Routes News Magazine, Issue 2, 2013 by routesnewsmagazine

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The world air service development magazine

GVK: Building for the future Interviewed: AirAsia, IndiGo & Tourism Australia Airport profiles: Phnom Penh & Malta Special report: Cargo Issue 2 Volume 9 2013 www.routesonline.com

Focus: Social media Plus: All the highlights from Routes Americas

Foreword T

his year looks set to be an exciting one for India’s aviation sector. In September last year, the Indian government came to the momentous decision to allow foreign companies to buy up to a 49% stake in Indian airlines. The impact of that decision has been swift, with Etihad conducting talks with Jet Airways for a possible partnership and AirAsia going even further by announcing plans to launch a new domestic carrier in the market. An announcement regarding Air Deccan founder Captain Gopinath’s plans for a new joint venture is expected imminently and there can be little doubt that these will not be the last new players to enter the Indian market. But of course this is not the first time that Manmohan Singh’s government has given the private sector the lead to underpin the growth of the country’s aviation sector. Its decision to privatise the country’s Mumbai and Delhi airports in 2006, and later Bangalore and Hyderabad, has led to a sustained period of modernisation and expansion of these key gateways under the direction of Indian multinational corporations GVK and GMR. Today, the results of that investment are obvious with Mumbai’s Chhatrapati Shivaji International Airport a thriving gateway that welcomed some 30 million passengers between April 2011 and March 2012. Later this year, the airport will open its revamped Terminal 2 ‘T2’, which will boost the airport’s capacity by 40 million and hosting Routes Asia will provide an

Editorial

Editor Oliver Clark +44 (0)208 831 7514 oliver.clark@routes-news.com Deputy Editor Piers Evans +44 (0)208 831 7508 piers.evans@routes-news.com Group Editor Joe Bates +44 (0)208 831 7507 joe@aviationmedia.aero Reporter Steven Thompson +44 (0)208 831 7560 steven.thompson@routes-news.com

Sales opportunity to showcase this new facility to delegates and the wider world. Mumbai is the powerhouse of India’s economy and delegates will have a chance to experience its wonders first hand during the event. Meanwhile, the Airports Authority of India is also pursuing an ambitious plan to modernise a number of its gateways and we interview chairman Vijai Prakash Agrawal in this edition. Elsewhere, you can read about both India’s airport and airline plans, with interviews with many of the lead players, including AirAsia. We also look at how airports such as Christchurch and Lambert St Louis came back to recover traffic after natural disasters and we profile Malta and Phnom Penh airports.

Editor Oliver Clark

R™ is a registered Trade Mark of UBM Aviation Routes and is used under licence. © Copyright 2013. The content of this publication is the copyright of UBM Aviation Routes 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 Aviation Routes shall not be liable for any errors or omissions contained herein.

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

Production

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

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

Contents 20 24

32 3 Foreword 8

World news

Cargo news

On the move

Airline one2one Keith Green, HOD network planning, South African Airways.

Indian summer India’s domestic aviation market looks set to heat up as a change in ownership law heralds new airline entrants, writes Oliver Clark.

Brand new

Capital gains With a $150m overhaul to its international airports, Cambodia Airports is shifting its focus to the capital, Phnom Penh, where the recent touchdown of a Qatar Airways A330 from Doha could open a new era, reports Simon Lewis.

Sound investment Oliver Clark talks to Sanjay Reddy, chairman of GVK Power and Infrastructure Limited, about the company’s plans to modernise its airports in India and further afield.

36 Where next for Asia’s low-cost airlines?

Low-cost carriers have only scratched the surface of their potential within Asia, argues Gordon Bevan of ASM.

Richard Maslen reports on the latest expansion of the AirAsia brand as it prepares to enter the Indian domestic market.

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Contents

41 51 41

New beginnings Routes are won and lost every day, but what happens when an airport needs to do some crisis management? Steven Thompson reports on the impact that earthquakes, tsunamis and devastating storms have on airports.

Being social Routes News takes a look at the latest innovative ways airlines and airports are using social media.

Call of the wild Routes Asia will head to the Malaysian state of Sarawak in 2014. Steven Thompson caught up with Tourism Minister, Datuk Amar Abdul Rahman Zohari, to discuss the region’s attractions.

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Island records Malta International Airport has broken its own passenger traffic record three years in a row. Steven Thomspon asks its CEO how he is attracting new airlines and routes.

Routes Americas report back

The last word V P Agrawal, chairman of the Airports Authority of India, tells Routes News about his hopes for the Routes Asia conference and gives an overview of how the country’s airports are performing.

Marketing wizard of Oz Since taking charge of Tourism Australia in January 2010, managing director, Andrew McEvoy, has been working to update the country’s image to stress blue sky, clean air and vibrant cities; he talks strategy with Peta Tomlinson.

Turning the corner Daniel Fernandez, secretary general of The International Air Cargo Association (TIACA), reflects on a challenging operating environment for the industry and the prospect of a more positive year ahead.

Routes update pages

View from the top Roger Dow, president and CEO of the US Travel Association, tells Routes News how his organisation is battling for the sector’s interests in the downturn.

World news Emirates puts second A380 on Sydney route From June 1, a second A380 will fly the Dubai–Sydney route, operating on an early morning service. Swapping a B777-300ER for the Airbus will add 1,890 seats per week on Emirates’ EK414 and EK415 flights. Salem Obaidalla, Emirates’ senior vice president, commercial operations, Far

East and Australasia, said the move has been triggered by customer demand for “the state-of-the-art aircraft” as well as growing popularity for the early morning service. “A second A380 for Sydney also complements our proposed plans for the partnership with Qantas,” he added. Roberto Colaninno, Ragnetti’s successor.

Qatar launches flights to Cambodia Qatar Airways has launched daily flights to Phnom Penh in Cambodia via Ho Chi Minh City from its Doha base. Flight QR602 – operated with an A330 – makes Qatar Airways the only Middle Eastern airline flying to the Cambodian capital. Despite having one of South East Asia’s fastest-growing air markets, Cambodia has a “highly under-served” air travel market, according to Qatar Airways CEO Akbar Al Baker.

“Qatar Airways is here to fill this void and we look forward to working with the travel trade and our business partners to make this a hugely successful operation.” Cambodia welcomed 3.6 million international tourists in 2012, up 24% on the previous year. “Qatar Airways currently operates dedicated flights to Paris and Montreal – both very important feeder markets for Cambodia,” said Al Baker.

Sri Lanka to open new international airport On March 18, Mattala Rajapaksa International Airport (MRIA) is set to open at Hambantota on the southern tip of Sri Lanka. The airport will carry HRI as its IATA code and VCRI as its ICAO location indicator. Minister of Civil Aviation Priyankara Jayaratne said airlines

EasyJet is ramping up its London– Copenhagen route from May, adding a fourth daily return flight from Gatwick. The carrier will fly early morning from Copenhagen for the first time and is also adding a 19:50 departure from Gatwick. Hawaiian Airlines is increasing Australia and New Zealand flights for peak season in September and October, with 8,800 8

including Emirates, Qatar Airways, Etihad, Air Arabia, Sichuan Airlines and Korean Airlines have agreed to fly to MRIA, according to Sri Lanka’s Sunday Times. An Open Skies policy will be in place at the airport for an unlimited period, he is reported to have said.

extra seats on routes from Honolulu to Sydney, Brisbane and Auckland. Virgin Australia is to challenge Qantas by opening ATR routes between Brisbane and Moranbah and Bundaberg. Merren McArthur, group executive of alliances, network and yield, said the company was bringing “much needed competition”.

Alitalia CEO resigns During a meeting of the airline’s board of directors on February 25, Alitalia’s board and CEO Andrea Ragnetti “mutually agreed to terminate their relationship”, according to a statement by the airline. Ragnetti, who had been CEO since March 2012, also resigned as CEO of Air One and managing director of Alitalia. Roberto Colaninno [pictured], the chairman of Alitalia, was named acting CEO until a replacement is found. He will be assisted by two vice presidents: Elio Catania and Salvatore Mancuso. The resignation comes as Alitalia announced a net operating loss of €280 million for the 2012 financial year.

Minoan Air is opening up routes from Oxford to Edinburgh and Dublin from March. COO Marcos Caramalengos said the Greece-based carrier may also later fly from London Oxford airport to Amsterdam and Copenhagen. AirAsia X has launched its inaugural flight from Kuala Lumpur to Shanghai Pudong International Airport. The six weekly flights

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Aer Lingus’ Christoph Müller.

News AirAsia India set to launch in Q4 AirAsia’s Indian joint venture will begin operations in the fourth quarter of 2013 with three to four A320 aircraft, if regulatory approval is forthcoming, according to AirAsia CEO Tony Fernandes. AirAsia India will differentiate itself on brand, price and network and will operate from secondary airports, avoiding the higher fees of hubs such as Mumbai and Delhi, Fernandes told journalists on a conference call on February 21. “Let’s not kid ourselves, it will be price that delivers traffic to us,” he said.

The model would be similar to AirAsia’s in Japan and Indonesia, he added. “India is a huge country with huge potential in terms of connecting the dots and we will provide the catalyst for private airport operators and government of India airports to develop third-tier airports that are capable of handling jets,” he said. Fernandes said that gateways such as Mumbai and Delhi should consider building dedicated low-cost terminals to attract low-cost airlines. The initial investment in AirAsia India will be $30–$50 million.

Malaysia Airlines eyes China and India Malaysia Airlines sees regional opportunities and is looking at new destinations, its CEO has told the national press agency, Bernama. Malaysia Airlines (MAS) aims to exploit growth in the regional market, with a view to new destinations in China and India, Ahmad Jauhari Yahya, group CEO, told Bernama. Firefly, the carrier’s budget airline, plans to fly more routes into Indonesia, Singapore and southern Thailand, he added. MASWings, which flies between Sabah and Sarawak, is also looking at opportunities in East ASEAN – Brunei,

Indonesia, Malaysia and the Philippines – he told the agency in an interview arranged by MAS. “We will make the announcement once we got the aircraft and study the traffic,” he said. MAS would react quickly, he added. MAS is also ready to take on Air France-KLM on the Kuala Lumpur–Paris route, which the Europe-based carrier will fly from April 23, he added. “We’ll compete by demonstrating we can do better than them,” he said. MAS will fly an A380 on the route from next month.

Aer Lingus – glad EC blocked Ryanair takeover.

tap portugal – Announces a €15.9 million profit for 2012.

Pegasus Airline – preparing for IPO.

Linda Markham – only female airline head in US.

Take off, NOT Iberia – cuts lead to protest.

US airports – risk losing routes in AA/US Airways merger.

Turkish Airlines – caught up in uniform spat.

Bahrain Air – on an A330 will compete with China Eastern and Malaysia Airlines. Georgian Airways is set to launch a weekly service from Batumi to Kyiv Zhuliany International Airport from April on a CRJ-200 aircraft, according to local media. The carrier is also reported to be planning daily flights to Batumi, with a B737, in the summer.

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Air Malta will operate weekly charter flights from Glasgow Airport every Tuesday between May and October. Philip Saunders, Air Malta’s CCO, said: “Our strategy is to become the market leader for flights to Malta and our summer charter operation from Glasgow Airport allows us to cater for Scottish holidaymakers during the busiest months.”

is grounded.

News EC blocks Ryanair’s takeover of Aer Lingus As expected, the European Commission (EC) again ruled on February 27 against Ryanair’s attempted takeover of the Irish national carrier. ‘Europe’s only ultra low cost carrier’ was prohibited on competition grounds, according to the EC. “The Commission concluded that the merger would have harmed consumers by creating a monopoly or a dominant position on 46 routes where, currently, Aer Lingus and Ryanair compete vigorously against each other,” said the EC. Ryanair had “offered remedies”, added the EC. But market tests revealed that these “fell short of addressing the competition concerns raised by the Commission”. Ryanair’s current 30% stake in its smaller rival has prompted an investigation by UK competition authorities. “The legality of this is now to be challenged by the UK Competition Commission, which can prohibit Ryanair having ‘material influence’ over Aer Lingus – a far lower threshold than the ‘decisive influence’ required for the European Commission’s jurisdiction,” said the lawyer. Ryanair could now lose its entire stake in Aer Lingus after the UK Competition Commission reopened the case in light of the EC’s decision.

Sichuan Airlines has won US Department of Transportation permission to continue flights from Guam and the Commonwealth of Northern Mariana Islands (CNMI) to Chengdu, Guangzhou and Shanghai. Hyannis Air Service has a green light to continue a thrice-daily Essential Air Service (EAS) between Massena, New York and Boston Logan via Albany for a 10

First phase of Qatar hub to open Hamad International Airport – a new $15.5 billion airport in Doha – is on track to open on April 1. Qatar Airways will operate the gateway, which will initially serve 12 legacy and low-cost carriers, before the national flag carrier shifts its entire operation to the airport in the second half of 2013 as the new hub starts full operation. In the intervening period, Doha will run two airports: Hamad and Doha international airports. Designed by global architecture firm HOK, the new threelevel gateway will cover 600,000sqm and be equipped to cater for 28mppa. An undulating, wave-shaped roof structure reflects Doha's seaside location, said HOK. Natural light from glazed façades and skylights intuitively guides people through the space, added the firm.

SAA could cut routes South African carrier SA Airways (SAA) is to present a turnaround plan to government, on either March 28 or April 2, which might involve cutting some flight routes, according to local media reports. Last month, the national carrier reportedly received a $62 million (R550 million) bank “facility” to cover fuel and other short-term commitments. The airline's losses over the past decade amount to $1.7 billion (R14.7 billion). SAA is set to take “a very hard look” at the routes it flew, said acting CEO Nico Bezuidenhout, according to the

further two years. Hyannis, operating as Cape Air, will operate a nine-passenger Cessna 402 on the route. Air France is stepping up its flights to Africa, with an expanded schedule of 10 flights a week from Paris to Abidjan in the Ivory Coast, as well as increased flights to Nigeria and to Libreville in Gabon. Libreville will have a daily flight from

South African Press Association. “If our... mandate is to connect up with the countries we do trade and tourism business with, then our route networks should be informed solely by that... mandate,” he was reported as saying. “This may mean we have to cut certain routes.” Bezuidenhout also suggested a fleet overhaul. “If we have the wrong tools for the job, we’re not going to make it. Our long-haul fleet will not be profitable unless we adapt and change our fleet,” he told the committee.

March 31, when a B777-200 will start to serve Port Harcourt in Nigeria. Etihad Airways has bought three pairs of daily slots from Indian carrier Jet Airways for €53.5 million. Jet Airways flies twice daily to Mumbai and once daily to Delhi. The deal is part of Etihad’s sale and lease back agreement signed on February 26, 2013.

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Cargo news IAG Cargo raises China capacity IAG Cargo will offer extra cargo capacity to businesses in China from March 31 on a passenger service between Shanghai Pudong International Airport and Heathrow. A B777 widebody capacity will become available on a weekly basis, as the new service expands from six to seven times a week, potentially adding 42 tonnes to the route.

AMI moves into India Air Menzies International (AMI) has set up a regional division for India and launched an operation in Mumbai. AMI India will debut trade-only air cargo wholesaling in India, said the firm. The Mumbai operation, based near the city's international airport, will initially focus on airport to airport traffic to the firm's existing stations in the UK, US and Africa. AMI India will progressively introduce more destinations, and additional products such as airport to door, over the coming months. Once its Mumbai office is fully established, AMI India plans to follow this with further branches in Delhi, Chennai, Bangalore and Hyderabad. Trevor Saldanha will head up AMI India as regional vice president.

