routesnews
The world air service development magazine
Prepare for landing Opinion: The next-generation route planner Interviews: Bmi regional & Cargolux Airports: Copenhagen Issue 5 Volume 9 2013 www.routesonline.com
Destination focus: Vietnam Plus: Routes Africa & CIS reports
Foreword T
here are a few destinations that truly have a hold on the imagination of people all over the world and one of those places is, without a doubt, Las Vegas. The days of Las Vegas appealing only to gamblers has long since gone, as the city has emerged as the premier leisure and convention destination in the US. But it hasn’t always been smooth sailing – like so many other US cities, Vegas was facing a potential tourism disaster in 2008 when the recession slammed into the country. Initially the city did see tourist numbers drop and air services decline, but American and international tourists alike demonstrated their unwillingness to give up on leisure travel entirely, even during the tough times. With a co-ordinated approach between city, tourism and aviation officials, Las Vegas came out the other side of the slowdown with its brand bigger and better than ever. Today, McCarran International is a key airport for Allegiant, Southwest and Spirit Airlines, as well as a host to international airlines ranging from Westjet and Virgin Atlantic. Once tourists and convention delegates have landed, they can choose from some of the best entertainment, shopping, spa and outdoor activities that the US has to offer. This October the Las Vegas Convention and Visitors Authority will host us in what will no doubt become a World Routes to be remembered.
Editorial
Acting Editor Lucy Siebert +61 432 770 828 lucy.siebert@routes-news.com Deputy Editor Piers Evans +44 (0)208 831 7508 piers.evans@routes-news.com Group Editor Joe Bates +44 (0)208 831 7507 joe@aviationmedia.aero
Sales
We have more on what you can look forward to on page 46, as well as a quick guide to the city and its surrounding attractions with LVCVA’s Cathy Tull on page 48. I am delighted to be back in the Routes News editor’s chair, writing, tweeting and broadcasting about all things route development. As we know, two years is a long time in business and publishing is no different. While your printed edition of Routes News continues to come to your door eight times a year, we are also busily working online (www.routes-news.com), tweeting (@LucySiebert and @routesnews) and even Facebooking (www.facebook.com/routesnews).
Acting Editor Lucy Siebert
R™ is a registered Trade Mark of UBM Aviation Routes and is used under licence. © Copyright 2013. The content of this publication is the copyright of UBM Aviation Routes Ltd and shall not be copied or stored in digital format without the written permission of the Copyright holder. Content is correct at time of printing. UBM Aviation Routes shall not be liable for any errors or omissions contained herein.
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Advertising Manager Rebecca Randall +44 (0)208 831 7513 rebecca.randall@routes-news.com Sales Manager David McCauley +44 (0)208 831 7515 david.mccauley@routes-news.com
Production
Design, Layout & Production Andrew Montgomery andrew.montgomery@routes-news.com Elaine Harris elaine.harris@routes-news.com Mark Draper mark@aviationmedia.aero Erica Cooper erica@aviationmedia.aero Website Jose Cuenca jose@aviationmedia.aero
Publisher
Jonathan Lee +44 (0)208 831 7563 jonathan@aviationmedia.aero Published by Aviation Business Media Ltd Sovereign House, 26-30 London Road Twickenham, TW1 3RW, UK T: +44 (0)208 831 7500 F: +44 (0)208 831 7501 The opinions and views expressed in Routes News are those of the authors and do not necessarily reflect any policy or position of UBM Aviation Routes or Aviation Media. Printed in the UK by The Magazine Printing Company using only paper from FSC/PEFC suppliers www.magprint.co.uk
ROUTES NEWS 5, 2013
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Contents 18 22
25
3 Foreword
8 World news
11 Cargo news 13 On the move
30 22 Regional rebirth Bmi regional’s CEO, Cathal O’Connell, speaks to Oliver Clark about how the airline is reinventing itself and its route network.
25 A route in focus
15 Airline one2one
Wizz Air’s chief commercial officer, Gyorgy Abran, on the airline’s new service from Budapest to Dubai World Central.
Alex Featherstone, vice president network planning, airberlin.
26 Next stop is Vietnam
17 Airport one2one
Vietnam is one of the fastest-growing aviation markets in Asia, and the country’s tourism industry is on the up, reports Gary Noakes.
Sonia Corrochano, director, Barcelona El Prat Airport.
18 The dawn of a new era of route development A new era that will see route development professionals being everything from marketers and social media gurus to aerotropolis developers is upon us, writes David Stroud.
www.routesonline.com
30 Heavy operator While it hunts for a new investor, a revamped Cargolux forges ahead by taking a giant freighter to unusual places, writes Ian Putzger.
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Contents
32 48
36 32 Great Dane Copenhagen Airport has just completed a €72.4 million terminal expansion project and now has its sights firmly set on North America, reports Steven Thompson.
40 Routes CIS report back 43 Routes Africa report back 46 Routes update
36 Nation building
48 Let us entertain you
World Routes 2015 host KwaZulu-Natal has big economic growth plans – one of the province’s top politicians outlined these to Richard Maslen during Routes Africa.
The highlight of the route development calendar is just weeks away – Las Vegas’s Cathy Tull shares some of her top insider tips to help you plan your trip.
38 Being social
50 View from the top
Routes News takes a look at the latest innovative ways airlines and airports are using social media.
Routes News speaks to Frank Brenner, director general, EUROCONTROL.
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/
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World news UGANDA AIRLINES TO BE REVIVED? A senior Ugandan government minister has told Routes News that Uganda Airlines could soon be resurrected as a partially state-controlled national carrier. The State Minister for Works, Stephen Chebrot, said a draft proposal had been discussed just days before Routes Africa, but added it was too early to reveal what form the airline could take. At Routes Africa, a government source told Routes News the outcome of ministrylevel discussions is likely to be presented to the cabinet following a decision on ownership. “The big question remains. Should this be a 100% government-owned business or should it follow the model being developed in other African countries and find a private investor that can bring industry experience?” Senior Ugandan aviation officials believe the venture is likely to get government backing and to be formed within months. Negotiations are under way to secure international traffic to launch operations by the year-end, added a senior figure at the Uganda Civil Aviation Authority (CAA). Uganda Airlines was established in May 1976 after the collapse of the multinational carrier East African. In the late 1990s, a decision was taken to privatise the carrier, but no agreement was reached and the airline was liquidated in 2001. Rumours of a revival have circulated for the past five years but have not gone beyond political whispers.
Malawian Airlines looks set to launch after a deal between Malawi and Ethiopian Airlines. Ethiopian Airlines will hold 49% in the new carrier, with the government offering 31% to Malawian investors and holding the remaining 20%, according to media reports.
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ROUTES NEWS 5, 2013
The South African tourism industry has welcomed British Airways’ plans to operate an A380 to Johannesburg from October. The airline revealed its plans by enrolling the help of two Springbok rugby players, Bryan Habana (left) and Jean de Villiers (right), and their British counterpart and English captain, Chris Robshaw (centre), along with model Georgia May Jagger. BA will initially fly the superjumbo on the route three times a week, rising to six times weekly in March 2014. Air France-KLM and Lufthansa already operate A380s from their European hubs to Johannesburg.
PHILIPPINE REVEALS EUROPEAN AMBITIONS Philippine Airlines plans to add five major European cities to its route network later this year. The airline hopes to link Manila with direct flights to London, Frankfurt, Paris, Amsterdam and Rome. This comes after the airline was removed from the European Union’s controversial airline blacklist. Philippine Airlines has not served Europe for more than 15 years. While Philippine Airlines made it off the blacklist, all other airlines based in the South East Asian country remain on the list.
AirAsia X raised $313 million in its IPO in Kuala Lumpur on July 10. Meanwhile, the airline is set to serve Adelaide from Kuala Lumpur, and plans to ramp up flights to Japan, said CEO Azran Osman Rani. AirAsia X also aims to open its first hub outside Malaysia in Thailand.
The president of the airline, Ramon Ang, said: “This welcome development signals the westward expansion of our international route network. “More than providing Filipinos living and working in Europe with the most direct link to Manila, we hope to bring the best of the Philippines to Europe”. Airlines can be removed from the EU blacklist “if they show real commitment and capacity to implement international safety standards in a sustainable manner,” European Transport Commissioner Siim Kallas said in a statement.
Southwest Airlines has asked its crew to have passports by the year-end. The airline is taking delivery of B737-800s, designed for longer routes, and announced in its 2012 report its plans for “markets such as Hawaii, Alaska, Canada, Mexico and the Caribbean”.
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News WIZZ SET TO MAKE RUSSIAN DEBUT Wizz Air will fly to Russia for the first time when it launches five-times weekly services between Budapest and Moscow Vnukovo in September. This is part of the carrier’s ‘Go East’ policy, and airline CEO József Váradi described the new route as “a landmark event” for its expansion. “It will make the airline’s debut in Russia,” he said. “It enhances Wizz Air’s position as the ‘home town airline’ for Hungarians
by offering more choices and more low fares to travellers.” The Moscow route comes after Wizz Air revealed more eastern destinations, including in the United Arab Emirates (UAE), Azerbaijan, Turkey and Egypt. Aeroflot currently flies the Budapest– Moscow route twice daily, with A320 services to Moscow Sheremetyevo. For more on Wizz Air’s new UAE routes, turn to page 25.
O’LEARY MAPS OUT GROWTH PLANS Ryanair’s growing fleet of B737-800s will mainly be put to work restoring capacity in European markets where home carriers are faltering, chief executive Michael O’Leary told Routes News. But talks are still ongoing with several countries on the peripheries of the continent, he added. “The big growth for us in the next five years will be taking more of the traffic from airlines that will be imploding, like SAS, Iberia, Alitalia and the central European airlines,” said O’Leary. Ryanair ordered 175 B737-800s at the 2013 Paris Air Show, with 70 aircraft scheduled for expansion and 105 to replace older units. Negotiations with “most” North African countries are also under way,
while Israel, Turkey and Jordan remain in the airline’s sights, he added. But more distant countries will remain “peripheral”, he said. Currently, Ryanair’s only non-European destinations are in Morocco. Short-haul capacity reductions by airberlin and Lufthansa’s mainline unit have made Germany “a very strong growth market for us”, added O’Leary. In his view, Germanwings’ pricing model would make competing with them “like taking sweets off a baby”, he said. To fly transatlantic routes, Ryanair needs an “oversupply” of widebodies so it can pick up 40 or 50 planes cheaply, he added. Without a cyclical downturn or surge in production, low-cost long haul is unviable for at least three to four years, he said.
Alitalia’s new route strategy will reinforce Rome Fiumicino’s hub role and boost point-to-point traffic at Milan Linate. The carrier also has its eye on cities with large Italian communities in countries such as Canada, the US, Brazil, Argentina, Uruguay, South Africa and Australia.
Air Canada has welcomed the easing of bilateral air links with China, said Ben Smith, executive VP and CCO. He said the changes would speed up international expansion, with five B777-300s now entering service and the first of 37 B787s due in early 2014.
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CATHAY NETWORK Malé in the Maldives and, for cargo, Guadalajara in Mexico join the route map.
AIR INDIA IN AUSTRALIA After 16 years, flights are back from Delhi to Sydney and Melbourne.
