central and South America. Capacity has risen since 2006, but average fares in Central America for intra-regional travel have risen by 6% overall and in South America by 31%. Higher fares often depress demand, and in Central America, intra-regional traffic has fallen slightly by 7%. However, demand in South America for travel within the continent remains strong and saw growth of 90% in 2006. Overall traffic to Central America has risen by 21% since 2006, in spite of an 11% rise in average fares in the same time period. In a similar vein, South America has enjoyed an astonishing 86% leap in overall passenger traffic on 20% higher fares. Although traffic volume has maintained its size and actually grown in the light of higher fares in Latin America, LCCs and ULCCs are opportunists, and this could provide the chance for them to enter new markets in the region and to stimulate traffic even more with their low fares.

Point-to-point casualties

Point-to-point services are a casualty of the hub focus and this is proving to be the case in Latin America.

ROUTES NEWS 1, 2014

As a result, non-hub airports will have great service to the hubs, but they will have to work harder to attract services to other cities. Depending on the routes, these air service development initiatives need to target domestic, regional, and international airlines that may or may not be incumbents. Airports must be proactive in developing action plans and reaching out to airlines they think will fill the gaps left by the Latin American airlines’ focus on their hubs. Often, airlines outside the region are not as focused on route opportunities created with this hub strategy in Latin America, so it is especially important for airports looking for new routes to seek out those airlines.

31% fare increase in intra-regional air fares in South America since 2006

Growing the pie

These trends have prompted a dramatic shift in marketshare since the turn of the 21st century. LATAM had a 33% market share of the entire intra-South American market in 2013 – a shift of 14 percentage points since 2000. Avianca grew as well by adding 8 percentage points of the entire intra-South American pie to achieve a 13% market share. Central America saw a more interesting chain of events with the consolidation and strengthening of Avianca and Copa. While Avianca (previously TACA) had a number of routes between the primary cities of Central America, its focus on San Salvador resulted in a reduction of capacity within the region. At the same time, Copa grew capacity substantially between Panama City and each of the Central American countries to feed its flights from its growing hub.

As a result of each airline’s focus on its hubs, TACA’s capacity in the region actually shrank while Copa’s grew. TACA surrendered 14 points in market share at the same time that Copa picked up 15 points in intra-regional market share. Amazingly, Copa picked up 27 points in market share of total seat capacity to Central America since 2000.

LCC challenge

While the consolidation phase continues, all the airlines solidifying their positions in their hubs are facing new challenges – the biggest being the low-cost carrier phenomenon. Although Latin America has a few LCCs, they are not as prevalent as other parts of the world. LCCs’ focus on point-to-point service can also reduce traffic on trunk routes to the hub, which poses challenges to the hubs’ dynamics. As the Latin American aviation sector evolves, each of the region’s new heavyweights must tackle the challenges that an LCC brings to markets, especially matching lower fares with existing cost structures. They must also face up to competing with similarly able and like-minded carriers. While these three airlines have often competed against lesser rivals, in many cases they now compete in the same markets, something that will only increase with their own ambitions. Avianca, Copa, and LATAM are currently the leaders in Latin American aviation; however, the race has just started. A new phase to harness and leverage the dynamics of the burgeoning Latin American economies is just beginning. Each airline brings outstanding assets to the competition, and passengers, airports, and nations in Central and South America will be the real winners.

ABOUT THE AUTHOR

Buddy Anslinger is vice president, airline network strategy, at InterVISTAS. He spent nearly 20 years at Continental Airlines where he was most recently managing director of international planning and scheduling. www.intervistas.com

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Knowledge is

power Network planners rely on tried and tested datasets to analyse growth potential. But Martin Ferguson asks if big data will bring valuable new intelligence to airlines.

ode breaking was responsible for many successful British missions during the Second World War. Scientists, physicists and probability theorists from across the Allied Powers developed the first data-processing machines. They pulled structured and unstructured data from multiple sources, including operational records, mission documentation and Nazi radar signals. The information was mined. Trends and patterns were sought. Often, the results led directly to victory on the battlefield. It was big data in its purest form. Arguably, it helped alter the course of history.

