ROUTES NEWS ISSUE 2 VOLUME 11 2015
routesnews ISSUE 2 VOL 11, 2015
The world air service development magazine
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China’s LCC revolution: Spring Airlines’ Zhang Xiuzhi
INTERVIEW:
Aberdeen’s Carol Benzie
REPORT:
Asia’s rollercoaster year
ANALYSIS:
Can India fulfil its potential? THE WORLD AIR SERVICE DEVELOPMENT MAGAZINE
routes-news.com Technology:
Airports:
Airlines:
Focus on:
Plus:
SITA CEO, Francesco Violante
China, Cambodia and Indonesia
Icelandair and JetBlue
Malta, Oman, Vancouver and New Zealand
World News and Event esstentials
EDITORIAL Graham Joe Bates, Newton, Group Editor +44 (0)208 831 7507 Editor joe@aviationmedia.aero +44 (0)208 831 7560 graham.newton@routes-news.com Jonny Williamson, Senior Reporter +44 (0)208 831 7560 Joe Bates, jonny.williamson@routes-news.com Group Editor Justin Burns, +44 (0)208 831Reporter 7507 +44 (0)208 831 7508 joe@aviationmedia.aero justin.burns@routes-news.com
SALES
David McCauley, SALES Senior Advertising Manager Rebecca Randall, +44 (0)208 831 7515 Group Advertising Director david.mccauley@routes-news.com +44 (0)208 831 7513 rebecca.randall@routes-news.com
PRODUCTION
Erica DavidCooper, McCauley, Design & Production Advertising Manager Manager erica@aviationmedia.aero +44 (0)208 831 7515 david.mccauley@routes-news.com Mark Draper, Production & Creative Director PRODUCTION mark@aviationmedia.aero Elaine Harris, Design & Production Manager WEBSITE elaine.harris@routes-news.com Jose Cuenca,
Creative Manager & Andrew Montgomery, Online CreativeCo-ordinator Director jose@aviationmedia.aero andrew.montgomery@routes-news.com Mark Draper PUBLISHER mark@aviationmedia.aero Jonathan Lee, Website Director Managing Jose Cuenca jose@aviationmedia.aero +44 (0)208 831 7563 Erica Cooper erica@aviationmedia.aero jonathan@aviationmedia.aero
PUBLISHER
Published by Jonathan Lee Aviation +44 (0)208Business 831 7563Media Ltd 91 - 93 Windmill Road, jonathan@aviationmedia.aero Sunbury-on-Thames, Published by 7EF Surrey, TW16 Aviation Business Media Ltd United Kingdom Sovereign House, 26-30 London Road, T: +44 (0)208 831 7500 Twickenham, TW17501 3RW, UK F: +44 (0)208 831 T: +44 (0)208 831 7500 The opinions and831 views7501 expressed in Routes News F: +44 (0)208 are those of the authors and do not necessarily The opinions andor views expressed inInformation Routes News reflect any policy position of UBM are those of theBusiness authors Media. and do not necessarily Ltd or Aviation reflect any policy or position of UBM Information Ltd or Aviation Business Media.
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Foreword Routes Americas was a great success, attended by 650 delegates. Denver was a great venue and Denver International Airport and VISIT DENVER made everybody welcome.
T
he Strategy Summit was notable for a forthright presentation from John Byerly, a former US Deputy Assistant Secretary of State, proving that Routes events not only support new air services but also tackle the biggest aviation issues. Byerly called an attempt by major US airlines to freeze the number of flights operated into the US by Gulf carriers and to stop a potential Norwegian Air International service as “anti-consumer, anti-growth and anti-competitive”. I don’t know if we’re in for similar fireworks at Routes Asia but it’s sure to be a memorable event. And in this issue of Routes News we look at some key developments in the Asian market. The lead feature is an interview with Spring Airlines boss, Zhang Xiuzhi (page 14). One of the few female airline CEOs in the world, Zhang has also made the LCC model work in China. While LCCs are enjoying great success elsewhere in Asia, the Chinese market remains largely untapped despite the boom in air travel. Peter Harbison, chairman of CAPA, provides a deeper analysis of the LCC market in Asia (page 48). He notes that LCCs will cross paths ever more frequently, making the future of individual carriers very hard to predict. We also explore the other Asian giant – India (page 34). The Indian market has enormous growth prospects and may
finally be achieving the stability that will unlock that potential. Airports throughout Asia will need to cope with this rapid growth, be it from LCCs or full service carriers. We take a good look at some major gateways in China (page 22) and also explore the infrastructure in other key Asian nations, such as Cambodia (page 44) and Indonesia (page 39). These could be massive markets but they need to develop the capacity and services to handle demand. That won’t be easy. Away from Asia, we are delighted to include the thoughts of SITA CEO, Francesco Violante, on how technology might develop in the years ahead (page 28). Whatever innovations take hold in the marketplace, it seems certain that the passenger experience is about to be revolutionised. So when discussing those new air services at Routes Asia, it is worth bearing in mind the expectations of passengers of the future. Enjoy Kunming! KEEP IN TOUCH
info@routes-news.com @routesnews facebook.com/routesnews Editor Graham Newton
R™ is a Registered Trade Mark of UBM Information Ltd and is used under licence. © Copyright 2015. The content of this publication is the copyright of UBM Information Ltd and shall not be copied or stored in digital format without the written permission of the Copyright holder. Content is correct at time of printing. UBM Information Ltd shall not be liable for any errors or omissions contained herein.
ROUTES NEWS 2, 2015
3
MY FIRST TIME AND I'M ALREADY IN LOVE They are doing their best to make me feel like I am amongst friends in Prague. Prague Airport is one of the most expanding airports in Central Europe. Thanks to their constant upgrading of technologies and tireless improvement of services, 9 new scheduled carriers chose to y there and 15 new destinations were opened last summer. They will take care of you too.
#prglovesyou
Contents
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22
8 World News 13 Cargo News 14 Spring into action
Zhang Xiuzhi, CEO of Chinese low cost carrier, Spring Airlines, tells Graham Newton that thinking big comes easily.
36
21 Fulfilling its potential
Kunming Changshui International Airport is the gateway to the vibrant Yunnan Province.
22 China roars on
Routes News explores the development highlights of China’s busiest gateways outside of the top 10.
31 Airline one2one
Scott Laurence, senior vice president for airline planning, JetBlue Airways, says business and pleasure can mix.
33 Airport one2one
Alex Cardona, manager of traffic development at Malta International Airport.
27 An ambitious programme
34 Indian aviation: the spice of life
28 The power behind the throne
36 The hidden jewel
Massive airport development plans are entirely justified given traffic growth, explains Joe Bates.
Francesco Violante, CEO, SITA, explores how technology drives the air transport industry.
Nigel Mayes, ASM senior vice president consulting and product development, asks whether India can finally fulfil its potential?
The Sultanate of Oman holds a unique position in the Gulf.
Cover Story
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ROUTES NEWS 2, 2015
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Contents
Contents
39
42
39 Stretched to the limits
Air traffic in Indonesia is growing at such a pace that the nation’s airports are struggling to cope, writes Justin Burns.
42 Lights, camera, action New Zealand has much to offer beyond the movie industry spotlight.
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44 Kingdom of wonder
Cambodia Airports’ CEO, Emmanuel Menanteau, talks to Joe Bates about booming passenger traffic, customer service and the next phase of infrastructure development.
49 A rollercoaster year
Peter Harbison, executive chairman, CAPA, says growth and turbulence provide excitement – and financial risk – for Asia’s airlines in 2015.
All the latest news, views and developments from the global network planning community online, plus exclusive airline and airport interviews.
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53 Service with distinction Icelandair hopes its rapid connections will make it stand out from the crowd.
55 Putting people first
The 2014 Airport IT Trends Survey reveals that China’s airports are increasingly focused on the passenger experience.
59 Routes Americas report back 67 Events Essentials
The HUB, your weekly, central source of information for everything related to Routes and Routesonline, is delivered to your inbox every Friday. It includes event updates, airline and airport profiles and news and analysis. Sign up to receive The HUB at www.routesonline.com/register/
ROUTES NEWS 2, 2015
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World News
Record year for Routes It was another record year for Routes – part of UBM EMEA – in 2014, with more delegates than ever before attending its World Routes and Regional Route Development Forums. A record number of 6,116 delegates representing 144 countries attended the six events that Routes organised around the world. Almost 3,000 delegates gathered in Chicago alone for World Routes, the world’s largest civil aviation gathering. The event saw attendance
Beginning 29 March 2015, bmi will connect Rotterdam, The Netherlands, Liege, Belgium, and Bern, Switzerland, to Munich. The flights will be operated in partnership with Lufthansa and tailored to complement Lufthansa’s schedule, opening up the German carrier’s
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ROUTES NEWS 2, 2015
from many of the world’s leading carriers, including all of the top 10 and 40 of the top 50 airlines (measured by available seat kilometres). “The record attendance from airlines, airports and an increasing number of representatives from tourism authorities and other aviation stakeholders at our 2014 events highlights the importance of air service development and its economic impact on national and regional economies,” commented Katie Bland,
Munich network of over 200 global destinations. Oman Air has launched new routes to Manila and Jakarta to facilitate an increasing number of travellers to and from Indonesia and the Philippines for business and leisure
director Routes for UBM EMEA. “With 27,300 face-to-face meetings taking place at our 2014 events, we offer the most efficient forum for everyone involved in negotiating and creating new air links.” Overall, this year’s events saved attendees 45,000 estimated days of travel by having their meetings at Routes. Some 11,800 users were active on Routesonline with 407,000 Route Exchange profile views supporting preparation for the meetings that took place.
purposes. Oman Airports currently hosts 33 airlines and serves 62 connections with approximately 112 daily departures. Iberia will resume flights between Spain and Havana, Cuba, this summer. The airline also announced the launch of
a new route from Madrid to the Colombian cities of Cali and Medellin. On both routes the Spanish airline will use its new Airbus A330s equipped with all-new interiors. Turkish Airlines will add Abjuja, Manila and Taipei to its network from March, 2015.
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On the
move
Welcome to the new Alitalia Alitalia’s new executive team and strategic investors are determined to reinvent the airline. Alitalia will introduce new routes, new product and service standards, a new cost management strategy and new branding as the foundations to build a premium global airline representing the best of Italy. “The energies, passion and expertise I have experienced at Alitalia in recent weeks do not leave any doubt that the airline we’re unveiling will become once again a premium Italian airline recognised worldwide,” said Luca di Montezemolo, chairman. “Our priority is to put the customer at the centre of everything we do. And to do
that, we will change many things, starting with the way we work. We need to work as one united team to achieve this great common goal. “The revitalised Alitalia we envisage and have started building, will be an asset to this country, and a driver to support the growth of our tourism and our business.” Silvano Cassano, CEO of Alitalia added: “A successful Alitalia means jobs, it means trade and it means tourism. It means a major impact on the Italian economy.” James Hogan, CEO of Etihad and one of Alitalia’s major investors, said a clear deadline had been set for the airline to deliver profitability by 2017.
The new Alitalia Milan Malpensa will increase long-haul services, while Milan Linate will increase connectivity with partner airline hubs. Rome Fiumicino will grow long-haul flying and continue to expand short and medium-haul flying.
New routes from Rome include Berlin, Düsseldorf, San Francisco, Mexico City, Santiago, Beijing and Seoul, with increased flights to New York, Chicago, Rio de Janeiro and Abu Dhabi.
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Robin Hayes assumed the position of CEO, JetBlue, in mid-February, 2015, taking over from David Barger.
Traffic and capacity increases by region
% increase compared with 2013
Demand for air travel (as measured by revenue passenger kilometres) in 2014 rose 5.9% compared with 2013. Capacity rose 5.6% last year, with the result that the overall load factor climbed 0.2 percentage points to 79.7%. In total, a record 3.3 billion passengers boarded aircraft last year, some 170 million more than in 2013. But Tony Tyler, IATA’s director general and CEO warned that while it is clear that people will continue to travel in growing numbers, there have been signs in recent months that softening business confidence is translating into a levelling off of international travel demand.
Cathay Pacific Airways announced that Anna Thompson will be its new director Flight Operations. Thompson will also continue to act as general manager Aircrew until a successor is found. American Airlines has promoted Vasu Raja to vice president – International Revenue Management. In this new role, Raja will oversee all revenue generated from the company’s international business.
There will also be increased connectivity with Etihad Airways’ hub in Abu Dhabi, with daily services from Venice, Milan, Bologna and Catania, as well as additional flights from Rome.
Demand for air travel rises
Etihad Airways has appointed Linda Celestino as the airline’s vice president, Guest Services. Most recently, Celestino was general manager, Inflight Services and Product, at Oman Air. She has also served as president of the New Yorkbased Airline Passenger Experience Association.
Traffic
Capacity Source: IATA
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World News
Adding a new dimension Qantas has teamed together with Samsung to provide a virtual reality in-flight experience for passengers. Qantas is trialling the VR headsets in the international first class lounges at Sydney and Melbourne as well as with first class passengers on selected A380 flights between Australia and Los Angeles. The immersive virtual world will initially portray the delights of Qantas destinations and products. “From an inflight entertainment perspective, it’s an industry first,” said Olivia Wirth, Qantas Group executive, Brand, Marketing and Corporate Affairs. “It’s a fantastic tool to feature our network’s destinations, inspiring travel and promoting tourism.”