Cargolux is to fly into Port Harcourt, in Nigeria, from March 5 with a B747. The new service was propelled by the regional capital’s strong oil and gas traffic, said the carrier. Cargolux is eyeing further expansion in Africa in 2013, the airline added. Dubai World Central (DWC) handled 219,092 tonnes of airfreight during its second full calendar year, up 144% on

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In January, IAG Cargo announced extra cargo capacity on a new thrice-weekly service between Heathrow and Chengdu in south west China. John Cheetham, regional commercial manager for APAC at IAG Cargo, said that IAG Cargo “is doing all it can to help customers fully realise the economic potential of the region” by ramping up its services to China.

Chinese New Year Lifts confidence

Etihad leases KLM freighter

The Stifel Logistics Confidence Index rose for the fourth consecutive month in February 2013, according to Transport Intelligence, a global logistics research and analysis firm. The index, combining both the current and expected situations, rose 3.3 points to 52.1 from 48.8 in January, with the index for airfreight up 3.4 points to 43.1 in February. Chinese New Year’s impact was clear on the Asia to Europe lane but forwarders also expressed greater confidence in the six-month outlook. In response to an additional question in February, 60% of survey participants expect the economy to improve in 2013. The Stifel Logistics Confidence Index is generated from an extensive survey of global logistics professionals.

Etihad Airways has signed a wet-lease contract with KLM-Martinair Cargo for a B747-400 ERF. From late March, the freighter is due to operate between Abu Dhabi and Amsterdam, and to increase capacity to Frankfurt, Hong Kong and Dhaka. Air France-KLM and Etihad Airways announced in October a strategic partnership to create value for each airline. The B747-400 ERF takes Etihad Cargo’s freighter fleet up to seven aircraft. The airline already operates two B777Fs, one B747-400F, two A330200Fs and one A300-600F. Over 2013 and 2014, Etihad Cargo has another three freighters scheduled for delivery: one B777F and two A330-200Fs.

2011. Monthly air cargo volumes averaged 18,258 tonnes and cargo transit traffic contributed 20% of traffic. More than 30 airlines operated at DWC over 2012, of which most were cargo charter operations. Eight new airlines launched services to the airport during 2012, including ZetAvia, Abakan-Aiva, Silk Way Airlines, Khalton Air, Sakavia Services, Iran Aseman and Saudi Arabian Airlines.

John F Kennedy International Airport (JFK) has slipped over the last decade from North America’s third-largest cargo gateway to its seventh, losing over a quarter of its tonnage during the slide. A report for the Port Authority of New York and New Jersey and the New York City Economic Development Corp blamed the drop on trucking firms bypassing the city’s traffic-clogged streets. 13

Strategically located in the south of Sri Lanka, touching down or taking off from Mattala Rajapaksa International Airport offers a host of advantages. That’s because this state-of-the-art facility is the new jewel in the crown of Hambantota, the fastest growing region in Sri Lanka. It is the country’s 2nd international airport and is strategically located. Offering some of the world’s most exciting tourism attractions, cutting-edge industrial and technological zones, a deep water port, and incentives for investors, Hambantota has all this and more. Launching on 18 March 2013. • State-of-the-art terminal with 1 million passenger capacity. • Easy access to more than half of the island. Airbus A380 runway/handling capabilities. • Cargo facilities with port access within 10 kms. • Fly to over 60 percent of the world within 4 to 8 hours. • Free Trade Zone. • IT Park.

ON THE MOVE

Andrea Ragnetti [pictured] has resigned from his post as CEO of Alitalia less than a year after taking the helm. Ragnetti and the airline’s board of directors said they had “mutually agreed to terminate their relationship”. Roberto Colaninno, the chairman of Alitalia was named acting CEO until a replacement is found. Hawaiian Airlines has appointed Michael Chock as director of alliances and airline partnerships. Chock will be responsible for developing business relationships with codeshare and interline partners. He brings 22 years of domestic and international management experience from Northwest Airlines and then Delta Air Lines. Silver Airways has appointed David Pflieger as its new president and CEO, effective from May 1, 2013. Currently Air Pacific CEO and MD, Pflieger will replace Darrell Richardson who announced his retirement in January. Richardson will remain on the board of directors. Dan Brutto, currently president of UPS International, is to retire at the end of April after a 38-year career with the freight operator. Brutto, 56, will be succeeded by Jim Barber, currently president of UPS Europe. Andrew Harrison has been named the new managing director of Stansted Airport following the acquisition of the gateway by Manchester Airport Group (MAG). Harrison, who was previously COO of MAG, will replace Nick Barton who has been running Stansted since 2010.

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Incheon president and CEO CW Lee [pictured] has retired. During his tenure which began in 2008, Lee helped the airport to win seven consecutive ACI ASQ awards, increase revenues and expand overseas with management contracts. Sven Kukemelk joined Tallinn Airport’s network planning team from Estonian Air in January 2013 as head of aviation marketing department. He has previously been in various positions in Estonian Air and airBaltic network planning divisions and a lecturer in the field of network planning and commercial developments. Ty Bronchetti, lead planner at Southwest, is moving from network planning to become manager of revenue management. Bronchetti was previously a senior planner between 2008 and 2012. A replacement in the network planning department has yet to be announced. Alaska Airlines’ Torque Zubeck has been named managing director of financial planning and analysis. Zubeck, a 13-year veteran of the airline, previously served as managing director of Alaska Air Cargo. Prior to that, Zubeck held positions in marketing/planning and financial planning and managed the commercial relationships with Alaska Airlines’ codeshare partners. Jonny Rayner has left his position as business development manager, London Southend Airport and has been appointed head of aeronautical Revenue at Edinburgh Airport. A replacement has not yet been announced.

Nico Bezuidenhout [pictured] the CEO of Mango, has been appointed acting CEO of South African Airways following the precautionary suspension of previous acting CEO Vuyisile Kona on charges relating to contravention of the airline’s procurement policies. Bezuidenhout was named acting CEO on February 11 and will hold this position until a new CEO is appointed, which is expected to happen in March or April 2013. Andreas Akerman has re-joined Virgin Atlantic as a senior alliance analyst, having started his aviation career at the airline’s contact centre 10 years ago. Akerman returned to Virgin Atlantic in December 2012 from anna.aero, where he analysed airline and airport networks for the previous three years, most recently as editor. JetBlue Airways’ manager for schedule planning, Jeff Meyer, has left the airline to join WestJet. Meyer was at JetBlue Airways for eight years, prior to the move. He joned WestJet on March 4 as manager of schedule publications and reports to director Peter Tong and VP Chris Avery. Winfried Hartmann has moved from managing director of Fraport’s cargo services to SVP of the airport’s traffic and terminal management unit. Hartmann, who began his new position on January 1, will be in charge of sales and the customer service centre and replaces Roland Weil. Shinya Hirotoh has left his position as head planner at Japan Airlines. His successor is Nishimura Genen, assistant manager of international network. 17

one2one How would you describe your network development strategy?

How can airports best help you? Airports are becoming more aware of the challenges facing commercial aviation today, competition is tough and margins are small and with the added pressure of rising fuel prices, airports and airlines need to work closely together to maximise passenger flows and revenues through greater efficiencies of current airport infrastructures without passing on further charges to passengers and airlines.

SAA’s network development strategy is designed around connectivity-driven networks, hub structures and asset productive networks.

You have 20 A320s on order, when will they arrive and where will they be deployed? These aircraft will be deployed in the South African domestic and Africa markets. Some of these aircraft will replace aircraft in the current existing narrowbody fleet however a number of these new A320’s will be for growth.

Would next generation aircraft such as the B787 or the A350 be a good fit for SAA in the future? New generation aircraft such as the B787 and A350 would both be a good fit for SAA as the newer engine technology promises much better fuel economy compared to our current fleet.

How well did your short-haul and long-haul operations perform in 2012? Both short-haul and long-haul passenger and revenue numbers were up YOY [year-on-year], however the rising fuel price and weaker South African Rand has had a significant impact to the airline’s bottom line.

South African Tourism Minister Marthinus Schalkwyk has stated his desire for a regional African hub strategy, is this something that could benefit SAA? Currently a number of passengers have to connect via Europe in order to get from one destination in Africa to another. SAA has been working hard

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Name: Keith Green Company: HOD Network Planning Designation: South African Airways Home town: Johannesburg

on enhancing its Johannesburg hub to capture further intra-Africa traffic, but unfortunately this has been met with a number of stumbling blocks relating to bilateral agreements.

What do you look for when deciding on a new route or changes to frequencies, is it all about the numbers? SAA is the national carrier of South Africa and therefore we do take into account a number of factors such as maximum reach and connectivity between South Africa and its trade and tourism partners, however commercial viability, is the deciding factor 8 out of 10 times.

Why did you choose aviation? Flight remains a source of inspiration for people around the world today; it opens doors, makes connections and enables choices in peoples’ lives. It also continues to be the leading edge of technology, added to that it is exciting and vibrant.

FastJet is attempting an ambitious intra regional low-cost operation, do you think Africa is ready for such a venture? The African passenger market is definitely ready for a regional low-cost operation however, without an Open Skies policy in Africa that is of benefit to the passenger market, it will not be realised as quickly as we have seen in North America, Europe and Asia.

Who has inspired you? It is not who inspired me, it’s what’s inspired me. South Africa as a nation as inspired me. The transition from Apartheid into a democracy has shown me that anything is possible should you believe in it.

What is the best thing and worse thing about your job? The best thing about Network Planning is that the operating environment continuously changes on a day-to-day basis and the worst thing about my job is the inability for airlines to control the fuel price.

What is the best piece of advice you ever received? Lead from the back – and let others believe they are in front.

Indian summer India’s domestic aviation market looks set to heat up as a change in ownership law heralds new airline entrants, writes Oliver Clark.

here is an old Hindu proverb that sums up the current fortunes of some of India’s biggest airlines pretty well: “when an elephant is in trouble even a frog will kick him”. Kingfisher is most definitely an elephant in trouble; in 2011, the airline seemed in good shape – it was the biggest domestic carrier in India, with a 20% market share, had its membership of oneworld pending and was expecting the arrival of its first A380s. But financial woes have laid the airline low and spiralling debts have led to strike action by staff and the grounding of its fleet in October. The airline’s operating certificate expired at the end of 2012, making the resumption of flights in the near future problematic. Another carrier in difficulty is Air India (AI); the national carrier has struggled for a number of years with debt, strikes and poor financial results. In 2012, it announced a major restructuring programme, but despite reducing staff and overheads the carrier continues to post losses. But Kingfisher and AI’s woes are its rivals’ opportunities and many are capitalising on them. IndiGo is now the biggest domestic airline by market share and both it and Jet Airways have been allocated Kingfisher’s slots. Meanwhile, another and potentially even more interesting chapter in India’s aviation sector has just begun. A ground-breaking decision by the Indian government last September to allow up to a 49% investment by foreign companies in the country’s airlines has

ushered in a flurry of moves by international and Indian companies to either launch new airlines with foreign backing or explore new international partnerships. One Indian entrepreneur who sees the potential for a new airline to tap into previously underserved markets is Air Deccan founder and current owner of Deccan Charters, Captain GR Gopinath. Gopinath is in the final stages of negotiating a joint venture (JV) with a foreign airline to create a new low-cost carrier and tells Routes News that India is ripe for a new player in the market. “Indian aviation is in a time warp,” Gopinath says. “While other sectors such as IT, biotech, pharma, auto, steel, cement, construction and engineering have exploded – for the first time in many years the number of net passengers flown year-on-year has shrunk from 60 million in 2011 to 57 million in 2012. “Today, less than 3% of Indians are flying in one of the world's largest economies! So it's a great opportunity for those who want to dare and open up the inexhaustible Indian market. There are good well-run LCCs in India but they are not expanding the consumer base in the true LCC fashion of Ryanair or Southwest.” Gopinath says relaxing ownership rules will not only “create competition and break cartelisation” within the sector, but will turn it into the backbone to underpin the country’s emerging economy. Etihad Airways has also shown its hand, having held discussions with Jet Airways over a potential cooperation,

and as Routes News went to press Etihad had agreed to purchase and lease several of Jet’s slots at London Heathrow Airport. AirAsia plans to enter the Indian domestic market for the first time through a JV with the Tata group, and Telstra Tradeplace has been dubbed ‘AirAsia India’, exporting the Malaysian LCC successful model to the subcontinent (see our ‘Brand new’ article for more details). The reason for their interest is clear. India represents huge market potential; already 150 million passengers fly within the country a year and if the same proportion flew as in the US, the figure would be closer to 2 billion, IATA estimates. The new Indian airlines could stand to reap huge benefits if they can convince people to fly for the first time.

Challenges But industry commentators are cautious about the prospects for new entrants, mindful of the problems that beset the likes of Kingfisher, Air Deccan, MDLR and Paramount. “It is perhaps important to understand the current scenario of this sector which is experiencing a mix of both exciting and trying times,” says Amber Dubey, partner and head of aviation at KPMG India. “On one hand, there are challenges like bleeding airlines, decreasing passenger and cargo traffic, rising fares, high airport charges and high taxes that are crippling industry growth. On the other, the long-term positive outlook of

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India market report

Aviation in India can witness something similar to the telecom revolution the industry is attracting international aviation players eager to grab a share of the pie given that valuations are low. The untapped potential of the sector can be gauged from the fact that India’s air travel penetration stands at 5%,” he adds. Dubey says the combination of the depreciation in the rupee’s value, crude oil price volatility, high costs and prohibitive taxes makes for very challenging conditions for existing and new entrants, and he urges government officials to introduce policies to support aviation. These include making aviation turbine fuel a ‘declared good’, with a uniform 4% sales tax across India, introducing a route development fund for tier III cities, easing tariff policies to encourage overseas investment in Indian airports and phasing out the “5 year/20 aircraft rule”.

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Above: Kingfisher’s Vijay Mallya. Right: Captain G R Gopinath.

IndiGo If there is one carrier that definitely is on the rise in India’s domestic market, it is IndiGo. Having only begun operations in 2006, IndiGo is now the country’s biggest domestic operator by market share and according to a survey by CAPA last year it was also the only profitable carrier in the domestic market for the financial year ending March 31, 2012. The carrier has pursued a route development strategy of linking India’s metropolitan cities, big and small, with a web of frequent and reliable A320 services on a low-cost model similar to that of easyJet or Air Arabia. As of March 2013, IndiGo has operated nearly 400 daily flights to 33 destinations, with 64 aircraft that operate services between big urban

conurbations such as Mumbai and Delhi, and has opened up new routes between previously unconnected cities. It also feeds domestic service into its international services to Singapore, Dubai, Muscat and Bangkok. Some 14 new domestic services have been launched this year, including the first daily Bangalore–Guwahati service, a seventh frequency between Bangalore and Mumbai and a fourth daily service between Ahmedabad and Mumbai. But Aditya Ghosh, president of IndiGo, says there is still plenty of room for more. “India is one of the least penetrated aircraft markets in the world, with only one commercial plane for every 3 million Indians. Even countries like Indonesia and the Philippines have three or four times the aircraft density,” says Ghosh.