ROUTES NEWS 1, 2014

Fast-forward 70 years and big data is again at the core of change. The world of commerce is in the fledgling years of a data arms race. It’s Moore’s Law in action. The equation is simple: add the falling cost of data storage, lightning-fast processing and connection speeds, the volume of people connected to the Internet and the advent of social media, and it equals 90% of the world’s data, ever, generated in the last two years. Google is a leader in the field. It can, for example, monitor social media posts and search engine results to alert medical authorities to potential

health epidemics around the world. The power and potential of big data is overwhelming. Enterprises across industry verticals are scrambling to stay ahead of the competition. Commercial aviation is data rich. Some airlines and data aggregators have information about ticketing, reservations, schedules, customer support, trading, irregular operations, maintenance logs and crew dating back three or four decades. The ‘code breaking’ happens when these datasets are combined with unstructured information to create a business benefit. That’s the random, voluminous stuff created every second

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Big data

The ability to see and understand the immediate impact of changes is still not available to the aviation community. But it’s the Holy Grail

from the Web, in social media, text messages, videos, images, and audio files. Since the topic emerged a few years ago, many legacy carriers have invested heavily in research and development, predominantly to improve customer service and the passenger experience. On the operational side, network planners rely heavily on data to make decisions. And though there are no significant big data solutions yet available in the marketplace, there is little doubt about what lies ahead.

Data rich

Starting a new route is a huge capital investment. An airline could be putting two or three aircraft on a long-haul route, so getting the analysis correct is crucial to the financial health of the business. There is booking and reservation information; credit card and frequent flyer data; government and immigration figures, through to airport customer statistics. One of the most valuable data sources is MIDT, an aggregation of booking and reservation data from the global distribution systems (GDSs). “It’s all extremely valuable, but has the potential to be confusing as there is no definitive source,” says John Grant, executive vice president of aviation intelligence specialist, OAG. “Network planners are reluctantly forced to combine this data. They’re

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making hugely expensive capital investment decisions based on it. A lot of people are now looking for a one-stopshop, or a limited selection of shops, that will give them all the answers they need,” he adds. Grant highlights the sheer volume of data being generated – whether it’s from airline systems or social media posts monitored in real time – as the key challenge, revealing his own company receives up to 600,000 messages a day on schedule changes alone. “That includes everything from a new market or destination being served, a change of aircraft or even a five-minute delay. All of which has an impact on potential route traffic. The ability to see and understand the immediate impact of those changes is still not available to the aviation community. But it’s the Holy Grail,” he says. Such is the pace of development in this area, Grant predicts that a software solution providing a transparent and accurate assessment of data is only a few years away.

What might have been

One man in zero doubt about the potential of big data for network planners is Alessandro Ciancimino, Sabre Airline Solutions’ vice president of consulting. He says new requirements are emerging, though traditional methods still have their place…for the moment.

“In network planning there are key questions: what is the size of the marketplace [on a route]? What is the total demand? And if I put in a service, how much market share can I take from those already operating? MIDT is important, but it doesn’t represent the total traffic on a route. Its relevancy is decreasing on some routes because of low-cost carriers [who sell most of their fares direct to customers rather than through the GDSs]. You also have to know the number of people who wanted to fly but couldn’t because there wasn’t enough capacity. MIDT accounts for booked seats, not shopping enquiries,” says Ciancimino. He adds that IT providers are already developing software to analyse shopping and location data, and predicts that will revolutionise network planning. “With shopping data, you understand where a passenger would have liked to fly as opposed to where they ended up going. You can intercept the shopping enquiries made in markets only served by LCCs. You could even garner information about markets that don’t yet exist. For example, there may be a significant volume of enquiries made from IP addresses in the Bristol area for flights from London to a particular destination. If you spot that trend you may see the potential for a service between Bristol and that searched-for destination. You couldn’t perform that

ROUTES NEWS 1, 2014

Big data

Ultimately, you want the right aircraft on the right routes at the right cost with the right fares. That’s the goal

level of analyses without big data,” he says. He bemoans the fact a product is not yet available, but is excited by the potential. Kevin O’Toole, Flightglobal’s head of business, agrees the potential could change the business forever, but says carriers must consider how to react quickly. “You can’t wait too long to act upon your findings. The world is evolving fast. You have to react in real time.” He emphasises the importance of having the right personnel within the organisation to make sense of the “data minefield”. “Ultimately, you want the right aircraft on the right routes at the right cost with the right fares. That’s the goal,” says O’Toole.