Tourism NT has been involved in content creation and so passengers will be treated to a 3D experience of Australia’s Northern Territory and Kakadu National Park. “This innovation
literally adds a new dimension to how visitors experience Kakadu,” said Adam Giles, the Northern territory’s Chief Minister and Minister for Tourism.
Adelaide Airport Master Plan approved Adelaide Airport has welcomed the Australian Federal Government’s approval of its 2014 master plan. The master plan envisages approximately A$1 billion in on-airport investment and the creation of a further 3,500 new jobs over the next five years. Potential infrastructure projects include a hotel, expansion of the southern end of the main terminal, expansion of the
AEGEAN, Greece’s largest airline and Star Alliance member, is to launch a new direct route from the UK to Larnaca, Cyprus and Heraklion, Crete. The flights to Larnaca will depart from Heathrow daily as of 29 March, 2015, while the flights to Heraklion will
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international arrivals hall, additional international arrival gates, expansion of the main security checkpoint, and more retail space and airline lounges. “Since privatisation in 1998, we’ve doubled the number of passengers and more than quadrupled the number of international passengers,” said managing director, Mark Young. “We’ve also invested more than $500 million in
be departing from Gatwick as of 21 June, 2015. Virgin America has entered a new interline agreement with Air Tahiti Nui, the leading carrier of French Polynesia. Virgin America has also grown its own flight network with the addition of
infrastructure and facilitated a further $350 million in the past 10 years alone.” Passenger numbers in 2015 at Adelaide are expected to top 8 million for the first time. A 30-Year Vision by Adelaide Airport suggests a tripling of domestic and international terminal boarding bridges by 2044, easily accommodating new-generation aircraft such as the A380.
Dallas Love Field and New York’s LaGuardia. The airline plans to take delivery of 10 new Airbus A320 aircraft from July 2015 through June 2016. airBaltic will launch a new route between Riga and Thessaloniki (Greece) on 5 June, 2015. The Latvian
national carrier will also improve service to Berlin and Vienna. In addition the carrier will begin its first direct flights with both origin and destination outside of the Baltic states, connecting Frankfurt and Dortmund with the German island of Usedom.
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At the heart of Europe Our ‘economy’ fuels your ‘business’ We offer you the best seats to follow European business from up close. Let us take care of you taking care of your passengers. Come spread your wings at Brussels Airport.
www.brusselsairport.be
Cargo news Another strong year for Hactl Hong Kong Air Cargo Terminals Limited’s (Hactl) total tonnage handled in 2014 was 1,814,726 tonnes, up 8.7% on the previous year. Exports increased 6.7% to 1,035,899 tonnes, imports were up 10.3% to 498,338 tonnes, transshipments were up 28.6% at 130,834 tonnes, and mail/express traffic grew 3.1% to 149,655 tonnes. “Trans-shipments once again showed exceptional growth, fuelled both by increased road feeder activity by our subsidiary Hacis, and the
continuing underlying development of Hong Kong as Asia’s preferred regional hub,” said Hactl chief executive, Mark Whitehead. “The ongoing strong growth of our business, based on our 100 airline customers, clearly demonstrates the need for Hong Kong’s third runway. For Hong Kong to continue such impressive development and maintain its position as the world’s number one cargo hub, we must have the additional capacity necessary for airlines to realise their full potential.”
T urkish Cargo opens new terminal Turkish Cargo has successfully transitioned operations to its new Cargo Terminal. The new facility will be able to handle more than one million tons per annum across 71,000m2. Import and export rack capacity has been increased 250% and total ULD capacity will be doubled. The terminal includes a larger cargo admission area; accelerated cargo Sponsored by
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admission and operational processes; specialty cargo storage areas; a singleprocess flow across the operation; increased storage area volume; and a comprehensive and higher quality security system Turkish Cargo has a network of more than 260 destinations in 108 countries through 9 dedicated freighters and Turkish Airlines’ passenger network.
Uta Uta Tjangala. Yumari. 1981. Acrylic on canvas. National Museum of Australia. (one of the IAG shipments)
Moving art
IAG Cargo is the official logistics partner for the British Museum’s new exhibition, Indigenous Australia: enduring civilisation. IAG Cargo has been entrusted with the delicate task of transporting nine irreplaceable indigenous artefacts from Australia to London and back, using its exceptionally high-security service. The objects have been loaned to the British Museum by the National Museum of Australia and Museum Victoria, Melbourne. IAG Cargo’s specialist staff will work closely with the British Museum throughout transportation, providing complete peace of mind that these culturally significant objects will be scrupulously cared for and kept safe at all times. “The British Museum is delighted to be able to borrow these important Australian objects and make them available to audiences in London as part of the Indigenous Australia exhibition,” said Jill Maggs, registrar at the British Museum. “IAG Cargo help to make this possible, by ensuring the loans arrive on time and are provided the highest standards of security and care at all times.” The BP exhibition Indigenous Australia: enduring civilisation will run between 23 April and 2 August, 2015. The exhibition includes over 170 objects of art and everyday life that reflect indigenous culture, colonial history and the struggle for recognition and rights.
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Spring into action Zhang Xiuzhi, CEO of Chinese low-cost carrier, Spring Airlines, tells Graham Newton that thinking big comes easily.
S
pring Airlines was founded in 2004 as part of a partial liberalisation of the civil aviation sector in China and commenced flights in July 2005. By 2008, many of the new airlines that had emerged during the partial liberalisation had either gone bankrupt or were taken over by the larger stateowned airlines. Spring’s ability to survive was in part due to its low-cost carrier (LCC) business model and the fact that its major bases are at Shanghai’s two airports of Pudong and Hongqaio. As China’s financial capital and home to a large population with the highest disposable income in China, there is a consistent volume of both inbound and outbound business and leisure traffic at Shanghai. The management ability of its cofounder, Zhang Xiuzhi, was also crucial. Zhang is a firm believer that the LCC model can thrive in China despite it being a highly regulated market. When Spring entered the market, over 80% of the Chinese population had never flown, meaning that the LCC business model made good sense for a market flooded with price-sensitive, first-time flyers. And as Spring developed, so too did its range of travel products, enabling the airline to cater to an increasingly
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Zhou Laizhen, the CAAC Deputy Director, spoke about the growing importance of the LCC sector at the 2nd ICAO-CAAC LCC summit, saying that they play an important part in the strategic plan for the industry’s growth and are critical to creating a more balanced and fiscally-sound aviation sector. He noted that the business models of both LCCs and full service carriers will continue to evolve and borrow from each other.
Performance by numbers Zhang Xiuzhi
sophisticated and price-conscious business segment. The strategy has been so successful that in 2013, China’s aviation administrators acknowledged the role that LCCs play in a sustaining a healthy aviation sector and have now given approval to a number of new LCCs – many of which are full service carriers’ regional subsidiaries that are transitioning to LCCs. Hainan group’s West Air and HK Express have already transitioned to LCCs, while a number of other airlines are in the process or contemplating such a move, including Capital, Chengdu and Chongqing airlines.
Since its first flight in July 2005, Spring has grown steadily, assembling a fleet of 46 A320 aircraft and carrying some 13 million passengers in 2014. “Significantly, over the last nine years we have maintained an average load factor of 95% and aircraft utilisation of over 11 hours,” says Zhang. “This translates into 45 more passengers per flight than the Chinese industry average and 20% lower ton-km fuel consumption. Our goal is straightforward; remain profitable and ensure that our profit per aircraft remains among the industry’s highest.” Certainly, there’s plenty of room to grow. The LCC market has captured around a third of traffic on average worldwide. In some southeast Asian
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Spring Airlines
nations that figure is well in excess of 50%. But in China, the world’s second largest aviation market, LCC market share barely scrapes 5%. “It is fair to say that a LCC revolution is underway and its impact will be profound,” says Zhang. “This revolution will mean greater operational and management efficiencies and improved competitiveness. It is an exciting time to be in the industry.”
Lessons learned
While the Chinese market may seem unique to many, Zhang informs that there is plenty of lessons to be learned from around the world. “When you look back to the classic LCC model that emerged in the 1970s with its focus on a point-to-point, single aircraft type, high load factors and strict cost control, it is now considered LCC 1.0,” Zhang suggests. “What Ryanair did in Europe – and the advent of online direct sales,
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the focus on ancillary revenue – was definitely 2.0. There have been many new versions since then and Spring has taken lessons from them all. Operationally, we have stayed with the traditional LCC model of simple, safe and cost-effective management. However, we are also focused on leveraging new technologies to improve our online sales channels and increasing ancillary revenues. “Regardless of the business model you employ, you need to adapt to changing market expectations,” she continues. “We are always prepared to learn from the industry leaders and pioneers but have to be flexible in the way we adapt to our unique market conditions and play to our strengths to ensure we too remain an industry leader.” One of those strengths is the pointto-point network and Zhang confirms that remains a priority. Even within the flying range of the A320s, there are rich pickings. Spring operates over 80
domestic, regional and international routes covering the Greater China, north Asia and southeast Asian regions. From its bases in Shanghai, the airline can operate the A320 to over 266 cities in more than 26 countries, a network serving 3.7 billion people. “North Asia is an important market for us,” says Zhang. “Our recent expansion in Japan and Korea means we already have aircraft overnighting in Osaka and Jeju Island. Stable SinoJapanese relations and a Sino-Korean Free Trade Zone will mean that we will seek to open new routes and add density on existing routes in the region. At the same time we will look at more tourist routes in southeast Asia.”
Spreading its wings
Building its international and regional network is an important part of Spring’s strategy. In 2010, it became the first private airline to be granted a licence to fly internationally by CAAC.
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Spring Airlines
Spring Airlines’ destinations The growth of Spring Airlines up to 1 November, 2014
Year
In the last few years, the carrier has launched international and regional flights from its four primary bases at Shanghai Hongqiao and Pudong, Shenyang and Shijiazhuang to Hong Kong, Macau, Taiwan, Japan, Korea and southeast Asia. New routes and greater density in these core markets is on the cards. According to CAPA, Spring is already ranked third in China for its percentage of international seat capacity. “We already have a subsidiary in Japan and, along with establishing bases in Osaka and Jeju, we are also looking into establishing other joint ventures,” says Zhang. “Future expansion plans focus on these new routes and increased density. Internationalisation, digital
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engagement and market focus are priorities in the short and long term.” Boosting brand awareness in the international market will be crucial to Spring’s success. Like many LCCs, brand is an essential component in Spring’s business model and active engagement in social media and on digital platforms is part of the company’s DNA. As the airline becomes more international, Zhang accepts the need to focus on how to increase the proportion of international travellers taking flights. Already, Spring is active in building a strong international social media presence on platforms like Facebook. And it will also look at strategic advertising in international media. Sales
Passenger Volume (m)
Fleet
2014
10.47
46
2013
10.55
39
2012
9.11
32
2011
7.15
27
2010
5.86
20
2009
4.31
14
2008
2.93
10
2007
2.35
8
2006
1.14
4
2005
0.18
2 Source: Spring Airlines.
channels are multi-lingual and the airline has long been recruiting experienced captains from around the world. “Listening and engaging with our customers regardless of where they are is key to building a strong brand,” notes Spring’s CEO.
Leveraging support
Expanding beyond the region will require a change in fleet policy. According to Zhang, should Spring
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Spring Airlines
Traditionally, LCCs have focused on low to mid-range leisure travellers but increasingly are targeting pricesensitive business passengers
introduce widebody aircraft to launch long-haul routes to destinations in Australia, Europe or even the US, then it would also need to consider how it could leverage the support of parent company, Spring Travel, to help the airline break into these new markets. Buying widebodies will not be an easy decision. Such an aircraft would have a significant impact on Spring’s cost base. And the market strategy, demand forecast and fuel efficiency would have to be carefully assessed. For now, Zhang reports the airline is satisfied with its 180-seat A320 work horse. Following the launch of CAAC policies in support of the LCC sector, Spring was able to order 30 additional aircraft that will begin delivery in 2015. From 2015 to 2020, the fleet will grow 17% annually. By 2018, Spring will
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have 100 aircraft, reaching around 130 aircraft by 2020. But it isn’t just about the fleet and network. China’s infrastructure needs to grow along with the industry and, importantly, it needs to reflect the wishes of its LCC customers. “Traditionally, LCCs have focused on low to mid-range leisure travellers but increasingly are targeting pricesensitive business passengers,” says Zhang. “Many LCCs already offer high frequency point-to-point routes, which require quick turnaround times to ensure efficiency and on-time performance. Many large international airports have dedicated terminal facilities that are more suited to LCCs requirements. But there are currently no such facilities available at large airports in China. LCCs in China face greater cost pressures and decreased
competitiveness when compared with overseas LCCs.” Zhang points out, however, that this may soon change. Important gateways are looking into building LCC facilities and CAAC has issued guidelines on their construction. “This will be a game-changing move and a win-win for all stakeholders; lower costs for airlines and the ability to attract more new operators for airports,” Zhang believes. Whatever the outcome, Spring’s future seems assured. An IPO is targeted to bring in some $285 million, which will used to finance up to nine A320s and three A320 simulators. Spring is keen to acquire scale so that in can position itself as the largest LCC in the north Asia region and counter the growing number of competitors entering the market.