EASYJET PROFITS The carrier forecasts record pre-tax profits of up to €556 million.
EMIRATES IN UKRAINE Kiev debuts in January.
TAKE OFF, NOT SAFETY AND SECURITY An Asiana crash at San Francisco tragically killed three passengers.
DREAMLINERS Emergency Locator Transmitters in some Boeing aircraft to be inspected after Ethiopian B787 fire.
HUNGARY START-UP Proposed carrier Sólyom Hungarian Airways hits a licensing snag.
NORTH AFRICA DEMAND Demonstrations in Egypt and assassination in Tunisia trigger travel warnings.
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Cargo news RANSAERO LAUNCHES T MOSCOW–STANSTED Transaero is now flying a weekly freight service from Moscow Domodedovo (DME) to London Stansted (STN). The new flight is the first to launch at Stansted since the gateway was taken over by MAG this spring, said Conan Busby, MAG’s cargo business development manager. “We are delighted Transaero have chosen London Stansted as their preferred UK airport for developing their UK cargo services,” he said. The new service, operated by Tupolev Tu304-100C aircraft, gives access to connections across Transaero’s network and is a response to increased demand from freight forwarders, said MAG.
AIR FRANCE-KLM-MARTINAIR FREIGHTERS DEBUT AT ABU DHABI Air France-KLM-Martinair Cargo is now flying to Abu Dhabi International Airport with two B747 freighter services each week. The B747 services land at Abu Dhabi as an intermediate stop on India and Asia routes. Ahmad Al Haddabi, COO of Abu Dhabi Airports Company (ADAC), said the new flights demonstrated the confidence cargo operators have in Abu Dhabi as a business and trade hub. Air France-KLM-Martinair already operates a daily A330 passenger service with belly capacity between Amsterdam and Abu Dhabi. A second daily passenger service is operated by the airline’s codeshare partner Etihad Airways. The carrier said the new cargo route will open up connecting destinations within the network of its partner Etihad, offering new destinations in countries such as Australia and India, while adding options for existing destinations.
Silk Way, a cargo carrier based in Baku, has ordered two B747-8Fs from Boeing. The airline is considered among Central Asia’s leading cargo carriers and serves Europe and the Middle East. It also serves the Far East, including Korea, China and Hong Kong, plus other international destinations through a network of alliances.
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ATHAY PACIFIC ARRIVES IN C LATIN AMERICA Cathay Pacific will launch a scheduled B747-8F service in the last quarter of the year to Guadalajara in Mexico, its first Latin America destination. The freighter will fly the route twice weekly and is expected to carry auto parts, electronics, garments and perishables to and from Mexico. Ivan Chu, Cathay Pacific’s COO, described the operation as the first such freighter service between Hong Kong and Mexico. “With growing demand for direct cargo services between Asia and Mexico, our new freighter service will help to establish a very important trade lane between the two regions,” he said. “At the same time it will help to further strengthen Hong Kong’s position as one of the world’s busiest international airfreight gateways.” Over 2012, the carrier added Zhengzhou, Hyderabad and Colombo to its freighter network. The airline recently took delivery of its ninth B747-8F, with three more to be delivered later in the year.
Cargolux Airlines International has returned to Santiago in Chile with a weekly B747 freighter service. The destination has been tagged onto the airline’s flight to Viracopos, Brazil. Cargolux said it had returned to the country because of “emerging demand for large capacity freighters to and from Chile”.
A 700,000sqm Emirates SkyCargo cargo terminal is under construction at Dubai World Central (DWC), due to open in May 2014. Facilities will include 46 truck docks, 80 truck parking spaces and 12 aircraft stands. The cargo handling system and interior should be complete by mid-September.
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ON THE MOVE
Christina Werkstetter (pictured) is leaving Munich Airport to join Sydney Airport’s aviation business development team from September 2. Werkstetter will lead the airport’s aviation development strategy in the key target markets of South East Asia, Indian subcontinent, Middle East and Africa. Nigel Fanning, previously airline commercial manager at Sydney Airport, has moved to Jetstar as head of commercial and operations improvement. Peter Hoslin, previously head of airline marketing at Abu Dhabi Airport Company’s air service development team, has left for a role at Oman Airports as senior manager for airline marketing. Former ADAC colleague Mark Povall has moved to Liverpool John Lennon Airport as commercial manager, and Rany Nasser is now manager network planning at Etihad. Brisbane Airport Corporation has appointed Ben James as aviation business development manager international and Maaike van der Windt as aviation business development manager Australasia. They will report to Andrew Brodie, who heads aviation business development following the retirement of Cam Macphee. Barry Biffle has resigned as executive vice president and chief marketing officer at Spirit Airlines to become CEO of the start-up low-cost carrier VivaColombia, headquartered in Medellin.
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Michael Cawley (pictured), Ryanair’s deputy CEO and COO, will leave both roles at the end of March 2014. He is leaving to follow other business interests but is expected to join Ryanair’s board in a non-executive capacity on May 1, 2014. Kimmo Holopainen has left Finavia, where he was corporation business manager and key account manager, airline customers. He is now head of business development at the Manchester Airport Group (MAG). Dirk Kokott has left Germanwings, where he was commercial director, and joined Menzies Aviation as vice president business development USA. Saad Hammad has been Flybe’s CEO since August 1. Jim French, previously CEO and chairman, has become non-executive chairman. Hammad moves from the Gores Group, a private equity firm, but he worked at Flybe as CCO from 2005 to 2009.
London Southend Airport’s managing director, Alastair Welch (pictured), left at the end of July. The airport’s management team will now be headed by Roger Clements. Arik De, who had headed WestJet’s planning team, has joined InterVistas as vice president, airline strategy. In his new role, he will split his time between Vancouver and London. InterVistas has also appointed Dr Sabine Reim, formerly with British Airways, as vice president, airline network strategy. Reim will join the consultancy in September and will be based in London. Cheryl Marcell, former ACI World communications and events director, is to oversee business development at Mineta San José International Airport (SJC). Marcell starts at SJC on July 22 as deputy director of business development, a newly created position.
After 10 years in the role, Alex De Gunten is stepping down as executive director of ALTA, the Latin American and Caribbean Air Transport Association. ALTA said it was aiming to appoint a replacement soon.
Dallas/Fort Worth (DFW) International Airport has picked Sean Donohue as its next CEO. Donohue, set to start his new role in October, moves from Virgin Atlantic where he was COO. He replaces Jeffrey Fegan, who is retiring after 19 years as DFW’s CEO.
The International Air Cargo Association (TIACA) has appointed Doug Brittin as its new secretary general, effective August 15. He replaces Daniel Fernandez, who has been offered a continuing role in the association.
Stefan Pichler is due to start on September 1 as managing director and CEO at Fiji Airways. He moves from Jazeera Airways where he was CEO, and has also served as CCO at Virgin Blue.
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What is the core of airberlin’s network strategy?
How important is hub networking for airberlin?
We are very strong in our home market in Germany, Austria and Switzerland. Our network strategy plays to our strengths in making sure that we serve that market exceptionally well. We also use strategic partnerships to maximise regional opportunities and provide global reach.
The development of our Berlin and Düsseldorf hubs is critical to our network development. We already offer our passengers an attractive portfolio of non-stop routes and the logical next step is to further capitalise on that by creating more connecting opportunities. In 2013, we increased weekly connections across our Berlin and Düsseldorf hubs by over 40% through a combination of selective frequency growth and flight time changes.
How are these partnerships developing? We have two very significant relationships through our strategic partnership with Etihad Airways and our oneworld membership. Together with Etihad Airways, we are able to offer a combined 42 weekly services between Germany and the UAE, and airberlin is able to place its code on over 30 destinations beyond Etihad’s Abu Dhabi hub. In 2012, we jointly generated over 300,000 passengers through this partnership and aim to significantly improve on that in 2013. We also generated over 300,000 joint codeshare passengers with oneworld alliance partners in 2012.
What are your current priorities? Building more depth and concentration into the network, and increasing connectivity at our Berlin and Düsseldorf hubs. In summer 2013, we increased our average frequency per route by 14%. A recent example is the expansion of North America frequencies in the winter 2013/14 season. On Düsseldorf–New York (JFK), we will increase from four times weekly to daily services. On Düsseldorf–Miami, we will increase from six times weekly to daily services.
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How is airberlin expanding its presence in the US?
NAME:
Alex Featherstone
COMPANY: airberlin JOB TITLE:
Vice president network planning HOMETOWN: Melbourne,
Australia
Which markets show most promise? Poland, Russia and Scandinavia all offer interesting opportunities and our Berlin hub is well positioned to attract connecting passenger flows. We commenced new services from Berlin to Warsaw earlier this year and now offer three destinations (Warsaw, Krakow and Gdansk) and up to eight daily flights between Berlin and Poland. But Spain remains by far our most important regional market outside of Germany/ Austria/Switzerland and we still see some development options there.
Our strategy for the US is to operate on major O&D markets with a competitive frequency and schedule proposition. Our focus cities in the US are New York JFK, Los Angeles, Chicago and Miami and we are fortunate that as well as being major point-to-point markets, these destinations also provide many attractive connecting opportunities with our oneworld partner American Airlines.
How did you start out in network development? I studied business and law with a view to either working in industry or investment banking. But I always had a strong interest in aviation, and in the end it was an easy decision to make a career out of my interest. I started out at the Qantas Group as a graduate in 2004, gaining experience in several finance and commercial roles.
What is your approach to route development? Be clear about the markets that you want to serve and how you want to serve them. Then play to your strengths.
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Which regions are you currently focused on for opening new routes?
the other to airlines that are not part of an alliance. A big part of our growth comes from point-to-point carriers, but our focus is certainly on growing connecting traffic. We are working with BARDC to make connecting in Barcelona more attractive for passengers as well as airlines. Aena has new discounts on passenger and security fees for connecting passengers and the plan is to increase the discount gradually and to extend it to freight on connection flights.
Our main priority is enhancing intercontinental traffic and our main strategic markets are Asia, North America and South America. For Asia, we have been working hard to establish routes to destinations such as Tokyo or Shanghai. We are also working to increase traffic to South and North America by consolidating existing traffic as well as building markets for new, strategic routes such as Chicago and Dallas.
What are Barcelona’s recent routes milestones?
How has Spain’s economic downturn affected El Prat? Despite the current situation in Europe and Spain, we achieved record passenger numbers last year of 35.1 million, mainly due to a good and stable mix of domestic, European and intercontinental traffic, as well as the different segments we serve.
NAME:
Sonia Corrochano
COMPANY: Aena JOB TITLE:
Director, Barcelona El Prat Airport What is Barcelona Airport’s capacity for growth?
HOMETOWN: Barcelona
Barcelona Airport’s two terminals have a combined capacity of 55 million passengers per year. In terms of runway capacity, with 90 movements per hour, so we still have margin to grow.
Commerce of Barcelona and Aena Barcelona Airport. Since 2006, the committee has helped increase intercontinental traffic by 100%.
What is distinctive about Barcelona’s approach to route development?
Is expanding business or leisure traffic more important to you?
In addition to building relationships with airlines, we have also built relationships with airports – for example, we are working to sign a memorandum of understanding with Beijing Capital International Airport – to use synergies when negotiating with airlines. We also continue to collaborate with the Route Development Committee (BARDC), which consists of the city council, the regional government, the Chamber of
The current mix in Barcelona is 52% leisure traffic, 20% VFR and 23% business. We are working to adapt our offer to all types of passengers. At the moment, we are expanding the luxury segment.