Better the devil you know

Over the past decade, easyJet’s network has been one of the fastest growing in Western aviation. The budget carrier remains focused on selling seats through its website, but in recent years it has tried to snatch a share of European business travel traffic by selling seats through the GDSs and entering route deals with corporations. That makes the need for relevant data more important than ever to the carrier’s planners. Neil Slaven, the airline’s network development manager, says his objective is to the find the sweet spot between capacity

ROUTES NEWS 1, 2014

and demand. For the moment he uses traditional methods and data sets. He says: “We look at macro economic data at a European, country and regional level. We might look at unemployment in a region, or the spread of a particular diaspora, such as the growing Eastern European community in the north of Italy. “On the capacity side, we are interested in what other airlines do,” he continues. “We use a number of sources, the main one being OAG, which gives a view of our competitors’ schedules and what they have on sale. In certain places we’re able to access data on passengers carried. We gather data from airport operators, tourism authorities from governments and the European Commission. And to a certain extent we use MIDT. But there are no big data solutions, and there’s no silver bullet offthe-shelf source,” he explains. Slaven won’t rule out using a big data solution if and when one becomes available, but is sceptical about the supposed benefits of a one-stop-shop data solution. “You’re always seeking a competitive edge. If your competitors can access the same product, that edge might be lost. I’d almost rather it was the way it is now, where we rely on us being better at what we’re doing than the competition,” he says. John Strickland, director at JLS Consulting, agrees with the sentiment, saying network planners have to act like detectives. “Using traditional data is fine, but like the financial sector, past performance is

no guarantee of what is going to happen in the future. You have to do your own work,” he says. Earlier in his career, Strickland was a network planner. Nowadays he advises and lectures on the subject. He believes airlines can often be too tied to dated methodologies and structures, and therefore recommends they embrace big data and the opportunities offered by social media. “There are a lot of important and valuable conversations happening online. Airlines have to watch and react,” muses Strickland. “This intelligence you couldn’t get before. It’s more random, but we’re at the early stages of being able to manipulate and learn about people’s desires and motivations. It will be a valuable source of data for network planning because you need to understand that intangible human sentiment. What gets a person on a plane and how are you going to maximise it?” Pricing, and the planning of networks and schedules is very commercially sensitive – for that reason, a number of airlines even declined to participate in this feature. What is clear, however, is that as big data solutions are unveiled by IT providers and third parties, airlines will have no option but to play ball, or risk losing share to the competition. Many are already evolving their processes, and hiring staff with the skills to break the big data codes. As history tells us, whoever wins the most battles will eventually win the war.

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Spotlight on

El Salvador Richard Maslen takes a closer look at the transformation of the aviation market in one of Central America’s rapidly changing destinations.

aving only been constructed in the late 1970s to replace Ilopango International Airport as the Central American country’s sole commercial airport, El Salvador International Airport (SAL) is a relatively young facility compared with many other gateways around the world. However, over the past year, it has seen significant change. First its largest carrier, TACA, was integrated into Colombian flag carrier Avianca and now operates under the Avianca Central America brand. Then in mid-January, El Salvador’s President, Mauricio Funes, announced that the airport would be renamed Óscar Arnulfo Romero International Airport with immediate effect.

ROUTES NEWS 1, 2014

New branding will be formally introduced during the remainder of his presidential term, although the previous names of Comalapa International Airport and Cuscatlán International Airport are likely to remain in informal use. The name change is part of a major ongoing redevelopment of the airport, the first phase of which is due for completion this summer. Like many airports across the region the rapid growth in air demand has left the original infrastructure in need of significant improvements. In order to meet growing demand, airport operator, Comisión Ejecutiva Portuaria Autónoma (CEPA) is initially making upgrades to the existing terminal structure at SAL but revealed a four-phase $492.7 million project

that will run between 2014 and 2032 as part of a revised master plan launched in December. Although this does not include the construction of a new terminal structure, it will significantly expand the existing building and boost passenger capacity in the first phase (2014 -2017) to 3.6mppa and ultimately to 6.6mppa by 2032, when the existing number of gates will more than double from 17 to more than 40. A look at schedule data for the past five years shows the recent growth in activities at SAL. After hovering around 1.8 million outbound seats during the 2000s, the airport passed the two million departure seats milestone in 2011 and will exceed 2.5 million for the first time this year.

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El Salvador

El Salvador’s beaches and waterways are becoming popular with surfers and nature-lovers alike.