India market report MARKET SHARE OF SCHEDULED DOMESTIC AIRLINES

November 2012

Airline

Market share %

1 Air India (Dom)

20.7

2 Jet Airways

18.3

3 JetLite

6.9

4 Spicejet

19.5

5 Go Air

7.4

4 6 IndiGo

27.3

Source: India's Directorate General of Civil Aviation.

“Our dot to dot route network reflects detailed planning and market understanding which further helps the carrier to tap India’s potential.” IndiGo is planning additional services to Muscat, Bangkok and Singapore this year and will have 72 aircraft by the end of 2013, so it can be expected that new destinations will soon be announced. So what is the secret of IndiGo’s success? According to Lida Mantizavinou, commercial aviation consultant at Frost & Sullivan, it is because the carrier has stuck faithfully to the LCC model. “Strong cash flow, low operating costs due to low labour cost, economies of scale generated by maintenance and procurement contracts for a single aircraft fleet are mainly driving the success of IndiGo,” she says.

The future With around 200 aircraft on order, IndiGo is likely to continue its domestic expansion whilst looking to add new medium-haul destinations, but go no further, says Mantizavinou. “We do not see any intention from IndiGo to enter the long-haul, low-cost market as the low-cost model has proven to be unsuccessful and as major

UAE competitors are price-competitive and offer ‘good value for money’ service and comfort on board.” And what does the future hold for India’s domestic market? In the case of Kingfisher, owner Vijay Mallya has made no secret of his desire to sell the ailing airline to investors and the change in ownership laws might boost his prospects, but Mantizavinou believes the major stumbling block is the carrier’s heavy debt burden. “There are few airlines in the market, other than the UAE’s that can currently take on board the high level of debt that Kingfisher carries.” In the case of Air India, Dubey believes the carrier could make a strong recovery if the turnaround plan is successful. “The government has offered it a whopping INR 30,000 ($5.8 billion) financial support package but that is linked to the successful implementation of the turnaround plan. “AI is focusing on key initiatives like efficient network planning, curtailment of unprofitable routes, better yield management, hiving off SBUs, focusing on on-time performance and customer satisfaction; rationalisation of manpower and staff incentives; increase in

commercial revenue etc. The arrival of AirAsia will heat up things further and AI would have to draw up plans to address the same, especially on routes that were hitherto an AI monopoly.” Captain Gopinath believes a less partisan approach to regulation by the government will bear fruit. “Historically, successive governments have treated airlines as something for the rich and not recognised its vital role in contributing to the equitable economic growth. Policies have been knee-jerk and ad hoc and not based on any strategic long-term vision but often tailored to suit individual players who can lobby, rather than all stakeholders. “If the government asks ‘what kind of policies and incentives do we need to make more people fly’ rather than how to make policies for Air India or another carrier, then we will get the right answers.” But perhaps Dubey best sums up the current opportunities and challenges in the market: “Aviation in India can witness something similar to the telecom revolution. This will require vision, execution focus, world-class infrastructure, a progressive regulatory framework and a relentless pursuit of quality and cost-competitiveness.” RN

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Brand new Richard Maslen reports on the latest expansion of the AirAsia brand as it prepares to enter the Indian domestic market.

he ground-breaking decision by the Indian government in September last year to allow up to 49% investment by foreign companies in the country’s airlines has once again placed the Indian aviation market in the global spotlight. One airline that has played its hand in recent weeks is the Asian low-cost giant AirAsia, which applied to regulators in February 2013 for approval to launch a new low-cost joint venture (JV) partnership with the Tata group and Indian investor Arun Bhatia. According to Tony Fernandes, the entrepreneur behind the airline and its

Group CEO, the Indian market is enjoying a “renaissance” and represents the final piece in the pan-Asian network jigsaw that will see the famous brand operate six airlines domiciled in India, Indonesia, Japan, Malaysia, Philippines and Thailand (see box story on page 26). AirAsia has applied to the Indian Foreign Investment Promotion Board (FIPB) for approval to take a 49% stake in the new venture with Bhatia, owner of Hindustan Aerosystems Pvt, through his investment company Telstra Tradeplace and Tata Sons Ltd, a part of the Tata group. The FIPB was expected to make a decision

on the application in the first week of March 2013. Subject to approval, the proposed JV will make an application to Indian aviation regulators for an Air Operators Permit, and Fernandes is confident the time is right for the new airline. “We have carefully evaluated developments in India over the last few years and strongly believe that the current environment is perfect to introduce AirAsia’s low fares which stimulate travel and grow the market,” says Fernandes. Branded AirAsia India, the start-up will operate from the city of Chennai in

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AirAsia the southern state of Tamil Nadu and will initially link smaller cities to the regional metropolis, mainly tier two airports that can accept the A320. Although AirAsia currently offers flights into India, it has found it difficult to compete with the local carriers, leading to the closure of some routes, most notably those of its AirAsia X long-haul division from Kuala Lumpur to Delhi and Mumbai.

Partnerships Fernandes acknowledged that AirAsia has had a tough time in India in the past but this proposed expansion into India’s domestic market has been something that has been discussed internally for the past three years. “It has been tough for us to develop a low-cost structure to compete effectively in India, but we now have the recipe to achieve this,” he said. This is where the carrier’s partnership with the Tata group comes into play. Fernandes acknowledges that although it has the operational expertise it will have to rely on its JV partners to provide the insight into the Indian way of life and travelling habits. “We have formidable partners that understand the Indian market and we can leverage on one another’s strengths,” he explained. Although AirAsia has a respected brand, Fernandes knows that price will be the main differentiator in the Indian venture and will be the main selling point for the start-up. “Let’s not kid ourselves, the main thing that will drive passengers is price,” he said. “We have a strong brand loyalty, a good distribution system and Asian route network but the key is the right cost structure so we can offer the right fares to stimulate the massive Indian domestic market to fly.”

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“There is a monstrous market opportunity in India. If you add up all the aircraft in India, it doesn’t match the number currently in Malaysia, yet the population is around 50 times larger. This is a huge opportunity but requires change. We haven’t jumped in quickly. We have done our homework and go into the domestic market with our eyes wide open,” he added. Fernandes believes that a number of failures in the Indian market have been due to cost levels, and therefore fare levels haven’t been low enough. “We looked at all the cost structures of the existing Indian operators but felt growing organically with our own partnership was the stronger option. This is primarily what we have always done,” he said.

Investment and fleet He expects to pump initial investment of between $30 million and $50 million into the new venture, but qualified this by adding: “How fast we expand is up to how fast we grow and how successful the business is. This model has worked well in our other joint ventures.”

AirAsia made its debut in India in December 2008 when it launched daily flights to Tiruchirappalli from its Kuala Lumpur base. The group now serves five points in the country, with AirAsia operations to Chennai, Kochi, Kolkata and Tiruchirappalli and through Thai AirAsia from Bangkok Don Muang to Bangalore, Chennai and Kolkata. It has also previously served Gaya, Hyderabad and Thiruvananthapuram. The start-up will initially launch with “three or four” A320s, but will “scale up relatively quickly after that” he explained. The formal start of operations is dependent on final regulatory approval, but Fernandes is confident the venture will take to the air before year-end with a fourth quarter tentative start date planned. The carrier will use some of the aircraft already ordered by the group, but the growth could lead to yet more aircraft being added to AirAsia’s already burgeoning order book. “A number of our new deliveries are already allocated to other ventures across the AirAsia group, but we do have access to Airbus to increase on our order if necessary,” the AirAsia founder commented.

AirAsia

Low-cost airports Although no confirmed route plans have been divulged, AirAsia India has already completed a review of a number of likely destinations and ruled out a number of high-cost airports. “Certain airports we will avoid due to their high charge structure, but we have developed innovative ways to stimulate markets we don’t even serve,” said Fernandes, adding, “We wouldn’t see Mumbai, for example, as a main destination. However, even Delhi has a kind of low-cost terminal offering. We would be happy to work with any of these high-cost facilities on the possibility of low-cost infrastructure.” The airline has already recruited its senior management team, including a chief executive who will lead the business, and more details are expected to be revealed in the coming weeks, although Fernandes noted that the majority of positions will be held by Indian citizens, highlighting the abundance of skilled and experienced personnel available. The company is expected to have an initial workforce of around 300 and expects to add around 20 additional workers for each new aircraft addition. The selection of Chennai International Airport as the operational base for AirAsia India is a logical move, given the brand’s presence in this part of India. AirAsia launched flights to Chennai from its Kuala Lumpur base in April 2010, while Thai

AirAsia offshoots Since Fernandes purchased AirAsia in 2002, it has launched six joint ventures to take the brand into new markets and satisfy international ownership constraints. AirAsia India, the most recent offshoot, follows Thai AirAsia (2003), Indonesia AirAsia (2004), AirAsia X (2007), AirAsia Philippines (2010) and AirAsia Japan (2011). The expansion has come through alliances with powerful players in target markets, such as Shin Corporation in Thailand, Fersindo Nusaperkasa in Indonesia and influential Philippine business people, such as Antonio Cojuangco Jr, Micheal Romero and Marianne Hontiveros. AirAsia Japan is a joint venture with Japan’s All Nippon Airways.

AirAsia added flights from Bangkok in March 2012, initially from the main Suvarnabhumi International Airport but more recently from Don Muang. Alongside point-to-point demand, the start-up will be able to leverage the demand for transfer traffic to two Asian capitals to support its network. These existing operations will play an important role in AirAsia India’s growth aspirations. Under Indian regulatory

conditions, all domestic ventures must prove themselves in the local market before they are permitted to fly outside the country. This is currently set at a five-year period, but Fernandes suggested this may change: “Our advantage is that we already have sister airlines across Asia that can fly into India. As a group, we effectively will be able to serve domestic and international markets.”

‘Last’ new venture AirAsia has proved it can successfully transfer its business model into other markets, but India will certainly be a major challenge. “This is the last one for me,” acknowledged Fernandes. “This is the final piece of our block.” Many had believed China would be a future base for the venture, but although it has grown aggressively in the country, Fernandes ruled it out, in the short-term at least. “We will only grow where we think we can make a big difference in the domestic market and we don't see an opportunity in the domestic market in China right now.” AirAsia India could act as a platform to better serve the Middle East, or could potentially act as a gateway for the return of long-haul flights to Europe, but what is for sure is that AirAsia will not be the only foreign carrier investing in India and the announcement of its plans marks the start of an exciting new RN chapter in India’s aviation sector.

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n February 20, flight QR602 landed in Phnom Penh International Airport from Doha to an enthusiastic welcome. Cambodia Airports’ CEO Emmanuel Menanteau was also glad for the flurry of new routes it may herald. The Qatar Airways flight – via Ho Chi Minh city – should usher in a new market for the airport, Menanteau said. “There is definitely a trend of airlines from the Middle East to expand. Not only Qatar, but also Emirates, Etihad in the future,” he told Routes News. Within Asia, Cambodia Airports is already on an encouraging trend. Tiger Airways, JetStar and AirAsia have piled on new flights, with 20 international destinations now linked to the country's airports.

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From the Philippines, Cebu Pacific has begun flying between Manila and Siem Reap, while Philippines Airlines is coming this year. For Europe, while Air France is dropping its flight to Phnom Penh via Ho Chi Minh City, Germany's Condor Air has opened a direct European flight into the Siem Reap International Airport. But, as Phnom Penh still lacks direct flights from Manila, Jakarta, Tokyo and Beijing, new links with East Asian capitals are a focus for Cambodia Airports, he added.

Backpacks to suitcases Back in 1995, when Cambodia Airports, a public-private partnership involving French infrastructure giant Vinci and Malaysian construction firm Muhibbah,

took over a small airport in Phnom Penh, remnants of the brutal Khmer Rouge still lurked in jungle hideouts. Today, Cambodia has sloughed off its image as a conflict-riddled backwater. Its economic growth topped 6% almost every year in the last decade, and Cambodia Airports has also expanded, taking on airports in the temple-touring base of Siem Reap and the beach town of Sihanoukville. But, while tourists still drive expansion, Cambodia Airports sees Phnom Penh International Airport’s business pull as the better long-term bet. Under an ambitious $150 million investment plan, the operator aims to double capacity at both its international airports – Phnom Penh and Siem Reap – but with extra focus on its facilities in the capital.

Phnom Penh

At Phnom Penh, the airport façade will change “completely”, he said. “There will be a complete revamping of the surroundings and the architecture, the look and feel of the terminal.” The city is due for a more dramatic overhaul than Siem Reap, despite traffic rising faster at the regional destination, he said. “We don't think that it will continue like that,” he said. “We believe that clearly there is a boom in the tourism activity, but there will probably be a kind of plateau where the growth will continue, but it will stabilise.”

A ‘five-star’ overhaul Phnom Penh is also preparing its welcome for more discerning visitors, he added. “Five-star” airlines like Qatar Airways demand a different level of service, he said. Cambodia Airports is in discussions with airlines on what private lounges they want, he added. “The offer from the airport will be enlarged; we will have dedicated lounges with increased space for their business people.” Across both Phnom Penh and Siem, handling capacity is also doubling to

reach 5 million at each airport by 2015, he said. "In Phnom Penh we will add an additional 10 check-in counters,” he said. “We will add boarding gates. We will add one new airbridge. We will add new airline lounges,” he said. Construction is scheduled to begin in June on plans to add 15,000sqm to the Siem Reap airport and 20,000sqm in Phnom Penh, he said. But, for Menanteau, it is the capital that promises the greatest growth in traffic, he said. “Phnom Penh is a different thing because it is a capital city,” he said. “First of all, we see a clear rebalancing between business and tourists in terms of passenger identity. Phnom Penh used to be more like Siem Reap, with 90% tourist and 10% business people. Now we are more like 60/40.” Cambodians make up about 10% of passengers, including those in the country's diaspora, largely based in the US and Australia. As Cambodians grow richer, they are bound to travel more, and Cambodia Airports sees a large potential market in travellers visiting friends and family, who

will fly regularly regardless of the economic outlook.

Change gets underway For now, traffic growth is fuelled both by tourists and by a sharp rise in business people from Japan and China in search of investment opportunities, said Menanteau. Phnom Penh's passenger numbers reached 2.08 million in 2012, up 13% year-on-year. The bright economic outlook is further underscored by a 50% year-on-year jump in cargo traffic. In the capital, Japanese firms have begun building factories that – in contrast to the dominant garment industry – add value in the country and create skilled jobs. In January, for instance, automobile parts maker Denso Corporation announced it would soon begin production in Phnom Penh. Chinese developers are involved in massive infrastructure projects, as well as tourism ventures, sparking US efforts to interest American companies in Cambodia. For Cambodia Airports, the outlook clearly hinges on whom the country attracts. By 2020, Prime Minister Hun Sen

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Phnom Penh

There will be a complete revamping of the surroundings and the architecture, the look and feel of the terminal has targeted a doubling of tourists to 7 million, but – just as significantly – the profile of visitors is already changing. As boutique hotels replace the capital’s basic guesthouses, eco-tourism resorts are sprouting up in the provinces. “It used to be backpackers; it's becoming more and more middle and upper class, with people with more and more spending power,” said Menanteau.