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Fulfilling its potential
Kunming Changshui International Airport is the gateway to the vibrant Yunnan Province.
K
unming – known as the Spring City due to its average temperature of 15°C – is a perfect holidaying destination. Whether it is the natural world that enthralls or a thirst for culture, visitors are well rewarded. There are four UNESCO natural and cultural heritage sites nearby; Lijiang Ancient Town, the Stone Forest, the Three Parallel Rivers of Yunnan Protected Areas and Honghe Hani Rice Terraces. Tourism, spurred on by air route development, remains a key driver of economic growth in the region. It is a primary source of foreign earnings, creates jobs and stimulates inbound investment. It is estimated that just one
new narrowbody service could generate some $4 million in aeronautical and nonaeronautical revenue. The gateway to this vibrant area is Kunming Changshui International Airport (KMG) – the flagship gateway of the 12 airports in Yunnan Province operated by the Yunnan Airport Group Co, Ltd. The airport comprises two independent runways, six taxiways and 110 parking positions (68 boarding bridges and 42 remote stands). Even though the facility is not yet three years old, new developments are on the horizon. Additional aircraft stands are planned as is a runway upgrade to ILS CAT II. The reconfiguration and
Welcome to Routes Asia 2015
Kunming promises to be a valuable and attractive trip for delegates. The potential of Yunnan Province and China in general is well documented and will cater to myriad route development ambitions. A unique cultural experience as well as beautiful landscapes also await. Two tours on offer
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expansion of the main terminal’s commercial and retail space is already underway. A second phase of the airport’s expansion will include two more runways, a new cargo terminal dedicated to freighters and another passenger terminal that will enable KMG to handle 80 million customers annually. The goal is to attract more international airlines to the Yunnan market. The Group’s ambition is to directly connect with every capital and secondary city in southeast Asia as well as major tourism sites. Further intercontinental routes would be the icing on the cake.
to delegates will provide an opportunity to visit the Stones Forest National Park and Yunnan Provincial Ethical Village. But there is also the Dianchi Lake just beside the convention center with great views of the Siberian seagulls passing the winter in warmer climes.
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China roars on Routes News explores the development highlights of China’s busiest gateways outside of the top 10. Hangzhou Xiaoshan International Airport
Hangzhou Xiaoshan, already the biggest and busiest airport in Zhejiang Province, is being further expanded with the aim of creating the largest facility on the eastern seaboard after Shanghai. The project is part of the strategy of the Airport Authority Hong Kong (AAHK), which took a 35% stake in the Hangzhou
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Xiaoshan International Airport Co Ltd to develop the Chinese market. Hangzhou Xiaoshan International Airport Co Ltd was first established in December 2000, but was converted into a joint venture company with a registered capital of $950 million in December 2006 when AAHK acquired its 35% stake for a 30-year term. The remaining 65% is held by the Zhejiang Province Airport
Administrative Co, Hang Zhou Investment Holding Co Ltd, and Hang Zhou Xiaoshan Capital Management Co. Construction of Phase II of the expansion was started in November 2006, with the first stage completed in 2010. This included a 96,000m2 international terminal and auxiliary facilities. A 100,000m2 domestic terminal (T3) was opened in December
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Chinese Airports Upon completion of both stages later this year, the estimated capacity at the airport will be 25.6 million passengers, 500,000 tonnes of cargo and 260,000 aircraft movements. In 2013, the airport handled 22.1 million passengers (+15.7%) and 368,095 tonnes of cargo (+8.8%). The long-term plan to 2035 provides for four runways, a total passenger terminal area of 570,000m2 and a 380,000m2 cargo warehouse. Annual capacity will double to 52 million passengers per annum (mppa), 1 million tonnes of cargo and mail, and 500,000 aircraft movements.
Xiamen Gaoqi international Airport
The major airport for the province is operated by the Xiamen Airport Development Co Ltd, established in May 1996. Completed recently were the $37 million Garden Plaza parking lot, which has space for 1,111 vehicles and an apron expansion. A new 72,000m2 Terminal 4, designed to handle 10mppa to 12mppa, was recently completed. Aimed at low-cost domestic airlines, the facility is part of a $667 million development project that will also add a new logistics centre, expanded aircraft aprons and a new runway that will effectively raise the airport’s capacity to 27mppa. In 2013, the gateway handled 19.7 million passengers (+13.8%) and 299,491 tonnes of cargo (+10.3%).
Changsha Huanghua International Airport
2012, and a 3,400 x 60m Class 4F runway, capable of handling the A380, will be in place by 2015, when the total area of terminals will be 230,000m2 with 85 gates. Also part of Phase II is a 567,000m2 apron with 67 new parking bays and a FedEx cargo centre, which includes a 60,000m2 sorting centre and an apron with 26 aircraft stands.
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This airport serves the capital city of Hunan Province and is one of the most important in central China. It is a regional hub for China Southern Airlines and has connections to all principal cities in China, including Hong Kong. In 2013, 16 million passengers (+8.5%) passed through the airport making it the twelfth busiest on the mainland. A major $348 million expansion, started in July 2006, was completed with the opening of the new 212,000m2
terminal – the fifth biggest in China – in July 2011. A 600m extension of the runway from 2,600m to 3,200m, together with additional taxiways and hardstands was completed in April 2009, while the renovation of the existing terminal and the enlargement of the parking area have recently been completed. A new plan for the further development of the airport (2009-2040) has been drawn up based on an expected passenger throughput of 62 million passengers, 1.8 million tonnes of cargo and 502,000 aircraft movements annually by 2040. Part of the plan is a second runway, 3,800m in length, together with two parallel taxiways, the construction of which began in November 2013, following the completion of the necessary expropriation of land and relocation of housing. Two further runways are also envisaged as is another terminal building, cargo complex, maintenance area and other ancillary facilities. Four rail stations are planned to facilitate access from the city.
Wuhan Tianhe International Airport
The Hubei Airports Group has signed a strategic framework agreement with China’s leading airlines to develop the airport into an international aviation hub and, as result of the deal, Air China, China Eastern Airlines and China Southern Airlines will base more than 60 aircraft at the airport. The airport opened a 120,000m2 terminal (T2) capable of accommodating 13mppa in 2008 as part of a development phase that also added a new 38,000m2 car park, 250,000m2 of apron and a 20,000m2 cargo warehouse. Terminal 1 was also renovated and its single runway lengthened by 400m to 3,600m. A second runway capable of handling the A380 was completed in May 2009 as part of the airport’s Phase II expansion project that took the airport’s spending on new facilities to $535 million. Construction of Phase III – designed to develop Wuhan into China’s fourth hub after Beijing, Shanghai and Guangzhou
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Chinese Airports
– started in June 2013 and will add a futuristic 350,000m2 Terminal 3, a second 3,600 x 60m runway, two 3,600 x 25m parallel taxiways and connecting taxiways, a new apron for 54 aircraft, a new ATC building, an 11,000m2 cargo building, a 140,000m2 parking area and office buildings. When completed in 2020, the airport will boast more than 500,000m2 of terminal facilities, capable of handling 38mppa. Wuhan Tianhe handled 15.7 million passengers (+12.3%) and 130,000 tonnes of cargo (+1%) in 2013.
Urumqi Diwopu International Airport
Urumqi Diwopu is one of the most important airports in China’s northwest, serving the city of Xinjiang. In 2013, 15.3 million passengers (+15%) passed through the airport, which offers connections to more than 40 cities in China and 20 international destinations that includes all five central Asian republics. The airport’s newest terminal, the 106,000m2 Terminal 3 built at a cost of $440 million, opened in December
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2009. T1 and T2 were reconstructed in 2011 as part of a $14 million modernisation programme. A feasibility study has been completed for the Phase IV expansion of the airport although it has yet to receive approval. Its proposals are based on an ultimate annual capacity of 42mppa and include plans for a new runway capable of handling the Airbus A380 by 2025 and a fourth terminal building. Meanwhile, the National Development and Reform Commission has approved an $80 million proposal for a new 14,000m2 ATC complex with management training facilities and a VHF remote control system.
Nanjing Lukou International Airport
Nanjing Lukou handled 15,011,792 passengers (+7.2%) and 255,789 tonnes of cargo and mail (+ 3%) in 2013. New additions to its infrastructure in 2014 included a second passenger terminal, new (second) 3,600m x 60m runway and 20,00m2 of hardstands for parking aircraft and ground support vehicles.
The new 260,000m2 Terminal 2 is equipped with 42 gates and has helped raise the airport’s capacity to 15 million passengers and 400,000 tonnes of freight per annum. The older terminals were renovated, expanded and improved under the umbrella of its Phase II development programme, approved in 2010. It is forecast that some 30 million passengers and 800,000 tonnes of cargo and mail per annum will pass through the airport by 2020. An airport rail link, the Ninggao Intercity Line was completed in late 2014 to add to the facility’s offering.
BROOKS REPORTS
This article is based on extracts from Brooks Market Intelligence’s new report, The People’s Republic of China – Airports, Capital Investment Programmes 2014, which takes an in depth look at the development of China’s airport system. Copies can be purchased at: www.brooksreports.com
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An ambitious programme Massive airport development plans in China are entirely justified given traffic growth, explains Joe Bates.
C
hina needs to embrace the privatisation of some of the stateowned enterprises responsible for operating and developing its airport infrastructure, according to a Brooks Market Intelligence’s report, The People’s Republic of China – Airports, Capital Investment Programmes 2014. It claims that such action could relieve the financial pressure on the state and allow China to maintain the economic momentum. There is certainly no disputing that the Chinese government has been concentrating strongly on airports, underpinned by a shift towards liberalising the aviation sector. Indeed, the Twelfth Five-Year Plan (2011-2015) for aviation predicts that 81% of China’s counties and cities will be served by a civil airport by 2015. It also projects that more than 83% of the population – contributing 94% of China’s GDP – will live within 100 kilometres or 90 minutes driving time of an airport by the end of the year. At present, around 61% of the population, contributing 82% to GDP, has convenient access to an airport, most of those living in the eastern part of the country.
The big build
In July 2012, Li Jiaxing, administrator of the General Administration of Civil Aviation of China (CAAC), announced that China would build 70 new airports
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in the 2011-2015 plan and expand and upgrade another 101. If successful, this would equip China with 230 commercial airports by the end of 2015. And they could all be needed in the future as traffic is rising at such a pace across China that experts are predicting that the number of Chinese airports serving more than 30 million passengers per annum (mppa) will increase from the current three – Beijing Capital, Guangzhou Baiyun and Shanghai Pudong – to 13 by 2020. In 2013, the number of airports handling more than 10mppa increased to 24, three more than in 2012. Between them they account for three-quarters of the total turnover of Chinese airports. The 2011-2015 plan specifically targets strengthening Beijing, Guangzhou and Shanghai’s airports to improve their international hub functions and enhancing their complementary airports in the Pearl River Delta, Yangtse River Delta and the Beijing-Tianjin-Hebei triangle to promote a multi-airport system. Other key targets, explains the report, include the establishment of an efficient ATC system; improving the management of airports; the “vigorous development” of passenger transportation; reducing flight delays; and speeding up the development of general aviation. In monetary terms, CAAC has estimated the total cost of airport
construction and expansion at a massive $73 billion, a substantial increase on the $30 billion spent during the previous five years. Says the report: “This is by far the largest and most ambitious airport investment programme anywhere in the world and has been drafted to meet increasing demand, which is predicted to result in annual average passenger traffic growth of 11.4% until 2020.”
Traffic data
In 2013, north China accounted for 16.9% of passenger traffic, northeast China for 6.3%, east China for 29.1%, central south China for 24.1%, southwest China for 15.6%, northwest China for 5.5% and the Xinjiang region for 2.5%. Cargo reached 12.585 million tonnes in 2013 (+4.9%). Domestic cargo amounted to 8.3 million tonnes (+5.7%), with international cargo traffic up 3.4% to 4.285 million tonnes. Regional distribution was 18% in north China, 3% in northeast China, 40.8% in east China, 24.5% in central south China, 9.6% in southwest China, 2.2% in northwest China, and 1.4% in the Xinjiang region. There are now 50 airports handling more than 10,000 tonnes of cargo with Beijing, Shanghai and Guangzhou accounting for 51.8% of the total. Aircraft movements reached 7,315,000 in 2013, an increase of 10.8% over the previous year.
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The power behind the throne Francesco Violante, CEO, SITA, explores how technology drives the air transport industry.
J
ust ten years ago, we could never have envisaged the impact technology would have on the air transport environment. From mobile booking to self-service check-in kiosks, automated boarding gates and automated passport kiosks complete with advanced biometrics, technology now touches every stage of the passenger journey. According to the annual SITA Passenger Survey, 97% of passengers carry a smartphone when they travel, and one in five passengers travels with three mobile devices: a smartphone, tablet and laptop. These passengers expect to remain connected, both on the ground and increasingly in the air on “connected aircraft�.