Largest airlines in San Salvador in 2013 (by seat capacity) 55.5% Avianca Central America (TA) 18.4% LACSA (LR) 7.1% United Airlines (UA) 3.9% American Airlines... 3.6% Aviateca (GU) 2.9% Copa Airlines (CM) 2.3% Iberia (IB)

2% Delta Air Lines (DL)

4.3% Other Source: OAG Schedules Analyser.

Estimated O&D demand from and to El Salvador in 2013 (bi-directional international O&D passengers) Rank

Destination

Estimated O&D demand

% Traffic share

United States

975,652

69.3

Honduras

57,046

4.1

Mexico

53,647

3.8

Canada

44,262

3.1

Costa Rica

42,186

3.0

Nicaragua

33,344

2.4

Panama

33,268

2.4

Colombia

26,838

1.9

Spain

20,074

1.4

Guatemala

19,031

1.4

Source: Sabre AirVision Market Intelligence.

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In fact capacity has risen 45.3% since 2009 with growth of 9.5% last year and an expected 11.3% rise this year. Avianca’s control of the local business is even stronger when you add the flights of Costa Rican carrier LACSA (also owned by Avianca), TACA’s old Peruvian operation and Avianca’s mainline business, growing to 76.2% in 2013 and 80.2% this year. Other operators at SAL include US carriers American Airlines, Delta Air Lines, Spirit Airlines and United Airlines, Mexican carrier Aeromexico Connect and Panama City-based Copa Airlines, while Iberia provides a non-stop link to the Spanish capital, Madrid. According to estimated data the number of O&D passengers travelling internationally from and to El Salvador in 2013 was 1.4 million, up 1.8% on the figure recorded in 2008. Avianca had an estimated 52.8% share of this international traffic, followed by United Airlines (15.3%), American Airlines (8.8%), Delta Air Lines (4.8%) and Aviateca (4.7%). Although the top 10 O&D international markets from and to El Salvador have not changed over the past five years, there have been some notable changes in position with markets such as Costa Rica, Guatemala, Nicaragua and Panama, with less O&D flows, while Canada, Colombia and Honduras have seen rising O&D flows. The US continues to be by far the largest market for passengers to and from El Salvador with O&D demand up 10.5% between 2008 and 2013, increasing its market share to 69.3%.

ROUTES NEWS 1, 2014

Vantage

Biting into the

Big Apple The Vantage Airport Group is bidding in one of the biggest airport privatisation projects in the USA – CEO, George Casey, spoke with Lucy Siebert.

t promises to be a big year for the Vantage Airport Group. Not only is the company celebrating its 20th anniversary, but 2014 could see the Port Authority of New York & New Jersey (PANYNJ) making a decision on which of four bidders will get the green light to build and operate the new Central Terminal Building at New York’s LaGuardia Airport. It is a decision that is being closely monitored by Vantage Airport Group, which is part of the LaGuardia Gateway Partners bidding consortium. Along with Vantage, the consortium is made up of Skanska, Meridiam Infrastructure, Tishman Construction, Parsons Brinckerhoff, Morgan Stanley, Citigroup and Wells Fargo. The tender is due on April 15, after which the PANYNJ will proceed with its decision-making process. While airport privatisation has been slow to take off in the United States, highlighted by Midway’s aborted process last year, there are high hopes the LaGuardia process will set in motion a series of improvements at the gateway, which sits in the busiest air space in the world. Vantage Airport Group’s CEO, George Casey, tells Routes News the LaGuardia

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bid is very much the key project for the Vancouver-based airport operator in the year ahead. “Our key focus is LaGuardia, given the timetable the PANYNJ has laid out. The company [Vantage] has a rich history of bidding for projects – LaGuardia is very exciting for us,” he says. Casey adds that while airport privatisation projects in the USA have, in many cases, been slow-starters, he believes the LaGuardia process is moving in the right direction. “We think the port authority is running a very transparent process, which is helpful,” he says. “We are responding to their requirements and leveraging the extensive experience and capabilities of the [Vantage] network with our consortium partners who we think can respond to the port authority’s objectives and requirements for the development and management of LaGuardia,” he adds. The Vantage group is up against Aerostar New York Holdings, a group that includes Highstar Capital, Aeropuerto de Cancun, Hunt Architects, Fentress Architects,VRH Construction and RBC Capital Markets; LGAlliance, which is made up of Macquarie, Lend Lease, Turner,

George Casey

Hochtief, Parsons and Gensler; and the third grouping, LGC Central Terminal Consortium, a joint venture of Aéroports de Paris, TAV Construction, Tutor Perini, Goldman Sachs, Suffolk Construction, STV, Arup and Kohn Pedersen Fox. The LaGuardia project stands front and centre in terms of short-term priorities, but Casey doesn’t rule out potentially looking at other airport acquisitions in the months ahead. “We continue to look at opportunities. There are some active opportunities out there that we are following, but our key focus this year is LaGuardia. If other opportunities come to the point where they are actually transacting, we will look at them,” he says.