Headwinds from Hun Sen Not that Phnom Penh International Airport is assured a dazzling future. Hun Sen, while fostering a welcoming environment for business, also makes some unpredictable moves. In 2010, a South Korean firm, apparently without consulting Cambodia Airports, announced a project to build a new $1 billion airport in Siem Reap: the New Siem Reap International Airport (NSRIA). Today, the project has not broken ground and now lacks financing, after the collapse of South Korea’s Busan Savings Bank. Hun Sen has also called for an entirely new airport to serve Phnom Penh, perhaps at an abandoned military strip in Kampong Chhnang province – which Menanteau describes as too far from town and in a state of disrepair.

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But the Cambodia Airports head remains bullish on the potential for more expansion at the existing airport, which he says could deal with well over 10 million passengers annually with further expansion. “From our side, first of all, we want to take it with professionalism with this future development,” he said. “So, in an agreement with the government, we started a new master plan study of all airports in Cambodia.” Cambodia Airports, which has contracted IATA to look at the country's airport needs, has a concession running until 2040, while the government has said a new airport would not be built before 2030, he said. Even if government projects take off, Menanteau believes franchise holder Vinci, which aims to expand in the region, would hold an advantage. “In the future, if there is this plan in Cambodia for new airports, we will follow,” he said. “We will look at it financially and also in terms of operation, and we will propose some solutions to the government.”

Working with the flag carrier In the meantime, expanding Phnom Penh’s airport involves more than new routes with international carriers.

Menanteau also sees a vital role for the national flag carrier to avoid overreliance on foreign airlines and the risk from outside shocks. “I've always been convinced that the sustainable development of airports goes definitely with sustainable development of the domestic carrier,” he said. “That’s why we are definitely extremely keen to work closely with our domestic carrier, Cambodia Angkor Air. The more they will expand, the more we will expand.” Cambodia Angkor Air is a newcomer, set up in 2009 with investment from Vietnam Airlines to fill a void that had lasted almost a decade after the collapse of Royal Air Cambodge. With a monopoly on domestic flights, it is responding to discounted rates from Cambodia Airports, said Menanteau. “Their plan to increase flights to [Sihanoukville] and to operate liaison between Phnom Penh and [Sihanoukville] demonstrates that they are willing to support the government's efforts to develop Cambodia as a global tourism destination on its own and not only as an extension of Thailand and Vietnam,” he said. The transformation of Phnom Penh’s terminal into a high-end retail space suits a shift that is clearly underway – although, hopes Cambodian Airports, RN just at the start.

Sound investment Oliver Clark talks to Sanjay Reddy, chairman of GVK Power and Infrastructure Limited, about the company’s plans to modernise its airports in India and further afield.

ts status as India’s commercial and entertainment capital means that Mumbai has long been associated with trade, innovation and the bold architectural design of its iconic buildings. One such building is the Gateway of India, a huge stone archway built on the waterfront in central Mumbai in 1911, which has become an enduring image of the city and a key attraction visited by millions every year. So, it is perhaps fitting that just over a century later year, it will be joined by a new gateway to India – the new showpiece Terminal 2 at Mumbai’s Chhatrapati Shivaji International Airport (CSIA), which is set to open later this year. Dubbed ‘T2’, the refurbished facility will consist of four integrated levels covering more than 439,000sqm and boasting 21,000sqm of retail space. The complex, together with new taxiways and aprons will ensure that the

airport has the capacity to accommodate up to 40 million passengers annually. Offering what has been billed as unrivalled levels of customer service and state-of-the-art facilities, T2 will handle the airport’s international operations and will be the first thing millions of

international tourists experience as they arrive in India for the first time. A huge exhibition area will showcase Indian art through the centuries, with touch screens for visitors to explain each piece and learn about its history and origin. It is also the culmination of years of work by operating company GVK to modernise and expand CSIA’s facilities to ensure it can handle the ever-growing passenger numbers passing registered through the gateway, while also positioning it to become a leading international hub. “I think the opening of Terminal 2 represents one of the most important milestones in the history not only of CSIA but also of Mumbai,” says Sanjay Reddy, chairman of GVK Power and Infrastructure Limited. “T2 will make CSIA a gateway to both the city of Mumbai and the hinterland for millions of international passengers

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GVK

Artist’s impression of CSIA’s new Terminal 2.

and, more importantly, we are setting new benchmarks in ways of operating; it will receive global recognition for its design and quality of service.” Reddy, the son of GVK founder GV Krishna Reddy, has a diverse portfolio of business interests in areas such as energy, resources, airports and transportation, and he has helped to steer the group’s ever-expanding airport profile which now includes managing Chhatrapati Shivaji and Bengaluru international airports, and will soon include a terminal at Bali’s Denpasar Airport and a new greenfield airport at Yogyakarta, Indonesia. Reddy says the T2 project was not without its challenges. GVK planners were hampered by the airport’s position which is hemmed in by urban development making expansion difficult, while the weak financial outlook also caused concerns. The new facility represents the cornerstone of GVK’s route development strategy, which seeks

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to attract new carriers from Europe, Asia, Russia and the CIS, and North America under the campaigning title “A hub in the making”. With this in mind, T2 has been designed to handle large volumes of connecting passengers and to allow airlines to easily organise banks of arrivals and departures. Two elements that are seen as crucial by GVK to make CSIA an enticing proposition for long-haul carriers. While its ultra modern facilities will no doubt prove attractive to airlines, Mumbai’s importance as the beating heart of India’s financial, business and entertainment industries offers another compelling reason for them to come, according to Reddy.

Routes Asia “I think airlines are going to be attracted to Mumbai because it is the commercial centre of India and ideally located for international routes; there is currently a good mix of different carriers, but we are

targeting long-haul airlines connecting Europe and the US and emerging markets such as China, Africa and South America,” says Reddy. “Routes Asia will provide a perfect opportunity to showcase the new terminal and promote it as an international gateway,” he adds. Indeed, delegates will get the chance for an exclusive sneak peak tour of the facility during the event. According to its route development action plan, GVK is seeking new services to Manila, Ho Chi Minh, Jakarta, Beijing, Guangzhou, Moscow and Tehran in the next one to two years, followed by services to Rome, Lisbon, Manchester and Seoul, among others, over the coming decade. The airport’s efforts are already bearing fruit and it celebrated a new Air China service to Chengdu last year. The new Terminal 2 represents the culmination of the GVK brief to improve the customer experience and capacity of CSIA. When it was awarded the contract to

GVK

operate CSIA in 2006, the airport was congested, its facilities were in a bad state and it had a reputation among passengers for delays and lengthy queues. Proof of what has been achieved since can be found in the host of awards for customer service, safety (including the prestigious Golden Peacock National Quality Award for 2012 from India’s Institute of Directors) and the 2011 ACI ASQ award in the 25–40 million passenger category. For Reddy, the awards are a nice recognition of what has been at the core of GVK’s business philosophy for decades. “As far as customer service is concerned, I believe it is of paramount importance. Our family business began in the hospitality sector and we have hotels as well as airports; as a family, we very much believe in hospitality as the core of our business,” he says. But Mumbai was only the beginning of GVK’s airport ambitions, and just three years after taking over Mumbai, the company formed the major part of a

consortium that was awarded the contract to manage Bangalore’s newly opened Bengaluru International Airport.

Navi Mumbai With scope to expand CSIA limited by its location, the Indian government has given the go-ahead for a new international airport to be built on the outskirts of the city. Named Navi Mumbai International Airport, it will be managed by a private company on a similar model to CSIA. So does Reddy see it as a potential threat? Not at all, he says, as Navi is intended to be primarily a domestic airport. “It is not going to be a threat at all because the new airport is being built to handle domestic services and will not replace the existing one which, perhaps uniquely, is being rebuilt to better serve international traffic. Typically, an existing airport is destroyed or turned into a secondary airport by the construction of a new airport, but this is definitely not the case in Mumbai.”

Reddy also points out that GVK can itself bid to run Navi Mumbai, and if this contract was forthcoming, states that “we would develop it as a complementary airport to CSIA and not compete against it for traffic”.

Bengaluru Bengaluru’s traffic grew rapidly after its completion and, once again, the Indian government’s brief was that the private operator should expand the facility and improve services, as befitting an airport that serves the home of the country’s burgeoning IT capital which has been described as the Silicon Valley of India. A year after taking over Bengaluru, operating company Bangalore International Airport Ltd (BIAL) unveiled an ambitious expansion programme, including the expansion of the existing Terminal 1 to cater for 36 million passengers. Work began in August 2011 at a cost of $221 million and involves

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Artist’s impression of Bengaluru International Airport’s terminal modernisation.

Mumbai’s new Terminal 2 interior.

GVK

the extension of the terminal in both directions, with improvements including better access to seating, amenities and commercial facilities, and smoother check-in and departure processing. The project is expected to be completed by the summer of 2013. “When we decided to expand Bengaluru, our priority first and foremost was to improve the passenger facility and expand the terminal because there was a dire need for more capacity as it was handling more than 12 million passengers. With the completion of this work, the facilities will be able to handle between 18–20 million,” explains Reddy. Passengers will also experience “a next generation of facilities and amenities” beams Reddy. Meanwhile, BIAL is pursuing a route development strategy that centres on making Bengaluru the gateway to southern India. In 2011, the airport attracted six new international airlines, including

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Etihad, Tiger, Cathay Pacific and Bangkok Airways. According to Reddy, BIAL sees IndiGo and Jet Airways as partners that can help to develop the airport’s regional network further.

Indonesia In November 2012, GVK took a step in a new direction with the signing of a contract with the Airports Authority of Indonesia (Angkasa Pura Airports) to manage non-aeronautical commercial operations at Bali’s Ngurah Rai ‘Denpasar’ International Airport under a five-year operations and management contract. Ngurah Rai is Indonesia’s second busiest airport after the capital’s Jakarta

International Airport, and is severley congested, leading to the need for an overhaul of its facilities. Also, GVK has signed a memorandum of understanding with the Indonesian government to develop an international greenfield airport in Yogyakarta in central Java. Reddy is excited about the prospects of both projects: “The government is very keen on the [Yogyakarta] project. There is a lot of potential as a tourism attraction but currently transport is severely limited.” With GVK’s long track record of managing and modernising overcrowded airports into award-winning facilities, it should have little trouble achieving RN its new Indonesian projects.

Where next for

Asia’s low-cost airlines? Low-cost carriers have only scratched the surface of their potential within Asia, argues Gordon Bevan of ASM.

t still amazes me that so many airports see low-cost carriers (LCC) as a recent phenomenon despite it being a model that has been working in every other sector for so long. There is nothing mysterious about it; if you keep airport fees down, LCCs will go and find passengers. Ryanair started back in 1985. EasyJet started in 1995, while AirAsia has been flying since 2001. JetBlue started operations in 1999. Don’t forget that Southwest has been operating low-cost flights since 1971, and in 2011 it carried more domestic passengers than any other US airline. Even in Asia, LLCs are hardly ‘new’. The trend is clear, and has been for many years: LCCs are a permanent fixture and they are growing. Asian airports cannot afford to be sniffy about them as part of their customer base.

LCCs stop at the border Globally, Asian markets, with their huge order book of B737s and A320s, echo a global trend for LLCs to take up to 30% of seats on scheduled services. But an interesting disparity is clear in the potential growth of LCCs within Asia and on routes to and from Asia-Pacific (see opposite). In fact, it is far easier to enter the LCC market if you operate in a single region and stick to narrowbody aircraft that can sustain both international and domestic services. Many LLCs start on domestic routes, where regulatory approval is easier and they pose less threat to prestigious national carriers. But LCCs have slowly overcome policy constraints to operate largely

Annualised global capacity growth share – LCC and legacy seat capacity LCC seat capacity

Legacy seat capacity

4,000,000,000 3,500,000,000 3,000,000,000 2,500,000,000 2,000,000,000 1,500,000,000 1,000,000,000 500,000,000 0

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Source: OAG.

LCC seats to/from and within Asia – total annual seat capacity Low-cost within Asia-pacific

Low-cost to/from Asia-pacific

300,000,000

240,000,000

180,000,000

120,000,000

60,000,000

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Source: OAG.

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ASM

between ASEAN states, following a path already blazed by US and European LCCs. Success in the LCC path rests on: a sizeable source market; a significant price differential with incumbent competitors; being the first into the market; efficiencies of new aircraft; a sympathetic national aviation authority; sizeable markets within two to three hours from your base; and a rising level of discretionary spend within your source markets. Yet the evidence is clear, even within Asian economies: LCC expansion is rapid and tangible. Asia’s surge in LLC seat capacity can be seen in the data opposite.

Unique challenges in Asia One aspect in which Asia differs from Europe or the US is the lack of airport competition. Asia has few out-of-town airports. Even secondary airports can be much smaller than those of a primary city, as urbanisation is heavily focused on capital cities. So, inevitably, LCC operations go head-to-head with national carriers. In Japan, domestic LCC operations have followed a stuttering but upward trend in capacity, which will continue with AirAsia’s expansion in the country. South Korea’s domestic and international markets have grown exponentially. Although domestic expansion has faded over the last three years with the availability of high-speed train services, the international market still seems hungry for LCC operations. The same can be said for Taiwan, where LCC growth is following the trend in other North Asian markets, despite a sticky political regulatory environment, particularly for flights to/from or over Mainland China.

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Even China has LCC rapid growth trajectories. While growth has been measured, this huge market clearly holds great potential at least on domestic routes, which are less heavily regulated than the international market.

• f ew long-haul markets require and can deliver traffic on a regular, year-round basis • a feeder market starts to become essential when you enter smaller, more seasonal or directional markets.

Long-haul limits All markets behave the same. In a restrictive airfare environment, introducing LCC products makes a significant impact on an airport’s throughput. AirAsia estimates it has expanded the Taiwan– Malaysia market by 87%, bringing airport traffic that simply could not exist under the legacy airline model. But it is tougher to drive the LCC model past the three-hour range of narrowbody aircraft. While some airlines operate between five and eight hours, legacy carriers dominate beyond this threshold.

Several factors work against the business model on longer distances: • t hey involve more uncontrollable costs, such as en route costs and fuel burn • yield drops dramatically with distance, especially in long-haul • scheduling freedom evaporates as airlines become subject to curfews, unsocial hours arrival/departure limits • crews need to be scheduled in different ways • airlines have to enter non-core markets such as airfreight to generate revenues • fleets need to introduce other aircraft types, raising complexity • l egacy airlines can compete on price, as there is always an inventory at the back of the plane to deep discount • traffic right issues become obstructive

And there are many more daunting obstacles. If long-haul low-cost operations were as simple to replicate as short-haul, it seems certain that Condor/Thomas Cook, Air Transat and TUI would have branched into this business. Jetstar, a unique success in this market, gets a leg-up from Qantas in terms of crossselling and frequent flyer participation. So, unsurprisingly, lessons can be learnt from a graveyard of long-haul LCCs, including Air Comet, Air Madrid, Air Europe, Oasis and Zoom. Australian Airlines was closed down and Flyglobespan’s entry into the long-haul scheduled market was swiftly overwhelmed by cost. All these airlines tried to corner tight market niches to focus their resources, but in doing so restricted their earning potential and lost their ability to grow. The growth trajectory of short-haul airlines provides an instructive contrast to the ultra-cautious growth of surviving European long-haul leisure airlines over 15 years.