Personal service
The adoption of new technologies has grown significantly in recent years, and passengers increasingly want more. Today, more than three-quarters of passengers use airline apps, and 56% want connectivity so that they can use their smartphone, tablet or laptop for in-flight entertainment. Passengers also expect more personalised apps and services delivered to their phone or tablet via social media. For example, 53% of passengers would like personalised alerts about delays sent directly to their phones and 30% expect support via social media when things go wrong.
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and it will complement the Internet of Things. As an early example, downloads from Apple’s App Store are estimated at more than 50 billion, with around 800 apps downloaded every second. Airlines and airports globally are actively developing mobile apps to enhance the passenger experience. According to our recent industry surveys, 84% of airports plan to launch mobile apps over the next three years, and 95% of airlines are focused on enhancing their mobile apps.
Francesco Violante
The air transport industry needs to be at the forefront of new technologies. This will enable airlines and airports to engage directly with their passengers and create a more seamless, personalised passenger experience. Looking forward ten years, we can expect five major trends to continue to shape the passenger experience: a shift to apps, the Internet of things and the subsequent data explosion, wearable technology, biometrics, and proximity sensing and beacons. A shift to apps: We are in the midst of a shift from web browsers to mobile apps. There are now apps available to control everything from the electronics in our homes to our health. The App for Everything world is around the corner
The Internet of Things and the data explosion: The Internet of Things is producing a huge amount of data. This includes data generated by machine-tomachine interaction, in which devices are connected to sensors, and they become self-monitoring, self-controlling and selfoptimising without any human interaction. Imagine arriving at the airport with your smartphone and having an Internet-enabled car parking robot and luggage robot meet you to park your car and take your luggage. Then imagine using your smartphone to turn down the heat at home, check that you turned off the coffee machine and activate your security alarm. This will all generate a vast amount of data, which will have significant potential business value for companies that can analyse the data and extract meaningful business intelligence. It will also provide new data to feed and control other
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Technology
connected devices, such as airport operations systems, which will enhance the passenger experience. Wearable technology: Wearable technology is also poised to have a big impact on the air transport industry. Our strategic research and development team, SITA Lab, this year successfully trialled Google Glass applications with Virgin Atlantic and Copenhagen Airport. In both cases, the smart technology helped improve customer service by enabling agents to quickly access passenger details and operational data. We can expect to see wearable technology launched more widely in the future. According to the recent SITA Passenger Survey, 77% of passengers are comfortable with wearable tech if it helps support their journey. Biometrics: Biometrics are just beginning to appear in the air transport environment. Many of the major airports in the US now have Automated Passport Control kiosks for self-service immigration. Passengers simply scan their passports, provide their fingerprints and a camera on the kiosk captures their face biometric, while passenger validation takes place automatically in the background. The entire process takes just 60 seconds. Another interesting aspect of biometrics is the integration into wearable technology. SITA Lab is
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exploring the use of “persistent identity” in a wristband. The wristband uses your heartbeat like a password and provides authentication with a mobile device such as a smartphone. We envisage passengers wearing these wristbands for authentication at control points. As the technology improves, biometrics could eliminate the need for boarding passes altogether. And when combined with proximity sensing, biometrics give the industry an opportunity to provide an end-to-end passenger process that is seamless, intuitive and secure. Proximity sensing and beacons: Proximity sensing, which relies on sensors to detect the presence of nearby objects, can link airport and airline technology to passengers’ mobile phones. This will enable us to access new data and gain unprecedented insights into passenger flow and behaviour at the airport. Using aggregated and anonymous geo-location data, airport operators can keep an eye on passenger flows and adjust operational procedures to smooth out the peaks. They can also give passengers accurate queuing times at security and other bottlenecks, helping avoid congestion. While passenger flow data is aggregated and anonymous, beacon technology can create more personalised communications to passengers. A beacon
is a low powered wireless transmitter that sends out a Bluetooth signal over a radius of up to 50 meters. Combine this with an app and you can trigger context-relevant messages or actions on a smartphone at specific locations. This might be as simple as a welcome message or a flight status update as a passenger arrives at the airport. It could also be a mobile boarding pass on the smartphone at control points or a personalised offer for airport shops and restaurants.
Technology is the future
The vast majority of today’s passengers are using technology to support their travel. As technology continues to evolve, there’s scope to add further value for travellers, to give them greater choice and to constantly enhance their journey. This will require airlines and airports to enable technology capabilities and drive adoption. SITA’s technology and innovation – and our collaborative work with customers and industry associations like the International Air Transport Association and Airports Council International – will also play a significant role. One of our industry’s greatest strengths is its readiness to collaborate. At SITA, we look forward to leveraging our unique industry expertise and collaborate with the key players to develop new technologies that benefit the entire air transport community.
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Airline one2one
Scott Laurence, senior vice president for airline planning, JetBlue Airways, says business and pleasure can mix. How would you describe your network strategy? JetBlue’s network is built around six strong focus cities – we don’t use the word “hub” because we primarily carry local traffic. In fact, about 90% of our traffic is point-to-point – it’s simpler operationally and more convenient for travellers. Our focus cities are in large population centres and each one attracts a slightly different mix of leisure and business traffic. For instance, in Boston, where we are the largest airline, we offer a robust business market schedule on top of numerous leisure routes. In slotconstrained New York, our network is primarily leisure focused. Our other focus cities are Fort Lauderdale/Hollywood, Florida; Long Beach, California; Orlando, Florida; and San Juan, Puerto Rico. Each looks a little different. In each of these key markets we aim to have not just a network that’s relevant to local customers, but prime airport real estate – the “corner lots” if you will – such as JFK Terminal 5.
Are there any cities/countries of particular interest to you in 2015? Right now we’re focused on acquiring slots in Mexico City so we can begin service to Orlando and Fort Lauderdale. This is an important
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market, especially from our South Florida focus city. We see Fort Lauderdale-Mexico City as a key part of our broader expansion at Fort Lauderdale Hollywood International Airport (FLL) into more Latin and Caribbean destinations. Over the next few years, we plan to ramp up our service at FLL to over 100 departures per day from 75 departures today.
What is the extent of your international ambitions? JetBlue is already a heavily international airline. In fact, one-third of our capacity is deployed offshore. That number will only continue to climb. Today, we have more service to the Caribbean region than any other US airline, we’re the largest airline in the Dominican Republic, we serve three cities in Colombia, and our route system now stretches as far south as Lima, Peru. Customers in international markets have been so responsive to our brand, our product and our pricing that our success could create opportunities in the future for larger aircraft or longhaul intercontinental flying.
What do you look for in a new destination? Our decisions are largely data driven. We look for markets where incumbent
carriers are charging high fares, providing poor service, or both. These kinds of markets offer an opening for JetBlue to come in and stimulate traffic with lower fares and better service, adding to our sustainable, profitable network.
Tell us about the work that needs to be done before that first flight to a new destination? While it is data that leads us in the direction of potential markets, we ultimately choose to land in destinations that embrace JetBlue wholeheartedly and understand we’re different from the other guys. Once we know we’ll have the backing of the airport and local community and are confident we can succeed, we announce our intentions and embark on a robust internal process to operationalise our plans so our outstanding crew members can serve our customers well.
How closely do you work with the fleet planning team? At JetBlue, we don’t work in silos. Our network planning team is part of a broader enterprise-wide planning organisation that includes finance, treasury, and operating functions. It’s critical that all of these groups collaborate to ensure our analytical output is, in fact, operable.
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Airport one2one
Alex Cardona, manager of traffic development at Malta International Airport, says the airport will continue to invest in its product. What new destinations are you looking to add to your network and why? Malta is well connected to over 80 destinations in Europe and North Africa – having developed a relatively good route network when one takes our island’s size into consideration. Our traffic growth continues to outperform that achieved at other European airports of similar size and as we continue to grow our route network further, we are looking at improving our connectivity with a number of strategically important markets. We expect to expand in Eastern Europe and Russia further, as demand for air travel from these significant markets continues to rise. Scandinavia is another key focus for Malta International Airport, since Nordic tourists look for a favourable climate and cultural experiences when travelling – a good fit for what Malta has to offer. Also, as the market conditions in Spain continue to improve we expect to see traffic resume from the Iberian Peninsula.
What are the main challenges in winning new airline business? Naturally, since our traffic is largely for leisure, the demand is stronger during the warmer months. Our focus is to keep developing our tourism product and attracting more visitors, even during the lean season. Promoting Valletta in its own right, especially with its European Capital
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of Culture status on the horizon, is one of the ways in which we, together with other tourism stakeholders, are working towards this goal. Malta International Airport also waives its winter landing fees, meaning that there are no fixed costs for airlines to operate here during this period. To attract new business in line with our growth objectives, our airport fees have also remained unchanged since 2007 and we have devised incentive schemes to assist airlines in developing new routes to accelerate our traffic growth.
How long does it take for an airline to open a new route? Can you give us a typical example from Malta Airport? We have no set formula in attracting new airlines and opening new routes, and we have seen varied timeframes. Our focus goes beyond just attracting new airlines or opening new routes. We work hard to secure the capacity, but also put a lot of effort into retaining and sustaining it. We invest heavily in the success of all our new routes, holding regular meetings at the airline headquarters to review the route’s performance, and discuss ways in which to improve the results being achieved. This ensures that we continue to grow our existing business sustainably, while also attracting new traffic, which we consider strategic for managing the airport’s growth and business mix.
How closely do you work with the tourism board and other organisations to market Malta? Our airline marketing activity is not done in isolation. We are well aligned with Malta Tourism Authority’s efforts and we share a common vision on a number of initiatives. We work in parallel in promoting Malta as an all-year-round destination and focus on developing strategic markets as mentioned above. We also work together in managing our market mix – identifying the most fitting airline partner when developing a specific route. Over the years we have also attended Routes conferences together with the Malta Tourism Authority, which we have found to be very effective. This, together with our synchronized efforts when attracting new routes and airlines, has proved to be crucial in leading towards the positive results achieved in recent years.
How will you develop the airport as you grow? Malta International Airport is constantly investing in its product offering. We have recently inaugurated a new VIP terminal – open to commercial aviation passengers – which will also help position Malta as an aviation industry player and enhances the island’s commercial aviation product. Works are underway to expand the terminal by enlarging the NonSchengen area, aiming to improve the passenger experience..
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Indian aviation: the spice of life Nigel Mayes, ASM senior vice president consulting and product development, asks whether India can finally fulfil its potential?
T
here is renewed optimism for the recovery of the Indian economy, the largest democracy on the planet. But is there the same optimism for the Indian aviation industry? The only constant in the Indian aviation industry is “change�, a function of the changing fortunes of its domestic airlines and the environment in which these carriers are operating. Spicejet is being rescued from the brink of bankruptcy while Indigo goes from strength to strength. Air India and Jet Airways have failed to develop their networks substantially over the last five years, but Jet Airways is in now the safe hands of Etihad and Air India has successfully joined Star Alliance and is benefiting from the introduction of the Boeing 787. Meanwhile, new carriers, Air Asia India, Vistara and Air Costa, signal a new breed of airline in the India domestic market.
Capacity growth
The election of Prime Minster, Narendra Modi, in May 2014 brought optimism for a change in fortunes of the Indian economy, but the recovery has been sluggish and his party has recently lost the Delhi State elections. Despite the faltering economy in 2014 with GDP growth static at around 5.8%, most economists are predicting a more promising 2015.
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The opportunity is enormous. With a population of 1.2 billion, India is the second most populous country in the world, but is the eighth largest aviation market by number of seats. A recent report by the Federation of Indian Chambers of Commerce (FICCI) and KPMG estimated that 99.5% the population has not flown, but the growing middle class has the potential to change this percentage dramatically. Airline seat capacity growth for 2015 looks set to be around 5.7%, taking a representative week in June. This is above a CAGR of 3.3% for the previous four years. There is one carrier that has driven the majority of the seat growth in India and that is Indigo, which has generated five times more weekly seats in the past four years compared with the next largest carrier, Jet Airways. Indigo has focused its network development on domestic city pairs, with 105% growth in weekly seats in 2015 versus 2011 and has over one-third of the domestic market in India. The carrier has also been cautiously developing its international network over the last four years, with services to Nepal, Oman, Singapore, Thailand and the UAE. Excluding the domestic market, India is dominated by capacity into the Middle East and in particular the UAE, which now accounts for 30% of all international seats. The next four largest markets in terms of seats are Singapore, Saudi Arabia, Thailand and the UK.