Celebrating 20 years

The competition for LaGuardia is stiff, but if Vantage is awarded the contract this year, it would be the biggest birthday present the operator could ask for to mark its 20th anniversary.

ROUTES NEWS 1, 2014

Vantage >>> FAST FACTS • Established in 1994 as Vancouver Airport Services • Jointly owned by Vancouver Airport Authority and Citi Infrastructure Investors (CII) • Eight airports in North America, the Caribbean and Europe

The group started as Vancouver Airport Services in 1994 and Casey, speaking from his Vancouver offices, tells Routes News that collaboration and partnership is deeply ingrained in the group’s culture. With airports in locations as diverse as Cyprus, the Bahamas, Canada, the UK and Jamaica, Casey says the group is in the enviable position of being able to leverage a breadth of global experience. He notes that one of the group’s key commitments is creating growth opportunities for staff within the company – something that has been highlighted over the past year. “What we really pride ourselves on is the development of our people within our network of airports. Recently that included the movement of our CEO in Cyprus, Craig Richmond, to become president and CEO of YVR, our long-time shareholder. Craig has had two other CEO positions within the group – one at Liverpool in the UK and, prior to that, at the Bahamas in Nassau. It’s a great example of someone working through our system,” says Casey. That move in turn saw Wes Porter moving from Liverpool to Cyprus to take up the CEO role, while Stewart Steeves moved from being president and CEO of Nassau airport to chief financial officer for the corporate holding company in Vancouver. The people approach has also resulted in the appointment of former Southwest network planning director, Lee Lipton, as director of air service marketing – a role that does not feature in many other airport groups’ structures.

ROUTES NEWS 1, 2014

The Vantage Airport Group’s stand at World Routes 2013 included representatives from its eight gateways, as well as staff from the Vancouver head office.

Casey says it is a position that has proved invaluable for the group over the past two years. “We are always surprised when we talk to partners and investors about how important a position like Lee’s is,” he says. “We have been putting resources – people and also systems – in place to allow us to analyse data, schedules, put air service proposals together. But, with a person like Lee, he can develop senior corporate level relationships with the airlines, so we might have an airline customer we know is a Vantage customer across a number of airports and Lee will help that relationship and the objectives of the airline, along with the local management team,” Casey explains. He cites the example of Transaero, saying Montego Bay was able to secure additional services, helped by the existing relationship the Russian carrier had with the Caribbean airport’s partner gateways in Cyprus. “They [Transaero] were flying into Cyprus and they had a really good relationship with our people on the ground there and a good rapport with Lee. It demonstrates what a relationship like Lee’s could do – it goes above and beyond what the site location can do in securing Transaero,” he says. Casey goes on to explain airports in the group’s network in some cases work on an “end-to-end service”, providing

packages and proposals to airlines from both gateways. “We are better able to give a deeper proposal and partnership approach to the carriers,” he says. “We are able to do that between our airports in Cyprus and Liverpool and also Hamilton and Montego Bay. The teams were able to work with the carriers in a much more unified fashion. We think that brings lots of value and it is not something we see elsewhere in the industry.” I ask Casey that with more political and economic turbulence forecast for the year ahead, what he believes the biggest challenge will be for Vantage and other airport operators, and, perhaps not surprisingly, he replies that it will lie with working even more effectively with airline partners. “It’s a highly competitive environment – the airlines are refining their decisionmaking processes around how they allocate aircraft and they are spending quite a bit more time and effort making sure those decisions are made, and they are responding to the market rapidly when they need to make those decisions,” he says. With such a sharp focus on air services and airline relationships, the air service community can expect to hear and see a whole lot more from Vantage Airport Group during its special 20th anniversary year.