How airports attract LCCs Aside from identifying the market, airports need to actively play their part – and not exclusively through airport charges. In fact, discounting airport charges is probably the simplest part of the equation and provides no guarantee of LCC participation, although it does get an airport on the list of potentials.

ASM

South Korean LCC capacity evolution average monthly seats Low-cost South Korea (domestic)

Low-cost South Korea (international)

700,000 600,000 500,000 400,000 300,000 200,000 100,000 0 2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Source: OAG.

Analysis shows that some of Asia’s largest passenger markets already have cheap airport charging regimes. Some of the largest airports with some of the biggest congestion issues do not differentiate between peak and off-peak pricing – so operations to Hong Kong, Taipei, Singapore, Manila and Guangzhou airports could be considered a bargain. Indian airports also appear to offer value for LCCs. The real savings come through airports creating more efficient operational procedures for LCCs. Although much of this is outside the control of airport companies, ramp licences for airport-handling companies should reflect the opportunity to provide more efficient work practices.

Another area where airports can expand their appeal to LCCs is handling. If market conditions permit, handling can be opened up to non-airline handling companies, free from ingrained airline operating procedures suited to fully laden widebody aircraft operating to long-haul destinations. Non-airline handlers can cope with the flexibility of offering multi-tasked personnel that can turn a plane around without wing-walkers, with dual door entry and with bulkloading baggage practices. Many turnarounds can be handled by a team of five or six, rather than the 10 that traditionally cover a legacy airline turnaround, bringing a huge cost-saving for the LCC. The traditional model is not sustainable and will either result

in an LCC leaving, or curtailing any expansion opportunities. LCCs like power-in/power-out operations. A slab of ramp concrete that enables this form of operation is cheap, low-tech and efficient, cutting pushback time and costs. Despite the weather challenges, LCCs love their passengers to walk out to their aircraft. A central holding area and ground-level gates enable faster and cheaper turnarounds. Although it requires greater marshalling efforts, the LCC can control the speed of embarkation – especially if dual-door embarkation is also enabled. Much of this runs counter to the trend for Asian countries to construct larger and more complex – as well as more costly – airport infrastructure. So far, few airports have included bespoke LCC facilities within their redevelopment plans. In fact, airport planners acknowledge the importance of terminal design to legacy alliances, whose membership and commitment are extremely fluid, but not to LCC operations. Much airport development is proposed in order to avoid offending incumbents, rather than to embrace a business model that has demonstrated its viability in Asia every year for more than a decade. Some airports are only now starting to take LCCs seriously. But Asia needs LCCs. We are conditioned into thinking that growth at Asian airports is unstoppable. Yet strip away the ‘China Effect’ and some Asian airports would have no growth. This is worth remembering when you next chat to an Asian LCC at Routes Asia – they may bring a balance to your network that creates a more sustainable airport operation. RN

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t is 12.51pm on February 22, 2013. Qantas’ daily B737-800 flight from Sydney is on its final approach into New Zealand’s Christchurch International Airport (CHC). Other than those returning home to New Zealand, most passengers on board are probably unaware that two years ago, to the minute, a devastating earthquake, measuring 6.3 on the Richter scale, struck their intended destination. It was the worst natural disaster to hit the country in 80 years. Twelve months later, New Zealand stood still, observing a two-minute silence to remember those who lost their lives that day. Prime Minister John Key said the tremor had “changed everything” but had not broken the city's spirit. That message holds true, particularly at CHC, where despite the obvious tragedy, they can see a silver lining to what was a very dark cloud. “Long-term there is confidence that we’ll rebound, on the back of huge re-investment being made in the city

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and the chance to rebuild a city, a chance most others don’t get in a lifetime,” says Matthew Findlay, Christchurch Airport’s general manager for aeronautical business development. “It will be a very modern city for the 21st century and is already being mentioned as one of the top cities to visit. This was a one in 2,000-year event – Christchurch was not known before this event to have any seismic risk.” Earthquakes are, in some respects, the worst of the natural disasters, because, unlike a hurricane or a flood, a quake has an initial tremor, followed by a series of smaller shocks. It makes recovery for an airport all the more difficult, because of the continued uncertainty. From its peak, in July 2010, before the earthquake, the airport has since lost 8.8% of its total traffic, or around 500,000 passengers, handling 5.4 million in 2012. While Christchurch’s traffic did suffer as a result of the earthquake, Findlay adds that the natural disaster was not the only cause.

Crisis management

“Our peak month was actually six months before the first quake, so you could say the effects of the global financial crisis were starting to have an effect at that time, even before the first quake. “Certainly, Auckland lost Aerolíneas from Ezeiza International Airport and Qantas from LAX during the same period, so you could say changing aviation markets have had an effect, greater than the circumstances faced by CHC. “Certainly, compared to other markets during the global financial crisis in Europe and North America, we've not done too badly, all things considered.” A quarter of that lost traffic is international, with the remainder being domestic. The airport’s main airlines are Air New Zealand, Air Pacific, Emirates, Jetstar, Qantas, Singapore Airlines, and Virgin Australia; and CHC has worked hard to add new destinations since the quake. “Route development has some very long lead times, so we’re just starting to see some benefits of the work we’ve put in,” he adds. “A first was to have Singapore Airlines operate daily year-round services to CHC. In each northern hemisphere summer season in the past, the service would reduce to five weekly services. “In addition, Air New Zealand launched a seasonal Mount Cook/Aoraki service. That is a scenic flight to our

highest peak and on every visiting international guest’s must-see list. “Air New Zealand also recommenced the northern hemisphere winter season direct service between Narita and CHC, and in addition, had the confidence in the Japanese market to sell six charters from Nagoya to CHC. “We’ve also had a lift in frequencies on core domestic routes, as demand for labour and skilled professionals are needed to assist with the rebuild of the region.” There was, however, no rebuilding required at the airport, which was already constructing its new terminal when the quake hit. Christchurch’s new integrated terminal will be officially opened on April 18 this year. A four-year build saw the entire 1960s terminal demolished in stages and New Zealand’s only long-haul integrated air passenger terminal facility built while the airport kept operating. Close to 44 million people passed through the airport while the terminal was being built and, despite the earthquake, Findlay says the facility will be delivered “within a whisker of the budget” and only slightly behind schedule. Commendably, CHC lost just one route following the earthquake, but Findlay says that even this was not down to the disaster itself, as the carrier,

AirAsia X, started a Kuala Lumpur– Christchurch service five weeks later. “We did lose some frequencies, notably across the Tasman as demand initially shrank because of the lack of hotel capacity,” he adds. So how has Christchurch worked to build up its traffic in the two years since the earthquake? “We work hand-in-glove with the regional tourism authority, Christchurch and Canterbury Tourism (CCT), which for the first time will attend Routes Asia in Mumbai. In fact, they share an office with us, assist with joint funding and we have partnered with them in some very large campaigns. CCT do some great work so it’s no surprise we’ve been voted by Lonely Planet as one of the top 10 cities to visit in 2013. “We’ve made a concerted effort to focus on the core markets and those we can grow considerably in supporting new or increased frequencies. We’re playing to our strengths and making inroads into markets where we’ve been absent in the past. “Importantly, the New Zealand Government has shown support for our efforts by putting a new transport policy in place which offers Open Skies over Christchurch until mid-2017. It is a particularly insightful gesture towards assisting the region in its recovery. There

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Crisis management

has never been a better time for airlines to work with us.” Christchurch is, of course, not the only airport to have been affected by natural disaster. Sendai too is gradually adding new routes since the Tohoku earthquake and tsunami. The airport was closed for more than a month, following the natural disaster in March 2011. Hawaiian Airways is the latest carrier to announce flights to the destination. “We are delighted to be bringing ‘the aloha’ of our island home to a region being rebuilt after massive devastation two years ago,” says Mark Dunkerley, Hawaiian’s CEO. “We have been interested in providing service to Honolulu from Sendai for some time. The city's airport draws travellers from throughout the Tohoku region, and its peak travel periods complement those of Sapporo to the north.” Lambert-St Louis International Airport is another to have been hit by natural disaster – the region’s worst tornado for nearly half a century. While the Christchurch gateway suffered no structural damage, the impact of a tornado on Friday, April 22, 2011, in Missouri, USA, was more immediate on Lambert-St Louis International Airport. The twister tore straight through the airport. Damage included downed power lines, trees, sign structures and

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hundreds of vehicles before it hit the terminal. “Even after suffering this type of damage, the airport was fortunate that there were only five people treated for minor injuries,” explains Jeff Lea, public relations manager for the airport. “The storm caused extensive damage to some jetways, some planes that were parked at the gates and airfield vehicles. The airfield was closed shortly after the tornado passed because of extensive debris that littered the ramp, runways and taxiways.” Lambert-St Louis’ emergency response was successful in clearing the airfield so it could be operational by the next morning. The first inbound flights arrived on the next day, April 23, between 8pm and midnight, and by the Sunday, April 24, the majority of Lambert's airlines had resumed service. “There was approximately $25 million in restoration projects that included the restoration of the C Concourse, replacement of Terminal 1 windows, exterior lighting, exterior signage, and all other damages to non-terminal buildings,” adds Lea. Surprisingly, Lambert’s traffic actually grew in the wake of the tornado – enplanements increased by 1.7%. “There was no impact on the enplanement because of the tornado,”

says Lea. “The airport grew its enplanements because Lambert has a strong O&D market, the addition of a few additional flights from the airport's top airline (Southwest) and because of a general upturn in the economy.” Again, as in the case of Christchurch, it seems the storm clouds had a silver lining. “The tornado was a great story for Lambert and this community,” he adds. “The airport was in the spotlight nationally and internationally during the first few days of the disaster and the fact that we resumed outbound flights within 36 hours was a great success story touted by local and national media.” Back at Christchurch, Qantas’ B737-800 lands at an airport which is feeling decidedly upbeat about its future. “There is definitely an air of positivity,” says Findlay. “There is even a term invented to measure the ongoing economic recovery here – the Cantometer [named after the Canterbury region of New Zealand]. “While we’re two years on from the February 22 quake, we’re now at the ‘bottom of the hockey stick’ and we are very optimistic about the future. The world’s second largest insured natural disaster has created a large opportunity and a forward-looking RN prospect of good times to come.”

@AmericanAir We are proud to announce @AmericanAir & @USAirways are coming together to create the #newAmerican: http://bit.ly/AmericanArriving

Being social

@HawaiianAir NEWS RELEASE: @HawaiianAir launches 5th Japan gateway with service 3 times a week to Sendai on June 25, 2013 http://ow.ly/hJ2s9

Routes News takes a look at the latest innovative ways airlines and airports are using social media.

NEWS JetBlue tops Twitter survey JetBlue has triumphed in a recent ranking of US airlines by their Twitter following. Data from SkiftSocial reveals that the low-cost carrier’s accounts (@JetBlue and @JetBlueCheeps) had just over 2 million followers by the end of last month. Characterised as ‘the popular prom queen’ by Skift researcher Samantha Shankman, JetBlue topped the survey despite

coming third by frequency of tweets. American emerged as the survey’s ‘Chatty Cathy’, with an average of 605 tweets each day during the two-week survey. Skift found less impressive stats with international airlines. AirAsia headed the list with 700,000 followers, as one of four Asian carriers in the top 10. From Europe, only British Airways and KLM made the cut.

Melbourne Airport partners with Wego Melbourne Airport claims to be the first Australian airport to partner with Singapore-based metasearch site Wego. Under the agreement, visitors to the airline’s portal (http://melbourneairport.com. au) will access a “comprehensive flight and

@SouthwestAir Two airlines. One itinerary. Our first phase of network connectivity is live: http://social.southwest.com/1SJ #OneLUV

hotel search module” featuring more than 600 full service and low-cost airlines and over 350,000 accommodation options. A Weekly Deals section will host offers with Melbourne Airport’s airline customers.

@JetBlue Today we proudly welcome our 76th BlueCity to the network, Charleston, SC, with daily service from New York & Boston bit.ly/JB_CHS

@AFnewsroom New dest. in #SouthAmerica: as from 16 April #AirFrance will fly 5 times a week to #Montevideo by #Boeing777 #Uruguay http://bit.ly/XZcMtP

@Maltairport We're adding yet another new airline to our portfolio @TurkishAirlines kicking off Istanbul Malta route #Summer2013 pic.twitter. com/9HSLwZGPiY

@fastjet For more information on our new routes, please read our blog “fastjet confirms 2 new domestic flight routes!” here: http://ow.ly/i3Mds

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Social media What tweets prove popular? RH: We love to live tweet, telling our story in real time. When Air Force One landed at CAK we live tweeted photos of the airplane landing and President Obama waving at the crowd. Those photos were retweeted a lot, especially by news outlets giving us even more reach. What other companies do you think use social media in an interesting way? RH: Some of our favourite big brands are Coca-Cola, Starbucks, Chipotle, Oreo and Disney World. We often look for inspiration from big brands outside of our industry. We also love Singapore Changi Airport’s social media. They really get it and love their customers, just like CAK.

ONLINE WITH:

Kristie VanAuken and Ryan Hollingsworth from Akron-Canton Airport’s marketing and communications department discuss their social media with Routes News. When did Akron-Canton Airport launch its Twitter and Facebook accounts? RH: Akron-Canton Airport (CAK) was the first US airport to use Facebook in 2007. We launched our Twitter account about a month later. We have 53,000 Facebook likes and 6,500 Twitter followers. How would you describe your airport’s social media strategy and ethos? KVA: Our strategy centres on customer engagement. We want to establish a relationship with our customers that feels authentic to them. We listen closely and respond quickly. Exceptional customer engagement requires exceptional content, so we serve up content that is engaging, entertaining and/or educational. Our posts are very visual and invite interaction. It has helped spark conversations and more importantly customer conversions to CAK. Over time we’ve been able to effectively establish what specific posts are most important and most enjoyed by those that choose to be in relationship with us.

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Have flashmobs or smartmobs taken place at the airport? RH: Although we haven’t had a flashmob, we do routinely surprise and delight our customers. For example, we recently hosted “Random Acts of CAKness” day, which was a total surprise to our customers. We spread a little cheer by handing out CAK treats and goodies. It felt great to thank customers for their business and give them something back for supporting us. How popular is your airport blog and how do you decide what topics to cover? KVA: Our blog is very well liked and well followed because it has been around for a long time (since 2005). The content ranks well in Google search and other engines, so the strategy is still effective and worth the human capital investment. Does social media play any role in your route network planning? KVA: We love asking our customers where they want to go next and they are happy to tell us. This data tends to be anecdotal, so of course, we rely on other methods of data collection and route analysis as well. We do believe that our ability to influence and engage with our customers is of great interest to airlines and helps us to tell our story in a more compelling way.

What social media activity are you most proud of? RH: Social media was an essential part of the launch strategy for Southwest Airlines at CAK, so we take great pride in the outcomes. We started with a countdown to their first landing. We took photos of employees holding a sign with the number of days until service started, getting customers excited about Southwest’s arrival. The social sharing was incredible too – as hundreds of customers shared, liked and retweeted these posts. If you were to give one piece of advice to an airport team who want to create a social media presence what would it be? KVA: Start first with what matters most to your customers. Why do they love to fly from your airport? If you have a brand, think about translating it into social, informal lingo that allows your customer to feel comfortable with and trust you. Be authentic. Then, use that language to empower, entertain and educate your new social friends. Go forth and succeed!