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What role will point-to-point routes play in Barcelona’s offering? We have dedicated one terminal to network carriers and their alliances and
Vueling has nearly doubled its destinations from Barcelona up to 100, making us the airport with most new routes in the world. These increase point-to-point routes, but are also expanding connecting traffic dramatically. Vueling is connecting Barcelona to all of Europe and is also using Barcelona as a hub from Europe and Spain to North Africa. This summer alone it has added seven destinations in North Africa.
How did you get into aviation and, specifically, route development? I studied aeronautical engineering and started my career in the construction of airports. I then changed to airport management, first in the operations division and now in my current role as airport director.
What are your own favourite aspects of Barcelona? Barcelona is a city that offers a very good quality of life. It combines cultural and business aspects with proximity to the mountains and the sea to offer a perfect balance between professional life and leisure activities.
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The dawn of a new era of
route development Forget what you think you know about air service development: a new era that will see route development professionals being everything from marketers and social media gurus to aerotropolis developers is upon us, writes David Stroud.
O
ver the past 20 years we have seen our industry transform itself. Airport marketing, business development, air service development, route development, whatever the function has been called, has moved from being a fringe discipline, practised by a handful of airports, to a role that is fundamental to the business and where those airports that do not yet have a route development team are very much in the minority. If the long-term forecasts from ICAO, which show 6.3 billion passengers being carried by 2030, are correct, the future of route development for airports should be straightforward. I believe these figures are far from the truth and that the challenge for airports in the new era is going to be much more complex. This will see airports grappling with seemingly impossible financial demands from airlines, and navigating a world where the delivery of actual traffic will become the most important route development skill there is. Through airport city and aerotropolis developments, airport managers will also become market creators for their air routes.
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Financing air routes I recently took up the role of leading ASM into this new era, and the first thing we did was to talk to airlines to get a better understanding of what currently is, and what is going to be, important to them when it comes to airport route development. This survey of 25 senior network planning managers across leading global carriers provided a fascinating insight into what really matters to airlines. Perhaps unsurprisingly, feedback about costs and financial agreements came out most strongly. This was not unexpected, but it indicated airports cannot ignore the financial pressures on airlines and the need for sustainable route viability going forward. For many airports this is already a tough challenge, and it will not become any easier in the next era. According to the research, airline network planners said airports “need to understand the small profit margins airlines obtain and how these margins are placed under severe pressure with a slight increase in costs”; they need to “identify opportunities to reduce airport costs for airlines and customers”; show an “increased willingness to participate in the financial risk of launching and successfully maintaining a new route”; and perhaps more radically, “tourism
would fund 50% of route marketing, airport charges are abolished and instead airports derive revenues from non-aeronautical sources”. Many airports will have heard these opinions before; however, the age we are entering is one where instant route profitability will be a prerequisite demanded by airlines. The days of generous maturity profiles of new routes are over, as are route start-up incentives and discounts. Long-term, probably lifetime, support partnership agreements will become the norm. In Europe, new draft EU state aid guidelines for airports and airlines will, if adopted, severely limit state funding of airport infrastructure. This could well leave a gap between airports and airlines that cannot be bridged. Airport operators will need to look again at their operating models, look at driving down aeronautical charges, finding new revenue streams to replace and support these reductions, and evolve new solutions for risk sharing and route joint ventures. While financing will be a constant feature of the new era of route development, there will be other factors, such as market creation and delivery of traffic, which means the role of the airport as a consumer marketer is returning fast.
www.routes-news.com
Opinion Financial support agreements (1 = Not important, 10 = Essential)
Long-term support partnership agreements
Traffic growth related charges discount incentives
Route start-up incentives
0 2 4 6 8 10 Source: Next Era of Route Development, Airline Survey 2013 Financial Support Agreements.
Market information and implementation actions (1 = Not important, 10 = Essential)
Route proposal profit / loss assessment Effective destination marketing to ensure passenger traffic Effective catchment marketing to ensure passenger traffic Catchment area and demographics
0 2 4 6 8 10 Source: Next Era of Route Development, Airline Survey 2013 Market Information & Implementation Actions.
Marketing to deliver traffic One of the many advances airports have made is the ability to process market data, undertake analytics and produce route traffic forecasts using methodologies that reflect how airlines undertake this evaluation. While this will remain an important skill, it will become a standard that all airports offer. There is a
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shift of emphasis coming. In the world of securing profitable, sustainable routes, those who can deliver traffic will be more powerful and more successful than those who are good at analysis. What good is strong technical forecasting if passengers don’t actually support a route? Our airline research revealed the importance for airports of not only
having an in-depth understanding of their catchment but also effective marketing at both origin and destination of the service. The days of trying to impress an airline with an appreciation of route profit and loss are over. The new era for airports in this marketing field will be driven by skills across two areas. Firstly, there is the harnessing of passenger “big data”, primarily through the focused use of social media, and secondly, the engaging of key stakeholders, particularly tourism authorities, to drive the attraction of the catchment. For years, airports did not truly have a customer-based relationship with passengers, because they had limited opportunities to enter into a meaningful direct dialogue with travellers. But more and more airports are now setting up Facebook and Twitter accounts and slowly starting to use these for route and traffic development. In the new era, the skilled use of these channels will be essential for developing air services. Many of you would have seen the recent postings of the #ASMTwitterTracker and #ASMFacebookTracker. What started for us as a curious look into how airports were using these channels for route and traffic development has become a fascinating exercise in understanding the diversity of airport social media activity. While there is a long way to go before there are tried and tested formulas for promoting routes, the creativity already on display shows the potential of what airports can achieve. Our trackers are showing audience reach of approaching five million currently, with China’s Weibo
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UK airports have the most social media followers May 18–24, 2013 London Heathrow
Opinion
showing 750,000 followers across 28 airports. These numbers are growing fast, and these are just official airport sites. The scale of audience reach going forward will be huge – much larger than any other channel. And reaching this audience is instantaneous and route campaigns are inexpensive to produce. Already, airports are starting to use Twitter, Facebook and other channels to research route opportunities. For instance, London City (@LondonCityAir) is very active in this area. Social media allows airports to learn more about the scale of market sizes, but also allows users to actually make contact with those individuals, understand their family connections, and discuss and promote air services. Social media offers a real potential to penetrate global markets and deliver passengers. This leads us to the other buzzword, and the area where we believe airports will be increasing their levels of investment – “big data”. Through social media channels, we are learning more about our catchment and the people who are currently using our airport. When we consider our other sources of data collection, such as car park transactions and retail spend, there is an opportunity to build powerful passenger marketing databases that airports can use to ensure new and existing air services are well supported. At ASM, one of the key services we are providing is this “big data” processing and social media management to ensure air services are most effectively marketed. Airports, though, cannot and should not drive forward on this alone. At Routes events, we are rightly seeing more collaboration between airports and tourism authority partners. This is proving
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148,200
London Gatwick
66,100
Manchester
63,400
Caracas Simon Bolivar
42,000
London City
35,600
Dublin
33,800
Aena
31,500
Edinburgh
29,600
Warsaw Frederic Chopin
28,700
Dubai
24,300
Los Angeles
23,900
Boston Logan
22,500
powerful in attracting new routes, and offers more strength in the marketing of these air services. When airports consider their “big data” alongside that held by tourism authorities, strong marketing databases can be developed and put to work. One of the key statements made by airlines in our research was that airports and their stakeholders should “work together as a destination rather than individual entities in a location”.
Airport cities and market creation The final piece of the jigsaw is the strategic role airports will play in market creation, and specifically the relationship between airport city and aerotropolis development. Those that have read Professor John Kasarda and Greg Lindsay’s book Aerotropolis: The way we’ll live next will be familiar with the airport city and aerotropolis development concept. Many airports and cities are now following this thinking, shaping their urban environment around successful airports. It is a virtuous circle that is being created. A successful airport city depends on strong air route connectivity. In turn, a successful airport city and aerotropolis provides the markets that airlines need for successful and sustainable routes. What is also fascinating is the scale of development funding that is going into airport city projects. In the UK, the
Source: ASM Ltd.
budget for Manchester Airport’s airport city is £650 million – much more than the cost of its second runway. In the new era, airports will join their teams much more closely together. Airport cities need air services, and airport cities will support air services and strengthen the property portfolio till, which may provide solutions to the financial challenges that route development is facing. Going forward, airports’ route development teams will be many things: they will be experts at articulating the market strength of their catchment, but more importantly they will be powerful marketers, securing the traffic needed to ensure instant route profitability. These teams will also become key influencers in the strategic task of market creation, shaping airport cities, the wider aerotropolis and the tourism infrastructure of the destination. These new skills will ensure traffic is always delivered for new routes, and that is the surest way to ensure the financial support discussion with the airline is painless.
About the author: David Stroud is executive vice president of ASM and a member of the Senior Management Team of UBM Live London. He can be reached on: david.stroud@ubm.com
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Regional rebirth Bmi regional’s CEO, Cathal O’Connell, speaks to Oliver Clark about how the airline is reinventing itself and its route network.
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hen BMI was sold to International Airlines Group (IAG) in March 2012, it looked like the writing was on the wall for the UK regional carrier. Within weeks, IAG announced it would be winding up bmibaby, its low-cost subsidiary, and when BMI mainline’s operating units were merged with British Airways, the UK carrier, which had officially adopted the name British Midland International in 1964, was history. But bmi regional was the one part of the group to escape the bonfire. The niche business arm of BMI had been plying a network of thin European routes with a fleet of Embraer ERJs and it was about to undergo a rebirth of its own. Its sale to Sector Aviation Holdings Ltd (SAH) saved the bmi regional brand and gave the airline a fresh lease of life, but for new chief executive, Cathal O’Connell, the challenge was only just starting. Following SAH’s takeover in April 2012, O’Connell inherited 18 Embraer ERJs, 14 145s and four 135s, and had just four months to untangle the regional offshoot from its parent before the latter was absorbed into BA. “It was like having to make an engine change in mid-flight,” he tells Routes News. “We had to create a standalone airline all of our own; we had to migrate our IT systems from BMI, create a whole new support infrastructure and set up our own call centre – and that was
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before we could tackle the network and open bases,” he says. The next challenge was reconfiguring the bmi regional European network, which, apart from its Manchester–Lyon route, had been driven almost entirely by its relationship with previous owner Lufthansa. “If you look back at what we inherited, bmi regional was a subsidiary of BMI mainline, which was itself a subsidiary of Lufthansa. Our network offered a few standalone routes, but the bulk of the network flow was feeding into Star Alliance hubs – last summer our routes were to places like Copenhagen, Brussels, Frankfurt and Zurich. This catered to European network traffic and very much built on providing links into these major hubs. As all bmi companies exited Star Alliance following IAG’s purchase, connecting traffic flows on these routes reduced considerably. In addition, we had seven of our aircraft on wet lease to BMI and Brussels Airlines, with all of these returning to us at the end of October 2012.” Once the logistical challenges of setting up the support infrastructure
were complete and with the winter schedule fast approaching, O’Connell sat down with his executive team and in little more than one meeting hammered out an entirely new network strategy for the carrier. The prerequisites were that a route had to be suitable for bmi regional’s Embraer fleet, have strong point-to-point potential, and have key business links. Onward connectivity potential was also considered, but initially, at least, the carrier needed to concentrate on point-to-point markets while it rebuilt its relationships with feed carriers. “What we asked ourselves was ‘can we offer a valuable product at the top of the market?’. We looked for markets with significant industrial or commercial connections for particular city pairs, along with the potential for some leisure traffic.” In its first year of independent operation, bmi regional launched 12 new routes and created new bases at Birmingham and Bristol. These included services to Frankfurt, Munich, Milan, Aberdeen, Hamburg and Hanover from Bristol, and Billund, Toulouse and Gothenburg from Birmingham.