Lee Lipton, Vantage Airport Group’s director of air service marketing, will be speaking at the Routes Americas Strategy Summit. Find out more: http://www.routesonline.com/events

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Quito

New era for Quito Ecuador’s new international airport is opening the door to more tourism and trade, writes Routes News.

year ago, the new Quito International Airport opened to serve the more than five million passengers who fly to or from Ecuador’s capital city each year. The new airport, which was constructed by and is managed and operated by concessionaire Quiport, was highly anticipated. The old facility had been located in the middle of city, with no scope to expand, and was actually considered a safety hazard for local communities. The new airport is the newest greenfield airport in South America and offers modern infrastructure and the latest technology and services for airlines and passengers. One of Quiport’s main focuses is on working closely with airlines on route

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development initiatives, and with other stakeholders on the development of Quito Airport City.

Route development

Over the past eight years, Quiport has actively worked on route development. This has included participating at Routes Americas and World Routes, and visiting airlines to keep their route developers updated on market opportunities. Upcoming plans include a visit to Air Canada in Montréal, as well as a technical meeting in Quito with representatives from JetBlue for a potential new flight to Fort Lauderdale. The company has also implemented several air service development initiatives aimed at increasing frequencies on existing routes, or developing new ones.

>>> FAST FACTS • 4,100m runway • S afer operations with lower landing approach minimums • State-of-the-art navigational aids • C ompliance with all ICAO regulations • 26 retail and F&B outlets

A key part of this has been garnering the support of the municipal and national government for these incentives. As well as working with them, the airport operator has also focused on co-ordinating with the Ministry of Tourism on joint marketing activities. This work has started to bear fruit, with a number of new frequencies and routes being announced. Since the opening of the new airport, Quito has landed a new route to Buenos Aires with Tame; a new three-times weekly service to Madrid with Iberia; and a new non-stop route to Mexico with Aeromexico. KLM has also increased its frequency to Amsterdam to daily flights. With Ecuador being a major exporter of agricultural goods and flowers, the

ROUTES NEWS 1, 2014

Quito cargo side of the business has also seen some positive developments. In June, the airport welcomed Etihad Cargo’s first B747-800F. The operator is currently flying a threetimes weekly service. Meanwhile, Emirates SkyCargo started trial operations in December, which could lead to a regular operation.

Airport City

Andrew O’Brian, CEO, Corporación Quiport How has the airport very closely with our performed over existing airlines and we the past year? are constantly talking to By the end of 2013, 5.5 million passengers had passed through the airport, about 4% growth compared with 2012. International passengers grew 16.7% in December. We added three new international destinations (São Paulo, Buenos Aires and Mexico City) and one domestic; one new airline (Aeromexico); two additional frequencies to Amsterdam with KLM and three weekly services to Madrid with Iberia.

potential new airlines that truly see the operational advantage of our new infrastructure, and the feasibility of having a route to Quito. We also believe there is great potential for a low-cost airline.

What are your goals for cargo this year?

The operational advantages of the airport have made cargo airlines operate larger aircraft because there are no restrictions on payload. In 2013, we had the What types of B747-800F operated by airlines are you Atlas flying three times focusing on a week regularly, plus targeting in 2014? some trial operations with Our focus will continue to Emirates SkyCargo. That be improving connectivity might lead to a regular with increased frequencies operation during 2014. or new routes. We work This year will be the first

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time the Valentine flower export season operates out of the new airport and we expect to see double-digit growth.

What are your plans for the Quito Airport City? Our plans are to continue growing the airport city with improvements in terms of route development, infrastructure and service levels. In 2014, we expect to see important growth so, as part of our master plan, we have already started the expansion phase with a total investment of about $18 million to benefit passenger and cargo operations. We have already started the construction of five-star hotel with a key real estate developer in the country.

Over the past year, Quiport and its partners have invested more than $74 million in developing an Airport City at Quito. These investments include a new logistics centre, and a new corporate centre that is connected to the terminal, offering a food court and services for airport users. It has also invested in a new 600sqm international VIP lounge, the expansion of duty free offerings and a new five-star 140 room hotel at the airport. With passenger numbers growing, Quiport has already announced the start of construction works on the next phase of its masterplan. This will see a total investment of about $15 million on a 5,260sqm terminal expansion and two new air bridges. Cargo will also be prioritised, with the company forecasting 28% growth in flower exports during the main flower cargo season. The airport’s cargo expansion plans include an 14,000sqm area, located on the south side of the current platform, and a connecting taxiway of 13,754sqm. Quiport’s vision of being an airport industry leader in the region, and providing an engine for social and economic development for Ecuador, is already taking shape.