GET INVOLVED! Do you want the global route development community to hear what you have to say? Let us know at: oliver.clark@routes-news.com

Marketing Headlinewizard of Oz Since taking charge of Tourism Standfirst Australia in January 2010, managing director, Andrew McEvoy, has been working to update the country’s image to stress blue sky, clean air and vibrant cities; he talks strategy with Peta Tomlinson. We’ve had Paul Hogan putting shrimps on the barbie, bikini models demanding “Where the bloody hell are you?”, and various celebrities entreating visitors to “Come and say g’day.” Why change a formula that works? I’ve led the change to our current international campaign – There’s nothing like Australia – launched in Shanghai in June 2012. Australia is a sophisticated destination and you have to demonstrate it in this way. Especially since, given the strength of our dollar, Australia is a higher-cost destination now. We can’t trade off our irreverence forever: global travellers are looking for quality, and we need to take our international marketing up a notch.

window [of McEvoy’s inner-Sydney office], I see clear blue sky over a cosmopolitan city. I see big smiles, from welcoming people. I can breathe fresh air, even in the central business district – things that most Australians take for granted. Unsurpassed natural beauty meets vibrant cosmopolitan city. That’s an image that sells around the world – it really is our winning formula.

How do you like to see Australia portrayed?

How do you pick the likely markets?

As a place which offers world travellers a different experience. Looking out the

Tourism 2020 [a national strategy to enhance growth and competitiveness in

the tourism industry] is about increasing visitor numbers, but it’s also about profitability. So, who likes what we’ve got to offer? And who will do more and spend more? We market to 25 countries in 17 languages, and our visitor profile is trending towards a well-educated, self-made group who are big travellers, socially aware and tech-savvy. They’ve researched a lot of information online, even if they use a travel agent to actually book. We’re tuned in to that. When we target an audience, we know what they

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Tourism Running Australia head read, what they watch, what they listen to, how they plan a holiday – and, in turn, how to advocate that. We still have the big, traditional advertising campaigns, but the ability to bring those to life through other [social media] mediums is something very powerful.

What do visitors see as Australia’s greatest assets? It’s pretty clear that a common refrain is: world-class beauty and the natural environment. Our beaches, parks and native animals still appeal, but more and more, Australia is seen as very open and friendly. Condé Nast has voted Australia as the friendliest nation so often they’ve put us in the Hall of Fame! There is growing appreciation of our food and wine offering. Our shopping space is ok – in particular, for Australian brands. Visitors like to go home with their Australian Ugg boots, wine from Penfolds, and skincare products by Jurlique.

How do you capitalise on these markets? Australia is in the top three most desired destinations of all target markets, but the real challenge is to connect the aspirational with actual travel. To do this, we work with commercial partners, and Australia, being an island nation – most people don’t swim here! – strong airline partnerships are essential.

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Currently, Tourism Australia has cooperative marketing agreements with 20 airlines to help increase passenger numbers, for mutual benefit. We also have three-year MOUs [memorandums of understanding] with a number of other major airlines, including Emirates, Singapore Airlines, Virgin, China Southern and, most recently, China Eastern.

So where are the bulk of visitors to Australia coming from? For the reasons I’ve said, China is our fastest-growing market: we’ve tripled the number of Chinese visitors in eight years. With more than 600,000 visitor arrivals last year, China now outranks Britain. These visitors want to shop, to dine – particularly on seafood – and they want entertainment, but not necessarily gambling. The Chinese love our beaches – even though they’re not swimmers – and our wildlife. Whilst China will continue to be the engine room of growth, other Asian markets will become increasingly important for us in 2013 and beyond – India, Indonesia, Malaysia, Singapore and Vietnam. Eight of Australia’s top 10 visitor markets now lie within the Asia-Pacific rim.

Do you see a permanent shift from West to East among your visitor demographic? Our plan is to continue building momentum, to continue the transition from Western to Eastern markets. And the one-stop, non-stop flight from most points in Asia, along with increasing wealth in that region, is a great point of difference. But our “one voice” initiative aims to build partnerships globally. Americans are arriving in great numbers, up 4% in 2012, after several years of slump, and Japan is showing signs of bouncing back after its earthquake and tsunami. The UK and Europe are coming back and should continue to do so as their economy improves, and this gives us a bigger world to play in. The British and Irish rugby tour, and the cricket Ashes, both occurring in 2013, should be a new source of inbound capacity, so that is really helpful.

Could Qantas’ decision to sever ties with Tourism Australia, following realignment of its Kangaroo routes via Dubai, have any long-term impact on Australia? The Qantas announcement was an unhelpful distraction for the industry, especially at a time when Australian tourism

Tourism Australia

Running head

is performing well. I hope we’ll be able to get things resolved at the earliest opportunity in 2013. On the other hand, the global aviation partnership between Qantas and Emirates enables Qantas, with the biggest network in Australia, to tap into the incredible global network of Emirates. This should have a very positive impact for Australia. Emirates has one of the strongest international networks in the world and is already one of Tourism Australia’s most committed marketing partners. Qantas will provide dispersal opportunities for visitors to Australia, through the complementary strength of its established domestic network.

How about new markets, such as South America? We are seeing great growth out of Argentina and Brazil – which, like India, might be the markets of tomorrow. India is already one of the world’s fastest growing outbound travel markets and it’s only getting started, with the United Nations World Tourism Organization predicting 50 million outbound travellers by 2020. The full tourism potential of India lies in the years ahead, driven by a fast growing economy and a rapidly emerging middle class. Similarly with Argentina and Brazil, you have strong economies and a

growing middle class. For visitors from South America, Australia is the only market viewed as a stop-off to Asia. We see huge potential there and a new opportunity that is, as yet, untapped.

What are the main challenges and opportunities facing Australian tourism? The main challenge is just competition. In the simpler times of the 80s and 90s, Australia was one of the pioneers of tourism marketing. Today, in the UK alone, there are 180 national tourism bodies all trying to capture the same markets we are. Today, tourism is the world’s biggest industry – everyone’s into the lucrative leisure business. But that also leads into the biggest opportunity: the digital social environment. When traditional mediums were the only way to reach consumers, it really did come down to how much money was spent. Now, if you are a desirable destination – which Australia is – we have the opportunity to outthink, rather than outspend. Our Nothing like Australia campaign has a strong focus on the digital, social media and advocacy channels that have become so central to holiday planning. Tourism Australia has the largest Facebook page in Australia with more than 3 million fans, and one of the strongest Twitter followings. We have a

dedicated YouTube channel, are the biggest destination on Google+, Instagram and Pinterest, as well as a large presence on major Asian social media platforms Weibo and Tudou. Digital platforms represent an approach we’ve used as we roll out with each phase of There’s nothing like Australia.

Tourism 2020 targets a 54% increase in international seats, and a 25% increase in domestic seats, by 2020. What can help you to achieve that? Australia’s visa system stacks up well by and large, but it could always be improved. The Australian Government is looking at e-visas to reduce the time and effort for people who want to come here. In terms of tourism infrastructure, our capital cities need more hotel rooms, while regional Australia needs better beds. A partnership formed with Austrade to attract new hotel investment aims to address that. We’re also continuing to work with our 20 airline partners to further grow profitable capacity to Australia. For ourselves, Tourism Australia will retain a balanced portfolio approach to our international marketing in 2013 and beyond – an approach that I believe is the right one if we are to achieve our goal of doubling overnight tourism by the RN end of the decade.

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Call of the wild Running head

Routes Asia will head to the Malaysian state of Sarawak in 2014. Steven Thompson caught up with Tourism Minister, Datuk Amar Abdul Rahman Zohari, to discuss the region’s attractions.

n the Gunung Mulu National Park, in Sarawak, on the Malaysian island of Borneo, just before dark, one of the great wonders of the natural world takes place. Out of Sarawak Chamber, the largest known cave in the world, comes an almighty sound. The cave is big enough to house 17 B747 aircraft, and at around 5pm every day, as the sun sets, observers will hear something akin to a jumbo jet fly out into the night sky. It is not, of course, an airliner, but the millions of bats that have made the cave system their home and it is one of the things that makes Sarawak such an enticing destination for international tourism. “The experience is out of this world,” says Datuk Amar Abdul Rahman Zohari, Sarawak’s Tourism Minister. “This is one of the only places in the world which has such a rich biodiversity. On the island of

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Borneo, eco-tourism is a key attraction and we want to share this with the rest of the world.” And Sarawak will get that chance next year, when its tourism board and Malaysia Airports Holdings Berhad jointly host Routes Asia 2014, in the state capital, Kuching. Eco-tourism is big business. Cashrich backpackers, as well as the newly retired baby boomers want something different from a holiday, and Sarawak wants its slice of this lucrative market. Zohari believes Routes Asia will be the ideal event to link the region, which has four international airports, with new emerging markets. “With the networking opportunities at Routes Asia, airlines can launch flights to bring eco-tourists to the region,” he says. “But besides the rich biodiversity, there are other natural attractions that

can interest people who love nature and adventure and Sarawak can offer that. Based on these reasons, we are very grateful to Routes for selecting us as the venue for Routes Asia 2014.”

Emerging markets “Sarawak is right in the middle of new, emerging markets between China and India, Japan and Korea. Singapore is only one hour away and you can also reach Europe and Australia. With the rise of India and China, plus Japan and South Korea, there’s the possibility of a lot of middle class spend in a new unexplored destination.” Known as Bumi Kenyalang “the Land of the Hornbills”, Sarawak is the largest of the Malaysian states. It is home to the world’s oldest tropical rainforests, and is abundant in wildlife, including rare and endangered species such as the orangutan and the hornbill.

Sarawak FAST FACTS • Kuching, the state's capital means “cat” and the world’s first cat museum can be found in Kuching. • More than 45 different languages and dialects are spoken in Sarawak. • Iban is the largest population, making its language the most widely used. Chinese is the second largest population, followed by Malay. However, English is widely understood. • The hornbill bird is the state symbol of Sarawak. • The Orangutan, known as the man of the forest, can only be found in Borneo and Sumatra. • The Gunung Mulu National Park in Sarawak is a UNESCO World Heritage Site and contains the world’s largest cave.

The historic capital city of Kuching has a population of around 600,000 and dates back hundreds of years when traders from China and the West would travel there to trade the exotic treasures of the rainforest. Today Kuching remains the central hub and gateway to Sarawak. It will be the fifth time a Routes event has taken place in Malaysia. In 2003, the first Routes Asia event, and the first ever Routes regional event, was held in Sepang, hosted by Malaysia Airports, who went on to host Routes Asia for the

following two years and World Routes 2008 in Kuala Lumpur. Air transport to Sarawak is served by four major airports; Kuching International Airport, as well as Sibu, Bintulu and Miri airports. Flights to Kuching are available from Kuala Lumpur International Airport, which is served by more than 50 carriers, Singapore and Jakarta amongst others. Sarawak had 3.8 million visitors in 2011 and more than 4 million tourists in 2012, flocking to its vast 1.5 million

hectares of national parks. However, not all of those visitors were able to get direct flights to the Malaysian state. “A lot of the foreign tourists come from Singapore but they would prefer to fly direct,” explains Zohari. “There are opportunities for airlines to fly direct because of the modern facilities here. We’re right in the middle of the ASEAN region. In terms of economic growth, the area is very fast growing, driven by China and India. “The feedback we get is that the younger generation like to see something different, and that is what you have here in Sarawak. “Singapore is a city state. They seldom see a live chicken. Singapore students come to Sarawak to see our farms and villages. We’re very excited about Routes Asia coming to Sarawak in 2014. We hope to have a very fruitful Routes Asia and that people will see our potential. “Out of Routes Asia, our objective is to get people in the industry to know about Sarawak and what its attractions are. In view of the global trend now, people are going for nature. We can give them that opportunity in Sarawak, RN where nature is king.”

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Island records

Markus Klaushofer, CEO, Malta Airport.

Malta International Airport has broken its own passenger traffic record three years in a row. Steven Thomspon asks its CEO how he is attracting new airlines and routes.

he tiny Mediterranean island of Malta measures just 27km by 14.5km and is home to a mere 410,000 proud Maltese and a smattering of ex pats. But despite being dwarfed by its neighbours Sicily and Italy to the north, the archipelago more than holds its own against its rivals with its only gateway, Malta International Airport (MLA), handling some 3.65 million passengers last year. The airport is looking back at three consecutive passenger records and has carriers like easyJet, Ryanair and the Maltese flag carrier, Air Malta, bringing hoards of loyal tourists who are drawn by the island’s warm climate, history and cuisine. But this traffic isn’t achieved simply by relying on Malta’s sunny climes. The gateway strives to keep its airlines onside with some innovative offers, and is working hard to up routes and frequencies during the winter months by cutting fees. “The major challenge we face as an airport of a tourism destination like Malta is seasonality, in the sense that we are reaching quasi saturation figures in the peak summer months and still

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have great potential in the winter months,” explains the airport’s CEO, Markus Klaushofer. “To address this, we gave a 100% refund to all scheduled airlines on their landing fees during the winter 2011/2012 schedule, and we repeated this once again for winter 2012/2013.”

Low-cost growth According to MLA’s own statistics, while legacy carriers still account for 56.6% of total traffic, it is the low-cost carriers that are growing their market share voraciously, having grown 10.1% in 2012 to a total share of business of 36.4%. Charter retained its share at around 7%. MLA’s network is primarily European short-haul focused and last year Malta added a whole raft of new international routes, including: Air France from Toulouse and Ryanair from Bournemouth, London Stansted, Malmo, Oslo, Turin, Wroclaw and Kaunas, Lithuania. This summer, the gateway will see airBaltic begin service from Riga; Monarch Airlines from East Midlands; Transavia from Paris Orly; Turkish Airlines from Istanbul; and Wizz Air from Budapest.

Ryanair will also be introducing Liverpool, Bergamo and Gothenburg; while Lufthansa will increase its frequency to Frankfurt to a double daily flight. Emirates has also recently upgraded its aircraft to a B777 for its daily flights from Dubai. “Our airline marketing activity is not done in isolation, but is strategically devised in collaboration with the marketing efforts of Malta as a tourism destination by the Malta Tourism Authority,” adds Klaushofer. “These collaborations are crucial and lead to the overall positive results achieved in recent years.” Most recently, the airport has launched an updated incentive programme. Malta’s first incentive programme was launched back in 2007 and was aimed at making Malta more attractive for airlines to launch new routes to and from the airport. The first scheme had targeted markets which, at the time, the airport considered strategic, such as the Iberian Peninsula, Scandinavia and Eastern Europe. Klaushofer says that after “very encouraging” results, the company continued to build on the programme.

Malta

“Another initiative was the waiving of all landing fees in winter, and the updated programme includes other new incentives such as the waiving of the night surcharge all year round as well as free aircraft parking for scheduled passenger flights, which is also valid all year round. “All these initiatives help to alleviate the airlines’ fixed costs when flying to and from our airport. Another initiative included in the incentive programme is that aimed at increasing non-EU traffic, to assist in the continued expansion of our airport’s route network. “Last, but not least, in 2012, and for the sixth year running, airport charges have remained unchanged. In real terms, this means that due to the increase in operating costs such as utilities as well as the inflationary effect over this period, these leave a reductive net effect on airlines’ costs.”