Airline fortunes
Indigo has become the market leader in India and with a fleet of 66 aircraft and an order book of 180 A320s, its position will be hard to dislodge. There is speculation that its success has caught the eye of Qatar Airways, so the carrier may be brought into the oneworld alliance, unless another group snaps it up. The fortunes of the two full service network carriers, Jet Airways and Air India, appear to be turning around, perhaps more quickly at the latter. Jet Airways, benefitting from investment from Etihad (24%) appears to have safeguarded its future. The carrier has seen its LCC brand, Jetlite, brought into the main business. Its long-haul fleet has been reduced and an increased focus has been placed on serving the Etihad hub at Abu Dhabi. Meanwhile, Air India joined Star Alliance on 11 July, 2014, which will bring revenue benefits and improved operational standards to the carrier. It has recently been mandated to reduce costs 10% for 2015/6, a task that should be achievable given the reduction in the fuel price and the introduction of Boeing 787s, replacing the 747 and 777 fleet. The second and third largest LCC carriers in India, GoAir and SpiceJet, appear to be having mixed fortunes with GoAir, a privately run airline, operating 20 A320s steadily developing its network from its main bases in Mumbai and Delhi. It is now able to operate international services.
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Analysis
Population
India Fast Facts
over 1.2 Billion Economy size
US$2,048 trillion That is $1,626 per capita with a Growth Rate of 5.7%
Largest Country Markets by Seats
99%
Of the population has not flown
SpiceJet, on the other hand, has debts of INR10 billion and as a consequence the founder, Ajay Singh, has taken on the ownership through additional investors. Spicejet operates 18 Boeing 737s and 15 Q400s, and, like Indigo, over 95% of its network is domestic flying, with a few international services to, Afghanistan, Maldives, Nepal, Oman, Sri Lanka, Thailand, and the UAE Time will tell if the investment secured is enough to save the brand. Given the carrier leases its aircraft, there are few assets to be salvaged if the new investment doesn’t succeed. In the last 18 months, India has seen three new carriers enter the market, each with a slightly different business plan. Air Asia India, 49% owned by Air Asia with the rest owned by the Tata Group, operates three A320s from a base in Bengaluru. The carrier will be adopting
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the Air Asia strategy of low cost services focusing on secondary cities. Air Costa, based at Vijawada, operates four Embraer 190s and 195s and has a further 50 on order. The regional low-cost carrier is targeting the slightly thinner routes between tier II and tier III cities, where a premium can be achieved. The last new entrant is Vistara, 49% owned by Singapore Airlines. Based in Delhi, the carrier operstes five A320s and has a lease signed for another 20, with the first route being Delhi to Mumbai. Vistara, like Air Asia India, has the backing of the Tata Group and is a full service carrier, bringing a Premium Economy product to India. The business plan is similar to JetBlue or Virgin America in the US. Certainly, Singapore Airlines’ involvement brings quality, but is the market mature enough for this level of market segmentation at this point in time?
United Arab Emirates Singapore Saudi Arabia Thailand United Kingdom
In addition to the above new carriers, there is a further queue of new entrants, which are currently at the licencing stage. These include Air One, Air Pegasus and ABC Airways. Despite the huge potential in the Indian market, these new carriers will be entering a domestic market that suffers from low yield and high taxation on fuel – up to 60% higher than other countries. These are not the foundations for success. Not all the carriers will survive and no doubt there will be some consolidation, similar to Air Sahara and Indian Airlines being absorbed into Air India. It will be interesting to see which carriers – new or old – will help India’s aviation industry to fulfil its potential.
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The hidden jewel The Sultanate of Oman holds a unique position in the Gulf.
O
man is very different from neighbouring countries. Rather than skyscrapers, the visitor notices mountains, beaches and palm trees. Forts rich in history, traditional souqs and mosques withstand the advances of glass-fronted monoliths. But such natural and cultural splendour hasn’t come at the cost of the country’s development. The hints of Frankincense mix freely with the unmistakable aroma of modernity. “Oman has attracted many global companies as they’ve seen the potential for growth in the country,” says Sheikh Samer al Nabhani, general manager of Commercial Operations at Oman Airports Management Company (OAMC). “Many future projects are being built, implemented and planned to accomplish the 2020 plan created in 1995 by the government.”
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There are new roads, new pipelines and even new maritime ports. A special economic zone is being created at Ad Duqm, hotel capacity will reach 20,000 rooms by 2018 and a new exhibition centre will handle major shows and events. “Oman is heating up at the moment, especially in the hospitality sector, so business is right around the corner,” notes Sheikh Samer.
Reaching out
From an aviation perspective, it is the investment in Muscat and Salalah international airports as well as in three regional airports – Sohar, Ras Al Hadd and Duqm – that catches the eye. The new Muscat International Airport is being built on the same airport site and is the largest
construction project ever undertaken in the country. It will handle 12 million passengers per annum (mppa) on opening – slated for 2016. A 4,000m runway will enable A380s to serve the airport while 32 gates will ease the passenger flow. Expansion is envisaged in three further stages, each of which will add capacity for an additional 12 million passengers. Salalah, south of Muscat, will handle 1mppa with possible expansion to 2mppa and ultimately 6mppa. “The new larger terminals, gates, and enormously improved facilities give us the ability to attract more operations and airlines to the new [Muscat] airport,” says Sheikh Aimen Al Hosni, general manager of OAMC. “This leads Oman to become a much more anticipated place for business and leisure. As we grow, we are launching
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Oman
more state-of-the-art technology, which will guarantee a safe and enjoyable experience to all our visitors coming through Muscat Airport and the new regional airports.” There are 33 airlines operating to 28 countries and 60 destinations to/ from Muscat International Airport. But with a favourable geographic location linking Europe and Asia as well as the Middle East and Africa, Sheikh Aimen anticipates strong growth, particularly through national carrier, Oman Air. “Oman Air is our national carrier and a key customer at our airports,” says Sheikh Aimen. “We work closely with them in all operational and commercial areas and both sides are in favour of joint route development approaches to attract new airlines to visit Omani airports, and to enhance the passenger experience.”
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Oman Air has a fleet of 31 aircraft, due to increase to 57 aircraft by 2017. This will include Boeing 787s. Oman Air has started operations to Manila and Jakarta from Muscat and has also announced plans to start serving Singapore and Goa in India during the first half of 2015. Work will continue on building business cases with several other carriers from around the world to enhance the traffic growth at Muscat International Airport. “In our longterm vision, Muscat could connect air travel between Africa and Asia, especially cities in China like Chengdu, Chongqing and Nanking,” says Sheikh Aimen. “Additionally, as we are strategically positioned close to India, we see also immense growth opportunities connecting air travel from Europe, Africa and Asia to the Indian subcontinent.”
OAMC will continue its close ties with the Oman Tourist Board to make this vision a reality and maintain Muscat’s position as a hub. Both entities rely on each other deeply when it comes to passenger and tourism growth in Oman and naturally enough are involved in related events, press releases, and other promotions. Both Muscat International Airport and the tourism board will attend major tourism events in 2015, including World Routes. “These events are a window of opportunity for Oman to showcase our potential as a onestop logistic hub and an attractive, safe and reliable tourist destination,” concludes Sheikh Aimen.
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Stretched to the limits Air traffic in Indonesia is growing at such a pace that the nation’s airports are struggling to cope, writes Justin Burns.
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ow the world’s largest air transport market, the Asia-Pacific region continues to register strong year-on-year traffic growth. Analysts forecast this rapid growth trend will continue, stimulated by the planned liberalisation of air travel and trade, as well as by increasing economic activity. But to keep up with the pace of the expected rise in demand, significant airport development is needed in all countries of the region. One market seeing considerable growth, but lacking the infrastructure to cope with rising demand is Indonesia, the region’s largest economy, which has extensive plans to substantially invest in the development of its gateways. IATA named Indonesia as one of the top five fastest-growing markets for additional passengers over the next 20 years. The world’s fourth most populated country with more than 252 million people, Indonesia handled around 110 million passengers in 2013, but is set for huge growth over the coming years. IATA forecasts that by 2034 traffic will rise to about 183 million.
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In April 2014, the Indonesian government revealed plans to build another 62 new airports over the next five years, primarily in the eastern regions, to bring the total of commercial gateways to 299. Airports in the east are operated by state organization PT Angkasa Pura I, and PT Angkasa Pura II operates those in the west. The country’s small airports are operated by UPT, part of the Indonesian Directorate General of Air Transportation.
East Indonesia
PT Angkasa Pura I operates 13 airports in Eastern Indonesia, and has allocated more than $590 million for the expansion of the five airports it runs – Denpasar Bali, Balikpapan, Semarang, Surabaya and Makassar – all of which are operating above their design capacity. A key development will take place at Surabaya Juanda, planned for implementation over the next two to three years. The gateway in East Java handled 17.6 million passengers in 2013, well above its 12 million capacity. It still needs urgent attention despite
Terminal 2 being opened in 2014, where national carrier Garuda Indonesia is based. To meet future traffic demand at the airport, which is expected to be around 40 million by 2018, the operator is considering an additional three runways as well as developing passenger facilities. Meanwhile, expansion was completed in June 2014 at one of the country’s most important gateways, Denpasar Bali, where the bulk of the traffic is tourists. The development raised the capacity to 25 million, and included increasing the size of the terminals and extending the apron to handle more widebody aircraft. Plans are also afoot to build a hotel on the site. Semarang in Central Java, which handled 3.2 million passengers in 2013, will also be upgraded and the green light has been given to a $93 million development to double the capacity to 10 million. Also in need of a revamp is capacitystretched Makassar, which welcomed
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Indonesia New look for Jakarta
9.6 million travellers in 2013 despite only having room for 7 million. It is expected to see 13 million visitors within the next five years so a fund of $79 million has been allocated for development to allow it to handle increased demand. Yogyakarta Adisucipto has also reached saturation point after strong growth. PT Angkasa Pura I and its partner, India’s GVK Power & Infrastructure, have applied to the regulator to build a new hub for the city, to be called Yogyakarta Kulonprogo International Airport. The limited availability of land and dense population around the existing gateway prevents further expansion. Also under consideration is a new airport in Kubutambahan in the north of Bali, to be called Bululeng. An expression of interest has been received from local company PT Pembangunan Bali Mandiri, and Canada-based Kinesis Consulting, and feasibility studies have been prepared. At Balikpapan, which handled 7.1 million passengers in 2013, and where a new terminal was opened in March 2014, plans have already been outlined to extend the runway to 3,250m to handle widebody aircraft, and to build a hotel on the site.
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West Indonesia
In the west of the sprawling archipelago, the state organization PT Angkasa Pura II operates and manages 13 airports, which between them handled a total of 86.3 million passengers in 2013. These include both airports in the capital Jakarta, and Medan Kualanamu, in the busy city of Medan in northern Sumatra. The country’s busiest Jakarta gateway, Seokarno-Hatta, last year handled some 60 million passengers. Demand continues to increase and despite constant upgrades it is operating above capacity. Expansion is ongoing and the new Terminal 3 will be fully operational by the end of 2015, and be able to handle 18 million passengers per annum (mppa). Terminal 2 will also be transformed and once ready, able to accommodate 19mppa. Development work is set to continue and the government’s transportation ministry has set aside funds for a third runway, along with a Terminal 4. Construction could start as early as 2016. This will raise the capacity to 62 million, bringing the total cost of the expansion to around $985 million. Further revamps will be needed. A new gateway is set to be built in West Java, to ease the pressure on
Jakarta Soekarno-Hatta. Karawang International Airport will be built 50km east of Jakarta and will be funded in a public-private partnership (PPP) format. The west has also seen a new gateway built at Medan Kualanamu, now the second largest airport in Indonesia by area. This opened in July 2013 but has already exceeded its capacity of 8mppa, handling 8.3mppa, and will need to be further developed. Plans are in the pipeline to increase the capacity to 14mppa by 2025 with the enhancement of facilities across the airport site.
Dealing with demand
Air traffic demand in Indonesia continues to grow at a rapid pace. More low-cost airlines are entering the market, tourism figures are on the rise and the country’s middle-class continues to increase in size. Though a raft of airport infrastructure projects are in development or awaiting approval, it seems a lot more government capital investment programmes, and PPPs, will be needed to cope with the forecasted traffic numbers. This story is based on the Brooks Market Intelligence report Airports in South-East and East Asia report, capital investment programmes – 2014. Copies can be ordered at www.brooksreports.com
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New Zealand
Lights, camera, action New Zealand has much to offer beyond the movie industry spotlight.
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elatively small, in a remote corner of the world, New Zealand still manages to exert a major pull on airlines and tourists alike. Not surprisingly, allowing the unassuming to thrive seems to be a trademark of the country. Tucked away in the Wellington suburb of Miramar, for example, are the movie production facilities that developed The Lord of the Rings and The Hobbit movie trilogies. The success of these blockbusters has helped grow New Zealand’s screen industry to support almost 3,000 associated businesses with important hubs in Auckland and the Queenstown/ Otago region, as well as Wellington. Tourists are flocking to the country on the back of this movie success, especially eager to see the Hobbiton movie set in Matamata, on New Zealand’s North Island. Research by the New Zealand Institute of Economic Research found that the marketing of New Zealand as Middle Earth has had a significant impact on tourism. Vacation arrivals into New Zealand are up around 7% compared with the previous year while visitors from the UK, a key target market, stay for an average 28 days. Gisella Carr, chief executive of Film New Zealand, says that most importantly in film-making terms, New Zealand is compact and accessible. “We are about the size of California and it means that our beaches, our mountains, our warm north, our colder south, our hills, our flat lands, are all easily reached by production
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companies. And of course that’s economically important.”