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BMI
In its first full year of independent operation, the carrier will carry some 500,000 passengers. “We looked in particular at Bristol and Birmingham and European business destinations. Our first choices were between Bristol and Frankfurt and Hamburg. Both had the key characteristics – corporate industries at both ends of the route, which means a lot of high-yield traffic between them, but also routes with a strong leisure component,” says O’Connell. Bmi regional’s network is almost entirely driven by its home UK market – its only foray into mainland European routes has been Bremen to Toulouse, which it launched within weeks of the previous operator, OLT, closing down. The choice of routes is also driven by the airline’s fleet of Embraer ERJs, which gives it a distinct edge over rivals operating larger aircraft on thin routes. “One of the benefits of operating a 50-seater jet is that we can provide frequencies that larger jets cannot operate,” O’Connell says. “Market sizes as low as 10,000 passengers per year can make sense on a smaller unit, provided the timing and frequency match the demands of key customers” he adds. O’Connell says the carrier’s aircraft type also allows it to pick out point-topoint markets that the low-cost carriers would struggle to make a profit on and yet still offer a product that appeals to the high-end business customer – which is a formula for some high-yield traffic. “Certainly when you are serving a business market it gives you the ability to get a yield that reflects the value of the
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service you provide to that passenger. “Other than the time value of not having to connect at a gateway, the other element is we are still a full service carrier, our baggage allowance is 20kg and that, along with our onboard catering, is complimentary; we are very much providing a high quality product,” he says. Some of bmi regional’s routes are extremely lucrative, with up to 80%-85% of traffic identified as business on its top-performing route, down to a still respectable 20% on its least lucrative routes, says the chief executive. It would appear the carrier is branching out into further high-yield markets. In late August, it will launch the first scheduled services between Aberdeen, the self-styled ‘Energy Capital of Europe’, and Kristiansund, Norway, another important energy centre.
Rivals While bmi regional has certainly grabbed some lucrative opportunities, the carrier has not had everything go its own way in the highly competitive European airline landscape. “We do not have exclusivity on all of our routes, with direct competitors such as Flybe on some domestic routes and both easyJet and Norwegian on Edinburgh to Copenhagen. Indirect competition is also provided by airports with overlapping catchments such as Birmingham and East Midlands and also hub carriers providing indirect service on city pairs we operate on,” explains O’Connell. Then there are the more subtle forms of competition. As a small regional
carrier without alliance membership, bmi regional cannot hope to leverage the same network benefits that a big network carrier can, while brand loyalty, corporate travel accounts and the benefits of frequent flyer programmes also make it hard to compete.
London While bmi regional is primarily a UK domestic carrier, one large hole remains in its network – the carrier has no presence in the London market. Back in its pre-Lufthansa days, bmi regional did have a presence in the London market, in the form of five aircraft leased to BMI mainline to operate Heathrow services. Following the IAG sale, this relationship was halted and, as O’Connell points out, without slots at any London gateway, the opportunities to enter the market are minimal. “We see London as a very congested and busy market where there are limited opportunities for aircraft of our size. We are trying to give access to European destinations from the UK regions, which amounts to allowing passengers to bypass London. Bristol is a good example where we are serving points in Europe.” While O’Connell says he would “certainly not rule out a London operation” at some point in the future, there are no immediate opportunities, and even with the planned exit of Flybe from London Gatwick next year, he says this situation has not “materially changed”. Just over a year after its rebirth, this is a regional carrier that is taking its first steps to becoming a force in the UK aviation market.
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A route
IN F
CUS
Budapest–Dubai
Routes News caught up with Wizz Air’s chief commercial officer, Gyorgy Abran, to find out more about its new service from Budapest to Dubai World Central. What is the forecast market split on the route? We expect to carry three customer segments. Firstly, there is a sizeable Hungarian community already working in the UAE, and there will also be Hungarian passengers travelling for a beach holiday or visiting Dubai. Then there will be UAE passengers travelling for a city break to see the vibrant city of Budapest or to enjoy spa tourism in Hungary. The Hungarian government is building ties with countries in the region, and the UAE is already a significant trade partner for Hungary, so we expect to attract some business traffic. Wizz Air’s low fares will stimulate traffic across all these three customer segments.
What type of traffic split do you expect to generate at each end of the route? Initially more sales are expected in Hungary, given that Wizz Air enjoys a huge brand awareness there and is already trusted by consumers. We also expect this route to be popular because of the low fares that will be available to the exotic holiday destination of Dubai. Our sales in the UAE will build up gradually, as we grow brand awareness in this new market. Hopefully we will also see improvements to the visa process.
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Do you expect passengers from other destinations within the Middle East to fly to Budapest via Dubai? This is an exciting possibility and our low fares will be attractive for everybody even if combined with a journey on another carrier and on individual separate bookings. This might be the cheapest way to get to Europe for some customers. But predominantly this route will serve passengers originating in either Hungary or the UAE.
How does Dubai fit into Wizz Air’s route strategy? The UAE is of strategic importance for Wizz as it is a booming market and an air travel market of unprecedented growth. It is home to many expats from Europe and it has economic, trade and tourism links to many of Wizz Air’s base countries. That is driving our large-scale expansion, which is made up of four routes and 14 frequencies from October. This network development in the UAE will continue, depending on the results of the initial four routes.
What is Wizz Air’s target in terms of traffic on the route? On BUD–DWC, we expect 60,000 passengers in the first year.
What potential is there for additional routes from Dubai World Central? Dubai World Central is a brand new airport, with a good location and plenty of capacity. It is a good match for Wizz Air’s future growth plans. Additional routes will be considered and added depending on the results of the first four. But, as indicated, many of Wizz Air’s Central and Eastern European bases present similar potential. We look at all the options, and of course there are not only commercial considerations, but also operational limitations due to the long sector length.
How will Wizz Air develop awareness in the UAE of Budapest and Wizz Air’s other destinations? We will be using the usual, and more unusual, approaches. Our marketing and PR ‘geeks’ are already excited about this opportunity. Wizz Air has opened 34 countries for sale, and has 17 bases in nine countries. Our remarkably low fares and very friendly crews make headlines everywhere we fly.
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Next stop is
VIETNAM Vietnam is one of the fastest-growing aviation markets in Asia, and the country’s tourism industry is on the up, reports Gary Noakes.
A
sk any aviation professional about key growth markets and they will doubtless name Asia, but it’s a fair bet that China and Indonesia will trip off the tongue before Vietnam is mentioned. That would be remiss; according to IATA, Vietnam will be the world’s second fastest-growing domestic air passenger market next year and the third fastestgrowing for international passengers. Vietnam’s population is growing in size and, in some cases, affluence. But tourism is fuelling demand in a country where the sector is maturing from the backpacker and independent market to include luxury beach and spa clients and cruise visitors. Numbers rise each year – in 2012, visitor figures grew nearly 14% to 6.85 million, including 1.4 million from mainland China and 174,000 Russians – the latter a 71% increase. An anomaly is that the main tourism gateway has not been the capital Hanoi but Ho Chi Minh City, formerly Saigon. Hanoi is the gateway to the limestone karst scenery of Ha Long Bay, but
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Ho Chi Minh City is a better access point to Cambodia’s Angkor Wat temples, an added attraction for many. The city is also a gateway to the Mekong Delta cruise departure points and the Cu Chi Tunnels, the former Viet Cong underground base. Part of the reason for Ho Chi Minh’s popularity is that the Middle East carriers have taken advantage of an Open Skies policy. Emirates, Etihad and Qatar Airways all serve Ho Chi Minh City, but only Qatar offers Hanoi. These carriers have skewed travel patterns from Europe. “It is a pattern that has stuck,” admits David Cook, Vietnam Airlines’ UK sales manager. “Capacity there has grown enormously in the last three to five years.” Tourism figures underline this. In 2011, from the UK alone, 86,000 people visited Vietnam, but 111,000 went to Cambodia, lured by Angkor Wat. Vietnam Airlines has added more flights from Hanoi to Siem Reap, the gateway to Angkor Wat, in an effort to boost Hanoi’s gateway role and facilitate easier twin centre stays.
“We are trying to change things around, but Ho Chi Minh offers more onward traffic options,” says Cook. It is likely to remain the main gateway when the new four-runway Long Thanh airport opens, possibly in 2020, with a target of 100 million passengers by 2030. Hanoi’s Noi Bai airport, meanwhile, will benefit when the much-needed Terminal 2 opens next year.
Expanding tourism market Vietnam has been successful in attracting cultural tourists, touring groups and independent travellers, but this autumn sees marketing take a different direction, with a determined effort to attract beach tourism to the central region around Da Nang. This is the gateway to the vast stretch of white sand known to US troops during the Vietnam War as China Beach. It has the imperial city of Hue to the north and the river port of Hoi An, dating back to the 15th century, 20 minutes to the south, both of which are UNESCO World Heritage sites. Da Nang is also Vietnam’s fastest-growing city and an increasingly popular stop for cruise ships.
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Left: Beautiful pool in Furama Resort Danang, Da Nang, Vietnam. Below: Tour boat, Halong Bay, Vietnam.
The area has seen significant development in the hotel sector. A decade ago, only one international property stood on the beach, now there are around 30, plus two international standard golf courses. Properties are mainly local and international brands in the three to five-star bracket, with some familiar names present. Typical of the building boom, a few miles north of Da Nang in the lagoon area of Lang Co is a new Banyan Tree that opened in November, next to a property from sister brand Angsana that opened in February. Developments like these have considerable pull and there is already a direct service from Da Nang to Seoul with Vietnam Airlines, which began a Da Nang–Siem Reap service in June 2013. The beach tourism campaign begins at November’s World Travel Market in London. Cook is convinced the time is right to promote what he dubs “Vietnam’s Riviera”. He estimates the growth in bed numbers there at around 1,000% in the last three years alone. “It’s a new product, it has never been done before – the potential is huge.
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Efforts to promote Vietnam have been hampered by the lack of any international tourist offices, leaving the task to embassies, airlines, some go-ahead hotel managers and destination management companies Ideally, some of these areas will very soon become almost household names.” Packages will be based on a threestar room plus breakfast rate of $40 a night, meaning that six nights in the resort plus flights will lead in at £659, with a top price of around £950 for five-star accommodation. One potential setback, however, is the resurgence of Indonesia’s Garuda, in particular its re-entry to the UK market in mid-2014, which Cook admits will affect Vietnam’s ambitions, particularly beach tourism.