Wizz Air One airline that has snapped up some of these incentives is Wizz Air, which this summer will launch flights from its Budapest base in Hungary to Malta. “Malta is a fabulous destination that is an easy two hours 15 minute flight from Budapest,” explains Kirstin Wulczyn, its corporate communications manager. “There is demand for low-cost

Our airline marketing activity is not done in isolation, but is strategically devised in collaboration with the marketing efforts of Malta as a tourism destination by the Malta Tourism Authority flying and pair that with an incredible sunshine destination that also offers plenty to do and attractive accommodation packages and you have a winning combination. “The airport warmly welcomed Wizz Air’s direct service to a new destination – Budapest.” Wizz Air launches its twice weekly flights from May 17 with an A320 on Mondays and Fridays. However, the carrier has not ruled out expanding its offering. “We haven't even started flying yet,” adds Wulczyn. “Give us some time to establish ourselves in the market and then we can talk growth.”

Ryanair, which launched seven routes to Malta last year, has been flying to the island for close to seven years, and the Irish carrier has clearly played its part in Malta’s three record-breaking years. “Our Malta summer 2013 schedule will total 30 routes, including three new routes to Gothenburg, Liverpool and Milan, from April 2013,” says Robin Kiely, head of communications for Ryanair. “Ryanair will operate 170 weekly flights to and from Malta this year and will carry one million passengers, which will support 1,000 jobs at the airport. “This follows another record year for Malta Airport in 2012 as a result of Ryanair’s sustained growth to date and

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Airline

Market share %

1 Air Malta

42.29

2 Ryanair

27.2

3 EasyJet

8.61

4 Emirates

3.19

5 Lufthansa

2.83

6 Alitalia

2.73

7 Vueling

2.3

8 Norwegian

1.72

9 Thomas Cook

1.69

10 Others

7.45

commitment to Maltese job creation and tourism.” Klaushofer joined Malta as CEO in January 2012, having spent the three previous years at Moscow’s Sheremetyevo International Airport, first as divisional director for marketing, sales and business development and subsequently as chief commercial officer. Prior to that, he spent more than seven years at Vienna International Airport, as head of marketing and sales. He knows Malta Airport well, having served on the board between April 2007 and April 2009 and he is clearly looking after new customers as well as the national airline, Air Malta. “There is close collaboration on marketing efforts with the Maltese national airline, in line with our overall airline marketing initiatives,” adds Klaushofer. “There is no doubt that as our home carrier, with more than 45% of traffic in 2012, Air Malta is a decisive stakeholder for us as an airport, and on a wider scale, crucial for the tourism industry of these islands. “It is to Air Malta’s credit that notwithstanding the restructuring process it was going through, in 2012 it managed to maintain more or less the same passenger figures of 2011 with less capacity, thus registering its

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8 9

5 4

Lyon-Saint Exu Malta

International Airport 1

Source: OAG Analyser.

highest average seat load factor in more than a decade.”

Expansion The airport expanded in 2008, enabling it to increase its retail offering in the terminal. It has also recently inaugurated a new €17 million business facility – the SkyParks Business Centre – which has more than 14,000sqm of office and retail space on landside. The sustainable, eco-friendly 22,000sqm development has welcomed tenants such as Vodafone, Air Malta, Bank of Valletta, Forestals Group, Talbot & Bons, Maleth Aero, Hyperion Aviation, Hermes Aviation, MiChild, Agri Holdings, Headlines Newsagent and Momentum Consult. “Airports all over the world are realising their potential in becoming a hub of end-user activity rather than just a point of transition. Hence the major decision to invest in a business centre,” says the airport chairman, Michael Hoeferer. “We are proud of the building not only because it is aesthetically pleasing and eco-friendly in its operation, but most of all because we have managed to attract important partners to set up here.” The airport is also planning further expansion inside the airport which will

address the increasing passenger numbers expected in the Non-Schengen areas. This will see the Non-Schengen Departures Lounge area increase by almost 40%. “As a foreigner who works on the island, I can honestly say that Malta, even though very small, has a lot to offer to visitors,” concludes Klaushofer. “Although traditionally renowned for the sun and sea, the islands have a cultural heritage which is astounding with 7,000 years of history. “If I had to highlight one main reason why Malta is attractive for visitors, I would say it is the diversity which is available in such a small space. One can do a myriad of things in the span of just one day, from visiting a World Heritage city like Valletta or the longest standing temples in the world, play golf, go to the beach or go diving, as well as clubbing or dining at one of our many great restaurants. “It is this diversity which makes it a unique place to visit. Valletta will be the European Capital of Culture 2018 and this is an important milestone for Malta and its tourism industry. “For us as an airport, it will hopefully see an increase in visitors coming through our terminal. It is already seeing huge investment in the local tourism product which will remain there even RN after 2018.”

routes americas report back

e r a fl n i t a L

Airlines and airports from across the Americas gathered in the Colonial splendour of Cartagena, Colombia, for a record-breaking Routes Americas.

ome of the biggest names in the aviation industry in the Americas were among 65 airlines and 145 airports who gathered in the Colombian city of Cartagena in February for what would prove to be the biggest Routes Americas event ever. Now in its sixth year, Routes Americas attracted a broad sweep of the region’s 20 top airlines, including low-cost carriers JetBlue, Spirit and VivaColombia, to major legacy and full service players United, American, AviancaTaca, LATAM and Copa and out of region operators such as Norwegian and Condor. Airports were also well represented with hub gateways such as Los Angeles, Chicago and Dallas rubbing shoulders with the newly opened Quito, Rome, Vienna and resurgent Toluca, who joined airlines for two days of packed meetings to forge new routes and develop new market opportunities.

The event was hosted by Sociedad Aeroportuaria de la Costa (SACSA), operator of Cartagena’s Rafael Núñez International Airport, which has seen traffic growing thanks to an Open Skies agreement between Colombia and the US.

Strategy Summit The event opened with the Routes Americas Strategy Summit, which examined the key opportunities and challenges for the continued expansion of the aviation industry in the Americas region. Estuardo Ortiz, CCO, AviancaTaca, outlined a roadmap to delegates that will see AviancaTaca work hard to improve on customer service and integrate its various parts into one system with the ultimate goal “to be the leading Latin America carrier” by 2015. Commenting on the US-Colombia Open Skies agreement, which recently came fully into effect, Ortiz said he welcomed increased competition,

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describing it as “positive to see” and an opportunity for the airline to develop new partnerships with its fellow Star Alliance members. But Ortiz said airport infrastructure had not kept pace with traffic development in Colombia, and this represented a major challenge for Colombian and international carriers wishing to grow their networks within the country. It was a theme that was picked up on by Latin American and Caribbean Air Transport Association (ALTA) executive director, Alex de Gunten, who painted a picture of the Latin American market as one that is experiencing growth and consolidation but whose continued expansion is threatened by the lack of adequate airport infrastructure. He pointed out that a total of 101 airlines operating in Latin America in 2003 has shrunk to 79 today. “There were 687 city pairs 10 years ago; today it is close to 1,000. This has been dramatic, but we are still restricted, we still have high bottlenecks in terms of infrastructure,” he said. “We are very constrained as an industry; 30% of our flights at ALTA airports are from congested airports and that’s before we take into account all the growth forecasts – we need long-term planning. “The forecast we have is that over the next 20 years, Latin America will be one of the fastest growing regions in the world.”

d New route negotiate at Routes Americas utes Negotiations during Ro the to tly ec dir Americas led Lines Air lta launch of a new De and les ge route between Los An ne e w San Jose, Costa Rica. Th mber route will begin on Dece daily ted era 20 and will be op with a B757-200.

Another major theme of the conference was the importance of choosing the right business model for the right market and a broad sweep of Mexico and Latin America’s carriers were on hand to give their views. Volaris CCO, Holger Blankenstein, said his airline had introduced a hybrid model in Mexico that worked well within its core markets, especially around Mexico City, while pouring scorn on European legacy carriers who are in the process of outsourcing much of their short-haul operations to their LCC subsidiaries. “We are very focused on price sensitivity, especially among the VFR traffic – this is a big market especially around Mexico City. “When we started operating in 2006, there were 14 airlines operating in Mexico; low-cost carriers had a bad image. We decided to come in with a hybrid model and offer customers more services and lower prices.” Juan Emilio Posada, chairman and co-founder of the LCC, Viva Colombia, which is backed by Declan Ryan’s

Irelandia and commenced operations last year, said he had been careful to stick to a business model that had succeeded in Mexico – targeting the traditional bus traveller with discounted tickets sold at both bus and airport terminuses. “In reference to the less mature markets, there is more opportunity for LCCs. They have to be able to bring people from not flying at all and convince people to skip using the bus,” he said. Nicolas Rhoads, SVP for commercial planning at Aeromexico, said offering customers best value, and more opportunities to use mobile technologies in their booking and travel experiences, were the keys to a successful airline. The final session of the strategy summit focused on the role of regulation in the aviation and tourism industries and how this hand of government could be reduced to boost air traffic. Zhihang Chi, Air China’s VP and general manager North America, emphasised that whatever an airline’s own view of the role of regulation within the industry, it was essential that they “worked with government and city authorities”

and “played the game” if they were to successfully launch new routes. Mauricio Emboada Moreira, planning and statistical director at Gol, pointed out that governments often only regulate to protect their home airlines: “We still have countries where governments protect local airlines but it is slowing coming down. The countries that do not protect their airlines do not have an internal market, those countries that do not like the US and Brazil have a protectionist stance, but that too is falling.” Coming from a government perspective, Brian Hedberg, senior air services negotiator at the US Department of Transportation’s Office of International Aviation, said there was a simple way to reduce government regulation – speak to as many departments and politicians as possible: “The more you reach out to the different agencies, we in government have a better chance of achieving what everyone RN is looking for.”

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Building Networks

Routes Americas delegates were treated to some traditional Colombian food, drinks and entertainment during the Networking Evening and Routes Airport Marketing Awards held in the Plaza de la roclamacion in Cartagena’s Old Town. Sponsored by Proexport Colombia, the event provided a lively backdrop for delegates to meet in a less formal environment and discuss industry developments and experience the hospitality of (SACSA) and Cartagena. In true Latin American style, the evening included music from Reggaeton band LH BACHILAO, which blended Latin rhythms with hip-hop and rap and encouraged Routes delegates to let down their hair and dance the night away.

San Diego win ‘A testament to the airlines’ San Diego International Airport was recognised as the leading airport in the Americas region for its innovative marketing campaign at a stunning event at the Plaza de la roclamación in Cartagena’s beautiful Old Town. Picking up the award for the best 4–20 million passenger airport as well as the overall award, Hampton Brown, director air service development at San Diego International Airport, told Routes News: “We believe the airline/airport relationship is really a partnership. We are most fortunate to win this award this year and it is really a testament to our airlines and their faith in us and our ability to help them tap into the San Diego market, and we would like to thank the airlines that have bestowed us with new flights,” he said. San Diego will now automatically be shortlisted for the World Routes awards which will be announced in Las Vegas. This years saw a number of innovations, with the awards split into three categories based on the size of the airport, and a new award launched to recognise the best destination marketing campaign by a tourism authority.

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Over 20 million passengers Winner George Bush Intercontinental Airport, Houston, USA Highly commended

 Dallas Fort/Worth International Airport, USA

4–20 million passengers Winner and overall winner San Diego International Airport, USA Highly commended

 Southwest Florida International Airport, USA  Tampa International Airport, USA

Under 4 million passengers Winner Queen Beatrix International Airport, Aruba Highly commended

 Lynden Pindling International Airport, Nassau

Shortlisted destinations Winner Fort Lauderdale, USA Highly commended

 Mexico

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63 63

route exchange and handover

Airline Insights Running head

Airport delegates were offered exclusive airline briefings at this year’s Routes Americas. Exclusively available to airport and tourism delegates at the Routes events, the Route Exchange Airline Briefings provide an insight into airline plans. Presented by one or more airline network planners, the briefings offer airports a unique insight into the business plans and strategy of the airlines in their region, and at this year’s Routes Americas there was a wide range of briefings to attend. WestJet On the Monday, delegates were given an insight into WestJet’s new subsidiary, WestJet Encore, with network planning manager, Arik De, explaining the business plan in more detail the day its initial schedule was unveiled to the world. condor Eric Oberhuber, the airline’s head of planning and international relations, explored Condor’s plans for expansion within the Americas region. alaska airlines As part of its launch of a Request for Proposals through Route Exchange, Ben Munson, director network planning for Alaska Airlines, delivered a briefing to explain how the airline’s record order of 50 B737 MAX made in October 2012 will impact on its route development plans. delta air lines The airline’s general manager planning for the Caribbean and Latin America, Christine Kennedy, explained how the carrier’s alliance – SkyTeam – evaluates new routes within the Caribbean and Americas region. allegiant AIR Launching a Request for Proposals through Route Exchange, Lukas Johnson, director of strategy and pricing, outlined the Las Vegas-based airline’s growth plans as it prepares for international expansion.

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next stop El Salvador Routes Americas will travel to El Salvador in 2014 Routes Americas was officially handed over in Cartagena as the event heads north, to the stunning Central American tourism and business destination that is El Salvador. The Honourable Minister of Tourism, José Napoleón Duarte Durán, was instrumental in securing the hosting of the 2014 event, which will welcome the region’s aviation industry leaders to El Salvador and show what the country can offer as a tourist destination as well as its great potential for business. Speaking during the handover ceremony, Sandra Trujillo Vélez, Honorary Consul to El Salvador, said: “For El Salvador, it will be an honour to host this great event in 2014, and we expect to see all of you next year in our country so you can experience the warmth of our people.” “After such a successful event here in Cartagena, we are eagerly awaiting next year’s event,” said Nigel Mayes, VP & Commercial for Routes. Mayes continued: “Routes Americas has potential for even more growth and we are again expecting record numbers to come to El Salvador.”

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The last word V P Agrawal, chairman, Airports Authority of India, tells Routes News about his hopes for the Routes Asia conference and gives an overview of how the country’s airports are performing. How many passengers did India’s airports handle in 2012, and what is the trend for 2013?

India has a quickly expanding middle class; could they further drive air travel growth in the future? Are they going to be travelling for business or pleasure?

Indian airports handled 159.13 million passengers during 2011, as against 158.35 million passengers handled in 2012, i.e. a marginal decline of 0.5%. The trend is likely to continue in 2013. However, AAI will go to great lengths to minimise this by taking steps to promote regional connectivity at low-cost airport facilities, which is expected to generate a traffic boom in the coming years.

Yes, you are right. In fact, the phenomenal growth during the last decade was because of the fast growth and expansion of India’s middle class. The middle class will continue to fuel growth in aviation traffic for both the categories of business and pleasure in the foreseeable future.

How have India’s international airports performed compared with purely domestic gateways? Within India, so far as international airports are concerned, they have performed better than domestic airports during the year 2012 compared with 2011. The passenger traffic growth at international airports is 5.2%, and the passenger traffic at domestic airports has declined by 2.4% during the year 2012 vis-à-vis 2011.

What are your main priorities in 2013? The coming era is for wider air connectivity through making available airports in the Tier II and Tier III cities of our country. In 2013, the priority will be to bring aviation to the forefront by developing economical airports including operationalisation of non-operational airports. Furthermore, 16 greenfield airports have been granted in-principle approval so far by the Ministry of Civil Aviation.