Quito’s Andrew O’Brian will be speaking at Routes Americas. www.routesonline.com/events

ROUTES NEWS 1, 2014

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Chicago is home to the skyscraper and one of the busiest airport systems in the world – get ready for an unforgettable World Routes this year.

orld Routes 2014, taking place in Chicago, Illinois, is promising delegates an unbeatable mix of Face-to-Face meetings, networking opportunities, industry-leading conferences and experiences unique to the Windy City. World Routes is the largest and most important event for the commercial aviation industry. Now in its 20th year, World Routes is where decision-makers from the world’s airlines, airports and tourism authorities gather annually to plan air services and discuss strategies for the global aviation industry. In addition to the Face-to-Face meetings, which are the core element of the event, the programme will also deliver more industry-leading content to all attendees than ever before. The conference programme will include the World Routes Strategy Summit, which will pick up on some of the key themes identified in the White Paper, which was published by the World Bank following last year’s event in Las Vegas. The Strategy Summit brings together senior leaders and key stakeholders from the aviation, tourism and cargo sectors to participate in discussions that will set the commercial and political agenda for the industry. The events attract the very highest level of senior decision-makers from around the world including: airline and airport CEOs; ministers of tourism; ministers of transport; and leaders from industry associations worldwide. World Routes will also deliver 30 Route Exchange Airline Briefings. These sessions, presented by senior network planners, are open exclusively to airport

ROUTES NEWS 1, 2014

and tourism authority delegates. They allow airport and tourism delegates to gain deeper insight into their current and target airline partners’ business. The Route Exchange Briefings, which are held in private theatres on the show floor, are an excellent way to develop a deeper understanding of the route planning function of airlines; hear a valuable update on airline opportunities; and to gain more of an understanding

of how decision-makers at airlines view the market. The 20th anniversary World Routes, hosted by the City of Chicago Department of Aviation (CDA) and Choose Chicago, will be held at McCormick Place, the largest convention facility in the Western Hemisphere. McCormick Place comprises four state-of-the-art buildings just minutes from downtown Chicago and hosts three million visitors each year. The new Routesonline has landed, featuring a new mobile responsive design, along with new features and tools. You can personalise your page, access in-depth analysis, global news and plenty more.

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Events essentials Routes Americas 2014

Routes Asia 2014

San Salvador, El Salvador 23-25 February 2014

Kuching, Sarawak, Malaysia 9-11 March 2014

Routes Africa 2014

Routes CIS 2014

Victoria Falls, Zimbabwe 22-24 June 2014

To be confirmed

Routes Europe 2014

Marseille, France 6-8 April 2014

World Routes 2014

Chicago, Illinois, USA 20-23 September 2014

A leading line-up This year’s Routes Asia Strategy Summit, sponsored by ATR – Avions de Transport, will feature some of the biggest names in Asia-Pacific aviation and tourism. The event will take place on March 9 and is open to all delegates. Routes Asia is taking place in Kuching, Sarawak, hosted by the Ministry of Tourism Sarawak and cohosted by Malaysia Airports Holdings Berhad. AirAsia X’s CEO Azran Osman-Rani will deliver a keynote address, while the other sessions will feature moderator led panel discussions addressing the issues affecting commercial aviation across the region. The Future of LCCs in Asia – Innovate or Stagnate will include panellists Andrew Cowen, deputy CEO of Hong Kong Express, and Girish Nair, chief commercial officer of GoAir. Deannath Kulatunge, IATA’s Asia-Pacific regional

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head for member and external relations, has confirmed he will join a panel entitled The Battle of the Hubs – Middle East vs. Far East. Vijay Poonoosamy, Etihad’s vice president international and public affairs, and chair of IATA’s Industry Affairs Committee, will moderate session three, entitled Emerging Outbound Tourism Markets. He will be joined by a panel of experts including Dr Hugh Dunleavy, director of commercial for Malaysia Airlines; Chris Flynn, regional director – Pacific for the Pacific Asia Travel Association (PATA); and Beatrice Lim, director, industry and regulatory affairs for the Association of AsiaPacific Airlines (AAPA). The Summit’s content and interactive format has cemented it as an integral part of Routes Asia, which this year is expected to attract around 800 delegates.