Where scheduled airline connections are lacking, charter and budget flights will perhaps fill the gap, particularly as brands such as Tui and Norwegian take delivery of B787s. About 270 miles south of Da Nang is Nha Trang, where a spread of mid-range hotels is already attracting charter flights from Russia and Scandinavia. Cook believes a charter from the UK to Nha Trang is likely in the summer months. “I think it will happen in the next two to three years,” he predicts.
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Left: Cambodia’s Angkor Wat temples can be reached via Ho Chi Minh City. Middle & right: The Cu Chi Tunnels are a popular tourist attraction.
Vietnam
However, Lesley Wright, international sales and marketing manager with tour operator Travel Indochina, believes Da Nang is where carriers will head. The airport there opened a new terminal in 2011 specifically for international carriers. “There are fewer flights than you would imagine, given the level of hotel development going on in the area,” says Wright, who adds that touring is still a growing segment, despite the new beach emphasis. One beach development may not have been so successful. Ho Tram, two hours south-east of Ho Chi Minh City, was to have had Vietnam’s first Las Vegas-style property, MGM Grand, an attempt to tap the huge Asia-Pacific gambling market. However, MGM pulled out in March in a row over construction deadlines. Efforts to promote Vietnam have been hampered by the lack of any international tourist offices, leaving the task to embassies, airlines, some go-ahead hotel managers and destination management companies. Another setback is visas. A $45 fee applies for tourists, with a new on-arrival option, which carries another $20 charge. Internationally, Vietnam Airlines is taking its role as flag carrier seriously and has taken on the promotion mantle. The carrier is on something of a wave and, although its monopoly status in the domestic sector is rapidly diminishing, there is definitely scope for international expansion. In Europe, only London, Paris, Frankfurt and Moscow are served by
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Vietnam Airlines, something that should change once it takes delivery of the A350 from 2014/15. It will place one of these on the London Gatwick route, which is currently operated by a B777-200ER, increasing capacity from 307 seats to around 340. The carrier says new European destinations are also being examined. Vietnam Airlines splits its London flights between Hanoi and Ho Chi Minh City and says 85% of traffic is leisure travellers. Expat VFR traffic affects travel patterns mainly during the summer peak and the Tet Festival, the lunar new year, in January or February. And there is plenty of space for new carriers to Vietnam.
Doing it domestically On the domestic front, the market for aviation is potentially huge. As affluence grows, Vietnam’s population of about 90 million will want to bypass the often poor road and rail infrastructure in favour of air travel. Although Vietnam Airlines has around 70% of the domestic market, the no-frills sector is burgeoning, with two carriers, Vietjet and Jetstar Pacific, accounting for the bulk of the remainder. Vietjet, the privately owned carrier launched in 2011, overcame a stalled investment attempt by AirAsia and began its first international route, from Hanoi to Bangkok, in February. Vietjet, which will have 10 A320s by the end of 2013, is already bigger than main rival Jetstar Pacific, the Ho Chi
Minh City-based carrier 70% owned by Vietnam Airlines and 30% by Qantas. Vietnam Airlines made its Jetstar investment in early 2012, taking over from the Vietnam State Capital Investment Corporation. A A$25 million injection was made to double its fleet to 15 aircraft “in the next few years”. Both carriers will undoubtedly expand tourism. Vietjet’s routes already include Nha Trang, Da Nang and Phu Quoc. Phu Quoc, off the Cambodian coast, is Vietnam’s largest island, where last year a new airport capable of receiving A320s opened, which Vietnam Airlines also serves. “Vietjet’s launch has helped with capacity, although we have not suffered too much with lack of availability as Vietnam Airlines has a good network,” says Wright. Vietnam Airlines has an advantage over rivals in that its fleet of 81 aircraft includes 14 ATR-72s, particularly so since Air Mekong, a turboprop operator, suspended operations in March. ATRs are employed on routes to restricted runways such as Con Dao, one of 16 tropical islands off the south coast, where Six Senses has a resort property. Potential upgrading of airports like this for jet operations is likely after the establishment of the Airports Corporation of Vietnam last year. This merged three regional airports corporations and should attract foreign interests. The hotel companies may have got there first, but Vietnam’s growing tourism industry means airport infrastructure could be the next big investment opportunity.
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HEAVY OPERATOR
While it hunts for a new investor, a revamped Cargolux forges ahead by taking a giant freighter to unusual places, writes Ian Putzger.
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number of airports that usually do not see widebody freighters, let alone large ones like the B747-400F, have rolled out the red carpet this year for an even larger behemoth – the B747-8F, courtesy of Cargolux. With a payload of 134 metric tonnes, it is the largest commercial freighter aircraft in scheduled service today. In recent months, Cargolux has operated the first ever commercial flight with a B747-8F to Brazil, and mounted scheduled flights with the aircraft to Muscat, Xiamen, Latacunga and Aguadilla. It is also in the process of becoming the first airline to run B747-8F transcontinental flights between China, Latin America and Africa via its Luxembourg hub. At the beginning of the year, few observers would have forecast this type of development. The European all-cargo airline was struggling to cut costs amid mounting losses, in a market racked by overcapacity and sluggish demand. If that wasn’t enough, a major stakeholder had also walked away. Freighter airlines were under siege, and Cargolux – historically one of the more profitable specimens in that segment – was no exception. The airline emerged from 2012 with a net loss of $35.1 million – almost twice as much as its deficit in 2011. Volume was down 2% to 646,000 tonnes, while revenues dropped 8.4% to $1.74 billion. On a positive note, the net loss was less than the $57 million deficit that management had budgeted for, but there was no doubt that a massive effort was needed to turn the company around.
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Richard Forson, the interim CEO and president of the airline, believes the established business model of freighter operators is under significant pressure, and has been buffeted by severe market challenges since the global economic downturn in 2008. “Our traditional competitors are struggling. The business model has changed,” he remarks. Freighter operators have been caught in severe downdraft from multiple directions. The economic downturn has diminished demand for goods to be flown between Asia, Europe and North America. This has also prompted shippers and their logistics providers to reduce shipping costs by diverting as much cargo as possible to cheaper, slower modes of transport. Air cargo capacity, on the other hand, has grown, with new freighters ordered in more buoyant times rolling off the production lines, while there is a sharp rise in bellyhold capacity from passenger carriers. This has put further downward pressure on yields – at a time when stubbornly high fuel prices keep pushing up operating costs for freighters. Of particular concern has been the inexorable rise in bellyhold lift, led by the aggressive expansion of the airlines from the Gulf. “This is something that we have to learn to live with, that we have to manage,” comments Forson. He describes this growth in belly lift as both an opportunity and a threat. “It depends on where they deploy that capacity,” he says. Since the end of last year, several all-cargo carriers have stumbled, and many industry analysts have predicted
the demise of more freighter operators. Some have questioned the viability of pure freighter outfits altogether. Forson does not share this view, although he agrees that there will be more casualties in their ranks. Global trade will always generate demand for dedicated freighter lift, as passenger airlines are not optimised for cargo, he argues. Above all, freighter operators need to be flexible to be able to respond quickly to changing market conditions, he stresses. This has profound ramifications for network strategy. While Forson regards Cargolux’s route network as one of its greatest strengths, he leaves no doubt that in today’s market a freighter airline cannot afford to maintain an unprofitable route for the sake of the network, as carriers were more inclined to do before 2008. If a route does not make a positive contribution to overhead costs, Cargolux will not fly it, he emphasises. Historically, the airline has developed routes in close co-operation with forwarder customers, which has led it to points like Huntsville, a destination picked to manage textile equipment traffic flows for one large forwarder. The new focus on flexibility and nimble network management is not at loggerheads with this approach, Forson insists.
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“There is no negative impact on the quality of our service to the forwarders,” he stresses. Typically, forwarders continue to play a major role in the addition of points to the network. According to the airline, its twice-weekly service between Hong Kong and Columbus, which was launched in June, was established in co-operation with a large forwarder and the regional airport authority in Ohio. Beyond its scheduled operations, adopting a more flexible stance has allowed the carrier to pursue more opportunities in the charter market. Forson wants to grow this further, but there are no specific targets for revenue contribution from this segment. “We would like to develop this as much as we can, but I cannot answer if it will be a significant contribution to our overall revenues. Charters are an important part of the overall revenue generation for Cargolux,” he comments. Another factor he stresses in the airline’s efforts to reverse its losses and develop a sustainable business is the deployment of the B747-8 freighter, for which Cargolux was the launch customer. The 747-8 has lower unit costs than the 747-400, but it also has 16% more capacity. In the current market conditions,
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it has not been easy to find the extra loads to fill up the larger space, but Forson claims the company has managed to do so. “You have to fill it up. If you don’t, you suffer the penalty,” he says. There has been speculation that Cargolux may forgo some 747-8s and keep some 747-400s instead. Out of an order of 13 new aircraft altogether, it has taken delivery of eight so far, and a ninth is due later this year. Forson rejects these suggestions, insisting that all the 747-8s on order will be brought into the fleet, replacing 747-400s as they come on stream. This will not take out all of Cargolux’s 747-400s, and Forson is glad about this. The older aircraft are debt-free and they could be grounded temporarily without incurring prohibitive costs and resume service when the market improves. “One of the key aspects of the business plan is to develop that flexibility,” he says. So far the plan appears to have worked. Financial targets have been met or exceeded. For the first half of 2013 and compared with 2012, tonnage is up almost 13%, while FTKs have climbed nearly 12.5% and turnover improved by 9.3%. “The only negative was the decline in yields in the market,” comments
Forson. “There is still overcapacity, there is still significant downward pressure on yields.” While the results so far give cause for cautious optimism, two key issues have yet to be resolved. Management needs to find a compromise with labour unions over plans for cost savings, and a new investor has to be brought on board to take over the 35% stake in the carrier that Qatar Airways relinquished and that the government of Luxembourg has taken over on a temporary basis. When Routes News went to press on August 2, the first issue was close to a successful conclusion after the unions and management announced that they had reached a settlement. As for a new investor, Forson says negotiations have been held with several interested parties. Qatar Airways was not the first airline to invest in Cargolux, but followed a foray by Swissair at the peak of its expansion drive in the late 1990s and an alignment with Lufthansa further back. Forson remarks that the decision is in the hands of the government of Luxembourg, which is mindful of the issues that led to the break-up with Qatar. A new alignment must benefit both parties, he stresses – time will tell just who the second party turns out to be.
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Great
DANE Copenhagen Airport has just completed a €72.4 million terminal expansion project and now has its sights firmly set on North America, reports Steven Thompson.