What are the challenges to developing international hubs in India and could India create more hub airports over the coming years?

Five airports have been given site clearance, and for the remaining 17 airports, site clearance is in process.

Does the Airports Authority of India work with tourism organisations to boost visitors to India? You will agree that tourism and aviation enjoys a symbiotic relationship, and AAI has always gone ahead to make available the infrastructure in the country for the overall success of tourism. To boost visitor traffic to India, AAI is committed to providing worldclass infrastructure at its airports

You know that India is a vast nation with a big population having its own potential; at times, India is termed as being one continent in itself. In this perspective, yes, India can have multiple hubs. Furthermore, in view of the fast growth of India’s economy, the metro airports will emerge as international hubs. However, the extend to which the ‘metros’ will have the potential to expand capacity will be based on the availability of resources and the availability of land for future expansion – these will be the future constraints.

Do you think most of the growth in traffic in India will come from low-cost carriers or full service airlines? As per the statistics at present, about 60% of the traffic growth is contributed

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AAI

by low-cost carriers and this trend is expected to improve further by up to 80% in the next decade.

Some airports in India and worldwide are developing into ‘airport cities’ with expansive real estate and offices surrounding them to become economic engines in their own right. Is this something you support? At the outset, I must say that it’s a natural phenomenon that the cities

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develop around airport, or airports are developed where cities exist and this is true for any big airport/hub airport in the world, including India. AAI supports this as a positive development.

What are you hoping will be achieved at this year’s Routes Asia conference? You know that India jointly with other stakeholders has been participating in Routes events, both global as well as regional, for the last four to five years.

Continuity is the key to success in participating in such events. AAI intends to market its newly developed international and regional airports and future airports to the international aviation community. I am sending a dedicated team of officers who will represent AAI to promote and market our airports. To represent each region, which typically has seven to eight airports each, there will be a dedicated officer within the AAI team.

Turning the corner

Daniel Fernandez, secretary general of the International Air Cargo Association (TIACA), reflects on a challenging operating environment for the industry and the prospect of a more positive year ahead.

he global air cargo industry is one of the clearest indicators of the world economy as it so quickly reflects changes and trends in manufacturing, export and import orders and consumer spending. Global air cargo traffic in 2012 decreased 1.5% compared to 2011 in

terms of freight tonne kilometres (FTKs), the second consecutive year of cargo traffic decline and the fourth time in five years that air cargo traffic has decreased on an annual basis. The outlook for 2013 indicates a small – but at least positive and welcome – growth in FTKs of 1.4%, and the

ACI is prediciting a near 3% rise in cargo volumes. Nations and international businesses need the air cargo industry to prosper because it plays such a vital role in world trade. In value terms, 35% of world trade – worth over $5 trillion a year – moves

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Cargo

by air cargo. So whether you are a Fortune 100 company or a farmer growing fresh berries in Africa for the European consumer market, air cargo will play an important part in your prosperity somewhere down the line. Speaking at TIACA’s Air Cargo Forum & Exposition in Atlanta, Georgia, USA, last October, Ray LaHood, US Secretary of Transportation, acknowledged the importance of our industry in his keynote address. He told the air cargo leaders present:

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“We are committed to your industry – because what’s good for air cargo is good for the US economy. A strong air cargo industry expands international trade and contributes to job creation and prosperity at home.” A healthy air cargo industry, he added, is essential in helping the US government achieve its goal of doubling the nation’s exports by 2015. Air cargo now accounts for 31% of the total value of US exports. It is very difficult in these unprecedented economic times to look beyond the impact of what’s happening in the financial markets and how this is affecting businesses and consumers, but we have to do so because this is not the only challenge we face. Aviation and air cargo security is a daily focus right across our industry. We also face potentially costly and significant changes as a result of carbon emissions ‘taxes’, and we also have some ‘housekeeping’ of our own in terms of the full adoption of e-cargo processes. We probably have the biggest ‘to do’ list our industry has ever seen – but something very positive has come out of it. For many years, there has been a big ‘them and us’ void between the industry and the bodies that regulate it. When changes are mandatory, we are naturally obliged to adopt them, but we have continually pushed for a proper level of engagement with the regulators to find the most viable ways of achieving their goals without impairing the speed of air cargo, its prime competitive advantage. Today, we have finally reached a point where all major parties recognise the advantages of collaboration and TIACA, which has taken a leading role in

bringing this about, is extremely positive about what this can achieve. In 2010, TIACA joined forces with the International Federation of Freight Forwarders Association (FIATA), the International Air Transport Association (IATA), and the Global Shippers’ Forum (GSF) to form the Global Air Cargo Advisory Group (GACAG) – an industry advisory group that ensures the air cargo industry has a strong, unified voice in its dealings with worldwide regulatory authorities and other bodies whose decisions directly impact on air cargo. It is already clear that the people in power, whose decisions shape the way we do business, are listening and increasingly demonstrating a commitment to work with us. We have been working proactively to achieve this, building closer ties with US Customs and Border Protection (CBP) and the US Transportation Security Administration (TSA), as well as key bodies such as the World Customs Organization (WCO), the International Civil Aviation Organization (ICAO), and the European Commission. We are particularly pleased to be building closer ties with ICAO because it is going to play such a key role in major areas I mentioned earlier, such as security and global emissions. TIACA and ICAO have committed to enhanced cooperation in the field of air cargo transportation. This covers the areas of air cargo and mail security and facilitation; environmental practices; market access; capacity building; and air cargo safety. We also hope to gain further benefit and opportunities for cooperation from ICAO’s institutional relationships with the United Nations and its specialised

Cargo

agencies, regional civil aviation bodies and regional civil aviation and economic integration organisations, as well as industry stakeholders. Having campaigned strongly against the EU’s inclusion of aviation in its Emissions Trading Scheme – which has since been suspended – we support ICAO’s commitment to press ahead with creating a global solution for managing aviation’s carbon emissions. The Kyoto Protocol designated ICAO as the body with authority to set international aviation’s greenhouse gas policy and it is now working towards delivering this. These are issues that we can influence but not directly control. E-cargo, however, is well within our own capability – and its adoption is long overdue. At the end of 2012, GACAG produced a ‘roadmap for paperless air cargo’ to accelerate the industry’s adoption of e-cargo in 2013. For the first time, the roadmap outlines a shared end-to-end industry approach, with clear leadership roles, centered around three core components or pillars (see above). Using the roadmap, we aim to create an environment, by the end of 2015, where the core transportation documents are paperless on at least

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Working collaboratively within the cargo supply chain to digitise the core industry transport documents, starting with the air waybill

80% of the world’s trade lanes, and where the traditional cargo pouch accompanying the shipments would be removed for a large set of shipments. As part of this, a key goal will be to achieve 100% e-AWB by the same timeframe. There are clear signs of the value of e-freight. Amsterdam Schiphol, for example, says e-freight shipments have jumped from only 1,665 to 21,176 in two years following the launch of a state-backed drive to encourage paperless transactions. Pilot projects between shippers and forwarders as a part of this initiative have resulted in substantial time savings, the airport has reported. Amsterdam Schiphol’s cargo development director, Saskia van Pelt, a founder member of e-Freight@NL, is reported as saying: “We will continue to drive the use of e-freight at Schiphol because it reduces costs, improves efficiency and speed, is environmentally friendly and will help to differentiate air cargo from other transport modes. We consider paperless transport as one of the top priorities to improve efficiency in the supply chain.” To support such initiatives globally, we have called on members of the World Customs Organization (WCO)

u Pillar III

Engaging regulators and governments worldwide to create an ‘e-freight route network’ with fully electronic customs procedures and where regulations support paperless shipments

u Pillar II

u Pillar I

Daniel Fernandez, Secretary General of the International Air Cargo Association (TIACA).

Developing a plan to digitise the commercial and special cargo documents typically accompanying airfreight today, in or outside of the ‘cargo pouch’

to embrace and implement the principles of the Revised Kyoto Convention and shift from a dependency on paper documents to a full e-customs environment. We believe harmonisation of global customs procedures will play a pivotal role in establishing e-customs platforms and have pledged the support of the entire air cargo industry in this effort. At a minimum, we have highlighted processes that should be accomplished through electronic means: export and import goods declarations to customs provided by exporters, importers and/or their forwarders or customs brokers; export, import and transit cargo declarations sent to customs by airlines; release of shipments into free circulation following completion of customs formalities; and recordkeeping and archiving for all participating parties. All of these changes promise benefits and growth opportunities for airports around the world, including those across the globe that are members of TIACA. There is no question that fast and secure freight movements through airports will lead to enhanced optimisation of their air cargo infrastructure and new potential to RN grow alongside their customers.

eventsupdate

The place to be â&#x20AC;&#x201C; World Routes in Las Vegas

orld Routes 2013 which takes place this October in Las Vegas, Nevada, USA looks set to deliver excellent and relevant content to all attendees. There will be a number of content streams running throughout the event including: the World Routes Strategy Summit, held in partnership with ICAO and the World Bank; the World Tourism Summit, held in partnership with the Pacific Asia Travel Association (PATA), the International Coalition of Tourism Partners (ICTP) and TTG. The summits bring together senior leaders and key stakeholders from aviation, tourism and cargo under one roof, 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. Speakers at the Summits who are already confirmed include; Akbar Al Baker, CEO Qatar Airways, Rossi Ralenkotter, President & CEO of Las Vegas Convention and Vistors Authority, Sani Sener, President & CEO TAV Airports, Angela Gittens,

Director General of ACI World, Andrew Levy, President, Allegiant Travel Company, Alain St Ange, Minister for Tourism & Culture, Seychelles, Geoffrey Lipman, President , International Council of Tourism Partners, Vijay Poonoosamy, VP International & Public Affairs, Etihad Airways, Dr Boubacar Djibo, Director of Air Transport Bureau, ICAO, and Martin Craigs, CEO, PATA. Senior representatives from the US Department of Transport and the US Department of State have been invited to take part in the World Routes Strategy Summit along with a number of industry leaders Key themes that will be debated at the World Routes Strategy Summit include: the state of the industry and the outcomes from the ICAO Air Transport Conference; the implications for liberalisation; airline mega mergers; airports of the future; and the Visa Waiver, Trusted Traveller and Global Entry programmes. The inaugural World Tourism Summit will be a high level conference which will address a number of current industry issues including: how governments can align their tourism, economic development and aviation strategies; and securing investment funds for tourism development.

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Events update Wizz Air CEO to open Routes Europe Strategy Summit Building on the success of the first ever Routes Europe Strategy Summit which took place in 2012 this year’s event promises to deliver even more high level industry leaders. Josef Varadi, CEO of Wizz Air has already confirmed that he will give the keynote address during the Strategy Summit, which will open the event in Budapest on Sunday 12th May. This hard hitting interactive event is free to attend for all registered delegates and is set to give a valuable insight into aviation across the whole of Europe. The panel of leading industry experts which so far includes John Hanlon, Secretary General of ELFAA, Fernando Estrada, Strategy & Alliance Director for Vueling, François Bouteiller, CEO of Nasair and Vijay Poonoosamy, VP International & Public Affairs of Etihad Airways and Chair of IATA Industry Affairs Committee will take part in a number of moderator led discussions addressing aviation and route development issues affecting the region. Topics such as the effect that the EU freeze on ETS will have on traffic from the US and China into the EU, the future evolution of the low cost carrier business model and consolidations, mergers and alliances will all be discussed during the afternoon. Routes Europe, now in its 8th year, has seen year on year growth and in 2013 over 800 delegates, including 100 airlines, from across Europe and beyond descend on the Hungarian capital to meet and discuss Europe’s future networks. Also continuing from the success of last year, delegates will have more opportunities to meet at the event as Face-to-Face Meeting will, once again, take place on the Sunday afternoon in addition to the usual two day meeting programme. This unrivalled event connects the entire European market and will also provide attendees with an opportunity to prepare for World Routes which will take place later in the year in Las Vegas.

Routes Asia 2014 to return to Malaysia The annual air service event for the entire Asia region will return to Malaysia in 2014 when the event will take place in Kuching, the capital of the Malaysian state of Sarawak and will be jointly hosted by Sarawak Tourism Board and Malaysia Airports Holdings Berhad. “Sarawak is a robust developing State in Malaysia with strong economy generated from medium to heavy industries,” says Honourable Datuk Amar Haji Abdul Rahman Zohari bin Tun Abang Haji Openg, Minister of

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Tourism Sarawak, continuing: “The State is putting priority on 10 economy thrusts that will spur further development which are aluminium, oil, timber, metal based industries, livestock, palm oil, fishing & aquaculture, marine engineering, halal industry and tourism industry. This will provide plenty of opportunities for airlines to fly into Sarawak. As host for Routes Asia 2014, we welcome all delegates to explore the opportunity in Sarawak”.

upcoming events

World Routes October 5–8, 2013 Las Vegas, USA

The global meeting place for every airline and airport

Routes Asia March 17–19, 2013 Mumbai, India Routes Europe May 12–14, 2013 Budapest, Hungary

Routes CIS TBA

Routes Africa July 7–9, 2013 Kampala, Uganda

Routes Americas 2014 El Salvador

el and CEO of the US Trav tion Roger Dow, president sa ni es News how his orga Association, tells Rout wnturn. or’s interests in the do ct se e th r fo g in ttl ba is What is the role of the US Travel Association?

non-profit US Travel is the national all ing ent res organisation rep ion trill .9 $1 the components of the g gin era lev By travel industry. ers, mb me our of h collective strengt the for te oca we are able to adv promote removal of travel barriers, ure ens and el trav the benefits of els lev all at s that policymaker ous power understand the tremend s and job ate cre to that travel has y. nom eco improve the US

What are the prospects try for the US travel indus in 2013?

derate Growth rates are more mo we’re t bu rs, yea than in previous , ure leis in ses projecting increa ound inb al tion rna business and inte our ans me at travel for 2013. Th ate industry will be able to cre jobs by an eric nearly 100,000 Am ure leis of er mb year-end. The nu h. hig e tim alltrips will reach an

What priorities would you ama press on President Ob m? ter d in his secon

t How has the governmen s ng eti me and business ? sector been performing

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ne much money does it ge y? om on ec for the US

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Can you tell us more about the association’s Travel Blitz programme?

s Travel Blitz is our grassroot 13. It’s 20 for e mm advocacy progra e new cat edu to rt a nationwide effo of ers mb Me and returning of travel Congress about the value

Factfile ORGANISATION:

US Travel Association

Web address:

www.ustravel.org

Headquarters: A Washington DC, US year founded: 1941

Membership:

er organisations More than 1,300 memb

t level. on a national and distric istrict in-d e lud inc Travel Blitz will h wit gs etin me roundtables, their Members of Congress and tours ry ust ind e ous staff, back-of-h ns, atio loc s iou var at s for lawmaker of t por sup in ies and local rall travel initiatives.

enges What are the big chall the for ies nit and opportu US travel sector?

ess leaders Policymakers and busin that have begun to recognise reform visa and el trav international t Bu n. atio cre job are central to ny ma ed iev ach while we’ve await successes, new challenges s tom cus the ing rov such as imp , tors visi al tion rna inte process for r ive Wa a Vis expanding the our Program and enhancing e. RN tur ruc ast infr ort nation’s airp