Another Routes first Routes Americas, the annual air service event for the entire Americas region, will next year take place for the first time in the USA. The event in Denver, Colorado, will be hosted by Denver International Airport and supported by Visit Denver, 1-3 February 2015. This event will also include Network USA which transferred to Routes control at the end of last year. Michael Hancock, Mayor of the City and County of Denver, has welcomed the event. “We are extremely excited to host Routes Americas in 2015 and provide a ‘Mile High’ welcome to airlines and airports from across North and South America. Expanding our global connectivity through Denver International Airport is a critical component of our ongoing international outreach efforts,” said Hancock. Kim Day, manager of aviation at Denver International Airport, added it was an opportunity to show the region off to delegates from around the world. “By hosting Routes Americas in 2015 we will be able to showcase all that Denver and Colorado have to offer as airlines look to expand their networks,” she said.

ROUTES NEWS 1, 2014

p o t e h t m o r f w ie V NAME JOB TITLE ORGANISATION WEBSITE HEADQUARTERS

EDUARDO IGLESIAS Executive director

tion (ALTA) ibbean Air Transport Associa The Latin American and Car www.alta.aero

YEAR FOUNDED

1980

Miami, Florida, USA

ion’s enting over 90% of the reg 40 member airlines repres MEMBERSHIP commercial air traffic

fatal consecutive years without llenges What are the biggest cha gistered A-re IOS accidents among the ion? facing aviation in the reg d nee the ise airlines. We recogn tly Continuing to operate efficien A IOS ll fulfi ’t for carriers that can ure and safely using infrastruct ir the of e aus requirements bec handle that is often barely able to higher fleets, but still wish to meet of lication growing air traffic. The app ess to acc e hav safety standards, to and antitrust regulations, taxation ed help We its. a different set of aud er airport overcharging of fuel and oth ed inat culm t drive an initiative tha diverse related services, as well as A Safety in the creation of ISSA (IAT s, are consumer rights legislation ch will whi nt), Standard Assessme is full of also challenging. Our region ther ano of ds help to meet the nee s and different antitrust regulation ured sec also e hav tier of airlines. We practices policies that prevent many of 85% of tion the shared informa parts of that are accepted in other wing us all flights in the region, allo ity to the world. This limits our abil any risk tely ura to identify more acc field. compete on a level playing it possible kes ma areas, which in turn that help es mm gra to implement pro s Are Latin American airport ALTA was ts. den inci mitigate high-risk e enough? prioritising infrastructur g, and osin opp in also actively involved na has l As a point of reference, Chi fue l era sev of, eal obtaining the rep n or s. 94 airports under constructio fee ort airp and taxation initiatives a, being expanded. Latin Americ which with its growth rate of 6.5%, an Is ALTA confident Brazili 16 has , na’s Chi to e is very clos welcome to dy rea airports will be n or being airports under constructio ? Cup rld visitors to the Wo iod. We expanded in the same per s to step n take Although Brazil has the region know over 30% of flights in 4 201 the for meet travel demand in an either depart from or land ics, mp Oly 6 201 World Cup and the oversaturated airport. ns these there are still many concer to what fix ary por will only be a tem ustry What has been ALTA’s ind tleneck. bot ure uct is a major infrastr r? highlight over the past yea wth gro c traffi If you look at the ty, We continue to improve safe the opportunities in Brazil over of five demonstrated by a record

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e those next 20 years and compar the to what can be achieved with r afte n current infrastructure, eve t the tha r recent investments, it is clea not y ma positive effects of aviation reach many communities. What has been the most Latin significant change in the ? ape American airline landsc of g Consolidation and the buildin e wer re alliances. Ten years ago, the e thre with 101 airlines in the region, e hav we involved in alliances. Today, the of 79 airlines and two thirds airlines in region’s ASKs are flown by est groups global alliances. The 10 larg rly 90% in the region represent nea solidation of the region’s capacity. Con as er, has benefitted the consum tions nec con efficiencies and seamless often result in lower fares. with Are airports partnering te rou tourism authorities on ? development initiatives from local There is a growing interest ing elop tourism authorities in dev s nitie ortu connectivity and new opp Ten es. ntri to promote cities and cou 687 city years ago, there were only region, the pairs being served within there ay, Tod including the Caribbean. g. win are more than 953 and gro

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