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openhagen is a city on the up. Such is its proximity to another major Scandinavian destination – Malmö – that a flight into Copenhagen Airport (CPH) not only allows you to visit two cities in one day, but two countries, with the gateway bordering southern Sweden. The Danish capital is the biggest cruise port in northern Europe and is also becoming increasingly well known for its gastronomy. By the turn of the next decade, CPH expects to be handling about 30 million passengers, having welcomed just over 23 million visitors in 2012. With this growth on the horizon, and anticipating a record 6.6 million travellers this summer alone, the airport brought forward a €72.4 million project to refurbish and expand Terminal 2 as well as install a larger and improved baggage system. The growth will come partly from North America. While others look east, towards the perceived untapped riches of Asia, CPH is remaining firmly focused on the US and Canada, as it looks to expand its long-haul offering. In April, SAS launched a six-times-aweek service to San Francisco (SFO). The carrier already flies to New York, Chicago and Washington DC, but had no
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direct flights to America’s West Coast until this latest service. Rickard Gustafson, CEO of SAS, says the destination was “an ideal starting point for the US West Coast”, giving customers access to many other destinations in the Star Alliance network. Airport CEO, Thomas Woldbye, says SFO had been “high on the Danish gateway’s wish list for several years”, adding that more than 40,000 US passengers were expected to travel to Denmark each year on the new service. Norwegian will launch direct flights to Florida in November from the newly refurbished T2. The new route to Fort Lauderdale, less than an hour’s drive north of Miami, will be the carrier’s first long-haul service out of Copenhagen. The twice-weekly service will be served by flights on Mondays and Fridays, increasing to three weekly flights as early as February 2014. Traditionally, Norwegian has been a low-cost, short-haul carrier, but its CEO, Bjørn Kjos, says the airline would be launching more long-haul services out of Copenhagen. “The market for long-haul air services has much too long been characterised by high fares with little flexibility,” he says. “The very warm reception that Norwegian’s services to
New York and Bangkok out of Oslo and Stockholm have received shows that there is a demand for attractively priced tickets to the USA and Asia. We will be continuing our focus on long-haul flights.” CPH’s director of route development, Ole Wieth Christensen, confirms that the airport will continue to grow its number of destinations in North America. “Looking at the intercontinental market, I would say we have a strong focus on developing strong ties with North America,” he says. “New York’s JFK is our largest unserved year-round route. We have a pretty strong focus on a couple of places in Asia, but the top focus is JFK. “We have Delta flying there in the peak of summer, and SAS has 10 flights a week to Newark. Our traffic is mainly inbound from the US. You may not know this, and it was a big surprise to me when I came here 10 years ago, but Copenhagen has the largest cruise ship turnaround port in northern Europe, so we have a lot of American tourists flying in. “The airport is quite close to the port and, because of the geography of Scandinavia, it makes a lot of sense for the cruise ships to turn around here. We believe there are further opportunities there in North America.
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Copenhagen’s Noma has been voted the best restaurant in the world for the last two years and the city now has at least 10 Michelin-starred eateries “People are very focused on Asia, but the largest opportunities remain in North America for us. You have to go down to fifth on our list of unserved destinations to get to Hong Kong. “We are speaking to all the relevant airlines that can fly between CPH and North America and we hope more routes will materialise in the next year or so.” When people talk of Denmark and food, traditionally it is all about Danish bacon and Danish pastry. However, the country has a growing reputation for its gastronomy. Copenhagen’s Noma has been voted the best restaurant in the world for the last two years and the city now has at least 10 Michelinstarred eateries. “From having maybe one or two Michelin stars in the city, we now have up to 13,” says Christensen. “This is an important selling point and we have many ‘foodies’ now visiting Copenhagen for our restaurants.”
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CPH sees an even mix of business and leisure passengers, with leisure travellers coming for cruises and the food, but also music events. “We have lots of concerts here,” adds Christensen, having just been to see Depeche Mode at the Parken national stadium in Copenhagen, the night before our interview. On the business side, Copenhagen and neighbouring Malmö are growing in the MICE sector (meetings, incentives, conferences and exhibitions). Malmö is building a large conference centre in downtown Malmö – Malmö Live – with a conference capacity of about 3,000. This will open in 2015, and the two cities combined will then have larger conference capacity than most other cities in Northern Europe. About a quarter of CPH’s traffic is low cost and, other than a very small percentage of charter flights, the remainder comes from legacy carriers. EasyJet is its biggest low-cost carrier and
the airport worked closely with the airline on its low-cost pier. Transavia also flies from this pier, while Norwegian operates out of the revamped T2. In Europe, Copenhagen has a mature, well-developed route network. As such, it is now concentrating on adding some thinner feeder routes, which will service the long-haul traffic. “The majority of our growth is with longhaul,” adds Christensen. “We have seen that Emirates have expanded and Qatar have upgraded aircraft with the Dreamliner starting flying here from September. “Long-haul is more sexy, but shorthaul is the bread and butter. You don’t get the long-haul business if you don’t have the feeder routes. The long-haul business won’t work without the shorthaul. It is definitely a balancing act. “In Europe, we have a good network, so here we are now focused on smaller places like Marseille, Salzburg and Split. We are looking at smaller, thinner feeder routes. We try to market ourselves as the preferred gateway to northern Europe, competing with places like Berlin and Amsterdam. “For example, SAS has just announced Bremen in north Germany, and Humberside in northern England, and we’re targeting other destinations in the Baltic region, northern Poland and northern Germany, as well as the north of the UK. “Our expansion process will allow growth to 30 million passengers. We handled 23.3 million last year and whether we reach 30 million just before or just after 2020, I cannot say, but the airport is now ready for this level of traffic and we expect to reach it in the next decade.”
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JOHANNESBURG
Nation building
BLOEMFONTEIN
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DURBAN
PORT ELIZABETH CAPE TOWN
World Routes 2015 host KwaZulu-Natal has big economic growth plans – one of the province’s top politicians outlined these to Richard Maslen during Routes Africa. hen World Routes lands in KwaZulu-Natal in South Africa in 2015 it will be the first time the global event has been held on the African continent and it will showcase the province’s economic ambitions, which are firmly centred around its aerotropolis development. KwaZulu-Natal has South Africa’s second largest economy and is home to two of Africa’s major seaports: Durban – Africa’s busiest port and the leading southern hemisphere container terminal – and Richards Bay – the country’s largest deep-water harbour and primary bulk commodities handling facility. The developing Dube TradePort is also situated here, along with an aerotropolis development around the new King Shaka International Airport.
KwaZuluNatal
Air services play a central part in the province’s economic growth ambitions. “Critical to the success of any aerotropolis is air connectivity,” Michael Mabuyakhulu, KwaZulu-Natal’s MEC for Economic Development and Tourism, told Routes News. “Without this, the aerotropolis becomes constrained in its ability to grow tourism, create accessibility for business people and generate export cargo volumes.” This focus means the KwaZulu-Natal provincial government has mandated Dube TradePort Corporation to aggressively pursue a route development strategy. As well as South Africa’s second largest provincial economy, KwaZuluNatal enjoys a booming tourism sector, and is the country’s leading domestic tourism destination. It also has a
World Routes 2015 Will take place at the Durban International Convention Centre on September 20–22, 2015.
burgeoning manufacturing sector, extensive farmland, world-class sporting venues and conference facilities, and a rich cultural and historical legacy. Against this background, the provincial government is investing heavily in infrastructure developments to further boost economic opportunities for the province’s people. “We are well aware that airport areas are steadily becoming the stimulus for business. In its turn, the business community globally is coming to realise the importance and economic benefits of locating their operations at such points of connectivity because of the access airport locations afford in terms of speed and the ability to connect with other business role-players locally, nationally and internationally,” said Mabuyakhulu.
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TOURIST PLAYGROUND KwaZulu-Natal offers visitors a wealth of attractions and experiences – here are just a few to whet your appetite:
BLOSSOMING INDUSTRY South Africa’s Carmel Nurseries is growing cut flowers, including the Thai tulip, at the Dube AgriZone. This tropical plant, native to northern Thailand, is grown – to exacting international standards – in one of the zone’s new greenhouses. Each week between October and March, 30,000 flowers are exported to Amsterdam for sale. “This international export illustrates not only the interest in developing the region and the level of demand already evident, but the ability of role-players to work together for a common goal: the initiation of a climate conducive for investment, business development and product export – such as our Thai tulips,” said Michael Mabuyakhulu, KwaZuluNatal’s MEC for Economic Development and Tourism.
KwaZulu-Natal has already laid the foundations with the opening of King Shaka International Airport in Durban in May 2010, ahead of the Fifa World Cup in South Africa. The facility replaced the former Durban International Airport and is part of a strategic investment in infrastructure and part of the multibillion-rand Dube TradePort, where major seaport upgrades, as well as road and rail links, are being built. Mabuyakhulu added that sustainable growth is vital for the success of the province’s air services growth plan. “As important as expanding the number of destinations served is ensuring that the routes remain sustainable,” he said, using King Shaka Airport’s main hub connection to the Middle East as an example. “The daily service by Emirates to Dubai has proven to be a successful and sustainable route, resulting in an upgrade of the aircraft in 2012 to a Boeing 777 to accommodate passenger demand,” he explained. Elsewhere, through a partnership between South African Express Airways and Dube TradePort Corporation, new regional routes to Lusaka and Harare were started in 2012 as part of a strategy to open up to 10 new destinations across the South African Development Community (SADC) over the next five years.
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“The Dube TradePort Corporation has analysed the Durban passenger and air cargo markets on an ongoing basis for over eight years and has established a clear understanding of the potential market, and as a result has been actively marketing to a wide range of airlines,” said Mabuyakhulu.
Cargo opportunity Mabuyakhulu continued by stressing the importance of developing a balanced and varied route network for the province. “The air services strategy will now be taken to the next level with the intention of opening up new passenger and dedicated cargo routes over the next three years, significantly increasing direct international and regional air services to and from King Shaka International Airport,” he said. If this growth is realised, infrastructure may need to be further expanded, which is possible, thanks to relatively undeveloped land around the airport. About 70% of the land within a 15km radius of Dube TradePort is undeveloped, or under sugar cane cultivation. “We have been quick to seize the opportunity to develop and build the foundation for an aerotropolis correctly, with available land being developed in a planned and systematic manner,” said Mabuyakhulu.
• BEACH BUM: With a warm year-round climate and kilometres of unspoilt white-sand beaches, a trip to the seaside is a must. Spot dolphins from the shore, or indulge in some surfing with the locals.
• GO WILD: KwaZulu-Natal is home to some of South Africa’s most stunning game reserves and lodges, which appeal to a range of budgets and tastes.
• CULTURE VULTURE: The Zulu nation and the famous battlefields will leave history and cultural buffs spoilt for choice.
• UKHAHLAMBA DRAKENSBERG PARK: A World Heritage Site and one of South Africa’s most spectacular natural attractions that draws visitors from far and wide.
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Being social
Routes News takes a look at the latest innovative ways airlines and airports are using social media.
News EMIRATES TAKES THE LEAD IN LINKEDIN Emirates believes it is the first airline to achieve 100,000 followers on the online professional network LinkedIn. Its LinkedIn page was launched in 2012 and the airline uses it to share company news and information about its products. Targeted content ensures only relevant information is released on its page, said Emirates. Professionals can also search for and apply for jobs and get insights into working at Emirates. Sophia Panayiotou, senior vice president of Human Resources at Emirates, said the carrier’s LinkedIn activities had aided recruitment.
V STAR JOINS T THOMSON CREW Thomson recruited Alesha Dixon, a star from Britain’s Got Talent, to help launch the carrier’s inaugural long-haul B787 Dreamliner flight. The tour operator tweeted about Dixon’s day as a crew member and produced a special YouTube video.