Coming in from the cold
That colder South Island has strong appeal too. Christchurch International Airport, the main gateway to New Zealand’s South Island is another example of a small business punching well above its weight. Seat capacity was up 11% in the southern hemisphere summer season compared with the previous year, the largest increase across all New Zealand airports. Passenger numbers are surpassing even that growth statistic. The challenge is to keep the momentum going. “Being a somewhat small airport, in a remote corner of the world, we need to be innovative in capturing the attention of potential visitors (and airlines to carry them) to entice them to visit our place,” accepts Matthew Findlay, general manager, Airlines and Alliances at Christchurch International Airport. “This involves – depending on the market – sometimes quirky and often cleaver ways to tell our story. Being original in presenting our compelling reasons to add capacity and to grow markets, will be where we stand out from our global competitors.” Christchurch International Airport is marketing itself in conjunction with several different agencies depending on the need of each existing or potential new airline entrant. Findlay notes that each airline serves different markets and has different needs and so the
airport needs to tailor its engagement with other stakeholders to match the need of the customer airline. “For instance, our engagement with Perth Airport to secure the seasonal Air New Zealand service was unique, and considered as being extraordinarily successful by the partner airlines, Air New Zealand and Virgin Australia,” he says. The airport was completely transparent with the financial aspects of the agreement it was entering into with the airlines and, in turn, the airlines were completely transparent about the costs and revenues as well as the entire business case. Furthermore, the airport was able to bring on-board a number of stakeholders, beyond the usual tourism aspect, including businesses and exporters/importers. The airport’s strategic imperative is to grow markets that can sustain air services, and are at a volume that would sustain an air service – or with a sustained marketing effort with partners, could be developed ready for an airline to take an active interest. “We don’t expend our efforts chasing tails or airlines/destinations that require extraordinary stimulation,” says Findlay. “Our efforts are spent investing in markets to prove we can support additional frequencies above organic growth or new services in markets we expect to secure services.” Be it beautiful scenery, an adrenalin fix, relaxation or simply visiting one of the many movie sets in person, New Zealand has plenty to offer.
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Kingdom of wonder Cambodia Airports’ CEO, Emmanuel Menanteau, talks to Joe Bates about booming passenger traffic, customer service and the next phase of infrastructure development.
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ambodia is arguably one of the best examples on the planet of how private investors can transform a country’s airport system for the better. Quite a claim? Well, there is simply no denying that passenger traffic at Phnom Penh International Airport has increased tenfold since the Cambodian government awarded Cambodia Airports (formerly known as Société Concessionnaire des Aéroports) the 30year concession to operate, manage and develop it back in 1995. Indeed, under the umbrella of Cambodia Airports traffic at Phnom Penh has grown from less than 200,000 passengers annually in 1995 to close to 2.4 million last year. The huge upturn in traffic and almost immediate investment in upgrading the airport’s core infrastructure – it opened a new terminal, renovated the existing runway and invested in new airfield lighting and navigational aids – so impressed the Cambodian Government that it awarded it the concession to operate Siem Reap International Airport in 2001 and Preah Sihanouk International Airport in 2006.
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Emmanuel Menanteau
And as part of the terms of the contract for the latter – Sihanouk is the gateway to the country’s southern beach resorts – Cambodia Airports’ concession for Phnom Penh was extended by a further 10 years and has since been extended to 2040. True to form, a new domestic passenger terminal, cargo facilities and an airfield upgrade quickly followed at Siem Reap, ensuring that the gateway, which handled just 20,000 passengers as recently
as 1998, is now equipped to handle in excess of 3 million passengers yearly. At Sihanouk International Airport, Cambodia Airports has spent $30 million on refurbishing the terminal building and extending the runway to 2.5km to allow the gateway to handle aircraft, such as the B737 and A320. To date, the combined cost of modernising the country’s airport system has exceeded $400 million, and there is more to come as Cambodia Airports is in the middle of a three-year $100 million project to expand the terminals at both Phnom Penh and Siem Reap. Each airport currently boasts a 25,000m2 terminal, which is being almost doubled in size to 45,000m2 to effectively double the capacity of both gateways from 2.5 million passengers per annum (mpaa) to 5mppa by 2016. France’s VINCI Airports has a controlling 70% stake in Cambodia Airports, and as is the way with all its gateways, the group’s building division, VINCI Construction, is carrying out the construction work, which started in 2012 and is due for completion late in 2015. And Cambodia Airports’ investment programme for the next five years rises
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Cambodia to above $250 million taking into account additional airfield improvements, new cargo facilities and other projects across its airport system. “The terminal expansion projects will ensure that we have sufficient capacity until at least 2022/23,” enthuses Cambodia Airports’ CEO, Emmanuel Menanteau. “I believe our investment programme in Cambodia’s airports, the rapid rise in passenger traffic across the country and expanding route networks shows just what can be achieved through public private partnership (PPP) projects. We are a long-term investor and are in it for the long haul.” Cambodia Airports’ other shareholder is Malaysian-Cambodian consortium, Muhibbah Masteron, which has a 30% stake in the joint venture.
Route development
Cambodia Airports is determined to make use of the infrastructure. Its route development team is actively working with airlines, tour operators and government agencies – namely Cambodia’s ministries of transport, tourism and civil aviation – to encourage the launch of new routes or additional frequencies on existing ones. In the last two years, Cambodia Airports has taken its route development efforts on the road by jointly organising tourism seminars and trade missions to countries such as India, China, Japan and Indonesia. And the strategy appears to be working as in the last couple of years a number of new routes has been
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launched to Siem Reap from China, South Korea and southeast Asia, and the destination has begun to gain a reputation as a meetings, incentives, conference and exhibition venue during the low season. The Khmer New Year in April has also become a popular time to visit Cambodia for many regional international visitors. “Ten years ago, when Angkor Wat was still a non-mass market destination and therefore quite expensive to visit, the majority of tourists were from Europe [principally France] and the US,” says Menanteau. “It is very different today as it is less exclusive and more easily accessible. As a result the majority of visitors are Asian, particularly from China.” The changes ensured that over 3 million people visited the Angkor Wat UNESCO World Heritage site in 2014 – around half of which used Siem Reap International Airport. Menanteau admits that the route development focus of Cambodia Airports right now is the Asian market, specifically China and South Korea, as well as the three big markets that currently aren’t served direct from Cambodia – Japan, India and Indonesia. In the mid-term, he reveals that attention is likely to stay within the region, but extend to destinations within six or seven hours flying time of Cambodia, such as Australia and New Zealand. “We are already quite open with the Australian airlines about launching flights to Cambodia,” he says. “We see many Australians travelling to
India and places like Bali in Indonesia and they are beginning to discover Cambodia. So why not add Phnom Penh to their route networks? “In the long term, we would like to see Qatar Airways launch Paris flights via Doha and it would be good to get an Emirates service to Dubai,” he continues. “We don’t think there is demand for direct long-haul flights to Europe or the US as these destinations are already served from neighbouring hubs in Bangkok, Singapore and Hong Kong.”
National flag carrier
Route development efforts have been boosted in recent years by the launch of new national flag carrier, Cambodia Angkor Air, five years ago. Owned by the Cambodian government (51%) and Vietnam Airlines (49%), the joint-venture is headquartered in Phnom Penh and operates a fleet of six aircraft (three Airbus A321s and three ATR 72-500s) on international flights from Phnom Penh and Siem Reap to Bangkok, Guangzhou, Shanghai as well as Ho Chi Minh City and Hanoi in Vietnam. It also operates charter services or seasonal flights between Siem Reap and the Chinese cities of Xiamen, Fuzhou, Hangzhou, Wenzhou and Zhengzhou and is said to be considering launching routes to Beijing, Seoul, Singapore, Phuket and Da Nang. All flights are codeshared with Vietnam Airlines, which provides the carrier with technical support, crew training and aircraft maintenance.
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Cambodia
Cambodia had been without a national flag carrier since predecessor, Royal Air Cambodge, went bankrupt in 2001. “I think a strong national flag carrier is important for any country and should go hand-in-hand with a strong airport system, as you cannot develop as a hub without a home-based carrier,” says Menanteau. “We are delighted that it has been launched with the support of the Cambodian government and is slowly developing its route network.”
Traffic growth
Not surprisingly, traffic at Phnom Penh and Siem Reap has soared between 12% and 20% annually for the past four years. Menanteau attributes the increase to a combination of Cambodia’s growing economy, stable political climate, thriving tourism industry – initially boosted by the Hollywood blockbuster Lara Croft: Tomb Raider, part of which was filmed at the country’s Angkor Wat temple complex – and the new facilities, which will take operational efficiency and customer service standards to the next level. He says: “2013 was a very good year for us with 18% growth across our three airports, which between them handled just over 5 million passengers. It followed double-digit growth in both 2011 and 2012 and, to be honest, although the global economic downturn did have an impact on traffic levels, we recovered quickly as the Cambodian market proved quite resilient to the crisis.”
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He adds that he would be more than happy with “stable growth” of around 10% per annum going forward as it will make the ongoing expansion projects at Phnom Penh and Siem Reap slightly easier to manage.
Customer service
Menanteau says that Cambodia is known as the “Kingdom of Wonder” and that customer service comes naturally to Cambodians, who are extremely welcoming to visitors. As such he notes that his workforce were quick to embrace the company’s customer service philosophy and various passenger-focused initiatives such as “Smiling Day”, inspired by VINCI Airports, where once a year all airport frontline employees from airline check-in staff and shop workers to police, security, customs and immigration officers are encouraged to interact with passengers, smile and, in some cases, hand out gifts. Menanteau says the company is also striving to improve the quality of the retail/ food and beverage offering at Cambodia’s airports to increase the choice for passengers and boost concession revenues. “The opening of the terminal extensions will allow us to completely transform the size and quality of the retail offering at our airports, which at Phnom Penh will include the first walkthrough concept stores at a Cambodian airport and more than 2,000m2 of space for core categories,” he enthuses.
“It is more difficult for small to medium-size airports handling less than 5 million passengers per annum to make money from non-aeronautical activity than large hubs such as Bangkok Suvarnabhumi or Singapore Changi because we just don’t have the opportunities that their throughput gives them,” he adds. “We therefore have to make maximum use of our facilities to be successful and I believe that the planned new duty free offering will help us do this.”
Just the beginning
Overall, Menanteau is justifiably pleased with how things are going but cautions that this is just the beginning for Cambodia’s airports. “We are doing well, there is absolutely no doubt about that, and I am very happy,” he notes. “But, compared with Thailand and Vietnam, we still have a long way to go because while Cambodia welcomes around 5 million tourists per year, Vietnam accommodates 10-12 million and Thailand more than 25 million. “However, things are changing because, whereas 10 years ago people used to come to Cambodia and spend one or two days at Siem Reap as part of a trip to Thailand or Vietnam, now increasing numbers are just coming to Cambodia as the country is being viewed as a destination in its own right. The future looks very positive.”
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A rollercoaster year
Peter Harbison, executive chairman, CAPA, says growth and turbulence provide excitement – and financial risk – for Asia’s airlines in 2015.
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n many ways, Asia’s aviation challenges derive from a problem most of the world would love to have: rapid market growth. Despite some headwinds, that is not likely to slow much in 2015. Although the growth is potentially limitless and continues to be rapid, matching supply and demand in such a dynamic market involves massive financial risk. In the process, as lowcost carriers (LCCs) intrude further into the core of the system, that risk is compounded by the fundamental disruption of traditional services that is occurring. For the Asian system has changed much faster than any other before it. Just ten years ago, there was effectively no low-cost airline operation in the region, outside Australia. All national markets were dominated by large full service flag carriers. Today, astonishingly, nearly 60% of intra-southeast Asian seats flown are on LCCs – much higher than Europe (42%)
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Peter Harbison
or the US (31%), where it all began. It is the more remarkable because much of the capacity is, unlike the rest of the world, in the highly complex and restrictive international market. The turbulence is being driven by a combination of high rates of
capacity expansion and, importantly, by new entry. Each new entrant adds algebraically to the level of competition; many of them are in fact subsidiaries/joint ventures of existing legacy brands, although there are also some big independent additions like Lion Air and its various entities (with 549 aircraft orders). Other airlines like VietJet (with 19 aircraft and a modest 61 on order) have aspirations for expansive growth. It is the new entry and the constant jostling for position that intensifies the financial risk profile of the Asian industry. It is not enough simply to establish a place in the market; strategically it is almost an imperative for an airline group wishing to establish for the long term to expand at a greater rate than prudence would dictate. Growth takes on a high priority, because in these dynamic markets failing to grow in the short term can mean being excluded from the market in the medium-term.
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CAPA LCC fleet orders by region
(as of 5 January, 2015)
952
745
135 19 1,669 300 Source: CAPA.
Asia Pacific
Middle East
Overcapacity
That goes part way to explaining the extraordinary size of order books for airlines in the region. Asia Pacific LCCs account for almost half of the world’s LCC aircraft orders – 1,669 according to CAPA’s Fleet Database – and a higher proportion of them will mean incremental growth rather than replacement of older equipment. Excitement Central has been southeast Asia – until last year, when the party slowed, at least temporarily. Overcapacity had impacted Singapore’s LCC sector, pressuring yields for all airlines and resulting in unsustainable losses. Singapore’s two home grown short-haul low-cost carriers, Jetstar Asia and Tigerair, had both been unprofitable since early 2013 as the market failed to absorb a surge in capacity. But, in the second half of 2014, Tigerair began to reduce capacity while Jetstar has greatly reduced its rate of capacity expansion (growing only through higher utilisation) without increasing its fleet. Already a globally renowned transfer hub – for full service airlines – Singapore has, as a result, become one of the
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Africa
Europe
centres for LCC transfer connectivity. Following neighbouring Kuala Lumpur’s example, where AirAsia and AirAsia X already connect as much as a third of their passengers, Singapore’s LCCs are now looking towards more transfer traffic to cement their positions. This evolution from the original, essentially point-to-point LCC concept, is hardly surprising. The Singapore-based LCCs are each affiliates or subsidiaries of full service airlines (Singapore Airlines and Qantas), working almost as surrogates for their parents as they chase the lower yielding passenger, enabled by lower costs. The southeast Asian market should therefore start to improve in 2015, driven by capacity adjustments and increased traffic flows from partnerships.
Liberalisation
However, the increasingly interesting story of this massive industry disruption is at last gathering pace in the northeast of the region. There the penetration by low-cost airlines is still very low. Only 13% of intra-northeast Asian seats are on LCCs. China, which one day will dominate world aviation, is accelerating its regional
North America
Latin America
presence, while others in the north are also moving. Both Japan’s and Korea’s LCCs are spreading their international wings more widely and the relatively liberal access regimes in place now (China’s is still restrictive) make that process easier. Thanks to a policy change by China’s CAAC, home grown low-cost airlines are now being encouraged, where previously they were prohibited; the international impact will take some time to filter through, but the mediumterm effects will be profound and domestically they will cause change. Greater efficiencies, more city-pair operations, accompanied by a flow of new airlines, all contribute to the foundations for a regional system that will look very different by the end of this decade. Across the region, the spread of several regional LCC brands will generate increasingly competitive conditions as their paths cross more frequently. This will not be a comfortable and predictable growth pattern. But it will stimulate enormous economic benefits and, for those who dare, even bigger opportunities.
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Service with distinction Icelandair hopes its rapid connections will make it stand out from the crowd.
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celandair is part of a distinctive business model. It is the largest subsidiary of the Icelandair Group that also contains travel companies, hotels and ground services. Nevertheless, this eclectic mix has proven extremely successful. Underpinning the success is a constant evaluation of potential new destinations. Most recently, the carrier has been opening up the Canadian market, sensing strong opportunities on the trans-Atlantic route and exploiting a natural, northern-latitudes connection. Only slightly further south, flights to Portland, Oregon, will start in May 2015. Andrés Jónsson, general manager for Icelandair in the UK, is bullish about the prospects for this service as there are few direct flights to the city out of Europe. It is this strategy, Jónsson explains, that has also seen the carrier choose to name Birmingham (BHX) as its fifth UK gateway, beginning February, 2015. “Birmingham airport is well located between London and Manchester but has a lack of connections to North America,” he says. “Our service will be the fastest way to go to 8 out of our 14 destinations in North America
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from BHX. We have seen big growth in tourist numbers into Iceland from our destinations across the UK and believe BHX fits well within our portfolio for Iceland and North America.” Jónsson says that for many of Icelandair’s routes, the carrier represents the fastest way to travel. Half of the 14 destinations out of London Gatwick and Birmingham provide the shortest trip duration for the destination. Six flights out of Glasgow and four from Manchester are equally expeditious. The airline has many other selling points too. There is a refreshingly generous baggage allowance, for example – two 23kg bags plus 10kg carry-on is allowed to North America for economy passengers. Passengers can also stopover in Iceland for up to a week with no additional air fare. But if speed is more your thing, Keflavik International Airport offers short connection times of 60-90 minutes. Indeed, Guðjón Arngrímsson, VP Corporate Communications, Icelandair, says the airport is playing its part in the airline’s success. “We are
constantly working with our partners to strengthen our product and it seems to be working quite well,” he notes. “Our home airport in Iceland is growing with us at a steady rate.” To maintain its profitable path, Icelandair will be exploring all available distribution channels to ensure every customer is served is the most appropriate manner. “Icelandair has been in the market for 70 years and we have a good long history with the travel trade while our online sales have also developed very well,” says Jónsson. “Our aim is to continue to grow within all channels and we have close cooperation with tour operators and travel agents,” he continues. “Our destinations in North America and gateways out of the UK have been growing fast for the last five years. We can experience different opportunities within each channel to serve our destinations.” “We think it is fantastic how social media is making companies rethink how they interact with the market. We try to incorporate our brand values in a conversation that benefits and interests customers as well as ourselves.”
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Putting people first The 2014 Airport IT Trends Survey reveals that China’s airports are increasingly focused on the passenger experience.
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o support the massive growth in traffic across China, the nation’s airports are investing in new infrastructure and technology and from an IT perspective, passenger processing tops the agenda, according to the latest Airport IT Trends Survey. The annual survey, conducted by SITA in partnership with ACI, is based on responses from participants at airports, which between them accounted for 2.35 billion passengers or 42% of the total global passenger traffic last year. And it reveals that 53% of China’s gateways cite passenger processing as their highest IT priority, followed by security and airport operations.
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Self-service
The shift of focus from operations to passengers is noticeable in the choice of investment projects with 65% of airports having major programmes – and a further 29% running pilot projects – related to self-service. New self-service options are also being introduced to improve passenger handling, such as bag-tag printing, selfboarding and bag-drop. Today, 65% of airports can offer bag-tag printing, up from 46% in 2013, while self-boarding is available at 35% of leading airports in China, a jump from 8% last year.
Chinese airports continue to increase the number of common-use kiosks available to passengers. Some 35% of leading Chinese airports plan to add more kiosks for check-in, and 35% are planning to install them for other uses (up from 29% in 2013). Airports in China are embracing new social trends too, such as mobile and social media, driven by Generation Y consumers. In fact, in 2014, every airport surveyed had a major investment or an evaluation project related to passenger services via mobile and social media. Behind the investments is a strong desire to develop a more personalised customer service through direct
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Airport IT
By the end of 2017, 94% of airports in China will have implemented real-time notification via social media and mobile
interaction and a majority of airports (53%) rate their social media investments against this criteria as performing well or above expectations. In particular, Chinese airports are using mobile and social media to communicate with passengers in times of disruption. By the end of 2017, 94% of airports in China will have implemented real-time notification via social media and mobile.
Global trends
China is certainly not alone in its ambition to improve passenger processing at airports as the survey found that it is the leading IT priority of airports around the world. According to the survey, nearly half (47%) of the world’s airports rank passenger and airport security as their top IT priority. Indeed, the annual airport survey shows a focus on the connected traveller with investments in IT infrastructure and services that give passengers more convenience and control. It claims that self-service and mobile options are key areas of investment with more than 80% of global airports planning a project in these areas over the next three years. The good news for passengers is that airports also have more money to invest in IT: 63% of CIOs expect to have spent more on technology in absolute terms in 2014 compared with 2013, and their total spend is estimated at $6.8 billion.
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Francesco Violante, CEO SITA, says: “This is the age of the connected traveller with nearly all passengers carrying mobiles, tablets and other devices. It is vital that airports invest in the infrastructure to support the changing expectations of these passengers. “This year’s survey shows that the majority of airports globally are investing more in new technologies and mobile services for passengers in an effort to improve passenger processes and satisfaction.”
New innovations
Over the next three years, more multi-service kiosks, self-bag drop and self-boarding services will be at airports around the world as 86% of airports plan investments in these areas. And the survey shows that by 2017, nearly three-quarters of airports expect the majority of their passengers to use self-service check-in. Common-use kiosks continue to be popular, with 60% of airports planning to increase their numbers for check-in and other uses. Geo-location technology, which allows an airport to provide services in relation to where the passenger or staff member is at a particular time, is one of the initiatives popular with airports; 60% plan geo-location programmes over the next three years. Newer innovations have caught the eye of some airports, too, with 49% investing in near field communications (NFC), 33% planning iBeacon programmes and
16% investigating wearable technologies during the same period. But it is the airports in Europe that are embracing these innovations the most. By 2017, 76% of them plan programmes with geo-location, 55% with NFC and 23% with iBeacons. Mobile investments continue to be a major part of airport IT strategies with 84% investing in mobile applications for passenger services over the next three years. The most common mobile service currently available is flight status notifications, with 50% of airports offering it now and 90% planning to offer it within the next three years.
Social media
Mobile is going to take hold in other areas, too. By 2017, the vast majority of airports plan to expand services through mobile apps, including customer relationship management (CRM) (78%), wayfinding (72%), security wait-time notifications (73%) and retail services (65%). For the connected traveller, airports will increasingly offer CRM via social media. Already 30% do so, but this is set to jump to 70% over the next three years. Overall, the performance in social media for airports is mixed. Of those airports that measure social media usage, 13% have found that it has exceeded their expectations while nearly 18% report passenger usage figures lower than expected.
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Routes Americas 2015 • Report Back
Largest Routes Americas event ever
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outes Americas 2015 in Denver had a record number of attendees. Hosted by Denver International Airport, supported by Visit Denver, Metro Denver EDC, State of Colorado, InterVISTAS and Colorado Ski Country USA, Routes Americas 2015 saw representation from over 80 airlines, 275 airports and almost 40 tourism authorities, along with a number of other industry stakeholders from across the globe. In total, more than 650
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people attended, equating to around 40% year-on- year growth and making Routes Americas the largest route development event for the entire Americas. “This growth is beyond our expectations and I’d like to thank our host, Denver International Airport, and partners for hosting this year’s event and for their excellent collaboration with our team to deliver a record event,” said Katie Bland, director Routes for UBM EMEA.
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Routes Americas 2015 • Report Back
Austin-Bergstrom International Airport wins award
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ustin-Bergstrom International Airport won the first heat of 2015 Routes Marketing Awards. As overall winner of the regional heat of the Routes Marketing Awards, AustinBergstrom will be automatically shortlisted for the World Routes Marketing Awards, which will take place 19-22 September in Durban, South Africa. “We are absolutely delighted about the win, but a little shocked
to pick this up given we were up against other airports with such high business credentials,” Austin Bergstrom International Airport’s assistant director, Jamy Kazanoff said. “It means a lot to us to be recognised by our airline partners for what we have achieved and I would like to thank them all for showing support in our journey to turn Austin-Bergstrom International Airport into one of the nation’s most successful airports.”
In the past year, AustinBergstrom has achieved record growth, with capacity up 7%. With four new carriers and 8 new destinations, the airport now offers 44 destinations served by 13 carriers. The shortlisted finalists were nominated by airlines and a respected panel of judges reviewed the lists and airport submissions to determine the winners. The panel consisted of the following experts: • John Kirby, vice president of capacity, Alaska Airlines • Adriana Hurtado, director of network planning, Avianca • Dave Clark, VP network planning, Jetblue Airways • John Weatherill, director network and schedule planning, WestJet Airlines • Lukas Johnson, VP network and pricing, Allegiant Air • Angel Garcia, network planning director, VivaAeroBus
ROUTES MARKETING AWARDS OVERALL WINNER: AUSTIN-BERGSTROM INTERNATIONAL AIRPORT Over 20 million passengers
Winner: Orlando International Airport
Highly commended: George Bush Intercontinental Airport Shortlisted: • Chicago O’Hare International Airport • McCarran International Airport • Toronto Pearson International Airport
4-20 million passengers
Winner: Austin-Bergstrom International Airport
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4-20 million passengers Highly commended: Tampa International Airport Shortlisted: • Louis Armstrong New Orleans International Airport • Pittsburgh International Airport • Punta Cana International Airport
Under 4 million passengers
Winner: Regina Airport Authority Highly commended: Aruba Airport Authority
Under 4 million passengers Shortlisted: • Sangster International Airport • Savannah/Hilton Head International Airport • University Park Airport
Destination Award
Winner: Las Vegas Convention & Visitors Authority Shortlisted: • Nassau Paradise Island Promotion Board • Visit Jacksonville
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Routes Americas 2015 • Report Back
Strategy Summit discussions
The first panel session of the Routes Americas Strategy Summit looked at how new routes can succeed across different models. Moderated by Michael Bell, consultant at Spencer Stuart, the panel featured: • David Dague, vice president airline strategies, InterVISTAS • Barry Biffle, president, Frontier Airlines • Dave Clark, vice president of network planning , JetBlue Airways • Vijay Bathija, vice president commercial, Air Canada rouge • Rafael Araujo, manager network planning, GOL The group agreed that the air traffic market needs a variety of business models. As Bathija summed up, “you can’t be everything to everybody”.