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With nearly 200 new aircraft on order, Emirates will look to increase its workforce, currently 40,000, over the next few years. “As we grow as a company, it is essential that we attract the right talent to help us achieve our ambitions and we see LinkedIn playing a very important role in that,” said Panayiotou. Jacob Thomas, head of LinkedIn Marketing Solutions, LinkedIn MENA, said LinkedIn was committed to partnering with Emirates. “We are proud to recognise the first airline on LinkedIn to reach this milestone is from the Middle East/UAE,” he said.
@tonyfernandes Great news. AirAsia now has Bangkok–Siem Reap as a route. We have been waiting a long time for this. AirAsia Malaysia and Indonesia going from strength to strength.
@shannon_airport New daily year-round services to Boston and New York from@shannon_airport announced by Aer Lingus for 2014.
@BostonLogan A great morning to launch a brand new service, BOS-PTY on @CopaAirlines!
@EtihadAirways We’re now flying between Jakarta and #Perth through a codeshare agreement with Garuda Indonesia. Is it time for you to visit Perth?
@flyPAL We’re taking off to the Land Down Under today! PAL now flies Manila to Darwin, Brisbane & Perth via Darwin. See you Mates! #PALDownUnder
FOLLOW US! @RoutesNews @Lucy Siebert @Routesonline @TheHUBRoutes
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Social media other airports in our catchment area to make sure we are a step ahead. We are mainly active on Facebook and Twitter, which are very effective in times of crisis.
How do you promote new routes online? We’ve started inviting two online visitors to participate in the launch of a new route. It is a great way to meet our fans and it is an opportunity to go behind the scenes at the airport. We are also using all our social media tools and posting albums on Facebook to highlight destinations, writing articles on our blogs and creating games. We are using more and more videos and photos.
ONLINE WITH:
Routes News talks to Arnaud Besson, strategy and communication director of Aéroports de Lyon, on why the airport now invites some of its Facebook fans to route launches.
How many followers does Lyon Airport have on Twitter and Facebook? We have about 22,500 fans on our French fan page, 2,700 fans on our English fan page and nearly 3,000 followers on Twitter.
What other social media channels are you active on? We use Instagram and Flickr for pictures, and “FLY’on Replay”, our Youtube channel for video. We are on Foursquare and we will soon be launching a new strategy for LinkedIn.
Do you have a blog? Our blog www.my-flyon.com is a great place to get travel ideas and find out about new routes, deals and travel tips. More and more passengers are reading this and sharing their experiences.
How has Lyon Airport’s involvement in social media developed? We created our Facebook fan page in 2010 and we regularly benchmark
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Are different approaches needed to tweet in English and French? Of course, that is why we have two fan pages. We have to adapt our communication to our different targets: outbound and inbound. For instance, people from London won’t be interested in information about going to Greece from Lyon.
What have been the key social media campaigns for Lyon Airport? We are posting games on Facebook to promote destinations – in July we had a partnership with Aegean to win tickets to Athens. We have also had some focus groups with fans and asked them to work on some of our projects. It was great to understand how they were seeing our brand.
What resources do you devote to social media? Our community manager is responsible for implementing our social media strategy, which includes creating, developing and moderating the Lyon Airport community on a day-to-day basis. She is supported by a social media agency, Blueboat, so we have enough resources and flexibility, particularly in times of crisis. Passengers need to get real time information and that’s what we try to
do. Using an agency also allows us to work on implementing innovative social media activities with them.
How can you measure the success of Lyon Airport’s social media engagement? We rely on an efficient social media monitoring tool. This is crucial for us to get all the necessary information (quantitative and qualitative) to make sure we are going in the right direction and to assess the SM ROI. We measure the number of fans and followers, but what is most important is the community dimension of social media.
How do you expect passengers’ engagement in social media to develop? We would like to create an online third place – a kind of “agora” or “village square” where people meet, share experiences and make suggestions. They can share good experiences, but it will also allow full transparency, so they can also share their bad experiences. We believe this is the best way to improve passengers’ experience at the airport.
What are the airport’s goals in extending its social media activities? We would like our community to be more active. The idea is to foster co-creation with our customers. We learn a lot from our customers and most of them have very good ideas. We will soon launch a FAQ Platform, moderated by Lyon Airport, which will include contributions from some of our fans. Internally, we will grow the number of people involved in the community management network to include people who work in marketing, operations and quality.
GET INVOLVED! Do you want the global route development community to hear what you have to say? Let us know at: lucy.siebert@routes-news.com
ROUTES NEWS 5, 2013
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ROUTES CIS REPORT BACK
CIS prepares for take-off The CIS region is poised for aviation growth, with several developments being highlighted during the Routes CIS Strategy Summit, reports Piers Evans.
F
ulfilling Ukraine’s aviation potential ahead of its Open Skies deal with the European Union was top of the agenda at the Routes CIS Strategy Summit. Konstantin Yefimenko, Ukraine’s first deputy minister of infrastructure, outlined how major infrastructure projects, including the overhaul of Donetsk airport and a new public-private ownership for Odessa airport, are combining with regulatory initiatives to boost the sector’s prospects. Yefimenko said he believed Ukraine’s airports could be handling 28 million passengers over a decade of growth. In drawing a comparison, he said: “Turkey, which started developing its airports only 10 years ago, now has 46 airports, up from 15.” In its international negotiations, Ukraine is aiming to finalise first category flight security status in the US by the year-end, he said. Meanwhile, an Open Skies deal with the EU is at “the last points of discussion”, he said, although Ukrainian airlines would need as much as two years to find their place in a highly competitive new market, he added. 40
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Several speakers highlighted challenges facing the region’s airports and airlines from outside the sector. Alexander Grechko, first deputy head of the State Aviation Administration of Ukraine, said the main obstacles for Ukrainian carriers are “low incomes and visa barriers”. A lively discussion also examined the various hurdles for getting low-cost carriers off the ground in the CIS. Denis Shkabara, VP commercial, UTair, took a provocative stance and said: “Moscow’s hubs can handle an aircraft in 20 minutes. Regional airports cannot do that. Regional airports are lazy. They don’t want to work.” LCCs were also in the spotlight in a presentation by Yuliya Crane, a consultant at ASM. In a vigorous defence of budget airlines, she pointed out how the loss of Russia’s only LCC had been followed by an increase in traffic as well as prices. “Passengers had changed their preference from trains,” she said. The CIS region, with its propensity for rail travel and growing middle class, looks ripe for low-fare air travel, she added.
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A session on the demand for outbound travel also revealed the region’s pent-up appetite for international flights. Nigel Mayes, VP commercial – Routes, UBM Live, launched the debate with a striking quote from Peter Long, head of the Tui Group: “The CIS markets could be as big for Tui as the business of our German and UK operations combined”. This view was echoed by Valerie Luyk, director of Discover the World Marketing. “CIS citizens are becoming more free mentality-wise – they really want to discover the world,” she said. Rising incomes in the CIS will mean other nations are likely to ease entry restrictions, while faltering economies in Europe will also welcome the tourist cash, she added. Greg Kaldahl, SVP resource management for Finnair, encapsulated the case for optimism with a simpler analysis. “Airline growth is related to GDP growth,” he said. “The future should be bright.”
FIZZICAL education Delegates at Routes CIS discovered Ukraine’s sparkling wines during a guided tour.
EKATERINBURG tops regional heat Ekaterinburg Koltsovo Airport triumphed in the Routes Awards heat for the CIS region. The gateway landed the trophy for its rapid passenger growth and its approach to working with carriers on new destinations. Aegean Airlines, Alitalia, Ukraine International Airlines, Azerbaijan Airlines, and Orenburg Airlines, Air Bishkek, East Air, Severstal and Kogalymavia are among the carriers that launched services to the airport last year. Nigel Mayes, VP commercial – Routes, UBM Live, said: “The airport achieved a passenger growth of 13% in 2012 and the judges felt that with their working relationship with all of their partners that they were worthy as overall winner from the CIS region.” As winner of this regional heat, Ekaterinburg joins the shortlist for the World Routes Marketing Awards in Las Vegas on October 7. In the contest for a global winner, the Russian gateway will face San Diego International Airport for the Americas,
Changi Airport Group for Asia, Munich Airport for Europe and Kilimanjaro International Airport for Africa.
OVER 4 MILLION PASSENGERS WINNER: Pulkovo Saint Petersburg Airport Highly commended: Kyiv–Boryspil International Airport Finalists: Sheremetyevo International Airport Domodedovo International Airport Vnukovo International Airport
UNDER 4 MILLION PASSENGERS WINNER AND OVERALL WINNER: Ekaterinburg Koltsovo Airport Highly commended: Tbilisi International Airport Finalists: Almaty International Airport Astana International Airport Karagandy International Airport
While not busy in negotiations or attending presentations, delegates at Routes CIS got the chance to discover more about the country during hosted trips to local attractions. These included a visit to the Artemovsk winery, a converted gypsum mine that has produced sparkling wines since 1950. Delegates trooped through the maze of tunnels to witness the complex champagnisation process, before tasting an array of award-winning white, red and rosé wines. Another tour took delegates to the picturesque Svyato-Uspenskaya Svyatogorskaya Lavra monastery, one of Ukraine’s most important religious sites. Meanwhile, football fans explored a different focus of devotion with a guided tour of the Donbass Arena, home to FC Shaktar. In the evenings, attendees relaxed at lively events organised by Donetsk International Airport. Staged by the imposing Donbass Arena, the networking evening combined a stunning firework show with displays of Cossack horsemanship and a performance by Ukraine’s Eurovision contestant, Zlata Ognevich.
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ROUTES AFRICA REPORT BACK
! s e i k s n a Afric
Uganda rolled out the red carpet for delegates at this year’s Routes Africa, writes Richard Maslen.
T
he passionate debate at this year’s two-day Routes Africa Strategy Summit in Uganda showed that attitudes towards aviation are beginning to change in Africa. Africa’s once sleeping economic giants are awakening and the message was that airlines, airports, tourism authorities and other stakeholders need to join together to lobby governments to allow aviation to drive enhanced connectivity across the continent and beyond. Uganda’s minister of tourism wildlife and antiquities, Maria Mutagamba, pointed to a new optimism and she renewed the call for a single visa for all East African countries. This would be a major fillip for Uganda, where despite immense potential, the tourism industry has not developed as quickly as those of some of its neighbours, and its visitor numbers reflect this. “So many tourists are visiting Kenya but they do not come to Uganda. If they do not need another visa to (come to Uganda), they will visit Uganda too. In the end, we shall all benefit,” said Mutagamba. The summit highlighted that in Africa for every three tourists that visit the continent, one job is created. Tourism in Africa is also outpacing the rest of the world, with annual tourism growth globally in 2012 running at about 4%, while Africa recorded 21.6%. Dr W Rama Makuza, managing director of the Uganda Civil Aviation Authority, pointed out that, as a landlocked country, Uganda relies on aviation to support its development.
Right: Dr Rama Makuza of Uganda’s CAA helped to open Routes Africa.
Mutagamba added that enhanced domestic access would mean that the country could showcase its assets to visitors. “We do not only need more airlines, we also need airports. Few of our visitors are urban tourists. The majority of them are eco-tourists, yet it takes six hours to drive from Kampala to Bwindi [impenetrable forest] or Kidepo [national park]. We really need to work to move tourists on from Entebbe more efficiently,” she said. This is a project that is now under ministerial discussion, according to the government, and a new aviation masterplan is being developed to prepare for demand growth. This will include significant investments in infrastructure at Entebbe as well as upgrades at domestic airports across Uganda.