A second panel session looked at the new flows of traffic involved in winter tourism. This was chaired by local news anchor for 9News Denver, Gregg Moss. Other panellists included: • Johanne Gallant, director of airport commercial development, Greater Moncton International • Peggy Croes, chief commercial officer, Curaçao Airport Partners • Elizabeth Scotton, chief commercial officer, Sangster International Airport • Richard Scharf, CEO, Visit Denver The panel agreed that travel was now becoming a priority in people’s lives but also conceded that stays were getting shorter. The solution, they opined, is for the industry needs to come up with yet more products and even greater flexibility.
The debate focused on two interesting topics. The potential lifting of the US ban on Cuba could have a dramatic effect on traffic flows. The cruise business and trade in visiting family and friends are two prime examples of the impact Cuba could have on the market. The panel also discussed the value of incentives in attracting new services. Innovation – rather than a simple financial deal – was welcomed and panellists also extolled the virtues of retaining services. Losing an airline service can be viewed as a black mark for airports so working with partners on a long-term promotional campaign can be every bit as important as winning the service in the first place.
Routes Americas 2016 to take place in San Juan
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uerto Rico, a US Commonwealth, will host the 9th Routes Americas, which will take place 7-9 February, 2016 in San Juan. The event will be hosted by Puerto Rico Tourism Company with the support of their partners Aerostar Airport Holdings LLC and Meet Puerto Rico. “We are confident that the Island will serve as the perfect backdrop to a very productive Routes Americas,” said Ingrid
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Rivera Rocafort, executive director of the Puerto Rico Tourism Company. “The Island may be known for its white sand beaches, spectacular scenery and vibrant culture, but it is also a great place to do business.” Located just above the Equator, between the Atlantic Ocean and the Caribbean Sea, Puerto Rico is the perfect connection point between north and south and continues to benefit from
having the best of both worlds. Puerto Rico is a world-class tourist and business destination and is home to the largest airport and cruise homeport in the Caribbean. Next year will also mark the inauguration of the newly remodelled Luis Muñoz Marín International Airport. Puerto Rico offers over 1,600 non-stop weekly flights from 43 destinations around the world.
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Routes Americas 2015 • Report Back
Byerly talks tough
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ohn Byerly, a former US Deputy Assistant Secretary of State, gave a candid keynote presentation at the Routes Americas Strategy Summit. Byerly has been a huge advocate for the benefits of relaxed air service agreements and is recognised within the industry for his work negotiating early open skies agreements in the mid-1990s. When Byerly left the State Department in late 2010, the US had negotiated open skies agreements with 99 countries. That number has risen to 114. New deals with Brazil and Mexico are awaiting formal approval. But Byerly warned that some people are now beating “a different drum”. He said: “Having secured the benefits of open skies for themselves, some of the largest US airlines, together with the Air
Line Pilots Association, have suggested over the past year that it’s time to adopt a policy of “fair skies”, not open skies. “They have aimed their attacks at the Gulf carriers and at Norwegian Air International, which is seeking approval from [the Department of Transportation] to exercise the rights granted to every licensed European Union carrier to operate transatlantic service,” he continued. He revealed that senior executives from US majors, American Airlines, Delta Air Lines and United Airlines, have met with President Obama administration officials to discuss a potential freeze on the number of flights that Gulf carriers operate into the US. He described these anti-open skies efforts as “anti-consumer, anti-growth and anti-competitive”.
Citing a study by Professor Martin Dresner of the University of Maryland, Byerly said that Emirates, Qatar, and Etihad have succeeded in the US market, not because they are stealing traffic from US airlines, but because they have opened new markets to places like India, Africa, and the Middle East that US airlines largely ignored. Regarding Norwegian Air International, Byerly – who acts as an advisor to the airline – said: “I do object when an unholy alliance of powerful carriers files joint pleadings before the Department of Transportation to prevent Norwegian Air International from operating to the United States. So far, they and their powerful, politically connected labour unions have succeeded in delaying a long-overdue DOT decision. Indeed, the European Union has formally objected to this unprecedented delay as a breach of the US-EU open skies agreement.” Byerly concluded on a positive note, however. “Yes, there are some clouds on the horizon, but I’m an optimist at heart,” he noted. “I am convinced that, by following the compass of good public policy and simple common sense, we can fly through this anti-competitive turbulence with our open skies principles intact.”
Network dedication
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s ever, the networking events at Routes Americas were memorable affairs. Following an engaging Strategy Summit, delegates were welcomed to the Sports Authority Field at Mile High, the home of the Denver Broncos. The venue was particularly apt given that the Super Bowl was taking place.
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Giant screens relayed the game, adding to the atmosphere. Denver Mayor, Michael Hancock, welcomed delegates to the event. He played an important role in bringing Routes Americas to Denver and fully supports the ambitions of Denver International Airport to boost connectivity and the local economy.
Hancock joked that all delegates should go out and spend as much money as possible to boost the local economy before departing back home. The following evening at the Denver Performing Art Center, the Marketing Awards took place with Austin-Bergstrom International Airport emerging as the overall winner.
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Heading to Aberdeen R outes Europe, the region’s largest annual route development forum, has seen year-on-year growth and in 2015 up to 1,300 delegates, including representations from 125 airlines from across Europe and beyond, will descend on Aberdeen to meet and shape Europe’s future networks. Now in its 10th year, Routes Europe is the only network planning forum for the entire region, bringing together senior delegates from airports, airlines, tourism authorities and other industry stakeholders to discuss air service development to, from and within Europe. The 2015 event will take place 12-14 April hosted by Aberdeen City and Shire, marking the first time the event will be held in the UK. By the end of January 2015, over 60 airlines had already registered to attend, including every major European low cost carrier. The region’s flag carriers will also be well represented with the likes of Swiss International Air Lines, Lufthansa, Turkish Airlines and Air
France having confirmed their attendance. In addition, out of region carriers that have registered to attend this year’s event include WestJet Airlines, Saudia Cargo and Etihad. Along with the face-to-face meetings, which are at the heart of the event, there will be a strong exhibition element and the event will open with the Routes Europe Strategy Summit. This will bring together thought leaders and decision makers from across the aviation sector to discuss some of the hottest topics affecting aviation today. The Summit, which is open to all Routes Europe delegates, will cover topics such as Investments, Partnerships and Acquisitions...The Changing Skies of Europe and LCCs – the game changers in Europe. This two-part session will explore how LCCs are Europe’s growth engine, followed by a look at how legacy carriers are competing with LCC growth. Confirmed speakers so far include Michael Haendel, Lufthansa’s director
of network planning; Jens Boyd, group director Long Haul Network and Revenue Management for Thomas Cook Group Airlines; Simon McNamara, director general of the European Regions Airline Association (ERAA) and Fernando Estrada, Strategy & Alliances director for Vueling. Route Exchange airline briefings will also be a key feature of the event. These airline briefings, delivered by senior personnel from key carriers, provide delegates with an opportunity to gain an insight into their target and current airline partners’ business plans and further develop understanding of the route planning function of airlines. Carriers which have so far confirmed they will deliver a briefing in Aberdeen include WestJet, easyJet, Thomas Cook and Flybe.
Manila thinks big
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n 2016, Routes Asia will head to the Philippines. The event takes place 6-8 March, 2016 in the vibrant capital city of Manila. Hosted by the Philippine Department of Tourism and the Department of Transportation & Communication, the event will provide the Philippines with the opportunity to improve international air connectivity and access for business and inbound tourism. Speaking at World Routes 2014 in Chicago when the event was announced, Secretary Ramon Jimenez, Jr of the Philippine Department of
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Tourism said: “We are extremely honoured and excited to be given the opportunity to host Routes Asia 2016. The Philippines is a strong, viable option for staging the largest and most important route development forum in Asia. Trade, investment and tourism in the country have grown rapidly in the last few years creating numerous opportunities for expanding air routes to major points in Asia and the rest of the world.” The Philippines is currently modernising and expanding its
premier gateway and secondary airports to sustain its international market growth and improve the arrival and departure experience. The upgrading of Manila’s Ninoy Aquino International Airport’s Terminal 1 is ongoing and will be completed in time for the hosting of the Asia Pacific Economic Cooperation in 2015 while the construction of an elevated highway linking Terminals 1, 2, and 3 to the Skyway and Manila Bay is expected to be completed by 2016.
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Routes Americas 2016 San Juan, Puerto Rico 07-09 February, 2016
Routes Asia 2016 Manila, Philippines 06-08 March, 2016
Routes Europe 2015
Aberdeen, Scotland 12-14 April, 2015
Routes Silk Road 2015
Tbilisi, Georgia 05-07 July, 2015
Routes Middle East & Africa 2015
Manama, Bahrain 31 May - 2 June, 2015
Joy Zhang, account director, China and territories, says work has already started on World Routes 2016, to be held in Chengdu. What does your job involve? My responsibility is to lead the China team to improve participation in Routes events, Airport Cities events and Routesonline and deliver new business.
Tell us about Routes Asia. What should delegates expect from the event and the city? Routes Asia is an excellent platform for delegates from all over the world to meet and discuss aviation business, especially new air route opportunities. Routes Asia 2015 is back to China in Kunming, Yunnan Province. With its beautiful landscapes, mild climate and 26 ethnical cultures, Yunnan Province is one of China’s major tourist destinations. Routes Asia 2015 in Kunming will be a valuable and attractive trip for delegates.
Have preparations begun for World Routes 2016? Yes! Everything has been under preparation since the end of World Routes 2014.
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World Routes 2015
Durban, KwaZulu-Natal Province, South Africa
19-22 September, 2015
MEET THE TEAM
What attractions are there for the delegates to explore in Chengdu next year? Geographically located in the heart of China, Chengdu, the capital of Sichuan Province, is a well-known cultural and historical city with a history dating back more than 2,300 years. It is also famous for its natural beauty. There are 9 top scenic spots, 9 national parks, 13 national nature reserves, 57 provinciallevel scenic spots and 46 provincial-level forest parks in Sichuan. Also, a relaxed lifestyle, spicy cuisine, and pandas are the icons of Chengdu.
Chinese air connectivity is improving all the time. Do you think any markets are still underserved? Aviation growth in China ranks the highest in the world, but, unlike other parts of the world, Chinese passengers have little experience flying on low cost carriers. There is only one major local budget carrier, Spring Airlines. In recent years, many foreign budget airlines have started operating international flights through China, and now there’s
hope that the Chinese government may introduce policies to encourage low cost carriers to enter the market.
How is the tourism industry faring in China? What are the challenges in attracting tourists to the country? Tourism in China has greatly expanded over the last few decades. China has become one of the world’s hottest inbound and outbound tourist markets. However, the number of tourists to China dropped in 2014 for a number of reasons. Despite great challenges, China is also confronted with tremendous opportunities as the surge in global tourism will create a favourable external environment for China to attract foreign tourists.
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Something for everyone Carol Benzie, managing director at Aberdeen International Airport, talks record growth and Routes Europe. You had a record year in 2014, can you continue the trend in 2015?
Are you happy with your infrastructure and what improvements are planned?
Last year was an exceptional one with 8% growth on 2013, which had also been a record year. We actually hit our target passenger number for 2015 a year early! We don’t believe that the speed of growth we have seen is sustainable, but we do still anticipate slow and steady growth ahead.
The significant growth we have experienced in the last four years has led to capacity constraints in a number of key areas. Our new owners are committed to investing in a terminal fit for the future and we are in the advanced stages of defining what this will look like.
Aviation seems to be in a period of solid growth. Are you optimistic about the future or do you see dark clouds on the horizon? Aberdeen’s growth has historically been attributable to the global oil and gas and energy sectors. Our numbers do tend to mirror their movements, but we are also targeting growth in leisure markets. So we are optimistic.
What’s your view on the UK Air Passenger Duty? Will the reduction in Scotland make a big difference? I strongly believe that Air Passenger Duty should not only be reduced but be abolished altogether. Scottish and UK airports are competing for new routes against major European airports that are more attractive to operate from as their country does not impose this tax.
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How easy/difficult are operations considering your heliport activity? Does the helipad limit your commercial airline growth in any way? Aberdeen has two helicopter runways, which intersect with the main runway. This affords us much greater flexibility in the number of movements we can achieve at peak times. Therefore, we are not restricted by their operations
How about your network? What are your key routes and what new destinations are on your wish list? Our top priority at the moment is to attract further leisure opportunities to allow our local community to fly on holiday from their local airport. We would particularly love to see more seatonly allocations to our top three most requested destinations of Alicante, Malaga and Faro as we have a high number of second homeowners in those areas.
Carol Benzie
Houston also figures frequently on our most wanted list and we’ve seen increasing demand for the Middle East.
How closely do you work with partners, such as tourism authorities and chambers of commerce to market the airport and Aberdeen as a destination? Team Aberdeen (Visit Aberdeen, Exhibition Centre, local councils, transport providers and hotel association) works very closely on our marketing propositions and the tourism offer in our region is exceptional. Castles, golf, whisky, great coastline and beaches, fishing villages, shopping and history all combine to ensure there’s something for everyone.
Finally, tell us a little bit about what delegates can expect from Routes Europe and Aberdeen. What does the airport and city/region offer? We want to deliver a conference, which gives everyone a sense of place with traditional Scottish hospitality blended with a contemporary twist. So expect whisky, tartan, haggis, castles and a few surprises!
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