To mark the start of Routes Africa, captain Howard Davenport wowed delegates with his trademark inverted ribbon cut over Lake Victoria.
Kenyan Airways’ boss on getting the groundwork right Poor ground infrastructure can also put tourists off, said Dr Titus Naikuni, chief executive officer of Kenya Airways. “Apart from Johannesburg, on this continent, the first thing that hits you when you get out of a big African airport are the traffic jams. If you do not sort out traffic jams, you will not get visitors,” he warned. Naikuni claimed that Africa also needs to improve safety and security standards in order to attract more airline partners. Naikuni added that Chinese investment in Africa continued to be a contentious issue, saying it was the “best thing to happen and worst thing to happen” to the continent. Naikuni noted African airports had been slow to respond to the Chinese influx and that little or no signage is offered to visitors from this part of the world. “How can you expect people to come in from China when you can’t actually offer them directions of where to go,” he said. He also said governments needed to ensure that local African communities benefit from the legacy of the Chinese investment.
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ROUTES AIRPORT MARKETING AWARDS
KILIMANJARO sky high with marketing award East Africa’s famous Lake Victoria played host to the networking evening, which saw Kilimanjaro International Airport win the Africa heat of this year’s Routes Airport Marketing Awards. “We would like to thank all of the airlines that serve the airport for voting for us in this process and we are pledging our commitment that we will keep working hand-in-hand with all of our partners. Thank you for trusting in us and believing in us and giving us this wonderful opportunity to show the rest of Africa what we are doing at Kilimanjaro International Airport,” said Christine Mwakatobe, business development manager, Kilimanjaro Airports Development Company. Kilimanjaro was also named as the winner in the Under 4 Million Passengers category, with Nairobi–Jomo Kenyatta International Airport ranked top in the Over 4 Million Passengers category. Meanwhile, the Destination Marketing Award went to Seychelles Tourism Board. “We would like to congratulate all of the winners and highly commended airports and tourism authorities in this regional heat of the 2013 awards. Kilimanjaro International Airport has delivered true route development results,” said Nigel Mayes, VP commercial – Routes, UBM Live. “Launching three new international airlines – Qatar Airways, Kenya Airways and Turkish Airlines – in the last year is a fantastic achievement, along with delivering on a clear air service development strategy which was set out three years ago,” he added.
OVER 4 MILLION PASSENGERS WINNER: Nairobi–Jomo Kenyatta International Airport Highly commended: Casablanca–Mohammed V International Airport Finalists: Addis Ababa–Bole International Airport Algiers–Houari Boumediene Airport Cairo International Airport
UNDER 4 MILLION PASSENGERS WINNER & OVERALL WINNER: Kilimanjaro International Airport Highly commended: Dar es Salaam–Julius Nyerere International Airport Finalists: Accra–Kotoka International Airport Luanda–Quatro de Fevereiro Airport Maputo International Airport
DESTINATION MARKETING AWARD WINNER: Seychelles Tourism Board Highly commended: Tourism KwaZulu-Natal Finalists: Mozambique Tourism Authority Zambia Tourism Board Zimbabwe Tourism Authority
From Lake Victoria to Victoria Falls Routes Africa has been officially handed over to next year’s hosts, the Civil Aviation Authority of Zimbabwe. The event will take place at the iconic Victoria Falls, one of the Seven Wonders of the World, from June 22–24. Known by the local Tonga people as Mosi-oa-Tunya (the smoke that thunders), this natural wonder is shared by Zimbabwe and Zambia. Victoria Falls International Airport (VFA), situated 21km south of the town,
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is currently served by scheduled domestic and regional flights and charter flights. Within the region, VFA is easily accessible from Johannesburg, Cape Town, Luanda, Nairobi and locally from Harare. A US$150 million infrastructure upgrade project is taking place at VFA, including construction of a new runway, international terminal building and control tower. This is expected to be completed by December 2014.
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eventsupdate
10
of the BEST The countdown is officially on to World Routes, which will be hosted in one of the world’s top convention and entertainment destinations. Here’s why every route planning professional needs to get to Las Vegas.
1 BEST OF THE BEST
World Routes is the world’s largest aviation event and the only place where airlines, airports, tourism authorities and governments come together to shape the world’s aviation and tourism industry.
2 MEET FACE-TO-FACE
Face-to-face meetings will be extended to take place on the Sunday through until Tuesday. Longer 50-minute strategic meetings are also available.
5 TEAM USA!
More American airlines will attend than ever before, including American Airlines, United Airlines, US Airways, Delta, Allegiant Airlines, Alaska Airlines, JetBlue Airways, Southwest and Spirit – all of which are including domestic network planners in their delegations.
6
Industry leaders come together at the World Route Development Strategy Summit – this year the focus is on consolidation, global impact of travel, Emissions Trading Scheme, cargo, security and sustainability.
AIRLINE 3 UNIQUE INSIGHT More than 30 airline briefings, including Allegiant, Southwest, Air Canada Rouge, AirAsia Group, Condor, SkyTeam and easyJet.
4 YES, MINISTER
Tourism ministers can join the World Tourism Summit where Lee McCabe, Facebook’s head of travel, will be presenting.
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INDUSTRY-LEADING CONFERENCES
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BE AMONG POLICYMAKERS Be the first to hear ICAO present the findings of the General Assembly on its proposal for a global carbon emissions policy for aviation. Other industry associations at World Routes will include IATA, ACI World, ACI-NA, ACI Europe, ALTA and the World Bank.
8 DEALMAKERS
Global airport investors, including Viracopos and GIP, will present the key deals that have been concluded over the past two years. This will be followed by a session on prospective deals for 2014.
9 GET TALKING
This year’s Routes Talks will have dedicated themed sessions, including ones focused on social media. Confirmed sessions include speakers from Facebook, PR Newswire, Nas Air, Porto Airport and ASM.
10 NIGHTS TO REMEMBER
Delegates will be wowed at the beach party themed Saturday Welcome Reception at the Mandalay Bay Hotel and Resort. Other special events include a networking lunch sponsored by Brand USA and a Networking Evening featuring the World Routes Awards at Caesars Palace Hotel.
www.routes-news.com
Events update
Looking ahead to 2014
upcoming events
With the majority of 2014 regional Routes event hosts secured, it promises to be another exciting year for route development. Routes Americas will head to
Routes Europe, the largest of the
San Salvador, hosted by the Ministry of Tourism El Salvador. The event is the only route development forum for all of the Americas and next year is expected to attract over 400 delegates.
Routes regional events, will return to France, hosted by Marseille-Provence Airport. More than 1,000 delegates are expected to attend the event in Marseille, which is the second-largest city in France and the regional capital of southern France.
Routes Africa will take place at
Routes Asia will take place in Kuching, Sarawak, hosted by the Ministry of Tourism Sarawak and co-hosted by Malaysia Airports Holdings Berhad. Sarawak, known as the Land of the Hornbills, is the largest state in Malaysia, and is situated on the island of Borneo. Home to the world’s oldest tropical rainforests, its abundant wildlife includes rare and endangered species such as the orangutan and the hornbill.
Victoria Falls in Zimbabwe. Hosted by the Civil Aviation Authority of Zimbabwe, delegates will get the chance to visit this UNESCO World Heritage Site.
The global meeting place for every airline and airport
Routes Americas February 23–25, 2014 San Salvador, El Salvador Routes Asia March 9–11, 2014 Kuching, Sarawak, Malaysia Routes Europe April 6–8, 2014 Marseille, France
World Routes is expected to attract 3,500 delegates when the 20th World Route Development Forum takes place in Chicago on September 20-23, hosted by the Chicago Department of Aviation (CDA), its partners and stakeholders. Chicago O’Hare is one of the world’s top five airports and the second busiest in the US.
www.routesonline.com
World Routes October 5–8, 2013 Las Vegas, USA
Routes Africa June 22–24, 2014 Victoria Falls, Zimbabwe Routes World September 20–23, 2014 Chicago, USA
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LET US
ENTERTAIN YOU The highlight of the route development calendar is just weeks away – Las Vegas’s Cathy Tull shares some of her top insider tips to help you plan your trip.
M
any have tried, but no other city has managed to capture the world’s imagination quite the way that Las Vegas has. Known globally for its high-rolling luxury hotels, unparalleled entertainment offering and nearby stunning natural attractions, this is a fun-loving city that also means business when it comes to conventions and events. Cathy Tull, senior vice president of global brand marketing at the Las Vegas Convention and Visitors Authority (LVCVA), explains the biggest misconception about the city remains that it is primarily a gambling destination. “In reality, less than 8% of visitors say gaming is their primary
motivation for visiting Las Vegas today, and a majority of the tourism revenue is generated through non-gaming offerings, such as shopping, dining and entertainment,” she says. In the past five years, Las Vegas has invested $26 billion into diversifying its tourism offering, Tull says. “We continue to reinvent with new entertainment, shopping and culinary offerings that appeal to all audiences, cultures and budgets. New and unique offerings such as the ‘daylife’ pool scene at Encore Beach Club and Cosmopolitan Marquee Dayclub, among others, have helped to broaden the allure of Las Vegas to new audiences,” she adds.
NOT TO BE MISSED ee one of eight S Cirque du Soleil shows ake in vintage Vegas and T see the Viva Vision show on the world’s largest big screen at the Fremont Street Experience Enjoy world-class shopping reat yourself to some of T the best culinary offerings in the world atch a helicopter to the C Grand Canyon
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BEST FOR RETAIL THERAPY FORUM SHOPS FASHION SHOW MALL GRAND CANAL SHOPPES PREMIUM OUTLET MALL CRYSTALS
TOP
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WHAT’S NEW? The new Smith Center for the Performing Arts
has an eclectic line-up of theatre, music and dance offerings for every taste.
The Las Vegas Museum of Law Enforcement and Organized Crime (The Mob
Museum) is located in the heart of Downtown and is an interactive attraction presenting an authentic view of organised crime’s impact on the city’s history.
CITY ESCAPES GRAND CANYON RED ROCK CANYON AKE MEAD & L HOOVER DAM MT CHARLESTON VALLEY OF FIRE
The Neon Museum
hosts a collection of more than 150 vintage Las Vegas neon signs that range from the 1930s to the present day, including the Stardust, Desert Inn, Golden Nugget, and the massive Treasure Island skull.
Cirque du Soleil recently opened two new shows on the Strip: Zarkana at Aria – “A stunning modern acrobatics spectacular” – and Michael Jackson–ONE at Mandalay Bay.
KEEP COMING BACK... Las Vegas is forever transforming and there are a number of major attractions opening in the coming months. These include The Linq (www.caesars.com/thelinq), an open-air retail and entertainment district complete with what will be the world’s tallest observation wheel, the High Roller, which opens in late 2013. There are also a number of exciting hotel developments opening next year, including the Delano Las Vegas at Mandalay Bay (www.delanolasvegas.com), the remodelled Gansevoort and the renovated SLS Las Vegas Hotel & Casino (slshotels.com/lasvegas).
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ROUTES NEWS 5, 2013
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P O T e h t m o r f W E I V FACTFILE
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of What are the big challenges R? SA SE ing implement
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ROUTES NEWS 5, 2013
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